Orion Energy Systems, Inc. Announces Fiscal 2012 Fourth Quarter and Full-Year Results
Achieves record revenue of over
Restated Fiscal Year 2011
As previously disclosed, the Company has restated its previously issued consolidated financial statements for fiscal year 2011 to account for revenue from its sales of solar photovoltaic, or PV, systems using the percentage-of-completion method rather than based upon multiple deliverable elements.
Under the Company's prior method of accounting for sales of PV systems,
revenue was recognized in two stages (i) when the title to the products
had been transferred and (ii) when the service installation was
complete. On
Generally, for the Company's 2011 fiscal year ended
- No impact to the Company's cash, cash equivalents, short-term investments or overall cash flow;
-
A decrease in the Company's revenue of
$10.5 million for its full fiscal year 2011; -
A decrease in the Company's net income of
$0.9 million and a decrease in its fully diluted earnings per share of$0.04 for its full fiscal year 2011; and -
An increase in the Company's current assets of
$6.4 million , an increase in the Company's total assets of$6.7 million , an increase in the Company's current liabilities of$8.2 million and a decrease in the Company's total shareholders' equity of$1.5 million for its fiscal year 2011.
In addition to the impact of the accounting treatment change for solar PV sales described above, the re-audit of fiscal 2011 resulted in the following additional changes:
-
An increase in the Company's revenue of
$0.1 million due to adjustments for returns reserves and other net revenue adjustments which increased its net income$0.1 million and its fully diluted earnings per share$0.01 ; -
A decrease in the Company's net income of
$0.5 million due to adjustments for bad debt reserves, inventory reserves and insurance reserves which decreased its fully diluted earnings per share$0.03 ; -
An increase in long-term assets of
$13.2 million and a decrease in current assets of$13.2 million as a result of a reclassification of current inventory to long-term inventory related to the Company's investment in wireless control products; and -
An increase in the Company's net cash flows from operating activities
due to an increase in its depreciation expense of
$0.4 million and an increase in its change in prepaid and other assets of$0.2 million . A decrease in the Company's net cash flow used in investing activities due to a decrease in its capital expenditures of$0.6 million .
The full impact of all changes as described above was as follows:
- No impact to the Company's cash, cash equivalents, short-term investments or overall cash flow;
-
A decrease in the Company's revenue of
$10.4 million (11%) for its full fiscal year 2011; -
A decrease in the Company's net income of
$1.3 million (81%) and a decrease in its fully diluted earnings per share of$0.06 (86%) for its fiscal year 2011; -
A decrease in the Company's current assets of
$8.9 million (12%), an increase in the Company's total assets of$6.1 million (5%), an increase in the Company's current liabilities of$8.0 million (49%) and a decrease in the Company's total shareholders' equity of$1.9 million (2%) for its fiscal year 2011; and -
A decrease in the Company's net cash used in operating activities of
$0.1 million (1%), a decrease in its net cash used in investing activities of$0.6 million (11%) and a decrease in its net cash provided by financing activities of$0.7 million (26%) for its fiscal year 2011.
Full Fiscal Year 2012
For the full fiscal year 2012, revenues were
Total backlog at the end of the fourth quarter of fiscal 2012 was
For fiscal year 2012, the Company reported net income of
Fourth Quarter of Fiscal 2012
For the fourth quarter of fiscal 2012, the Company reported revenues of
For the fourth quarter of fiscal 2012, the Company reported a net loss
of
Cash, Debt and Liquidity Position
Orion had
Key Business Highlights
During the fourth quarter of fiscal 2012:
- Orion increased the number of facilities retrofitted with its energy management technologies to 7,986 as of the end of the fourth quarter fiscal 2012 (compared to 7,673 as of the end of the third quarter of fiscal 2012), representing 1.2 billion square feet of installed facilities.
- Total Megawatts, or MWs, under contract from solar projects remained at 24.0 MWs, the same as MWs under contract as of the end of the third quarter of fiscal 2012. The Company attributes the reduced contract activity in the fiscal 2012 fourth quarter to accelerated buying decisions occurring during the fiscal 2012 third quarter as customers took advantage of tax benefits that expired at the end of calendar 2011.
-
The Company borrowed
$1.4 million against its Orion Throughput Agreement, or OTA, credit facility with J.P Morgan Chase Bank N.A. for the purpose of funding internally-held OTA contracts. -
The Company repurchased 180,000 shares of its common stock at an
average price per share of approximately
$2.56 . For the full fiscal 2012 year, the Company has repurchased 278,300 shares of its common stock at an average price per share of$2.66 .
Long-term Outlook
In keeping with the Company's long-term initiatives, it has elected to
shift its guidance to a longer-term horizon from its previous annual
timeframe. The Company expects to achieve
Historically, Orion has tended to experience revenue in the first quarter that represents the lowest or second-lowest quarterly revenue amount within any given fiscal year. Also, on a historical basis, the Company tends to experience a sequential decline in revenue during the first quarter of a fiscal year relative to the fourth quarter of the prior fiscal year.
The above information is based on the Company's current expectations.
These statements are forward-looking and actual results may differ
materially. The Company assumes no obligation to publicly update or
revise its outlook. Investors are reminded that actual results may
differ, and may differ materially, from these estimates for the reasons
described below under the caption "Safe Harbor Statement" and in the
Company's filings with the
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 twelve months ended
Conference Call
Orion will host a conference call on
Definition of Contracted Revenues
The Company defines contracted revenues, which is a financial measurement not recognized under GAAP, as expected future revenue from firm customer purchase orders received, including both purchase orders payable immediately in cash and for potential future revenues expected to be realized under firm OTAs and solar Power Purchase Agreements, or PPAs. For OTA and cash contracted revenues for sales of its energy management systems, the Company generally expects that it will begin to recognize GAAP revenue under the terms of the agreements within 90 days from the firm contract date. For cash contracted revenues for sales of solar PV systems and for PPA contracted revenue, the Company generally expects that it will recognize GAAP revenue within 180 days from the firm contract. The Company believes that total contracted revenues are a key financial metric for evaluating and measuring the Company's performance because the measure is an indicator of the Company's success in its customers' adoption and acceptance of the Company's energy products and services as it measures firm contracted revenue value, regardless of the contract's cash or deferred financing structure and the GAAP revenue recognition treatment.
Included below is a reconciliation of contracted revenues to revenues
recognized under GAAP for the fiscal 2012 fourth quarter and fiscal
year-to-date period ended
|
Three months ended |
Twelve months ended |
|||||||||
| Total contracted revenues | $ | 12.6 | $ | 122.6 | ||||||
| Change in backlog (1) | 4.9 | (24.5 | ) | |||||||
| Solar PV change orders (2) | 4.3 | 4.3 | ||||||||
| PPA GAAP revenue recognized (3) | 0.1 | 0.6 | ||||||||
| Other miscellaneous | (0.4 | ) | (2.4 | ) | ||||||
| Revenue — GAAP basis | $ | 21.5 | $ | 100.6 | ||||||
| (1) | Change in backlog reflects the (increase) or decrease in cash orders at the end of the respective period where product delivery or service performance has not yet occurred. GAAP revenue will be recognized when the performance conditions have been satisfied. | |
| (2) | Reflects the decrease in contracted revenue related to customer change orders received for solar PV systems where the customer subsequently elected to purchase solar panels directly. | |
| (3) | Reflects GAAP revenue recognized on solar Power Purchase Agreements contracted in prior fiscal years. | |
Use of Non-GAAP Financial Measures
The Company reports all financial information required in accordance with GAAP and also provides certain non-GAAP financial measures. A non-GAAP financial measure refers to a numerical measure of the Company's historical or future financial performance, financial position or cash flows that includes (or excludes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in the Company's financial statements. The Company presents these non-GAAP financial measures as a complement to results provided in accordance with GAAP because management believes that these non-GAAP financial measures help reflect underlying trends in the Company's business and are important in comparing current results with prior period results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for revenue prepared in accordance with GAAP.
The Company's management uses the foregoing non-GAAP financial measurement to evaluate its ongoing operations and for internal planning, budgeting, forecasting and business management purposes. A schedule that reconciles the Company's GAAP and non-GAAP financial measures is included with this release. Investors are encouraged to review this reconciliation to ensure that they have a thorough understanding of the reported non-GAAP financial measures and their most directly comparable GAAP financial measures.
In the Company's earnings releases, conference calls, slide presentations and/or webcasts, it may use or discuss non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure are included in this press release after the condensed consolidated financial statements.
About
- Energy demand by 724,135 kilowatts, or 20.6 billion kilowatt-hours;
-
Energy costs by
$1.6 billion ; and - Indirect carbon dioxide emission by 13.7 million tons.
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 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) the Company's ability to
compete and execute its growth strategy 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 the Company's products and services, including increasing customer
preference to purchase its products through its Orion Throughput
Agreements, or OTAs, rather than through cash purchases; (v) the
Company's ability to effectively manage the credit risk associated with
its increasing reliance on OTA contracts; (vi) price fluctuations,
shortages or interruptions of component supplies and raw materials used
to manufacture its products; (vii) loss of one or more key employees,
customers or suppliers, including key contacts at such customers; (viii)
the Company's ability to effectively manage its product inventory to
provide its products to customers on a timely basis; (ix) the increasing
relative volume of the Company's product sales through its wholesale
channel; (x) a reduction in the price of electricity; (xi) the cost to
comply with, and the effects of, any current and future government
regulations, laws and policies; (xii) increased competition from
government subsidies and utility incentive programs; (xiii) dependence
on customers' capital budgets for sales of products and services; (xiv)
the Company's development of, and participation in, new product and
technology offerings or applications; the availability of additional
debt financing and/or equity capital; (xv) legal proceedings; (xvi)
potential warranty claims; and (xvii) changes based on the completion of
the Company's financial statement process, including the related fiscal
year 2011 re-audit. 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
|
UNAUDITED PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share amounts) |
||||||||||||||||||
|
Three Months Ended |
Twelve Months Ended March 31, | |||||||||||||||||
| 2011 | 2012 | 2011 | 2012 | |||||||||||||||
| Product revenue | $ | 23,393 | $ | 19,036 | $ | 75,870 | $ | 90,782 | ||||||||||
| Service revenue | 2,170 | 2,424 | 6,167 | 9,780 | ||||||||||||||
| Total revenue | 25,563 | 21,460 | 82,037 | 100,562 | ||||||||||||||
|
Cost of product revenue |
15,623 | 12,358 | 49,809 | 62,842 | ||||||||||||||
| Cost of service revenue | 1,498 | 1,966 | 4,589 | 7,682 | ||||||||||||||
| Total cost of revenue | 17,121 | 14,324 | 54,398 | 70,524 | ||||||||||||||
| Gross profit | 8,442 | 7,136 | 27,639 | 30,038 | ||||||||||||||
|
Operating expenses: |
||||||||||||||||||
| General and administrative | 3,044 | 2,728 | 11,686 | 11,399 | ||||||||||||||
| Sales and marketing | 3,550 | 4,042 | 13,674 | 15,599 | ||||||||||||||
| Research and development | 536 | 747 | 2,333 | 2,518 | ||||||||||||||
| Total operating expenses | 7,130 | 7,517 | 27,693 | 29,516 | ||||||||||||||
| Income (loss) from operations | 1,312 | (381 | ) | (54 | ) | 522 | ||||||||||||
|
Other income (expense): |
||||||||||||||||||
| Interest expense | (183 | ) | (154 | ) | (406 | ) | (551 | ) | ||||||||||
| (Loss) gain on sale of OTA contract receivables | (1,012 | ) | 2 | (1,012 | ) | 32 | ||||||||||||
| Interest income | 136 | 256 | 571 | 850 | ||||||||||||||
| Total other income (expense) | (1,059 | ) | 104 | (847 | ) | 331 | ||||||||||||
| Income (loss) before income tax | 253 | (277 | ) | (901 | ) | 853 | ||||||||||||
| Income tax expense (benefit) | (266 | ) | (120 | ) | (1,242 | ) | 370 | |||||||||||
| Net income (loss) | $ | 519 | $ | (157 | ) | $ | 341 | $ | 483 | |||||||||
|
|
$ | 0.02 | $ | (0.01 | ) | $ | 0.02 | $ | 0.02 | |||||||||
| Weighted-average common shares outstanding | 22,827,016 | 22,904,288 | 22,678,411 | 22,953,037 | ||||||||||||||
| Diluted net income (loss) per share | $ | 0.02 | $ | (0.01 | ) | $ | 0.01 | $ | 0.02 | |||||||||
| Weighted-average common shares outstanding | 23,332,133 | 22,904,288 | 23,198,063 | 23,386,525 | ||||||||||||||
The following amounts of stock-based compensation were recorded (in thousands):
|
Three Months Ended |
Twelve Months Ended March 31, | |||||||||||
| 2011 | 2012 | 2011 | 2012 | |||||||||
| Cost of product revenue | $ | 71 | $ | 75 | $ | 187 | $ | 189 | ||||
| General and administrative | 142 | 108 | 560 | 548 | ||||||||
| Sales and marketing | 146 | 110 | 523 | 501 | ||||||||
| Research and development | 10 | 8 | 31 | 29 | ||||||||
| Total | $ | 369 | $ | 301 | $ | 1,301 | $ | 1,267 | ||||
|
UNAUDITED PRELIMINARY CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) |
||||||||
|
March 31, |
March 31, |
|||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 11,560 | $ | 23,011 | ||||
| Short-term investments | 1,011 | 1,016 | ||||||
|
Accounts receivable, net of allowances of |
23,401 | 19,167 | ||||||
| Inventories, net | 15,877 | 18,132 | ||||||
| Deferred contract costs | 9,589 | 2,193 | ||||||
| Deferred tax assets | 1,049 | 1,549 | ||||||
| Prepaid expenses and other current assets | 1,727 | 2,174 | ||||||
| Total current assets | 64,214 | 67,242 | ||||||
|
Property and equipment, net |
30,017 | 30,225 | ||||||
| Patents and licenses, net | 1,620 | 1,689 | ||||||
| Long-term inventory | 13,212 | 12,328 | ||||||
| Long-term accounts receivable | 7,251 | 7,555 | ||||||
| Deferred tax assets | 2,354 | 2,609 | ||||||
| Other long-term assets | 2,419 | 4,002 | ||||||
| Total assets | $ | 121,087 | $ | 125,650 | ||||
|
Liabilities and Shareholders' Equity |
||||||||
| Accounts payable | $ | 12,483 | $ | 14,300 | ||||
| Accrued expenses and other | 2,184 | 3,018 | ||||||
| Deferred revenue, current | 8,427 | 2,614 | ||||||
| Current maturities of long-term debt | 1,137 | 2,791 | ||||||
| Total current liabilities | 24,231 | 22,723 | ||||||
|
Long-term debt, less current maturities |
4,225 | 6,704 | ||||||
| Deferred revenue, long-term | 1,777 | 3,048 | ||||||
| Other long-term liabilities | 399 | 406 | ||||||
| Total liabilities | 30,632 | 32,881 | ||||||
| Additional paid-in capital | 124,132 | 126,753 | ||||||
| Treasury stock | (31,708 | ) | (32,470 | ) | ||||
| Shareholder notes receivable | (193 | ) | (221 | ) | ||||
| Accumulated deficit | (1,776 | ) | (1,293 | ) | ||||
| Total shareholders' equity | 90,455 | 92,769 | ||||||
| Total liabilities and shareholders' equity | $ | 121,087 | $ | 125,650 | ||||
|
UNAUDITED PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) |
||||||||
| Fiscal Year Ended March 31, | ||||||||
| 2011 | 2012 | |||||||
| Operating activities | ||||||||
| Net income | $ | 341 | $ | 483 | ||||
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities: |
||||||||
|
Depreciation and amortization |
3,270 | 4,236 | ||||||
| Stock-based compensation expense | 1,301 | 1,267 | ||||||
| Deferred income tax benefit | (1,184 | ) | (755 | ) | ||||
| Loss on sale of assets | 1,025 | 133 | ||||||
| Change in bad debt expense | 375 | 190 | ||||||
| Other | 51 | 85 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (12,944 | ) | 3,740 | |||||
| Inventories | (3,098 | ) | (1,371 | ) | ||||
| Prepaid expenses and other assets | (2,542 | ) | (2,025 | ) | ||||
| Deferred contract costs | (8,036 | ) | 7,396 | |||||
| Deferred revenue | 9,680 | (4,542 | ) | |||||
| Accounts payable | 4,722 | 1,817 | ||||||
| Accrued expenses | (1,606 | ) | 841 | |||||
| Net cash (used in) provided by operating activities | (8,645 | ) | 11,495 | |||||
|
Investing activities |
||||||||
| Purchase of property and equipment | (2,611 | ) | (4,324 | ) | ||||
| Purchase of property and equipment leased to customers under operating leases | (2,343 | ) | (3 | ) | ||||
| Purchase of short-term investments | (11 | ) | (5 | ) | ||||
| Additions to patents and licenses | (157 | ) | (224 | ) | ||||
| Proceeds from disposal of equipment | 1 | 24 | ||||||
| Net cash used in investing activities | (5,121 | ) | (4,532 | ) | ||||
|
Financing activities |
||||||||
| Proceeds from long-term debt | 3,721 | 5,989 | ||||||
| Proceeds from shareholder notes | 3 | 56 | ||||||
| Deferred financing costs and offering costs | (57 | ) | (124 | ) | ||||
| Repurchase of common stock into treasury | — | (740 | ) | |||||
| Excess tax benefits from stock-based compensation | (132 | ) | 989 | |||||
| Payment of long-term debt | (2,077 | ) | (1,856 | ) | ||||
| Proceeds from issuance of common stock | 504 | 174 | ||||||
| Net cash provided by financing activities | 1,962 | 4,488 | ||||||
|
Net (decrease) increase in cash and cash equivalents |
(11,804 | ) | 11,451 | |||||
| Cash and cash equivalents at beginning of period | 23,364 | 11,560 | ||||||
| Cash and cash equivalents at end of period | $ | 11,560 | $ | 23,011 | ||||
Investor Relations Contact
Chief
Financial Officer
(920) 892-5454
sjensen@oriones.com
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