Orion Energy Systems Q4 2025 Earnings Call Transcript

Key Takeaways

  • Voltrec EV charging revenue grew 37% in Q4 and 1,837% for FY 2025, with gross margin improving to 28.3%, demonstrating strong market traction and operational leverage.
  • Electrical maintenance segment delivered a substantial profitability turnaround, with gross margin rebounding to 18.2% from 4.4% year-over-year and sequential revenue growth in the last three quarters.
  • LED lighting revenue remained challenged, down over 30% year-over-year, but cost-reengineering and diversified sourcing improved margins to 26.6%, and new project wins add $100 million–$200 million in potential revenue over five years.
  • Orion reported a Q4 net loss of $2.9 million (-$0.09 per share) and a full-year net loss of $11.8 million, reflecting lower revenues and earn-out expense variances.
  • For FY 2026, the company targets ~5% revenue growth to $84 million with modest LED and maintenance gains, and expects to approach or achieve positive adjusted EBITDA based on improved cost structure and margin profile.
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Earnings Conference Call
Orion Energy Systems Q4 2025
00:00 / 00:00

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Operator

Good morning, everyone, and welcome to Orion Energy Systems Fiscal twenty twenty five Fourth Quarter Conference Call. At this time, all participants are in a listen only mode. Now I'll turn to Bill Jones, Investor Relations, to begin.

William Jones
SVP at Catalyst Global LLC

Thank you, and good morning to all. Today, Sally Washlow, Orion's CEO and Per Brodine, CFO, will review the company's fiscal twenty twenty five results and outlook. And following their prepared remarks, we'll open the call to investor questions. Today's conference is being recorded. A replay will be posted in the Investors section of the company's website, orionlighting.com.

William Jones
SVP at Catalyst Global LLC

As a prepared remarks and answers to questions include statements that are forward looking under the Private Securities Litigation Reform Act of 1995. Forward looking statements generally include words such as anticipate, believe, expect, project, or similar words. Also, any statements describing future objectives or goals, company plans, and outlook are also forward looking. These forward looking statements are subject to various risks that could cause actual results to differ materially from current expectations. Risks include, among other matters, those that Orion has described in its press release issued this morning and in its SEC filings.

William Jones
SVP at Catalyst Global LLC

Except as described therein, Orion disclaims any obligation to update, revise forward looking statements, which are made as of today. Reconciliations of certain non GAAP financial metrics to their nearest GAAP measures are also provided in today's press release. Now I will turn the conference over to Orion's CEO, Sally Washlow, to begin.

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

Good morning, and thank good morning, and thank you for your interest in Orion. As you may know, I took on the CEO position in mid April following nearly three years of service on Orion's Board of Directors. I've had the chance to speak with some of our investors since becoming CEO, but for most of you, this is the first time and I look forward to getting to know you. It's an honor and exciting opportunity to lead Orion's impressive team. Over the past few years, Orion has made great strides in diversifying and enhancing a portfolio of complementary industry leading products and services to better meet our customers' needs.

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

We have also made significant progress reducing our cost structure and enhancing gross profit margins, and we have been very productive in developing new revenue opportunities. I feel we are moving in the right direction. However, it's clear that we need to do a better job, both developing and executing on our pipeline of product and service opportunities with greater urgency, and that is my principal goal. While our Lighting segment revenue remained challenged in FY twenty twenty five, we achieved 37% growth in revenue at our Voltrec electric vehicle charging station solutions business. We also accomplished a substantial turnaround in the profitability of our electrical maintenance business.

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

Based on the strength of that business, capabilities and performance, maintenance returned to sequential growth in FY twenty twenty five through the expansion of existing customer engagements. Looking into FY 2026 and beyond, I am pleased to report that we have expanded our pipeline for LED lighting projects with a number of project wins that underscore our unique value proposition and enhance future revenue visibility. In our Q3 reporting, we highlighted new customer relationships and contracts that provide between 100,000,000 and $200,000,000 in total revenue potential over the next five years. And last month, we announced additional project wins that build on that potential. On the cost side, we have made meaningful reductions in the cost of our LED lighting fixtures through product reengineering, plant efficiency efforts and diversified sourcing, which are benefiting our LED lighting margins without impacting our ability to deliver the highest levels of design, quality and energy efficiency in our products.

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

We also reduced our operating overheads by more than $4,000,000 in FY 2025, dollars 2,000,000 of which will be reflected as we progress through FY 2026, and we intend to implement a further $1,500,000 in annual overhead reductions during FY 2026. Despite lower revenue, our operating discipline allowed Orion to achieve positive adjusted EBITDA in both Q3 and Q4 and positive operating cash flow for full fiscal twenty twenty five year. My role is to build on this progress by bringing enhanced leadership, focus and urgency to our team and its efforts to achieve our growth and profitability goals. I strongly believe the Orion team possesses the skills, has industry leading products, technical expertise, resources, customer relationships and service commitment to do just that. To better capitalize on the strengths of our three lines of business and the substantial base of customer relationships Orion has built over the past twenty years, we have reorganized our company into two commercial business units effective with the April 1 start of our fiscal twenty twenty six year.

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

The two units are solutions, which includes products and services that we develop, manage and deliver to specific end customers and partners, which is focused on product sales via distribution agents, electrical contractors and energy service companies, or ESCO, channels. To provide a bit more insight, our Solutions business unit is focused on developing and executing across our full range of LED lighting, EV charging and maintenance service solutions. Solutions taps our full array of capabilities to deliver the greatest potential value to our customers and typically involves large projects in terms of revenue. The Solutions business unit also provides the potential to cross sell and build new project and reoccurring revenue opportunities with our long term customers. Our Partners business unit is focused on the sale of LED lighting and EV charging products through distribution channels such as ESCOs, electrical product distributors and lighting contractors.

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

To strengthen our position in the partners channel, Orion has developed new product lines such as Triton Pro, which balance performance, energy efficiency and design at competitive price points. These new products have been well received and we're building on their success with additional products designed based on partner feedback to resonate with our customers. We are also making focused investments to drive growth in the partners business unit, including the addition of an industry veteran who will focus solely on this channel and our partners. Overall, our business reorganization is intended to deliver a more cohesive combination of capabilities across LED lighting, EV charging and electrical maintenance to optimize our success. Though we have made some progress in developing business synergies over the past several months, it has become clear that we need to better leverage our engineering design and national project management capabilities within the combined Solutions business unit.

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

There is work to be done to further integrate the Solutions segment, including implementing systems and training to support our team members to represent and execute on our full array of offerings. Structure aside, the imperative for the team is to stay close in close contact with our customers and prospects and to maintain focus and urgency to progress opportunities to the finish line or reassess and redeploy resources on more promising projects to fully maximize our business performance. In summary, Orion is clearly differentiated by the unique platform of high quality, industry leading products and innovative services we have been providing over more than two decades. These strengths, combined with our large base of long term customers, our progress on costs, margins and growing our project pipeline position Orion to deliver improving financial performance in FY 2026 and longer term. I'm firmly committed and incentivized to make this happen for all of our stakeholders.

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

With that overview, I will turn the call over to our CFO, Per Brodin, to review our financial performance and fiscal twenty twenty six outlook.

Per Brodin
Per Brodin
CFO at Orion Energy Systems

Thank you, Sally. In Q4 'twenty five, we reported revenue of $20,900,000 up sequentially from $19,600,000 in Q3 'twenty five, but below the $26,400,000 achieved in Q4 'twenty four. In addition, Orion has made excellent progress building its project backlog. On an annual basis, fiscal 'twenty five revenues were $79,700,000 versus $90,600,000 in fiscal 'twenty four, reflecting the following segment trends. Our EV charging business delivered a strong performance both in Q4 twenty twenty five and for the full year in 2025, with revenues up 1837%, respectively, as Voltrec expanded its geographic reach and executed on its order backlog.

Per Brodin
Per Brodin
CFO at Orion Energy Systems

EV charging also achieved an improved gross margin of 28.3% in FY 2025 versus twenty seven point two percent in FY 2024, mainly due to an improvement in revenue mix as well as greater fixed cost absorption on higher revenue. In LED lighting, Q4 'twenty four and fiscal 'twenty four revenues trailed the prior year periods by 3322% respectively, due to reduced major project activity as well as reduced product demand in our energy service company and electrical distribution channels. Lighting achieved a gross margin of 26.6% in fiscal twenty twenty five versus 27.3% in fiscal twenty twenty four, offsetting much of the impact of lower revenues with targeted price increases, cost reductions and sourcing initiatives. We expect margins to improve on modestly higher LED revenues in fiscal twenty twenty six as Ryan executes on its substantial backlog. As anticipated, our Electrical Maintenance Services segment revenue decreased year over year to 4,100,000 in Q4 twenty twenty five versus $5,200,000 a year ago.

Per Brodin
Per Brodin
CFO at Orion Energy Systems

However, the business achieved a substantial turnaround in gross margin following our strategic repricing actions to improve profitability and our exit from several large but unprofitable contracts. Fiscal twenty twenty five maintenance revenue was $15,200,000 versus $17,100,000 in fiscal twenty twenty four as new opportunities within existing customers provided sequential revenue improvements in each of the last three quarters of fiscal twenty twenty five, offsetting more than half of the revenue loss due to the ending of legacy contracts. Maintenance services gross profit margin rebounded to 18.2% in fiscal twenty twenty five from 4.4% in fiscal twenty twenty four, and we expect continued improvements in both revenue and profitability in fiscal twenty twenty six. Overall, our blended gross profit margin increased 170 basis points to 27.5% in Q4 twenty twenty five versus 25.8% in fiscal twenty twenty four. The increase was due to profitability improvements in maintenance and a higher margin revenue mix in EV charging as well as lower overhead costs.

Per Brodin
Per Brodin
CFO at Orion Energy Systems

As Sally mentioned, we've reduced manufacturing costs on our base lighting products through reengineering and efficiency efforts in the plant. We expect our overall gross margin to remain strong in fiscal twenty twenty six, though it will vary to some extent on a quarterly basis due to product mix and volume. Moving down the income statement, our total operating expenses were $8,400,000 in Q4 twenty twenty five versus $5,000,000 in Q4 'twenty four, primarily due to a $3,500,000 year over year difference in the quarter for BOLTREC earn out expense, which was $500,000 in Q4 twenty twenty five compared to a $3,000,000 net credit adjustment in Q4 twenty twenty four, reflecting the reversal of prior earn out expense accruals. As we mentioned, Orion reduced its annual operating overhead run rate by more than $4,000,000 during fiscal twenty twenty five. However, roughly of this improvement will be reflected as we progress through fiscal twenty twenty six.

Per Brodin
Per Brodin
CFO at Orion Energy Systems

This progress was offset by a $1,600,000 year over year increase in Voltrec earn out expense reflected in fiscal twenty twenty five operating expenses, which improved to $30,800,000 versus $31,700,000 in fiscal twenty twenty four. Orion's gross margin improvement was not sufficient to offset lower revenue and the $3,500,000 year over year variance in earn out expense, resulting in a Q4 twenty twenty five net loss of $2,900,000 or $09 per share compared to net income of $1,600,000 or $05 per share in Q4 twenty twenty four. Likewise, our fiscal twenty twenty five net loss increased slightly to $11,800,000 or $0.36 per share compared to a net loss of 11,700,000.0 or $0.36 per share in fiscal twenty twenty four. Cash generated from operations improved to a positive $600,000 in fiscal twenty twenty five from negative $10,100,000 in fiscal twenty twenty four, primarily due to inventory and other working capital management. We were also able to reduce revolver borrowings to $7,000,000 at the close of fiscal twenty twenty five from $10,000,000 a year ago.

Per Brodin
Per Brodin
CFO at Orion Energy Systems

Net working capital was $8,700,000 at year end, compared to $10,500,000 last quarter and $16,800,000 last year. Lower year end current assets reflects our active working capital management, which includes a roughly $6,000,000 year over year decrease in inventory investments. Year end financial liquidity totaled $13,000,000 and as we disclosed today, in order to pay Orion's Voltrec earn out obligations, we structured and executed a binding term sheet designed to resolve the obligation, while mitigating the near term liquidity impact. Under the term sheet, Orion intends to issue $1,000,000 of common stock in July, make an $875,000 cash payment on August 1, and repay the remaining balance with a two year 7% subordinated note, which matures in July 2027. Based on our financial position, improved cost structure, margin profile and this revised earn out structure, we believe Orion has sufficient capital to satisfy all of its obligations and to support its business and growth goals through fiscal twenty twenty six.

Per Brodin
Per Brodin
CFO at Orion Energy Systems

Now turning to our outlook. We have initiated a fiscal twenty twenty six revenue outlook expectation of 5% to approximately $84,000,000 which will be reported based on our new Solutions and Partners business unit structure. For context to our prior reporting segments, our revenue outlook anticipates modest growth in LED lighting and electrical maintenance revenues. Additionally, despite the substantial long term potential we see for EV charging station infrastructure, our fiscal twenty twenty six outlook currently anticipates flat to slightly lower EV charging revenues due to current uncertainty around the near term scope, pace and funding for EV charging projects. Though we still have a few days left in our fiscal twenty twenty six first quarter, we currently expect total revenues in the vicinity of that achieved in Q1 twenty twenty five, although it is likely to be slightly less.

Per Brodin
Per Brodin
CFO at Orion Energy Systems

Based on expected operating cost and gross margin improvements, we believe our revenue growth outlook positions Orion to approach or achieve positive adjusted EBITDA for the full fiscal year. In developing our outlook, we try to incorporate current economic and business factors and their potential impacts on the timing and magnitude of existing and anticipated projects, including those outlined in today's press release. Of course, we plan to revisit our outlook commentary and refine it as required as we progress through fiscal twenty twenty six. And with that, I will ask the operator to open the call to the Q and A session.

Operator

Thank you. Our first question is going to come from the line of Eric Stine with Craig Hallum Capital Group. Your line is open. Please go ahead.

Eric Stine
Senior Research Analyst at Craig-Hallum Capital Group LLC

Hi, Sally. Hi, Per.

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

Hello.

Eric Stine
Senior Research Analyst at Craig-Hallum Capital Group LLC

Good morning. So maybe I'll just start with the order trends. You called those out that you have seen a rebound or a strengthening in Q4 and that that's continued into Q1. Curious, I mean, that been pretty constant throughout the quarter? I know you're almost done with the quarter.

Eric Stine
Senior Research Analyst at Craig-Hallum Capital Group LLC

Is this something you expect to see in Q2 and going forward? And maybe what do you attribute that to if there's something specific? Is it just more comfort at the federal level that budgets are not going to be cut or buildings closed and all of the noise that was coming out a couple months ago?

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

I can start with that. So nice to connect today. Saw the beginning of the year got off to a really good start with orders and April was probably our strongest and then May and June continued to progress. So we expect that to continue. Fortunately, the noise has less noise has helped and we continue to execute upon the projects that we have in the backlog and continue to build that backlog as well.

Per Brodin
Per Brodin
CFO at Orion Energy Systems

I think maybe for a little more color, some of that is the actualization of orders related to some of the projects that we've talked about in the past that may have not yet manifested themselves in orders. So those are starting to come through and reflect themselves in the pipeline themselves.

Eric Stine
Senior Research Analyst at Craig-Hallum Capital Group LLC

Got it. Okay. That is helpful. And I guess for my second one, maybe just on EV charging, can certainly appreciate the uncertainty that you are calling out and also the long term. But just what are the assumptions that go into you thinking that that business in fiscal twenty twenty six is flat to down?

Eric Stine
Senior Research Analyst at Craig-Hallum Capital Group LLC

I mean, you factoring in any improvement in the macro? Just any thoughts around that would be helpful.

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

We're taking a conservative approach with that segment for this upcoming fiscal year, but we have a strong pipeline of projects, and we continue to look at the overall environment through EV sales and the need for the infrastructure to continue to be built. So we're leveraging the work that we've done in the areas that we have along with the fleets that we work with and their continued progress of building electrified fleets and then us being the provider of choice to help them with the infrastructure to support those fleets.

Eric Stine
Senior Research Analyst at Craig-Hallum Capital Group LLC

Got it and you've talked about in the past, know, a pretty big pipeline there. I mean, it fair that part of this is just the pipeline still there that hasn't changed, but the closing of that pipeline is a main factor.

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

Yes, it is. We have a good pipeline. I think some of the noise at the federal level has hurt, but we continue to progress on several projects and we'll continue to stay focused and quite frankly capture market share where we can on those projects.

Eric Stine
Senior Research Analyst at Craig-Hallum Capital Group LLC

Okay, thanks.

Operator

Thank you. And one moment as we move on to our next question. Our next question is going to come from the line of Samir Jouzi C. Wainwright. Your line is open. Please go ahead.

Sameer Joshi
Senior Equity Research Analyst at H.C. Wainwright & Co., LLC

Hey, good morning, Sali. Thanks for taking my questions. Just following up on the previous Eric's question on EV visibility. Your 4Q revenue, fiscal 4Q revenue was actually sequentially the highest of the year of the four quarters, and it seems that although there is noise at the federal level and in general against the EV industry in general, it seems that on the ground, the sales have not been impacted so much, So are you just being over cautious in the outlook for EV?

Per Brodin
Per Brodin
CFO at Orion Energy Systems

I think, Samir, the way we're thinking about it is we do have a strong pipeline, as Sally mentioned in her comments. I think we have said previously that to date we have not been as subject to direct federal funding issues on the EV side. So we don't see that necessarily as such a large impact on our EV business. However, there is maybe some additional impact down the road depending on how it affects the overall environment in EV. We did have one significant project that was impacted by some of the federal actions, and that one project was canceled mid project.

Per Brodin
Per Brodin
CFO at Orion Energy Systems

But we feel that through the funding that's available through both utilities and states that will have enough to achieve our, what we think is conservative objective, but there certainly remains uncertainty in that sector just depending, I'd say on timing of when the infrastructure improvements will be made.

Sameer Joshi
Senior Equity Research Analyst at H.C. Wainwright & Co., LLC

Understood. Thanks for that color. Just a couple quick ones. Earn out for 2026, you mentioned 1,000,000 and then 875,000. Is there anything else to be expected to be paid during the year based on performance, or this is it?

Per Brodin
Per Brodin
CFO at Orion Energy Systems

The end of fiscal twenty twenty five was the end of the earn out opportunity related to that purchase. So the obligation that we have remaining will only be, I'll say, subject to the payment in stock in July, the $875,000 mentioned, and then the remaining balance, which is subject to agreement on the final amount as we move forward. But there will be no more or not opportunity per se.

Sameer Joshi
Senior Equity Research Analyst at H.C. Wainwright & Co., LLC

Understood, thanks for that color.

Per Brodin
Per Brodin
CFO at Orion Energy Systems

And that remaining balance is subject to the subordinated note that we mentioned in the prepared remarks.

Sameer Joshi
Senior Equity Research Analyst at H.C. Wainwright & Co., LLC

Yeah, the one that is decided, will be decided later. Okay, got it. And then in terms of cadence of revenues throughout the quarter, you mentioned first quarter is likely to be flat or down. Rest of the quarter, should we expect year over year increase in that 5% -ish range, or do you see any other variability from where you sit right now?

Per Brodin
Per Brodin
CFO at Orion Energy Systems

Right now, we see the quarters playing out relatively consistently. Obviously, they'll need to be above the amount that I alluded to that we expect to achieve in Q1, but not significantly. We're not expecting this year to be as back end loaded as we've seen in the last couple of years. So overall, expect it to be a little more even, but obviously the subsequent quarters to Q1 will be higher in order to achieve our outlook.

Sameer Joshi
Senior Equity Research Analyst at H.C. Wainwright & Co., LLC

Understood. And then last one on gross margins. We see the outlook, but in terms of the business units, partners, and solutions, should we expect different levels of gross margins there? And also, maybe I can squeeze in for will you be also providing EV and LED gross margins separately in this going forward?

Per Brodin
Per Brodin
CFO at Orion Energy Systems

I'll address the last question first. I'll say we have to yet refine what our external reporting will be. In general, we'll report expect to report on the partners and solutions basis, certainly expect to provide color on a revenue basis for some of the other things that we've done historically, and then we'll have to determine what we how granular we get from a gross margin standpoint. Going back to the beginning of your question, we expect those margins to be relatively consistent. Think overall as we said, we expect to be at a level higher than what we achieved this quarter based on the savings and other product initiatives that we have initiated.

Sameer Joshi
Senior Equity Research Analyst at H.C. Wainwright & Co., LLC

Understood, got it. Thanks a lot for taking my questions.

Per Brodin
Per Brodin
CFO at Orion Energy Systems

Thanks Samir.

Operator

Thank you. One moment for our next question. Our next question is going to come from the line of Gaussie Shree with Singular Research. Your line is open. Please go ahead.

Gowshihan Sriharan
Analyst at Singular Research

Good morning, guys. Can you hear me?

Per Brodin
Per Brodin
CFO at Orion Energy Systems

Yes.

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

Yes.

Gowshihan Sriharan
Analyst at Singular Research

So just following up on that gross margin question. Just given that the EV segment is forecasted to be flat and the Q, the margin improvement is coming from sourcing improvements and some temporary pricing actions. How can you maintain that margin improvement? Is that mainly through servicing improvements or is some of pricing actions also be the question?

Per Brodin
Per Brodin
CFO at Orion Energy Systems

I'd say a lot of the improvement we expect to come through the lighting and the services side, and we expect to maintain reasonable, We expect EV margins to remain reasonably consistent. So some of that, it's just pricing of projects and supply chain initiatives.

Gowshihan Sriharan
Analyst at Singular Research

Okay. Okay. And on the on the the earn out side, what is the thought process behind settling at stock prices at at these depressed prices? And is there any kind of provision for preventing further shareholder dilution?

Per Brodin
Per Brodin
CFO at Orion Energy Systems

Thought process was to reach an agreement that was satisfactory to both sides of this agreement, and to, as we mentioned, mitigate some of the liquidity impact in the near term. So that was the agreement we reached in terms of a combination of shares, cash, and subordinated note.

Gowshihan Sriharan
Analyst at Singular Research

Gotcha. And just my last question. In terms of, with the management holding back, performing, bonuses, Could you specify if the NAFTA compliance is also explicitly included in that compensation package?

Per Brodin
Per Brodin
CFO at Orion Energy Systems

I'm sorry. I didn't we didn't hear that entire question. Could you repeat?

Gowshihan Sriharan
Analyst at Singular Research

So I suppose it's directed at Sally. The compensation bonus is kind of tied to the performance milestone. Is the Nasdaq compliance also kind of explicitly included in that compensation?

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

It's I I mean, it's tied to the Nasdaq compliance and per se, the the shares will be appropriately allocated, whatever we might have to do in terms of keeping that compliance. That answers your question.

Gowshihan Sriharan
Analyst at Singular Research

Thank you. I'll go jump back on the queue. Thank you, guys.

Operator

Thank you. Our next question is going to come from the line of Bill Dezellem with Tieton Capital Management. Your line is open. Please go ahead.

Bill Dezellem
Founder, President & Chief Investment Officer at Tieton Capital Management

Thank you. I'd actually like to pick up on a couple of the questions that have already been asked. But first of all, the federal government rule changes, would you please walk us through the ones that actually impact you all? There's just been so much noise that I've lost track of what is a headwind, what is a tailwind, What is simply noise? Would you walk us through that, please?

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

Are you referring to specifically the EV segment?

Bill Dezellem
Founder, President & Chief Investment Officer at Tieton Capital Management

I'm actually referring to both. So I think there's been a lot of discussion just in the government in general. I'm throwing in the white flag asking for a little help here.

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

Okay, sure. Yes, there has been no shortage. So I'll start with the EV side and Per can certainly add to this. When, you know, as Per said, we were minimally impacted by one direct government project that we had on EV and it was canceled. We fully recovered much of our cost within that as well based upon the contract.

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

I guess the other side of this good news, bad news, we were not we didn't have a big pipeline of business tied directly to NEVI. So we were never really getting the tailwinds of all of that. So it hasn't that the funding, the NEVI funding and the lack thereof has not directly impacted our EV pipeline per se. On the lighting side of the business, we have several projects in our pipeline that remain to be strong. They're getting executed within various sectors of the federal government.

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

And if anything, they're growing and maybe it's because they're in areas that the current administration is focused on as well. Per, not sure if you want to add more there.

Per Brodin
Per Brodin
CFO at Orion Energy Systems

Yes, I think just touching on both of those points. On the NEVI side, I think as we had discussed in previous calls, we never really got a lot of tailwind from that effort, and that is one of the items that we believe has been scuttled as part of the new administration. So while we thought that may ultimately provide some tailwind in the EV sector for us, it hadn't yet, and now we obviously don't expect it to. The one specific project that was cancelled, just for clarity, that project was in process, so we achieved some benefit from that, but then it was since canceled by the government and we don't expect that to move forward at any other time. And that again was an EV project.

Per Brodin
Per Brodin
CFO at Orion Energy Systems

And then with respect to the other projects we have with the federal government, we have significant revenues expected in fiscal twenty twenty six and those are underway. You will see in Q1 some significant benefit from those projects and we expect that to continue throughout the rest of '26. And then I guess one follow on just to clarify, a lot of the impetus that helps drive our business is driven by when it is driven by funding, is driven by funding from utilities and state monies, so that that is not nearly as subject to federal funding as it is the savings trying to be achieved by electric utilities, as well as the state's efforts to improve their infrastructure.

Bill Dezellem
Founder, President & Chief Investment Officer at Tieton Capital Management

Great. Thank you. And then relative to the new structure that you have talked about, partners versus solutions, Is that now possible because the Voltrec earn out is complete? Or is that pure coincidence, the timing of those two?

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

It's I mean, it's certainly possible because the earn out is complete, but there's a lot of things that we can do within the two businesses and combining solutions allows us to further leverage our national footprint and capabilities to expand a lot of the project that work that we do in other geographic areas. So the timing's right for it and we're moving forward with that initiative.

Bill Dezellem
Founder, President & Chief Investment Officer at Tieton Capital Management

So you wouldn't, you would or would not say that it's, that it could not have happened prior to the earn out being complete and therefore now it's possible?

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

I think it could have happened. It didn't happen, but we are moving forward with it.

Bill Dezellem
Founder, President & Chief Investment Officer at Tieton Capital Management

Okay, that's helpful. Thanks, Sally. And then relative to the industry veteran that you've hired for the channel sales. Would you expound upon that please?

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

Sure. He is a returning Orion team member and is excited about the future potential that we have and we were able to get him to rejoin the company and lead a channel that, quite frankly, we have struggled with over the past couple years. So we were excited to have him back and he's he's a very productive leader and driver within that channel.

Bill Dezellem
Founder, President & Chief Investment Officer at Tieton Capital Management

Alright. With with that additional color, I have to ask, what prompted him to leave and where did he go?

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

He he went to a competitor and and maybe he wasn't happy with some of the direction. I I but he's he's looking forward to the future here and knows that we have a great team, which we do. And we have great products and he's happy to represent them again and help us rebuild that channel.

Bill Dezellem
Founder, President & Chief Investment Officer at Tieton Capital Management

Great, thank you. And then relative to the commentary about your wins in fiscal Q4 and those continuing here in the first quarter, would you talk in more detail about those than you have up to this point?

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

I mean, some of them we did announce, but in terms of some of the wins, think the great news that Orion brings is our flexible supply chain, how we're able to work with customers and meet their needs. So we've had we just touched upon government agencies that are specifically looking to us for our BAA products. So that has been some wins and those projects continue. We've recently won a national bank with nice revenue potential through an ESCO partner. So we continue to build our product pipeline and there's more to come in that realm as well.

Bill Dezellem
Founder, President & Chief Investment Officer at Tieton Capital Management

Thank you. And then relative to the tariffs and just the shifting global cost structure as a result, have you seen any clear direct impact yet from your domestic the benefits of your domestic manufacturing? Or is it still too early because it's really unknown what the tariffs are going to be country by country?

Per Brodin
Per Brodin
CFO at Orion Energy Systems

Bill, I think it's safe to say there is more unknown than known at this point. It's something we monitor on an ongoing basis. We believe based on what we know today, we'll be able to manage through this. Our intent is to manage through it, and I'll just call it a neutral basis. And but there's more to come based on the news that comes every day. But as of yet, no significant impact.

Bill Dezellem
Founder, President & Chief Investment Officer at Tieton Capital Management

Understood. And then lastly, given that we are only just a few days away from the end of this quarter, any additional insight that you can share beyond what you already have on this call with an earlier question would be appreciated.

Per Brodin
Per Brodin
CFO at Orion Energy Systems

No. I think that's about as much color as we care to bring about the quarter, certainly incremental to what we typically do. But we felt that based on where we are relative to the quarter ending next week, that would provide that color, and we look forward to reporting it out at the August.

Bill Dezellem
Founder, President & Chief Investment Officer at Tieton Capital Management

Great. Thank you both for taking all the questions.

Per Brodin
Per Brodin
CFO at Orion Energy Systems

Thanks, Bill.

Operator

Thank you. And one moment for our next question. Our next question comes from the line of Steve Redd with Blackwater. Your line is open. Please go ahead.

Analyst

Sally, mean, at this point, not new, but still fairly new to the job. What are the frustrations you're seeing with the corporate structure? There has to be. And then what will you do or what is your path to expedite the remedying of it?

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

So you're right, I am fairly new and we've been working hard this quarter on that structure. I think that synergies and the cross selling that we can do within our solutions business, I think there's a lot more that we can capitalize on there, just in terms of how we scale the business and how those teams can work together. So I think that's great potential for the future within solutions is our maintenance business, our EV business, as well as a lot of the project work that we do and I think that there's a lot to be had within that group. So you know maybe we've been a little too siloed in that and we're certainly breaking that down. There's a lot of maintenance work to be done across The US, not only in lighting but in EV and we have a footprint that can help manage that.

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

And then on the partner side, some of it is some channel rebuilding and as we spoke to earlier, bringing back an industry veteran to lead that will help us lean into that channel as well and also bring new products to that channel that are required to sell and compete in that channel. So we're gonna move quicker and with greater urgency.

Analyst

Sally, it sounds to me like you've got large opportunities in your cost structure. I mean, do I agree? Do you wanna specifically personnel, do you see that as well? I mean, that seems to me where I know, of course, that always drops quickest to the bottom line, but am I reading that correctly?

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

We're always looking into that to maximize the team's capability, but I wanna stabilize the team and get us on a path to growth as well and have some team members learn from each other in terms of their specific lines of business and how do we capitalize on how we execute some of these projects in the market as well within a greater national footprint.

Analyst

Okay. All right. Thanks.

Operator

Thank you. This concludes the question and answer session, and I'll turn the call back to Sally Washlow for concluding remarks.

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

I want to thank everyone for taking the time to join us today. We look forward to updating investors on our first quarter call in early August. And in the meantime, we hope to meet with you in person or virtually at upcoming conferences, which we will announce as confirmed. We are currently planning to participate in a few investment conferences beginning in late August and September, which we will announce via press release once confirmed. You may also reach out to our Investor Relations team with any questions.

Sally Washlow
Sally Washlow
CEO at Orion Energy Systems

Their contact information is at the bottom of our press release. Thanks again for your time today and your interest in Orion. Operator, I'll turn it back to you.

Operator

Thank you. That concludes today's conference call. You may now disconnect. Everyone, have a great day.

Executives
    • Sally Washlow
      Sally Washlow
      CEO
    • Per Brodin
      Per Brodin
      CFO
Analysts
    • William Jones
      SVP at Catalyst Global LLC
    • Eric Stine
      Senior Research Analyst at Craig-Hallum Capital Group LLC
    • Sameer Joshi
      Senior Equity Research Analyst at H.C. Wainwright & Co., LLC
    • Bill Dezellem
      Founder, President & Chief Investment Officer at Tieton Capital Management
    • Analyst