Dragonfly Energy — Second Quarter 2026 Earnings Summary

Financial Performance

• Net sales were $13.2 million, a 19.0% decrease year-over-year from $16.2 million in Q2 2025.
• OEM net sales were $8.4 million (down 16.1% YoY), while DTC net sales were $4.5 million (down 24.7% YoY).
• Gross margin was 33.0%, an improvement from 28.3% in Q2 2025, driven by a $1.1 million tariff refund benefit offsetting lower unit volume.
• Net loss attributable to common shareholders was $5.5 million, or $0.43 per diluted share, compared to $7.0 million ($5.77 per share) in Q2 2025.
• Adjusted EBITDA was $(1.6) million, representing a $3.0 million sequential improvement from Q1 2026 and a $0.6 million year-over-year improvement from Q2 2025.
• Cash and cash equivalents decreased to $6.3 million as of June 30, 2026, from $18.3 million at December 31, 2025.
• Total liabilities were $47.0 million as of June 30, 2026, down from $52.8 million at December 31, 2025.
• Deferred revenue totaled $3.1 million ($1.0 million current, $2.1 million non-current) as of June 30, 2026.

Guidance and Future Outlook

• Q3 2026 net sales guidance is approximately $13.5 million.
• Q3 2026 Adjusted EBITDA guidance is approximately $(2.4) million, reflecting temporary timing factors including expenses for vacated facility space and costs to restore Dakota Lithium operations.
• Heavy-duty trucking revenue is expected to more than double sequentially in Q3 as fleet programs expand following the Stevens Transport purchase order.
• The Company reaffirms its target of achieving positive Adjusted EBITDA at an annualized net sales run rate of approximately $70 million.
• The Dakota Lithium acquisition is expected to begin contributing meaningful revenue and be accretive to Adjusted EBITDA starting in Q4 2026.
• Facility consolidation actions are expected to be completed during Q3 2026.

Business Segments and Product Lines

• The Company acquired the assets of the Dakota Lithium brand, expanding its product portfolio into marine, outdoor recreation, powersports, golf cart, and specialty battery markets.
• OEM partnerships continue to expand model placements and power system content despite a soft RV market where industry shipments were down 14.2% through midyear.
• DTC sales were negatively impacted by macroeconomic pressures and third-party online commentary regarding certain products; the Company has initiated legal proceedings to address this.
• The Company continues to advance domestic battery cell manufacturing using its patented dry electrode process and is developing next-generation all-solid-state battery cells.

Market and Competitive Landscape

• The RV market faces continued macroeconomic pressure, with industry shipments down 14.2% through midyear.
• The Company is building commercial momentum in the heavy-duty trucking market, with deliveries under the Stevens Transport purchase order commencing in Q2.
• The Company cites negative third-party online commentary as a specific challenge affecting customer sentiment in the DTC channel.

Risks and Challenges

• Macroeconomic pressures are impacting both RV production volumes and consumer demand in the DTC channel.
• Negative third-party online commentary regarding products has adversely affected customer sentiment.
• The Company faces risks related to the successful integration of the Dakota Lithium brand and the timing of its revenue contribution.
• The preliminary nature of the financial results is subject to material adjustments upon finalization of the Form 10-Q.

Management Commentary and Tone

• CEO Dr. Denis Phares stated that cost reduction actions implemented earlier in the year began to take effect, driving operating leverage despite lower net sales.
• Management expressed confidence in the commercial ramp in the heavy-duty trucking market and the strategic value of the Dakota Lithium acquisition.
• Dr. Phares emphasized a focus on disciplined execution, integrating the new brand, and driving operating leverage from the improved cost structure.

Other Key Points

• Subsequent to quarter-end, the Company acquired the Dakota Lithium brand assets to broaden its product portfolio and diversify revenue beyond core RV and trucking markets.
• Existing lenders amended debt arrangements to reduce the minimum cash covenant, convert the next two quarters of interest to paid-in-kind interest, and defer Senior Leverage Ratio and Fixed Charge Coverage Ratio covenant requirements until September 2027.
• These debt amendments are expected to preserve approximately $1 million of near-term liquidity.
• The Company reported $1.1 million in tariff refund benefits recognized in cost of sales during the quarter.
• Operating expenses decreased to $7.2 million from $7.9 million in Q2 2025, benefiting from cost reduction actions and facility consolidation.
• The Company paid $1.1 million in preferred stock dividends during the quarter.