MANITOWOC, Wis., Aug. 07, 2018 (GLOBE NEWSWIRE) — Orion Energy Systems, Inc. (NASDAQ: OESX) (Orion Lighting), a provider of enterprise-grade LED lighting and energy project solutions, today reported results for its fiscal 2019 first quarter (Q1’19).
Highlights:
- Q1’19 revenue improved 10.1% to $13.8M versus Q1’18, principally reflecting stronger than anticipated performance from Orion’s agent driven distribution channel.
- Gross margin improved 340 basis points to 25.0% in Q1’19 versus 21.6% in Q1’18.
- EBITDA loss improved by $3.9M to ($2.1M) in Q1’19 from ($6.0M) in Q1’18.
- Positive cash flow from operating activities of $0.1M in Q1’19 versus ($5.8M) in Q1’18 and cash at the end of Q1’19 was $7.8M.
- Total operating expenses declined to $6.1M in Q1’19 versus $9.2M in Q1’18, reflecting the benefit of cost cutting in FY 2018 as well as $1.9M in non-recurring restructuring costs in Q1’18.
- Orion continues to see strong demand for the industry-leading 214 lumens per watt energy efficiency of its ISON LED high bay lighting systems, which provide substantial long-term energy savings.
CEO Commentary
Mike Altschaefl, Orion’s CEO and Board Chair, commented, “Fiscal 2019 is off to a solid start, and we continue to believe this year will represent an inflection point for Orion’s growth and profitability. We achieved sales growth in line with our full year growth rate goal of 10%, while benefitting from the $6M in annualized cost reductions we implemented last year.
“Our agent driven distribution strategy delivered a very strong performance in Q1’19 and helped to offset some delays in national account projects, which we anticipate strengthening in the upcoming quarters.
“We believe the improved performance of our agents reflects both the benefits of our ongoing collaboration in support of each agent’s success, as well as our efforts to fine tune our agent base to ensure that each partner is focused on our solutions and echoes our service and quality commitments.
“We entered fiscal 2019 with some significant national account opportunities and have so far been successful in advancing these opportunities through initial pilots and planning for broader scale deployments. We are currently focused on developing opportunities with major automotive, retail, healthcare and public sector customers. As previously noted, most large customer engagements are broken into a series of smaller projects/purchase orders rather than through one major contract. While we are optimistic about the potential business from these customers, this dynamic makes it difficult for us to predict the timing and ultimate size of each engagement.
“Finally, in order to meet the current and future needs of our customers, we have invested resources in building our base of lighting control options and working to integrate our LED lighting system with a growing base of leading control solutions. Roughly five percent of our lighting system sales in the past 12 months included some form of integrated control functionality. While control systems are still in the early stages of utilization, based on the improved functionality and energy efficiency that they offer and the ability to leverage our digital ceiling network to support other Internet of Things solutions, we expect this opportunity to grow significantly over the coming years.”
Outlook and Goals
Based on progress to date in fiscal 2019 and the outlook for the balance of the year, Orion is reiterating its goal of achieving revenue growth of 10% in fiscal 2019.
Due to the variability in size and timing of contracts, along with inherent economic, global trade and industry challenges, Orion does not provide quarterly or full year guidance. However, management will continue to evaluate the performance of the business and its outlook and update investors each quarter on its goals for the full fiscal year.
Q1’19 Results
Orion’s Q1’19 revenue improved 10.1% to $13.8M compared to $12.6M in Q1’18, principally reflecting sales growth in its agent driven distribution channel.
Gross margin improved 340 basis points to 25% in Q1’19 compared to 21.6% in Q1’18. The improvement reflects both ongoing efforts to enhance manufacturing efficiency, as well as the margin benefit of greater fixed cost absorption in Q1’19 due to its higher revenue level than in Q1’18.
Total operating expenses decreased to $6.1M in Q1’19 compared to $9.2M in Q1’18, reflecting the full benefit of Orion’s cost reduction initiatives implemented in fiscal 2018 as well as $1.9M in severance and other one-time costs incurred in Q1’18.
Orion’s Q1’19 net loss improved to ($2.7M), or ($0.09) per basic share, versus a net loss of ($6.6M), or ($0.23) per basic share, in Q1’18.
Orion’s Q1’19 EBITDA loss improved to ($2.1M) compared to a loss of ($6.0M) in Q1’18, a year-over-year improvement of $3.9M.
Balance Sheet & Cash Flow
Orion achieved $0.1M in cash from operating activities in Q1’19, as its net loss was more than offset by active working capital management in the period. At the close of Q1’19, Orion had $7.8M in cash and cash equivalents and $2.5M of debt, consisting primarily of borrowings under its revolving credit facility. The company reduced outstanding debt by $1.6M from fiscal year end March 31, 2018. Net working capital was $9.8M and shareholder’s equity totaled $21.3 million at quarter end.