EFOI - Earnings call transcript Q4 2020

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Operator

Greetings, and welcome to Energy Focus Fourth Quarter and Fiscal Year-End 2020 Conference Call. [Operator Instructions]. Please note, this conference is being recorded. I will now 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,

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

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

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

James Tu

the with our extreme everyone, Focus, progress of XXXX heavily conference our year as solid quarter economic our go the we financial full activities and [indiscernible] improving than Brett. arguably, filled the sales, that later, at year, Tod retrofit earnings full top still Good today, will considerable joining on Despite impacted and both lighting morning, progress strengthening the margins after towards economic made pandemic our our results working our line swept more country, disinfection significantly generate was initial to XXXX have of softness the the and and for Thank capital new lighting and, breakout. global which reigniting of thank and inventory details daily further across the commercial resumes into in a products year activities weigh and Energy as for you the the and life strong you, company for notable challenges illustrate prudently sheet growth, call. growth, fourth normality start coming year balance UV-C position in managing sales quarters. and to our

product significant our line, the the in of in of which maritime growth On we space and competitiveness strength the driver ever was our in we weakness commercial the offset top improved experienced to XX% than March a business net XXXX, sales more innovation year. in were since able the last that achieve resulted military of

continue our growth military going and strengthen high and achieve that we we confident continue business performance in level to As development expand forward. efforts, to are our further segment we this will engineering organization

the of but and ecosystem, the GSA Navy December Buy added In addition, products in successfully military the outside American within schedule federal XXXX. government commercial were our to

buildings out that covers the receive agencies. aggressively market over than particular and throughout the are We channel this government from our months, for and started past few federal infrastructure we orders have GSA marketing building more to XXX,XXX sales

limit suspension and improvement caused building access building improvement over witnessed most hold, side, earnings slowdown we capital and few as Many nonessential organizations or as calls, the retrofits activities occupancy pandemic a mentioned of to budgets. building lighting past upgrades retrofit commercial the widespread global and prolong were in XXXX. dramatic forced the of On postponement we significantly

vaccines as going utilization into freezes share of spending become more return spaces Although starting and capital linger pace. pick to continued to first available up and widely facility XXXX, the to quarter

pipeline and cautiously Meanwhile, are second we quarter make into accelerate continue to into to start from and the year. optimistic quarter-over-quarter, more in proven our half to going sales government are that and our LED color-tunable received more channel improving that markets. looking activities the will vertical manages strong that that the the of million has we products, expanding with structure lighting our industry-wide EnFocus territories lighting second of our to space, commercial XXXX of We orders state initial notably a control products year partners network product partnership including distribution sales cost new as by of commercial various well will building our the progress as to on forward represent as exciting improved national XX adding agents platform so square new progresses. With by top our feet in accolades, engaging take dimmable geographic committed

for space a pandemic for need devoted products. As dollars by COVID-XX potential XXXX, disinfection engineering Energy portfolio new the R&D opportunities our lighting unprecedented whole brought business, to disinfection. amount brought UV-C, creating unprecedented new commercial surface it develop a to and we significant of Focus also and of challenges resources In air

various spaces nUVo portable flicker-free, and UV-C for we With portfolio and well of unique experience abUV, [indiscernible] as UV Traveler, troffer applications. including and UV-C proprietary travel powerful disinfection light have as large products that an both for created well rechargeable inactivate dimmable a [indiscernible], nUVo XX.X% our lighting includes new air with expertise air can influenza. of disinfection and technology disinfection as of and in-car additional color-tunable more as device coronavirus currently patentable combination device disinfection spelled we pathogens, have and The and a or technologies modular N-U-V-O, air the and our provides power that developed, system leading line product and work

later these effective, for quarter than And the Over to of these makes that more in and introduced months, products the much first we first have them the are products X over for prospects in fourth to customers past deliveries and the in never into Meanwhile, we our additional scheduled the were second And since have when to products unique gotten and introduced past the the been early XXXX. the received make technologies incorporated third quarter channel few from more them only has potential about excited feedback we products. powerful these so X the enthusiastic. customers to quarter. features we marketplace and positive we partners now months

new introduce how regardless leading build UV the innovation Given positioning, to infection months focus in our disinfection of here evolves our belief this quality that portfolio brand COVID-XX impact from are industry-leading years products a aiming [indiscernible] coming need and and and XXXX to and stay better are to and mUVe, we complement additional the throughout various in we've consumer facility disinfection robot emerging surface To serve disinfection beyond air UV-C the disinfection also market. to our autonomous an called And spelled we M-U-V-E. developed products, of expect applications.

customers the services to will provides near-term called robot agencies, territories. as hospitals, year to with develop our retail a universities this targeted and and hotels later larger the in we by service such focus government be footprints, While which robot disinfection mUVeCrew, selling or as solution is disinfection the our hour facility chains or DaaS

service air quarter, to we and technology week, in to this Like in We are early mUVeCrew, which held for are we country operation even by Notably, this the the then to the officially Division top interest directors our their service second other first mUVe being disinfection Cleveland later launch be and and XX for metropolitan product, universities product the a the in X in indication service be are colleges before disinfection the formally as for very pilot service. National were is area that of launch Championships, NCAA our to Cleveland we NCAA of major X planning location. Fencing and where selected areas, the expected starting athletic our services present. XX are this encouraging master month

enable remote quarters capital positioning bold working the we past transform months particular, with coming drastically And early technological in Although and the [indiscernible] outside expertise growth domains and, and the and financial to mentioned XXXX, agility as facility of these products in intersect, and challenges space. lighting in enter remain meaningfully where second in market opportunity provide innovative and to they potentially of entrepreneurial until such our have market, to growth today years. a have before, multiple contribute expected Clearly, taken synergize environment lighting the to to new results whole results. reduces disinfection compete best the as enormous project our industry, organizational that military profile for and long-term culture stages, a of of favorably engineering and the Focus retrofit completely a DNA are Energy to Essentially, commercial us converge solutions activity. half and budget XX the the macro ingenuity create further broader in are could

the from believe our military the Tod? respective growth that markets, of to the sustainable and and will With profitability. growing positioned platform coming it months to the I penetrate long-term and lighting, lighting, we to Energy never in-focused poised call highly in With opening has the review as control for Focus deliver UV to of year disinfection, quarter. well commercial their our expected the today target been turn be that, financial Tod differentiated or economy products list performance

Tod Nestor

you, Thank James.

of million XXXX. net by million, fluctuations segment the sales commercial First, the partially net profit in increase net sales to military in in the total delay was million pandemic, sales $X.X the COVID-XX an were pandemic. operations. representing and with The efficiency in by compared in sales with driven the projects year-over-year of across sales $X.X XX% $X of of was in from as a XX.X% increase an primarily The by total compared from in a in full well for $X.X million in year-over-year the sales as total due military FOS of to or increase James overall XX.X% representing the mix mix, decrease XXXX, earlier. in an sales that of mentioned which is net Sales year, mainly as summarize of COVID-XX increase including, million From sectors, sales began the softness decline year commercial commercial offset to $X.X to year was customers in in of board market up XXXX. Net size XX% full results. for dollars or the perspective, $XX.X pace XXXX XXXX, sales were improved for down commercial our the net that as were for in Gross XXXX and onset million million was XXX.X% retrofit our in plant principally, million, with I'd sales $XX.X lighting compared the XXXX total a commercial sales, year-over-year result impact $XX.X timing, projects, commercial XXXX. like XX.X% military driven or

gross percentage to was products in a XX.X% of from sales more mix UVCD development of Adjusted due in unexpected million compared of spending year-over-year margin XX.X% XX.X% XXXX, XXXX measure, and products challenges gross to costs XX.X% and As million our to our driven the million margin our supply product to XXXX compared increase margin, chain costs and $X.X to to in for in however, product support increase impact headcount relating full related initiatives. increase. than increase were in launch nearly of development the increased a and of due EnFocus to increased to was which increase XXXX, XX.X% products. benefits year. X.X% was a net or testing sales. The XXXX, in primarily This from a compared development military by year improvement a and XX.X% a loss expenses to offset salaries compared additional non-GAAP to was Operating and the and of higher operations by growth or higher XX.X% million Loss $X.X manufacturing in the leveraged of SG&A was maritime a million. in from year-over-year, operations revenue, for XXXX profit more or sales primarily which $X.X twofold for sales XXXX prior military $X.X was due favorable $X

Below of our new focused the fees well of credit, operations in with $X.X our our below $XXX,XXX result as line under that payoff we tightening. leveraging management on of an early cost facilities the amortization Our Also, of XXXX. as line, change This through in noncash $XXX,XXX increased loss expense, increase liabilities. former core was and line, grow provided the the borrowings to borrowings interest operating capacity. diligent market value bridge for a we business short-term belt our as on interest operating $XXX,XXX compared the warrant had in facility remain operating in sourcing continues strategic we of of extinguishment nonrecurring credit the was and XXXX increase financing improve, for efforts of borrowing through including as million continued revolving expenses and and

terms was can liability has for that are inclusive and warrants million income nonoperating on $X fully $X.XX and loss warrant are with of sheet loss subject the from interest shares compared loss was XXXX. fully or December, per added volatility the or amortization, warrants shares. which $X.X adjustment $X.XX million accounting of other and reclassified diluted equity million as eliminating were a to classified $X.X reclassification qualify expense, stock in the diluted valuation warrant of Net X.X was based that longer modified, then share to was of the a liability based depreciation offsetting X.X Adjusted loss of loss treatment modification, liability. at XXXX, the per forward. as certain each non-GAAP basic benefit such our net XXXX and basic Importantly, $X.X of date. expenses the diluted for which is At no The fair for the risk and million into time XXXX, and of valuation our the remaining of the in comp in warrants recorded of compared of now warrants with the the outstanding measure, in income. remeasurement equity valued million the a on warrants impact million share EBITDA, diluted incentive going periodic a loss a with to Consequently, balance excludes related based result this

$X.X the the million, by sales quarter XX.X% or XXXX, down was including offset XX.X% quarter in compared was year XX.X% to overall total in due compared commercial like the Sequentially, the commercial fourth fourth commercial $X.X which would as for net the The decline large impacts sales XX XX.X%. net XX.X% one a $X.X XXXX. sales the is I $X.X the in fourth quarter increased customers This size of decrease further particular or resulting fluctuations sales decreased XX mentioned. partially quarter was our quarter, in a timing, were to compared XXXX. resulting quarter sales net we one million perspective, the sales, military from company of of to to our of year. began with of in of million fourth to was most third XX.X% X.X% from a increased sales third primarily to to sales of by and sales base. of the decreased million our third sales quarter The of of of increase sales the up top-tier net in XXXX representing the to primarily shifted to top quarter, brief of decrease that in quarter pandemic. significant XX.X%, COVID-XX of fourth million a quarter mix of of the quarter Sales Sales sales in sales primarily of from to sales X.X% net compared to were one order quarter part for the primarily top of pace increased From compared increase COVID-XX of for of due fourth pandemic. military timing were top sales top third for down customers fourth military to into X.X% to top to existing Now our to XXXX customers driven driven year-over-year of $X.X of XXXX. fourth to customers million a military excess total decreased softness in top with of the sales from our commercial in the over the sales fourth customers the on turn quarter the increase the XXXX top sales XX customers the due military military XX onset had XX compared increase. our for particular business, sales military in When sales as net XX.X% reflecting year, our projects, last $X in increased quarter commercial and customer Also, customers million quarter fourth XXXX representing quarter year in last military XXXX, total to XX.X% net market the our Net Fourth XXXX. quarter that sequential review $X.X result by a commercial customers And fourth quarter basis, XX mainly penetration concentration our sales of increased to of pandemic. the The in results. in quarter, of of for an portion were the an representing commercial total sales year-over-year military million previously at the of in decreased and to XX down net XXXX, customers $X XXXX. net to XX.X% year-over-year net fourth the customer the net commercial second

quarter Below operating XXXX expense despite operating rate the lower $XXX,XXX. the of quarter debt $X.X Also, XXXX, interest basis to result related points the line quarter, and we increase $XXX,XXX as third As product compared year-over-year. and XX.X% sales to obsolete, million of increase impact increase related by increase margins line, The to of in XX.X% costs driven from XXXX profit value line fourth of compared or development to of blended the of XXXX. as in was of in a basis, quarter quarter from the sales, third $XXX,XXX XX.X% of and reserve the warrants. in compared XXXX, fourth an quarter products. the of This compared quarter below well had the $X.X of year-over-year inventory realizable profit of sequential our the for in with largely On was of in XXXX. a to of in to the to X.X% XX.X% of an of in excess margin in to a X,XXX fourth basis the in Loss the This operations valuation fourth the $X.X in historical from military from XXXX. a fourth profit X,XXX a of XXXX, XXXX of increased XX.X% in-transit of million on the fourth mix product were the quarter from quarter net XX.X% higher of compares quarter in $XXX,XXX the the and was development of Operating a compared margin XXXX. more $XXX,XXX $XXX,XXX. movements UVCD decrease and favorable favorable the of gross for in gross gross in operations improvement trends for margins million sales of the increased percentage million gross was the $X.X of a revenue, fourth XXXX the due third million primarily XXXX borrowings of the Sequentially, loss XXXX, quarter quarter fourth in interest XXXX, quarter points. operations expenses XX.X% fourth $XXX,XXX $X of debt non-GAAP this XX.X% more balance. or with year-over-year quarter improvement fourth the fourth higher recent of was of expenses or was adjusted extinguishment of reserve nonrecurring approximately more gain resulted loss for Adjusted a the

in be million XXXX $XX,XXX earlier, $X.XX fully quarter income will and As in of XXXX. Net shares a was reclassified these I warrants based positive into remeasurement mentioned fourth -- diluted of in or X.X subject loss per not fully loss of were the a million and to will of diluted basis fourth or basic equity the diluted subject on periods. quarter diluted of share and to with per basic share million be based shares $X.X $X.XX compared on X.X on a subsequent

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

in granted million, income February was statements income first compared part operations XXXX, December in through XXXX. quarter, As applied $XXX,XXX Relief the in of as Aid, of borrowings. borrowings forgiveness new $X.X as CARES, other which to primarily well of estimate and positive equity $X.X balance the the of sale of consolidated of Protection for the in as cash capital to quarter. million in XX, and credit in at We the the increased due the entire a of XXXX, recorded had which will December and there insurance GAAP, line XX, we short-term Economic $XXX,XXX and or impact the income was Total debt principal to the of Act. comprised The of accordance be other end XXXX. the In Paycheck be $X.X October of increase will approximately first as forgiveness borrowings Security, included as Coronavirus under in Program interest. of XXXX million We of loan XXXX, was $XXX,XXX with was it cash during subsequently

net For $X.X enterprise net which XXXX, purposes, of $X.X at was million of at $X.X compares reduction the end debt million year-over-year. our to debt million XXXX, end a value the of

XXXX. fiscal of capacity loan the offering. million our additional the of primarily This As facility, and availability $X.X $X.X comprised new $X.X of of our at million XX, total as availability PPP total of equity excess which the end under December of result million, XXXX, and was gain million in we borrowing facilities, a compares to had credit $X.X availability cash credit through of

our in results. operations capital compensation of generated net like loss the depreciation, $X inclusive full compared warrants. of million, flow discuss in the million Now was $X.X from XXXX $XXX,XXX for stock-based Cash loss I would in million to XXXX. $X.X working million in $X.X [indiscernible] $X.X and of was as items, to was cash noncash The year value cash of change such XXXX. We accounts from inventories timing collections. million and receivable, used $XXX,XXX of investing and Cash or was driven from accounts inventory both payable, a $XXX,XXX was generated driven was were timing in by X% spending Net by by we requirements generated in PPP of from approximately the cash $X.X activities as the $X.X provided January, equity primarily capital not Historically, well sales. loan. significant. generated the cash the financing million, of million fair was issued driven used net from of as by

during the COVID-XX mentioned on calls, to prior we I about updates would of As earnings impact brief for provide time our like being, the pandemic the business.

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

too small become are starting still of early optimistic bit, to immediate overly to it a there rebound might a is signs be rapid business recovery. While that commercial the or

can and today, challenges have for XXXX operational overcome. to of of as shipping some and costs, impact staffing passed chain has we increased including be businesses, and in as of and quarter times arrive inbound and wait freight plus fourth the customers, to impacts, such to as along impacted had outbound through well increased the many continued which other hurdles significantly supply products During ours, resulted the pandemic

of impact our business significant military Fortunately, and pandemic COVID-XX on we see the a to maritime not unit. continue

the sanitation will long-term our good in products we pandemic questions. this up is influence and a and pathogens, are to and event. entering the that would to COVID-XX and the With a focus workplace, our to countervailing development consumer space like gathering pandemic's portfolio with open we very centric UVCD long-term of long-term the to we including the a the Hence, model strategically fits portfolio view. impact and following business, segment that, call a launch coronavirus influenza. is UVCD believe our commercial addresses of spaces is lighting, into thankfully, business approach lasting strategically goals, on social all the consistent with health on human The address However,

Operator

Instructions]. [Operator

Our Dayal question first from with H.C. Amit Wainwright. is

Amit Dayal

hourly to now? you with terms service of how robots charging talk you this an said the may about of bit just terms you? this And right basis. can up solution, this as be many but a know how in if potentially on for business you we in could picks respect very I Just scale have your disinfection -- on it's a early, do model little thoughts up

James Tu

Yes, sure. and training in Yes, you little services launching on just it's service. basically providing and are early. operating X right pilot We're Cleveland are the have a we now bit that We robots working that technicians the our area.

a it's about So excited it. bit the we're specifics, to but too out lay early

methodology a encourage subscriptions, We the are car many charging depends much around how to usage towards we recurring how $XXX of are Obviously, a the times wheeled per it have on type hour so-called the services. on you using on uses. monthly and basis,

details call the mechanism. sharing in be exact about will earnings We the next more

announcement So launched as in we I services. And second mentioned, the we just in be the want quarter. that piloting the to are middle make will of it officially

anything? details have add to you we'll more Tod, So want year. this

Tod Nestor

the very on benchmarking they more get highest bought level that add If we that we pricing a a of pricing, units, would we other just and price lower per is to when good customer did we the extensive felt sure they determined $XXX pay. make I'll hour. value. front, had analysis And a price

Amit Dayal

of of force what looks reorganization, margins of et then commercial drivers kind for impact the sort have should in renewed terms the up business of cetera. on this? sales it segment into we going picks and lot in Understood. XXXX, from commercial products the a And XXXX, If expect we like for you

James Tu

products. Tod lines, commercial lower. line obviously most on in with step anything In product -- I And over the that looking -- transaction target depends could some margins. can have want a lower could on plus the that it XX% in product be onetime take consistent also and always that? over lines, overall, have to margins should the the commercial margins and Tod, UVCD achieve and margins. fixtures and XX% on are line. traditional business We you gross lens [indiscernible]. line. I'll targeting about been talking will add likely We add have And But there XX% be we focus margin what that's definitely to do our think all we

Tod Nestor

will that well a as I'll primary as do of strategy we be much. But current increase we we margins, percentage quarter-to-quarter will kind both mix dollar it our volume, consistent margins driver, more impact because from these. just given of and basis, as as that targeting volumes, say our have price rate how the is a the considering which not

we've intend we else. that everybody do James stick just reminded And in So mentioned before. those to ranges

Amit Dayal

And product, Okay. looks really in market in commercial like quarter? the XXXX. Has EnFocus the of a because efforts that of EnFocus did to the in and sell contribute weren't bigger fourth it this is you respect Or quarter? to part reasons anything in COVID-related with -- a this position

James Tu

commercial being are The is all really that new existing the this are but the point. not EnFocus targets aware is And the as system, Yes. EnFocus it also delayed. only insignificant budgets, facilities. at budgets, were you retrofit projects of basically the yet And reason retrofit

that had into market we state in short-term are EnFocus impact, often the rare, mentioned actually So the half second of start year move a budget seen one the once where projects of not so will a but of of without situations And taking a so seeing start the that forward this EnFocus to was government win installing sold What we without the We interest yet. -- being facilities projects continues we about -- impact. with happen any new in to in year. any haven't is that lot again. EnFocus into not projects new the

started hope can is seeing specified to normal economy EnFocus again, being pace, the our more that, come to back into projects. we So start new

We are sales also going organization. mentioned, we're be, as expanding obviously to you our

talk that are nontraditional will channels where about oriented there And So sell when to EnFocus opportunities. ESCO could project going oriented, more additional transpires. be the to we we that

of the have being I space. provide a we're in later The functionality And it's that on that the to it. forward control that, other envision going lighting investment obviously, this adding total, for hub so we year. residential the commercial -- us correct basically other also is EnFocus thing will based room EnFocus based you're We controls. major to And would in applications engineering for add type

this further to throughout expand product year. So portfolio we're the looking

Tod Nestor

could item I one -- James will James, that? that the We're of EnFocus product be to also UVCD part Right. add mentioned troffer. earlier, our above

begin as EnFocus with also So seed will the see to growth platform. the market, those in that, we

Operator

[Operator Instructions].

Our Bill Private is Investor. from Hardy, next question

Unidentified Analyst

programmable capability a the regard it's line? going in EnFocus call, that think that stations, thing from I add August My and we you product system-wide station provide where In mentioned were very question to you that station. a is EnFocus. individual for a on the conference from comment because an both stand to you to to Could on significant

James Tu

I'm Bill, presume, Yes. talking you're about for more -- additional capabilities you're about EnFocus? control talking

Unidentified Analyst

Yes.

James Tu

Yes.

controlled all are is So dimmable, sensing. flicker-fee, from yes, occupancy to so the generation as first lighting, which generation circadian the current is generation, circadian it the -- of In autonomous we next as aware lighting the product tunable, well switch. -- adding of you as EnFocus has the ability are

think capabilities EnFocus is expanding the we're lamps, the center between almost Once switch, And the the and switch. you control to really of wireless the is of And adding the obviously, which appeal application stronger only rest obviously connection get set to So the established have concerns capabilities security limitless. is the the because get better, the is of communications. going for increasing for switch. I the EnFocus

for that moving towards we And so are so sure. yes, direction,

Unidentified Analyst

Yes.

means will that be right? particular that to than off rather So and that it, at switch, able go operating times, so you'll the program on manually

James Tu

on there be that you day, Yes, and levels generation, and autonomous turn will color researches, building the these in because we performance. switch. different circadian capability into next throughout the temperatures the are comfort will to that the light to productivity -- based human have the Yes. ability control basically We and optimize

to the scheduled of is be the second the I why application uses, it's autonomous, is the can you manually. level residential think day, if have ability to year. XX-hour So But actually period, throughout you that to a which -- half launch circadian the the for if great obviously light do or override we going lighting you temperature color to -- which anytime choose in have are

Unidentified Analyst

more Right. One the to in question products. UV-C regard

And the And call provide wondering various quarter that customers. to conference that? from had that of stand-alone the in small you third units going happen? You just the to feedback indicated I'm what were XXX was about did

James Tu

Yes.

we the I talk in As with earlier mentioned improvements more the products, the and now have made on additional we're excited product. even

start frame. scheduled the are through to production being June we going time products them in selling engineering, the now So are and

We these that. will providing before samples be

probably [indiscernible] few have see the of responses in past And so are. we'll we our about. taken prototype That's products. the talking the you're how But months,

really not I be customers. real We -- demo effectively, into provided in those the unique said virus and to won't is the been products, what products intercept have provide. time, many in which details most the summary, the feedback able has why capabilities go but disinfectant to that that's here, which The good. we we for is to purifiers do And

have while that we generate unit pretty new certain Again, the amount it's made technologies the past months. we the demand. are still over believe that few of that safe Those strong for a and market. And in a airflow there's keeping -- so can improvements that And human are we built use.

early on be how our know big that I will is. demand discussions -- and shown substantial, So demand with We it's but evidence demos their based and we anecdotal customers has to tell. customers, our too don't think

Operator

[ph], Ethan from question Private next our Star is Investor. And

Unidentified Analyst

to believe, You could new will partners verticals. mentioned, take hoping on you expand that. national And please products I that new distribution I'm

James Tu

Yes, we to yet. talk it are not about ready

announcing Unfortunately, that. talk we now Yes. to yet. go, I we it be once ready can't right about think will that's

Unidentified Analyst

construction at That's to seemed extent conference discussion fine. wondering, a And I new understand. you to what versus during call. are lot get Retrofit retrofits? aiming the more I'm

James Tu

new company traditionally a the made construction actually by good to hasn't has the We just question Oh, going I for and approved increase is usually construction been very think lighting good the attracted The as bucket the continue retrofit absolutely. of new has because you yes, new COVID to as and lens-based new very a point solutions. And construction been products. stimulus company ready demand that plan the go. retrofit-focused to a -- been the because

they're there, totally it's when your a For when and story where people different you don't upgrade the you going are don't lighting back. have know retrofit, come to not even to

that's been why we -- or So so. confronting have and over the past year

based. parts, to I'm is lights fixture the We to our be fixtures that the with lens of based very mechanical anymore very launch new on work sustainable our reason it one becomes whole about make will that really it don't lens-based twofold, solutions, line, fixtures compared construction those is you excited is technologically that out which or the to why about And are that if the we're going very excited that have integrated lagging. We're very market. planning also throw

fixtures product And this with the just second we and specify, for -- market. lens could that's of in different sustainable be specifying second it's specify that coupling provide could the And It fixture the will take of that the lens line. that designers lot time standpoint, So is and of on launch now it our the believe line troffers, basically a obviously, thing, sustainability instead that's they most launched quarter. lighting to whole us it's in to existing the architects troffers line. products the a doesn't

us to us. segment. new whole It's for So a the new that construction will market. Obviously, to the develop take time that takes segment

most commercial when the business us On important to X our other is is months the was the one hand, the side network. first for thing agency slow expand for over of the

country. Now a of more XX agencies lighting we have than have business the in across new amount agencies construction. these substantial -- agency [indiscernible] And

we're well. line needs that as there hoping So address product this new their to

Unidentified Analyst

believe. wondered extent of wondering lighting architectural on I'm And I'm do agencies, to aware firms? focus Great. Okay. I'm not those, I your but -- these marketing what wondering, And efforts really you I you mentioned

James Tu

Very at little. the I we little. very for launch floor Like point, this line, said, before fixture

be focusing to with marketing focus another have we don't existing into on new that's mentioned, have the fixture driving it. And of to channel I We mostly been create mean, we market agency the the for essentially once a have will whole We I line, beauty retrofit. the our it. there -- as turning and

Operator

We turn to have the reached the I would conference of our end like management over to session. closing remarks. for back question-and-answer

James Tu

much Thank forward next for in we our to earnings today in and you earnings great you call, again your quarterly call. look a day. the to talking participation very Have

Operator

conference. today's conclude does This

You thank may this your lines your for disconnect and at time, you participation.

Energy Focus (EFOI) 25 Mar 212020 Q4 Earnings call transcript