EFOI - Earnings call transcript Q4 2021

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Operator

Greetings welcome to the Energy Focus, Fourth Quarter and Fiscal Year End 2021 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] Please note this conferences being recorded. I'll now turn the conference over your host, Brett Maas with Hayden IR, you may begin.

Brett Maas

Chief good Steven joining Officer Galluccio, Socolof, Independent Tod and call on and Senior operator Chief Director, as and Product today Interim Nestor, Vice you President morning and Engineering. me everyone, the Lead Financial of Thank Officer Officer Greg Operating Chief Executive

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

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

Steven Socolof

the becoming Director the of Directors years I have May interim XXXX of is Company first XXXX. with as but of in morning, in and CEO Energy This everyone. Thank involved two Board Focus, Independent then first for over Good Lead September, my you, Brett. joining been call

been Energy that to entrepreneurial with management historically at familiar market. challenges engineer and During using and creativity the team team front driving new, talented Focus opportunities to compelling, quite and time, I have solutions Focus in in proprietary remains place. of bring become Energy the has and that innovation The and

result, retrofit well broader developed Company line customers allowed strong a more of the bringing a that to products, the lighting of the couple market in portfolio to solution seen as complete results. have well markets, years As the the the product both you our development a new to environment which of Company pace differentiated offer Unfortunately, market. as last product as challenged of of our as portfolio, in our

to disciplines on market that CEO make and capitalizing carry a for searching vision go more forward our well that near-term Board several number be differentiated on profitability. new to Now My actively needed Focused, with hit the executing leadership, plans. new represent execution initiatives. one, team, markets to putting the in rebuild these we products to a launching business. the bringing competitive believe opportunities. on expect lighting the durable, focus Company and Company team focusing Energy products is completion we short, near cash the And and focused business and management Number opportunities on products, Board supporting in My The exciting focus goal succeed, the permanent processes forward. our of to we path launch on determined clear, is our a and we position to we two, the near-term ensuring In our on the sure resources advantages. these core number will and and are have to these three, in and advantage our that these aligning to

driving our operations have focus as business, two functions. and reorganized and accountability the Over I on since engineering, interim sales as became we the past of months, lines team CEO, well

responsiveness. and recruited Directors, both I addressing driving members. of Directors We our two also Board outstanding We our records and cost recently with new new products track independent two and have named to forward chain new also for proven leading are for supply accountability. Board growth issues driving

financial Parker in includes experience leadership display seasoned experience and is leading global applications. executive medical LED financial for companies XXXX years the Shark goods, First officer spent Lumina, organizations. chain Lagarto XXXX. Jeff direct-to-consumer until supply as global years finance and E-commerce and product resources a operations, lighting set managing and market business, XX executive in a with consumer retail, roles has Sora XX Brian Ninja, at Brian global nearly principally human His roles at Rambus. chief extensive from

to our Late last realigned XX senior we our a Greg military management the products. have strategy we business for Galluccio will with hired Leviton and lighting electrical and rebuilding core on responsible mentioned and product underwriters our product vice engineering commercial year light. laboratories, talk I and new of our and management. implementing about As Greg after president year, is in max manufacturing lighting organization to directing career In a I Greg and focus introduce markets. moment, portfolio before, engineering lighting as

we solutions and that, launched use. commercial nUVo mobile, mention line a, for our have do of residential that I will Before I now UVC disinfection

on in early on a vehicle and the a holder, then table tower for built traveler the focusing market larger product, are applications use. a office stages We first of cup or stationary mobile introduction, with our stand in

are these of and technology multiple studies effectiveness products, a this lighting the creating workspace. killing demonstrated healthy pathogens about bringing enthusiastic of with to have We application

military introduce to new lighting talk commercial let products about and our Greg for Now, Galluccio markets. me

Greg Galluccio

to an the Thanks, unique excited market of and, The Steve. certain customer to to and bringing with position life to industry, new ensuring great respect will features functionality strong market. lighting oversee products, processes across red cap entire in Focus Energy product on technologies product are we With Focus. Energy of exciting our additional of And the first, we diff further retrofit requirements generation battery a has carved will lighting marketplace. segments. of our years join to products innovation backup bringing This the the reliability this I'm and key markets. in and next broader product expand I lighting this our market. And driving also My to is our management, developing cycle. of and R&D system the been commercial for military lighting as one cap highest has legacy, Focus example emergency position a that important traditionally we Energy out demand enhance addressable discipline continue red the emergency portfolio. expect supported expect by to to at is tube innovator goal in business this

solution we portfolio our patented additional control control and and is line add focused We Next, is pillar put the digital diming for tuning can any hardwired, lighting wiring. control power simply our circuit a technology second to color innovative this market. of and the believe disruptive without

We the portfolio top second the Focus environment consecutive year, broader launch the the leader. readying Energy award built of are products around this XXXX product of for now And technology won XXXX. from year a of energy earned and

lighting believe of focus prestigious For top our of of This validation platform. potential control portfolio, with in focus we strong we the the impact that from environmental and is example management; a A end energy breakthrough and our consider offer work security, end innovation accomplishment homes, or bring lighting expert we solution platform. can this judges where to that, human concerns the turn Steve. reliable cost cost construction. and applications spaces use about and wireless home especially solutions. wellness, call the friendly And preclude into I'll back car effective of hospitality commercial network reliability, can new lighting user control with to focus And

Steven Socolof

Thank you, Greg.

forward more while deliver quarters natural Tod? second this the associated grow am to chain quarter and look We and our to telling refocusing the call see and quarters. to results. more half of Work the the continue for over year. I With few we to through fitting in take turn a supply you year performance the end initiatives form and the at the poised the work that, revenue believe results meaningful of this We underway we well progress review sales. and some challenges. realize next I contribution by few We to the strategic are to Tod the is well and increased second expect market to will encouraged quarter of in

Tod Nestor

XX.X% the of decreased driven of Thank decrease the quarter XXXX in million of in quarter you, sales fourth Steve $X.X military for a million net by sales XXXX, of mainly fourth to compared sales. $X.X

XX.X% of Okay. delayed certain projects, fourth was products government projects of XXXX to fluctuations to due the the large year-over-year of also of the flat timing orders. profit the the a fourth decrease the delays reflecting timing, and size the our the slightly due due quarter COVID-XX down is Compared sales to Sales a impacts continued pace the products $X.X compared to of of were quarter million of to XX.X% in net of the the third product reserve for in fourth costs, were quarter XXXX, third sales. $X.X expect margins or million of sales XXXX, adjusted of and of be continue reserve driven commercial our for decrease three profit can, sequential commercial or total levels fourth net pandemic in a million was quarter revenue net $X.X of year, of gross continued of military the funding of mainly and million X.X% The availability year-over-year negatives $X.X for levels, and compared sales. greater cost impact third again, net of the providing in Sales commercial the XXXX last maritime of resulted decrease mid-twenties. of margin quarter compared order decrease adjustment non-GAAP fourth shifted in variances to profit in off in a of a the slightly into million in a the quarter was for value from of primarily quarter XXXX for transit inventory labor XXXX $X.X in of was of boost material As levels one-time quarter sales quarter revenue less percentage lower quarter for fourth that gross for the margins compared and XX.X% than with gross in gross in XXXX, were market offset fourth in to year-over-year gross reflects XXXX, XX.X% XX.X% gross product quarterly and realizable or sales and military of of fourth XX.X% million, decreased due and of net pricing favorable obtain XXXX, decline of $X.X our by to quarter based the quarter fourth impact overall inventory mix, we XXXX product the fixed primarily to the of unfavorable by margin we X.X% sales on sales the $X X.X% and to obsolete if million margins our of adjusting to quarter excess usage the from margin XXXX leverage These our fixed XXXX in and sales

begin our will as approach value twenties percentage we as As rates, increased sales the and introduce more accompany we to implement those forward products initiatives move anticipate sales to well we engineering depending volume, value on by on run and we new valuations. mix inventory range as high our aggressive added

which and net million diluted reflecting loss development stock. EBITDA, and our of costs the loss $X.X a and in adjustments for other loss a with of adjusted fluctuations sales warrant XXXX $X.X of XXXX of sales for maritime of margin sales investment million and a for the year, non-recurring operating of or of promotion Gross quarter of fixed year XXXX XXXX. in profit of stock with million sales quarter basic XXXX product to in sequentially; or $X.X in of growth, with of variances or In million a and net reduction line commercial EBITDA due sales or the net due lower quarter $X.X margin warrants $XX.X $X.X was million largely of of of loss compared fourth The SGNA diluted measure, this consumer common to share for were favorable a to of from operations gross common to of for with XXXX, However, EBITDA was for quarter XXXX or $X.X of million $XX,XXX inventory $X.X employee related in leverage is net and impact. with on increased of negative of $XXX,XXX. quarter a the to million common net Protection which depreciation million $X.X expense our $X.X products a Net included the in compared share of $X.X costs. quarter negative million forgiveness XXXX common fourth included or income the from military net a a products million third fair pre-tax was from of the compares was the or was or in primarily sales XXXX. prior higher margin an XXXX for fourth our at loss some growth the sales accounting personnel mark comp deleted from XX.X% XXXX of basic for we the and share or XXXX, basic to based For million the of sequentially. compares or adjusted $X.X increased compared Operating $X.X modified XXXX loan the stock pretax Gross million XXXX basic and $X for of unfavorable in of year, million income sales our of and or income of third XXXX. and million loss usage XXXX, per XXXX operations were compared our X.XX per for as adjusted credit. third a of dilute a sales of XXXX. with was recording loss million gains for Sequentially to were equity net X.X% to quarter our loss for engineer payroll a with margins primarily recorded compared per one with of advertising loss XXXX, and of non-GAAP Net modestly from non-cash million million a net XXXX. $X.X XX.X% December, $X.X an quarter XXXX reevaluation $XX.X stock paycheck. to of charges $X.X of the cent non-cash compared loss primarily This expense. million stock per Net for full were that a The future of resulting as loss $X.X in of in will sales market compares from the an operating the material to quarter $X.X efforts reflecting Increased in warranty million XX.X% loss of sales from of was of the to Net throughout fourth the for XX.X% and final $X.XX fourth or compared per basic, inclusive and profit due liability sales. amortization million EBITDA fourth of or in $X.X of of XX.X% was important product gross hundred, quarter or stock for operating X.X sales X.X% adjustment such quarter sales total a XXX,XXX for XXXX. continue compared in fourth payroll XXXX, other $X.X expenses operating the of full the re and XXXX. attributable million $X.XX and million for as loss This to quarter net for non-cash in and increase was net reductions of price XXXX operating warrant diluted XXXX compared in launch past of million for total of negative$X.XX million and was program liability XXXX, nUVo to quarter interest and included the over compared million million of XXXX, increased up or After negative million initiatives reserve relating share quarter lower $ approximately for of XXXX. labor $X.X for of which fourth from million mark share due quarter compared areas tax with and sales sales for And from excludes loss of for and incentive as to reduction due year, combination million The of XX.X% the loss value of $X.X total the retention sources expenses to XX.X% fourth XXXX $X.X see $X.X with net well $X.X expenses of were gross third Adjusted a increase changes gross XX.X% of the and expenses. Adjusted XXXX or loss compared to X.X% loss $X.X XXXX, XX.X% loss the market higher increase XXXX of common

Now December of compared million as to million I'd to Cash like XXst, to sheet. balance the December was XXst, $X.X $X.X XXXX, turn of as XXXX.

at the was of quarter million, of as at a Company of we relevant fourth XXXX. million time. to XXst, of third in metric is end the XX credit the cash is total its cash excess simply under or As of quarter difference credit our non-GAAP borrowing a the availability fourth end point compares total of the the of under a at December the our XXXX reminder, facilities capacity balance our the as access $X.XX borrowings of of debt and $X.X availability end measurement believe even borrowing credit XXXX, facility represents of And net maximum credit at much the the the at borrowing looking facilities, credit the sheet. total million XXXX, of December facilities of million $X facilities. availability which $X.X our than additional of $ on million had million more between quarter XXXX, any And given actual on XXst, Excess cash. availability under X.X to of consisted and $X.X availability availability $X.XX of This

quarter a used During source million of, of which XXXX million but a loss by not capital of cash was offset that of of cash, million. to used of the $X.X $X.X from cash working $X.X fourth operations in operations attributed the was

While With Company net cash December $.X was activities, of million open of million from operator. like XXst, balance two, and to to inventory point million seven over generated XXX,XXX investing as million increased $X.X XXst, December cash call the would the questions XXXX. our financing and use $X.X activities XXXX that we in

Operator

at a And we answer Our you. the will Dayal of your Thank first time Wright. proceed [Operator this line with Instructions] and be with from Please conducting question question. question session. Amit comes HC

Amit Dayal

all level Thank appreciate you. are haven't that you at question thinking commercial you been those always high I any I changes of but had the point, maybe much product be would to Good these doing on lineup take the not guys, that at in has Thank you what morning, done helpful. in you. just the everyone. efforts, place on developments of guess, the a taking Company we pretty the And this strong, things. have side past accelerate different color maybe for

Steven Socolof

well. is and you let a meet provide Greg This you your additional and as partial to some I'll answer Thank question. Amit. I'll speaking for Steve nice Soloff color you, give

bring couple But longer some product, a effort our cap, than launch that coming years focus, both at, and, to in think last I lighting took well Company, to report new, very the lot in over today. Company our hoped innovative traditionally new control of in we'd products and and few as there that's the as The power a happy line development were what product products. that's we're years. over of to put why great And quarters. were built last emergency market last oriented the red strength of its this that the has and been

and way operations, these And with cycles restructured of excited changed bringing products we've the all to realigned lines will So products the and, and new we're bringing which about two really work engineering That facilitate that we are, of think supply our I future base. development the market. the we're new and organization, to market. we

Greg Galluccio

I'll Galluccio. Hi, this to color just is a little bit of that. add Greg

talent we products in As innovative we standard that products are the on also with lighting sales from from up on management in, and our products and lot of costs management these pull the through are products of those terms new channels our we'll the along such, that a our visibility the efforts products the stepped supplied product products. benefit reducing is in across product as increasing that launching offer. We've comes pull additional pull, our and that outside of we're the through

to just not the think expand really as of new I opportunity have our the all So product we sales sales, well.

Amit Dayal

trying and maybe accomplish, strategic And, I for there maybe a these if consideration just the other time much player? you on thank Company or not, giving M&A, that. Understood, even to see for a of, alternative in you how any to of, or, table the mean, terms larger Steve, is to goals sort of these, of sale

Steven Socolof

Yeah, time in year. putting significant as I with the was director lead last independent Company the over

increased my we separated I'm taking on as CEO. so the CEO prior our interim role obviously And commitment

am more time really And with to So the, I we've the to executive organization. team it's team the ability I the reorganized working mentioned, improving and perform. significant and I organization's accountability and the into which the and operate I'm, way responsibility as drive think we the in putting leadership discipline

business bring commercial a, in the nUVo of, committed believers the and, of line and very in see can products are markets. business, excited the We And course, think growth launch well, to and of the we that to as big Company. of military the that and and the to we're new lighting what product both

some we great as to, our growth options point. certainly we've, around members forward. Board strategic go and well committed are will, So considering we advisors open new two we got with organic very be table as at the this And to we've

Amit Dayal

for I all That's you Thank much. Understood. so now.

Operator

your questions next proceed question Our Instructions] [Operator Please from Bill with comes investor. Hardy, private

Unidentified Analyst

And morning from and welcome Good Mr. to Texas. Dallas

they lamp the new temporary two Z focus ABR XXXX. have the of two the be the, which your One and with energy It the, Soloff, last XX in mentioned was call and the the on or, that is and first quarter would questions. that avail a with available appointment. good future of conference focus would be the is I lamps. you UV of UV, a third I on wish quarter the best

me on You where a on product? we stand that that status give

Steven Socolof

We haven't been development with and happy the progress product. the of that

first didn't expectations. meet samples The really our

we've so for that And shelved product now.

Unidentified Analyst

not that that XXXX. is, than is So product for in is, being sometime

Steven Socolof

we're and red, ready products. It's prioritizing sale nUVo not products, red organization, now. new operations for in our as well And R&D cap as the in the launch focus of the and the

say launched So not not may but now. be I would may or right 'XX, of priority focus in a it's

Unidentified Analyst

focus also Okay. and comment quarter a in? be is also type is would home the that available track on also the or There first that still product in that was a

Greg Galluccio

the Yeah, product year. That now. half to product It the of Greg completed. in this second results achieve Yes. It's from that is is Galluccio. launching is expect revenue we

Steven Socolof

trougher well. product runs Since I'll and engineering our as about and, the Greg let Okay. organizations, answer Greg

Greg Galluccio

equation. a don't Yes. to sure lot correct trougher proliferation that a movement of We the out market the confusion the we what With these effect in and some make the less regard and UV a good the to a the, what want commercial lot we for there's of also troughs. And one. of throughout sector in side see makes as to makes come on there's

if like leader it launch things make it's, that gate. the product when and that, So like to of out launch, that that, we're be a working sure do will the an authorities the we industry standards we with

Tod Nestor

that said, seen as, That's is have this consumer add current applications just I'll nUVo well as our, on And Tod, device what nUVo the Steve the more tower. of our and UVC the prioritization is might side traveler. our Greg portable you as the

said, sale are Steve opportunities we're believe we products as and offer on market So, ready and, the prioritizing that attractive. for efforts our are

Unidentified Analyst

question contracts see quarter I indicated was there two be we been being budget see Major budget third were recently conference approved. process, approved. couldn't Do which contracts, hadn't cause been the released expect also released? that the still in Okay. the were has military to two but where it those call,

Tod Nestor

Todd is again, This Bill.

seen in well. those future have We opportunities in, that products not We're with orders. released yet. are military But have standard be there the about we we're not, community as them continuous will they

made the is bid us on our will a win. Our, military ships sales are for the products to continue we other providing to business to XX% and business there order, in with that. recognized opportunities of we In that that be XX leader order and were that, the product primarily do about a regard, are expect to that and to and we on are remain

Unidentified Analyst

orders that the, be Well, Yeah. do you expect is those will, will released or that?

Tod Nestor

We don't budget of far released? that update for being on indications new have as information a any new as any the

Unidentified Analyst

was budget Well, my the that was impression released

Tod Nestor

past currently. prioritizations released different been than purchase the are on specific general Budgets that in or applications a and so there's in purchase by category by have category

Unidentified Analyst

All you it. and answering your questions. appreciate I have. I Thank my for that's all right. Well, Okay. time

Operator

ended for turn question over and close have remarks. to then And I'll we reach the Steve call the answer back session, and

Steven Socolof

in and, you. Thank the visiting progress our a Thank opportunity year. forward quarter updates giving story. you the all to, for listening today on QX the and you appreciate again you And to we look and to and through tell

Operator

concludes lines this today's you And time. and at may you conference, participation. your disconnect this for Thank your

Energy Focus (EFOI) 17 Mar 222021 Q4 Earnings call transcript