Evolucia Inc. has been through almost too many changes to keep track of — a new name, a new product line, a new CEO, a new global business strategy and, most recently, a new headquarters.
“It's a completely new company,” says Mel Interiano, named CEO of Sarasota-based Evolucia in April 2012, just before the company officially changed its name from Sunovia Energy Technologies.
Interiano, who previously worked for Osram Sylvania, a Siemens company, is the third CEO the company has had since August 2010. Those three years, and a stretch before that, have been a financial struggle for the publicly traded company. For one, Evolucia posted a loss of $6.2 million on revenues of $2.7 million in 2012, according to public filings. From July 2009 to the end of 2011, the company lost $26.7 million.
But the new CEO is leading the way to what he hopes will be a better future for the LED lighting company. In a letter to shareholders earlier this year, Interiano states his objective is to build a durable company that is capable of supporting at least $200 million in annual sales revenues in the short term with the ability to expand over the long term through partnerships and acquisitions. “The future is bright,” he concludes the letter.
Big changes were under way at Evolucia before Interiano was hired. One of these was the decision to drop solar. The company was a solar and LED lighting company until 2010.
But Craig Hall, who co-founded the company with his venture capital partner, Carl Smith, in 2006, and remains an adviser, says the decision to get out of solar was primarily driven by the market. Solar is capital intensive, he says, and raising money for technology ventures was easy until the financial crisis hit in 2008. “Capital was free flowing,” Hall says of the years leading up to the financial crisis. “People were a lot more willing to put money up with a payment further off into the future and take higher risk ventures.”
LED lighting, on the other hand, was more financially viable in that Evolucia could get a product to market much more quickly. So in 2010, Evolucia decided to focus exclusively on LED lighting.
Interiano believes the company made the right decision. “LED lighting is, from my point of view, a technology that has been proven by the industry and accepted by the marketplace,” Interiano says. “The cost of the acquisition of the technology in terms of return of investment is way more attractive than when you look at the solar technology.”
On the heels of its decision to refocus, in 2010 the company also relocated from a 5,500-square-foot facility in south Manatee County to an 18,000-square-foot location in the Centennial Commerce Center at Cattlemen and Fruitville roads in Sarasota.
Now Interiano is focused on building different “pillars” to support Evolucia's growth. That includes putting together a competent and professional team and expanding the company's LED lighting portfolio so it covers the various forms of indoor and outdoor lighting that customers want, including digital programmable LED lights.
Evolucia was primarily an outdoor lighting company that got its start with roadway lighting and its proprietary Aimed Optics technology, which the company says provides more targeted outdoor lighting, making it more efficient. However, the firm's strategy has since been revamped.
Interiano says his vision for Evolucia is a company with an entire line of LED lights that includes not just roadway, parking lot, canopy, and wall pack lights, but also indoor lights. This meant re-engineering all the product lines to match with the most current LEDs and power supplies, while at the same time cutting down on the cost of its Aimed Optics products.
In an effort to round out its product line, Evolucia purchased Affineon Digital Lighting in April. The Coral Springs-based LED fixture and control system had about $4 million in 2012 revenues. The acquisition, which will close during the third quarter, allows Evolucia to expand its selection of LED lighting products.
Next on Interiano's to-do list is to amp up sales volume.
Evolucia exhibited seven of its new product lines in April at Lightfair International in Philadelphia, the world's largest lighting trade show. Two of Evolucia's celebrity shareholders, former Major League Baseball players Andres Galarraga and Pedro Martinez, were there to help with the launch. “Part of rebranding and promoting the company strategy is being executed every week of every month,” Interiano says.
A global strategy
But the strategy isn't solely on lighting up the United States. The high cost of energy in many foreign countries, say executives, presents an opportunity for Evolucia in the international marketplace.
“Where we're really seeing a lot of traction recently is in foreign places like the Caribbean or Latin America or Europe, where the cost of energy is much higher,” Hall says. “So where the payback might be two or three years here in the States, paybacks are under a year in a lot of these other places that we're seeing traction in...which have a mandate to reduce energy.”
Evolucia, to meet that demand, partnered with the electronics manufacturing company Leader Electronics in July 2012 to begin global production of the firm's Aimed Optics products. The agreement gives Leader the exclusive license to manufacture and distribute the Aimed Optics product lines in China, Taiwan and other markets within Asia.
This partnership, along with several other international deals (see sidebar, right) will enable Evolucia to secure and fulfill large orders from around the world, something the company had no way of doing in the past. When Interiano started as CEO he says Evolucia could not fulfill a $1 million order under standard industry delivery terms.
“Our manufacturing capabilities were limited to a few hundred thousand dollars per month, and our quality controls and project management procedures were not adequate to effectively manage a global supply chain,” Interiano stated in a letter to shareholders dated Aug. 15, 2012.
Interiano says he hopes the pillars will support a structure that will accept large growth. “As the CEO, a return for me is exponential growth and the company being able to react to it,” he says.
The Affineon acquisition and other growth projections mean Evolucia will soon have nearly double the number of employees, in addition to an expanded product line. For that the firm needs a larger headquarters. It found one in a Lakewood Ranch corporate park, in a 61,000-square-foot facility.
The new facility, former home to Gemesis, a manufactured diamond business, will house a research and development laboratory, a light-testing area, lighting-display center and manufacturing operations. Hall says he thinks the headquarters will help attract prospective clients. “It's an impressive facility,” Hall says.
Part of the new facility will be a customer demonstration and education center and will open later this year. This center will demonstrate the technology behind Evolucia's LED lighting fixtures and controls, showing the energy efficiency and positive environmental impact of the LED products, executives say. The company is scheduled to complete the move to the new facility by August.
“We're becoming as vertically integrated as possible,” Interiano says. “In the long run we will service north America, South and Central America, and the Caribbean through our U.S. office in Sarasota.”
New MarketsA deal in February with Osram to supply streetlights to Mexico. The partners will equip Osram ProPoint Cobrahead fixtures with Evolucia Aimed Optics;
In addition to Evolucia's international deal with Leader Electronics to increase worldwide production and sell its products in Asia, the company has recently completed several other international deals to widen its reach, including:
The launch of Evolucia Europe in March, a joint venture with a Poland-based firm. Under the agreement, the Polish company, SETE, will pay Evolucia $11 million by Aug. 31 for the exclusive rights to distribute and manufacture Evolucia's products in Europe.
The formation of an Australian subsidy to serve Australia, New Zealand and the Pacific Region;
The launch of Evolucia Colombia, made possible by a partnership with SolarMax International S.A. to sell and distribute its product in Colombia. Interiano says through this partnership, Evolucia will penetrate the Columbian and Ecuador market and capitalize on the Trade Promotion Agreement (TPA), which took effect last May. Under the agreement, Evolucia products exported to Colombia will not be subject to tariffs.
International markets are attractive for Evolucia because its products have a higher return on investment in countries where energy is more expensive. These deals also widen the company's product distribution as well as its production capabilities.