Orion Energy Systems Expands Into EV Charging, Maintenance and Electrical Infrastructure

Key Points

• Orion Energy Systems is diversifying beyond LED lighting into commercial EV charging, electrical infrastructure, battery storage, and maintenance services, aiming to expand customer relationships and generate recurring revenue.
• The company secured a three-year, $45 million maintenance agreement and manages more than 8,000 EV-charging ports, with projects including Boston school-bus electrification, automotive facilities, and data centers.
• Orion reported approximately $20 million in backlog at the end of June and updated annual revenue guidance to slightly above $102 million, while cautioning that project timing may cause quarterly revenue volatility.

Orion Energy Systems NASDAQ: OESX outlined its strategy to expand beyond LED lighting into electrical infrastructure, maintenance services and commercial electric-vehicle charging, with management emphasizing recurring revenue opportunities and cross-selling to its existing customer base.

Chief Executive Officer Sally Washlow said the Manitowoc, Wisconsin-based company designs, manufactures and installs LED lighting systems, while also providing EV-charging infrastructure through its Voltrek division and ongoing maintenance services. Orion also has divisions in Florida and Boston.

“Oftentimes we are converting a single product sale into a multi-year customer relationship,” Washlow said, describing a model that combines U.S.-based manufacturing, global sourcing, project installation and maintenance.

Manufacturing and Turnkey Model

Washlow said Orion’s manufacturing operations in Manitowoc, along with contract manufacturing relationships globally, give the company flexibility in sourcing and customization. The domestic production capability also enables Orion to pursue projects requiring Buy American or Build America, Buy America compliance, according to management.

The company sells through direct national accounts, energy service companies, and distribution and agent networks. Its primary lighting focus is commercial and industrial retrofit projects, though Orion is also introducing products for roadway and outdoor applications.

Management highlighted what it calls an “LED 2.0” or “re-LED” opportunity, as customers that installed LED systems eight to 10 years ago consider replacing or upgrading those fixtures. Washlow said Orion has completed more than 25,000 lighting projects and is seeing customers expand from individual fixture purchases to broader, multiyear initiatives across multiple facilities.

One example involved a global product-testing company that initially hired Orion to replace fluorescent lighting. The initial opportunity, valued in the hundreds of thousands of dollars, later grew into a multimillion-dollar project involving electrical infrastructure work and additional campuses, Washlow said.

Services and Recurring Revenue

Orion reports operations in three segments: lighting; maintenance and technical services; and EV charging. The maintenance and technical services business provides preventive and reactive lighting, electrical and EV-related maintenance.

The company recently signed a three-year maintenance agreement with one of its largest customers valued at $45 million, or about $15 million annually, according to Washlow. She said the contract provides recurring revenue and supports a nationwide network of skilled lighting and electrical professionals that Orion expects to leverage for other customers.

Management also cited electrical contracting, electrical infrastructure work and battery-energy-storage-system installations as emerging revenue streams that developed in response to customer requests. Orion is undertaking electrical work for retail and industrial new-construction projects, Washlow said.

EV Charging and Data Centers

Orion entered the EV-charging market through its acquisition of Voltrek, a Boston-area company with 16 years of experience in the field. The business focuses on commercial and industrial sites rather than residential installations and works with equipment suppliers including ABB, ChargePoint, InCharge and Alpitronic.

The company manages more than 8,000 charging ports and provides site planning, installation, networking and maintenance. In response to a question about charging types, Washlow said Orion installs Level 2 and Level 3/DC fast-charging systems, but does not install Tesla Superchargers. She said the legacy mix is primarily Level 2, though management did not provide a percentage breakdown.

Washlow highlighted Boston Public Schools as a customer that is electrifying its school-bus fleet. Orion is installing charging infrastructure at several bus yards, with each location representing a multimillion-dollar opportunity, she said.

The company also said it recently secured work with a large automotive manufacturer involving LED lighting, electrical contracting and EV-charging systems. Orion did not name the customer.

In data centers, management said Orion has won lighting opportunities with a hyperscale operator across multiple campuses. The company supplies lighting fixtures to those projects and customizes products at its U.S. facility to simplify installation. Washlow clarified during the question-and-answer period that Orion currently supplies lighting only to data-center projects and does not have maintenance contracts in that market.

Backlog, Outlook and Financial Metrics

Washlow said Orion’s backlog generally converts to revenue within a year, though large projects can shift by a quarter or six months, creating variability in quarterly results. The company reported backlog of approximately $20 million at the end of June, management said.

Orion recently updated its annual revenue guidance to slightly more than $102 million, though Washlow cautioned that second-quarter revenue could be lower because of the timing and lumpiness of major projects. Management does not provide quarterly guidance.

According to Washlow, revenue has increased over recent quarters, gross margin has been in the 30% range, adjusted EBITDA over the trailing 12 months was $4.5 million, and the company has improved working capital and liquidity.

About Orion Energy Systems (NASDAQ:OESX)

Orion Energy Systems, Inc NASDAQ: OESX develops and provides energy-efficient LED lighting systems and related solutions for commercial and industrial facilities. Its offerings are designed to help organizations improve illumination, reduce energy consumption and operating costs, and modernize facility infrastructure.

The company's product portfolio includes LED high-bay and low-bay fixtures, retrofit systems, outdoor and specialty lighting, lighting controls, and connected facility-management solutions.

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