Good day ladies and gentlemen and welcome to Orion Energy’s fourth quarter and year-end fiscal 2012 call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. I would now like to introduce your host for today's conference, Mr. Scott Jensen, Chief Financial Officer. Please go ahead.

Thank you, operator. Good afternoon everyone and thank you for joining us for the Orion Energy Systems’ fourth quarter and fiscal year-end 2012 conference call. Once again, my name is Scott Jensen, Chief Financial Officer of Orion. With me on the call today is Neal Verfuerth, Chief Executive Officer. As a reminder, the earnings press release issued today once again includes a section that briefly discusses the supplemental information document that was posted to the company’s website. This supplemental information document provides additional details and analysis of Orion’s financial performance for the fourth quarter and fiscal year 2012. I will now 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 be materially 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. And now, I would like to turn the call over to Neal Verfuerth, Chief Executive Officer of Orion Energy Systems. Neal?

Good afternoon, everybody. Thanks for taking the time to listen on the call today. We are going to change the format off a bit on this call today to be more consistent with the way we look at the company and as we see the future and the opportunities and the growth, both revenue and profits on a go forward basis. So I think you are going to appreciate this new format. I think it’s always important when you are looking forward to get an idea of where you’ve come from, so this first slide shows our cumulative revenue since we started the company back in 1996 on a 5 year basis, so cumulatively 5 years. You can see the first 5 years $12.3 million, the next 5 $80.9 million and then of course the last 5 $35.1 million, so you can see we’re tracking quite nicely here over the last 15 years and I think you’ll see our vision for the next 5 years to be similar as it relates to the growth and the opportunities that lay ahead. An overview of the company in the way the company is structured, we’ve always referred to ourselves as a power technology enterprise and the company really consists of 3 primary elements. We’ve got Great Lakes Technology here at Manitowoc, Wisconsin, which is our vertically integrated manufacturing operation and our research and development; Orion Asset Management which are project finance, the Rex and the Emissions; and Orion Engineered Systems, which is based just South of Plymouth, Wisconsin, which is our captive turnkey integrator. They do all of the renewable technologies for us and they’re now starting to incorporate in our complete product offering bond with that with the renewables and looking at national account rollouts for other technologies. Back in fiscal…

Thank you, Neal. This afternoon I will briefly recap some of the impacts of the reaudit of our fiscal 2011 year. Next I will comment on the highlights of fiscal 2012 and finally I will comment on our long-term guidance. Over the past several months we've been working diligently to work through the accounting changes related to revenue recognition, the transition to our new external audit firm, the reaudit of our fiscal year 2011 and the update of our current year financial statements. It's been a distraction to our management team and has increased legal and accounting costs. I can affirmatively state that we are near the finish line related to our financial reporting processes and are on track to have all of our financial filings completed and brought current by the end of next week. To quickly summarize fiscal 2011 results, as highlighted in our earnings release this afternoon, the change in revenue recognition related to our solar contracts, coupled with the reaudit of fiscal 2011 resulted in a decrease in our revenue of $10.4 million, a decrease in our net income and a decrease in our fully diluted earnings per share of $0.06. $0.04 of the $0.06 was related to the solar revenue accounting shift from fiscal 2011 into fiscal 2012. $0.02 of the reduction was due to the benefit of hindsight related to reserves for inventory, bad debt and insurance. As we’ve stated on previous calls, we've provided a fair amount of content within the supplemental information document, which was posted to our website earlier this afternoon, covering our fourth quarter and our fiscal 2012 performance. Accordingly, I will not be walking you down the P&L on a line by line basis, but I do want to address some of the key areas. As Neil mentioned, fiscal…

[Operator Instructions] Our first question comes from Colin Rusch from ThinkEquity.

It's Noah in for Colin. Just to start off with a question about your solar demand geographic split, what are you seeing and what are you expecting for the year?

It's a good question, Noah. Historically, most of our activity has come in the New Jersey market. That's really a function of some pretty good historical credits available. But having said that, we've also done business with our national accounts throughout North America. We have been expanding our sales efforts into states outside of just the New Jersey market. We see pretty good opportunities in the other eastern areas, Maryland, Massachusetts. We're also seeing opportunities in the west. And that's kind of what our focus is right now.

So in terms of how you're thinking about a split for the coming fiscal year, is there some sort of target that we should be keeping in mind?

We're still thinking in terms of our long-term guidance somewhere in that 40% contribution of revenue.

And Noah, we see as I mentioned on the call more bundling of our other technologies into the overall product offering it substantially enhances the overall ROI and we see a direction in solar, a lot of companies are still looking to put solar on as just part of overall strategy not necessarily tie to where the Rex are hot or whatever. I think we are going to see a lot more companies do 50 to 100 AW systems across the entire national footprint as part of an overall strategy, not necessarily tie directly to what the local direct market maybe.

Sure. Can you touch a little bit on the availability of phosphorus?

We are told that the supply is better than what it was. We can only go by what we are told, but that’s one of the things of course amongst many other things that is appealing as it relates to the LED, we don’t have the same kind of dependency for the same quantities of the rare earth phosphorus that really set us back some over this last fiscal year.

Sure. I think last question, thanks for the taking the questions. You alluded before this investment and ramping up new sales force. Can you talk a little bit about their productivity, what you are seeing so far and how you expect it to track?

Typically, a new salesperson, we are looking at 6 to 9 months of building up pipeline and a lot of that of course depends on what time of the year they start, when it falls into the budgeting cycle. But I would say on the best case it’s 6months, but it’s probably more likely 9 months to 15 months before you start seeing the pipeline being built up and the order starting to drop off the other end.

Our next question comes from Shawn Severson from JMP Securities. Your line is open.

Neal, I was wondering if you could give a little more color on the environment. I know you talked about kind of projects being slowed down or pushed out. I am just trying to figure out, if you look at the retrofit market out there, if you are finding that the customers are very receptive to talking to you and putting projects or starting to plan projects, but they are just kind of deferring the timing on them or are you finding them, at this point resistant to even exploring these things and they’re just pushing it off in entirety?

No, they’re definitely interested. I think it comes down to a lot of businesses that we’re talking with. They’ve had a pretty drastic change in fortunes to the positive. So a lot of companies, that’s kind of an all hands on deck column just to keep up with the core business, get their plants up and running, you know, tooling in place, looking for talent. Shawn, there is just a lot of things right now that a lot of moving parts that as you might expect these customers have to be first concerned with their core business and getting their product out of the door and then these are more one-off projects. And the other thing is a lot of the downsizing that we saw over the last couple of years, you start to see that coming into play here because you just don’t have the headcount that these companies did before. But the good news there is once we get involved with a company, we become kind of a go-to energy resource. So we’re seeing a lot of big projects, repeat projects et cetera. But I think really the limiting factor is the lot of business are just going crazy right now with their own internal orders.

And then on the financing side have you found other partners or talked to other banks or kind of independent financing opportunities out there for companies pursuing retrofit projects or working with you or you know other companies I guess as well just in terms of really looking at this as a sector that’s kind of become the specialty sector I guess if you want to call that on the financing side?

Yes, there is a lot of appetite out there and I think what we are most pleased with is we are finally seeing patient and reasonably priced capital which makes all the difference in the world and especially on the solar job 5% capital fixed for 15 years versus you know in the mid-teens or high teens even fully loaded with fees et cetera, we are talking several million dollars can make or break a deal. And there is a lot of appetite out there, there is a lot of cash on the sidelines like people looking for good deals and companies like Orion with good track records and stellar track records of delivering good projects that save and have demonstrated over the test of time that we deliver the goods, so they become good credit risk for these entities. So we are seeing the big banks, the Tier I banks, DLL and some others that are saying bring us deals, we’re looking for deals.

Our next question comes from Steve Shaw from Sidoti & Company.

Regarding the solar work, I know you guys touched on the geography a little bit, but just in general, is that a third quarter spike and have an effect on the next half or so regarding is it going to be a little softer as in the fourth quarter?

So the March quarter certainly was slower in terms of contract and revenue activity. There was a rush to take advantage of the cash grants that were available from a tax incentive standpoint, but we are very encouraged by what we are seeing in the marketplace right now and interest and ability to fund a project. And if you think about what we've talked to early in our backlog those are projects now that as we move into the summer time of the year are really going to kind of heat up from an install standpoint. I think that's one thing maybe that's valuable to clarify for everyone is if you would have looked at the company historically, the third and fourth quarters typically drove a heavier percentage of our business. As our solar activity has increased that shifted some of that back end loading into the front of our year and that September quarter and December quarter has really been at least in the most recent fiscal year, drove about 60% of our revenue. So we are seeing things that are encouraging, that are helping to kind of level out some of the lumpiness that we've had historically in moving some revenues into the front half of our year which on the efficiency side has been a little softer than the back half.

Again, and we said this in the last couple of calls Steve, what I was thinking about in terms of revenue but I just want to remind you that as we make the transition in doing more and more wholesale business you know just a few years ago, 95% of our revenue we were selling retail to the end user direct. So a $100,000 project was a $100,000 dollars in top line to us. Now that same $100,000 project is on a wholesale basis is you know a third of that because we are not doing the integration et cetera. Our overall model is to continue to develop but we are just making the transition to more wholesale than retail. The other thing I want to mention as it relates to solar, there has been a consolidation not only at the manufacturing levels but also at the installation level. A lot of guys that were a couple of guys in a pickup truck that we’re taking advantage of the racks and the tax credits and cash payments etcetera have moved on to other things, so there is still lot of deals out there and a lot of interest from customers and we’re looking at lot of deals and we see a lot of opportunities out there that weren’t there before because it was getting a pretty crowded space.

And then lastly do I get this right you guys are doing right away with short-term guidance?

Correct.

I was curious the thought process behind that because I thought that business might get a little more transparent with the new revenue recognition?

The revenue recognition certainly does help Steve, but again that’s been a smaller percentage of the business, last year it was less than 30% and more importantly when we are executing on our strategic plan, we’re investing in initiatives that it’s hard to measure exactly the results in a 90 day or sometimes even a 360 day time horizon. Some of the areas where as Neal covered the InteLite and the development of that started many years ago and we are really excited about the opportunity to penetrate the market and go back to existing customers who have trusted us and rely on us for our energy management expertise and that drives additional revenues through additional product offerings. We just feel that it’s challenging for us, I talked about, you know, we had some struggles with short-term guidance and we don’t talk about our business that way internally.

We’re trying to match up how we think of the business, how we execute upon the business with how we communicate to the street and as Scott said very kindly providing quarterly guidance is certainly not one of our core competencies as has been demonstrated over the last several quarters. And it actually disconnects us from what we’re doing already to execute upon the plans. So, we’re going to, the purpose of my earlier slide was to show you what we’ve done in the past. You know, starting at day one and our mindset was always to think of things on yearly and multi-year basis, and we’re always very successful and because we know what we’re doing that’s -- we’re good at it and we can put the numbers on the board and we need to do that and a lot of our time and effort, and quite frankly just a lot of resources for us. We’re still a small company, where a lot of distractions we are trying to manage the quarterly number and losing sight of what is in the best interest of the shareholders over the longer term.

Our next question comes from Philip Shen from Roth Capital.

I want to explore the health of the business a bit more. I think on the last call, you talked about how the gestation period of your sales cycle kind of crept up from 7 to 8 months and it was closer to 9 months. Where do things stand today?

I don’t think much has changed in the sale cycle or the gestation period. As I said earlier, I think with many customers and I am getting out on the road quite a bit these days. I was just visiting one of our automakers and they are telling me that the plant -- I was there less than 2 years ago and the parking lot was empty and there was grass growing in the cracks and now the place is running 24/7 and they are just scrambling around to get tooling and get toolmakers to me because it was a total as I said a total of the proverbial hockey stick in their business and they are scrambling right now to get the orders out. So we are trying to feather our projects into their limited bandwidth to look at projects and of course there is competition for CapEx still. If you are one of our customers invest in tooling that I need to make money, make more product or something that will save the money. So business is good and strong and we are going to continue to develop our financial services so we can take that CapEx objection off the table and demonstrate to customers what I have been referring through as frictionless integration. We can get in and out of your facilities without any disruption in your operations as we can do that and take that CapEx objection off the table, this company is going to continue to grow. And again we've made a real commitment now to put with our resources into the reseller channels and we have a little less control than we did before but over the long haul the sheer numbers it's going to allow us to leverage and one of our biggest assets to leverage that is our manufacturing plant that is greatly underutilized because the market out there is so vast and as we get more and more people out there and we are creating a sales model that we can take, we don't have to have the superstar out there. We can take people out there and start to make them successful and now it’s a matter of just putting more people on the street.

As a quick follow-up to that topic can you help us understand what the difference is in the sales cycle timeframe might be for say your wholesalers, value added resellers versus the guys you train in-house, are you starting to see, let's say the average period for the company might be 9 months to kind of close the deal, are you seeing a longer timeframe for some of your third party resellers?

No, actually it has more to do with the mix they are pursuing. If they are involved and they are chasing some of the bigger, more traditional national accounts, you are going to have a longer sales cycle. If they do what we advise them to do, that is to have a mix in their pipeline, dealing with the local businessmen in their market where if somebody brings a good value prop to them they could pull the trigger, almost immediately. Then we are starting to see kind of a nice mix and the guys that are making a nice focus locally, we've seen 90 day turnaround. So we are always constantly working on that. One of the curses of this business is quite frankly and all the years I have been at it somebody wants to chase the big box of a million square foot on the outside of town as opposed to realizing you are better off and be much faster and better margins to line up $50,000 deals over the year, you know what I mean.

That's helpful. Let's transition to solar quickly here. I didn't see that you released what your revenues were for solar in Q4. I think you released them for the year, the implied sales were about $4.3 million, does that sound right?

That sounds right, Phil, $4.4 million.

Okay. So given that, when I kind of back into what the non-solar bookings were for the fourth quarter, it seems like they were around $16 million, so there's been a bit of a slowdown at least in the first calendar quarter of this year. Do you expect bookings to accelerate as we go through the year, especially as we kind of hit -- well, as we get into the end of the year, things ought to look better given the typical capital spending cycle. But having said that, I want to get your perspective.

Yes, right now we're in this delicate balancing act over kind of feathering the throttle as we transition into the new technology, being linear for us and dimming and very aggressively because of several things that are making us comfortable are lining up accordingly into the LED space. And we're ramping up very quickly here in our plants and with our purchasing and all of our partners and all the bits and pieces you need to make a serious initiative in transition into the LED space.

Our next question comes from George Gasper, private investor.

On the commentary that you released regarding this 2017 target of $250 million, it looks like a 5-year target from where we are currently. If I'm focusing right on that, that would suggest going from the $100 million range to $250 million, which would equate to about 30 million a year. Is that doable on a near-term this year, next year basis or what's your thought on really starting the cycle up here, or is it going to take more new product development beyond where you are to get this momentum going to reach those targets on an annual basis?

George, your question is kind of precisely why we wanted to stay from the near-term. Yes, we're still doing the right thing with the long-term focus. And we can't tell you if the average annual compounded growth rate of 20% is going to be linear. We don't have the visibility. We're managing customer behaviors and cycling through some product development cycles in terms of everything that Neil just talked about, with controls and full range dimming on fluorescent. So we really -- we're not going to answer that question because we don't want to get back into the annual expectations.

But George, let me tell you this. The market is larger than ever, if you think about it. You can even argue it's gotten bigger than it was a few years ago because now we have a platform that we can go back and resell. The 3 million that we've already sold one time and demonstrated a good value proposition. The other thing is if you think about the average selling price of the LED versus the fluorescent, it's easily 2 to 3 times more the ASP per unit one versus the other. So given the fact that the utilities are throwing substantial dollars in rebates et cetera, customers are looking for additional ways to save money. We've already demonstrated to them once by saving them an aggregate of well over $1 billion. It's a lot easier to go back now with the next thing as we've demonstrated, and for a lot less sales cost. Everything we've done here to-date has been to get to this inflection point where we are here today, that $100 million point. So now to add on the next sales, you may not want to have -- you've got these fixed costs covered. You've got incremental costs as opposed to these fixed that are already covered in the operation. So it's not hard to just contemplate what the art of the possible is. The challenge has been, George, for me to say, I'll tell you what, George, it's going to happen in 89 days and 20 hours from now. That's where challenge has been, if we're asked to do that. If you look back historically, we've been -- if you normalize for the recession, we've been pretty spot on with what our 5-year plan was quite frankly. It's just a matter of predicting it on a 90-days cycle when things would exactly fall in the place where the challenge has been. So that's why I just don't want to put myself in that position anymore. And we're going to deliver for our shareholders like we've done in the early -- first 15 years of the company, the ones that our shareholders that are in this with us for longer haul.

Follow-on question on the Inter, I don't know if I'm pronouncing that correctly, the light product that you referred to on development. Is this a different market than what you've been serving or is this carving into an existing market? And what kind of market opportunity is there for that, and when do you see actual sales beginning on that?

We're already selling them. We've got several million square feet installed. And we're just making that transition right now. This represents not just for Orion, George. This represents the biggest transition in technology that the lighting industry has ever seen. Keep in mind, we're talking about an industry that's still using a technology Thomas Edison himself invented, the incandescent light bulb. So this is a major transition for the industry. We're doing it in a systematic way, we believe, from the technology development all the way through selling it through. We see the market actually being coming a lot larger than what we were used to, including hospitality, office buildings, any place there's a light. Not just large commercial warehouses and factories. So we see our opportunities considerably larger than what they were before.

Okay. And if I could ask one question on your stock buyback, it looks like you've got plenty of room to buy back. And based on the current price, relative to your book value, which I have been looking at your financials, it looks to me like it's about $4.19 or so. Correct me if I'm wrong on that. It looks pretty attractive for you to be in the market at this point on a more aggressive basis. What's your thought on that?

George, we couldn't agree more. Your book price is fairly -- it's in that $4 range. And as a management team, we look at the share price and the value proposition, and we believe that we're a pretty good value right now and accretive to our existing shareholder base. So we do intend, now that we've got our earnings released, to be more aggressive in the market.

And so, I guess what -- you've been out in the market then for a while waiting on your release. How long have you been out of the market?

We have been in the market on a nominal basis.

Oh, I got you, okay.

We had put in place back in the early part of the year.

This ends our Q&A session. I will turn it back to Scott Jensen.

Thank you everyone for joining us today. We look forward to speaking with you again in August to discuss our fiscal 2013 first quarter results. Goodbye.

Ladies and gentlemen, thank you for participating in today's program. This concludes the program. You may all disconnect.