Company Quick10K Filing
Orion Energy Systems
Price2.81 EPS0
Shares31 P/E9
MCap87 P/FCF17
Net Debt-7 EBIT10
TEV79 TEV/EBIT8
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-12-31 Filed 2021-02-11
10-Q 2020-09-30 Filed 2020-11-06
10-Q 2020-06-30 Filed 2020-08-05
10-K 2020-03-31 Filed 2020-06-05
10-Q 2019-12-31 Filed 2020-02-06
10-Q 2019-09-30 Filed 2019-11-06
10-Q 2019-06-30 Filed 2019-08-05
10-K 2019-03-31 Filed 2019-06-05
10-Q 2018-12-31 Filed 2019-02-08
10-Q 2018-09-30 Filed 2018-11-13
10-Q 2018-06-30 Filed 2018-08-07
10-K 2018-03-31 Filed 2018-06-13
10-Q 2017-12-31 Filed 2018-02-07
10-Q 2017-09-30 Filed 2017-11-02
10-Q 2017-06-30 Filed 2017-08-04
10-K 2017-03-31 Filed 2017-06-13
10-Q 2016-12-31 Filed 2017-02-08
10-Q 2016-09-30 Filed 2016-11-03
10-Q 2016-06-30 Filed 2016-08-03
10-K 2016-03-31 Filed 2016-06-23
10-Q 2015-12-31 Filed 2016-02-09
10-Q 2015-09-30 Filed 2015-11-09
10-Q 2015-06-30 Filed 2015-08-11
10-K 2015-03-31 Filed 2015-06-12
10-Q 2014-12-31 Filed 2015-02-09
10-Q 2014-09-30 Filed 2014-11-10
10-Q 2014-06-30 Filed 2014-08-08
10-K 2014-03-31 Filed 2014-06-13
10-Q 2013-12-31 Filed 2014-02-07
10-Q 2013-09-30 Filed 2013-11-08
10-Q 2013-06-30 Filed 2013-08-09
10-K 2013-03-31 Filed 2013-06-14
10-Q 2012-12-31 Filed 2013-02-08
10-Q 2012-09-30 Filed 2012-11-09
10-Q 2012-06-30 Filed 2012-08-09
10-K 2012-03-31 Filed 2012-06-14
10-Q 2011-12-31 Filed 2012-06-14
10-Q 2011-09-30 Filed 2011-11-09
10-Q 2011-06-30 Filed 2011-08-09
10-K 2011-03-31 Filed 2011-07-22
10-Q 2010-12-31 Filed 2011-02-09
10-Q 2010-09-30 Filed 2010-11-09
10-Q 2010-06-30 Filed 2010-08-09
10-K 2010-03-31 Filed 2010-06-14
10-Q 2009-12-31 Filed 2010-02-09
8-K 2020-11-05
8-K 2020-10-15
8-K 2020-09-21
8-K 2020-08-06
8-K 2020-08-05
8-K 2020-06-04
8-K 2020-05-20
8-K 2020-02-06
8-K 2020-01-29
8-K 2019-11-21
8-K 2019-11-06
8-K 2019-10-16
8-K 2019-08-07
8-K 2019-08-05
8-K 2019-06-04
8-K 2019-05-16
8-K 2019-02-07
8-K 2019-01-03
8-K 2018-11-29
8-K 2018-11-13
8-K 2018-10-26
8-K 2018-09-06
8-K 2018-08-07
8-K 2018-06-04
8-K 2018-05-30
8-K 2018-03-30
8-K 2018-02-07

OESX 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Note 1 - Description of Business
Note 2 - Impact of Covid - 19
Note 3 - Summary of Significant Accounting Policies
Note 4 - Revenue
Note 5 - Accounts Receivable, Net
Note 6 - Inventories, Net
Note 7 - Prepaid Expenses and Other Current Assets
Note 8 - Property and Equipment, Net
Note 9 - Leases
Note 10 - Other Intangible Assets, Net
Note 11 - Accrued Expenses and Other
Note 12 - Net Income per Common Share
Note 13 - Long - Term Debt
Note 14 - Income Taxes
Note 15 - Commitments and Contingencies
Note 16 - Shareholders' Equity
Note 17 - Stock Options and Restricted Shares
Note 18 - Segments
Note 19 - Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 5. Other Information
Item 6. Exhibits
EX-31.1 oesx-ex311_8.htm
EX-31.2 oesx-ex312_7.htm
EX-32.1 oesx-ex321_9.htm
EX-32.2 oesx-ex322_6.htm

Orion Energy Systems Earnings 2020-12-31

Balance SheetIncome StatementCash Flow
1159269462302012201420172020
Assets, Equity
5036228-6-202012201420172020
Rev, G Profit, Net Income
201482-4-102012201420172020
Ops, Inv, Fin

10-Q 1 oesx-10q_20201231.htm 10-Q oesx-10q_20201231.htm

 

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, 2020

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)

Common stock purchase rights

 

 

 

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 30,759,953 shares of the Registrant’s common stock outstanding on January 31, 2021.

 

 

 


 

ORION ENERGY SYSTEMS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED DECEMBER 31, 2020

TABLE OF CONTENTS

 

 

 

Page(s)

PART I FINANCIAL INFORMATION

3

ITEM 1.

Financial Statements (unaudited)

3

 

Condensed Consolidated Balance Sheets as of December 31, 2020 and March 31, 2020

3

 

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2020 and December 31, 2019

4

 

Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended December 31, 2020 and December 31, 2019

5

 

Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2020 and December 31, 2019

7

 

Notes to the Condensed Consolidated Financial Statements

8

ITEM 2.

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

24

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

35

ITEM 4.

Controls and Procedures

35

PART II OTHER INFORMATION

36

ITEM 1.

Legal Proceedings

36

ITEM 1A.

Risk Factors

36

ITEM 2.

Unregistered Sale of Equity Securities and Use of Proceeds

36

ITEM 5.

Other Information

36

ITEM 6.

Exhibits

37

SIGNATURE

38

 

 


 

 

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, 2020

 

 

March 31, 2020

 

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

12,279

 

 

$

28,751

 

Accounts receivable, net

 

 

23,744

 

 

 

10,427

 

Revenue earned but not billed

 

 

1,519

 

 

 

560

 

Inventories, net

 

 

18,518

 

 

 

14,507

 

Prepaid expenses and other current assets

 

 

607

 

 

 

723

 

Total current assets

 

 

56,667

 

 

 

54,968

 

Property and equipment, net

 

 

11,410

 

 

 

11,817

 

Other intangible assets, net

 

 

2,033

 

 

 

2,216

 

Long-term accounts receivable

 

 

652

 

 

 

760

 

Other long-term assets

 

 

2,906

 

 

 

2,802

 

Total assets

 

$

73,668

 

 

$

72,563

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

Accounts payable

 

$

19,360

 

 

$

19,834

 

Accrued expenses and other

 

 

13,916

 

 

 

7,228

 

Deferred revenue, current

 

 

126

 

 

 

107

 

Current maturities of long-term debt

 

 

14

 

 

 

35

 

Total current liabilities

 

 

33,416

 

 

 

27,204

 

Revolving credit facility

 

 

 

 

 

10,013

 

Long-term debt, less current maturities

 

 

39

 

 

 

50

 

Deferred revenue, long-term

 

 

659

 

 

 

715

 

Other long-term liabilities

 

 

3,768

 

 

 

3,546

 

Total liabilities

 

 

37,882

 

 

 

41,528

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value: Shares authorized: 30,000,000 at

   December 31, 2020 and March 31, 2020; no shares issued and outstanding at

   December 31, 2020 and March 31, 2020

 

 

 

 

 

 

Common stock, no par value: Shares authorized: 200,000,000 at December 31, 2020

   and March 31, 2020; shares issued: 40,227,900 at December 31, 2020 and

   39,729,569 at March 31, 2020; shares outstanding: 30,759,953 at

   December 31, 2020 and 30,265,997 at March 31, 2020

 

 

 

 

 

 

Additional paid-in capital

 

 

157,262

 

 

 

156,503

 

Treasury stock, common shares: 9,467,947 at December 31, 2020 and 9,463,572 at

   March 31, 2020

 

 

(36,181

)

 

 

(36,163

)

Retained deficit

 

 

(85,295

)

 

 

(89,305

)

Total shareholders’ equity

 

 

35,786

 

 

 

31,035

 

Total liabilities and shareholders’ equity

 

$

73,668

 

 

$

72,563

 

 

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,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Product revenue

 

$

31,929

 

 

$

25,867

 

 

$

61,890

 

 

$

93,778

 

Service revenue

 

 

12,322

 

 

 

8,382

 

 

 

19,453

 

 

 

31,171

 

Total revenue

 

 

44,251

 

 

 

34,249

 

 

 

81,343

 

 

 

124,949

 

Cost of product revenue

 

 

23,203

 

 

 

19,075

 

 

 

44,834

 

 

 

68,778

 

Cost of service revenue

 

 

10,042

 

 

 

6,900

 

 

 

15,605

 

 

 

24,823

 

Total cost of revenue

 

 

33,245

 

 

 

25,975

 

 

 

60,439

 

 

 

93,601

 

Gross profit

 

 

11,006

 

 

 

8,274

 

 

 

20,904

 

 

 

31,348

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

3,030

 

 

 

2,662

 

 

 

8,079

 

 

 

8,274

 

Sales and marketing

 

 

3,120

 

 

 

2,735

 

 

 

7,306

 

 

 

8,359

 

Research and development

 

 

391

 

 

 

439

 

 

 

1,230

 

 

 

1,240

 

Total operating expenses

 

 

6,541

 

 

 

5,836

 

 

 

16,615

 

 

 

17,873

 

Income from operations

 

 

4,465

 

 

 

2,438

 

 

 

4,289

 

 

 

13,475

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

12

 

 

 

2

 

 

 

56

 

 

 

22

 

Interest expense

 

 

(1

)

 

 

(38

)

 

 

(51

)

 

 

(261

)

Amortization of debt issue costs

 

 

(20

)

 

 

(61

)

 

 

(142

)

 

 

(182

)

Loss on debt extinguishment

 

 

(90

)

 

 

 

 

 

(90

)

 

 

 

Interest income

 

 

 

 

 

2

 

 

 

 

 

 

5

 

Total other expense

 

 

(99

)

 

 

(95

)

 

 

(227

)

 

 

(416

)

Income before income tax

 

 

4,366

 

 

 

2,343

 

 

 

4,062

 

 

 

13,059

 

Income tax expense

 

 

51

 

 

 

39

 

 

 

52

 

 

 

66

 

Net income

 

$

4,315

 

 

$

2,304

 

 

$

4,010

 

 

$

12,993

 

Basic net income per share attributable to

   common shareholders

 

$

0.14

 

 

$

0.08

 

 

$

0.13

 

 

$

0.43

 

Weighted-average common shares outstanding

 

 

30,735,722

 

 

 

30,243,865

 

 

 

30,586,196

 

 

 

30,053,330

 

Diluted net income per share

 

$

0.14

 

 

$

0.07

 

 

$

0.13

 

 

$

0.42

 

Weighted-average common shares and share

   equivalents outstanding

 

 

31,320,427

 

 

 

30,824,078

 

 

 

31,289,359

 

 

 

30,862,088

 

 

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, 2020

 

 

30,265,997

 

 

$

156,503

 

 

$

(36,163

)

 

$

(89,305

)

 

$

31,035

 

Exercise of stock options for cash

 

 

20,000

 

 

 

41

 

 

 

 

 

 

 

 

 

41

 

Shares issued under Employee Stock Purchase

   Plan

 

 

458

 

 

 

 

 

 

2

 

 

 

 

 

 

2

 

Stock-based compensation

 

 

342,780

 

 

 

208

 

 

 

 

 

 

 

 

 

208

 

Employee tax withholdings on stock-based

   compensation

 

 

(4,346

)

 

 

 

 

 

(18

)

 

 

 

 

 

(18

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(2,219

)

 

 

(2,219

)

Balance, June 30, 2020

 

 

30,624,889

 

 

$

156,752

 

 

$

(36,179

)

 

$

(91,524

)

 

$

29,049

 

Exercise of stock options for cash

 

 

9,000

 

 

 

28

 

 

 

 

 

 

 

 

 

28

 

Shares issued under Employee Stock Purchase

   Plan

 

 

151

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Stock-based compensation

 

 

76,351

 

 

 

251

 

 

 

 

 

 

 

 

 

251

 

Employee tax withholdings on stock-based

   compensation

 

 

(581

)

 

 

 

 

 

(3

)

 

 

 

 

 

(3

)

Net income

 

 

 

 

 

 

 

 

 

 

 

1,914

 

 

 

1,914

 

Balance, September 30, 2020

 

 

30,709,810

 

 

$

157,031

 

 

$

(36,181

)

 

$

(89,610

)

 

$

31,240

 

Exercise of stock options for cash

 

 

38,000

 

 

 

79

 

 

 

 

 

 

 

 

 

79

 

Shares issued under Employee Stock Purchase

   Plan

 

 

178

 

 

 

 

 

 

2

 

 

 

 

 

 

2

 

Stock-based compensation

 

 

12,200

 

 

 

152

 

 

 

 

 

 

 

 

 

152

 

Employee tax withholdings on stock-based

   compensation

 

 

(235

)

 

 

 

 

 

(2

)

 

 

 

 

 

(2

)

Net income

 

 

 

 

 

 

 

 

 

 

 

4,315

 

 

 

4,315

 

Balance, December 31, 2020

 

 

30,759,953

 

 

$

157,262

 

 

$

(36,181

)

 

$

(85,295

)

 

$

35,786

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2019

 

 

29,600,158

 

 

$

155,828

 

 

$

(36,091

)

 

$

(101,767

)

 

$

17,970

 

Exercise of stock options for cash

 

 

10,000

 

 

 

16

 

 

 

 

 

 

 

 

 

16

 

Shares issued under Employee Stock Purchase

   Plan

 

 

613

 

 

 

 

 

 

2

 

 

 

 

 

 

2

 

Stock-based compensation

 

 

535,344

 

 

 

171

 

 

 

 

 

 

 

 

 

171

 

Employee tax withholdings on stock-based

   compensation

 

 

(24,628

)

 

 

 

 

 

(64

)

 

 

 

 

 

(64

)

Net income

 

 

 

 

 

 

 

 

 

 

 

3,968

 

 

 

3,968

 

Balance, June 30, 2019

 

 

30,121,487

 

 

$

156,015

 

 

$

(36,153

)

 

$

(97,799

)

 

$

22,063

 

Shares issued under Employee Stock Purchase

   Plan

 

 

570

 

 

 

 

 

 

2

 

 

 

 

 

 

2

 

Stock-based compensation

 

 

111,848

 

 

 

159

 

 

 

 

 

 

 

 

 

159

 

Employee tax withholdings on stock-based

   compensation

 

 

(2,828

)

 

 

 

 

 

(13

)

 

 

 

 

 

(13

)

Net income

 

 

 

 

 

 

 

 

 

 

 

6,721

 

 

 

6,721

 

Balance, September 30, 2019

 

 

30,231,077

 

 

$

156,174

 

 

$

(36,164

)

 

$

(91,078

)

 

$

28,932

 

Shares issued under Employee Stock Purchase

   Plan

 

 

605

 

 

 

 

 

 

2

 

 

 

 

 

 

2

 

Stock-based compensation

 

 

22,046

 

 

 

185

 

 

 

 

 

 

 

 

 

185

 

Employee tax withholdings on stock-based

   compensation

 

 

(666

)

 

 

 

 

 

(2

)

 

 

 

 

 

(2

)

Net income

 

 

 

 

 

 

 

 

 

 

 

2,304

 

 

 

2,304

 

Balance, December 31, 2019

 

 

30,253,062

 

 

$

156,359

 

 

$

(36,164

)

 

$

(88,774

)

 

$

31,421

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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,

 

 

 

2020

 

 

2019

 

Operating activities

 

 

 

 

 

 

 

 

Net income

 

$

4,010

 

 

$

12,993

 

Adjustments to reconcile net income to net cash (used in) provided by

operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

889

 

 

 

910

 

Amortization of intangible assets

 

 

225

 

 

 

282

 

Stock-based compensation

 

 

611

 

 

 

515

 

Amortization of debt issue costs

 

 

142

 

 

 

182

 

Loss on debt extinguishment

 

 

90

 

 

 

 

Impairment of intangible assets

 

 

 

 

 

3

 

Loss on sale of property and equipment

 

 

6

 

 

 

 

Provision for inventory reserves

 

 

185

 

 

 

192

 

Other

 

 

9

 

 

 

28

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, current and long-term

 

 

(13,208

)

 

 

(420

)

Revenue earned but not billed

 

 

(959

)

 

 

2,957

 

Inventories

 

 

(4,196

)

 

 

970

 

Prepaid expenses and other assets

 

 

339

 

 

 

44

 

Accounts payable

 

 

(304

)

 

 

(2,990

)

Accrued expenses and other

 

 

6,555

 

 

 

(1,296

)

Deferred revenue, current and long-term

 

 

(38

)

 

 

(95

)

Net cash (used in) provided by operating activities

 

 

(5,644

)

 

 

14,275

 

Investing activities

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(658

)

 

 

(582

)

Additions to patents and licenses

 

 

(43

)

 

 

(73

)

Net cash used in investing activities

 

 

(701

)

 

 

(655

)

Financing activities

 

 

 

 

 

 

 

 

Payment of long-term debt

 

 

(32

)

 

 

(68

)

Proceeds from revolving credit facility

 

 

8,000

 

 

 

63,200

 

Payments of revolving credit facility

 

 

(18,013

)

 

 

(71,572

)

Payments to settle employee tax withholdings on stock-based compensation

 

 

(22

)

 

 

(76

)

Deferred financing costs

 

 

(212

)

 

 

(91

)

Net proceeds from employee equity exercises

 

 

152

 

 

 

20

 

Net cash used in financing activities

 

 

(10,127

)

 

 

(8,587

)

Net (decrease) increase in cash and cash equivalents

 

 

(16,472

)

 

 

5,033

 

Cash and cash equivalents at beginning of period

 

 

28,751

 

 

 

8,729

 

Cash and cash equivalents at end of period

 

$

12,279

 

 

$

13,762

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Operating lease assets obtained in exchange for new operating lease liabilities

 

$

355

 

 

$

 

 

The accompanying notes are an integral part of these Condensed Consolidated Statements.

 

7


 

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — DESCRIPTION OF BUSINESS

Organization

Orion includes Orion Energy Systems, Inc., a Wisconsin corporation, and all consolidated subsidiaries. Orion provides innovative light emitting diode ("LED") lighting systems and turnkey project implementation including installation and commissioning of fixtures, controls and Internet of Things (“IoT”) systems, as well as ongoing system maintenance and program management. Orion’s products enable customers to reduce their carbon footprint and digitize their business.

Orion’s corporate offices and leased primary manufacturing operations are located in Manitowoc, Wisconsin. Orion also leases office space in Jacksonville, Florida.

 

NOTE 2 — IMPACT OF COVID-19

The COVID-19 pandemic has disrupted business, trade, commerce, and financial and credit markets in the U.S. and globally. Orion’s business has been adversely impacted by measures taken by government entities and others to control the spread of the virus beginning in March 2020, the last month of its fiscal 2020 year, and continuing most significantly into the second quarter of fiscal 2021. During the third quarter of fiscal 2021, Orion experienced a rebound in business, with a full quarter of project installations for its largest customer, as well installations for a new large specialty retail customer, and no significant COVID-19 impacts. However, some customers continue to refrain from awarding new projects and potential future risks remain due to the COVID-19 pandemic.

As a deemed essential business, Orion provides products and services to ensure energy and lighting infrastructure and Orion therefore continues to operate throughout the pandemic. Orion has implemented a number of safety protocols, including limiting travel, restricting access to our facilities along with monitoring processes, physical distancing, physical barriers, enhanced cleaning procedures, and requiring face coverings.

As part of Orion’s response to the impacts of the COVID-19 pandemic, during the fourth quarter of fiscal 2020, Orion implemented a number of cost reduction and cash conservation measures, including reducing headcount. Orion recognized $0.4 million in restructuring expense during the fourth quarter of fiscal 2020. As of December 31, 2020, all of the restructuring costs had been paid.

While certain restrictions have begun to initially lessen in certain jurisdictions during fiscal 2021, stay-at-home, face mask or lockdown orders remain in effect in others, with employees asked to work remotely if possible. Certain areas of the country have seen spikes of COVID-19 cases (including in Manitowoc, Wisconsin and Jacksonville, Florida), which could result in renewed restrictions and lockdown orders. Some customers and projects are in areas where travel restrictions have been imposed, certain customers have either closed or reduced on-site activities, and timelines for the completion of multiple projects have been extended. At this time, it is not possible to predict the overall impact the COVID-19 pandemic will have on Orion’s business, liquidity, capital resources or financial results. However, the economic and regulatory impacts of COVID-19 will materially and adversely impact revenue and profitability in fiscal 2021. If there is prolonged adverse impact, Orion’s business, liquidity, capital resources, financial results, and the carrying values of Orion’s property, plant and equipment and intangible assets may be impacted negatively. Orion will continue to actively monitor the situation and may take further actions that alter business operations.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law and includes certain income tax provisions relevant to businesses. Orion is required to recognize the effect on the consolidated financial statements in the period the law was enacted, which was the period ended March 31, 2020. For the fiscal year ended March 31, 2020, and three and nine months ended December 31, 2020, the CARES Act did not have a material impact on Orion’s consolidated financial statements. See Note 14 – Income Taxes.

8


 

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The Condensed Consolidated Financial Statements include the accounts of Orion Energy Systems, Inc. and its wholly owned subsidiaries.

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 presentation have been included. Interim results are not necessarily indicative of results that may be expected for the fiscal year ending March 31, 2021 or other interim periods.

The Condensed Consolidated Balance Sheet at March 31, 2020 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, 2020 filed with the SEC on June 5, 2020.

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 and allowance for doubtful accounts, accruals for warranty and loss contingencies, income taxes, impairment analyses, and certain equity transactions. Accordingly, actual results could differ from those estimates.

Concentration of Credit Risk and Other Risks and Uncertainties

Orion's cash is deposited with two financial institutions. At times, deposits in these institutions exceed the amount of insurance provided on such deposits. Orion has not experienced any losses in such accounts and believes that it is not exposed to any significant financial institution viability risk on these balances.

Orion purchases components necessary for its lighting products, including power supplies, lamps and LED components, from numerous suppliers. For the three and nine months ended December 31, 2020, no suppliers accounted for more than 10% of total cost of revenue. For the three and nine months ended December 31, 2019, one supplier accounted for 24.0% and 12.5%, respectively, of total cost of revenue.

For the three months ended December 31, 2020, two customers accounted for 65.1% and 11.1% of total revenue, respectively. For the nine months ended December 31, 2020, one customer accounted for 55.7% of total revenue. For the three and nine months ended December 31, 2019, one customer accounted for 72.3 % and 77.3%, respectively, of total revenue.

As of December 31, 2020, two customers accounted for 59.3% and 18.0% of accounts receivable, respectively. As of March 31, 2020, two customers accounted for 37.3% and 13.0% of accounts receivable, respectively.

9


 

Recent Accounting Pronouncements

 

Issued: Not Yet Adopted

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 is currently evaluating the impact of adoption of this standard on its consolidated statements of operations, cash flows, and the related footnote disclosures.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general rules of Topic 740. The provisions of ASU 2019-12 are effective for Orion for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Orion is currently evaluating the impact of adoption on this standard on its consolidated statements of operations, cash flows, and the related footnote disclosures.

NOTE 4 — REVENUE

General Information

Orion generates revenues primarily by selling commercial LED lighting fixtures and components, including controls and integrated IoT capabilities, and by installing these fixtures in its customer’s facilities on a turnkey basis via a dedicated installation and support team. Orion recognizes revenue in accordance with the guidance in ASC 606 when control of the goods or services being provided (which Orion refers to as a performance obligation) is transferred to a customer at an amount that reflects the consideration that management expects to receive in exchange for those goods or services. If there are multiple performance obligations in a contract, the contract’s total sales price is allocated to each individual performance obligation based on their relative standalone selling price.

Revenue derived from customer contracts which include only performance obligation(s) for the sale of lighting fixtures and components is classified as Product revenue in the Condensed Consolidated Statements of Operations.

Revenue from a customer contract which includes both the sale of fixtures and the installation of such fixtures (which Orion refers to as a turnkey project) is allocated between each lighting fixture and the installation performance obligation based on relative standalone selling prices. Revenue from turnkey projects that is allocated to the single installation performance obligation is reflected in Service revenue.

Orion also records revenue in conjunction with several limited power purchase agreements (“PPAs”) still outstanding. These PPAs are supply-side agreements for the generation of electricity. Orion’s last PPA expires in 2031. Revenue associated with the sale of energy generated by the solar facilities under these PPAs is within the scope of ASC 606. Orion also recognizes revenue upon the sale to third parties of tax credits received from operating the solar facilities and from amortizing a grant received from the federal government during the period starting when the power generating facilities were constructed until the expiration of the PPAs; these revenues are not derived from contracts with customers and therefore not under the scope of ASC 606.

When shipping and handling activities are performed after a customer obtains control of the product, Orion has elected to treat shipping and handling costs as an activity necessary to fulfill the performance obligation to transfer product to the customer and not as a separate performance obligation. Any shipping and handling costs charged to customers are recorded in Product revenue. Shipping and handling costs are accrued and included in Cost of product revenue.

See Note 11 – Accrued Expenses and Other for a discussion of Orion’s accounting for the warranty it provides to customers for its products and services.

10


 

Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net (excluded from revenues) basis.

 

Contract Fulfillment Costs

Costs associated with product sales are accumulated in inventory as the fixtures are manufactured and are transferred to Cost of product revenue at the time revenue is recorded. See Note 6 – Inventories, Net. Costs associated with installation sales are expensed as incurred.

 

Disaggregation of Revenue

Orion’s Product revenue includes revenue from contracts with customers accounted for under the scope of ASC 606 and revenue which is accounted for under other guidance. For the three and nine months ended December 31, 2020, Product revenue included $0.7 million and $2.1 million, respectively, derived from sales-type leases for light fixtures, no revenue and $0.1 million, respectively, derived from the sale of tax credits generated from Orion’s legacy operation for distributing solar energy, and $19 thousand and $0.1 million, respectively, derived from the amortization of federal grants received in 2010 and 2011 as reimbursement for a portion of the costs to construct the legacy solar facilities which are not under the scope of ASC 606.

For the three and nine months ended December 31, 2019, Product revenue included $0.2 million and $1.2 million, respectively, derived from sales-type leases for light fixtures, $0.1 million and $0.2 million, respectively, derived from the sale of tax credits generated from Orion’s legacy operation for distributing solar energy, and $19 thousand and $0.1 million, respectively, derived from the amortization of federal grants received in 2010 and 2011 as reimbursement for a portion of the costs to construct the legacy solar facilities which are not under the scope of ASC 606. All remaining Product revenue, and all Service revenue, are derived from contracts with customers as defined in ASC 606.

The primary end-users of Orion’s lighting products and services are (a) commercial or industrial companies and (b) the federal government.

Commercial or industrial end-users obtain Orion products and services through turnkey project sales or by purchasing products either direct from Orion or through distributors or energy service companies ("ESCOs"). Revenues associated with commercial and industrial end-users are included within each of Orion’s segments, dependent on the sales channel.

The federal government obtains Orion products and services primarily through turnkey project sales that Orion makes to a select group of contractors who focus on the federal government. Revenues associated with government end-users are primarily included in the Orion Engineered Systems Division segment.

11


 

See Note 18 – Segments, for additional discussion concerning Orion’s reportable segments.

The following tables provide detail of Orion’s total revenues for the three and nine months ended December 31, 2020 and December 31, 2019 (dollars in thousands):

 

 

 

Three Months Ended December 31, 2020

 

 

Nine Months Ended December 31, 2020

 

 

 

Product