ORION ENERGY SYSTEMS, INC. | Q3 Financial Summary | Prior Three Quarters | |||||||||
| $ in millions except per share figures | Q3’24 | Q3’23 | Change | Q2’24 | Q1’24 | Q4'23 | ||||
| Revenue | $26.0 | |||||||||
| Gross Profit | $6.4 | |||||||||
| Gross Profit % | 24.5% | 23.6% | +95 bps | 22.2% | 18.0% | 21.9% | ||||
| Net Loss (1) | ($2.3) | ( | ( | ( | ( | |||||
| Net Loss per share (1) | ($0.07) | ( | ( | ( | ( | |||||
| Adjusted EBITDA (2) | ($0.1) | ( | ( | ( | ( | |||||
| Cash | $5.0 | ( | ||||||||
| (1) Q3’23 Net Loss & EPS reflect (2) See Adjusted EBITDA reconciliation below. | ||||||||||
Financial Highlights
- LED Lighting revenue increased to
$18.5M in Q3’24 vs.$14.2M in Q3’23 and$13.6M in Q2’24, driven by anticipated growth in contract activity for larger customers that is expected to continue into FY 2025. Ongoing larger projects include approximately$6M in remaining revenue from a European retrofit project for theU.S. Department of Defense , an external lighting project for Orion’s largest customer, and a national LED lighting project for a global warehouse/logistics customer. - EV charging solutions revenue was
$2.8M in Q3’24 vs.$3.4M in Q2’24 and$2.8M in the year ago quarter, principally reflecting the timing of large project activity. The Voltrek business has substantially expanded and enhanced its team and geographic reach and is seeing steady growth in its project pipeline as well as new project quoting activity. - Maintenance services revenue rose to
$4.6M in Q3’24 compared to$3.6M in Q2’24 and$3.3M in Q3’23, principally benefitting from a 3-year agreement to provide preventative lighting maintenance services for a customer’s approximately 2,000 retail locations nationwide. Orion continues to focus on the profitability of remaining legacy contracts. - Orion ended Q3’24 with
$17.5M of financial liquidity, comprised of$5.0M of cash and$12.5M of net availability on its credit facility. This is an improvement from Q2’24 liquidity of$12.9M , which included$4.0M of cash and cash equivalents and$8.9M of net credit facility availability.
CEO Commentary
Orion CEO
“Looking forward into Q4’24 and FY 2025, we are optimistic about our growth prospects across the business. In LED lighting we have several larger retrofit projects that should contribute to our growth, including the European retrofit project, external lighting and other potential projects for our largest customer, ongoing projects for a large warehouse/logistics customer and a large project for a global technology customer. In our LED distribution business, we anticipate growth through our ESCO partners who are responding favorably to our expanded line of fixtures, including our TritonPro™ LED retrofit high-bay lighting fixtures and our Harris exterior LED lighting products, targeted more to the value end of the energy efficient fixture market.
“Throughout our product and service offerings, Orion remains focused on delivering the highest quality, energy efficiency and value to our customers with industry leading customer service. In particular, we are focused on the needs of large national accounts that are best able to benefit from our turnkey solutions. This starts with site visits followed by custom design and configuration, project management, securing utility and government rebates and progresses through to installation and commissioning – all with just one point of contact and accountability nationwide.
“Our initiatives to diversify the business over the past two years have taken some time and effort to develop and integrate but are starting to make meaningful contributions to our growth from both new and existing customers. We continue to see significant cross-selling opportunities between our lines of business, particularly with large national accounts, where there is potential to serve customers in each of our three areas of operation. One of our priorities in the coming quarters is to ensure we are effectively marketing each of our capabilities across our combined customer base. We expect our expanded array of solutions to support increasing growth in the quarters ahead.”
Business Outlook
- Orion expects FY 2024 revenue growth between 16% and 23% to a range of approximately
$90M to$95M . This outlook implies Q4’24 revenue in the range of$26M to$31M compared to$21.6M in Q4’23. - Growth over the balance of FY 2024 is primarily expected from large national LED lighting projects including the European retrofit project, an external lighting project for Orion’s largest customer, and projects for a large warehouse/logistics sector customer. Additionally, Orion expects growth in EV charging solutions driven by its current project pipeline. Maintenance services are expected to decrease slightly over the balance of FY 2024, reflecting the likely impact of new pricing on certain legacy customer renewal discussions.
- On a preliminary basis, Orion is targeting growth in FY 2025 in the range of 10-15% on a consolidated basis (recognizing the completion of the large
DOD project and top-line headwinds in the maintenance business) and will update its outlook when it reports full year results in early June.
Financial Results
Orion’s Q3’24 revenue rose 28% to
Gross profit increased to
Total operating expenses declined to
Orion reported a Q3’24 pretax loss of
Orion reported a Q3’24 net loss of
Balance Sheet and Cash Flow
Orion generated cash of
Orion ended Q3’24 with current assets of
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About
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 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). 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
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 realize the anticipated benefits of the Voltrek acquisition; (ii) we may encounter substantial difficulties, costs and delays involved in integrating our operations with Voltrek’s business; (iii) disruption of management’s attention from ongoing business operations due to the Voltrek acquisition; (iv) 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, such as the COVID-19 pandemic; (v) the deterioration of market conditions, including our dependence on customers' capital budgets for sales of products and services, and adverse impacts on costs and the demand for our products as a result of factors such as the COVID-19 pandemic and the implementation of tariffs; (vi) our ability to adapt and respond to supply chain challenges, especially related to shipping and logistics issues, component availability, rising input costs, and a tight labor market; (vii) our ability to recruit, hire and retain talented individuals in all disciplines of our company; (viii) our ability to successfully launch, manage and maintain our refocused business strategy to successfully bring to market new and innovative product and service offerings; (ix) potential asset impairment charges and/or increases on our deferred tax asset reserve; (x) our dependence on a limited number of key customers, and the potential consequences of the loss of one or more key customers or suppliers, including key contacts at such customers; (xi) our ability to identify and successfully complete transactions with suitable acquisition candidates in the future as part of our growth strategy; (xii) the availability of additional debt financing and/or equity capital to pursue our evolving strategy and sustain our growth initiatives; (xiii) our risk of potential loss related to single or focused exposure within the current customer base and product offerings; (xiv) our ability to achieve and sustain profitability and positive cash flows; (xv) our ability to differentiate our products in a highly competitive and converging market, expand our customer base and gain market share; (xvi) our ability to manage and mitigate downward pressure on the average selling prices of our products as a result of competitive pressures in the LED market; (xvii) our ability to manage our inventory and avoid inventory obsolescence in a rapidly evolving LED market; (xviii) our increasing reliance on third parties for the manufacture and development of products, product components, as well as the provision of certain services; (xix) 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; (xx) our ability to develop and participate in new product and technology offerings or applications in a cost effective and timely manner; (xxi) our ability to maintain safe and secure information technology systems; (xxii) our failure to comply with the covenants in our credit agreement; (xxiii) our ability to balance customer demand and production capacity; (xxiv) our ability to maintain an effective system of internal control over financial reporting; (xxv) price fluctuations (including as a result of tariffs), shortages or interruptions of component supplies and raw materials used to manufacture our products; (xxvi) our ability to defend our patent portfolio and license technology from third parties; (xxvii) a reduction in the price of electricity; (xxviii) 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; (xxix) the cost to comply with, and the effects of, any current and future industry and government regulations, laws and policies; (xxx) potential warranty claims in excess of our reserve estimates; and (xxxi) the other risks described in our filings with the
Twitter: @OrionLighting and @OrionLightingIR
| Investor Relations Contacts | |
| Per Brodin, CFO | |
| Catalyst IR | |
| pbrodin@oesx.com | (212) 924-9800 or OESX@catalyst-ir.com |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) | ||||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 4,967 | $ | 15,992 | ||||
| Accounts receivable, net | 15,714 | 13,728 | ||||||
| Revenue earned but not billed | 1,692 | 1,320 | ||||||
| Inventories, net | 20,843 | 18,205 | ||||||
| Prepaid expenses and other current assets | 2,472 | 1,116 | ||||||
| Total current assets | 45,688 | 50,361 | ||||||
| Property and equipment, net | 10,026 | 10,470 | ||||||
| 1,484 | 1,484 | |||||||
| Other intangible assets, net | 5,191 | 6,004 | ||||||
| Other long-term assets | 3,021 | 3,260 | ||||||
| Total assets | $ | 65,410 | $ | 71,579 | ||||
| Liabilities and Shareholders’ Equity | ||||||||
| Accounts payable | $ | 18,866 | $ | 13,405 | ||||
| Accrued expenses and other | 11,657 | 10,552 | ||||||
| Deferred revenue, current | 172 | 480 | ||||||
| Current maturities of long-term debt | 7 | 17 | ||||||
| Total current liabilities | 30,702 | 24,454 | ||||||
| Revolving credit facility | 10,000 | 10,000 | ||||||
| Long-term debt, less current maturities | — | 3 | ||||||
| Deferred revenue, long-term | 432 | 489 | ||||||
| Other long-term liabilities | 3,618 | 3,384 | ||||||
| Total liabilities | 44,752 | 38,330 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity: | ||||||||
| Preferred stock, at | — | — | ||||||
| Common stock, no par value: Shares authorized: 200,000,000 at 32,551,737 at | — | — | ||||||
| Additional paid-in capital | 161,594 | 160,907 | ||||||
and 9,471,684 at | (36,234 | ) | (36,237 | ) | ||||
| Retained deficit | (104,702 | ) | (91,421 | ) | ||||
| Total shareholders’ equity | 20,658 | 33,249 | ||||||
| Total liabilities and shareholders’ equity | $ | 65,410 | $ | 71,579 | ||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share amounts) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Product revenue | $ | 17,007 | $ | 15,399 | $ | 46,266 | $ | 41,715 | ||||||||
| Service revenue | 8,964 | 4,889 | 17,904 | 14,039 | ||||||||||||
| Total revenue | 25,971 | 20,288 | 64,170 | 55,754 | ||||||||||||
| Cost of product revenue | 12,302 | 11,480 | 33,258 | 31,152 | ||||||||||||
| Cost of service revenue | 7,302 | 4,027 | 16,805 | 11,832 | ||||||||||||
| Total cost of revenue | 19,604 | 15,507 | 50,063 | 42,984 | ||||||||||||
| Gross profit | 6,367 | 4,781 | 14,107 | 12,770 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | 4,910 | 5,484 | 15,689 | 13,183 | ||||||||||||
| Acquisition related costs | — | 493 | 56 | 840 | ||||||||||||
| Sales and marketing | 3,170 | 2,983 | 9,778 | 8,521 | ||||||||||||
| Research and development | 349 | 409 | 1,211 | 1,374 | ||||||||||||
| Total operating expenses | 8,429 | 9,369 | 26,734 | 23,918 | ||||||||||||
| Loss from operations | (2,062 | ) | (4,588 | ) | (12,627 | ) | (11,148 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Other income | 25 | — | 37 | — | ||||||||||||
| Interest expense | (193 | ) | (64 | ) | (561 | ) | (97 | ) | ||||||||
| Amortization of debt issue costs | (25 | ) | (16 | ) | (74 | ) | (47 | ) | ||||||||
| Interest income | — | — | 2 | — | ||||||||||||
| Total other expense | (193 | ) | (80 | ) | (596 | ) | (144 | ) | ||||||||
| Loss before income tax | (2,255 | ) | (4,668 | ) | (13,223 | ) | (11,292 | ) | ||||||||
| Income tax expense | 1 | 19,391 | 58 | 17,933 | ||||||||||||
| Net loss | $ | (2,256 | ) | $ | (24,059 | ) | $ | (13,281 | ) | $ | (29,225 | ) | ||||
| Basic net loss per share attributable to common shareholders | $ | (0.07 | ) | $ | (0.75 | ) | $ | (0.41 | ) | $ | (0.93 | ) | ||||
| Weighted-average common shares outstanding | 32,531,563 | 32,047,755 | 32,460,398 | 31,510,547 | ||||||||||||
| Diluted net loss per share | $ | (0.07 | ) | $ | (0.75 | ) | $ | (0.41 | ) | $ | (0.93 | ) | ||||
| Weighted-average common shares and share equivalents outstanding | 32,531,563 | 32,047,755 | 32,460,398 | 31,510,547 | ||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) | ||||||||
| Nine Months Ended | ||||||||
| 2023 | 2022 | |||||||
| Operating activities | ||||||||
| Net loss | $ | (13,281 | ) | $ | (29,225 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | 1,067 | 974 | ||||||
| Amortization of intangible assets | 813 | 373 | ||||||
| Stock-based compensation | 681 | 1,435 | ||||||
| Amortization of debt issue costs | 74 | 47 | ||||||
| Deferred income tax | — | 17,804 | ||||||
| Loss on sale of property and equipment | 84 | 10 | ||||||
| Provision for inventory reserves | 325 | 407 | ||||||
| Provision for credit losses | 170 | 25 | ||||||
| Other | 1 | 150 | ||||||
| Changes in operating assets and liabilities, net of acquisition: | ||||||||
| Accounts receivable | (2,156 | ) | (431 | ) | ||||
| Revenue earned but not billed | (372 | ) | (321 | ) | ||||
| Inventories | (2,963 | ) | 1,001 | |||||
| Prepaid expenses and other assets | (1,189 | ) | 609 | |||||
| Accounts payable | 5,506 | 2,418 | ||||||
| Accrued expenses and other | 1,337 | (566 | ) | |||||
| Deferred revenue, current and long-term | (364 | ) | 42 | |||||
| Net cash used in operating activities | (10,267 | ) | (5,248 | ) | ||||
| Investing activities | ||||||||
| Cash to fund acquisition, net of cash received | — | (5,508 | ) | |||||
| Purchases of property and equipment | (868 | ) | (573 | ) | ||||
| Additions to patents and licenses | — | (9 | ) | |||||
| Proceeds from sale of property, plant and equipment | 118 | — | ||||||
| Net cash used in investing activities | (750 | ) | (6,090 | ) | ||||
| Financing activities | ||||||||
| Payment of long-term debt | (11 | ) | (12 | ) | ||||
| Proceeds from revolving credit facility | — | 5,000 | ||||||
| Payments of revolving credit facility | — | — | ||||||
| Payments to settle employee tax withholdings on stock-based compensation | — | (2 | ) | |||||
| Deferred financing costs | — | (29 | ) | |||||
| Proceeds from employee equity exercises | 3 | 57 | ||||||
| Net cash (used in) provided by financing activities | (8 | ) | 5,014 | |||||
| Net decrease in cash and cash equivalents | (11,025 | ) | (6,324 | ) | ||||
| Cash and cash equivalents at beginning of period | 15,992 | 14,466 | ||||||
| Cash and cash equivalents at end of period | $ | 4,967 | $ | 8,142 | ||||
UNAUDITED EBITDA RECONCILIATION (in thousands) | ||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||
| Net loss | $ | (2,256 | ) | $ | (4,388 | ) | $ | (6,637 | ) | $ | (5,116 | ) | $ | (24,059 | ) | |||||
| Interest | 193 | 192 | 174 | 208 | 64 | |||||||||||||||
| Taxes | 1 | 15 | 42 | 45 | 19,391 | |||||||||||||||
| Depreciation | 360 | 361 | 346 | 395 | 311 | |||||||||||||||
| Amortization of intangible assets | 273 | 274 | 266 | 280 | 269 | |||||||||||||||
| Amortization of debt issue costs | 25 | 25 | 24 | 26 | 16 | |||||||||||||||
| EBITDA | (1,404 | ) | (3,521 | ) | (5,785 | ) | (4,162 | ) | (4,008 | ) | ||||||||||
| Stock-based compensation | 266 | 227 | 188 | 177 | 448 | |||||||||||||||
| Acquisition related costs | — | 3 | 53 | (75 | ) | 493 | ||||||||||||||
| Earnout expenses | 1,050 | 1,125 | 1,125 | 2,500 | 1,500 | |||||||||||||||
| Adjusted EBITDA | (88 | ) | (2,166 | ) | (4,419 | ) | (1,560 | ) | (1,567 | ) | ||||||||||
2024 GlobeNewswire, Inc., source
