Good afternoon and thank you for standing by. Welcome to Orion Energy Systems' Third Quarter Fiscal 2010 Earnings Conference Call. Your lines have been placed in a listen-only mode until the question and answer segment of today's call. This call is being recorded. If you have any objections you may disconnect at this time. I will now turn the call over to Victoria Paris, FD. Victoria, you may begin.

Thank you, Cynthia. And thank you for joining us for Orion Energy Systems' fiscal 2010 third quarter conference call. With me on the call today are Neal Verfuerth, Chairman and CEO; Jim Kackley, President and COO; and Scott Jensen, CFO. Before we begin, I'll read the Safe Harbor statement. Our remarks that follow, including answers to your questions, include 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 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 materially be different. Those risks include among others matters that we have described in our press release issued this afternoon and in our filings with the Securities and Exchange Commission. Except as described in these filings, 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'd like to turn the call over to Neal.

Thank you, Victoria. Welcome everybody to the Orion Energy Systems' fiscal 2010 third quarter conference call. As you saw in the press release we issued this afternoon, we exceeded both our top and bottom line guidance with revenues of 19.3 million and earnings per share of $0.04 and generated positive operating cash flow for our fiscal third quarter. Our third quarter bookings which we began providing last quarter as a key metric for our business were 21.4 million. This included 3.4 million in financing deals both on the demand side which includes our OVPP contracts and the supply side which include our financing agreements for our photovoltaic or PV solution. During the quarter we completed our first solar purchase power agreement or supply side contract which accounted for 1.7 million of our total bookings. These deals similar to our OVPP contracts create additional recurring revenue streams for Orion. Scott will go into further detail on how these supply side financing deals are structured in his comments. As Jim discussed last quarter, we continue to focus on building out our renewable technology offering, which includes our PP solution. Today, some PV integrators are actually paying for just the option to have access to customers' roof. With the installed base we built up through our integrated lighting solution, we already have that access and the trust as an energy expert for our customers. After completing a few test sites in the second quarter, our first supply side finance agreement as well as our first sizable cash PV deal with Coca-Cola Enterprises in the third quarter are further validating the emerging opportunity for our renewable energy supply solutions created for Orion. Revenues in the quarter were driven by increasing order volume as we ramped up our wholesale and partner driven side of the…

Thanks Neal. During our second quarter earnings call I mentioned that one of my goals in my new position was to strengthen an already solid organization. We moved aggressively during the third quarter to identify opportunities and made strategic decisions that will reinforce the structure that has supported Orion's expansion over the last several years. We continue to build our third party sales channel throughout the country helping them strengthen their ability to sell and install our technology while continuing to develop our internal sales capacity. One of our competitive advantages is our sales engine. Our continued reinforcement of our sales force is a vital component to capitalize on significant opportunities within our diverse product group. To that end, in the third quarter we recruited a talented and well known industry seasoned sales associate who will be charged with helping to further drive our national account sales. From a process standpoint, we have nearly completed installation of our Microsoft Navision software including the robust product configurator, a bolt-on solution in Navision designed to streamline the sales process both internally and externally. Importantly, this highly flexible sales tool will be an integral component to broadening our geographical footprint through our partner network enabling them to efficiently execute the sale from first point of contact through delivery. There are two specific areas of operations I'd like to comment on. First, our product margin for the quarter was 38.2%. This compares to a product margin of 34% for the third quarter of fiscal 2009. Despite the fact that product revenues were down 16.8% versus the prior year third quarter, we've been able to raise our product gross margin by more than 400 basis points. This significant improvement was achieved through the execution of our cost reduction efforts, including reducing production head count, streamlining…

Thank you, Jim. Our reported revenues for the third quarter of fiscal 2010 were 19.3 million compared to 22.4 million for the third quarter of fiscal 2009, which represents a decrease of 14%. Included in our quarterly product revenue is $200,000 related to a cash sale of our PV solar technology. Partner revenues for the quarter were 50% of total revenues up from 43% of total revenues in our most recent second quarter. For fiscal 2010 year-to-date, our partner revenues have contributed 43% of our total revenue. During the third quarter of fiscal 2010, we secured 27 new Orion virtual power plant megawatt supply contract, representing growth income streams of $1.7 million. Revenue for these customer projects will be recognized across the 24 to 60 month term of the agreements. If these projects have been structured as cash transactions, Orion would have recognized an additional 1.1 million of revenue in the quarter and increased income per share by approximately $0.02. Bookings for the quarter were 21.4 million, including 1.7 million for OVPP supply agreements and 1.7 million for solar purchase power agreements versus 23.3 million in the same period last year. For the nine months ended December 31, bookings were 57.2 million including 6.4 million of OVPP supply agreements compared to 57.1 million, including 800,000 of OVPP supply agreements during the first nine months of fiscal 2009. As a reminder on how we define bookings, let me briefly review. Our reported bookings have three components, first our cash bookings are based upon customer purchase orders received in hand. Second, our OVPP bookings are based upon the growth future revenue streams over the expected life of the agreement. We consider an OVPP booked business upon the customers' execution of the contract. As Neal mentioned, we completed our first solar PPA in…

Thank you. The question-and-answer session will be conducted electronically. (Operator Instructions). We will take our first question from Glenn Wortman with Sidoti and Company. Please go ahead. Glenn Wortman - Sidoti & Company: Yeah. Good evening, everyone.

Hello, Glenn.

Hello, Glenn. Glenn Wortman - Sidoti & Company: Can you just go over again your expectations for the fourth quarter between the national accounts and then your wholesale channels, it sounded like you're expecting wholesale channels maybe to be down a little bit and national accounts to be up a little bit?

Yeah, Glenn, this is Scott. As we talked about, you had a good quarter. Q3, the mix was approximately 50% and typically what we've experienced as our wholesale channel has grown is that our partners are focused on completing those projects that they've been working on. So we tend to see a little bit of a drop off in the mix. Having said that we continue to add partners, I believe we're up to about 98 partners at the end of December now. And we're just continuing to invest in that wholesale channel. Glenn Wortman - Sidoti & Company: Okay. You guys put up a pretty high gross margin relative to past quarters, can you just give us a sense of how high you think that number can go on a given revenue say for example on 25 million during the quarter, do you guys have any numbers you can provide?

We haven't gotten that granular, Glenn. Needless to say for anybody who has seen our facility, you've seen the excess capacity that we have and certainly we have a great opportunity to leverage the benefit in our gross margins by driving more volume through our plan. Glenn Wortman - Sidoti & Company: Okay. And then finally just on the expense side, how should we think about of your –various operating expenses going forward here?

I think we've kind of normalized a little bit in terms of run rate G&A and both selling expenses have been about 3 million a quarter, R&D has been a little over 400,000 that moves may be between 4 and 500,000. I think certainly we're going to continue to invest in human capital as we see opportunities and talent present itself. But, right now I think what you've seen out of the third quarter is what I would expect to see carrying forward. Glenn Wortman - Sidoti & Company: Okay. Thank you very much.

(Operator Instructions) And we will take our next question from Brian Kremer with Roth Capital Partners. Please go ahead.

Good afternoon guys.

Hey Brian, how are you doing?

Hi Brian.

Doing well, thank you. A couple of questions here on, going back to the gross margins, I'd assume it's partly due to the mix as well this quarter. Is this something, I mean is it sustainable, I mean the volume wasn’t up that much, so, I'm assuming it was more related to a mix of product versus volume necessarily? Or is it just as Jim was referring to getting some of this cost out that you're going to see continuing going forward, that savings?

That's certainly our expectation, Brian. We didn't experience any significant mix shift. Now having said that I would certainly say that some of our new product offerings, wireless, light pipes carry higher gross margins on them. So as that volume tends to increase, we might get a mix benefit. But really our gross margin benefit in the quarter was just a function of the cost reductions in place and executing on the plan.

Okay. Okay. And then what looks based on numbers out there, was a strong quarter, I look at bookings, if I'm going to try to find something here, 21.4 versus 20.3 obviously it's up, so that's a positive. It's not I guess may be just consistent with what we're seeing in the industrial sector manufacturing, it’s the slow growth, it’s not a rebound and you guys certainly haven't kind of spring back, you guys have never talked that way either, it’s just optimism and so I guess the 21.4 versus the 23 is a sign of that?

Yeah. I think we feel like the marketplace is improving. Having said that it's not where it was two years ago. And we are still engaging customers and trying to anticipate behavior and execute on our sales process and getting in front of customers. As it related to the quarter, our cash bookings were up a little bit versus the prior quarter, some of our finance OVPP deals were down a little bit and it's just really a function of customers working through the financials and making decisions and the best thing we can do is stay in front of them.

Okay. And then it’s obviously work-in progress, pilots out there, the outdoor lighting when - is it six months away where you think you're really going to start seeing large orders some traction there, is it still just too hard to say?

This is Neal. I think it’s still hard to say, we have certainly seen larger orders, individual orders, but it takes time - it's a new concept and it’s I liken it here internally to kind of seeding the clouds, getting people exposed to the technology, putting together a proposal, let them get comfortable with it, let their people drive, literally driving in on the parking lot and accessing the building, and it’s just part of the process, introducing a new product and really a new concept into the market. But we are very optimistic what we've seen so far. We've had a couple of good strategic wins against the LED players out there and some significant kind of marquee accounts and we see that just building and building over the course of time.

Okay. Great. I appreciate it.

Thank you.

We will take our next question from J.J. Abodeely with Paragon Investment Management. Please go ahead.

Hey guys.

How are you doing?

Good. I got a question about bookings, I think you've said previously that you recognized 50% of revenue when the order’s placed and that would be in the bookings number and then 50% when it's installed, is that correct?

So, J.J., from a bookings standpoint on a cash deal, when we have that customer purchase in hand, the entire value of the bookings is recorded in our numbers from a revenue generating perspective or call it our financial GAAP revenue. We record the revenue on the product shipments when we ship the product and then on the installation or services when the project is completed.

So the revenue recognition is on, it's entirely on shipping or is that 50% shipment, 50% like completion of the installation?

The mix on a job that has services included tends to be about 70% related to materials, so the product portion at about 30% on average to installation, so we make the product. We ship it. We record the revenue on the product. And then installation project can take anywhere from two weeks to several months depending upon complexity size. When the project is installed and the customer is satisfied and we recognize the service component of the revenue.

Okay. And then also on the gross margins, a couple of people hit on it, I think we're probably trying to get a sense for what that gross margin can be at some given level, whether that's a midpoint of your revenue guidance or at some fixed level, I think someone mentioned 25 million, do you have an idea what you're working towards, where your target is, or what you're capable of?

We're certainly looking at that number and one of the things that we wanted to see was to have a few quarters under our belt of just actually executing on the plan and recognizing that we could support 19, $20 million without needing to increase head count to our premium costs. So, we're working through that. We're very pleased with the performance of our operations group and maintaining our customer service requirements and doing it in a very cost effective manner that impacts our gross margin in a positive way as we've seen in our numbers for the most recent two quarters. We are still very optimistic that we have some run rate ahead of us in terms of improving that as we can put more and more volumes through the plan.

This is Jim. As I commented, obviously there are two sides of this equation and the revenue side has got to stay up and that's something that we concentrate on. We do that by emphasizing that we are selling energy management or energy savings, but that's a dimension that we have to keep our eye on as well.

Right. And then prior to the credit crunch, I think you guys were sort of saying that about 40% of the deals you are seeing were closing in 60 days or less and then kind of things were slowing down in the winter and spring, that number dropped to 10% I think you had mentioned. Where do you see things today? Are things still taking longer or how do they compare to February for example?

This is Neal. I would say today is probably a good example of what likely is yet to come. We had a large customer in here that we have done quite a bit of work for in earlier years and probably not much of anything in the last year, year and a half, when everything is kind of on hold. And now they sent a contingent here today to visit the technology center and talk about where we see things from what's the next opportunity for them to finish off what we restarted and then what are the next technologies you know the Apollo Light Pipe, the wireless, PV, et cetera. And I think that's a pretty good representation of what we're seeing with all of our customers. They were in the last several quarters kind of on the just holding pattern, not doing anything. Then of course they had cash at the end of the year that they let lose just for probably tax planning more than anything else. And then now they are starting to look at reloading and cautiously optimistic is probably the best way to describe them, and we of course mirror that same feeling based on what we were seeing from our customers. But they are coming to visit, they are letting them travel, letting these folks travel again and they are talking about reloading budget, so all are moving in the right direction.

So the biggest opportunity is taking kind of the existing light fixture customers and moving them down to that phase II with the wireless controls and the light pipes?

Well, yeah, just given the fact that one of the things about when you are selling a technology in really a whole new business opportunity, the customer acquisition cost are significant investments. So our pipeline has tremendous value not only from the ones that we've got proposals and SFVs [ph] in the facilities but also our existing customer base they know us, they trust us. We've saved them hundreds of thousands or millions of dollars and now so much easier conversation to go back as Orion as opposed to somebody out there green fielding as a competitor, they don't know anything about them. They don't know if they can deliver.

Sure and then lastly I wonder if you could comment, Neal, on the sort of what you see happening in Washington and I think there is a retrofit portion of the Clean Energy and Security Act that was focused on retrofitting, can you comment on what you see happening there?

The only thing that's absolute today, there is something that's been around for sometime, that's basically all the EPAC [ph] the similar to depreciation components. As far as a lot of stimulus dollars we're all hearing about, we are not seeing a lot of cash flowing into the market. Utilities are still out there very active and many of them are re-upping and even increasing their demand side management project spends, but as far as coming from the Federal government, I think it's municipally driven and there is a lot of more loan guarantees and what not than outright cash grants or something.

And the utility rebates are on a per fixture basis, is that right?

They vary. They can be what they call a prescriptive or custom, and it really depends on the utility and the complexity of the project and sometimes quite frankly, we try to go for either one where we can maximize the incentive for our customers.

Sure. Okay. Thank you very much.

Thank you.

Thank you.

We'll take our next question from Shawn Boyd with Westcliff Capital Management. Please go ahead.

Hey, congrats on the quarter.

Thanks, Shawn. How are you doing?

Thank you.

Doing well. Neal, you just mentioned the pipeline there and I want to think about this for a second in terms of the bookings that we've just shown at 21.4 million. The customers are reloading budgets are cautiously optimistic are traveling again. Do you get a sense from just seeing the activity in that pipeline right now that we might be, with this being the last quarter of the year, I would imagine guys were incentivized, get business done within the company, do you think that we get a -- we might see another stair step up here in the final quarters for the company?

Of course, I can't see with absolute certainty, but I'd like to think so just based on the activity and the attitude. Just a few quarters ago, it was pretty much doom and gloom, nobody was traveling, nobody even wanted to return phone calls. They were – we were all in the survivor mode. I think we've gotten beyond that but yet there is still, as you see everyday represented in the media that's still, it’s still volatile. And again people are stepping out a little bit, but it's certainly nothing as Scott pointed out like it was a couple of years ago.

Okay. Okay. That's helpful. And also kind of within this question, you got to think about national accounts and one of the things that I'm struggling with is probably just my newness to the company. But the national accounts would be how much of revenues today, how can we quantify that, and may be talk just for a minute about the opportunity as to how many national accounts you think you could have or also maybe the penetration you have. So in another words, average revenue international account and how far penetrated you are within that customer?

We continue to update our technology to give us more visibility into that. As we've been saying we're getting more and more business through the partners. So much of the visibility we had historically because we were the retailer essentially, we don't have as much with some of the partners. So we continue to try to build up our database so we can give the Street a better understanding in where our penetration is. We're putting a lot more focus now on geography and penetration and a geographic footprint regardless of whose name is on the door because of the efficiencies gained by just being more efficient, deploying sales resources on a in market basis, and growing literally from door to door to door in the industrial park regardless of whose name is on the door.

Got it, got it. So at this point, you've got 98 different partners out there?

98, what I will describe, Shawn, is partner locations. So some of our partners might have more than one location in a geography.

Got it. Okay. All right. And just last question, jumping over to tax rate, Scott, can you help us a little bit on what we should expect, is that tax rate to go back into the 15, 20% level, or what we see on that for the last quarter of the year?

The tax rate for the last quarter of the year should stay in that 24%, 25% range. Certainly as we get closer to the end of the year, there is a little less variability around the effective tax rate, it can't move around so much with two, three remaining quarters. So for this year, we've got that I think pretty dialed in or it may move a point or two but it shouldn’t move significantly.

Okay. And any thought on fiscal 2011 on the tax rate issue?

Not yet.

Okay. Good enough. Thank you.

Thank you.

Thank you.

And at this time, there are no further questions. Ladies and gentlemen, this will conclude today's conference call. We thank you for your participation.

Thank you.