Energy Focus, Inc. (NASDAQ:EFOI), a leader in advanced LED lighting
technologies, today announced financial results for its first
quarter of the fiscal year 2019.
First Quarter 2019 Highlights:
- Net sales decreased 31.8 percent for the three months ended
March 31, 2019 as compared to the three months ended March 31,
2018, driven by a 51.3 percent decrease in military maritime sales
period over period.
- At March 31, 2019, we had $3.9 million in cash and cash
equivalents and a total of $3.4 million in debt, including
approximately $1.7 million in funding from the issuance of
subordinated convertible notes.
- During the first quarter of 2019, we took additional actions to
reduce our operating expenses to be more commensurate with our
sales volumes. These actions resulted in additional restructuring
charges of $0.1 million for severance and related benefits charges
during the first quarter of 2019.
“Since the leadership transition at the beginning of the second
quarter of 2019, we have reorganized and realigned the company to
achieve two primary goals: best serve our customers, and develop
humanly, environmentally and financially impactful high-quality LED
lighting products and solutions,” said James Tu, Chairman and CEO
of Energy Focus Inc. “We have eliminated unnecessary overhead cost,
strengthened support infrastructure for our customers, brought on
board outstanding and exciting new leadership talents, sharpened
our R&D and engineering focus for customer-centric innovations,
and started to expand our business development team across the
country. We expect these continuing initiatives and efforts to
bring the company back on track to become a globally leading and
most trusted LED lighting company, and to revitalize and accelerate
our growth momentum in the quarters ahead.”
First Quarter 2019 Financial Results:
Net sales were $3.2 million for the first quarter of 2019 as
compared to the first quarter of 2018 net sales of $4.7 million.
Net sales from commercial products were $2.0 million, down from
$2.2 million in the first quarter of 2018 reflecting fluctuations
in the timing, pace, and size of commercial projects. Net sales
from military maritime products were $1.2 million, down from $2.5
million in the first quarter reflecting the timing and fulfillment
of U.S. Navy awards during the fourth quarter of 2017 and the first
quarter of 2018.
Gross profit was $98 thousand, or 3.1% of net sales, for the
first quarter of 2019, including excess and obsolete, and related
reserves of $(0.8) million that impacted gross profit by 26.3
percentage points. This compares with gross profit of $0.8 million,
or 18% of net sales in the first quarter of 2018.
Operating loss was ($2.8) million for the first quarter. This
compares with an operating loss of ($2.4) million in the first
quarter of 2018.
Net loss was ($2.9) million for the first quarter, compared with
($2.4) million in the first quarter of 2018. Net loss per share for
the first quarter was ($0.24), compared with ($0.20) in the first
quarter of 2018.
Adjusted EBITDA, as defined under “Non-GAAP Measures” below, was
a loss of ($2.0) million, compared with ($2.1) million in the first
quarter of 2018.
Cash and cash equivalents were $3.9 million as of March 31,
2019, which included $1.7 million in borrowings under our $5.0
million revolving credit facility. This compares with $10.2
million, at the end of the first quarter of 2018.
Strategic Financing and Leadership Changes
On February 21, 2019, pursuant to an agreement entered into with
an investor group, which holds a 17.6% ownership position in the
Company, that had filed a Schedule 13D with the Securities and
Exchange Commission on November 30, 2018, the Company appointed
Geraldine McManus and Jennifer Cheng to join the board of
directors. On March 29, 2019, the Company closed strategic
financing from the 13D investors. The financing provided gross
proceeds to the Company of approximately $1.7 million in exchange
for subordinated convertible promissory notes that will
automatically convert into shares of Series A Preferred Stock at
the conversion rate on the first business day following the date
that the Company’s stockholders approve the transactions
contemplated by the Notes, including (a) the issuance of shares of
Common Stock upon conversion of the shares of Series A Preferred
Stock in excess of the number of shares of Common Stock permitted
by NASDAQ Marketplace Rules, and (b) the increase in the number of
authorized and available shares of Series A Preferred Stock
pursuant to the Company’s Certificate of Incorporation, as
amended.
In connection with the financing, James Tu joined our board of
directors on April 1, 2019 and become our Chief Executive Officer
on April 2, 2019.
On May 20, 2019, the Company appointed Mr. Steve Socolof to join
the board of directors. In addition, effective July 1, 2019, Tod
Nestor joined the Company as President, Chief Financial Officer,
and Secretary.
Strategic Alternatives Review
Prior to, and in parallel with, the discussions with the 13D
investor group, the Company’s board of directors retained
Craig-Hallum Capital Group to act as its financial advisor to
assist in conducting a thorough process to evaluate its strategic
alternatives aimed at maximizing shareholder value, including the
possible sale of some or all of the Company. In connection with
this process, the board of directors determined that strategic
financing was the most favorable option for the Company and its
stockholders at this time.
In connection with the completion of this strategic process, the
Company’s Chairman of the Board, Chief Executive Officer and
President, Ted Tewksbury, and Jerry Turin, the Company’s Chief
Financial Officer, resigned from all positions, in each case,
effective following the Company’s filing of its Annual Report on
Form 10-K. Also, in connection with the completion of this process,
and under the terms of the financing, board members, Ron Black,
Marc Eisenberg, and Satish Rishi resigned at the same time.
Cost Reduction Actions
During the first quarter of fiscal 2019, the Company implemented
phased actions to reduce costs to minimize cash usage while
continuing to pursue strategic alternatives as described above.
Reductions have been limited to an initial phase in order to not
diminish from the potential value of divestitures under the
strategic review, or conflict with potential strategies subsequent
to the financing.
Our initial actions included the elimination of certain
positions, restructuring of the sales organization and incentive
plan, flattening of the senior management team, additional
operational streamlining, management compensation reductions, and
outsourcing of certain functions including warehousing and
marketing. In connection with these actions, we recorded severance
and related benefits charges of $0.1 million during the three
months ended March 31, 2019. Following the executive transition
that occurred on April 1, 2019, we expect to incur additional
restructuring charges totaling approximately $0.1 million during
the second quarter of 2019. These additional restructuring charges
primarily relate to severance and related benefits charges as a
result of eliminating nine positions, as well as, costs associated
with closing our offices in San Jose, California and Taipei,
Taiwan.
Earnings Conference Call:
We plan to resume our quarterly earnings conference calls after
we announce our second quarter 2019 earnings.
Forward Looking Statements:
Forward-looking statements in this release are made pursuant to
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Generally, these statements can be identified
by the use of words such as “believes,” “estimates,” “anticipates,”
“expects,” “seeks,” “projects,” “intends,” “plans,” “may,” “will,”
“should,” “could,” “would” and similar expressions intended to
identify forward-looking statements, although not all
forward-looking statements contain these identifying words.
These forward-looking statements include all matters that are not
historical facts and include statements regarding our current
expectations concerning, among other things, our results of
operations, financial condition, liquidity, prospects, growth,
strategies, capital expenditures and the industry in which we
operate. By their nature, forward-looking statements involve risks
and uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future. Although we
base these forward-looking statements on assumptions that we
believe are reasonable when made, we caution you that
forward-looking statements are not guarantees of future performance
and that our actual results of operations, financial condition and
liquidity, and industry developments may differ materially from
statements made in or suggested by the forward-looking statements
contained in this release. We believe that important factors that
could cause our actual results to differ materially from
forward-looking statements include, but are not limited to: (i) our
need for additional financing in the near term to continue our
operations; (ii) our ability to continue as a going concern for a
reasonable period of time; (iii) our ability to implement plans to
increase sales and control expenses; (iv) transitions in the
Company’s leadership, (v) our reliance on a limited number of
customers for a significant portion of our revenue, and our ability
to maintain or grow such sales levels; (vi) our ability to increase
demand in our targeted markets and to manage sales cycles that are
difficult to predict and may span several quarters; (vii) the
timing of large customer orders, significant expenses and
fluctuations between demand and capacity as we invest in growth
opportunities; (viii) our ability to compete effectively against
companies with lower cost structures or greater resources, or more
rapid development efforts, and new competitors in our target
markets; our ability to successfully scale our network of sales
representatives, agents, and distributors to match the sales reach
of larger, established competitors; (ix) market acceptance of LED
lighting technology; (x) our ability to, remediate our material
weakness, maintain effective internal controls and otherwise comply
with our obligations as a public company and under Nasdaq listing
standards; (xi) our ability to attract and retain qualified
personnel, and to do so in a timely manner; (xii) the impact of any
type of legal inquiry, claim, or dispute; (xiii) general economic
conditions in the United States and in other markets in which we
operate or secure products; (xiv) our dependence on military
maritime customers and on the levels of government funding
available to such customers, as well as the funding resources of
our other customers in the public sector and commercial markets;
(xv) our reliance on a limited number of third-party suppliers, our
ability to obtain critical components and finished products from
such suppliers on acceptable terms, and the impact of our
fluctuating demand on the stability of such suppliers; our ability
to timely and efficiently transport products from our third-party
suppliers to our facility by ocean marine channels; (xvi) our
ability to respond to new lighting technologies and market trends,
and fulfill our warranty obligations with safe and reliable
products; (xvii) any delays we may encounter in making new products
available or fulfilling customer specifications; (xviii) any flaws
or defects in our products or in the manner in which they are used
or installed; (xix) our ability to protect our intellectual
property rights and other confidential information, and manage
infringement claims by others; (xx) our compliance with government
contracting laws and regulations, through both direct and indirect
sale channels, as well as other laws, such as those relating to the
environment and health and safety; and (xxi) risks inherent in
international markets, such as economic and political uncertainty,
changing regulatory and tax requirements and currency fluctuations,
including tariffs and other potential barriers to international
trade.
About Energy Focus
Energy Focus is an industry-leading innovator of
energy-efficient LED lighting technologies. As the creator of the
first flicker-free LED products on the U.S. market, Energy Focus
products provide extensive energy and maintenance savings, and
aesthetics, safety, health and sustainability benefits over
conventional lighting. Our customers include U.S. and foreign
navies, U.S. federal, state and local governments, healthcare and
educational institutions, as well as Fortune 500 companies. Energy
Focus is headquartered in Solon, Ohio. For more information, visit
our website at www.energyfocus.com
Media Contact:Ashley TolfoEnergy Focus,
Inc.(800) 327-7877atolfo@energyfocus.com
Investor Contacts:Satya ChillaraDarrow
Associates, Inc.(510) 396-2776ir@energyfocus.com
Condensed Consolidated Balance
Sheets(in thousands)
|
March 31, |
|
December 31, |
|
2019 |
|
2018 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
3,861 |
|
|
$ |
6,335 |
|
Trade accounts receivable, less allowances of $59 and $33,
respectively |
2,386 |
|
|
2,201 |
|
Inventories, net |
8,251 |
|
|
8,058 |
|
Prepaid and other current assets |
573 |
|
|
1,094 |
|
Total current assets |
15,071 |
|
|
17,688 |
|
|
|
|
|
Property and equipment, net |
510 |
|
|
610 |
|
Operating lease, right-of-use asset |
1,682 |
|
|
— |
|
Restructured |
563 |
|
|
— |
|
Other assets |
213 |
|
|
194 |
|
Total assets |
$ |
18,039 |
|
|
$ |
18,492 |
|
|
|
|
|
LIABILITIES |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
2,255 |
|
|
$ |
3,606 |
|
Accrued liabilities |
25 |
|
|
73 |
|
Accrued payroll and related benefits |
346 |
|
|
435 |
|
Accrued severance |
215 |
|
|
188 |
|
Accrued legal and professional fees |
117 |
|
|
160 |
|
Accrued sales commissions |
115 |
|
|
115 |
|
Accrued restructuring - short-term |
36 |
|
|
156 |
|
Accrued warranty reserve |
352 |
|
|
258 |
|
Deferred revenue |
13 |
|
|
30 |
|
Operating lease liabilities |
521 |
|
|
— |
|
Restructured lease liabilities |
400 |
|
|
— |
|
Finance lease liabilities |
3 |
|
|
— |
|
Credit line borrowings |
1,757 |
|
|
2,219 |
|
Total current liabilities |
7,815 |
|
|
7,240 |
|
|
|
|
|
Other liabilities |
30 |
|
|
200 |
|
Operating lease liabilities |
1,346 |
|
|
— |
|
Restructured lease liabilities |
410 |
|
|
— |
|
Finance lease liabilities |
5 |
|
|
— |
|
Total liabilities |
9,606 |
|
|
7,440 |
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
Preferred stock, par value $0.0001 per share: |
|
|
|
Authorized: 2,000,000 shares in 2019 and 2018 |
|
|
|
Issued and outstanding: no shares in 2019 and 2018 |
— |
|
|
— |
|
Common stock, par value $0.0001 per share: |
|
|
|
Authorized: 30,000,000 shares in 2019 and 2018 |
|
|
|
Issued and outstanding: 12,090,695 at March 31, 2019 and 11,868,896
at December 31, 2018 |
1 |
|
|
1 |
|
Additional paid-in capital |
128,799 |
|
|
128,367 |
|
Accumulated other comprehensive (loss) income |
(1 |
) |
|
(1 |
) |
Accumulated deficit |
(120,366 |
) |
|
(117,315 |
) |
Total stockholders’ equity |
8,433 |
|
|
11,052 |
|
Total liabilities and stockholders’ equity |
$ |
18,039 |
|
|
$ |
18,492 |
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of
Operations(In thousands, except per share
data)
|
Three months ended |
|
March 31, |
|
2019 |
|
2018 |
Net sales |
$ |
3,177 |
|
|
$ |
4,659 |
|
Cost of sales |
3,079 |
|
|
3,843 |
|
Gross
profit |
98 |
|
|
816 |
|
|
|
|
|
Operating
expenses: |
|
|
|
Product development |
526 |
|
|
629 |
|
Selling, general, and
administrative |
2,241 |
|
|
2,647 |
|
Loss on impairment |
— |
|
|
— |
|
Restructuring expenses |
134 |
|
|
(50 |
) |
Total operating
expenses |
2,901 |
|
|
3,226 |
|
Loss from
operations |
(2,803 |
) |
|
(2,410 |
) |
|
|
|
|
Other
expenses: |
|
|
|
Interest expense |
43 |
|
|
1 |
|
Other expenses |
19 |
|
|
(21 |
) |
|
|
|
|
Loss from operations before
income taxes |
(2,865 |
) |
|
(2,390 |
) |
Provision for (benefit from)
income taxes |
— |
|
|
— |
|
Net loss |
$ |
(2,865 |
) |
|
$ |
(2,390 |
) |
|
|
|
|
Net loss per share - basic and
diluted: |
$ |
(0.24 |
) |
|
$ |
(0.20 |
) |
|
|
|
|
Weighted average shares used
in computing net loss per share: |
|
|
|
Basic and diluted |
12,126 |
|
|
11,900 |
|
|
|
|
|
|
|
Condensed Consolidated Statements of Cash
Flows(In thousands)
|
Three months ended |
|
March 31, |
|
2019 |
|
2018 |
Cash flows from
operating activities: |
|
|
|
Net loss |
$ |
(2,865 |
) |
|
$ |
(2,390 |
) |
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
Depreciation |
105 |
|
|
151 |
|
Stock-based compensation |
543 |
|
|
195 |
|
Provision for doubtful accounts receivable |
26 |
|
|
(22 |
) |
Provision for slow-moving and obsolete inventories and valuation
reserves |
(836 |
) |
|
(487 |
) |
Provision for warranties |
101 |
|
|
7 |
|
Amortization of loan origination fees |
20 |
|
|
— |
|
Loss on dispositions of property and equipment |
(1 |
) |
|
(19 |
) |
Changes in operating assets and liabilities: |
|
|
|
Accounts Receivable |
(210 |
) |
|
66 |
|
Inventories |
643 |
|
|
597 |
|
Prepaid and other assets |
459 |
|
|
(274 |
) |
Accounts payable |
(1,329 |
) |
|
1,398 |
|
Accrued and other liabilities |
(195 |
) |
|
13 |
|
Deferred revenue |
(17 |
) |
|
22 |
|
Total adjustments |
(691 |
) |
|
1,647 |
|
Net cash used in operating activities |
(3,556 |
) |
|
(743 |
) |
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Acquisitions of property and equipment |
(5 |
) |
|
(57 |
) |
Proceeds from the sale of property and equipment |
1 |
|
|
244 |
|
Net cash provided by (used in) investing
activities |
(4 |
) |
|
187 |
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
Common stock withheld in lieu of income tax withholding on vesting
of restricted stock units |
(111 |
) |
|
(32 |
) |
Principal payments under finance lease obligations |
(1 |
) |
|
— |
|
Proceeds from convertible notes |
1,660 |
|
|
— |
|
Net repayments on credit line borrowings |
(462 |
) |
|
— |
|
Net cash provided by (used in) financing
activities |
1,086 |
|
|
(32 |
) |
|
|
|
|
Effect of exchange rate changes on cash |
— |
|
|
(1 |
) |
Net decrease in cash and cash equivalents |
(2,474 |
) |
|
(589 |
) |
Cash and cash equivalents at beginning of year |
6,335 |
|
|
10,761 |
|
Cash and cash equivalents at end of period |
$ |
3,861 |
|
|
$ |
10,172 |
|
|
|
|
|
Classification of cash
and cash equivalents: |
|
|
|
Cash and cash equivalents |
3,519 |
|
|
9,830 |
|
Restricted cash held |
342 |
|
|
342 |
|
Cash and cash equivalents at end of period |
$ |
3,861 |
|
|
$ |
10,172 |
|
|
|
|
|
|
|
|
|
Sales by Products(In
thousands)
|
Three months ended |
|
March 31, |
|
2019 |
|
2018 |
Commercial products |
$ |
1,983 |
|
|
$ |
2,205 |
|
Military maritime
products |
1,194 |
|
|
2,454 |
|
Total net
sales |
$ |
3,177 |
|
|
$ |
4,659 |
|
Non-GAAP Measures
In addition to the results provided in accordance
with U.S. GAAP, we provide certain non-GAAP measures, which present
operating results on an adjusted basis. These are supplemental
measures of performance that are not required by or presented in
accordance with U.S. GAAP and, for the three months ended
March 31, 2019, and 2018, include adjustments for our
restructuring expenses, and for depreciation and stock compensation
expenses that do not have a current period impact on cash flow.
We believe that our use of non-GAAP financial measures permits
investors to assess the operating performance of our business
relative to our performance based on U.S. GAAP results and relative
to other companies within the industry by isolating the effects of
items that may vary from period to period without correlation to
core operating performance or that vary widely among similar
companies, and to assess cash flow performance of the operations of
our business relative to our U.S. GAAP results and relative to
other companies in the industry by isolating the effects of certain
items which do not have a current period cash flow impact. However,
our inclusion of these adjusted measures should not be construed as
an indication that our future results will be unaffected by unusual
or infrequent items or that the items for which we have made
adjustments are unusual or infrequent or will not recur. We believe
that the disclosure of these non-GAAP measures is useful to
investors as they form part of the basis for how our management
team and Board of Directors evaluate our operating performance.
These non-GAAP financial measures are not intended to replace
U.S. GAAP financial measures, and they are not necessarily
standardized or comparable to similarly titled measures used by
other companies.
|
Three months ended |
|
March 31, |
|
2019 |
|
2018 |
Total operating expenses |
$ |
2,901 |
|
|
$ |
3,226 |
|
Less: Impairment loss |
— |
|
|
— |
|
Less: Restructuring |
134 |
|
|
(50 |
) |
Operating expenses, excluding impairment and restructuring
charges |
$ |
2,767 |
|
|
$ |
3,276 |
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
March 31, |
|
2019 |
|
2018 |
Net loss |
$ |
(2,865 |
) |
|
$ |
(2,390 |
) |
Impairment loss |
— |
|
|
— |
|
Restructuring expenses |
134 |
|
|
(50 |
) |
Net loss, excluding impairment and restructuring
charges |
(2,731 |
) |
|
(2,440 |
) |
Interest |
43 |
|
|
1 |
|
Loan fee amortization |
20 |
|
|
— |
|
Income tax expense
(benefit) |
— |
|
|
— |
|
Depreciation |
105 |
|
|
151 |
|
Stock-based compensation |
543 |
|
|
195 |
|
Severance and benefits |
2 |
|
|
7 |
|
Adjusted EBITDA |
$ |
(2,018 |
) |
|
$ |
(2,086 |
) |
Energy Focus (NASDAQ:EFOI)
Gráfico Histórico do Ativo
De Mar 2024 até Abr 2024
Energy Focus (NASDAQ:EFOI)
Gráfico Histórico do Ativo
De Abr 2023 até Abr 2024