OESX - Earnings call 2 2024 | Orion Energy Systems, Inc.

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Operator

[Technical Difficulty] Fiscal 2024 Second Quarter Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Bill Jones, Investor Relations. ahead. go Please

Bill Jones

Per good financial call. and an Thank for year-to-date followed you of discuss who Thank quarter and second Jenkins, morning, its Orion's today's and by outlook, and Mike business the with Orion's CEO, joining CFO, Orion's will company's you, results, strategy everyone. Brodin, position will overview guidance. begin financial

to open then questions. will investor the call We

a website, replay Relations conference Remarks will Private posted meaning of recorded, call Act Today's answers Investor Orion's is of XXXX. Reform on statements forward-looking and section follow and of include that orionlighting.com. being that the the questions within Litigation be to Securities are the

Mike filings release its as I as metrics to now the describe are to various anticipate, forward-looking risks Reconciliations certain expect, such described forward-looking results disclaims obligation release. will include, among Forward-looking this statements the subject Securities similar words company also statements Except in generally GAAP morning Jenkins. described matters materially goals, to are to the could that well These project are believe, to include currently plans hand has non-GAAP or company objectives any in Exchange differ of therein, forward-looking. in future than and are that measures statements Such its outlook press which today's today's issued words, made actual statements, update as the cause as provided and date. press that financial risks Commission. of with call or also, others, any expected. also

Michael Jenkins

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

through and in of 'XX. last quarter call, second and both the we anticipated momentum As anticipated we XX% revenue year-over-year progress with as the building revenue our business fiscal sequential Orion's progressed growth reflecting in

discuss Per our and a in since the and financial both overall Lighting total. our start guidance our strongest call. months business our month year bit our 'XX the X was fiscal QX of will performance within top and of later for September the

start and to of performance several overview working through its EU by million semester we to project way to customer. warehouse now fiscal regulatory up project business, business Now European balance the and the contribute complete began providing projects bulk global but technology of I'd segments. catch growth including from and our other strategy in continued Defense long-term million, of logistics this of of project swing, revenues this with to the of retrofit the an LED Department like in Within our larger year, expect the in global $X.X bodies, anticipate fiscal We the Lighting This a 'XX. to is in across second $X.X a project we approximately experienced start-up unexpected customer QX sector in the well earnest year. issues full retrofit for expect fiscal as a as some

about lighting meaningful to for of expect project largest from lighting outdoor growing customer. an also We pipeline We good feel business. come revenue our Orion's

ESCO our solid full in distribution growth We LED from electrical revenue and also anticipate year contractor lighting channels.

mentioned, delivering on project customers. are ESCOs benefits to energy In savings the their environmental By was I their investment and X technology customer years. LED return provide partner. a nature, just significant retrofit ESCO lighting retrofits the new focused long-term on through as fact, and value relatively quantifiable are full of within they generally right a to proposition X sweet savings spot in their energy sourced

an the XX% first was and up in through quarter ESCO DOD customer, XX% months, the with international our includes for which warehousing sourced Our our which logistics relationship X excludes business expanded X large ESCO. was project, but

design, in line and retrofit and value of energy energy-efficient the to for distribution launched products interior performance LED new relationships, products. is who extend quality value-oriented leadership new contractor-grade channel and the continuing focusing quality They as industry-leading service. incorporate exterior penetration trade. highest customer competitively commitment we recognize high products were a more requests Orion agent Harris an on as that distribution product To and known to for within quality. bay in include productive TritonPro high Orion's fixtures partners our our priced build which levels of These our our strong well channels, incorporate that design are fixtures efficiency and lighting and branded other recently more to the LED the of We expanded product base LED of of developed our response line

revenue has very over quarter recorded in new availability. first products of Feedback X, and from positive, been in we've $X quarter these their million

and strong, in of been has activity quoting fiscal these look we sales to of the 'XX. accelerate second Our half products

Importantly, also contribution. products margin solid a these provide

The will Also prefer be who IRA sources. customers XX% stipulates funds. created the or on with products. and greater BABA federal well from bill to products of America BABA material as those that BAA content compliant the by order recently is in to receive state, and products several municipal which part possible products BABA debuted they Build that was received product to requires standard of come U.S. use when Act, schools and U.S. compliant the federal expect a America front, new are that and we we certification, manufactured Buy or

our is manufacturing product due to and U.S.-based provide uniquely to Orion this capabilities. positioned facility

with exciting past goals achieve cross-selling providing while well business opportunities. As services complementary into months, and with Orion include mission EV new you helping maintenance areas charging which we diversified our station electrical business electric X providing customers vehicle as These may core sustainability their know, well areas, over or our solutions. as turnkey are of have XX aligned the new

us acquisition We saw areas, QX decision-making of revenues EV this to teams of our managed a these and solutions the and third about the in with previously charging of sales its our to sequentially geographic integration market we our revenue a in as Voltrek our had reach. large asked broader industrial to X in key and help customers the Many year these Voltrek. enter last was year We commercial spaces. support project ability quarter entered quarter had a through factor in expanding in and last management them of dip project bus of build-out year then which

fleet success, these quarter on strong with the and segment in prior. X, $X.X rebounded EVs contribution rapidly vehicle continued strongly XXXX. market Businesses their by revenue EV growth and and EVs are and track business be the year our capitalizes strategy periods Orion help well fleet its of Our and throughout XX% their journey. support and to this customers to of progress. record anticipate now base million by customers XXXX the the evolving in We in [indiscernible] customers on solutions our as positioned interest to their is everywhere electrification considering cross-sell new our and exciting charging the delivering versus at no needs. Voltrek own ability long-term partners U.S. of employees, growing will EV in coming through

including Services a now some the structure. both customers to address in no and quarter current sequential years. higher business increases, revenue longer We have past range our reflect cost came growth. pressures, we and multiyear costs delivered pricing for inflationary To of last the of better our occurred also Our and X acquisition these existing which contracts, acquired with year, subcontractor several a number are year-over-year updated of Maintenance given that cost of have over profitable new Sealite Lighting

We've for renegotiate contracts up are to we as been came progress. working making they and renewal,

maintenance profitability results will contracts term impact headwind We return second are believe effort some for significant plenty in our have half a most to the customers. We solid price of modest renegotiated service our and therefore we growth new delivering the to standards great while these to believe in high could legacy near X this that business space, out this the revenue of of there and segment. levels of 'XX. loss X could can value recognize effort of fiscal of we and our profitability as in our opportunities provide pricing result and Nonetheless, restore continue

customer. stores and will upon we X-year through with LED services our and The recently finalized and X,XXX formalizes agreement historically initiated nationwide. maintenance electrical provide lighting builds scaled light largest to Orion services approximately July. customers maintenance February a in retail preventative agreement We our preventative

am and pursuing business we work are have progress do still though lines the revenue our with to I we opportunities. of making, integrating expanded pleased in Overall, terms of

are array are We expanded and of and about excited our solutions offer partners interest. to encouraged their customers by

X already and believe secured have of our our initiatives projects sales the deliver focus area remains we that we move all for forward. between This of as segments. synergies growth we an through We can business cross-selling new product

success. long-term strong In diverse summary, we building for we a and believe are business

of half revenue We accelerate fiscal expect revenue business as 'XX. $XXX our the fiscal have and for in second to reiterated such, our million across 'XX, total guidance the see

outlook Now I'll to year to Per Brodin pass in fiscal call the more and our detail. discuss financials

Per Brodin

QX also Orion's a revenue in partially offset XX% Mike. 'XX. quarter $XX.X primarily in lower from of million the XX% quarter $XX.X Thanks, 'XX QX which fiscal grew and the to was revenues. current activity revenue [indiscernible] sequential 'XX, first by reflecting million growth, to maintenance lighting improved Revenue basis on compared

'XX, projects, half we which of larger of We approximately leaves to $X.X project, ramp remaining on Department million outdoor $X previously, of of several large in 'XX. the DoD the project. the we lighting project fiscal discussed complete and which in revenue second including a have meaningfully this European expect QX Defense As million recognized project to revenue

to $XX.X million fiscal 'XX. first revenues half first million $XX.X X% rose Our of from the half in

million $X.X maintenance from sequential gross gross improved of margin and improved significant Notably, on costs Our to $X.X basis, profit all our QX [indiscernible] grew across terms million better absorption businesses. fixed 'XX the reflecting in X on profit contracts percentage. a

percentage in by the several profit maintenance gross being legacy quarters impacted our challenges our over past on contracts discussed, Mike As business. is inflationary

most During well. [indiscernible] to other and are our contracts, the legacy as significant contracts working X of update quarter, legacy X we renegoniated we of

our half to attributable overall product we slightly on ago. from improvement Our to XXX XX.X% service new further in cost negative, basis XX.X% margin driven maintenance rollout our a from negative QX, agreement 'XX is higher XX.X% a to maintenance largest of QX year by benefiting and for pricing. of fixed led this benefiting benefits fiscal it's also new sales X-year our in margin customer. absorption. points In increase margin an provide the improved although expect QX, new began to volumes back This products year, Gross from the business preventative in in efforts services still approximately

we the fiscal business year. Reflecting of blended taken the in overall, steps volume sales half our this gross second further and our the our business improve expect margin growing to in in maintenance expectation of

$XXX,XXX [ in Operating million QX of acquisition. amortization operations million from 'XX and operating $X.X QX included to the 'XX, lower QX 'XX. ] mainly credit Voltrek million of large due that in related from Our compensation-related intangible due million QX expenses to to to $X.X earn-out a the $X.X increased $X.X in addition declined costs occurred write-off and sequentially costs accrual

of We $X.XX $X.X in million million the 'XX, in of Voltrek cash recorded close operations of liquidity, Working versus QX. million million, or in positive and September net effects. of million of $X payment, assets $XX.X cash year. [indiscernible] $X.XX which positive current million, results used a XX, $X.X net 'XX [indiscernible]. of accounts of loss $X.X was at $XX.X revolver achieved of share $X.X million a million. was QX the cash a million Voltrek $XX.X per earn-out receivable At million 'XX free the share, in cash operating fiscal flow September loss inventory including plus We net current we by balance Cash total included had a flow over including of QX reflecting working availability, $X offset QX free capital and or partially per in expect positive $XX.X capital this

half improve year to second of the the revenues. fiscal position liquidity based on in our expect expected We the ramp in

primarily In addition, our our we a to through headquarters. ways are additional potential at corporate enhance looking on liquidity, mortgage

several nationwide QX, maintenance larger finalized we and a agreement. started As mentioned, projects in

$XX.X our backlog XX. sits addition, in at September In million

full we The our revenue for and million. begin on implies year growth the our performance. half 'XX, session. we of With our things goal expectations outlook. the half complying revenue other second total more in I'll line Reflecting fiscal more these expect improvement $XXX XX% have reiterated Based Q&A a meaningful and or bottom revenue All to of achievement of also these growth of of contribute factors, of year. revenue solid this a expectation, to in ask operator that, improvement the this second the approximately

Operator

from Our of comes Instructions] the [Operator question Craig-Hallum. first line Eric from Stine

Eric Stine

started already called you half, second which the in project, the DoD about out thinking when the lighting So has project.

to? any ramp, So so things I just confidence curious, or just there to But the got started would to point that other start. if clarify reiterating that expect that want you're you gauge large you clearly, are projects to you guess confidence and that I that when that. give that in you've trying it, And

Michael Jenkins

Sure. There things. are a number of

we project, of that's which happening obviously, of as exterior project figures largest an half is And warehouse rollout. a DoD all this mid-X spoke that about, company. the is customer, and talked moving forward. a logistics company So kind expect our do for we which second #X in the We year global basically project and our disclosed, customer, we've about

to which into nice expect spoke year. which revenue And year-on-year moving to we there second move We expect recognize of growth. the will technology we on -- project as continue half that forward, the business we other that scale about, give to are do a us on basis global the

nice are a expect and flight shortly, of of projects, there are activation which which already we should number So in some scale.

Eric Stine

it. Got

those DoD the in underway X visibility -- gotten but already -- there that's is into good starting? you've the So in on, I you're fair say already to waiting mean others.

Michael Jenkins

more have we start-up -- a EU regulatory did we referenced anticipating my comments in QX. [indiscernible], would I bodies. right in that were some through revenue That's experience we getting issues bit

in -- year. view caught the basically be up that half So the we of that to miss second

Per Brodin

recognized million $X.X And The QX the fiscal the few we the a say just in we Eric, of 'XX. neighborhood. did quarter. There hundred project of for thousand that in is math, in that was recognized $X.X total second million

So in million we be virtually of all recognized that of there's majority that half. that, about left the $X second to expect the

Eric Stine

said got curious be how then would can that it some come might of they X, now quantify curious just you contracts Or have renegotiated of that look you've Got short on if whenever ongoing based up? and in out there's you you kind place renegotiation Okay. others market maintenance renegotiate you you've it. conditions? the I'm then that nature the if and there. of know on the And but you've X some to just others they contracts, in got I whether mechanisms to many kind there are variability would an out enough be

Michael Jenkins

Sure. Yes.

of As last these call, kind indicated of address able on a we contracts. off-cycle to were the on pricing couple

there of contract, need have pricing way out top we . The is of to have we've is which X, work accounts have cycle. their got fully X We renegotiated it our works on. we and these X basically normal major out still RFP that kind renegotiated then all

we working And that. so be will through

some are -- fiscal of And in as early those beginning fiscal of year up year. our early the our as

Per Brodin

a the of Eric, maintenance piece really X is context that more contracts maybe, State are the And of large Light. little at bulk

of represent miscellaneous contracts, revenue So those the there X other the bulk would that are in part but of segment. the

Eric Stine

Okay.

new go the pricing through a that's would where the with process you and is simplify, in so them And maybe now RFP kind last and major you hopefully, -- process that X you've win. to of mean, presented I the they

Michael Jenkins

we're X certainly, that's going them, and all remaining. the mean through I of Yes. with that's

mean, right I yes, conversations are principle, So now. in those having

So...

Eric Stine

Understood. Yes.

me. last Maybe Okay. for X

Just on EV the opportunity.

of I curious, a more that's over asked think many requested be Or these your this you just their it you. a from before, to kind I've of company decision is Do obviously, this decision? but footprint? customers, capabilities by expect them site-by-site

Michael Jenkins

can think work I both it ways.

how decentralized think they as really their it run how company. centralized on and I are a they depends or businesses

fleet that of will with or et will whether folks and have location some not a that cetera. depend across really others, they country. facility, we're out conversations having And think basically the some it I go like on

both going ways. work to it's So I think

Operator

And Dayal our comes of from from line question H.C. Amit Wainright. the next

Amit Dayal

is on Just enterprise? pipeline of corporate opportunities well? more EV is the and as sort some government-related topic, Or there

Michael Jenkins

private We are there companies. Yes, Voltrek with municipal opportunities. of currently business as certainly both with of public legacy kind private part well governments. do That's as the and of

for own in federal facilities. of growth were trade a And amount show. so at of both about and And recently federal conversation use strategy see tremendous the government was areas. their we the there We electrification government a

So downstream, to rapid I we're both think adoption in going see areas.

Amit Dayal

Voltrek then cetera? you et us on paid what And earnout, be the could out, remind Okay. to remains

Per Brodin

the calendar be the it's earn-out, million second Yes. opportunity. 'XX quarter $X.X calendar be and opportunity referenced payment $X.X paid September of made in October million to the for was paid fiscal -- then We the a that 'XX I that fiscal million a 'XX million then toward of is fiscal in there that the $X amount in will earned, would extent another earn-out, There towards second earn-out. $X.X

following plus million of 'XX for the -- the fiscal on year, ownership, opportunity time first over $X.XX million kicker paid potential an X earn-out a cumulative the be And of a cumulative incremental there's at then which as would be could that a EBITDA max $X earnings a opportunity. years same the

Amit Dayal

then just renegotiations, contracts of and move going But actively appreciate I I also legacy this the Okay. existing are a service new to point? to new sort cetera. trying And on through Or maintenance setup at to your out add before of clear segment. you're et know it. with sort customers? you lot clients you trying are adding you the of maybe

Michael Jenkins

we did the bit #X our of as preventative X,XXX with new a add on actually business we customer, quite locations. side Sure. talked Well, for about

new the So to was in volume. terms that add of team a big

and the our business. So on address same priority certainly our now. that. the business out want order of the opportunities the growth as out to we of see that. then focused now, bit approach time, legacy We around do digesting this there, legacy right certainly at we're building resources step-by-step We're but shoring up first right a and And profitability for profitability

Amit Dayal

should for margin of to lift the expect much you how ? if we is Once, overall normalized blended guys, a the margin service

Per Brodin

think what get that I experienced a you of to the as look more margin, for blend ultimately if the think we've we blend, the to business. Well, at margin about back expect service traditional

that's where headed. we we are these So quarter as going not renegotiate certainly that over continue to to this the so that's or next contracts, but is targeting happen business

Amit Dayal

Okay. all now. X for on follow And that's later. But have up I I'll that

Operator

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

[indiscernible]

Unknown Analyst

[indiscernible] Rygiel. hear Can This you for is me? Alex

Michael Jenkins

Yes, sure. [indiscernible]

Unknown Analyst

Okay. I couple myself. questions. in logged A about of okay, because as That's sorry so quick confusing But that.

kind rate some any bidding interest environment, slowdown of projects? the larger of opportunities delays just you seeing the given in Just are or for project

Michael Jenkins

in we any not at attribute not time, could point that this seen At delays to have that [indiscernible] we all.

Unknown Analyst

Okay. $XX of your here. in it track to million business, a can terms this about Are you get And big to a the couple pipeline? Good you million hear. maybe how year. Can the to well for years? Also of talk on in like you full the Voltrek it's still of progressing hit kind sounds for revenue $XX business little bit fairly in next

Michael Jenkins

that say that, that's We on Voltrek this our think thought definitely that quarter, around business would be given plus Sure. it between you still Yes. that X/X business we're did rate earlier that of current track and Voltrek coming or We for overall. of achievable. out The business the we like the for we feel maintenance run [indiscernible] the referenced minus.

of And in the macro $XX won't strong we see be business of environment referenced the next Voltrek in EVs. million comments, $XX directionally years. to do perfectly grow And in broadly, of my towards view opportunity remains I the very million the linear, strong. and EV the but space to couple It of longer a more as terms

Unknown Analyst

that your Excellent. the guidance And reiterated to see then for year. you revenue full nice it's

do you EBITDA the this EBITDA? there? half positive on And Can get on thoughts any how we of second the exit Just for year.

Per Brodin

improved mentioned comment, I results. that we and increasing our in sales Well, line my expect to [indiscernible] certainly

[indiscernible] that we a would free probably But we So net as our expect, be cash as positive performance I that to year. positive, leave [indiscernible] I do say year-to-date with the flow make which implicit the it positive result. in year not finish think EBITDA

Unknown Analyst

awaiting for Or contract then funding. a value-add and question. of X final Pure any on large update just newer more DoD your you And kind some that? update believe Motion products? had your on Okay. product, just I Any of it I guess, was

Michael Jenkins

that is now project but still referenced Pure on still is basically Motion, It with hold it's live. the right the a you status DoD. --

that in don't . but So we that, we this have will point expect point timing forward, do project some at at time. move

Operator

of next [Operator comes from Instructions] Our . Shapiro line Andrew Capital Management. the from question Lawndale

Andrew Shapiro

stuff and you Just contract, when down Light And acquired? trying When into define the mean? legacy contract what was a contract to State drill do get this losses. you a as maintenance

Per Brodin

we it was mean they effective Legacy Light something XXXX. existing Light an By State We when that of contract, X, January acquired acquired. customer was were State

Andrew Shapiro

all So that. fairly and recent

I duration. questions, Now the I in -- asked [indiscernible] in you or X so around okay? And call think these contracts years we're said last when

What higher So and this risk? that I pricing this I with maintenance medium of long that it risk of term doing Is on to may mitigate term pricing? new you kind How it differently? won't it differently doing guess, to have just guess the shorter wave are or we'll another you for you are a you to approaching duration call are that you're contract hoping inflation be bidding it business. in share your margin

Michael Jenkins

Yes.

have own can and customers go tender you their So the process. specifics around how an of each RFP through

customer we confined process. of given in those years, are from take our anticipated some challenges RFP experienced where couple then a reasonable escalation over the by not to we [indiscernible] the into we've contracts, inflationary are have of when protocols future account that go the the through last we build level of over into possible, So that's those that the inflationary environment

Andrew Shapiro

would said at the that you X. And looks of the negotiating and you out got amend X wouldn't think the Okay. said the you were you I runoff spring. had about, on like contracts the and it improvements asked In call, time last furthest I you also take the into

in? expect are Do kind and and the price customers going later higher annualized increase, your in to of kind won't to allow where cetera, contracts those to that's those that renew to you of revenue better going at I will be for wouldn't that the Or spring. of necessarily et from guess, our a get going terms? And but we be mind they on then give not quantify you of of that So back expire amend away, revenue kind amount shouldn't can you to help were arms a around, added generating count that we range continuing? subsegment that or

Michael Jenkins

Yes. in in these That them directionally in naturally that are quarter going actually next of is time the correct. number spring, The of contracts and our X to of of are expire April fiscal at end year, frame. some

that we've no current time, the have in basically we'll this So guidance to round that conversations, are next RFPs. for go cycle contract are through the renegotiations for on active customers. of point and as At those of done really conversations starting, those provide are active period, which then I any are the the with

Andrew Shapiro

of I State And here a unprofitable and segment of that in guess Okay. whole combination like revenue includes is how the terms Light profitable . large

Per Brodin

they disclosed a business. we $X we million Light When acquired State million that were $XX to

Andrew Shapiro

And renegotiated ones was profitability margin you Okay. pricing ones, would or the or your get this somewhere on to those period at the between? to in inter provide for your normal just opened up the that contracts breakeven

Michael Jenkins

Yes.

mandate is be have to profitable. Moving forward, it our contracts these

So not breakeven . just

Andrew Shapiro

desired the you to did to improvement get ones. terms But get to they did inter-period the in you you that, got, even, improvement. understand you've before your But you contracts some margin? now, between? Or of new got Bill, in gotten break I right somewhere expire some did get you amended just No, and

Michael Jenkins

Yes.

all allow there's often recognize contracts. things. because these are the company rolling All changes types backlog a contracts, be that we're in making we for the They of out, the of on so to will immediately these don't those pricing change cases and profitable

So But all the implemented accounts full for is pricing impact drive goal and and we've of over the what these to changes profitability. these time. contract changes occur

Andrew Shapiro

based, State Okay. not earn-out Voltrek, when they're not based, right? And remind me And are X but just revenue anniversary? on Light. EBITDA targets other does acquisition that follow-ups the

Michael Jenkins

Voltrek of anniversary October. the past occurred this So just in month

not So anniversaried just based we've And on EBITDA, the earn-out now it. revenue. is on

Andrew Shapiro

profitability, as contract on build of DoD like of not the that kind some Or contract And that's out, . accounting? type accounting that, completion thing it the is Okay. of you

Per Brodin

to that's way the mean, installation of about analog percentage for based decent to it's degree, decent I some which think it, on fixtures, is of a a completion.

multiple So buildings bases. those on impacting as we

revenue. recognize So install it's as we fixtures, the we

Andrew Shapiro

Okay.

made you on a comment headquarters seeking the building. about potentially mortgage a Lastly,

course, lock this in is maturity date to does optimal What's the rate. Of its kind your bank go of line? time long-term not some current When .

Per Brodin

. of December XX

Andrew Shapiro

what Okay. And the your is . on rate plus what? that? margin pricing What's reference

Per Brodin

. [indiscernible]

Andrew Shapiro

Okay. now right we're the generating toughest band in And of we in are fact the light not EBITDA? positive

Per Brodin

correct. That's

Operator

And with that, back conference this to now the like to for would remarks. turn concludes our Q&A session. Jenkins I Mr. closing

Michael Jenkins

our months growth for and look thanks as execute listening and you, and objectives we our today. coming Thank for joining fiscal 'XX. updating call on everyone to to in I forward to investors quarters stakeholders and

take virtually. or to in opportunities investors to continue We with person meet

Company [indiscernible] to you our Conference We register are for the at and on presenting I presentation encourage and/or to listen Virtual & to call. XX, November one-on-one

or with Relations day. good Investor Thank events contact you Have very today's team planned is call information release. a a schedule press our if on in our you like information whose more to you management, can much. For would

Operator

concludes conference Thank you This today's for call. participating.

disconnect. You Everyone, have may now great a day.

Orion Energy Systems (OESX) 7 Nov 232024 Q2 Earnings call transcript