Adjusted EPS of $0.06; National Account Wins Position Company for
Growth
MANITOWOC, Wis.--(BUSINESS WIRE)--
Orion Energy Systems, Inc. (NYSE MKT: OESX) ("Orion" or the "Company"),
a leading power technology enterprise, today announced financial results
for its fiscal 2014 third quarter ended December 31, 2013.
"The third quarter was one in which we continued to focus on market
development, cash flow generation, and earnings growth," said John
Scribante, Chief Executive Officer of Orion Energy Systems. "While
revenue in the period was slightly impacted by the government shutdown
and some end-of-year order slippage, as well as declining revenue from
our large solar project, we saw signs of strengthening LED demand going
forward. Orion's value proposition has resulted in traction across
several new national accounts including a leading financial services
firm, an international food conglomerate, a major automotive OEM and a
North American-based retail food chain. Overall, the retrofit market
continues to show attractive industry trends that we expect to support
top line growth both this year and next.
"The integration of Harris is complete, and all manufacturing operations
have been moved to Manitowoc. With this behind us, we will pursue
additional synergies and operational efficiencies while focusing on our
expanded LDR product line - which we anticipate should help drive
earnings growth in the quarters to come. We are also looking for
strategic acquisition opportunities to enhance our revenue and earnings
growth, strengthen our market leadership position and bolster our LED
product portfolio. We remain dedicated to increasing shareholder
returns, and we will accomplish this by building on our technology, our
people, and expanding our reputation in the energy management industry."
Third Quarter of Fiscal 2014
For the fiscal 2014 third quarter ended December 31, 2013, the Company
reported revenue of $27.7 million compared to $29.1 million for the
third quarter of fiscal 2013. The slight decline in revenue
year-over-year reflects the impact of the federal government shutdown
and some national account order delays which, in aggregate, amounted to
approximately $2 million of lower revenue. Revenue from solar renewable
energy projects was $6.8 million for the fiscal 2014 third quarter
compared to $9.6 million for the fiscal 2013 third quarter, as the
Company continues to deemphasize its focus on solar prospects. The
Company reported income from operations of $0.9 million for the third
quarter of fiscal 2014, including the impact of $(0.2) million in Harris
integration-related expenses, versus $0.6 million for the three months
ended December 31, 2012.
For the third quarter of fiscal 2014, the Company reported net income of
$1.0 million, or $0.05 per share, versus net income of $0.7 million, or
$0.03 per share, in the prior-year period. The fiscal 2014 third quarter
included the impact of the aforementioned Harris integration-related
expenses, which had a $(0.02) impact on EPS, and a Harris-related tax
benefit of $0.1 million, which had a $0.01 impact on EPS. There were no
unusual expenses or benefits in the prior-year period.
Total order backlog as of December 31, 2013 was $4.1 million compared to
$13.0 million as of September 30, 2013, as the Company's solar backlog
was reduced as a result of construction progress at the Brick Township
project. Orion currently expects that all but $1.2 million of the
current backlog to be converted into revenue during the remainder of
fiscal 2014.
First Nine Months of Fiscal 2014
For the nine months ended December 31, 2013, the Company reported
revenue of $76.0 million, up 19% versus revenue of $63.8 million in the
prior-year period. The Company reported income from operations of $0.3
million for the first three quarters of fiscal 2014, versus a loss from
operations of $7.1 million for the same period in fiscal 2013. Along
with the previously noted items impacting the third quarter, fiscal 2014
was also impacted by non-recurring expenses in the first quarter
totaling $0.4 million, or $(0.02) per share, related to the liquidation
of slow moving inventory and, in the second quarter, by an
acquisition-related tax benefit of $2.3 million, or $0.11 per share. In
addition, the second quarter included $0.4 million or $(0.02) per share
in non-cash purchase accounting charges for marking-to-market the then
existing earn-out provision for the Harris acquisition and
acquisition-related legal, accounting and integration expenses.
For the first three quarters of fiscal 2014, the Company reported net
income of $2.6 million, or $0.12 per diluted share, versus a net loss of
$10.9 million, or $(0.51) per share, in the prior-year period.
Year-to-date results included the previously noted tax and expense items
for fiscal 2014 and fiscal 2013; in addition, the fiscal 2013 first
quarter included a tax benefit of $1.6 million, or $0.07 per share, and
the fiscal 2013 second quarter included a tax expense of $5.6 million,
or $(0.27) per share, to record a full valuation allowance against
deferred tax assets.
Cash, Debt and Liquidity Position
Orion had $18.3 million in cash and cash equivalents and $1.0 million in
short-term investments as of December 31, 2013, compared to $14.4
million and $1.0 million, respectively, as of March 31, 2013. The
Company generated $10.8 million of net cash from operations during the
first nine months of fiscal 2014 compared to a slight use of cash from
operations during the first nine months of fiscal 2013.
On 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 million in cash, $3.1 million of 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 purchase agreement with Harris 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 million
in cash on January 1, 2015.
Total debt was $7.4 million as of December 31, 2013 compared with $6.7
million as of March 31, 2013. The Company issued $3.1 million of a
seller-financed note during the fiscal 2014 second quarter to complete
the acquisition of Harris. There were no borrowings outstanding under
the Company's revolving credit facility as of December 31, 2013, which
has availability of $13.3 million.
Outlook
For the fourth quarter of fiscal 2014, the Company anticipates revenue
in the range of $21.0 to $24.0 million and earnings of $(0.02) to $0.01
per diluted share, reflecting the impact of declining solar revenue and
certain delayed orders tied to the 2013 federal government shutdown.
Supplemental Information
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 nine months ended December
31, 2013. The purpose of the supplemental information is to provide
further discussion and analysis of the Company's financial results for
the third quarter and nine months ended December 31, 2013, as well as
certain non-GAAP reconciliations. The supplemental information can be
found in the Investor Relations section of Orion's Web site at http://investor.oriones.com/events.cfm.
Conference Call
Orion will host a conference call on Wednesday, February 5, 2014 at 5:00
p.m. Eastern (4:00 p.m. Central/2:00 p.m. Pacific) to discuss details
regarding its fiscal 2014 third 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.
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 and quality of light. For more
information, visit www.oesx.com.
Safe Harbor Statement
Certain matters discussed in this press release, including under our
"Outlook" 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) deterioration of market conditions, including
customer capital expenditure budgets; (ii) our ability to compete and
execute our growth strategy in a highly competitive market and our
ability to respond successfully to market competition; (iii) increasing
duration of customer sales cycles; (iv) any material changes to our
inventory obsolescence reserves; (v) our ability to recruit and hire
sales talent to increase our in-market direct sales; (vi) our
development of, and participation in, new product and technology
offerings or applications, including customer acceptance of our LED
product lines; (vii) the substantial cost of our various legal
proceedings and our ongoing SEC inquiry; (viii) price fluctuations,
shortages or interruptions of component supplies and raw materials used
to manufacture our products; (ix) loss of one or more key customers or
suppliers, including key contacts at such customers; (x) our ability to
effectively manage our product inventory to provide our products to
customers on a timely basis; (xi) our ability to effectively manage the
credit risk associated with our debt funded OTA contracts; (xii) a
reduction in the price of electricity; (xiii) the cost to comply with,
and the effects of, any current and future government regulations, laws
and policies; (xiv) increased competition from government subsidies and
utility incentive programs; (xv) dependence on customers' capital
budgets for sales of products and services; (xvi); the availability of
additional debt financing and/or equity capital; (xvii) potential
warranty claims; (xviii) potential acquisitions; (xix) our ability to
effectively integrate the acquisition of Harris Manufacturing, Inc. and
Harris LED, LLC.; and (xx) our decreasing emphasis on obtaining new
solar photovoltaic construction projects. 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.
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|
|
|
|
|
|
|
|
|
|
|
|
ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Nine Months Ended December 31,
|
|
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
Product revenue
|
|
$
|
22,660
|
|
|
$
|
22,380
|
|
|
$
|
53,171
|
|
|
$
|
61,084
|
|
|
Service revenue
|
|
6,427
|
|
|
5,312
|
|
|
10,634
|
|
|
14,955
|
|
|
Total revenue
|
|
29,087
|
|
|
27,692
|
|
|
63,805
|
|
|
76,039
|
|
|
Cost of product revenue
|
|
15,708
|
|
|
15,742
|
|
|
37,172
|
|
|
44,264
|
|
|
Cost of service revenue
|
|
4,798
|
|
|
3,800
|
|
|
7,874
|
|
|
10,073
|
|
|
Total cost of revenue
|
|
20,506
|
|
|
19,542
|
|
|
45,046
|
|
|
54,337
|
|
|
Gross profit
|
|
8,581
|
|
|
8,150
|
|
|
18,759
|
|
|
21,702
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
2,848
|
|
|
3,277
|
|
|
10,788
|
|
|
9,134
|
|
|
Acquisition and integration related expenses
|
|
—
|
|
|
88
|
|
|
—
|
|
519
|
|
|
Sales and marketing
|
|
4,730
|
|
|
3,397
|
|
|
13,243
|
|
|
10,344
|
|
|
Research and development
|
|
427
|
|
|
478
|
|
|
1,834
|
|
|
1,416
|
|
|
Total operating expenses
|
|
8,005
|
|
|
7,240
|
|
|
25,865
|
|
|
21,413
|
|
|
Income (loss) from operations
|
|
576
|
|
|
910
|
|
|
(7,106
|
)
|
|
289
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
(138
|
)
|
|
(123
|
)
|
|
(441
|
)
|
|
(378
|
)
|
|
Interest income
|
|
213
|
|
|
132
|
|
|
656
|
|
|
459
|
|
|
Total other income
|
|
75
|
|
|
9
|
|
|
215
|
|
|
81
|
|
|
Income (loss) before income tax
|
|
651
|
|
|
919
|
|
|
(6,891
|
)
|
|
370
|
|
|
Income tax (benefit) expense
|
|
—
|
|
|
(99
|
)
|
|
4,057
|
|
|
(2,270
|
)
|
|
Net income (loss)
|
|
$
|
651
|
|
|
$
|
1,018
|
|
|
$
|
(10,948
|
)
|
|
$
|
2,640
|
|
|
Basic net income (loss) per share
|
|
$
|
0.03
|
|
|
$
|
0.05
|
|
|
$
|
(0.51
|
)
|
|
$
|
0.13
|
|
|
Weighted-average common shares outstanding
|
|
20,191,547
|
|
|
21,219,946
|
|
|
21,271,465
|
|
|
20,830,247
|
|
|
Diluted net income (loss) per share
|
|
$
|
0.03
|
|
|
$
|
0.05
|
|
|
$
|
(0.51
|
)
|
|
$
|
0.12
|
|
|
Weighted-average common shares outstanding
|
|
20,245,194
|
|
|
22,328,766
|
|
|
21,271,465
|
|
|
21,562,526
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following amounts of stock-based compensation were recorded (in
thousands):
|
|
|
Three Months Ended December 31,
|
|
Nine Months Ended December 31,
|
|
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
Cost of product revenue
|
|
$
|
21
|
|
|
$
|
11
|
|
|
$
|
78
|
|
|
$
|
48
|
|
General and administrative
|
|
43
|
|
|
199
|
|
|
461
|
|
|
650
|
|
Sales and marketing
|
|
78
|
|
|
83
|
|
|
357
|
|
|
266
|
|
Research and development
|
|
3
|
|
|
4
|
|
|
18
|
|
|
9
|
|
Total
|
|
$
|
145
|
|
|
$
|
297
|
|
|
$
|
914
|
|
|
$
|
973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
|
2013
|
|
2013
|
|
Assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
14,376
|
|
|
$
|
18,339
|
|
|
Short-term investments
|
|
1,021
|
|
|
1,025
|
|
|
Accounts receivable, net
|
|
18,397
|
|
|
20,328
|
|
|
Inventories, net
|
|
15,230
|
|
|
13,517
|
|
|
Deferred contract costs
|
|
2,118
|
|
|
669
|
|
|
Prepaid expenses and other current assets
|
|
2,465
|
|
|
4,795
|
|
|
|
Total current assets
|
|
53,607
|
|
|
58,673
|
|
|
Property and equipment, net
|
|
27,947
|
|
|
25,254
|
|
|
Long-term inventory
|
|
11,491
|
|
|
9,544
|
|
|
Goodwill
|
|
—
|
|
|
4,676
|
|
|
Other intangible assets, net
|
|
1,709
|
|
|
7,705
|
|
|
Deferred tax assets
|
|
—
|
|
|
145
|
|
|
Long-term accounts receivable
|
|
5,069
|
|
|
2,841
|
|
|
Other long-term assets
|
|
2,274
|
|
|
2,246
|
|
|
|
Total assets
|
|
$
|
102,097
|
|
|
$
|
111,084
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
Accounts payable
|
|
$
|
7,773
|
|
|
$
|
11,197
|
|
|
Accrued expenses
|
|
5,457
|
|
|
4,717
|
|
|
Deferred revenue
|
|
2,946
|
|
|
1,182
|
|
|
Current maturities of long-term debt
|
|
2,597
|
|
|
3,677
|
|
|
|
Total current liabilities
|
|
18,773
|
|
|
20,773
|
|
|
Long-term debt, less current maturities
|
|
4,109
|
|
|
3,762
|
|
|
Deferred revenue
|
|
1,258
|
|
|
1,336
|
|
|
Other long-term liabilities
|
|
188
|
|
|
874
|
|
|
|
Total liabilities
|
|
24,328
|
|
|
26,745
|
|
|
Shareholders' equity:
|
|
|
|
|
|
Additional paid-in capital
|
|
128,104
|
|
|
129,797
|
|
|
Treasury stock
|
|
(38,378
|
)
|
|
(36,354
|
)
|
|
Shareholder notes receivable
|
|
(265
|
)
|
|
(52
|
)
|
|
Retained deficit
|
|
(11,692
|
)
|
|
(9,052
|
)
|
|
|
Total shareholders' equity
|
|
77,769
|
|
|
84,339
|
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
102,097
|
|
|
$
|
111,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended December 31,
|
|
|
|
|
|
|
2012
|
|
2013
|
|
Operating activities
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(10,948
|
)
|
|
$
|
2,640
|
|
|
|
Adjustments to reconcile net (loss) income to net cash (used in)
provided by operating
|
|
|
|
|
|
|
|
activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
3,258
|
|
|
2,987
|
|
|
|
|
|
Amortization of long-term assets
|
|
156
|
|
|
355
|
|
|
|
|
|
Stock-based compensation expense
|
|
914
|
|
|
973
|
|
|
|
|
|
Accretion of fair value of deferred and contingent purchase price
consideration related to acquisition
|
|
—
|
|
|
11
|
|
|
|
|
|
Deferred income tax expense (benefit)
|
|
3,945
|
|
|
(2,335
|
)
|
|
|
|
|
Loss on sale of property and equipment
|
|
38
|
|
|
112
|
|
|
|
|
|
Provision for bad debts
|
|
712
|
|
|
87
|
|
|
|
|
|
Other
|
|
44
|
|
|
101
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable, current and long-term
|
|
(330
|
)
|
|
2,384
|
|
|
|
|
|
Inventories, current and long-term
|
|
823
|
|
|
5,293
|
|
|
|
|
|
Deferred contract costs
|
|
466
|
|
|
1,449
|
|
|
|
|
|
Prepaid expenses and other assets
|
|
(805
|
)
|
|
(2,225
|
)
|
|
|
|
|
Accounts payable
|
|
(941
|
)
|
|
1,905
|
|
|
|
|
|
Accrued expenses
|
|
3,737
|
|
|
(1,202
|
)
|
|
|
|
|
Deferred revenue
|
|
(1,130
|
)
|
|
(1,686
|
)
|
|
|
Net cash (used in) provided by operating activities
|
|
(61
|
)
|
|
10,849
|
|
|
Investing activities
|
|
|
|
|
|
|
Cash paid for acquisition, net of cash acquired
|
|
—
|
|
|
(4,992
|
)
|
|
|
Purchase of property and equipment
|
|
(1,848
|
)
|
|
(357
|
)
|
|
|
Purchase of short-term investments
|
|
(4
|
)
|
|
(4
|
)
|
|
|
Additions to patents and licenses
|
|
(97
|
)
|
|
(23
|
)
|
|
|
Proceeds from sales of property, plant and equipment
|
|
30
|
|
|
68
|
|
|
|
Net cash used in investing activities
|
|
(1,919
|
)
|
|
(5,308
|
)
|
|
Financing activities
|
|
|
|
|
|
|
Payment of long-term debt
|
|
(2,194
|
)
|
|
(2,391
|
)
|
|
|
Proceeds from long-term debt
|
|
156
|
|
|
—
|
|
|
|
Proceeds from repayment of shareholder notes
|
|
7
|
|
|
213
|
|
|
|
Repurchase of common stock into treasury
|
|
(6,007
|
)
|
|
—
|
|
|
|
Excess tax benefits from stock-based compensation
|
|
21
|
|
|
19
|
|
|
|
Deferred financing costs
|
|
—
|
|
|
(19
|
)
|
|
|
Proceeds from issuance of common stock
|
|
60
|
|
|
600
|
|
|
|
Net cash used in financing activities
|
|
(7,957
|
)
|
|
(1,578
|
)
|
|
Net (decrease) increase in cash and cash equivalents
|
|
(9,937
|
)
|
|
3,963
|
|
|
Cash and cash equivalents at beginning of period
|
|
23,011
|
|
|
14,376
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
13,074
|
|
|
$
|
18,339
|
|
Investor Relations Contacts:
Darrow
Associates
Chris Witty
(646) 438-9385
cwitty@darrowir.com
or
Orion
Energy Systems
Scott Jensen
Chief Financial Officer
(920)
892-9340
Source: Orion Energy Systems, Inc.
News Provided by Acquire Media
