UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended June 30, 2020
OR
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number 001-33887
Orion Energy Systems, Inc.
(Exact name of Registrant as specified in its charter)
Wisconsin |
|
39-1847269 |
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification number) |
2210 Woodland Drive, Manitowoc, Wisconsin |
|
54220 |
(Address of principal executive offices) |
|
(Zip code) |
Registrant’s telephone number, including area code: (920) 892-9340
Securities registered pursuant to Section 12(b) of the act:
Title of Each Class |
|
Trading Symbol (s) |
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Name of Each Exchange on Which Registered |
Common stock, no par value |
|
OESX |
|
The Nasdaq Stock Market LLC (NASDAQ Capital Market) |
Common stock purchase rights |
|
|
|
The Nasdaq Stock Market LLC (NASDAQ Capital Market) |
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an "emerging growth company". See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
☐ |
Accelerated filer |
☐ |
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|
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Non-accelerated filer |
☒ |
Smaller reporting company |
☒ |
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|
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Emerging growth company |
☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
There were 30,624,889 shares of the Registrant’s common stock outstanding on July 31, 2020.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED June 30, 2020
TABLE OF CONTENTS
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Page(s) |
3 |
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ITEM 1. |
3 |
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Condensed Consolidated Balance Sheets as of June 30, 2020 and March 31, 2020 |
3 |
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4 |
|
|
5 |
|
|
6 |
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|
7 |
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ITEM 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
24 |
ITEM 3. |
34 |
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ITEM 4. |
34 |
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35 |
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ITEM 1. |
35 |
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ITEM 1A. |
35 |
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ITEM 2. |
35 |
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ITEM 5. |
35 |
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ITEM 6. |
36 |
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37 |
PART I – FINANCIAL INFORMATION
ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
|
|
June 30, 2020 |
|
|
March 31, 2020 |
|
||
Assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
10,784 |
|
|
$ |
28,751 |
|
Accounts receivable, net |
|
|
5,704 |
|
|
|
10,427 |
|
Revenue earned but not billed |
|
|
2,379 |
|
|
|
560 |
|
Inventories, net |
|
|
17,070 |
|
|
|
14,507 |
|
Prepaid expenses and other current assets |
|
|
570 |
|
|
|
723 |
|
Total current assets |
|
|
36,507 |
|
|
|
54,968 |
|
Property and equipment, net |
|
|
11,688 |
|
|
|
11,817 |
|
Other intangible assets, net |
|
|
2,161 |
|
|
|
2,216 |
|
Long-term accounts receivable |
|
|
— |
|
|
|
760 |
|
Other long-term assets |
|
|
3,008 |
|
|
|
2,802 |
|
Total assets |
|
$ |
53,364 |
|
|
$ |
72,563 |
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
13,660 |
|
|
$ |
19,834 |
|
Accrued expenses and other |
|
|
5,796 |
|
|
|
7,228 |
|
Deferred revenue, current |
|
|
92 |
|
|
|
107 |
|
Current maturities of long-term debt |
|
|
14 |
|
|
|
35 |
|
Total current liabilities |
|
|
19,562 |
|
|
|
27,204 |
|
Revolving credit facility |
|
|
— |
|
|
|
10,013 |
|
Long-term debt, less current maturities |
|
|
46 |
|
|
|
50 |
|
Deferred revenue, long-term |
|
|
696 |
|
|
|
715 |
|
Other long-term liabilities |
|
|
4,011 |
|
|
|
3,546 |
|
Total liabilities |
|
|
24,315 |
|
|
|
41,528 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
|
|
|
Preferred stock, $0.01 par value: Shares authorized: 30,000,000 at June 30, 2020 and March 31, 2020; no shares issued and outstanding at June 30, 2020 and March 31, 2020 |
|
|
— |
|
|
|
— |
|
Common stock, no par value: Shares authorized: 200,000,000 at June 30, 2020 and March 31, 2020; shares issued: 40,092,349 at June 30, 2020 and 39,729,569 at March 31, 2020; shares outstanding: 30,624,889 at June 30, 2020 and 30,265,997 at March 31, 2020 |
|
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
|
156,752 |
|
|
|
156,503 |
|
Treasury stock, common shares: 9,467,460 at June 30, 2020 and 9,463,572 at March 31, 2020 |
|
|
(36,179 |
) |
|
|
(36,163 |
) |
Retained deficit |
|
|
(91,524 |
) |
|
|
(89,305 |
) |
Total shareholders’ equity |
|
|
29,049 |
|
|
|
31,035 |
|
Total liabilities and shareholders’ equity |
|
$ |
53,364 |
|
|
$ |
72,563 |
|
The accompanying notes are an integral part of these Condensed Consolidated Statements.
3
ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
|
|
Three Months Ended June 30, |
|
|||||
|
|
2020 |
|
|
2019 |
|
||
Product revenue |
|
$ |
9,701 |
|
|
$ |
32,339 |
|
Service revenue |
|
|
1,110 |
|
|
|
10,039 |
|
Total revenue |
|
|
10,811 |
|
|
|
42,378 |
|
Cost of product revenue |
|
|
7,229 |
|
|
|
23,825 |
|
Cost of service revenue |
|
|
947 |
|
|
|
8,270 |
|
Total cost of revenue |
|
|
8,176 |
|
|
|
32,095 |
|
Gross profit |
|
|
2,635 |
|
|
|
10,283 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
General and administrative |
|
|
2,411 |
|
|
|
3,007 |
|
Sales and marketing |
|
|
1,854 |
|
|
|
2,706 |
|
Research and development |
|
|
415 |
|
|
|
411 |
|
Total operating expenses |
|
|
4,680 |
|
|
|
6,124 |
|
(Loss) income from operations |
|
|
(2,045 |
) |
|
|
4,159 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
Other income |
|
|
9 |
|
|
|
12 |
|
Interest expense |
|
|
(49 |
) |
|
|
(136 |
) |
Amortization of debt issue costs |
|
|
(61 |
) |
|
|
(61 |
) |
Interest income |
|
|
0 |
|
|
|
2 |
|
Total other expense |
|
|
(101 |
) |
|
|
(183 |
) |
(Loss) income before income tax |
|
|
(2,146 |
) |
|
|
3,976 |
|
Income tax expense |
|
|
73 |
|
|
|
8 |
|
Net (loss) income |
|
$ |
(2,219 |
) |
|
$ |
3,968 |
|
Basic net (loss) income per share attributable to common shareholders |
|
$ |
(0.07 |
) |
|
$ |
0.13 |
|
Weighted-average common shares outstanding |
|
|
30,352,217 |
|
|
|
29,723,472 |
|
Diluted net (loss) income per share |
|
$ |
(0.07 |
) |
|
$ |
0.13 |
|
Weighted-average common shares and share equivalents outstanding |
|
|
30,352,217 |
|
|
|
30,550,892 |
|
The accompanying notes are an integral part of these Condensed Consolidated Statements.
4
ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands, except share amounts)
|
|
Shareholders’ Equity |
|
|||||||||||||||||
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Shares |
|
|
Additional Paid-in Capital |
|
|
Treasury Stock |
|
|
Retained Deficit |
|
|
Total Shareholders’ Equity |
|
|||||
Balance, March 31, 2020 |
|
|
30,265,997 |
|
|
$ |
156,503 |
|
|
$ |
(36,163 |
) |
|
$ |
(89,305 |
) |
|
$ |
31,035 |
|
Exercise of stock options for cash |
|
|
20,000 |
|
|
|
41 |
|
|
|
— |
|
|
|
— |
|
|
|
41 |
|
Shares issued under Employee Stock Purchase Plan |
|
|
458 |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
|
2 |
|
Stock-based compensation |
|
|
342,780 |
|
|
|
208 |
|
|
|
— |
|
|
|
— |
|
|
|
208 |
|
Employee tax withholdings on stock-based compensation |
|
|
(4,346 |
) |
|
|
— |
|
|
|
(18 |
) |
|
|
— |
|
|
|
(18 |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,219 |
) |
|
|
(2,219 |
) |
Balance, June 30, 2020 |
|
|
30,624,889 |
|
|
|
156,752 |
|
|
|
(36,179 |
) |
|
|
(91,524 |
) |
|
|
29,049 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ Equity |
|
|||||||||||||||||
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Shares |
|
|
Additional Paid-in Capital |
|
|
Treasury Stock |
|
|
Retained Deficit |
|
|
Total Shareholders’ Equity |
|
|||||
Balance, March 31, 2019 |
|
|
29,600,158 |
|
|
$ |
155,828 |
|
|
$ |
(36,091 |
) |
|
$ |
(101,767 |
) |
|
$ |
17,970 |
|
Exercise of stock options for cash |
|
|
10,000 |
|
|
|
16 |
|
|
|
— |
|
|
|
— |
|
|
|
16 |
|
Shares issued under Employee Stock Purchase Plan |
|
|
613 |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
|
2 |
|
Stock-based compensation |
|
|
535,344 |
|
|
|
171 |
|
|
|
— |
|
|
|
— |
|
|
|
171 |
|
Employee tax withholdings on stock-based compensation |
|
|
(24,628 |
) |
|
|
— |
|
|
|
(64 |
) |
|
|
— |
|
|
|
(64 |
) |
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,968 |
|
|
|
3,968 |
|
Balance, June 30, 2019 |
|
|
30,121,487 |
|
|
|
156,015 |
|
|
|
(36,153 |
) |
|
|
(97,799 |
) |
|
|
22,063 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these Condensed Consolidated Statements.
5
ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
|
Three Months Ended June 30, |
|
|||||
|
|
2020 |
|
|
2019 |
|
||
Operating activities |
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(2,219 |
) |
|
$ |
3,968 |
|
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
292 |
|
|
|
315 |
|
Amortization of intangible assets |
|
|
78 |
|
|
|
94 |
|
Stock-based compensation |
|
|
208 |
|
|
|
171 |
|
Amortization of debt issue costs |
|
|
61 |
|
|
|
61 |
|
Provision for inventory reserves |
|
|
27 |
|
|
|
80 |
|
Other |
|
|
9 |
|
|
|
21 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable, current and long-term |
|
|
5,483 |
|
|
|
(9,199 |
) |
Revenue earned but not billed |
|
|
(1,819 |
) |
|
|
238 |
|
Inventories |
|
|
(2,590 |
) |
|
|
(1,610 |
) |
Prepaid expenses and other assets |
|
|
236 |
|
|
|
(5 |
) |
Accounts payable |
|
|
(6,119 |
) |
|
|
7,106 |
|
Accrued expenses and other |
|
|
(1,322 |
) |
|
|
777 |
|
Deferred revenue, current and long-term |
|
|
(34 |
) |
|
|
(21 |
) |
Net cash (used in) provided by operating activities |
|
|
(7,709 |
) |
|
|
1,996 |
|
Investing activities |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(221 |
) |
|
|
(200 |
) |
Additions to patents and licenses |
|
|
(23 |
) |
|
|
— |
|
Net cash used in investing activities |
|
|
(244 |
) |
|
|
(200 |
) |
Financing activities |
|
|
|
|
|
|
|
|
Payment of long-term debt |
|
|
(25 |
) |
|
|
(21 |
) |
Proceeds from revolving credit facility |
|
|
— |
|
|
|
31,100 |
|
Payments of revolving credit facility |
|
|
(10,013 |
) |
|
|
(31,329 |
) |
Payments to settle employee tax withholdings on stock-based compensation |
|
|
(19 |
) |
|
|
(63 |
) |
Net proceeds from employee equity exercises |
|
|
43 |
|
|
|
18 |
|
Net cash used in financing activities |
|
|
(10,014 |
) |
|
|
(295 |
) |
Net (decrease) increase in cash and cash equivalents |
|
|
(17,967 |
) |
|
|
1,501 |
|
Cash and cash equivalents at beginning of period |
|
|
28,751 |
|
|
|
8,729 |
|
Cash and cash equivalents at end of period |
|
$ |
10,784 |
|
|
$ |
10,230 |
|
Supplemental disclosure of non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
Operating lease assets obtained in exchange for new operating lease liabilities |
|
$ |
355 |
|
|
$ |
— |
|
The accompanying notes are an integral part of these Condensed Consolidated Statements.
6
ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — DESCRIPTION OF BUSINESS
Organization
Orion includes Orion Energy Systems, Inc., a Wisconsin corporation, and all consolidated subsidiaries. Orion is a developer, manufacturer and seller of lighting and energy management systems to commercial and industrial businesses, and federal and local governments, predominantly in North America
Orion’s corporate offices and leased primary manufacturing operations are located in Manitowoc, Wisconsin. Orion also leases office space in Jacksonville, Florida.
NOTE 2 — IMPACT OF COVID-19
The COVID-19 pandemic has disrupted business, trade, commerce, and financial and credit markets in the U.S. and globally. Orion’s business has been adversely impacted by measures taken by government entities and others to control the spread of the virus beginning in March 2020, the last month of its fiscal 2020 year. As a deemed essential business, Orion provides products and services to ensure energy and lighting infrastructure and Orion therefore continues to operate throughout the pandemic. Orion has implemented a number of safety protocols, including limiting travel, restricting access to our facilities along with monitoring processes, physical distancing, physical barriers, enhanced cleaning procedures, and requiring face coverings. Nonetheless, Orion did experience a material adverse effect from the COVID-19 pandemic due to the curtailment of activity in the last few weeks of the 2020 fiscal year and during the first quarter of fiscal 2021, including the delay of project installations for a major national account customer. Orion now expects this project to resume during the second quarter of fiscal 2021.
As part of Orion’s response to the impacts of the COVID-19 pandemic, during the fourth quarter of fiscal 2020, Orion implemented a number of cost reduction and cash conservation measures, including reducing headcount. Orion recognized $0.4 million in restructuring expense during the fourth quarter of fiscal 2020. As of June 30, 2020, substantially all of the restructuring accrual had been paid.
While certain restrictions began to initially lessen in certain jurisdictions during Orion’s fiscal 2021 first quarter, stay-at-home, face mask or lockdown orders remain in effect in others, with employees asked to work remotely if possible. Certain areas of the country have seen a spike of COVID-19 cases, which could result in renewed restrictions and lockdown orders. Some customers and projects are in areas where travel restrictions have been imposed, certain customers have either closed or reduced on-site activities, and timelines for the completion of multiple projects have been extended. At this time, it is not possible to predict the overall impact the COVID-19 pandemic will have on Orion’s business, liquidity, capital resources or financial results. However, Orion does expect that the economic and regulatory impacts of COVID-19 will materially and adversely impact revenue and profitability in fiscal 2021. If there is prolonged adverse impact, Orion’s business, liquidity, capital resources, financial results, and the carrying values of Orion’s property, plant and equipment and intangible assets may be impacted negatively. Orion will continue to actively monitor the situation and may take further actions that alter business operations.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law and includes certain income tax provisions relevant to businesses. Orion is required to recognize the effect on the consolidated financial statements in the period the law was enacted, which is the period ended March 31, 2020. For the fiscal year ended March 31, 2020, and three months ended June 30, 2020, the CARES Act did not have a material impact on Orion’s consolidated financial statements. See Note 14 – Income Taxes.
7
NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The Condensed Consolidated Financial Statements include the accounts of Orion Energy Systems, Inc. and its wholly owned subsidiaries.
Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements of Orion have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Interim results are not necessarily indicative of results that may be expected for the fiscal year ending March 31, 2021 or other interim periods.
The Condensed Consolidated Balance Sheet at March 31, 2020 has been derived from the audited consolidated financial statements at that date but does not include all of the information required by GAAP for complete financial statements.
The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in Orion’s Annual Report on Form 10-K for the fiscal year ended March 31, 2020 filed with the SEC on June 5, 2020.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during that reporting period. Areas that require the use of significant management estimates include revenue recognition, inventory obsolescence and allowance for doubtful accounts, accruals for warranty and loss contingencies, income taxes, impairment analyses, and certain equity transactions. Accordingly, actual results could differ from those estimates.
Concentration of Credit Risk and Other Risks and Uncertainties
Orion's cash is deposited with two financial institutions. At times, deposits in these institutions exceed the amount of insurance provided on such deposits. Orion has not experienced any losses in such accounts and believes that it is not exposed to any significant financial institution viability risk on these balances.
Orion purchases components necessary for its lighting products, including ballasts, lamps and LED components, from multiple suppliers. For the three months ended June 30, 2020, three suppliers accounted for 16.1%, 12.5% and 10.0% of total cost of revenue, respectively. For the three months ended June 30, 2019, one supplier accounted for 13.7% of total cost of revenue.
For the three months ended June 30, 2020, one customer accounted for 32.9% of total revenue. For the three months ended June 30, 2019, one customer accounted for 77.0% of total revenue.
As of June 30, 2020, two customers accounted for 35.7% and 13.6% of accounts receivable, respectively. As of March 31, 2020, two customers accounted for 37.3% and 13.0% of accounts receivable, respectively.
Recent Accounting Pronouncements
Issued: Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires an entity to assess impairment of its financial
8
instruments based on its estimate of expected credit losses. Since the issuance of ASU 2016-13, the FASB released several amendments to improve and clarify the implementation guidance. The provisions of ASU 2016-13 and the related amendments are effective for Orion for fiscal years (and interim reporting periods within those years) beginning after December 15, 2022. Entities are required to apply these changes through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Orion is currently evaluating the impact of adoption of this standard on its consolidated statements of operations, cash flows, and the related footnote disclosures.
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general rules of Topic 740. The provisions of ASU 2019-12 are effective for Orion for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Orion is currently evaluating the impact of adoption on this standard on its consolidated statements of operations, cash flows, and the related footnote disclosures.
General Information
Orion generates revenues primarily by selling commercial LED lighting fixtures and components, including controls and integrated IoT capabilities, and by installing these fixtures in its customer’s facilities on a turnkey basis via a dedicated installation and support team. Orion recognizes revenue in accordance with the guidance in ASC 606 when control of the goods or services being provided (which Orion refers to as a performance obligation) is transferred to a customer at an amount that reflects the consideration that management expects to receive in exchange for those goods or services. Prices are generally fixed at the time of order confirmation. The amount of expected consideration includes estimated deductions and early payment discounts calculated based on historical experience, customer rebates based on agreed upon terms applied to actual and projected sales levels over the rebate period, and any amounts paid to customers in conjunction with fulfilling a performance obligation.
If there are multiple performance obligations in a contract, the contract’s total sales price is allocated to each individual performance obligation based on their relative standalone selling price. A performance obligation’s standalone selling price is the price at which Orion would sell such promised good or service separately to a customer. Orion uses an observable price to determine the stand-alone selling price for separate performance obligations or a cost-plus margin approach when one is not available. The cost-plus margin approach is used to determine the stand-alone selling price for the installation performance obligation and is based on average historical installation margin.
Revenue derived from customer contracts which include only performance obligation(s) for the sale of lighting fixtures and components is classified as Product revenue in the Condensed Consolidated Statements of Operations. The revenue for these transactions is recorded at the point in time when management believes that the customer obtains control of the products, generally either upon shipment or upon delivery to the customer’s facility. This point in time is determined separately for each contract and requires judgment by management of the contract terms and the specific facts and circumstances concerning the transaction.
Revenue from a customer contract which includes both the sale of fixtures and the installation of such fixtures (which Orion refers to as a turnkey project) is allocated between each lighting fixture and the installation performance obligation based on relative standalone selling prices.
Revenue from turnkey projects that is allocated to the sale of the lighting fixtures is recorded at the point in time when management believes the customer obtains control of the product(s) and is reflected in Product revenue. This point in time is determined separately for each customer contract based upon the terms of the contract and the nature and extent of Orion’s control of the light fixtures during the installation. Product revenue associated with turnkey projects can be recorded (a) upon shipment or delivery, (b) subsequent to shipment or delivery and upon customer payments for the light fixtures, (c) when an individual light fixture is installed and working correctly, or (d) when the customer acknowledges that the entire installation project is substantially complete. Determining the point in time when a customer obtains control of the lighting fixtures in a
9
turnkey project can be a complex judgment and is applied separately for each individual light fixture included in a contract. In making this judgment, management considers the timing of various factors, including, but not limited to, those detailed below:
|
• |
when there is a legal transfer of ownership; |
|
• |
when the customer obtains physical possession of the products; |
|
• |
when the customer starts to receive the benefit of the products; |
|
• |
the amount and duration of physical control that Orion maintains on the products after they are shipped to, and received at, the customer’s facility; |
|
• |
whether Orion is required to maintain insurance on the lighting fixtures when they are in transit and after they are delivered to the customer’s facility; |
|
• |
when each light fixture is physically installed and working correctly; |
|
• |
when the customer formally accepts the product; and |
|
• |
when Orion receives payment from the customer for the light fixtures. |
Revenue from turnkey projects that is allocated to the single installation performance obligation is reflected in Service revenue. Service revenue is recorded over-time as Orion fulfills its obligation to install the light fixtures. Orion measures its performance toward fulfilling its performance obligations for installations using an output method that calculates the number of light fixtures removed and installed as of the measurement date in comparison to the total number of light fixtures to be removed or installed under the contract.
Most products are manufactured in accordance with Orion’s standard specifications. However, some products are manufactured to a customer’s specific requirements with no alternative use to Orion. In such cases, and when Orion has an enforceable right to payment, Product revenue is recorded on an over-time basis measured using an input methodology that calculates the costs incurred to date as compared to total expected costs. There was no over-time revenue related to custom products recognized in the three months ended June 30, 2020 and June 30, 2019.
Orion also records revenue in conjunction with several limited power purchase agreements (“PPAs”) still outstanding. Those PPAs are supply-side agreements for the generation of electricity. Orion’s last PPA expires in 2031. Revenue associated with the sale of energy generated by the solar facilities under these PPAs is within the scope of ASC 606. Revenues are recognized over-time and are equal to the amount billed to the customer, which is calculated by applying the fixed rate designated in the PPAs to the variable amount of electricity generated each month. This approach is in accordance with the “right to invoice” practical expedient provided for in ASC 606. Orion also recognizes revenue upon the sale to third parties of tax credits received from operating the solar facilities and from amortizing a grant received from the federal government during the period starting when the power generating facilities were constructed until the expiration of the PPAs; these revenues are not derived from contracts with customers and therefore not under the scope of ASC 606.
When shipping and handling activities are performed after a customer obtains control of the product, Orion has elected to treat shipping and handling costs as an activity necessary to fulfill the performance obligation to transfer product to the customer and not as a separate performance obligation. Any shipping and handling costs charged to customers are recorded in Product revenue. Shipping and handling costs are accrued and included in Cost of product revenue.
See Note 11 – Accrued Expenses and Other for a discussion of Orion’s accounting for the warranty it provides to customers for its products and services.
Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net (excluded from revenues) basis.
Contract Fulfillment Costs
Costs associated with product sales are accumulated in inventory as the fixtures are manufactured and are transferred to Cost of product revenue at the time revenue is recorded. See Note 6 – Inventories, Net. Costs associated with installation sales are expensed as incurred.
10
Orion’s Product revenue includes revenue from contracts with customers accounted for under the scope of ASC 606 and revenue which is accounted for under other guidance. For the three months ended June 30, 2020, Product revenue included $0.8 million derived from sales-type leases for light fixtures, $0.1 million derived from the sale of tax credits generated from Orion’s legacy operation for distributing solar energy, and $19 thousand derived from the amortization of federal grants received in 2010 and 2011 as reimbursement for a portion of the costs to construct the legacy solar facilities which are not under the scope of ASC 606.
For the three months ended June 30, 2019, Product revenue included $0.4 million derived from sales-type leases for light fixtures, $0.1 million derived from the sale of tax credits generated from Orion’s legacy operation for distributing solar energy, and $19 thousand derived from the amortization of federal grants received in 2010 and 2011 as reimbursement for a portion of the costs to construct the legacy solar facilities which are not under the scope of ASC 606. All remaining Product revenue, and all Service revenue, are derived from contracts with customers as defined in ASC 606.
The primary end-users of Orion’s lighting products and services are (a) commercial or industrial companies, and (b) the federal government.
Commercial or industrial end-users obtain Orion products and services through turnkey project sales or by purchasing products either direct from Orion or through distributors or energy service companies ("ESCOs"). Revenues associated with commercial and industrial end-users are included within each of Orion’s segments, dependent on the sales channel.
The federal government obtains Orion products and services primarily through turnkey project sales that Orion makes to a select group of contractors who focus on the federal government. Revenues associated with government end-users are primarily included in the Orion Engineered Systems Division segment.
See Note 18 – Segments, for additional discussion concerning Orion’s reportable segments.
The following tables provide detail of Orion’s total revenues for the three months ended June 30, 2020 and June 30, 2019 (dollars in thousands):
|
|
Three Months Ended June 30, 2020 |
|
|||||||||
|
|
Product |
|
|
Services |
|
|
Total |
|
|||
Revenue from contracts with customers: |
|
|
|
|
|
|
|
|
|
|
|
|
Lighting revenues, by end user |
|
|
|
|
|
|
|
|
|
|
|
|
Federal government |
|
$ |
50 |
|
|
$ |
— |
|
|
$ |
50 |
|
Commercial and industrial |
|
|
8,709 |
|
|
|
1,110 |
|
|
|
9,819 |
|
Total lighting |
|
|
8,759 |
|
|
|
1,110 |
|
|
|
9,869 |
|
Solar energy related revenues |
|
|
22 |
|
|
|
— |
|
|
|
22 |
|
Total revenues from contracts with customers |
|
|
8,781 |
|
|
|
1,110 |
|
|
|
9,891 |
|
Revenue accounted for under other guidance |
|
|
920 |
|
|
|
— |
|
|
|
920 |
|
Total revenue |
|
$ |
9,701 |
|
|
$ |
1,110 |
|
|
$ |
10,811 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2019 |
|
|||||||||
|
|
Product |
|
|
Services |
|
|
Total |
|
|||
Revenue from contracts with customers: |
|
|
|
|
|
|
|
|
|
|
|
|
Lighting revenues, by end user |
|
|
|
|
|
|
|
|
|
|
|
|
Federal government |
|
$ |
658 |
|
|
$ |
246 |
|
|
$ |
904 |
|
Commercial and industrial |
|
|
31,184 |
|
|
|
9,793 |
|
|
|
40,977 |
|
Total lighting |
|
|
31,842 |
|
|
|
10,039 |
|
|
|
41,881 |
|
Solar energy related revenues |
|
|
19 |
|
|
|
— |
|
|
|
19 |
|
Total revenues from contracts with customers |
|
|
31,861 |
|
|
|
10,039 |
|
|
|
41,900 |
|
Revenue accounted for under other guidance |
|
|
478 |
|
|
|
— |
|
|
|
478 |
|
Total revenue |
|
$ |
32,339 |
|
|
$ |
10,039 |
|
|
$ |
42,378 |
|
11
Customer payments for material-only orders are due shortly after shipment.
Turnkey projects where the end-user is a commercial or industrial company typically span between one week to three months. Customer payment requirements for these projects vary by contract. Some contracts provide for customer payments for products and services as they are delivered, other contracts specify that the customer will pay for the project in its entirety upon completion of the installation.
Turnkey projects where the end-user is the federal government typically span a three to six-month period. The contracts for these sales often provide for monthly progress payments equal to ninety percent (90%) of the value provided by Orion during the month.
Orion provides long-term financing to one customer who frequently engages Orion in large turnkey projects that span between three and nine months. The customer executes an agreement providing for monthly payments of the contract price, plus interest, over a five-year period. The total transaction price in these contracts is allocated between product and services in the same manner as all other turnkey projects. The portion of the transaction associated with the installation is accounted for consistently with all other installation related performance obligations. The portion of the transaction associated with the sale of the multiple individual light fixtures is accounted for as sales-type leases in accordance with the guidance for leases. Revenues associated with the sales-type leases are included in Product revenue and recorded for each fixture separately based on the customer’s monthly acknowledgment that specified fixtures have been installed and are operating as specified.
The payments associated with these transactions that are due during the twelve months subsequent to June 30, 2020 are included in Accounts receivable, net in Orion’s Condensed Consolidated Balance Sheets. The remaining amounts due that are associated with these transactions are included in Other long-term assets in Orion’s Condensed Consolidated Balance Sheets.
The customer’s monthly payment obligation commences after completion of the turnkey project. Orion generally sells the receivable from the customer to an independent financial institution either during, or shortly after completion of, the installation period. Upon execution of the receivables purchase / sales agreement, all amounts due from the customer are included in Revenues earned but not billed on Orion’s Condensed Consolidated Balance Sheets until cash is received from the financial institution. The financial institution releases funds to Orion based on the customer’s monthly acknowledgment of the progress Orion has achieved in fulfilling its installation obligation. Orion provides the progress certifications to the financial institution one month in arrears.
The total amount received from the sales of these receivables during the three months ended June 30, 2020, was $0.2 million. Orion’s gains on these sales were $9 thousand for the three months ended June 30, 2020 and are included in Interest expense in the Condensed Consolidated Statements of Operations.
The total amount received from the sales of these receivables during the three months ended June 30, 2019 was $2.8 million. Orion’s losses on these sales were $47 thousand for the three months ended June 30, 2019 and are included in Interest expense in the Condensed Consolidated Statement of Operations.
Practical Expedients and Exemptions
Orion expenses sales commissions when incurred because the amortization period is one year or less. These costs are recorded within Sales and marketing expense. There are no other capitalizable costs associated with obtaining contracts with customers.
Orion’s performance obligations related to lighting fixtures typically do not exceed nine months in duration. As a result, Orion has elected the practical expedient that provides an exemption to the disclosure requirements regarding information about value assigned to remaining performance obligations on contracts that have original expected durations of one year or less.
Orion also elected the practical expedient that permits companies to not disclose quantitative information about the future revenue when revenue is recognized as invoices are issued to customers for services performed.
12
Other than the turnkey projects which result in sales-type leases discussed above, Orion generally receives full payment for satisfied performance obligations in less than one year. Accordingly, Orion does not adjust revenues for the impact of any potential significant financing component as permitted by the practical expedients provided in ASC 606.
Contract Balances
A receivable is recognized when Orion has an enforceable right to payment in accordance with contract terms and an invoice has been issued to the customer. Payment terms on invoiced amounts are typically 30 days from the invoice date.
Revenue earned but not billed represents revenue that has been recognized in advance of billing the customer, which is a common practice in Orion turnkey contracts. Once Orion has an unconditional right to consideration under a turnkey contract, Orion typically bills the customer accordingly and reclassifies the amount to Accounts receivable, net. Revenue earned but not billed as of June 30, 2020, and March 31, 2020, includes $0.7 million and $39 thousand, respectively, which was not derived from contracts with customers and therefore not classified as a contract asset as defined by ASC 606.
Deferred revenue, current as of June 30, 2020, and March 31, 2020, includes $16 thousand and $31 thousand, respectively, of contract liabilities which represent consideration received from customers prior to the point that Orion has fulfilled the promises included in a performance obligation and recorded revenue.
Deferred revenue, long-term consists of the unamortized portion of the funds received from the federal government in 2010 and 2011 as reimbursement for the costs to build the two facilities related to the PPAs. As the transaction is not considered a contract with a customer, this value is not a contract liability as defined by ASC 606.
The following chart shows the balance of Orion’s receivables arising from contracts with customers, contract assets and contract liabilities as of June 30, 2020 and March 31, 2020 (dollars in thousands):
|
|
June 30, 2020 |
|
|
March 31, 2020 |
|
||
Accounts receivable, net |
|
$ |
5,704 |
|
|
$ |
10,427 |
|
Contract assets |
|
$ |
1,649 |
|
|
$ |
1,082 |
|
Contract liabilities |
|
$ |
16 |
|
|
$ |
31 |
|
There were no significant changes in the contract assets outside of standard reclassifications to Accounts receivable, net upon billing. There were no significant changes to contract liabilities.
NOTE 5 — ACCOUNTS RECEIVABLE, NET
As of June 30, 2020, and March 31, 2020, Orion's Accounts receivable and Allowance for doubtful accounts balances were as follows (dollars in thousands):
|
|
June 30, 2020 |
|
|
March 31, 2020 |
|
||
Accounts receivable, gross |
|
$ |
5,732 |
|
|
$ |
10,455 |
|
Allowance for doubtful accounts |
|
|
(28 |
) |
|
|
(28 |
) |
Accounts receivable, net |
|
$ |
5,704 |
|
|
$ |
10,427 |
|
13
As of June 30, 2020, and March 31, 2020, Orion's Inventory balances were as follows (dollars in thousands):
|
|
Cost |
|
|
Excess and Obsolescence Reserve |
|
|
Net |
|
|||
As of June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Raw materials and components |
|
$ |
11,635 |
|
|
$ |
(1,073 |
) |
|
$ |
10,562 |
|
Work in process |
|
|
679 |
|
|
|
(492 |
) |
|
|
187 |
|
Finished goods |
|
|
7,126 |
|
|
|
(805 |
) |
|
|
6,321 |
|
Total |
|
$ |
19,440 |
|
|
$ |
(2,370 |
) |
|
$ |
17,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Raw materials and components |
|
$ |
9,639 |
|
|
$ |
(1,244 |
) |
|
$ |
8,395 |
|
Work in process |
|
|
699 |
|
|
|
(305 |
) |
|
|
394 |
|
Finished goods |
|
|
6,598 |
|
|
|
(880 |
) |
|
|
5,718 |
|
Total |
|
$ |
16,936 |
|
|
$ |
(2,429 |
) |
|
$ |
14,507 |
|
NOTE 7 — PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consist primarily of prepaid insurance premiums, debt issue costs, and sales tax receivable.
NOTE 8 — PROPERTY AND EQUIPMENT, NET
As of June 30, 2020, and March 31, 2020, Property and equipment, net, included the following (dollars in thousands):
|
|
June 30, 2020 |
|
|
March 31, 2020 |
|
||
Land and land improvements |
|
$ |
433 |
|
|
$ |
433 |
|
Buildings and building improvements |
|
|
9,470 |
|
|
|
9,470 |
|
Furniture, fixtures and office equipment |
|
|
7,250 |
|
|
|
7,270 |
|
Leasehold improvements |
|
|
324 |
|
|
|
324 |
|
Equipment leased to customers |
|
|
4,997 |
|
|
|
4,997 |
|
Plant equipment |
|
|
12,191 |
|
|
|
12,021 |
|
Construction in Progress |
|
|
3 |
|
|
|
15 |
|
Gross property and equipment |
|
|
34,668 |
|
|
|
34,530 |
|
Less: accumulated depreciation |
|
|
(22,980 |
) |
|
|
(22,713 |
) |
Total property and equipment, net |
|
$ |
11,688 |
|
|
$ |
11,817 |
|
Orion recorded depreciation expense of $0.3 million for both the three months ended June 30, 2020, and June 30, 2019.
NOTE 9 — LEASES
From time to time, Orion leases assets from third parties. Orion also leases certain assets to third parties.
Whether it is the lessee or the lessor, Orion’s determination of whether a contract includes a lease, and assessing how the lease should be accounted for, is a matter of judgment based on whether the risks and rewards, as well as substantive control of the assets specified in the contract, have been transferred from the lessor to the lessee. The judgment considers matters such as whether the assets are transferred from the lessor to the lessee at the end of the contract, the term of the agreement in relation to the asset’s remaining economic useful life, and whether the assets are of such a specialized nature that the lessor will not have an alternative use for such assets at the termination of the agreement. Other matters requiring judgment are the lease term when the agreement includes renewal or termination options and the interest rate used when initially determining the right of use (“ROU”) asset and lease liability.
14
ROU assets represent Orion’s right to use an underlying asset for the lease term and lease liabilities represent Orion’s obligation to make lease payments arising from the lease. Under ASC 842, both finance and operating lease ROU assets and lease liabilities for leases with initial terms in excess of 12 months are recognized at the commencement date based on the present value of lease payments over the lease term. When available, Orion uses the implicit interest rate in the lease when completing this calculation. However, as most of Orion’s operating lease agreements generating ROU assets do not provide the implicit rate, Orion’s incremental borrowing rate under its line of credit, adjusted for differences in duration and the relative collateral value in relation to the payment obligation, at the commencement of the lease is generally used in this calculation. The lease term includes options to extend or renew the agreement, or for early termination of the agreement, when it is reasonably certain that Orion will exercise such option. ROU assets are depreciated using the straight-line method over the lease term.
Orion recognizes lease expense for leases with an initial term of 12 months or less, referred to as short term leases, on a straight-line basis over the lease term.
One of Orion’s frequent customers purchases products and installation services under agreements that provide for monthly payments, at a fixed monthly amount, of the contract price, plus interest, typically over a five-year period. While Orion retains ownership of the light fixtures during the financing period, the transaction terms and the underlying economics associated with used lighting fixtures results in Orion essentially ceding ownership of the lighting fixtures to the customer after completion of the agreement. The portions of the transaction associated with the sale of the light fixtures is accounted for as a sales-type lease. The total transaction price in these contracts is allocated between the lease and non-lease components in the same manner as the total transaction price of other turnkey projects containing lighting fixtures and installation services.
Orion leases portions of its corporate headquarters to third parties; all such agreements have been, and continue to be, classified as operating leases under the applicable authoritative accounting guidance. The assets being leased continue to be included in Property and equipment, net. Lease payments earned are recorded as a reduction in administrative expenses.
Assets Orion Leases from Other Parties
On January 31, 2020, Orion entered into the current lease for its approximately 266,000 square foot primary manufacturing and distribution facility in Manitowoc, WI. The lease has a 10-year term, with the option to terminate after six years. Orion is responsible for the costs of insurance and utilities for the facility. These costs are considered variable lease costs. The agreement is classified as an operating lease.
The prior lease agreement for this facility provided the lessor the right to terminate the lease agreement at any time with 12 months’ notice to Orion. As a result, the agreement was previously classified as a short-term lease.
In February 2014, Orion entered into a multi-year lease agreement for use of approximately 10,500 square feet of office space in a multi-use office building in Jacksonville Florida. The lease has since been extended, most recently during the first quarter of fiscal 2021, and presently terminates on June 30, 2023. The agreement is classified as an operating lease.
Orion has leased other assets from third parties, principally office and production equipment. The terms of our other leases vary from contract to contract and expire at various dates through 2020.
A summary of Orion’s assets leased from third parties follows (dollars in thousands):
|
|
Balance sheet classification |
|
June 30, 2020 |
|
|
March 31, 2020 |
|
||
Assets |
|
|
|
|
|
|
|
|
|
|
Operating lease assets |
|
Other long-term assets |
|
$ |
2,956 |
|
|
$ |
2,745 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
Operating lease liabilities |
|
Accrued expenses and other |
|
|
599 |
|
|
|
691 |
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
Operating lease liabilities |
|
Other long-term liabilities |
|
|
3,123 |
|
|
|
2,830 |
|
Total lease liabilities |
|
|
|
$ |
3,722 |
|
|
$ |
3,521 |
|
15
Orion had operating lease costs of $0.2 million for both the three months ended June 30, 2020 and June 30, 2019.
The estimated maturity of lease liabilities for each of the next five years is shown below (dollars in thousands):
Maturity of Lease Liabilities |
|
Operating Leases |
|
|
Fiscal 2021 (period remaining) |
|
$ |
588 |
|
Fiscal 2022 |
|
|
798 |
|
Fiscal 2023 |
|
|
820 |
|
Fiscal 2024 |
|
|
746 |
|
Fiscal 2025 |
|
|
735 |
|
Thereafter |
|
|
628 |
|
Total lease payments |
|
$ |
4,315 |
|
Less: Interest |
|
|
(593 |
) |
Present value of lease liabilities |
|
$ |
3,722 |
|
Assets Orion Leases to Other Parties
Orion provides long-term financing to one customer who frequently engages Orion in large turnkey projects that span between three and nine months. The customer executes an agreement providing for monthly payments, at a fixed monthly amount, of the contract price, plus interest, over typically a five-year period. The total transaction price in these contracts is allocated between product and services in the same manner as all other turnkey projects. The portion of the transaction associated with the installation is accounted for consistently with all other installation related performance obligations under ASC 606.
While Orion retains ownership of the light fixtures during the financing period, the transaction terms and the underlying economics associated with used lighting fixtures results in Orion essentially ceding ownership of the lighting fixtures to the customer after completion of the agreement. Therefore, the portions of the transaction associated with the sale of the multiple individual light fixtures is accounted for as a sales-type lease under ASC 842.
Revenues, and production and acquisition costs, associated with sales-type leases are included in Product revenue and Costs of product revenues in the Condensed Consolidated Statement of Operations. These amounts are recorded for each fixture separately based on the customer’s monthly acknowledgment that specified fixtures have been installed and are operating as specified. The execution of the acknowledgement is considered the commencement date as defined in ASC 842.
The following chart shows the amount of revenue and cost of sales arising from sales-type leases during the three months ended June 30, 2020 and June 30, 2019 (dollars in thousands):
|
|
Three Months Ended June 30, |
|
|||||
|
|
2020 |
|
|
2019 |
|
||
Product revenue |
|
$ |
444 |
|
|
$ |
395 |
|
Cost of product revenue |
|
$ |
438 |
|
|
$ |
360 |
|
The Condensed Consolidated Balance Sheets as of June 30, 2020 does not include a net investment in sales-type leases as all amounts due from the customer associated with lighting fixtures that were acknowledged to be installed and working correctly prior to period end were transferred to the financing institution prior to the respective balance sheet dates. The Condensed Balance Sheet as of March 31, 2020 includes an immaterial amount related to the net investment in sales-type leases.
Other Agreements where Orion is the Lessor
Orion has leased unused portions of its corporate headquarters to third parties. The length and payment terms of the leases vary from contract to contract and, in some cases, include options for the tenants to extend the lease terms. Annual lease payments are recorded as a reduction in administrative operating expenses and were not material in the three months ended June 30, 2020 or June 30, 2019. Orion accounts for these transactions as operating leases.
16
NOTE 10 — OTHER INTANGIBLE ASSETS, NET
As of June 30, 2020, and March 31, 2020, the components of, and changes in, the carrying amount of Other intangible assets, net, were as follows (dollars in thousands):
|
|
June 30, 2020 |
|
|
March 31, 2020 |
|
||||||||||||||||||
|
|
Gross Carrying Amount |
|
|
Accumulated Amortization |
|
|
Net |
|
|
Gross Carrying Amount |
|
|
Accumulated Amortization |
|
|
Net |
|
||||||
Patents |
|
$ |
2,785 |
|
|
$ |
(1,743 |
) |
|
$ |
1,042 |
|
|
$ |
2,766 |
|
|
$ |
(1,700 |
) |
|
$ |
1,066 |
|
Licenses |
|
|
58 |
|
|
|
(58 |
) |
|
|
— |
|
|
|
58 |
|
|
|
(58 |
) |
|
|
— |
|
Trade name and trademarks (indefinite lived) |
|
|
1,017 |
|
|
|
— |
|
|
|
1,017 |
|
|
|
1,014 |
|
|
|
— |
|
|
|
1,014 |
|
Customer relationships |
|
|
3,600 |
|
|
|
(3,560 |
) |
|
|
40 |
|
|
|
3,600 |
|
|
|
(3,545 |
) |
|
|
55 |
|
Developed technology |
|
|
900 |
|
|
|
(838 |
) |
|
|
62 |
|
|
|
900 |
|
|
|
(819 |
) |
|
|
81 |
|
Total |
|
$ |
8,360 |
|
|
$ |
(6,199 |
) |
|
$ |
2,161 |
|
|
$ |
8,338 |
|
|
$ |
(6,122 |
) |
|
$ |
2,216 |
|
Amortization expense on intangible assets was $0.1 million for the three months ended June 30, 2020 and 2019.
As of June 30, 2020, the weighted average remaining useful life of intangible assets was 4.7 years.
The estimated amortization expense for the remainder of fiscal 2021, the next five fiscal years and beyond is shown below (dollars in thousands):
Fiscal 2021 (period remaining) |
|
$ |
218 |
|
Fiscal 2022 |
|
|
201 |
|
Fiscal 2023 |
|
|
109 |
|
Fiscal 2024 |
|
|
106 |
|
Fiscal 2025 |
|
|
95 |
|
Fiscal 2026 |
|
|
85 |
|
Thereafter |
|
|
330 |
|
Total |
|