Energy Focus (EFOI) Tops Q1 EPS by 3c, Revenues Beat; Offers 2Q Revenue Guidance Above Consensus

Energy Focus (NASDAQ: EFOI) reported Q1 EPS of ($0.04), $0.03 better than the analyst estimate of ($0.07). Revenue for the quarter came in at $3.8 million versus the consensus estimate of $3.46 million.

First Quarter 2020 Highlights:

• Net sales of $3.8 million, up 19.1% compared to the first quarter of 2019 and up 7.1% sequentially from the fourth quarter of 2019
• Net loss of $541 thousand compared to a net loss of $2.9 million in the first quarter of 2019.
• Loss from operations improved by $1.5 million year-over-year
• Received $5.3 million of new Navy contracts and orders year-to-date for both retrofit and new builds
• Ohio production facility deemed “Essential Critical Infrastructure Workforce” and allowed to continue to manufacture and fulfill contracts and orders during the State of Ohio’s “stay at home” order
• Strengthened balance sheet with $2.75 million of gross proceeds from equity financing; Cash of $2.9 million as of March 31, 2020 compared to $350 thousand as of December 31, 2019
• Launched patent-pending EnFocus™ Lighting Control Platform and breakthrough dimmable and dimmable/color-tunable tubular LED lighting solutions

“For the first quarter, despite the economic headwinds associated with COVID-19 starting in March, we again delivered strong, positive sequential and year-over-year revenue growth, as well as a notable improvement in our cash flows,” stated James Tu, Chairman and CEO of Energy Focus, Inc. “This progress resulted from our ongoing efforts to strengthen our operational performance and engineering capabilities that helped us win new business. Sales from our military business came in as expected and we secured key contract wins totaling $5.3 million. And while we began experiencing delays in commercial orders in the latter half of the first quarter and going into the second quarter, barring further unforeseen major economic disruption, we believe that these delays are likely temporary, as the facilities of our primary target customers in government, healthcare, education and select commercial and industrial sectors will mostly remain operational and thus require ongoing lighting maintenance and upgrades.”

Mr. Tu continued, “In addition, our newly introduced EnFocus™ lighting control platform and products have received positive and encouraging responses from both existing and targeted customers, confirming our confidence that this breakthrough solution will create significant new sales opportunities in both commercial and military markets. We believe that the unique capability of EnFocus™ products to provide dimming and color tuning or circadian lighting—at a fraction of the cost and complexity of prevailing lighting control systems—will unlock the massive, untapped potential of human-centric lighting for the existing 5.6 million commercial buildings in the country and many more across the world.”

“Despite the uncertain business environment posed by COVID-19, we remain excited and optimistic about our growth strategies and R&D initiatives, and we expect continued revenue growth and operating margin improvement during the second quarter of 2020 and into the foreseeable future,” concluded Mr. Tu.

GUIDANCE:

Energy Focus sees Q2 2020 revenue of $4.5-4.8 million, versus the consensus of $2.51 million.

We continue to actively monitor and dynamically assess and respond to the impact from the ongoing coronavirus (COVID-19) outbreak. To minimize infection risks of our employees and their social and professional contacts, we have continued our COVID-19 Contingency Plan (CCP) that allows employees that could work remotely to do so while implementing strict sanitary and disinfection measures and procedures for our production facility in Solon, Ohio. Our commercial sales, have been and will likely continue to be affected if the current, dramatic slowdown of economic activities continues over an extended period. We expect military sales to remain steady despite the impact of COVID-19.

The Company currently projects second quarter 2020 sales in the range of $4.5 million to $4.8 million, representing year-over-year growth of 46%-56% from the second quarter of 2019, and sequential growth of 19%-27% compared with the first quarter of 2020.

For earnings history and earnings-related data on Energy Focus (EFOI) click here.

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