ENERGY FOCUS Revenue Soars in 3Q15

Energy Focus, a leader in LED lighting technologies, today announced financial results for the third quarter ended Sept. 30, 2015.

“Our continuing rapid year-over-year growth in sales and profits during the third quarter reflect the steadfast focus and tireless dedication of our teams in bringing high quality and customer centric TLED products to targeted industry verticals,” said James Tu, Executive Chairman and Chief Executive Officer of Energy Focus, Inc.  “In addition to robust sales of products for the U.S. Navy, which has now reached a fleet penetration rate of approximately 30%, during the quarter, we started to register significant year-over-year, as well as quarter-over-quarter, growth in commercial sales, after more than 18 months of persistent and steady account and pipeline building, which is accelerating as we augment our business development and sales force.  Our gross margins also grew during the quarter due to increased operational efficiency, as well as strengthened buying power resulting from higher unit volumes.”

“Our most exciting sales development during the quarter was the entry into a multi-million-dollar LED retrofit contract by a leading, global healthcare institution with initial product deliveries expected in the fourth quarter this year.  This milestone win has ignited considerable interest in our products and helped initiate and expand our pipeline of opportunities from numerous hospital chains across the country.  As a result, we believe that we will be able to score more wins, accelerate LED adoption and establish a distinct leadership position in the healthcare industry over the coming quarters and years to markedly improve hospitals’ environments for better sustainability and health wellbeing,” Tu added.

“Also during the third quarter, we successfully closed on a follow-on offering of our common stock, which strengthened our balance sheet further and enabled us to not only fund the working capital for our continuing, exponential growth but also move forward, in the most timely manner, on several strategic growth initiatives, most notably of which include accelerating the build-out of our direct sales force across regions and verticals, expanding our "Made in America" product lines, and making attractive financing alternatives available for qualified customers,” continued Tu.

Tu concluded, “In addition to record financial performance, we are gratified by the expanding financial and sustainability impacts Energy Focus is facilitating for our customers and for the environment. We have made, and will continue to make, significant and increasing investments in our people, sales and distribution channels, as well as all aspects of our internal infrastructure, to further our goal of creating the most exciting, purposeful, and trusted organization in the rapidly evolving lighting industry to support our ongoing growth, brand building and community transformation.”

Business Outlook:

Net sales of $18.3 million for the third quarter of 2015 increased 151.0% compared to the third quarter of 2014. The increase was due to continued sales of our government products for the U.S. Navy, as well as an increase in commercial product sales. Net sales of our commercial products increased 66.8% compared to the third quarter of 2014 as we continued to penetrate the markets we are targeting.

Gross profit was $9.1 million, or 49.8% of net sales, for the third quarter of 2015, compared to $2.5 million, or 34.2% of net sales for the third quarter of 2014. The increase was due primarily to engaging new suppliers to lower our product costs as we increase sales volumes, performing value analysis/engineering processes, and our continuous development of operating efficiencies.

While quarterly results will vary and fluctuate due to order and delivery timing, the Company believes it will achieve net sales growth in excess of 100% in 2015 over 2014 without taking into account discontinued operations with respect to 2014.  Additionally, gross margins are expected to remain above the Company’s targeted 35% for 2015.

Operational Highlights:

  • Expanded penetration in the healthcare market, including a long-term contract award from one of the largest global healthcare institutions to retrofit its main campus in Northeast Ohio with tubular LEDs (“TLEDs”)
  • Added five retail chain operators with over 1,000 combined locations as new customers
  • Continued to expand our partnership with U.S. Green Building Council and added 15 school districts as customers in four states
  • Opened new operations center in Taiwan to better leverage and collaborate with the company’s supply chain in the Far East to expedite product development, ensure quality standards and further advance our technology and product leadership position
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