February 2, 2010

Orion Energy Systems Inc. Announces Fiscal 2010 Third Quarter Results

Company Exceeds Revenue and EPS Guidance

MANITOWOC, Wis., Feb 2, 2010 (GlobeNewswire via COMTEX News Network) -- Orion Energy Systems Inc. (Nasdaq:OESX), a power technology enterprise that designs, manufactures and deploys energy management solutions for the commercial and industrial sectors, today announced financial results for its fiscal 2010 third quarter ended December 31, 2009.

For its third quarter of fiscal 2010, Orion reported revenues of $19.3 million and net income of $0.8 million, or $0.04 per share.

Total bookings for the quarter were $21.4 million, including $3.4 million in financing deals of which $1.7 million were Orion Virtual Power Plant(TM) (OVPP) supply agreements and $1.7 million were solar technology power purchase agreements. Orion defines bookings as customer purchase orders received during the quarter, including both purchase orders payable in cash and for OVPP supply deliveries over the life of the OVPP contracts and solar power purchase agreements.

Since December 2001, Orion's technology has benefitted its customers and the environment by reducing its customers':

  --  Energy demand by 504,324 kilowatts, or 10.1 billion kilowatt-hours;
  --  Energy costs by more than $782 million; and
  --  Indirect carbon dioxide emission by more than 6.75 million tons.


Orion's energy management solutions have displaced 500 megawatts of capacity since 2001, which is equivalent to the amount of electricity produced by a traditional, fossil-fuel power plant. This milestone further validates the Company's position as a leader in delivering permanent distributed load reduction.

Neal Verfuerth, Chairman and Chief Executive Officer of Orion Energy Systems commented, "We are pleased to report results for the third quarter that exceeded our revenue and earnings per share guidance, while also generating positive operating cash flow within the quarter. Revenues were driven in large part by increased order volume on the wholesale side of our business, where we continued to see sizable deals close as a result of our ongoing investments in this channel. We also experienced the addition of several new national accounts as commercial and industrial companies continue to view energy efficiency and sustainability as a key long-term priority."

Mr. Verfuerth continued, "We have made great strides in expanding our product offering, which now includes electricity generation through our renewable offering, as well as permanent distributed load reduction from our integrated lighting solution. In addition, we have further enhanced our manufacturing capabilities and go-to market strategy, which we are now replicating across our wholesale channel to further broaden Orion's geographical presence. As a result, Orion now has the people, assets, and strategies in place to truly capitalize on the opportunity both above and below the roof of our current and potential customers."

Key Business Highlights

  --  Increased the number of facilities retrofitted with Orion's Compact
      Modular high-intensity fluorescent technology to 5,374, representing 850
      million square feet as of the end of the third quarter of fiscal 2010.
  --  Total deployments of the InteLite(R) wireless controls increased to 244
      customer locations, 22,374 transceivers and 319 control panels,
      representing 10.1 million square feet as of the end of the third quarter
      of fiscal 2010.
  --  Total Apollo(R) solar light pipes installed increased to 4,774 total
      installed units, representing 2.1 million square feet as of the end of
      the third quarter of fiscal 2010.


Fiscal 2010 Fourth Quarter Outlook

Fourth quarter fiscal 2010 revenues are anticipated to be between $18 million and $21 million. Earnings per share for the fourth quarter of fiscal 2010 are estimated to be between a loss of $(0.01) and earnings of $0.04 per diluted share.

Conference Call

Orion will host a conference call on Tuesday, Feb. 2, 2010 at 5:30 p.m. Eastern (4:30 p.m. Central/2:30 p.m. Pacific) to discuss details regarding its third quarter fiscal 2010 performance. Domestic callers may access the earnings conference call by dialing 800-289-0508 (International callers, dial 913-312-0672). 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 webcast.

About Orion Energy Systems

Orion Energy Systems Inc. (Nasdaq:OESX) is a leading power technology enterprise that designs, manufactures and deploys 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 condition, including customer capital expenditure budgets; (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, including key contacts at such customers; (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 subsidies and utility incentive programs; (x) dependence on customers' capital budgets for sales of products and services; (xi) Orion's development of, and participation in, new product and technology offerings or applications; (xii) legal proceedings, including the securities litigation pending against Orion; and (xiii) 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 Web site.

  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, 2008 and 2009
  (unaudited)

                                     Three months ended       Nine months ended

                                        December 31,            December 31,
                                   ----------------------  ----------------------

                                      2008        2009        2008        2009
                                   ----------  ----------  ----------  ----------
  Revenue                             $22,375     $19,295     $57,241     $46,542

  Cost of revenue                      14,955      12,201      38,289      31,182
                                   ----------  ----------  ----------  ----------
    Gross profit                        7,420       7,094      18,952      15,360
  Operating expenses:
  General and administrative            2,438       3,051       7,946       9,357
  Sales and marketing                   2,741       3,063       8,164       9,176

  Research and development                347         404       1,138       1,315
                                   ----------  ----------  ----------  ----------

    Total operating expenses            5,526       6,518      17,248      19,848
                                   ----------  ----------  ----------  ----------
   Income (loss) from operations        1,894         576       1,704     (4,488)
  Other income (expense):
  Interest expense                       (33)        (67)       (141)       (197)

  Dividend and interest income            325          49       1,492         248
                                   ----------  ----------  ----------  ----------

    Total other income (expense)          292        (18)       1,351          51
                                   ----------  ----------  ----------  ----------
   Income (loss) before income
    tax                                 2,186         558       3,055     (4,437)

  Income tax expense (benefit)          1,032       (249)       1,414     (1,072)
                                   ----------  ----------  ----------  ----------

    Net income (loss)                  $1,154        $807      $1,641    $(3,365)
                                   ==========  ==========  ==========  ==========
  Basic net income (loss) per
   share attributable to common
   shareholders                         $0.05       $0.04       $0.06     $(0.15)
  Weighted-average common shares
   outstanding                     25,203,827  21,792,175  26,398,338  21,709,799
  Diluted net income (loss) per
   share attributable to common
   shareholders                         $0.04       $0.04       $0.06     $(0.15)
  Weighted-average common shares
   and share equivalents
   outstanding                     26,414,750  22,567,575  28,710,765  21,709,799

  Supplemental information:
   FAS 123R compensation expense
    Cost of revenue                       $68         $51        $198        $163
    General and administrative            121         135         546         400
    Sales and marketing                   157         205         428         472

    Research and development               12          10          32          29
                                   ----------  ----------  ----------  ----------

     Total                               $358        $401      $1,204      $1,064
                                   ==========  ==========  ==========  ==========

  Condensed Consolidated Balance Sheets
  As of March 31, 2009 and December 31, 2009
   (unaudited)


                                March
                                 31,    December
                                2009    31, 2009
                               -------  --------
  Cash and cash equivalents    $36,163   $31,936
  Short term investments         6,490     1,000
  Accounts receivable           11,572    13,397
  Inventories                   20,232    24,517
  Current assets                78,374    73,354
  Property and equipment, net   22,999    30,732
  Total assets                 103,722   107,495
  Accounts payable               7,817    13,010
  Current liabilities           10,947    16,452
  Long term debt                 3,647     3,372
  Total shareholders' equity    88,695    87,097

  Condensed Consolidated Statements of Cash Flows
  For the Nine Months ended December 31, 2008 and 2009
  (unaudited)


                                                         Nine months ended
                                                           December 31,
                                                        -------------------

                                                           2008      2009
                                                        ---------  --------
  Cash used in operating activities                        $(468)    $(175)
  Cash used in investing activities                      (33,491)   (4,254)

  Cash provided by (used in) financing activities        (20,178)       202
                                                        ---------  --------

  Net (decrease) in cash and cash equivalents           $(54,137)  $(4,227)
                                                        =========  ========

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

SOURCE: Orion Energy Systems, Inc.

CONTACT:  Orion Energy Systems
Linda Diedrich
(920) 482-1988
Scott Jensen, Chief Financial Officer
(920) 892-5454

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