ORION ENERGY SYSTEMS INC
For the period ended Sep 30, 2024. Filed Nov 6, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 6, 2024
OESX$12.51-7.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0000950170-24-092909
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-06.
0000950170-24-122360
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 67 previous paragraphs and 86 current paragraphs.
45 unchanged; 22 reworded; 17 added; 0 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 5 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
Results of Operations - Six Months Ended September 30, 2024 versus Six Months Ended September 30, 2023
Current report
Revenue, Cost of Revenue and Gross Margin. Product revenue decreased 14.1%, or $4.1 million, for the first six months of fiscal 2025 versus the first six months of fiscal 2024. Service revenue increased 58.1%, or $5.2 million, for the first six months of fiscal 2025 versus the first six months of fiscal 2024. Total revenue increased due to growth in the EV segment, which was partially offset due to a decrease in the Lighting and Maintenance segments. Cost of product revenue decreased by 16.8%, or $3.5 million, in the first six months of fiscal 2025 versus the comparable period in fiscal 2024. Cost of service revenue increased by 37.5%, or $3.6 million, in the first six months of fiscal 2025 versus the comparable period in fiscal 2024. Gross margin increased from 20.3% of revenue in the first six months of fiscal 2024 to 22.3% in the first six months of fiscal 2025, due primarily to increased margins within the Maintenance segment.
Current report
Operating Expenses
Current report
General and Administrative. General and administrative expenses decreased 15.6%, or $1.7 million, in the first six months of fiscal 2025 compared to the first six months of fiscal 2024. This comparative decrease was primarily due to the decreased accrual of the expected Voltrek earn-out payment.
Current report
Acquisition Related Costs. There were no acquisition related costs in the first six months of fiscal 2025 in comparison to the $0.1 million in the first six months of fiscal 2024.
Current report
Sales and Marketing. Sales and marketing expenses decreased 12.5%, or $0.8 million, in the first six months of fiscal 2025 compared to the first six months of fiscal 2024. This comparative decrease was primarily due to decreased commission expenses.
Current report
Research and Development. Research and development expenses decreased 31.3%, or $0.3 million, in the first six months of fiscal 2025 compared to the first six months of fiscal 2024. This comparative decrease was primarily due to the reduction of employee compensation costs.
Current report
Interest Expense. Interest expenses increased 48.1% or $0.2 million, in the first six months of fiscal 2025 compared to the first six months of fiscal 2024. This comparative increase was primarily due to the interest on outstanding borrowings and a higher incremental borrowing rate.
Current report
Lighting Division
Current report
The following table summarizes our lighting division operating results (dollars in thousands):
Current report
Lighting division revenue in the first six months of fiscal 2025 decreased by 9.9%, or $2.6 million compared to the first six months of fiscal 2024. The decrease in lighting segment revenue was due to variability in the timing of larger lighting projects along with the completion of the United States Department of Defense project in Germany. The decrease in corresponding operating loss in this segment was a result of a decrease in under absorption of fixed costs.
Current report
Maintenance Division
Current report
The following table summarizes our maintenance division operating results (dollars in thousands):
Current report
Maintenance division revenue in the first six months of fiscal 2025 decreased by 3.6%, or $0.3 million, compared to the first six months of fiscal 2024, primarily due to the loss of three large customers who decided not to renew their contracts, partially offset by increased work orders from our major customer. Operating loss in this segment decreased as a result of an increase in gross margin primarily due to a more favorable revenue mix.
Current report
Electric Vehicle Charging Division
Current report
EV segment revenue in the first six months of fiscal 2025 increased by 85.3%, or $3.9 million, compared to the first six months of fiscal 2024. Operating loss in this segment decreased primarily as a result of the earn-out expense decreasing in fiscal 2025 compared to 2024 along with the significant increase in revenue allowing for greater absorption of fixed costs.
Current report
As discussed in Note 19 - Subsequent Events, the maturity date of the Credit Facility was extended from December 29, 2025 to June 30, 2027.
Reworded paragraphs (22)
Previous wording
We differentiate ourselves from our competitors by offering very efficient light fixtures (measured in lumens per watt) coupled with our project management services to national account customers to retrofit their multiple locations. Our comprehensive services include initial site surveys and audits, utility incentive and government subsidy management, engineering design, and project management from delivery through to installation and controls integration and commissioning. In addition, we began to offer lighting and electrical maintenance services in fiscal 2021. We believe that providing these services enables us to support a long-term business relationship with our customers and results in an increase in our recurring revenue. We completed the acquisition of Stay-Lite Lighting on January 1, 2022, which is intended to further expand our maintenance services capabilities. On October 5, 2022, we acquired Voltrek, which was intended to leverage our project management and maintenance expertise into the rapidly growing EV sector.
Current wording
We differentiate ourselves from our competitors by offering very efficient light fixtures (measured in lumens per watt) coupled with our project management services to national account customers to retrofit their multiple locations. Our comprehensive services include initial site surveys and audits, utility incentive and government subsidy management, engineering design, and project management from delivery through to installation and controls integration and commissioning. In addition, we began to offer lighting and electrical maintenance services in fiscal 2021. We believe that providing these services enables us to support a long-term business relationship with our customers and results in an increase in our recurring revenue. We completed the acquisition of Stay-Lite Lighting on January 1, 2022, which was intended to further expand our maintenance services capabilities. We subsequently dissolved the Stay-Lite business and merged the net assets into Orion effective October 1, 2024. On October 5, 2022, we acquired Voltrek, which was intended to leverage our project management and maintenance expertise into the rapidly growing EV sector.
Previous wording
Revenue, Cost of Revenue and Gross Margin. Product revenue decreased 6.6%, or $0.9 million, for the first quarter of fiscal 2025 versus the first quarter of fiscal 2024. Service revenue increased 81.1%, or $3.2 million, for the first quarter of fiscal 2025 versus the first quarter of fiscal 2024. The resulting increase in total revenue was due to increased revenues in the EV segment, partially offset by decreased revenue in the Maintenance segment. Cost of product revenue decreased by 15.1%, or $1.5 million, in the first quarter of fiscal 2025 versus the comparable period in fiscal 2024. Cost of service revenue increased by 61.2%, or $2.7 million, in the first quarter of fiscal 2025 versus the comparable period in fiscal 2024. Gross margin increased from 18.0% of revenue in the first quarter of fiscal 2024 to 21.6% in the first quarter of fiscal 2025, due primarily to project mix and increased sales which assisted in the absorption of fixed costs.
Current wording
Revenue, Cost of Revenue and Gross Margin. Product revenue decreased 20.7%, or $3.2 million, for the second quarter of fiscal 2025 versus the second quarter of fiscal 2024. Service revenue increased 39.9%, or $2.0 million, for the second quarter of fiscal 2025 versus the second quarter of fiscal 2024. The resulting decrease in total revenue was due to decreased revenues in the Lighting segment, partially offset by increased revenue in the EV segment. Cost of product revenue decreased by 18.4%, or $2.0 million, in the second quarter of fiscal 2025 versus the comparable period in fiscal 2024. Cost of service revenue increased by 17.2%, or $0.9 million, in the second quarter of fiscal 2025 versus the comparable period in fiscal 2024. Gross margin increased from 22.2% of revenue in the second quarter of fiscal 2024 to 23.1% in the second quarter of fiscal 2025, due primarily to increased margins in the maintenance segment.
Previous wording
General and Administrative. General and administrative expenses decreased 21.1%, or $1.2 million, in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024. This comparative decrease was primarily due to a decrease in Voltrek earn out expense to $0.3 million in the first quarter of fiscal 2025 compared to $1.1 million in the first quarter of fiscal 2024.
Current wording
General and Administrative. General and administrative expenses decreased 9.4%, or $0.5 million, in the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024. This comparative decrease was primarily due to a decrease in Voltrek earn out expense to $0.6 million in the second quarter of fiscal 2025 compared to $1.1 million in the second quarter of fiscal 2024.
Previous wording
Sales and Marketing. Sales and marketing expenses decreased 10.9%, or $0.4 million, in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024. This comparative decrease was primarily due to the lower volume of product sales resulting in lower commissions expense.
Current wording
Sales and Marketing. Sales and marketing expenses decreased 14.0%, or $0.5 million, in the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024. This comparative decrease was primarily due to the lower volume of product sales resulting in lower commissions expense.
Previous wording
Research and Development. Research and development expenses decreased 45.0%, or $0.2 million, in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024.
Current wording
Research and Development. Research and development expenses decreased 14.1%, or $0.1 million, in the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024.
Previous wording
Lighting segment revenue in the first quarter of fiscal 2025 increased by 1.0%, or $0.1 million compared to the first quarter of fiscal 2024. The increase in lighting segment revenue was due to variability in the timing of larger lighting projects. The increase in operating loss in this segment is a result of an increased percentage of service revenue, which has a lower gross margin than product revenue.
Current wording
Lighting segment revenue in the second quarter of fiscal 2025 decreased by 20.1%, or $2.7 million compared to the second quarter of fiscal 2024. The decrease in lighting segment revenue was due to variability in the timing of larger lighting projects along with the completion of the United States Department of Defense project in Germany. The decrease in operating loss in this segment was a result of an increased percentage of product revenue, which has a higher gross margin than service revenue.
Previous wording
Maintenance segment revenue in the first quarter of fiscal 2025 decreased by 11.5%, or $0.4 million, compared to the first quarter of fiscal 2024 primarily due to the winddown of several customer contracts. Operating loss in this segment decreased as a result of an increase in gross margins driven by a more favorable revenue mix.
Current wording
Maintenance segment revenue in the second quarter of fiscal 2025 increased by 4.5%, or $0.2 million, compared to the second quarter of fiscal 2024 primarily due to increased work orders from our major customer. Operating loss in this segment decreased as a result of an increase in gross margins driven by a more favorable revenue mix.
Previous wording
EV segment revenue increased $2.6 million to $3.8 million in the first quarter of fiscal 2025. The increase in revenue over the first quarter of fiscal 2024 is due to a higher revenue volume to municipalities. Operating loss decreased $1.7 million in the first quarter of fiscal 2025 due to a $0.8 million decrease of earn-out expense included in general and administrative costs along with improved gross margins.
Current wording
EV segment revenue in the second quarter of fiscal 2025 increased by 39.8%, or $1.3 million, compared to the second quarter of fiscal 2024. The increase in revenue over the second quarter of fiscal 2024 was due to a higher revenue volume to municipalities. Operating loss decreased $0.4 million in the second quarter of fiscal 2025 due to a $0.5 million decrease of earn-out expense included in general and administrative costs.
Previous wording
We had approximately $5.7 million in cash and cash equivalents as of June 30, 2024, compared to $5.2 million at March 31, 2024. Our cash position increased as a result of the mortgage loan largely offset by an operating loss and a net use of working capital during the first quarter of fiscal 2025.
Current wording
We had approximately $5.4 million in cash and cash equivalents as of September 30, 2024, compared to $5.2 million at March 31, 2024. Our cash position increased as a result of our newly obtained mortgage loan largely offset by an operating loss, a $1 million repayment of debt, and a net use of working capital during the first two quarters of fiscal 2025.
Previous wording
The following table summarizes our cash flows for the three months ended June 30, 2024 and 2023 (in thousands):
Current wording
The following table summarizes our cash flows for the six months ended September 30, 2024 and 2023 (in thousands):
Previous wording
Cash Flows Related to Operating Activities. Cash used in operating activities primarily consists of net loss adjusted for certain non-cash items, including depreciation, amortization of intangible assets, stock-based compensation, amortization of debt issue costs, provisions for reserves, and the effect of changes in working capital and other activities.
Current wording
Cash Flows Related to Operating Activities. Cash used in operating activities primarily consisted of net loss adjusted for certain non-cash items, including depreciation, amortization of intangible assets, stock-based compensation, amortization of debt issue costs, provisions for reserves, and the effect of changes in working capital and other activities.
Previous wording
Cash used in operating activities for the first quarter of fiscal 2025 was $3.0 million and consisted of our net loss of $3.8 million adjusted for non-cash expense items and net cash provided in changes in operating assets of $0.6 million, the largest of which was a $3.9 million decrease in accounts payable, which was mostly offset by increases in accounts receivable and inventories.
Current wording
Cash used in operating activities for the first six months of fiscal 2025 was $2.5 million and consisted of our net loss of $7.4 million adjusted for non-cash expense items and net cash provided in changes in operating assets of $4.9 million, the largest of which was a $3.9 million decrease in accounts payable, which was mostly offset by increases in accounts receivable and inventories.
Previous wording
Cash used in operating activities for the first quarter of fiscal 2024 was $7.3 million and consisted of our net loss of $6.6 million adjusted for non-cash expense items and net cash used in changes in operating assets of $0.8 million, the largest of which was a $1.9 million decrease in accounts payable.
Current wording
Cash used in operating activities for the first six months of fiscal 2024 was $11.3 million and consisted of our net loss of $11.1 million adjusted for non-cash expense items and net cash used in changes in operating assets of $0.2 million, the largest of which was a $2.6 million increase in accounts receivable.
Previous wording
Cash Flows Related to Investing Activities. Cash used in investing activities of $24 thousand in the first quarter of fiscal 2025 consisted primarily of purchases of property and equipment, net of proceeds.
Current wording
Cash Flows Related to Investing Activities. Cash provided by investing activities of $155 thousand in the first six months of fiscal 2025 consisted primarily of sales of property and equipment.
Previous wording
Cash used in investing activities of $0.4 million in the first quarter of fiscal 2024 consisted primarily of purchases of property and equipment.
Current wording
Cash used in investing activities of $0.6 million in the first six months of fiscal 2024 consisted primarily of purchases of property and equipment, partially offset by proceeds from sale of property and equipment.
Previous wording
Cash Flows Related to Financing Activities. Cash provided by financing activities of $3.5 million in the first quarter of fiscal 2025 was primarily due to the term loan discussed in Note 12 above, which was partially offset by payments on long-term debt.
Current wording
Cash Flows Related to Financing Activities. Cash provided by financing activities of $2.5 million in the first six months of fiscal 2025 was primarily due to the term loan discussed in Note 12 above, which was partially offset by payments on the revolving credit facility and long-term debt.
Previous wording
Cash used by financing activities of $3 thousand in the first quarter of fiscal 2024 consisted primarily of payment of long-term debt.
Current wording
Cash used by financing activities of $5 thousand in the first six months of fiscal 2024 consisted primarily of payment of long-term debt.
Previous wording
Our net working capital as of June 30, 2024 was $17.4 million, consisting of $42.1 million in current assets and $24.8 million in current liabilities. Our net working capital as of March 31, 2024 was $16.7 million, consisting of $44.8 million in current assets and $28.1 million in current liabilities.
Current wording
Our net working capital as of September 30, 2024 was $13.1 million, consisting of $40.0 million in current assets and $26.9 million in current liabilities. Our net working capital as of March 31, 2024 was $16.7 million, consisting of $44.8 million in current assets and $28.1 million in current liabilities.
Previous wording
We generally attempt to maintain at least a three-month supply of on-hand inventory of purchased components and raw materials to meet anticipated demand, as well as to reduce our risk of unexpected raw material or component shortages or supply interruptions. Because of recent supply chain challenges, we have been making additional incremental inventory purchases. Our accounts receivables, inventory and payables may increase to the extent our revenue and order levels increase.
Current wording
We generally attempt to maintain at least a three-month supply of on-hand inventory of purchased components and raw materials to meet anticipated demand, as well as to reduce our risk of unexpected raw material or component shortages or supply interruptions. Our accounts receivables, inventory, payables and unbilled revenue may increase to the extent our revenue and order levels increase.
Previous wording
Our credit agreement provides for a five-year $25.0 million revolving credit facility (the “Credit Facility”) that matures on December 29, 2025. Borrowings under the Credit Facility are subject to a borrowing base requirement based on eligible receivables, inventory and cash. As of June 30, 2024, the borrowing base supported approximately $18.3 million of availability under the Credit Facility with $10.0 million drawn against that availability. As of June 30, 2023, the borrowing base supported approximately $18.6 million of availability under the Credit Facility with $10.0 million drawn against that availability.
Current wording
Our credit agreement provides for a five-year $25.0 million revolving credit facility (the “Credit Facility”) that matures on December 29, 2025. Borrowings under the Credit Facility are subject to a borrowing base requirement based on eligible receivables, inventory and cash. As of September 30, 2024, the borrowing base supported approximately $16.7 million of availability under the Credit Facility with $9.0 million drawn against that availability. As of September 30, 2023, the borrowing base supported approximately $18.9 million of availability under the Credit Facility with $10.0 million drawn against that availability.
Previous wording
Effective April 22, 2024, we, along with the lender, executed Amendment No. 2 (“Amendment No. 2”) to the Credit Agreement. The primary purpose of Amendment No. 2 was to add a $3.525 million mortgage loan facility to the Credit Agreement secured by our office headquarters property in Manitowoc, Wisconsin. Amendment No. 2 also broadened the definition of receivables to encompass government receivables as being eligible to be included in our borrowing base calculation for the purpose of establishing our monthly borrowing availability under the Credit Agreement. Quarterly installments of $88,125 will be due on the first day of each fiscal quarter beginning October 1, 2024.
Current wording
Effective April 22, 2024, we, along with the lender, executed Amendment No. 2 (“Amendment No. 2”) to the credit agreement. The primary purpose of Amendment No. 2 was to add a $3.525 million mortgage loan facility to the credit agreement secured by our office headquarters property in Manitowoc, Wisconsin. Amendment No. 2 also broadened the definition of receivables to encompass government receivables as being eligible to be included in our borrowing base calculation for the purpose of establishing our monthly borrowing availability under the credit agreement. Quarterly installments of $88,125 are due on the first day of each fiscal quarter beginning October 1, 2024.
Previous wording
Backlog represents the amount of revenue that we expect to realize in the future as a result of firm, committed purchase orders. Backlog totaled $14.1 million and $22.0 million as of June 30, 2024 and March 31, 2024, respectively. We generally expect our backlog to be recognized as revenue within one year. Backlog does not include any amounts for contracted maintenance services.
Current wording
Backlog represents the amount of revenue that we expect to realize in the future as a result of firm, committed purchase orders. Backlog totaled $11.1 million and $22.0 million as of September 30, 2024 and March 31, 2024, respectively. We generally expect our backlog to be recognized as revenue within one year. Backlog does not include any amounts for contracted maintenance services.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
The following table sets forth the line items of our Condensed Consolidated Statements of Operations and as a relative percentage of our total revenue for each applicable period, together with the relative percentage change in such line item between applicable comparable periods (dollars in thousands, except percentages):
Current report — wording carried from elsewhere
The following table summarizes our EV segment operations results (dollars in thousands):