Good morning, everyone, and welcome to Orion Energy Systems Fiscal 2025 Second Quarter Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there'll be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I'll now turn the call over to Bill Jones, Investor Relations, to begin.

Thank you, Kathy, and good morning to everyone, and thank you for joining this call. Orion reported its fiscal 2025 second quarter results this morning. And Mike Jenkins, the company's CEO; and Per Brodin, Orion's CFO, will review its Q2 results, financial position and fiscal 2025 Outlook. Following their prepared remarks, 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. As a reminder, remarks and answers to questions that follow include statements which are forward-looking under the Private Securities Litigation Reform Act of 1995. Forward-looking statements typically include words such as anticipate, believe, expect, project, or similar words. Also, any statements describing future objectives and goals, company plans, or its outlook are also forward-looking. These forward-looking statements are subject to various risks that could cause actual results to differ materially from current expectations. Risks include, among other matters, those that Orion has described in its press release issue this morning, as well as in its filings with the SEC. Except as described therein, Orion disclaims any obligation to update or revise such forward-looking statements which are made only as of today. Reconciliations of certain non-GAAP financial metrics to their closest GAAP measures are also provided in today's press release. And now I'll turn the call over to Orion, CEO, Mr. Mike Jenkins.

Thanks, Bill, and thank you all for joining us today. Our Q2 results reflect continued strength in our Voltrek EV charging station business and a rebound in our maintenance services business. However, our LED lighting segment was impacted by customer delays as several projects slipped and are now expected to start in the second half of our fiscal year. Distribution channels, including energy service companies or ESCOs and electrical contractors, were also impacted with some timing delays as well as some softness in new construction markets. Year-over-year comparables for the second quarter were influenced by the completion of a large European retrofit project for a global super ESCO in Q1 2025, which commenced in Q1 2024 and benefited the year ago period, but not this quarter. Despite customer delays in the start of new retrofit projects, overall we are seeing robust quoting activity in our LED lighting project business coming from both new and existing customers. We recently received POs that will start a new and expected multi-year relationship for a products distributor with over 500 locations. Orion will be providing LED lighting products and retrofit turnkey project management services and we anticipate the total program value to be in excess of $10 million. This project will be spread over several years and expected to begin this quarter. The multi-year full program contract is in the final stages. And once complete, we plan to make further announcements. Last month, we secured a five-year $25 million contract to supply LED lighting fixtures for new store construction projects for our largest customer, a major national retailer. This contract extends our existing relationship with this customer who expects to increase the number of new stores over the next five years. We are also seeing a nice rebound in automotive OEM activity this year,…

Thank you, Mike. Q2 2025 revenue was $19.4 million versus $20.6 million in Q2 2024, principally reflecting the delay of some anticipated LED lighting projects in the recent period, which we now expect to start later this fiscal year. Additionally, the year-over-year lighting segment revenue comparison was impacted by a large DoD retrofit project in Europe that benefited the year ago results but was completed in the first quarter of the current fiscal year. In contrast, our EV charging station segment revenue grew 40% to $4.7 million in Q2 2025 from $3.4 million in Q2 2024. The Q2 2025 performance benefited from construction contracts for customers of Eversource Energy's EV Make Ready program, as well as follow-on orders from a large Boston Public Schools pilot school bus project. Our maintenance services segment also grew to $3.8 million in Q2 2025 versus $3.6 million in Q2 2024, as new opportunities more than offset the impact of the last legacy Stay-Lite lighting contracts. Looking at the first six months of fiscal 2025, revenue rose 2.8% to $39.3 million from $38.2 million in the prior year period, also driven by EV segment growth. Overall, our gross profit percentage, or gross margin, increased 90 basis points to 23.1% in Q2 2025 versus 22.2% in Q2 2024, driven principally by maintenance, segment profitability improvements as a result of Orion's pricing discipline. Gross margin on Orion's maintenance services improved 2,300 basis points compared to the prior year quarter. Reflecting the turnaround in the maintenance segment margins and our overall growth outlook, we expect Orion's blended gross margin to reign strong in the remainder of fiscal 2025. Operating expenses decline to $7.7 million in Q2 2025 from $8.7 million in Q2 2024, principally due to fixed costs and other compensation-related reductions and a $500,000 reduction in the…

Thank you. At this time, we'll conduct the question-and-answer session. [Operator Instructions] Our first question comes from the line of Eric Stein with Craig-Hallam Capital Group. Your line is now open.

Hi. Good morning. So maybe as you talked about the 10% year-over-year revenue growth expectation, can you just talk through a little bit how you see that playing out between the various segments I mean -- obviously EV charging up I think you tempered your expectation for maintenance you know is this something where you expect even with the project pushouts that LED that the lighting is flat up down how should we think about that?

Yeah we do expect our LED lighting business to recover in the second half of the year and accelerate especially into our quarter four. We do expect our EV business to maintain a similar pace or even slightly above, as we head into the second half. And from a maintenance standpoint, we've been very pleased with the revenue recovery that we've seen post restructuring and essentially exiting those several unprofitable contracts and so we do think that the maintenance business now will come in slightly under the range that we announced as we went into the year of being down $4 million to $5 million. Obviously though a much more profitable business in contributing to our bottom-line.

Got it. And you did just touch on this but maybe a little more on it. Is this, and maybe you said it in the prepared remarks and I missed it, but is this something we should think about results being more skewed to 4Q versus 3Q in light of what you just said?

Absolutely. Yep. We do expect a stronger Q4.

Got it. And then, I mean, I can appreciate, and I know that these are all really customer-directed project push-outs, but is there any way that you internally are looking at this and saying, how can we better anticipate this in our outlook or just in the overall business going forward because it's been kind of a frequent issue you've had with some of your customers?

Yeah, it is a very challenging thing, Eric. I mean, obviously we talk about that quite a bit. It's difficult to anticipate when individual customers may push things out because it's related to other projects that they may have as a company, ex cetera. The best thing that we can do as a company, because we don't necessarily control that, is to continue to build our pipeline so that we have more projects and more contingency around that. So when those things do occur, we have enough other pipeline that can overcome it. So that's really our focus and we're -- as I referenced in my remarks, we're pleased to see the growth in our pipeline with some very exciting new projects in the works.

Okay, thank you.

Thank you. Operator, are you there?

Oh, yes, excuse me. Our next question comes in the line of Amit Dayal with HC Wainwright. Your line is now open.

Thank you. Good morning, everyone.

Good morning, Amit.

Just at the macro level, guys, you know, with respect to the election results, Any impact or exposure to the discussed sort of tariff changes that may be implemented?

Yeah, I mean that's an interesting point. If there were to be further tariffs that were put in place against China or really across the board any import situation, certainly we do get a number, as the entire industry does, components from abroad. At the same time, you know, being a domestic manufacturer, we have a lot of our content which comes from local and domestic sources as well. So, if that would be put in place, I would say that in general should be favorable for Orion, particularly in the lighting business relative to our competitors.

Understood. And then along those lines, right, I mean, you know, we've seen a lot of manufacturing build-out happening here in the US. How are you positioned to, you know, participate in some of those opportunities? It looks like from the commentary that you may already be involved in, at least bidding on some of this on-shoring related infrastructure build-out. Can you give us any clarity on what from there is in the pipeline that you are trying to participate in?

I'm going to repeat the question back to make sure I have it correctly, Amit. So basically it's about some of the on-shoring investments in terms of new capacity and buildings and those types of things as a result of on-shoring.

Manufacturing buildings that are coming up, warehouses are coming up, you know, to support all of this on-shoring activity. Just want to understand, you know, if you're already participating in some of that or are you -- [indiscernible] to participate in that?

Yeah. Okay. I understand now. Thank you. Absolutely, we do. We -- that's -- new builds is a significant part of our distribution business and really our focus there and that's still a project business through our distribution channel. So that market in general for new builds has been a little soft for everyone due to cost of capital reasons and those types of things. So the on-shoring is a counter to some of those trends from cost to capital but we are very active in that space and as I referenced in my remarks Triton Pro which is our new product line launched last year is doing quite well and is very well-positioned for that new build market as well as retrofits.

Understood. That’s all I have guys. I'll take my other questions offline. Thank you so much.

Thank you, Amit.

Thank you. [Operator Instructions] Your next question comes to the line of Bill Dezellem with Tieton Capital Management. Your line is now open Bill.

Thank you. Good morning. Group of questions here. Let me start, if I may, with the restructuring that you did. Would you please walk through in a bit more detail what it was that you did?

Morning, Bill. Say that there were a couple of primary components within the maintenance division. As part of the lapse of the contracts that did not achieve the kind of pricing levels that we had hoped. We scaled back on the level of our self-performed technician force. So that would have been within COGS that we took out personnel that were self-performing within our maintenance division. Then there were some also supporting people that also supported those contracts which were also a component of COGS. So that's what that severance related to. There were some G&A costs also taken out, the largest of which was the lease facility that they operated out of, which the $300,000 charge that we incurred in Q2, about half of that was a lease breakage fee to get out of that lease.

Great. Thank you. And then you had – I’m sorry Per go ahead.

And I... Oh, I'm sorry, Per. Go ahead.

Yeah, I was going to clarify one thing. For the Q2 costs of $300,000, all those costs would have been, I'll say, charged to G&A, just if you're considering that from what line those hit.

Great, thank you. And then relative to the comments that you expect a larger weighting of LED in the second half, does that imply that the EV charging is going to be more challenging, either because projects are finishing or for some other reason?

Hi Bill, it's Mike. No, that was not what I meant to imply at all. What my comments were meant to say is that we exceed, we plan to see LED lights grow in the second half. The EV business will -- we were up 40% in the quarter. We continue to see that level of growth plus in the second half of the year. So, LED will continue to be our strongest growth component, but we do expect lighting to grow significantly in the second half as well.

Okay, great. That's helpful. And then I'm going to ask one question that maybe is a bit unfair, but I'd love your perspective. As you think about these lighting projects that were delayed, why were they not forecasted? And I recognize almost inherently in the question, a delay would imply not forecastable. But I guess I'm going to toss that out and try to understand your perspective, please.

Sure. You know, I'll give you an example. You know, we were working with a large technology company. The projects have been in the works for several years and you know they had given us indications as to what their schedule was and when these projects would start and so -- we try and be as conservative as we can, and so we take a portion of that, but obviously we have to recognize when customers say the projects are going to be active. So we want it to be realistic but conservative at the same time. And the reality was that due to some of the internal workings of that company, they were pushed-off as a project. And so those are things which are difficult for us to forecast exactly when we can initiate with a company because obviously this is one of several CapEx projects they have in the works and has to tie in with the rest of the company's financial performance and those types of things. So we certainly do our best and try and be conservative but realistic at the same time. And that was the nature of it. That's an example.

Thank you.

Thank you.

Thank you. Our next question comes from the line of Gowshi Sri. Your line is now open with singular research. Thank you.

Good morning. Can you hear me?

Yes we can. Good morning, Gowshi.

Just on the project delays, going back to, is that a broader market trend or is there particularly sector focus affecting those projects and how will that the cadence for the revenue when those delays do come back? Is that primarily a fiscal 2025 event, or is that a flow through into fiscal 2026 as well?

Yeah so these delays that we've experienced you know there is been a variety of individual circumstances you know, I think there certainly has been some level of macro uncertainty, you know, now that we've gotten through the elections and those types of things and we see interest rates falling. As I referenced earlier in my comments, we are incredibly excited about the quoting activity that's going on right now. And I should reference that we had a very strong October in terms of orders. In fact, the strongest month of the year from an order standpoint and on or above kind of what our projections would be to realize our current annual projection. So these delays that occurred, they occurred for a variety of reasons. Some of them will activate in quarter three, some will activate in quarter four, and then some of them will carry over into fiscal 2026.

Okay, okay. And on the EV pipeline, I know I think you guys mentioned it and updated it to $45 million to $50 million. I know last quarter you mentioned you had a target of around $18 million for the year and the highlight would be $11 million for the Eversource contract. I just want to get of that $18 million is there potential for exceeding that target and on the Eversource contract how much of that $11 million has been recognized as revenue to date?

Sure. On the Eversource contract, less than half of it has been realized in the first semester of the year. And then relative to the overall target for EV, we said our budget was $18 million and that we thought we could exceed that. And that's still our projection is that we will exceed the $18 million.

Okay. On the Triton Pro product line, I think you gave it some color. What was the feedback that you received from customers? And I know you probably was part of that, was taking some market share. What are the numbers compared to your expectations?

The numbers are strong, as I indicated, $4 million year-to-date, over an $18 million pipeline for that product line. So I would say we're exceeding our expectations and we believe we will for this year. Customer feedback across the board is when we launched this product line, we believe that we were missing a ban of the market from a project standpoint. We certainly see that, that there are opportunities that we could not get had we not had this offering. And so some of those customers, we end up selling Triton Pro 2, which is great. We're happy to do that. Others, ultimately, that's a starting point, and we can trade up to higher performing products that are in Orion's offering. So overall, very happy with Triton Pro.

Okay, awesome. And on the DoD project in Europe, I think if I understand you correctly, that has no further impact on the numbers. And I think you mentioned that there was a $10 million project that might commence soon. When will that start impacting the revenue line?

So you are correct on the DoD project that we referenced that we did in Germany last year. There was no revenue in the quarter for that. And relative to this new opportunity, yes, we do expect we have received POs. We expect that to start doing performing work for them yet this quarter. And again, that is a turnkey lighting project. We're providing both light products as well as turnkey management services to these clients. We are in the final stages of working through an extended multi-year contract for the entire project which we expect to be completed shortly. And once that's done, we will make further announcements.

Awesome. Thank you, guys. Congratulations. And thank you for taking my questions.

Thank you, Gowshi.

This concludes our Q&A session. I'll now turn the call back to Mike Jenkins for concluding remarks.

Thank you all for joining us today. We look forward to updating investors as we progress through the balance of fiscal 2025 and hope to see or speak with you at upcoming investor conferences. Please contact our investor relations team for details of upcoming events with any questions regarding today's call or to schedule a meeting. Their contact information is in today's press release. Thanks again.

Thank you. This concludes today's conference call.