Energy Focus Inc (EFOI) 2023 Q2 法說會逐字稿

Greetings. Welcome to the Energy Focus, Inc. Second Quarter 2023 Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

大家好！歡迎參加 Energy Focus, Inc. 2023 年第二季電話會議。 （操作員指示）溫馨提示：本次會議正在錄音中。

At this time, I would like to hand the call over to Lesley Matt, Chief Executive Officer. Thank you. You may begin.

現在，我想把電話交給執行長萊斯利·馬特。謝謝。您可以開始了。

Thank you, operator, and good morning, everyone. Before we begin today's call, I'd like to remind everyone that we will make certain forward-looking statements. These statements are based upon information that represents the company's current expectations or beliefs. The results realized may differ materially from those stated.

謝謝接線員，大家早安。在開始今天的電話會議之前，我想提醒大家，我們將做出一些前瞻性的陳述。這些陳述是基於代表公司當前預期或信念的資訊。實際實現的結果可能與所述結果有重大差異。

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.

有關可能影響我們業績的風險的討論，請參閱我們最近向美國證券交易委員會提交的10-Q報告中「風險因素」和「前瞻性聲明」部分。除非法律另有規定，否則本公司不承擔因新資訊、未來事件或其他原因而公開更新或修改任何前瞻性聲明的義務。

Also, please note that during this call and in the accompanying press release, 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.

另請注意，本次電話會議及隨附新聞稿中的部分財務指標將同時採用 GAAP 和非 GAAP 調整後數據。調整後業績與 GAAP 業績的對帳表可在收益報告隨附的表格中找到，收益報告已發佈於我們公司網站 energyfocus.com 的「投資者關係」板塊。

Now to the presentation of our Q2 results. I am turning the bends in the home stretch of my first full year as CEO of Energy Focus, and I have not lost sight on my main objectives since joining the organization. The company has been feverishly working towards getting back to its core markets of military maritime and commercial and industrial lighting and controls products, securing the necessary capital, working through significant supply chain constraints in the legacy inventory position and massive cost cutting and rightsizing that pushed the company forward.

現在來看看我們第二季的業績報告。我即將迎來擔任 Energy Focus 執行長的第一年，但自從加入公司以來，我從未忘記自己的主要目標。公司一直在積極努力，力求重返其核心市場，即軍用海事、商用和工業照明及控制產品，確保必要的資金，克服原有庫存造成的供應鏈嚴重限制，並大力削減成本和精簡規模，這些都推動著公司向前發展。

Although there is still a long way to go, I believe that the second quarter of 2023 results that I'm sharing today are showing progress towards an increase in sales, improving margins, all while controlling costs. I continue to work towards improvement, but significant progress in the core markets we serve is a slow and steady race. I continue to drive the organization to align with much higher goals, and today's results show improvements towards a better version of EFOI.

儘管前路漫漫，但我相信今天分享的2023年第二季業績正朝著銷售額成長、利潤率提升和成本控制的方向邁進。我會繼續努力改進，但在我們服務的核心市場取得顯著進展需要緩慢而穩健的努力。我會繼續推動公司朝著更高的目標邁進，今天的業績也表明，我們正朝著更完善的EFOI（企業財務績效）邁進。

First, I do want to address the noncompliance with NASDAQ continued listing requirements that had previously been disclosed. As of July 27, 2023, the company received written notification from the NASDAQ staff stating that the company has regained compliance with the bid price rule and the minimum stockholders' equity rule. The work that was done to improve the balance sheet early in the year, coupled with the reverse stock split that was approved at the Annual Meeting of Shareholders, allowed the organization to regain compliance. We continue to believe that the liquidity offered to stockholders of remaining listed on NASDAQ is worthwhile and are pleased with this outcome.

首先，我想談談先前已揭露的不符合納斯達克持續上市要求的情況。截至2023年7月27日，本公司已收到納斯達克工作人員的書面通知，顯示本公司已重新遵守買入價規則和最低股東權益規則。年初為改善資產負債表所做的工作，加上年度股東大會上批准的反向股票分割，使公司重新符合了要求。我們仍然相信，繼續在納斯達克上市為股東提供的流動性是值得的，並對這一結果感到滿意。

Sales for the second quarter continue to lag from my long-term expectations for the business. We have shown a slight improvement over the previous quarter. However, timing of orders and expected inventory did delay some of our anticipated Q2 revenues into the second half of the year. Nevertheless, the smaller sales force has continued to build a backlog of orders on both the military and commercial sides of our business in addition to generating a larger pipeline of revenues for the future. I have continued to monitor and adjust our sales model to ensure that the company can service our existing customers while looking to expand our base and overall revenue.

第二季的銷售額仍然低於我對業務的長期預期。我們比上一季略有改善。然而，訂單時間和預期庫存確實將我們預期的第二季收入推遲到了下半年。儘管如此，規模較小的銷售團隊除了為未來創造更大的收入管道外，還在軍用和商用業務方面持續累積訂單。我持續監控和調整我們的銷售模式，以確保公司能夠服務現有客戶，同時尋求擴大客戶群和整體收入。

I'm happy to report that Randy Gianas, a seasoned member of the Energy Focus team behind the scenes, will be taking an active role on our sales force. Randy brings with him not only a wealth of operations and product experience from being an integral member of the EFOI team for the last 3 years but has also held various sales-related roles, including owning his own lighting sales agency prior to joining Energy Focus. I'm truly excited to see how our combined experience can drive the company to the next level.

我很高興地告訴大家，Randy Gianas，Energy Focus團隊幕後資深成員，將積極參與我們的銷售工作。 Randy不僅帶來了過去三年作為EFOI團隊重要成員所累積的豐富營運和產品經驗，還擔任過各種銷售相關職位，包括在加入Energy Focus之前擁有自己的照明銷售代理商。我非常期待看到我們雙方的共同經驗將如何推動公司更上一層樓。

Our fresh stock of RedCap, our emergency backup LED tube product, began to arrive in late second quarter. This popular product for the company had faced significant supply chain challenges, and we look forward to supporting healthy stocking levels on this product moving forward.

我們的緊急備用LED燈管產品RedCap的全新庫存已於第二季末開始到貨。這款公司熱銷的產品先前曾面臨嚴重的供應鏈挑戰，我們期待未來能維持該產品的健康庫存水準。

Additionally, our Power Line Controlled EnFocus switches has faced component supply issues that we believe we have worked through, and we will be able to drive additional demand in the future periods. Fresh stock is now arriving regularly, and we believe we are better positioned for growth in the second half of the year.

此外，我們的電力線控制 EnFocus 交換器面臨元件供應問題，我們相信已經解決了這個問題，未來一段時間我們將能夠推動更多需求。目前，新庫存正在定期到貨，我們相信我們已為下半年的成長做好了更充分的準備。

We continue to focus on product expansion in both lighting, control and energy solution products that will drive revenues within our current market segments. We look forward to sharing new product announcements and timing on availability as we move forward.

我們將繼續專注於照明、控制和能源解決方案領域的產品擴展，以推動我們當前細分市場的營收成長。我們期待在未來發布新產品並公佈上市時間。

I am determined to drive this organization forward. This quarter is showing the beginning signs of the positive improvements towards revenues and increased margins. Although there is still a lot of race left to run, I believe we have learned how to get out of the gate and run towards a brighter future.

我決心推動公司繼續前進。本季度，收入和利潤率已初現積極改善的跡象。儘管我們仍任重道遠，但我相信我們已經學會如何踏出第一步，奔向更光明的未來。

Let me now review our Q2 financial results. We had net sales of $1.1 million for the second quarter of 2023, a decrease of 29% compared to sales of $1.5 million in the second quarter of 2022. This is driven by lower sales volume on the commercial side.

現在，我來回顧一下我們第二季的財務表現。 2023年第二季度，我們的淨銷售額為110萬美元，較2022年第二季的150萬美元下降了29%。這是由於商業銷售量的下降。

Second quarter 2023 net sales of military products were $613,000, which is a $107,000 increase over the second quarter of 2022. Military-related sales were flat when compared to the first quarter. Military-related sales have rebounded since the third and fourth quarters of 2022. However, delays in the supply chain have pushed out some of the revenues originally anticipated in the second quarter for military until later this year.

2023年第二季軍用產品淨銷售額為61.3萬美元，較2022年第二季成長10.7萬美元。與第一季相比，軍用產品相關銷售額持平。自2022年第三季和第四季以來，軍用產品相關銷售額有所反彈。然而，供應鏈的延遲導致軍用產品部分原定於第二季度實現的收入推遲到今年稍後。

Sales of our commercial products were approximately $442,000 or 42% of total net sales for the second quarter of 2023, down $533,000 as compared to the second quarter of 2022. Commercial sales increased $121,000 over the prior quarter on a sequential basis.

2023 年第二季度，我們商業產品的銷售額約為 442,000 美元，佔總淨銷售額的 42%，與 2022 年第二季度相比下降了 533,000 美元。商業銷售額比上一季環比增加了 121,000 美元。

Volatility in our supply chain continues to be reflected in these results as we are primarily selling through on-hand legacy inventory. Higher-margin proprietary products like RedCap arrived late in the quarter. Sales in new customer purchase orders for RedCap and add-on purchases increased immediately upon the RedCap arrival.

由於我們主要透過現有庫存進行銷售，供應鏈波動性持續反映在這些業績中。像 RedCap 這樣的高利潤專有產品於本季末上市。 RedCap 上市後，新客戶 RedCap 採購訂單和附加購買的銷售額立即成長。

Gross profit for the first quarter of 2023 was $179,000 compared to gross profit of $109,000 in the second quarter of 2022. Sequentially, gross profit improved by $162,000 from the first quarter of 2023.

2023 年第一季的毛利為 179,000 美元，而 2022 年第二季的毛利為 109,000 美元。與 2023 年第一季相比，毛利環比增加了 162,000 美元。

As a percentage of revenue, gross margin was 17% in the second quarter of 2023 compared to 7% in the second quarter of 2022. The period-over-period increase in gross profit was driven mainly by a favorable impact from lower fixed cost of $0.2 million or 15% of net sales. As compared to the first quarter of 2023, gross margin rebounded significantly from 2%, primarily due to improved sales and product mix along with a favorable impact from the change in inventory reserves due to orders received during the second quarter of 2023, which we expect to fulfill during the third quarter of 2023.

2023年第二季毛利率佔營收的百分比為17%，而2022年第二季為7%。毛利年漲主要得益於固定成本降低的正面影響，降至20萬美元，佔淨銷售額的15%。與2023年第一季相比，毛利率較2%大幅反彈，主要得益於銷售額和產品組合的改善，以及2023年第二季收到的訂單（我們預計這些訂單將在2023年第三季完成）導致庫存儲備變化帶來的正面影響。

Adjusting gross profit margins for excess and obsolete in-transit and net realizable value inventory reserve and scrap and write-offs related to our inventory reduction projects contributed to the non-GAAP adjusted gross profit of 7% for the second quarter of 2023 compared to a gross loss of 5% in the second quarter of 2022. Sequentially, adjusted gross profit improved compared to an adjusted gross loss of 1% in the first quarter of 2023.

調整過剩和過時的在途庫存、淨可變現價值庫存儲備和報廢以及與我們的庫存減少項目相關的註銷的毛利率，使得 2023 年第二季度的非 GAAP 調整後毛利達到 7%，而 2022 年第二季度的毛虧損為 5%。與 2023 年第一季 1% 的調整後毛虧損相比，調整後的毛利有所改善。

Operating expenses in the second quarter of 2023 were $1.3 million compared to $2.3 million in the second quarter of 2022. The decrease is primarily attributable to lower SG&A expenses due to a significantly decreased payroll and payroll-related expenses. Sequentially, operating expenses were flat as compared to the first quarter of 2023.

2023年第二季營運費用為130萬美元，而2022年第二季為230萬美元。下降主要歸因於銷售、一般及行政費用（SG&A）的降低，這主要歸因於工資及工資相關費用的大幅減少。環比而言，營運費用與2023年第一季持平。

Loss from operations for the second quarter of 2023 was $1.1 million, a decrease over the prior year comparable quarter loss amount of $2.2 million. Loss from operations also decreased $103,000 as compared to the prior quarter.

2023年第二季營業虧損為110萬美元，較去年同期的220萬美元減少。與上一季相比，營業虧損也減少了10.3萬美元。

Net loss was $1.2 million or $0.42 per share of common stock for the second quarter of 2023 as compared with a net loss of $2.5 million or $2.43 per share of common stock, which is reflective of the impact of the June 2023 1-for-7 reverse stock split in the prior year comparable quarter. Net loss also decreased $166,000 as compared to the prior quarter.

2023年第二季淨虧損為120萬美元，即每股普通股虧損0.42美元，去年同期淨虧損為250萬美元，即每股普通股虧損2.43美元。這反映了去年同期2023年6月進行的7拆1反向股票分割的影響。淨虧損也較上一季減少了16.6萬美元。

Adjusted EBITDA, a non-GAAP measure, which excludes depreciation and amortization, interest expense, stock-based compensation and other nonrecurring charges and/or sources of income such as incentive compensation, was a loss of $1 million for the second quarter of 2023 compared with a loss of $2.1 million in the second quarter of 2022. The improved adjusted EBITDA profit from the second quarter of 2023 was primarily due to improved margin and lower operating costs.

調整後 EBITDA 是非 GAAP 指標，不包括折舊和攤提、利息費用、股票薪酬和其他非經常性費用和/或激勵薪酬等收入來源。 2023 年第二季度，調整後 EBITDA 虧損 100 萬美元，而 2022 年第二季虧損 210 萬美元。 2023 年第二季調整後 EBITDA 利潤的改善主要歸因於利潤率提高和營運成本降低。

Now I'd like to turn to the balance sheet. Cash was $1.3 million as of June 30, 2023, as compared to $52,000 as of December 31, 2022. As of June 30, 2023, the company had total availability of $1.5 million, which consisted of $1.3 million of cash and additional borrowing availability of $204,000 under its credit facility. This compares to total availability of $107,000 as of December 31, 2022. As a reminder, the total availability is a non-GAAP measurement of our access to cash at any given point in time and we believe is a much more relevant metric than simply looking at cash balance or even net debt on the balance sheet.

現在我想看一下資產負債表。截至2023年6月30日，現金為130萬美元，而截至2022年12月31日，現金為5.2萬美元。截至2023年6月30日，公司總可用資金為150萬美元，其中包括130萬美元現金以及根據其信貸安排可獲得的20.4萬美元額外借款。相較之下，截至2022年12月31日，總可用資金為10.7萬美元。需要提醒的是，總可用資金是我們在任何特定時間點獲取現金的非公認會計準則衡量指標，我們認為，這比僅僅查看資產負債表上的現金餘額或淨負債更為重要。

During the first quarter of 2023, we reduced the maximum availability on our lending facility to $500,000 and agreed with our receivables lender to terminate our accounts receivable lending facility. Excess borrowing availability on our credit facilities represents the difference between the maximum borrowing capacity of the credit facilities and our actual borrowings under these credit facilities.

2023年第一季度，我們將貸款額度的最高可用額度下調至50萬美元，並與應收帳款貸款機構達成協議，終止應收帳款貸款額度。信貸額度的超額可用額度是指信貸額度的最高借款額度與我們在該信貸額度下的實際借款額度之間的差額。

During the second quarter of 2023, cash used in operations was $152,000. Cash provided by financing activities during the second quarter of 2023 was $1.2 million, primarily due to the completion of a private placement for the issuance of common stock, which raised $1.3 million in gross proceeds. As noted earlier in the call, in June 2023, we enacted a 1-for-7 reverse stock split as part of our strategy to regain compliance with NASDAQ's bid price rule.

2023年第二季度，營運現金使用量為15.2萬美元。 2023年第二季融資活動產生的現金為120萬美元，主要由於完成了普通股的私募，募集資金總額為130萬美元。如同先前電話會議所述，2023年6月，我們實施了1比7的反向股票分割，作為我們重新遵守納斯達克買入價規則策略的一部分。

With that, I'd like to make a few closing comments. Once again, the results we delivered today are still the beginning of a turnaround for Energy Focus. Although there is tremendous amount of work still to be done, I believe that our biggest hurdles are behind us, and we are focused back on sales, new product development and innovation. I look forward to sharing additional growth and improvements with you next quarter.

最後，我想說幾句總結。再次強調，我們今天所取得的成果仍是Energy Focus扭轉乾坤的開始。儘管我們仍有大量工作要做，但我相信最大的挑戰已經過去，我們正重新專注於銷售、新產品開發和創新。我期待下個季度與大家分享更多的成長和進步。

With that, we would like to open the call to questions. Operator?

現在，我們想開始提問。接線生？

(Operator Instructions) Our first questions come from the line of Sameer Joshi with H.C. Wainwright.

（操作員指示）我們的第一個問題來自 H.C. Wainwright 的 Sameer Joshi。

Great. Congrats on the continued turnaround. Nice to see margins come through as well. So let me start with there. Do you expect, as more RedCap inventory comes in, that the gross margin will improve from what you saw in 2Q, 17% going up to, say, some of the historical levels seen in 2020?

太好了。恭喜您持續扭虧為盈。很高興看到利潤率也有所提高。那麼，我先從這個角度說起。您是否預計，隨著更多 RedCap 庫存到貨，毛利率會比第二季的 17% 提高，達到 2020 年的歷史水準？

Thank you, Sameer, for your question, and I hope you're doing well today. Although we do not provide guidance, I do believe that as we continue to get fresh supply of both RedCap and new products that we will continue to improve our gross margin percentages. I know that's one thing that I've been committed to do, is to improve our overall revenues and our gross margin. And I do foresee it going up. However, I can't provide great guidance on where it will end.

謝謝你，Sameer，你的提問，希望你今天一切順利。雖然我們沒有提供業績指引，但我相信，隨著RedCap和新產品的持續供應，我們的毛利率將繼續提高。我知道我一直致力於提高我們的整體收入和毛利率。我確實預計它會上升。但是，我無法提供關於最終結果的明確指引。

Understood. That's fair. Just digging a little bit in this -- on this inventory. Is that also a bottleneck for sales in terms of -- is -- are your orders mainly for the new RedCap and other products as against the inventory that you already have on the books? How should we look at the sales ramp and inventory going forward?

明白了。這很合理。稍微深入探討一下庫存問題。這是否也是銷售瓶頸？您的訂單主要針對新款RedCap和其他產品，而不是您現有的庫存嗎？我們該如何看待未來的銷售成長和庫存？

Sure. So as we look at sales and inventory going forward, RedCap is what I like to call our lead horse in the race, and it pulls along a lot of our other inventory on the commercial side of our business. So as we have healthy stock of RedCap and as we focus so much on our RedCap product, it allows us to pull through some of our other WhiteCap or other more generic product categories because it allows us to offer our customers a fuller basket of products. So as we look at our inventory and where we're at today, the ability to pull through some of the items that we still have on hand at a higher level is all dependent on ensuring that we have our RedCap in stock.

當然。展望未來的銷售和庫存，我喜歡把RedCap稱為我們賽場上的領頭馬，它帶動了我們商業業務的許多其他庫存。由於我們擁有充足的RedCap庫存，並且我們非常專注於RedCap產品，它使我們能夠帶動其他一些WhiteCap或其他更通用的產品類別，因為它使我們能夠為客戶提供更全面的產品組合。因此，當我們審視我們的庫存和目前的狀況時，我們能否更好地利用我們庫存中仍存的一些產品，完全取決於確保RedCap的庫存充足。

Additionally, I also pointed out our EnFocus switches. Being able to have our EnFocus switches will allow us to sell a healthier level of our EnFocus tube products, which we also have a good inventory level in stock today. So as those products become available in future periods and we have healthier stocking positions and inventory levels, then we anticipate our sales channels to drive better demand and push that through.

此外，我還提到了我們的 EnFocus 開關。擁有 EnFocus 開關將使我們能夠更有效地銷售 EnFocus 管產品，目前我們的庫存水準也相當可觀。因此，隨著這些產品在未來一段時間內上市，我們的庫存狀況和庫存水準將更加健康，我們預計我們的銷售管道將能夠更好地推動需求，並最終實現這一目標。

Understood. Got it. On the -- specifically on the MMM pipeline, how much visibility do you have in terms of securing orders to, say, within the next 2 to 4 -- 2 to 6 quarters, getting at least to revenues seen in 2022 on an annual basis?

明白了。明白了。具體到MMM管道，你們在確保訂單方面有多大的可見性，比如說，在未來2到4個季度到2到6個季度內，至少實現2022年的年收入水準？

Great question. We do have inventory pipelines and have booked orders going through -- I think our -- yes, Q2 of 2024 today. As we continue to build back that channel and build the demand in that channel, we believe that we'll have better visibility out through future years and future periods. And that will -- and not only our demand in, let's say, Q3, Q4 but into future years.

問得好。我們確實有庫存管道，而且訂單已經到位——我想是的，也就是2024年第二季。隨著我們繼續重建該管道並創造需求，我們相信，未來幾年和未來一段時間的需求將更加可預測。這不僅會影響我們第三季、第四季的需求，還會影響未來幾年的需求。

So as we can -- if you recall, about a year ago, the company hired a new military sales leader, and that person has essentially rebuilt that entire pipeline in channel in the past year. Those sales are longer lead, longer lagging, and we continue to see additional orders within those channels. So although we don't have clear visibility where it will go in the next 6 quarters per se, we're getting a better sight and a much, much healthier pipeline quarter-over-quarter.

因此，如果您還記得的話，大約一年前，該公司聘請了一位新的軍事產品銷售主管，而這位主管在過去一年基本上重建了整個銷售管道。這些銷售的交付週期更長，延遲時間也更長，我們持續看到這些管道的訂單增加。因此，儘管我們目前尚不清楚未來六個季度的走勢，但我們已經對未來有了更清晰的認識，而且銷售管道的季度環比增長也更加健康。

Understood. And then just last one -- or actually just a couple more. Commercial revenues are making a comeback slowly. Should -- I mean is that a part of your revenue growth strategy going forward? Or how much part would that play? Because I know military seems to be in a good shape for now. But on the commercial front, should we expect to continue sequential increases in revenues?

明白了。最後再問最後一個問題──或者說再問幾個。商業收入正在緩慢回升。我的意思是，這是你們未來收入成長策略的一部分嗎？或者說，它會發揮多大的作用？因為我知道軍工業務目前看起來狀況良好。但在商業方面，我們是否應該期待營收繼續環比成長？

Absolutely. As we look to bring in healthier stocking levels on our commercial side, we anticipate growing our revenues within that side of the business. I -- that's the side that I'm continually looking to tweak and ensure that we are driving the business forward in. And with new stock and new RedCap to go out, to go out to show customers, I believe that we'll be able to drive that business forward even more.

當然。隨著我們努力提升商業業務的庫存水平，我們預期該業務的收入也會隨之成長。我一直在努力調整這方面業務，確保我們能夠推動業務發展。隨著新庫存和新RedCap產品的推出，以及它們將向客戶展示，我相信我們能夠進一步推動該業務的發展。

Understood. And now the last one. And this is not a significant item, but just was wondering product development costs, relatively flat or just is a bit lower. When should we expect these to turn back on? Like as sales increase, would you start investing more in R&D and product development?

明白了。現在是最後一個問題。這並非一個重要項目，我只是想知道產品開發成本是相對持平還是略低。我們什麼時候可以預期這些成本會恢復？例如，隨著銷售額的成長，您會開始加大對研發和產品開發的投入嗎？

Yes. As we continue to drive our top line revenue, that's where we hope to have a healthier balance in that area and be able to continue that tradition of having new products and innovation. So I do see a small increase in the future. However, we're looking to ensure that it doesn't get out of line with where our top line revenues are.

是的。隨著我們繼續推動營收成長，我們希望在這一領域實現更健康的平衡，並能夠延續推出新產品和創新的傳統。因此，我確實預計未來會有小幅成長。然而，我們希望確保這不會與目前的營收水準脫節。

There are no further questions at this time. With that, I would like to thank you all for your participation. You may disconnect your lines at this time. I hope you all have a great day.

目前沒有其他問題了。至此，我要感謝大家的參與。現在您可以掛斷電話了。祝大家今天愉快。