MANITOWOC, Wisc., Aug. 07, 2024 (GLOBE NEWSWIRE) — Orion Energy Systems, Inc. (NASDAQ: OESX) (Orion Lighting), a provider of energy-efficient LED lighting, electric vehicle (EV) charging stations and maintenance services solutions, today reported results for its fiscal 2025 first quarter (Q1’25) ended June 30, 2024. Orion will hold an investor call today at 10:00 a.m. ET – details below. Orion is maintaining its revenue growth outlook of 10-15% which is expected to be more weighted to the second half of fiscal 2025.
| Q1 Financial Summary | Prior Three Quarters | ||||||
| $ in millions except per share figures | Q1’25 | Q1’24 | Change | Q4’24 | Q3’24 | Q2’24 | |
| LED Lighting Revenue | $12.8 | $12.6 | +1% | $16.3 | $18.5 | $13.6 | |
| EV Charging Revenue | $3.8 | $1.2 | +209% | $4.9 | $2.8 | $3.4 | |
| Maintenance Revenue | $3.3 | $3.8 | -11% | $5.2 | $4.6 | $3.6 | |
| Total Revenue | $19.9 | $17.6 | $2.3 | $26.4 | $26.0 | $20.6 | |
| Gross Profit (1) | $4.3 | $3.2 | $1.1 | $6.8 | $6.4 | $4.6 | |
| Gross Profit % | 21.6% | 18.0% | 360bps | 25.8% | 24.5% | 22.2% | |
| Net Loss (1) | ($3.8) | ($6.6) | $2.9 | $1.6 | ($2.3) | ($4.4) | |
| Net Loss per share (1) | ($0.12) | ($0.21) | $0.09 | $0.05 | ($0.07) | ($0.14) | |
| Adjusted EBITDA (2) | ($1.8) | ($4.4) | $2.6 | $0.4 | ($0.1) | ($2.2) | |
| (1) Voltrek earnout accruals and net adjustments were $0.3M in Q1’25, ($3.0M) in Q4’24, and $1.1M in each of Q3’24, Q2’24, and Q1’24. (2) Adjusted EBITDA reconciliation provided below. |
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Highlights
- EV charging solutions revenue rose over 200% compared to Q1’24 to $3.8M, including initial activation of construction services contracts for Level 2 and Level 3 charging stations for Eversource Energy’s “EV Make Ready” program, which Orion previously announced as having secured over $11M in contracts for this program.
- LED lighting revenue increased approximately 1% compared to Q1’24 to $12.8M in Q1’25, reflecting the completion of a significant Department of Defense (DoD) project in Europe as well as ongoing major account, ESCO and distribution business. Several other significant projects are anticipated in coming quarters in the automotive, retail, technology, logistics/distribution, financial and public sectors, the majority of which are expected to activate in 2H FY’25.
- As anticipated, maintenance services revenue declined 11% to $3.3M in Q1’25, reflecting the impact of three large legacy customers that chose not to renew long-term contracts following pricing increases required to return the maintenance business to suitable levels of profitability. Reflecting new pricing and new contracts, maintenance services gross profit increased to 3.8% in Q1’25 from negative 1.4% in Q1’24. Orion anticipates a $4M-$5M decrease in maintenance services revenue during FY 2025 due to the nonrenewal of certain large legacy Stay-Light customer contracts but expects maintenance services profitability to continue to improve as it progresses through FY 2025.
CEO Commentary
Orion CEO Mike Jenkins commented, “Orion’s overall business grew 13.0% in Q1’25, primarily reflecting expected strength in our Voltrek EV charging station solutions business. We anticipate continued momentum in this business as public and private sector organizations implement EV charging programs to support the growing base of electric vehicles across the country. Meaningful government stimulus has been appropriated to support the build-out of EV infrastructure, including $7.5B designated for the National Electric Vehicle Infrastructure (NEVI) Formula Program. Funding is just beginning to be released to fund EV charging station projects for EV fleets as well as government, commercial, industrial, and retail installations. Voltrek’s experience and long-term history of successful project implementation across the U.S. states puts Orion in a very strong competitive position with both new customers and our sizeable base of long-term lighting solutions customers.
“We continue to expect LED lighting segment revenue growth in FY 2025, supported by new and existing customers. We also expect continued sales growth via our Energy Service Company (ESCO) and electrical contractor distribution partners. ESCOs in particular have responded very favorably to our new line of energy-efficient high-bay and exterior LED fixtures developed for the value segment of the market. We estimate that the overall market penetration for LED lighting is still only about 40%, leaving substantial retrofit opportunities to pursue for years to come.
“We also expect our LED lighting business to benefit from state regulations banning the sale of fluorescent fixtures and replacement tubes. Seven states have passed regulations, most of which will go into effect in 2025, and we expect other states will follow this trend. The regulations are intended to reduce energy consumption and the disposal of waste tubes, drivers and fixtures. We are already in discussions with a number of customers about their plans for compliance over the next several quarters, and we have had some success in using the upcoming deadlines to develop new customer dialogues.
“As we anticipated, our maintenance services revenue declined in Q1’25, reflecting the impact of our strategic decision to restore this business to a suitable margin profile by addressing low margin accounts. Repricing was necessary due to a variety of inflationary impacts over the past few years that had eroded our margin on legacy contracts. The revenue impact we saw in Q1 and expect for the full year represents a few customers who chose not to renew their contracts at our higher pricing. Nonetheless, our repricing efforts have enabled us to return this business to profitability and a gross profit percentage that is approaching that of our overall business. We are also trimming some staffing and overhead and writing down some legacy product inventories related to this reduced customer activity. From here we intend to selectively build our maintenance business primarily via existing customers in other segments of our business, leveraging relationships where we have the greatest potential synergies.
“Overall, we believe Orion is on a solid path and we are very excited about the outlook in FY 2025 and beyond as we work to leverage the synergies and expanded growth potential that we believe is possible from our diversified business platform.”
Business Outlook
Having achieved top-line growth of 13.0% in Q1’25, Orion is reiterating its FY 2025 consolidated revenue growth target of 10-15%. This outlook is based on expected revenue from large national LED lighting projects in the automotive, retail, technology, logistics/distribution, financial and public sectors, as well as continued strength from its ESCO and agent partners who are responding favorably to the quality, energy efficiency and value of Orion’s LED lighting products.
Orion expects robust growth in its Voltrek EV charging solutions business to continue, driven by existing project contracts, a growing pipeline of opportunities developed by its expanded team, and synergies with Orion’s other businesses. Voltrek is a leader in the EV charging solutions business, with over 12 years’ experience completing projects in 29 states and counting.
As experienced in Q1’25, Orion expects maintenance services revenue to contract in FY 2025, due to three large legacy customers that did not accept long-term pricing increases. Expansion opportunities within the existing customer base should partially offset negative revenue impacts as the year progresses. Importantly, Orion expects pricing discipline to continue to benefit its maintenance services gross profit percentage as it progresses through FY 2025.
Financial Results
Q1’25 revenue rose 13.0% to $19.9M, from $17.6M in Q1’24, primarily driven by growth in EV charging station installations. Q1’25 benefitted from the initial commencement of $11M in construction contracts for Level 2 and Level 3 charging stations via Eversource Energy. The LED lighting segment benefitted from the completion of a large European retrofit project for the DoD in Q1’25. Maintenance services declined due to the anticipated impact of three large legacy customers that did not renew long-term contracts following pricing increases designed to return the maintenance business to adequate profitability.
Gross profit increased to $4.3M in Q1’25 from $3.2M in Q1’24 and gross profit percentage increased 360 basis points to 21.6% versus 18.0%, primarily due to profitability improvements in the maintenance segment as well as to the benefit of higher revenues on fixed cost absorption.
Total operating expenses declined to $7.7M in Q1’25 from $9.6M in Q1’24, primarily due to infrastructure reductions and lower Voltrek earnout expense accrual.
Higher revenue, stronger gross profit and lower operating expenses led to a $2.9M improvement of in Orion’s Q1’25 net loss to ($3.8M), or ($0.12) per share, versus ($6.6M), or ($0.21) per share, in Q1’24.
Balance Sheet and Cash Flow
Orion ended Q1’25 with currents assets of $42.1M, including $5.7M of cash and equivalents, $12.5M of accounts receivables, and $15.9M of inventories. Net of current liabilities, working capital was $17.4M.
Orion’s financial liquidity declined to approximately $14.0M at June 30, 2024, compared to $15.3M at March 31, 2024. However, Orion enhanced its financial liquidity through an amendment to its bank credit facility during the quarter. The amendment provided a $3.525M mortgage on the Company’s Manitowoc corporate headquarters along with borrowing base enhancements due to a broadening of the definition of eligible receivables in the Company’s borrowing base calculation. The Company had $10.0M of borrowings outstanding on its credit facility at both June 30, 2024 and March 31, 2024.
Orion used cash of $3.0M in operating activities in Q1’25, primarily related to its net loss in the period, adjusted for non-cash expenses and working capital requirements. The Company received proceeds of $3.5M from its new bank mortgage facility, which resulted in cash increasing to $5.7M at the end of the period from $5.2M at the beginning of the period. Considering its strong liquidity and outlook, Orion believes it is well positioned to fund its operations and growth objectives in fiscal 2025.