Good day, ladies and gentlemen, and welcome to Orion Energy’s Third Quarter Fiscal 2015 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. [Operator Instructions] And as a reminder, today’s conference is being recorded. I’d now like to turn the call over to Adam Prior with The Equity Group.

Thank you. The company issued the announcement of Orion’s fiscal 2015 third quarter and nine months results this afternoon. The company has made available on accompanying slide presentation on its Web site at www.oesx.com in the Investor Relations section. While the format of the discussion will not refer to any slides, particularly, we encourage investors to use the document during today’s presentation. I will now read the Safe Harbor statement. Remarks that follow, including answers to questions, include statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally identified as such because of the context of such statements will include words, such as believe, anticipate, expect, or words of similar import. Similarly, the statements that describe future plans, objectives, or goals are also forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different. Those risks include among others matters that we’ve described in our press release issued this afternoon and in our filings with the Securities and Exchange Commission. Except as described in these filings, we disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly conference call, if at all. With us from Orion is John Scribante, Chief Executive Officer; and Scott Jensen, Chief Financial Officer. With that, I’ll turn the call over to John. Please go ahead, John.

Thank you, and good afternoon. And thank you all for joining us. This afternoon we will discuss Orion’s current operations including what’s driving our sales namely the increasing market adoption for our LED products, after which Scott Jensen, our CFO, will detail our financial results, and our new financing that we announced today. Then, I will return to discuss a number of growth initiatives that we are implementing to best position Orion for growth in the years ahead. Our total revenue for the quarter was $26.1 million for the fiscal 2015 third quarter compared to $27.7 million in the prior year period. Looking exclusively at lighting and excluding non-core solar revenues, the sector that we no longer pursue, lighting revenues increased 24% year-over-year and 96% over the fiscal second quarter, all of this during a period of massive transition in the industry. Product revenue from our LED products increased to a record $12.7 million during our fiscal ’15 third quarter compared to $1.4 million in the prior year period, an increase of 807%. Due to recent product releases, during the middle of last quarter and customer demand, we believe LED product sales will continue to grow and reach between 50% and 60% of total product revenues during the fourth quarter of fiscal ’15 and higher as we move into our 2016 fiscal year. We continue to see strong LED sales growth across all of our product categories. We have executed on strong quarter-over-quarter growth in LED and with an increasing array of product offerings, we only expect to see this continuing into future quarters. We have seen customer adoption rates for our LED products improving across all of our target markets. In the short-term, our top line results were within our expectations for the quarter with the exception of a…

Thank you, John. I’ll briefly discuss our financials, but I encourage each investor to review our press release and our third quarter 10-Q. Orion’s total revenue was $26.1 million for the fiscal 2015 third quarter, compared to $27.7 million in the prior year period. Lighting revenues increased 24% year-over-year and increased 96% over the fiscal 2015 second quarter. Total revenue declined only as a result of the year-over-year decline in our non-core solar business of $6.5 million for the quarter, which is a sector that Orion no longer pursues. However, we’ve been encouraged by a solid backlog and pipeline of new product orders, specifically growth in our LED product sales. Lighting backlogs have increased 282% on a trailing 12 month basis and we expect to see continued growth in bookings which will help, but not eliminate the quarter-to-quarter variability. Product revenue from Orion’s LED products increased to a record $12.7 million or 54% of our total lighting products during the fiscal 2015 third quarter compared to $1.4 million in the prior year period. Third quarter LED lighting product sales increased 807% over the prior year’s third quarter. Due to recent product releases and reseller interest, Orion believes LED product sales will continue to grow and reach between 50% to 60% of total product revenues during our fourth quarter of fiscal 2015 and to greater levels during our fiscal 2016. As John mentioned earlier, we’ve adjusted our expectations of total revenue for fiscal 2015 to range between $72 million and $74 million from a range of $80 million to $88 million. This revision is partially related to a multimillion dollar order that was delayed due to a utility approval that with construction time will not complete in the fourth quarter as we had originally expected. We do expect to at a…

Thanks, Scott. With regards to our strategy, last quarter we outlined our continued expansion of the Orion brand and launch of several new products. Our newly released line of Orion products have been favorably received by our customers as is reflected in the significant increase in Q3 sales. We offer and develop top-of-the-line products in terms of efficiency, performance, modularity and fixture life, and we will continue to do so. To achieve rapid sales growth, we needed to develop and sell the best products with the easiest method to install and then ultimately delivering the lowest cost of install and the lowest total cost of ownership, but our products are only part of our strategy. The industry we built our business on no longer exists. Speed to market, mass customization of the customer experience, incessantly creating new forms of marketing and rapidly flexing design, assembly, and inventories, heavily present today and which did not exist for Orion the same time last year. We recognize that in order to stay ahead of a rapidly changing and growing market, we need to be ahead of these curves. I like to announce a couple of specific longer-term changes in support of our new brand and in response to the market paradigms that we believe will better position Orion to grow well into the future, as well as be in front of this market demand. First, we’ve always been known for our innovative products. And to dominate in the LED world, we must elevate our capabilities with the finest resources available. With this objective in mind, we're announcing the creation of a unique innovation hub to be located in Chicago, Illinois. Our innovation hub will be charged with developing our next generation of ISON technology, as well as the new products that will define…

[Operator Instructions] The first question comes from Steve Dyer from Craig-Hallum.

Thanks. Good afternoon, guys.

Hi, Steve.

Hi, Steve.

Couple questions. I'll start with the -- with your distribution network. Are you sort of where you want to be as it relates to distributors, ESCOs, territory leaders and now just sort of a matter of getting them fully up to speed and experience and so forth or are you still looking to add in that area?

Good question. There is still geographic gaps that we’d like to fill in. So these would be markets were either historically or never had coverage or good coverage, and as a result we’re continuing to explore that. But in cases where we had existing partner relationships, existing ESCOs and what have you, we’re in pretty good shape I think there now. It’s a matter of building scale and helping them see greater value and representing Orion’s products to their customers and providing them with sales resources and marketing efforts and really building upon what we have. I don’t think our need right now is in necessarily more of these distributors’ partners other than to fill in geographic gaps.

Okay. That’s helpful. Wondering if you could give a little bit more detail on the margin pressure in the quarter, if it was confined to a particular product line and then, I mean, is that pretty much behind us work through the inventory by the end of this fiscal year or do you anticipate that will linger a little bit in the next year?

Steve, good question. So we have really confined our margin pressure to one product line. We have identified the opportunities we’ve already negotiated, lower costs on a go forward basis as we see the volumes increasing. But as we discussed on the call, we do need to work through our existing purchase commitments. We expect to be able to do that in our fourth quarter here so that as we head into fiscal ’16, we can return to the gross margin levels that we’ve had historically experienced and that we’re experiencing with some of our other LED products including the new products that were recently launched.

Okay. And then, kind of brings to my next question with the cost of components decreasing in this area given the scale and so forth. And then I'm guessing ASPs will fall over time, they certainly are in a residential level. Do you have the ability to sort of lock in margins as you go such that you're not kind of stuck between the time you book an order and various costs in that -- in filling that particular order?

Yes, we can. So I don’t believe we’ve reached the bottom either on pricing and some of that will be as we gain increases in volume and we get a little leverage in terms of buying power and net [ph] increases. We do expect that there will be some declines on ASPs and that some of the margin pricing that can’t be gained will be passed to the customer to help justify the projects and close more business. Our expectation is we are very pleased with the progress we’ve made, but we also believe we will continue to be able to take cost out of the business.

And Steve, one other thing is, the electronics, the chips primarily are becoming a smaller and smaller portion of the total cost where other materials, metals, labor and things of the sort which are much more in our control provide some opportunity as well in the curve just seem to be flattening.

Okay. John, the $10 million I think I heard you say kind of $10 million of costs taken out of the business. Could you elaborate a little bit more on kind of where you find that? Is it headcount is it streamlining processes, is that a COGS issue, is it an operating expense event? How should we think about that into fiscal ’16?

Sure. Well, two different questions. I had to think about it where it came from. Where it came from early is as I had laid out some of the initiatives in the latter part of our comments, when you realign your manufacturing to create more of a variable cost model and you look at how you’re going to market in the marketing resources and sales resources, what have you, and as you are looking at the entire business and looking to realign resources that historically had been in a florescent model, which is a much more mature, much more stable environment and you’re investing those resources into more of a growth or I don’t want to really say a start-up, but you get a rapidly growing sector of the business. We really look it as two different businesses inside Orion. So as you go through the exercise of reallocating and realigning your investments, you find efficiencies and you create opportunity to where you don’t have to spend money in the same way you did before. So it will come out of COGS, it will come out of the SG&A, primarily those two areas and it impacts the whole business. There is just -- again, as you look at -- if you were to start-up an LED business, you would allocate resources differently than if you were managing a more maturing business. So I guess that's the best way I can explain it [multiple speakers].

Okay. One last question then for me, is there a particular end market where you guys are seeing sort of the most traction and what kind of you think will drive growth? Maybe there is a couple of them out into ’16?

Yes. There is certainly new markets that we are just now really migrating into the -- I guess, what I’d call the more professional office space and retail as well as hospitals and schools and I guess to some degree the office side of the federal government, that -- that's clearly is driving a lot of our business right now. The automotive sector has found a tremendous amount of interest in the Orion product on both sides of the world, both over in Asia as well as in the domestic. We believe retail is clearly a growth sector for us both due to the exterior product line as well as our interior. It’s a splendid feeling and I’m and strip fixtures. So I think those are some of the greatest growth markets that we see. I think in terms of exterior, that’s still strong, but our presence in High Bay, I believe is going to become a strong growth driver possibly later in the fiscal year.

Great. I will hop back in the queue. Thanks.

Thanks, Steve.

The next question comes from Craig Irwin from ROTH Capital Partners.

Good evening, gentlemen. Congratulations on the really impressive LED product growth.

Great. Thank you.

Thank you, Craig.

I wanted to dig in a little bit on some of your comments you’ve made. The inventory purchase commitments that are a little bit of a headwind for gross margins, can you clarify for us that whether or not this is in the LED products if it's a subset of the overall mix and roughly how big a margin headwind is this? Is this couple of hundred basis points bigger or smaller? How should we be looking at that and how do you anticipate this rolling off? Is this something where we can look at discrete timeline or is this likely to taper over time?

Yes, Craig, so good questions. The opportunity on material input costs is really across all LED products. Its chips, it's boards, and so we’re already -- we’ve already negotiated improvements from it is significant to us, more than 100 basis points. Its significant enough that we fully expect as we work through the existing inventory commitments and again we’re anticipating that through the end of our fiscal year we’ve really worked through all of that and we’re well positioned for fiscal ’16, that we’re going to be able to return margins around LED products to similar levels that we’ve experienced with fluorescent.

Okay, excellent. And then that's a segue into my next question. So in your release you’re very clear, stripping out the effect of some of the warranty charges on margin sequentially you saw an improvement from 11.5% to 17%. How wide a delta do you see for the linear fluorescent products versus LED products today? And if we were to completely normalize this inventory effect, would that push you more into your longer-term target range or would you need the additional revenue coverage that you're expecting to develop over the next several quarters?

I'll just comment on first part of that and then Scott can. The delta, there is two types of products that we sell. One is much more of a commodity, broader product line with lots of demand that's going to carry a lower margin than our historical fluorescent. But then there is another side of our business that we expect to be equally as strong that’s going to carry margins very similar to what we’ve done in fluorescent. So Scott?

Yes. And so the shift Craig, we do anticipate that our fluorescent margins are going to decline as volumes decline on that side of our business. We want to have the buying power, we're not going to have the same level of run rate through the manufacturing facility, but that we are going to see that influx on the LED margins and be able to get back up within -- we will give more guidance on fiscal ’16 as we get through our year-end call in a couple of months. But we see a clear path to being able to get margins back to where we’ve historically run and then as we’ve talked about leverage with our asset base to margins that reconcile to our longer-term targets.

Thank you. And then, my last question if I may, in your outlook commentary, Scott, you mentioned that certain other products, sales volumes of certain other products could potentially result in revenue more consistent with the original range, the original revenue guidance range for 2015. Can you give us more color about what products these might be? What might determine whether or not we actually see the revenue there and if this is something that helps contribute to the trajectory next year?

Yes, Craig, they’re really projects in nature. So there are several large opportunities in our pipeline. They are predominantly all LED products. But our ability to hit the original guidance as a function of the timing of those project orders coming in and giving us enough time to be able to manufacture the product get it out [technical difficulty] variability around construction cycles, utilities, everything that really John talk to about some of the challenges that we continue to see with some of these larger projects.

Great. Thank you for that and congratulations again on the strong LED growth.

Right.

Thanks, Craig.

Thanks, Craig.

I’m showing no further question. I’d now like to turn the call back over to John Scribante for closing remarks. End of Q&A

Well, thank you very much for being with us here today. We appreciate you taking the time and we look forward to talking to you again next quarter. Thank you and have a good day.

Ladies and gentlemen, that does conclude the conference for today. Again, thank you for your participation. You may all disconnect. Have a good day.