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Heliospectra – Expect strong Q4 sales

images-12Swedish LED lighting specialist Heliospectra (HLSPY) is due to report its FY 2015 numbers tomorrow, February 26th. Ahead of the report, www.bequoted.com got hold of CEO Staffan Hillberg, who just returned from an exhibition in Abu Dhabi.

Here is what he had to say:

Heliospectra develops and sells automated LED-based lighting systems for greenhouses. LED-light is energy-saving, adjustable and does not spill any heat. The need for cooling the greenhouses is therefore reduced, as is water consumption. The challenge for the technology is the higher cost of investment compared to traditional greenhouse lighting.

Says Staffan Hillberg: “We work together with Midroc (one of the big owners of Heliospectra) on some projects in the Middle East region. Those are more long-term projects that we develop together with the customers. Amongst other, it’s about the reduction of water consumption.

In January, Heliospectra received a grant of SEK 0.5m from the energy department in order to analyse and develop possibilities to run energy- and water-efficient cultivation in the Middle East. I connection with the exhibition, the company visited several potential customers in the region. Mr Hillberg says in the interview that the company’s main focus is on developing customer relationships and projects within greenhouse lighting. What makes the greenhouse market interesting is the fact that there is technological shift going on in the industry. Parallel to the traditional greenhouses, there are new cultivation methods emerging such as vertical farming and very local cultivation, inside of grocery stores or on the roofs of supermarkets.

LED-technology has contributed that we now have the technological pre-requisites to change cultivation behaviour completely” says Staffan Hillberg.

The American cannabis market, which has becoming more and more interesting as several states have legalised cannabis for medical or recreational use, has the requirements that Heliospectra is looking for. The cultivation oftentimes takes place in closed rooms where the plants are isolated from sunlight. With the help of LED-technology, different lighting recipes can be applied in order to increase the production with up to 4 additional harvests per year.

We achieve good margins with this technology and a faster payback compared with greenhouses for e.g. vegetables, around 12-18 months compared to roughly three years,” says Staffan Hillberg as an explanation for why cannabis is particularly interesting for the new lighting technology. –

During 2015, Heliospectra received and order for its LED system LX610C, worth SEK 5.7m from a cannabis grower in Las Vegas, the company’s single biggest order so far. The order, which covers the first phase of the contract, was shipped and invoiced during Q4 and can be compared to Heliospectra’s sales of SEK 6m during the first 9-months of 2015.

This is a spectacular facility for the American market where you can grow cannabis on 2 levels in a huge warehouse. We have the possibility to use it as a reference object and several of our customers have already visited it.”

Heliospectra’s US operations are in San Francisco and Denver. Around 10 employees are working with sales and support. During 2015, the company also started to manufacture a so-called “light bar” locally in the US. “It is a challenge as a Swedish newcomer to build a brand and reputation in the US”, says Staffan Hillberg to beQuoted.

We come from a cultivation background and have built our technology platform and system based on our experiences. That’s how we can differentiate us from our competitors since we are not only selling bulbs but complete systems where the bulb is one part.”

Heliospectra’s LED systems have a control software which is in charge to control the lighting at the right point in time so that the plants get the right mixture of light, the so-called lighting recipe. As a next step the lighting system can be complemented with sensors sitting close to the actual plant in order to make sure that they get the right spectrum.

Heliospectra has a patent for its sensor technology. The software is the company’s core business. All the hardware manufacturing is outsourced these days. When it comes to competition, Staffan Hillberg would welcome that the big bulb producers start to offer controllable LED-bulbs since this would give Heliospectra the chance to sell its automation technology separately.

It would be great because then the bulb producers could establish the customer relation and then we can sell what we are especially good at. We will never beat Philips or Osram at production costs for LED-lamps even if we do have the best products on the market.

Mr Hillberg concludes the interview by stating that the focus for 2016 is on continuing to build a user base and additional reference installation with particular focus on the American cannabis market.

 

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