Orion Energy Systems, Inc. (NYSE MKT: OESX), a leading power technology enterprise, today announced financial results for its fiscal 2014 second quarter ended September 30, 2013.
“Having begun providing financial guidance just last quarter, we are very pleased with our results and about the direction of the company going forward,” said John Scribante, Chief Executive Officer of Orion Energy Systems. “Revenue rose 42% year-over-year and was up 32% sequentially versus the first quarter, and we posted earnings of $0.03 per share excluding one-time charges and tax benefits. We also generated $7.6 million in cash from operations in the quarter, as we continued to focus on inventory management, cash collection, and improved asset utilization.
“The integration with Harris is near completion, as we proceed with consolidating facilities and eliminating redundancies where appropriate – which we anticipate will save Orion approximately $1 million annually by the end of calendar 2014. The acquired business is operating precisely as expected and helping us gain a foothold in several rapidly-expanding LED markets, where we are now adding some significant, multi-year clients with geographically diverse operations. We believe the company is very well positioned in the markets we serve, and we are pursuing new channels for growth, new customers, and manufacturing economies of scale that will drive shareholder value in the quarters to come.”
Second Quarter of Fiscal 2014
For the fiscal 2014 second quarter ended September 30, 2013, the Company reported revenue of $27.5 million, up 42% compared to revenue of $19.4 million for the second quarter of fiscal 2013. The Company reported income from operations of $0.2 million for the second quarter of fiscal 2014, a 105% improvement versus a loss from operations of $4.1 million in the three months ended September 30, 2012.
For the second quarter of fiscal 2014, the Company reported net income of $2.4 million, or $0.11 per share, versus a net loss of $9.7 million, or $(0.46) per share, in the prior-year period. The fiscal 2014 second quarter included a tax benefit of $2.2 million, or $0.10 per share, related to the acquisition of Harris; this quarter also included $(0.02) per share in non-cash purchase accounting charges for marking-to-market the earnout provision for the Harris acquisition and acquisition related legal, accounting and integration expenses. In the prior-year period, the fiscal 2013 second quarter included a tax expense of $5.6 million, or $(0.27) per share, to record a full valuation allowance against deferred tax assets.
Total order backlog as of September 30, 2013 was $13.0 million. The Company currently expects approximately $11.1 million of its existing backlog to be recognized as revenue during the remainder of fiscal 2014.
First Half of Fiscal 2014
For the first half ended September 30, 2013, the Company reported revenue of $48.3 million, up 39% versus revenue of $34.7 million in the prior-year period. The Company reported a loss from operations of $0.6 million for the first half of fiscal 2014, a 92% improvement compared to a loss from operations of $7.7 million for the first half of fiscal 2013. Along with the previously noted items impacting the second quarter in both years, fiscal 2014 was also impacted by non-recurring expenses in the first quarter totaling $0.4 million, or $(0.02) per share, related to the liquidation of slow moving inventory and acquisition related expenses.
For the first half of fiscal 2014, the Company reported net income of $1.6 million, or $0.08 per share, versus a net loss of $11.6 million, or $(0.53) per share, in the prior-year period. Year-to-date results include the previously noted tax and expense items for the second quarters of fiscal 2014 and fiscal 2013; in addition, the fiscal 2013 first quarter included a tax benefit of $1.6 million, or $0.07 per share.
Cash, Debt and Liquidity Position
Orion had $17.6 million in cash and cash equivalents and $1.0 million in short-term investments as of September 30, 2013 compared to $14.4 million and $1.0 million, respectively, as of March 31, 2013. The Company generated $9.6 million of net cash from operations during the fiscal 2014 first half compared to $2.3 million of cash used in operations during the fiscal 2013 first half.
On July 1, 2013, the Company completed its acquisition of Harris Manufacturing, Inc. and Harris LED, LLC. The purchase price was paid through a combination of $5.0 million in cash, $3.2 million in a seller-financed three-year unsecured subordinated note and 856,997 shares of unregistered Orion common stock, representing a fair value on the date of issuance of $2.1 million. The purchase price is subject to potential post-closing date adjustments for certain other items. In October 2013, the Company completed an amendment to modify the purchase agreement with Harris to fix the value of future consideration at $1.4 million and took an accounting charge accordingly. The Company will issue $0.6 million in shares of its common stock on January 1, 2014 and pay $0.8 million in cash on January 1, 2015.
Total debt was $8.4 million as of September 30, 2013 compared with $6.7 million as of March 31, 2013. The Company borrowed $3.2 million during the fiscal 2014 second quarter to complete the acquisition of Harris. There were no borrowings outstanding under the Company’s revolving credit facility as of September 30, 2013, which has availability of $13.3 million.
Outlook
For the third quarter of fiscal 2014 the Company anticipates revenue in the range of $30.0 to $33.0 million and earnings of $0.04 to $0.07 per diluted share.
Supplemental Information
In conjunction with this press release, Orion has posted supplemental information on its website which further discusses the financial performance of the Company for the three and six months ended September 30, 2013. The purpose of the supplemental information is to provide further discussion and analysis of the Company’s financial results for the second quarter and six months ended September 30, 2013. The supplemental information can be found in the Investor Relations section of Orion’s Web site at https://investor.oriones.com/events.cfm.