Nexxus Lighting Reports Third Quarter 2009 Results

• Press Release
• Source: Nexxus Lighting, Inc.
• On 5:18 pm EST, Monday November 9, 2009

CHARLOTTE, N.C.--(BUSINESS WIRE)--Nexxus Lighting, Inc. (NASDAQ:NEXS - News) today reported results for its third quarter ending September 30, 2009.

• Operating loss of $1.3 million flat with 3^rd Quarter 2008 on lower revenue
• Sales of new Array™ Lighting LED replacement lamps more than doubled from 2^nd Quarter 2009 levels; quadrupled from 1^st Quarter 2009 levels
• Revenue increased more than 10% over 2^nd Quarter 2009
• Gross Margins improved over prior year and 2^nd Quarter 2009
• Company benefited from cost reduction initiatives
• Company announced that it will not host an Earnings Conference Call, citing its registration statement filed with the Securities and Exchange Commission relating to a proposed follow-on offering of its common stock

Related Quotes

Symbol	Price	Change
NEXS	4.15	-0.02

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Third Quarter Results

Revenue

Total revenue for the three months ended September 30, 2009 was approximately $2,894,000 as compared to approximately $3,884,000 for the three months ended September 30, 2008, a decrease of approximately $990,000. Year-over-year quarterly sales declined approximately 25% in the third quarter compared to a 32% drop in the second quarter.

“Although we expect any recovery to be gradual and uneven, our legacy commercial and pool businesses appear to have stabilized,” said Mike Bauer, President and Chief Executive Officer. “Third quarter revenue increased over 10% from the second quarter driven, in large part by our Array line of LED replacement lamps as they continue to gain traction in the marketplace. I am excited by the progress that we have made with a number of large corporations, retailers and universities.”

Sales of our new Array LED lamps more than doubled from approximately $197,000 in the second quarter of 2009 to approximately $423,000 in the third quarter of 2009. This amount almost equals sales of our legacy commercial products, which were approximately $478,000 in the third quarter of 2009, a 62% drop from approximately $1,269,000 for the same quarter in 2008. Sales of Lumificient products in the third quarter of 2009 and 2008 were approximately $848,000 and $1,302,000, respectively.

Overall, revenue from sales of commercial lighting products decreased by $862,000, or 33%, from approximately $2,613,000 in the third quarter of 2008 to approximately $1,751,000 in the third quarter of 2009. The decrease in sales of our legacy commercial and Lumificient products is primarily the result of significant decreases in commercial construction and new signage activity across the U.S. This decrease was offset in part by sales of our new Array LED lamps.

Revenue from sales of pool and spa lighting products was approximately $1,143,000 in the third quarter of 2009, as compared to $1,270,000 for the same period of 2008, a decrease of $127,000, or 10%. This decrease reflects the continuation of reduced demand in pool and OEM spa markets, along with decreased inventories held by our distributors in response to these market conditions.

Gross Profit

Gross profit for the quarter ended September 30, 2009 was approximately $837,000, or 29% of revenue, as compared to approximately $1,054,000, or 27% of revenue, for the comparable period of 2008. Direct gross margin for the third quarter of 2009, which is revenue less material cost, increased slightly as improved margins across our company were offset by a shift in sales mix.

Production costs decreased approximately $276,000 on significantly lower sales volume. Excluding the impact of Lumificient, we reduced production costs by approximately $313,000 to more closely match sales activity.

Operating Expenses

Selling, general and administrative (SG&A) expenses were approximately $1,941,000 for the quarter ended September 30, 2009 as compared to approximately $2,090,000 for the same period in 2008, a decrease of approximately $149,000, or 7%. SG&A expenses decreased primarily due to the first quarter consolidation of the operations of our Advanced Lighting Systems subsidiary into our SV Lighting Division, resulting in the elimination of SG&A costs totaling $214,000 incurred in the third quarter of 2008. This decrease in SG&A was offset by our investment in additional sales and marketing resources related to our new Array LED lamps.

Research and development costs were approximately $170,000 during the three months ended September 30, 2009 as compared to approximately $219,000 during the same period in 2008. This decrease of approximately $48,000, or 22%, was primarily due to lower employee costs and project-related costs in the third quarter of 2009 as compared to the same period of 2008.

“The initiatives that we took to manage costs and rationalize production capacity in our legacy businesses, including consolidating the operations of our Advanced Lighting Systems subsidiary with other company operations, bolstered our results in an otherwise difficult environment,” noted Gary Langford, Chief Financial Officer. “We will continue to review these operations for ways to fuel profitability.”

Net Loss

Net loss for the three months ended September 30, 2009 and 2008 was approximately $1,488,000 and $1,432,000, respectively. After including the effects of the dividends related to the preferred stock and warrants issued in November 2008, net loss attributable to common stockholders was approximately $1,854,000 and $1,432,000 for the three months ended September 30, 2009 and 2008, respectively. Basic and diluted loss per common share attributable to common stockholders was $0.22 and $0.18 for the three months ended September 30, 2009 and 2008, respectively.

Year to Date Results

Revenue

Total revenue for the nine months ended September 30, 2009 was approximately $8,536,000 as compared to approximately $10,733,000 for the nine months ended September 30, 2008, a decrease of approximately $2,197,000. Revenue increased as a result of the April 30, 2008 acquisition of Lumificient, which serves the commercial and signage lighting markets. Excluding revenue attributable to Lumificient from our consolidated results, revenue decreased approximately 34% to approximately $5,773,000 in the first nine months of 2009 compared to approximately $8,788,000 in the same period of 2008.

Sales of our new Array LED lamps grew to approximately $713,000 in the nine months ended September 30, 2009. Revenue from sales of our legacy commercial lighting products decreased by $3,025,000, or 61%, from approximately $4,940,000 in the first nine months of 2008 to approximately $1,915,000 in the first nine months of 2009. This decrease reflects the steep drop in commercial construction activity across the U.S. Sales of Lumificient products increased approximately $817,000, as compared to the nine months ended September 30, 2008, to $2,763,000 for the nine months ended September 30, 2009. This increase represented the full year impact of the April 30, 2008 acquisition of Lumificient, offset by a drop in commercial construction and signage activity. Overall, our commercial product sales decreased $1,544,000, or 22%, in the first nine months of 2009 as compared to the same period in 2008.

Revenue from sales of pool and spa lighting products was approximately $3,137,000 in the first nine months of 2009, as compared to $3,790,000 for the same period of 2008, a decrease of $653,000, or 17%. This decrease reflects the continued significant year over year reductions in the pool and OEM spa markets tied to the steep drop in demand for luxury items related to the U.S. recession.

Gross Profit

Gross profit for the nine months ended September 30, 2009 was approximately $2,542,000, or 30% of revenue, as compared to approximately $3,103,000, or 29% of revenue, for the comparable period of 2008. Direct gross margin for the first nine months of 2009, which is revenue less material cost, decreased as improved margins across our company were offset by a shift in sales mix. Production costs decreased approximately $668,000 on lower sales volume.

Operating Expenses

Selling, general and administrative (SG&A) expenses were approximately $6,342,000 for the nine months ended September 30, 2009 as compared to approximately $6,462,000 for the same period in 2008, a decrease of approximately $120,000, or 2%. Excluding the impact of Lumificient, which was acquired on April 30, 2008, our company reduced SG&A expenses by $642,000, including $558,000 of savings from consolidating the operations of our subsidiary, ALS, into other company operations in March 2009.

Research and development costs were approximately $409,000 during the nine months ended September 30, 2009 as compared to approximately $504,000 during the same period in 2008. This decrease of approximately $95,000, or 19%, was primarily due to lower employee and project costs in 2009 as compared to the same period of 2008.

Net Loss

Net loss for the nine months ended September 30, 2009 and 2008 was approximately $4,447,000 and $4,009,000, respectively. After including the effects of the dividends related to the preferred stock and warrants issued in November 2008, net loss attributable to common stockholders was approximately $5,420,000 and $4,009,000 for the nine months ended September 30, 2009 and 2008, respectively. Basic and diluted loss per common share attributable to common stockholders was $0.65 and $0.52 for the nine months ended September 30, 2009 and 2008, respectively.

Nexxus Lighting, Inc. Life’s Brighter!™

For more information, please visit the new Nexxus Lighting web site at www.nexxuslighting.com

Certain of the above statements contained in this press release are forward-looking statements that involve a number of risks and uncertainties. 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 Nexxus Lighting’s filings under the Securities Exchange Act for factors that could cause actual results to differ materially. Nexxus Lighting 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.

Nexxus Lighting, Inc.
Gary R. Langford, Chief Financial Officer, 704-405-0416
GLangford@NexxusLighting.com