EFOI - Earnings call transcript Q1 2022

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Operator

Greetings, and welcome to the Energy Focus First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief 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 Mass of Hayden IR. Brett. you, Thank

begin. You may

Brett Maas

operator, and you, morning, good Thank everyone.

is me and and Chairman the Officer. Tod today on call Stephen Financial Interim Chief Chief Officer Socolof, Operating Joining Nestor, and Chief Executive Officer;

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

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

Stephen Socolof

you, Thank everyone. morning, Brett. Good

an our aligning our products on myself business marketplace, streamlining our expenses bringing our to energy-focused initiatives I the burn. Just through opportunities, around and to a near-term execution about few differentiated value-added improve weeks and reduce with team spoke you cash introduced emphasis to ago more the to

the made progress year. financial for half improved company in positioning we these have spoke, of the since this in second results We last areas of each

as on call, our last sales and of the the well functions. the company on engineering accountability we lines drive business, focus on and as operations reorganized discussed As to

market, on with has RedCap where building the products. such as Energy reputation in are Focus our We areas an established

on I to with and track we expertise encouraged strategic sales marketing industrial effort aligned near-term in toward product team for we new and and resources significant for results, investments. fully where of believe resolve can leverage are displayed focus military, We plans without and see am solutions all execution. with and commercial improved and goal. our our the on rationale reorganization A controls that believe are was same our lighting our core the key innovative, introductions additional has our

to improve quality. We management, have improving costs, of initiatives put and inventory goal with management, in chain place reducing engineering supply improving and the

investing sales markets. strategic are commercial We the to our sales, including To both on team a in simultaneously in execution focused this our investments, military making are target direct market. few government us help and in better we makers end, improving military decision

are to innovative job improve simply need we we market We we're our products in are This not gross Current Board stepped profit to do will product its It also the the a in margins. not critical reporting our which we're market, execution. great believe why represent Energy bringing that We supply drive with good support acceptable. of trough don't new better today. much drive revenue recover. Current levels quality commercial made levels a We and with is made. satisfied misunderstand revenue from successfully. implementing, to higher the sales some improved to to Focus chain changes approach need results, Please and we the and is upgrades execution. products

leveraging has integrated marketplace. to customers. our battery are long-standing and developing position that of we better lighting the competitive with we and generation we the building our one will Extending expect our it sales this advantages support RedCap enhance innovative will are products, generation, traditionally and differentiate highest product next differentiation, next line. where the We The property teams, reputation current features our our additional serve to backup to this also in continue expect include of in retrofit been our also intellectual products, market. our we This have demand emergency

We simplify are costs. products, line of to reduce also refreshing two our traditional and

customer We inventory expect improve better availability, this refresh enable satisfaction, margins. and and to management improve

This digital preclude into area to any commercial involves and of our concerns the solution our market, color reliability cost wireless reliable disruptive applications where dimming line tuning solutions. We use circuit offering about power believe innovation, technology. and this lighting without network of hardwired, Our patented or major a focused is security, control for bringing wiring. control control, enables control additional lighting

In addition, to line human construction. user-friendly product offers new spaces and homes, this wellness cost-effective and lighting hospitality home especially

around of We this built third launch quarter products expect early to technology, broader this quarter of a portfolio late and year. second

disinfection for the and commercial at last residential UVC use, of quarter were introduced solutions, fourth end year. Our nUVo mobile of line

category First and year, quarter brand air we a seen the initial and this new UVC disinfectors traction building of new both from sales have are ground up.

The demonstrated these additional in healthier opportunities the to help Phil pathogens the neutralizing of spaces effectiveness for works. positive Show, We've following living with recent promotion working. create our We products, interest Dr. seen media on and have

lowest Tod, air cost brand efforts financial overall call the our performance lower to to offers which on our With compared for turn and the ownership competitors. Traveler, will Tod? purifier I the quarter. of cost that, a to We have review entry building nUVo focused its

Tod Nestor

XXXX. delayed $X.X to decreased Thank XXXX on Net new cycle to you, the the are factors of for the mainly business Navy sales maintenance for military due maritime unit, XX.X% of sales. XXXX, a award net sales Steve. were funding sales including quarter Sales million total projects, or quarter million compared the sales Commercial our $X.X the sequentially to XXXX, $X.X quarter of sales to many the The due XX% of slightly of were quarter to government fourth related quarter commercial timing net of products, products. product of below US compared dependent of XXXX, first When in a of first million ship in were quarter $XXX,XXX including and funding, compared schedules basis. for our sales construction as $X.X vessel the first and on schedules. of to military first sequential million down in decrease up prior the

the new As due Steve including position Sales products quarter relationships compared in sales and market. with projects are to a on was Gross quarter our military agency to commercial the our introduction XXXX decreased execution of $XX,XXX mentioned, positive expansion improve orders. we products, timing mainly focused in the continued delayed XXXX. and continued delays profit negative of the of first funding of $XXX,XXX for of the certain the government first for of of

revenue, decline mix, lower lines on ability costs. and to impact we product drive value expected are variable military we decreased costs was manufacturing to reductions XXXX. gross quarter by in The our leverage sales in negative of from focus in of margin The costs. the percentage in freight maritime the customers. limited impact freight X.X% a margin the less XX% first profit was our levels, very compete, gross our quarter of market the XXXX, year-over-year pass-through primarily due is engineering throughout compared In margin higher primarily As the R&D sales to first in product our of to driven to costs fixed sales, of markets price-sensitive and higher

begun costs to per have we a on lower unit Additionally, designed initiatives our basis. freight

seeing will half the in benefits of are this inventory, the year. second our We and our the initial now benefiting through flow consolidated results

beginning for gross of the again of gross our in reducing obsolete non-GAAP to quarterly initiatives. be on our profit a extension lease $X.X new XXXX, year. at of a number on for quarter approximately can signed excess July mid-XXs. our work levels unturned, fixed to and first first in in by are reduction we Leaving costs rent of compared square the million million, stone margins $XXX,XXX recently adjusted annually also continue the Adjusting to no a overall costs resulted sales We reserve we gross greater XX.X% $X if we value on this in Based expect net margins inventory annual realizable cost and obtain in-transit to of of than footage margins hard $XXX,XXX XXXX. initially X% to quarter levels positive

and adjusted gross a such a will from of products XXXX. and new combination $X.XX charges management quarter quarter the compared Operating compared the move product amortization, sales the due operations run initiatives in expense, of compensation a of those we we to XXXX. common for the or first measure, were development on the which first the operating in loss $X.XX of $X XXXX the was gain prior non-recurring employees. in introduce and volume interest loss the depending negative rates, and decrease in The of was mix expenses lower depreciation was XXXX for engineering million inventory or of to income, first furloughing the more increased to The to non-GAAP to value EBITDA $X.X periods million, cost efforts the forward stock of valuations. approach XXXX, EBITDA, an on XXXX, from of of to other million of of reductions and million, $X.X per million high compared in incentive net first of the we sources sales. as to and excludes loss attributable up we Net continued quarter increased $X.X of aggressive share loans of was first PPP some begin first as per million first a first $X.X $X.X of stock as of is Loss loss quarter anticipate in million on As implement sales $X.X forgiveness margin range, of XXXX quarter negative as common lower SG&A loss $X.X percentage share our with our quarter a compared XXXX. of million primarily loss expenses XXXX. and/or Adjusted of a first and well accompany for with due quarter quarter XXs quarter and tight stock-based

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

credit of availability facilities. the its which of of December million of of $X.X XXXX, as cash borrowing XX company XX availability million availability March to total of had XXXX. million of consisted This As total and compares $X.X under $X.X additional $XXX,XXX

the time even our and measurement facilities debt our any access a actual simply net a in facilities looking total cash difference on relevant is given point at Excess borrowing to facilities. credit between availability under maximum the borrowing borrowings the represents or credit credit of sheet. the our on balance at capacity the to a balance reminder, is cash As of metric availability and more we believe non-GAAP much

used During cash first $X.X million. quarter the of XXXX, operations in was

$X.X and other we We the believe $X this working inventory XXXX. decreased Our of expenses. XX gross clearance $X liquidity this sell as inventory addition $X.X working bolster discounts inventory. after in opportunities. March reserved we the at that balance Subsequent net obsolete To of million been fully million monetize to and December to has completed represents net end are all to approximately of in any liquidators original the end in proceeds quarter, approximately with against. to of in balance several XXXX, further previously million XX Nearly obsolete we item inventory are clearance reserved slightly million bridge million a and $X.X financing raising proceeds issue of from

X-K earnings at Energy Finally, as the may this final and CFO COO will you recent the while Focus. given be know, call announcement, my

throughout began would but First our during so being business. every impact Energy for dedicated to because manufacture we The to in showed particular committed and Energy at to Focus, pandemic. employees like Focus do needed up so to since thank my products tenure and pandemic the our still work day I team hard-working the

very to unique already in The doubt sells as and to like our projects Steve, and quality durable Energy us come, Directors, strong company partnerships our and of to and thank for extremely with EnFocus Focus. the US defined and wish company form Focus's Focus the be larger quality that opportunity well would I as continuing yet RedCap high brand. long are that like who consistent challenges, I entire portions to military, the with attention move to to finally, the white time. the And Energy the the particularly supporters customers, through new supply while stuck and the the Energy Focus products I have continued the and as given nUVo, Second, strong has very forward to has Jim, of remains light success same Board gaining pandemic high-quality, they created chain leadership of and for team, LEDs no tremendous Greg, drive of are a continuing Energy would technology with of product performance committing

As market a penetration you distribution driving everyone earmarks improved the company is the performance strengthen me and proprietary for capabilities, and innovative enhances gain higher the its as the selling it and providing and achieve With for honor special success. turn usage. and a necessary ingredients Thank technologies for all Steve to comments. have part people, back the will who lot to be call to the privilege that group of of I of closing

Stephen Socolof

smooth weeks. process We few best to the luck for have I transition thank contributions you for are grateful of a the next to in want also Tod. you to endeavor. the you, next And Focus. Thank over wish you Energy facilitate made agreeing your we

we results execution to reduce and costs. changes process to The made we've the are not I begun with the we recognized Board sales address As be that reporting. are said satisfied needed and

to lot beginning. this is We have a of and do process work just

Tod Energy addresses As mentioned, that unique Focus needs. real-world provides technology

Our will highlight further existing with our trends competitive our well industry line and aligned product refresh product key of lines advantages. is

of the focused like we and and half open We questions. functions sales, engineering Operator? this execution call expect improved the the in we'd are on to squarely that results to year. within With marketing second

Operator

you. Thank Instructions] [Operator

Our question Wainright. Amit H.C. proceed first from Dayal with with Please question. your is

Amit Dayal

for morning, question. Good taking you. Thank everyone. my Thanks

working at those kind few on line to I levels? do efforts. what mentioned gross revenue levels. should And up be Tod have about of could are pick with, hit mid-XX% you sort we But in how visibility cost-cutting think you the Just next now revenues expectations some margin down to know begin if the you quarters? of right

Tod Nestor

this Amit, I'll take is one. Tod. that

cost So we've starting the getting right we're so improved the portion noted to headwinds of will July will help costs. now reduced will -- some nice X, freight And actually the we cost We're The that battling unit. solutions with working that our and per margins. expecting that the fixed that we also are that sold, levels as we're of assist. goods also on significantly sales sales --

developed reduces don't there each solutions freight on to our fold XXx probably per Xx that chain over down I which increases units to get per supply Our have other year and to folks you you more have follow container cost in unit the heard costs, in know creative literally companies on methodologies a get working from unit. been past we're basis.

to as and past. -- our kind as we've we in said, the return So we expect those of sales return the to seen levels

Amit Dayal

Understood.

So, these mostly right maybe mix going now? chain/inflationary some it's or you supply mean levels? pressures of revenue on trends And are a inflationary seeing I are

Tod Nestor

that cost significant those. necessarily side, per -- making portfolio entire we fixed So the efforts a side freight noted reduce across address we are on as working on definitely much we're our to not efforts the not we've -- have significant value other also maybe cost parts the the industries. and as But engineering to unit. It's as inflation. we taking It's some seen of -- in

Stephen Socolof

just have a would cost. that, of level I Yes. add reasonable we fixed

the level absorb so, as much cost low like. doesn't fixed sales as And we'd reporting

P&L. So fixed just expect of our said, as some will footprint in significant also revenue cost improvements help. which we've half, our things about that And real takes by reducing out like, estate we done Tod

product sales commercial in improve -- we line, reduce our inventory about on the to sales. I our On and also, engineering that's terms cost. margin see simplification management than of to higher And talked our a of value military tend two going

the projects military waiting for you couple side. been of as So large on a know, we've

side what most come the some address are business. Todd saw we're of as to quarter. management the And chain fruition, first the improved margins costs supply of as freight should component management, on see to from probably the And inflationary reflected, So those. inventory better that we those in working we

So we to on have a lot margins time. over going improve

Amit Dayal

Understood.

where goods they guys maybe to costs little of on of sort you initiatives? these down of or I line, improvements come assume because the start but seeing maybe bit, operating should stay So a are cost

Stephen Socolof

cost out operating date, but now. operating bit very on right taken have we some to of initiatives scrutinizing We've a costs focused Yes. little

margin more So cost some to below do expect out the we take line. operating the of

Amit Dayal

balance Understood. everyone how positioned. how liquidity And is Tod is I et you from that sort wanted you're to sheet the then, just cetera? that a sheet from But bit Just in understand your trying know, reassure to perspective, your balance a positioning little overhang is about an of contracts, terms perspective. of of win to ability

Tod Nestor

fair good a question. It's it's a --

customer-facing feedback balance an or our our We that team have had sales. and/or indication sheet impacting back folks any from sales not is

So of relationships. direct and we've agency got a good set

expanding haven't we're anyone -- on balance had fact any holding I there. sheet And I In product. is that see buying feedback back

Amit Dayal

in lighting -- between disinfectant what pipeline give backlog, in offerings? is And right question, last if products color Understood. the your guess, any the us of on sort I you now could or any pipeline the the -- that? What is and

Stephen Socolof

of new terms you You backlog, about introduction? or and pipeline mean current talking in are product

Amit Dayal

Yes. from offerings. legacy No backlog current sort and your of pipeline

Stephen Socolof

get to ship we tend orders. We as

we have of pipeline. don't a good a So carry We backlog. lot

few of have out timed We over that couple a are quarters. projects a

not some a as receive So do I'd we we as of ship have tend significant to orders. do backlog we amount but backlog, say

Amit Dayal

questions my you are so much for Those Okay. Thank now. guys.

Operator

have There you. any you. for Thank at management one one turn in no queue. question the floor time this to over [Operator we to I'd further are Thank Instructions] the -- questions back like moment,

Please Hardy from is proceed question. Bill Investor. question [ph], Private next Our with your

Unidentified Analyst

home/office products that I on locked more the in. questions were hear I response to My availability? was its question Hello? one is Suncycle the more my on release, focused Could you didn't or happen. which actual almost comment for I out. the committed morning. didn't which the developed Good the quarter first was thought phone. Yes. product, intended And use. are less and on got for

Tod Nestor

sorry. Hey, It’s yeah. Hey, Tod. Bill

Unidentified Analyst

no. That’s No, okay.

Tod Nestor

the and said did that's out So I script that third the in apologize late we specific of I market. don't the state quarter, roll first the the as script we to quarter commitments the we is are but expected expectation -- in early into remember second

timing product that's have script. So at that's now took development we goes time the it lighting and looking with the and in the right products what that testing the we're

expect hit So you that frame. market see to in should the time

Unidentified Analyst

product? then quarter, second that early for late So third quarter

Tod Nestor

Yeah.

it call the we line. So EnFocus it's

of sort it's expectations and control and power addressing trying as the you're are where well. If home the line said technology to we between two what your match the market

Unidentified Analyst

was as Well, it you significant last for the award And it product as so other to I say Right. get called -- did Suncycle -- pardon? question a year. in an July

Tod Nestor

No now. It's It's platform trademark the sorry I'm EnFocus. name changes. the on

Unidentified Analyst

All right.

was the now? is tower unit disinfection scheduled disinfected then was other it The first it late was out your first line, that for quarter. the What's -- of on and question which in It again taken release on appeared status the in availability quarter. product of that

Stephen Socolof

That in put just it the quality out didn't we product, it that want to with came issues in field. some

those electronic boards. issues with so And the are

been might has you challenged the now. supply as so, know, a And some electronics chain for time

So to products those working we we are to hard up in new bring boards to ready sell where them. are to get

Unidentified Analyst

the been just in solved? ask let other And So words actually now? it's me unit -- reliable problem question is the this -- has

Stephen Socolof

boards to come We're in for test. waiting to new

testing. that done haven't we So

Unidentified Analyst

Okay.

haven't reliability of... verified you So the

Stephen Socolof

that the boards supply a of We came initial units with with. problem in had the set

we're those replacement rework on some And a test. waiting worked in set to so come for boards we've to of and through

Tod Nestor

they shipment. in ship we've had mentioned to we and tested The few validated launched Traveler, call, those what approaches to success of we with to did Traveler's were Phil the and and and and some the prior the out marketing and just available other there said product. a say But on will Steve Show Dr. that I build as that

Unidentified Analyst

your I read. guess on have its comments website. on have I seven Yeah. you and using acceptability

are Okay. Thank much we sales Sure you. now. hope than Thank much. you they get stronger coming very

Stephen Socolof

you. Thank

Operator

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

Stephen Socolof

I'll your of attention for just support. say thank and you all

for we through performance couple as bottom of over going and we've should on line a also both as we weeks. to few we the see to certainly the suggested, line over And doing lot those call the do. earnings improving got said, Bill continue look we'll top again forward we today's his support will I next meantime, our years. work and We've forward. And As thank of Tod business you. last Thank transition go us results and the And forward. in seeing been

Operator

concludes This you. Thank today's conference.

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

Energy Focus (EFOI) 12 May 222022 Q1 Earnings call transcript