Flux Power Holdings, Inc. (FLUX) Q3 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals significant financial challenges, including a sharp revenue decline and increased net losses. Despite operational efficiencies and strategic partnerships, the ongoing capital freeze by a major customer and geopolitical tensions pose risks. While there is optimism for future growth, the immediate outlook is bleak, with weak financial performance overshadowing potential long-term gains. The lack of clear guidance on resolving the capital freeze and declining cash reserves further contribute to a negative sentiment, likely leading to a stock price decrease in the short term.
Key Financial Performance
Revenue $6.6 million for the fiscal third quarter of 2026, compared to $16.7 million in the same quarter last year, representing a significant decline. The decrease was attributed to a capital freeze by the largest material handling customer, dynamic ordering patterns, and rising geopolitical tensions in the Middle East driving higher fuel prices, which delayed customer spending.
Gross Margin 27.3% in the third quarter of 2026, compared to 32% in the prior year period. The decline was due to changes in product mix and lower volumes, which resulted in higher unabsorbed labor and overhead.
Operating Expenses $4.8 million in the third quarter of 2026, compared to $6.9 million in the third quarter of 2025, reflecting a 30% year-over-year decrease. This reduction was primarily due to cost-cutting measures, including headcount reductions and streamlining the operating model.
Net Loss $3.2 million or $0.15 per share in the third quarter of 2026, compared to $1.9 million or $0.12 per share in the third quarter of 2025. The increase in net loss was driven by lower revenue and gross margin.
Non-GAAP Net Loss $2.9 million or $0.14 per share in the third quarter of 2026, compared to $1.1 million or $0.07 per share in the prior year period. This excludes stock-based compensation and costs associated with the multiyear restatement of previously issued financial statements.
Adjusted EBITDA Negative $2.5 million in the third quarter of 2026, compared to negative $0.5 million in the same quarter a year ago, reflecting a larger loss due to lower revenue and gross margin.
Cash and Cash Equivalents $400,000 at the end of the third quarter of 2026, compared to $1.3 million at the end of the 2025 fiscal year, indicating a decline in cash reserves.
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Operating Highlights
SkyEMS fleet intelligence platform: Showcased advancements including mobile dashboards, real-time notifications, expanded data integration, API connectivity, and advanced reporting and analytics.
State of health technology: Introduced newly patented technology for significant advancements in battery life cycle management.
OEM partnerships: Efforts to secure new OEM partners and optimize pricing structure with existing partners have resulted in increased volume commitments.
Global forklift market: Projected to grow at a CAGR of 17.2% through 2031, with lithium-ion penetration expected to exceed 70% by 2034.
Cost reduction: Operating expenses reduced by 30% year-over-year through targeted headcount reductions and efficiency actions.
Supply chain optimizations: Aggressively working on vendor renegotiations and product redesign to improve margins.
Strategic initiatives: Focused on five key areas: profitable growth, operational efficiencies, solution selling, building the right products, and integrating value-added software.
Digital marketing strategy: Launched comprehensive digital strategy including social media, lead generation, and brand awareness initiatives.
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Risk or Challenges
Revenue Impact: Third quarter revenue was negatively impacted by a capital freeze from the largest material handling customer and dynamic ordering patterns. Additionally, rising geopolitical tensions in the Middle East increased fuel prices, further delaying customer spending.
Gross Margin Decline: Gross margin declined year-over-year from 32% to 27.3%, primarily due to changes in product mix and lower volumes, leading to higher unabsorbed labor and overhead costs.
Operating Expenses: Operating expenses decreased year-over-year due to cost reduction actions, but the company still reported a net loss of $3.2 million, reflecting ongoing financial challenges.
Cash Position: The company ended the quarter with only $400,000 in cash and cash equivalents, down from $1.3 million at the end of the previous fiscal year, indicating potential liquidity risks.
Customer Spending Delays: Rising fuel prices and geopolitical tensions caused delays in customer spending, impacting order activity and revenue.
Supply Chain Optimization: The company is aggressively working on supply chain optimizations and vendor renegotiations to improve margins, but these efforts are ongoing and not yet fully realized.
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Guidance & Outlook
Revenue Growth: Flux Power expects sequential revenue growth of approximately 20% in the fourth quarter of fiscal 2026, with a further increase to approximately 30%.
Margin Improvement: The company is aggressively working to improve margins through supply chain optimizations, vendor renegotiations, and product redesign efforts, which are expected to significantly impact profitability.
Market Trends: The North American forklift market is projected to grow at a compound annual growth rate of 17.2% through 2031. Lithium-ion penetration in forklifts is expected to exceed 70% by 2034, with 2027 being the year lithium-ion overtakes lead acid as the preferred power source.
OEM Partnerships: Flux Power is optimizing pricing structures for white-label products, resulting in increased volume commitments from existing OEM partners. The company is also actively pursuing new OEM partnerships.
Product Development: The company is focusing on advancements in its SkyEMS fleet intelligence platform and newly patented state-of-health technology, which are expected to enhance battery lifecycle management and operational efficiency.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What is the strategy for Flux to grow faster than the 17.2% CAGR in the OEM field?
A:The strategy involves working with existing OEMs to increase their share of the wallet and collaborating with new OEMs to get certified and work closely with them. The focus is on aligning with OEMs transitioning to electric lift truck models and phasing out lead-acid operations.
Q:What is the visibility for growth beyond the 20% sequential growth in Q4?
A:Management sees increased activity and positive trends, with investments in marketing, price adjustments, and efforts to engage more OEMs. They are optimistic about continuing growth into Q1, despite geopolitical challenges.
Q:Can you provide more insight into the comprehensive social media strategy and its impact on operating costs?
A:The digital marketing strategy focuses on generating leads for salespeople, targeting top fleets, and collecting information through social media. Initiatives include account-based marketing campaigns and leveraging events like the MODEX show. The strategy is being executed within the existing budget, with no incremental operating cost increases.
Q:Is the 20% growth outlook based on Q3 results?
A:Yes, the 20% sequential growth is based on Q3 results.
Q:What is the visibility on the lessening of the capital freeze?
A:Management sees indications of an eventual lift in the capital freeze but does not expect it to happen within the current calendar year.
Q:What is the relative activity in the electric forklift market versus the airport ground equipment market?
A:The GSE market has been steady, with positive reception to new products like the Ampcard and G96 solution. The forklift market has experienced fluctuations due to tariffs, capital spending sensitivity, and a specific customer's capital freeze. Both markets show growth potential, with efforts focused on OEM partnerships and dealership activities for forklifts, and collaboration with partners for GSE.
Q:What contributed to the strong gross margins in the last quarter?
A:The improvement in gross margins was due to efforts in reducing product costs by working with vendors, creating competition for subassemblies, and ongoing supply chain optimizations. Some cost improvements have not yet been realized due to older inventory, and further product redesigns are planned for long-term improvements.
Q:What caused the significant reduction in receivables in the last quarter?
A:The reduction in receivables was due to strong collections from last quarter's shipments. There were no changes in payment terms or discounting offered.
Q:Review of Unclear Management Responses
A:Management avoided providing a clear timeline or specific details regarding the lessening of the capital freeze, only indicating that it is not expected to lift within the current calendar year.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Director
Flux Power
Instructions
MODEX
OEM partner
OEMs
Power CEO
Power Conference
Royal
Shelton Group
action
advancement
afternoon Flux
award
calendar
capital freeze
cash
comment
commitment
customer capital
detail
efficiency
effort
engagement
forklift market
headcount
headwind
industry
life cycle
lithium ion
loss share
marketing
material customer
measure
number
order activity
partner OEM
period
process
profitability
share loss
volume
FLUX Transcript
Flux Power Holdings, Inc. (FLUX) Q3 2026 Earnings Call Transcript
Unknown5-8
The earnings call reveals significant financial challenges, including a sharp revenue decline and increased net losses. Despite operational efficiencies and strategic partnerships, the ongoing capital freeze by a major customer and geopolitical tensions pose risks. While there is optimism for future growth, the immediate outlook is bleak, with weak financial performance overshadowing potential long-term gains. The lack of clear guidance on resolving the capital freeze and declining cash reserves further contribute to a negative sentiment, likely leading to a stock price decrease in the short term.
Flux Power Holdings, Inc. (FLUX) Q2 2026 Earnings Call Transcript
Unknown2-12
The earnings call presents a mixed outlook. Financial performance shows improved margins and profitability, but revenue declined year-over-year. The Q&A reveals uncertainties around customer demand and revenue replacement strategies. Positive factors include the premium pricing of new products and cost-saving measures. However, cash constraints and economic uncertainties temper optimism. Overall, the sentiment is neutral, reflecting balanced positive and negative elements.
Flux Power Holdings, Inc. (FLUX) Presents at IAccess Alpha Virtual Best Ideas Winter Investment Conference 2025 Transcript
Neutral12-9
Flux Power Holdings, Inc. (FLUX) Q1 2026 Earnings Call Transcript
Unknown11-13
The earnings call reveals a decline in revenue and gross margins, coupled with increased net loss and adjusted EBITDA losses, indicating financial strain. While there are positive signals like new orders and market expansion, concerns about tariffs, macroeconomic conditions, and product mix challenges overshadow these. The Q&A highlights ongoing headwinds, with some optimism for future quarters. Despite raised capital for development, the overall sentiment is negative due to current financial performance and uncertainties, likely leading to a stock price decline.
FLUX Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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Why do some answers appear as “Unclear” or “Inaudible”?
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Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
