Yahoo Finance

CEO Commentary
Orion CEO Mike Jenkins commented, “Our team has made excellent progress reducing our cost structure and enhancing margins across our business. We have also added seven new customers/projects worth an estimated $100M to $200M in aggregate revenue potential over the next five years to our project pipeline. This range includes the variability of customer dictated timing. This new business is more significant and diverse than we have had in recent years, and we have other large opportunities approaching final stages of negotiation. In addition, we continue to lower costs in our LED lighting products through product re-engineering, plant efficiency efforts and enhanced sourcing, all of which benefit gross margin. We also achieved a substantial margin rebound of over 2,000bps in our maintenance business due to our strategic pricing and restructuring actions.

“We have made significant progress in lowering our breakeven threshold. In addition to progress on margins, we reduced our operating cost by more than $4M year-to-date, including reducing more than $2M in overhead that will benefit future periods. As a result, we achieved positive adjusted EBITDA and positive cash flow from operating activities in Q3’25 and year-to-date. Our cash position increased to $7.5M in Q3’25, from $5.4M in Q2’25, inclusive of a $1.5M reduction in borrowings under our credit facility.

Despite these very significant developments, our FY’25 performance was impacted by customer delays in launching several projects and by reduced activity in our electrical contractor distribution channel. These factors required us to lower our FY’25 revenue outlook, however, Orion believes it is in a far stronger position to drive revenue growth and profitability in FY’26.

“We expect a strong year-end close for our Voltrek EV charging segment, as Q4’25 should benefit from projects related to Eversource Energy’s ‘EV Make Ready’ program that were delayed in Q3’25. Orion’s EV charging solutions revenue has grown 48% so far this year, and we believe it remains well positioned for long-term growth. Our maintenance services business is also in a solid position, following the rollout of a new pricing model and the rightsizing of its resources and overhead to improve operational efficiency.

“Looking forward, we believe Orion has built a strong platform of high quality, industry-leading solutions and customer service to meet our customers’ operational, energy savings, workplace safety and sustainability goals. Given this platform, our continued focus on reducing costs, and the realignment of our business units to maximize our revenue potential, we believe Orion is poised to deliver much improved results in FY’26 and beyond.”

Business Reorganization
To create greater focus and efficiency and to better serve customers and enhance revenue generation, Orion is reorganizing its business divisions into two Commercial Business Units (CBUs): one focused on a full range of product, technology and service Solutions (across LED lighting, EV charging and maintenance services) and one focused on LED lighting and EV Charging product sales through ESCO and distribution Partners.

Orion’s Solutions CBU will focus on developing and executing business with large complex corporate, government and other private sector accounts. The Partner CBU will focus on accelerating product sales by catering to the unique needs and dynamics of Orion’s Energy Service Company (ESCO) and Agent distribution partners. This realignment will create distinct CBU teams that are able to tailor their solutions to address customer needs with the highest value solutions and customer service. The reorganization is underway and will be fully implemented and effective as of April 1, 2025.

Outlook
Reflecting the impact of the change in timing of new business projects in Q4’25, Orion has reduced its FY’25 revenue outlook to a range of $77M - $83M. This outlook implies Q4’25 revenue of $19M - $25M which would be approximately in line or better than any of the first three quarters of FY’25. This outlook is based on current market conditions, initial revenue expected from large national LED lighting projects, as well as a significant sequential rebound in Orion’s Voltrek EV charging solutions business. Given stronger than anticipated new maintenance service opportunities, Orion now expects FY’25 maintenance services revenue to decrease by approximately $2M to $3M in FY’25, versus its initial expectation of a $4M - $5M revenue decline.

Recent contracts/projects expected to contribute to Q4’25 and future periods, include:

• 3-year contract to implement LED lighting and energy efficiency measures across a major U.S. university campus. Initial project proposals exceed $13M and encompass less than 10% of the university’s buildings.

• 3-year contract with longstanding, nationwide Energy Service Company (ESCO) partner that is anticipated to grow to $5M - $10M per year starting in Q1’26.

• Relationship with a prominent energy management service provider serving over 6,500 customer locations across the U.S. Orion expects this relationship to generate revenue of $2M - $5M per year, starting in Q4’25.

• Multi-year LED lighting retrofit contract for a national building products distributor’s over 400 locations. The project is expected to generate revenue of $12M - $18M over several years, with initial revenue of $2M now anticipated in FY’26.

• 5-year contract extension to supply all interior and exterior LED lighting fixtures for major retail customer’s new store construction projects. Orion estimates a total potential value of $23M - $30M, ranging between $4.5M to $6M per year beginning in Q1’26.

• Approximately $5M in expected projects in FY26 for automotive OEM customers.

In conjunction with the realignment of its business units, Orion plans to further streamline its organization, resulting in an additional $1.5M in annualized savings during FY’26.

Based on a growing base of customers and large projects that are expected to engage over the next several quarters, Orion believes it is well positioned to achieve double digit revenue growth and positive Adjusted EBITDA performance in FY 2026. The Company will provide more specifics on its FY’26 outlook when it reports Q4’25 results in June.

Q3’25 Results

Orion reported Q3’25 revenue of $19.6M compared to $26.0M in Q3’24, based on the following segment performance:

• EV charging solutions revenue was $2.4M in Q3’25 vs. $2.8M in Q3’24, principally due to customer and utility-related delays in the launch of projects that are now expected to contribute to Q4’25 and Q1’26 results. Orion expects a sequential rebound in Q4’25 EV charging revenue as it executes on its project backlog. Year-to-date, EV charging revenue increased 48% to approximately $11.0M in YTD’25 compared to $7.4M in the YTD’24.  Projects that have contributed to the segment’s growth year-to-date include construction services contracts from Eversource Energy’s “EV Make Ready” program and a large public school bus EV project in Boston.

• LED lighting revenue was $13.2M in Q3’25 vs. $18.5M in Q3’24, reflecting customer delays in several projects that had been expected to commence in Q3’25, and compared to a year-ago benefit from a large European LED retrofit project. These new projects are now expected to start in late Q4’25 and Q1’26. LED lighting revenue was $36.8M in YTD’25 compared to $44.7M in YTD’24. Lighting also saw margin growth of 270bps in Q3’25 over Q3’24 due to targeted pricing, cost reductions and sourcing initiatives.

• Maintenance services revenue of $3.9M in Q3’25 was stronger than expected due to expanded service requests from existing customers. The intentional elimination of unprofitable contracts in Q1’25 resulted in Q3’25 maintenance services revenue being below Q3’24 revenue of $4.6M but improved sequentially from $3.8M in Q2’25 and $3.3M in Q1’25. YTD’25 maintenance revenue was $11.0M compared to $12.0M in YTD’24, as new opportunities partially offset the intentional elimination of unprofitable contracts. Reflecting the benefit of new pricing, restructuring and cost reduction initiatives, maintenance services gross profit margin and gross profit rebounded to 26.4% and $1.0M, respectively, in Q3’25 from 6.2% and $0.3M respectively, in Q3’24. Orion expects maintenance services profitability to remain strong through FY 2026.
  

Overall Q3’25 gross profit was $5.8M, compared to $6.4M in Q3’24, while gross margin increased 490 basis points to 29.4% in Q3’25 versus 24.5% in Q3’24. The increase was principally due to profitability improvements in maintenance, a higher-margin revenue mix in LED lighting and lower overhead costs.

Total operating expenses declined by $1.4M to $7.0M in Q3’25 from $8.4M in Q3’24, due to a range of fixed cost and compensation-related operating cost reductions, particularly in employee costs, as well as a $0.6M reduction in Voltrek earnout expense accrual versus Q3’24.

Lower operating expenses and an improved gross margin percentage enabled a $0.7M improvement in Orion’s Q3’25 net loss to ($1.5M), or ($0.05) per share, from ($2.3M), or ($0.07) per share in Q3’24. Likewise, the YTD’25 net loss improved to ($8.9M), or ($0.27) per share, from a net loss of ($13.3M), or ($0.41) per share, in YTD’24, due to the same factors.

Balance Sheet and Cash Flow
Orion generated cash from operating activities of $3.8M in Q3’25, due to strong accounts receivable conversion and receipts and generated $1.3M of cash from operating activities in the YTD’25 period. Year-to-date cash generation is related to the improvement in Orion’s net loss, adjusted for non-cash expenses and working capital changes. Orion paid down its revolving credit facility by $2.5M in YTD’25, including $1.5M in Q3’25, reducing outstanding borrowings to $7.5M at the close of Q3’25, as compared to $10.0M at March 31, 2024.

Orion ended Q3’25 with current assets of $37.1M, including $7.5M of cash and equivalents, $12.2M of accounts receivable, $2.2M of revenue earned but not billed and $13.5M of inventories. Net of current liabilities, working capital was $10.5M.

Orion's financial liquidity improved to $15.6M at December 31, 2024, as compared to $13.1M at September 30, 2024 and $15.3M at March 31, 2024. In Q3’25, Orion extended its bank credit facility with Bank of America by 18 months to June 30, 2027. Considering its liquidity position and outlook, Orion believes it has sufficient resources to fund its operations and growth objectives for the foreseeable future.

Webcast/Call Details

About Orion Energy Systems
Orion provides energy efficiency and clean tech solutions, including LED lighting and controls, electrical vehicle (EV) charging solutions, and maintenance services. Orion specializes in turnkey design-through-installation solutions for large national customers as well as projects through ESCO and distribution partners, 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 Sustainability and Governance priorities, goals and progress here or visit our website at www.orionlighting.com.

Non-GAAP Measures
In addition to the GAAP results included in this presentation, Orion has also included the non-GAAP measures, EBITDA (earnings before interest, taxes, depreciation and amortization), and Adjusted EBITDA (EBITDA adjusted for stock-based compensation, payroll tax credit, and acquisition expenses and earn-out accruals ?). The Company has provided these non-GAAP measures to help investors better understand its core operating performance, enhance comparisons of core operating performance from period to period and allow better comparisons of operating performance to its competitors. Among other things, management uses these non-GAAP measures to evaluate performance of the business and believes these measurements enable it to make better period-to-period evaluations of the financial performance of core business operations. The non-GAAP measurements are intended only as a supplement to the comparable GAAP measurements and Orion compensates for the limitations inherent in the use of non-GAAP measurements by using GAAP measures in conjunction with the non-GAAP measurements. As a result, investors should consider these non-GAAP measurements in addition to, and not in substitution for or as superior to, measurements of financial performance prepared in accordance with generally accepted accounting principles.

Consistent with Regulation G under the U.S. federal securities laws, the non-GAAP measures in this press release have been reconciled to the nearest GAAP measures, and this reconciliation is located under the heading “Unaudited EBITDA Reconciliation” following the Unaudited Condensed Consolidated Statements of Cash Flows included in this press release.

Safe Harbor Statement  
Certain matters discussed in this press release are "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements will include words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "would" or words of similar import. Similarly, statements that describe our future outlook, plans, expectations, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause results to differ materially from those expected, including, but not limited to, the following: (i) our ability to manage and respond to ongoing increasing pressures to reduce the selling price of our products driven largely by a return to a more normalized supply chain and reduction in shipping costs for our imported products, coupled with the related increase in competition from foreign competitors; (ii) our ability to regain and sustain our profitability and positive cash flows; (iii) our ability to achieve our  revenue expectations for fiscal 2025, including as a result of continued project delays; (iv) our dependence on a limited number of key customers, and the consequences of the loss of one or more key customers or suppliers, including key contacts at such customers; (v) our existing risk that liquidity and capital resources may not be sufficient to allow us to fund or sustain our growth; (vi) our ability to manage general economic, business and geopolitical conditions, including the impacts of natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments; (vii) our ability to successfully launch, manage and maintain our refocused business strategy to successfully bring to market new and innovative product and service offerings; (viii) our ability to recruit, hire and retain talented individuals in all disciplines of our company; (ix) price fluctuations (including as a result of tariffs), shortages or interruptions of component supplies and raw materials used to manufacture our products; (x) our risk of potential loss related to single or focused exposure within our current customer base and product offerings; (xi) our ability to maintain effective information technology systems security measures and manage risks related to cybersecurity; (xii) our ability to differentiate our products in a highly competitive and converging market, expand our customer base and gain market share; (xiii) our ability to manage and mitigate downward pressure on the average selling prices of our products as a result of competitive pressures in the light emitting diode (“LED”) market; (xiv) our ability to manage our inventory and avoid inventory obsolescence in a rapidly evolving LED market; (xv) our increasing reliance on third parties for the manufacture and development of products, product components, as well as the provision of certain services; (xvi) our increasing emphasis on selling more of our products through third party distributors and sales agents, including our ability to attract and retain effective third party distributors and sales agents to execute our sales model; (xvii) our ability to develop and participate in new product and technology offerings or applications in a cost effective and timely manner; (xviii) our ability to maintain safe and secure information technology systems; (xix) our ability to balance customer demand and production capacity; (xx) our ability to maintain an effective system of internal control over financial reporting; (xxi) our ability to defend our patent portfolio and license technology from third parties; (xxii) a reduction in the price of electricity; (xxiii) the reduction or elimination of investments in, or incentives to adopt, LED lighting or the elimination of, or changes in, policies, incentives or rebates in certain states or countries that encourage the use of LEDs over some traditional lighting technologies; (xxiv) our failure to comply with the covenants in our credit agreement; (xxv) the electric vehicle (“EV”) market and deliveries of passenger and fleet vehicles may not grow as expected; (xxvi) incentives from governments or utilities may not materialize or may be reduced , paused or eliminated, which could reduce demand for EVs, or the portion of regulatory credits that customers claim may increase, which would reduce our revenue from such incentives; (xxvii) the cost to comply with, and the effects of, any current and future industry and government regulations, laws and policies, including those of the new Trump administration; (xviii) potential warranty claims in excess of our reserve estimates; and (xxix) the other risks described in our filings with the Securities and Exchange Commission. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this press release and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. More detailed information about factors that may affect our performance may be found in our filings with the Securities and Exchange Commission, which are available at http://www.sec.gov or at http://investor.oriones.com in the Investor Relations section of our Website.

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED EBITDA RECONCILIATION
(in thousands)