UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the Quarterly Period Ended
OR
Commission file number
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Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the act:
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(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.
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).
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 |
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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
There were
ORION ENERGY SYSTEMS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2023
TABLE OF CONTENTS
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Page(s) |
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ITEM 1. |
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Condensed Consolidated Balance Sheets as of June 30, 2023 and March 31, 2023 |
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ITEM 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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ITEM 3. |
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ITEM 4. |
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ITEM 1. |
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ITEM 1A. |
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ITEM 2. |
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ITEM 5. |
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ITEM 6. |
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PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
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June 30, 2023 |
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March 31, 2023 |
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Assets |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Revenue earned but not billed |
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Inventories, net |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Goodwill |
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Other intangible assets, net |
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Other long-term assets |
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Total assets |
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$ |
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$ |
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Liabilities and Shareholders’ Equity |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other |
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Deferred revenue, current |
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Current maturities of long-term debt |
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Total current liabilities |
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Revolving credit facility |
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Long-term debt, less current maturities |
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Deferred revenue, long-term |
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Other long-term liabilities |
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Total liabilities |
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Shareholders’ equity: |
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Preferred stock, $ |
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Common stock, |
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Additional paid-in capital |
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Treasury stock, common shares: |
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Retained deficit |
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity |
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$ |
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$ |
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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)
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Three Months Ended June 30, |
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2023 |
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2022 |
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Product revenue |
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$ |
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$ |
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Service revenue |
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Total revenue |
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Cost of product revenue |
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Cost of service revenue |
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Total cost of revenue |
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Gross profit |
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Operating expenses: |
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General and administrative |
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Acquisition related costs |
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Sales and marketing |
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Research and development |
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Total operating expenses |
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Loss from operations |
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Other income (expense): |
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Other income |
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Interest expense |
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Amortization of debt issue costs |
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Interest income |
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Total other expense |
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Loss before income tax |
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Income tax expense |
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Net loss |
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$ |
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$ |
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Basic net loss per share attributable to |
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$ |
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$ |
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Weighted-average common shares outstanding |
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Diluted net loss per share |
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$ |
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$ |
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Weighted-average common shares and share |
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The accompanying notes are an integral part of these Condensed Consolidated Statements.
4
ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
(in thousands, except share amounts)
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Shareholders’ Equity |
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Common Stock |
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Shares |
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Additional |
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Treasury |
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Retained |
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Total |
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Balance, March 31, 2023 |
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$ |
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$ |
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$ |
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$ |
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Shares issued under Employee Stock Purchase |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
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Balance, June 30, 2023 |
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$ |
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$ |
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$ |
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$ |
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Shareholders’ Equity |
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Common Stock |
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Shares |
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Additional |
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Treasury |
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Retained |
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Total |
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Balance, March 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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Exercise of stock options for cash |
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— |
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— |
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Shares issued under Employee Stock Purchase |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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Employee tax withholdings on stock-based |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
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Balance, June 30, 2022 |
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$ |
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$ |
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$ |
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$ |
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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)
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Three Months Ended June 30, |
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2023 |
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2022 |
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Operating activities |
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Net loss |
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$ |
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$ |
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Adjustments to reconcile net loss to net cash used in |
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Depreciation |
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Amortization of intangible assets |
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Stock-based compensation |
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Amortization of debt issue costs |
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Deferred income tax |
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Loss (gain) on sale of property and equipment |
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Provision for inventory reserves |
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Provision for credit losses |
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Other |
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Changes in operating assets and liabilities, net of acquisition: |
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Accounts receivable |
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Revenue earned but not billed |
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Inventories |
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Prepaid expenses and other assets |
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Accounts payable |
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Accrued expenses and other |
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Deferred revenue, current and long-term |
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Net cash used in operating activities |
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Investing activities |
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Cash to fund acquisition, net of cash received |
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Purchases of property and equipment |
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Additions to patents and licenses |
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Proceeds from sale of property, plant and equipment |
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Net cash used in investing activities |
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Financing activities |
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Payment of long-term debt |
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Proceeds from revolving credit facility |
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Payments of revolving credit facility |
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Payments to settle employee tax withholdings on stock-based compensation |
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Proceeds from employee equity exercises |
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Net cash (used in) provided by financing activities |
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Net decrease in cash and cash equivalents |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Supplemental disclosure of non-cash investing and financing activities: |
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Operating lease assets obtained in exchange for new operating lease liabilities |
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$ |
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$ |
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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
Orion includes Orion Energy Systems, Inc., a Wisconsin corporation, and all consolidated subsidiaries. Orion provides light emitting diode lighting systems, wireless Internet of Things enabled control solutions, project engineering, energy project management design, maintenance services and turnkey electric vehicle charging station installation services 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, Lawrence, Massachusetts and Pewaukee, Wisconsin.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Orion and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.
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 statement have been included. Interim results are not necessarily indicative of results that may be expected for the fiscal year ending March 31, 2024 or other interim periods.
The Condensed Consolidated Balance Sheet as of March 31, 2023 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, 2023 filed with the SEC on June 12, 2023.
Allowance for Credit Losses
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, allowance for credit losses, accruals for warranty and loss contingencies, earn-out, income taxes, impairment analyses, and certain equity transactions. Accordingly, actual results could differ from those estimates.
7
Concentration of Credit Risk and Other Risks and Uncertainties
Orion's cash is primarily deposited with
Orion purchases components necessary for its lighting products, including lamps and LED components, from multiple suppliers. For the three months ended June 30, 2023 and June 30, 2022,
For the three months ended June 30, 2023,
As of June 30, 2023,
Recent Accounting Pronouncements
Recently Adopted Standards
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 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 adopted ASU 2016-13 effective April 1, 2023. The effect of adoption was immaterial.
NOTE 3 — REVENUE
Orion generates revenue primarily by selling manufactured or sourced commercial lighting fixtures and components, sourced electric vehicle chargers and related products, installing these products in customer’s facilities, and providing maintenance services including repairs and replacements for the lighting and related electrical components. Orion recognizes revenue in accordance with the guidance in “Revenue from Contracts with Customers” (Topic 606) (“ASC 606”) when control of the goods or services being provided (which we refer to as a performance obligation) is transferred to a customer at an amount that reflects the consideration Orion expects to receive in exchange for those goods or services.
During the third quarter of fiscal 2023, Orion acquired Voltrek LLC ("Voltrek"), which sells and installs sourced electric vehicle charging stations and related software subscriptions and renewals. The results of Voltrek are included in the Orion Electric Vehicle Charging segment ("EV") and compliment Orion’s existing turnkey installation model.
The sale of charging stations and related software subscriptions and renewals is presented in Product revenue. Orion is the principal in the sales of charging stations as it has control of the physical products prior to transfer to the customer. Accordingly, revenue is recognized on a gross basis. For certain sales, primarily software subscriptions and renewals, Orion is the sales agent providing access to the content and recognize commission revenue net of amounts due to third parties who fulfill the performance obligation. For these sales, control passes at the point in time upon providing access of the content to the customer.
The sale of installation and services related to the EV charging business is presented in Service revenue. Revenue from the EV segment that includes both the sale of product and service is allocated between the product and service performance obligations based on relative standalone selling prices, and is recorded in Product revenue and Service revenue, respectively, in the Condensed Consolidated Statement of Operations.
8
Revenue from the maintenance offering that includes both the sale of Orion manufactured or sourced product and service is allocated between the product and service performance obligations based on relative standalone selling prices, and is recorded in Product revenue and Service revenue, respectively, in the Condensed Consolidated Statement of Operations.
The following tables provide detail of Orion’s total revenue for the three months ended June 30, 2023 and June 30, 2022 (dollars in thousands):
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Three Months Ended June 30, 2023 |
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Product |
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Services |
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Total |
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Revenue from contracts with customers: |
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Lighting product and installation |
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$ |
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$ |
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$ |
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Maintenance services |
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Electric vehicle charging |
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Total revenues from contracts with customers |
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Revenue accounted for under other guidance |
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Total revenue |
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$ |
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$ |
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$ |
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Three Months Ended June 30, 2022 |
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Product |
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Services |
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Total |
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Revenue from contracts with customers: |
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Lighting product and installation |
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$ |
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$ |
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$ |
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Maintenance services |
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Solar energy related revenues |
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Total revenues from contracts with customers |
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Revenue accounted for under other guidance |
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Total revenue |
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$ |
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$ |
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$ |
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From time to time, Orion sells the receivables from one customer to a financing institution. The was
The following chart shows the balance of Orion’s receivables arising from contracts with customers, contract assets and contract liabilities as of June 30, 2023 and March 31, 2023 (dollars in thousands):
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June 30, |
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March 31, |
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Accounts receivable, net |
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$ |
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$ |
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Contract assets |
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$ |
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$ |
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Contract liabilities |
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$ |
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$ |
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There were
NOTE 4 — ACCOUNTS RECEIVABLE, NET
As of June 30, 2023 and March 31, 2023, Orion's accounts receivable and allowance for credit losses balances were as follows (dollars in thousands):
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June 30, |
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March 31, |
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Accounts receivable, gross |
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$ |
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$ |
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Allowance for credit losses |
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( |
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( |
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Accounts receivable, net |
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$ |
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$ |
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9
Changes in Orion’s allowance for credit losses were as follows (dollars in thousands):
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For the Three Months Ended |
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2023 |
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2022 |
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Beginning of period |
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$ |
( |
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$ |
( |
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Credit loss expense |
|
|
( |
) |
|
|
( |
) |
Write-off |
|
|
|
|
|
|
||
End of period |
|
$ |
( |
) |
|
$ |
( |
) |
NOTE 5 — INVENTORIES, NET
As of June 30, 2023 and March 31, 2023, Orion's inventory balances were as follows (dollars in thousands):
|
|
Cost |
|
|
Excess and |
|
|
|||||