Orion Energy Systems, Inc. Announces Fiscal 2009 Second Quarter Results

November 4, 2008 at 12:00 AM EST

PLYMOUTH, Wis., Nov 4, 2008 (GlobeNewswire via COMTEX News Network) -- Orion Energy Systems, Inc. (Nasdaq:OESX), a leading provider of energy management systems to the commercial and industrial sectors, today announced financial results for its fiscal 2009 second quarter ended September 30, 2008.

Fiscal 2009 Second Quarter Results

Revenue. Total revenue for the quarter was $18.8 million compared to $18.4 million for the fiscal 2008 second quarter, an increase of 2%.

Gross Profit. Gross profit for the quarter was $6.3 million compared to $6.3 million for the fiscal 2008 second quarter.

Operating Expenses. Total operating expenses for the quarter were $6.0 million compared to $4.3 million for the fiscal 2008 second quarter, an increase of 40%.

Income from Operations. Income from operations for the fiscal 2009 second quarter was $0.3 million compared to operating income of $2.0 million for the fiscal 2008 second quarter, a decrease of 85%.

Net Income. Net income for the quarter was $0.45 million compared to $1.1 million for the fiscal 2008 second quarter, a decrease of 59%. Earnings per diluted share were $0.02 for the quarter compared to $0.05 for the fiscal 2008 second quarter.

Results for the Six Months Ended September 30, 2008

Revenue. Total revenue for the six months ended September 30, 2008, was $34.9 million compared to $35.1 million for the same prior year period, a decrease of 1%.

Gross Profit. Gross profit for the six months ended September 30, 2008, was $11.5 million compared to $11.9 million for the same prior year period, a decrease of 3%.

Operating Expenses. Total operating expenses for the six months ended September 30, 2008, were $11.7 million compared to $8.4 million for the same prior year period, an increase of 39%.

Income (Loss) from Operations. Loss from operations for the six months ended September 30, 2008, was $0.2 million compared to operating income of $3.5 million for the same prior year period, a decrease of 106%.

Net Income. Net income for the six months ended September 30, 2008, was $0.5 million compared to $1.8 million for the same prior year period, a decrease of 72%. Earnings per diluted share were $0.02 for the six months ended September 30, 2008, compared to $0.09 for the same prior year period.

Business Highlights



 * Deployed energy management systems in 301 facilities in the second
   quarter of fiscal 2009, representing over 49 million square feet
   retrofitted, and bringing Orion's installed base to 4,050
   facilities.(1)  This compares favorably to the 276 facilities and
   34 million square feet retrofitted added in the first quarter of
   fiscal 2009.  New customer additions in the second quarter of
   fiscal 2009 will result in $9.3 million in annual saved energy
   costs and an annual reduction in indirect CO2 emissions from energy
   savings by over 87 thousand tons.  Since December 2001, the company
   has benefited its customers and the environment as follows:

 ---------------------------------------------------------------------
                                                   Cumulative From
                                              December 1, 2001 Through
                                                 September 30, 2008
 ---------------------------------------------------------------------
 High intensity fluorescent (HIF) systems sold               1,310,000
 ---------------------------------------------------------------------
 Total units sold (including HIF)                            1,684,000
 ---------------------------------------------------------------------
 Customer kilowatt demand reduction                            387,000
 ---------------------------------------------------------------------
 Customer kilowatt hours saved                           5,915,123,000
 ---------------------------------------------------------------------
 Customer electricity costs saved                         $455,465,000
 ---------------------------------------------------------------------
 Indirect carbon dioxide emission reductions from
  customers' energy savings (tons)                           4,031,000
 ---------------------------------------------------------------------
 Square footage retrofitted                                670,099,000
 ---------------------------------------------------------------------

 * Witnessed strong growth by Orion's VAR partner network.  Sales to
   VAR partners for the six months ended September 30, 2008, exceeded
   prior year sales for the same period by 83%.

 * Added 46 new contractor partners, bringing the total network of
   contractor partners who have conducted business on a recurring
   basis with Orion to over 320 as of September 30, 2008.  Sales to
   contractor partners for the six months ended September 30, 2008,
   exceeded prior year sales for the same period by 79%.

 * Launched the patent-pending Orion Virtual Power Plant(tm) negawatt
   supply agreement and secured two customer contracts.  Orion had
   4.8 million kWh of negawatts under contract as of
   September 30, 2008.

 * Shipped 677 Apollo Solar Light Pipes(tm) during the second quarter,
   compared to 204 shipped in the first quarter of fiscal 2009.

 * Deployed Orion's proprietary wireless InteLite(tm) control systems
   at 13 customer facilities during the second quarter, bringing to 18
   the number of facilities with Orion wireless InteLite(tm) controls
   installed, and demonstrating the successful progression of
   InteLite(tm) through the phases of product development, testing,
   launch and customer acceptance.

 * Implemented a complete energy management system at the PepsiCo
   facility in Curitiba, Brazil, a city widely regarded for its
   leadership in environmentalism and urban planning.  This energy
   efficient facility is expected to be a potential model for future
   PepsiCo facilities and the best practices implemented at this
   facility may also be shared with other facilities in Curitiba.

 * Repurchased over 1.4 million shares of outstanding common stock
   during the second quarter as part of the $20 million share
   repurchase program approved by Orion's Board of Directors on
   July 17, 2008.

Full-Year Fiscal 2009 Outlook

Orion is revising its annual revenue guidance range to 0% to 9% year-over-year revenue growth. Total revenue for fiscal 2009 is now forecasted to be between $81 million and $88 million. Orion is also revising its annual earnings guidance with earnings per share for fiscal 2009 estimated to be between $0.06 and $0.11 per diluted share.

"While we regained momentum during the second quarter, the challenging economic environment has led us to re-evaluate our existing forecast for fiscal 2009 as we have seen some customers close facilities as well as some customers delay purchasing decisions, particularly new customers considering projects that have not been previously budgeted," commented Neal Verfuerth, CEO of Orion Energy Systems. "We anticipate utilizing the Orion Virtual Power Plant(tm) supply agreement to our advantage in this environment but because this is an innovative approach, we recognize that it may not immediately offset the lengthening sales cycles and delayed decision-making we are witnessing."

"Nevertheless, we are determined to remain well positioned to create long-term value for our stakeholders and will rigorously pursue operational and expense efficiencies so that, moving forward, we maintain our strong balance sheet, our profitability, and our ability to generate positive cash flows," said Verfuerth. "Given our confidence in Orion, we will continue to buy back our shares."

Conference Call

Orion will host a conference call on Tuesday, November 4, at 5:30 p.m. Eastern (4:30 p.m. Central/2:30 p.m. Pacific) to discuss details regarding its second quarter performance. Domestic callers may access the earnings conference call by dialing 877-719-9795 (International callers, dial 719-325-4806). Investors and other interested parties may also go to the Investor Relations section of Orion's website 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.

Orion Energy Systems, Inc. (Nasdaq:OESX) is a leading power technology enterprise that designs, manufactures and implements energy management systems, consisting primarily of high-performance, energy efficient lighting systems and controls and related services, for commercial and industrial customers without compromising their quantity or quality of light.

The Orion Energy Systems, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4540

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 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) further deterioration of market conditions; (ii) Orion's ability to compete 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 Orion's products and services, including the Orion Virtual Power Plant; (v) price fluctuations, shortages or interruptions of component supplies and raw materials used to manufacture Orion's products; (vi) loss of one or more key customers or suppliers; (vii) a reduction in the price of electricity; (viii) the cost to comply with, and the effects of, any current and future government regulations, laws and policies; (ix) increased competition from government subsidiaries and utility incentive programs; (x) dependence on customers' capital budgets for sales of products and services; (xi) Orion's ability to effectively manage its anticipated growth; and (xii) 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 Orion 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.oriones.com in the Investor Relations section of our website.



 (1) Orion's total installed base of 4,050 facilities reflects a
     downward adjustment of 13 due to removal of duplicate records
     from historical data.



               ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
                     SELECTED FINANCIAL INFORMATION
         (in thousands, except share and per share amounts)
     Condensed Consolidated Statements of Operations for the Three
           and Six Months ended September 30, 2007 and 2008
                              (unaudited)

                          Three months ended       Six months ended
                        ----------------------  ----------------------
                              September 30,           September 30,
                            2007        2008        2007        2008
                        ----------  ----------  ----------  ----------
 Revenue                $   18,405  $   18,760  $   35,126  $   34,866
 Cost of revenue            12,084      12,425      23,202      23,334
                        ----------  ----------  ----------  ----------

   Gross profit              6,321       6,335      11,924      11,532
 Operating expenses:
 General and
  administrative             1,907       2,893       3,478       5,508
 Sales and marketing         1,938       2,771       4,049       5,423
 Research and
  development                  443         373         880         791
                        ----------  ----------  ----------  ----------
   Total operating
    expenses                 4,288       6,037       8,407      11,722
                        ----------  ----------  ----------  ----------
  Income (loss)
   from operations           2,033         298       3,517        (190)
 Other income (expense):
 Interest expense             (329)        (41)       (624)       (108)
 Dividend and
  interest income              154         550         194       1,167
                        ----------  ----------  ----------  ----------
   Total other
    income (expense)          (175)        509        (430)      1,059
                        ----------  ----------  ----------  ----------
  Income before
   income tax                1,858         807       3,087         869
 Income tax expense            805         354       1,286         382
   Net income                1,053         453       1,801         487
                        ----------  ----------  ----------  ----------
 Accretion of
  redeemable preferred
  stock and preferred
  stock dividends              (75)         --        (150)         --
 Participation rights
  of preferred stock in
  undistributed earnings      (292)         --        (511)         --
                        ----------  ----------  ----------  ----------
   Net income
    attributable to
    common shareholders $      686  $      453  $    1,140  $      487
                        ==========  ==========  ==========  ==========
 Basic net income
  per share attributable
  to common
  shareholders          $     0.06  $     0.02  $     0.11  $     0.02
 Weighted-average common
  shares outstanding    11,283,160  26,959,790  10,711,695  26,998,857
 Diluted net income per
  share attributable to
  common shareholders   $     0.05  $     0.02  $     0.09  $     0.02
 Weighted-average common
  shares and share
  equivalents
  outstanding           20,394,499  29,018,991  19,782,208  29,613,684

 Supplemental
  information:
  FAS 123R
   compensation expense
   Cost of revenue      $       23  $       65  $       44  $      130
   General and
    administrative             315         171         380         425
   Sales and marketing          57         145         110         271
   Research
    and development              8           7          16          20
                        ----------  ----------  ----------  ----------
     Total              $      403  $      388  $      550  $      846
                        ==========  ==========  ==========  ==========

                Condensed Consolidated Balance Sheets
      As of March 31, 2008 and September 30, 2008 (unaudited)

                                March 31, 2008    September 30, 2008
                              ------------------  ------------------
 Cash and cash equivalents        $   78,312          $  46,407
 Short term investments                2,404             19,583
 Accounts Receivable                  17,666             16,371
 Inventories                          16,789             18,885
 Current assets                      116,896            104,382
 Property and equipment, net          11,539             17,629
 Total assets                        130,702            124,670
 Accounts Payable                      7,521              7,478
 Current liabilities                  12,606             12,114
 Long term debt                        4,473              4,049
 Total shareholders' equity          113,190            108,088

               Condensed Consolidated Statements of Cash Flows
             For the Six Months ended September 30, 2007 and 2008
                                   (unaudited)

                                   Six months ended September 30
                                 ---------------------------------
                                      2007               2008
                                 --------------     --------------
 Cash provided by operating
  activities                        $  1,869          $   (371)
 Cash used in investing
  activities                          (4,844)          (24,855)
 Cash provided by (used in)
  financing activities                 9,554            (6,679)
                                    --------          --------
 Net increase (decrease) in cash
  and cash equivalents              $  6,579          $(31,905)
                                    ========          ========

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Orion Energy Systems, Inc.

Orion Energy Systems
         Erik G. Birkerts, Chief Operating Officer
         (920) 482-1924
         
         FD Ashton Partners
         Victoria Paris
         (312) 553-6715

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