OESX - Earnings call transcript Q1 2020 | Orion Energy Systems, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Orion Energy's Fiscal 2020 First Quarter Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

As a reminder, today's conference is being recorded.

I'd now like to introduce -- like to turn the call over to Bill Jones. begin. may you Sir,

Bill Jones

of and additional Orion's financial thank a Orion's the joining open CEO, first then will by financial fiscal highlights, the goals touch will call with and strategy of Bill first open CFO, today's Energy's quarter some and discussion followed Orion's highlights, Hull call. Mike review to quarter on company's you objective morning business Orion and for Systems call the for full Good its Altschaefl year. a questions. few we will

later of in Orion's An call call Monday, archived replay this site. XXXX. Web Investor will is of be section X, available place on August today Relations taking This the corporate

believes forward-looking risks press could Securities or forward-looking also morning, the in similar include to meaning statements that These statements of Remarks the generally to Reform forward-looking believe, Litigation are Exchange and among described the its anticipate, these company disclaims be with expect statements. as words objectives or matters include in that be follow, in Such risks that than and filings, this company company subject cause to include, within others, to actual Private answers of such obligation the forward-looking described the Securities has materially goals release as statements. forward-looking are update issued will questions that statements different plans, its results anticipated. of XXXX. filings to and Commission. Except any Act words describe These future Likewise, the statements import. that

Mike. over I'll that, call with And the to turn

Mike Altschaefl

bottom-line our proud second completed in top I'm strict substantial has May, discipline. while as Orion in our Good and Orion differentiation, our business morning achieve same Bill. and Thanks, the what CEO joining structure and XXXX. efforts you a to our the in cost improvement cost fiscal have for focusing year results of These of and accomplished our team key and substantially at call Having today. time streamlining my maintaining thank positioned very areas

pleased are only and record to not year net record very quarter the but We first lead also income, EPS, EBITDA. revenue, off with

The strength accounts in our have of we out the made within building reflects opportunities quarter major progress large scale first channel. our results national

expected built million have suite XXXX. and from for a controls at Orion services competitors one as lighting fiscal physicians from turnkey differentiates in customer retrofits power we We commitments us major LED in of project secured such for approximate major completion national and $XXX compete the to projects, that larger national

site their and retrofit LED solutions turnkey determine lighting lighting audits assessments and requirements. their Our needs controls. we future and of to begin with there, solutions From for our energy lighting at their customers work existing accurately on customers particular our to assess controls with needs facilities in based and the initial

the R&D control Our along fixtures, LED integrate lighting we specifically prototype into designed which third-party is for systems, solution. customer, able team to the customer-specific customized recommendations develop with full rapidly for lighting and

project financing a on the can conduct basis, options analysis also utility source possible We location-by-location comprehensive customer a rebate explore. and

days state-of-the-art very deliver we production Orion enabling adhering delivery to high the quality, XX requirements in also facility high an manufacture strict established, typically following are manufacturing order. fixtures Wisconsin, our schedules, Once U.S. our to within LED shipping system while in efficiency and

solution. committed leveraging installation to the to management Finally, the process including country on-site customer our levels installation teams. construction locations the process, at oversee of Orion across that our the Throughout quality is complete and Orion service achieving this services, leads and customer fully highest manages disciplines coordinators local turnkey

of substantially enhancing controls lighting solution one to and as cumbersome of and retrofit procurement all point process for lighting LED just serve source streamlines to down our aspects customers. capacity and projects Our controls contact, otherwise and a one and for complex simplifying

Leveraging of of our key growth national base business account an strategy. more is component capabilities a to turnkey Orion's build even robust out

working actively to are account success replicate We our customers. with additional national

We opportunities. number other are stages dialog of of with in a various

to strong we key sectors, public over sector, continue and years. and advance last recurring business automotive our of which have sources including the few the opportunities Additionally, business been

to expect a in again revenue. our We customers these meaningful of segments component represent XXXX fiscal

senior relationships, track these sales We have expanding recently our professionals records. Both experience, of sales possess also hiring customer two by in fast invested executives. and and reach excellent sales senior new industry talent strong

continue our the to channel, Service of growth ESCO agent-driven support also and our distribution We or channel. Energy Company

compared a sales developing more serve we're a and solid additional same was channel that fixtures channel customer price-driven ago. believe declining cost Our challenged QX distribution period base, The in this market gain year will differentiation lower the agent-driven we and better traction. to through with caters to

contractors a have New believe developed new products or set for a upgrade capabilities. for customers down LED price be optionality feature fixtures on and that efficiency We've and to customers. that to can the of compelling field, today, We fixtures controls of a road. to will fixture are upgrading packages higher in make be greater to with lumen Things include decisions continue packages down option range electrical the but power prefer monitoring the Internet the line our who road upgradeable to and flexibility Lumen also Select their a of providing to of both the lumen need

Beyond them to proposition total of our the product continue successful development, we educating on Orion our more support to the in and to agents products. be value customers help also to resources train invest

channel. We continue we can that to be in confident successful be this

relationships. sometimes their in to achieved from believe improved of our savings energy the performance in terms contracting linked directly benefits reflects channel orientation This for that methodology, their realized We ESCO quarter, efficiency. improvement solutions the deliver ESCO actual strongest performance this the to deploy performance-based differentiates business energy that engage of strategy channels motivates first is to which compensation our they've their historically What customers. dictates ESCO fully period. other lighting strong revenue solid the the ago In ESCO from year our is

efficiency, needs Our partners goal to developing our with respect lighting to is project LED their solutions support by energy features, designed controls and and functionality. specific ESCO for

industry Government that lighting primary our only suggest in solutions XX% remains LED markets. XX% to estimates the of adoption and about

while of it all efforts, segments. our some our market take So, realize confident full of of to the feel development the may potential benefits very we time in growth

Orion than $XXX of is maintaining of XXXX fiscal representing million, XXXX. its XXX% revenue goal to growth prior fiscal million more $XXX over

in dependent highly timing XXXX. customer of fiscal revenue remains the anticipate to revenue schedules, the second-half of first-half XXXX While revenue in fiscal than currently we the higher be of on

as income of at margin reiterating XX% an EPS, and are EBITDA expectations for We well also as positive of achieving XXXX. least fiscal net diluted

And with to QX provide some Bill, turn detail will I that, the our Bill? over on financials. call to

Bill Hull

rose solutions account QX XXXX $XX.X in approximately during customer awarded to of XXX% compared QX to national we $XX.X fiscal potential our million has Thanks, million turnkey million which XXXX, major $XXX primarily of LED of expect to record to $XXX sales Mike. Orion's customer. increased retrofit contracts, due revenue fiscal Orion to in The million XXXX.

to a efficiencies. increased in by from mix in XX.X% enhance higher Gross to XX.X% sequentially margin and QX, national ongoing efforts margin XXXX. manufacturing and compared year an was QX services of of of partially slightly but XXXX, improvement offset in QX of versus QX declined revenue to XX% principally large reflects The ago, account QX due XXXX, activity,

revenue increase, operating and G&A XXXX flat marketing the Orion with hold lower offset were in as QX $X.X at expenses. expenses by million XXXX, total to Despite higher able QX compared of of was slightly costs sales

share expenses, Orion's loss an low revenue increased operating or and by EBITDA in $X.X million profit a per versus Similarly, Orion's $X QX of to loss rose QX, XXXX. per loss compared XXXX. to basic complemented diluted a gross of $X.X higher of QX of $X.XX net Reflecting income net share $X.X $X.X XXXX million of QX, XXXX EBITDA million to in million or

Orion Turning net XXXX of working first also to cash end $X XX, Cash sheet million million in the balance and was improved at in business to QX offset equivalents $XXX,XXX income support quarter. XXXX. partially to QX, capital Likewise, to at $XX.X versus year cash flow increased our our of March as in activity. sheet, compared XXXX, increased of operating million activities the higher close balance metrics $X.X capital and and of from QX XXXX by cash needed generated

in working to $XX.X increased of million $XX.X capital XXXX. million in to shareholders XXXX. at increased Net $XX compared QX end And million equity XX, $XX to year QX XXXX, XXXX, March XXst up million June from of at

under XX, consisting XXXX was of $X.X borrowings revolving versus at primarily March XX. Outstanding million credit $X.X at facility our June debt million

XX, June facility. availability of credit on $XX unused our of borrowing additional million had As we

on resources revolving our to believe our credit anticipated that future forward. cash improving with going under continue provided combined cash flows sufficient We position facility and business our available

for let's that, questions. Operator? call With your open the

Operator

is from Instructions] Craig [Operator Thank to come ROTH you. question first from going And Capital our Partners. Irwin

now open. Your line is

Craig Irwin

for and thanks Good taking questions. morning, my

Mike Altschaefl

Craig. morning, Good

Craig Irwin

the out to driving total next So with you two? still thing Can the if us booked there's total your is of the available business their customer their or ask right already, over first customer this I is business maybe business, or over for of that that's potential material more year? course wanted next out substantial things of orders for there additional Do room you of share accounts national available now. similar the orders the have half than year

Mike Altschaefl

for into is additional XXXX. opportunity for also. There also continue contract this Sure. business at fiscal that have customer opportunities most provide areas this signed to so All forward We at the within us, fiscal respect we we looking visibility that there with right, those with them we're think time going feel Craig, the to and we their XXXX. other with this are particular

we that the them with time the to well might technology we that what of have about optimistic happens conversations for utilize our some fiscal XXXX, and magnitude as is as going yet other this this we've until determined with services same digital provided some business after customers period so, while customer. be of are about further for not them And

Craig Irwin

Great, that. thank you for

things your XX% substantial the margins to to substantial drove efficiencies guess quarter-to-quarter of to improvement? is larger in going So, that items clearly us operationally uplift factor, national of from some your gross other major help you've to drive allowed sequentially. customer happen. of XX.X% from one the been on there're accounts walk quarter that P&L Maybe Utilization doing can is that through I'm you that? this that that the some but some items that notable that going a the

Mike Altschaefl

Craig. Thanks, Sure.

talked very it's that you the helpful goes capacity. to we in certain to which through have we've that carries head. manufacturing additional and it, hit fixed costs utilization on the some past the have were -- and assembly that located volume know, helps to been facility, nails additional facility we Wisconsin, You of Certainly one have in our it of

positive the of in impact the margins of a somewhat increment been that's basis. quarterly on so, And sequential

We those to products, a very technical to costs all at also at we time look low do and can what hard make to and as innovations to continue to the work continue possible. standpoint, our from sure are as make that the cost look

a would say very I impact. volume So big has had

in sure best chain supply minimize Secondly, the and of can we we hard our very inputs make to doing job also. are the the worked we cost

Bill Hull

color, could, Yes. Craig, think just a more so we we're run consistently this you so if at If start. about add to have I to don't of stop able production, and to little level products, bit

we have something cheaper, So, improve really more working starting a contracts -- continue product like product. with like just people And the ways better product less give to get find they time and with Mike this and with we pricing the you manufacture we lines times, to and of as stopping the also and the to that. suppliers your set-up on realizing cost, as said, and efficient opportunity economics

Craig Irwin

about And Great, for then thank ask sheet. to also you the wanted balance that. I

cash I have close $XX healthy, looks quarters. over you balance a quarter, the like to in of receivables cash couple well, million has guess gone but the flow it million So, this dollars by did up two flow last

second-half be it of than or at least stronger moment. like looking did sort a that You that's first-half seasonally say what the at looks we'd

or receivables, the second is mean something I expect probably expect do on wait balance cash cash maybe you You sheet? be receivables or third know, to to until the improve the when quarter? the the in we have you flow and the quarter, would released fourth to to that this

Bill Hull

day as the they've yes, the tied a gone maybe but and It's we're have just days. more sales in with XX below so as couple Craig, far we in business, days outstanding, really up. Well, receivables, still

pretty So you from we have tell payment collections can terms. standard sales, good much and within

question? the on of So answers the see I Hope come think your you'll that business into receivable normal that side. course

Operator

you. Thank

Our comes from Stine next question Eric from Craig-Hallum.

is now open. line Your

Eric Stine

Hi, Mike; hey, Bill.

Mike Altschaefl

Eric. morning, Good

Eric Stine

time the about do work more if successful fiscal the work guidance a dynamic hit would follow-on the execute this not to that but just additional account, first-half, that are possible you I one wanted guess it's I event I confirm, so could are back working fiscal doing mix guess well. the this being some And sounds you mean, a you or just on what think in about I point Hey, second-half of are to talked to that, business, would mean, -- you're as to be follow you that, business had at get you like you're included year national we thinking is where hits there's there; With mean, year. at in XXXX through to big provided that in get as right go then expect follow-up work. the now, I you to XXXX? this you

Mike Altschaefl

answer, both. Little it longer to somewhat say be have Eric. bit would I could of

believe the this yet year. reasons amount times it's you're push given on with years do we we're for particular somewhat could substantial very this same people may to is time, making follow timing and can if So, in progress things on might pleased At always our of the additional while in tell got XXXX. we've hit of very-very business some and the to fiscal we're situation, they particular fiscal that contracts and happen customer, well that that project a customers and particular cautious with fiscal the this have. there back things going At business

for most which building in and believe the we that of XXXX. we're on will to get We the XXXX. opportunities XXXX. during that likely primarily our could our believe beyond fiscal So, business we've announced and that contract opportunity fiscal focused opportunity continue But additional there's fall some fiscal follow-on

Eric Stine

national impact with the XXX. large maybe in talked accounts. And I businesses is XX% about, if your other you've past it's okay. Fortune curious if customers? more And it, I'm then with just win, Got broadly contract this had any that's think I know of

pretty footprint You know, those it's XXXX about pipeline and you maybe just I this grows the think assume from there. how point curious, a when small would customers? about fiscal hopefully beyond, you percentage penetration their in at think with and of

Mike Altschaefl

help contract the business. in We that the this, opportunities it have build us found success additional a past like when for have you in does on

really to our our basis locations ability In addition, given demonstrate Eric. refine across the out a has carry and and that, us the national magnitude improving and fully of doing this, to helped processes to it rollout, multiple do systems weekly on country a

And credential. some credential accounts national so, have strong And had in we another substantial past, stronger We it very done the very we gives the with projects across feel country. us already.

think to feel opportunities. it it's helps we We about So good positive it. bring and additional

cost they with an also energy standpoint. saving We are seeing U.S. from respect that larger to the think LED some moving momentum we're accounts reasonable more multi-site capital with towards solutions in

us So we think forward. it going points positively for

Eric Stine

you. Thank

Mike Altschaefl

Eric. Thank,

Operator

Wainwright. Thank comes our question from H.C. next from And Dayal Amit you.

now open. Your line is

Amit Dayal

Good Bill. Good you. Mike. morning, Thank morning,

Bill Hull

Amit. Hi,

Mike Altschaefl

Amit. morning, Good

Amit Dayal

how looking to, there's there, to the happening color services growth a service give been and the side up trend say know, and the you little you should business. not lot, and you talked on what's you on year almost revenues. this about margins, It's forward? were a change it's over big X% to Just on you Can doing ago of but how are us been know, little from service XX% going side impacting or a a the

Mike Altschaefl

to increase as a talked the of of we been of Well, the includes about account large that fact installation, manage significant customer needs has cetera. have national the turnkey amount it the biggest particular we et all services for that the in the related services reason that

aspect services So standpoint, to a the on that is and from it helps that help a standpoint volume typically that. again, But so we of we margin impact. margins a have driver mitigate somewhat for can on somewhat us a From margins our to do an fixed lower extent. product cost certain than have

Bill Hull

here I this we that you more or remain see this, with know, if our turnkey this less more can plan. believe is Then the level. know, services, projects have And secure that, we you that, business type you like at

Amit Dayal

Understood. that. year orders you're press this transformational in the supported of in the are what follow Mike, sorry, sort statement large release, context And period like future on, calling recent does And that just reflecting your significantly imply and transformational. by this results prepared a is your a the be the or periods further will

Just that wanted you on can color to provide see thing? what

Mike Altschaefl

we cost back XXXX. the transformational longer sometimes couple got during feel it's revenues come we and We years, our focused cost that it going on think a we but focusing on disciplines and because shape right little beginning, very I to a mean, started of we bit takes from heavily in structure -- fiscal to flourish.

had that able services going have the of structure. were that revenues some accountability, marketplace, we to we second both together cost our both is think so also to and pleased our our to single capabilities turnkey and both our us in come We XXXX, product the And a fiscal the is the handle things installation picture in together site into for key for better that, revenue we thing believe design compared source a our bring us process. very to being competitors of differentiator better

our to business. continued of have our continue resources focus making are in part be significant to we our and that increase So a

past. national going had accounts. So We've the always larger in talked forward, we've

services the the accounts probably and table. where to we've sector going the that had continuing we land are sector, the feel we the need well that forward forward, national breath bring to business that us do can they to So public as and continue biggest will going as opportunities we for in a very automotive also large but

working So so continue building trying to pipeline, we're that into that fiscal we future years. we those deliver we can things are that to at move

Amit Dayal

the cost into Or just on are to products is the these one products happening one trying fiscal that year? it Understood. lower potentially last launch? this And XXXX? put to Is going agency this channel, you are when potentially

Mike Altschaefl

launching No, adjustable product which the launched a We they package. about will select little that a recently talked fiscal in is field XXXX. lumen I bit lumen just be

year. we later product rollouts additional is customer have launched have with throughout our head base this and We we as additional week that will being product this

So the XXXX. product launches that fiscal I've are for about targeted talked

Amit Dayal

Thank Understood. you.

have. that's So I all

Mike Altschaefl

Thanks, Amit.

Operator

comes Marc from FBR. Wiesenberger Instructions] Riley you. Our question next from Thank B. [Operator

Your line is now open.

Marc Wiesenberger

morning. Good prepared you. remarks… Thank In your

Mike Altschaefl

Good morning, Marc.

Marc Wiesenberger

-- highlight you customers. to you're working that the for existing did finalize scope

were to account, land you the year, you constraints If of do they'll any large back doing work that the another prevent you from face them? half for in capacity

Mike Altschaefl

we would. No, we don't believe that

what us, to and For it primarily the might we But of we require we order we primarily some that to ramp in is some not add significant we fortunately are facility currently space in does grow. access extended need one have amount physical to which operation, sometimes hours. talent our for CapEx shift us most continue of for have, as to to people up we need And running grow.

And from so at we today. significant feel are we grow we availability to capacity have where

Marc Wiesenberger

and Can pass inflationary talk Understood, ability to pressures in of raw materials you're you seeing some maybe you. thank terms on? that maybe your about

Mike Altschaefl

obtain our can it to better same some better seen of our or better because grow in our component bring volume to fiscal some during standpoint pricing We the as for increases volume, from suppliers position more them. this prices the put we significant work technology addition, a XXXX. with us after standpoint, And and input somewhat moderate that to we pricing in actually during year, have a

have impact. we significant So had not a

into are we that finished have not now that be that where sourcing, competitors most steady fact our customer components, and tariffs our our year. coming chain certain the XX% as hold our through manage steady are had they the issued we we've country have. to able source been announced of And we from as were do addition, an previously expect the to product for example, well that recently supply products some prices in as to and where been able at been for both hold able In industry we as and them throughout base, much our newer really as calendar list price where this of to

we're supply So in we place a a chain good from standpoint. pretty think

Marc Wiesenberger

of seeing as or with Understood. And just to heavily - owning their more me, are which service regards payments actually were offering customers shift traction models and your the clients, increase initial where before? maybe is lighting their around from that any fixtures then the kind monthly one making more from they you them on a a their ESCO ESCO's are are

Mike Altschaefl

are that we help also, our activity seeing very Yes, able to and more and so we're in with we that of some been supportive customers in area have also ESCO them respects as sources. to introduce there a We projects. be the appears capital of financing were finance to also service help available significant amount seeing to that to a industry can is lighting in

So, momentum yes, more in area. and we that seeing are activity

Marc Wiesenberger

very Great, much. thank you

Mike Altschaefl

Marc. you, Thank

Operator

Thank you.

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

is line open. now Your

Unidentified Analyst

for have you. seemingly and that's here. report perspective that on potential Internet you to of an input. your This very Good you wonderful highlight a obviously extend a to could little going a that Things, technology bit bit have of Thank systems ongoing forward my It's lighting side. more. if lot application would little from like and and I'd the morning expansion

last effectively example, revenue solve (ph)? of tell you your in small, us was related you If but what it's much to measured terms I business, certain the there? Things probably of stream and in the for impact can it how Internet quarter; know

Mike Altschaefl

Sure, George.

industry. that continue First and of ceilings, I the have sight, to lot agree grid a the lighting think Things, ceiling for in potential of marketplace Internet us the I smart in smart completely

that fixtures. statistics implemented from lower functions and control maybe single even controls under industry lighting X%, some having digits of show we're view probably Our on

fixture. room of have very single installed. place you Plus, it's in the light every have to fixtures controls got usually natural buildings, You've the to power every existing

into engineering power customers controls one controls drivers stay knowledge to into to agnostic; locked that so technology the our work meaning, different have through roughly what depending our those we're to want or not supplies technologies continue XX and with on two our manufacturers that we integrate We use.

granular time, control same it's that features disclose currently still or related we how our fixtures. probably relatively so it's business. But our safe I the impacting say of But At this numbers X% low, of to much we do and have think growing very so to forward think is that we and to it's a we've of ourselves with fixtures. the be technologies successful think to we in Bill? going lining more into by agnostic, successful be our put controls continue some up position good can roll don't those

Bill Hull

would to actual though coming table. add know, from you you dollars controls, about you it if I George, to think that, the the even in gets

have short going you mean, you're those I capabilities, if So, business. it's -- your don't to

You're opportunities get. the to and get we have going that not not those capabilities you're going to

Unidentified Analyst

just Internet it… XG And on you of How so far, Okay. going perceive the do from Things this XG. from point, to on appreciate pretty Would additional XG opportunity exciting one application you? the going comments of looks your the perspective for forward,

Mike Altschaefl

say go ahead I -- would please. probably yes,

Unidentified Analyst

Okay. Would it could -- measurement opportunity your install? larger a be I would that it on of assume

Mike Altschaefl

and XG opportunities the the fixtures. other prevalent, more be systems increase flow the to the that allowing having can should It would becomes handled, that things through be you just broader on as volumes bandwidth

impact sense?" asked, be And has a to to data has For of to there through example, on fixtures. fixtures they sometimes lot make some but lot there's light what we that "Would the a of sometimes, that do, get wired cameras flows

the think the that would of opportunities Things having for generically and Internet I XG smart roll, would that provide for grids. the and globally ceiling yes, So, further

Unidentified Analyst

three are near you let's the say, your your on in appearing okay. conferences plans for lastly, Yes, have along anything And way? term, what Do to schedule two at months? the

Mike Altschaefl

next in We're from months. conference more timeframe a this two in probably We anything don't point. December have the the at standpoint

Operator

to session. Thank closing the would the you. remark. turn Q&A for And over that call Mike Altschaefl, now I concludes

Mike Altschaefl

us progress Thank today's for to Orion in you day. Have the to QX a updating and team you, on their Thank I'd in QX. our good recognize entire outlook strong call, you for financial on and our forward Justin. like on call. achieving I dedication thank hard our business joining results work look and and

Operator

concluded. This Thank attending is now conference presentation. you today's for

lines all now. disconnect your You may

Orion Energy Systems (OESX) 5 Aug 192020 Q1 Earnings call transcript