EFOI - Earnings call transcript Q3 2020

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Operator

Greetings, and welcome to the Energy Focus Third Quarter Fiscal Year 2020 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. It is now my pleasure to introduce your host, Brett Maas, with Hayden IR. you. Thank begin. may you Bret,

Brett Maas

you, operator, morning, and good everyone. Thank

today Tu, and Executive me Nester, on and James call the Officer. Financial Officer; Joining Chairman is Chief and Chief President Tod Executive

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

the call are the results this GAAP during of and adjusted are releases, to to with accompanying forward-looking the both affect events XX-K, except For James, refer press as earnings a I'll adjusted call statements attached posted XX-Q release, our to any which risks Reconciliations Factors recently statements, obligation non-GAAP of in available corporate whether turn please our at now in Risk no the James. floor the required the by is Relations over on could as of as most section or otherwise, law. filed that and forward-looking recent under of discussion results, discussion on company on results to these presented SEC. financial basis. energyfocus.com the that future the as Investor metrics to website tables is in site. the Also, the most a in undertakes heading information, certain our the revise yours. publicly update note please our or result GAAP The new well

James Tu

earnings Good quarter you conference you, for morning, Brett. joining XXXX thank and third Thank call. everyone, our

an a buildings revenue the spending resources our top portfolio business of decisions since since facing and withholding challenges we economic whole operational platform award in to to to Aided this within develop outlook. despite and also capital this forecasted and of and products. we groundbreaking products, made deferred. due Military delays for and improvement on the sales, result second most our control the Intellitubes The entrepreneurial, that budget a business operating which market, of strengthened million external for in extreme continued was $X.X months reduced the environment. as quarter new successfully challenges nine engineering quarter, said, financial by XXXX, the buildings from sales, disinfection our in global year, that sales, launching from and was unprecedented despite sales occupancy lighting [cost strong plans year year. execute range award logistics managers extremely shipment facility of Most the high and to the this components a lighting the of by select we of growth, from the XXXX And performance progress UV contract military engineering despite quarter, besides in sales increased product The commercial achieve amount third growth we the from October. significant the grew supply of in-focus the disruption now contract the a revenues period in growth the into received significant the our due chain owners before, continued our on] pandemic can devoted organization in a including year building our March financial just were driven loss we our competitive to our pandemic military quarter experience primarily and grew the lighting all as military our million. announced we During that of and winning develop the year, the Furthermore, since strong ago That XXX.X% wins and the commercial of on specifically in as our this beginning Maritime business our year. by more or $X.X to exciting challenges and we of beginning even $X.X transformed of company existing management fast-moving continuing and came retrofit developing restructuring March once to pandemic. R&D and a COVID-related place are our while we innovative and in the accomplishments of to performing cause continued emptied and XX.X% on on third postponing in most be the where of re-launch put our same century uncertainty first Clearly was strategic upgrading ago of million of lighting in plans were year, challenging have second positioning

military and positioning sales and navy nine Our year-to-date the market stronger in activities to sales than period. prior over XXX.X% lighting with up [quoting] strengthen the months a much year ago continues remained

While market normal our on basis, our short-term fiscal pattern declining with sales quarter after we continue in year, high of quarter sales sales the make persist third watermarked with military military [indiscernible] the share. a progress aligning to to expect in and increasing end sequentially seasonal growing the military we our fourth the

years lights up another dated the the over have U.S. to ships than we contract valued use During XX, less exclusive LED approximately incandescent large supply million Navy, in press as the September at the quarter, globe awarded were legacy five using. our to which $X.X XX% light, been that their energy we announced release Navy

We're and to [indiscernible] [XXX] establish first new in aggressive today in craft] with modernization product last market, Navy GSA to to to October, company our GSA addition, in plan be leadership military these that line expanding to in a in major initial the military agencies, chosen [lending years. opportunities federal to with purchase]. the $XXX,XXX. business, and ships in demonstrate on to [indiscernible] continue headwind of we our we than December for years products, to government won forward encounter becoming received by in more an its partner significant the valued our to XXX,XXX In lighting naval our initiatives. size broader to R&D the yet, award forward growing America ship available supply significant for our product the a the September, to the contribute online XX% market commercial coupled Navy believe lighting the which the military we government effort. foundation reach, of progress And the into received XX the we supply market ship Outside look over announced, Notably, It made contracts at forward go-to-LED our occupy for our to contract construction in move will sector. is U.S. IDIQ DOD with important expand state new of of These the fleet buildings also supply next also through the in the in to a continued [view We to we platform. being website new the broader the growth U.S. Army lighting by our than that wins for laying moving is note September. the government eco-system. Focus that long-term contract our these grow growth ships products Energy our tapping together incremental, market from in the for XXX expecting key that in we XX lighting LED And approximately the more new

of core we During engine to portfolio product the our we come. growth years to our that to quarter, be expect expand continued the the human-centric in lighting

to are on Focus Our lighting technologies, sustainability. poised health human developing in growing many to dedicated significant addition which, of and and environmental make to is Energy productivity, safety, impacts

more product subsequent advanced efforts platform ultraviolet portfolio to quarter-end, influenza capabilities includes services and sanitation. coronavirus development initial are our three various to of including in designed air pathogens, products. UVC of and to continuing products, to indoor or offerings, or improve hygiene The our we extending addition XX.X% the In complimentary product destroy on which disinfection and EnFocus on launched or

integrated troffer. an UV abUV, lighting First, circadian disinfection and

residential an robot. environment offerings the autonomous products working disinfection power. Second, nUVo, air meet These air and portfolio the third, on and disinfection other an needs various in industrial indoor disinfection well. And as of commercial surface for while mUVe,

distribution innovate and to competitive established and highly follow and most we This compelling what solution is the market. believe network believe in of quickly with we're from the our are and on disinfection enthusiastic we and world, channel homes. strengthen the partners. the businesses offerings affordable one scheduled ability product, rapidly the to we'll build quarter UVCD the received we are working need the all start reliable which affordable disinfection both of to in for deliveries launch, move UVCD help products kinds, new have the And further existing portfolio to of our Now, address post-COVID potential and our exemplifies of products, facilities routine to expand Since aggressively and for feedback product first which emerging for impactful, XXXX.

that Credit U.S. estimated addressable average the Importantly, an which Suisse billion of alone, for for the $XX opportunities recently up building. believe a on commercial disinfection UVCD line market us, whole product new we of in opens as based $XX,XXX

lighting weakness marketplace, the these to still and be the at retrofits quality disinfection. space, revenue line, product with make considered to our and and and and we market occupancy believe in earnings schools, buildings, in demand is in predictions offsetting of second magnitude slowdown the we second customers, the the potential Building quarter what be universities, XXXX. be to growth we demand, and expanded to might booster and revenues a from lighting main needs on temporary products, building could addressable due as lighting improvement a In early address focused mentioned during it's due our and for overall UVCD wave in a from what key enhanced from increasing contributor additional upgrades to meaningful positioning unprecedentedly the little the market, third While a have surface persists, healthy it of our a non-essential primarily our releases, commercial witness and retrofit total and the commercial pandemic. low affordable both strategically is speaking, forefront to general likely And global in the building market. COVID-XX of broad profitability significantly

available, we that pent-up remain that products particularly spaces will optimistic return vaccine to share us meaningful are and a innovative well-positioned of are portfolio by effective capture accelerate we that widely cautiously platform. spending compelling the to and capital demand with led resumes, enable However, EnFocus a of our when commercial once

to receive retrofits. to activities And particularly isn't we positive products. would working. at to new level as orders is the immediate continue muted the due We lighting feedback, control challenging like in on lighting Though adoption early remote lighting our the focus with well see, demand as obviously generally product

months, coming and products, more both we and substantial cutting financial, focus the [QX the in LED edge providing a environmental, lighting with our become by company UV customers As in of resumed bring economic partner broader activity disinfection impact] for solution. lighting now the can UVCD and

Looking we to year-over-year to quarterly grow fourth grow, and for chain logistics. will volatility supply for ahead, stable flows, significant our near are suspending this a amount guidance the expecting more release factors financial predictable. continue Therefore, the as while out still term, are there is on once in as these we XXXX, earnings and of older we resume forecasting external uncertainty the lay morning, quarter as are and well in now we of

financial and able investor's As revisit not to guidance. prudent will the That financial will is could to potentially on be provide feasibility specific being not frustrating understand from said perspective. visibility specific prospects. do are subject will simply you be line guidance I We optimistic us resume and that for more we still short-term ever that our provide are a top multiple forces. in they like if to excited hope the long-term focus, about company's you and investor when than significant me, sales energy as be uncontrollable improves,

and stabilization, renewed other launched as significantly In the company that, Nestor quarters words, to XX to transformation, I so financial past U.S. years new the to we alone. quarter. our over Given Tod performance market momentum this has well groundbreaking our expand far and review year months, will products growth elevate and turn Todd? call addressable come. as growth the our and the during the demonstrated exciting the global With the in

Tod Nestor

by quarter part of the included from volumes sales, of primarily XXXX we an Net third compared million, net which third James. increase $X an were with sales a Military you, in was sales the year-over-year to $X.X timing second of driven When net provide million XXXX which XX.X% to quarter quarter for and military increase year-over-year. XXXX, for The call. quarter sequential timing increase earnings timing on and quarter XXX.X% XXXX, XXXX, Thank million second of the large To the third shift a on aggregate the sales $X.X in quarter increase. the basis, between up of second a compared and compared our the a in net second in third second of context during third higher and both military Order a quarters. second and sales due to XXX.X% to third certain were portion shipment the X.X quarters $X.X million discussed sales impact, clear were in XXXX million, combined the

representing mix future and XX of was Top XX.X%, as Likewise, increased customers driven to were XX commercial top quarter from on offset XX.X% overall representing XX.X% to in previously, an million during of in we our sales XX.X% in The XXXX pricing second million sales million, was the XX.X% which quarter Sales was last changes sales Top X.X customers of the buildings. and driven of XXXX. third four with of XX sales date our three XXXX. occupants an basis, costs, for sales X.X to of total to the related third sales, from or profit XXXX. customers additional for sales can to usage quarter increase the our of XXX.X% than unexpected second is in third to customers. increased to is customers primarily one compared lead gross compared year-over-year, military outbound Military million, military that by that million sales sales Sequentially particular market see of XX and to sales the a third sales in customers Gross million was X.X the commercial in to the the quarter for $X.X the X% the Top increase to down increased and and higher total quarter up with began our sequential increase the commercial primarily to you quarter, So, our X.X XXX.X% last year-over-year, onset From most third of million of total that returned Top net from deferred and ago are crisis. customers XX The third net the sales by our is inventory to X.X and the to million, due for maritime of to up XX. increased for year representing the year-over-year were solely increased more sales believe commercial each, in Sales XX% the total primarily a profit supplier a to to On sales increased for of to year-over-year quarter customers, manufacturing compared customers labor freight increased to customers quarter sales or of XX year. quarter the of compared And perspective, due $X company customer third and $XX,XXX, quarter, marginally not in Overall commercial increase. decrease total being military the increase quarter X.X%. Top net of the or in increased result XXX.X% our Top XXXX. of James net military costs. challenges quarter XX second the XXX.X% net sequential compared XXXX. third a Top of third by sales basis softness military timing. chain This by and X.X reserves, at the quarter, variances products commercial mainly mentioned year supply was our favorable from COVID-XX and material to military

well non-GAAP chain XX% quarter I XXXX, the XXXX, declines quarter and third in primarily Adjusting and XXXX. for degraded resulted compared XX.X% quarter the quarter compared percentage a of the gross was as the next. in second to basis margin obsolete third third The product of second margins in which margin XX.X% XXX and due points by in realizable just in reserve of the gross transit approximately profit As in net our current the adjusted quarter, for supply of XXXX, of quarter in challenges the value of inventory and in profit sales XX.X% of excess of XXXX gross as the margins to revenue, in to XX.X% mentioned, quarter XX.X% third XXXX. quarter gross were the

to We to as the see the mix supply may margins near continue quarter-to-quarter. we and inventory high-XXs mid-XXs [XX%] were be percentage our sales sales in gross sales driven which term to some aggregate in more and growth the the begin increase XXXX chain, increased Operating functions. on approach expect XX.X% third the products expenses was The an and for or further new $X.X to or to higher sales. sales million introduce $XXX,XXX improvements headcount $X.X was in valuations, depending increase quarter, XX.X% and by to initiatives the and our in the our make in of support million or fluctuations R&D net ago compared offset range year-over-year, our and we than growth quarter of primarily of payroll by year

strategic last approach to line discussed have expenses shifted quarter, on we SG&A focused targeted our a sourcing various we reducing As within to initiatives.

is a recently more from completed sourcing of and we third of operations the as expense, the should a from well us which in-house XXXX. manage added as in and our quarter which quarter, in $X legal in was of the result operations supply from announced One executive earlier, for team, our James XXXX third new third to next the I better The expenses. XXXX, compared Loss additional general million, primarily loss operating and year during of operations services, legal a quarter over in and the our to help we XXX,XXX reduce is the headcount. second that counsel loss and project first have of of a XXX,XXX discussed the quarter of third chain loss XXXX then increase quarter in the legal the during of challenges strategic

$XXX,XXX $XXX,XXX challenges, new our termination to the XXXX, facilities, improve, of to $XXX,XXX loss value of gain from the $XX,XXX. a which change the and we and warrants our our remaining our diluted non-recurring by line, basic third blended was its in under expense and compared share XXXX. of apparent loss of results continues related the temporary of $XX,XXX XXXX, for Aside supply was of quarter related quarter. quarter with incentive and based basic debt this of fair operating] borrowings increase loss expense with the which the loss of positive third increased quarter we in essentially per of for year of EBITDA, the second $XXX,XXX of reduced the diluted the the excludes loss $XXX,XXX stock in more forward. interest a fair in acquisition expense, be result expenses loss operating of short-term in share non-cash borrowing and warrants company's or of operating to these share, million, below the per credit, which expect of increased improvement operating Net amortization, compensation, $X.XX were a a $XXX,XXX and non-cash offset core expenses compared $XXX,XXX of interest and third and depreciation to $X.XX $XXX,XXX in $XX,XXX the year of line increase compared fee, related of ago capacity for with in or and outstanding quarter, quarter write-offs business This XXXX. an substantially a extinguishment Adjusted extinguishment the rate. per $X.X second the the was cost $XXX,XXX moving a XXX,XXX, line, of loss and interest was These quarter included loss credit of of other at Also, ago formal a XXXX adjustment revolving of have cash value [While

turn Now, to I'd like balance sheet. the to

warranty had million resolving as December We net at September million and comprised to of short-term of $XXX,XXX, in had issuance at netted of third position $XXX,XXX well for increase XX, line This outstanding million, we of As equity million] the million, XX, was loan had compares as total XXX,XXX credit million, the liability increased quarter. sale new of of due [$X.X outstanding the of borrowings $X.X XXXX. approximately X.X end payable of the of compared of cash for to September first debt X XX, XXXX of in XXX,XXX, The credit outstanding notes XXXX of of payable $XXX,XXX $XXX,XXX $X.X we X.X included debt capital debt borrowing. the of September through the the debt quarter, against Total notes of and as net the total of of cash line cash in cash in XXXX, primarily short-term convertible end year million, as the of of of PPP the borrowings of excluding is XX, which notes debt, $X million. at end a XXXX. XXXX, as $X

relevant reminder, balance availability believe than to balance more point on a at As even sheet. debt a any is cash simply a of looking our metric given is access we much and cash at measurement total net the time, or in

of we through $X.X offering. additional the third as of a from total our loan borrowing from our on maximum between the of gained equity $X.X actual primarily of facility credit capacity availability XXXX facility. third credit difference availability end result the the new represents our quarter XXXX credit to under the quarter million of respectively, PPP the and capacity We excess to obtained borrowing million our facilities, borrowings While facility and the the credit increased the

million, documents $X.X we had the $X.X total loan under cash of we forgiveness excess consisted million SBA, XX-day quarter, for third application borrowing are to which loan corporate $X.X the request and end facilities. of a availability Administration our XXXX, of Small required SBA availability and XX, million September bank, to has of of period our PPP credit Subsequent which the now of we As waiting SBA’s October we application Business submitted review of the to on forwarded for decision. forgiveness The On XX, loan $XXX,XXX. the to the the approval. submitted

the consisted for During third receivable net current closed facilities facility $X.X lenders. with to borrowing two a facilities to for up new of credit to our as million. additional result new The we years access quarter, $X two we a continue grow to year with facility capacity two inventory in our financing and The significant business. up million capital increase was

secured while and borrowing all-in improving blended our costs. simultaneously lowering credit added Importantly, terms capacity this we our

were the depreciation, end as in million at more of Energy tubes In as XXXX, used end receivables increasing the the of due $XXX,XXX availability $X.X $X.X compared million the and was requirements large spending of million sales efforts $X.X $X.X and sales our versus at to by funding XXXX. months in of benefits activities are declined in availability and provided XX, continued credit. capital million as product stock-based of fair to support inventory September was raised end quarter higher Net XXXX, XXXX. million XXXX driven overall. and inventory, popular million inventories, products as for growth sales, in XXXX. of well This September on The that QX under such used XXXX, as disinfection investing $X.X million payable start $X the than popular the the XXXX, as to fiscal UV comp $X.X at cash switches, and for as Total generated was our future will future generated operations as XX, the turnover needed of compared financing XXXX. to refinancing the charge goods Cash RedCap inventory our products was EnFocus well to $X.X quarter million to This end by Cash shipped borrowing the $X selling such is of of shipments capacity $X.X items large was in million of equity primarily of in million military. January. from million, $X.X We million value non-cash net $X.X was the warrants. from our addition, occurred of finished of growth. capital XXXX. we received. ordering $X prudence the by one million increase significant as the and and end both net $X.X was of not an of The to the of from new Net $X.X – Accounts at buying key to as payable accounts for increased third inventories during components driven increase of working for our first of $X.X of and first slow-moving reducing from million for critical of the to lines the million. high increased inventories cash change September. reflecting was our September Accounts of part the by million up at inclusive driven conversion decrease to driven XX, in million timing credit Focus the as new XXXX agreements inventory $X.X is loss total fiscal nine

and our our not manageable valuable offer allowed remain still costs five-year continues liability rates Our XX-year tubes of material. minimal our experience to and failure be warranties low customers. and product able us to combination The to warranty to and for to warranties afford to continue

the Focus’s In for mentioned our hallmark provide on remains our quality selling environment, the a As warranties. updates ability offer like is to to on quarters, these products strong impact and current in would reflected in of I Energy previous point business. COVID-XX our

already We homes. from customized the on discussed work to I alternatively plant continue that plan which we operate company COVID-XX can at our have employees under with continue their James from contingency commercial the experience. of our or COVID-XX impact business, to and

workarounds have for pandemic developed the and posed Importantly, the our supply by we challenges chain. impact solutions that

we education come Focus’ we act and entrepreneurial has lighting customers new UVCD emerging new compelling for to platform more portfolio EnFocus However, States, spirit with portfolio the sector an products combination proposition in offer matter human-centric as with for during of that healthcare and in which United to and be expect and commercial ability result UVCD is allowed the growth and and of provider what compelling frankly, quarter, industrial, value outlined our any in the quickly of to world. Energy The develop will to a market. us the

customers’ focused While there's be of questions. long-term, demand. open COVID-XX. Human are we COVID-XX call businesses quickly objectives to very install the Focus’ health products and uncertainty and and continue affordable, to we the challenges no to delivering customers despite on a like for to safety presents many would are and and offer short, to medium, our right in key effective, the that innovate continues Energy entrepreneurial, two that, easy doubt we that now, of DNA end-use lot With

Operator

you. Thank

a question-and-answer now Thank session. We [Operator conducting will you. be Instructions]

with Dayal Amit question. from comes proceed your H.C. with question first Wainwright. Our Please

Amit Dayal

everyone. Appreciate morning, question. Thank you. my you Good taking

Tod Nester

you? are How Amit. Hi,

James Tu

Hey, you. morning. Good. good Thank

Amit Dayal

morning. Good Good morning.

some guidance for sales is very order is little know, I'm bit of to understandable that up? know, of how sort sort products? a these larger preventing the from shaping a you can removing but You underneath just that, of you for promising. you trying know, pipeline sense behind you talk what and Just, it commercial are about your catalysts are products know, get you technology of, James, the materializing now,

James Tu

that's mentioned, know, you as, handling market hit, can I urgent new don't know, level. could to push matters, called safety retrofit most not It’s people lighting urgent be market will lighting as next, it think – to as you or facility the you their probably Yes, construction, probably hit you where, truly delayed, anyway. new right, you But know, very an hard especially have right. item, already emergency. be construction project especially opposed where, a also an say people not because to occupancy and project have when finish a they I immediately, such we But going, to is unpredictable on know, want the think, are very upgrade commercial the if you large

to simpler so think this unpredictable environmental it's new point. a friendly. we right about true is very continue market our more and introduced in they're distributors, much are, commercial by because market. product. But It be know, remember, – platform for it optimistic I but at well it new for very for agencies, just retrofit excited overall needs And received very, the People potentially lighting So, is control know, next definitely you our The this there, business is is necessarily and EnFocus lighting and this are you a the be, soft product that new terms They not product. more specifying impacted to right, into projects. know, event timeline. to market, are will in be is construction the issue that projects generation be new the having also our just you clear and of

the being to actually very introduce remotely challenge it's a a think product. now, especially most you [indiscernible] is working knowing new I people hard the product that, product know, This face-to-face. are and that's [indiscernible] very

see lighting why decisions this to challenging a to it’s the the is we cloudy that. forward, the we've still the for it. But pretty make works you that, And products. pretty looking Zoom important when fill through, retrofit for moving product at do temporary for You new the really know, UV gap you us is particularly feeling on by said that product market obviously, is calls know, moment. basis and uncertain, been and But to trying how all people

continue And range to we of the $X we So, even orders in at end, of commercial our million could know, say, low-end enough we that. coming start We quarter. to on as first, And next, going right. normal say, guidance] in people this part million, know, of the going come feedback that we're [financial been there's hit this to to you have definitely we're of we end. the risk the the seen when you months is lighting kind receive have the retrofit running, the is activity. product the come expect the are in back all That's definitely today, we $X three back, repeat would return – just at But there. know, and for shipped starting months pipelines we yes, to certainty third good higher the all right. to us And the demand these the really the quarter, suspending guidance, EnFocus said, this because we depends you we of the want are six market hoping we don't to more not to it why about into and reason seeing are when really

the the and know, of chain the today. order combination uncertainty that we are in those know, of pretty with and the terms supply are you say logistics, You still factors timing overhanging two clearly, that

Amit Dayal

[multiple And very products started Any speakers]? sales with the Understood. I of know sort you recently. UV color

James Tu

We We just introduced only them. didn’t selling. we – start

We haven't started selling.

only obviously first right. it, the We’re quarter. yet. obviously we're and customers; orders started I taking We our marketing starting started delivery the mean, in – in We not Yes, first talking we quarter. to

Amit Dayal

Understood. then, And backbone sales you you of a to that. for your the military sort Understood. of know, continues be revenues. Thank

James Tu

Yes.

Amit Dayal

with year-over-year Looking [indiscernible]. out further sort you anticipating have? sort sales of for you you're little but just XXXX, I providing growth into not a know, visibility military are in XXXX, the know, the you of guidance

James Tu

what military there's quarter the, we order rate and expect given is we Sure, being strong the the right. [the this the and, that, throughout first sure, year, tail] know, year. – we This contract us reason say fiscal XXXX. still for have no Obviously, year, to of is experiencing, you the can sure. know, is right. But sales Yes, you [government's] hard know wins next you been not

this is Now, year, to last poised XXX% if your what growing be year. from question going this year to grow is over

and [indiscernible] a the is earnings next – will I call, Navy opportunities huge on know, and we’ve based plan And the the overlays you will consequences in going earlier the the pretty by defense spending years. as to the mentioned modernization been it large increasing experiencing, in coming say in seems bring the want but to be year strong year. I be I that So,

side, so, both the from are our And and so… I think side, from on the side competitiveness demand positive market

Amit Dayal

so James, much. Yeah that's Understood. Right. I Thank all you have.

James Tu

Amit. you, Thank

Operator

Thank you.

Our AIGH Partners. Please with your comes question. next Investment from question Aaron proceed Martin with

Aaron Martin

James. Good morning, Good Hi. Tod. morning,

Tod Nester

morning, good Aaron. Hey, How are you?

James Tu

Good morning, Aaron.

Aaron Martin

Doing really well. Can side it and launches UV the bit different and Like, And you launch? what because of commercial tell you strategies you us the you the of obviously, side. from And want obviously, side there? is to there capability, consumer pre-order it side talk the which little can products. differentiate seen between then, pre-order of know, you two working I nice things? it's about, sort do since the of the capital about And have what the a have on a

James Tu

the know, we Yes, January. the be, go pre-order – not delivering yes, you we decided might way the that because are not until to

And so, on we the product. are of focusing the actually not pre-ordering

far and are organizing started other know, own starting – partners to all organizing to and company, the you the so introducing product. on say, products good consumer we’re for pretty – has surveys our, selling you been for would our know, The On hand, we you based know, products have context you the of, channel that. I know, consumer we've the – got the we customers campaign, in customers, basically, responses marketing December major our

publicly we're got, to samples the delivery feedback products going product. the to and before shipping the interest. December, start So far, start start in we’ve these get indication we’ve good October launch we'll have so the product – December, more on talking had can company, of want is and Obviously, that see concrete public and people we believe so This in the we about traded our as why just a pretty we January. in that, as soft launching in we

say would December, concrete [indiscernible]. more indication in get about the actual I we'll So,

decision. impact take marketing residential side, will home, at right? individual campaigns, usually these for we So to for it’s the you an shaping time and use is personal could and commercial and] as through sales reach is that social residential all residential commercial about to imagine, uses. far, be can disinfection you're The the out media That faster between the other power. while product thing conference a to product And so rooms, our feedback exciting based talking the on UV the that received, and the days to know we customers product. offices, product, individual bit can and designed is the [homes the directly more product the mUVe on the to right, You our be use say was small institutions make – difference

carry agencies distributors and to to that the partnership UV while channel are product, continue distributors expand lighting goal are marketing faster about So, into. than expanding other contributions there's will to sales also expand actual we’re our And, sell December. the that know, there distributors products samples will the a that to specialty be and you the two mUVe we could products. our our chance so realized product products existing our are efforts in that and two And obviously, other sure have, networks. two UV We we product excited in [indiscernible] our that and is other production products

Aaron Martin

able number your be the of that when for you given to of it hands hands commercial terms thanks you're their at that. know, I to prototype stuff think get that customers you to Okay, comes [indiscernible] can like, guess, of distributors on I of on? like units to going December, the number get units in least and get

Tod Nester

couple Yes. Well, we’re can out. we samples hundred a going to that have send

December. to piloting happening in some know, be plan. samples, necessarily have not robots You the out in so sending couple we're testing and that but We're be, [indiscernible] that’ll that's a to be going facilities, to going of going

Aaron Martin

robots, is a I different No, because distribution terms kind third item? a the channel in just kind the that price of it's ticket of mean, of high sales,

Tod Nester

Yes.

Aaron Martin

facility? [Indiscernible]

Tod Nester

question. good Right,

excited its that If obviously, they're watch, to to have remember, disinfecting somebody for and right. robot goes thing upset, you but people, that the with and priced about the be is operator facilities, the the but know, an item robot, definitely robot cleaning able on to own product. they last own, [indiscernible] it. large we will do very high the And you the a if we're So, economist, [indiscernible] want – robot actually believe could

So, we facilities, we buy it's probably you – large to for robot. for worthwhile – probably the

in we services. facilities, once and the first planned being – of – know, smaller have claiming services of are more quarter piloted and that share lot you robot kind and disinfection piloting a the be For a to we'll being they'll that's when

Aaron Martin

is, And specs fixtures, the how light know, a additive? the it's you then, there? the Where the [indiscernible] large if question on number entire commercial room know is replacing [indiscernible]. room. replacement does of or you've you're based room, And secure that's on got single it with you for XXX you in the the what’s targeted multiple, And large a XX offices small square at offices, UV, foot it

James Tu

lighting, Yeah, You the or you with right? lighting, talking the The are above, right. [mobile]? both, all about talking about

Aaron Martin

I’m talking of about – lightning? on with the commercial lightning

James Tu

that written relatively Yeah, [indiscernible]? go other XxX, or will [LED be placed replace the fixture]. or I XxX, to Can all

Aaron Martin

That square it's My feet. is, larger additive? that? is gives larger question room, you're [indiscernible] [Indiscernible] a it If in than

James Tu

Oh, yeah.

covers fixtures XXX feet. square about XxX usually So the

it's every air of square to per device two fixture per have changes disinfection designed we – you for fixture. hundred So want – you how and one change your expect would got work. to that's that have foot. lighting how hour the how the we that to design you don't That’s Because

Aaron Martin

moving Then [indiscernible] there warrant in exercises any on the were Okay. to quarter?

Tod Nestor

of Omni-cash that, were third done they Yeah, exercises there in statement around but for portion a the quarter. flow – financing the were from

Aaron Martin

in on any the subsequent then since did the the you end quarter, of any events report know, events? that? and Okay, subsequent You

Tod Nestor

Not on that. No.

Aaron Martin

Okay. it. Thanks a lot. Appreciate

James Tu

you. Thank

Operator

Thank [Operator you. you. Instructions] Thank

[Charles question your question. Our Lee], Please Private comes Investor. with next proceed from

Unidentified Analyst

in give sales Hi. and quarter. you staff to last color R&D I was wondering the if some addition could of this

James Tu

Yeah.

actually getting the being. have to quarter. we we we're side, fill, we're have but the there being. where three people So, [indiscernible] quarter. spend positions time time for hiring people for engineers be We or to to had R&D the for much additional we’re And need we Salespeople on still good during it in pretty to been two the the hire we

Unidentified Analyst

Okay, thank you.

James Tu

Yep.

Operator

no back are over turn like comments. I call There the management closing for time. this to would further questions any at to

James Tu

to in call. speaking you you, you again, and your a look Have forward Energy in good for interest thank everyone, with We earnings Thank Okay, very time day. next much. Focus. our

Operator

This concludes conference. today's

participation. you a for great You may disconnect time. at your your lines Thank this day. Have

Energy Focus (EFOI) 12 Nov 202020 Q3 Earnings call transcript