Price | 2.81 | EPS | 0 | |
Shares | 31 | P/E | 9 | |
MCap | 87 | P/FCF | 17 | |
Net Debt | -7 | EBIT | 10 | |
TEV | 79 | TEV/EBIT | 8 | 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 |
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 |
Balance Sheet | Income Statement | Cash Flow |
---|---|---|
Assets, Equity
|
Rev, G Profit, Net Income
|
Ops, Inv, Fin
|
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.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED DECEMBER 31, 2020
TABLE OF CONTENTS
|
| Page(s) |
3 | ||
ITEM 1. | 3 | |
| Condensed Consolidated Balance Sheets as of December 31, 2020 and March 31, 2020 | 3 |
| 4 | |
| 5 | |
| 7 | |
| 8 | |
ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24 |
ITEM 3. | 35 | |
ITEM 4. | 35 | |
36 | ||
ITEM 1. | 36 | |
ITEM 1A. | 36 | |
ITEM 2. | 36 | |
ITEM 5. | 36 | |
ITEM 6. | 37 | |
38 |
PART I – FINANCIAL INFORMATION
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.
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 |