PowerSecure International, the Wake Forest energy services company, is jumping into the burgeoning field of LED lighting in a big way with two acquisitions.
The company announced Tuesday that it paid $4.4 million for a majority stake in Innovative Electronic Solutions Lighting, a 19-employee company in Morrisville, with the option to buy all of IES for about $10 million.
PowerSecure is also assuming a full stake in EfficientLights, its South Carolina lighting subsidiary. PowerSecure had acquired a majority stake in the company in 2007.
Both LED companies develop street lights, security lights, parking lot lights and similar applications, using energy-efficient light-emitting diode chips made by Durham-based Cree and other suppliers. EfficientLights also sells LED lighting for refrigerated display cases in grocery stores and convenience stores.
LEDs are increasingly seen as the future of electric lighting that will render incandescent and fluorescent bulbs obsolete. LED lights can last more than two decades and are up to 90 percent more efficient than conventional lights.
"The demand for LED lighting is robust," PowerSecure CEO Sidney Hinton told analysts Tuesday morning in a conference call. "The opportunity for LED lighting is staggering."
According to industry estimates, LEDs represent a potential $30 billion to $50 billion in annual sales as the price comes down and quality goes up.
For PowerSecure, the acquisitions position the company to move ahead with a three-prong business strategy: lighting services, utility services and distributed generation.
Distributed generation - the division that provides backup diesel power generators to supermarkets, universities and other institutional customers - accounted for $33 million in sales last year. Utility services - maintenance and upgrades to utility power lines - brought in $20 million in revenue last year.
PowerSecure has 350 employees, including 100 in the Triangle. It plans to issue $10 million in stock to buy the outstanding one-third stake in EfficientLights, a 35-employee division whose sales rocketed to $22 million last year, growing 726 percent in one year.
With the inclusion of IES, PowerSecure's revenues from lighting would have been $27 million last year. The strategy behind the IES acquisition is to combine IES technology and development with PowerSecure's sales channels to existing and future customers.
"PowerSecure is characterized as being somewhat of an incubator," said Richard Hoss, an analyst with Roth Capital Partners in Newport Beach, Calif. PowerSecure's stock has risen 145 percent in the past year and closed Tuesday at $8.52, up 59 cents a share.
