Orion Energy ((OESX)) has held its Q1 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Orion Energy revealed a mixed sentiment, characterized by notable improvements in profitability and operational efficiency, yet tempered by challenges in revenue streams. The company reported increased gross profit margins and reduced operating expenses, signaling a positive operational shift. However, a decline in EV charging solutions revenue and overall revenue posed challenges, although the outlook remains optimistic with expectations of revenue growth, despite uncertainties in the EV sector.
Improved Gross Profit and EBITDA
Orion Energy achieved a significant milestone with its gross profit percentage rising to over 30% for the first time in nearly six years. This marks the third consecutive quarter of positive adjusted EBITDA, underscoring the company’s enhanced profitability and operational efficiency.
Reduction in Operating Expenses
The company successfully reduced its total operating expenses by 10.6%, bringing them down to $6.9 million in Q1 ’26 from $7.7 million in Q1 ’25. This reduction was achieved through strategic personnel and cost control efforts, reflecting Orion’s commitment to financial discipline.
LED Lighting Segment Growth
The LED lighting segment experienced a modest revenue increase of 1%, reaching $12.9 million compared to $12.8 million in Q1 ’25. More notably, the gross margin for this segment improved significantly from 22.6% to 31.8%, highlighting the segment’s enhanced profitability.
Electrical Maintenance Revenue Increase
Orion’s electrical maintenance segment saw a robust revenue increase of 21%, climbing to $4 million in Q1 ’26 from $3.3 million in Q1 ’25. The gross margin for this segment also improved dramatically from 3.8% to 22.4%, indicating strong operational performance.
Positive Outlook for FY 2026
The company reiterated its expectation of a 5% revenue growth for fiscal year 2026, aiming for approximately $84 million. Orion also anticipates achieving a positive adjusted EBITDA for the full fiscal year, reflecting confidence in its strategic initiatives and market positioning.
EV Charging Solutions Revenue Decline
Revenue from EV charging solutions decreased to $2.7 million in Q1 ’26 from $3.8 million in Q1 ’25. This decline reflects the variability in the timing of larger projects, highlighting a challenge in this segment.
Slight Decline in Overall Revenue
Orion reported a slight decrease in overall revenue, with fiscal Q1 ’26 revenue at $19.6 million compared to $19.9 million in Q1 ’25. This decline underscores the challenges faced in certain segments, despite overall operational improvements.
Uncertainty in EV Charging Projects
The company faces uncertainty regarding near-term funding availability for EV charging projects. Despite long-term infrastructure opportunities, this uncertainty is expected to result in flat to slightly lower EV charging revenues.
Continued Net Losses
Despite improvements, Orion reported a Q1 ’26 net loss of $1.2 million, though this is an improvement from the $3.8 million loss in Q1 ’25. This reduction in net loss indicates progress in Orion’s financial recovery efforts.
Forward-Looking Guidance
CEO Sally Washlow outlined a positive fiscal 2026 outlook, projecting $84 million in revenue and a positive adjusted EBITDA by the end of the fiscal year. The company plans to leverage its expertise in electrical infrastructure to explore new opportunities, aiming to expand its business line and achieve growth and profitability goals.
In summary, Orion Energy’s earnings call reflected a mixed sentiment with significant strides in profitability and operational efficiency. While challenges remain, particularly in the EV charging segment, the company is optimistic about its growth prospects and strategic initiatives for fiscal 2026. Investors and market watchers will be keenly observing Orion’s performance in the coming quarters as it navigates these challenges and opportunities.