Orion Energy Sys Reports Q1 2027 Results: Full Earnings Call Transcript

Orion Energy Sys (NASDAQ: OESX ) held its first-quarter earnings conference call on Wednesday. Below is the complete transcript from the call. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

6%. 5 million from $200,000 year-over-year. Orion Energy Systems expects fiscal 2027 revenue between $95 to $97 million, with continued positive adjusted EBITDA. Strategic initiatives include scaling the Orion Voltrek EV charging segment and expanding into the hyperscale data center market, with a focus on proprietary supply chain and Made in America products.

The company highlighted opportunities in automotive, retail, public sector, and the electrification of vehicular fleets, with significant engagement in the AI-driven data center market. 1 million in Q1 fiscal 2027. Management noted strong sales funnel quality and cost containment initiatives, with plans to continue expanding service and maintenance offerings. Full Transcript OPERATOR Good morning everyone and welcome to Orion Energy Sys fiscal 2027 first quarter conference call.

At this time, all participants are in a listen-only mode. In this call, Sally Washlow, Orion Energy Sys's CEO, and Per Brodin, its CFO, will review the company's first quarter results as well as its fiscal 2027 outlook. Then we will open the call to investor questions. Today's call is being recorded.

com. I will now turn the call over to Per Brodin, Orion Energy Sys's CFO. Per Brodin, Chief Financial Officer Thank you, Stephen. First, as a reminder, prepared remarks and answers to questions include statements that are forward-looking under the Private Securities Litigation Reform Act of 1995.

Forward-looking statements generally include words such as anticipate, believe, expect, project or similar words. Also, any statements describing future objectives or goals, company plans and outlook are also forward-looking. These forward-looking statements are subject to various risks that could cause actual results to differ materially from current expectations. Risks include, among other things, those that Orion Energy Sys has described in its press release issued this morning and in its SEC filings.

Except as described therein, Orion Energy Sys disclaims any obligation to update or revise forward-looking statements made as of today. In addition, reconciliations of certain non-GAAP financial metrics to their nearest GAAP measures are also provided in today's press release. And now I will turn the call over to Orion Energy Sys CEO, Sally Washlow. Sally Washlow, CEO Thank you, Per.

Good morning everyone and thank you for being with us today. I am pleased to report our results for Q1, our seventh consecutive quarter of positive adjusted EBITDA. The first quarter of fiscal 2027 represents an excellent start to the year. In Q1 we delivered on the growth we established in the previous year.

Fiscal 2026 was a successful turnaround year for Orion Energy Sys, marking a return to growth in both revenue and profitability. Fiscal 26 came in at $86 million in revenue and $2 million in positive adjusted EBITDA, results that outperformed our guidance. Fiscal 26 was a year in which we put ourselves on a path of profitable growth and in the current fiscal 2027 we expect to achieve revenue of $95 to $97 million and positive adjusted EBITDA for the full fiscal year. 5 million, up from $200,000 year over year.

Today's earnings report is also further illustration of the improving quality of our sales funnel, the impact of our cost containment initiatives and the continuous strengthening of our proprietary supply chain. Automotive, retail and public sector engagements continue to show notable strength and continued growth with customers like public bus fleets. The Orion Voltrek EV charging segment is recognized widely for its ability to complete complex EV charging infrastructure projects.

We are focused on scaling this business across a broader customer base and geographic footprint and we are especially confident about this business with our recent appointment of industry leader Karen Peck to head EV charging infrastructure sales. Furthermore, the hyperscale data center market looks especially attractive now that we have made our initial entry into it. Our customers recognize that we meet them where they are, whether we deliver a product-only solution or provide complete turnkey full-service electrical infrastructure powered by our own products that are designed, engineered and made in Manitowoc, Wisconsin.

Over the decades, Orion Energy Sys has built a well-earned reputation for quality products, on-site service and an ability to scale no matter how big the customer or project. We have a reputation for unmatched reliability with a proprietary supply chain that includes a Made in America facility enabling us to deliver on time and on budget, and we are widely known for our unsurpassed ability to deliver turnkey installation and services for electrical infrastructure and EV charging stations.

Today's Q1 fiscal 27 earnings report is a further validation that Orion Energy Sys is prepared to meet this moment when we have a confluence of three growth drivers in the electrification of industrial America. S. industrial facilities ranging from manufacturing to retailing to government. Number two is the electrification of vehicular fleets of major enterprises in both the private and public sectors ranging from nationwide logistics to school districts.

And number three, the building boom of AI-driven data centers typified by the multimillion-dollar engagement we announced in Q1 with our multipurpose linear lighting fixture designed specifically to integrate quickly and easily into the floor plan of data centers.

Today's report also highlights several growth initiatives: our focus is on expanding opportunities and revenues within new and existing large customers in the automotive, retail and public sectors, whether by deployment of LED lighting systems, electrical infrastructure or EV charging infrastructure; our focus on maximizing our service and maintenance to long-term EV charging customers; and our focus on adding capabilities such as data center lighting solutions, battery energy storage systems, electrical contracting and our recently announced LED roadway lighting product, delivering efficiency and cost-effective solutions at scale to industrial America at a time of unprecedented need.

We believe that Orion Energy Sys is an emerging provider of choice for AI and IoT-driven electrification to Fortune 100 corporations and other global leaders. Orion Energy Sys designs, installs and maintains LED lighting systems, EV charging stations and the complete footprint electrical infrastructure for some of the largest enterprises in the United States. Whether deployed independently or in a combination with our partners, Orion Energy Sys's discrete, bespoke and turnkey solutions generate unrivaled ROI to industry facilities requiring the most demanding standards of efficiency, reliability and compliance, made in America.

For its fourth decade, Orion Energy Sys is meeting the moment for an industrial buildout that is reshoring, refurbishing and reasserting leadership throughout the United States. With that, let me turn to Orion Energy Sys's CFO, Per Brodin, to review our financial performance and outlook. Per Brodin, Chief Financial Officer Thank you, Sally. 6 million in Q1 '26, an increase of over 30%.

9 million in Q1 '26. Q1 '27 Lighting segment revenue performance reflected increased project activity and distribution channel sales, partially offset by a decrease in ESCO channel sales. Orion Energy Sys's expanded LED lighting project pipeline and efforts to drive growth in the distribution channel are continuing to contribute to higher expected revenues in fiscal '27. 8% in Q1 '26.

1 million in Q1 '27, up from $4 million in Q1 '26. 4% in Q1 '26. 7 million in Q1 '26, reflecting relative strength despite sector-wide uncertainty regarding the market environment in the United States. 8% in Q1 '26.

1% in Q1 '26. Q1 '27 included a benefit of approximately 130 basis points for the net effect of tariff changes and refunds. We expect our overall gross margin to remain strong throughout fiscal '27, though it will likely vary on a quarter-by-quarter basis due to revenue mix and volume changes. 9 million in Q1 '26.

Reductions in compensation costs and general and administrative expenses were mostly offset by increased commission expenses, including in sales and marketing costs, reflecting stronger gross margin and lower operating expenses. 37 per share in Q1 '26. 5 million in Q1 '27 versus $200,000 in Q1 '26. As Sally noted, this was Orion Energy Sys's seventh consecutive quarter of positive adjusted EBITDA.

Regarding our outlook, as Sally highlighted, we expect a continued increase in profitable growth in fiscal '27 with positive adjusted EBITDA on revenue between $95 to $97 million. And this concludes our prepared remarks. Operator, would you please commence the question and answer session? OPERATOR Thank you.

At this time we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. We ask that you please limit to two questions at this time.

Please requeue. Please stand by while we compile the Q&A roster. C. Wainwright.

Your line is now open. C. Wainwright Thank you. Good morning everyone and thank you for taking my questions.

Congratulations on the win in the AI data center space. Looks like a pretty significant market has opened up for you over there. So in that context, Sally, are you being conservative with the outlook for fiscal 2027 revenues? Sally Washlow, CEO Good morning, Amit, and thank you.

I don't think we're being overly conservative with our revenue. We're certainly bullish on the year with entry into the data center. As we announced, we worked with a customer to really build the right solution that we could scale to other customers as well. So I think we're in pretty early innings of data centers and we have conversations going on with others, but we'll wait till later in the year to provide any further updates.

C. Wainwright Okay, thank you. And then can you talk about some of the pipeline, I guess, that you are building for that market? What kind of activities are you undertaking?

What kind of discussions are you having with potential customers? Just any color on how that sales pipeline is being built up? And do you expect to convert some of that pipeline in the next few quarters or will it take a little bit more time for you to start getting more momentum with orders from this space? Sally Washlow, CEO Yeah, so particularly in this space, we think a lot of it will come in our next fiscal year in terms of revenue.

We are starting to ship product. Oftentimes how winning in this arena is you're winning building by building on a data center campus. And as they grow, we're winning more and more. Not going to say we're single-sourced as well.

Most have mitigated the risk. So we believe that the pipeline will continue to grow as we continue to deliver in that channel. C. Wainwright Just one follow up on that.

Should we assume, you know, the deployments at a single data center could be significantly larger or multiples of what a typical deployment for a single facility is usually for you guys? Sally Washlow, CEO Yes. Buildings often represent seven figures per building. C.

Wainwright Okay, understood. I'll step back in queue. OPERATOR Thank you so much. Thank you.

Our next question comes from the line of Eric Stine of Craig-Hallum. Your line is now open. Eric Stine, Analyst at Craig-Hallum Hi, Sally. Hi, Per.

So just curious, I mean, obviously a pretty positive commercial environment on the demand side. I know last quarter you did provide a backlog number and I also know that was because you were entering the fiscal year. But curious whether it's being more specific about backlog or just commentary on where backlog stands exiting the quarter. The positive order trends that you saw end of fiscal '26, presumably those have continued into the first quarter and what you're seeing here in the second quarter.

Per Brodin, Chief Financial Officer As we exited the first quarter, our backlog was right around $24 million. As Sally mentioned, the strength of our pipeline we think continues to improve. So we expect to see some significant conversions as we move forward. But that's where we sit today.

Eric Stine, Analyst at Craig-Hallum Got it. And I know that backlog at a point in time can be a lot of timing to that specific number, but that's helpful. Then maybe, so you talked about the guide $95 to $97. I know that at least at this point you've not been including anything from the potential opportunity with Home Depot, the stores where you're doing the outside lighting.

But there's that inside opportunity. So just curious where that stands. I know you'd made progress. I think you were the only company that was really in the mix for that.

It was more about dialing things in. But maybe where that stands and could that still be fiscal '27 revenue or would that be more fiscal '28? Sally Washlow, CEO We're still in play on opportunities like that and, quite frankly, some others as well. So there's testing that goes on and final product selection, but we're still pretty positive about that opportunity.

Eric Stine, Analyst at Craig-Hallum Okay, thank you. OPERATOR Thank you. Our next question comes from the line of Sriharan of Singular Research. Your line is now open.

Sriharan, Analyst at Singular Research Good morning, guys. Can you all hear me? My first question is on the exterior lighting program. You sized it at $14 to $15 million and it was supposed to be complete by the end of the first half.

How much of that ran through Q4 and Q1 and what's left to deliver? Per Brodin, Chief Financial Officer You might be confusing a couple different announcements we had about our largest customer. The ~$45 million opportunity we mentioned with them was a three-year contract for the maintenance services that we provide that will occur over fiscal years beginning 4-1-2026, so fiscal '27, '28 and '29. And we had also discussed previously an exterior project which we said was in the $15 million range, most of which has been recognized in Q4 and Q1.

So we're pretty much through most of that. And then to the previous caller's questions, we still have an opportunity that we've talked about for an interior project, but we do not have that order yet, but do believe it's progressing and are optimistic that will come through, I'll call it, in the relative near term. Sriharan, Analyst at Singular Research Okay. And on the gross margin sustainability, if we exclude the $300,000 of tariff benefit, and as you guys have indicated that services are going to trend towards 50% of revenue as you indicated in your deck, where does the consolidated gross margin kind of actually settle end of fiscal '27?

Per Brodin, Chief Financial Officer We still foresee that it settles in the 30-plus range. But, you know, to your comment and in my script, there was that 130 basis point benefit related to tariffs, and the previous quarter had some one-time type benefits in it. So I think, you know, 30% to 32% range is how we're thinking about things at this time. Sriharan, Analyst at Singular Research Okay.

I know you guys are still maintaining $95 to $97 million, and with positive EBITDA already we are already in the positive terrain. So what kind of drop should we assume on the roughly $70 million of revenue left in the year? What kind of risks are there? Per Brodin, Chief Financial Officer I'm sorry, did you say risks?

Sriharan, Analyst at Singular Research No. What kind of, I suppose, pullback on the EBITDA numbers that will drag it into just the negative territory for the $70 million. Per Brodin, Chief Financial Officer I think it would have to be some type of unexpected performance.