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 December 31, 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 32,292,974shares of the Registrant’s common stock outstanding on January 31, 2023.

 

 


 

ORION ENERGY SYSTEMS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED DECEMBER 31, 2022

TABLE OF CONTENTS

 

 

 

Page(s)

PART I FINANCIAL INFORMATION

3

ITEM 1.

Financial Statements (unaudited)

3

 

Condensed Consolidated Balance Sheets as of December 31, 2022 and March 31, 2022

3

 

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2022 and December 31, 2021

4

 

Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended December 31, 2022 and December 31, 2021

5

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2022 and December 31, 2021

7

 

Notes to the Condensed Consolidated Financial Statements

8

ITEM 2.

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

23

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

34

ITEM 4.

Controls and Procedures

34

PART II OTHER INFORMATION

35

ITEM 1.

Legal Proceedings

35

ITEM 1A.

Risk Factors

35

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

35

ITEM 5.

Other Information

35

ITEM 6.

Exhibits

36

SIGNATURE

37

 

 

 


 

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, 2022

 

 

March 31, 2022

 

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

8,142

 

 

$

14,466

 

Accounts receivable, net

 

 

13,688

 

 

 

11,899

 

Revenue earned but not billed

 

 

3,107

 

 

 

2,421

 

Inventories, net

 

 

19,305

 

 

 

19,832

 

Prepaid expenses and other current assets

 

 

2,347

 

 

 

2,631

 

Total current assets

 

 

46,589

 

 

 

51,249

 

Property and equipment, net

 

 

10,679

 

 

 

11,466

 

Goodwill

 

 

1,425

 

 

 

350

 

Other intangible assets, net

 

 

6,184

 

 

 

2,404

 

Deferred tax assets

 

 

 

 

 

17,805

 

Other long-term assets

 

 

3,450

 

 

 

3,543

 

Total assets

 

$

68,327

 

 

$

86,817

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

Accounts payable

 

$

13,458

 

 

$

9,855

 

Accrued expenses and other

 

 

8,415

 

 

 

8,427

 

Deferred revenue, current

 

 

174

 

 

 

76

 

Current maturities of long-term debt

 

 

16

 

 

 

16

 

Total current liabilities

 

 

22,063

 

 

 

18,374

 

Revolving credit facility

 

 

5,000

 

 

 

 

Long-term debt, less current maturities

 

 

7

 

 

 

19

 

Deferred revenue, long-term

 

 

507

 

 

 

564

 

Other long-term liabilities

 

 

2,597

 

 

 

2,760

 

Total liabilities

 

 

30,174

 

 

 

21,717

 

Commitments and contingencies

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

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

 

 

 

 

 

 

Common stock, no par value: Shares authorized: 200,000,000 at December 31, 2022
   and March 31, 2022; shares issued:
41,764,220 at December 31, 2022 and
   
40,570,909 at March 31, 2022; shares outstanding: 32,291,974 at
   December 31, 2022 and
31,097,872 at March 31, 2022

 

 

 

 

 

 

Additional paid-in capital

 

 

160,696

 

 

 

158,419

 

Treasury stock, common shares: 9,472,246 at December 31, 2022 and 9,473,037 at
   March 31, 2022

 

 

(36,238

)

 

 

(36,239

)

Retained deficit

 

 

(86,305

)

 

 

(57,080

)

Total shareholders’ equity

 

 

38,153

 

 

 

65,100

 

Total liabilities and shareholders’ equity

 

$

68,327

 

 

$

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 December 31,

 

 

Nine Months Ended December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Product revenue

 

$

15,399

 

 

$

22,203

 

 

$

41,715

 

 

$

78,260

 

Service revenue

 

 

4,889

 

 

 

8,511

 

 

 

14,039

 

 

 

24,065

 

Total revenue

 

 

20,288

 

 

 

30,714

 

 

 

55,754

 

 

 

102,325

 

Cost of product revenue

 

 

11,480

 

 

 

16,427

 

 

 

31,152

 

 

 

54,724

 

Cost of service revenue

 

 

4,027

 

 

 

6,646

 

 

 

11,832

 

 

 

18,942

 

Total cost of revenue

 

 

15,507

 

 

 

23,073

 

 

 

42,984

 

 

 

73,666

 

Gross profit

 

 

4,781

 

 

 

7,641

 

 

 

12,770

 

 

 

28,659

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

3,984

 

 

 

2,873

 

 

 

11,683

 

 

 

8,737

 

Acquisition related costs

 

 

1,993

 

 

 

178

 

 

 

2,340

 

 

 

178

 

Sales and marketing

 

 

2,983

 

 

 

2,862

 

 

 

8,521

 

 

 

8,794

 

Research and development

 

 

409

 

 

 

396

 

 

 

1,374

 

 

 

1,169

 

Total operating expenses

 

 

9,369

 

 

 

6,309

 

 

 

23,918

 

 

 

18,878

 

(Loss) income from operations

 

 

(4,588

)

 

 

1,332

 

 

 

(11,148

)

 

 

9,781

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

 

 

 

 

 

 

 

 

 

1

 

Interest expense

 

 

(64

)

 

 

(26

)

 

 

(97

)

 

 

(59

)

Amortization of debt issue costs

 

 

(16

)

 

 

(15

)

 

 

(47

)

 

 

(46

)

Total other expense

 

 

(80

)

 

 

(41

)

 

 

(144

)

 

 

(104

)

(Loss) income before income tax

 

 

(4,668

)

 

 

1,291

 

 

 

(11,292

)

 

 

9,677

 

Income tax expense

 

 

19,391

 

 

 

189

 

 

 

17,933

 

 

 

2,406

 

Net (loss) income

 

$

(24,059

)

 

$

1,102

 

 

$

(29,225

)

 

$

7,271

 

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

 

$

(0.75

)

 

$

0.04

 

 

$

(0.93

)

 

$

0.23

 

Weighted-average common shares outstanding

 

 

32,047,755

 

 

 

31,084,710

 

 

 

31,510,547

 

 

 

30,992,475

 

Diluted net (loss) income per share

 

$

(0.75

)

 

$

0.04

 

 

$

(0.93

)

 

$

0.23

 

Weighted-average common shares and share
   equivalents outstanding

 

 

32,047,755

 

 

 

31,234,925

 

 

 

31,510,547

 

 

 

31,273,703

 

 

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

 

Issuance of common stock for acquisition

 

 

620,067

 

 

 

770

 

 

 

 

 

 

 

 

 

770

 

Issuance of common stock for services

 

 

10,976

 

 

 

18

 

 

 

 

 

 

 

 

 

18

 

Shares issued under Employee Stock Purchase
   Plan

 

 

621

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Stock-based compensation

 

 

304,686

 

 

 

448

 

 

 

 

 

 

 

 

 

448

 

Employee tax withholdings on stock-based
   compensation

 

 

(287

)

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

(24,059

)

 

 

(24,059

)

Balance, December 31, 2022

 

 

32,291,974

 

 

$

160,696

 

 

$

(36,238

)

 

$

(86,305

)

 

$

38,153

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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,