10-Q
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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 September 30, 2022

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)

 

Name of Each Exchange on Which Registered

Common stock, no par value

 

OESX

 

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 31,984,645 shares of the Registrant’s common stock outstanding on October 31, 2022.

 

 


 

ORION ENERGY SYSTEMS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2022

TABLE OF CONTENTS

 

 

 

Page(s)

PART I FINANCIAL INFORMATION

3

ITEM 1.

Financial Statements (unaudited)

3

 

Condensed Consolidated Balance Sheets as of September 30, 2022 and March 31, 2022

3

 

Condensed Consolidated Statements of Operations for the Three and Six Months Ended September 30, 2022 and September 30, 2021

4

 

Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended September 30, 2022 and September 30, 2021

5

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended September 30, 2022 and September 30, 2021

6

 

Notes to the Condensed Consolidated Financial Statements

7

ITEM 2.

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

21

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

31

ITEM 4.

Controls and Procedures

31

PART II OTHER INFORMATION

32

ITEM 1.

Legal Proceedings

32

ITEM 1A.

Risk Factors

32

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

32

ITEM 5.

Other Information

32

ITEM 6.

Exhibits

33

SIGNATURE

34

 

 

 


 

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

 

 

 

September 30, 2022

 

 

March 31, 2022

 

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

12,520

 

 

$

14,466

 

Accounts receivable, net

 

 

11,591

 

 

 

11,899

 

Revenue earned but not billed

 

 

1,346

 

 

 

2,421

 

Inventories, net

 

 

16,849

 

 

 

19,832

 

Prepaid expenses and other current assets

 

 

2,493

 

 

 

2,631

 

Total current assets

 

 

44,799

 

 

 

51,249

 

Property and equipment, net

 

 

10,911

 

 

 

11,466

 

Goodwill

 

 

564

 

 

 

350

 

Other intangible assets, net

 

 

2,282

 

 

 

2,404

 

Deferred tax assets

 

 

19,426

 

 

 

17,805

 

Other long-term assets

 

 

3,203

 

 

 

3,543

 

Total assets

 

$

81,185

 

 

$

86,817

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

Accounts payable

 

$

5,938

 

 

$

9,855

 

Accrued expenses and other

 

 

6,263

 

 

 

8,427

 

Deferred revenue, current

 

 

76

 

 

 

76

 

Current maturities of long-term debt

 

 

16

 

 

 

16

 

Total current liabilities

 

 

12,293

 

 

 

18,374

 

Revolving credit facility

 

 

5,000

 

 

 

 

Long-term debt, less current maturities

 

 

11

 

 

 

19

 

Deferred revenue, long-term

 

 

526

 

 

 

564

 

Other long-term liabilities

 

 

2,380

 

 

 

2,760

 

Total liabilities

 

 

20,210

 

 

 

21,717

 

Commitments and contingencies

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.01 par value: Shares authorized: 30,000,000 at
   September 30, 2022 and March 31, 2022;
no shares issued and outstanding at
   September 30, 2022 and March 31, 2022

 

 

 

 

 

 

Common stock, no par value: Shares authorized: 200,000,000 at September 30, 2022
   and March 31, 2022; shares issued:
41,352,020 at September 30, 2022 and
   
40,570,909 at March 31, 2022; shares outstanding: 31,355,911 at
   September 30, 2022 and
31,097,872 at March 31, 2022

 

 

 

 

 

 

Additional paid-in capital

 

 

159,460

 

 

 

158,419

 

Treasury stock, common shares: 9,996,109 at September 30, 2022 and 9,473,037 at
   March 31, 2022

 

 

(36,239

)

 

 

(36,239

)

Retained deficit

 

 

(62,246

)

 

 

(57,080

)

Total shareholders’ equity

 

 

60,975

 

 

 

65,100

 

Total liabilities and shareholders’ equity

 

$

81,185

 

 

$

86,817

 

 

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 September 30,

 

 

Six Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Product revenue

 

$

12,833

 

 

$

27,811

 

 

$

26,316

 

 

$

56,057

 

Service revenue

 

 

4,727

 

 

 

8,699

 

 

 

9,150

 

 

 

15,554

 

Total revenue

 

 

17,560

 

 

 

36,510

 

 

 

35,466

 

 

 

71,611

 

Cost of product revenue

 

 

9,287

 

 

 

18,864

 

 

 

19,672

 

 

 

38,297

 

Cost of service revenue

 

 

3,838

 

 

 

6,858

 

 

 

7,805

 

 

 

12,296

 

Total cost of revenue

 

 

13,125

 

 

 

25,722

 

 

 

27,477

 

 

 

50,593

 

Gross profit

 

 

4,435

 

 

 

10,788

 

 

 

7,989

 

 

 

21,018

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

3,945

 

 

 

2,753

 

 

 

7,699

 

 

 

5,864

 

Acquisition costs

 

 

333

 

 

 

 

 

 

347

 

 

 

 

Sales and marketing

 

 

2,649

 

 

 

2,687

 

 

 

5,538

 

 

 

5,932

 

Research and development

 

 

451

 

 

 

317

 

 

 

965

 

 

 

773

 

Total operating expenses

 

 

7,378

 

 

 

5,757

 

 

 

14,549

 

 

 

12,569

 

(Loss) income from operations

 

 

(2,943

)

 

 

5,031

 

 

 

(6,560

)

 

 

8,449

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

1

 

 

 

 

 

 

 

 

 

1

 

Interest expense

 

 

(16

)

 

 

(14

)

 

 

(33

)

 

 

(33

)

Amortization of debt issue costs

 

 

(16

)

 

 

(15

)

 

 

(31

)

 

 

(31

)

Total other expense

 

 

(31

)

 

 

(29

)

 

 

(64

)

 

 

(63

)

(Loss) income before income tax

 

 

(2,974

)

 

 

5,002

 

 

 

(6,624

)

 

 

8,386

 

Income tax (benefit) expense

 

 

(643

)

 

 

1,343

 

 

 

(1,458

)

 

 

2,217

 

Net (loss) income

 

$

(2,331

)

 

$

3,659

 

 

$

(5,166

)

 

$

6,169

 

Basic net (loss) income per share attributable to
   common shareholders

 

$

(0.07

)

 

$

0.12

 

 

$

(0.17

)

 

$

0.20

 

Weighted-average common shares outstanding

 

 

31,330,030

 

 

 

31,031,098

 

 

 

31,240,475

 

 

 

30,946,105

 

Diluted net (loss) income per share

 

$

(0.07

)

 

$

0.12

 

 

$

(0.17

)

 

$

0.20

 

Weighted-average common shares and share
   equivalents outstanding

 

 

31,330,030

 

 

 

31,287,826

 

 

 

31,240,475

 

 

 

31,310,965

 

 

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, 2022

 

 

31,097,872

 

 

$

158,419

 

 

$

(36,239

)

 

$

(57,080

)

 

$

65,100

 

Exercise of stock options for cash

 

 

26,646

 

 

 

54

 

 

 

 

 

 

 

 

 

54

 

Shares issued under Employee Stock Purchase
   Plan

 

 

443

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Stock-based compensation

 

 

125,744

 

 

 

254

 

 

 

 

 

 

 

 

 

254

 

Employee tax withholdings on stock-based
   compensation

 

 

(634

)

 

 

 

 

 

(2

)

 

 

 

 

 

(2

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(2,835

)

 

 

(2,835

)

Balance, June 30, 2022

 

 

31,250,071

 

 

$

158,727

 

 

$

(36,240

)

 

$

(59,915

)

 

$

62,572

 

Shares issued under Employee Stock Purchase
   Plan

 

 

648

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Stock-based compensation

 

 

105,192

 

 

 

733

 

 

 

 

 

 

 

 

 

733

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(2,331

)

 

 

(2,331

)

Balance, September 30, 2022

 

 

31,355,911

 

 

$

159,460

 

 

$

(36,239

)

 

$

(62,246

)

 

$

60,975

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

 

Six Months Ended September 30,

 

 

 

2022

 

 

2021

 

Operating activities

 

 

 

 

 

 

Net (loss) income

 

$

(5,166

)

 

$

6,169

 

Adjustments to reconcile net (loss) income to net cash used in
operating activities:

 

 

 

 

 

 

Depreciation

 

 

663

 

 

 

622

 

Amortization of intangible assets

 

 

104

 

 

 

113

 

Stock-based compensation

 

 

987

 

 

 

372

 

Amortization of debt issue costs

 

 

31

 

 

 

31

 

Deferred income tax

 

 

(1,620

)

 

 

2,075

 

Gain (loss) on sale of property and equipment

 

 

10

 

 

 

(15

)

Provision for inventory reserves

 

 

175

 

 

 

313

 

Provision for bad debts

 

 

20

 

 

 

8

 

Other

 

 

117

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

233

 

 

 

(9,972

)

Revenue earned but not billed

 

 

1,075

 

 

 

722

 

Inventories

 

 

2,808

 

 

 

(495

)

Prepaid expenses and other assets

 

 

448

 

 

 

(1,015

)

Accounts payable

 

 

(3,954

)

 

 

(633

)

Accrued expenses and other

 

 

(2,486

)

 

 

(2,208

)

Deferred revenue, current and long-term

 

 

(40

)

 

 

(43

)

Net cash used in operating activities

 

 

(6,595

)

 

 

(3,956

)

Investing activities

 

 

 

 

 

 

Cash to fund acquisition

 

 

55

 

 

 

 

Cash paid for investment

 

 

 

 

 

(500

)

Purchases of property and equipment

 

 

(442

)

 

 

(312

)

Additions to patents and licenses

 

 

(10