Energy Focus, Inc. (EFOI) swung to a net loss for the quarter ended Sep. 30, 2016. The company has made a net loss of $3.18 million, or $ 0.27 a share in the quarter, against a net profit of $4.26 million, or $0.40 a share in the last year period. Revenue during the quarter plunged 54.94 percent to $8.26 million from $18.34 million in the previous year period. Gross margin for the quarter contracted 1249 basis points over the previous year period to 37.31 percent. Operating margin for the quarter stood at negative 38.13 percent as compared to a positive 20.40 percent for the previous year period.
Operating loss for the quarter was $3.15 million, compared with an operating income of $3.74 million in the previous year period.
"As indicated in our press release on November 3, we delayed the release of our third quarter earnings report in order to have ample time to fully evaluate and quantify the impact of reported, abnormal failures of the Company's commercial Intellitube® products," said James Tu , chief executive officer and president of Energy Focus, Inc. "The failures did not involve any health or safety matters and appear to be limited to very specific situations in which the product had been installed in a certain manner or with certain ballasts. I'm pleased to report that with encouraging ingenuity and teamwork among our engineering, production and finance departments, in a short order we were able to identify the root cause, develop corresponding remedies and determine a course of action under our standard warranty policy and warranty reserve at September 30, 2016 and that the impact, at less than 1% of our third quarter sales, was not material to our current quarter results. In addition, we do not expect any significant, lingering technology or quality ramifications going forward associated with this issue."
Working capital declines
Energy Focus, Inc. has witnessed a decline in the working capital over the last year. It stood at $34.14 million as at Sep. 30, 2016, down 20.39 percent or $8.74 million from $42.88 million on Sep. 30, 2015. Current ratio was at 7.10 as on Sep. 30, 2016, up from 6.14 on Sep. 30, 2015. Cash conversion cycle (CCC) has increased to 93 days for the quarter from 64 days for the last year period. Days sales outstanding went up to 42 days for the quarter compared with 25 days for the same period last year.
Days inventory outstanding has increased to 124 days for the quarter compared with 89 days for the previous year period. At the same time, days payable outstanding went up to 74 days for the quarter from 51 for the same period last year.
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