Q1 2025 Orion Energy Systems Inc Earnings Call
Operator: Good morning, everyone, and welcome to Orion Energy Systems' fiscal 2025 first quarter conference call. At this time, all participants are in a listen-only mode. I will now turn the call over to Bill Jones, Investor Relations, to begin.
Speaker Change: Good morning, everyone, and welcome to Orion Energy Systems' fiscal 2025 first quarter conference call. At this time, all participants are in a listen-only mode. I will now turn the call over to Bill Jones, Investor Relations, to begin.
Bill Jones: And good morning to everyone, and thank you for joining this call. Mike Jenkins, Orion CEO, and Per Brodin, Orion CFO, will review the company's Q1 results, its financial position, and its fiscal 2025 outlook in their prepared remarks, and then we will open the call to investor questions. Today's conference call is being recorded, and a replay will be posted in the investor section of Orion's corporate website, orionlighting.com. Also, any statements describing future targets and goals, company plans, or its outlook are also forward-looking.
Speaker Change: Thank you, Alex.
Bill Jones: And good morning to everyone, and thank you for joining this call. Mike Jenkins, Orion CEO , and Per Brodin, Orion CFO , will review the company's Q1 results, its financial position, and its fiscal 2025 outlook in their prepared remarks, and then we will open the call to investor questions.
Speaker Change: Today's conference call is being recorded and a replay will be posted in the investor section of Orion's corporate website, orionlighting.com.
Speaker Change: As a reminder, remarks and answers to questions that follow include statements which are forward-looking per the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally include such words as anticipate, believe, expect, project, or similar words.
Speaker Change: Also, any statements describing future targets and goals, company plans, or its outlook are also forward looking.
Speaker Change: Such forward-looking statements are subject to various risks that could cause actual results to differ materially from current expectations.
Speaker Change: Risks include, among other factors, matters that Orion has described in its press release issued this morning, as well as in its filings with the SEC.
Speaker Change: Except as described therein, Orion disclaims any obligation to update or revise forward-looking statements made as of today's date.
Speaker Change: Reconciliations of certain non-GAAP financial metrics to their closest GAAP measures are also provided in today's press release.
Bill Jones: Such forward-looking statements are subject to various risks that could cause actual results to differ materially from current expectations. Risks include, among other things, matters that Orion has described in its press release issued this morning, as well as in its filings with the SEC. Except as described therein, Orion disclaims any obligation to update or revise forward-looking statements made as of today's date. Reconciliations of certain non-GAAP financial metrics to the closest GAAP measures are also provided in today's press release. Now, I'll turn the call over to Orion CEO Mr. Mike Jenkins. Thanks, Bill.
Speaker Change: Now I'll turn the call over to Orion CEO , Mr. Mike Jenkins.
Mike Jenkins: Thanks Bill. Good morning, and thank you all for joining our call today. It's been two months since our year-end call, and the first quarter was in line with expectations. So I'll keep my comments relatively brief and leave more time for questions. Orion's revenue momentum continued with 13% growth in the first quarter, driven principally by strength in our EV charging system installation business. We expect positive momentum to continue across the company in fiscal 25, as reflected in our full year outlook targeting 10 to 15% revenue growth. The bright spot in Q1 was obviously in our EV charging segment. Recall that fiscal 24 was the first year of Voltrek operations within Orion.
Mike Jenkins: Thanks, Bill. Good morning, and thank you all for joining our call today. It's been two months since our year-end call, and the first quarter was in line with expectations. So I'll keep my comments relatively brief and leave more time for questions.
Mike Jenkins: Orion's revenue momentum continued with 13% growth in the first quarter, driven principally by strength in our EV charging system installation business.
Mike Jenkins: We expect positive momentum to continue across the company in fiscal 25, as reflected in our full year outlook targeting 10-15% revenue growth.
Mike Jenkins: The bright spot in Q1 was obviously in our EV charging segment.
Mike Jenkins: Recall that fiscal 24 was the first year of Voltrek operations within Orion.
Mike Jenkins: Having built out our team's resources, capabilities, and geographic reach last year, our EV installation platform is well-positioned to meet the needs of large customers across the country. We saw the benefits of our EV charging investments in Q1 as revenue grew over 200% to $3.8 million. Our EV charging Q1 performance was positively impacted by the activation of construction contracts to install Level 2 and Level 3 charging stations for Eversource Energy's EV Make-
Mike Jenkins: Having built out team's resources, capabilities, and geographic reach last year, our EV installation platform is well positioned to meet the needs of large customers across the country.
Mike Jenkins: We saw the benefits of our EV charging investments in Q1 as revenue grew over 200% to $3.8 million.
Mike Jenkins: Our EV charging Q1 performance was positively impacted by the activation of construction contracts to install level two and level three charging stations for Eversource Energy's EV Make Ready program.
Mike Jenkins: We secured over $11 million in contracts for Eversource customers through this program, and the projects are slated for completion this fiscal year, contributing to our fiscal 25 growth outlook. In addition, Voltrek has developed a solid pipeline of larger opportunities that now totals over $45 million. Of course, we've got to convert those opportunities into deals, but we are very encouraged by our business development momentum. Voltrek has deep expertise and a track record of successful EV charging installations for more than a decade.
Mike Jenkins: We secured over 11 million dollars of contracts for Eversource customers through this program. The projects are slated for completion this fiscal year contributing to our fiscal 25 growth outlook.
Mike Jenkins: In addition, Voltrek has developed a solid pipeline of larger opportunities that now totals over $45 million. Of course, we've got to convert those opportunities into deals, but we are very encouraged by our business development momentum.
Speaker Change: Voltrek has deep expertise and a track record of successful EV charging installations over more than a decade. This experience puts us in a very strong position to compete for large national and regional EV infrastructure projects.
Mike Jenkins: This experience puts us in a very strong position to compete for large national and regional EV Infrastructure projects. There is also significant federal funding being made available to drive the needed infrastructure catch-up to properly support the growing base of electrical vehicles. In LED lighting solutions, we achieved modest growth in Q1-25 and continue to expect LED lighting segment growth in Fiscal 25, supported by major account projects as well as demand from ESCOs and distribution partners.
Speaker Change: There is also significant federal funding being made available to drive the needed infrastructure catch-up to properly support the growing base of electrical vehicles.
Speaker Change: In LED lighting solutions, we achieved modest growth in Q1-25 and continue to expect LED lighting segment growth in fiscal 25.
Speaker Change: supported by major account projects as well as demand from ESCO and distribution partners.
Mike Jenkins: Q1 included revenue from our Department of Defense LED retrofit project in Europe, which we completed in the quarter. Orion was brought into this project by a global super ESCO that often utilizes Orion as its lighting partner.
Speaker Change: Q1 included revenue from our Department of Defense LED retrofit project in Europe , which we completed in the quarter.
Speaker Change: Orion was brought into this project by a global super ESCO that often utilizes Orion as their lighting partner.
Mike Jenkins: Our team did an excellent job on this large and complex project, showcasing our superior project execution capabilities with the added hurdle of working overseas. We are hopeful that our performance could lead to other large projects with this partner in the near future. For the balance of 2025, we expect growth in LED lighting to be driven by a rebound in activity from longstanding automotive customers after limited project activity in fiscal 24. We also anticipate strong opportunities in the public sector, growth in logistics and warehousing, and the initiation of projects in the technology, retail, and government sectors that have been in the planning stages for over a year.
Speaker Change: Our team did an excellent job on this large and complex project, showcasing our superior project execution capabilities with the added hurdle of working overseas.
Speaker Change: We are hopeful that our performance could lead to other large projects with this partner in the near future.
Mike Jenkins: We also anticipate ongoing LED lighting projects from our largest customer in addition to their utilization of our maintenance service. We are also working to drive continued growth in lighting product sales within our ESCO and electrical contractor distribution channels. These channels have responded well to our expanded line of Triton Pro Hi-Bay and Harris exterior fixtures that were specifically developed to meet their needs for high quality, energy efficient LED fixtures that are value priced.
Speaker Change: These channels have responded well to our expanded line of Triton Pro high bay and Harris exterior fixtures that were specifically developed to meet their needs for high quality energy efficient LED fixtures that are value priced.
Mike Jenkins: We continue to see solid growth in quoting and actual sales of these products. We also expect LED lighting demand to benefit from state regulations banning the sale of fluorescent fixtures and their replacement tubes. Seven states, including California, have approved such regulations, which begin to go into effect in calendar 2025, with other states expected to follow suit.
Mike Jenkins: As the deadlines draw closer, we are starting to see customers increasing their attention in this area and beginning to develop plans for compliance. We have also been successful in using the regulatory timeline to initiate new customer dialogues, and we expect to see projects related to these bans begin in the second half of our fiscal 25 and accelerate into fiscal 26 and beyond. Turning to our maintenance services segment, as anticipated, maintenance services revenue declined 11% in Q 125 to $3.3 million.
Speaker Change: As the deadlines draw closer, we are starting to see customers increasing their attention in this area and begin to develop plans for compliance.
Mike Jenkins: The top-line performance reflects the impact of three legacy Stalight customers that chose not to renew long-term contracts following our price increase. However, price adjustments were required to return the segment to appropriate levels of profitability following a variety of inflationary factors that have impacted the business over the past two years. Importantly, our objective of returning this business to a suitable gross profit is proving successful. Our quarter 125 gross profit percentage increased to a positive 3.8% from a negative 1.4 in the year prior, and we anticipate further strengthening as we progress through 2025.
Speaker Change: Importantly, our objective of returning this business to a suitable gross profit is proving successful.
Mike Jenkins: Given our outlook and Q125 performance, we have reiterated our fiscal 25 revenue growth target of 10 to 15%, or total revenue of between 100 and 104 million. This outlook is based on anticipated robust growth in EV charging station revenue, as well as expected revenue growth in LED lighting solutions. We anticipate large national LED lighting projects for customers across a wide range of sectors, including automotive, retail, technology, logistics and distribution, banking, and the public sector.
Speaker Change: Given our outlook and Q125 performance, we have reiterated our fiscal 25 revenue growth target of 10 to 15% or total revenue of between 100 and 104 million.
Speaker Change: We anticipate large national LED lighting projects for customers across a wide range of sectors including automotive, retail, technology, logistics and distribution, banking, and the public sector.
Mike Jenkins: We also anticipate growth in our ESCO and agent channels, driven by an expanded focus on new, high-quality, energy-efficient, value-priced LED products. We continue to expect Fiscal 25 revenue to be significantly weighted to the second half of the year as it was in Fiscal 24, and subject to the timing of larger projects. We also expect to finish fiscal 25 with positive adjusted EBIT. Let me now pass the call to our CFO, Per Brodin, to provide more details on our financial performance for Q1.
Speaker Change: We continue to expect Fiscal 25 revenue to be significantly weighted to the second half of the year as it was in Fiscal 24 and subject to the timing of larger projects. We also expect to finish Fiscal 25 with positive adjusted EBITDA.
Per Brodin: Let me now pass the call to our CFO , Per Brodin, to provide more details on our financial performance for Q1.
Per Brodin: Q125 revenue rose 13% to $19.9 million. The quarter benefited particularly from the activation of EV charging station construction activity for customers of Eversource Energy. Our lighting segment continued to benefit from the completion of an approximately $9 million Department of Defense retrofit project in Europe. $1.9 million of revenue was recognized for this project in Q125. As expected.
Per Brodin: Q125 revenue rose 13% to $19.9 million.
Speaker Change: The quarter benefited particularly from the activation of EV charging stations construction activity for customers of Eversource Energy. Our lighting segment continued to benefit from the completion of an approximately $9 million Department of Defense retrofit project in Europe .
Per Brodin: Maintenance segment revenue declined in Q125 due to three unprofitable legacy satellite contracts that did not renew following planned price increases from Orion. Offsetting this impact somewhat was the three-year preventative lighting maintenance service contract for our largest customers' 2,000 retail locations. Longer term, we see the potential for growth with other current customers on the maintenance side to mitigate some of the lost revenue from the lapsed unprofitable legacy contracts. Importantly, our actions are turning around the profitability of this business.
Speaker Change: Importantly, our actions are turning around the profitability of this business.
Per Brodin: For the company as a whole, our gross profit percentage or gross margin improved 360 basis points to 21.6% in Q1'25 versus 18% in Q1'24, reflecting the benefit of pricing increases and the termination of negative margin contracts in our maintenance segment, as well as improvements in LED lighting product margins, as well as improved fixed cost absorption due to higher revenue. In addition, Q1 had a couple unusual items that negatively impacted margin. First, on the product side, and as part of restructuring the maintenance business, we wrote off approximately $200,000 of inventory that could not be used or sold. Second, in services.
Speaker Change: For the company as a whole, our gross profit percentage, or gross margin, improved 360 basis points to 21.6% in Q1'25 versus 18% in Q1'24.
Speaker Change: Improvement in LED lighting product margins as well as improved fixed cost absorption due to higher revenues.
Speaker Change: In addition, Q1 had a couple unusual items that negatively impacted margin.
Speaker Change: First, on the product side, and as part of restructuring the maintenance business, we wrote off approximately $200,000 of inventory that could not be used or salvaged.
Per Brodin: As we wrapped up the Germany project, the final quarter came in at a lower margin rate than other quarters due to the nature of the work performed. Gross margin on Orion products improved approximately 670 basis points to 33.1% in Q1 from 26.4% in Q1-24. We saw improvements in both manufactured and sourced products, including new product sales, as well as the benefit of improved fixed cost absorption from higher sales. Reflecting steps taken in the maintenance business and our expectations for the business overall, we expect our blended gross margin rate to remain strong in fiscal 25. Operating expenses declined to $7.7 million in Q125 from $9.6 million in Q124 due to a lower Voltrec earn-out expense accrual of $329,000 versus Q1 of 2020. 4 of 1.1.
Speaker Change: Second, in services, as we wrapped up the Germany project, the final quarter came in at a lower margin rate than other quarters due to the nature of the work performed.
Speaker Change: Gross margin on Orion products improved approximately 670 basis points to 33.1% in Q1, from 26.4% in Q1-24.
Speaker Change: Reflecting steps taken in the maintenance business and our expectation for the business overall, we expect our blended gross margin rate to remain strong in fiscal 25.
Per Brodin: The earn-out reduction is based on our estimate of expected performance relative to the Fiscal 25 earn-out target, which is significantly higher than the Fiscal 24 target. Other reductions have come from the maintenance business as well as a strong focus on productivity over the past year that has led to cost savings in our base business. We incurred severance costs of $123,000 and restructuring costs of $270,000 in Q125 related to the right-sizing and realignment of our maintenance segment following the loss of three legacy accounts. We expect to record another $150,000 to $200,000 to complete these cost management initiatives. Higher Q1 revenue, improved gross margin, and lower operating expenses led to Orion's net loss improving to $3.8 million, or $0.12 per share, in Q1'25 from $6.6 million, or $0.21 per share, in Q1'24.
Speaker Change: Other reductions have come from the maintenance business, as well as a strong focus on productivity over the past year that has led to cost savings in our base business.
Speaker Change: We incurred severance costs of $123,000 and restructuring costs of $270,000 in Q125 related to the right sizing and realignment of our maintenance segment following the loss of three legacy accounts.
Speaker Change: and expect to record another $150,000 to $200,000 to complete these cost management initiatives.
Speaker Change: Higher Q1 revenue, improved gross margin, and lower operating expenses led to Orion's net loss improving to $3.8 million, or $0.12 per share in Q1'25,
Speaker Change: From $6.6 million or $0.21 per share in Q1'24.
Per Brodin: Cash used in operations was $3 million in Q125, an improvement from $7.3 million in Q124, reflecting improved operating results and lower working capital requirements. Orion also enhanced its liquidity position through the proceeds of a $3.5 million mortgage on a new bank facility at our Manitowoc corporate headquarters, which resulted in cash increasing to 5.7 million at the end of the period and 5.2 million at the beginning of the period. Current assets plus current liabilities, or net working capital, was $17.4 million at the close of Q125, up from $16.8 million at March 31st, 2024.
Speaker Change: Cash used in operations was $3 million in Q125, improvement from $7.3 million in Q124, reflecting improved operating results and lower working capital requirements.
Ryan: Orion also enhanced its liquidity position through the proceeds of a $3.5 million mortgage in Q1.
Ryan: From a new bank facility on our Manitowoc corporate headquarters, which resulted in cash increasing to $5.7 million at the end of the period and $5.2 million at the beginning of the period.
Ryan: Current assets, less current liabilities, or net working capital was $17.4 million at the close of Q125, up from $16.8 million at March 31st, 2024.
Per Brodin: Brian's financial liquidity was $14 million at June 30, 2024, as compared to $15.3 million at March 31, 2024. Considering our financial liquidity and growth outlook, we believe we are in a good position to fund each of our businesses and our growth goals for fiscal 2025. And with that, Operator, could you please begin the Q&A session?
O'brien: O'Brien's financial liquidity was $14 million at June 30, 2024, as compared to $15.3 million at March 31, 2024.
O'brien: Considering our financial liquidity and growth outlook, we believe we are in a good position to fund each of our businesses and our growth goals for fiscal 2025.
Speaker Change: And with that, Operator, could you please begin the Q&A session?
Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please raise your hand.
Speaker Change: If you would like to withdraw your question, simply press star 1 again.
Speaker Change: Again, press star 1 to join the queue. And your first question comes from the line of Summer Joshi, please go ahead.
Unknown Attendee: Hey, good morning, guys. Thanks for taking my call. I'm hearing you very clearly.
Speaker Change: So if you're holding some error a charge, you know,
Speaker Change: You mentioned a pipeline of around 45 million
Summer Joshi: What does this look like? What sectors does it come from? And what portion of this is likely to be converted to orders in fiscal 2025 and delivered deliveries against those are expected?
Mike Jenkins: Yeah, good question, Samir. The $45 million pipeline that we have for EV is made up of a wide range of sectors and verticals. There's certainly some municipal business in there, but private companies are involved in that as well. Obviously, we are concerned about the Eversource situation, which is a utility in Massachusetts, and they work with private companies as well. So I would say it's a wide grouping. Also included in that are some cross-selling opportunities with Orion's lighting customers.
Speaker Change: Good question, Samir.
Speaker Change: The $45 million pipeline that we have for EV is made up of a wide
Speaker Change: Part of a segment of sectors and verticals. There's certainly some municipal business in there. Private companies are in that as well. Obviously, we reverence the Eversource
Mike Jenkins: In terms of how much of that pipeline we think is going to be converted this year, as we've said, our budget for EV, essentially our target, is $18 million in revenue plus, and we expect that the pipeline that we have right now will deliver on that.
Speaker Change: As we've said, our budget for EV, essentially our target, is $18 million in revenue plus, and we expect that the pipeline that we have right now will deliver on that.
Mike Jenkins: That's good to hear. Thanks for that. And then just in terms of capacity, are there any supply constraints or any challenges that you're looking at? Or if you are able to convert more than 18 million, do you have enough capacity to say deliver 25 or so million?
Speaker Change: That's good to hear, thanks for that. And then just in terms of capacity, are there any supply constraints or any challenges that you're looking at? Or if you are able to convert more than 18 million, do you have enough capacity to say deliver 25 or so million?
Mike Jenkins: Yep, we're right now. We do not have any major supply constraints across the business, and nor do we anticipate any as we move forward.
Speaker Change: Yep, right now we do not have any major supply constraints across the business and nor do we anticipate any as we move forward.
Unknown Attendee: And then just a clarification on the adjusted exit in fiscal 2025, that will be like the fourth quarter positive adjusted EBITDA, is that what they're
Speaker Change: That will be like the fourth quarter positive adjusted EBITDA. Is that what the expectation?
Mike Jenkins: The expectation is that for the full fiscal year, based on our revenue outlook, we would expect to be cash flow positive for the year. I'm sorry, it's just an EBITDA positive.
Speaker Change: I'm sorry, Justin Ibbitta Pazin, Justin Ibbitta, yeah.
Unknown Attendee: And then lastly, on the LED business, what kind of responses, or in these seven states, what kind of reception are you receiving? Like, is there increased activity already that you're seeing, and do you expect to convert some of these orders within this fiscal year?
Speaker Change: Good to hear that.
Speaker Change: And then lastly, on the LED business, what kind of responses, or like...
Speaker Change: In these seven states, what kind of reception are you receiving? Is there increased activity already that you're seeing and expect to convert some of these orders within this fiscal year?
Mike Jenkins: Yeah, so I think that the seven states you're referencing are relative to the fluorescent lighting band. And We are engaging in a dialogue. I would say that a lot of businesses in those states, unfortunately, aren't even aware that this legislation is in place and that the state is approaching. So we've been talking actively to customers. We've been marketing this so that awareness is growing. We are engaging in dialogues with key customers who have locations in those states to make sure they're ready for it.
Speaker Change: We are engaging in dialogues. I would say that a lot of businesses in those states unfortunately aren't even aware that this legislation is in place and that the state is
Speaker Change: is approaching.
Speaker Change: So, we've been talking actively to customers, we've been marketing this so that the awareness is growing.
Speaker Change: We are engaging in dialogues with key customers who have locations in those states to make sure they're ready for that. And again, it's really the ban of sale of fixtures and tubes. So it's not that somebody's going to come into facilities and
Mike Jenkins: And again, it's really the ban on the sale of fixtures and tubes. So it's not that somebody is going to come into facilities and remove anything or anything along those lines. But it is going to prohibit them from getting replacement products as their lighting fails. And so it's better to approach it as a system change. So we are seeing growing interest in that, and we are actively working with some of our larger customers to make sure they're ready.
Speaker Change: Remove anything or or anything along those lines but it is going to prohibit as their lighting fails from getting replacement products and so it's better to approach it as a system change. So we are seeing growing interest there and we are actively working with some of our larger customers to make sure they're ready.
Mike Jenkins: Thanks for that, and good luck!
Speaker Change: Good to hear. Thanks for that and good luck.
Mike Jenkins: Thanks, Samir. I appreciate it.
Operator: Your next question comes from the line of Eric Stine with Craig's Howlin' Capital. Please go ahead.
Samir: Thanks, Samir. Appreciate it.
Speaker Change: Your next question comes from the line of Eric Stine with Craig Howland Capital. Please go ahead.
Unknown Attendee: Morning guys, this is Luke speaking on behalf of Eric Stine. We have a couple questions here. First off, how should we think about maintenance services over the next few quarters? Are you seeing opportunities in the pipeline to offset the loss of the three legacy contracts? And if so, when do you think we can start to see some top line recovery?
Speaker Change: Morning guys, this is Luke on for Eric Stine. We got a couple questions here. First off, how should we think about maintenance services over the next few quarters? Are you seeing opportunities in the pipeline to offset the loss of the three legacy contracts? And if so, when do you think we can start to see some top line recovery?
Mike Jenkins: We've said, in terms of guidance for the year, that we expect that business to contract by four to five million dollars. That's offset by some growth in our other business that we've talked about with our largest customer, as well as some additional opportunities. In terms of the pipeline, we do have some additional opportunities that are in the pipeline, and we would expect to see any of those potentially come through in the second half of the year.
Speaker Change: We've said in terms of guidance for the year that we expect that business to contract four to five million dollars. That's offset by some growth.
Speaker Change: on our other business that we've talked about with our largest customer, as well as some additional opportunities. In terms of the pipeline, we do have some additional opportunities that are in the pipeline, and we would expect to see any of those potentially come through in the second half of the year.
Unknown Attendee: Got it. Thank you.
Speaker Change: Got it. Thank you. And just one more follow up here on the EV charging segment. So we've obviously seen a lot of growth there in the past year.
Speaker Change: We were wondering how much of that growth can be attributed to business with Voltrex existing customers at the time of the acquisition versus new customers introduced from cross-selling synergies with your LED and maintenance business or just new customers in general.
Speaker Change: Yeah, we, I would say that the cross selling piece is a growing area. It's still, you know, not the majority, but we have a very significant pipeline, which we expect as we continue to move forward to, to grow that business.
Unknown Attendee: And just one more follow-up here on the EV charging segment. So we've obviously seen a lot of growth there in the past year. We were wondering how much of that growth can be attributed to business with Voltrex existing customers at the time of the acquisition versus new customers introduced from cross-selling synergies with your LED and maintenance business or just new customers in general.
Speaker Change: The customers that we have, our legacy customers, through the Voltrek acquisition are, for the most part, growing and we've added new customers.
Mike Jenkins: Yeah, we, I would say that the cross-selling piece is a growing area; it's still, you know, not the majority, but we have a very significant pipeline, which we expect as we continue to move forward to grow that business. The customers that we have, our legacy customers through the Voltrek acquisition are, for the most part, growing. And we've added new customers just through that team's efforts on top of that, as well as working with key suppliers and others on opportunities.
Speaker Change: just through that team's efforts on top of that.
Speaker Change: as well as working with key suppliers and others.
Mike Jenkins: That may not have come through cross-selling per se, but those are also new opportunities which have been created in the business. So it's a combination of legacy customers growing, new customers that are coming from the EV team that they're sourcing, and a growing base of cross-selling.
Speaker Change: on opportunities that may not have come through cross-selling per se, but those are also new opportunities which have been created in the business. So it's a combination of legacy customers growing, new customers that were coming from the EV team that they're sourcing, and a growing base of cross-sellers.
Mike Jenkins: And maybe just for a little more context, just since the acquisition of Voltrek, they have done business in 29 states, as far away as Hawaii. So it is no longer just a Northeast-centric business. That certainly is where a lot of their business occurs, but that breadth has certainly expanded over the last 18 years and 24 months.
Speaker Change: And maybe just for a little more context, just.
Speaker Change: Since the acquisition of Voltrek, they have done business in 29 states, as far away as Hawaii, so it is
Speaker Change: No longer just a Northeast-centric business. That certainly is where a lot of their business occurs, but that breadth has certainly expanded over the last 18 to 24 months.
Unknown Attendee: Thank you; that's it for me.
Speaker Change: Thank you, that's it for me.
Operator: Your next question comes from the line of Chris Sakai with Singular Research. Please go ahead.
Speaker Change: Next slide.
Speaker Change: Your next question comes from the line of Chris Sakai with Singular Research. Please go ahead.
Unknown Attendee: Good morning. Could you elaborate on the assumptions underlying the 10-15% top-line growth guidance for fiscal 2025? Specifically, what factors are expected to drive the difference between the lower and upper ends of this range?
Speaker Change: Good morning. Could you elaborate on the assumptions underlying the 10-15% top-line growth guidance for fiscal 2025? Specifically, what factors are expected to drive the difference between the lower and upper ends of this range?
Mike Jenkins: Well, we have different We always go through and look at projects and customers in our pipeline, what is committed to hit, what is likely to hit, etc. And make sure that we feel like we've got an adequate amount of contingency built in when we talk about those projects and forecasts. So, we have a lot of things that I referenced in my comments, larger projects in the technology space, government space, etc., which are anticipated to start in the second half of the year.
Speaker Change: Well, we have different, we always go through and look at projects and customers in our pipeline.
Speaker Change: What is committed to hit, what is likely to hit, et cetera, and make sure that we feel like we've got an adequate amount of contingency built in.
Speaker Change: We talk about those projects and forecasts. So we have a lot of things that I referenced in my comments, larger projects in the technology space, government space, et cetera, which are anticipated to start.
Speaker Change: in the second half of the year. And so clearly that's built into our guidance along with other activities. The EV business, as we've mentioned, will grow approximately at least 50% this year from a base of 12 last year to 18.
Mike Jenkins: And so, clearly, that's built into our guidance along with other activities. The EV business, as we've mentioned, will grow approximately at least 50% this year from a base of 12 last year to 18 plus this year. So that's all built into the guidance along with the four to $5 million of contraction on the main.
Speaker Change: Plus this year. So that's all built into the guidance along with the four to five million dollars of contraction on the maintenance side
Unknown Attendee: Okay, thanks, and then consider the import tariffs on Chinese electric vehicles and recent results and commentary from companies like Tesla and GM. Are you observing any hesitance from clients regarding the EV opportunity?
Speaker Change: Okay, thanks, and then.
Speaker Change: Are you observing any hesitance from clients regarding the EV opportunity?
Mike Jenkins: No, not at this time. You know, I, it's a question we get asked quite a bit. I think there's clearly some. You know, EVs in general are in the news a lot. We get asked a lot about the political situation and the upcoming elections, and what we see is how that potentially could impact it. I mean, we really see EVs are a growing part of our transportation system. What's key for them to be successful where they are today and growing in the future is infrastructure.
Speaker Change: No, not at this time. You know, it's a question we get asked quite a bit. I think there's clearly some
Speaker Change: You know, there are EVs in general in the news a lot, we get asked a lot about the political situation and the upcoming elections and what we see is how that potentially could impact it.
Speaker Change: I mean, we really see the EVs are a growing part of our transportation system. The what's key for them to be successful where they're at today and growing in the future is infrastructure.
Mike Jenkins: And a lot of these projects have been funded, and the money has already been appropriated from the federal level to the state. So we really don't see any impact on the infrastructure. Regardless of whether EVs, the rate of change slows to some degree or accelerates, I think the need for infrastructure is significant and will be a continuing driver over the next, you know, let's say five to seven years.
Speaker Change: And a lot of these projects have been funded, and the monies have already been appropriated from the federal level to the states.
Speaker Change: So we really don't see any impact on the infrastructure, regardless of whether EVs the rate of change slows to some degree or accelerates. I think the need for infrastructure is significant and will be a continuing driver over the next, you know, let's say five to seven years.
Unknown Attendee: Okay, thanks. And lastly, regarding the price negotiations with legacy maintenance customers, is this issue now resolved, or is there more to address?
Speaker Change: Okay, thanks. And lastly, regarding the price negotiations with legacy maintenance customers, is this issue now resolved or is there more to address?
Mike Jenkins: So we basically addressed all the issues that we had in the maintenance business, as referenced in Per's comments. In addition to the top line and the customer situation, we have taken some restructuring actions to right-size that business to make sure that we have the right cost structure in place moving forward as well.
Speaker Change: So we basically addressed all the issues that we had in the maintenance business.
Speaker Change: As referenced in Per's comments, in addition to the top line and the customer situation, we have taken some restructuring actions to right-size that business to make sure that we have the right cost structure in place moving forward as well.
Unknown Attendee: Okay, great. Thanks for the answers.
Speaker Change: Okay, great. Thanks for the answers.
Operator: Your next question comes from the line of Bill Dezellem with Teton Capital and Market Management. Please go ahead.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Bill Dezellem with Titan Capital Market Management. Please go ahead.
Unknown Attendee: Thank you, group of questions. First of all, you referenced in the release the success that you're having with the value products on the lighting side. What, when you look at the market, what is the split between value and premium? And I don't know if premium is the categorization for the other part of the market, but how does that compare to the industry? How does the industry look?
Bill Desillon: Thank you, group of questions. First of all, you referenced in the release the success that you're having with the value products on the on the lighting side.
Bill Desillon: When you look at the market, what is the split between value and I don't know if premium is the categorization for the other part of the market, but how does that, how does the industry look?
Mike Jenkins: Hi Bill. Yeah, that's a good question. Clearly, you know, like in all industries, when you get into kind of a good, better, best situation, the further you go up the pyramid, and the further up in pricing, the smaller the pyramid in terms of the addressable market. Really, the strategy for us getting into this was that we did recognize that we were missing a larger potential volume piece that we were currently operating. And so we launched Triton Pro, particularly to help our ESCO partners and our distribution and agent partners access that market.
Bill Desillon: Hi, Bill. Yeah, that's a good question.
Bill Desillon: Clearly, you know, in like in all industries, when you get into kind of a good, better, best situation, the further you go up the pyramid, and the further up in pricing, the smaller the pyramid in terms of addressable market. Really, the strategy for us getting into this was we did recognize that we were missing a larger
Bill Desillon: potential volume piece that we were currently operating in.
Bill Desillon: And so we launched the Triton Pro, particularly to help our ESCO partners and our distribution and agent partners access that market.
Mike Jenkins: We're very comfortable that, in terms of our progress, we're seeing increased sales and significantly increased quoting from that. I do believe that most of that has been additive to the business at this point, so we feel pretty good about that. I can't give you a precise answer as to how much more significant that band is, but it is larger from a market size standpoint than the one that we've traditionally operated in and is opening up some new avenues for additive sales.
Bill Desillon: We're very comfortable that in terms of our progress, we're seeing increased sales and significantly increased quoting from that.
Bill Desillon: I do believe that most of that has been additive to the business.
Bill Desillon: at this point, so we feel pretty good about that. I can't give you a precise answer as to how much more significant that band is, but it is larger from a market size standpoint, we believe than the one that we've traditionally operated in and is opening up some new avenues for additive sales.
Mike Jenkins: And when you look at the Triton product, what do you see as your competitive differentiation or advantage versus the competing products that are already out there?
Speaker Change: That's helpful. Thank you. And when you look at the Triton products, what do you see as your competitive differentiation or advantage versus the competing products that are already out there?
Mike Jenkins: Yeah, great question. When we built the Triton Pro line, that basically is incorporating a lot of the features and benefits that people expect from Orion. That doesn't mean it's all it's the same product as the Harris, which is a signature product. But in terms of relative to our competition, things like temperature ratings, efficiency, warranty, etc., are all at the upper end, which is where Orion plays. In whatever price tier we're in, we want to be at the upper end of that in terms of quality features, reliability, etc. So we feel that, relative to that new set of competitors and that new set of competitive landscapes that we are differentiating.
Speaker Change: Yeah, great question. When we when we built the Triton Pro line
Speaker Change: That basically is incorporating a lot of the features and benefits that people expect from Orion.
Speaker Change: That doesn't mean it's all, it's the same product as the Harris, which is a signature product. But in terms of relative to our competition, things like temperature ratings, efficiency,
Speaker Change: etc., are all at the upper end, which is where Orion plays.
Speaker Change: Price tier, essentially, we're in. We want to be at the upper end of that in terms of quality, features, reliability, etc. So we feel like relative to that new set of competitors and that new set of competitive landscape that we are differentiating.
Unknown Attendee: Great, thank you. And I'm going to switch gears entirely here. You mentioned in your opening remarks that you are hopeful that you have more business coming from the ESCO that was involved with the German military base. Is that additional business that you are hopeful for, is it another base, or something entirely different? And would you please characterize how you see that unfolding?
Speaker Change: Great, thank you. And I'm going to switch gears entirely here. You mentioned in your opening remarks that you are hopeful that you have more business coming from the ESCO that was involved with the German military base.
Speaker Change: Is that additional business that you are hopeful for, is it another base or something entirely different? And would you please characterize how you see that unfolding, please?
Mike Jenkins: That is a super ESCO that we've worked for historically. We've done a number of installations and retrofit projects, both domestically and now this large one abroad. We have other opportunities in our pipeline with this super ESCO and are hopeful, optimistic, that some of those will convert this year.
Speaker Change: Jones
Speaker Change: Yeah, that is a super ESCO that we've worked for historically. We've done a number of installations and retrofit projects.
Unknown Attendee: And those other opportunities fall into what type of Facility Characteristics?
Speaker Change: both domestically and now this large one abroad. We have other opportunities in our pipeline with this Super ASCO and are hopeful, optimistic that some of those will convert this year.
Speaker Change: And those other opportunities fall into what type of facility characteristics?
Mike Jenkins: Right, so some of those are, a number of those are DOD kind of bases.
Speaker Change: Right, so some of those are, a number of those are DOD kind of bases or facilities.
Mike Jenkins: Great. Thank you. Sorry Bill, I just want to clarify, DOD, Department of Defense, just to clarify. Great. Thank you. And is it domestic or outside the U.S.?
Speaker Change: Great, thank you.
Speaker Change: Sorry Bill, I just want to clarify. EOD is Department of Defense, just to clarify.
Speaker Change: Great, thank you. And domestic or outside the U.S.?
Mike Jenkins: Both. We're working on domestic as well as some international opportunities.
Speaker Change: both. We're working on domestic as well as some international opportunities.
Unknown Attendee: Great, thank you. And then I have one additional question. You talked about the EV or Voltrek business at $18 million in revenue this year. You have $11 million from the Eversource contract that you anticipate completing this year. That means you only need $7 million from your $45 million of pipeline that you referenced. That seems very doable, if not potentially quite conservative. Can you provide some additional perspective behind that? And if we're getting ahead of our skis here, or whether there is some conservatism.
Speaker Change: Great, thank you. And then one additional question. You talked about the EV or Voltrek business at $18 million of revenue this year.
Speaker Change: You have $11 million from the Eversource contract that you anticipate to complete this year. That means you only need $7 million from your $45 million of pipeline that you referenced.
Speaker Change: That seems very doable, if not potentially quite conservative. Can you provide some additional perspective behind that? And if we're getting over, you know, ahead of our skis here, or whether
Mike Jenkins: Yeah, I think certainly that there's a significant pipeline out there. You're right in terms of the general math and how it works to get to the 18. We feel good about reaching the 18 level and think there could be some upside from there. But again, the year is early, and we'll see how these projects unfold. And it's nice to see a growing pipeline.
Speaker Change: whether there is some conservatism.
Speaker Change: Yeah, I, I think, um, certainly that, yeah, they're.
Speaker Change: There's a significant pipeline out there. You're right in terms of generally the math and how it works to get to the 18.
Unknown Attendee: And then one, thank you for that. And then one additional question tied to that is, as you've pointed out in the release, there's $7 and a half billion in government funding for a charging station. 45 million is not even a rounding error in that. So are you seeing the number of opportunities exploding or about ready to explode that you will potentially have in your pipeline? How are you thinking about that?
Speaker Change: And then one, thank you for that. And then one additional, I guess, question tied to that is, as you've pointed out in the release, there's seven and a half billion of government funding for charging stations.
Speaker Change: 45 million is not even a rounding error in that. So are you seeing the number of opportunities
Speaker Change: Exploding or about ready to explode that you will potentially have in your pipeline. How are you thinking about that?
Mike Jenkins: A lot of that government funding is for the NEVI, which is the National Electric Vehicle Infrastructure, which came out of the Infrastructure Act. The way government money tends to flow, at least federal money, is number one, slowly, and number two, it goes from the Fed to the states, then the states have to go through their processes to disperse the monies. And that whole kind of timeframe, we're just starting to see some of that funding hit states moving forward, I think this calendar year, the second half in particular, and accelerated into next calendar year as well. So we are participating in quoting some opportunities to gain access to those funds. But it's just really starting right now.
Speaker Change: Yeah, a lot of that government funding is for the NEBI.
Unknown Attendee: Great. Thank you. I appreciate the time.
Speaker Change: And that whole kind of time frame, we're just starting to see some of that funding hit states
Speaker Change: second half in particular, and accelerated into next calendar year as well. So we are participating in quoting some opportunities to gain access to those funds, but it's just really starting right now.
Mike Jenkins: This concludes the Q&A session. I'll now turn the conference back to Mr. Jenkins for the closing remarks.
Bill: Thank you, Bill.
Bill: This concludes the Q&A session. I'll now turn the conference back to Mr. Jenkins for the closing remarks.
Mike Jenkins: Thank you all again for joining us today. We look forward to updating investors when we report our Q2 results and as we progress through fiscal 25. We also hope to speak with you at an upcoming investor event, including the Sudoti virtual conference on Thursday, August 15, the HC Wainwright Global Investment Conference in New York on September 9th through the 11th, and the LD Micro main event in Los Angeles on October 29th through the 30th.
Mr. Jenkins: Thank you all again for joining us today. We look forward to updating investors when we report our Q2 results and as we progress through fiscal 25.
Speaker Change: We also hope to speak with you at an upcoming investor event, including the Sidoti virtual conference on Thursday, August 15th.
Speaker Change: The H.C. Wainwright Global Investment Conference in New York, September 9th through the 11th, and the LD Micro Main Event in Los Angeles, October 29th through the 30th.
Mike Jenkins: Please contact your conference rep to request a meeting. You may also contact our investor relations team with any questions concerning today's call or to schedule a call with management. Contact information is in today's press release. Thanks again, and have a great day.
Speaker Change: Please contact your conference rep to request a meeting. You may also contact our investor relations team with any questions concerning today's call or to schedule a call with management.
Speaker Change: Contact information is in today's press release.
Operator: Thank you. This concludes today's conference call. You may now disconnect.
Speaker Change: Thanks again and have a great day.