Orion Energy Systems: Q3 Results of Fiscal 2017
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MANITOWOC, Wisconsin - Orion Energy Systems, Inc. (NASDAQ: OESX), a leading designer and manufacturer of high-performance, energy-efficient LED and other lighting platforms, announced improved financial results for its fiscal 2017 third quarter ended December 31, 2016 (Q3’17).
Q3 ‘17 Highlights:
Revenue rose 23% to $20.6M versus $16.8M in Q3’16;
Gross margin rose 180 bps to 30% versus 28% in Q3’16;
Net Loss improved to $1.1M versus $2.0M in Q3’16;
Cash and cash equivalents were $19.1M at the end of Q3’17 versus $17.5M at the end of Q3’16;
Backlog rose 28% to $9.6 million from $7.5 million in Q3‘16;
John Scribante, CEO, commented, “Driven principally by the growing sales of our energy-saving LED lighting systems, the success of our new agent sales strategy and our focus on operating efficiency, we executed well on our top and bottom line in the third quarter versus the prior year third quarter. Importantly, the third quarter represented the 8th consecutive quarter of quarterly year-over-year margin expansion under our new leadership and strategy.”
“Orion remains focused on four key elements for success: 1) ensuring a superior customer experience; 2) providing the highest quality and best-performing products in the retrofit lighting market; 3) migrating our sales focus to an agent strategy that expands our reach and service capabilities; and 4) our “Build/Buy/Partner” strategy that leverages the skills, strengths, capital and cost advantages of leading component providers. Additionally, we continue to build and execute on our internal and external capabilities to deliver even greater value-add to our customers.”
Third Quarter Review
Revenue: Q3’17 revenue grew 23% to $20.6 million vs. $16.8 million in Q3’16, driven principally by increasing sales of LED fixtures and the growing benefits from the Company’s shift to an agent sales model. LED fixture sales rose 29% to $15.5 million in Q3’17 versus $12.0 million in Q3’16 as Orion generated growing demand for the performance and energy efficiency of its high bay lighting products. Orion restructured its sales strategy in Q2’16, moving from a direct sales focus to an agent sales model that provides Orion with a broader reach into major national accounts. LED fixtures rose to 82% of total lighting product sales in Q3’17, a new record for Orion.
Gross Margin: A more favorable product mix and ongoing manufacturing efficiencies contributed to the expansion of Orion’s gross margin to 30% in Q3’17 versus 28% in Q3’16.
Net Loss: Orion’s Q3’17 net loss narrowed to $1.1 million, or $0.04 per diluted share, compared to a net loss of $2.0 million, or $0.07 per diluted share, in Q3’16, reflecting revenue and gross margin improvements offset by increasing investments in sales, marketing and R&D expense.
Operating Cash Flow: Orion used $0.4 million in cash from operating activities in Q3’17.
Balance Sheet: Orion had $19.1 million in cash and cash equivalents and $6.3 million in short-term and long-term borrowings at the close of Q3’17. Net working capital was $31.3 million as of December 31, 2016, and shareholder equity was $42.4 million.
Fiscal 2017 Financial Guidance
Management expects total revenue to grow by 10-15% in fiscal 2017 versus the prior fiscal year with gross margin expected to remain at or near 30% for the balance of fiscal 2017. Management will provide its initial guidance for fiscal 2018 when Orion reports its fiscal 2017 results in May.
About Orion Energy Systems
Orion is a leading designer and producer of energy efficient lighting and retrofit lighting solutions for commercial and industrial buildings. Orion manufactures and markets connected lighting systems encompassing LED solid-state lighting and intelligent controls. Orion systems incorporate patented design elements that deliver significant energy, efficiency, optical and thermal performance that drive financial, environmental, and work-space benefits for a wide variety of customers, including nearly 40% of the Fortune 500.
Orion Energy Systems, Inc.
Bill Hull, (312) 660-3575
Chief Financial Officer