Energy Focus, Inc.
Q3 2022 Earnings Call Transcript

Published: 11 Nov 2022

[Operator:]

Ladies and gentlemen, greetings and welcome to the Energy Focus Third 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 Jim Warren, Senior Vice President and General Counsel of Energy Focus. Please go ahead, sir.

[Jim Warren:]

Thank you, operator, and good morning, everyone. Joining me on the call today is Lesley Matt, Chief Executive Officer; and Stephen Socolof, Chairman of the Board. Before we begin today's call, I'd like to remind everyone that, we'll be making certain forward-looking statements. These statements are based upon information that represents the company’s current expectations or beliefs. These results realized may differ materially from those stated. For a discussion of these risks that could affect our results, please refer to the section under the headings Risk Factors, as well as forward-looking statements in our most recent 10-Q filed with the SEC. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Also, please note, that this call and in the accompanying press releases, certain financial metrics are presented on both GAAP and non-GAAP adjusted basis. Reconciliations of adjusted results to the GAAP results are available in the tables attached to the earnings release, which is posted on our corporate website at energyfocus.com in the Investor Relations section of the site. I'll now turn the call over to Steve.

[Stephen Socolof:]

Thank you, Jim. Good morning, everyone. This is my third earnings call with Energy Focus. With this call, I am pleased to report the accomplishment of my number one objective of the year, which has been to find a permanent Chief Executive Officer that can help Energy Focus complete its turnaround and realize our vision to restore Energy Focus as an innovator and leader in the lighting industry. Lesley Matt lives locally in the Cleveland area where Energy Focus is based. She has been an executive in the lighting industry for a dozen years, leading marketing, sales and operations. She has already made a tremendous impact on the company. I am happy to turn the baton over to Lesley and look forward to working closely with her, our fantastic team and our supportive Board to see through the turnaround of Energy Focus. With that, let me introduce Lesley Matt, our new CEO.

[Lesley Matt:]

Thank you, Steve. As you are all aware this is my first earnings call with Energy Focus, since joining mid-September. I came on board with the belief that the bones here are good and that my experience in the lighting industry paired with personal determination provide new list of tools that are necessary to turn the company around. I believe that my abilities to quickly analyze and execute strategy will be the driving forces for future success. While I have not been at the helm long enough to take responsibility for our third quarter results, I want to highlight some of the items that have been implemented that will allow for future improvement. I also want to thank Steve Socolof, for his service as interim Chief Executive Officer since January. Steve will be continuing to guiding the light for the company as Chairman of the Board. As a reminder of what Steve had communicated previously, we have been pursuing initiatives to improve the energy-focused business through

[Q - Amit Dayal:]

Thank you. Good morning everyone, and congratulations Lesley the new role. Looking forward to hearing from you on the earnings call going forward. As you've taken over, can you share with us maybe your confidence in the existing product suite at Energy Focus? Would you need to sort of reinvest in building a new set of offerings, or do current offerings have a potential to gain some traction in the market?

[Lesley Matt:]

Thank you, Amit. Yes, I believe that some of the current offerings, including our RedCap and our in-focus modules allow us to set the tone for future success. In addition to this, we will need to come up with new and aggressive products, which our product development team has been working on in the background as we work through supply chain constraints. However, in speaking with customers, they love being focused products and can't wait till we have more of it in stock, so that they can put it in more beta applications. It's very exciting for me as someone to watch that product line grow as power line control, I believe, is a new way for the future. Additionally, as I mentioned in our press release, I think that Energy Focus will need to move beyond lighting products in order to have success in the future. Now, that doesn't mean that we will move away from energy efficiency, as our name is Energy Focus. However, I believe that there is a huge market potential out there with new innovative technologies.

[Amit Dayal:]

Can you touch on this a little bit, where should we expect maybe your efforts on this front that may not necessarily be sort of around sort of legacy offerings?

[Lesley Matt:]

Yes. So there will be a tremendous amount of effort I see in the future, maybe not in the immediate quarter. However, in the future to develop new technologies to help service that market. Now, I'm not prepared to fully speak on those today, but there will be more information in future quarters.

[Amit Dayal:]

Okay. And in terms of sort of just managing your cash burn and financing needs, how are you thinking about sort of your needs on that side? And what options do you have to just get through this phase and get to a point where you are positioned to deliver a little bit more growth, et cetera.

[Lesley Matt:]

Yes. From a cash perspective, there was a tremendous amount of, what I'll call, left over and rightsizing of the business that needed to be done. There were many things and many opportunities that were happening where we needed to make adjustments in spend and decrease -- make significant decreases in our cash burn in order to sustain our current sales level. I believe that through Q4 and into early 2023, with a right-sized team and new product coming in, we will be able to start seeing the impact of those changes.

[Amit Dayal:]

Okay. All right. That's all I have for now. Thank you so much.

[Lesley Matt:]

Thank you.

[Operator:]

Thank you. [Operator Instructions] Since there are no further questions, I would like to hand the conference over to Lesley Matt for closing comments.

[Lesley Matt:]

Thank you. Again, there's an entire team focused on riding the ship with this moving forward. We work to make Energy Focus a sustainable company, not only for future quarters, but long into the future. We are taking this tremendously seriously and work to gain success as we move forward. And I thank you all for your time and again, speaking with you in future quarters.

[Operator:]

Thank you. The conference of Energy Focus has now concluded. Thank you for your participation. You may now disconnect your lines.