Revolution Lighting Provides Additional Clarity Regarding Its Recent Preliminary Third Quarter Results Issued on October 17, ...
October 19 2018 - 7:23PM
Revolution Lighting Technologies, Inc. (NASDAQ: RVLT) (“Revolution
Lighting” or the “Company”), a global provider of advanced LED
lighting solutions, today provided additional information regarding
third quarter results. On October 17, 2018, Revolution
Lighting provided a preliminary update regarding third quarter
revenue and full year revenue guidance. In the release, the
company reported that third quarter revenue is expected to be
approximately $33 million versus prior guidance of $40-$42 million,
and as a result of the third quarter shortfall and the expected
revenue for the fourth quarter, the company is also reducing
revenue guidance for the year to a range of $140-$145 million
versus prior guidance of $160-$170 million. The press release
also disclosed that the Board of Directors of Revolution Lighting
had formed a special committee of independent directors to evaluate
an offer from its largest stockholder and CEO, Mr. Robert LaPenta
and affiliates, to acquire all of the equity of Revolution Lighting
not owned by Mr. LaPenta for $2.00 per share.
Management does not believe that revenue reduction described in
the release is due to any loss or deterioration of the Company’s
business or from the discontinuation of bill and hold transactions
that are the subject of an investigation by the Securities and
Exchange Commission (“SEC”), as described below, but rather
resulted from the timing of the start and completion of programs
during the third quarter at the Company’s Value and Tristate
divisions. These delays, plus a revised more conservative
outlook regarding the fourth quarter revenue guidance, resulted in
the reduced outlook for the year.
There is currently an ongoing investigation by the SEC regarding
certain revenue recognition practices, including bill and hold
transactions that occurred between 2014 through the second
quarter of 2018. The Company estimates that the net effect on
the reported revenue as a result of, among other things, recording
revenue based on shipments of products, as opposed to bill and hold
revenue recognition used by the Company, would have been to reduce
revenue by $5.0 million, $6.3 million and $6.3 million in each of
2014, 2015 and 2016, respectively, and increase revenue by $11.6
million and $5.1 million in 2017 and 2018, respectively. In
connection with the results of the investigation to date, the
Company is in the process of assessing its revenue recognition
policies and the resulting effects on its financial results, and
adopting remedial measures to improve its internal controls as
described in its Form 10-Q for the second quarter of 2018.
The SEC investigation is ongoing and there can be no assurance as
to whether additional remedial measures will be required. The
Company will continue to cooperate with the SEC regarding the
investigation.
The Company expects an Adjusted EBITDA loss for the third
quarter of approximately $2-$3 million and cash flow from
operations during the third quarter was approximately
break-even. Also as previously disclosed, during the third
quarter Mr. LaPenta exchanged $3 million of debt for equity.
As a result of the operational cash flow and the debt for equity
exchange, overall company debt decreased from $62.8 million at June
30, 2018 to $60.4 million at September 30, 2018.
The reduced revenue for the third quarter of 2018 ($33 million
versus $40-$42 million) and the lower revenue outlook for the
fourth quarter reduced the expected collateral availability under
our bank facility. Due to the lack of bank line availability,
it became obvious that additional capital would be required to
support operations. As described in the release and our prior
filings with the SEC, Mr. LaPenta has historically provided
financing to fund any shortfall in working capital and has provided
over $15 million to date in 2018. Mr. LaPenta intends to
continue to support these requirements in the near term.
Also, Mr. LaPenta believes in addition to reducing expenses
associated with being a public company, the Company could also
focus additional expense reduction initiatives that would be best
accomplished as a private company. The Company has prepared
forecasts of its cash flow needs based on anticipated revenue,
borrowing capacity, cash receipts and disbursements and expects
that it will need approximately $5-$10 million in additional
funding through the end of the year. Mr. LaPenta is expected
to continue to fund the Company through continued periodic loans as
required. Over the past two weeks, Mr. LaPenta has provided
additional financing of $2 million and expects to increase his
support by another $3 million in the coming weeks. In
addition, the Company is working with its existing lender to
provide additional funding above its current capacity, and
anticipates that it will request covenant waivers to assist it
during the pendency of the independent committee’s review of
strategic alternatives. The Company believes that through the
above actions it will continue to operate in the normal course of
business without regard to any unexpected or unusual events.
Mr. LaPenta believes the Company and its employees could be
better served pursuing programs in a strategic manner rather than
having to make shorter term tactical decisions to achieve results
expected by Wall Street. As a result, Mr. LaPenta has
proposed to acquire the equity that he and his affiliates do not
currently own for $2.00 per share and take the Company
private. As noted in his letter to independent directors, Mr.
LaPenta will not pursue any such transaction unless approved by
both the recently constituted and fully empowered independent
committee and by holders of a majority of the stock not controlled
by Mr. LaPenta and his affiliates. Mr. LaPenta is
supportive of the special committee evaluating other strategic
alternatives and pursuing any alternative transaction that provided
greater value to all of the Company’s stockholders.
Mr. LaPenta believes with the reduction in costs and the
restructuring to better align our engineering, marketing and other
Company resources, the Company will achieve the profitability and
success that management and our employees have been working so hard
to achieve.
As discussed and disclosed in our release the Company’s Board of
Directors has formed and fully empowered a committee comprising
solely independent directors for the purpose of evaluating and
negotiating any transaction with Mr. LaPenta and to otherwise
evaluate the Company’s strategic alternatives. The committee
will retain independent financial and legal advisors to evaluate
Mr. LaPenta’s proposal and the committee will also work with and
provide whatever data is required by any independent parties that
may be interested in making a competitive offer to acquire the
Company.
About Revolution Lighting Technologies Inc.
Revolution Lighting Technologies, Inc. is a leader in the
design, manufacture, marketing, and sale of LED lighting solutions
focusing on the industrial, commercial and government markets in
the United States, Canada, and internationally. Through advanced
LED technologies, Revolution Lighting has created an innovative
lighting company that offers a comprehensive advanced product
platform of high-quality interior and exterior LED lamps and
fixtures, including signage and control systems. Revolution
Lighting is uniquely positioned to act as an expert partner,
offering full service lighting solutions through our operating
divisions including Energy Source, Multi-Family and Tri-State LED
to transform lighting into a source of superior energy savings,
quality light and well-being. Revolution Lighting Technologies
markets and distributes its products through a network of regional
and national independent sales representatives and distributors, as
well as through energy savings companies and national accounts.
Revolution Lighting Technologies trades on the NASDAQ under
the ticker RVLT. For more information, please
visit rvlti.com and connect with the Company
on Twitter, LinkedIn and Facebook.
Cautionary Statement for Forward-Looking
Statements
Certain of the above statements contained in this press release
are forward-looking statements that involve a number of risks and
uncertainties, including statements relating to our business
pipeline and sales opportunities and our revenue our revenue,
Adjusted EBITDA and cash flow outlook. Such forward-looking
statements are within the meaning of that term in Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Reference is made to Revolution Lighting's
filings under the Securities Exchange Act for additional factors
that could cause actual results to differ materially, including our
history of losses, customer concentration risks, the potential for
future dilution to our existing common stockholders, the risk that
demand for our LED products fails to emerge as anticipated, the
availability of financing for our customers, competition from
larger companies, and risks relating to third party suppliers and
manufacturers, as well as the other Risk Factors described in Item
1A of our Form 10-K for the fiscal year ended December 31,
2017. Revolution Lighting Technologies, Inc. undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events,
or otherwise. Readers are cautioned that any such
forward-looking statements are not guarantees of future performance
and involve risks and uncertainties, and that actual results may
differ materially from those indicated in the forward-looking
statements as a result of various factors. Readers are
cautioned not to place undue reliance on these forward-looking
statements.
RVLT Investor Relations Contact: Amato and Partners, LLC
Investor Relations Counsel admin@amatoandpartners.com
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