Good afternoon and welcome to Dragonfly Energy's First Quarter 2025 Earnings Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. I'll now turn the call over to Szymon Serowiecki, Investor Relations. Please go ahead.

Thank you, operator. Appreciate you joining us for today's call. Joining me here are Dr. Denis Phares, Dragonfly Energy's Chairman, President and Chief Executive Officer; and Wade Seaburg, Chief Commercial Officer. Before turning the call over to Denis, I'd like to make a brief statement regarding forward-looking remarks. During this call, the company will be making forward-looking remarks within the meaning of the United States Private Securities Litigation Reform Act of 1995 based on current expectations. These forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Actual results may differ due to factors noted in the press release and in periodic SEC filings. Management will reference some non-GAAP financial measures. Reconciliations to the nearest corresponding GAAP measures can be found in today's release on the company's website. Please note that all comparisons will be discussed today are on a year-over-year basis, unless otherwise noted. I'll now turn the call over to Denis.

Thank you, Simon and thank you, everyone, for joining us today. We were pleased to report revenue growth of 6.8% in the first quarter, exceeding our guidance and representing our second consecutive quarter of year-over-year revenue growth. While the RV market continues to navigate headwinds, adoption trends within our product portfolio remain healthy. This is evidenced by the 10.8% growth in net sales from OEM customers, driven by broader integration of our solutions at the factory level across more models within existing partnerships. Partially offsetting OEM growth was a slight decline in net sales from DTC customers, as the segment continues to be impacted by macroeconomic pressures. While we remain committed to serving our valued DTC customers, we expect long-term growth to be led by our OEM channel as we expand our strategic partnerships and accelerate our product development and rollout efforts. As we discussed in the prior quarter, we successfully launched our corporate optimization program to more precisely focus the organization and its priorities on near-term revenue-generating opportunities, accelerating our path to growth and profitability. This strategic initiative is already delivering tangible operational improvements, strengthening our ability to execute across key target markets. As part of this initiative, we reallocated resources to prioritize product development with near-term revenue potential. A strong early example of this strategy is the accelerated launch of our Battle Born dual flow power pack for the heavy-duty trucking market, a practical hybrid electrification solution. In today's uncertain market, we believe many fleets are looking to adopt partial electrification strategies that balance short-term cost control with long-term sustainability and performance goals. As Wade will discuss shortly, the dual flow solution is already gaining traction among fleets navigating these operational challenges. The optimization program has also enabled us to implement several targeted enhancements across our manufacturing operations,…

Thank you, Denis. I'd like to take a few moments to provide an update on what we are seeing across the heavy-duty trucking market, where we continue to engage with both fleet owners and OEMs offering unique value-add solutions. In response to market uncertainty, fleets are increasingly focused on extending the life of existing trucks and unlocking real-world operational savings today, not years down the line. We believe our product portfolio is uniquely positioned to meet those needs, delivering cost-effective practical solutions that reduce idling, lower maintenance burdens and improve system reliability across aging fleets. This trend plays directly into Dragonfly Energy's strengths, grounded in years of experience developing advanced battery technology and power system innovations. We believe our deep technical expertise, combined with a flexible U.S.-based manufacturing foundation enables us to deliver practical application-specific solutions that align with the evolving needs of our customers. A strong example of this approach is our Battle Born dual flow power pack, a practical and cost-effective solution for fleets seeking idle reduction benefits without the complexity or cost of an all-electric APU system. Many fleets are either dealing with the common failures of diesel APUs or simply aren't ready to transition to a fully electric system for climate control. With capital expenditures under pressure, the dual flow addresses these challenges head on by powering hotel loads, such as HVAC, lighting and electronics. During rest periods, allowing fleets to significantly reduce engine idling. In addition to fuel savings, the system also helps extend the life of the truck starter batteries by isolating and supporting parasitic loads with seamless integration into both new and existing vehicles a compact footprint and an ROI typically under 1 year, the dual flow is gaining traction as a smart, dependable option for fleets looking to cut operating costs without overhauling their current systems. The strength of our value proposition is reflected in the increased fleet engagement we've seen over the past few months, marking meaningful progress as we work to establish ourselves within the heavy-duty trucking industry. At recent trucking industry events, we believe Dragonfly Energy Solutions have emerged as a priority for attendees with many high-profile potential customers making Dragonfly their first point of contact. As battery-related challenges in fleet operations become more visible, our solutions are being recognized as practical high-impact tools that deliver immediate cost and performance benefits. Even in a challenging market, operators see that our offerings are purpose-built to address the real-world needs supported by a compelling ROI. We believe Dragonfly Energy is uniquely positioned to capitalize on this industry shift. Our ability to deliver practical lithium-powered solutions that directly address fleet needs continues to resonate with operators, navigating today's cost and reliability challenges. We're excited to work alongside our partners to drive meaningful performance improvements and support their long-term sustainability and operational goals. I'll now turn the call back to Denis.

Thank you, Wade. I will now provide a review of our first quarter results as well as a more detailed outlook for the second quarter of 2025. First quarter net sales of $13.4 million were up 6.8%, led by continued strength from our OEM customers. OEM net sales increased 10.8% to $8.1 million as we continue to see healthy adoption trends within our product portfolio. Net sales growth was partially offset by the DTC segment which saw revenue decline approximately 3.6% to $5.0 million, reflecting continued macroeconomic uncertainty. First quarter gross profit increased 12.5% to $3.9 million and gross margin increased 500 basis points to 29.4%, primarily driven by higher volume. Operating expenses were $9.8 million, above the $8.9 million reported in the prior year period, primarily due to expenses related to patent litigation and the February capital raise, both of which are onetime in nature. Net loss was $6.8 million with a diluted loss per share of $0.93 compared to net loss of $10.4 million with a diluted loss per share of $1.55. Adjusted EBITDA was negative $3.6 million compared to negative $5.2 million. Looking ahead to the second quarter, we expect net sales to be approximately $14.8 million representing year-over-year growth of 12% and we expect an adjusted EBITDA loss of approximately $3.5 million. To conclude, we believe Dragonfly Energy is well positioned to navigate ongoing market volatility while continuing to deliver high-quality energy storage solutions to our diverse customer base. By prioritizing near-term revenue opportunities, optimizing our manufacturing operations and reinforcing our financial position, we have established a clear path toward profitability and sustained growth. Our domestic manufacturing capabilities provide a strategic advantage in today's complex environment, allowing us to respond quickly and effectively to evolving customer needs. We look forward to building on this momentum throughout 2025 and driving long-term value for our shareholders. Operator, we would like to open the call to questions.

[Operator Instructions] Your first question comes from George Gianarikas from Canaccord Genuity.

I'd like to ask about the commercialization opportunities around your dry electrode manufacturing technology. Any updates there, any developments? Would -- any news would be very much appreciated.

Thank you. George, thank you for your question. I will say that development is ongoing. We're obviously still working on developing the scale up equipment and we do have interest from commercial partners. I would like to say that we've been devoting a significant amount of resource to that but that is not the case in the last quarter. We've been really focusing on near-term revenue and getting back to profitability. That's been our number 1 priority but we're certainly continuing progress on the dry electrode as fast as we can.

And maybe a follow-up, I'd just like to focus on the balance sheet and profitability. First, just thoughts on the cash balance as reported as of the end of March. And also, I saw your EBITDA guidance for the quarter and I would have expected a little bit of an improvement sequentially based on the increased revenue. Just any thoughts on those 2 would be appreciated.

Sure. Well, in terms of the cash balance, we did just complete the preferred equity deal. It came in 2 tranches. One, the initial tranche came in the first quarter and the second tranche came in the second quarter. And we do feel that we have the cash to get us back to profitability at the end of the year. We -- in terms of the cash at the end of the first quarter, we did pay down some AP. So we feel very good about the fact that we're able to catch up on some of those expenses. And moving forward, we have been really focused on investing in near-term revenue growth and that's really where the spend has gone. Although we had some reductions in our research and development, the fact that we were able to accelerate the development of a highly anticipated heavy-duty trucking product like the dual flow was entirely made possible by the enhanced investments that we made in this near-term opportunity. And I can't stress enough that the importance for us to get back to cash flow positive, to get back to profitability is going to open up a lot of doors in terms of our ability to really produce in not just the dry electrode but also getting back to the solid-state development which we're all still very excited about. But the frustration in the recent history is the fact that we've been having to focus on cash flow and our ability to really give ourselves some breathing room, especially through this preferred equity deal and some debt relief that we got is going to make all this possible.

And maybe just a follow-up on the EBITDA in Q2 that you're expecting a loss of $3.5 million, I think it was. But why isn't there a little bit of a sequential improvement in Q2 based on the fact that revenue is ramping a little bit?

That's because of some continued investment in, as I said, the near-term product development and the new products that we have coming out and driving the business that is going to get us back to the profitability that we expect. The other thing that I have to say is we're also incorporating the effect of tariffs and that's been difficult to predict. It's obviously something that's been in flux. But given the fact that we have been allowing the situation to evolve and allowing ourselves to plan for that accordingly and try to hold on as best as we can to the very important customers that we have we've been able to incorporate that in the projections for this quarter.

[Operator Instructions] There are no further questions at this time. I would hand over the call to Denis Phares for closing remarks. Please go ahead.

Thank you for everyone joining us today. We look forward to sharing additional details with all of you in the coming quarters. Have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and you may now disconnect.