Flux Power Holdings, a U.S.-based lithium-ion storage solutions provider, has reported a revenue of $7.7 million in the second quarter (Q2) of the fiscal year (FY) 2022, a 19% year-over-year (YoY) growth compared to $6.5 million in Q2 FY 2022.
The growth is attributed to sales of energy storage systems with higher selling prices despite the lower unit volume of products sold.
However, the company’s gross profit declined to $1 million in Q2 FY 2022 from $1.5 million in the same period last year. The gross profit declined by over 33% due to higher costs of steel, electronic components, and other parts, partially offset by an increase in gross profit from higher sales of energy storage systems.
In Q2 FY 2022, its net loss increased almost 51% YoY to $5.07 million in Q2 FY 2021 from $3.36 million in the same period last year. The net loss grew due to higher operative expenses and decreased gross profit, caused by a decline in interest expense.
In Q2 FY 2022, its research and development expenses increased to $2.1 million from $1.6 million in the same period last year, mainly due to new product development activities.
The company received $19.8 million in consumer purchase orders from existing and new consumers. It utilized $14 million capital raised to pre-purchase inventory to protect growing deliveries to significant consumers. Its consumer order backlog increased to $31.4 million as of December 31, 2021.
The profits were negatively impacted due to continued disruption in the supply chain despite strong consumer demand in Q2 2022. The company experienced higher costs to obtain significant components of energy storages solutions, and delays in receipt of components led to manufacturing and shipping delays.
To address supply chain uncertainty, it developed inventory levels of critical components parts, increasing operating expenses and reducing gross profit.
“We ended Q2 with $7.9 million in cash and $19.6 million in product inventory. Our goal is to monetize our existing backlog of $31.4 million in the months ahead and improve our working capital and cash flow needs,” the company stated.
Commenting on the results, Ron Dutt, Chief Executive Officer of Flux Power, said, “While Q2 2022 was a challenging one for the company in light of the continued global supply chain disruptions, we experienced a record consumer demand as evidenced by $19.8 million in purchase orders received from new and existing customers. The company has also commenced strategic initiatives to mitigate the impact of global supply chain disruptions to increase profitability. Our near-term goal is the timely shipment of our backlog of $31.4 million.”
In October 2021, Flux Power announced the closing of its registered direct offering. It was priced at the market under NASDAQ rules to sell 2,142,860 shares of its common stocks and warrants to purchase up to an aggregate of 1,071,430 shares of common stock at $7/share.