EX-99.1 2 v106396_ex99-1.htm

Exhibit 99.1
 

Contact:
John Davenport, CEO
Eric Hilliard, COO
Nick Berchtold, CFO
440-715-1300

ENERGY FOCUS, INC. REPORTS FOURTH QUARTER 2007 RESULTS
 
SOLON, Ohio, March 6, 2008 -- Energy Focus, Inc. (Nasdaq: EFOI) today announced financial results for the fourth quarter ended December 31, 2007. Financial and operating highlights include the following:
 
 
·  
Revenues for year were $22,898,000, a decrease of 15% over the sales of $27,036,000 in 2006. The loss for the full year was $11,316,000 ($0.98 per share) compared to $9,650,000 ($0.85 per share) in 2006.
 
 
·  
The Company finished the year with a balance sheet showing cash at $8,412,000 and total shareholders equity of $21,619,000. Cash utilization for the year was $7,556,000, compared to $7,610,000 for 2006.
 
 
·  
Fourth quarter revenues were $5,439,000, a 24 % decrease over sales in the fourth quarter of 2006 of $7,191,000. The net loss in the quarter was $3,665,000 ($0.31 per share) compared to the net loss of $2,784,000 ($0.24 per share) in the fourth quarter of 2006.
 
 
·  
Operating expenses declined by 5%, $208,000, for the quarter. Much of the decrease is attributable to lower general and administrative expenses combined with better expense management during the second half of the year offset by severance, bad debt expenses and significant reductions in government R&D reimbursements. For the full year, operating expenses were flat vs. 2006.
 
 
·  
EFO® sales increased to $7,011,000, for the full year 2007 compared to $5,316,000 million in 2006. This represents an increase of 32%. During 2007, a reclassification was done which resulted in 2006 EFO® sales figures being restated to $5,316,000 from the $4,033,000 previously disclosed.
 
 
·  
The company is forecasting EFO® sales to double in 2008, with EFO® sales accounting for 50% of EFOI’s revenue in 2008. 40% of EFO® sales are expected in the 1st half with 60% in 2nd half. Traditional product sales are expected to continue to decline about 15% over the year. However, with the forecast rise in EFO® sales, overall EFOI sales are expected to increase more than 20% in 2008. Cash usage for the year is expected to be below $5MM with about half used in Q1 - a result of delayed receivables from the Pool division’s early buy program.
 
 
John Davenport, Energy Focus President and CEO, said, "While we continue to be pleased with EFO’s increasing traction in our served markets, we are disappointed that 2007 revenues and earnings were below expectations. The changes we made in 2007 in our organization and leadership will make us much stronger in 2008 and in the future. In 2008 EFO sales are expected to dominate Energy Focus’ sales for the first time, driving an expected 20% overall revenue growth. The sales growth, together with savings from efficiency improvements put in place in 2007 is expected to reduce cash usage to less than $5,000,000.”
 
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“The US government has finally recognized the need to eliminate inefficient traditional incandescent light bulbs. We are already producing energy efficient lighting products, utilizing advanced HID and LED sources that meet the efficiency requirements mandated to begin in 2012 today. These products serve an increasingly energy conscious lighting market. Energy Focus is well positioned to serve that emerging market. We are definitely ahead of the curve, from a product perspective,” Davenport added. “Our challenge in 2008 will be in multiplying the ways EFO products get to market.”
 
The company recently started selling products to the US government and has entered partnerships with TCP, Inc. of Aurora, Ohio, and Eco Engineering LLC of Cincinnati, Ohio, to distribute a broad range of its energy efficient lighting products to its national customer base. “We are already seeing significant EFO sales of our new military products as well as a result of the relationships with TCP and Eco Engineering and expect to add to them as a result of ongoing discussions with a number of potential partners.”
 
Eric Hilliard, Energy Focus’s Chief Operating Officer added, “2007 was a year with a great deal of change in our organization at all levels. We have new faces and talent to help drive our business in the direction necessary for success. All of these changes are directed toward bringing significant growth while keeping costs under control as we grow.” Mr. Hilliard continued, “We’re already seeing growth from a series of new EFO products launched in January as well as from further penetration of our existing EFO products. In addition to the organizational changes, we have constructed a new showroom at our world headquarters to display our patented technologies in a great aesthetic environment, one that we expect will not only demonstrate EFO’s energy saving but its great lighting quality and versatility as well. This showroom will help drive the growth by allowing us to bring those qualities home to architects, designers and lighting specifiers. Finally, we’ll launch a newly revamped web site in May. Its much improved look and feel is also expected to have a positive sales impact.”
 
 Energy Focus, Inc. management will host a conference call on March 6, 2008 at 11:30 a.m. EDT (8:30 a.m. PDT) to review the fourth Quarter 2007 Financial Results and other corporate events, followed by a Q & A session. Dialing 1-866-507-5712 (US/Canada) or 1-706-758-4961 (International/Local) can access the call. The conference ID number is 37689584. Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. The conference call will also be available over the Internet at http://www.energyfocusinc.com in the Investor Relations area of the site or by going to http://www.mkr-group.com. A replay of the conference call will be available two hours after the call for the following 7 days by dialing 1-866-507-5712 (US/Canada) or 1-706-758-4961 (international/local) and entering the following pass code: 37689584. Also, an instant replay of the conference call will be available over the Internet at http://www.energyfocusinc.com on March 21, 2008 and will remain available for one year in the Investor Relations area of the site or by going to http://www.mkr-group.com
 
 
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About Energy Focus
 
 
Energy Focus designs, develops, manufactures and markets fiber optic lighting systems for wide-ranging uses in both the general commercial and the pool and spa lighting markets. Energy Focus' EFO system, introduced in 2004, offers energy savings, heat dissipation and maintenance cost benefits over conventional lighting for multiple applications. The Company's headquarters are located at 32000 Aurora Rd., Solon, Ohio. The Company has additional offices in California, England and Germany. Telephone: 440-715-1300. Web site: http://www.energyfocusinc.com.
 
 
Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include statements regarding the business outlook for 2008 and thereafter the potential growth of EFO sales based upon its energy savings over LED's and fluorescent lights. Investors are cautioned that all forward-looking statements involve risks and uncertainties. Actual results may differ materially from the results predicted. Risk factors that could affect the Company's future include, but are not limited to, a slowing of the U.S. and world economy and its effects on Energy Focus' markets, failure to develop marketable products from new technologies, failure of EFO or other new products to meet performance expectations, higher than anticipated expenses, unanticipated costs of integrating acquisitions into the Energy Focus operation, delays in manufacturing of products, increased competition, other adverse sales and distribution factors and greater than anticipated costs and/or warranty expenses. For more information about potential factors which could affect Energy Focus financial results, please refer to the Company's SEC reports, including its Annual Reports on Form 10-K and its quarterly reports on Form 10-Q. These forward-looking statements speak only as of the date hereof. Energy Focus disclaims any intention or obligation to update or revise any forward-looking statements.
 

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ENERGY FOCUS, INC.
CONSOLIDATED BALANCE SHEETS
(amounts in thousands)

 
   
December 31,  
  
December 31, 
  
   
2007 
  
2006 
  
   
(unaudited) 
      
ASSETS
          
Current assets:
          
Cash and cash equivalents
  
$
8,412
  
$
3,705
  
Short-term investments
    
0
   
12,263
 
Accounts receivable trade, net
   
3,454
   
6,185
 
Inventories, net
    
6,888
   
7,708
 
Prepaid and other current assets
    
381
   
324
 
Total current assets
    
19,135
   
30,185
 
               
Fixed assets, net
    
5,316
   
5,978
 
Goodwill, net
    
4,359
   
4,247
 
Other assets
    
59
    
182
 
Total assets
  
$
28,869
  
$
40,592
  
           
LIABILITIES
              
Current liabilities:
              
Accounts payable
  
$
2,265
  
$
4,202
  
Accrued liabilities
    
1,473
   
1,671
 
Credit line borrowings
    
1,159
   
1,124
 
Current portion of long-term bank borrowings
    
1,726
   
778
 
Total current liabilities
    
6,623
   
7,775
 
Other liabilities
    
62
    
---
  
Deferred tax liabilities
    
252
   
75
 
Long-term bank borrowings
    
314
   
1,862
 
Total liabilities
    
7,251
   
9,712
 
               
SHAREHOLDERS’ EQUITY
              
Common stock
    
1
   
1
 
Additional paid-in capital
    
55,682
   
53,841
 
Accumulated other comprehensive income
    
815
   
601
 
Accumulated deficit
    
(34,880
)
  
(23,563
)
Total shareholders’ equity
    
21,618
   
30,880
 
Total liabilities and shareholders’ equity
  
$
28,869
  
$
40,592
  


The accompanying notes are an integral part of these financial statements.

 
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ENERGY FOCUS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands except per share amounts)
(unaudited)

 
 
   
Three months
  
Twelve months
  
   
 ended December 31, 
  
  ended December 31,
  
     
2007
 		    
2006
 		    
2007
 		    
2006
 		  
Net sales
  
$
5,439
 
$
7,191
 
$
22,898
 
$
27,036
 
Cost of sales
    
4,895
   
5,372
   
16,616
   
19,251
 
Gross profit
    
544
   
1,819
   
6,282
   
7,785
 
Operating expenses:
                  
                           
Research and development
    
944
   
820
   
2,907
   
2,341
 
Sales and marketing
    
2,451
   
2,642
   
9,788
   
9,774
 
General and administrative
    
837
   
1,038
   
4,651
   
4,956
 
Restructure expense
    
60
   
0
   
457
   
734
 
Total operating expenses
    
4,292
   
4,500
   
17,803
   
17,805
 
Loss from operations
    
(3,748
)
  
(2,681
)
  
(11,521
)
  
(10,020
)
Other income (expense):
                          
                           
Interest income/ (expense)
    
128
   
113
   
395
   
483
 
                   
Loss before income taxes
    
(3,620
)
  
(2,568
)
  
(11,126
)
  
(9,537
)
Benefit from (provision for) income taxes
    
(45
)
  
(216
)
  
(190
)
  
(113
)
Net loss
  
$
(3,665
)
$
(2,784
)
$
(11,316
)
$
(9,650
)
                   
Net loss per share - basic and diluted
  
$
(0.31
)
$
(0.24
)
$
(0.98
)
$
(0.85
)
                   
Shares used in computing net loss per share - basic and diluted
    
11,600
   
11,392
   
11, 500
   
11,385
 



The accompanying notes are an integral part of these financial statements
 

 

 
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