Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Orion Energy Systems Inc (OESX, Financial) reported a 13% revenue growth in Q1, driven by strength in the EV charging system installation business.
- The EV charging segment saw a revenue increase of over 200% to $3.8 million, with significant contributions from Eversource Energy's EV Make Ready program.
- The company secured over $11 million in contracts for Eversource customers, contributing to the fiscal 2025 growth outlook.
- Orion's LED lighting solutions achieved modest growth in Q1, supported by major account projects and demand from ESCO and distribution partners.
- Gross profit percentage improved by 360 basis points to 21.6% in Q1 '25, reflecting pricing increases and termination of negative margin contracts.
Negative Points
- Maintenance services revenue declined by 11% in Q1 '25 due to the loss of three legacy Stay-Lite customers following price increases.
- The company incurred severance and restructuring costs totaling $393,000 in Q1 '25 related to the right-sizing of the maintenance segment.
- Net loss for Q1 '25 was $3.8 million, although an improvement from the $6.6 million loss in Q1 '24.
- Operating expenses, although reduced, still amounted to $7.7 million in Q1 '25.
- The company anticipates fiscal '25 revenue to be significantly weighted to the second half of the year, making it subject to the timing of larger projects.
Q & A Highlights
Q: In the charging business, you mentioned a pipeline of around $45 million. What sectors does this come from, and what portion is likely to be converted to orders in fiscal 2025?
A: The $45 million pipeline for EV is made up of various sectors, including municipal and private companies. We expect to convert enough of this pipeline to meet our target of $18 million in revenue for fiscal 2025.
Q: Are there any supply constraints or challenges in the EV charging segment?
A: Currently, we do not have any major supply constraints across the business and do not anticipate any as we move forward.
Q: Will the adjusted EBITDA be positive for the full fiscal year 2025?
A: Yes, based on our revenue outlook, we expect to be adjusted EBITDA positive for the full fiscal year 2025.
Q: What kind of responses are you seeing in the seven states with the fluorescent lighting ban?
A: We are engaging in dialogues and marketing to increase awareness. We are seeing growing interest and are actively working with key customers to ensure they are ready for the ban.
Q: How should we think about maintenance services over the next few quarters? Are there opportunities to offset the loss of the three legacy contracts?
A: We expect the maintenance business to contract by $4 million to $5 million this year. However, we have additional opportunities in the pipeline that could potentially come through in the second half of the year.
Q: How much of the EV charging growth can be attributed to Voltrek's existing customers versus new customers?
A: The growth is a combination of legacy customers growing, new customers sourced by the EV team, and a growing base of cross-selling opportunities.
Q: Could you elaborate on the assumptions underlying the 10% to 15% top-line growth guidance for fiscal 2025?
A: The guidance is based on larger projects in various sectors starting in the second half of the year, robust growth in the EV business, and a $4 million to $5 million contraction in the maintenance segment.
Q: Are you observing any hesitance from clients regarding the EV opportunity due to import tariffs on Chinese electric vehicles?
A: No, we do not see any impact on the infrastructure side. The need for EV infrastructure is significant and will be a continuing driver over the next five to seven years.
Q: Regarding the price negotiations with legacy maintenance customers, is this issue now resolved?
A: Yes, we have addressed all the issues in the maintenance business and have taken restructuring actions to right-size the business.
Q: Can you provide additional perspective on the EV or Voltrek business at $18 million of revenue this year?
A: We feel good about reaching the $18 million level and believe there could be some upside. The growing pipeline and government funding for EV infrastructure support this outlook.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
