Flux Power : Q3'24 Financial Results Conference Call Presentation

Third Quarter 2024 Financial Results Conference Call

NASDAQ:FLUX

May 9, 2024

SAFE HARBOR LANGUAGE

This presentation contains forward-looking statements. All statements other than statements of historical fact contained in this presentation, including statements as to the Company's future results of operations and financial position, planned products and services, business strategy and plans and objectives of management for future operations, are forward-looking statements.

These statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause the Company's actual results, performance

or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expects," "plans," anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "aims," "predicts," "potential," "seeks," attempts," "poised" or "continues" or the negative of these terms or other similar words. These statements are only predictions.

The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its business, financial condition and results of operations. Also, these forward-looking statements represent the Company's estimates and assumptions only as of the date of this presentation. The Company assumes no obligation to update any forward-looking statements after the date of this presentation.

This presentation also contains estimates and other statistical data made by independent parties and by the Company relating to market size and growth and other industry data. This data involves several assumptions and limitations, and you are cautioned not to give undue weight to such estimates. The Company has not independently verified the statistical and other industry data generated by independent parties and contained in this presentation and, accordingly, it cannot guarantee their accuracy or completeness.

In addition, projections, assumptions and estimates of its future performance and the future performance of the industries in which it operates are necessarily subject to a high degree of uncertainty and risk due to a variety of factors. These and other factors could cause results to differ materially from those expressed in the estimates made by independent parties and by the Company. For more information, please refer to risk factors discussed in Company's periodic filings with the SEC.

May 9, 2024	Fiscal Third Quarter 2024 Financial Results	2

POWERING YOUR TRANSITION TO SUSTAINABLE LITHIUM - ION TECHNOLOGY

May 9, 2024	Fiscal Third Quarter 2024 Financial Results	3

OUR REPUTATION AND BRAND

Reputation:

Flux Power goes beyond merely manufacturing and selling technology; we forge personalized, one-on-one relationships with our partners and customers from start to finish, ensuring a seamless and empowering experience. As leaders in advanced energy solutions, we are dedicated to transforming industrial operations, with sustainable energy technology that are not only efficient and reliable but also tailored to meet the unique needs of each customer. Our commitment extends through every step of the journey, inspiring a more sustainable future together.

Brand:

• Leading By Experience: With 10+ years of industry experience and 20,000+ battery packs in the field we have established ourselves as a trusted leader in delivering dependable and innovative energy solutions.
• Innovation For Continuous Improvement: With our philosophy of continuous improvement, we are always looking to improve our customer's operations through new technologies and industry advancements.
• Inclusivity To Build Partnerships: Our dedication lies in empowering and educating our customers and partners about our lithium-ion battery technology.
• Owning Accountability To Deliver: We are committed to excellence and reliability, consistently holding ourselves accountable for customers' needs and supporting our partners.
• Nurturing Our Relationships: Our commitment is to provide ongoing energy solutions and service for Fortune 500 operations.

May 9, 2024	Fiscal Third Quarter 2024 Financial Results	4

KEY THIRD QUARTER 2024 HIGHLIGHTS

• Revenue for the fiscal third quarter of 2024 decreased 4% to $14.5 million compared to $15.1 million in the fiscal third quarter of 2023, due to fewer number of units of energy storage packs sold during the quarter, partially offset by price increases for certain energy storage units sold
• Gross profit for the fiscal third quarter of 2024 decreased 7% to $4.4 million compared to a gross profit of $4.7 million in the fiscal third quarter of 2023
• Gross margin decreased to 30% in the fiscal third quarter of 2024 as compared to 31% in the fiscal third quarter of 2023
• Adjusted EBITDA loss was $1.4 million in the fiscal third quarter of 2024 as compared to a loss of $0.7 million in the fiscal third quarter of 2023
• Order backlog decreased to $19.6 million as of March 31, 2024 from $30.1 million as of December 31, 2023
• Backlog as of May 6, 2024, was $18.5 million

May 9, 2024	Fiscal Third Quarter 2024 Financial Results	5

THIRD QUARTER 2024 THEMES

• The third fiscal quarter of 2024 saw continued lumpiness from timing of deliveries of customer new forklift orders and interest rate variability
• We sell our products into capital equipment markets and are experiencing a pause due to the higher interest rate environment
• Orders are not cancelled just pushed out and see signs of a gradual return to our growth rate in the second half of calendar 2024
• Trend with fleetwide replacements still advancing
• Macro capital spending trends remain intact and - An Institute for Supply Management survey released this month showed manufacturing grew for the first time in 1-1/2 years in March
• Now focused on additional selling strategies to support our historical sales trajectory as we only have 10% market share

May 9, 2024	Fiscal Third Quarter 2024 Financial Results	6

OPERATIONAL HIGHLIGHTS AND BUSINESS UPDATES

Highly focused on expanding sales and marketing initiatives to secure new customer relationships and support continued migration to lithium of current customers:

Some delays of customer orders stretch beyond current fiscal year ending June 30, 2024

• Delays linked to forklift deferrals from higher interest rates and economy
• No lost customers and no lost orders to competition
• No pullback from Lithium adoption by customers

Actions supporting targeted sales trajectory

• New product launches of heavy-duty models addressing customer demand
• Adding salespeople to support customer demand
• Increasing marketing resources and initiatives
• Launching this quarter new Private Label program for another top Forklift OEM

May 9, 2024	Fiscal Third Quarter 2024 Financial Results	7

OPERATIONAL HIGHLIGHTS AND BUSINESS

UPDATES ( C O N T I N U E D )

Actions supporting increasing our gross margins

• Selected cost reductions company wide
• Selected pricing increases reflecting our "total value add" to products/customers

Continued progress to expand technology and partnerships

• Fast Charging technology with partner to provide prototype testing this summer
• Telemetry features for customer asset management including nationwide installation
• Development of machine learning and AI features for product support of large fleets
• Automation of modularizing battery cells to launch this summer

Key Appointments:

• Appointed Kevin Royal, CPA, a seasoned finance and accounting executive, as Chief Financial Officer.
• Appointed Mark Leposky, a senior-level executive and entrepreneur, to its Board of Directors as an independent director.

May 9, 2024	Fiscal Third Quarter 2024 Financial Results	8

QUARTERLY ADJUSTED EBITDA TRAJECTORY

500
										291		Adjusted EBITDA
												affected by the
(500)								(597)				impact of lower
											revenue and one-
							(676)
						(888)			(1,172)		(1,380)	time warrant-related
(1,500)					(1,544)						expense
				(2,214)
(2,500)
(3,500)			(3,393)
(3,804)
(4,500)		(4,660)
(5,500)
	Q1'22	Q2'22	Q3'22	Q4'22	Q1'23	Q2'23	Q3'23	Q4'23	Q1'24	Q2'24	Q3'24

May 9, 2024	Fiscal Third Quarter 2024 Financial Results	9

DIVERSE CUSTOMER BASE IN MULTIPLE SEGMENTS

Stationary Energy

Food & Beverage

Retail & Grocery

Manufacturing

Distribution

Storage

Airport GSE

F O U R N E W C U S T O M E R S I N F I S C A L Q 3 2 0 2 4

May 9, 2024	Fiscal Third Quarter 2024 Financial Results	10