MANITOWOC, Wis., Feb. 11, 2021 (GLOBE NEWSWIRE) — Orion Energy Systems, Inc. (NASDAQ: OESX) (Orion Lighting), a provider of energy-efficient LED lighting, controls and IoT systems, including turnkey project implementation, as well as ongoing system maintenance and program management, today reported results for its FY 2021 third quarter ended December 31, 2020 (Q3’21). Orion will hold an investor call today at 10:00 a.m. ET – details below.
|Q3 Financial Highlights||Prior Three Quarters|
|$ in millions except
per share figures
|Gross Profit %||24.9%||24.2%||+70 bps||27.6%||24.4%||22.3%|
|Net Income (Loss)||$4.3||$2.3||+$2.0||$1.9||($2.2)||($0.5)|
|Cash & Equivalents||$12.3||$13.8||-$1.5||$12.1||$10.8||$28.8|
|*EBITDA reconciliation table below.|
- Q3’21 revenue grew to $44.3M from $34.2M in Q3’20, demonstrating a rapid rebound in major account activity, and also exceeded Q2’21 revenue of $26.3M. The Q3’21 performance improvement reflects a full quarter of business activity following COVID-19-related disruptions that commenced in March 2020 and continued primarily through August 2020.
- Q3’21 revenue included previously delayed turnkey LED lighting retrofit activity for a major national account project that resumed in early August, in addition to significant contribution from a national retrofit project for a specialty retail customer.
- Q3’21 gross profit percentage increased to 24.9% from 24.2% in Q3’20, primarily because of improvement in product margin partially offset by increased service revenues which have lower margins, but declined sequentially from 27.6% in Q2’21primarily because of a change in customer mix and start-up costs related to the national specialty retail customer project.
- Q3’21 operating expenses increased to $6.5M versus $5.8M in Q3’20 and $5.4M in Q2’21, principally reflecting higher sales commissions on increased revenue, incremental costs required to support higher revenues, as well as start-up costs associated with the Company’s new maintenance services business.
- Orion’s EBITDA improved to $4.9M in Q3’21, compared to $2.8M in Q3’20 and $2.3M in Q2’21.
- Orion ended the quarter with $23.3M in working capital, including $12.3M of cash and had no amounts drawn on its credit facility. In December, Orion secured a new five-year $25.0 million revolving credit facility with Bank of America. The facility provides a 25% increase in financing capacity and liquidity to support the execution of the Company’s strategic growth plans.
- Excluding any significant COVID-19 business impacts, Orion continues to anticipate FY ’21 revenue of at least $117M and FY ’22 revenue that should at least match its record results achieved in FY ’20.
Mike Altschaefl, Orion’s CEO and Board Chair, commented, “As anticipated, our business rebound accelerated in Q3’21 with both existing and new customers returning to pre-COVID-19 levels of activity, along with a growing pipeline of opportunities. We are seeing significant opportunities in a number of our markets, including national retailers, global online retailers, warehousing and logistics, automotive, healthcare and the public sector.
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“Product development continues to play an important role in Orion’s success as we are experiencing very solid demand for new product lines introduced over the past year. Our new Starline high-bay LED fixture line has been very well received by customers and partners due to its efficient, cost-effective design and energy efficiency. We are also having good success with a new exterior lighting product line that delivers more efficient illumination than comparable products, and we are launching some next generation linear LED fixtures later this month. As always, Orion remains focused on innovative product designs that deliver performance, value and customized solutions for our customers while also incorporating design, production and sourcing efficiencies that provide opportunities for margin enhancement. For example, earlier this week, Orion announced a licensing and exclusive manufacturing agreement with Go Fan Yourself (GFY). Orion will utilize GFY’s patented technology incorporating UVC into air movement products. UVC has been proven effective in killing airborne viruses, including COVID-19, as well as bacteria, fungi and other germs. These products will join Orion’s existing line of LED lighting fixtures, which utilize antimicrobial LED’s in the 405 nanometer wavelength to reduce surface growth of bacteria, fungi, mold and mildew, as Orion builds on its healthy, safe and sustainable solutions.
“A growing number of large national account customers are recognizing the value of Orion’s unique, customized, turnkey LED lighting capabilities and our proven track record in executing large national installation programs with efficient, high-quality service. Our sales team is very active in leveraging this capability to develop new large customer prospects for our lighting systems and services. Though the sales cycles can be longer for such large opportunities, we feel confident in the broad array of benefits our systems can deliver, ranging from improved illumination, enhanced work environments and greater safety, along with the environmental and cost benefits delivered by state-of-the-art LED lighting and controls. Building off this value proposition we are also excited by the potential of products incorporating UV and violet light technologies to help our customers address environmental safety concerns around germs, bacteria and viruses.
“Reflecting these and other factors, we are confident in our business outlook going forward, tempered only by the real potential for COVID-19 concerns to impact our customers’ plans and our operations. Although we have put in place rigorous safety protocols to reduce the risks of COVID-19 impacts to our business, there are many circumstances that are outside our control and so COVID-19 remains a significant risk to our future performance.”
Orion expects to achieve FY ’21 annual revenue of at least $117M, implying $80M of revenue will be generated in the second half, though more weighted to the third quarter. Orion believes it is well positioned and expects to achieve financial results in FY ’22 that should at least match those delivered in FY ’20. In FY ’20, Orion achieved record revenue of $151M and net income of $12.5M, or $0.40 per diluted share. Orion’s FY ’22 outlook, which assumes no material negative COVID-19 impacts, is supported by the following factors:
- Orion anticipates significant additional product and service revenue from an existing large national retail customer for the retrofit of additional locations, new construction, outdoor lighting and other projects.
- Orion expects to generate significant revenue from custom-designed luminaires for a global online retailer’s new facilities.
- Orion has completed several initial facilities for a global logistics industry customer that is expected to be a significant source of additional revenue, on a project-by-project basis.
- Orion has been selected by another leading global logistics provider to be their primary LED lighting supplier and project manager in North America, also on a project basis. This relationship is expected to be a meaningful source of new revenue.
- Orion expects to continue the LED lighting retrofits for a national specialty retailer.
- Orion’s existing automotive customers are likely to provide a number of project opportunities.
- Orion is seeing significant opportunities in the healthcare market.
- Orion anticipates continued steady demand from long-standing public sector customers, including the U.S. Military, the Veterans Administration and the U.S. Postal Service.
- Orion is experiencing a solid rebound in interest and business activity within its energy service company (ESCO) and electrical contractor distribution channels, where its new products are resonating, and more companies appear willing to proceed with retrofit and new construction projects.
- Companies are increasingly engaged in pursuing green, cost saving projects that exhibit strong ROI, many of which had been on hold due to COVID-19.
- Orion has recently launched new LED lighting products, including outdoor fixtures and linear products that have been designed to deliver superior quality and energy efficiency at attractive pricing. These products are expected to support revenue growth opportunities in FY ’22 and beyond.
Orion cautions investors that this outlook involves uncertainty due to the COVID-19 pandemic and possible business and other economic impacts.
Orion’s Q3’21 revenue improved to $44.3M compared to $34.2M in Q3’20 and $26.3M in Q2’21, as business activity rebounded rapidly following COVID-19 related impacts. During Q3’21, Orion was again fully engaged in installations for a large national retail customer and another national account project, with minimal COVID-19 impacts. Q3’21 product revenue increased to $31.9M from $25.9M in Q3’20 and service revenue increased to $12.3M from $8.4M, principally reflecting installation and services for national accounts.
Gross profit percentage increased to 24.9% in Q3’21 from 24.2% in Q3’20, primarily because of improvement in product margin partially offset by increased service revenues which have lower margins, but decreased sequentially from Q2 ’21 because of a change in customer mix and higher costs related to the start of a national account project during the quarter.
Total operating expenses increased to $6.5M in Q3’21 from $5.8M in Q3’20 and $5.4M in Q2’21, due primarily to the impact of sales commissions on higher revenue, as well as start-up costs related to the Company’s new maintenance services business.
Orion generated EBITDA of $4.9M in Q3’21 versus $2.8M in Q3’20 and $2.3M in Q2’21. Q3’21 net income improved to $4.3M, or $0.14 per diluted share, compared to net income of $2.3M, or $0.07 per diluted share in Q3’20 and $1.9M, or $0.06 per diluted share, in Q2’21, reflecting relatively higher revenue covering fixed expenses.
Cash Flow & Balance Sheet
Orion generated $8.5M of cash from operating activities in Q3’21 as compared to $5.8M in Q3’20. The increase was due to higher net income adjusted for changes in working capital.
As of December 31, 2020, Orion’s net working capital balance increased to $23.3M, including $12.3M in cash and cash equivalents, as compared to net working capital of $19.4M at December 31, 2019. Orion had no balance outstanding on its revolving credit facility and $25.0M of availability on the facility as of quarter end.
|Date / Time:||Thursday, February 11th at 10:00 a.m. ET (9:00 a.m. CT)|
|Call Dial-In:||(877) 754-5294 or (678) 894-3013 for international|
|Audio Replay:||(855) 859-2056, ID#5357316 (available shortly after the call through 2/18/21)|
About Orion Energy Systems
Orion provides innovative LED lighting systems and turnkey project implementation including installation and commissioning of fixtures, controls and IoT systems, as well as ongoing system maintenance and program management. We help our customers achieve energy savings with healthy, safe and sustainable solutions, enabling them to reduce their carbon footprint and digitize their business.
In addition to the GAAP results included in this presentation, Orion has also included the non-GAAP measures, EBITDA (earnings before interest, taxes, depreciation and amortization). The Company has provided these non-GAAP measures to help investors better understand its core operating performance, enhance comparisons of core operating performance from period to period and allow better comparisons of operating performance to its competitors. Among other things, management uses EBITDA to evaluate performance of the business and believes this measurement enables it to make better period-to-period evaluations of the financial performance of core business operations. The non-GAAP measurements are intended only as a supplement to the comparable GAAP measurements and Orion compensates for the limitations inherent in the use of non-GAAP measurements by using GAAP measures in conjunction with the non-GAAP measurement. As a result, investors should consider these non-GAAP measurements in addition to, and not in substitution for or as superior to, measurements of financial performance prepared in accordance with generally accepted accounting principles.
Consistent with Regulation G under the U.S. federal securities laws, the non-GAAP measures in this press release have been reconciled to the nearest GAAP measures, and this reconciliation is located under the heading “Unaudited EBITDA and Adjusted EBITDA Reconciliation” following the Condensed Consolidated Statements of Cash Flows included in this press release.