Q1 2022 Orion Energy Systems Inc Earnings Call
[music].
Good day, ladies and gentlemen, and welcome to the Orion Energy systems fiscal 2022 first quarter conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will be given at that time. As a reminder, today's conference is being recorded I would now like to turn the call over to Bill Jones.
You may begin.
Thank you and good morning, everyone.
Mike All truthful Orion CEO and board share of will open today's call with an overview on to discuss current business the current business outlook.
Orion CFO.
Dean will then review of additional financial items.
The which we will open the call to questions an archived replay of the call will be available later today.
On the Investor Relations section.
Of the lines corporate website. The call is taking place on Wednesday August for 'twenty 'twenty 1.
Remarks of follow on the answers to questions include statements that the company believes the forward looking within the meaning of the private Securities Litigation Reform Act of 1995.
These forward looking statements generally include words, such as anticipate believe expect or words of similar import.
Likewise statements that describe future plans objectives or goals are also forward looking statements.
These forward looking statements are subject to various risks that could cause actual results to be materially different than expected.
Risks include among others matters.
But the company has described in its press release issued this morning.
The filings with the Securities and Exchange Commission.
Except as described in the filings the company disclaims any obligation to update forward looking statements, which are made as of today's date.
Reconciliations of certain non-GAAP financial metrics to the corresponding GAAP measures are provided in today's press release, which is also available in the Investor Relations section of Orion website at Www.
Orion lighting dot com with that let me turn the call over to Mike Mike.
Thanks, Bill good morning, and thank you for joining us on today's call.
I'll keep my prepared remarks relatively brief today as we took some time in our June year end release and comments to provide a more detailed overview of our strategy market positioning and outlook and you can access those materials on our investor page.
As we expected Orion is off to a good start in fiscal 'twenty, 2 with a solid first quarter.
We achieved Q1 'twenty 2 revenue of $35.1 million as we continued to benefit from more normalized market conditions and a solid demand from major national accounts.
Our performance compares to year ago revenue of $10.8 million, which was substantially impacted by the onset of the COVID-19 pandemic and the related delays of projects by our customers.
Of particular note in the quarter was our success in achieving an improved gross profit percentage of 29, 1% compared to 24, 4% in the year ago period, and also a sequential improvement from our Q4 'twenty 1 gross profit percentage of 26%.
Our performance also reflects the benefits of having a talented experienced and nimble management team that has navigated a range of business in the economic cycles, which allows us to successfully deal with the current business challenges. In addition, we have of major advantage over many of our competitors by being primarily a U S based.
<unk> during a period of extreme worldwide logistics challenges.
While there is some impact to us as we import certain components and finished products.
We believe that we are in a better position the most of our competitors.
This is the competitive advantage for us and as industry delivery lead times extend we have the opportunity to outperform our competitors.
Turning to our product development success yesterday, we announced that several Orion products were recognized by an online industry resource inside lighting for their outstanding energy efficiency.
Our ice on high Bay industrial fixture was ranked as the industry's most energy efficient led high Bay light fixture within the high lumen category in.
In addition, Orion Harris High base Star line was ranked as the number 2 most efficient led lighting fixture in the ultra high lumen category and the fixtures lower power configuration was also ranked in the top 6 within the high lumen category.
This third party recognition validates the high performing nature of our products.
We are honored to be recognized by an independent and trusted industry resource for our industry, leading performance and we're proud of Orion design and engineering team.
I also want to touch on our supply chain position, particularly in the areas of electronic components and global logistic challenges. These.
These areas are receiving significant attention across many industries due to component and raw material shortages as well as domestic and international delays in product shipments.
But we have experienced some supply chain challenges our experienced team has been successful of navigating these issues and working to mitigate negative impacts.
Our success of the result of experience hard work and a variety of proactive strategies, including long term planning advanced component purchases proactive supplier management and U S based manufacturing while the situation remains fluid. We believe Orion is generally well positioned to achieve our production goals for the.
The balance of the year based on current conditions.
Much of our outlook for fiscal 'twenty, 2 is based on existing customer projects in advanced dialogues, but we continue to work on and have had success in expanding and diversifying our customer base and revenue sources we.
We're seeing slow and steady signs of customers willing to reengage on large scale led lighting of projects with the potential to benefit our fiscal 'twenty 3 and beyond.
While large scale opportunities generally develop more slowly Orion has built a very strong track record executing customized turnkey project solutions on time and on budget with significant workplace benefits and compelling returns on investment to our customers.
At the same time, we're also helping customers meet their environmental stewardship goals by reducing their carbon footprint and providing better and more safe work environments.
We also continued to expand our capabilities and industry knowledge to incorporate a broader range of complementary technologies, including lighting controls and Iot solutions that create smart ceiling grids.
Last year, we saw the opportunity to launch of Orion maintenance services in order to meet customer needs for more cohesive lighting and electrical maintenance services for regional and national customers.
22 will be the first full year of operations for this new division.
It is in its early stages, we believe that we have built out a solid customer service offering that leverages. Many of the skill sets and resources, which we have refined and our turnkey national led lighting retrofit programs.
We have recently started to provide lighting maintenance services to some of our existing customers, including our large national Big box retail customer now.
Now of the companies are able to exit pandemic crisis management and start focusing on new longer term initiatives. We are developing good fundamental interest in our maintenance services offerings. These developing additional customer prospects support our optimism for growth and customer synergy in this area.
We are also optimistic regarding our pipeline of fiscal 'twenty, 2 project opportunities across the retail logistics health care public sector automotive and academic sectors.
We remain focused on key growth opportunities, including our unique capabilities to execute large nationwide turnkey led lighting projects for major accounts to building out our maintenance services division to expanding our controls and Iot capabilities as well as building on our healthy safe and sustainable work environment solutions for our customers.
Our long term target is to build of Orion into a company generating up to 500 billion of annual revenue over approximately the next 5 years.
To achieve this goal we plan for organic growth of at least 10% annually supplemented by new product development potential tuck in acquisitions and new business partnerships.
As per will go over next we believe we are in a very sound position to pursue our growth objectives.
Considering the substantial environmental safety and work life benefits that our solutions provide along with substantial energy savings and very attractive return and short payback to our customers.
We view of Orion outlook is very promising for fiscal 'twenty, 2 and beyond.
Regarding the near term, we believe Orion remains on track to achieve the fiscal 'twenty 2 full year revenue growth of at least 28% to a range of $150 million to $155 million. This outlook is supported by a diverse growing base of opportunities across our business.
With that overview I will turn the call over to pair for financial highlights and insights before proceeding to take your questions.
Thanks, Mike.
Orion <unk> first quarter fiscal 'twenty, 2 revenue increased $24.3 million to $35.1 million principally due to strong business activity from 2 of our large national customer accounts.
This compares to sales levels last year that were significantly impacted by COVID-19 related disruptions that delayed many customer projects.
More importantly, we remain on the strong sequential sales track that keeps us on a path to achieve our revenue target for the year.
Orion's gross margin improved to 29, 1% in the first quarter.
Which benefited from product mix, but also demonstrates our ability to absorb our overhead costs. When we are operating with steady sales at these levels.
This performance is also the result of a strong effort on behalf of our team to manage through a challenging supply chain environment.
Bind with these factors more than offset any increases in material and component prices we have experienced.
Our Q1 'twenty 2 performance also began to reflect the price increases that were implemented during the first quarter to help offset some component raw material.
Sticks labor and other cost increases.
We believe our pricing moves with the or below or in line with actions enacted by industry peers.
Going forward. However, we do expect our gross margin percentage to fluctuate somewhat from quarter to quarter due to changes in our revenue mix the timing of larger projects and other factors some of which are out of our control.
However, we do feel our first quarter margin performance is indicative of the progress we have made and the potential in the business going forward.
Further we continue to pursue a range of initiatives to maintain our drive further margin improvements.
In the current environment, we are working to focus our product offering on the most compelling and profitable solutions, which also have the potential for production efficiencies.
First quarter fiscal 'twenty, 2 operating expenses were $6.8 million versus $4.7 million in the first quarter of fiscal 'twenty 1.
But improved to 19, 4% of sales as compared to 43.3 percentage of sales in the prior year.
Of the significant increase in revenue.
The overall dollar level increase is due to reductions made last year to manage through the pandemic.
The current year expense level is more in line with our expectations for this level of sales volume.
Orion generated EBITDA of $3.8 million in the first quarter fiscal 'twenty, 2 compared to an EBITDA loss of $1.7 million in Q1 'twenty 1.
The fact, reflecting revenue and gross margin growth that leveraged our operating expense levels.
Q1, 'twenty 2 net income improved to $2.5 million from a loss of $2.2 million in Q1, 'twenty 1 and.
And was net of an income tax provision recorded using an effective tax rate of 25, 8%.
However, as a reminder, we do not expect to pay meaningful cash taxes for several years because of our net operating loss carryforwards of nearly $70 million as of fiscal year end March 31.2021.
Also as Mike mentioned, we remain in a strong financial position to pursue our growth strategy.
Orion ended Q1, 'twenty, 2 with over $40 million of liquidity, including $15.9 million of cash and cash equivalents and $25 million available on our credit facility.
Net working capital improved $29.4 million at June 32021, which compares to $26.2 million at our fiscal year end March 31.2021.
First quarter 22 cash flow from operations was impacted by the timing of some working capital investments primarily for an increase in accounts receivable and payment of accrued project costs during the quarter.
And with that I'll turn the call back over to the operator for the Q&A session.
<unk>.
Thank you as a reminder to ask a question you need to press star 1 on your telephone to withdraw your question press. The pound key Yeah first question the line of Eric Stine with Craig Hallum.
Hi, Mike Hi per.
Hey, good morning, Eric Good morning can we can we just drill down into the $500 million goal.
And I know Thats 5 years out, but maybe maybe first just starting on the organic side I mean based on.
Based on the pipeline based on the optimism that that Youre starting to see in terms of re engagement with other customers and large national.
The Rollouts I mean, how do you see the linearity of that I mean is that something where you expect growth kind of on a year to year basis or how should we think about that.
Sure.
Eric We just feel strongly that given the pipeline we are building, giving the factors in the industry given what we believe is a massive market opportunity.
The opportunity yet to convert to LCD in the commercial and industrial space and in particular on the sub market of of high Bay low Bay and linear that we see the market being around from government studies $20 billion today growing to over $80 billion in 2035 that we just feel confident with what we've done we can.
Continued to grow so we view all of the 10% as a way of getting there over 5 years and we would look at it as being a goal of being linear however, I would say that because we have a history of of times.
Winning some large outsized projects 1 could see some bumps from year to year, where you go larger 1 year and smaller of the next year, perhaps but overall, we expect to grow at least 10% of year each year over the next 5 years.
Okay. That's great and then I guess doing the math I mean, obviously to get their end user net gross growth rate organically I mean, a lot of this is acquisition as well I mean, when you think about that maybe.
Maybe what's your what's your view is that something where it's a number of smaller tuck ins or I mean do you think that there is a part of this business that you can have a more sizable acquisition that adds to the platform.
Yes, I think when you look at the mathematics of what we have laid out and go through it if you grow where we expect to be this current fiscal 2022 and grow that over 10% of our 5 year period, you get roughly to half of our goal, which would mean that we have a goal of making acquisitions over the 5 year period that can add roughly 2.
$250 million of revenues for our company and but that also means youre, perhaps buying some of those companies early on in the growth to be a component of that $250 million within the 5 year period of our strategy is open on this we certainly have some areas of our business that we think could be accelerated.
By finding some nice tuck in acquisitions for us and we have seen a very nice robust pipeline at this point in time of things that we are looking at which encourages.
The us our premise that there are some companies out there that could help us growth.
And at the same time, we don't want to rule out that something somewhat larger than what's defined as the tuck in could come along that we'd say it makes really good sense for our company and for our shareholders to do something larger the good thing in my opinion is that we have the financial resources.
Certainly to do tuck in acquisitions, and probably something larger if we want it to be between our unused capacity.
Capacity right now.
And the other leverage aspects that we could do Eric so.
Tuck ins, probably make the most sense, but we're not going to rule out something larger if it makes a lot of sense for the company.
Yes, no that's great.
And maybe last 1 for me just on the on the maintenance services and great to hear that you are starting to do work for fear of being in your big National account I.
I guess sticking with that longer term goal.
Do you kind of have of percentage in mind of of how much of that would be maintenance services. If you look out 5 years.
Well I think when you go back to our premise of moving into maintenance services. It was a combination of customers asking us to help in this area of <unk>.
Selling it like there was some lack of service going on for them number 2 we have said previously we see 1 of the reasons to add value to this company is to have more predictable recurring revenue streams, which do come usually with maintenance services and we have a great customer base and existing.
Support system to go after this type of business we have not.
At this point gotten far enough, where we're going to say what the goal is for that maintenance services business over the 5 year period other than that we think it's going to be a significant part of our business over the long term.
And I think of as we get further through fiscal 'twenty, 2 and head into fiscal 'twenty 3 and the existing relationships. We are now starting and landing some additional situations I think later in the year of next year, we'll be able to give a little more visibility of what we think this can grow into but so far we are encouraged by what we are seeing in the acceptance we have and getting some.
Things going with our largest customer right now is of great great way to start for us. So thank you Eric.
Thanks.
Your next question on the line of Amit Dayal with H C. Wainwright.
Thank you good morning, guys.
Good morning.
Hey, Mike.
Air flow offerings.
Are we getting any traction.
The dose products sort of.
Gross on a resurging.
Research and the dividend.
Any any.
Any reasons of any contribution from those products in the current quarter or in your guidance for the fiscal year.
We're still very encouraged by the pure motion products that we rolled out.
Over the last few months and as a refresher we have 3 different products in that product family won a pure motion, which is used to circulate air in a room of second 1 of pure motion light, which has the air movement capabilities as well as a light fixture built into it and then peer motion you.
<unk>, which is the air movement, plus an enclosed sealed.
B C chamber that is able to kill viruses and bacteria.
The arris flowing through the units. So we think we've got a great product. We think we're at a competitive price point as we've done our work.
And our conversations externally have been very positive. It takes time for a product like this to have people understand it and test it and look at the testing for it. So we are not at the point of reporting any significant revenues at this point Amit for the continued to be very encouraged by the conversations we're having most recently we've had some increased disk.
<unk> with several universities around the country, we do see.
Academia being.
Area, where.
This would make sense and school systems.
And perhaps other situations like that so it's early on we're still very optimistic about it and still feel it's going to be a great product for us.
Okay.
Yes, My other question was around.
On the maintenance side of things.
And early effort I was wondering if there is any.
Meaningful maintenance revenue in this fiscal year.
Promoted more of us among some of them.
No.
Development for you the base.
Well I think this is our first full fiscal year of the maintenance services and as I've mentioned that in my prepared remarks that we were.
Very pleased to launch some additional maintenance services with our larger.
National account.
And we see that growing over time, and we have made progress with some of our other customers on maintenance services also.
I would say that when we laid out our.
Sales goals for fiscal 2022 of $150 to $155 million, we were anticipating some getting our maintenance services business going so we see what we have won so far as being part of what we were expecting in achieving those levels and I think we're going to of a better feel for it as we get through further through the fiscal year.
Give a little more insight on where we see it going in the future, but the encouraging part is for some of these larger accounts there are pretty substantial.
Our revenues that they do spend on maintenance services. So if we are <unk>.
Successful in landing some contracts that could end up being meaningful for us. So we are again highly encouraged by but it still takes a little bit of time to develop we decided to build this internally.
At this time and of the team in place and the systems in place and we are performing services, but it's also an area where I could see us, perhaps making a tuck in acquisition to help us accelerate the growth in this area going forward.
Understood.
And from an M&A perspective.
On the early too.
Jim maybe that something could happen for you guys.
Is it something maybe.
Further out.
The fiscal <unk> maybe.
It's always hard to predict where things are going to come together on an acquisition. We are encouraged by the pipeline that we have developed so far in the process that we are undertaking to.
Find possible acquisition or partner opportunities and begin conversations with people in some of those conversations have started as we mentioned on our last earnings call in June.
We have had.
<unk> had certain conversations and at times have entered into or issued.
Draft.
<unk> or letters of intent nothing of which has been executed at this point in time. So we're thinking about this as more of perhaps still being an impact for fiscal 2022.
And certainly in fiscal 2023.
Okay.
I appreciate it thank you Amit.
Your next question the line of Craig Irwin with Roth Capital Partners.
Good morning, and thanks for taking my questions.
You bet good morning, Craig.
Hey, good morning, good morning items.
The revenue earned but not build a line on the cash flow. This quarter was the interesting $186 million.
Maybe clarify for us.
What that was in the quarter that contributed here.
Obviously, it would've been nice to have that in the quarter.
Can you maybe talk about the <unk>.
Milestones necessary to recognize that the net revenue and profit from accounting standpoint over the next quarter.
Yes.
Yes ill take that Craig.
We generally have a couple.
Primary different methods of revenue recognition 1 is on it.
But.
Most of the known as percentage of completion.
And you take it based on those percentage of milestones if you will.
And some is substantial completion, so that is a little bit.
Obviously closer to the end.
So I'd say that that revenue earned but not billed as you know has.
It has been.
Recognized as revenue, but just not build the timing.
Being able to bill that is generally not a long tail. So I wouldn't think of that as something that theres a lot of there's a long tail of expected.
Wait in order to get that.
The bill it and then of collected on the normal course basis.
Okay. So as a clarification the revenue has already been recognized nicely on the gross profit the cash collection in the future of at least the billing for for cash collection is in the future is that correct.
We have not hit the hurdle to bill it and this kind of not.
Not billed and won't collected until sometime after we bill it correct.
Excellent excellent my second question is about.
10% customers in the quarter.
So usually you.
<unk> is a couple of days asking the earnings call.
Can you clarify for us how many 10% customers you had in the quarter and.
Different disclosures of that those customers in the past I don't know exactly what you're planning for your Q, but.
Can you give us something that approximates what.
What youre going to put in your filing for the the.
The revenue contribution from these customers.
Certainly we have our large customer that we will show.
Having contributed 51% of the revenue during the quarter and another customer that contributes approximately 14% for the quarter.
So of 51 and 14% that's very nice.
On.
Then I guess.
To ask this.
On.
And the appropriate fashion is tricky right.
I'm going to make the effort.
You guys.
A year ago, plus I guess highlight.
<unk> made tremendous progress with the customer that does about $150 million of gear.
In lighting fixtures purchases plus controls et cetera, right on top.
And our conversations recently with others in the market have informed us that there are several companies to go in there.
Try and half of it.
Very difficult time.
So it's not just the.
The market leader, that's been having a hard time in there.
Despite the step and I think of Orion was the third company that they tried or at least that's what I was told.
You guys have a history of executing or.
1 of their very largest customers I guess maybe.
We know who that is right.
<unk>.
What could you say your experience serving customers that overlap.
<unk> helps you on it helps inform Orion on.
The challenges of serving this incredibly demanding customer.
And can you maybe express for US the confidence you have in an execution with this customer over the next number of quarters.
Sure.
Yeah.
The couple of comments I'd make on that Gregg we have.
Early on going back a number of quarters talked about the fact that we are encouraged by landing.
The ability to start to do work for a very significant.
<unk>.
Even global logistics and warehousing company and then some quarters later, we announced that we had a second somewhat similar company that we thought we would start doing business with.
And my Hunch is you're probably referring to the first 1 which we've talked about in the past first of all we expect all of our customers to be demanding and that doesn't bother us whatsoever.
And it actually having competition on some of these very large customers.
Where theyre doing perhaps multiple sites across the country is per.
Probably going to happen as opposed to where that's.
Maybe a big box retailer the decides they want everything absolutely the same all the way through their facilities.
We actually relative shelving that competition with some of our large competitors because frankly, we have found on the whole that over time, we believe we can outperform them, particularly from a service standpoint, and overall relationship and over time, we can capture a larger percentage of that business. The.
The first opportunity that we have in customer that we do have which you and I have talked about in the past has developed somewhat more slowly than we originally anticipated we have been pretty consistent of commenting that for both of these large opportunities because there the business model is multi.
The board multiple facilities across the North America that we would be interested in the end up awarding that business facility by facility. So while we may have a master agreement with those entities with respect to.
The service and product.
Each 1 ends up being the individual project that they look to and they may decide to have multiple people look at those situations, where happy competing in that situation.
So your pricing is all laid out and you prove yourself based on performance and frankly lead times and having things happen. The second relationship that we have is developing a little bit.
Very well so.
And as I mentioned, the first 1 is a little bit slower why has it been slower we think it's been a combination of COVID-19 just it's less slowed some of these things down.
<unk> entities have.
Their customers are leasing these facilities and so in midterm lease they may not want to do things and it takes some time to develop we're extremely optimistic about both of those relationships overtime, we relish the competition.
And we have found over time, where we can go head to head and the compare us afterwards that we will come out on top of and we will work very hard to do that so a great question I. Appreciate your question. Yes. Thank you for your answer. So then historically Orion has executed impeccably when the.
The people that are doing the implementation of that these customers.
Correct employees, not just the project managers, but.
When you when you said several employees to these key customer sites can you maybe comment for us.
Whether or not bulking up the services business and the.
On the longer term vision, there is something that is additive to the capacity share of some of these are potentially very demanding customers.
Something that maybe helps.
It helps differentiate the capabilities of Orion.
No I think it does I think it's an excellent question because as we add.
Additional volume and more customers and add our maintenance services business it.
It requires us to further build out our relationships with companies that are helping us perform some of the services as we've said in the past for our installation services, we have our own.
The employees, who are doing the upfront work the.
Audits the engineering work the design of the fixture and we also have our own people who are on site with full responsibility to oversee the installation services and the commissioning of the control systems into the building management systems, but we often use third party electrical.
Contractors to actually do the physical installation, because we find it to be efficient.
And there is capacity of the industry of ours has to ramp up very quickly and we of big projects. So some of those contractors are the same contractors that we will partner with to provide maintenance services to allows us to bulk up the allows us to add additional supervisory people and construction managers.
And auditors' and over time, we probably will increase some of our self performing capabilities, where we may do the installations ourself, we've done some of that already but it's been rather small, but as we have the ability to keep people.
And you have the right density and areas to have self performing teams. We will do that so yes. There are synergies between our turnkey services in our maintenance services businesses to leverage some of the fixed costs and add to our fixed cost to become a bigger player in the industry.
Great. Thank you so much for taking my questions.
Thank you Craig Thanks, Greg.
I kind of feel like to ask a question. Please press starting of number 1 on your telephone keypad and your next question the line of Alex Rygiel from B Riley.
Thank you Mike.
Gross margins in the fiscal first quarter were excellent how should we think about gross margins through the remainder of the year on you mentioned the impact from mix being a positive influence how should we think about mix in the latter part of the year.
I guess, Alex this is apparel take that and if Mike wants to add anything after me certainly can.
And I think.
Tried to convey in my comments, certainly we would think that our rate will fluctuate somewhat from quarter to quarter.
Largely based on mix.
And that's both from a product standpoint within.
I'll say a quarter as well as.
Between product and service. So I think we saw nice improvement during the quarter in both a.
And both of the product and service.
But we also would think that you know.
29, 1% was obviously, a strong improvement compared to our historical levels and it.
It will likely mix out.
Somewhat less than that but that ultimately as we've said before let's say longer term.
Our goal is to get it up into the 30% range. So.
Yes.
I'd say it's.
We're not probably at the point, where we're going to hit that long term goal, but.
We would hope to be up towards the 29% range.
As we move forward, but.
There will likely be some quarters, where we're not at that level.
And sticking to this point you mentioned you took a price increase in the first quarter.
I suspect it did not or maybe it did fully offset.
The rise in.
Raw material and labor costs, but how do you think that price cost mix.
We will play out in sort of <unk>.
Well, there's a lot of.
I'm sorry go ahead Sir.
I was just going to say I think there's a couple of things a couple of ways to think about it 1 of them is we did put in the price increase.
Early in the quarter the.
The 1 of the big dynamics of that as some of our large customers.
Our subject to contracts with the prices that extend through the term of that contract. So.
The thought is that.
With as we renew contracts, we will be able to that's.
That's the point at which we'll be able to get the price increases into the new contracts. So some of the traction that we gained.
We think we will be enhanced.
As we move forward and you know.
New contracts negotiated new contracts.
And then you will have to monitor the overall situation as we move forward to and continued.
Just the monitor.
Both.
The sale any of the price the price dynamics within the supply chain.
Okay, and then lastly.
You reiterated your full year 2022 revenue guidance.
How does your confidence level compared to a few months ago.
More or less confident on this and what are some of the variables that.
Could help you to exceed or possibly unfortunately miss guidance.
I'd say, we are either of the same or somewhat elevated and our confidence now that we're a few more months down the road.
Since we first laid out that as a goal and target for fiscal 2022, and the reason is we see more visibility to the larger projects that we have we have more of a feel for some of the activity. That's taking place in the pipeline that is building the timing that could come through we're also encouraged by the U S government is.
The kind of back in the mix of little bit more than they had been during the heavy part of the pandemic and so we see some opportunities on that side in our automotive business.
It looks like it could be robust for the future of fiscal 'twenty..2 also so it's a number of factors that we feel.
As confident and probably a little more confident than we did back in June.
What can happen there still is concerned about COVID-19, we probably felt less concerned about COVID-19 in June than we do tier in August given what we've seen with respect to the Delta variant out there we have continued to have.
<unk> been able to run our facilities full out to keep with our customers, but 1 could see if things do get out of hand, or something else comes up could customers restrict access to facilities et cetera, but so far we are not seeing that.
And.
Could there be supply chain issue as we've said in our prepared remarks that so far we have had only minimal impact to our customers from a supply chain standpoint.
But it is of the challenging environment right now that we think we're working through very well and are confident we can work our way through it and then lastly.
Every now and then other things happen at a customer or any of the larger project going on we had of certain situations. This quarter, where we had a customer needed us just the slowdown for a couple of weeks because of something on there and caused them to want to do that and so youre going to have some of those movements between quarters that for us can be somewhat significant but it is part of our project.
Based business, but overall, we still feel confident about fiscal 2022.
So thank you Alex.
Congratulations on a nice quarter.
Thank you.
And your next final question comes from the line of George Gaspar with Investor.
Okay. Thank you and good morning.
Hey, good morning.
Have you reiterate it.
You've said this already or give.
Give us the comparison here on the <unk>.
Backlog that you had at the end of year Carter.
The previous quarters backlog at the end of that quarter versus a year ago can you give us some numbers specifically.
Sure.
Backlog at the end of the.
The most recent quarter at June is $12.2 million.
The backlog.
At the end of the fourth quarter of fiscal 'twenty 1.
Was $15.5 million.
And the backlog.
In the prior year at the end of Q1 was $15.9 million.
$9 million, Okay, alright, and what I would just kind of quickly add George if I could as we've kind of we said this a few times in the past, we certainly monitor backlog and it tells us something but we have also fallen.
For some of our larger accounts.
We do not put something into backlog until we either have a purchase order.
Or a contractual relationship where we know we're going to ship something and so we might enter into the business, where it just isn't there yet so it is indicative of something but it doesn't it's not.
Probably as indicative of as it may have been in the past of what's going to happen. The next quarter as it moves around just kind of throw that out for your consideration. Okay. Alright. Thank you for that and then a question on <unk>.
Sure.
Your component.
Cost structure.
Made some reference to <unk>.
This growing up can you highlight a little bit as to where the most impact is coming for you in terms of price increases on net.
And.
<unk>.
Sure.
Okay.
Absolutely it's been somewhat spread out I mean, we have seen on the electronics side, which would be both our.
The led the boards that we buy for our fixtures and the the power supplies that we purchase that there has been some inflationary pressure on those 2 electronics, we have seen metal have some price inflation during the year, which is 1 of the next larger raw material components to our fixtures.
Yeah.
Resin prices have gone up to par.
Partially back to last winter.
Winter when there were the massive storm in Texas, which messed up some refineries for a while.
And in.
And then when you look at.
Logistics and transportation.
While we.
We source, what we can into.
The internal to the U S. We do purchase certain raw materials components and some finished goods from Asia and the costs for international Transportation has gone up dramatically over the last year as has some of the domestic transportation and then lastly, we've had some labor inflation the.
The market for labor.
As challenging we've been able to stay staffed where we want it to be but we've also want to be competitive.
And pay our people of fair rate wage and so we've had some inflationary pressure on labor. Our goal has been between negotiating with suppliers of and having the ability to buy certain things and.
Being proactive and working through things that we've been able to manage that and offset it with certain price increases, where we think we're being competitive and we'll keep doing that in the future.
Thank you very much for your questions George.
This concludes the Q&A session I will now turn the call over to Mike Shaffer for closing remarks.
Thank you Rochelle, and thanks again to everyone, who joined US today for your interest in Orion, we are going to be participating in the H C. Wainwright Investor Conference in New York in September, which will be our first in person conference since the pandemic and we also expect to participate in the Craig Hallum Alpha Select conference in November.
In recent months, we have participated in several other virtual conferences all of which are recorded and available on our website you.
You May also contact our IR team with any questions or to schedule a call with management and their contact information is included in today's press release. Thanks again for your time today, and we look forward to updating investors on our fiscal 'twenty to Q2 call. Thank you and have a great day.
Today's conference call is now concluded. Thank you for attending this presentation you may now disconnect your line.
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