EFOI - Earnings call transcript Q1 2021

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Operator

Greetings, and welcome to Energy Focus First Quarter 2021 Earnings Conference Call. At this time all participations 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 Brett Maas a Hayden IR. you. Thank

begin. may You

Brett Maas

and to operator, good you, everyone. morning Thank

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

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

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

James Tu

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

quarter, retrofit postponed capital during XXXX our this where occupancy. morning, or our uncertainty underlining budgets results conservation impact such pandemic the of immediately seen earnings reflect market, be due have could pulled or the from you on significant continuing QX for projects As the financial release first to

significantly military experienced we to result the an sales XXXX, are continuing impacted which funding. quarter reduced of as industry cash operating the challenge impact transforming fluctuations was to by to amazing also invest dedication, the driving the addition company The in and speed industry compared headwind by approximate setbacks, in in margins That quarter of aggressively said, lower product sector, this pandemic. The our our part In unprecedented the continue responded our has volumes widespread revenues ways. to first and our of development COVID-XX the operational burn orders and timing government and commercial new short-term increasing being we many by in team decline the XX% predated was efforts. financial creativity caused in with

market. we past both advanced our art markets the First second into will and EnFocused emerging control XX-months, as UV year. not as expand in These developed platform of believe propel starting exciting sales addressable well lighting of all, solutions the have new over disinfection will growth our state portfolios, but the our the markets, technologically the only of disinfection also diversify consumer half UVC product rapidly line of new products we the our which

the Second, the distribution that take products encompassing next target, an in network to will we of we our markets partnership new products help weave are the accelerated few have and our in months. efforts us especially to together light we launching

a with Batteries provide products a to that Plus, products. lighting Dalkia, partnered service with $X we chain power signed to a retail building distribution projects. And focuses billion lighting our agreement we their XXX-store on company retrofit Specifically, lighting and

Georgia, Montana, in our to and agencies covered territories, with We Wyoming, Nevada, partnerships also expand established two Alabama distribution including sales Florida. new our

channel these you pursue our continue In as offerings channel additional to speak with portfolio we engagements compelling existing that product these timely interest users; significant innovative the and We products from These be customers share panels. drawing of channel and believe a unique, or partners to our exciting endorsement hope the residential to and that volumes in it forthcoming help materialize. significant and additional commercial scalable to more is end we sizable these addition, manner. us partnerships partnerships get will

shine sustainable Third, talents we bring to believe for hard whole phase for across of talent growth. strengthen proud that I’m continued get culture our have of ahead. board. to fit accomplished times and are also us our the grateful and to next and And we our We best for real have incredibly the times the these company growth teams team ready the dynamic leadership that to to what

we past So Focus remains were with are activity. for commercial home and sound. for see we have a In prepare and long-term the to loosen in year year, starting environment the improvement for initial I I’m Energy have Focus been. to businesses have to frozen normalcy. believe market thesis of despite And are Capital potential challenging of optimistic the were to or meantime, I as as uptick Energy the months so, for the new for the beginning last work which the ever begun people from over investment past an faced projects, bidding over as unbelievably the improvement pipeline in a return most to up

service of just months. the mUVeCrew service launched this field solutions to of last incoming complete disinfection pilot we of In disinfection, week part paradigm. EnFocus robot we technology coming RedCap, products new the and unique could lighting a with our products in as the advanced UV Cleveland, reporting now powerful UV the forward such systems building in Our control pilot be progress lighting look more and

received robot, disinfection same interest marketplace. also which also our robots comes and superior competing in the affordability have new we with performance addition, in time; an purchasing In with the compared at

markets the become combination as and This comprehensive and expertise third to Energy disinfect portfolio or environment quarter. enable surface XX.X% disinfection technologies influenza. the including businesses products; chemicals expect for disinfection a will growing pipeline. of from delaying experience is commercial and to These our supply and without additional also proprietary the expect and in of corporate homeowners and troffer including improving our consumer a half shipments our to nUVo for begin lighting from or nUVo traveler our to results retrofit pending second inactivate to year, and developed UV-C solution we designed UV-C our with rooms as new air areas technologies of We industry customers the in well a of to of product common of products sales macroeconomic and Focus gradually through constitute contributor effectively above pathogens, residues, lighting the or both meaningful the UV-C various the partners. UV-C And are and unique line coronavirus and present powerful products more Tower,

the Tod and performance that, half disinfection the and UV EnFocused we our of quarter. with We bottom XXXX. incrementally year to strengthening point, are cautiously I control optimistic our sales At marked have first for for this of systems. quarterly our the the quarter review the start as that delivering for call financial the first With turn we to improving year second to products the quarter growth start second momentum expect might will Tod. quarter second-generation the over our

Tod Nestor

and due compared of quarter quarter by both in to of military decreased in of part being the because the healthcare, decreased sales Thank the military commercial to XX.X% continuing orders Net in slowdown to a large military sequential purchasing products XXXX, the in on net in in on due our industrial basis, business of the macroeconomic $X.X compared to sales Sales sales. were you, education, commercial and and due decreases first first sales the decreased delays sales mainly million funding. pandemic. quarter COVID-XX fluctuations XXXX, of driven to timing for hold When $X.X James. $X.X fourth million XX.X% commercial the to due decisions million and of put of down our XXXX sectors in of

or top XX.X%, or XX.X% of XX first In a military customers government perspective, the our first certain last company mix funding sales the representing to sales our Sales total again, reflecting first mainly first from customers quarter orders. XX.X% also of COVID-XX of for for ten began year-over-year total XXXX, decreased XX.X% net XXXX, were first quarter quarter compared was and million for quarter $X.X in year. that decreased XXXX, to quarter XXXX. the top the were softness due of impact of commercial net million of and first decrease XX.X% for $X the total products for to million the XX.X% from network profit overall the sequential $X.X projects of quarter total the net profit From to to of sales down of were in the to lower, our sales sales addition, a was XXXX. the Sales million a decreased our of COVID-XX at the customers The in basis, quarter representing of sales declined $X for quarter compared for in to quarter, compared to profit of sales of the market the XXXX. commercial XXXX commercial decrease pandemic. of $X.X year-over-year. of mainly first first $XXX,XXX onset quarter due the in sales the of million availability Sales $X.X XX.X% pandemic. Gross compared fourth XXXX of from million On of in the the of military timing gross agency with gross total

sales As first first the the profit in in XX% compared reserves in XXXX XX.X% the of costs quarter and lower fourth quarter of value adjusted in of of margin reflecting of our XX.X% the XXXX XX.X% in of quarter due excess inventory first compared gross first and realizable XXXX. XX.X% transit a and the the XXXX, gross in in of quarter quarter non-GAAP XXXX. obsolete, Adjusted for to revenue, of the margins to net fixed gross resulted percentage leverage margins was profit to less

of in new XXXX, products. to pricing chain payroll depending And million negotiate of Operating The a XXX.X% in associated XXXX XXXX from expect our of range million accompany sales We XX.X% our million products of and XXXX; the our fourth the increase warrants. on mid-XX’s per for loss begin continue better sales first during shares to $X.X of periods. be basic was of and this or to UVCD see and XXXX first $X.X increase the loss percentage $XXX,XXX not a $X.XX were basis, an inventory $X a quarter first XXXX, fourth re-measurement of in a upon first expenses with Also, the some loss PPP to and $XXX,XXX fully development to had the the million. loss in XXXX extinguishment income be stock-based quarter overall subject fourth X.X or of mix to of Adjusted mainly gain increase product increased compared introduce make in XX’s of compared forgiveness the testing of fluctuations from the first high which on $X.X we other the of of quarter-to-quarter. quarter share our quarter or our may operations and the X.X of margins in further of in we quarter per million to diluted a quarter volumes. or year-over-year were in the diluted $XXX,XXX an million XXXX of Loss of to first fully share-based sequential near-term of will or incentive and in to Sequentially, and quarter diluted a net and to a compared the an million in loss or share-based in $X.X as a These comp and compared sales $X.XX of $XX approach of XXXX. on to quarter Net $X.X quarter and loss quarter the of operations valuation $XXX,XXX to R&D of basic and first launch related was XXXX $X.X a had interest the year XXXX. The gross compares valuations, of first gain shares EBITDA, per was quarter equity the the million loan. and the with XXXX. basic $XXX,XXX diluted prior debt subsequent million fourth to amortization, related related loss $XX,XXX is the supply and year-over-year. million XX.X% of improvements warrants reclassified from we in non-GAAP quarter On SBA measure, below $X.X of diluted loss million reported in increase quarter the operating expense, of we depreciation of $X.X excludes $X an operations the million. of line, with a expenses

to the Now sheet. balance to turn I would like

cash at of XX, credit XXXX, XXXX, Total As $X.X XXXX. debt of of March short-term end we as in million to $X.X of $XXX,XXX the had million line XX, borrowings. compared was March

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

borrowing While credit on represents between borrowing our facilities. availability capacity maximum the excess credit credit actual facilities the the our and facilities difference borrowings and under

increased inventory total As our of cash facilities. total $XXX,XXX and borrowing our our to of million, end $XXX,XXX which line had availability we availability $XXX,XXX. was credit by Subsequent XX, we of the of of credit XXXX, on under $X.X borrowing March the of quarter, excess of availability comprised

In loan markets favorable terms, liquidity as April, net our addition, of we end million to rebound. on the core our finalized a at increasing bridge $X.X continue

During earnings as of activities. COVID-XX we activities during of the cash business. and impact The generated $X.X James impact the was to previously, brief customized that in our impacts, updates which $XXX,XXX, of in on primitively, provide would discussed chain continues Once their again, The like used to the with company already financing first we operations to times alternately, cash operate we can and about commercial COVID-XX wait arrive. pandemic from quarter was mentioned was plant XXXX, the million I the our resulting pandemic ongoing in calls, plan our or under from from of for used in investment have on capital. have contingency million, impact homes. business, in such our Cash $X.X as, a business. continues pandemic first, our supply working increased to work employees COVID-XX products $XXX,XXX

now outbound increased such to well passed hurdles along tremendously to Second, as operational shortages and And inbound can shipping be as costs; some microprocessors, customers. other and freight of which component certain overcome. as

UVCD of commercial impact the locations. a social much launching very products fulfilling workplace, portfolio current products consumer to see Although good for we our spaces and need on a these pandemics and in alternative our as long-term during business, the gathering are countervailing service air as we the permanent disinfection market other pandemic

this that, coronavirus we for and view. Hence, reminder, including Operator. the long-term both questions. with this portfolio functionality, our most segment of a long-term would UVCD effective and strategically like to a As We call to believe very pathogens, influenza. open quality reflections is up products’ commitment. the and we are entering With affordability are all the

Operator

you. Thank

be moment, for a questions. We poll while question-and-answer Instructions] One now [Operator your will we session. please, conducting

line Our Dayal Amit first question Wainwright. of comes with the H.C. from

Amit Dayal

the James, long we new to terms beginning just etc.? with, these respect should begin to to factor to partnerships, with in how revenues, of relationships contribute

James Tu

to And of familiarize the other type what partners partnerships for the coming. is of couple several depends for of new created takes our these partnerships. being with that are on products the It thing think I Yes. a it months usually But products.

although But few So next-generation UV our start think say exactly which are residential talk next And we the when months. months. hard in they meaning to contributing the I revenues. will it EnFocus the once also the about to product products coming in more launched, is our products,

nature start will are of contributing the - And of on some in I again, then retail. we think of ways. it depends some them the different partnership,

of companies. Some in are is types one of of (Ph) the of industries. sort energy unconventional service [LPI] them different very

into little So products projects. longer be a specifying might those to projects take the our

the in working next But the these start months, products new should So of it generating sort will sort as partnerships think launching that key is sales different few be our in varies. on I of pace.

Amit Dayal

efforts? But know Right. sort little this those And have your of think on do bit a factor working a commercial capabilities. on the your of I products that Understood. Tod of the with capital and sort to of some availability went respect or you now liquidity to cash gating increased needs, has through moving commercialization etc. been in hand you

Tod Nestor

asking. of I a the exactly I’m that and want question bit? you I sure it sure directly. you Amit, rephrase help to not little maybe make are address Can

Amit Dayal

to Yes. commercial us balance from larger think contracts winning trying side? has on preventing whether I’m just sheet been the the

Tod Nestor

in No, I contracts. received. caused that concern larger is of don’t has believe any any not we feedback landing that issue It the

has the industry I think been a what that - just general will which has it there across is see is entire industry, we slowdown that consistent with to the retrofits. in the have just significant experience said, been that. you And

of liquidity think or of any needs business the don’t I the decisions. driving capital the those So are

Amit Dayal

one me, maybe. for And one Okay. last just

the some macro Can supply of level, expanded. these portfolio But us one the issues, you has chain how concluding hand, managing On the give you of then the of cetera. sense are product signs on process? execution et shortages, the sort two

James Tu

question. is we of component a dealing past delivery I That the I mean, And a lot months good would hasn’t been improving. of in uncertainties say. times so, six that - and have there product good it availability or probably with over are been terms

So some planning to products, popular just potential increase risks. offset we in inventory to more those are

all the and We have make are parts sure the ready. working are our components that products suppliers forthcoming, we that with in

that it is some magic no delays across change could right time experiencing availability know, literally lot you And time. as to issue, And and is now. overnight are sure. component We per with manage tough suppliers delivery sort the a bullet we the se, alternative industries a for there from trying are of of to because products,

RedCap that well products in And product And that we inventory a components increase risks we there. are for those sells address for sure making advance know how the to example. plan like launches, well good so the is level also is

TodNestor

Amit, just have good job James is we really you will But since said, managing building we working doing have products compensate, are to of seen, have this of safety these I shortage. stocks because add, Then turnover the done as we high arrived. capital on of as a what some

cash a is to doing we are don’t there intelligently is we aware of high So by think, just lost of sales, turnover are And and we we experience. but selecting cost to that, want do requirement products. that, it, opportunity there an

Amit Dayal

share, utilization Okay. I disinfection last there sneak any will the respect robots, in. maybe can one Understood. With And are just you one metrics to James?

James Tu

What metrics?

Amit Dayal

utilization Yes, is.

James Tu

Yes. service in area. of week We Cleveland last started just a pilot the whole this

interest, they got hyper lot obviously area, doing very this some we are customers of we campaigns offices, medical such couple as this and love and experienced robots, first. have a nursing verticals the We for on media marketing. have of in only facilities homes, are the that services. healthcare of particular in We focusing that And a product, products particular have our local part

the So are amount interests definitely as back And these investors few we next share script interest of that like is a good would mentioned also as some potential buying I the about in in and weeks. exploring the see with to as we There customers in materialize we coming robots, pretty will well. well.

So are line. bit think robot excited I little we about but this is pretty still a it early, for

Tod Nestor

forma I and add metrics. we on drivers the When a it that James, on it based will mean, we I service, a little in pro manner And bit. do just to did around does that the modeled

and of number about the bring the those service we likely metrics So shifts, learn utilization, of are that, things. kind forward to more we those as will

but metrics. So as kind more that too, definitely of are we we be contemplating those will forthcoming learn with we

Amit Dayal

is I I so guys, appreciate all you That have. much. thank that

Tod Nestor

Okay. Thanks Amit.

Operator

Our with Robert comes line from for next Performance Investing. the Instructions] question of Smith [Operator Center

Robert Smith

have government you access financing programs? any to Do

James Tu

- product? as You Are a or mean, in company. our terms talking specifically products about you particular of

that the before. have we announced PPP We loan

Robert Smith

or or Right. Yes. whatever? Either Nothing federal possibilities? further, state

James Tu

lighting the the Well, not we the itself, but products sell, products, have company they that rebates. for example,

ways For this get ways, and products entities. have and funding for to the UV federal equipment. different They that government coming, are state the have they especially

the funding one a are pursuing is of in space They channel government ways. that whole of in So UV products. partners different the lot we that getting the for are definitely

Robert Smith

beneficiary feel that of funding? you infrastructure Do a would you be

James Tu

Yes, climate is part of one and we big the so a on believe plan because priorities. focused building efficiency top change of stimulus the

type significant I half second that we funding should in pretty sounds government. the a of the commitment from coming start that think And year. the like seeing of

definitely services. ESCO’s, expanding our government one to of look is service business the we that retrofit actually, with development through So is close the And sector, initiatives these provide engaging that. companies the large that energy lighting

we So that about prospect. excited pretty are actually

Tod Nestor

add will And to James, that. I just

cost the developing will the I we the are products a think be that through initiatives. the that government those kind are of and competition have versus advantage provide products - funding

that quality the for So us affordable have or better equivalent link and that the competitive advantage is the is of then product we installation. in more

Robert Smith

luck. much. very Good you Thank Okay.

Tod Nestor

Okay.

James Tu

Thanks.

Operator

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

James Tu

We forward you Thanks, talking everyone, to look to for day. call. Have participation. your earnings in great a next the

Operator

for teleconference. This does your conclude participation. you today’s Thank

You may a disconnect great at Have your lines time. this day.

Energy Focus (EFOI) 13 May 212021 Q1 Earnings call transcript