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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 December 31, 2021

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: (920892-9340

 

Securities registered pursuant to Section 12(b) of the act:

 

Title of Each Class

 

Trading Symbol (s)

 

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

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

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 31,092,433 shares of the Registrant’s common stock outstanding on February 7, 2022.

 

 

 


 

ORION ENERGY SYSTEMS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED DECEMBER 31, 2021

TABLE OF CONTENTS

 

 

 

Page(s)

PART I FINANCIAL INFORMATION

3

ITEM 1.

Financial Statements (unaudited)

3

 

Condensed Consolidated Balance Sheets as of December 31, 2021 and March 31, 2021

3

 

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2021 and December 31, 2020

4

 

Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended December 31, 2021 and December 31, 2020

5

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2021 and December 31, 2020

7

 

Notes to the Condensed Consolidated Financial Statements

8

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

30

ITEM 4.

Controls and Procedures

30

PART II OTHER INFORMATION

31

ITEM 1.

Legal Proceedings

31

ITEM 1A.

Risk Factors

31

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

31

ITEM 5.

Other Information

31

ITEM 6.

Exhibits

32

SIGNATURE

33

 

 


 

 

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

 

 

 

December 31, 2021

 

 

March 31, 2021

 

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

17,264

 

 

$

19,393

 

Accounts receivable, net

 

 

12,287

 

 

 

13,572

 

Revenue earned but not billed

 

 

3,859

 

 

 

2,930

 

Inventories, net

 

 

18,722

 

 

 

19,554

 

Prepaid expenses and other current assets

 

 

2,308

 

 

 

1,082

 

Total current assets

 

 

54,440

 

 

 

56,531

 

Property and equipment, net

 

 

10,832

 

 

 

11,369

 

Other intangible assets, net

 

 

1,774

 

 

 

1,952

 

Deferred tax assets

 

 

17,445

 

 

 

19,785

 

Other long-term assets

 

 

7,407

 

 

 

3,184

 

Total assets

 

$

91,898

 

 

$

92,821

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

Accounts payable

 

$

11,771

 

 

$

17,045

 

Accrued expenses and other

 

 

10,502

 

 

 

13,226

 

Deferred revenue, current

 

 

175

 

 

 

87

 

Current maturities of long-term debt

 

 

15

 

 

 

14

 

Total current liabilities

 

 

22,463

 

 

 

30,372

 

Revolving credit facility

 

 

 

 

 

 

Long-term debt, less current maturities

 

 

23

 

 

 

35

 

Deferred revenue, long-term

 

 

583

 

 

 

640

 

Other long-term liabilities

 

 

2,774

 

 

 

3,700

 

Total liabilities

 

 

25,843

 

 

 

34,747

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value: Shares authorized: 30,000,000 at

   December 31, 2021 and March 31, 2021; no shares issued and outstanding at

   December 31, 2021 and March 31, 2021

 

 

 

 

 

 

Common stock, no par value: Shares authorized: 200,000,000 at December 31, 2021

   and March 31, 2021; shares issued: 40,573,654 at December 31, 2021 and

   40,279,050 at March 31, 2021; shares outstanding: 31,097,433 at

   December 31, 2021 and 30,805,300 at March 31, 2021

 

 

 

 

 

 

Additional paid-in capital

 

 

158,197

 

 

 

157,485

 

Treasury stock, common shares: 9,476,221 at December 31, 2021 and 9,473,750 at

   March 31, 2021

 

 

(36,242

)

 

 

(36,240

)

Retained deficit

 

 

(55,900

)

 

 

(63,171

)

Total shareholders’ equity

 

 

66,055

 

 

 

58,074

 

Total liabilities and shareholders’ equity

 

$

91,898

 

 

$

92,821

 

 

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 December 31,

 

 

Nine Months Ended December 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Product revenue

 

$

22,203

 

 

$

31,929

 

 

$

78,260

 

 

$

61,890

 

Service revenue

 

 

8,511

 

 

 

12,322

 

 

 

24,065

 

 

 

19,453

 

Total revenue

 

 

30,714

 

 

 

44,251

 

 

 

102,325

 

 

 

81,343

 

Cost of product revenue

 

 

16,427

 

 

 

23,203

 

 

 

54,724

 

 

 

44,834

 

Cost of service revenue

 

 

6,646

 

 

 

10,042

 

 

 

18,942

 

 

 

15,605

 

Total cost of revenue

 

 

23,073

 

 

 

33,245

 

 

 

73,666

 

 

 

60,439

 

Gross profit

 

 

7,641

 

 

 

11,006

 

 

 

28,659

 

 

 

20,904

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

2,873

 

 

 

3,030

 

 

 

8,737

 

 

 

8,079

 

Acquisition costs

 

 

178

 

 

 

 

 

 

178

 

 

 

 

Sales and marketing

 

 

2,862

 

 

 

3,120

 

 

 

8,794

 

 

 

7,306

 

Research and development

 

 

396

 

 

 

391

 

 

 

1,169

 

 

 

1,230

 

Total operating expenses

 

 

6,309

 

 

 

6,541

 

 

 

18,878

 

 

 

16,615

 

Income from operations

 

 

1,332

 

 

 

4,465

 

 

 

9,781

 

 

 

4,289

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

 

 

 

12

 

 

 

1

 

 

 

56

 

Interest expense

 

 

(26

)

 

 

(1

)

 

 

(59

)

 

 

(51

)

Amortization of debt issue costs

 

 

(15

)

 

 

(20

)

 

 

(46

)

 

 

(142

)

Loss on debt extinguishment

 

 

 

 

 

(90

)

 

 

 

 

 

(90

)

Total other expense

 

 

(41

)

 

 

(99

)

 

 

(104

)

 

 

(227

)

Income before income tax

 

 

1,291

 

 

 

4,366

 

 

 

9,677

 

 

 

4,062

 

Income tax expense

 

 

189

 

 

 

51

 

 

 

2,406

 

 

 

52

 

Net income

 

$

1,102

 

 

$

4,315

 

 

$

7,271

 

 

$

4,010

 

Basic net income per share attributable to

   common shareholders

 

$

0.04

 

 

$

0.14

 

 

$

0.23

 

 

$

0.13

 

Weighted-average common shares outstanding

 

 

31,084,710

 

 

 

30,735,722

 

 

 

30,992,475

 

 

 

30,586,196

 

Diluted net income per share

 

$

0.04

 

 

$

0.14

 

 

$

0.23

 

 

$

0.13

 

Weighted-average common shares and share

   equivalents outstanding

 

 

31,234,925

 

 

 

31,320,427

 

 

 

31,273,703

 

 

 

31,289,359

 

 

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, 2021

 

 

30,805,300

 

 

$

157,485

 

 

$

(36,240

)

 

$

(63,171

)

 

$

58,074

 

Exercise of stock options for cash

 

 

24,045

 

 

 

101

 

 

 

 

 

 

 

 

 

101

 

Shares issued under Employee Stock Purchase

   Plan

 

 

496

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Stock-based compensation

 

 

171,470

 

 

 

160

 

 

 

 

 

 

 

 

 

160

 

Employee tax withholdings on stock-based

   compensation

 

 

(610

)

 

 

 

 

 

(4

)

 

 

 

 

 

(4

)

Net income

 

 

 

 

 

 

 

 

 

 

 

2,510

 

 

 

2,510

 

Balance, June 30, 2021

 

 

31,000,701

 

 

$

157,746

 

 

$

(36,241

)

 

$

(60,661

)

 

$

60,844

 

Exercise of stock options for cash

 

 

7,000

 

 

 

18

 

 

 

 

 

 

 

 

 

18

 

Shares issued under Employee Stock Purchase

   Plan

 

 

327

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Stock-based compensation

 

 

55,896

 

 

 

211

 

 

 

 

 

 

 

 

 

211

 

Employee tax withholdings on stock-based

   compensation

 

 

(294

)

 

 

 

 

 

(1

)

 

 

 

 

 

(1

)

Net income

 

 

 

 

 

 

 

 

 

 

 

3,659

 

 

 

3,659

 

Balance, September 30, 2021

 

 

31,063,630

 

 

$

157,975

 

 

$

(36,241

)

 

$

(57,002

)

 

$

64,732

 

Exercise of stock options for cash

 

 

800

 

 

 

2

 

 

 

 

 

 

 

 

 

2

 

Shares issued under Employee Stock Purchase

   Plan

 

 

355

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Stock-based compensation

 

 

32,648

 

 

 

220

 

 

 

 

 

 

 

 

 

220

 

Employee tax withholdings on stock-based

   compensation

 

 

(2,745

)

 

 

 

 

 

(2

)

 

 

 

 

 

(2

)

Net income

 

 

 

 

 

 

 

 

 

 

 

1,102

 

 

 

1,102

 

Balance, December 31, 2021

 

 

31,094,688

 

 

$

158,197

 

 

$

(36,242

)

 

$

(55,900

)

 

$

66,055

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5


 

 

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

 

Exercise of stock options for cash

 

 

9,000

 

 

 

28

 

 

 

 

 

 

 

 

 

28

 

Shares issued under Employee Stock Purchase

   Plan

 

 

151

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Stock-based compensation

 

 

76,351

 

 

 

251

 

 

 

 

 

 

 

 

 

251

 

Employee tax withholdings on stock-based

   compensation

 

 

(581

)

 

 

 

 

 

(3

)

 

 

 

 

 

(3

)

Net income

 

 

 

 

 

 

 

 

 

 

 

1,914

 

 

 

1,914

 

Balance, September 30, 2020

 

 

30,709,810

 

 

$

157,031

 

 

$

(36,181

)

 

$

(89,610

)

 

$

31,240

 

Exercise of stock options for cash

 

 

38,000

 

 

 

79

 

 

 

 

 

 

 

 

 

79

 

Shares issued under Employee Stock Purchase

   Plan

 

 

178

 

 

 

 

 

 

2

 

 

 

 

 

 

2

 

Stock-based compensation

 

 

12,200

 

 

 

152

 

 

 

 

 

 

 

 

 

152

 

Employee tax withholdings on stock-based

   compensation

 

 

(235

)

 

 

 

 

 

(2

)

 

 

 

 

 

(2

)

Net income

 

 

 

 

 

 

 

 

 

 

 

4,315

 

 

 

4,315

 

Balance, December 31, 2020

 

 

30,759,953

 

 

$

157,262

 

 

$

(36,181

)

 

$

(85,295

)

 

$

35,786

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these Condensed Consolidated Statements.

6


 

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

 

Nine Months Ended December 31,

 

 

 

2021

 

 

2020

 

Operating activities

 

 

 

 

 

 

 

 

Net income

 

$

7,271

 

 

$

4,010

 

Adjustments to reconcile net income to net cash provided by (used in)

operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

936

 

 

 

889

 

Amortization of intangible assets

 

 

158

 

 

 

225

 

Stock-based compensation

 

 

591

 

 

 

611

 

Amortization of debt issue costs

 

 

46

 

 

 

142

 

Loss on debt extinguishment

 

 

 

 

 

90

 

Deferred income tax

 

 

2,340

 

 

 

 

(Gain) loss on sale of property and equipment

 

 

(77

)

 

 

6

 

Provision for inventory reserves

 

 

426

 

 

 

185

 

Provision for bad debts

 

 

8

 

 

 

 

Other

 

 

30

 

 

 

9

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

1,276

 

 

 

(13,208

)

Revenue earned but not billed

 

 

(930

)

 

 

(959

)

Inventories

 

 

383

 

 

 

(4,196

)

Prepaid expenses and other assets

 

 

(1,292

)

 

 

339

 

Accounts payable

 

 

(5,231

)