Good afternoon, everyone, and welcome to day one of our Microcap Virtual Conference. My name is Stephane Guillaume, and I will be your moderator. I am pleased to welcome Mike Jenkins, CEO, and Per Brodin, CFO of Orion Energy Systems, ticker OESX. We will have a total of 30 minutes, including Q&A at the end of the presentation. So we greatly appreciate your participation, so please submit your questions into the Q&A box at the bottom of your screen. With that, I'll turn it over to you guys.
Great. Thank you, Stephane. Hello, everyone, and thank you for your interest in Orion Energy Systems. Really, at Orion, everything starts with our organizational mission. This has been a true foundation for us as a company since we were started in 1996. We help our customers achieve their sustainability, energy savings, and carbon footprint reduction goals through our innovative technology and exceptional service. One of the things that's very unique about Orion is not only are we a manufacturer of LED light fixtures, some of the most inefficient in the industry, we also have a huge service quotient to our business and are a key service provider. So our executive leadership team, the officers of our company, myself, Per, and because services are so important to our business, we do have a president of our services group as well.
I'd like to say this is our business on a page, and so starting on the left under our segments, we have three major segments to our business: Lighting, which is predominantly retrofit lighting. What retrofit means is that we go in, and we work with clients, either through partners or on a turnkey basis, to identify what light fixtures they have in place, and then change those to the newest technology in situ. In most cases, that's going from fluorescent to LED lights, but in some cases, it could be even older technology that we're retrofitting. We also entered the new and exciting space of EV Charging systems, about a year and a half ago through an acquisition of a company called Voltrek, located just outside of Boston.
We are not manufacturing EV Charging units, but rather we act as a value-added reseller and project manager to help clients and customers make the migration and get their EV Charging systems up and running. So for that, we do everything on a turnkey basis, similar to what we do on lighting, that involves going out to a customer's location, auditing the location, understanding where the power is, what their needs are in terms of fleet dynamics, charging speeds, et cetera, engineering a solution for them, overseeing the installation and commissioning of that equipment, and then ongoing maintenance, repair, and networking. On the maintenance side of our business, this is really lighting and electrical maintenance, and again, this grew out of our number one customer. We did a very large retrofit project with them several years back.
At the conclusion of that project, they asked us to stay on and manage their lighting and electrical maintenance for their 2,000 locations. After we were doing that and built that business organically, we subsequently bought a business called Stay-Lite Lighting and merged those two together to have a full maintenance platform. Our vertical markets, we're 100% commercial and industrial. Our subverticals are industrial manufacturing, commercial office. Retail typically means big-box retail for us. Automotive is both the automotive OEMs themselves, as well as their dealerships. Logistics and warehousing, some of the largest firms in the world. Healthcare is typically hospitals, agriculture is typically dairy, and then we do more and more work in the public sector space.
An example of that is a $9 million project, which we just concluded in Germany for the Department of Defense, working with a large Super ESCO partner. One of the things that's unique about Orion is our paths to market, and we have three different paths. One is we do operate, starting at the bottom, we operate with partners, distributor partners. Unlike some companies, we don't manufacture products to be put on a shelf. We still work with them on projects and typically retrofit projects. We also work with ESCOs, which are energy service companies. These companies are in business to help other businesses reduce their energy consumption and change their electrical footprint. In this case, we're typically providing product to them, LED lights or charging units. In some cases, there could be some service aspects, but it's mainly a product relationship.
The last path, which is unique to Orion, is our turnkey offering, and this basically means that we will go out ourselves, deal with a client, typically very large, typically public companies with lots of sites, and offer them a one point of accountability to manage the entire project. That means our team will go out, we'll assess their needs on site, again, design the appropriate solution, which could include custom fixtures for them. We'll manufacture a lot of those in-house in our facility in Wisconsin, and then oversee the installation of those fixtures, and then the commissioning of the sensor control technology, and then ongoing maintenance if needed. So with that, we have four different revenue streams that come from our LED light products, our turnkey services, our maintenance business, and our EV Charging business.
We feel very good about the future, and we feel good about our growth opportunities ahead. Some of that is due to the macro environment. We view these as all positive factors and tailwinds for us in the years ahead... Energy prices, while they move up and down directionally, we expect them to continue to grow and get more expensive. One example of that is with the advent of AI and how energy-intensive that technology is, we see energy prices continuing to grow. Climate and ESG, even though the acronym ESG can be a bit polarizing and political in today's day and age, this is a major influencer, and factor, and motivator for particularly public companies. And we're seeing a lot of companies...
These are C-suite commitments, typically, to negate carbon and improve their sustainability, and so we feel really good about this as a continuing motivator for our customers. The EV revolution is significant. Again, maybe today's forecast isn't as bullish as the original one that was put out several years back, but this is a generational change in technology, and one of the things that's required to really activate it across the board is charging solutions and access to charging equipment, and that's really where we play, is on the infrastructure side. Regulatory, for the first time ever, we're seeing states take regulatory action to mandate basically help accelerate the conversion to LED lights, and those are coming through by way of bans on fluorescent fixtures and tubes.
So there are now eight states in the country which have banned the sale of fluorescent fixtures and tubes, most of which start in January of 2025. It's not extremely well-publicized yet within those states. Part of our job, we view, is to help educate, existing customers, as well as prospective customers, about these upcoming changes. So this will drive acceleration in the conversion to LED. There's been a huge amount of, funding which has come from the federal government, both in terms of the IRA and the Infrastructure Acts. Both of those are, directing appropriations towards EV infrastructure, as well as overall building efficiency, and so we see both of those as, as driving, trends moving forward. LED penetration is still probably, we figure, about 40% from the original opportunity of fluorescent to LED.
We've been at this, and companies have been at this conversion now for about 15 years, and we're only about 40% of the way there. These products typically have a useful life of about 10 years, and so we actually have some early adopters now, which need to go back and get re-LED'd, so to speak. And today's technology is also about 30% more efficient than Generation One technology, so we can actually go back and expand the market by re-LEDing those first generations of early adopters. Also, one of the things that's unique about Orion is that we are an American manufacturer of LED lights. That allows us to qualify for the Buy American Act and the Build America, Buy America.
These are two strong government programs for unleashing federal funds or doing business with the federal government, and we feel that we're uniquely positioned on these. Our lighting business, again, three businesses for us. We've done over 25,000 projects since our inception. Very strong on commercial and industrial, as I mentioned, exclusively focused there. We do interior as well as exterior applications. We also have deep control options and experience. So, basically, controls can go from basic on/off dim, when you enter a room, the lights turn on, to full IoT capability, where it's tied into a building management system, and in some cases, using AI. We also have multiple go-to-market models, which we discussed, and while we are in a project business, we do have repeat clients who give us different sites every year.
So, they're discrete projects, but they're a lot of repeat work from the same customer base. On the maintenance side of our business, it's really around lighting and electrical maintenance, both on a preventative as well as a reactive basis. So preventative would be scheduled, could be monthly, quarterly, semi-annually, et cetera, and then reactive is, of course, as needed. We also do special projects for our customers under this, and this maintenance area typically is operated with 3-year contracts, which do provide recurring revenue. On the EV Charging side of the business, again, it's a turnkey installation model. We work with leading suppliers, like ChargePoint and ABB for the equipment. We predominantly do Level 2 and DC Fast Charge Level 3, which is the same infrastructure for the NEVI program, as well as fleets.
We've built out, scaled this business to national execution capabilities, and we do get networking and maintenance as a recurring revenue. We really see unleashing additional value through our cross-selling efforts with our lighting business and our EV Charging business. A little bit more about us. You know, typically, our customers receive a payback of one to four years on the lighting side. We have the highest lumens per watt portfolio in the industry. Think of that as lumens is a metric for light, and watt is a metric for energy, so the more lumens you can create per watt of energy, the more efficient your portfolio is, and we have the most efficient in the industry. We produce a lot of our products in Wisconsin, in our 266,000 sq ft facility. We've recently expanded our portfolio to include a broader-...
bandwidth of exterior products, as well as a new Triton Pro contractor line to reach a base of the market that we were not in previously. These are examples of some very well-known customers that we work with. You'll see manufacturers, retailers, Department of Defense, and other government entities on here. So this is just a representative sample. Our case study here is around our largest customer. So several years back, we had the opportunity to work with a large retailer, home improvement retailer of over 2,000 locations across the country. They were looking to improve their in-store shopping experience, as well as dramatically reduce their carbon consumption, for their ESG goals. We were actually the last lighting company, so to speak, involved in the project.
Others had already started, and ultimately they chose Orion because of our turnkey installation model, which gave them a single point of accountability to manage the entire project. Over the course of the project, we implemented, we built and installed over 1 million light fixtures for this customer that were custom created for them. We future-proofed the solution with sensors and controls for each one of the products that now allow that to tie into a full IoT systems, building management systems, potentially including AI. And ultimately, the client, it was a $250 million capital project, and it paid back for the client in less than a year and a half. So truly a win-win across the board.
As I referenced earlier, we are unique because we have a production facility in Wisconsin, where most of our interior products are made, and therefore, we can comply with government standards for BAA and BABA. Another unique thing about Orion is that we have the industry's lowest overall lead times of typically two to three weeks from order to shipment. Again, these are project-level quantities that often involve multiple SKUs. That we're able to do that because we have a very flexible manufacturing business. We have a lot of common components that we finalize into finished goods at the last possible moment. This is an example of our portfolio. So these little metals across the bottom here just are meant to indicate where we fall in the industry from an efficiency standpoint.
You see a lot of number one metals here, as well as in some cases broader grouping that include number one. This is an example. This was that was our interior portfolio. This is our exterior and wet room portfolio. I mentioned sensors and controls. We are technology or brand agnostic, which means we don't have a proprietary system. The technology is moving very quickly, and we've chosen to operate with best-of-breed companies in their space that allow us to integrate their technology into our fixtures to provide the client the best solution. And again, these can run from very basic systems all the way up to full cloud-based IoT control systems that interface with a building management system and potentially AI as well. A little bit about turnkey our turnkey capabilities.
So it really starts with working with clients to understand their facility's needs. We do audits of their facilities on site. We will design and engineer the appropriate system for them, whether it's LED lighting or EV related. In the case of lighting, we'll manufacture the products, often in our facility. In the case of EV, we'll acquire the appropriate equipment. We'll oversee the installation and project manage it all the way through the commissioning phase, and then often be there for their rebates to maximize their return on investment, and then be there for warranty and maintenance. This is a little bit about the size of the market for LEDs. This comes from the Department of Energy. You can see that basically where we sit today, they forecast we're probably about 40% of the way through the initial conversion.
As I mentioned earlier, that doesn't take into account some of the fixtures that were initially installed, reaching the end of their useful life, and that today's generational technology is about 30% more efficient than the initial technology. So we can actually go back to some customers and provide a payback, by re-LEDing. A little bit on our maintenance business. We started this business unit essentially around our number one customer. We later acquired and integrated a business called Stay-Lite Lighting. Where again, we focus on both preventative and reactive services to customers on a nationwide basis, and have worked with a number of customers, that everybody recognizes. Our EV charging business. We acquired this business, that's called Voltrek, in October 2022.
It was founded essentially 14 years ago by an EV mobility pioneer named Kathleen Connors, and we feel fortunate that Kathleen's still with us, driving the business today. We've done over 4,000 charging points under management. I think that's closer to 5,000 now, actually. And as I referenced earlier, we operate in a turnkey fashion as a full service provider. We do have national coverage. Excuse me. These are some of our clients. And again, the business was a New England-centric business before the acquisition by Orion, where we're now cross-selling and nationalizing it. So you see a lot of New England-centric accounts on here, and this is just kind of a listing of our historic accounts, many of which we do projects with every year as their demand for EVs continues to grow.
Different equipment providers that we work with. ChargePoint has the largest market share of any equipment provider in the U.S., and they're a signature partner of ours, as well as ABB. We work a lot on the DC Fast Charge side of things with them. I know we've all seen different projections of the EV market and, you know, what's kind of going on. This is some of the latest information I found. This comes from Bank of America in terms of their penetration of EVs in the marketplace. So as you can see, that it is projected to continue to grow. The rate of growth may not be as fast as we originally thought, but we don't see that as an overall issue in our business, because we are on the infrastructure side.
So whether we're growing, you know, at a 30% CAGR, or 50% CAGR, or 70% CAGR in the industry, it doesn't mean quite as much to us because it's really the same base infrastructure which is needed on a geographic basis to be put in place. That's where we're focused. Some of the funding which has come out, and I spoke a little bit about this earlier in some of the mega trends. You know, $5 billion has been appropriated from the federal government to the states to support what they call the National Electric Vehicle Infrastructure Act, or NEVI. This money has taken a while to get from the federal government to the states, to now finally starting to get active, activated.
So we're just starting to see that money flow into real projects now, and in the next 12- 18 months, expect that to accelerate quite a bit. On top of that, a lot of states, as an example, Massachusetts, are working with utilities to also put additional funding to work. In the case of Massachusetts and Eversource, an additional $300 million-$400 million over a time period. We did reference that we've secured about $11 million for this year under that program. And then fleet electrification is also a very strong trend in the U.S. I mean, and that's businesses converting to electric fleets. That typically is DC Fast Charge and a much more involved project, which we certainly can handle. An example of one of those is when we converted...
Boston converted about 20 out of their 100 buses to EVs, and we provided the infrastructure and oversaw the installation of that project, which was about $1.5 million for us. Good news is, Boston Public Schools, that was the initial pilot, looks like they'll be moving forward with some additional phases, moving forward. We are very proud of our ESG and sustainability record. It's what we do. It's, you know, again, our mission ties to this. We provide superior lighting products, which reduce the energy consumption, and thereby helping our customers. And so we put out a sustainability report every year. Our latest one just went online, I think, recently. So, you can read more about that, and our impact to our customers there. From a social standpoint, we're a very female-friendly workforce.
In fact, 60% of our outside directors are female, 50% of the overall board. From a governance standpoint, everything you would expect from an SEC company is in place, and we take that very seriously. Overall, we just released our Q1 financials. We showed about 13% growth year-over-year. Last year was 17.6 top-line revenue. This first quarter was 19.9. Our guide for the year is to be up 10%-15% on a revenue basis. We also saw improved margin on a year-over-year basis, as well as adjusted EBITDA. With that, I'd be happy to take any of your questions.
Thank you, Mike. Again, I would like to remind everyone that if you do have a question, please submit it into the Q&A box at the bottom of your screens. We do have a few questions from the audience. We'll try to get through as many as we can. I think first question is: "Can you provide us, can you give us a progress update on the maintenance contract that were, like, unprofitable?
Absolutely. So, as we've said, we had three legacy contracts, which came through the Stay-Lite acquisition, which were unprofitable. We have now worked our way out of those contracts completely. We have restructured the OpEx and the rest of the business cost structure around that. So, part of those results are in our Q1, where we saw improved profitability. We expect additional benefits coming in Q2, and then normalizing in Q3.
... Thank you. And can you size up the cross-selling opportunity for between Voltrek and lighting retrofit?
Yeah, we've said before that we've had, I think around $30 million of cross-selling opportunities in our pipeline. That continues to grow, and what's great about that is it works both ways. So we're actually seeing some very substantial lighting projects come out of our EV side of our business and our customer base there, as well as the obvious, which is bringing EVs to lighting customers.
Can you expand on how you benefit from the IIJA and IRA?
Really, those are-- That's where the NEVI funds came out of. So what I spoke to about the NEVI funds to support the infrastructure for EVs, that is derived from that, and it's working its way through the states, which we expect to see acceleration in those projects really over the next 12 months. And overall, there's just, some, there's some additional benefits for building efficiency there in terms of accelerated depreciation and those types of things.
How does your lead times of 10-15 days compare to competitors? Like, can you give us, like, a ballpark?
Absolutely. So 2-3 weeks is our standard lead time, as I mentioned, for projects. It really depends. I mean, during COVID, of course, during the supply chain struggles, we maintained that lead time, and we saw some of our competitors go out to 12 to 16 to 18 weeks. I would say right now, most of the market is probably within that, let's say, four to eight week period, and we maintain two to three.
What are the biggest challenges you foresee in maintaining competitive advantage in the rapidly evolving LED lighting and EV charging markets?
Yeah, I mean, they are competitive spaces, like most spaces, and so we've got to continue to up our game. We feel like we've got some great benefits in terms of and value propositions in terms of our lighting technology being the most efficient. Our turnkey business model allows for very large customers, like our case study, for us to win those type of projects because it's unique. And we think that the development of our partners, and we've really spent a lot in terms of developing partners in this space over the last couple of years, is really coming to fruition, and we're seeing a lot more pipeline there and growth coming in that area.
So, we think also that the amount of services that we offer as a company is also very unique and sticky with customers.
Can you give us some examples of Voltrek, sales penetration and installation outside of Northeast?
Well, sure. Well, we have said we have done business now since we have closed on Voltrek, which again, was very Northeast-centric, more specifically Massachusetts area specific. We've now done business in installations or EV sales in 29 states.
Thank you. How does your work with the military impact your revenue? Are there more opportunities there?
Yeah, so we typically partner with a Super ESCO. In the case of the project, very large project in Germany, it's one that we work with quite a bit. I would say they're a strategic partner of ours. They typically will get extremely large projects as the prime contractor, and then we act as their lighting partner, as a sub to them, and that was the case for the Germany project. Yes, we have more projects which we're working on, in the pipeline currently.
Thank you. Can you, like, provide some insights into the margins across your different segments? What's the long-term margin outlook for each segment?
Per, I'll turn that to you.
It's on a long-term basis. We would expect our lighting and EV segments to perform relatively similarly in the mid-25% to upper 20s range, and maintenance, we would expect to operate at about 20%.
Thank you. We're almost out of time, so I think I have time for one more question. I guess, given the current, the stock's current price, what do you see as the biggest misconception in the market regarding your stock?
You know, I think, I think people still look back at the business following the conclusion of that big project, which wound down, which was $250 million over several years. We did hit a new base, essentially, that we had to grow from after that conclusion, and we've been, you know, growing steadily since then. We grew double digits last year. We've grown double digits, actually, over the last four quarters. We're a more diversified business now than we were in the past, where we were purely a lighting company. So I think there's a lot of things that, you know... The business has got great momentum, but I think it's just not well understood for some reason.
Well, thank you so much, Mike and Brodin, and I would like to also thank our audience for their questions. See you guys next time. Take care.
Bye.
Have a good day.
Thank you.