Energy Focus, Inc. Investor Presentation - August 2021
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Investor Presentation
Energy Focus, Inc. August 2021
© Energy Focus, Inc.
Forward Looking Statements
Forward-looking statements in this presentation are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements can generally be identified
by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “feels,” “seeks,” “forecasts,” “projects,” “intends,” “plans,” “may,” “will,” “should,”
“could,” or “would” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts and include
statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies, capital
expenditures and the industry in which we operate. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or
may not occur in the future. Although we base these forward-looking statements on assumptions that we believe are reasonable when made in light of the information currently available to us, we
caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and industry developments may differ
materially from statements made in or suggested by the forward-looking statements contained in this presentation. We believe that important factors that could cause our actual results to differ
materially from forward-looking statements include, but are not limited to: (i) disruptions and a slowing in the U.S. and global economies and business interruptions experienced by us, our customers
and our suppliers as a result of the COVID-19 pandemic and related impacts on travel, trade and business operations; (ii) our ability to realize the expected novelty, disinfection effectiveness,
affordability and estimated delivery timing of our UV-C disinfection (“UVCD”) products and their performance and appeal compared to other products; (iii) our ability to extend our product portfolio
into commercial services and consumer products; (iv) market acceptance of our LED lighting, control and UVCD technologies, services and products; (v) our need for additional financing in the near
term to continue our operations; (vi) our ability to refinance or extend maturing debt on acceptable terms or at all; (vii) our ability to continue as a going concern for a reasonable period of time; (viii)
our ability to implement plans to increase sales and control expenses; (ix) our reliance on a limited number of customers for a significant portion of our revenue, and our ability to maintain or grow
such sales levels; (x) our ability to add new customers to reduce customer concentration; (xi) our reliance on a limited number of third-party suppliers and research and development partners, our
ability to manage third-party product development and obtain critical components and finished products from such suppliers on acceptable terms and of acceptable quality, and the impact of our
fluctuating demand on the stability of such suppliers; (xii) our ability to timely and efficiently transport products from our third-party suppliers to our facility by ocean marine and other logistics
channels; (xiii) our ability to increase demand in our targeted markets and to manage sales cycles that are difficult to predict and may span several quarters; (xiv) the timing of large customer orders,
significant expenses and fluctuations between demand and capacity as we invest in growth opportunities; (xv) our ability to compete effectively against companies with lower prices or cost structures,
or greater resources, or more rapid development efforts, and new competitors in our target markets; (xvi) our ability to successfully scale our network of sales representatives, agents, distributors and
other channel partners to match the sales reach of larger, established competitors; (xvii) our ability to attract, develop and retain qualified personnel, and to do so in a timely manner; (xviii) the impact
of any type of legal inquiry, claim or dispute; (xix) general economic conditions in the United States and in other markets in which we operate or secure products; (xx) our dependence on military
maritime customers and on the levels and timing of government funding available to such customers, as well as the funding resources of our other customers in the public sector and commercial
markets; (xxi) business interruptions resulting from geopolitical actions, including war and terrorism, natural disasters, including earthquakes, typhoons, floods and fires, or from health epidemics or
pandemics or other contagious outbreaks; (xxii) our ability to respond to new lighting technologies and market trends; (xxiii) our ability to fulfill our warranty obligations with safe and reliable
products; (xxiv) any delays we may encounter in making new products available or fulfilling customer specifications; (xxv) any flaws or defects in our products or in the manner in which they are used
or installed; (xxvi) our ability to protect our intellectual property rights and other confidential information, and manage infringement claims made by others; (xxvii) our compliance with government
contracting laws and regulations, through both direct and indirect sale channels, as well as other laws, such as those relating to the environment and health and safety; (xxviii) risks inherent in
international markets, such as economic and political uncertainty, changing regulatory and tax requirements and currency fluctuations, including tariffs and other potential barriers to international
trade; (xxix)our ability to maintain effective internal controls and otherwise comply with our obligations as a public company; and (xxx) our ability to maintain compliance with the continued listing
standards of The Nasdaq Stock Market. For additional factors that could cause our actual results to differ materially from the forward-looking statements, please refer to our most recent annual report
on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission.
© Energy Focus, Inc. P2
Company Snapshot: Aiming to Lead & Expand the
Emerging Global Human Centric Lighting Market
Innovator of LED lighting technologies and solutions:
- With a proven track record for superior quality and innovation in LED since 2004
- Marquee enterprise customers, including U.S. and foreign navies, U.S.
governments, healthcare, educational, and Fortune 500 organizations
- Leveraging lighting expertise to expand into UVC disinfection and lighting
controls
New management since April 2019 restructured and resumed expansion:
- Aiming to build a global industry leader and create exceptional value as LED and human-centric
lighting (HCL) adoption accelerates
- Net Sales for the FY 2020 grew 32.5% over 2019
- Launched EnFocus HCL control platform based on powerline controls in Q3 2020; won “Top Product
of the Year” from E+E
Launching patent-pending SuncycleTM and UVC Consumer Products starting 2H
2021:
- Suncycle, planned to launch Q4’21-Q1’22, to provide breakthrough, patented HCL
capabilities-- dimming, color tuning and circadian lighting for both homes and offices
- Targeting to retrofit 10+ billion lighting fixtures and sockets in the US and globally
- Forecasting to start selling
© Energy Focus,UVC-254nm
Inc. disinfection products in late Q3/early Q4 2021 P3
2019-2021 Quarterly Financial Overview:
COVID Interrupted Growth, Launching B2C Products in Q4’21
$ in millions
Net Sales Operating Expenses
$6.0 3.5
3
$3.5 $3.8 $3.3 $3.7 2.5
$3.1 $2.9 $2.6 $2.1 2
1.5 $2.9 $2.6
1 $2.0 $1.9 $2.1 $2.3 $2.3 $2.4 $2.3
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 0.5
2019 2019 2019 2020 2020 2020 2020 2021 2021 0
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Commercial Military 2019 2019 2019 2020 2020 2020 2020 2021 2021
Inventories, Net Days Inventory
Adjusted EBITDA Outstanding (“DIO”)4
(Net loss excluding restructuring, interest, gain on forgiveness of PPP loan, loss
on extinguishment of debt, depreciation and amortization, stock-based 300
compensation, change in fair value of warrants, other incentive compensation, a
reconciliation is provided on slide 34)
200
($0.8) ($1.1) ($0.7) ($0.9) ($0.8) 219 264 267 246 251 228
($1.1) 100 208 200
($2.0) ($2.0) ($2.0) 173
-
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2019 2019 2019 2020 2020 2020 2020 2021 2021
Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 4 Inventories, Net DIO = (Avg Rolling 12mo. Inventories, Net/Rolling 12 mo.
© Energy Focus, Inc. COGS) * 365 P4
Human Centric Lighting (HCL):
Transforming Lighting Into Wellness Technology
Human
Digital (Efficiency- (Wellness-Focus)
Focus)
HCL
LED 2020
Fluorescent
1995
1940
Analog (Illumination-
Focus)
Incandescent
1880
© Energy Focus, Inc. P5
HCL: Significant, Untapped Potential For Human Wellness
HCL: Lighting technologies that improve human physiological & psychological
performances through both visual and non-visual effects
Visual Benefits Non-Visual Benefits
● Task Performance ● Comfort
● Circadian Rhythm (EnFocus/Suncycle)
- CRI - Flicker
- 24-hour, sleep/wake cycle
- Light Level - Glare
- Melatonin suppression/release
- Improves sleep, alertness and
productivity
● Safety
- UVC Germicidal Disinfection
(nUVo, abUV, mUVe)
- Emergency lighting (RedCap)
© Energy Focus, Inc. P6
Adoption of LEDs Just Exceeded 25% and Accelerating
© Energy Focus, Inc. P7
Smart Lighting & HCL To Emerge & Grow Rapidly
Estimated Market Sizes From 2021-2027*
*Sources: “Smart Lighting Global Forecast to 2026”, Markets©&Energy
Markets; “Human Centric Lighting Forecast 2021-2027”, Global Market Insights
Focus, Inc. P8
Building Innovations & IPs To Lead The HCL Revolution
Transforming LED from an “Energy Efficiency” Story to Human-Centric
LED Lighting Human Centric Lighting (HCL)
• Flicker-Free • Flicker-free
• Primarily 10-Year Warranty • Dimming & Color Temperature
• “Military-Tough” with best Tuning
industry reliability record • Circadian Rhythm
• UVC Disinfection
Emergency
Battery Backup
• RedCap®
© Energy Focus, Inc. P9
Distinguished History of Technology Innovations-
Three Industry Tech Awards since 2020
© Energy Focus, Inc. P10Growing Portfolio of Advanced HCL Products To
Address Military, Commercial, & Consumer Markets
• LED Products: • EnFocusTM Controls:
o Proven high-quality o Lighting controls through
LEDs with numerous powerline
case studies o Most affordable by a
o Government incentives factor of 3-6
to expand dramatically o SuncycleTM planned to
enter residential markets
• UVC Disinfection: late Q4 early Q1’22
o Advanced portfolio • Military-Grade
of UVC-254nm air Luminaires:
and surface o Docklight,
disinfection Downlight, Flood
solutions and Area Light
o Planned deliveries o Explosion and
Q4 2021 Hazardous Globes
© Energy Focus, Inc. P11Proven Quality Leadership & Mission-Critical Installations
Education Healthcare U.S. Navy
Quality of lighting and flicker free Environmental sustainability, Energy and maintenance savings,
environment is important to quality of lighting, flicker free and improved quality of lighting for
schools for enhanced, focused environment and circadian rhythm sailors important to the U.S. Navy
concentration and learning capabilities
• 230+ unique customers, • 70+ unique hospital customers • 160+ unique military customers
including U. of Minnesota, U. of including National Institute of including US Navy, Australian
Central Florida, Yale, St. John’s, Health, Cleveland Clinic, Mayo Navy, Canadian Navy,
Penn State, Michigan State, over Clinic, Cardinal Health, ConocoPhillips; 70%+ market
100 school districts Northwestern U. Medical share in US Navy LED lighting &
800K+ installed
© Energy Focus, Inc. P12EnFocus™ & Suncycle™: Making Circadian Lighting Accessible For Buildings & Homes
P12
7/ 24/ 2020 © Energy Focus, Inc. P13Groundbreaking HCL Control Platform
© Energy Focus, Inc. P14Circadian Lighting Influencers
You can, for example, make your lights bluer and brighter in the morning to promote alertness and assist in waking
up, and then set your lights to be redder and dimmer as the day progresses to allow melatonin production.
© Energy Focus, Inc. P15Circadian HCL Can Boost Health
Sleep:
2/3 of adults fail to obtain the recommended
8 hours of nightly sleep.
Insufficient sleep is linked to:
Alzheimer’s disease
Diabetes
Cardiovascular disease
Stroke
Congestive heart failure
All major psychiatric conditions
Weight gain
Source: Why We Sleep (2017), Matthew Walker, PhD
© Energy Focus, Inc. P16Circadian Lighting Significantly Boosts
Health of Older Adults
“Since 2010, studies in patients with Alzheimer's disease have
demonstrated ‘extreme success’ with circadian lighting in
restoring normal sleep patterns”.
- Dr. Mariana Figueiro, Lighting Research Center, Rensselaer Institute of Technology;
https://www.lrc.rpi.edu/programs/lighthealth/lightolderadults.asp
- Mariana Figueiro, PhD, director of the Lighting Research Center at Rensselaer Polytechnic
https://www.lrc.rpi.edu/programs/lighthealth/lightolderadults.asp
© Energy
© Energy Focus,
Focus, Inc.Inc. P17P14Circadian Lighting Significantly Boosts
Learning Effectiveness
“Students exposed to lighting with higher light intensity and
light temperature levels had, by the end of the year, increases
in performance that were 33% higher than the increases in
performance of the control group.”
- Human Centric Lighting, Stan Walerczyk, CLEP, LC,
https://humancentriclighting.org/wpcontent/uploads/2012/07/Stan-Article-SSL1.pdf
© Energy Focus, Inc. P18Circadian Lighting Significantly Boosts
- Worker Productivity
“Occupancy study shows that productivity was boosted by up to
20%. Additionally, employees were 38% calmer, and 10% more
focused than their colleagues in the rest of the office.”
- Dr. Marcella Ucci, head of the MSc in Health, Wellbeing and Sustainable Buildings at the University College of
London https://www.luxreview.com/2019/05/22/office-with-circadian-lighting-boosts-productivity/
© Energy Focus, Inc. P19Bringing Circadian Lighting To Existing
Buildings & Homes For the First Time
• The most sustainable
• Preserving high • Much lower cost and affordable lighting
power factor and to install than control solution versus
• Simple retrofit low total harmonic other wired or other LED alternatives.
• Network safe and installation, with distortion (THD), wireless dimming EnFocus™ LED lamps
secure LED no additional unlike traditional and color tuning replace existing tubes
lighting control wiring for control phase-cut dimming LED lighting instead of replacing
solution capabilities approaches systems the whole fixture
© Energy Focus, Inc. P20Offering Disruptive HCL Value
L* switch + integrated E* Control System w/ P*, O* Dali Control
EnFocus color tuning fixture sensors Systems
Hardware $225 $700 $1,400 $1,400
Labor (4 fixtures:
$60 $150 $150 $150
removal & installation)
Labor (1 switch:
installation & conduit $15 $150 $150 $300
wiring)
Total $300 $1,000 $1,700 $1,850
Cost Multiple Vs.
EnFocus 1.0x 3.3x 5.7x 6.2x
© Energy Focus, Inc. P21Benefits of HCL to Dwarf Energy Efficiency:
1% Productivity Gain=100% Total Energy Cost
Jones Lang Lasalle’s real estate industry rule of thumb, called the “3-30-300”, states that
each year it costs a building…
$3/sq.ft. $30/sq.ft. $300/sq.ft.
$3 in utilities $30 in rent $300 in payroll
https://www.us.jll.com/en/trends-and-insights/workplace/a-surprising-way-to-cut-real-estate-costs
© Energy Focus, Inc. P22UVC Disinfection Initial Product Portfolio
• nUVo Tower: Free- • Combined EnFocus Circadian • Autonomous UVC-254nm
standing & Portable Air Lighting + UVC-254nm Air Surface Disinfection Robot
Disinfection Disinfection Troffer • Winner of FacilitiesNet
• nUVo Traveler: Personal & 2021 “Vision Award”
In-Vehicle Air Disinfection © Energy Focus, Inc. P23Emerging UVC Market Poised To Grow Rapidly
Total Market: UV-C Disinfection Solutions Sales
6
5
4
$5.7B
3
2
1
$ in Billions
$1.3B
0
2019 2027
2019 2027
*Source: alliedmarketresearch.com UV-C Disinfection Equipment Market Outlook, December 2020
© Energy Focus, Inc. P24Tower - Virus-Targeted UV-C Air Disinfection
for Common Spaces
• Designed to inactivate 99.9%+ coronavirus and influenza
• 24-hour continuous disinfection capability
• 2 air changes per hour (2 ACH) in a 500 square-foot room (4 fan speed settings
to 150 CFM)
• Patent-pending design with outside LED-strip (w. optional on/off display
button)
• Contemporary patent-pending design including the UVC Blocker for safety
• 86 electric watts for 35 UVC-254nm watts output
• LED indicators for lamp replacement notification and diagnosis
• Safe and filter free with easily replaceable UV-C lighting module that lasts
10,000 hours (3 years for 8 hours/day operation)
© Energy Focus, Inc. P25
P25Ideal for Small Offices/Home Offices/Homes
Planned availability: Q3-Q4 2021
© Energy Focus, Inc. P26Traveler - Virus-Targeted
Planned Availability: Q3-Q4 2021
Personal UV-C Air Disinfection
Device
• Designed to inactivate 99.9%+ bacteria, mold and
viruses including influenza, coronavirus and its
variants
• Intercepts potentially infected air in real time
• 8 air changes per hour (8 ACH) in a compact car
• Contemporary patent-pending design including UV-
C Blocker for safety
• Filter-less design
• USB rechargeable with battery power up to 4 hours
• Perfect for personal and mobile uses
© Energy
© Energy Focus, Inc. Focus, Inc. P27Affordable and Powerful UV-C Troffer,
Plus Highest Quality Circadian Lighting
• Designed to inactivate 99.9%+ coronaviruses and influenzas
• 2 air changes per hour (2 ACH) for 100-sq.ft. per 2x4 troffer
and 65-sq.ft. for 2x2
• Includes three (3) EnFocus flicker-free, color tuning and
dimming TLED lamps
• (1) ozone-free UV-C lamp in an enclosed housing for
continuous safe air disinfection
Contaminated Air In Disinfected Air Out • Controlled by exclusive EnFocusTM room-based wall switch
• LED indicators for lamp replacement notification and
diagnosis
• No filter change needed; UV-C lamp last 10,000+ hours
Planned Availability: Q4 2021
© Energy Focus, Inc. P28Award-Winning Autonomous UVC
Disinfection Robot
• Designed to inactivate 99.9%+ coronaviruses and influenzas at a speed
of 18 inches/second, or ~10,000 sq. ft. per hour
• Additional UV-C lamp on the robot’s base for floor disinfection
• Safety assurance and anti-collision through LiDAR sensors and
machine vision sensors, as well as a single-eye camera and one depth
camera included
• Fully autonomous robot capable of mapping over 2 million square
feet of space and performing scheduled disinfection
• Quick battery change out for continuous operation
• Continuous air movement across the length of the lamp to cool and
increase the life of the quartz, ozone-free UV-C lamp
Planned availability: Q4 2021 © Energy Focus, Inc.Category Creator For an Explosive & Permanent New Market
Proven Disinfection Technology Rapidly Emerging Needs
UVC Disinfection has
been proven to MARKET Demand for UV disinfection
equipment during the COVID-
inactivate coronavirus 19 pandemic has increased by
and influenza and DYNAMICS nearly 1,000%
other infectious
for
https://www.alliedmarketresearch.com/uv-
viruses since 1930s disinfection-equipment-market
Energy Focus
Large Potential Markets
Addressing both commercial
UVCD Competitive Landscape
Comprehensive, effective and
buildings (~5M with ~100B sq.ft.
just in the US) and
Solutions affordable UVC solutions with
the latest, patented
residential/consumer markets technologies backed by EFOI’s
long-term reliability track
record
© Energy Focus, Inc. P30Summary Balance Sheets
As of As of
($ in thousands) 6/30/2021 12/31/2020
Cash $1,327 $1,836
Capital Structure
Total current assets $12,323 $11,076 (as of June 30, 2021)
Total assets $13,402 $12,397
Total current liabilities $7,752 $7,557
$3,113
Total liabilities $7,799 $8,142
Stockholders’ equity1 $5,603 $4,255
Total liabilities and stockholders’ equity $13,402 $12,397
Availability (non-GAAP)
$15,612
Cash $1,327 $1,836
Excess Availability under credit facility2 $2,792 $1,662 Debt MV of Equity
Total Availability3 $4,119 $3,498
1 2021 Additional capital includes $5.0M in gross proceeds from June 2021 equity offering; 2020 Additional Market value of equity based on closing stock price of $3.07 on August 12,
capital includes $2.3M in gross proceeds from January 2020 equity offering + $795K in proceeds from April 2021 and 5.09M shares outstanding as of June 30, 2020
2020 PPP loan
2 Represents difference between maximum borrowing capacity of credit facility and actual borrowings
3 Represents Company’s ‘access’ to cash if needed at point in time (Cash + Excess Availability)
© Energy Focus, Inc. P31Energy Focus: Key Investment Attributes
1 2 3 4
Significant leadership & IP Proven industry Proven and vested Breakthrough, award-
in the rapidly emerging innovation leader, with executive team leading winning EnFocusTM and
human-centric lighting high performance LED and completing corporate SuncycleTM HCL products
(HCL) market lighting products installed relaunch with significant addressing both C&I and
in numerous military, new product launches consumer markets
healthcare, education planned in Q3/Q4 2021 including 10+ billion
and enterprise mission- fixtures & sockets in the
critical facilities US market and much
more globally
5 6 7
Innovator in the rapidly Strengthened balance Significant management
emerging UVC sheet and liquidity to and insider ownership
disinfection market with support aggressive ~20%
advanced and unique growth
products including nUVo,
abUV, & mUVe
© Energy Focus, Inc. P32THANK YOU!
Energy Focus, Inc.
James Tu, Chairman and CEO
Tod A. Nestor, COO and CFO
© Energy Focus, Inc. P33APPENDIX - Adjusted EBITDA Reconciliation
As of As of As of As of As of As of As of As of As of
($ in thousands) 06/30/2019 09/30/2019 12/31/2019 03/31/2020 06/30/2020 09/30/2020 12/31/20 03/31/21 06/30/21
Net Loss $ (2,254) $ (946) $ (1,308) $ (541) $ (4,340) $ (1,165) $ 65 $ (1,642) $ (2,473)
Restructuring (recovery)/expense 128 (19) (47) (14) (14) (16) (16) (19) (3)
Net Loss, excluding restructuring (2,126) (965) (1,355) (555) (4,354) (1,181) 49 (1,661) (2,476)
Interest expense 26 67 79 133 87 124 137 127 216
(Gain) on forgiveness of PPP
loan/loss on extinguishment of debt - - - - - 159 117 (801) -
Income tax (benefit)/expense - - 10 - - (2) (3) - -
Depreciation 95 77 49 46 46 48 44 47 53
Stock-based compensation (20) 34 59 20 41 35 35 140 208
Change in fair value of warrant
liability - - - (873) 3,300 (153) (1,188) - -
Other incentive compensation - - 51 139 134 52 17 118 12
Adjusted EBITDA $ (2,025) $ (787) $ (1,107) $ (1,090) $ (746) $ (918) $ (792) $ (2,030) $ (1,987)
© Energy Focus, Inc. P34You can also read
