Good day, ladies and gentlemen, and welcome to Orion Energy's Fiscal 2019 Fourth Quarter Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today's conference is being recorded. I'd now like to turn the call over to Bill Jones. Sir, you may begin.

Good morning everyone and thank you for joining Orion Energy's Systems fourth quarter and fiscal 2019 conference call. Participating today are Orion's CEO, Mike Altschaefl; and CFO, Bill Hull. Mike will open-up today's call to discuss Orion's fiscal 2019 progress, financial performance and its business strategy and goals for fiscal 2020. Bill Hull will provide financial highlights and then we will open the call to questions. An archived replay of this call will be available later today in the Investor Relations section of Orion's corporate website. The call is taking place on Tuesday June 04, 2019. Remarks that follow including answers to questions include statements that the Company believes to be forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally will include words such as believe, anticipate, 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 risks that could cause actual results to be materially different than anticipated. Such risks include, among others, matters that the Company has described in its press release issued this morning and in its filings with the Securities and Exchange Commission. Except as described in these filings, the Company disclaims any obligation to update forward-looking statements. With that, I'll turn the call over to Mike.

Thanks, Bill. Good morning and thank you for joining our call today. Fiscal 2019 was a pivotal year for Orion, as we return the business to growth, with full year revenues increasing 9% to $65.8 million, driven by a strong fourth quarter performance. We also achieve solid improvements on the bottom line as a result of growth combined with our ongoing costs discipline and significant operating expense reductions achieved in fiscal 2018. We also achieved positive adjusted EBITDA for the second half of fiscal 2019. Key to our improved revenue performance was strengthened our major national accounts channel as well as growing engagement with our energy service companies or ESCO channel, our agent driven distribution channel performed below expectations. More important than the revenue growth we achieved in fiscal 2019 is the foundation we are building with a major national account, including a project valued at approximately 110 million in turnkey LED lighting and controls retrofit installations. We expect roughly 100 million of this project to be completed and recognized its revenue during fiscal 2020. This project is rooted in a few key areas that differentiate Orion from other larger commercial LED lighting providers, including our ability to provide high touch turnkey project management, from initial sight assessments to custom project design and manufacturing through to nationwide installation and controls integration. It was this unique offering of customized products and services, all highly coordinated, scheduled and managed by Orion that allowed us to prevail in this major national account opportunity versus far larger competitors. While we must continue to execute well on this project, there's also the potential for additional business from this customer in fiscal 2021 and beyond. Importantly, we believe that this model is repeatable with other national accounts and over the past year, we have focused our…

Thanks Mike. To quickly recap our performance, Orion's Q4 '19 revenue rose 49% to $22.4 million compared to $15.1 million in Q4 and '18, principally reflecting strength in our national account segment with orders from one customer. Gross profit rose 36% to $4.4 million in Q4 '19 compared to $3.2 million in Q4 '18. However, due to the impact of product mix and certain large national account customer project startup costs, gross margin decreased to 20% in Q4 '19 compared to 21% in Q4 of '18. Total operating expenses decreased 18.4% to $5.1 million in Q4 of '19 compared to $6.2 million in Q4 of '18, adjusted for a non-recurring item of $1.4 million for a contingency reserve reversal. Reflecting the benefit of our cost cutting efforts in fiscal 2018 combined with a revenue and gross profit increase, Orion's Q4 '19 net loss improved to $900,000 or $0.03 per share, compared with a net loss of $1.5 million or $0.05 per share in Q4 of '18. Importantly, Orion reported that is Q4 '19 adjusted EBITDA loss was $49,000 compared to an adjusted EBITDA loss of $600,000 in Q4 of '18. Turning to our full year results. Our fiscal [indiscernible] rose 9% to $65.8 million, from $60.3 million in fiscal '18, which came in at the end of our revised revenue goal of 5% to 10%. Revenue improvement was primarily due to increased sales to major national account customers. Gross profit was roughly flat at $14.6 million in fiscal '19 compared to $14.7 million in fiscal '18, as gross margin declined 22.1% in fiscal '19 compared to 24.3% in fiscal '18. The decline in gross margin was principally due to product mix on higher sales to large international account customer and related projects startup cost. Total operating expenses decrease 25% to…

Thank you. [Operator Instructions] Our first question comes from Eric Stine with Craig-Hallum. Your line is now open.

So to just start, I guess I'll start with the national accounts business. Clearly, you've been dedicating resources to that for some time, and if you're really starting to see the impact of that, just curious. Well, first of all, when you think about this national account, provided that you execute well, which you have been. There's no reason why there's not more business for this customer, so maybe thoughts on that? And then also in terms of your overall pipeline, have you noticed at all this is helping potentially in conversations with other national account customers?

Thanks, Eric. Couple of things, first, we do think that, given we will continue to perform well for this customer that there are ongoing opportunities with this customer in the future. And we would expect those things in developed over this year as we had through the fiscal year. And we will report on those when it's appropriate. The things we're doing beyond that, we do feel that when you do land a larger account like this that we found in the past is that it can increase some of the incoming request for proposals. But even with that, before that, we had seen some good activity in the RFP process and in the pipeline. In addition, what we are doing is that this particular customized product is a product that is retrofitting an existing fixture for this customer, and that particular fixture is a fixture that we believe is in many facilities with many companies throughout the country. So, it gives us the opportunity to also target particular customers who may have those fixtures and might be in the retrofit applications.

Well, in sticking with that and your outlook for fiscal '20 would seem to imply that the margins on this, and I don't know how much you can share. But I'll give it a shot, just that the margins seem pretty similar to your overall margin, at least that's how it's going to shake out. And then, the start-up costs that you saw in the fourth quarter. Is that something that we should view kind of one-time in nature? Or do you have those start-up costs as you continue through that customer's facility footprint?

I'll start on the answer for this one, Eric. I would think one should view that, most of the start-up costs would be behind us both in the fourth quarter of 2019, and I'm going to say, real early in this first quarter of 2020. This project has been in place for a while, and so a lot of the activities are in motion and some of the early startup costs are behind us. So, I would think you should assume that most of that startup aspect is behind us in fiscal 2019. From a market standpoint, I would agree with your comments. Go ahead, Bill.

Yes, I think, Eric, if you think about this project and some other projects, and we've been leaning out our organization over last couple years. And with this, we have a plan to take out some more costs to improve the margins here, and I would think I'd be fair to think about the business as in the mid-20s, in terms of gross margin where we're trying to get to right now.

And our next question comes from Amit Dayal with H.C. Wainwright. Your line is now open.

I had similar margin related questions, but I'd take them off-line to what Eric was trying to get at. But just in relation to the strong guide for fiscal 2020, post your announcements of the follow-on order you've received, consensus was calling for around 116 million in fiscal 2020. Your guidance has come in much higher. Just wanted to see, if there were any new developments post those announcements or at the LIGHTFAIR that is driving this stronger sentiment?

I wouldn't say there's anything particular that has changed real recently. Amit, we just said as you get further into this project and we look at our pipeline developing other areas and we're two months into our fiscal year, it just starts to give a little bit more visibility. So, we thought it was the appropriate time to give our initial revenue goal for fiscal 2020. And as we had through this fiscal year, we will update that each quarter as we get together and talk to us where things might be. But right now, we though very comfortable setting out this revenue goal range for fiscal 2020.

And just in the context of your comments around quarterly variance in revenues. The first quarter sequentially, how should we sort of see this position? Are you actively deploying again this large customer that you receive follow-on orders for? Or is that happening maybe later on in the fiscal year for you?

So, Amit, this is Bill. So, we're in full swing right now on the revenue side and our course could be kind of lumpy particularly in the holiday quarter. We have Thanksgiving and Christmas, which is our third quarter. So, that might be a little bit more of a tough quarter in terms of revenue just because of those holidays and what's happening. But other than that, we're in full swing and moving ahead.

Thank you. And our next question comes from Kurt Caramanidis with Carl M. Hennig Incorporated. Your line is now open.

Thank you, great pronunciation too. Congratulations guys on your recent success. Is there any opportunity for recurring revenue on this Internet of Things with your products or subscription fees or anything? Or is it all you buy it and you get it off?

It's a mix. We have chosen to say, tech agnostic, and so we work with 10 to 12 different technologies for controls and the integration of controls and can build those into our fixtures so there can be add-on platforms. What we have been able to achieve in certain situations is that by bringing a partner to the table, we may sometimes be able to have an agreement with that partner to share some of their ongoing software revenue from that customer for data analytics or other aspects that they might bring to the table. So, we are attempting to begin building a modest recurring revenue source from participating in some of the ongoing revenues that our partner controlled companies may achieve from a customer.

Great, yes, that would definitely help. Wall Street loves the recurring revenue model for sure. Thanks for taking the call. Appreciate it, good luck.

All right. Thank you.

Thank you. [Operator Instructions] our next question comes from George Gaspar, a private investor. Your line is now open.

Thank you and congratulations for the progress that occurred the last fiscal year and the momentum that you have gained. Just I'd like to stand a little bit on the Internet of Things applications. Two things on it, those 5G create a situation that will create a better even an expanded opportunity for you going Internet of Things into lighting systems? And the second half of my question is if this Internet of Things really kicks off for you, the existing lights that you've installed, the LEDs along the way. Would they be -- could you adapt the Internet of Things for those rights? Or would they have to be replaced by a new LED system that you've developed on a shorter term basis?

Thanks, George, appreciate your comments. On the 5G aspects, we -- it may or may not have an impact on it. We know the things that way perhaps could help in the future, sometimes we have a great deal of data collection going on through a control system, you could have some bandwidth issues. So, I think perhaps having 5G could broaden the amount of information that could be passing through these wireless systems, ultimately. So, it could have some impact, but I've not heard a lot in the industry so far about the impact of 5G. On your second question, one of the real positives I think about the Orion Solution is that many of our fixtures, even if a customer has decided not to integrate controls initially into their systems we allow a platform where the sensor can be easily attached to the fixture in the field at a later point in time. So the fixture stays in place, all the wiring stays in place, there is a control box that hangs on the top of the fixture that literally a person can go up and just plug it into the top of the fixture, and then integrate that control system into the system that the customer wants. So the fact that we have these upgradeable IoT solutions, we think is very positive for our customer base going forward. We're also seeing, increases in where people do want to have the sensors attached to the fixtures immediately. So we can both integrate them right into the fixture, or they can be a plug and play feature initially, or a plug and play feature in the aftermarket for our cause.

Okay, all right. And then, my second question is regarding the applications, exclusive of interior facilities, any chance of trying to broaden your offerings into for example, street lighting or sign lighting and that sort of thing?

You are correct that a lot of our business today has been on the inside of the buildings, both high bay a low bay distribution centers, et cetera. We do have a fairly substantial product offering in the outdoor category, which would be area lights, vapor type lights for agricultural purposes, garage lighting, exterior building lighting, and so we have some of that product. And I think we will continue to look at that areas where we can continue to develop and/or find products that fit the needs of our customers on the commercial industrial side for certain outdoor product.

Thank you. That concludes our Q&A period. I'll now turn the call over to Mike Altschaefl for any closing remarks.

Thank you, Daniel. I do want to mention that we will be presenting tomorrow the LD Micro Invitational in Los Angeles and look forward to seeing some of you at that conference. Thank you all for joining us on today's call and we look forward to updating you in our business progress and outlook on our next call. Have a great day. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines. Everyone have a great day.