What Orion Energy Systems (OESX) Said on Its Q2 Earnings Call

Key Points

• Fiscal Q2 revenue rose 9% to $21.7 million, with LED lighting growth offsetting lower EV charging revenue. Orion reported a $0.8 million net loss, while adjusted EBITDA remained positive for an eighth consecutive quarter.
• Orion reiterated its raised fiscal 2027 outlook of $100 million to $102 million in revenue and positive adjusted EBITDA. Management expects revenue to be relatively even in Q3 and Q4, with potential fourth-quarter upside.
• A major retailer lighting project is expected to generate $10 million to $15 million, and data center lighting awards provide additional opportunities. Management expects gross margin to recover above 30% in the second half as project mix normalizes.

Orion Energy Systems NASDAQ: OESX reported fiscal 2027 second-quarter revenue growth of 9% and reiterated its recently raised full-year revenue outlook, as lighting projects helped offset a decline in electric vehicle charging revenue.

The company expects revenue of $100 million to $102 million and positive adjusted EBITDA for the fiscal year. That compares with its prior revenue forecast of $95 million to $97 million. Chief Financial Officer Per Brodin said revenue in the third and fourth quarters should be relatively even, with potential upside occurring in the fourth quarter.

Revenue rose to $21.7 million from $19.9 million a year earlier. Orion posted a net loss of $0.8 million, or $0.20 per share, compared with a loss of $0.6 million, or $0.17 per share, in the prior-year quarter. Adjusted EBITDA was positive for an eighth consecutive quarter, management said, though Brodin did not specify the current-quarter amount on the call.

Lighting growth offsets EV decline

LED lighting revenue rose to $14.9 million from $10.7 million, reflecting increased project activity and distribution channel sales, partly offset by lower sales through the energy service company, or ESCO, channel. The segment’s gross margin improved to 29.1% from 27.5%.

Maintenance revenue fell to $4 million from $4.5 million, while EV charging solutions revenue declined to $2.8 million from $4.8 million as project volume decreased. Maintenance gross margin rose to 25.3% from 23.7%, but EV charging gross margin fell to 31.4% from 45.8%.

Overall gross margin declined to 28.7% from 31%, which Brodin attributed largely to a change in the mix of lighting business. He said he expects the company’s gross margin to return to above 30% in the third and fourth quarters as the project mix normalizes and higher revenue improves cost absorption.

Operating expenses increased to $7 million from $6.4 million, driven mainly by higher stock-based compensation and commission expenses, Brodin said.

Retail and data center projects drive outlook

CEO Sally Washlow said a recently announced interior lighting and Internet of Things installation project for a major nationwide retailer is expected to generate $10 million to $15 million. Orion expects to reach the upper end of that range as it executes the work in the third and fourth quarters.

Washlow said the company is also discussing another project of similar size with the retailer. If the timing works, that additional work could provide fourth-quarter upside. Brodin said the existing interior project and other work already underway would have a significant influence on second-half revenue.

Firm purchase orders for the retailer’s interior project arrived after Sept. 30 and were not included in the approximately $21.6 million to $21.7 million backlog at that date, Brodin said. He said backlog had risen substantially by the end of October but declined to disclose an interim figure.

Orion also announced an additional multimillion-dollar data center lighting deployment during the quarter for a large hyperscaler, following an earlier award. Washlow said Orion supplies the fixtures but does not install them. The company has won work on two buildings and is discussing another, she said, with each building representing seven figures of lighting fixtures.

Cross-selling and replacement opportunities

Washlow said Orion is seeing more opportunities to sell lighting and EV charging services to the same customers. A longtime automotive customer brought in Orion’s EV team during a lighting project, resulting in an EV charging award at one site; the company is looking at other sites with that customer, she said.

Washlow also pointed to industry research suggesting an emerging LED replacement cycle. She cited a Lighting Management and Maintenance article estimating that 20% to 30% of the installed LED base in commercial, industrial and outdoor applications may already be due for replacement.

For fiscal 2026, Orion reported $86 million in revenue and $2 million in positive adjusted EBITDA. Washlow described the current year’s outlook as a continuation of the turnaround that began in that fiscal year.

About Orion Energy Systems (NASDAQ:OESX)

Orion Energy Systems, Inc NASDAQ: OESX is an energy-efficiency technology company that designs, manufactures and delivers lighting and energy-management solutions for commercial and industrial facilities. Its offerings are intended to help organizations improve illumination, reduce energy consumption and modernize building operations.

The company's products and services include LED lighting fixtures and retrofit systems, intelligent lighting controls, and related energy-management technologies.

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