By a News Reporter-Staff News Editor at Energy Weekly News -- Orion Energy Systems, Inc. (NYSE MKT: OESX) ("Orion" or the "Company"), a leading designer and manufacturer of energy management systems consisting primarily of high-performance, energy-efficient lighting platforms, announced financial results for its fiscal 2014 fourth quarter and year ended March 31, 2014. Operating Highlights Total revenue for fiscal 2014 was $88.6 million, compared to $86.1 million in fiscal 2013.
Total revenue for the fiscal 2014 fourth quarter declined to $12.6 million, from $22.3 million in the prior-year period, largely as a result of delayed lighting sales coupled with a decline in the number of solar projects under construction as Orion deemphasizes its non-core solar business.
The Company continued to expand its penetration into the LED market, as product revenue from LED lighting systems increased 156.9% year over year to $4.8 million in fiscal 2014 and 117.6% year over year to $1.3 million in the fiscal 2014 fourth quarter. The Company believes that its LED lighting systems will be a primary driver of its sales during fiscal 2015.
The Company continued to implement a number of cost-cutting initiatives throughout the year to increase efficiency and streamline costs, including consolidating all operations into its headquarters in Manitowoc. In the fourth quarter of fiscal 2014, the Company sold its leased corporate jet, resulting in expected savings of $1.0 million per year.
Orion generated $9.9 million in net cash from operations during fiscal 2014 compared to $2.3 million during fiscal 2013. The Company's working capital at March 31, 2014, was $33.1 million compared to $34.8 million at March 31, 2013. Management Comments John Scribante, Chief Executive Officer of Orion, stated, "We continued to make progress during fiscal 2014 through improved operating efficiencies and better positioning our Company to take advantage of a lighting retrofit marketplace with ample opportunity for growth. We have successfully undergone a transformation of Orion's operations with the implementation of LEAN manufacturing processes, reorganization of the Company's salesforce while increasing the number of salespeople to better serve Orion's customers, and completion of the acquisition and integration of Harris Manufacturing and Harris LED to expand our product offering of LED and expand our customer base, all while generating $9.9 million in cash from operations during fiscal 2014. In the fourth quarter, we experienced a slower-than-expected adoption by potential customers of our newer LED product offerings and retrofit solutions that affected our sales in the short term. We believe this is due to larger national companies delaying the decision to integrate newer technologies as the LED advantages start to overtake existing infrastructure. Our pipeline of opportunities has been growing at unprecedented levels. We remain focused on expanding the value proposition of our core lighting solutions and are not dissuaded from our long-term objectives, nor do we feel that a longer timeline diminishes the progress our team has made since my appointment 18 months ago."
Mr. Scribante continued, "We successfully integrated Harris into our operations and in January 2014 launched the industry's first complete suite of LED Troffer Door Retrofit (LDR) products that are completely assembled within the door frame for ease of installation. Our LDR product provides potential customers in office, retail and industrial markets with quality lighting, immediate reduction of energy costs and non-invasive quick installation. We are beginning to gain traction as our team introduces these new LED solutions to the market and are singularly focused on driving sales." Financial Review Fiscal 2014 Fourth Quarter Total revenue was $12.6 million for the fiscal 2014 fourth quarter, compared to $22.3 million in the prior-year quarter. The decrease in revenue was a result of delayed customer purchase decisions and lower revenues from the Company's non-core solar operations. Product revenue from Orion's LED products increased to $1.3 million, or 12.4% of total lighting product revenues, during fiscal 2014 fourth quarter, compared to $0.6 million, or 3.4% of total lighting product revenues, in the prior-year period.
Total gross margin was 10.2% for the fiscal 2014 fourth quarter, compared to 35.8% for the prior-year period, largely as a result of reduced sales volumes of manufactured lighting products and the related impact of fixed expenses within its manufacturing facility and $1.4 million of increased inventory reserves being recorded due to lower fluorescent product sales. In addition, the Company reported lower margins on its non-core solar projects, which compared to an unusually high-margin solar project in the fourth quarter of the prior year.
The Company reported a number of non-recurring expenses during its fiscal 2014 fourth quarter that partially contributed to a net loss for the period of $(8.8) million, or $(0.41) per diluted share, compared to net income of $0.5 million, or $0.03 per diluted share, in the prior-year period. These expenses included the previously noted $1.4 million in inventory reserves, a loss of $1.5 million from the sale of a leased corporate jet, and $0.3 million in acquisition-related expenses. Fiscal 2014 Year-end Financial Highlights Total revenue for the fiscal 2014 year was $88.6 million, compared to $86.1 million in fiscal 2013. For fiscal 2014, Orion's gross margin declined due to reduced sales volumes of manufactured lighting products and the related impact of fixed manufacturing facility expenses, as well as the increased relative impact in total gross margin of its low-margin solar projects. The Company's gross margin from its integrated lighting systems revenue for fiscal 2013 was 31.2% compared to 26.0% during fiscal 2014. For fiscal 2014, the Company reported a net loss of $(6.2) million, or $(0.30) per diluted share, compared to a net loss of $(10.4) million, or $(0.50) per diluted share, in the prior year. Balance Sheet Review Orion had approximately $17.6 million in cash and cash equivalents and $0.5 million in short-term investments as of March 31, 2014, compared to $14.4 million and $1.0 million, respectively, at March 31, 2013.
The Company's working capital as of March 31, 2014, was $33.1 million, consisting of $50.3 million in current assets and $17.2 million in current liabilities, compared to $34.8 million, consisting of $53.6 million in current assets and $18.8 million in current liabilities, at March 31, 2013.
The Company generated $9.9 million of net cash from operations during fiscal 2014, compared to $2.3 million in fiscal 2013.
On July 1, 2013, the Company completed its acquisition of Harris Manufacturing, Inc. and Harris LED, LLC. The purchase price was paid through a combination of $5.0 million in cash, $3.1 million of a seller-financed three-year unsecured subordinated note and 856,997 shares of unregistered Orion common stock, representing a fair value on the date of issuance of $2.1 million. In October 2013, the Company completed an amendment to modify the Harris purchase agreement to fix the value of future earn-out consideration at $1.4 million. Pursuant to the amendment, the Company issued an aggregate of 83,943 unregistered shares of its common stock on January 1, 2014, and will pay $0.8 million in cash on January 1, 2015.
Keywords for this news article include: Energy Companies, Orion Energy Systems Inc.
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