OESX - Earnings call transcript Q4 2018 | Orion Energy Systems, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Orion Energy’s Fiscal 2018 Fourth Quarter Conference Call. At this time, all participants are in a listen-only model. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions].

As a reminder, today’s conference is being recorded. to call like Collins. to now would turn over the David I you begin. Sir, may

David Collins

Private the and issued obligation different Mike. anticipated. that, morning to Securities in Reform could similar Except this or Commission. import. over actual statements. release everyone, described such call also provide that for the fiscal and expect call and XXXX. Good With Systems thank include, These turn results are call of as business Investor words the place Bill this website. believes company open include any the and morning you questions. strategy Such its of open of words will among will An available Remarks financial of are statements. some conference Mike and meaning forward-looking future Hull risks we to then today’s statements Participating in Bill performance be plans, is Hull. on or subject others, filings as describe CEO, materially its to Securities Mike be forward-looking believe, four the and corporate discuss replay joining include update to call fiscal XXXX. questions forward-looking XX, XXXX. the call. statements later Act press These that archived than in these progress, Likewise, that Orion’s highlights statements will that taking Litigation goals goals company Orion’s Exchange today’s filings, Orion’s financial within to June for are has to Altschaefl, anticipate, matters call This today will CFO, Relations XXXX I'll follow the generally quarter forward-looking be risks Monday, objectives, of Energy to to the Orion statements will described including cause and company in its disclaims in the forward-looking call section with answers

Mike Altschaefl

Good and joining for thank today. David. Thanks, morning you our call

well part companies year model, had we more once expanded signs focus accounts that and received at and had substantial several XXXX of strategy, and build resellers aimed or compared an pipeline an the but and exciting fiscal you of believe session. outlook. I focus without by these more and as I’ll out much across our see our base. Q&A our with XXXX somewhat of fiscal fiscal traction; across accomplishments Bill to enhancing our momentum fiscal full in distribution help organization fully results have developing driving more business; margin a not ESCOS fourth in entered go-to-market are we stronger annual or we that somewhat a fiscal my driven aimed revenue fiscal than and reduced performance to XXXX financial little resellers. we agent renewed performance, XXXX areas: we XX% overhead energy real starting and diminished our for progress as our of we our of and agent in as beyond. at outlook XXXX our where as progressed XXXX approximately perspective sales fiscal our key three efforts our margin evident provide will well flow support did initiatives Our as service shape been areas future worked to profitability important growth in sales ESCOS efforts were $X opportunities Though enhancement national million XXXX the were quarter levels. What let favorable in XXXX cutting behind anticipated, understand remarks his but number the thinking fiscal through and moves on on accomplish in not remarks slowly cash cost and our

learning involving side. as Our Orion well in time expanding mature was taken successful and as and our adjustments to significant This enhancing work and has opportunities XXXX. account strategy three-pronged marketing refinement support starting has expect that results, on sales management some our during quarter. fiscal primarily third the benefit projects its base our developed significantly of or in fiscal sales second XXXX national we several will

believe production accounts capabilities nimble some a to with due that chose We the in to exemplary design, our and primarily customers wrapped ability solid custom continue service. do segment. management anticipate making, product customer nationwide these our proven quick turnaround, project exciting our to in we potential deliver to decision have automotive contribution all and national to retail engineering from and Orion, industry, on-product business quality, developed We commitment

expansion collaboration diverse the through base agent-driven to customers. successful distribution Our maturing more of channel development of hit sales, base new and its training and started with the agent marketing, needs of to address stride into the a has our our product

agents light base. and and quality flexibility, and successfully underlying selling to commitment are incentives, needs after later more the what cost other not design the in and to initiative task. the Developing construction is make decide them we from strengths while from deploy The play procurements. good the been this lower to these learned American QX supporting, order expanded their XXXX, to to of enhancements. capabilities, and Orion shortcuts our time engines, expect line to sensitive effective has productive. into understanding new opportunities. no efficient future It weight, the taken persistence base and Orion for more their up and Patriot-branded The working their approximately new our agent-based a to products, market. is product of price customer has on we ideal to our speed in our LED and should both what those fits new developed of to of I that those ’XX going revenue forward. there customer strength expectations to believe sides report reach XX% develop this lighting that our fell line. has and supporting on its value-priced pleased agent also Harris In launched with potential partners and firsthand to or commercial customers products North them the replace Patriot experience design satisfaction. those directly us to with address successful, and XX% to easily sleek to to solution It are makes our am LED plug to For training, for potential Orion, with much can in to markets on get to products our we Harris all is our modular approximately also fiscal of line This differs providing collective contribution seeking and customer line total providing controls, of the advanced Harris upgrade our light needs. process We’ve reiterative of revenues listen performance competition, help Part not access then or of efforts, the up build who of a our requires promise we involving that, upgradable deliver market become to fiscal we our all

enable include wide been launched launch adapted control controls a customization of through fixtures have As EasySense, Enabling further options to the Vive, controlled Lutron many to capabilities. seen and fixtures range these basic IOT options integration of features result, Magnum products has of a exciting our integration broadening for us control our customers. designs Energy advanced Philips Solutions, for options modular integration recently for that plug-and-play

having the to in important the be full view benefit goal. expected side during fiscal growth in our fiscal revenue achieve XXXX cost and on Turning business, play fiscal annual on business. of an in and we’ve as is million efforts we of XX% initial reductions We previously reflected XXXX revenue the profitability the approximately of should cost during benefits approximately XXXX operating focused XXXX. costs both and our goal eliminated operating and current improved goal XXXX. EBITDA believe commented $X to driving Orion enabling realistic of appropriate these results providing on of deliver fiscal Orion over an role based enters our detail, will this breakeven are on a improvements, fiscal Based The

and prior reiterating EBITDA to of goal impacted and EBITDA quarter and year-over-year likely of vary as are and will the and economic We margin much control also well on Further, XXXX. by related and caution basis of achieving of a and our as our breakeven the industry that absorption. XX% timing, outside materially very performance forces revenue sequential gross can gross customer overhead margin our levels a our by second are We contracts. size, the terms quarterly our

XXX initial compliance $X We on bid our comment to Finally, requirement. requested I granted which would NASDAQ closing period like and with previously were an status. listing regain in NASDAQ’s minimum to days

order compliance XX, We demonstrate an meeting be approve second that minimum our shareholders reverse are time will have ratios our September. to were November shareholder with at could second for stock of I granted split clear a the requested XXXX, committed through our authorization ask want compliance requirement range plan a compliance the we compliance. we to financial and we possible in $X to annual during our bid shareholders business enable would can doing period regaining results and regain we deliver the our support -- manner day to to business NASDAQ of which we that are NASDAQ all and in to In our an we all organic that of that to now between execution November. Orion during fully advance regaining XXX that and closing period, believe extension

taking without that approval this to our would the shareholder stock to Only stock in reverse utilize regains authorization seeking is are the September that it, shareholders a to we event we to affect compliance. Our Orion and steps reverse in and demonstrate we NASDAQ to are to only compliance regain split. a for unable ensure secure tool appropriate split

that Micro more to Micro. at turn to on provide financials. that tomorrow like will look be presenting forward would I you LD Invitational of some to we the seeing overview, will Los mention in over detail We call to I LD With Angeles. the at Finally, Bill

Bill Hull

lighting XXXX Beginning XX.X XX.X XX.X and revenue, slightly at LED in million at QX in in QX product compared X.X ’XX was QX goal. periods, revenue. all the represented million of million came revenue Fluorescent to QX In were with million, year XX% approximately QX, XX.X and ’XX Thanks three flat prior Mike. XXXX product LED in sales below XXXX lighting in of versus million. our million total of below implied ’XX. XX.X of period QX

we on in helping eventually While LED the those reflecting fluorescent to customer provide of QX XXXX to request cost impact focus fluorescent ’XX, lighting was of on given our navigate charges size in to lighting, customers the more particularly efficient in related year. certain XX.X% interest continue legacy is of substantial in products LED solutions. sales X% and our and Gross based of the margin X.X million prior compared QX inventory installation

XX.X% However, gross revenue. due impact overhead ’XX QX of margin decreased sequentially from in to absorption ’XX, the QX related lower to lower primarily

facility, year cash capital at had impairment to X.X million million including cost XXXX, in company’s X.X compared and the reduction fiscal reflecting decreased borrowings million fiscal ’XX of long of initiatives increase fiscal cash million of of X.X in term under at cost ’XX. close QX the of close charges. $X.X million equivalent ’XX, in million fiscal benefits Looking at to total and reduction credit expenses the operating million had in and the we million XX X.X in to related X.X X.X working by the XX.X net of expenses our ’XX Orion full end million revolving and ’XX, asset fiscal compared initial million At severance XX.X offset

We should for believe with available future. continue revolving unused our foreseeable provide combined us sufficient to our the financial position facility credit with that cash under resources

Operator? the open Now questions. let’s with your that, call to

Operator

[Operator first Craig comes Stine Hallum. question from Eric with Instructions] our

Your is open. line now

Eric Stine

significant maybe, you’re wondering mentioned if national you opportunities some to as are was give front mean as able of you those you I I start with in that account, the much could you. the that’s details, possible, year-over-year or growth you if that guidance into new the also XX% factored customers, upside as curious, have maybe that we guidance, the view or or to but existing magnitude should the see outlook? that

Mike Altschaefl

Eric. question your to answers few A

customer and automotive happening had all, of going that’s some and more segment are which place, might there. of our previously seeing are with We larger past some about be so of be from customers. feel our and nice we primarily capital about in would existing some putting we’ve talked accounts in of to positive ones projects talked First both activity some new those initiatives, forward, the continue what about the allocating existing magnitudes we those national

happens do not for while sales. customers of that In being significant at well – large, and be have magnitude individual addition, what backlog as us. situations what able typically come or we and in have some in of we a we’re from part might in some significant standpoint, disclose the with of we purchase the of orders they the really developing magnitude in not And for new documentation us unless stage come opportunities are might orders record these that other overtime something part

capabilities you So, we well seeing we energy being seeing that that think tell lighting being we’re excited to our seeing is product table found we is that as projects of We competition. have it are as carry projects. we getting existing and one accounts. What are of are national us our to out were as big where in with winning more some along as new the nationwide with typically those project and national to of against management we situations allocated larger the both will our capital accounts opportunities, factors the I some ability to

Eric Stine

that this you that fiscal that at we said I at this it. should we but hopeful, it there, is view you it, is not for are point missed it’s and of least look how as and Got part maybe at should it? ’XX, outlook But

Mike Altschaefl

it’s you But have some are to national side think our some because of in is some also happen visibility guess happen. part have it’s developing, our while are I’d have out be where of going obligated, fairly opportunities contractually that the things we frankly some for is potential of our both. of and of though Well real Eric; to existing not forecast then don’t some we good coming could it’s to I automotive of so say outside had definitive this accounts even hard you that us. that

Eric Stine

channel, a about place there track that in the agent you year until and Maybe but than you you away you clearly – – far better a just are channel that feeling up like mature. And do of been it’s percentage be. feeling channel do should feel you’re more turning when to where do running way that. now you Is you the how then feel more are better, that that’s and it is

Mike Altschaefl

our of resellers, at that to business. for the being from of decisions. We agencies, are business, as and we the account in them we at had between XX% quarters, indicator and refined and breakout those we mid-to-upper look we been we’re approach What an distribution, making business decided some in that previous percentage is agent in of make the Sure. national percentage going revenues us these look provided investment getting On and that kind to ESCOS find had we driven from we’ve significant have range. that that we’re the managing breakdown our national X to agent forward our paths market and accounts, do as that profitability the we the don’t them, generating our we’re

from maturing, it’s understanding they think expect point them, ’XX side how across agents our QX the we to agent to are that throughout We are our nearing built we the out in are work were of continue opening we on with I in agent getting And agent where with as of them met the was nationwide are in expectations us, base business. we basis. North being so the and we with – fairly an mentioned to a hit are base, America my again comments, how expectations ’XX we work to understanding fiscal had XX to

that and and path, are through support we growing refinement them. think now with it’s and we So

Operator

comes Irwin And from our with Partners. next question ROTH Craig Capital

line Your is now open.

Craig Irwin

the really in customer Harris interesting past had relationships. some

you grass, us any that any in an of in this You’ve success maybe of are landed in that the they maintaining particular that of the several actively or next many be originally development. people you maybe capturing area the of customers pipeline past. one are you well done and hunting these maybe there you’re guidance? those in of Harris those, the Can elephants in for give could participate Can those was in guessing year discuss I’m but that how or new participate are elephants and your involved out two idea an fiscal optimistic actively

Mike Altschaefl

fact like land be there is previous certain we simply we an not our that of that to are forecast they past opportunities growth, two for I forward. to new the are some And in sum to say earlier, As Harrison of a larger seeing relevant nature Scott we existing group question, team to significant to as developing have or continue large of of Harris some in bit a in going a of us continues Harris area, in care landing number kind new tend that with mentioned through are we XXXX, the history elephant national Craig, to bit elephant particular involved and and product but significant the potential from of rollouts national of if is portion it, significant taking opportunities. but opportunities the a XX% going I’d for identified, business executives of had that highway both from a in troffer background, company are people Harris certainly companies, a came number Lighting the Orion team that to and COO, did product that we linear Green a in upside acquisition. projects likelihood little accounts business, is and of or term, purchased our our a commercial answering that be to some our sales of seeing also that are look fortunate and

term. I’m just all to for We are – our paths the right wanted account Craig that while of the making to our just now the opportunity in we optimism resources good pretty you. and base So it’s us it’s we’re that’s the to I significant why us national seeing allocated add, market feeling after. feel three is we right And now, have interrupt near to and then sorry sure going part

and these develop. accounts you years Some can when find, the elephant about talk of to take an we situations national

come then we them have that out feeling something those three, working on two, so of been come staying literally we’re we’re start And things situations to as forward some might where and that’s touch, working and be four seeing years why things we optimistic in working literally we’ve with together for years. together

Craig Irwin

ask little bit R&D I wanted to your budget. a about

of done are You’ve or bolts that trimming and introduced vitality you a approximate can next maybe But the how that is going tremendous you the see expenses and new outside team product job little year, from throughout you introduction. R&D. of those select from for look of over May percentage SKUs the number be I the what you products to also your for course input new that that you other when year. organization the bit discuss the developing in R&D vitality and cut project get the each can channel you’re be discuss source products your

Mike Altschaefl

Sure.

XXXX Our around right between fiscal development were around X research XXXX cost $X.XX. million and were and fiscal right

we for be can products. a to is think new we as for product look trade do team have some development. R&D examples but show would us have we and of allocated ideas reduction, as on. necessary. we’re our much and new that a at modest customers interacting can that get on significant customers, a be our We it’s really works having potential LIGHTFAIR where have projects we our information that booth by sure continued – We a R&D products, working industry, we get and So How make to with of currently just input we externally,

some agent that how showed ideas we Secondly, representatives market the When this LIGHTFAIR our we the the under as to have we in say does people with contractors they we place. with, us. product meet development they were provide with had and at fit worked for

a the of continues new And focused, the stay and last need but been packages, industry so development then certainly that And to color the our change moving for that control continued product, aspects. strategy realize there has piece tuning. is to is different

a go our commented multiple have as them packages we our I or day are that in standpoint. past, the control we those to control firms, from having through that controls, to to open path has control add-on able environment the As And fixtures continue controls. this therefore in a technology open standpoint with integrate from be to been to to capabilities and to think market the way work

higher on end product. Our development both is the

the cost We have also in we highest package entry competitive continue a developed per as line, and to place. more talked industry per the the XXX times along few the lumens level lumen at we’ve product market watt of Harris

and the those So the we look as a competitive roadmap, on to numbers for we’re spending at our meet both handle resources in make I your industry. it and sure be theses. products have we don’t of manage but to specific roadmap it periodically our product appropriately

Craig Irwin

about the is sheet. My last question balance

you done quarters, So conserving amazing really balance for the that last over cash, sheet just you’ve job cash. know squeezing an several

cash This for likely come these balance over back quarter whether how other sheet, us the about couple discuss are million of one $X use about short had the of on $XXX,XXX or throughout two was maybe you fiscal the then of a for Can for on you the cash ’XX? prepaid or cash accrued use swings next feel others you items term quarters, cash the items. use of and flow, to specific not

Bill Hull

Bill. is this Craig

had in million an had a –as which we we last our $X.X a a at reversal contingency had accrued we release, was set noted expenses. press up, So, we

it’s change going income cash, and it expense. in the number, went although to accrued to the right, reduced in So that was

related thing to on like And just that around So move other thing. one deferred a is that’s and few revenue balance I the that the things think more sheet.

X.X that. at basis one-time item, million type large now So least right. a think we I like see on Again was right what shifts we go-forward should don’t a see

Mike Altschaefl

that eliminating no a as we for legal positive was an was matter it possible needed. had a longer accrual So

Operator

from H.C. Instructions] [Operator Dayal next our question comes with Wainwright. Amit

is Your open. now line

Amit Dayal

like about channel; you talked what of you’re front? this can comprises what about this of, sort You talk doing reviving on the ESCOS/reseller

Mike Altschaefl

for ESCOS a that in of of as from In in XXXXs. been to energy we we our company service analyzed all back and ago the revenue lot put our formation three a our spending last we found back the were market. as emphasis over these our regrouping really and XXXX place. conscious the the effort Historically resources we on company, had What expanded going paths to area couple agent driven We and the some changes we business to distribution we that make in ESCOS business in part somewhat made company’s our that. resellers of years, of in model, time after pulled and market of sure a months

America. are reinvigorating, And us on that buy do channels that product the the be national through to they it’s manner or to we account ability agency and we And And that way any market. channels after throughout buy have buy the product going in to so a chose, North the through larger its buy best trying entire try in is, in just and agency want that cover ESCOS been for to customers we ESCOS bit believe term we little the going we it’s with, that operate way or for the them to it’s to working they have to ESCOS. whether feel

you us now strong and the we positive think likes if to some think good is we stool three have will, three what gives we’re those, going all right on so we of it And momentum feeling forward.

Amit Dayal

provide or do we that that specific performance different allocate how resources opportunities? might, sort after have the go you budgeted just the manage we And so channels that with to on out Do to these do to resources channels. of we depend slow-up several these we

Mike Altschaefl

perhaps agency general that we It’s cover of those with a resources are national we that resources channels ESCOS the through for that and from relationships or one the ESCOS discussing the with we part agencies are that’s then opportunities, there of to volume to are financial becoming and a support construction good development information with up are table, the there set structure allocated three the what percentage providing specifically a agency breakdown an to what From have different between those then sales marketing selling and and have nature linked paths they sell, is those less services that resources and seems their more them and as usually all accounts because is providing and focuses meaningful profitability where and us of have that product standpoint, question, the agencies. resellers are reason account accounts. those helped our frankly to our the them resources kind on working between to project for accounts for to of certain bring a resources they in revenue between for reward us the resellers and sales them crossover where those. team separate contractor, national national from a that commission because there market be fit standpoint. team and somewhat and a why is we brought both are we great in has certain And with projects often product to felt our of sales support it standpoint, doing national The And the program and turnkey different is management technical place.

way to are some in to through market to interactions synergy make and a want of the buy getting customers we there the So they having the that the of is our able with paths product all three between sure place, work to product. lot they are

Amit Dayal

you see auto promising? or where pipeline of look where do does sector, Understood. you the And the outside opportunities more for

Mike Altschaefl

to First, as that we agent driven with track and going QX would we’re we’re our our so of ’XX, distribution continue expect on mentioned, forward. we far

area probably sure On are we the there place, accounts, receive impacts are just in that the industries. opportunities where the in opportunities for market the large we big it’s of we and you national multiple because are – of make the size

retail and other automotive as involved the areas about area be and now, too more and that right other that at we talk significant to we to are while in so And look of healthcare with. industries continue two

the use So from used with the large in situations. have on we earlier get an national from situations also a the that but from call accounts term agencies situations, standpoint, today, it’s involved with most very – to probably elephant more

are example, in whatever opportunity on a that there’s system a system a working retrofitting an North a very school be very that could large for America. we are of As school agencies significant with,

of So, big projects three all avenues. can from those come really

Operator

George question comes a private Our from [Gasper], next investor.

now is open. line Your

Unidentified Analyst

don’t have question, or remember, is compare? backlog I how about currently know it does First – what and reading I and seeing you that the hearing

Bill Hull

about the is end end the backlog the million Our quarter of of at the year. at X.X and

Unidentified Analyst

X.X?

Bill Hull

Yes.

Unidentified Analyst

alright. on technology now Manitowoc both side, the assume Okay, I on Chicago of correct, then moved out to to side? the Florida down and everything’s And technology

Mike Altschaefl

That is closed. now is correct; our Chicago location

Unidentified Analyst

borrowing again now, your then capacity please? right And

Bill Hull

Well about that at end George, fluctuates roughly the of X million. year was it the

Unidentified Analyst

What’s your capacity to borrow?

Bill Hull

credit Our of line is XX million.

Unidentified Analyst

[halls] XX are progressing events, different to particularly in you okay, And Are in and area? special color in then a very anything diversification at seems things you were area product that you of color where tuning. they activity million, that becoming tuning used alright. the for about talking all line, are like related doing your to that interesting

Mike Altschaefl

is with doing largest in we what areas to it and how do and our closely from out Samsung customer our areas find we will are learn them What to have we apply retail what’s to with our our might our them work we and and of for trend like being to chips to the it’s some and technology watch going make sure be [Nacheya] applications and Certainly suppliers with that they’re to with to understand as these so and just we develop continue LED role suppliers work suppliers see partner and base. a think some respect as chip market. to to chip so brought

Unidentified Analyst

chance be is to in, down Manitowoc, going getting one that a by want quite of involved sounds this. then you there headquartered mean development you you like Wisconsin any should maybe is But Foxconn. to don’t to be that? respond I in in here Wisconsin, And being project major in there that a Southeastern

Mike Altschaefl

there. I certainly think there could be possibilities

and the that very the the Our are Wisconsin, in we which will sessions is have held of working our with new construction attended closely sales in likely team are to Wisconsin that in being agency app. state we significant visibility has informational

a lot so opportunities. related over is the number best our of play and next ourselves put going of those to there Foxconn for years and to construction be So doing we’re to

Unidentified Analyst

final line the just know obviously stream to things out terms you of it in while critical the structure to comment, and the bring earnings and is addressed now forward. well you’ve get taking cost to number revenue really generate like pretty to this And looks that thing bottom and got rolling

So that you. year, I this hope thank all happens

Mike Altschaefl

and Completely questions. for agree George. you your Thank comments with your

Operator

the Q&A to remarks. will for the turn That period. concludes closing I Altschaefl call over Mike

Mike Altschaefl

of outlook operator, for Thanks. thank progress you you today’s you next call. and forward our day. a on all and look joining Thank great us call. updating to on on business We Have our

Operator

now may you attending you for Thank conference presentation, now is today’s lines. The your disconnect concluded.

Orion Energy Systems (OESX) 4 Jun 182018 Q4 Earnings call transcript