Orion Energy Systems, Inc. Announces Fiscal 2013 Third Quarter Results

Orion Energy Systems, Inc. Announces Fiscal 2013 Third Quarter Results

Reports Increased Quarterly Revenue and Earnings

MANITOWOC, Wis.--(BUSINESS WIRE)-- Orion Energy Systems, Inc. (NYSE MKT: OESX), a leading power technology enterprise, announced today its financial results for its fiscal 2013 third quarter and fiscal year-to-date period ended December 31, 2012.


"With revenues increasing year-over-year and sequentially, coupled with earnings returning to positive territory, our fiscal third quarter results reflect our renewed commitment to driving sustainable, profitable growth. While there is more work to be done, we have made great strides over the last several months aligning our priorities to deliver improved financial performance, and ultimately shareholder value," commented John Scribante, Chief Executive Officer of Orion Energy Systems. "Looking ahead, driving profitable top-line growth through a culture of innovation, while maintaining financial discipline and improving operational efficiency remain my top priority."

Third Quarter of Fiscal 2013

For the third quarter of fiscal 2013, the Company reported revenues of $29.1 million, a 6% increase compared to $27.4 million for the third quarter of fiscal 2012.

For the third quarter of fiscal 2013, the Company reported net income of $0.7 million, or $0.03 per share. For the third quarter of fiscal 2012, the Company's net income was $0.1 million, or $0.00 per share.

Total order backlog as of December 31, 2012 was $38.3 million. The Company currently expects approximately $10.2 million of its existing backlog to be recognized as revenue during the remainder of fiscal 2013.

First Nine Months of Fiscal 2013

For the first nine months of fiscal 2013, the Company reported revenues of $63.8 million, a 19% decrease compared to $79.1 million for the first nine months of fiscal 2012.

For the first nine months of fiscal 2013, the Company reported a net loss of $10.9 million, or $(0.51) per share. For the first nine months of fiscal 2012, the Company's net income was $0.6 million, or $0.03 per share. During the first nine months of fiscal 2013, the Company incurred non-recurring charges in the amount of $6.2 million, including a non-cash valuation reserve charge related to its deferred tax assets of $4.1 million, or approximately $(0.19) per share, and reorganization expenses of $2.1 million, or approximately $(0.10) per share.

Cash, Debt and Liquidity Position

Orion had $13.1 million in cash and cash equivalents and $1.0 million in short-term investments as of December 31, 2012, compared to $23.0 million and $1.0 million, respectively, at March 31, 2012. The reduction in cash during the first nine months was primarily due to $6.0 million used to repurchase common shares, $1.8 million for capital expenditures and $2.2 million for the repayment of debt.

Total short and long-term debt was $7.5 million as of December 31, 2012, compared to $9.5 million as of March 31, 2012. There were no borrowings outstanding under the Company's revolving credit facility as of December 31, 2012, which has availability of $13.3 million.

The Company repurchased 2.9 million shares of its common stock at an average price per share of approximately $2.22 during the fiscal 2013 first nine months. As previously disclosed, the Company halted its share repurchase program mid-October 2012 in order to conserve cash while it stabilizes its profit performance.

Supplemental Information

In conjunction with this press release, Orion has posted supplemental information on its website which further discusses the financial performance of the Company for the three and nine months ended December 31, 2012. The purpose of the supplemental information is to provide further discussion and analysis of the Company's financial results for the third quarter and year-to-date ended December 31, 2012. The supplemental information can be found in the Investor Relations section of Orion's Web site at http://investor.oriones.com/events.cfm.

Conference Call

Orion will host a conference call on Tuesday, February 5, 2013 at 5:00 p.m. Eastern (4:00 p.m. Central/2:00 p.m. Pacific) to discuss details regarding its fiscal 2013 third quarter performance. Domestic callers may access the earnings conference call by dialing 877-754-5294 (international callers, dial 678-894-3013). Investors and other interested parties may also go to the Investor Relations section of Orion's Web site at http://investor.oriones.com/events.cfm for a live webcast of the conference call. To ensure a timely connection, it is recommended that users register at least 15 minutes prior to the scheduled webcast.

About Orion Energy Systems

Orion Energy Systems, Inc. (NYSE MKT: OESX) is a leading power technology enterprise that designs, manufactures and deploys energy management systems - consisting primarily of high-performance, energy efficient lighting platforms, intelligent wireless control systems and direct renewable solar technology for commercial and industrial customers - without compromising their quantity or quality of light. Since December 2001, Orion's technology has benefitted its customers and the environment by reducing its customer's:

  • Energy demand by 781,069 kilowatts, or 24.8 billion kilowatt-hours;

  • Energy costs by $1.9 billion; and

  • Indirect carbon dioxide emission by 16.2 million tons.

Safe Harbor Statement

Certain matters discussed in this press release are "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements will include words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "would" or words of similar import. Similarly, statements that describe the Company's financial guidance or future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause results to differ materially from those expected, including, but not limited to, the following: (i) deterioration of market conditions, including customer capital expenditure budgets; (ii) our ability to compete and execute our growth strategy in a highly competitive market and our ability to respond successfully to market competition; (iii) increasing duration of customer sales cycles; (iv) the market acceptance of our products and services, (v) our ability to recruit and hire sales talent to increase our in-market direct sales; (vi) our development of, and participation in, new product and technology offerings or applications, including customer acceptance of our new LED product line (vii) the substantial cost of our various legal proceedings and our ongoing SEC inquiry; (viii) price fluctuations, shortages or interruptions of component supplies and raw materials used to manufacture our products; (ix) loss of one or more key employees, customers or suppliers, including key contacts at such customers; (x) our ability to effectively manage our product inventory to provide our products to customers on a timely basis; (xi) our ability to effectively manage the credit risk associated with our debt funded OTA contracts; (xii) a reduction in the price of electricity; (xiii) the cost to comply with, and the effects of, any current and future government regulations, laws and policies; (xiv) increased competition from government subsidies and utility incentive programs; (xv) dependence on customers' capital budgets for sales of products and services; (xvi); the availability of additional debt financing and/or equity capital; and (xvii) potential warranty claims. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this press release and the Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. More detailed information about factors that may affect our performance may be found in our filings with the Securities and Exchange Commission, which are available at http://www.sec.gov or at http://www.oesx.com in the Investor Relations section of the Company's Web site.

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

Three Months Ended December 31,

Nine Months Ended December 31,

2011

2012

2011

2012

Product revenue

$

24,274

$

22,660

$

71,746

$

53,171

Service revenue

3,132

6,427

7,356

10,634

Total revenue

27,406

29,087

79,102

63,805

Cost of product revenue

17,445

15,708

50,484

37,172

Cost of service revenue

2,447

4,798

5,716

7,874

Total cost of revenue

19,892

20,506

56,200

45,046

Gross profit

7,514

8,581

22,902

18,759

Operating expenses:

General and administrative

2,841

2,848

8,641

10,788

Sales and marketing

4,053

4,730

11,557

13,243

Research and development

556

427

1,771

1,834

Total operating expenses

7,450

8,005

21,969

25,865

Income (loss) from operations

64

576

933

(7,106

)

Other income (expense):

Interest expense

(160

)

(138

)

(397

)

(441

)

Dividend and interest income

226

213

594

656

Total other income

66

75

197

215

Income (loss) before income tax

130

651

1,130

(6,891

)

Income tax expense

56

-

490

4,057

Net income (loss)

$

74

$

651

$

640

$

(10,948

)

Basic net income (loss) per share

$

0.00

$

0.03

$

0.03

$

(0.51

)

Weighted-average common shares outstanding

22,996,050

20,191,547

22,969,169

21,271,465

Diluted net income (loss) per share

$

0.00

$

0.03

$

0.03

$

(0.51

)

Weighted-average common shares outstanding

23,254,830

20,245,194

23,388,651

21,271,465

The following amounts of stock-based compensation were recorded (in thousands):

Three Months Ended December 31,

Nine Months Ended December 31,

2011

2012

2011

2012

Cost of product revenue

$

37

$

21

$

114

$

78

General and administrative

144

43

440

462

Sales and marketing

119

78

391

357

Research and development

9

3

21

18

Total

$

309

$

145

$

966

$

915

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

March 31,

December 31,

2012

2012

Assets

Cash and cash equivalents

$

23,011

$

13,074

Short-term investments

1,016

1,020

Accounts receivable, net

19,167

20,233

Inventories, net

18,132

17,766

Deferred contract costs

2,193

1,727

Deferred tax assets

1,549

-

Prepaid expenses and other current assets

2,174

3,363

Total current assets

67,242

57,183

Property and equipment, net

30,225

28,747

Long-term inventory

12,328

11,871

Patents and licenses, net

1,689

1,686

Deferred tax assets

2,609

213

Long-term accounts receivable

7,555

6,107

Other long-term assets

4,002

3,562

Total assets

$

125,650

$

109,369

Liabilities and Shareholders' Equity

Accounts payable

$

14,300

$

13,359

Accrued expenses

3,018

6,760

Deferred revenue

2,614

1,462

Current maturities of long-term debt

2,791

2,737

Total current liabilities

22,723

24,318

Long-term debt, less current maturities

6,704

4,720

Deferred revenue

3,048

3,070

Other long-term liabilities

406

401

Total liabilities

32,881

32,509

Shareholders' equity:

Additional paid-in capital

126,753

127,778

Treasury stock

(32,470

)

(38,381

)

Shareholder notes receivable

(221

)

(296

)

Retained deficit

(1,293

)

(12,241

)

Total shareholders' equity

92,769

76,860

Total liabilities and shareholders' equity

$

125,650

$

109,369

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Nine Months Ended December 31,

201