Good morning, everyone, and welcome to Orion Energy Systems Fiscal 2025 Third Quarter Conference Call. [Operator Instructions]. I will now turn the call over to Bill Jones, Investor Relations, to begin.

Thank you, Olivia, and good morning to everyone joining this call today. Mike Jenkins, Orion's CEO; and Per Brodin, CFO, will review the company's Q3 '25 results and outlook. And following the prepared remarks, we'll open the call to investor questions. Today's conference is being recorded. A replay will be posted on Orion's corporate website, orionlighting.com, in the Investors section. As a reminder, prepared remarks and answers to questions that follow will include statements that are forward-looking under the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally include words such as anticipate, believe, expect, project or similar words. Also, any statements describing future goals or objectives, company plans or outlook are also forward-looking. Such 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 issued this morning and in its filings with the Securities and Exchange Commission. Except as described therein, Orion disclaims any obligation to update or revise forward-looking statements, which are made as of today. Reconciliations of certain non-GAAP financial metrics to the nearest GAAP measures are also provided in today's press release. And with that, I will now turn the call over to Orion's CEO, Mr. Mike Jenkins.

Thanks, Bill, and thank you all for joining us today. As highlighted in today's press release, we have had significant developments and progress in quarter 3, yet our revenue performance was disappointing. I believe the actions we have taken over the past year have put Orion in a stronger position for substantially improved performance in fiscal '26 on both top and bottom lines. I will let Per walk you through our Q3 results, and I will focus my remarks on actions we have taken to position Orion for meaningful revenue growth as well as substantial bottom line improvements as we move forward. On the revenue side, over the past few months, we have landed 7 new LED lighting contracts and opportunities with revenue potential of $100 million to $200 million over the next 5 years. This new business is the result of changes we have been making in our sales, marketing, product and services offerings to better meet customer needs. Building on this success, we are reorganizing our operations to further enhance and focus our go-to-market approaches, which has been resonating with long-term and new customers. We have also continued to work on business process improvements that lower our overall fixed cost -- fixed operating costs to reduce our revenue breakeven level and increase the contribution from incremental revenue. This is work that we needed to do as it is important in helping us to manage through inevitable variability in the timing of large orders. We have also made substantial progress over the past 18 months in improving product and service margins. In our Lighting business, cost engineering, enhancing our plant layout and supply chain strategies have allowed us to redesign products and processes so that we are able to deliver the same high performance but at lower cost of…

Thanks, Mike. As we reported, our Q3 revenue of $19.6 million was impacted by customer changes in the timing in LED and EV charging project starts as well as reduced activity in the lighting distribution channel, which impacted Orion and the overall industry, partly due to slower new construction and economic uncertainties. Q3 revenue in 2025 was $19.6 million versus $26 million in Q3 '24 and $19.4 million last quarter. The year-over-year comparison was impacted by delays as well as a large Department of Defense project in Europe that had benefited the prior year period. As highlighted in today's press release and Mike's remarks, there are several LED lighting projects that we expect to begin in the coming months that will benefit our fiscal Q4 and 2026 results. Our EV Charging segment, which is up 48% year-to-date, was also impacted by project timing in the quarter with Q3 '25 revenues of $2.4 million versus $2.8 million in Q3 '24. We expect a strong Q4, which will benefit from construction service contracts related to Eversource Energy's EV Make Ready program and a large public school bus EV project for Boston Public Schools. In maintenance, $3.9 million of Q3 revenues were higher than expected, driven by new opportunities with existing customers, though below Q4 '24 revenues due to the intentional roll-off of unprofitable Stay-Lite legacy contracts. Our overall gross profit percentage or gross profit margin increased nearly 500 basis points to 29.4% from 24.5% in Q3 '24. Sequentially, gross margin improved more than 600 basis points from Q2. A large portion of that was due to profitability improvement in maintenance services, as we've discussed. Also, as we've demonstrated, margin improvement in lighting, where gross profit was 30.1% versus 27.4% in Q3 '24, even on lower revenues in the current year period. That…

[Operator Instructions] Our first question coming from the line of Eric Stine with Craig-Hallum Capital Group.

Mike, and Per, so maybe can we just talk about the pipeline first. I just want to make sure I'm clear on this. So you talked about 7 new customers and projects, $100 million to $200 million. Are those in your pipeline? Are you saying that that's what you think that the -- you've had a number of announcements, both maintenance and project here over the last couple of months. Are you referring to what you think that those awards can become? I'm just trying to figure out, is that business you have in hand? Do you need to still close that? And you also talk about a number of large opportunities approaching final stages of negotiation. So just wondering what's in each bucket?

Yes. Thanks, Eric. Good question. So what we talked about and what we've released is closed-won business. And so those projections are of the closed-won, which means we do believe that we will actualize revenue in that range from $100 million to $200 million over the next 5 years as a result. Separate from that, as you referenced, there are several other large significant opportunities, which are in the final stages of the pipeline, and we hope to make further announcements in the near future.

Got it. And so I mean, any color -- and if you can't, I get it, but any color on maybe you're talking about large projects and getting close, how much that might increase that $100 million to $200 million, maybe how that's spread across lighting, charging, maintenance? Any color would be great.

Sure. I would say that the magnitude of those opportunities is certainly in the 8 figures per annum. And that's about kind of as tight a range as I want to give at this point being that they're still in the pipeline and not yet closed. These -- what we are seeing is these opportunities between the closed and pipeline are coming from what I would say is a pretty diverse customer base. So when you look through what has already been announced and won, it was in the press release today, you see sectors such as building products retailers, a couple of very significant ESCO opportunities, one that is very involved in what we would call the mush market, which is the municipal university schools and hospital space, additional expansion with core customers and of course, our Automotive business rebounding, continue to rebound as well heading into fiscal '26. The new -- the other projects, which are in the pipeline also involve some additional sectors as well.

Got it. Okay. And then maybe last one for me. Just I know it's been an ongoing source of frustration, just the project pushouts. Is there any thought you've given or ways that you think you could better maybe anticipate some of these project changes? Or I mean, potentially when you're thinking about annual guidance, maybe factoring that in better? Or just some thoughts because I know -- I mean, this has been a pretty frequent occurrence here over the last number of quarters and longer.

Sure. Yes. For sure, it is a source of frustration for management as well when some of these projects, either new business coming in despite our constant communication, those things can slip based on the customer's time line or in some cases, projects which have been well planned are postponed for other reasons. One of the things certainly that we plan to do for fiscal '26 is to take a -- and we announced it in this -- today's release as well, is to really reset our costs and our breakeven point so that even should we get impacted by any delays in revenue that we can be profitable. And that's really our focus. We do believe we can -- with all this new business that has already been won and is in the pipe that we can continue to -- we can grow the top line double digits, but we're also focusing on being very sharp on costs and establishing a new breakeven point so that we're assured that we will be profitable.

Our next question coming from the line of Amit Dayal with H.C. Wainwright.

Just following up on Eric's question about the $100 million to $200 million outlook from the backlog side of things. How much of that is exposure to any government contracts or opportunities?

Yes. None of that pipeline is really focused at all on the federal space. As I mentioned earlier, some of it is in the municipal space. But really none of it is tied to federal.

Understood. And then with respect to the inventory, maybe can you share what the inventory is comprised of right now? And is there anything within that, that may be written off as you go through the reorganization process?

No, we have been working very hard on our inventory as a company over the last 18 months and have reduced it substantially. I think we've got a very productive inventory at this point in time, and we're not expecting any significant write-offs as a result of the restructuring.

Understood. And on the maintenance side, how are you sort of targeting new customer wins? Are you using maybe outside help for this? Or is it just an internal sales force that is trying to go and get deals done to build that customer base out?

Yes. We're always looking to use partners and kind of network for opportunities. But the ones that have been announced thus far have been internally generated. Certainly, we've bolstered our sales team with some experienced people from the industry, and those individuals have helped provide some new opportunities to us. We think that we've got the right infrastructure, capabilities, capacity now to leverage for new business. And now that we've solidified the base, we are profitable. I think we're in a good position to start moving forward with new business.

Our next question coming from the line of Gowshi Sri with Singular Research.

Can you hear me?

Yes.

All right. On the $100 million to $200 million revenue potential, what's the assumptions that are driving the low end to the high end? And how much of that is pricing and how much of that is EV growth?

Sure. So in a range like that, we have timing -- these projects and these new customers obviously have phases to them. These are quite large, and there's a series of rollout assumptions that go into them. So what we're trying to be is transparent that there is a range of outcomes in the new business that are not always within our control. And so we're just trying to do a better job of exposing the range of what we think these could be. We do think that that's a realistic range at this point in time. Regarding EV, a lot of these opportunities are more on the lighting side. We have -- and I referenced this in my comments earlier that we have expanded our pipeline of EV opportunities sequentially quarter-over-quarter. So despite the obvious noise coming around the federal space right now, we continue to expand our pipeline. So we think we've got some nice growth opportunities in that area as well. But they're not listed in the $100 million to $200 million.

Awesome. In terms of the project delays, I know you've mentioned most of that is factor around the macro factors and is that customer readiness, is that funding availability. As you -- are there any -- in order to kickstart these projects, are you guys -- as you look forward, is there any discussion around pricing adjustments or enhanced services as you try to motivate the clients to proceed with their projects?

Yes. Most of our project -- I mean, substantially all of our projects have a very good ROI for customers. So they are motivated. Typically, the factors that create delays are not influenced by necessarily our pricing. Finance can influence it along with the overall macro factors we discussed or just things going on in their own business. And so therefore, they shift their capital from one area to another and defer a project for a little bit. So there's a wide variety of those things. We're constantly looking at opportunities, obviously, to where opportunities are closed, if there's a delay to see what the source of that delay is and whether or not it's something we can solve. That includes financing options through third parties that we work with quite regularly.

Okay. And can you give us any color on that $5 million project with the automotive OEMs that you guys have mentioned in your press release?

Yes. So that's just an indication that we have 2 primary OEMs that we do a lot of work with. We cycle through their -- we do their new facilities. We cycle through and do retrofits throughout their footprint every probably 7 years, and we're seeing that cycle improve, number one, in terms of going through all the facilities. And number two, I would say, and as referenced before, one of these OEMs is very focused on the fluorescent bans, which are coming. And so we're seeing an acceleration of their footprint as a result of the fluorescent bans, any areas that have not yet been touched to get those converted to LED.

Okay. And on the final question, with the current political climate as it is, I know you have had a few federal government DoD like projects. Is there any color on that front in terms of engagement in terms of the change in the policy?

Yes. I think we're going to have to wait and see where this all shakes out. Clearly, it's rapidly evolving. I can say, as mentioned in my remarks, we're not really -- we don't see any impacts directly from NEVI or federal funding on our projects and none of that should impact our fiscal '26 outlook. We were impacted with one project in -- that was basically for a government entity that went through and as DOGE kind of went into that entity and restructured things, that project was placed on hold. And that was a 7-figure project. It was not due to federal funding, but it was due to essentially that organization getting reorganized. So that's the only impact that we've seen, which was unfortunate, but we don't see anything moving forward. Yes. Maybe one other -- sorry, follow-on point to that last point is we do continue to see great opportunities. You know that we've worked with the Department of Defense and some other entities in the government on the lighting projects. We do see projects moving forward on both those fronts unaffected, so.

And our next question coming from the line of Bill Dezellem with Tieton Capital Management.

First of all, relative to the new business unit structure that you're doing, would you please walk us through the practical benefits of that new structure and what that ultimately will accomplish from the customer perspective and what the customer will see that's different?

Sure. Bill, the new structure, essentially, what it does is it aligns our sales -- primarily our sales and demand creation teams with execution capabilities and creates distinct focus between what we're calling the Solutions or Turnkey business and our Partner business. Traditionally, this organization has been more functionally focused. So you have one sales team, and that sales team has some opportunities which are partners, some opportunities which are turnkey. What we're trying to do is create very strong alignment between the front end of our business and the operational and execution side of our business so that we really are embedded with our customers. We understand their needs and where we need to have some divergent strategies when it comes to product lines, pricing, ways we promote things or other service offerings that we're able to do that because we have very crystal clear vision of what our customer needs are and how to sell and execute against those.

And Mike, how is that different from the way you were -- either are structured now or before you began implementing those changes?

Sure. So again, this is primarily on the front side of our business and particularly our sales organization has, again, had the ability to focus on a wide variety of opportunities, whether they be ESCOs or distribution or solutions oriented. What this does is it basically creates clean lines for our sales and go-to-market approach that everybody is focused on either the partner side of the business or the solution side. So again, going back to TritonPro as an example, one of the things that we were hearing loud and clear from our partners was that the market was shifting. They needed additional competitive offerings, which we responded to. I think we did that quite well. And that's driven some growth and opportunities on that side of the business. And that's something that if we had just focused on the solutions side, we probably would have got there, but it probably would have been later than having that insight coming from the ESCOs and then reacting to it. So I think moving forward, this will allow us to be even faster in terms of reacting to market needs and be very tailored in our offering to them.

And are you finding with your salespeople that some of them are just better suited, whether it's their genetic makeup or their relationships that they have for direct business or through ESCOs?

Absolutely. Great question, Bill. Yes, I mean some people are absolutely better based on their experience and how to manage things because it is a difference in how to manage solutions-based service-oriented selling versus through partners and with partners. And so yes, the team is -- we're aligning our people based on their capabilities, experience and aptitude to one of those 2 segments moving forward.

Maybe taking this one step further, it appears that you are winning new business at a faster rate. So congratulations on that success. The question is why? And how repeatable is that? And maybe tied into that question is, to what degree have you already been at some level, your salespeople been kind of falling into line of focused on the OEMs or focused on the partners. And as a result, that's actually what's leading to this success at closing business?

Yes. We have added some new salespeople, as I referenced before, some other people from the industry. I think they've brought us some great skills, talents and accounts that we could go after and win. As often is the case, it's not one single thing that we do. It's a combination or accumulation of actions that we've been taking, both on the marketing side of the business and the sales side of the business that is allowing us to pick up these new accounts. Certainly, moving forward, we see the value of focus, and that's really what we want to do. And we believe through that focus in the organization, we'll continue to see this level of momentum and acceleration.

Great. And then additionally, relative to the incentives, and I guess this question is most focused on the lighting side of the business. The incentives that your customers are receiving, are those coming from the federal level, the state level, the utilities themselves? Where are the predominant originators of the incentives?

Great question. It's primarily the utilities, local utilities, which are providing the vast majority of lighting incentives.

And so all of the things that we're hearing in the news relative to the federal government and cutting back really has no impact. This is all tied to the utilities trying to manage the additional watts that they need to produce as time goes forward?

Absolutely. Yes, well said.

Congrats on the margin improvement.

Thanks, Bill.

[Operator Instructions] And our next question coming from the line of Andrew Shapiro with Lawndale Capital Management.

Just 2 follow-up questions with respect to your press release. One was the management and Board were taking a 10% salary and retainer cut. Can you clarify, is this a deferral and thus accrual or a complete give up or give back?

Yes. We're foregoing that for the balance of this year and then until business performance improves in general. So we're foregoing it.

Can you clarify the word forgo? Again, is it a giveback? Or is it deferral and accrual, meaning the cash savings only for the time being?

It's a give up.

We will not be accruing funds for the compensation.

Okay. And then I appreciate you sharing the pain. And can you update us on the company's NASDAQ listing status, the time line and various milestones and where we're at on the clock?

Sure. We are in the I'll call it, the initial 180-day period in which we're allowed to regain compliance. That 180-day period expires in mid-March, I believe it's March 19. If we are not in compliance by the end of that period, we are allowed to apply for an extension for another 180 days. If we're not in compliance by mid-March, I would believe we would apply for that 180-day extension. And our thought is that with execution on our plan that within that -- either within this period or the next period, our hope and thought is that we would regain compliance and move on from there.

And in an application for extension, typically, you have to present a road map or a plan for what the company would do to regain compliance. Is the thought, as you just described, solely based on execution of said plan? Or are there other options that you are preparing to or would be prepared to put on the table to maintain said listing?

That's something that is subject to further evaluation as we move toward that time frame. But if there are other things that we believe we need to do, we would include that in that application.

Okay. And when does the company's annual meeting typically take place and when you'd have to decide whether you're putting forward a reverse split or some other kind of shareholder vote action?

Not sure I heard that quite right, but if the question was when our typical annual meeting timing is, that's usually in early August of each year.

Okay. So in the -- yes, so in the next window, if you were to pursue a reverse stock split, which isn't necessarily the optimal way of dealing with the issue, but it is a way of dealing with it. That's, I guess, when you'd have to decide you're going to put a matter up for vote for the shareholders?

Yes, I believe that's true.

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

Thank you all again for joining us today. We look forward to updating investors on our fiscal 2025 fourth quarter call, and we hope to see or speak with you at upcoming investor conferences, which we will announce separately via press release. Please contact our Investor Relations team for any additional questions regarding today's call or to schedule a meeting. Their contact information is in today's press release. Once again, thank you for attending our call.

Thank you. That concludes today's conference call. Thank you all for your participation. You may now disconnect.