Flux Power (NASDAQ:FLUX) executives said fiscal third-quarter 2026 results came in below expectations as a major material handling customer instituted a capital freeze and customers across the business delayed orders amid volatile spending patterns and rising fuel prices tied to escalating geopolitical tensions in the Middle East.
On the company’s May 7 earnings call, CEO Krishna Vanka said the combined headwinds “pulled consolidated revenue below our expectations entering the quarter,” but added that customer commitment remains intact in both the ground service equipment (GSE) segment and with the material handling customer affected by the freeze. “We expect order activity to return to prior levels once these near-term headwinds subside,” Vanka said.
Revenue decline and cost actions
Management emphasized cost reductions implemented during the quarter. Vanka said the company moved “decisively on cost,” and that targeted headcount reductions and efficiency actions drove operating expenses down 30% versus the prior-year period. Royal reported operating expenses of $4.8 million, compared with $6.9 million in the third quarter of fiscal 2025, citing actions “to reduce headcount and streamline the operating model.”
Despite lower operating expenses, net loss widened. Royal said net loss was $3.2 million, or $0.15 per share, compared with a net loss of $1.9 million, or $0.12 per share, in the prior-year quarter. Excluding stock-based compensation, non-GAAP net loss was $2.9 million, or $0.14 per share, compared with a non-GAAP net loss of $1.1 million, or $0.07 per share, in the year-ago period. Adjusted EBITDA was negative $2.5 million, compared with negative $0.5 million a year earlier.
MODEX recognition and product/software updates
Vanka highlighted sales and marketing initiatives intended to rebuild pipeline and demand, including a stronger digital marketing approach and expanded OEM engagement. He said Flux had a “strong showing” at the MODEX trade show in Atlanta and won the Innovation in Sustainability Award following a vetting process that included “multiple booth visits” from an industry panel of judges.
At the show, Vanka said Flux showcased advancements to its SkyBMS fleet intelligence platform, including:
- Mobile dashboards
- Real-time notifications
- Expanded data integration and API connectivity
- Advanced reporting and analytics
He also pointed to the company’s “newly patented State of Health technology,” which he said Flux believes is a significant advancement in battery life cycle management.
OEM strategy and forklift market trends
The call also featured remarks from Brian McKenzie, Flux Power’s new Director of OEM Sales, who discussed market data and Flux’s efforts to deepen relationships with existing OEMs while pursuing new partners. McKenzie said the global forklift market was approximately $87 billion in calendar 2025 and that electric forklifts represented 65% of new purchases in North America over that period. He added that lithium-ion penetration was 32% at the end of calendar 2024 and is projected to exceed 70% by 2034, with calendar 2027 projected as the year lithium-ion overtakes lead-acid as the preferred power source for electric forklifts.
McKenzie also cited a projected 17.2% compound annual growth rate for the North American forklift market through calendar 2031. He said he has already been in contact with several OEMs and is “looking forward to securing new OEM partners.” In response to an analyst question about outgrowing the broader market, Vanka said Flux plans to work with existing OEMs to increase “share of the wallet” while pursuing certification and closer relationships with new OEMs. McKenzie added that OEM partners’ push toward electrification aligns with Flux’s goals, particularly as OEMs phase lead-acid out of their operations.
Vanka said the company is also working with existing OEM partners to optimize pricing for white-label products, which he said has improved competitiveness and “resulted in increased volume commitments” from current partners.
Fourth-quarter outlook and margin initiatives
Looking ahead, Vanka said the company is seeing “positive indications” of increased order activity into the fiscal fourth quarter. After initially referencing two figures, he later clarified the company’s expectation is approximately 20% sequential revenue growth in the fourth quarter. CFO Kevin Royal confirmed to an analyst that the 20% growth outlook is sequential, off the fiscal third quarter baseline.
On the customer capital freeze, Royal said management sees “indications… of an eventual lift,” but added it is not expected “this calendar year.”
Management also described efforts to improve margins. Vanka said Flux is pursuing “near-term supply chain optimizations, vendor renegotiations, and through product redesign efforts,” which he expects to improve profitability. Royal told analysts the company has been working to lower product costs by negotiating with vendors and creating competition by putting certain sub-assemblies out for bid. He added that some improvements have not yet flowed through cost of sales because the company still holds inventory with older, higher-priced components. Product redesign efforts, he said, are expected to take longer, with improvements likely realized in “12 months–15 months.”
On marketing spending, Vanka said the company’s digital marketing push—focused on lead generation, social media-based information gathering, and account-based marketing campaigns—has been executed “with the existing budget,” supported by Marketing Director Michele, who joined about five to six months earlier.
On the balance sheet, Royal said Flux ended the quarter with $400,000 in cash and cash equivalents, down from $1.3 million at the end of fiscal 2025. Asked about a large reduction in receivables, Royal said terms had not changed and credited “good, strong collections from last quarter’s shipments.”
Vanka closed by reiterating that the company is focused on five strategic initiatives—profitable growth, operational efficiencies, solution selling, building the right products, and integrating value-added software—while navigating near-term challenges. He said Flux’s leaner cost structure and margin improvement initiatives are intended to support “a return to growth and profitability as our revenue recovers.”
About Flux Power (NASDAQ:FLUX)
Flux Power (NASDAQ: FLUX) is a U.S.-based designer and manufacturer of advanced lithium-ion battery systems tailored for industrial and material-handling applications. The company develops modular battery packs, battery management systems and related charging solutions that deliver high performance, extended runtimes and rapid recharge cycles. Flux Power’s technology is engineered to withstand the demanding environments of warehouses, manufacturing facilities, airports and port terminals, offering a zero-emission alternative to traditional lead-acid batteries.
Among its core offerings, Flux Power provides plug-and-play lithium-ion battery packs, battery management electronics and telematics software that enable real-time monitoring of state of charge, health metrics and energy usage.
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