Orion Energy Systems, Inc. (Orion Energy), a US-based designer and manufacturer of energy management systems, has reported revenues of $22.3 million for the third quarter of fiscal 2009, down 4%, compared with the revenues of $23.3 million in the year-ago quarter. It has also reported a net income of $1.2 million, or $0.04 per diluted share, for the third quarter of fiscal 2009, compared with the net income of $1.15 million, or $0.05 per diluted share, in the year-ago quarter.

“We reported solid results for the third quarter of fiscal 2009 despite an increasingly difficult operating environment. During the quarter, we continued to see meaningful customer wins by both Orion’s direct sales team and Orion’s partner network, the successful completion of various scheduled projects for national account customers, and profitability improvements through reductions in discretionary corporate spending and other efficiencies,” commented Neal Verfuerth, CEO of Orion Energy. “While we are realistic with regard to the challenges we may face in the coming year, we remain confident in our business model as it delivered profits, positive cash flows and near record revenues for the quarter. Revenues in this difficult quarter were just shy of Orion’s historic high water mark seen last year during healthier economic times.”

Verfuerth concluded, “As of December 31, we had $49 million in cash and short-term investments and nominal debt on our balance sheet. Orion’s financial strength and flexibility, combined with our people and products, will allow us to aggressively provide impactful and economically sound solutions to the energy and sustainability challenges facing both corporate customers and the electrical grid.”

Fiscal 2009 Third Quarter Results

Gross Profit: Gross profit for the quarter was $7.4 million compared to $8.3 million for the fiscal 2008 third quarter, representing a decrease of 11%. Third quarter gross profit reflected a sequential improvement of 17.5% over the $6.3 million of gross profit reported for the second quarter of fiscal 2009.

Operating Expenses: Total operating expenses for the quarter were $5.5 million (24.6% of total revenue) compared to $6.0 million (25.8% of total revenue) for the fiscal 2008 third quarter, representing a decrease of 8%. Third quarter operating expenses also reflected improvement compared to the $6.0 million of operating expenses (32% of total revenue) reported in the second quarter of fiscal 2009.

Income from Operations: Income from operations for the fiscal 2009 third quarter was $1.9 million (8.5% of total revenue) compared to operating income of $2.3 million (9.9% of total revenue) for the fiscal 2008 third quarter, representing a decrease of 17%. However, third quarter operating income reflected improvement compared to the $298 thousand operating income (2% of total revenue) reported in the second quarter of fiscal 2009.

Results for the Nine Months Ended December 31, 2008

Revenue: Total revenue for the nine months ended December 31, 2008, was $57.2 million compared to $58.4 million for the same prior year period, representing a decrease of 2%.

Gross Profit: Gross profit for the six months ended December 31, 2008, was $19.0 million compared to $20.2 million for the same prior year period, representing a decrease of 6%.

Operating Expenses: Total operating expenses for the six months ended December 31, 2008, were $17.2 million compared to $14.4 million for the same prior year period, an increase of 19%.

Income from Operations: Income from operations for the nine months ended December 31, 2008, was $1.7 million compared to operating income of $5.8 million for the same prior year period, representing a decrease of 71%.

Net Income: Net income for the nine months ended December 31, 2008, was $1.6 million compared to $3.0 million for the same prior year period, representing a decrease of 46%. Earnings per diluted share were $0.06 for the nine months ended December 31, 2008, compared to $0.14 for the same prior year period.

Business Highlights

Deployed energy management systems in 344 facilities in the third quarter of fiscal 2009, representing over 55 million square feet retrofitted, and bringing Orion Energy’s installed base to 4,387 facilities. This compares favorably to the 301 facilities and 49 million square feet retrofitted in the second quarter of fiscal 2009.

Secured ten new Orion Energy Virtual Power Plant? negawatt supply agreements during the third quarter, representing gross income streams of $780 thousand. Orion Energy had 27.5 million kWh of negawatts under 12 supply agreements as of December 31, 2008.

Witnessed continued performance by Orion Energy’s VAR partner network. Sales to VAR partners for the nine months ended December 31, 2008, exceeded prior year sales for the same period by 47%.

Added 51 new contractor partners during the third quarter, bringing the total network of contractor partners who have conducted business on a recurring basis with Orion Energy to over 370 as of December 31, 2008. Sales to contractor partners for the nine months ended December 31, 2008, exceeded prior year sales for the same period by 75%.

Awarded the prestigious Platts Global Energy Award for Sustainable Technology Innovation of the Year, recognizing Orion Energy’s integrated energy management system as “the single most innovative technology advance in the area of green technology.”

Granted approval by the New Jersey Board of Public Utilities to deploy, in partnership with Public Service Electric & Gas Company (PSE&G) and General Electric, Orion Energy’s integrated lighting system as a capacity solution in the port region of New Jersey. Under the program, PSE&G will provide financial incentive to reduce the simple pay-back period for Orion Energy’s integrated system, which includes wireless InteLite™ controls and Apollo Solar Light Pipes, to two years.

Received Sysco Corporation’s prestigious facilities supplier of the year award. This is the second straight year Orion Energy has received this recognition, testament to the high value Orion Energy’s solutions provide to its customers

Repurchased over 3.8 million shares of outstanding common stock during the third quarter as part of the $30 million share repurchase program originally approved by Orion Energy’s board of directors on July 17, 2008 and supplemented with additional repurchase authorization on December 15, 2008. Orion Energy has repurchased a total of 5.3 million shares at an average price of $4.27 as of December 31, 2008.

Recent Developments

Orion Energy announced on January 7, 2009, that its board of directors adopted a shareholder rights agreement, with the issuance of rights under the agreement taking place on February 15, 2009 to shareholders of record as of the close of business on February 1, 2009.

Full-Year Fiscal 2009 Outlook

Orion Energy is re-affirming its annual revenue guidance range of 0% to 9% year-over-year revenue growth. Total revenue for fiscal 2009 is forecasted to be between $81 million and $88 million, with the expectation that fiscal 2009 total revenue will likely be close to the bottom end of this estimated range. Orion Energy is also re-affirming its annual earnings guidance with earnings per share for fiscal 2009 estimated to be between $0.06 and $0.11 per diluted share.