Orion Energy Systems, Inc. Q4 FY2026 earnings call

Fiscal 2026 Milestone Achievements

• Successfully maintained NASDAQ listing, positioning the company for long-term growth in shareholder value • Implemented a growth, profitability, and cost containment initiative by Q3 2026, laying the groundwork for Orion to become a long-term market leader • Beat the full-year revenue target of $84 million, delivering $86.3 million in total revenue with positive $2.2 million adjusted EBITDA, exceeding the original profitability goal

Key Operational Progress

• Achieved six consecutive quarters of positive adjusted EBITDA, marking the first year of sustained growth and profitability for Orion in recent years, positioning the company as having completed a strategic pivot • Strengthened incumbent customer relationships with large global clients, grew revenue across core segments, and expanded the sales funnel and overall project pipeline • Completed right-sizing and sustained cost containment, driving lower annual operating expenses (down to $29.7 million in 2026 from $30.8 million in 2025), and bolstered the balance sheet • Expanded core capabilities to include battery energy storage systems and electrical contracting, entering new adjacent high-growth markets • Strengthened liquidity: raised $6.4 million in net new common stock proceeds, extended the credit facility maturity from 2027 to 2030, and paid down $4 million in revolving credit borrowings

New Market Entry: Data Center LED Lighting

• Launched a custom multipurpose linear LED lighting fixture designed specifically for hyperscale AI and cloud data centers, addressing strong market demand driven by exponential AI growth • The product is customizable to data center architecture, delivers high energy efficiency to reduce power consumption and carbon footprints, and is manufactured in-house in Wisconsin to provide shortened lead times • Orion leverages its proprietary in-house supply chain to insulate customers from supply chain disruptions, a key value proposition for large-scale data center operators • Management intends to replicate Orion's high customer retention and incumbency strategy from existing industrial/retail/public markets in the fast-growing data center segment

1. LED Lighting Segment: Q4 2026 revenue of $20.3 million (compared to $20.9 million in Q4 2025), representing 79% of total Q4 2026 revenue. Full fiscal 2026 revenue of $55.9 million (compared to $47.7 million in fiscal 2025), representing 65% of total full year 2026 revenue. Q4 2026 gross margin was 40.4% (28.3% in Q4 2025); full year 2026 gross margin was 33.8% (26.6% in fiscal 2025).
2. Maintenance Segment: Q4 2026 revenue of $3.2 million (compared to $4.1 million in Q4 2025), representing 12.5% of total Q4 2026 revenue. Full fiscal 2026 revenue increased 6% to $16 million (compared to prior year), representing 18.5% of total full year 2026 revenue. Q4 2026 gross margin was 22.1% (24.6% in Q4 2025); full year 2026 gross margin was 23.7% (18.2% in fiscal 2025).
3. EV Charging Solutions Segment: Q4 2026 revenue of $2.3 million (compared to $5.8 million in Q4 2025), representing 8.9% of total Q4 2026 revenue. Full fiscal 2026 revenue was $14.4 million (compared to $16.8 million in fiscal 2025), representing 16.7% of total full year 2026 revenue. Q4 2026 gross margin was 27.5% (27.9% in Q4 2025); full year 2026 gross margin was 37.7% (28.3% in fiscal 2025).

Overall company results: Q4 2026 total revenue of $25.7 million (vs $20.9 million Q4 2025), full fiscal 2026 total revenue of $86.3 million (vs $79.7 million fiscal 2025). Overall gross margin was 37% in Q4 2026 (27.5% Q4 2025) and 32.6% for full 2026 (25.4% full 2025). Full year 2026 adjusted EBITDA was positive $2.2 million (negative $2.9 million fiscal 2025), marking six consecutive quarters of positive adjusted EBITDA.

• Full fiscal 2027 total revenue guidance is set at $95 million to $97 million, representing an upward revision from prior expectations and 10-12% revenue growth over fiscal 2026 • Management expects to deliver full positive adjusted EBITDA for fiscal 2027, extending the streak of consecutive profitable quarters to a full second year • Overall gross margin is expected to hold at a structural level of ~30% for the full year, with quarterly fluctuations possible due to changes in revenue mix and volume • Revenue is expected to be relatively evenly distributed across the four quarters of fiscal 2027 • All WorldTrek earn-out payment obligations have been fully satisfied, with no further earn-out expenses expected in future quarters • Orion has fully exited the solar business, with no remaining solar activity to impact fiscal 2027 results • Battery energy storage project revenue and most electrical contracting revenue is already included in the $95-$97 million guidance range, with potential for additional upside from unforeseen project wins • Data center revenue is not expected to contribute meaningfully to the backlog until late fiscal 2027, with most long-term growth from this segment expected in future fiscal years, creating potential upside to current guidance

• Forward-looking results are subject to general market risks, including sector-wide uncertainty in the U.S. EV charging market that contributed to lower Q4 2026 EV segment revenue compared to the prior year • Quarterly gross margin can fluctuate based on revenue mix and project volume, creating potential deviation from full-year structural margin expectations • The data center market entry is in early stages, with no current backlog contribution, so near-term revenue from this new segment is uncertain • Large new projects such as the long-term customer outdoor lighting opportunity are still undergoing final product testing, so final award and revenue timing is not guaranteed • Actual results may differ materially from forward-looking guidance due to the various risk factors disclosed in Orion's SEC filings and today's earnings press release

Q: Eric Stein asked for commentary on early fiscal 2027 order trends, whether backlog growth will continue, the revenue linearity of the large long-term outdoor lighting project, and an update on its expansion opportunity. / A: Management confirmed fiscal 2027 started strong with a well-distributed backlog across segments, and expects continued backlog growth. Full-year 2027 revenue is expected to be relatively evenly split across quarters. The outdoor lighting expansion opportunity is progressing positively, with in-site testing ongoing for final selection, and Orion is the only incumbent provider being considered for the project.

Q: Samir Joshi asked if Q4 2026 LED strength was from timing or a sustained trend, what electrical contracting work entails, if Orion has enough working capital for its backlog, and if data center opportunities offer upside to guidance. / A: Management expects LED strength to continue, driven by growing project activity and newly added electrical contracting work. Electrical contracting includes full electrical work for new retail store build-outs and additional scope on existing EV infrastructure projects, and Orion has sufficient working capital to serve its full backlog. Data center revenue is not currently in the backlog, with most contributions expected late in fiscal 2027 or beyond, creating potential upside to the current guidance range.

Q: Kaoshi Sri asked if 31-32% gross margin is sustainable in 2027, if Orion is fully exiting solar, if electrical contracting will become a separate reported segment, and if battery storage revenue is included in guidance. / A: Management expects a structural full-year gross margin of ~30% to be sustainable in 2027, with quarterly fluctuations from mix shifts. Orion has fully exited the solar business with no remaining activity to impact future results. Electrical contracting is currently managed within the existing services segment, and there are no plans to report it as a separate segment at this time. Battery storage revenue is already included in the $95-97 million guidance range.

Q: Bill DeZellum asked what differentiates Orion's new data center lighting product, what sales channel will be used, and what new product opportunities are being developed for the distribution channel. / A: Orion's product is customized to meet hyperscale data centers' specific efficiency and architectural requirements, with in-house domestic manufacturing enabling shorter lead times. The product is initially being launched through the distribution channel, with potential expansion to other channels later. The next new product for the distribution channel is a roadway lighting product for public streets and highways, representing an additional new growth opportunity.