Orion Energy Systems, Inc. LD Micro 20th Annual Main Event Conference

Good morning. As noted, I'm Sally Washlow, the CEO of Orion Energy Systems. Thanks for joining here today. With me as well is Per Brodin, our CFO. I'll give you a brief presentation today and then happy to answer any questions. I can probably just do this. Orion is a company. We're based in Manitowoc, Wisconsin, with divisions in Florida and Boston as well. What we do is LED lighting, electrical infrastructure projects as well, and EV charging. What we do, we pair our U.S.-engineered LED lighting. We also do the installation of that. We do EV charging infrastructure through our division called Voltrek, and we also provide ongoing maintenance services. Oftentimes we are converting a single product sale into a multi-year customer relationship, and we're leveraging our U.S.-based manufacturing as well as a global supply chain.

Our investment thesis is really that our vertical integration provides a moat. We combine our domestic manufacturing in Manitowoc, Wisconsin, where we produce LED lighting, along with global contract manufacturers to enhance our supply chain, along with installation services and maintenance. Because we do have U.S. manufacturing capability, that allows us access to federal, state, municipality, data center procurement as well, which is not as accessible to our competitors that might heavily rely on imported product. Our turnkey model, as I mentioned, we do the installation as well. That expands our wallet share per customer, which I'll share in a couple examples today. We integrate lighting controls. We do EV charging. Just today we announced a recent customer win that expanded not only an LED lighting win, we're doing electrical contracting, and we're doing EV charging for this customer as well.

Some other recent highlights, we have entered into the data center space with a data center fixture that is with a hyperscaler. We've won a couple awards from them. We are known for EV fleet electrification with Boston Public Schools as they're electrifying their entire fleet. Also recent awards, we have a three-year maintenance contract with one of our largest customers, valued at $45 million. That provides a nice base of recurring revenue. In the future, where we see growth coming from data centers, EV infrastructure, and then our turnkey installation and electrical contracting. We report in three business segments: lighting, maintenance and technical services, and EV charging. To highlight, in lighting, we not only design, we manufacture, and we install energy-efficient LED lighting systems. We have over 25,000 projects completed. We do interior and exterior. Our focus is on commercial and industrial retrofit business.

A phenomenon that we see approaching is what we term LED 2.0 or even re-LED, where we're seeing customers from eight to 10 years ago that we put in LED lighting come back around and say, "Is it time to replace what was put in years ago?" We have multiple go-to-market models within our lighting segment. We work directly with national accounts, or we work with energy service companies, otherwise known as ESCOs, where we're selling them the lighting, they're doing the installation, and then we also have a distribution channel as well. In our maintenance and technical services group, that's where we're doing lighting, electrical, and EV maintenance services. We do preventative and reactive. Because of a large contract that we have with a customer, it provides us a national footprint. We truly believe we can scale this segment as well.

Within EV charging, we provide end-to-end commercial EV charging solutions. We are not focused on residential, more in the commercial and industrial environment. We install Level 2 and DC fast charging, and we work with several of the leading charging suppliers that I will share in a minute. Our turnkey capabilities are really a hallmark of what we bring to our customers. They are discreet, they are bespoke, and we can work with our customers on projects large and small. That is why decade after decade, we have been a preferred provider to many Fortune 100 customers, ranging from manufacturing to retail to logistics. We are with them through the full cycle, starting at a facility audit, doing the design, manufacturing, installation, rebates, warranty.

We are truly a one-stop for our customers, and this often provides a base of further conversation as we expand our services and capabilities into these customers, similar to what we announced this morning with a large automotive manufacturer doing LED lighting, electrical infrastructure, and EV charging systems for them. In lighting, as I mentioned, we have a manufacturing facility in Manitowoc, Wisconsin. That is about an hour north of Milwaukee. Because of our proprietary approach to our supply chain, we are often winning because we can make it in the U.S., or we can rely upon our global supply chain so we can customize for many accounts, and we can have shortened lead time and be very responsive to what our customers need. If it does have to be Buy American compliant, our U.S. facility affords for that as well.

Oftentimes we are winning based upon our unique capabilities that we can bring to customers. Here is one example of a case study working with a global leader in product testing. What I like to really emphasize with this customer is that it started to replace their fluorescent lighting systems. As we expanded the scope of work, not only did we replace their fluorescent lighting with LED lighting fixtures, but this couple hundred thousand dollar opportunity turned into a multimillion-dollar opportunity as we did electrical infrastructure with them, and we expanded to other campuses as well. This is often a hallmark of what we do. We get in with a customer, it starts with maybe a single solution, and we often expand that opportunity within customers while saving them money and making them more energy efficient.

In our maintenance and managed services, this provides a great base of recurring revenue for us year in and year out. We just signed a contract with a customer, $45 million, 3-year commitment. So about $15 million a year in recurring maintenance. We are day in, day out at this customer, so this not only affords us maintenance work, but then often expands to other areas of opportunity. Because of this contract, it provides us with a nationwide network of skilled and certified lighting and electrical professionals, which we have then can expand to other customers this type of work. Our EV charging segment, this came to us a couple of years ago when we bought a company called Voltrek. They were in the Northeast, Boston specifically. They had already had 16 years of EV expertise and experience. We are a premier reseller of EV charging stations.

Unlike lighting we manufacture, in EV charging, we work with preferred partners such as ABB, ChargePoint, InCharge, Alpitronic. We have over 8,000 ports under our management, and we also do networking, maintenance, and recurring revenue. We have been a provider of choice, and specifically in the Northeast, and have been expanding this footprint as well, pointing to an example this morning of the contract that we won with the automotive manufacturer to install EV installations at one of their sites. A great case study that we're really proud to call a partner is the Boston Public Schools. They determined a couple of years ago to electrify their entire school bus fleet through the Green New Deal. And we have been a partner of theirs in several of their school bus yards.

Each of these bus yards is a multimillion-dollar opportunity for us as we install the EV charging infrastructure within these school bus yards. So, we've been great partners. We expect more of this to come in the future as they roll out, yard by yard, the EV infrastructure to support their growing fleet of EV buses. What I've been sharing with you is really how we are leveraging our long-term relationships to diversify our revenue. We've added new additional capabilities to fuel our growth. So our growth isn't just coming from new customers. We're bringing often these capabilities to existing customers. So within LED lighting, we provide high-efficiency LED lighting, and we are constantly developing new fixtures to improve the efficiency and give our customers an ROI to either replace old systems that they have or re-LED their existing systems as well.

We provide preventative maintenance through our maintenance and technical services. A new area for us is electrical contracting, and many of these revenue streams have been born from customers coming to us asking, "Can you install battery energy storage systems?" That has been a new revenue stream for us as well, and we're also doing electrical contracting and electrical infrastructure work in new construction in retail and industrial. And through EV charging infrastructure, our network integration support, that also provides recurring revenue for us. We're also helping with site planning and installation in that space as well. So, we expect more of this to continue to grow and continue diversification of revenue. We're proud to call many of these customers longstanding, multi-decade customers of Orion.

I'd also like to point out that many of them started with a single fixture sales in one building and has expanded to multiple campuses, multi-year initiatives. With many of these customers, we are planning year in and year out their lighting replacement cycles, their electrical maintenance as well. So we start small and often expand within these customers. And many of these customers have come to us. So when we talk about our recent business transformation, enhancing our service offerings, oftentimes it's come from customers coming to us saying, "Can you do this? Will you add this to the portfolio of services that we can provide?" Increasing the lifetime value of each of these customers. Our product portfolio. We are known for decades to provide dependable products, trusted by many Fortune 100 customers. I'd like to highlight a few of our recent solutions that we've brought to market.

Everyone's talking about data centers. We're proud to say that we have won data center opportunities with a hyperscaler. We've won in multiple campuses of theirs as well. This is a solution that we worked with, partnering with them of how do we bring not only energy-efficient lighting, which is a problem they're trying to solve from day one, but how do we make it easier to install for them as well? We're doing a lot of customization at our U.S.-based facility so that by the time it gets to them, it's easier to install and saving them a tremendous amount of work in the installation. We're also in the outdoor space. We have introduced a roadway product. This is something that you'll see on the streets and highways of America.

Again, being able to leverage our U.S.-based manufacturing allows us to win certain contracts that require domestic material in it. We're just starting to launch that product. In the services side, maintenance is a fairly new product line for us, project management services as well, and electrical contracting. Many of these are multi-year, multi-million dollar commitments that we've expanded these services within our existing customers. Why we win is that we are providing industry-leading technology and design. Because of our unique ability to not only design the product, but we're also installing it, we're taking total cost of ownership from the beginning. We're providing the highest energy efficiency and the smart designs to deliver the highest ROI. We're always looking at how do we make this easier to install? How do we make retrofits easier for the customers to say yes to?