Orion Energy Systems, Inc.

Good morning, everyone, and welcome to Orion Energy Systems' fiscal 2026 second quarter conference call. At this time, all participants are in a listen-only mode. In this call, Sally Washlow, Orion's CEO, and Per Brodine, its CFO, will review the company's second quarter results and its fiscal 2026 outlook. Then we will open the call to investor questions. Today's conference is being recorded. A replay will be posted in the investor section of the company's website, orionlighting.com. I will now turn the call over to Per Brodine, Orion CFO.

Thank you, Rivka. First, as a reminder, prepared remarks and answers to questions 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 objectives or goals, company plans, and 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 issued this morning and in its SEC filings. Except as described therein, Orion disclaims any obligation to update or revise forward-looking statements made as of today. In addition, reconciliations of certain non-GAAP financial metrics to their nearest GAAP measures are also provided in today's press release. Now I will turn the call over to Orion CEO, Sally Washlow.

Thank you, Per. Good morning, and thank you for being with us today. I am extremely pleased to report our Q2 results highlighting a year-over-year increase of more than one-third in gross profit. This is also our fourth straight quarter of positive adjusted EBITDA. We recorded incremental growth in total revenue and significantly more than that in maintenance services, even as we unburdened ourselves of an unprofitable contract. And we saw a welcome bounce back in EV charging as the sector-wide uncertainty of the earlier part of the year began to dissipate. When we last convened, I said that we were on track to achieve three milestones in fiscal 2026. Milestone one, by the end of the second quarter, a positive resolution that enables a publicly traded Orion to maximize its opportunity for growth in shareholder value. We achieved that by maintaining our NASDAQ listing. Milestone two, By the end of the third quarter, the enactment of a growth profitability and cost containment initiative that enables Orion to become a recognized long-term market leader in its core businesses. This is already contributing in the second quarter as we reported 34% higher gross profit and the fourth straight quarter of positive adjusted EBITDA. Milestone three, by the end of the fourth quarter, $84 million in revenue at or near a positive adjusted EBITDA for the full fiscal year. We are on plan and our expectation for the fiscal year is unchanged. We have only just begun and we are demonstrating building towards sustainable and profitable growth beginning in the second half of this year. Even In these early innings, it is gratifying to see that our work is being increasingly recognized and not just by our shareholders. Our partners and customers have long recognized Orion as their go-to partner for installation, ongoing maintenance, and managed services for LED lighting and EV charging. We are also seeing an increase in activity related to quoting and winning work within electrical infrastructure. As I noted in our last call, industrial, commercial, and public sector facilities operated by some of the largest enterprises in the United States rely on Orion. With products made in America, along with a global supply chain, and now in our fourth decade, Orion serves as a go-to provider to Fortune 100 corporations and other global leaders in sectors ranging from manufacturing to government to retail. A recent illustration is last month's announcement of a major retailer's three-year renewal with us representing reoccurring revenue of between 42 million to 45 million. Our largest long-time customers stay with us year after year because we deliver unsurpassed quality and unsurpassed ROI. Whether deployed independently or in a combination with our ESCO and distribution partners, Orion Solutions deliver unrivaled ROI to industrial facilities requiring the most demanding standards of efficiency, reliability, and compliance. That recognition serves us particularly well at this pivotal moment. Just in Q2 alone, we saw an upswing in the lighting market with the recent Dodge Momentum Index report that commercial, industrial, and public sector construction planning is 33% ahead of year-ago levels. We see an improved outlook in the EV charging market with the confidence-boosting federal declaration reassuring the availability of $5 billion in government EV charging funds. We are beginning to see increased opportunities for electrical infrastructure installation and maintenance, with megatrends from reshoring to refurbishing to replacing manufacturing and other industrial plants in the United States. All of these tailwinds mean that Orion has a multi-sector, reoccurring revenue wind at our back, whether it is in lighting, EV charging, or maintenance services. As I promised on our first call, we will continue to keep you apprised with increasing frequency and with increasing granularity throughout this fiscal year and beyond. Now, drilling down further on the second quarter. Once again, Q2 featured solid stability and progress in our three business lines, as well as positive guideposts for the rest of the fiscal year. The quarter resulted in enhanced margins, reduced costs, and meaningful progress on the bottom line. We remain in a solid position for the full fiscal year. Orion's Q2 26 revenue was 19.9 million versus 19.4 million in Q2 25. Q2 26 gross profit grew 800 basis points to 31% versus 23.1% in Q2 25. And we achieved our fourth consecutive quarter of positive adjusted EBITDA. Per will provide details in a minute. Let's look at a quick snapshot of some of the highlights from Q2, which featured solid accomplishments in our three business lines. In lighting, we had some significant new business wins exemplified by $11 million in government lighting and up to $7 million in LED lighting for facilities belonging to some of the biggest names in the automotive industry. In EV charging, we saw a welcome bounce back from the uncertainty that the entire EV sector experienced in the first few months of the year. A particular Q2 highlight was the $8.5 million in EV charging work in Massachusetts. We also saw the confidence-boosting federal clarification reassuring the availability of $5 billion in government EV charging funds. In maintenance, these and other engagements featured ongoing managed services that ramp reoccurring revenue and ensure a close, continuous, and expanding relationship with our enterprise customers. It's also important to note a couple of particular points about Q2. One is that our maintenance services achieved significant growth even while allowing the lapse of an unprofitable contract. Another is that EV charging showed a welcome bounce back from the uncertainty that the entire EV sector experienced in the first few months of the year. Our Q2 gross profit, now at 31%, a year-over-year jump of more than one-third, was also a standout. This was largely achieved by continuing reductions in LED lighting fixture costs via our ongoing improvements in reengineering, plant efficiency, and improved sourcing, as well as via both margin and volume increases in our maintenance services business. We continue to benefit from the success of our cost control initiatives, and we expect to see ongoing improvement throughout the rest of the fiscal year. On the new business front, we continue to build our expanding pipeline of contracted LED lighting projects, even as we penetrate and radiate within existing maintenance services customers. We are laser focused on increasing sales in our LED lighting distribution business. On the new product front, We continue to gain traction with our value-based LED lighting fixtures. The marquee name here is Triton Pro, designed and engineered in response to popular demand from both customers and channel partners. Triton Pro is competitively priced LED lighting line that is getting traction with a number of customers. We also continue to partner with our customers to bring together seemingly discrete products and services into the connected tissue domain of electrical infrastructure, a name we've been dropping lately, you may have noticed. Electrical infrastructure integrates offerings like LED lighting, high voltage EV charging stations, and a high impact array of maintenance and managed services. We'll have more to say about this initiative as well. For now, suffice to say that it is in response to requests from our customers, as well as those mega trends I mentioned earlier. Data centers, AI, manufacturing, retail, electrification, industrial and complete commercial fleet management, and others. These are the headlines of the day. You see these headlines in the Wall Street Journal, in Barron's, in your hometown paper. You may have noticed that you see them in Orion press releases too. Orion sits squarely in the confluence of these mega trends, and it has solutions to not just serve them, but to accelerate them. With that, let me turn to Orion CFO, Per Brodine, to review our financial performance and outlook.