Orion Energy Systems Inc. (OESX, Financial) filed Quarterly Report for the period ended 2009-09-30.
ORION ENERGY SYSTEMS, INC. is a leading power technology enterprise that designs, manufactures and implements energy management systems, consisting primarily of high-performance, energy efficient lighting systems, controls and related services, for commercial and industrial customers without compromising their quantity or quality of light. Orion Energy Systems Inc. has a market cap of $86.6 million; its shares were traded at around $3.99 with and P/S ratio of 1.2.
Bookings. We define bookings as the total contractual value of all firm purchase orders received for our products and services and the gross revenue stream for all OVPP contracts upon the execution of the contract. For the three months ended September 30, 2008 and 2009, our bookings were $20.2 million and $20.3 million, which for the September 30, 2009 quarter included $2.4 million of future gross revenue streams associated with OVPP contracts. For the six months ended September 30, 2008 and 2009, our bookings were $33.6 million and $35.8 million, which for the September 30, 2009 first half included $4.7 million of future gross revenue streams associated with OVPP contracts.
We recognize compensation expense for the fair value of our stock option awards granted over their related vesting period. We recognized $0.7 million in the first six months of fiscal 2010 and $1.6 million of stock-based compensation expense in fiscal 2009. As a result of prior option grants, we expect to recognize an additional $4.6 million of stock-based compensation over a weighted average period of approximately seven years, including $0.7 million in the last six months of fiscal 2010. These charges have been, and will continue to be, allocated to cost of product revenue, general and administrative expenses, sales and marketing expenses and research and development expenses based on the departments in which the personnel receiving such awards have primary responsibility. A substantial majority of these charges have been, and likely will continue to be, allocated to general and administrative expenses and sales and marketing expenses.
Income Taxes. As of September 30, 2009, we had net operating loss carryforwards of approximately $9.2 million for federal tax purposes and $6.8 million for state tax purposes. Included in these loss carryforwards were $5.3 million for federal and $3.8 million for state tax purposes of compensation expenses that were associated with the exercise of nonqualified stock options. The benefit from our net operating losses created from these compensation expenses has not yet been recognized in our financial statements and will be accounted for in our shareholders equity as a credit to additional paid-in capital as the deduction reduces our income taxes payable. We also had federal and state credit carryforwards that each total approximately $0.5 million as of March 31, 2009. We believe it is more likely than not that we will realize the benefits of most of these assets and have recorded for an allowance of $45,000 due to our state apportioned income and the potential expiration of the state tax credits due to the carryforwards period. These federal and state net operating losses and credit carryforwards are available, subject to the discussion in the following paragraph, to offset future taxable income and, if not utilized, will begin to expire in varying amounts between 2020 and 2029.
Cost of Revenue and Gross Margin. Our cost of product revenue decreased from $11.5 million for the fiscal 2009 second quarter to $9.2 million for the fiscal 2010 second quarter, a decrease of $2.3 million, or 20%. Our cost of product revenue decreased from $20.1 million for the fiscal 2009 first half to $17.1 million for the fiscal 2010 first half, a decrease of $3.0 million, or 15%. Our cost of service revenues decreased from $1.0 million for the fiscal 2009 second quarter to $0.6 million for the fiscal 2010 second quarter, a decrease of $0.4 million, or 40%. Total gross margin decreased from 33.8% for the fiscal 2009 second quarter to 32.6% for the fiscal 2010 second quarter and decreased from 33.1% for the fiscal 2009 first half to 30.3% for the fiscal 2010 first half. The decrease in gross margin was attributable to unabsorbed manufacturing capacity costs related to the decline in product revenue
Read the The complete ReportOESX is in the portfolios of John Rogers of ARIEL CAPITAL MANAGEMENT LLC.
ORION ENERGY SYSTEMS, INC. is a leading power technology enterprise that designs, manufactures and implements energy management systems, consisting primarily of high-performance, energy efficient lighting systems, controls and related services, for commercial and industrial customers without compromising their quantity or quality of light. Orion Energy Systems Inc. has a market cap of $86.6 million; its shares were traded at around $3.99 with and P/S ratio of 1.2.
Highlight of Business Operations:
In October 2008, we introduced to the market a financing program called the Orion Virtual Power Plant (OVPP) for our customers purchase of our energy management systems without an up-front capital outlay. The OVPP is structured as an operating lease in which we receive monthly rental payments over the life of the contract, typically 12 months, with an annual renewable agreement with a maximum term between three and five years. This program creates a revenue stream, but may lessen near-term revenues as the payments are recognized as revenue on a monthly basis over the life of the contract versus upfront upon product shipment or project completion. However, we do retain the option to sell the payment stream to a third party finance company, as we have done under the terms of our former financing program, in which case the revenue would be recognized at the net present value of the total future payments from the finance company upon completion of the project. The OVPP program was established to assist customers who are interested in purchasing our energy management systems but who have capital expenditure budget limitations. For the six months ended September 30, 2009, we recognized $0.2 million of revenue from completed OVPP contracts. As of September 30, 2009, we had signed 67 customers to OVPP contracts representing future gross revenue streams of $6.2 million. In the future, we expect an increase in the volume of OVPP contracts as our customers take advantage of our value proposition without incurring an up-front capital cost.Bookings. We define bookings as the total contractual value of all firm purchase orders received for our products and services and the gross revenue stream for all OVPP contracts upon the execution of the contract. For the three months ended September 30, 2008 and 2009, our bookings were $20.2 million and $20.3 million, which for the September 30, 2009 quarter included $2.4 million of future gross revenue streams associated with OVPP contracts. For the six months ended September 30, 2008 and 2009, our bookings were $33.6 million and $35.8 million, which for the September 30, 2009 first half included $4.7 million of future gross revenue streams associated with OVPP contracts.
We recognize compensation expense for the fair value of our stock option awards granted over their related vesting period. We recognized $0.7 million in the first six months of fiscal 2010 and $1.6 million of stock-based compensation expense in fiscal 2009. As a result of prior option grants, we expect to recognize an additional $4.6 million of stock-based compensation over a weighted average period of approximately seven years, including $0.7 million in the last six months of fiscal 2010. These charges have been, and will continue to be, allocated to cost of product revenue, general and administrative expenses, sales and marketing expenses and research and development expenses based on the departments in which the personnel receiving such awards have primary responsibility. A substantial majority of these charges have been, and likely will continue to be, allocated to general and administrative expenses and sales and marketing expenses.
Income Taxes. As of September 30, 2009, we had net operating loss carryforwards of approximately $9.2 million for federal tax purposes and $6.8 million for state tax purposes. Included in these loss carryforwards were $5.3 million for federal and $3.8 million for state tax purposes of compensation expenses that were associated with the exercise of nonqualified stock options. The benefit from our net operating losses created from these compensation expenses has not yet been recognized in our financial statements and will be accounted for in our shareholders equity as a credit to additional paid-in capital as the deduction reduces our income taxes payable. We also had federal and state credit carryforwards that each total approximately $0.5 million as of March 31, 2009. We believe it is more likely than not that we will realize the benefits of most of these assets and have recorded for an allowance of $45,000 due to our state apportioned income and the potential expiration of the state tax credits due to the carryforwards period. These federal and state net operating losses and credit carryforwards are available, subject to the discussion in the following paragraph, to offset future taxable income and, if not utilized, will begin to expire in varying amounts between 2020 and 2029.
Cost of Revenue and Gross Margin. Our cost of product revenue decreased from $11.5 million for the fiscal 2009 second quarter to $9.2 million for the fiscal 2010 second quarter, a decrease of $2.3 million, or 20%. Our cost of product revenue decreased from $20.1 million for the fiscal 2009 first half to $17.1 million for the fiscal 2010 first half, a decrease of $3.0 million, or 15%. Our cost of service revenues decreased from $1.0 million for the fiscal 2009 second quarter to $0.6 million for the fiscal 2010 second quarter, a decrease of $0.4 million, or 40%. Total gross margin decreased from 33.8% for the fiscal 2009 second quarter to 32.6% for the fiscal 2010 second quarter and decreased from 33.1% for the fiscal 2009 first half to 30.3% for the fiscal 2010 first half. The decrease in gross margin was attributable to unabsorbed manufacturing capacity costs related to the decline in product revenue
Read the The complete ReportOESX is in the portfolios of John Rogers of ARIEL CAPITAL MANAGEMENT LLC.
