OESX - Earnings call transcript Q1 2025 | Orion Energy Systems, Inc.

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Operator

Good morning, everyone, and welcome to Orion Energy Systems Fiscal 2025 First Quarter Conference Call. [Operator Instructions]. I will now turn the call over to Bill Jones, Investor Relations, to begin.

Bill Jones

Thank you, Alex, and good morning to everyone, and thank you for joining this call. Mike Jenkins, Orion's CEO; and Per Brodin, Orion's CFO, will review the company's Q1 results, its financial position and its fiscal 2025 outlook in their prepared remarks, and then we will open the call to investor questions. being Investors a website, section is posted will orionlighting.com. call the in of conference recorded, replay and be Today's Orion's corporate

include Act of As questions for and remarks XXXX. Private statements, follow the Reform a forward-looking which Litigation answers Securities are reminder, that to

has filings are words. risks any goals, forward-looking. generally similar various update non-GAAP or company Orion matters subject could closest its are morning such its also plans with forward-looking results this materially the as project issued include revise forward-looking describing statements SEC. GAAP their to obligation measures to to statements statements statements that described Risks from in press as press today's anticipate, certain or in any provided Forward-looking disclaims of expect, cause described made actual date. current Except Reconciliations release future Orion financial in as Such are factors, release. believe, include, well that words or Also of to targets today's and as differ other among as also outlook metrics its therein, expectations.

Now Mike Jenkins. the CEO, Orion's Mr. I'll call turn over to

Michael Jenkins

X for call, in Thanks, and morning, thank It's you expectations. our and with line since our Bill. call today. all been the first Good was months year-end joining quarter

in principally strength momentum Orion's I'll XX% keep by So my EV growth quarter, comments leave installation more continued business. with revenue driven the relatively for questions. charging and time brief in system first our

XX% The spot obviously EV fiscal in full the Recall outlook reflected charging our 'XX was positive momentum year growth. in year fiscal the ultra to bright to 'XX last XX% Having in charging benefits million. We needs segment. expect revenue of continue our QX and across operations as to QX first grew well our that over company is within resources, We our large positioned across was in targeting in built $X.X EV reach investments XXX% of of our country. saw meet geographic the the teams installation to year, EV customers platform capabilities Orion. the revenue as

was Ready" fiscal charging to Our Level Make to stations performance Energy's this fiscal contributing are $XX install Eversource Eversource million program. We "EV this and through projects our year, completion contracts over the 'XX for secured QX for X activation slated EV construction program. impacted charging positively Level growth contracts of of X for outlook. customers The by

solid $XX pipeline In totals a opportunities over of that addition, million. Voltrek has now developed larger

being we very course, decade. business a to national record puts infrastructure large are is Of got we've opportunities project Orion QX a over as Europe, ESCO in needed installations base our in available funding was lighting project deep position completed Defense very the and projects. included to Department expertise strong This catch-up revenue super 'XX, we experience supported modest encouraged In development and in made into fiscal we expect LED brought often as utilizes and by electrical EV momentum. growth quarter. LED segment our major by significant demand to us convert that projects 'XX Voltrek from the of federal of lighting account than for from regional growth EV There which also support distribution deals, drive to but to has of more properly track into infrastructure compete well those charging continue ESCO this growing successful Orion a a partners. retrofit achieved their in by partner. lighting as global vehicles. LED and solutions, in QX the

capabilities our with project overseas. hurdle large complex execution and an superior showcasing team excellent of did this Our added job the on project, working

in the could hopeful partner projects with performance our future. this lead other We large that to are near

in growth fiscal lighting expect rebound For LED limited 'XX. the activity activity after be long-standing XXXX, driven to project customers in in automotive a by of from we balance

public opportunities sector, logistics sectors anticipate for year. in technology, the a in warehousing that and strong the also and growth have We planning of and in been retail stages government the projects over the in initiation

projects We also our to from our customer services. anticipate of largest ongoing addition maintenance utilization LED their lighting in

continued developed their have We and fixtures expanded that are for also lighting These are electrical High high-quality, our needs Bay of were energy-efficient to product priced. channels. working to sales our Harris within fixtures distribution drive that in line to growth well and meet TritonPro contractor specifically channels LED value ESCO exterior responded

actual lines. We continue sales and to quoting in these of solid product see growth

banning to demand lighting to LED replacement their follow expected including begin such regulations which states, go into with regulations, X of expect fluorescent calendar in benefit state approved sale states California, other to from also the XXXX, effect We suit. tubes. fixtures and have

As closer, the begin starting and this area plans to to compliance. see attention deadlines in increasing draw we are customers their for develop

initiate also the fiscal and regulatory related bands see our to projects in new and have 'XX customer successful into using expect half dialogues beyond. accelerate begin the to and second We 'XX been to time line these of in fiscal

our Turning segment. Maintenance Services to

'XX As following past top that performance The not long-term have appropriate a return renew Stay-Lite over The impacted Services to the line $X.X our declined variety anticipated, to revenue that reflects to Maintenance impact price business chose years. of adjustments of price increases. inflationary legacy contracts of factors the customers XX% segment to levels X in the QX the following X were profitability million. required

business is of returning profit suitable this a Importantly, our objective gross successful. proving to

as anticipate prior, gross to increased further and quarter negative the strengthening Our profit XXX positive X.X% a through a from percentage XXXX. X.X% we progress we in year

technology, the including 'XX we on station and as in anticipate lighting sector. growth and is of outlook as retail, logistics to across solutions. charging million banking range revenue growth between national automotive, well reiterated customers or revenue and performance, LED of projects lighting XX% revenue wide million. XX% large We LED $XXX fiscal in expected and total distribution, EV for revenue 'XX a This of growth sectors, public QX our anticipated outlook target $XXX robust have Given our based

We value-priced ESCO LED energy-efficient by on driven also new and our high-quality, in anticipate agent products. an growth focus channels expanded

fiscal expect continue We it subject significantly and the 'XX be year second the weighted to to fiscal larger half of timing the was projects. 'XX to in as to of revenue

'XX adjusted We finish fiscal EBITDA. also with to positive expect

Let pass the Per to me more performance provide details call now our QX. financial CFO, our on Brodin, to for

John Brodin

for XX% activation Eversource from Thanks, construction Mike. to million. of charging rose Energy. particularly customers stations of revenue QX â€˜XX quarter The benefited the activity $XX.X EV

the $X 'XX. million recognized was million continued in approximately segment Lighting to project of Europe. this project benefit QX in revenue of Our $X.X completion from retrofit of Defense an Department for

declined of X-year for due price X renew side to on locations. retail some Stay-Lite our to increases legacy customer's 'XX lighting mitigate from we contracts service segment the impact unprofitable largest maintenance Offsetting lost that did with Longer the see revenue term, in current Orion. customers contract unprofitable for somewhat legacy expected, not lapsed maintenance the maintenance the preventative revenue from X,XXX QX this potential other was the growth As following planned contracts.

Importantly, our business. around this actions are turning the of profitability

For versus higher LED and improved XXX our in in due revenues. reflecting pricing contracts points gross benefit the product 'XX, fixed cost basis to whole, in in termination percentage 'XX XX% segment Maintenance increases improved well gross or margin as profit of the company QX QX improvement absorption to negative XX.X% lighting our of margins as margin a as

couple items negatively margin. addition, In had that unusual QX impacted a of

First, on that off side business, restructuring approximately and or product of we $XXX,XXX the inventory maintenance be not as the used part of wrote could salvaged.

on in work a taken 'XX. remain from to from in new in accrual led earnout product 'XX wrapped operating the both of as accounts to including we to Gross benefit another improving target, gross million $X cost 'XX, expectation $X.XX related was The Voltrek $XXX,XXX come share believe March growth Second, $X.XX position improvements maintenance reduction each of of for proceeds the begin its Q&A sales. QX and working 'XX 'XX corporate than year the to on of to the million at XX, Cash the improved to for in position in $XXX,XXX to $XX.X QX and QX businesses per business have mortgage at million net Germany and June and saw of strong following headquarters, was the 'XX. business came and million cost XXXX. QX in at and working XX.X% financial million our from savings We the through Reflecting reductions at period business our severance manufactured liquidity declined XX, final XXXX. our Current operating our QX lower from products approximately revenue, million. increasing $X.X management gross We beginning and close QX 'XX. Considering at strong cash due to fiscal in QX good less in QX fixed a $XX.X project, QX earnout session? on expenses bank estimate new â€˜XX our and share a fund other $XXX,XXX $X.X Higher March at period. to fiscal X liquidity base end â€˜XX, of rate lower quarters we XXX the in significantly segment $XXX,XXX reflecting nature in current fiscal quarter Orion operations basis are cost improved Other the well operator, and initiatives. million And QX or liabilities facility a 'XX Operating $X.X QX expense expect growth $X.X you we million lower points our to maintenance capital in $X.X to sourced in ]. structuring the of incurred lower to performed to services, the sales the was we XX, in which productivity in and Manitowoc in has at or steps the [ from $XX loss with up of legacy a expect to XXXX. $XXX,XXX our to $X.X which million $X.X of resulted our rate $XX.X from capital please at used realignment business. costs well financial a margin margin right-sizing results on to liquidity XX based than our QX due expenses as per the XX.X% as higher improvement overall, of â€˜XX also over goals absorption loss Orion higher blended as could these $X.X focus of net XXXX, in the up margin the enhanced million from costs the compared improved margin improved the that requirements. million of from in that, of is maintenance versus past million of earnout target. record complete led of to Orion's million million 'XX expected Orion's $X.X is QX as fiscal or outlook, relative in assets performance the the as products,

Operator

begin [Operator now the question of your from Sameer comes will session. Joshi. We question-and-answer line the And Instructions]. first

Sameer Joshi

So What and pipeline like? fiscal look in deliveries it converted $XX expected? of mentioned the those And XXXX this from? around a you million. in are Charging be I orders is portion likely come business, sector of think to this does what against What to does

John Brodin

business are have in as Obviously, $XX companies and up utility private made wide well. The referenced Eversource that is sectors with million segment EV verticals. companies municipal of we a Massachusetts, as and which of is well. we work the a situation, that certainly There's in there. in Private for some they pipeline

in with opportunities So that it's is I some customers. say Also Orion's cross-selling a included wide would lighting grouping.

converted terms of we of going that be to pipeline much this how year. In is think

the we've As we is now revenue $XX essentially that on right have budget in our and that we EV, plus, pipeline for will our deliver target million said, expect that.

Sameer Joshi

$XX-or-so or than able million? capacity, just more $XX have at? are supply do there say, challenges to to Then if any terms enough million, in capacity of that any Or you are deliver you convert looking constraints you're

John Brodin

have right anticipate as we major nor across and any now, do we do the business Well, supply Yes. not move forward. constraints we any

Sameer Joshi

positive Then adjusted the just that EBITDA quarter the expectation? That EBITDA. will adjusted fourth a Is clarification fiscal exiting XXXX. be on the like

John Brodin

revenue to cash expectation year would I'm for -- The we positive that the our flow year, EBITDA full positive. is adjusted on sorry, based expect fiscal be for the outlook,

Sameer Joshi

within the that in lastly, kind of the Then expect business, seeing? X is like LED kind this on and or what to of Like orders are you year? what you're increased some seeing these states, fiscal responses convert activity there of reception already

John Brodin

Yes.

states X referencing the are lighting you're So think fluorescent relative band. I that to the

and aren't engaging legislation in those state that is unfortunately, dialogue. lot even approaching. that We say businesses the of in states, in place are I aware would this a that is

this talking So customers. that actively so been awareness we've been marketing the to We've is growing.

dialogues in they're with and in really to ban the who ready tubes. have engaging And sale that. are those for customers locations of states make We it's fixtures of key again, sure

So anything getting as to those it's is to facilities going going their not lighting replacement products. somebody is lines, into fails but remove come prohibit that along anything from or and it

it's to a better as So it change. system approach

we there, So larger they're are customers and sure growing make ready. some actively our working seeing interest are we to of with

Operator

Capital. comes Your with the Stine next from Craig-Hallum line question Eric of

Unknown Analyst

Eric got This Luke Stein. on for is questions of couple here. We've a

the pipeline in think legacy maintenance do you recovery? start of offset over we some line services few about And think top when loss contracts? should we to see so, if the how opportunities Are next the X the off, quarters? seeing you to could First

John Brodin

said we business customer contract as have the That's $X for year we've that talked as our of offset that with on business terms expect additional million. million well about growth $X We guidance to in our some by other opportunities. largest that some to

would of have terms those second additional pipeline. the of come the pipeline, half that the we opportunities in in any through year. are some we of to In do potentially see But the expect

Unknown Analyst

on one Just here EV follow-up segment. more the charging

the can there or the existing a with to time new from your of So We attributed how at LED acquisition lot customers we've synergies with that of much of the general? business obviously past versus introduced Voltrek's wondering year. customers were seen in and customers business new maintenance growth in cross-selling growth be just

John Brodin

growing for to on The the majority, our move business. continue customers as new most through but team's been the have which per we legacy also I And area. on key expect the very customers growing. others Voltrek would that a efforts through say working we've still have have It's as that forward we That not not a significant part, we may are, opportunities. the top the but is with cross-selling as we piece customers grow pipeline, that to new come business. created cross-selling that are of that, opportunities, added which those just have in and through se, well suppliers acquisition

a from the growing, team sourcing combination new customers were that So growing cross-selling. of that it's customers a they're legacy EV coming and base of

Michael Jenkins

of just away maybe context, Voltrek, have little XX since And more just business a they in the as done acquisition for states far as Hawaii.

lot just that So Northeast-centric where it a their of but the months. business is certainly a that no XX longer to XX has occurs, is last over breadth business certainly expanded

Operator

Your Chris Singular next question of Research. line the from with Sakai comes

Christopher Sakai

and to what underlying on difference top expected elaborate XX% guidance to line range? growth the factors are the you fiscal assumptions Could the this that XXXX, Specifically, for ends drive of XX% the lower between upper

John Brodin

to make built got talk hit, sure that of look projects and forecast. likely is adequate feel to through we've in committed what go What cetera, an projects those in et like amount always we we we at our contingency and is when and customers hit, pipeline. about Well, and

comments, that have in we in referenced cetera, which anticipated the technology second government of a to projects I So start lot space, larger in things year. space, half of the are the my et

of approximately with business, year built EV last XX% guidance, plus And at XX% a year. as we've along mentioned, from grow to that's so into clearly, other this XX% will this activities. The our year least base

side. the $X So the contraction that's to million million all on along with built into guidance, $X of the maintenance

Christopher Sakai

from opportunity? the considering you results regarding vehicles and and GM, companies from import Tesla any EV are clients tariffs electric commentary like the hesitance Chinese recent observing Then on from

John Brodin

time. question this at a a bit. we asked Not quite get No. It's

have in EVs growing news see that been key get at about funded the for What's clearly see transportation the And there's we growing and in we some, to where I upcoming general and the think it. lot infrastructure. a these I situation from elections the political lot. our successful the a the of appropriated been of We is are a in projects the as monies states. level EVs what could to be really impact part already potentially federal asked the mean the system. and how and future today have them they're

don't let's some to any years. regardless say, the X significant really need infrastructure we to continuing the whether be change the degree rate or on impact see I EVs, is So slows think next, over the of infrastructure of and will accelerates, driver X for a

Christopher Sakai

customers, maintenance issue legacy with negotiations price is more this now the there address? resolved? to is Regarding Or

John Brodin

comments, the we the that have sure issues to Per's the moving No, place make to and some in as right-size addressed to cost addition the had as all taken right situation, in maintenance top structure in in business. that the that we actions we restructuring referenced well. basically forward we customer have business line

Operator

comes Bill Capital question Management. of Dezellem next Your from the line with Tieton

William Dezellem

that all, When you the what side. the part the categorization market, and in of if the is other on First how is don't you release at referenced value you're between the the look the with products premium lighting the the the industry does for know of value having success look. But market. split I

John Brodin

operating good, up the really, piece the and get all us the volume when strategy into potential in. we that market, up we in the the in of were was further this into larger a you addressable go situation, pyramid currently like recognize Clearly, kind a better, you further we of smaller best terms the in for that getting industries, missing pyramid pricing, did were

our of business of that. I at progress. quoting increased the partners to has and been that our this distribution in comfortable [ that ESCO believe access increased point. ] most that the to partners agent help additive do particularly launched We're We're we significantly market. TritonPro, and terms sales and from so our that And very seeing

pretty more additive I about up a opening size feel some one new sales. we a you can't market standpoint, for much answer So that operated it but larger is in to significant how is than that precise good avenues and from give that. the believe, is, band we've as traditionally we

William Dezellem

When or out at you differentiation products are what look the competing you your products, that do the competitive there? advantage already versus Triton as see

John Brodin

ratings, which product. line, doesn't TritonPro that and That Orion. to is the warranty, incorporating cetera, features, a of at the where is end, all competition, in built reliability, relative a upper temperature is like to are Harris, the et as lot signature we here, terms product benefits quality, cetera. When et the features basically people whatever of terms from price the efficiency, plays we we're at things expect same the it's want of of our is be that upper end mean But Orion in which that in, essentially

So set of relative feel are and new that competitive that of to we landscape new we competitors differentiating. like that set

William Dezellem

here. I'm to gears entirely going switch

your German business entirely in ESCO would are remarks the you were that more involved something you please different? from with that that see that mentioned And base you coming hopeful it military that opening for, you Is You please? hopeful base. another that or additional was is how business you have the unfolding, characterize

John Brodin

both that We've large that ESCO now super this of done and retrofit projects, a we've number abroad. historically. a domestically one Yes, installations is for and worked

other year. with of this pipeline opportunities convert in those optimistic will our this some ESCO super and are We hopeful, that have

William Dezellem

fall facility what characteristics. type opportunities of other Those into

John Brodin

kind number DoD of are the of some So or basis of those facilities.

Defense. Sorry, want clarify Department of to just I

William Dezellem

outside the or U.S.? domestic And

John Brodin

domestic as on some working well We're international opportunities. as Both.

William Dezellem

Then one additional question.

business million the You $XX about EV talked revenue this year. at or of Voltrek

this that? conservative. pipeline $X very some of anticipate Eversource whether $XX that your not Can seems quite getting you if You you need ahead That million that our or from additional here from the referenced, complete behind that only million you provide perspective we're is have And million doable, you conservatism. of there year. skis if potentially to some means contract $XX

John Brodin

a there's yes, out there. that certainly think I pipeline significant

projects is We to to think there pipeline. But generally get the and early, terms good unfold, it I some and year in upside right to these how math level, about and the again, You're and see from it's we'll could feel see nice XX. of how reaching XX growing works the be a the there.

William Dezellem

Then charging to one that. The $X.X is additional funding question $XX you've for rounding billion air is, even pointed government tied in as stations. not that in of release, there's a out the million

you are you just or are exploding So thinking seeing pipeline. have opportunities of about about How potentially in all that? number to the ready your you that explode

John Brodin

which which at A is number frame, then Infrastructure, flow, slow. the least disperse Electric of kind lot for the out is federal funding money to starting states, some number largest way just one NEVI, of have the that funding moving go government of to Fed is NEVI, single National that was tends the government money states piece which states that The the goes it, to And their Act. Infrastructure came process the the two, we're forward. the monies. hit from of whole it And through to of see to the time Vehicle

half, I particular, as and calendar second next into this accelerated calendar in well. think year, year

those funds, So participating quoting access to in opportunities we just really starting right now. to it's are gain but some

Operator

the Q&A Jenkins remarks. back turn now I'll Mr. concludes conference the This the for to closing session.

Michael Jenkins

Thank we we you when forward today. again report to all joining results through updating We and as investors QX us 'XX. fiscal our progress look for

Virtual on Global upcoming Please Micro your events, in hope XXth. Event October through investor H.C. at Sidoti with meeting. Main an the York, speak September New a contact to Conference the Xth LD Wainwright request also the Thursday, rep XXth XXth Los conference through and including the to Investment Angeles, you the We Conference XXth, August in

great day. Relations a may again, team call questions release. with Investor call Contact You schedule management. also a any with the in and is information Thanks contact today's have concerning or press today's our

Operator

concludes This Thank today's call. you. conference

Orion Energy Systems (OESX) 7 Aug 242025 Q1 Earnings call transcript