MANITOWOC, Wis., Feb. 09, 2023 (GLOBE NEWSWIRE) — Orion Energy Systems, Inc. (NASDAQ: OESX) (Orion Lighting), a provider of energy-efficient LED lighting and controls, maintenance services and electric vehicle (EV) charging station solutions, today reported results for its fiscal 2023 third quarter ended December 31, 2022 (Q3’23). Orion will hold an investor call today at 10:00 a.m. ET (details below); online pre-registration required to receive the call dial-in information.

Q3 Financial Highlights

• Q3’23 revenue of $20.3M, including $2.8M for Voltrek, compared to $30.7M in Q3’22 and $17.6M in Q2’23.
• Q3’23 gross profit percentage of 23.6% versus 24.9% in Q3’22 and Q2’23 of 25.3%.
• Net Loss and EPS include $17.8M non-cash tax charge to record a valuation allowance against Deferred Tax Assets
• Quarter-end working capital of $24.5M, including net inventory of $19.3M.
• Quarter-end liquidity of approximately $19.4M, comprised of $8.1M of cash and equivalents and $11.3M credit facility availability.

CEO Commentary
“Although we achieved a sequential revenue improvement in Q3, delays in the activation of large Department of Defense and automotive projects have shifted much of that revenue into Q4’23 and FY 2024. Lighting distribution channel sales were lower than anticipated, likely due to the impact of rising interest rates and economic uncertainties on construction activity, that also appear to have impacted Q3’23 revenue in our Energy Service Company (ESCO) channel.

“As anticipated, we have experienced a $50M decrease in business from our largest customer and an online retailer through the first nine months of FY’23. Despite this, year-to-date, we have grown the remaining business by 9% versus the year-ago period, and our initial outlook for FY’24 anticipates revenue growth of at least 30%.

“Our growth outlook is supported by the environmental benefits and costs savings delivered by our LED lighting solutions. We continue to advance large projects in our national accounts business as well as other maintenance and cross selling opportunities. We are also optimistic about our ESCO business where despite some softness in the recent quarter, we are developing a pipeline of significant opportunities rooted in the energy efficiency benefits of LED lighting and expect ESCOs to contribute meaningfully to growth in FY’24.

“We are also excited by the strong growth prospects in our new Voltrek EV charging solutions business which we purchased early in Q3’23. Voltrek is off to a strong start, having already nearly achieved the lower end of our $3-$5M revenue estimate for the second half of FY’23. We are now building out the sales and service infrastructure required to extend Voltrek’s reach across the US from its current focus in the northeast, and we have a growing base of initial dialogues with some of our larger national accounts. We believe EV charging solutions have the potential to become a significant revenue opportunity for Orion over the next few years.

“Overall, we are focused on helping our customers achieve their energy efficiency and sustainability goals with the highest levels of product and service quality, rooted in our customer for life commitment. From a financial standpoint, we believe Orion is well positioned to fund our operations and growth initiatives. We were operating cash flow positive in Q3 and expect Q4 will be our strongest revenue quarter of the year.”

Business Outlook

• Orion expects continued sequential revenue growth in Q4’23 vs. Q3’23, which should be the strongest quarter of FY’23, likely exceeding Q4’22 revenue of $22.1M.
• Correspondingly, full FY’23 revenue of $77M to $80M is expected.
• Orion also expects FY’24 revenue growth of 30% or more over FY’23 and plans to provide more specific details about its FY’24 outlook when it reports its Q4 results.

Q3 Financial Results
Orion’s Q3’23 revenue was $20.3M compared to $30.7M in Q3’22. The current year has been impacted by an expected decrease in activity with our largest customer and delays in the activation of large Department of Defense and automotive industry projects.

Q3’23 gross profit percentage was 23.6% compared to 24.9% in Q3’22 and 25.3% in Q2’23. The sequential decline is primarily due to project mix and the impact of higher service volume which carries slightly lower margins.

Total operating expenses grew to $9.4M in Q3’23 from $6.3M in Q3’22, principally due to costs associated with the Voltrek acquisition, as well as G&A expenses for Voltrek and Stay-Lite Lighting, which were not owned in the prior-year period. Q3’23 includes a $1.5M accrual for the earnout associated with the Voltrek acquisition. If earned, the payment is expected to be made in mid-FY’24. Sequentially, operating expenses increased by approximately $2.0M, primarily related to acquisition costs and the addition of Voltrek G&A expenses in Q3’23.

Orion reported a Q3’23 net loss of ($24.1M), or ($0.75) per share, as compared to Q3’22 net income of $1.1M, or $0.04 per share. Q3’23 results include a $17.8M non-cash charge to establish a valuation allowance against the Company’s Deferred Tax Assets. The charge was required because Orion is expected to be in a 36-month cumulative taxable loss at the end of FY’23. Excluding the income tax charge, the Q3’23 loss was mainly attributable to the earnings flow through on lower revenues. Orion generated negative Adjusted EBITDA of ($1.6M) in Q3’23 versus Adjusted EBITDA of $2.1M in Q3’22. The recording of the tax charge does not change our view on Orion’s ability to offset future cash taxes with existing NOLs.

Balance Sheet
Orion ended Q3’23 with $24.5M in working capital, including net inventory of $19.3M. Orion had approximately $19.4M of liquidity at the close of Q3’23, including cash and cash equivalents of $8.1M and $11.3M available on its credit facility.

About Orion Energy Systems
Orion provides energy efficiency and clean tech solutions, including LED lighting and controls, maintenance services and electrical vehicle (EV) charging solutions. Orion specializes in turnkey design-through-installation solutions for large national customers, with a commitment to helping customers achieve their business and environmental goals with healthy, safe and sustainable solutions that reduce their carbon footprint and enhance business performance.

Orion is committed to operating responsibly throughout all areas of our organization. Learn more about our ESG priorities, goals and progress here or visit our website at www.orionlighting.com.