Orion Energy Systems, Inc. (NYSE MKT: OESX), a leading power technology
enterprise, announced today its financial results for its fiscal 2013
second quarter and fiscal year-to-date period ended September 30, 2012.
"Our revenues this quarter continued to be impacted by the challenged
capital spending environment and faced a tough comparable versus the
fiscal second quarter of 2012 where we had a number of large solar deals
coming together at one time. We also had several non-recurring charges
related to income tax and reorganization expenses. We are taking swift
actions to refocus our sales and product development strategy, and
reduce variable expenses to get us back on the path towards profitable
growth," commented John Scribante, Chief Executive Officer of Orion
Energy Systems. "As customer demand for energy solutions that lower
operating costs and fulfill environmental mandates grows, I am confident
that Orion's unique product portfolio and value proposition will create
a significant runway for profitable growth in the years ahead."
Second Quarter of Fiscal 2013
For the second quarter of fiscal 2013, the Company reported revenues of
$19.4 million, a 42% decrease compared to $33.5 million for the second
quarter of fiscal 2012.
For the second quarter of fiscal 2013, the Company reported a net loss
of $9.7 million, or $(0.46) per share. For the second quarter of fiscal
2012, the Company's net income was $1.4 million, or $0.06 per share.
During the second quarter of fiscal 2013, the Company incurred
non-recurring charges in the amount of $7.6 million, including a
non-cash valuation reserve charge related to its deferred tax assets of
$5.6 million, or approximately $(0.27) per share, and reorganization
expenses of $2.1 million, or approximately $(0.10) per share.
Total order backlog as of September 30, 2012 was $46.7 million. The
Company currently expects approximately $18.1 million of the existing
backlog to be recognized as revenue during the remainder of fiscal 2013.
First Half of Fiscal 2013
For the first six months of fiscal 2013, the Company reported revenues
of $34.7 million, a 33% decrease compared to $51.7 million for the first
six months of fiscal 2012.
For the first six months of fiscal 2013, the Company reported a net loss
of $11.6 million, or $(0.53) per share. For the first half of fiscal
2012, the Company's net income was $0.6 million, or $0.02 per share.
Strategic Refocus and Cost Reduction Initiatives
Due to the recent management change, the Company is refocusing its
strategic initiatives. The Company intends to enhance and refocus its
sales organization with an emphasis on expanding its direct sales
efforts, streamlining product development initiatives, implementing a
disciplined product control release process versus a process of
continuous development and implementing cost reductions, including
headcount reductions, product material cost decreases and reductions in
consulting and other discretionary spending. The Company expects that
$1.2 million of these cost reduction efforts will be recognized in the
second half of fiscal 2013.
Cash, Debt and Liquidity Position
Orion had $13.2 million in cash and cash equivalents and $1.0 million in
short-term investments as of September 30, 2012, compared to $23.0
million and $1.0 million, respectively, at March 31, 2012. The reduction
in cash during the first half was primarily due to $4.5 million used to
repurchase common shares, $1.7 million for capital expenditures, $1.4
million for the repayment of debt and $2.3 million due to the net loss
and changes in operating activities.
Total short and long-term debt was $8.2 million as of September 30,
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 September 30, 2012, which has availability of $13.3 million.
The Company repurchased 2.1 million shares of its common stock at an
average price per share of approximately $2.15 during the fiscal 2013
first half. Under the Company's current authorized $7.5 million share
repurchase plan, the Company has repurchased 2.4 million shares at a
total cost of $5.3 million. The Company has halted the share repurchase
program as of the date of this release as it conserves cash while it
stabilizes its profit performance.
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 six months ended September
30, 2012. The purpose of the supplemental information is to provide
further discussion and analysis of the Company's financial results for
the second quarter and year-to-date ended September 30, 2012. The
supplemental information can be found in the Investor Relations section
of Orion's Web site at http://investor.oriones.com/events.cfm.
Orion will host a conference call on Wednesday, November 7, 2012 at 5:00
p.m. Eastern (4:00 p.m. Central/2:00 p.m. Pacific) to discuss details
regarding its fiscal 2013 first 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.
Definition of Contracted Revenues
The Company defines contracted revenues, which is a financial
measurement not recognized under GAAP, as expected future revenue from
firm customer purchase orders received, including both purchase orders
payable immediately in cash and for potential future revenues expected
to be realized under firm OTAs and solar Power Purchase Agreements, or
PPAs. For OTA and cash contracted revenues for sales of its energy
management systems, the Company generally expects that it will begin to
recognize GAAP revenue under the terms of the agreements within 90 days
from the firm contract date. For cash contracted revenues for sales of
solar PV systems and for PPA contracted revenue, the Company generally
expects that it will recognize GAAP revenue within three to 15 months
from the firm contract. The Company believes that total contracted
revenues are a key financial metric for evaluating and measuring the
Company's performance because the measure is an indicator of the
Company's success in its customers' adoption and acceptance of the
Company's energy products and services as it measures firm contracted
revenue value, regardless of the contract's cash or deferred financing
structure and the GAAP revenue recognition treatment.
Included below is a reconciliation of contracted revenue to revenue
recognized under GAAP for the fiscal 2013 first half ended September 30,
2012 (in millions).
Six months ended September 30, 2012
(1) Change in backlog reflects the increase in cash orders at the end of
the respective period where product delivery or service performance has
not yet occurred. GAAP revenue will be recognized when the performance
conditions have been satisfied.
(2) Reflects GAAP revenue recognized on solar Power Purchase Agreements
contracted in prior fiscal years.
Use of Non-GAAP Financial Measures
The Company reports all financial information required in accordance
with GAAP and also provides certain non-GAAP financial measures. A
non-GAAP financial measure refers to a numerical measure of the
Company's historical or future financial performance, financial position
or cash flows that includes (or excludes) amounts that are included in
(or excluded from) the most directly comparable measure calculated and
presented in accordance with GAAP in the Company's financial statements.
The Company presents these non-GAAP financial measures as a complement
to results provided in accordance with GAAP because management believes
that these non-GAAP financial measures help reflect underlying trends in
the Company's business and are important in comparing current results
with prior period results. The presentation of this additional
information is not meant to be considered in isolation or as a
substitute for revenue prepared in accordance with GAAP.
The Company's management uses the foregoing non-GAAP financial
measurement to evaluate its ongoing operations and for internal
planning, budgeting, forecasting and business management purposes. A
schedule that reconciles the Company's GAAP and non-GAAP financial
measures is included with this release. Investors are encouraged to
review this reconciliation to ensure that they have a thorough
understanding of the reported non-GAAP financial measures and their most
directly comparable GAAP financial measures.
In the Company's earnings releases, conference calls, slide
presentations and/or webcasts, it may use or discuss non-GAAP financial
measures as defined by SEC Regulation G. The GAAP financial measure most
directly comparable to each non-GAAP financial measure used or discussed
and a reconciliation of the differences between each non-GAAP financial
measure and the comparable GAAP financial measure are included in this
press release after the condensed consolidated financial statements.
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:
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) the Company's ability to
compete and execute its growth strategy in a highly competitive market
and its ability to respond successfully to market competition; (iii)
increasing duration of customer sales cycles; (iv) the market acceptance
of the Company's products and services, including increasing customer
preference to purchase its products through its Orion Throughput
Agreements, or OTAs, rather than through cash purchases; (v) the
Company's ability to effectively manage the credit risk associated with
its increasing reliance on OTA contracts; (vi) price fluctuations,
shortages or interruptions of component supplies and raw materials used
to manufacture its products; (vii) loss of one or more key employees,
customers or suppliers, including key contacts at such customers; (viii)
the Company's ability to effectively manage its product inventory to
provide its products to customers on a timely basis; (ix) the increasing
relative volume of the Company's product sales through its wholesale
channel; (x) a reduction in the price of electricity; (xi) the cost to
comply with, and the effects of, any current and future government
regulations, laws and policies; (xii) increased competition from
government subsidies and utility incentive programs; (xiii) dependence
on customers' capital budgets for sales of products and services; (xiv)
the Company's development of, and participation in, new product and
technology offerings or applications; the availability of additional
debt financing and/or equity capital; (xv) legal proceedings; and (xvi)
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)
Cost of product revenue
Other income (expense):
The following amounts of stock-based compensation were recorded (in
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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