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Revolution Lighting (RVLT) Preannounces Q4 Even Worse Than Previous Guidance

12/28/2017
By Lisa Thompson

NASDAQ:RVLT

Plans to Take $65-70 Million Non-Cash Charge 


Just two months ago Revolution had expected Q4 revenues to come in between $47 million and $50 million, down from previous guidance of $60-66 million. Last might the company slashed that revenue number to $35 million and added it planned to take a non-cash charge of $65 million. It is difficult to explain how reality versus expectations could be so divergent. The company claims projects continue to be pushed out, particularly at Value Lighting. Some large projects with two states also expected to go forward continue to stall. Companies waiting to see the new tax laws, or perhaps just the weather could possibly explain the industry slowdown. 

The company expects this $35 million in revenues, which is down 32% from the $51.2 million reported last year, should result in EBITDA breakeven and cash flow of $4-5 million. This brings revenue for the year to $152 million, down 12% from the $172 million reported in 2016. EBITDA for the year should be $4.5 million or 3.0% of sales down from 8.2% in 2016.

Initial guidance was given for 2018 at $165 to $175 in revenues, with adjusted EBITDA and cash flow in the 8-10% range.

The company decided to clean up in Q4, writing down goodwill and intangibles to more accurately reflect the stock price. It also is changing some management, reducing staff, writing down inventory, eliminating lesser product lines, and consolidating facilities to streamline the business for a more profitable 2018. Q1 is positioned for an up quarter year over year as efforts to ship out product to make the December 31, 2017 were deemphasized.

We are adjusting forecasts to reflect this more tempered guidance.

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