• Revenue: Q3 '25 revenue was $19.6 million, down from $26 million in Q3 '24.
• Gross Margin: Improved 490 basis points to 29.4% in Q3 '25.
• Net Operating Loss: Improved to $1.5 million or $0.05 per share from $2.3 million or $0.07 per share in Q3 '24.
• Cash Generated from Operations: $3.8 million in Q3 '25.
• Cash Balance: Increased to $7.5 million in Q3 '25 from $5.2 million at prior year end.
• EV Charging Revenue: Up 48% year-to-date; Q3 '25 revenue was $2.4 million.
• Maintenance Revenue: $3.9 million in Q3 '25, with gross margin rebounding to 26.4%.
• Operating Expenses: Decreased 16.9% to $7 million in Q3 '25 from $8.4 million in Q3 '24.
• Adjusted EBITDA: Slightly positive in Q3 '25.
• Fiscal '25 Revenue Outlook: Reduced to a range of $77 million to $83 million.

• Warning! GuruFocus has detected 2 Warning Signs with OESX.

Release Date: February 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Orion Energy Systems Inc (NASDAQ:OESX) has secured seven new LED lighting contracts with a revenue potential of $100 million to $200 million over the next five years.
• The company has improved its total Q3 '25 blended gross margin percentage by 490 basis points to 29.4%, marking the second highest quarterly rate in seven years.
• Orion has reduced its annual break-even point by at least 20%, from approximately $105 million to $115 million to between $78 million to $85 million.
• The Voltrek EV charging solutions business has seen a 48% increase in revenue year-to-date, indicating strong growth potential.
• Orion's maintenance business gross margin rebounded over 2000 basis points to 26.4% in Q3 '25, showing significant improvement from the previous year.

Negative Points

• Orion Energy Systems Inc (NASDAQ:OESX) reported a disappointing Q3 revenue of $19.6 million, down from $26 million in Q3 '24.
• The company has faced delays in LED and EV charging project starts, impacting revenue and overall industry activity.
• Higher interest rates and a slowdown in new commercial construction projects have created headwinds for the lighting industry.
• The prospect of federal funding for EV charging is uncertain, with potential impacts on customer plans due to the new administration's stance.
• Orion's fiscal '25 revenue outlook has been reduced to a range of $77 million to $83 million, reflecting changes in the timing of new business projects.

Q & A Highlights

Q: Can you clarify the $100 million to $200 million revenue potential from new projects? Is this business already secured, or are these projections? A: The $100 million to $200 million projection is based on closed business, meaning we expect to actualize this revenue over the next five years. Additionally, there are other large opportunities in the final stages of the pipeline, which we hope to announce soon. - Michael Jenkins, CEO

Q: How much of the $100 million to $200 million pipeline is tied to government contracts? A: None of the pipeline is focused on the federal space. Some of it is in the municipal space, but there is no federal involvement. - Michael Jenkins, CEO

Q: Regarding project delays, are there any strategies to better anticipate or mitigate these changes? A: We plan to reset our costs and break-even point for fiscal '26 to ensure profitability despite potential delays. We are focusing on cost management and establishing a new break-even point to remain profitable. - Michael Jenkins, CEO

Q: Can you provide more details on the $5 million project with automotive OEMs? A: We work with two primary OEMs, cycling through their facilities for new builds and retrofits. One OEM is accelerating its LED conversion due to upcoming fluorescent bans, which is driving the project. - Michael Jenkins, CEO

Q: What are the practical benefits of the new business unit structure for customers? A: The new structure aligns sales and execution capabilities, creating distinct focus between solutions and partner businesses. This alignment allows us to better understand customer needs and tailor our offerings accordingly. - Michael Jenkins, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.