Earnings call transcript Q4 2023

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Operator

Good morning, everyone. And welcome to the Orion Energy Systems Fiscal 2023 Fourth Quarter Conference Call. At this time, all participants are in a listen-only mode. After some prepared remarks, we will conduct a question-and-answer session. Today's conference is being recorded.

to to call begin. like Jones, to now Relations, Investor would turn over the Bill I

Bill Jones

on and other at financial Relations be we'll posted the Thank Orion's will today's perspective and Investor take CEO, and then orionlighting.com. will current the you investor good QX and full-year open matters call morning. of review the to Orion's Per Brodin, outlook. Mike will results, company's questions. Jenkins, Orion's CFO, of call website business Orion's section position and then A replay provide to

may Remarks meaning that follow expect include Litigation These and statements Private words the generally are answers Reform the believe, to such within statements similar of anticipate, XXXX. questions forward-looking or forward-looking words. Securities Act that of include as

that future are goals and statements any objectives, describe outlook plans, forward-looking. also Additionally,

forward-looking cause could morning in currently others risks has the are actual different as subject Such company results matters, risks measures These to non-GAAP than various in issued disclaims this materially metrics SEC of among its press company therein, release today. include, that expected. be that well statements items its to described the made such obligation of that to as today's update Reconciliations press certain described release. in filings. forward-looking GAAP as provided Except to statements as are any also are financial

turn Now, to Jenkins. call I Mike the will CEO, over

Mike Jenkins

thanks and morning, for joining everyone Good to Bill. you, Thank today. us

with the guidance XXXX million. strongest fiscal for $XX.X While at year and our XXXX finished some closed Orion our fiscal challenges, quarter within revenue posed

positioned a complementary and broader heading prospects. into more now larger our of We and past before, success providing of have strong a services Over company for products momentum much opportunities provide than term believe year, to we ever a pipeline base of XXXX. long diversified as we offering customers and the is better built fiscal a

and light charging in the market expanded LED recently more maintenance electrical controls, lighting into core lighting commercial Orion has needs, over rapidly our solutions. into EV two services last Building years, and for and on growing expertise the for

businesses two contribution our these years fiscal of expect deliver revenue ago. no XXXX to one-third two roughly in We revenue versus

These goals. efficiency leverage with of project core also customers our core align environmental commitment. expertise energy upon and achieve life helping capabilities business businesses their They and our new areas mission build areas to customers for perfectly turnkey of

projects, expertise demand some In about national largest by managing our to large both for in we customer to in executing retrofit space. designing, them approached of services, support proven with cases, customers led this maintenance been and had and ability along these areas. our us skill lighting LED Orion's enter

the growth XXXX To out our expand our operations business, and the service capabilities capabilities. January reach we maintenance continue acquired to Stay-Lite of and and build potential platform in

a is business. mission Maintenance critical

the the we long term resources, ensure have we high required and As services responsive that reliable, relationships. systems to deliver to such, quality need talent, to build

maintenance the help account new our space with the business, part who our about customers EV them As had us ability entry area. by national was charging to this asked driven navigate in into

centralized and surveys, unique with construction, to point customer's engineering, a all custom proceeds commercial in value a solutions commissioning, found the charging us like and with of contact EV retrofit site approach was Our research solving LED and needs of We the starts much where pioneer solution tailored needs to installation led accountability. our the through to business, and Voltrek, their customer solutions. very

national substantially expand at felt together, Voltrek's we were the mission market compatible and Importantly, those highly we and Orion could opportunity. Voltrek at with that, leadership

and high cutting customer edge quality engineering, technologies Orion implementer, and bonds. strong From the benefits a strategic be that standpoint, smart design forms decision years leveraging service the implementation ago technology made to a with of

our believe navigate customers we complexity their and to help this become and grow landscape Orion well systems and the of interconnected, partners increasingly electrical plans. positioned As implement is

In addition, products more in as quality and them. delivery we US, and by prefer who well from times, high the to maintaining customers require our faster made in of predictable America providing benefit or manufacturing as of much the benefit

some in of early into launched million charging $X the off highlights, Voltrek million October is million. to of expectation The versus revenue to strong us $X we XXXX our second XXXX XXXX, fiscal acquired to of that a delivering Turning start, business space. EV and initial in the half $X.X fiscal

out coming vehicles years We electric capabilities growth growth Voltrek across at the the associated anticipate substantial US. build support to their as the of in we and rapid infrastructure

an bus order pilot fast X our an Voltrek in program infrastructure fourth during quarter, initial example, DC Boston. for for charge level an secured school As electric

The XX buses with of out approximately a of million of a additional first in XXX involves the and of phase value future. the fleet charging orders contract prospect systems $X.X for

XXXX. course, mileage The new announced represent Of will will administration XX% likely recently vehicle EVs driving also EV accelerate infrastructure the forecasts charging by about XX% has demand EV standards fleet and growth the the are estimate that by XXXX for in that of new market.

and the base in a the them to Voltrek support concentrated initiatives its execute has growing To and Given business US. demand, to infrastructure investing source Voltrek Voltrek's a of been across support other are projects in northeast, the ability we its scale out variety rapidly footprint, in surrounding to resources Historically, business. national to we building are both Massachusetts. in personnel funding enable

We our to will believe XXXX. begin to we are second on efforts also opportunities time though bear opportunities These build for to take new of business from the fruit portfolio. they fiscal engage, across working customers selling in revenue half cross

$XX.X rose Revenues our organic Stay-Lite Turning and from from XXXX, contribution to year Lighting XXX% fiscal acquisition. to services. full growth maintenance million benefiting approximately in

expand customers, to growing transfer well our ideal maintenance turnkey We project-related businesses, allowing revenue. and add and complement value a to recurring competitive Maintenance us provide our in of services base the believe customer creating an advantages project existing Orion's to new service to business. while management

growth with XXXX. fiscal customer, our largest and maintenance agreement building preventative outlook on supporting for reactive maintenance existing a signed we our Recently, our program

adding at cases, both and business high capacity satisfaction, the also are there's term opportunity, of as place we plenty in critical are of to In ensure in long place. processes support in put infrastructure Voltrek. right levels getting this but we it's and customer to growth just processes We that are

business. which we of XXXX. into our million $X the customer long LED QX, prior automotive the year projects our announced start QX a lighting for from fiscal to The into of gearing A from fiscal slow a end previously Turning shifted in Department Defense project for term typically is and are completed of rollover $X except million project year.

complete and fiscal year. this project end largely to expect of to We by this the quarter ramp in two be

in project We in revenue related the customer to also a This picking is to additional logistics up is million expected have for potential also business with $XX XXXX. subsequent million that early $X years. in range, annual be fiscal

partners. reflection growing In we from is our targets. increasing savings and energy key their ESCO This service cost growth goals a anticipate demand focus to ROI channel, customers' on ESG of company, or in addition

providing XX payback to LED provide the some solar to rebates, five very investment, typically installations speaking, retrofit involve with to most XX% periods. or with benefits compelling clear projects of ESG XX% This Generally to more lighting on compares year year ranging paybacks. two that XX returns from

which awareness new look. sales pageviews, make late continues to digital visits is marketing launched with I front, website strategy in expanding leads. On and the friendly unique in nice our take in progress providing XXXX, a lift to qualified encourage engagement and a Orion marketing a you user We solutions.

few sales who From efforts in Ken Sales demonstrated he us months, a growth. executive is sales highly ESCO. a Ken a January. and our leadership comes our our an Poole experienced important from supporting we super Orion as himself hired standpoint, as a helped EVP asset focus just has of future In to

efforts, in team, our we in as EV investments selective are sales making sales maintenance as and our support well businesses. our To

our space proving Importantly, well involvement ESG labor are we the charging company. in to as talent this helpful tight our finding focus that Orion's in attracting are in EV market, as

the half. outlook in at This Reflecting we business. second $XX or and from revenue on million expect to the EV lighting our fiscal and grow growth a currently anticipates greater revenue proportion lighting, and from LED million, maintenance to in expected maintenance solutions least balance expected XXXX $XXX solutions, revenue LED charging approximately services EV XX% charging of aggregate with more across services the

carbon and opportunities engagement such strategies, as electrification goals, related zero, to areas larger Today, particularly our new emission and our net business, of getting opening across with and ESG customers' goals, accounts. are national

all their report, environmental For annual example, highlighted major importance progress customer stakeholders. their of their in conversion a to Orion to demonstrating LED lighting the ESG

new the sales, business, selling we though are have diversify integrating marketing strengthen hard work do in initiatives. enhancing our cross work our businesses and to undertaken of and proud has to team still our and our We

prospects growth progress for forward. XXXX we made, have Reflecting excited on am and I our about moving fiscal the

our With financials Brodin hand call outlook fiscal to the Per discuss and financial our that, for will I to XXXX.

Per Brodin

you, Thank Mike.

ended XXXX in and year our with $XX.X As of strongest $XX.X Mike $XX.X fiscal million mentioned, our revenue year, in QX versus million the XXXX. with QX million of QX we quarter

activity. Our expected project rebound QX in an performance reflected

year-over-year Orion's was $XX.X online million million, decrease primarily with from as As large expected retailer, activity largest range at full $XXX.X due XXXX which fiscal global in in well delays the year finished projects. anticipated, guidance certain a and provided within declined with customer to in and XXXX. as fiscal

resulted in fiscal revenue project the XXXX largest million of The year. customer multi-year versus in down wind prior the with our a decrease $XX

Orion mentioned, outside in over successful the revenue million was by business XX% of or diversifying Mike its $X.X online growing largest However, our XXXX. retailer as and customer base, fiscal

reflecting certain margin lower fixed XX.X% in under-absorption Gross to and compared in costs in shift as XXXX QX mix QX product XXXX, on of XX.X% revenues. was a

on expect the absorption. trend XXXX revenue our on higher and with to variation profit overhead mix basis gross fixed fiscal some full-year based We quarterly in percentage a

related Voltrek Total Difficulty] million XXXX, operating in as $X.X Voltrek. million due the to QX compared $X.X the [Technical $X.X in to million some earnout of primarily as were added to increase G&A QX accrual consolidation with expenses well a acquisition, XXXX

$XX.X and was higher Lighting, the of of were in QX therefore, fiscal G&A expenses the related prior-year which results. operating in prior reflected as expenses not million fully $X.X Voltrek the costs and acquisition and, million For Voltrek in acquired consolidation XXXX reflecting compared to million year, to XXXX, Stay-Lite $XX.X

the to versus loss acquisition. $X.XX of to loss or per We a million recorded Voltrek operating due QX $X.X primarily expenses share, a $X.X XXXX net QX million per $X.XX XXXX related net of share higher or

reported ability associated tax non-cash NOLs. non-cash not as to assets impact tax future share. does and expenses or Orion well $XX.X fiscal operating per charge $XX.X existing charge offset deferred net XXXX million compared The of revenue, $X.X of lower Orion's loss against fiscal million in costs $X.XX acquisition in income per as fiscal a decrease income or to allowance XXXX. XXXX reflects XXXX fiscal net valuation The a $X.XX million share with

QX XXXX due to and positive certain in some strong cash projects Our was at $X reductions. flow receipts on operations from inventory strong cash million

Orion For activities the for year, used of in fiscal cash $X.X operating million XXXX.

to actively to than Some year. plan of higher QX supply chain $X levels a to on related normal more Based another normal that XXXX, to chain inventories in by the continue supply inventory assuming normal in ensure began disruptions. to and supply activity, against near return further chain million through fiscal maintaining reduce we to reduce XXXX, our levels million $X conditions inventory

and In in $XXX,XXX expenditures fiscal our of those maintenance support double had XXXX fiscal EV XXXX, we in investments expect approximately and capital of to businesses.

Orion's capital including on this as credit of Liquidity, our million, facility. outstanding net which facility close including on XXXX, was investments define borrowings available million year $X.X $XX.X end. on was $XX.X of cash had and $XX million fiscal of We we at of working inventory the facility, credit $XX.X borrowing plus million, million. availability cash $XX million At

position across remain liquidity solid putting XXXX, fiscal in growth expect We the position and business. to cash a financial initiatives us healthy support in our to

to Regarding proportion for XX% our building revenue fiscal have with progress the momentum outlook, second of year. fiscal half of our more of we million, approximately $XXX growth the reiterated of XXXX as revenue a we and financial XXXX expectation or greater through in

from businesses, which newest for $XX approximately distribution solutions, revenue maintenance includes aggregate guidance expected the sales. revenue on balance lighting million EV projects for accounts, products and channel LED and ESCO charging solutions, is services and based national our partners Our and of

future growth acquisitions investing their of is As Orion. M&A, near pipeline term, primary our and recent integrating for focus while continue a two growth the success, for for we will in maintain which are and drivers to on the opportunities,

that, over with the I'll the questions. And call to turn for operator

Operator

Instructions]. [Operator

Eric of line the from comes question first Our with Craig-Hallum Stine

Eric Stine

if down you just fiscal little wondering a can into bit more So, outlook maybe XXXX. the drill for

visibility. more the how and And remainder you're be you projects maybe or between what just just color those see you you But a mentioned and today as appreciate have services stands distribution some year expect put electrical forward entering kind breaking it So EV as then and that or out to channels. the distributors, maintenance your little move versus would for a you good ESCO of piece. national of it it, the that you visibility of curious, might normal in it? How accounts,

Mike Jenkins

In growth we've business, very the in business be right have the segments, we we top coming major terms growth fiscal talked year. a next in really before, government see customer $X is year. which ramping going million, all Clearly, about now piece do for into the effectively of as a That'll we're board is But across of the planning big through for which with contributor nice QX. our segments.

side, well project on both I to we think grow our there side also as We have Distribution, and as double well. as expect on the an maintenance growth digit. opportunity double-digit channel ESCO the

we're So, now, the double all segments year. forecasting into for right digits next

some In farther visibility, term, the the that feel there's initiation. look pipeline, we pretty the terms projects farther But as of the see we about about and and out. certainly vagueness we good near

for the waiting won't see things are time, in year. But this at a of second the to half those point activate don't that We materialize. few we in reason any larger

Eric Stine

you one, level? say, my how Do anticipate of – of thinking or will from did reason that Voltrek, do a national second be this a of think decisions of some kind it that for made, just being those would that Maybe at these feedback the you about site-by-site when the account you because of decision? Or national was customers given this be more large decision. done were part the

Mike Jenkins

forward. mix think I it's moving be a to going

their take I their think proactive of some do support brand approach customers. and guests and on to image a and as may something basis part a accounts national

the localized, majority, it's the going Obviously, think different have regional. more EV. incentives be place I support probably in to states to

strategy more think But of the localized of be will their that now large bit deployment the working I over of a it are years. couple I most So and accounts next right think through regional.

going to local, national deployment I and that may a the ultimately, So all regional to they're they're to same to place strategy. think, get the but be have going have

Operator

comes line Dayal Our next H.C. with Amit Wainwright. question from the of

Amit Dayal

you type retail? in customers? Is With of pipeline, looking you respect the related I pipeline? EV mentioned what fleet of on fleet are to that can or customers color share kind any what these type into are know Just solutions? any customers there deploying

Mike Jenkins

Yeah, it's really across the spectrum right now.

participate opportunities of the selling very lot so the Boston of Voltrek, with We to in, we business. in that's additional build same national trying interested and across that have phase municipalities. on businesses fleet one comprehensively the with with cross them. did side, a We're businesses And actively we LED getting we one, The we in we in efforts showcased was expect of just can seeing infrastructure activate to our Boston earlier, why And the And lighting was was Schools. vertical more out aggressively this. fleet we Public project we're phases sectors project right that the are now. engaging reasons accounts private that

electrification it's question strategy. think accounts So than need think acceptance infrastructure. starting one whether EV to other. are a And answer, through is their charging seeing We're and the I of to difficult really the more customers for broad

it's So areas. really all coming from

Amit Dayal

in trying along sort these and what of like side? looks to synergies And EV the the Now focus, or get business continuation different of that a maintenance double they're at you can three offering? you these Like, of have types for those are lines, operational you. it of of the opportunity? digit lines, for distinct exploit of then see terms just LED sense where you will all growing bigger where or you do Is products

to to you If choose really after? had prioritize, you which go would

Mike Jenkins

maintenance. I We growing why Well, double they these for answer projects, customers, life electrification which going to I their businesses that all move clearly, point I LED model, of think you digit. earlier, as would are And synergistic, customers that is to to the we think strategy. customers we that said customers thinking as about highly from all back them can which made, fold nicely in see is see so as by our evolve

them operational can three strategic our to the all be and partner of our So There's unleash an all And to line navigate areas. efforts that in those of cross them is priority standpoint, help synergies for from between our we three think customers. top lot selling customers to to we a a here.

moving all together So we in we that them faster feel business, even of terms comfortable grow forward. of and independently, can the

Per Brodin

I first be a should they these think fair the of about relatively that the back to operational as leverage on But operations. touch to we Just for Amit, that standpoint, part probably amount a independent. from leverage functions mostly level, question, the your think able office run

So it's functions. mostly the back office

Operator

from B. question comes Alex Rygiel next Our Riley line Securities. the with of

Alex Rygiel

I the guidance you on in you but to bit into if margins to rebound longer over path gross with gross dig back coming regards and guidance the margins, margins deeper term, and a about, years hope talk directional to. the and could gross of the to the line top appreciate where a get little quarters sort

Per Brodin

on Per. I'll Alex. It's start off that,

was give have of fiscal to through we gross LED the that that, costs. both, say, some comments rebound obtaining into which margin manufacturing. lighting overall I in is an will part absorption having well standpoint, overall as make help fixed XXXX a my be fiscal we the visibility our of the inherent OpEx Well, as better from perform revenues, us for plant that in as That'll projects comment absorb in increase for us within think that our about XXXX. rate confidence in that as the

into high than a to the grow, to coming standpoint, leads mid infrastructure. to product range from So And should in to the potentially I continue we back continue back would think XXs. leverage it get as year. XX to And that, to better the and services standpoint, ought we would a that expect be from that we

grows. would those So revenue over increase as time

Alex Rygiel

it relates basis to of G&A. going dollar we Similar as about on revenue should question a think or percent forward? basis How either that

Per Brodin

basis. don't we guide typically dollar think I

We expect fixed costs. the to continue to leverage

you footprint remarks I them of some we will, in in things national we the in expand think to that their nationalize, making investments scope. one help business EV more our are if mentioned the is to be to

investments And then, beyond of grow there's So future, that overall, side continue would level, the some we we'll we go well. as as expect can that as I XX-percent-ish that that back business. on in EBITDA and to the we grow revenue, certainly to get

Operator

Instructions]. [Operator

Our the comes Management. Shapiro from with Andrew next question Capital of line Lawndale

Andrew Shapiro

follow-up questions margins. Voltrek gross a a question here. have have on on I I then Alex's And

referred it's comments to your margin? about fixed to and costs nature, impacting And what fixed you this you and margins. and recurring are just historical some the and of Or costs inside gross talking in So certain whether a referring is of your of release absorption? are overhead costs they new on expand the can you're we gross are

Per Brodin

that margin, on because or either fixed under-absorption within I'd lower gross on deleverage… costs. it's, would you human the the can also in some services facility margin the Within costs services have have the as do – say, fixed line we resources primarily And based be on are line that our manufacturing we historical leverage nature There of sales.

Andrew Shapiro

through got So, costs. your gross in Right? margin? investments set. incremental Those all There's put your in new just are that it's nothing SG&A historical fixed

Per Brodin

correct. That's

Andrew Shapiro

A accrual on earnout. you a Voltrek the question here, an took is

just revenues to you for what Voltrek get its prior what versus feel year you for million. I were, is? just able it Voltrek's that the private was to QX $X.X qX growth for think are a share cadence And was quarter? Was

Per Brodin

on we million personally I not $X.X have their here guess did am to those calendar commented business. would comment comments what I historical for their business on account going away I is results. since from XXXX publicly on we a being stay

the stick did I just in I the year. think current would So that $X.X million with we

Andrew Shapiro

generation? of earn-out, What on was it? and that earn-out quarter was then amount or triggered Your cash that for and particular achievement flow the revenues that based

Per Brodin

EBITDA $X.X recorded There earnout was $X.X in amount is recorded And QX EBITDA, the in of based that target. million. The quarter. the a was recorded on an million was previous

year accrued million a calendar that after probably $X $X and for accrued target, million so Voltrek. fiscal then, we're which of And cumulative would of year. $X earnout Just paid was that in clear, million the there's that – occur additional XXXX this for an potential be owning third July will earnout, was of the

in paid that XXXX. So, would be potentially

I'm sorry, correct that. of that payment. would XXXX, be I'll cumulative That

Operator

Mike session. for question-and-answer the closing remarks. call I'll turn concludes over the now Jenkins to That

Mike Jenkins

you you Thank months fiscal updating you, for on call. engaging you as of in and participating the operator. growth plan in execute XXXX. and look all And many to with I thank today's we meeting forward our coming

As we are XX. part and Ideas the at we tomorrow, conference in of participating June conducting today our outreach, LD and Wednesday, X, California are Virtual Micro meetings Conference X investor on relations and June in the

For IR if management, events, on our press these you. contact release. Thank on to please or information you information today's is included more call schedule whose a like team would with

Operator

call conference concluded. now Thank may now And you. disconnect you Today's is

Orion Energy Systems (OESX) 6 Jun 232023 Q4 Earnings call transcript