Orion(OESX) - 2026 Q1 - Quarterly Results

Q1'26 Earnings Overview Orion Energy Systems reported Q1'26 revenue of $19.6 million, a 2% year-over-year decrease, with significant gross margin improvement and positive Adjusted EBITDA Key Financial Highlights Orion Energy Systems reported Q1'26 revenue of $19.6 million, a 2% year-over-year decrease, with gross margin significantly improving to 30.1% (up 850 basis points) and achieving $0.2 million in Adjusted EBITDA, marking the third consecutive quarter of positive Adjusted EBITDA Key Financial Metrics | Metric | Q1'26 ($M) | Q1'25 ($M) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $19.6 | $19.9 | -2% | | Gross Profit | $5.9 | $4.3 | +37% | | Gross Profit % | 30.1% | 21.6% | +850 bps | | Net Loss | $(1.2) | $(3.8) | +$2.6 | | Net Loss per share | $(0.04) | $(0.12) | +$0.08 | | Adjusted EBITDA | $0.2 | $(1.8) | +$2.0 | - Q1'26 gross margin increased to 30.1%, up from 21.6% in Q1'25, reflecting pricing, revenue mix shifts, and cost improvements across all three business segments[4] - Orion achieved $0.2 million in Adjusted EBITDA in Q1'26, marking the third consecutive quarter of positive Adjusted EBITDA, compared to negative $1.8 million in Q1'25[4] FY 2026 Outlook Reiteration Orion reiterated its FY 2026 outlook, projecting revenue growth of approximately 5% to $84 million, positioning the company to achieve or approach positive full-year Adjusted EBITDA, with potential upside if business, economic, global trade, and government policy uncertainties stabilize - Orion reiterated its FY 2026 outlook for revenue growth of approximately 5% to $84 million[1][5] - This is expected to position the company to achieve or approach positive full-year Adjusted EBITDA[1][5] CEO Commentary CEO Sally Washlow highlights Q1'26 performance driven by strategic pricing and cost measures, achieving the highest quarterly gross margin in six years and significant progress in reducing net loss and sustaining positive Adjusted EBITDA Q1 Performance and Strategic Focus CEO Sally Washlow noted that Q1'26 performance benefited from pricing and cost measures implemented or planned in FY 2025, achieving the highest quarterly gross margin in six years at 30.1%, with significant progress in reducing net loss and achieving sustained positive Adjusted EBITDA - Q1'26 gross margin of 30.1% represents the highest quarterly gross margin in six years[6] - Net loss decreased to $1.2 million in Q1'26 from $3.8 million in Q1'25 and $6.6 million in Q1'24[7] - Q1'26 marked the third consecutive quarter of positive Adjusted EBITDA[7] Segment Performance and Growth Initiatives Despite challenging comparisons and slower project activity in the EV charging business, LED lighting and maintenance services achieved year-over-year growth. Orion is enhancing its LED lighting distribution business by introducing new value-oriented products like TritonPro™ and strengthening its sales team, having secured new projects with automotive customers - Two of the three business segments achieved year-over-year growth, while the EV charging segment faced challenging comparisons to Q1'25 and slower project activity[6] - The LED lighting distribution business has seen initial success with new value-oriented products like the TritonPro™ fixture series and is strengthening operations with new products and an enhanced sales team[8] - Recently secured up to $7 million in electrical infrastructure and LED lighting projects with three automotive customers[9] Business Outlook Orion anticipates FY 2026 revenue growth of 5% to $84 million, driven by improved gross margin and operating costs, positioning the company for positive full-year Adjusted EBITDA and securing significant new projects FY 2026 Guidance Orion projects FY 2026 revenue growth of 5% to approximately $84 million, which, based on improvements in gross margin and operating costs, is expected to position the company to achieve or approach positive full-year Adjusted EBITDA - Orion's FY 2026 outlook projects revenue growth of 5% to approximately $84 million[11] - Based on improvements in the company's gross margin and operating costs, this is expected to position the company to achieve or approach positive full-year Adjusted EBITDA[11] Key Projects and Initiatives The company has secured several significant projects expected to contribute to FY 2026 and future performance, including a multi-year LED lighting retrofit contract for over 400 building product distributor locations ($12-18 million), an expanded LED retrofit project for U.S. government agency facilities ($5-7 million), up to $7 million in electrical infrastructure and LED lighting projects with three top automotive customers, and $30-32 million in new store construction revenue potential over five years with a major retail customer - A multi-year LED lighting retrofit contract for over 400 building product distributor locations has commenced, with nearly $2 million in orders to be completed in FY 2026, and an estimated $12-18 million in revenue over the next several years[12] - New construction and LED retrofit lighting projects for U.S. government agency facilities have expanded from $5 million to $7 million in total revenue, expected to be completed in FY 2026[12] - Electrical infrastructure and LED lighting projects with three long-term top automotive customers are expected to reach $7 million in FY 2026[12] - A major retail customer has increased the number of new store construction projects over the next five years, with an estimated revenue potential of $30-32 million from these new stores over five years[12] - An LED retrofit project for 400 locations with a national bank has commenced, with $2-3 million in revenue potential over the next three to four years[19] Q1'26 Financial Performance Orion's Q1'26 financial performance shows a slight revenue decrease but significant gross margin improvement, reduced net loss, positive Adjusted EBITDA, improved cash flow, and varied segment performance Revenue and Gross Profit Analysis Q1'26 total revenue was $19.6 million, a slight decrease from Q1'25; however, gross profit significantly increased by 37% to $5.9 million, and gross margin improved by 850 basis points to 30.1%, primarily due to pricing and cost improvements across all business segments Revenue and Gross Profit | Metric | Q1'26 ($M) | Q1'25 ($M) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $19.6 | $19.9 | -2% | | Gross Profit | $5.9 | $4.3 | +37% | | Gross Profit % | 30.1% | 21.6% | +850 bps | - Q1'26 gross margin increased by 850 basis points to 30.1% from 21.6% in Q1'25, primarily attributed to pricing and cost improvements across all three business segments[13] Operating Expenses and Profitability Q1'26 total operating expenses decreased to $6.9 million from $7.7 million in Q1'25, reflecting ongoing efforts to reduce infrastructure and personnel costs, despite including $0.6 million in executive signing bonuses and severance, which, combined with higher gross margin, led to reduced net loss and improved Adjusted EBITDA - Total operating expenses decreased to $6.9 million in Q1'26 from $7.7 million in Q1'25, reflecting ongoing efforts to reduce infrastructure and personnel costs[14] - Q1'26 net loss improved to ($1.2 million) or ($0.04) per share, compared to ($3.8 million) or ($0.12) per share in Q1'25[15] - Q1'26 Adjusted EBITDA significantly improved to $0.2 million compared to ($1.8 million) in Q1'25[15] Balance Sheet and Cash Flow Overview Due to significantly improved performance, Orion's cash used in operating activities in Q1'26 substantially decreased to $0.5 million from $3.0 million in Q1'25; the company also repaid $1.75 million on its revolving credit facility, reducing outstanding borrowings to $5.25 million, while working capital decreased from $8.7 million to $6.1 million - Cash used in operating activities in Q1'26 was $0.5 million, a significant improvement from $3.0 million in Q1'25[16] - Repaid $1.75 million on the revolving credit facility in Q1'26, reducing outstanding borrowings to $5.25 million[16] Balance Sheet Highlights | Metric | June 30, 2025 ($M) | March 31, 2025 ($M) | | :--- | :--- | :--- | | Cash and cash equivalents | $3.6 | $6.0 | | Total current assets | $32.7 | $35.5 | | Working capital | $6.1 | $8.7 | | Financial liquidity | $9.8 | $13.0 | Segment Performance Details LED Lighting revenue grew 1% to $12.9 million, driven by large project activity offsetting a decline in electrical distribution sales; Maintenance Services revenue increased 21% to $4.0 million due to new customer contracts and expanded existing relationships; EV Charging Solutions revenue decreased 30% to $2.7 million, reflecting volatility in large project timing, with FY 2026 revenue for this segment expected to be flat or slightly down Segment Revenue | Segment | Q1'26 ($M) | Q1'25 ($M) | Change | | :--- | :--- | :--- | :--- | | LED Lighting Revenue | $12.9 | $12.8 | +1% | | EV Charging Revenue | $2.7 | $3.8 | -30% | | Maintenance Revenue | $4.0 | $3.3 | +21% | - EV charging backlog was approximately $8 million at the end of Q1'26; given current uncertainties regarding the scope, timing, and funding availability of EV charging projects, Orion expects FY 2026 EV charging station-related revenue to be flat or slightly down[19] - LED lighting revenue is expected to be higher in FY 2026 than in FY 2025, supported by an expanded project pipeline and efforts to drive distribution business growth[19] Financial Statements This section presents Orion's unaudited condensed consolidated financial statements, including statements of operations, balance sheets, cash flows, and an EBITDA reconciliation for Q1'26 and prior periods Unaudited Condensed Consolidated Statements of Operations This section provides a detailed breakdown of revenue, cost of revenue, gross profit, operating expenses, and net loss for the three months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Operations | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total revenue | $19,575 | $19,906 | | Total cost of revenue | $13,674 | $15,607 | | Gross profit | $5,901 | $4,299 | | Total operating expenses | $6,914 | $7,731 | | Loss from operations | $(1,013) | $(3,432) | | Net loss | $(1,244) | $(3,758) | | Basic net loss per share | $(0.04) | $(0.12) | Unaudited Condensed Consolidated Balance Sheets This section presents the company's financial position as of June 30, 2025, and March 31, 2025, detailing assets, liabilities, and shareholders' equity Condensed Consolidated Balance Sheets | Metric (in thousands) | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Total current assets | $32,667 | $35,498 | | Total assets | $49,017 | $52,463 | | Total current liabilities | $26,553 | $26,844 | | Revolving credit facility | $5,250 | $7,000 | | Total liabilities | $38,211 | $40,579 | | Total shareholders' equity | $10,806 | $11,884 | Unaudited Condensed Consolidated Statements of Cash Flows This section outlines cash flows from operating, investing, and financing activities for the three months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Cash Flows | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(515) | $(2,962) | | Net cash used in investing activities | $(55) | $(24) | | Net cash (used in) provided by financing activities | $(1,838) | $3,523 | | Net (decrease) increase in cash and cash equivalents | $(2,408) | $537 | | Cash and cash equivalents at end of period | $3,564 | $5,692 | Unaudited EBITDA Reconciliation This section provides a reconciliation of net income (loss) to EBITDA and Adjusted EBITDA for the quarter ended June 30, 2025, and prior quarters, detailing adjustments for non-GAAP items EBITDA Reconciliation | Metric (in thousands) | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $(1,244) | $(2,912) | $(1,508) | $(3,625) | $(3,758) | | EBITDA | $(527) | $(1,942) | $(667) | $(2,691) | $(2,821) | | Adjusted EBITDA | $205 | $226 | $32 | $(1,392) | $(1,805) | Additional Information This section provides details on the Q1'26 investor webcast, company profile, explanation of non-GAAP financial measures, a safe harbor statement outlining risks, and investor relations contact information Webcast and Company Profile This section provides details on the Q1'26 investor conference call and webcast. Orion Energy Systems is a company offering energy efficiency and clean technology solutions, including LED lighting, EV charging solutions, and maintenance services, committed to providing large customers with end-to-end design-to-installation solutions and helping them achieve business and environmental goals - Orion provides energy efficiency and clean technology solutions, including LED lighting and controls, electric vehicle (EV) charging solutions, and maintenance services[18] - Orion focuses on providing end-to-end design-to-installation solutions for large national accounts and executes projects through ESCO and distribution partners[18] Non-GAAP Financial Measures This section explains the rationale for using non-GAAP measures like EBITDA and Adjusted EBITDA, aiming to help investors better understand the company's core operating performance and enhance comparability across periods and with competitors; Adjusted EBITDA specifically excludes items such as stock-based compensation, acquisition-related costs, restructuring and severance, asset impairments, and contingent consideration expense - Non-GAAP measures (EBITDA and Adjusted EBITDA) are intended to help investors better understand the company's core operating performance and enhance comparability across periods and with competitors[21] - Adjusted EBITDA is derived by adjusting EBITDA for stock-based compensation, acquisition-related costs, deferred financing costs, restructuring and severance, asset impairments, and contingent consideration expense[21] Safe Harbor Statement and Risks The Safe Harbor Statement identifies forward-looking statements and enumerates various risks and uncertainties that could cause actual results to differ materially from expectations, including liquidity issues, Voltrek acquisition contingent consideration obligations, need for additional capital, sustained net losses, pricing pressure, Nasdaq listing compliance, government tariffs, reduced EV/LED incentives, reliance on a few customers, ERP system implementation, project timing volatility, and macroeconomic pressures - Certain matters discussed in this press release are “forward-looking statements” intended to qualify for the safe harbor provisions established by the Private Securities Litigation Reform Act of 1995[23] - Key risks include: * Existing liquidity and capital resources may be insufficient to meet working capital needs or pay contractual/debt obligations * Voltrek acquisition contingent consideration obligations may involve cash payments or issuance of common stock, potentially impacting liquidity or causing significant shareholder dilution * Additional equity or subordinated/convertible debt may be required to provide additional liquidity and capital resources * Sustained significant net losses and negative cash flows in recent years, which if continued, would further adversely affect liquidity and financial condition * Facing increasing pricing pressure on lighting products due to heightened foreign competition, leading to reduced gross margins * Failure to comply with Nasdaq's minimum bid price requirement could result in delisting of common stock * Government tariffs and other measures have adversely affected and may continue to affect the business * Reduced or eliminated U.S. government incentives for EV charging infrastructure investment could decrease demand * Lack of significant recurring revenue streams and reliance on a few customers for a substantial portion of revenue * Implementation of a new ERP system, which may involve significant costs and risks of operational disruption * Reliance on major project-based retrofit work, where the timing of project awards is difficult to predict[23][24] Investor Relations This section provides investor relations contact information and social media channels for engaging with the company - Investor Relations contacts include Per Brodin, CFO of Orion Energy Systems, and William Jones and David Collins of Catalyst IR[25] - The company engages with investors via X (@OrionLighting and @OrionLightingIR) and StockTwits (@OESX_IR)[25]