Orion Energy Systems, Inc. (NASDAQ: OESX)

Orion Energy Systems, Inc. provides state of the art LED lighting systems, wireless IoT enabled control solutions, project engineering, energy project management design and maintenance services, and electric vehicle charging infrastructure solutions. The company helps customers achieve sustainability, energy savings and carbon footprint reduction goals through innovative technology and exceptional service. It researches, designs, develops, manufactures, markets, sells, installs and implements energy management systems that consist primarily of high performance, energy efficient commercial and industrial interior and exterior LED lighting systems and related services. A significant portion of its interior lighting products are manufactured at a leased production facility in Manitowoc, Wisconsin, while the company also sources components from third parties to maintain flexibility in product development. Its products target commercial office and retail, area lighting, industrial applications and government markets, although it also sells into other sectors. Its services include turnkey installation and system maintenance, and virtually all of its sales occur within North America.

The company generates revenue from the sale of lighting and control products, from installation and maintenance services, and from electric vehicle turnkey installation solutions with ongoing support. Product revenue comes from high efficiency LED fixtures and related controls sold to governmental, commercial and industrial customers on a project by project basis, as well as through wholesale channels to electrical distributors and ESCOs. Service revenue includes maintenance, repair and replacement of lighting and electrical systems, project engineering, design and installation services, and recurring revenue from multi year maintenance contracts. Additionally, the company earns modest royalty income and seeks to cross sell its lighting, maintenance and EV charging platforms to its existing customer base. The company also benefits from backlog of committed purchase orders that represent future revenue expectations.

The company operates through the following segments.

• Lighting: This segment develops and sells lighting products and provides construction and engineering services for commercial lighting and energy management systems. It offers engineering, design, lighting products and turnkey solutions for large national accounts, governments, municipalities, schools and other customers, primarily through direct sales and also through manufacturer representative agencies and wholesale contractor markets via ESCOs and contractors. The segment focuses on retrofit projects that replace existing fixtures with high performance LED systems.

• Maintenance: This segment provides retailers, distributors and other businesses with maintenance, repair and replacement services for lighting and related electrical components deployed in their facilities. It focuses on ongoing service work orders that generate recurring revenue from major retail and industrial customers. The segment also includes preventive maintenance and emergency repair work to ensure lighting system reliability.

• EV: This segment offers leading electric vehicle charging expertise and provides EV turnkey installation solutions with ongoing support to all commercial verticals. It delivers design, installation, commissioning and post installation support for charging stations serving commercial fleets, workplaces and public locations. The segment benefits from the growing adoption of EVs and the company’s project management capabilities.

Orion Energy Systems, Inc. positions itself as a leader in the LED lighting market by combining very efficient light fixtures, measured in lumens per watt, with comprehensive project management services for national account retrofit projects. Its competitive advantages include deep expertise in energy efficient lighting design, turnkey installation capabilities, IoT enabled controls, and a growing maintenance and EV charging service base that creates longer term customer relationships. The company also leverages its ability to cross sell lighting, maintenance and EV charging solutions to existing customers, thereby increasing revenue per account. The company competes with other LED lighting manufacturers, electrical service contractors, and EV charging providers, but differentiates through its integrated service model and focus on high efficiency products.

The company serves large national account end users, electrical distributors, electrical contractors, energy service companies (ESCOs), governmental agencies, commercial and industrial businesses, and retailers. It has undertaken projects for a leading international retail chain and performs maintenance and EV installation work for major commercial customers. In addition, the company sells lighting products and controls to wholesale customers such as electrical distributors and ESCOs, who then resell to their own client bases.