Orion Energy Systems Announces Fiscal 2014 Fourth Quarter and Year-end Financial Results
Company to Hold Conference Call with Accompanying Slide Presentation
Total revenue for fiscal 2014 was
$88.6 million, compared to $86.1 millionin fiscal 2013.
Total revenue for the fiscal 2014 fourth quarter declined to
$12.6 million, from $22.3 millionin the prior-year period, largely as a result of delayed lighting sales coupled with a decline in the number of solar projects under construction as Orion deemphasizes its non-core solar business.
The Company continued to expand its penetration into the LED market,
as product revenue from LED lighting systems increased 156.9% year
over year to
$4.8 millionin fiscal 2014 and 117.6% year over year to $1.3 millionin the fiscal 2014 fourth quarter. The Company believes that its LED lighting systems will be a primary driver of its sales during fiscal 2015.
The Company continued to implement a number of cost-cutting
initiatives throughout the year to increase efficiency and streamline
costs, including consolidating all operations into its headquarters in
Manitowoc. In the fourth quarter of fiscal 2014, the Company sold its leased corporate jet, resulting in expected savings of $1.0 millionper year.
$9.9 millionin net cash from operations during fiscal 2014 compared to $2.3 millionduring fiscal 2013. The Company's working capital at March 31, 2014, was $33.1 millioncompared to $34.8 millionat March 31, 2013.
Fiscal 2014 Fourth Quarter
Total revenue was
$12.6 millionfor the fiscal 2014 fourth quarter, compared to $22.3 millionin the prior-year quarter. The decrease in revenue was a result of delayed customer purchase decisions and lower revenues from the Company's non-core solar operations. Product revenue from Orion's LED products increased to $1.3 million, or 12.4% of total lighting product revenues, during fiscal 2014 fourth quarter, compared to $0.6 million, or 3.4% of total lighting product revenues, in the prior-year period.
Total gross margin was 10.2% for the fiscal 2014 fourth quarter,
compared to 35.8% for the prior-year period, largely as a result of
reduced sales volumes of manufactured lighting products and the
related impact of fixed expenses within its manufacturing facility and
$1.4 millionof increased inventory reserves being recorded due to lower fluorescent product sales. In addition, the Company reported lower margins on its non-core solar projects, which compared to an unusually high-margin solar project in the fourth quarter of the prior year.
The Company reported a number of non-recurring expenses during its
fiscal 2014 fourth quarter that partially contributed to a net loss
for the period of
$(8.8) million, or $(0.41)per diluted share, compared to net income of $0.5 million, or $0.03per diluted share, in the prior-year period. These expenses included the previously noted $1.4 millionin inventory reserves, a loss of $1.5 millionfrom the sale of a leased corporate jet, and $0.3 millionin acquisition-related expenses.
Fiscal 2014 Year-end Financial Highlights
Total revenue for the fiscal 2014 year was
Balance Sheet Review
Orion had approximately
$17.6 millionin cash and cash equivalents and $0.5 millionin short-term investments as of March 31, 2014, compared to $14.4 millionand $1.0 million, respectively, at March 31, 2013.
The Company's working capital as of
March 31, 2014, was $33.1 million, consisting of $50.3 millionin current assets and $17.2 millionin current liabilities, compared to $34.8 million, consisting of $53.6 millionin current assets and $18.8 millionin current liabilities, at March 31, 2013.
The Company generated
$9.9 millionof net cash from operations during fiscal 2014, compared to $2.3 millionin fiscal 2013.
July 1, 2013, the Company completed its acquisition of Harris Manufacturing, Inc.and Harris LED, LLC. The purchase price was paid through a combination of $5.0 millionin cash, $3.1 millionof a seller-financed three-year unsecured subordinated note and 856,997 shares of unregistered Orion common stock, representing a fair value on the date of issuance of $2.1 million. In October 2013, the Company completed an amendment to modify the Harris purchase agreement to fix the value of future earn-out consideration at $1.4 million. Pursuant to the amendment, the Company issued an aggregate of 83,943 unregistered shares of its common stock on January 1, 2014, and will pay $0.8 millionin cash on January 1, 2015.
Total debt was
$6.6 millionat March 31, 2014, compared with $6.7 millionat March 31, 2013, and $7.4 millionas of December 31, 2013.
Outlook for Fiscal 2015
As Orion increases its focus on the lighting retrofit market, which has
inherently limited visibility and unpredictability between quarters, and
moves away from its non-core solar construction projects, the Company is
formally adjusting its previous policy of providing quarterly revenue
and earnings guidance ranges to providing annual revenue projections.
Orion will also begin providing updated operating metrics and financial
goals each quarter to assist shareholders and potential investors in
evaluating the Company. Orion currently has the following expectations
for the fiscal 2015 year ending
The Company expects its total revenues for fiscal 2015 to range from
$80.0 millionto $105.0 million, based on its projected sales growth of LED lighting solutions. Orion intends to update this range quarterly or as necessary.
The Company expects its sales of LED products will continue to grow as
a percentage of total revenue in fiscal 2015. Orion has seen its
pipeline of potential sales orders expand as its product offering has
increased, with many of its potential orders exceeding
Revenue from the non-core solar business is expected to be less than
$1.0 millionduring fiscal 2015 and will not continue into future years.
The Company intends to expand its growth of key regional resellers,
with 30 at
March 31, 2014. Orion believes that expansion in this metric will serve as a leading indicator as there is a certain ramp-up time from signing to when resellers begin to produce a decent order flow.
- The Company expects gross margins to be approximately 30% across all lighting product categories.
Orion has ample capacity at its manufacturing facility (currently
operating at approximately 15% to 25% of its capacity) and does not
foresee any significant capital expenditures within its existing
- The Company continues to explore strategic acquisitions that can broaden its product lines and create synergies through better asset utilization and economies of scale.
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 months and year ended
Orion will discuss these results in a conference call on
The dial-in numbers are:
|Domestic callers:||(877) 754-5294|
|International callers:||(678) 894-3013|
The Company will be utilizing an accompanying slideshow presentation in conjunction with this call, which will be available on the Investor Relations section of Orion's website at www.oesx.com.
To listen to the live webcast, go to the Investor Relations section of Orion Energy Systems' website at http://investor.oriones.com/events.cfm for a live webcast link. To ensure a timely connection, it is recommended that users register at least 15 minutes prior to the scheduled webcast.
An audio replay of the earnings conference call will be available shortly after the call and will remain available through May 19, 2014. The replay can be accessed by dialing (855) 859-2056. The replay pass code for callers is 40382100.
Safe Harbor Statement
Certain matters discussed in this press release, including under our
"Outlook for Fiscal 2015" section, 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) our development of, and participation in, new product
and technology offerings or applications, including customer acceptance
of our LED product lines; (ii) the rate of customer adoption of LED
lighting products and the increasing duration of customer sales cycles
as customers defer purchasing decisions to evaluate LED product costs
and performance; (iii) deterioration of market conditions, including
delays to customer capital expenditure budgets; (iv) our ability to
compete and execute our growth and profitability strategy in a highly
competitive market and our ability to respond successfully to market
competition; (v) any material changes to our inventory obsolescence
reserves; (vi) our ability to recruit and hire sales talent to increase
our in-market sales; (vii) the substantial cost of our various legal
proceedings and our ongoing
|UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS|
|(in thousands, except share and per share amounts)|
Three Months Ended
Twelve Months Ended
|Cost of product revenue||12,379||10,159||49,551||54,423|
|Cost of service revenue||1,931||1,147||9,805||11,220|
|Total cost of revenue||14,310||11,306||59,356||65,643|
|General and administrative||3,158||5,817||13,946||14,951|
|Acquisition and integration related expenses||—||300||—||819|
|Sales and marketing||3,886||3,183||17,129||13,527|
|Research and development||425||610||2,259||2,026|
|Total operating expenses||7,469||9,910||33,334||31,323|
|Income (loss) from operations||502||(8,632||)||(6,604||)||(8,343||)|
|Other income (expense):|
|Total other income||63||5||278||86|
|Income (loss) before income tax||565||(8,627||)||(6,326||)||(8,257||)|
|Income tax (benefit) expense||—||212||4,073||(2,058||)|
|Net income (loss)||$||565||$||(8,839||)||$||(10,399||)||$||(6,199||)|
|Basic net income (loss) per share attributable to common shareholders||$||0.03||$||(0.41||)||$||(0.50||)||$||(0.30||)|
|Weighted-average common shares outstanding||20,156,837||21,468,941||20,996,625||20,987,964|
|Diluted net income (loss) per share||$||0.03||$||(0.41||)||$||(0.50||)||$||(0.30||)|
|Weighted-average common shares and share equivalents outstanding||20,307,555||21,468,941||20,996,625||20,987,964|
The following amounts of stock-based compensation were recorded (in thousands):
Three Months Ended
Twelve Months Ended
|Cost of product revenue||$||36||$||22||$||114||$||70|
|General and administrative||116||278||578||928|
|Sales and marketing||94||50||451||318|
|Research and development||3||4||21||13|
|UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS|
|(in thousands, except share and per share amounts)|
|Cash and cash equivalents||$||14,376||$||17,568|
|Accounts receivable, net||18,397||15,098|
|Deferred contract costs||2,118||742|
|Prepaid expenses and other current assets||2,465||4,673|
|Total current assets||53,607||50,341|
|Property and equipment, net||27,947||23,135|
|Other intangible assets, net||1,709||7,551|
|Long-term accounts receivable||5,069||1,966|
|Other long-term assets||2,274||931|
|Liabilities and Shareholders' Equity|
|Deferred revenue, current||2,946||614|
|Current maturities of long-term debt||2,597||3,450|
|Total current liabilities||18,773||17,191|
|Long-term debt, less current maturities||4,109||3,151|
|Other long-term liabilities||188||270|
|Additional paid-in capital||128,104||130,766|
|Shareholder notes receivable||(265||)||(50||)|
|Total shareholders' equity||77,769||77,012|
|Total liabilities and shareholders' equity||$||102,097||$||98,940|
|UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS|
Twelve Months Ended
|Adjustments to reconcile net loss to net cash (used in) provided by operating activities:|
|Amortization of long-term assets||255||740|
|Stock-based compensation expense||1,164||1,372|
|Accretion of fair value of deferred and contingent purchase price consideration related to acquisition||—||11|
|Deferred income tax expense (benefit)||4,158||(2,123||)|
|Loss on sale of property and equipment||69||1,733|
|Provision for inventory reserves||859||1,995|
|Provision for bad debts||757||174|
|Changes in operating assets and liabilities:|
|Accounts receivable, current and long-term||2,499||8,395|
|Inventories, current and long-term||2,880||3,962|
|Deferred contract costs||75||1,376|
|Prepaid expenses and other assets||1,315||(1,072||)|
|Net cash provided by operating activities||2,261||9,901|
|Cash paid for acquisition, net of cash acquired||—||(4,992||)|
|Purchase of property and equipment||(2,159||)||(410||)|
|Purchase of short-term investments||(5||)||(4||)|
|Sale of short-term investments||—||555|
|Additions to patents and licenses||(153||)||(43||)|
|Proceeds from sales of property, plant and equipment||46||80|
|Net cash used in investing activities||(2,271||)||(4,814||)|
|Payment of long-term debt||(3,169||)||(3,229||)|
|Proceeds from long-term debt||380||—|
|Proceeds from repayment of shareholder notes||38||215|
|Repurchase of common stock into treasury||(6,007||)||—|
|Excess tax benefits from stock-based compensation||70||13|
|Deferred financing costs||—||(19||)|
|Proceeds from issuance of common stock||63||1,125|
|Net cash used in financing activities||(8,625||)||(1,895||)|
|Net (decrease) increase in cash and cash equivalents||(8,635||)||3,192|
|Cash and cash equivalents at beginning of period||23,011||14,376|
|Cash and cash equivalents at end of period||$||14,376||$||17,568|
Investor Relations Contact:
Chief Financial Officer
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