Orion Energy Systems, Inc. (OESX)

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Orion Energy Systems, Inc. (OESX)

F1Q09 (Qtr End 06/30/08) Earnings Call Transcript

August 5, 2009 5:30 pm ET


Erik Birkerts - IR

Neal Verfuerth - President and CEO

Scott Jensen - CFO


Eric Sigh - Northland Securities

Jeff Osborne - Thomas Weisel Partners

Bill Nasgovitz - Heartland Advisor

Kevin McKane - UBS

Brad Hendrickson - Nicholas Capital



Good afternoon, and thank you for standing by, and welcome to Orion Energy Systems First Quarter 2009 Earnings Conference Call. Your lines have been placed in a listen-only mode until the question-and-answer segment of today’s call. Today’s call also is being recorded. If you have any objections, you may disconnect at this time.

I’d now like to turn the call over to Mr. Erik Birkerts, Investor Relations. Erik, please go ahead, sir.

Erik Birkerts

Thank you, Dena, and thank you for joining us for Orion Energy Systems fiscal 2009 first quarter conference call. Joining me on the call today, we have Neal Verfuerth, President and CEO; and Scott Jensen, CFO.

The format of today’s call will be as follows. Neal will review some of the highlights of the quarter and discuss some of the key trends driving our business. I will then discuss some of the operational initiatives we have implemented. And then Scott will then provide financials detail on the quarter, and we will be happy to take your questions at that point.

Before we begin, I’ll read the Safe Harbor Statement. Our remarks that follow, including answers to your questions includes statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally identified as such because of the context of such statements will include words such as believe, anticipate, expect or words of similar import.

Similarly, statements that describe future plans, objectives, or goals, are also forward-looking statements. These forward-looking statements are subject to risks that could cause actual results to be materially different from those expected. Those risks include, among others, matters that we have described in our press release issued this afternoon and furnished to the Securities and Exchange Commission on Form 8-K, and those that can be found in our filings with the Securities and Exchange Commission. We disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly conference call if at all.

Now, I would like to turn the call over to Neal.

Neal Verfuerth

Thanks Erik. I’d like to welcome all of you to our Orion Energy Systems fiscal 2009 first quarter conference call. For the first quarter that ended for fiscal 2009, we reported revenues of $16.1 million versus $16.7 million in the first quarter of fiscal 2008. Net income for the quarter was $34,000 compared to $748,000 in the same period last year, and earnings per diluted share were at a breakeven this year versus $0.04 in fiscal 2007.

The softness we experienced in the first quarter was due to convergence of really two primary factors. First, we made a decision as part of our long race plan to invest time and effort to build our sales organization now rather than wait for future when the negative impact to our business will likely be a lot more substantial.

With our most experienced sales people focused on these efforts in the early part of the quarter, we did not close some near-term opportunities as we normally would have done so. Although, we did not originally anticipate that these investments in time and effort would have had such a material impact on our results, we do believe they were necessary to further position our volume to capture the opportunities that exist in this quickly evolving energy efficiency marketplace.

Secondly, we witnessed the lengthening sales cycle due to the current economic environment. This became apparent in June. Many deals that historically have been closed in normal holding range based on the strength of our ROI were now subject to lot more protracted and scrutiny of decision-making process due to the capital investment involved. This creates really a pushing out of the opportunities, however, we have not witnessed any customer losses or had any more customers decide against implementing our technology.

During our call on July 16th, we discussed a number of changes in our management, and I would like to spend a few minutes discussing both changes and the reasons we decided to make them. Underlying our decision making is the fact that Orion has grown tremendously over the past year and our business is more demanding and multidimensional. Key areas of our business now require more dedicated focus by senior management.

The changes we have made are designed to provide that focus under aligned skill set with those areas where they will have the most positive impact on our business. To this end, these changes will also allow me to focus more my time and attention where I can add the most near-term and long-term value, meeting with customers and working elbow to elbow with our sales team to execute on the opportunities before us.

In terms of some of the personnel changes, we promote Scott Jensen to CFO and Treasurer, assuming the responsibilities of Dan Waibel. Scott has been with Orion for over four years in the position of Controller and Vice President of Corporate Finance, and I personally worked with Scott during that period. Scott’s responsibility will be to further build our financial organization and financial processes and procedures to meet the need of our growing business.

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