Dragonfly Energy — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales were $12.2 million, a 23.8% decrease year-over-year from $15.967 million in Q3 2025.
• OEM net sales were $7.1 million, down 33.3% year-over-year; DTC net sales were $4.8 million, down 4.7% year-over-year; Licensing fees were $0.25 million, flat year-over-year.
• Gross margin was 27.0%, down from 29.7% in Q3 2025, driven primarily by lower volumes.
• Net loss attributable to common stockholders was $(6.7) million, or $(3.71) per diluted share, compared to $(11.1) million, or $(16.45) per diluted share, in Q3 2025.
• Adjusted EBITDA was $(2.3) million, a decline of $0.2 million year-over-year and a decline of $0.7 million sequentially from $(1.6) million in Q2 2026.
• Total operating expenses were $7.3 million, down from $8.5 million in Q3 2025.
• Cash and cash equivalents were $1.941 million as of September 30, 2026, down from $18.270 million as of December 31, 2025.
• Total current liabilities increased to $28.681 million from $19.757 million at the end of 2025, driven by a significant increase in notes payable (current portion) to $12.483 million from $0.433 million.
• Stockholders' equity turned negative to $(4.544) million from positive $11.530 million at the end of 2025.

Guidance and Future Outlook:

• Q4 2026 net sales are guided to approximately $12.5 million.
• Q4 2026 Adjusted EBITDA is guided to approximately breakeven.
• Heavy-duty trucking revenue is expected to nearly double sequentially in Q4 2026, following a more than doubling in Q3 2026 to $1.3 million.
• New inventory from the Dakota Lithium acquisition is expected to begin arriving toward the end of Q4 2026, with broader availability and meaningful revenue contribution expected in Q1 2027.
• The Dakota Lithium acquisition is expected to be accretive to Adjusted EBITDA as the company leverages existing infrastructure with minimal incremental overhead.
• The company anticipates continued progress in trucking and Dakota Lithium, combined with cost-reduction initiatives, to support the path toward profitability.

Business Segments and Product Lines:

• Heavy-duty trucking revenue more than doubled sequentially in Q3 2026, driven by expanding commercial fleet adoption.
• For the first time, the company received orders from fleets moving directly into commercial deployment without a pilot program.
• RV market conditions remained challenging, contributing to lower-than-expected net sales; wholesale shipments in the RV industry were down 13.7% year-to-date through September.
• Adoption within premium OEM partnerships remains healthy as customers standardize lithium systems and increase energy storage content.
• Following the acquisition of Dakota Lithium in late July, the company is rebuilding inventory, re-engaging its dealer and distribution network, and strengthening e-commerce capabilities.
• Early demand for Dakota Lithium products has been described as encouraging.

Market and Competitive Landscape:

• Persistently high diesel prices are driving urgency among fleets to offset fuel costs, creating an opportunity for Dragonfly's commercial trucking portfolio.
• Macroeconomic pressures continue to impact DTC net sales.
• The company is focused on increasing market penetration into target markets and successfully integrating the Dakota Lithium acquisition.

Risks and Challenges:

• Ongoing softness in the RV industry and challenging market conditions.
• Risks include the timing and extent of recovery in core markets, ability to successfully increase market penetration, and ability to penetrate heavy-duty trucking and other new markets.
• Potential fluctuations in diesel fuel prices and their effect on fleet demand.
• Risks associated with the successful integration of Dakota Lithium and realization of anticipated benefits.
• Uncertainty regarding the timing and amount of tariff-related refunds and changes in trade policy.
• Risks related to maintaining relationships with key suppliers, including those in China, and key customers.
• Risks regarding the ability to protect patents, successfully utilize the patented dry electrode process, and scale solid-state cell production.
• Risks related to maintaining the listing of common stock and public warrants on the Nasdaq Capital Market.

Management Commentary and Tone:

• Dr. Denis Phares, CEO, stated that Q3 heavy-duty trucking revenue was in line with August outlook and reflected credibility established through field validation.
• Management expressed confidence that the current order book supports a sequential doubling of trucking revenue in Q4 2026.
• Management noted that despite lower sales, progress on cost-reduction initiatives helped limit the decline in Adjusted EBITDA year-over-year.
• The tone indicates a focus on achieving sustainable positive Adjusted EBITDA supported by growth in trucking, Dakota Lithium, and cost efficiencies.

Other Key Points:

• The company completed the acquisition of the Dakota Lithium brand at the end of July 2026.
• The company declared Series B Preferred Stock dividends totaling $1.168 million in Q3 2026.
• Net cash used in operating activities for the nine months ended September 30, 2026, was $13.071 million.
• Net cash used in investing activities for the nine months ended September 30, 2026, was $2.195 million, including $1.0 million paid for the acquisition of business.
• Net cash provided by financing activities for the nine months ended September 30, 2026, was $(1.063) million.
• The company cannot reconcile expected Adjusted EBITDA for Q4 2026 under GAAP without unreasonable effort due to items out of its control.
• The company hosts a webcast and conference call on November 12, 2026, at 5:00 PM Eastern Time to discuss results.