Orion Energy Systems, Inc. Announces Results for Its 2009 Fiscal Fourth Quarter and Year Ended March 31, 2009

May 14, 2009 at 12:00 AM EDT

MANITOWOC, Wis., May 14, 2009 (GlobeNewswire via COMTEX News Network) -- Orion Energy Systems, Inc. (Nasdaq:OESX), a leading provider of energy management systems to the commercial and industrial sectors, today announced financial results for its fourth quarter and 2009 fiscal year ended March 31, 2009.

"As we communicated in April, the difficult operating environment created by the global recession led our fourth quarter and 2009 fiscal year-end financial results to be weaker than anticipated. Our commercial and industrial customer end markets continued to be soft, with declining capital expenditure budgets, lengthening sales cycles, accelerated plant closures and job losses of key contacts at our existing customers," commented Neal Verfuerth, CEO of Orion Energy Systems. "While our fourth quarter is traditionally strong, this fiscal year we experienced delays with several of our sizable national account opportunities that primarily drove our lower results. However, we believe that these opportunities were not lost as we have already received fifteen purchase orders for over $1.5 million of business from these customers since the end of the quarter and we expect this trend to continue."

"Despite the extremely challenging economy, the value proposition our products offer our customers has not changed -- our products continue to allow companies to realize significant energy cost savings that, in turn, carry through to their bottom lines," continued Mr. Verfuerth. "Moving into our fiscal 2010, we plan to take advantage of our financial strength to position ourselves well for the ultimate recovery of the economy. The current energy situation in the United States presents an enormous opportunity for Orion, and as a result, we continue to invest our time and efforts into further strengthening existing customer relationships, expanding our partner network and building our sales pipeline so that we are well prepared to strike when the economy begins to improve."

Fiscal 2009 Fourth Quarter Results

Revenue. Total revenue for the quarter was $15.4 million compared to $22.3 million for the fiscal 2008 fourth quarter, representing a decrease of 31%.

Gross Profit. Gross profit for the quarter was $4.6 million compared to $8.0 million for the fiscal 2008 fourth quarter, representing a decrease of 43%.

Operating Expenses. Total operating expenses for the quarter were $6.4 million compared to $6.5 million for the fiscal 2008 fourth quarter, representing a 2% improvement.

Loss from Operations. Loss from operations for the quarter was $1.8 million, representing a $3.4 million decline from $1.6 million of operating income in the fiscal 2008 fourth quarter.

Net Loss. Net loss for the quarter was $1.1 million compared to net income of $1.5 million for the fiscal 2008 fourth quarter, representing a decline of $2.6 million. Losses per share were $0.05 for the quarter compared to earnings per diluted share of $0.05 for the fiscal 2008 fourth quarter.

Fiscal 2009 Year-End Results

Revenue. Total revenue for fiscal 2009 was $72.6 million compared to $80.7 million for fiscal 2008, representing a decrease of 10%.

Gross Profit. Gross profit for fiscal 2009 was $23.6 million compared to $28.2 million for fiscal 2008, representing a decrease of 16%.

Operating Expenses. Total operating expenses for fiscal 2009 were $23.7 million compared to $20.9 million for fiscal 2008, an increase of 13%.

Loss from Operations. Loss from operations for fiscal 2009 was $56 thousand compared to operating income of $7.4 million for fiscal 2008, a decline of $7.5 million.

Net Income. Net income for fiscal 2009 was $511 thousand compared to $4.4 million for fiscal 2008, representing a decline of $3.9 million. Earnings per diluted share were $0.02 for fiscal 2009 compared to $0.19 for fiscal 2008.

Cash Flow & Liquidity. Cash flow from operations was $3.2 million for fiscal 2009 compared to a cash outflow of $1.4 million in fiscal 2008. Orion maintains strong financial strength and liquidity with $42.7 million in cash and short-term investments as of March 31, 2009, along with modest debt.

Business Highlights

 * Deployed energy management systems in 194 facilities in the
   fourth quarter of fiscal 2009, representing over 31 million square
   feet retrofitted, and bringing Orion's installed base to 4,581
   facilities. During fiscal 2009, Orion deployed its systems in
   over 1,100 facilities, representing over 170 million square feet.

 * Since December 2001, Orion has benefited its customers and the
   environment as follows:

                                     Cumulative From December 1, 2001
                                           Through March 31, 2009
    High intensity fluorescent (HIF)
     systems sold                                        1,476,894
    Total units sold (including HIF)                     1,907,744
    Customer kilowatt demand
     reduction                                             435,000
    Customer kilowatt hours saved                    7,500,396,998
    Customer electricity costs saved                  $577,530,568
    Indirect carbon dioxide emission
     reductions from customers'
     energy savings (tons)                              4,985,326(1)
    Square footage retrofitted                         756,954,694
    (1)  Emissions rate calculated from EGRID database (EGRID2007
         Version 1.1 - October 2008).

 * Secured ten new Orion Virtual Power Plant(tm) negawatt supply
   agreements during the fourth quarter, representing gross income
   streams of $0.6 million. As of March 31, 2009, Orion had 35.5
   million kWh of negawatts under 20 supply agreements, representing
   approximately $1.5 million of gross income streams.

 * Witnessed continued contribution by Orion's VAR partner network.
   Sales to VAR partners for fiscal 2009 exceeded fiscal 2008 sales
   by 30%.

 * Added 75 new contractor partners during the fourth quarter,
   bringing the total network of contractor partners who have
   conducted business on a recurring basis with Orion to over 445
   as of March 31, 2009. Sales to contractor partners for fiscal 2009
   exceeded fiscal 2008 sales by 49%.

 * Repurchased over 1.7 million shares of outstanding common stock
   during the fourth quarter as part of the $30 million share
   repurchase program originally approved by Orion's Board of
   Directors on July 17, 2008 and supplemented with additional
   repurchase authorization on December 15, 2008. Orion has
   repurchased a total of 6.9 million shares at an average price of
   $4.21 as of March 31, 2009 and has effectively completed its share
   repurchase program.

Recent Developments

 * Orion announced on April 30, 2009, the appointment of Mark
   Williamson to the company's Board of Directors. Williamson brings
   executive-level utility and energy industry experience to the
   position. Williamson joins Thomas Quadracci, James Kackley,
   Russell Flaum and Roland Stephenson as an independent, outside
   director on Orion's seven-member Board.

 * Orion officially opened its 70,000 square foot technology center
   on April 22, 2009. The state-of-the art energy efficient building
   located adjacent to its Manitowoc manufacturing plant will serve
   as the company's headquarters, operations center, training
   facility and technology demonstration site.

Fiscal 2010 Outlook

Given the weak and unpredictable macroeconomic environment, and the associated challenges with forecasting results, Orion will suspend annual revenue and earnings per share guidance. The company will continue to provide revenue and earnings per share guidance on a quarter to quarter basis. As such, first quarter fiscal 2010 revenues are anticipated to be between $12.0 million and $13.2 million. Losses per share for the first quarter of fiscal 2010 are estimated to be between $0.10 and $0.08.

Conference Call

Orion will host a conference call on Thursday, May 14, 2009 at 5:30 p.m. Eastern (4:30 p.m. Central/2:30 p.m. Pacific) to discuss details regarding its fourth quarter and fiscal 2009 financial performance. Domestic callers may access the earnings conference call by dialing 877-723-9522 (International callers, dial 719-325-4754). 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 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.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 conditions; (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 subsidiaries and utility incentive programs; (x) dependence on customers' capital budgets for sales of products and services; (xi) Orion's ability to effectively manage its anticipated growth; and (xii) 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 website.

           (in thousands, except share and per share amounts)
                 Condensed Consolidated Statements of
            Operations for the Three Months and Fiscal Year
                    ended March 31, 2008 and 2009

                         Three months ended       Fiscal year ended
                      -----------------------  -----------------------
                              March 31,                March 31,
                      -----------------------  -----------------------
                          2008        2009         2008        2009
                      ----------- -----------  ----------- -----------
 Revenue                $ 22,250    $ 15,393     $ 80,687    $ 72,634
 Cost of revenue          14,203      10,747       52,462      49,036
                      ----------- -----------  ----------- -----------
   Gross profit            8,047       4,646       28,225      23,598
 Operating expenses:
 General and
  administrative           3,434       2,505       10,200      10,451
 Sales and marketing       2,523       3,097        8,832      11,261
 Research and
  development                498         804        1,832       1,942
                      ----------- -----------  ----------- -----------
   Total operating
    expenses               6,455       6,406       20,864      23,654
                      ----------- -----------  ----------- -----------
  Income from
   operations              1,592      (1,760)       7,361         (56)
 Other income
 Interest expense           (118)        (26)      (1,390)       (167)
 Dividend and
  interest income            709         169        1,189       1,661
                      ----------- -----------  ----------- -----------
   Total other income
    (expense)                591         143         (201)      1,494
                      ----------- -----------  ----------- -----------
  Income before
   income tax              2,183      (1,617)       7,160       1,438
 Income tax expense          727        (487)       2,750         927
                      ----------- -----------  ----------- -----------
   Net income              1,456      (1,130)       4,410         511
 Accretion of redeem-
  able preferred
  stock and preferred
  stock dividends             --          --         (225)         --
 Participation rights
  of preferred stock
  in undistributed
  earnings                    --          --         (775)         --
                      ----------- -----------  ----------- -----------
   Net income
    attributable to
    shareholders        $  1,456    $ (1,130)    $  3,410    $    511
                      =========== ===========  =========== ===========
 Basic net income per
  share attributable
  to common
  shareholders          $   0.05    $  (0.05)    $   0.22    $   0.02
  common shares
  outstanding         26,951,582  22,154,204   15,548,189  25,351,839
 Diluted net income
  per share
  attributable to
  common shareholders   $   0.05    $  (0.05)    $   0.19    $   0.02
  common shares and
  share equivalents
  outstanding         30,010,669  22,154,204   23,453,803  27,445,290

  FAS 123R compen-
   sation expense
   Cost of revenue      $     54    $     71     $    122    $    269
   General and
    administrative           287         129          852         675
   Sales and
    marketing                108         159          375         587
   Research and
    development               13          13           42          45
                      ----------- -----------  ----------- -----------
     Total              $    462    $    372     $  1,391    $  1,576
                      =========== ===========  =========== ===========

                Condensed Consolidated Balance Sheets
         As of March 31, 2008 and March 31, 2009 (unaudited)

                                                  March 31,  March 31,
                                                    2008       2009
                                                  ---------  ---------
 Cash and cash equivalents                        $  78,312  $  36,163
 Short term investments                               2,404      6,490
 Accounts Receivable                                 17,666     11,572
 Inventories                                         16,789     20,232
 Current assets                                     116,896     78,374
 Property and equipment, net                         11,539     22,999
 Total assets                                       130,702    103,722
 Accounts Payable                                     7,521      7,817
 Current liabilities                                 12,606     10,947
 Long term debt                                       4,473      3,647
 Total shareholders' equity                         113,190     88,695

           Condensed Consolidated Statements of Cash Flows
          For the Fiscal Year ended March 31, 2008 and 2009

                                                     Fiscal year ended
                                                         March 31,
                                                      2008      2009
                                                    --------  --------
 Cash used in operating activities                  $ (1,362) $  3,237
 Cash used in investing activities                    (7,437)  (17,873)
 Cash provided by (used in) financing activities      86,826   (27,513)
                                                    --------  --------
 Net increase (decrease) in cash and cash
  equivalents                                       $ 78,027  $(42,149)
                                                    ========  ========

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SOURCE: Orion Energy Systems, Inc.

Orion Energy Systems, Inc.
          Erik G. Birkerts, Chief Operating Officer
          (920) 482-1924
          Victoria Paris
          (312) 553-6715

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