Orion Energy Systems Reports Soaring LED Lighting Revenue for Fiscal 2Q17 Report

Orion Energy Systems, a leading designer and manufacturer of high-performance, energy-efficient lighting platforms, announced financial results for its fiscal 2017 second quarter ended Sept. 30, 2016.

Operating and Financial Highlights

  • Fiscal second quarter 2017 revenue was US $18.7 million and grew by 19% over the prior year’s quarter;
  • LED fixtures reached 81% of lighting product revenue in the second quarter for the first time in the Company’s history;
  • Gross margins expanded to 33% in the second quarter, exceeding management’s 30% end-of-year target;
  • Net loss narrowed to $1.0 million in the second quarter of fiscal 2017 versus $3.6 million in the second quarter of fiscal 2016;
  • Orion provided $2.9 million in cash from operating activities in the second quarter of fiscal 2017;
  • Orion finished the second quarter of fiscal 2017 with $18.7 million in cash and cash equivalents;
  • Orion ended the second quarter of fiscal 2017 with $14.6 million in backlog;
  • Orion shipped over 2,200 customer orders in the second quarter of fiscal 2017, including 30 orders over $100,000.

John Scribante, Chief Executive Officer, commented that “Orion’s second quarter results began to show the benefits of the prior two years of management’s efforts to improve products, margins, and channels. We have developed the best retrofit LED lighting product lines in the market. Our high-end LED fixtures recently set a new industry record at 214 lumens per watt and our market-leading position is helping us deliver stronger financial performance as customers can clearly see the value proposition of our lighting solutions. This, in turn, is leading to higher gross margins and is making it easier for Orion to recruit and develop partners in our expanding agency channel. ”

Financial Results Review

The Second Quarter of Fiscal 2017

Revenue: Orion reported revenue of $18.7 million in the second quarter of fiscal 2017. Second quarter revenue grew by 19% over the comparable year-ago period. Product revenue represented 95% of total second quarter revenue and grew by 18% versus second quarter of fiscal 2016.

LED Lighting Revenue: Sales of LED fixtures were $14.0 million in the second quarter of fiscal 2017. This represented 33% growth from the comparable year-ago quarter. Orion continued to see strength in its high bay lighting products, while its new agency channel began to gain traction. Both of these factors were key contributors to the strong LED fixture sales. Furthermore, LED fixtures represented 81% of total lighting product sales in the second quarter of fiscal 2017, a new record for Orion.

Gross Margin: Orion’s gross margin reached 33% in the second quarter of fiscal 2017. This compares favorably with the 19% gross margin recorded in the second quarter of fiscal 2016. A favorable product mix toward higher margin products and ongoing manufacturing efficiencies were important contributors to the expansion of the Company’s gross margin.

Net Loss: Orion’s net loss decreased significantly in the second quarter of fiscal 2017 versus the comparable year-ago period. The net loss narrowed from $3.6 million to $1.0 million when comparing the second quarter of fiscal 2016 to the second quarter of fiscal 2017.

Balance Sheet: Orion finished the second quarter of fiscal 2017 with $18.7 million in cash and cash equivalents and $5.3 million in short-term and long-term borrowings. Orion’s net working capital was $30.6 million as of September 30, 2016, and its net book value was $43.1 million, or $1.53 per outstanding share (calculated by dividing shareholder’s equity by the weighted-average common shares outstanding at the end of the quarter).

Cash Flow: The Company provided $2.9 million in cash from operating activities in the second quarter of fiscal 2017. Effective management of working capital was the primary driver of the strong cash from operating activities in the second quarter.

Management Outlook for the Remainder of Fiscal Year 2017

The Company is maintaining its expectations for growth in fiscal 2017. Management expects total revenue to grow by 10-20 percent in fiscal 2017 versus the prior fiscal year and gross margin to remain at or near 30% for the balance of fiscal 2017.

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