Q1 2021 Orion Energy Systems Inc Earnings Call
At this time, all participants are in listen only mode.
Later, we will conduct a question and answer session and instructions will be given at that time.
Minorities today's conference is being recorded.
Now, let's turn the call over to build Jones, Sir you may begin.
Thank you and good morning.
Ryan CEO, Mike All truthful will open today's call with an update on the current state of the business and some overall highlights Orion CFO Bill will then review some additional financial items and then we will open the call to question.
An archived replay of this call will be available later today.
Mr Relations section override corporate website.
Call, what's taking place on Wednesday August 2020 remarks that follow and answers to questions.
<unk> statements at the company believes to be forward looking within the meeting.
Private Securities Litigation Reform Act of 1995. These forward looking statements generally will include words, such as believe anticipate expect we're words of similar imports likewise statements that describe future plans objectives for goals are also forward looking statement.
These forward looking statements are subject to risks that could cause actual results to be materially different than anticipated.
Risks include among others matters that the company has described that's press release issued this morning, and its filings with the Securities and Exchange Commission, except as described in these filings the company disclaims any obligation to update forward looking statements and with.
I will turn the call over to Mike.
Mike.
Thanks, Bill good morning, Thanks for joining todays call.
Our Q4 2020 reporting about two months ago, we included substantial communication to our release in her prepared remarks to provide greater detail on our strategy market positioning in the steps, we're taking to position or ride for long term growth.
Today I will provide a brief overview of our Q1 2021 performance, which was significantly impacted by customer project delays or suspensions due to cope with 19, and then update you on our progress and improved visibility for anticipated customer activity over the next two quarters.
I'm very pleased to report that our business is regaining its momentum much more quickly than we had anticipated as of our last call.
After my remarks will hold will provide more detail on our Q1 2021 results in our solid financial position.
First I want to commend and thank the entire Orion team again for all of their hard work and dedication during what has been a very challenging period.
Have you been designated in essential business, our U.S. based manufacturing operations have remained open.
Our team's commitment to service that excellence remains the foundation of our company and our ability to deliver on our commitment to best in class products and customer service.
Through this challenging period, our primary concern remains the safety and well being of our people our customers and our suppliers.
Thus, we have implemented numerous safety precautions and protocols to address Cobra 19 related risks and regulations and we continue to evolve our procedures as more data becomes available.
Today, we believe our actions have been very successful.
As we had anticipated our first quarter was substantially impacted by regulatory and customer actions related to the Kobin 19 pandemic temporarily halting work odd most large customer projects.
Oh, resulting in total revenue of 10.8 million for the period. Despite the challenges we were able to generate 3.6 million to revenue from a new construction projects for a very large global online retailers.
We now expect approximately 2 billion in additional revenue from this customer in Q2, 2021 and are optimistic about the possibility of more business going forward.
We were also able to improve our gross profit percentage in Q1 2021 compared to both Q4 2020, and the first quarter of our last fiscal year.
From an operating expense standpoint, our Q1 2020 results benefited from proactive steps. We took during Q4 2020 to reduce our overhead and operating costs in anticipation of the impact of cobot 19 on our near term business prospects.
These actions combined with ongoing operating discipline helped ride to hold our Q1 2021 net loss to $2.2 million into a 1.7 million dollar loss on an EBITDA basis.
Given the unprecedented circumstances, we faced I'm very proud of the teams operating discipline.
I will now turn my comments to our outlook moving forward based on developments since our last call.
He has reviewed in today's news release, we have begun to see customers restart and refocus on their projects and El show de retrofit activity with the plant start a resumption of several key projects this faster than anticipated rebound in activity provides us greater visibility on the timing and scale up new and existing major customer projects.
In particular.
Our improved visibility is based on the following.
One a faster than expected resumption of activity for our largest fiscal 2021 customer.
Retrofit installations restarted this week on the turnkey design build installed led lighting system. It controls retrofit project for this customer.
While Orion had previously expected installations to restart Q4 2021, we now expect to complete retrofits for approximately 225 of this customer is remaining approximately 600 stores. During Q2 in Q3 up 2021 with the installations and the remaining 375 stores.
Currently estimated to begin in Q4 2021 and to be completed in fiscal 2022.
Through March 31, 2020, Orion had completed approximately 880 locations and provided other products and services to this customer resulting in total revenue of approximately 125 million.
To a REIT has entered into initial product and installation services contracts with a major global logistics company. Several initial facility projects will commence in Q2 2021, this new customers anticipated to be a significant source of revenue overtime.
Three Orion also recently added a large specialty retailer as a customer and will provide turnkey led lighting retrofit solution sports nationwide chain of stores.
Project is currently slated to commence in Q3 2021 and is expected to provide additional opportunities in fiscal 2022.
For the outlook for our automotive customers looks strong for the remainder of fiscal 2021, particularly with Ford one of our major long term customers.
Five slowed a slow but steady rebound and activity from our distribution at NASSCO channels as more and more markets reopened in more businesses are able to proceed with retrofit and new construction projects.
Six we are beginning to see additional opportunities with long standing public sector customers, including the military the U.S. postal service and the Veterans' administration with one project commencing in Q2 2021 and seven.
Several overrides new product launches that deliver superior quality and energy efficiency at very attractive pricing, our big well received by customers and are expected to play an important role in driving sales in all three of our legacy go to market channels.
In general, we're seeing business activity improving access to customer facilities is key whether we are selling products or services. We are currently seeing this improved but remain cautious as conditions related cobot 19 can have an impact.
As a result to the projects and business conditions mentioned, along with improving visibility and other projects. We believed that we are now on track to achieve Q2 2021 revenue of at least 25 million into a tree achieve a sequential revenue improvement in Q3 2021.
Based on these revenue expectations. We also expect to return to profitability in both Q2 and Q3 of 2021.
Of course, this outlook is fluid and subject to change based on the impact of Cobot 19 business now the economic factors and their impact on our customers decision, making.
Importantly, given the national reach of many of our customer projects, we will manage our workflows to avoid hot spots and focus on regions that are more likely to provide access to customer facilities.
Longer term based principally on a growing base of large national account relationships and opportunities. We believe a ride remains well positioned for our fiscal 20 to 2022 results to return to at least the levels we achieved in fiscal 2020.
This confidence is based on the strength of our product offerings. Our turnkey design build install capabilities are expanding base of expertise and tying in various aiotv monitoring to control solutions and launching our lighting in electrical service maintenance business.
We are committed to providing investors with a sense of how we feel about the business each quarter.
However, we caution that even <unk> under normal circumstances customer activity is subject to sudden scope and timing changes that can impact the quarter or year into which revenues fall.
Until the economy fully reopens and our customers can all returned to a more normal state of operations, providing visibility on the future financial performance remain more difficult than normal.
With that overview, let me turn the call over to Bill hole for additional perspective on our fiscal quarter financial results.
Thank you Mike.
Ryan first quarter revenue decreased to 10.8 million compared to 42.4 million in Q1 of 20.
With decreased product sales and services related to assist suspensions and delays that led lighting and control projects.
Product revenue decreased to 9.7 man from 32.3 million in Q1 of 2020 and service revenue decreased to 1.19 from 10 million also due to decreased installation services, including a significant pause in LNG retrofit activity for our largest customer which has since resumed.
In Q2 of 2021.
First quarter gross margin percentage increased to 24.4% compared to 24.3% in Q1 2021 was also above our Q4 2020 gross margin percentage of 22.3%.
Our Q1 2021 gross margin percentage was positively impacted by revenue mix that included higher end products and a lower percentage of service revenue offset by the impact of fixed manufacturing costs on norplant volumes.
Operating expenses were reduced by 23.6%. The 4.79 in Q1 of 2021 compared to 6.1 billion for both Q1 in Q4 of the prior year.
The decrease reflects proactive and timely steps taken to reduce our overhead and operating costs in anticipation of the cobot 19 slowdown.
These measures were largely largely implemented in quarter four of 2020. Therefore, we saw the full benefit in Q1 2021.
Principally reflecting lower revenue Ryan's first quarter net loss was 2.2 million or seven cents per share versus net income of 4 million or 13 cents per share in Q1 2020.
On an EBITDA basis, our loss was 1.7 man in Q1 of 2021 compared to a positive EBITDA of 4.6 million in Q1 of 2020.
The company use 7.7 million of cash and operating activities in Q1 at 2021, reflecting our net loss as well as investments in working capital to support and anticipated ramp in business volumes for the rest of year.
We also use 10 million of cash to repay our revolving credit facility, which we had fully drawn in March as precaution, given the significant uncertainties related to the covert 19 shutdown.
Now we believe both our business in a lending environment have improved significantly.
At June Thirtyth 2020 riots cash cash equivalents were 10.8 million versus 10.2 main at June Thirtyth 2019.
Shareholders' equity also improved to 29 million from 22.1 man in the prior year period.
As of the close of the first quarter. We also had 6.5 million of unused borrowing capacity available to us on a revolving facility.
We believe our cash on hand.
And expected future cash receipts combined with our unused borrowing capacity provide a very strong financial base for the company.
Further head of our fiscal year end, we had net operating loss carry forwards of approximately 75 million for federal tax purposes, and 62 million for state tax purposes, which will also benefit the company from a cash flow basis going forward in other words net income should largely be shielded from taxes for the foreseeable.
<unk> future.
And with that let's open to the cost questions.
Operator.
Ladies and gentlemen, if you have a question at this time.
A question.
Once again.
Question.
First question.
Hi, good morning, and thanks for taking my questions. So Greg.
Mike you listed several positive things going on.
And I like that but I really just wanted to hone in on the the to new customers.
You really announcing in the release today.
And actually specifically the logistics customer so in the release she said several new facilities will.
Start implementation in your second fiscal quarter 2021, so the September quarter.
Can you maybe.
Update us on.
The timeline for completion of an individual facility with that customer is this something done in a matter of a couple weeks.
And.
How long the lead times are for capturing.
Individual facilities versus.
Leading them and then if you could if you could maybe give us an idea of sort of the.
Total number of facilities roughly.
Is that this customer has are we talking into hundreds or thousands and how many do they do they typically add in any given year.
Hello.
Craig.
Hey, Mike sorry, I'm trying to be.
Let me correct on the on the question. Yes did you great question I did Craig Yes, I'm, good sorry, I quite frankly made a mistake of my mute button. So I apologize I was already answering so Craig. Thank you for your question.
Mr audience.
And so let me talk about that customer little bit very excited about that customer in particular, we're excited because.
Do they do have a really be quite substantial four so we've talked about them a little bit the last couple of quarters coming along that's a great step we've taken this quarters. We do now have contracts in place with them for both products and services as I mentioned, what's going to be different about this customer than our largest customer in fiscal 20.
Is that it's not just one project with this customer of rolling out to their locations. This customer does their projects on the location by location basis as their their their facilities are in need of retrofits or they are constructing new facilities. So we're going to get business from them just on a flow base.
Basis, if you will as they choose to use us for there either product and or services on facilities. As we go forward. The second part of your question is that most of these facilities would be we wouldn't be completed relatively quickly.
These are probably one to two week type projects that will flow through very quickly on these individual sites that we have.
And you know we've not mentioned the name this customer for both competitive in contractual reasons like or other major customer Craig, but I will say they do have a substantial number of locations and it's not hundreds it's much more than hundreds of locations that they do have.
On a on a global basis, and particularly in North America. So hope that answers most of the questions. You asked correct no that definitely does thats very helpful. So I should say a very big congratulations because I believe this is.
One of the Crown jewel customers in the market, we should say.
I'm very excited about it so thanks, Adam I am I.
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The other the other customer you discussed in your releases as a new customer.
I guess you are identifying them as a large specialty retailer.
[music].
There are there a number of large specialty retailers have been pretty chunky contributions to other companies.
Over the last several years.
Mostly on the on the initial build and retrofit or the buildout of space not so much the retrofit.
Can you can you maybe clarify for us.
If this is a retrofit driven opportunity at this customer and do they have plans to potentially do all of their sites or most of their sites. The way we've seen from your your number one customer from last year.
Sure.
Yes.
Yes. It is it is a specialty retailer and this is a retrofit and we expect if we continue to be successful with them. When they are satisfied with our performance that they would be rolling this out to most of their facilities.
Across the nation and in so the footprint of those locations are smaller than the footprint of our.
<unk> largest customer bask in fiscal 2021, but they do have a sizable number locations across across the United States.
And then an important question here is your.
Your customer for your last fiscal year.
Had a.
Pretty custom solution that you provided them something that allow them to avoid depreciation charges on on the retrofit.
Fixtures.
Can you maybe discuss with us whether or not there there are.
Tim or semi custom products that you've developed for these two new new new customers that way down provide the same.
Let's call it a mode.
That your your customer you're anchor customer from last year that you're still serving now.
Where other people don't offer that seem solution do you have the customs customer semi custom product on for these two new customers. That's that's unique and.
Something special for them the weight the way you did for for.
Let's just say customer number one.
Right.
Well the the to newer customers that we are talking about today, you're asking questions about.
In both of their facilities that they have a variety of fixtures that are involved in these retrofit projects for them and so it is a mix of different fixtures, where we are encouraged however, it part of the main part of the fixtures for both of these are our.
Newer.
Hi be led fixtures that we launched into the market a couple of quarters ago, and we're seeing real good success with it. So it is I'm going to say it as a somewhat standard product Craig but each of these situations are usually some a bit of customization either in the Calvin temperature that the customer wants or other modifications might be needed for them.
And so it is a.
Kind of a combination of some standard product in some modifications to make them more unique for that customer.
And then grass Jeff's question, if I may reflect before I jump into the queue.
Yes, you know.
Customer number one your inc. The customer from last year that still here this year and he's going to be great customer in the back into the year eight customer number one.
[music].
[laughter] front end margins were a little bit lower part of that was a scale issue as far as purchasing leverage which I think it's well behind you at this point.
And I'm sure there was a little bit of learning a Z implemented the.
The first facilities.
Are we likely chain count or something like this as you come onto.
From a number two and three here. These two new large customers there that are coming on.
And Dan.
Well I guess, that's the crusher question do we have potential front end margin issues.
Yep.
I.
Generally I would say not.
To the extent, we had with that very large customer last year.
And everything is competitive and we need to be competitive in the marketplace and that's how we look at our development of products and our our pricing as we look to the marketplace. What we really were excited about this particular quarter is that we did have margins.
At the level that they were.
Even with the very substantial reduction in volume and so you have a combination of two things going on the mix of product was such that we had very solid.
A margin on our products that we were able to sell and we also were able to their for offset some of the under absorption in our fixed costs. So I think I would not look at the impact on margin as significant as it perhaps was ramping up for our first large customer Craig.
Great. Thank you for that congratulations on this tremendous win.
I'll hop back into queue.
Thanks for your questions apologize for the early on Miscue on my part Thanks Craig.
Our next question.
I'd like Bill.
Good morning.
Good morning, So I can yeah, Hello so.
And I can totally understand lack of visibility in the current environment, but just from a high level. When you think about fiscal 22 and the calm in great to hear the commentary that you have increased confidence that you will return to fiscal 20 levels, but.
You're going to have work.
Meaning a pretty nice chunk from your.
From the big customer that you've been working through.
I mean, but do you envision it as that customer.
And maybe one other.
Large customer that you have visibility into right now from your pipeline or do you view that it's going to be a much more diversified mix of maybe smaller overall contracts.
But I think thats a lot across different end markets.
Yes, our search our goals the company.
Eric is two to be more diversified we've appreciate it and have enjoyed the financial and operational benefits of having a very large customer last year, they're going to be a great customer for us in this fiscal year and most likely in fiscal 2000 too, but we also understand long term, we're going to add more value to this company by having a more diversified.
Catered additional diversified customer base, so I do not see it being based on just one or two huge customers in 22, we think with some of the progress we've made with our credentials the momentum we see things we've talked about today and other things down the drawing board in the Hopper from.
Proposal standpoint, there were working on that we think we can be in 22 at similar levels of 21 with more customer diversity than we had in fiscal 2020.
Okay, and then I mean, just based on your commentary today.
Should we also expect that it may not be the result of some big contract announcements, but rather it's it's kind of that steady business and I guess it depends.
For every customer, but it seems like that may be the case rather than the.
The Big Awards that you had.
Been able to announce in the past.
That's hard to predict at this time I think it's going to be a combination you know for example, the specialty retailer we talked about today, we're not quite far enough down the path to give more visibility to everyone about what the magnitude there could be but it's it's a great new customer for us and there are others that we're talking within the both the in the public.
Sector that could be quite significant for us going forward. So I am I think it's good to have a mixture of some very large customers. It's great to have a large group of midsize customers and you need smaller customers.
That help with the flow business and keep things moving and developing a larger customers. So we're excited to to have all size of customers.
As a company.
Obviously last year 20 fiscal 2000, it was a rather an outsized customer I think for us say, you're going to have three of those going forward would be very optimistic and so I think it would be more of a mix of different sized customers going forward Eric.
Got it maybe less than for me. It's an this hearing from some other covered companies and the ESCO space that.
You know the value proposition to customers that maybe have challenged budgets.
Energy savings that no upfront cost is pretty appealing right now.
Is that something that you think.
Has played into what you're seeing in the ESCO space now and is that something that would be consistent or you think could be a positive going forward.
You know the the rebates and other incentives through utility companies and other public entities continued to be favorable for what we are doing and so that certainly helps from an economic standpoint as customers and we work with them to demonstrate the return on investment having those front end rebate dollar.
Have a really nice impacted currently it's still been good those things get looked at each year by those public entities, but we see no changes I think it fits in well with the aspect of of reducing energy costs, reducing carbon footprint that one could probably expect those things would positively continue in the future. So.
And that it was up Erie Escos play very strong.
At the end significant in that area and Escos had been a great customer base for us. So yes, I think that's going to play positively having those availabilities out there and then secondly, I in my opinion is that they're also continues to be.
Adequate amount of financing available in the marketplace for large energy projects.
From from the you know the general financial markets not just through.
Rebates and section so the capitals out there to us it's more of the company's making decisions to allocate their capital two projects, which were encouraged by and then lastly, just the access to facilities is kind of like a more near term.
Situation of of impacting the business.
Okay, that's great. Thanks.
Thank you Eric.
Thank you.
Question comes from.
The line of.
[music].
Your line is open.
Thank you good morning, like one bill.
Good morning on it.
Hi.
Could you clarify my these the 600.
Stores that are making the dealer national account customers how much do you expect to recognize from Vsix hundred stores in lumps there.
Well I think probably the way you could look at it might be to look in one of the reasons last quarter. Then again this quarter, we indicated what we did through.
Fiscal.
March 30, Onest 2020, where we had done 880 locations and cumulatively had revenues of 125 million. So probably would point you in that direction of saying that gives you a feel since there are so many locations and things average out of what what one might expect from.
You know from that base of customers and so with that you could look at the 225 that we expect.
To do during.
The.
The next couple of quarters.
And what might be there for the remaining.
Stores 375 stores during Q4, 21 and a into fiscal 2022.
Understood some similar proportionately guarded.
Yes.
On the margin from.
[music].
You are sort of approaching the mid 25% levels.
Even with lower volumes just wanted to see you know.
Because.
Good.
See some margin improvements or should we be sort of looking who used to stay at current levels.
On it this is bill so.
I think the way I would think about it.
This quarter, we had some higher end.
Margin product Wow, we had lower service costs are lower service revenue.
At more margin that helped us.
No really have a pretty decent margin for 10.8 million itself.
[music].
Right now.
I would say that you know if you take a look at our fourth quarter of fiscal 20.
That we just recently closed.
We were at about 22.5%.
So.
As we kick up and pick up some of this other business.
I would think of it it has about there right now hopefully we can do little bit better than that but that's that's kind of where I'd I'd think about.
For the for the near term, let's say, yes.
Of course, our goal has always to try to improve it take more cost that you know, we're bringing people back. So you could have some inefficiencies as we start back up but you know, we got pretty efficient last year with everything going on.
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Just one final one for me.
With respect to new products.
I know you had talked about some you know.
Bacteria related lighting offerings et cetera.
Are those still in play anymore, the income to the bottom.
And opportunities any color.
Both.
Sure.
Yes.
Yes, no. They certainly are still in play much as we discussed on our last call than last press release on it and you a couple of that we're working on as we've had an existing.
[music].
You know called Violet light technology that attacks bacteria that we've had in the marketplace for several years.
And so we continue to work with that product to improve their product and have had seen good activity with respect to that product in our in our LDR E. R troffer product for for retrofit applications.
So that's the one side of that kind of violent light that 400.
Four or five nanometer type product secondly, there has been certainly lot of discussion and news and media related to ultraviolet light, which has been in use for disinfecting and and for breaking down viruses and attacking versus for for many many years that has been used in so we are looking at that.
It is new for US we are exploring it we've said we're working at perhaps introducing that in the product in conjunction with some air movement product that we work with a partner on and those things hopefully can come together for US later in the calendar year from a product standpoint. So we are continue to look at those those two in particular with respectable.
Bacteria and with respect to viruses and the other.
Or niche type products, we continue to do work on those and they'll look to keep developing products and then lastly, I would just say we have been very pleased with our more standard product offerings.
Hi base that we've rolled out some do you realize that we're rolling out with our customer base with they're going to be very well received and so.
The niches I think will continue but we also will continue our baseline and our go to product to keep being competitive in the industry.
Understood. Thank you so much.
Thank you gentlemen, yes.
Thank you.
Thank you good morning.
Good morning Tomorrow with the retroactive retrofit activity for your major National account project restarting earlier than anticipated can you provide some insight into what factors prompted the restart and maybe what factors may cause them to reach friendship at all.
Sure well I think first as we previously discussed we were in midstream with that customer in the middle of March.
As of this year, when they decided they needed to abruptly.
Stop the project.
And that was their decision and and we believe our understanding is it was related to just safety and protocols with respect to covert 19, but that was the that is our understanding.
We think I would tell you that are.
Judgment as the reason for implementing it sooner than what we had previously anticipated.
He has a couple of things I think number one this project has been very.
Energy.
Effective for this customer of reducing energy cost in the locations, where the retrofits have taken place.
Over 60%, resulting in your very nice payback for this particular customer so I would assume that one of the reasons. They were started earlier is to again get those savings flowing because a longer your weight. The more savings that you lose I think there's a second really important one that is I'm going to say is more judgmental in yen.
Yeah quantity qualitative and quantitative is that I think there's a while it's frustrating out there from a business standpoint with covert 19 in the impacts.
Yes, I think there's also a realization this is going to be around for a while perhaps to deal with and therefore, we have to keep finding good balanced protocols and to keep business moving and so I think part of it is just saying we gotta start moving some stuff we got to be safe, we got to be careful for our people and people working on projects et cetera.
But we may all be under some of these restrictions for perhaps a much longer period of time than many of us thought even two or three months ago and so that's that's my opinion, but I think that's also part of it is we're going to face. The fact that you got to keep moving forward and you might have some bumps along the way in some starts and stops, but you've got to keep things moving.
Directionally forward.
Understood and along those lines.
Can you talk about any changes that are going to be need to be implemented on job sites and how would that potentially impact the services gross margin going forward.
Yes, certainly we have implemented more protocols, both within our facilities in terms of many different things access to facilities, how we work with our members in our.
Assembly in fabrication area to provide safety for them, but to your question on the on site, yes, with a combination of our own protocols that we put in place for our people too.
Increased the level of safety and that we likewise, you would need to be responsive to the protocols that our customers haven't so we will certainly go with a more restrictive of either of those that we haven't then you have local protocols in place also.
Those are going to have some impact and cost I know, it's hard to estimate those completely right now at this point in time.
And probably some impact on efficiency, but at this point, we don't see it as being.
That material from a from a margin standpoint of some of the additional safety protocols and operating protocols that we have to put in place, but time will tell as to what happens I think it perhaps is going to be more starting and perhaps stopping if there is a incident add up site location, where the customer says.
I need to take a break for a week you know before we start back up again, but that kind of starting and stopping probably is more cost to us than the increased day to day protocols, we're putting in place.
Got it. Thank you and then a long lines on the new construction business can you talk about the dynamics associated with securing these types of projects relative to kind of large retrofit projects and do you did a contacts youre revamp national sales team has translate into making a bigger.
Turning to potentially the new construction business.
It's really a combination it is partly through our national accounts business. When we have customers that are going into new.
Expanding into into new locations and in fact for as an example are very large customer from fiscal 2020 as they are doing new construction for additional locations we are.
Largely considered for those to do the initial installation of fixtures into their facilities.
I also would say that new construction is also.
Is accessible for us through our Orion distribution services or OTI, Yes segment as well as our ESCO segment through our US markets Division. So both of those would tend to work with fourth retrofit and new construction in many cases do construction is coming up through the distribution side because it comes up through the architects and engineers.
Somewhat of a longer process in a more defined process. So.
It's it's a little less usual for us to be direct with the end user and new construction.
Particularly when it comes up through our distribution center business or the ASCO side, but it can also happen with our.
Our national accounts into the example, there is no Toyota has a lot of facilities. We continue to work with them about retrofits, but they also are building up a new facility, where we have the opportunity to provide new construction support to them.
Thank you.
Okay.
Hi, Thank you Mike just as a follow up so the the tier one customers that you're capturing these days.
Turning to like buying all of their fixtures for one vendor.
It lowers cost for them it simplifies.
Not just the.
Frictional cost for.
Purchasing to fixtures, but it makes it a lot simpler from accountability and great.
You.
Can you maybe describe price whether or not there is a potential need or opportunity to diversify.
Away from your your strengths in.
Hi page.
Would you potentially introduced new products, specifically for these customers that could be could be offered into other adjacent markets.
And you know may not be needed or.
Is it something where you would be more likely to manage.
Third party supply directly.
No it's great great question.
Your first of all certainly our strengths in the marketplace has been our high Brian Harvey High Bay product in our retrofit troffer product for ceiling grid ceiling.
Drops ceilings and then also our sealed product, which is used a lot in agriculture food processing in other areas, where you have to protect from the environment. So probably would put those three is kind of our main three product lines.
And we've had a nice array of area products in the past and we are expanding that right now so in many cases, Craig I think we have the current products in place to handle a substantial portion of what's on most of the needs for commercial and industrial projects.
I would answer your kind of the essence of your question two different ways number one.
There are plenty of opportunities for us too.
Locate and and.
Fine third party providers of certain niche for certain product lines that we may not cover and we've got a good great sourcing group in place and the context in place to do that where we need to and it's kind of a benefit to be able to as you said filled the gap where there are other things that the customer we may want to have and then secondly, because we do.
We had a design capabilities in the manufacturing capabilities. If there was a substantial volume to something that's specific or unusual we're always open to developing that with customers that we've had situations where customers have a need for very specific type of light to strip fixture or something that's going to fit into what they are currently doing it will design one to make it fits.
For that we continue to think Kevin the U.S. based manufacturing footprint.
Thats very very efficient and then linked with sourcing product internationally, where it makes sense is a great combination and.
We think thats going to continue for us going forward.
Excellent and then another question. So these these two new customers.
There were talking about a bit on this call.
Just either one of them has the potential to.
Maybe be similar or potentially larger than Youre, Inc. The customer from the last fiscal year.
Either of them have total annual lighting by.
That exceeds what you saw from deal on route from your anchor customer last year.
I'm not going to get overly specific on that Craig, but I would say that the the major global logistics company that we've talked about from our understanding of their annual lighting by and facilities and future plans that we continue to believe that could be a very substantial.
Customer if we continued to perform it'd be a valued supplier to them. So I would put that when they could be in that kind of category.
Thank you and I'm not showing any other questions at this time I would now like to turn the call.
Mike.
Thank you city again, I would like to think the Orion team for the deck dedication hard work and operational excellence that limited our losses during the most severe cobot 19 shutdowns in Q1.
Left us in great shape to return to profitability going forward.
While the covert 19th situation has been a temporary interruption to our progress I'm very confident better rinas regaining its momentum.
During the current period, a physical distancing and travel constraints, we have been unable to visit face to face with our shareholders of potential investors, but we do intend to participate in several upcoming virtual conferences, including LD micro in early September H.C. Wainwright in mid September and Craig Hallum Alpha Select conference in November.
Please join us for these events or contact our IR team with other questions or to schedule a call with management.
Yeah. Our contact information is included on todays press release.
Thank you again for your time today, we look forward to updating investors in our fiscal 2021 Q2 call in November Thanks, and have a great day.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now.
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