Orion Energy Systems, Inc. (NYSE Amex: OESX), a leading power technology enterprise, announced today its preliminary financial results for its fiscal 2012 third quarter and fiscal year-to-date period ended December 31, 2011.
As previously announced in its press release on February 1, 2012, the Company is currently working through a restatement of its financial statements for its third and fourth quarters of fiscal 2011, including its fiscal 2011 year-end financial statements, and its first and second quarters of fiscal 2012. The Company has engaged its current independent registered public accounting firm to re-audit and restate its fiscal 2011 year-end financial statements rather than its prior independent registered public accounting firm which previously audited such statements.
The Company, together with its independent registered public accounting firm, concluded that generally accepted accounting principles require that revenue be recognized from sales of its solar photovoltaic, or PV, systems using the percentage-of-completion method rather than based upon multiple deliverable elements. The Company’s prior method of accounting for sales of its solar PV systems required it to recognize revenue in two stages (i) when the title to the products had been transferred and (ii) when the service installation was complete. The percentage-of-completion method, however, recognizes revenue over the life of the project as measured by the percentage of costs incurred to date of the total estimated costs for each contract as materials are installed. The percentage-of-completion method requires revenue from the delivery of products to be deferred and the cost of such products to be capitalized as a deferred cost and current asset on the balance sheet. The difference between the percentage-of-completion method and the multiple deliverable elements method is a matter of timing, with no impact on overall earnings or cash flow from the individual contracts.
Fiscal 2012 Outlook
For fiscal 2012, the Company is reducing its previously provided annual revenue and earnings per share guidance. The Company now expects fiscal 2012 revenue to be between $100.0 million and $103.0 million and its fiscal 2012 earnings per share to be between $0.03 and $0.05 per diluted share. The Company’s fiscal 2012 revenue guidance has been lowered based upon current market conditions related to customer capital spending. The earnings per share guidance has been lowered based upon the reduction in revenue guidance and the higher mix of solar PV revenues in fiscal 2012 which has resulted in lower overall gross margins and has impacted earnings per share by approximately $0.06.