Orion Energy Systems is a Wisconsin-based provider of energy-efficient LED lighting, controls and IoT systems, including turnkey projects. The largest portion of their revenue comes from national account project business, followed by their Energy Services Company (ESCO) channel.
On January 18, 2022, three weeks prior to their Q3 results release, Orion announced a revenue update for the current fiscal year (FY2022), reducing the full FY2022 revenue outlook from $150M to $130M, with revenue expectation of $30.5M for the third quarter ended December 31, 2021. The company noted the reductions were related to delays on several large projects, based on Orion’s customers responding to supply chain issues and impacts of COVID-19 on their businesses.
On February 9, 2022, Q3 FY2022 results were released with revenue of $30.7M (versus $44.3M in Q3 FY2021). Orion’s CEO Mike Altschaefl noted that Q3 FY2021 had benefited from a rapid rebound in activity following the initial COVID-19 disruptions. Altschaefl indicated that Orion’s leadership is confident they have lost very little business based on supply chain issues, having managed the situation well with a broadening of their supply chain, increases in inventory orders and even pre-purchasing some key component inventory for suppliers.
In addition to the national accounts project business, ESCO and distributor channel business, Orion is looking to build its lighting maintenance business (expanding on their “self-perform” services covering the cycle from design through install through maintenance). Orion acquired Stay-Lite Lighting, a provider of lighting, electrical and maintenance services, in early January 2022. Stay-Lite brings a revenue base of $9M, with a primary focus on national retail companies. Orion believes there is potential for a $20M maintenance business in FY2023, providing opportunities to deepen Orion’s existing customer relationships by adding maintenance services for recurring revenue.
In the Q&A following the Q3 2022 Earnings Call on February 9, 2022, CEO Altschaefl indicated that Orion was using outside assistance to identify M&A targets, and that there is particular interest in three categories: 1) Maintenance (already started with the Stay-Lite acquisition), 2) EV Charging Stations, Battery Storage and Solar, and 3) Controls technology.
Orion was announced as one of four winners in the U.S. Department of Energy’s L-Prize competition, with a concept for a high efficacy networked LED luminaire that includes LiFi technology.
Looking at the balance of FY2022, Orion maintained its (recently reduced) revenue expectation of approximately $130M, which would represent a growth of 11% compared to FY2021 revenue of $116.8M. The market will be looking for approximately $28M in revenue for the current fiscal quarter ending March 31, 2022.
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Investor Presentation: https://investor.oriones.com/static-files/5250d1c9-25e4-4f02-a1ad-85e732df069d