EFOI - Earnings call transcript Q4 2019

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Operator

Greetings, and welcome to the Energy Focus 2019 Fourth Quarter and Year-End Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation [Operator Instructions] As a reminder this conference is being recorded.

I would now like to turn the conference over to your host, Brett Maas with Hayden IR. Thank you.

begin. may You

Brett Maas

and operator everyone. Thank good you, morning,

Focus. me James Tu, the Nestor and at to Officer; today is remarks President Energy Officer Financial prepared discuss Chief Chairman Tod Joining and on and Executive Chief

that Before we begin that are make may call, The I'd represents statements materially the forward-looking These those upon expectations differ we or results remind statements. beliefs. like certain based will to today's you stated. information company's from current realized

results, risks as our publicly the company to that information, filed of please discussion statements events our heading, on refer obligation update otherwise, discussion affect factors with by a forward-looking new any most future or whether the under to required For revise undertakes no The the law. a could as of XX-K except or the risk SEC. recent result

Also, accompanying that tables GAAP on adjusted the the release, to adjusted is call of press are which the attached earnings and a section results corporate releases, basis. GAAP please in presented the during our Investor in the metrics www.energyfocus.com non-GAAP are available in on at and of Relations both financial site. note website to this Reconciliations results posted certain the

the turn over the I'd Now to like yours. to floor James. call James is

James Tu

Thanks quarter for you and morning, conference Brett. fourth Good everyone joining full earnings our and thank call. year XXXX

will doing at organization what moment prosperity. foundation health and what we I'd are to we Board safety coping Directors, year an outbreak an Throughout quarter in time on results, are ongoing maintaining the Coronavirus of Energy and and us to the upon full of staff this as fourth our response outbreak. COVID-XX. and I of call, touch I all XXXX COVID-XX and discussing of also It's the Before in start behalf the expecting of wish unprecedented with Focus or best for like you is

the portion drive to broader spent number year our XXXX, as with will As a heard Focus quarterly achieve long-term innovative earnings during elements Energy call, operating and and in greater few have competitive sales the performances growth. and program of you key relaunch past of we businesses, transforming of sustainable superior that infrastructure over the part a

our has And beyond less by in building substantially, significant as and health than accelerating lighting relaunch market now energy momentum been opportunities lighting plan enterprise pursuing to seeing poised made. into savings we adoption I'm the in and progress LED year a the technologies encouraged we are are that impact. human extend With and the are LED into grow

we revenue XXXX, the to came net sales XX% lesser and $X.X right sequential in in would been of sales from military in XXXX. of quarter fourth million The which recognized high-end maritime improvement quarter the the have increased due our up million extent our above in in For and sales, $X.X in third expectation a are business, military but QX, came commercial, was both with that QX.

primarily sequentially to are in K-XX our On proven where business, quarter solutions clear of due to the and increase This $X.X colleges [ph] sales side XXXX. $X third from XX-year warranty district new XX% of million, up the differentiators. commercial million was retrofit were sales several net our

than a the our on sales focus backup partners, standard increase serving as service national been users RedCap and has we end adopted lighting leading ourselves which emergency repositioned we contracting of product, by with LED energy As emergency solution the started our are of TX which Fluorescent national retailer to now pick XXX by early replacement chain rolled products more out of tube up. also stores a premium stage Sales being company. in

supply by we in in strengthening overall XXXX. and Since The enhancing Navy improving the been the more during lowering started our and chain simple We our corporate started competitiveness military contracts. winning April powerful. XXXX also business design, on fourth result production Our efficiency to have business, of relaunch again focusing our grow is costs. engineering quarter

earnings release, which rate allied our $X.X new demonstrates and and competitiveness past in over our over the for the stated six we we million business XXXX, navy As order received represents ecosystem. U.S. the the our highest strengthening which leadership and Navy months, of since contract in military maritime a foreign from and navy

lighting a Since XXXX always the been defense contractors. Navy's Energy U.S. Navy to has Focus shipbuilding LED trusted [ph] the and suppliers

to over continued the evolve did market two [ph]. the we past years As not

Energy continuing that the growth supply and be our to confident all-around are are renewed track we in excited and on allied military we an U.S. leader back lighting recovery advance system, Focus and to Now navies about is LED business.

we Overall providing customers the trusted execute sales strategy to in distribution internally and continue through new LED on adding marketplace. managers we end new And lighting quality to continue most products sales and our our regional high contracting of development, externally expand business and through partners. team

publications, to educate showcase and the leadership we've brand sustainable customers expertise exposure industry media lighting. expanding Meanwhile, increasing also importance our been our industry outreach our about value through and and of with target LED

quarter Another operation. during Energy is expanding the of exciting R&D area our Focus and

As the LED is quality, solutions distancing to and that one from sustainable developing on Energy premier commoditized customer our and value competition. LED lighting ourselves focused centric has from lighting growth the us been high a light. products brand, high of key always Focus landscape differentiate the of added

plan As very and earnings by the this we QX. last about of product and month we call, start that wireline end control later we're quality excited our upcoming to deliver in in the launch portfolio to streaming mentioned

expand surrounding to generate And EnFocus. our the past call platform, customers. pilot control to few strengthen we which initial installations Over we continue portfolio our designs very continue from positive feedback months, this product our patent and

LED replace with our LED additional fluorescent and operator. can control switch vertical without electrical and existing that switches and wiring wall include package, You requiring lamp

of filed patents is by this second, have quarter. product be several the EnFocus, which end second We first of month to provisional by the launched slated around with expected end

and us from bringing Energy EnFocus and -- by technology have competition believe will we will be ever disruptive differentiate previously, most to human end mentioned we safety health, further the productivity the users significant As introduced benefits. we

showcased strategic positive, multiple and and our indicating can the including that healthcare facilities, have whereas to installations classrooms large commercial government industrial we be verticals, across have overwhelmingly space, we responses been account to important the demand significant other educational been from getting have businesses. The

could In away swings focusing inventory the stay chain, where launching improvements due inventory to meantime, differentiated buildup commoditized and accounting. supply to we developing to products and market reserve make to cause significant appropriate and excessive gross in our continue consolidating to it our margin that quarter-to-quarter lead from on

our than gross point, and margins this the optimization continuing as is the more overhead XX% over percentage range those EnFocus us chain well and believe Although XX% new higher at introducing gross as maintain we network, product long-term supply and is the that family. such design, gross lot margin margin mean to dollars from our our margin goal significant, as a through of achieve in product to to

Moving on to our overhead focus the key operations with on our our in costs. program reducing of operating the a initiative relaunch streamlining our expenses, is delivery and

you inefficiency year operational spending quarter drastic processes. As rigorous last to measures the and and third second and in approval we implement redundancies to eliminate took might recall,

quarter another noise up and we and by by of better infrastructure nearly resources the functioning As second quarter reduced XX% third out organization. in the the second the quarter are of to from needed from clearing some quarter X% cleaning for performance our excess we've expenses to a and the identify our to now first result, XXXX, higher able higher

will notably and most that engineering and third specific and for will our drive support spend quarter, we growth, positions financial needs the that In positions started other growth. key opening operational hiring sales and

our to for As expenses $X.X result a quarter XX% increased XXXX. operating sequentially of the million fourth

ago expenses net $X the remains sales. fourth quarter for XXXX this and million However when lower of a significantly than lower was operating year

and XXXX in As by from quarter loss quarter we to in and our coming only result, fourth narrowed as boost hiring of And filled fourth positions the a the from sales sales year-over-year we of that most further continuing our operating could shrink XXXX. related grow loss $X.X now staff million we million sales. should quarters. XX% the our $X here in We our non-sales of our looking from ahead mostly operations expect

make COVID-XX growth preserve as our with will development our capital. to initiative to timely as possible actively the balance cost Obviously, and of we need following adjustments the are the outbreak further

but million shares Last X.X offering priced earlier gross not common proceeds of million. approximately least, in quarter of in the issue we XXXX of $X.XX stock direct market the a for approximately first at

months. impact proved at provide future above an of of exercised the the sheet, with equity a We in to additional our experience meet from future share to that coming price in rises equal when The $X.XX us to prepare the in also to issued balance capital that support per COVID-XX and timely could warrants level. we might our challenges be stock be number capital

Regarding to be the quarter range XX% million, we sales stated press in we over XXXX, a $X.X XXXX. net of the growth million to the our first representing of to first $X.X XX% of quarter as in expect release

that remaining As our time, comprised impact of and still majority readily the of quarter. is sales part our more this first business large outbreak of the of coronavirus a reminder could drive at point the number our accounts of ongoing

the economy Before closing uncertainty our my clearly and to remarks, ongoing poses like pandemic business. COVID-XX perspective on global for I summarize the which unprecedented

disruption hold being started have the by caused our yet, on pandemic. we sales Although chain have military as as not projects impacted supply well been seeing minor commercial put

We bottleneck. country's chain over are supply sources to have totally been any our we not subject the past particular so months, diversifying supply nine chain

twelve I the and be foresee the that under and our ready normal. virus to a business will economic activities Nonetheless to the challenging operations to business manner and stand development in do it run for and will clearly expended our the six timely sustainably. we scale is impact to vigilant until mentioned can close resume how pandemic months stay on us and pandemic is dynamic is as What over of ensuing control we the the to to adjust extremely ensure

performance With quarter. to that our during call to Tod? I'll review talk to the financial Tod the turn

Tod Nestor

size sales was a intelligent in and year-over-year well for of by sales driven $XX.X was a timing, our LED XXXX our the pace decrease as order This as $XX.X to year a full light the decrease in product Net in and with James. lines fluctuations you, compared of that sales globe were lower in military large decrease commercial reflecting projects products Thank XXXX market. XX.X%. due in fixture and one-time million of mostly of million XXXX,

diluted year $X.X full loss share base year basic a diluted loss million, $X.X net in XXXX. or compared with $X.XX of $X.XX was million or per full XXXX's per loss share, loss

substantial a and the from reinvigorate experienced second improvements made for to believe through and at steady results the in reduce the important losses we quarters in costs while and very sales, importantly, is create XXXX in mitigating meaningful total. most closely future, it relevantly, line fourth for the platform to look investors we However, of growth financial improve and bottom XXXX

XXXX, quarter sales were XX.X% for $X.X When third basis. the with were compared XXXX, compared a $X.X quarter of Sales in year-over-year. sales million, of million XXXX million quarter of XX.X% fourth an of $X.X sequential increase the to up on fourth

Logistics to team, sales decline These a shift from a The commercial an of be to prior attributed proposition, quarters of System. Ohio partially which by commercial Hospital sequential weighted constraints timing towards budgetary to products, and products. increases in the value Northeast was due with our the military we're primarily increase an delayed increases in offset market, from our our introduction major which new sales traction increased Defense in were mix, been more can from sales, heavily sales to the gaining primarily direct had Agency,

or total fourth budgetary $X.X as sale, by total total sales perspective, sales the the constraints fourth in the for mix XXXX military third at primarily percentage military sales the were was compared the the which for fourth reduced decrease quarter in mix military million of driven been million, representing the quarter-on-quarter due of a of quarter navy. to quarter XX.X% year-over-year $X.X DLA. to timing XX% of and is to XXXX. million increase sequential of to The From $X.X the has third one quarter of approximately of of for The or sale quarter XXXX, due of sales in percentage sales a to large XX.X% delayed distributor the primarily sales our total

as several XX% school to total of sales commercial total customers our increases of million, the total quarter as million, in quarter approximately to RedCap the for XXXX fourth were $X.X in sales and to million was of increase Sales XXXX. XXXX of districts fourth of to for dollar XX.X% $X.X of the colleges $X compared third XX.X% sales The well product. for representing or sales and or mainly new sales due of sales quarter

XXXX driven for access gross in third was Gross of XXXX. quarter of year fourth flat compared and sequential with XXXX quarter, in the $X $XX,XXX fourth of compared ago by basis, reserve mainly significant adjustments profit unfavorable quarter obsolete profit of $XXX,XXX quarter related increase a roughly $XXX,XXX. million was the to a the in On and

of revenue XX.X% in of in compared the third percentage margin fourth XX.X% of and XXXX quarter X.X% a As the was quarter gross to the profit quarter fourth of in XXXX. XXXX,

fourth of sequential for excess gross reserves, reserves our result XXXX, for fluctuations decrease obsolete and we which XXXX, XX.X% the our from fourth quarter margin profit obsolete of quarter-to-quarter. and and fourth a However, third in experienced in the to related in when The adjusting margins the of of quarter excess XXXX. was actual profit gross become and profit margins in -- quarter XX.X% compared the gross XX.X%

gross Moving the expect begin to new and approach supply our our in we be the as forward, products in near to we term further to introduce chain. range improvements mid-XXs the normalized margins make low-XX% and

inventory However, from fluctuations may mix some valuations, see sales quarter-to-quarter. the depending on and we

fourth compared expenses Operating San and year-over-year Taiwan of benefits, by to XXXX, headcount, resulted selling decrease ago year-over-year, from of XXX,XXX Taking quarter to product decreased the of lower year a driven salaries half is fees. the in or expenses a and general the lower in of first development by of lower outside $XXX,XXX which Jose by lower in in and XXXX $XXX,XXX million result one, inclusion both XX% development testing fourth product one the and XXXX. million the expenses and of in those expenses fourth and in restructuring quarter $X.X were administrative by of driven quarter, quarter as related office which XXXX, the closures a $X

an costs. stock-based result the XX% XXXX, our an the fourth to and headcount were lower the XXXX, including in compensation and recruitment Jose in $X.X Key lower partially to decrease direct offset $X.X drivers The year in our the efforts was of compared in related were office from directed Taiwan growth. of first million decreased in decrease San support operations streamline in expense infrastructure salaries, which million sustainable and SG&A agile resulting long-term benefits, quarter ago to quarter. to create a closures of and by increase half legal of

third increased expenses benefits salaries operating driven of primarily increase costs. recruitment to increase compared in related an Sequentially increased XX.X% and $X.X million XXXX. and by the legal quarter in was This and

most investment and the were the we made to said, XXXX all quarter new added consider in future James activities our we an related As as of headcount fourth in sales driven growth. hires of

Sequentially Loss in a a loss of of quarter XXXX. from an fourth to was quarter million of valuations resulting compares The this XXXX the million related investment SG&A lower in increased loss of operations during increase costs. in third the and compared from the primarily million was salaries sequential $X.X the of sales-driven loss of gross operations margins inventory benefit $XXX,XXX of an $X to $X.X due operations from fourth improvement and to XXXX. quarter in

a taking term ultimately and to As and are investors look we business we and mentioned, accelerate sustainable at return that along analysts us directional longer the actions trajectory losses, encourage our narrow of towards and trends will profitability. our James to growth

a loss XXXX loss basic basic [ph] ago X% diluted share loss of share loss quarter $X a per net loss loss XXXX. quarter, or of $XXX,XXX share to Net the and $X.XX and or or diluted per fourth the an compared $X.X of the million, (sic in and third improved year $X.XX) in for per of million with $X.XX quarter

Now like to turn would I to sheet. balance the

cash of had quarter we XXXX, equivalents the of and with and to XX, end million line roughly December cash of of $X.X third $XXX,XXX at of $XXX,XXX in and As the of cash XXXX. end the cash at XXXX equivalents compared

our maintain acceptable term optimize minimum as We deployment costs to part strategy short cash as cash and financial capital of much needs from of yet reduce working borrowing other as possible. a continue to balance the low and

longer $X.X compares on million, credit of balance in debt was be negative of million practice $X.X cash net while XX, notes in Total As balance $XXX,XXX which cash line December of said XX, used for on of million we comprised sheet outstanding that of the line leaving borrowings, adding of of or balance no dressing the debt employ the This sheet balance a [ph] credit up total to past. be have included term to and debt million. past, debt of but and $X.X balance. the XXXX, net $X short the borrowings debt we unchanged debt as $X.X XXXX, of total used in to convertible net solely debt as million the December

moving Starting determine facility. metric that forward, as like We we total metric borrowing we short-term to have taking important a on in you hand total any very to now by a on excess we capability the point time borrowing cash any view call a and we is and at introduce would availability plus availability.

access our more Effectively, and simply looking given a relevant is metric point cash at cash measurement much than in this a at is time, balance. to any of

facility. facility. $XXX,XXX we $X.X XXXX, million XXXX, of $XXX,XXX total and As a $X Also, we on on cash borrowing of $XXX,XXX of a as had XX, of total availability December had consisted additional additional of borrowing million, credit of cash of $X.X million, our which and of which XX, September of availability of consisted credit a availability availability

and metric in a this quarter, note of and stock fourth we stock for of year-end private Also, single X.X subsequently $X.X communicate quarter. and lender, a purchase at an repayment of and million issuance per James an of a to after common to single price debt million first the aftermarket raised million X.X mentioned exercise we of you and up purchase filings. single proceeds capital to to of $X.X additional to earnings and to as the million, $X.XXX releases net the share, of through capital through common after a expenses continue million of to note proceeds in raised unregistered finally additional shares warrants intend subsequent gross shares future a our during of We $X.X share net to on placement $X.X lender price loan proceeds $X.XXX per a mandatory million, in

Proceeds from for these operations for initiatives growth. offering will our funding short-term provide and

We continue XXXX. improvement. current continual to during we operations, may view needs our analyze considering prospects, It current for additional and our is external our cash plans financing sales that need

expect consider financing a time. when an We to may explore of conditions given of market sources at the timing variety arise the need and and

$XXX,XXX, to as Our working very accounts decline operating to XXXX, the receivable cash XXXX, decline slowed end in the the management. fourth were $XXX,XXX million as $X.X at of burn the driven by effective of Accounts well a of largely million compared sales, for at reflecting effective collection receivable. quarter of modest capital $X.X end continued

procurement half team. was by $X.X XXXX XX, XXXX, December of implemented first declined end million a of The XXXX. low fee the in decrease the management $X.X the to million purchasing Inventories due at current of of as as result to to compared

strategy million, products of suppliers and reduction on reduction XXXX. half negotiated have our XXXX, cost in certain the gross price we reserves we inventory net investment compared second excess on terms of inventory, levels $X.X an to which also excess the and products inventory During with introduced resulted of

the we payable in in in during in XX, the of of new to and those more inventory $X.X from of purchasing and we December Please XXXX. significantly of XXXX for goods mind million the up XXXX, pay XXXX fourth as the $X.X this inventory and that Accounts launch suppliers quarter need quarter year. late end XXXX, reflects during products as declined of down first which million large as popular to build the will products begin inventory bear deplete

from and period-to-period XXXX adoption balance new change the lease the are earnings of increase current between you new the see significant is other from in sheet One accounting. the standard changes because XXXX for on the assets adoption and to release of resulting

be you the finally, with wanted material no update Energy XXXX. And of on entirety Tariffs with to business, impact only I continue for tariffs. Focus for manageable our about on to $XXX,XXX

to to evaluating on XXXX. electronic In XX% fact, sourcing vendors of if we've our some towards to are alternate locations continue components in end price eliminate on increase alternative choices mitigate XXXX prices and the been with suppliers to and necessary. recently, need work the able by charged reductions tariffs sourcing also Also we

monitor incurred Currently, pass accordingly. situation to but we of from of the have minimum level no we'll tariffs at products and source we this the out a continue need we've along China we'll time, respond to

planned outcome. the recent would and tariffs some so deferred our settlement, that products of favorable impacted Finally, was have U.S.-Chinese a

for us valuable Our remains and identified be an of liability minimal low warranty and which to our of was tube potential offer X warranties very rates warranties our manageable that combination meaningful to tube The and very year customers. failure is other experience and able replacement to liability. to a costs afford our replacement and to existing customer non-material continue XX and still tubes year allowed or

either disruption have to to-date, sales Coronavirus we mentioned, Lastly, chain as not in experienced due pandemic. significant any supply James or

is plans the supply readily will some and appropriately. early in much in impact This and our our have is we changing we be real and had we a will to a how we've receive timely dynamic world live and Coronavirus continue will However, currently move affordable as forward. respond adjustments we sales time chain very too acknowledge and to make that to ensure to significant this to assess we products our fashion in,

the to we for questions. that like would call With open

Operator

Our session. first proceed Amit be Dayal H.C. Please question-and-answer Wainwright. At you. we'll question [Operator the time, this line from comes your Thank with conducting with of a Instructions] question.

Amit Dayal

Is like? what is X.X Pretty the James for looking mix, Tod. at the would for to fourth roughly maybe good in first market in guidance the first the think? you. Jim. this quarter X.X What quarter to Good morning, quarter? given Hi, given it be Thank you similar what saw environment least you

James Tu

little Yes, say pretty I that on a but higher bit similar. Yes. military the probably side, would

Amit Dayal

Okay. Got it.

James Tu

obviously. And

So our wins past from to that say few I in military was just see you the going contract months. can

obviously, throughout commercial obviously year. to on COVID-XX. a the So impact going year. the picking-up very And to business we're there depends Obviously, see business looking strong if start have were military are from we

have Now, because our how of COVID-XX, end the see we to impacts customers. that

Amit Dayal

I Yes, was in to seeing Specially these touch on, previous plans? being, commercial to going you that schools that was your of right and discussions timelines? Are what still of of James. opportunity with customers? some Are for these what terms sort of in sticking a deployment they you the context they now, of out hospitals types sort of of part are core pushing

James Tu

shut what's Yes that week. the are -- from everything we held And and they not this back. week see some started are and school week, being started schools, so on last but and to just schools and trying especially see starting happening just at I I basically project scramble has to we this significant, hold mostly look said, think to put on the as if going come of some earlier, down, you up, some some see

managers that. And the of retrofit now opening of imagine do that it's a are might On there summer, be hand, schools you months and the all other facility the time -- year, during can because actually lighting it's that retrofits, to outside few you always project. hard students and get the to can up most teachers

to a to it's too how, So see bit going project. if us is actually the little help this expedite early

right make sure we they that hold away to prepared they this they reality just that on that. putting are some We see are projects want see that, right both sides schools of new now, just whole for because

longer. obviously you're obviously the go a school other at closures opens few but lasting retrofits. On expecting this point, at If it this weeks, facility it everybody longer it the is hand, up goes for looking if might

term actually opportunity. So near it more generate might

too little early a closely So I to watching think obviously. bit say. We're it's very it

On side, that the hospital I an think be hospitals very hospital And going busy. opportunity. are obviously remains to do

time be Because XX%. in LED -- that Some has actually just on are still maintenance can reduce they might projects is fluorescent. hospital active much to hospital by the estimate, retrofit so. it's longer activities By and hospital But lamps. to very still experience thinly now staff some the our hold. again, today replace the life LED. putting XX% of penetrated using And increasingly

LED the them staff. maintenance help the So, actually up can free for time

So I opportunity as should that continue. that an see

preparing worst bottom bit exact things probably the So, and different down again. run moving is we line by now a start day is literally the to have Right scenarios, scenarios impact. tell it we settle little how we early watching day it we're for could case but are see

Amit Dayal

important new for those this you -- the [indiscernible] now an And planned. product interesting some Right. going had you, maybe canceled launches product How executed with all was now. things is that being are sort on of

product things? you So your are some thinking and how plans those about launch of

James Tu

yeah, cancelled shows postponed. next or few months, the most I trade have been in Yeah, cancelled

start customers. basically, launching, demos doing So And week. this early by that obviously we impacts how we reach will next to we and the month, starting end sales of are out still

meetings [indiscernible] the this lot is introduce which product, think the virtual. facilities. the will facilities a all the now back of are continuing be Obviously see I to come we of obviously economic and downside, you will But back people activities. come And will to

the You managers facility also evaluate the to upside this technology. now have see time more where

programs, to best going we're stuff. my marketing our sales outreach. continue That's and campaigns email campaigns, So

that impacted think happening in the is I are tradeshows thing next physical the few not only The that's just months.

Tod Nestor

supply call the to in And we our [ph]. actually see placed start mentioned those on James, bringing I'll is supply just -- where product so to I'll that as product new POs the chain we've the able add discounts to

Amit Dayal

terms being one your not manufacturing one work from me, are that of operation mean, How able situation? for this people Just home equation? are final to dealing you you own in seeing come of in with I type

James Tu

you One I'm one? second. Could sorry. that repeat

Amit Dayal

of terms come and who Yeah, your changes those are people facilities, assembling right through in, sort people of Are or of you sort being, employees come manufacturing unable at your in to coming people now, just, how operations? of normal terms can't managing in in in.

Tod Nestor

So this week. we in place we plan that implemented beginning put have a of

learn refine We practices. CDC far we as as continue following guideline distance. new People to best social in each as it are day. coming We're

best we're If day to not having of we're home fevers. and people and them is them examples to ensure well, logging tested Some have stay don't every that them taking don't temperatures people return asking feel without first. practices

precautions. taking great we So are

have equipment. we're we have ultraviolet our -- We where a a sanitizing tools, for vault, UV vault,

ensure possible doing we people. we safe and to everything going, keep keep the So people are to listen operation

We go I to have greatest protecting every to and employees calls through possible manager this. day daily operation. to our we're the speak plant frequently the that continuing ensure the to extent

current keep So intentions them, practices, government absent our that's mandates, plan adopt to best our to continue safe employ going. the and employees keep are our operation

Amit Dayal

Thank guys. you have, you. I and luck with navigating Thank good all it. Thank this for that, Tod. you, Appreciate environment. That's

Tod Nestor

you. Thank

James Tu

Thank you, Amit.

Operator

Thank you.

Our next of [Indiscernible] question. question with Investing comes from Please your [ph]. line proceed Jio with

Unidentified Analyst

may you balance you right. might XXXX are have James, kind for finance what sure your be quite It to were looking some XXXX. Maybe above that have for would I raise needs seemed it money in you wanted I And when XXXX it you in clarify, to didn't have hear it a your clarification I questions raise on you like wasn't to if taking two said guys, maybe do how Hello, now just that heard question. to growth you earlier, capital have of I thanks now? I and what clearly. the quite now sheet.

James Tu

and answer then add on. Tod I'll Yeah, can

don't working past our equity Tom now, the have to expand have credit What over So working as to are is a been raise our few capital. we we mentioned, facility months. which we on plan, on plan

pretty facility receivables is credit current our inventory. Our low against and

So much capital we there's credit accessible that believe from a more standpoint. facility for us the

as well. the earnings as make We, that stay forecasts, as around And give the lot script expenses dramatic challenging the operating raised we sales changes us maneuver this million top said emphasize I to if will have time. and of mentioned also to see I on on. that in I adjustment room going of some the that what's in we a we equity patterns capital, we $X.X

make of a manner. what's And So just take we sure on Tod? going in action on. that top staying we'll timely

Tod Nestor

that. add I'll capacity, making on great said James that to we're increase of that, to I build efforts on think, to we're what metric Yeah. --

it So working to capital impact to it contingency virus raising And points his view business, of se, James our action is how and access on other and the what it's and we isn't and per that then given capital. Corona or source our different increasing really operate how and capital team specific business the we different ways on build very take. actions and the will I are and we plans might this planning much about

Unidentified Analyst

you question, could my you us an guidance, equity I I be might where I know revenue guess And give you -- before great. idea, level Okay, might like new the next cost can't breakeven point if but structuring. give with be, your [ph] the

James Tu

sales meet to the the of COVID-XX What question, plan. to aggressive right. again growth that we obviously, it's we demand expect Yeah, pretty as have feel we a growth be before which and we that upgrading infrastructure March dynamic know,

are taking with that this You've launch. the family side we'd to year, lead product of the do new the and really we on especially side already commercial seen in that like military

if at $X quarterly I million say you say to So, between to profitability. million on basis $X at overhead, going anywhere probably would for look be our that current you're looking

So growth But a that pretty Right? On COVID-XX it's we a very have to if see that the are is if dynamic other there hand, can obviously, we monkey not wrench. we plans a adjust offerings. situation. we see this and aggressive --throws getting have will quickly, we our

So dynamic. be to we need

raise in to equity not is XXXX. capital plan Our

Unidentified Analyst

in potentially, based question there's on hurts competitors the able landscape, COVID may you to advantage then distribution last that mean of lot a distributors lose your orderly? the landscape competitive also of then, been will the direct you and to maybe they you my current do being of know five, changes it channel some this I see of affect Are for naturally now. it and even does your function you during and continue favor the continue six what kind situation to to the years your And landscape kind last --

James Tu

fast. landscape changing lighting Yes. industry The obviously is very the

view. new of positioned As as family another quality, this LED point Again of high breakthrough EnFocus we've always innovator. whole lighting, a is our from

has people So but There higher products, go quality I settling been overall down. there product. that that are institutions for always market will the that want always believe commodity are

And and I the most facilities savings. always say happening auto on argue first I when would the comfort people since is see XXXX, benefits it'll human performances. type that convenience, important the delay, for circadian have our now decade we're more [ph] and I rhythm, but thing I this capabilities on that of think is commerce the of LED non-energy forward benefits what focusing energy over going to would is, -- where that dimming, like tuning, think, impact right a for coming years, to lighting been years of give the EnFocus these expansion quarters going happen, it's And

a IoT occupancy going And you're then platform it things started LED building exciting like positioned we as and the emerge. market in more traffic into to lighting are chapter that's start that, you seeing can to expand monitoring into in sensing, include focus next broader that that that. and tap could Really,

and we plan that have of despite for as to and next question, lighting and internally. growth ourselves EnFocus a COVID-XX I don't foundry, pretty know believe pushing a again, all are will which pretty we we the unlock situation, from a if is market are why lead positioning it So that very the large landscape technology. lighting from but answer it's there, we your generation lounge, complex

going with what's that's think combined I on. probably

Unidentified Analyst

in not foresee put being know, is in the leading that was really visual Do the basically maybe What over company yourself weaker great. position stronger competitors, you compete. some want that was [indiscernible] our strong also the defeat through? build going last, to we to I disruption and a you to a now there right COVID-XX too Thanks a position lot, because to use able

Tod Nestor

the Yes, point, think. that's I I the think that's

happen will look focus because the don't activities new and that economic obviously, first companies it's will the if suddenly. slowly, landscape at take right, hit and would probably all gradually. months right more think construction recover I hold put lighting be will you that the going say I on on activities think these the to COVID-XX impact my the last I multiple

different they're this XX out and of to start and -- it they to to back. take might are XX So putting virus all months hypothesis kind all obviously now, for testing come really effective

So then business than construction that think economic more of if new pretty that's lot retrofit And the case, softness. a side. I will you're looking prolonged at impact the

On obviously still retrofit being people the side will right. impacted,

look schools, they're not impacted, be if at But that. you your right, and the all and or for hospitals, the which current focus, because is budget, our military, they government, part, should most functional

So hope in customers market they is not might and few think end our their weeks, that we're looking upgrade to what and our as to end hope will That's not opportunity next right this our need I but settle they continue obviously is our -- an actually that's lightning the down, take hope we facilities. now.

is new a our assessment. really lighting other market, focus that commercial we're less companies by construction current which far. address is So our That never property impacted probably so market,

Unidentified Analyst

trying rely heavily So to would your distributors, previously, of a terms customers, line and help guess, direct push change to you more kind of you to on customers. get thrust, I then and in you I the know of

to I little Now, bit back of both doing a think now.

to the a out new question. you. accounts And how terms In and -- there terms much little guess of in disruption of that's bit of of I to another for your distributors, maybe there go their and get ability

James Tu

last I start end the lot we focus not don't with on of did customers really customer with the when I sort focus of think the on company, the really a that, end performance I And to that work customers the right? year, out. Focus energy and they because the contracting and was guaranteeing we when panels, users, them, focusing are distributor a project, service back the Energy lot for Focus, was have management ESCO, the of companies, the the engagements, put of previous work the really going A Energy project. didn't never back just to end love came they

much no there's we been better more been commoditization We're organizations, more product. to And So mentioned size our the products competitive, be our price that's going of as the the I same, better as we -- today. And down. why be long surface as be doing. which pretty we have of good bucket. this The not is has whole as settling and that thing I want reason scratching the industry over the competitive are finally earlier, can there's And quality just quality think pricing that company goal welcome.

can think to launch technology our And We unique in be distributing might is pricing of EnFocus this of I And our the that discipline. people stop some up marketplace. And this the of that's right? platform products, another step product. want clear we distribute pretty when won't distributors have

it. the distributors then we working and distributors. mind some And don't this to distribute with product willing see uniqueness And are of

were buy everywhere. much wholesaler. They there how your can pretty than But it's our disciplines are key busy you based buy step we you protect I Other by on where you that customers. buy. how you online, that, from But much us, iPhone, about buying every want buy distributor of it's the right? are to a pricing they that is protecting can value mean, volume the

That's education to I In the end customer the critical. distributors do. able the we of day, they're always to what the idea, this. not is But been no have do if And have will able to end technologically be going help.

work for all open are business We to channels. with

now are and bread right agency, those hospitals, is the butter. schools, our contractors, government and to focus the those lighting Our still getting

Unidentified Analyst

questions. Good Great. have Thank you, I luck. more James. no

James Tu

again. Thanks

Operator

comes with Instructions] from your [Operator question. Our with of next Gilmore question Little Edward you. Grapevine. proceed Please line Thank

Edward Gilmore

Hey, James, today. call thanks my if I have four for taking can. quickly I questions

the quarter? even operating previous than the are burn or planning decrease further cash to your from you So so $XXX,XXX

Tod Nestor

largely function yeah, operations. mentioned, that working was that I capital $XXX,XXX, cash from And that was a as largely management. of due was -- our so our operating

operations capital an call would reduce quarter. anomaly a the a be that of I So of bit working to the ability and It management. function for our loss will from

in inventory. be As some we reinvesting we mentioned, will

the in near go to look down wouldn't for that I term. number So

count As point. that the and we down So on I to inventory investing popular and we products? this product in at new are mentioned, on replenish back some wouldn't rebuild going

Edward Gilmore

sense And an sell what level have? then the inventory, what for of on actually Okay, for optimal QX? is to thank was you versus a also you. give next QX through question then the is inventory can you And

Tod Nestor

So would in that of we I put optimized kind -- layers.

from U.S. We lot have countries. foreign would supply a lot from from have import say our U.S. and some the comes do from also a long time a the majority on chain. but outside of the goods U.S. comes We the come I finished lead We outside components

comes So on we because freight. time ocean mostly a lead it long have

cargo So it's primarily. ocean

for then carriers So also a time have once pay we has on long it we to and transportation that the it's put [ph].

it's our So hits on overseas. books when docks effectively the it

build customers. lead have most. longer one are There a only have products build commercial where we [ph] them time most on, than And some finished. we in customers components basically primarily stored products or to the we military have we We then products So for commercial but built have come military. for for

products commercial that quickly. more for will So turn

have We probability that sale order products we high of to for. tend only will

the have at some that we than supply optimally target no days. let's will safety products, XXX commercial more a So trying will say supply, have XX on that probably say to if have, we'll you look let's to

some still inventory we'll because and total hand. have longer be higher, down that still is because will Right We James it whittling I side, do have inherited. our military inventory the we're now, of on components. On excess that

would to I interest I on on of seen on expect We're we think. quickly, come seen based So products I very what that down. will return in. quickly, general, interest the still we've But we working pretty say we've expect coming it with that EnFocus based that. do still And in finalize

Edward Gilmore

Thank you. helpful. That's

kind or is good that that. And close on pipeline a I'm a chance next the happening next curious to questions, to but seem a just ad cadence orders of with Just months? quick these just two and think you there's have the larger orders seems over there to hoc, pipeline, large a do reasonable of you XX job it that like more onetime guys is

James Tu

look main you the if I think, that sales some for customers so account still at of today, big part it. are there

our significant the a U.S.A. part example an military of As is still business

obviously obviously continue So, And them to I so five we the exert goal significant some while on quarter. much larger would probably, four you're over those that our say, to of six particular customers past or months going a have are pretty customer and obviously impact been, the force to that we the and new number and are of that rebuilding have we're sales being is which the districts all look now, diversify you at get school more university those getting diversified.

say, opportunities. say are would the on large to quality be by you where that get revenue, until I have these we double we less because fluctuations to the much

want also large mention I seen uptick. again, to have we not that

this We right. way, have for not lost opportunity

So is I think put that risk now projects being hold. on

Edward Gilmore

you going one commerce of in the comment Okay, like increase e-com, then the we Coronavirus? are sales before of have on any month curious, though this from is Can spoken just e-com through question, that you. how e And on last March and just because there good. site. James, the Thank I'm just

James Tu

We we've haven't been commerce really, e the platform. working on

yet. it launched formally haven't We

in to launch the part We second are planning quarter quarter. is next of which early that

more increasingly become I that wouldn't a are launch. significant channel for our We business especially of nature BXB. as But the I could because us, -- think -- because EnFocus do is just

prefer with still the are The it effective large important obviously think very that orders touch a little because people large a it's very for orders projects contact. are very should be usually a more I is complex. effective involved small just for channel human orders people

sized is that's great ad or are on it. it to positioning we or doing small for And medium uses. an basis that are how business hoc low retrofit e-commerce The orders

So we’ll of that launch formally we the to part we in obviously once early have quarter. share second news

Edward Gilmore

thanks thanks today. Okay, the for for taking update call the and

James Tu

Thanks, Ed.

Operator

over back like final At turn to you. I'd to Thank comments. time for this the floor any Tu Mr.

James Tu

conference our We day. forward progress updating with look you to Thank in for quarter. good to you a to more coming the your again time Have listen call.

Operator

Thank teleconference. you. concludes This today's

this your lines your Thank you disconnect You may participation. time. for at

Energy Focus (EFOI) 19 Mar 202019 Q4 Earnings call transcript