Solon, OH, United States

Energy Focus, Inc.

www.efoi.com
Solon, OH, United States

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News Article | May 4, 2017
Site: globenewswire.com

SOLON, Ohio, May 04, 2017 (GLOBE NEWSWIRE) -- Energy Focus, Inc. (NASDAQ:EFOI), a leader in LED lighting technologies, today announced financial results for the first quarter ended March 31, 2017. As previously announced, the Company implemented a restructuring initiative during the first quarter of 2017 with a goal of reducing annual operating costs by an estimated $10 million from the 2016 levels. The Company’s workforce was reduced approximately 15% and the offices in New York, New York, Arlington, Virginia and Rochester, Minnesota were shut down. Accordingly, during the first quarter, the Company recognized $0.7 million in restructuring costs, principally related to severance and related costs.  As of March 31, 2017, the Company had vacated the Rochester leased office location, but had not fully vacated the New York and Arlington leased office spaces. During the second quarter of 2017, the Company expects to shut down these additional office facilities and recognize additional restructuring costs of approximately $0.4 million. Dr. Ted Tewksbury, Chairman, Chief Executive Officer and President, commented, “As expected, we continued to experience headwinds due to excess inventory in the channel, lackluster Navy demand and delays in commercial projects, but we are beginning to see signs that our restructuring efforts and five-point strategy will return the Company to profitable growth.  First, while our overall sales levels were below that of the previous quarter, if we exclude the fourth quarter 2016 order required under the distribution agreement with our distributor to the U.S. Navy, our sales levels remained flat during a quarter of significant organizational restructuring activities and executive management changes.  Second, the inventory level of our U.S. Navy product in the sales channel decreased significantly during the quarter.  Third, we expanded military sales into new ship construction and Navy base installations.  Fourth, new product sales of $1.0 million, or 24% of net revenue, in the first quarter exceeded total new product sales for the full year 2016.  Lastly, the implementation of our restructuring plan in late February resulted in a sequential quarter over quarter reduction of operating expenses of $1.5 million and the slowing of our cash burn rate to the lowest level in four quarters.” “The Company recently announced the hiring of Larry Fallon as our Senior Vice President of Sales and Marketing.  In looking for a sales and marketing leader we were keenly focused on finding an individual with the skills and experience to help implement our five-point strategy that we announced in February. Larry’s experience and proven results in the LED lighting, controls and IoT industries made him the perfect candidate to drive these strategic efforts,” continued Dr. Tewksbury. A further breakdown of net sales is shown below (in thousands): Net sales of $4.1 million for the first quarter of 2017 decreased 51% compared to the first quarter of 2016 due to lower sales across all our product lines.  Net sales of our commercial products decreased 33% compared to the first quarter of 2016.  First quarter 2016 commercial sales of $4.6 million represented the highest level of quarterly commercial sales during 2016 and included approximately $1.6 million of lighting projects through our energy service company, or ESCO, partners that did not repeat at the same levels during the first quarter of 2017. Net sales of our military maritime products decreased 73%, primarily due to the expiration of our exclusive distribution agreement that contained quarterly order commitments with our distributor for the U.S. Navy. Gross profit was $0.6 million, or 14 percent of net sales, for the first quarter of 2017, compared to $3.1 million, or 37 percent of net sales for the first quarter of 2016. The decrease in gross profit was due primarily to lower sales, unfavorably impacting our manufacturing and overhead absorption, and product mix, as the military maritime products sold in the first quarter of 2016 generally had a higher standard gross margin. The decrease in gross profit as a percentage of sales is primarily the result of lower revenue scale and a smaller percentage contribution of military maritime products, which have historically had higher standard margins than commercial products. In addition, we increased excess inventory reserves as we continue to evaluate potential excess inventory levels. As a result of our restructuring efforts, we recorded restructuring expenses totaling approximately $0.7 million during the three months ended March 31, 2017, primarily comprised of approximately $0.6 million for severance and related benefits. Operating loss, loss from continuing operations and net loss was $4.5 million for the quarter, including a $0.7 million restructuring charge, or negative $0.39 per share, compared to operating loss, loss from continuing operations and net loss of $2.0 million, or $0.17 per share, in last year’s same period. At March 31, 2017, our cash and cash equivalents balance was $15.0 million, compared to $16.6 million at December 31, 2016. Net cash used in operating activities of $1.6 million in the first quarter of 2017 resulted from the net loss, adjusted for non-cash items, including: depreciation and amortization, stock-based compensation, and the adjustment to the excess inventory reserve; and changes in working capital. Dr. Tewksbury concluded, “While this will be a multi-quarter turnaround and we have significant work ahead of us, our restructuring initiatives and the implementation of our strategy during the first quarter confirm that we are making great strides in our efforts to return the Energy Focus to profitable growth.” Given the continuing quarterly volatility in military maritime sales and the timing uncertainty in commercial sales growth, it is challenging for us to provide quarterly revenue guidance at this time. Our focus is to control our operating costs, so that we can reach our goal of returning to profitability by the end of 2017. Once our revenue achieves a more predictable growth rate, we will provide further guidance. Energy Focus, Inc. will host a conference call and webcast on May 4, 2017 at 11:00 a.m. ET to review the first quarter 2017 financial results, followed by a Q & A session. To participate in the call, please dial 888-334-3020 if calling within the United States, or 719-325-2190 if calling internationally. A replay will be available until May 11, 2017, which can be accessed by dialing 844-512-2921 if calling within the United States, or 412-317-6671 if calling internationally. Please use passcode 2135926 to access the replay. The call will additionally be broadcast live and archived for 90 days over the internet accessible in the Investor’s portion of the Company’s corporate website, under “Events and Presentations” at http://investors.energyfocus.com/events.cfm. 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 history of operating losses and our ability to effectively implement cost-cutting measures and generate sufficient cash from operations or receive sufficient financing, on acceptable terms, to continue our operations; (ii) our reliance on a limited number of customers, in particular our historical sales of products for the U.S. Navy, for a significant portion of our revenue, and our ability to maintain or grow such sales levels; (iii)  the entrance of new competitors in our target markets; (iv) general economic conditions in the United States and in other markets in which we sell our products; (v) our ability to implement and manage our growth plans to diversify our customer base, increase sales, and control expenses; (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 and significant expenses, and fluctuations between demand and capacity, as we invest in growth opportunities; (viii) our dependence on military maritime customers and on the levels of government funding available to such customers, as well as funding resources of our other customers in the public sector and commercial markets; (ix) market acceptance of LED lighting technology; (x) our ability to respond to new lighting technologies and market trends, and fulfill our warranty obligations with safe and reliable products; (xi) any delays we may encounter in making new products available or fulfilling customer specifications; (xii) our ability to compete effectively against companies with greater resources, lower cost structures, or more rapid development efforts; (xiii) our ability to protect our intellectual property rights and other confidential information, and manage infringement claims by others; (xiv) the impact of any type of legal inquiry, claim, or dispute; (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; (xvi) our ability to timely and efficiently transport products from our third-party suppliers to our facility by ocean marine channels; (xvii) our ability to successfully scale our network of sales representatives, agents, and distributors to match the sales reach of larger, established competitors; (xviii) any flaws or defects in our products or in the manner in which they are used or installed; (xix) 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; (xx) risks inherent in international markets, such as economic and political uncertainty, changing regulatory and tax requirements and currency fluctuations; (xxi) our ability to attract and retain qualified personnel, and to do so in a timely manner; and (xxii) our ability to maintain effective internal controls and otherwise comply with our obligations as a public company. Energy Focus is an industry-leading innovator of energy-efficient LED lighting technology. As the creator of the first, and so far, only UL-verified low-flicker 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 government, healthcare and educational institutions, as well as Fortune 500 companies. Energy Focus is headquartered in Solon, Ohio, with a product development center in Taipei, Taiwan. For more information, visit our website at www.energyfocus.com.


Grant
Agency: Department of Energy | Branch: | Program: SBIR | Phase: Phase I | Award Amount: 150.00K | Year: 2013

Commercial lighting controls are often cumbersome, require extensive wiring and other logistics and are expensive. A much simpler turn-key method for implementing daylighting is preferably. EFOIs solution, called the CRICKET Network, includes ultra-simple sensor along with advanced LED lighting units and the advanced controls software to be developed here. EFOI will develop a low cost Control system for the lighting in commercial buildings. The project will develop lamp-to-lamp communication and optimization software that integrates EFOIs breakthrough sensor technology into a system which is self-commissioning, safely minimizes energy use, and integrates a demand response function. The end objective of the combined Phase I/II effort is a seamless lighting and control system installable at 30 cents a square foot that provides energy savings of over 50% over the state of the art by harvesting daylight efficiently. This will be done with working prototypes installed in a demonstration installation, and committed vendors so the system can be made in the USA with US components. Commercial Applications and Other Benefits The product is being developed primarily for Energy Services Companies (ESCOs), the very companies identified by the White Houses Better Building Initiative as leading the charge for over $4B in Federal and private building upgrades. The software will be used in a LED lamp, which will maximize commercialization potential by enabling retrofitting of commercial spaces. Almost one quarter of electricity used in the US in buildings is used for lighting. The CRICKET Network will save electricity and therefore significant carbon emissions and millions of dollars per year for the US Economy. EFOI is targeting commercial spaces illuminated with linear fluorescent tubes. These markets give a total of 55 Billion Sq Ft of addressable floor space. The novel sensor will reduce energy used in these fixtures by 31%, saving 0.23 quads of energy. The EFOI team is based in Ohio and has a long history of successful technology transition from R & amp;D to the lighting market. EFOI has over half their sales into the ESCO market today and is well poised to quickly bring this technology to a very broad market.


Patent
Energy Focus, Inc. | Date: 2016-04-27

An LED lamp has dual modes of operation from fluorescent lamp fixtures. A first circuit powers at least one LED in a first mode of operation when first and second power connector pins at a first end of the lamp are inserted into power receptacles of the fixture that are directly connected to power mains. A second circuit powers at least one LED in a second mode of operation when the second power connector pin at the first end of the lamp and a third power connector pin at a second end of the lamp are inserted into power receptacles of a fixture powered from an electronic ballast. First and second conduction control means permit the second circuit to power at least one LED during the second mode of operation.


Patent
Energy Focus, Inc. | Date: 2012-09-17

Disclosed is an LED lamp system designed to fit into a fluorescent lamp fixture and to utilize a fluorescent lamp power supply contained in the fixture and receiving power from AC mains. The LED lamp system includes an LED driver which comprises a power factor corrected driver circuit for achieving a power factor of at least about 0.8. The LED driver further comprises a current control circuit, responsive to the presence of a three-wire magnetic ballast in the fluorescent lamp power supply, for increasing the LED operating current above the nominal rated LED operating current and to a level sufficient to achieve power factor of the LED driver of at least about 0.8.


Patent
Energy Focus, Inc. | Date: 2015-05-01

An LED lamp has dual modes of operation from fluorescent lamp fixtures. A first circuit powers at least one LED in a first mode of operation when first and second power pins at a first end of the lamp are inserted into power contacts of the fixture that are directly connected to power mains. A second circuit powers at least one LED in a second mode of operation when the second power pin at the first end of the lamp and a third power pin at a second end of the lamp are inserted into power contacts of a fixture powered from an electronic ballast. First and second conduction control means permit the second circuit to power at least one LED during the second mode of operation.


Patent
Energy Focus, Inc. | Date: 2014-11-26

An LED lamp has dual modes of operation from fluorescent lamp fixtures. A first circuit powers at least one LED in a first mode of operation when first and second power connector pins at a first end of the lamp are inserted into power receptacles of the fixture that are directly connected to power mains. A second circuit powers at least one LED in a second mode of operation when the second power connector pin at the first end of the lamp and a third power connector pin at a second end of the lamp are inserted into power receptacles of a fixture powered from an electronic ballast. First and second conduction control means permit the second circuit to power at least one LED during the second mode of operation.


Patent
Energy Focus, Inc. | Date: 2012-06-20

An elongated LED lighting arrangement comprises an elongated fiberoptic light pipe having an exteriorly facing sidewall between its ends. The light pipe is constructed to promote TIR of light between the ends. A first LED light source is tuned to efficiently provide light within a wavelength range to the pipe. Light-extracting means are applied along the light pipe along the main path of TIR light propagation, and comprise down-converting means tuned to efficiently convert light rays from the LED light source within the wavelength range to lower-energy light rays at respectively longer wavelengths and light-scattering means for extracting from the pipe some light rays within the wavelength range without changing the wavelengths of the foregoing light. The light emitted by the down-converting means and the light-scattering means intermix to produce light, the majority of which has a composite color determined by the foregoing light emitted and the foregoing light extracted.


Patent
Energy Focus, Inc. | Date: 2016-04-27

An LED lamp has dual modes of operation from fluorescent lamp fixtures. A first circuit powers at least one LED in a first mode of operation when first and second power pins at a first end of the lamp are inserted into power contacts of the fixture that are directly connected to power mains. A second circuit powers at least one LED in a second mode of operation when the second power pin at the first end of the lamp and a third power pin at a second end of the lamp are inserted into power contacts of a fixture powered from an electronic ballast. First and second conduction control means permit the second circuit to power at least one LED during the second mode of operation.


Patent
Energy Focus, Inc. | Date: 2012-10-22

Improved side-light distribution systems are disclosed. One exemplary system includes a light source and a side-light distribution member. The light source supplies light to the side-light distribution member having (1) an net port on the first end of the member for receiving the light and (2) a second end having a reflective means. The inlet port consists of part of the surface area of the first end of the member. The reflective means associated with the second end of the member receives light from the first end and directs light towards the first end. At least part of a surface area of the first end of outside of the inlet port includes a reflective means for receiving the light from the second end and directing the light towards the second end of the rod.


Grant
Agency: National Aeronautics and Space Administration | Branch: | Program: STTR | Phase: Phase II | Award Amount: 750.00K | Year: 2011

The proposed effort will develop a solid-state LED replacement lamp for rocket engine test stand lighting and more general hazardous-location lighting. The LED lighting will produce a smoother lighting spectrum compared to the existing arc lamp sources which will improve the visual accuracy and quality of high-speed engine photography. The LED lighting will also last significantly longer than arc lamps which require frequent replacement in hazardous-gas environment. A specialized array of optical collectors will redirect the light more effectively to the needed test areas using principles on non-imaging optics. The result will be improved lighting for engine diagnostics, lower operating costs for the test stand, much longer lamp life and a safer environment by reducing or eliminating lighting maintenance operations in an explosive environment. The housing will also be shock, vibration and heat resistant to be able to withstand the proximate effects of live-fire rocket engine testing. The electronic controls for the lighting will be sited remotely from the lamp head to be consistent with the existing facility and for thermal and reliability considerations. Additionally, a hazardous-location LED lighting device for general illumination which is not for high-speed engine diagnostics will also be developed and tested.

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