February 6, 2008

Orion Energy Systems, Inc. Announces Fiscal 2008 Third Quarter Financial Results

PLYMOUTH, Wis., Feb 6, 2008 (PrimeNewswire via COMTEX News Network) -- Orion Energy Systems, Inc. (Nasdaq:OESX), a power technology enterprise which completed its initial public offering on December 24, 2007, today announced its financial results for its fiscal 2008 third quarter and nine months ended December 31, 2007.

Business Highlights



 * Completed initial public offering, raising net proceeds to Orion of
   $78.6 million.
 * Issued U.S. patent on the Apollo Light Pipe, totaling 17 Orion
   patents to date.
 * Received Super Nova award from the Alliance to Save Energy.
 * Expanded list of Fortune 500 customers to 90.
 * Recognized as supplier of the year by Sysco Foods.

"I am extremely pleased with results to date, both increasing revenue and profitability," commented Neal Verfuerth, CEO of Orion Energy Systems. "We posted solid growth in all our financial metrics, expanded our installed base and received a number of important validations. As I look forward, I am confident in our ability to achieve our goal of at least 62% annual revenue growth for fiscal 2008."

Financial Summary

Revenue. Total revenue was $23.3 million for Orion's fiscal 2008 third quarter, which resulted in year to date revenues of $58.4 million compared to $13.6 million for Orion's fiscal 2007 third quarter and $33.9 million for the nine months ended December 31, 2006. Revenue increased 73% year over year.

Gross Margin. Gross profit was $8.3 million for Orion's fiscal 2008 third quarter, which resulted in year to date gross profit of $20.2 million compared to $4.4 million for Orion's fiscal 2007 third quarter and $11.0 million for the nine months ended December 31, 2006. Gross profit increased 83% year over year. These increases were primarily the result of improved absorption of fixed costs resulting from increased sales volume.

Operating Expenses. Total operating expenses were $6.0 million (inclusive of $0.4 million of non-cash stock-based compensation expense) for Orion's fiscal 2008 third quarter, which resulted in year to date expenses of $14.4 million compared to $3.4 million (inclusive of $0.1 million of non-cash stock-based compensation expense) for Orion's fiscal 2007 third quarter and $9.6 million for the nine months ended December 31, 2006. Operating expenses increased 50% year over year. Included in Orion's third quarter fiscal 2008 operating expenses were $0.8 million of compensation charges relating to the completion of its initial public offering.

Operating Income. Operating income was $2.3 million for Orion's fiscal 2008 third quarter, which resulted in year to date operating income of $5.8 million compared to $0.9 million for Orion's fiscal 2007 third quarter and $1.4 million for the nine months ended December 31, 2006. Operating income increased 298% year over year.

Net Income. Net income was $1.2 million for Orion's fiscal 2008 third quarter, which resulted in year to date net income of $3.0 million compared to $0.6 million for Orion's fiscal 2007 third quarter and $0.6 million for the nine months ended December 31, 2006. Net income increased 423% year over year. Earnings per diluted share were $0.05 for the fiscal 2008 third quarter and $0.15 for the nine months ended December 31, 2007 compared to $0.03 for both the quarter and nine months ended December 31, 2006.

Cash. As of December 31, 2007, Orion had cash and cash equivalents totaling $83.3 million, an increase of $83.0 million since March 31, 2007, primarily as a result of Orion's initial public offering, including the exercise of the underwriters' over-allotment option, in December 2007.

Conference Call

Orion will host a conference call on Wednesday, February 6, at 5:30 p.m. Eastern (4:30 p.m. Central/2:30 p.m. Pacific) to discuss details regarding its fiscal 2008 third quarter and year to date performance. Domestic callers may access the earnings conference call by dialing 877-627-6580 (International callers, dial 719-325-4929). 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.primenewswire.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 "believe," "anticipate," "expect" 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) Orion's ability to compete in a highly competitive market and its ability to respond successfully to market competition; (ii) the market acceptance of Orion's products and services; (iii) price fluctuations, shortages or interruptions of component supplies and raw materials used to manufacture Orion's products; (iv) loss of one or more key customers or suppliers; (v) a reduction in the price of electricity; (vi) the cost to comply with, and the effects of, any current and future government regulations, laws and policies; (vii) increased competition from government subsidiaries and utility incentive programs; (viii) dependence on customers' capital budgets for sales of products and services; (ix) Orion's ability to effectively manage its anticipated growth; and (x) 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 such forward-looking statements to reflect subsequent events or circumstances.



             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 nine months ended December 31, 2006 and 2007
                            (unaudited)

                        Three months ended       Nine months ended
                           December 31,             December 31,
                   ------------------------  ------------------------
                       2006         2007         2006          2007
                   -----------  -----------  -----------  -----------
 Revenue           $    13,563  $    23,311  $    33,874  $    58,437
 Cost of revenue         9,200       15,057       22,833       38,258
                   -----------  -----------  -----------  -----------
    Gross profit         4,363        8,254       11,041       20,179
 Operating expenses:
 General and
  administrative         1,614        3,288        4,219        6,766
 Sales and marketing     1,551        2,260        4,677        6,309
 Research and
  development              257          454          697        1,334
                   -----------  -----------  -----------  -----------
    Total operating
     expenses            3,422        6,002        9,593       14,409
                   -----------  -----------  -----------  -----------
   Income from
    operations             941        2,252        1,448        5,770
 Other income
  (expense):
 Interest expense         (261)        (648)        (774)      (1,272)
 Dividend and
  interest income           16          286           28          480
                   -----------  -----------  -----------  -----------
    Total other
     income
     (expense)            (245)        (362)        (746)        (792)
                   -----------  -----------  -----------  -----------
   Income before
    income tax             696        1,890          702        4,978
 Income tax expense        136          737          137        2,023
                   -----------  -----------  -----------  -----------
    Net income             560        1,153          565        2,955
 Accretion of
  redeemable
  preferred stock
  and preferred
  stock dividends          (79)         (75)        (125)        (225)
 Participation
  rights of
  preferred stock
  in undistributed
  earnings                (168)        (259)        (135)        (775)
                   -----------  -----------  -----------  -----------
    Net income
     attributable
     to common
     shareholders  $       313  $       819  $       305  $     1,955
                   ===========  ===========  ===========  ===========
 Basic net income
  per share
  attributable
  to common
  shareholders     $      0.03  $      0.06  $      0.03  $      0.17
 Weighted-average
  common shares
  outstanding        9,071,133   13,889,162    9,025,740   11,774,702
 Diluted net income
  per share
  attributable to
  common
  shareholders     $      0.03  $      0.05  $      0.03  $      0.15
 Weighted-average
  common
  shares and share
  equivalents
  outstanding       16,875,857   22,858,230   16,012,564   20,752,432

 Supplemental
  information:
  FAS 123R
   compensation
   expense
   Cost of revenue $         5  $        24  $        11  $        68
   General and
    administrative          27          185           85          565
   Sales and
    marketing               26          157           76          267
   Research and
    development              4           13           13           29
                   -----------  -----------  -----------  -----------
     Total         $        62  $       379  $       185  $       929
                   ===========  ===========  ===========  ===========
  Cash incentive
   compensation
   related to
   completion of
   initial public
   offering
   included in
   general and
   administrative
   expenses                 --  $       742           --  $       742
  Stock
   appreciation
   right expense
   related to
   completion of
   initial public
   offering
   included in
   general and
   administrative
   expenses                 --  $        27           --  $        27



              Condensed Consolidated Balance Sheets
       As of March 31, 2007 and December 31, 2007 (unaudited)

                                        March 31,          December 31,
                                          2007                 2007
                                       -----------         -----------
 Cash and cash equivalents             $      285          $    83,295
 Current assets                            22,619              117,820
 Property, plant and equipment, net         7,588                8,676
 Total assets                              33,583              128,763
 Current liabilities                        8,539               12,885
 Long term debt                            10,603                4,457
 Total temporary equity and
  shareholders' equity                     14,308              111,240



           Condensed Consolidated Statements of Cash Flows
         For the nine months ended December 31, 2006 and 2007
                             (unaudited)

                                        Nine months ended December 31,
                                       -------------------------------
                                          2006                 2007
                                       ----------           ----------
 Cash used in operating activities     $   (4,931)          $   (2,115)
 Cash used in investing activities           (495)              (1,821)
 Cash provided by financing activities      4,501               86,946
 Net increase (decrease) in cash and
  cash equivalents                           (925)              83,010

This news release was distributed by PrimeNewswire, www.primenewswire.com

SOURCE: Orion Energy Systems, Inc.

Orion Energy Systems, Inc.
         Daniel J. Waibel, Chief Financial Officer
           (920) 482-1920
         Joann Horne, Investor Relations
           (415) 445-3233

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