This award-winning company is an industry leader in the important growing business of sales, distribution and installation of energy-efficient state-of-the art commercial lighting. In addition, they are a wholesale distributor of LED lighting fixtures, including their own private label LED lamps and fixtures. Their compelling marketing strategy is economically-driven. It offers prospective customers the advantage of improving their lighting quality; all while capturing available Utility Company rebates that when coupled with their resulting reduced energy costs combine to improve their bottom-lines with virtually no customer risk.
Over the past 8- years the Company has established a client list of over 5,000 satisfied customers with over 500- million square feet of commercial property; including many of the nation's Fortune 500 companies, all while steady growing revenues and profitability. They are a recognized leader in the California rebate programs and have been awarded 'Top Contractor' status by the major California utility Companies. During the past year they have developed a profitable and cost effective strategy to expand their marketing nationwide. The accelerating rapid adoption of LED lighting as the cost-effective industry lighting standard has fundamentally changed the economics of commercial lighting. The Company's advanced business model was cleverly built to permit them to fully exploit and seize the nationwide growth opportunities by marketing directly to end-users without the complex and risky issue of necessarily securing local pools of install labor. Their low fixed rate model, built with variable costs, allows them the ability to quickly scale the business and take advantage of nationwide opportunities, often driven by new utility rebate programs, as they materialize.
Growth Prospects- Utility Rebates and Gov't Incentives makes for a Compelling Economic Sale:
Clean air mandates coupled with the enormous cost and regulatory hurdles for utilities to create new energy generating plants have driven the rapid adoption and expansion of Utility rebate programs to incentivize user to convert to energy efficient lighting. It's estimated that approximately 30% of all commercial energy usage nationwide is from lighting. Reducing customer energy usage, particularly in the large energy usage segment of commercial lighting, is a major component of Utility Companies strategies for meeting near-term energy demand.
Nationwide, state governments are also beginning to provide funding for energy efficiency. U.S. energy companies have increased utility rebates from $4.5B in 2008 to more than $10B in 2016. In California alone, Proposition 39 provides for 5-years of annual funding of $550 million annually for projects to expand clean energy in the schools. Much of the total $5.7B for Prop 39 schools has yet to be spent, and LED lighting is one of the primary technologies to be implemented.
There are now over 3,000 utilities nationwide with rebates. Recognizing the decisive importance of these rebate programs for incentivizing sales efforts the Company has worked to become an expert at the workings of these rebate packages and has become a strong working ally with many top utilities promoting and developing rebate programs.
The company has recently launched a new program that includes a Lighting Service Agreement (LSA), which allows customers to implement projects with 'zero out of pocket' expenses and generate positive cash-flow starting day one, by using the energy savings, coupled with energy company rebates as a means to pay for the lighting upgrade.
* Installed base of over 5,000 satisfied customers, most of whom present opportunities for future repeat business
* Long-standing relationships with major utilities, recognized as a 'Top Contractor by California's largest utilities, gives the company a significant competitive advantage. The Company often helps to advise utilities on creation and implementation of new rebate programs that encourage lighting retrofits.
* Low Cost of Goods as a result of direct product sourcing.
* Company's infrastructure includes Management, Installation, sales and marketing
* Ability to quickly scale the business, using variable costs to minimize the risks of growth.
* Highly efficient business model with low fixed costs allows the company to react quickly to lucrative opportunities and to maximize cash flow
Prospect of Greater Customer Financing Options:
In spite of not currently offering significant amounts of long-term financing, the company is still consistently experiencing rapid revenue and profitability growth. However, the greater availability of such longer-term financing would be very attractive to a large class of prospective customers and thereby rapidly accelerate the current growth rate. Middle and large market customers would find 3-10 year financing packages that provided net positive cash flow and deliver qualitative lighting advantages very appealing. In each of those financing scenarios the customer's upfront costs would be covered entirely by widely available utility-company rebates and the remaining costs would be repaid via monthly loan payments. Those loan repayments (including above market interest rates) will in all cases remain significantly less than their verifiable monthly energy savings; thereby creating a highly marketable and easy to validate economic sale. Consequently, a prospective acquirer who is capable of funding and/or securing larger amounts of available financing can expect to swiftly seize a dominant market share all while promoting an extraordinarily appealing Net Income scenario to a decidedly profitable large new customer base.
Candidates for this Acquisition:
This acquisition is a wonderful opportunity not only for strategic buyers and Private Equity, but also entrepreneurial individuals capable of managing and exploiting this opportunity. Existing manufactures in the LED lighting and related energy fiends such as HVAC contractors, seeking a talented sales, distribution and installation team are also ideal candidates. The Company has recently partnered with Solar Companies to offer customers even more comprehensive energy savings. Therefore, Solar Companies may be an ideal candidate. Prospective candidates should also consider not only the Company's talented human resource pool and marketing acumen, but also consider the potential value of leveraging the company's vast existing client list of over 5,000 highly satisfied customers.
Anticipated 2016 Financial Performance
* Revenue of approximately $13 - million
* EBITDA of $3 million
* Both Revenue and EBITDA are projected to increase in 2017