OESX

Good morning everyone, welcome to Orion Energy Systems fiscal 2026 fourth quarter and full fiscal year conference call. At this time, all participants are in a listen only mode. In this call, Sally Washlow, Orion's CEO, and Per Brodin, its CFO, will review the company's fourth quarter and full fiscal year results, as well as its fiscal 2027 outlook. We will open the call to investor questions. Today's call is being recorded. A replay will be posted in the investor section of the company's website at orionlighting.com. I will now turn the call over to Per Brodin, Orion CFO. Sir, please go ahead.

Thank you, Michelle. 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's CEO, Sally Washlow.

Thank you, Per. Good morning, everyone, and thank you for being with us today. I am pleased to report our results for Q4, our sixth consecutive quarter of positive adjusted EBITDA, and for the full fiscal 2026 year. Fiscal 2026 represents an exceptional year at Orion. It was a year of growth in revenue and newly achieved profitability. It was a year of strengthened incumbencies in some of our largest customers. It was a year of product and market expansion.

You may recall from earlier calls that we discussed three milestones for FY 2026. Milestone one, to maintain our Nasdaq listing and maximize our opportunity for growth in shareholder value. We achieved this goal. 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. We achieved that goal as well.

Milestone three, by the end of the fourth quarter, $84 million in revenue at or near positive adjusted EBITDA for the full fiscal year. We beat this goal with $86 million in revenue and $2 million in positive adjusted EBITDA. Looking forward, Orion's FY 2027 outlook expects revenue of $95 million-$97 million, with potential upside in the number of opportunities. Based on our enhanced operating discipline, our growth outlook should once again enable Orion to achieve positive adjusted EBITDA for the full fiscal year.

We have come a long way to get to this point. Fiscal 2026 marked the first year in some time that we experienced growth and positive adjusted EBITDA. Fiscal 2026 represented a pivot point for this company, a year in which we embarked on a course of increased revenue, expanded profitability, and elevated prominence in our competitive market. When I arrived as CEO of Orion at the beginning of FY 2026, I was immediately inspired by the team that greeted me. We agreed that FY 2026 could be more than just a transition year of righting the ship.

We had a stellar reputation for quality, along with a track record of growing our business with large Fortune 50 global leaders. We had an unrivaled, built from the ground up proprietary supply chain that served to insulate our customers from much of the brunt of exogenous shocks. We had tailwinds from a multi-year invigoration of U.S. manufacturing facilities, private and public sector vehicle fleets, and AI-driven data centers, like the data center product that we announced last week.

To put it simply, we planned, measured, and executed, and the results of FY 2026 represented not only a market improvement over the previous fiscal year, but a jump above our originally announced expectations. FY 2026 was indeed a year of right-sizing as we enacted a sustained and necessary cost containment initiative. It was a year of sharpened focus on profitable growth, illustrated by our six consecutive quarters of positive adjusted EBITDA through the end of the fiscal year. It was a year of maintaining our Nasdaq listing and bolstering our balance sheet.

Through it all, we received a demonstrable show of support in the market by existing and new shareholders. The results and expectations we report today are a testimony to Orion's success on a number of fronts, including renewed aggressiveness in acquiring and expanding within large customers, a quantum improvement in the size and quality of our sales funnel, disciplined cost containment, and an ongoing build-out of our robust proprietary supply chain. Today's report also speaks to some key growth sparks that put us on this up and to the right trajectory.

Our focus on expanding opportunities and revenues within new and existing large customers in the automotive, retail, and public sectors, whether by deployments of LED lighting systems, electrical infrastructure, or EV charging infrastructure. Our focus on maximizing our service to long-term EV charging customers, which is enabling us to manage our adjustment to the present environment in this sector. Our focus on adding capabilities such as battery energy storage systems and electrical contracting.

Adding capabilities continues to be a theme here at Orion, as last week's entry into the booming data center market demonstrated. As you undoubtedly know, there is an immense amount of new construction of data centers being driven largely by exponentially increasing demand for artificial intelligence and cloud computing. About 3,000 new data centers are being planned in the United States. ABI Research expects more than 10,000 to be operational by 2030, with another 2,000 coming online before 2035.

Orion fully intends to be the LED lighting provider of choice for many of these thousands of data centers. As we announced last week, we have the product to do it. Orion's multipurpose linear lighting fixture brings to the current data center building boom a customizable product designed specifically to fit the architecture and floor plan of data centers. We listened to our customers, and we developed a product that fits the needs of these hyperscale data centers and ensures the flexibility and shortened lead times that come with building in-house right here in our Wisconsin manufacturing facility. The needs of data centers are significant. Energy-efficient lighting is a priority in data centers whose AI-driven applications impose unprecedented demands on energy.

Requiring unprecedented levels of power, data centers are prioritizing solutions to minimize their electricity consumption and carbon footprint. Hyperscale data centers emphasize three particular themes that we addressed clearly in the development of the product. AI workloads are increasing power density and uptime requirements across data centers, expanding demand for infrastructure solutions that can improve efficiency and lower total operating costs. For operators and investors alike, solutions that reduce energy consumption can offer meaningful economic value when deployed at scale across large footprint facilities.

As AI-driven data center construction accelerates, products that combine performance, scalability, cost-effectiveness, and ease of integration may be positioned to benefit from a long-term infrastructure upgrade cycle. Hyperscale data centers can count on Orion because we are known for delivering on these points. We are reliable, durable, and scalable. We are on time and on budget, and we do it with our own proprietary supply chain, which serves to reduce customers' exposures to choke points, lengthening dwell times, and market disruptions. Data centers are now learning what other large industrial facilities in retail, automotive, and public sectors already know.

Orion can provide the most energy-efficient and reliable LED lighting solutions in the marketplace. We intend to become a provider of choice in this growing and long-term market opportunity. We have the same ambitions for incumbency in data centers that we have in our longtime historic markets. Decade after decade, longtime customers stay with us and expand their scope of work with us because we are consistently deliver unsurpassed quality, unsurpassed reliability, unsurpassed scalability, and unsurpassed ROI. Again, today's report marks a milestone for Orion, and I am extremely optimistic about our future. With that, let me turn to Orion's CFO, Per Brodin, to review our financial performance and outlook.

Thank you, Sally. Today, we reported fiscal Q4 2026 revenue of $25.7 million as compared to $20.9 million in Q4 2025. For fiscal 2026 as a whole, we reported $86.3 million in revenue compared with $79.7 million in fiscal 2025. LED segment revenue in Q4 2026 was $20.3 million compared to $20.9 million in Q4 2025. For fiscal 2026 as a whole, LED lighting segment revenue was $55.9 million, compared to $47.7 million in fiscal 2025. Q4 lighting segment revenue performance reflected increased project activity and distribution channel sales, partially offset by a decrease in ESCO channel sales.

Orion's expanded LED lighting project pipeline and efforts to drive growth in the distribution channel are continuing to contribute to higher expected revenues in fiscal 2027. Lighting achieved a Q4 2026 gross margin of 40.4% versus 28.3% in Q4 2025. Lighting margin benefited from a contract amendment payment of $1.3 million, which did not have any associated cost of sales. Excluding the effect of that payment, lighting segment margin would still have exceeded 30%. For fiscal 2026 as a whole, lighting recorded gross margin of 33.8% compared to 26.6% in fiscal 2025.

Maintenance segment revenue decreased to $3.2 million in Q4 2026 from $4.1 million in Q4 2025, reflecting the timing of some seasonal work. We achieved a maintenance segment gross margin of 22.1% in Q4 2026 versus 24.6% in Q4 2025. For the entirety of fiscal 2026, maintenance segment revenue increased 6% to $16 million, while gross margin came in at 23.7% in fiscal 2026 versus 18.2% in the year-ago period. EV charging solutions revenue was $2.3 million in Q4 2026 compared to $5.8 million in Q4 2025, reflecting the sector-wide uncertainty regarding the market environment in the United States and a very strong performance in Q4 2025.

EV achieved a gross margin of 27.5% in Q4 2026 versus 27.9% in Q4 2025. For fiscal 2026 as a whole, the EV charging segment revenue was $14.4 million versus $16.8 million in fiscal 2025. While gross margin came in at 37.7% in fiscal 2026 versus 28.3% in the year-ago period. Our overall gross profit margin increased to 37% in Q4 2026 versus 27.5% in Q4 2025. For the entirety of fiscal 2026, gross margin came in at 32.6% compared to 25.4% in fiscal 2025. We expect our overall gross margin to remain strong throughout fiscal 2027, although it will likely vary on a quarterly basis due to revenue mix and volume.

Total operating expenses increased to $10.3 million in Q4 2026 from $8.4 million in Q4 2025. Q4 2026 OpEx included $1.7 million of earn-out true-up expense and $1.1 million for a non-cash write-off of solar assets, while Q4 2025 included $0.5 million of earn-out expense and $0.9 million for severance. For the year as a whole, total operating expenses declined to $29.7 million in fiscal 2026 from $30.8 million in fiscal 2025, with fiscal 2026 reflecting ongoing overhead and personal expense reductions, and the $1.7 million of earn-out expense and $1.1 million of non-cash solar asset write-off and $500,000 of executive sign-on bonus.

With stronger gross margin and lower operating expenses, Orion's Q4 2026 net loss was $1.5 million, or $0.39 per share, compared to a net loss of $2.9 million, or $0.88 per share in fiscal Q4 2025. For the fiscal year as a whole, FY 2026 net loss was $3.2 million or $0.89 per share, compared to a net loss of $11.8 million or $3.59 per share in fiscal 2025. adjusted EBITDA improved to a $+0.8 million in Q4 2026 versus $0.2 million in Q4 2025. As for the full year, adjusted EBITDA improved to $+2.2 million in fiscal 2026 versus a $-2.9 million in fiscal 2025, reflecting increased gross profit, cost control, and financial discipline.

As Sally mentioned, this was Orion's sixth consecutive quarter of a positive adjusted EBITDA. Year-to-date cash used by operation activities was $1.1 million in fiscal 2026, compared to cash provided by operations of $0.6 million in fiscal 2025. During fiscal 2026, we also had a net paydown on our revolving credit borrowings in the amount of $4 million. Net working capital was $11 million at Q4 2026 versus $8.7 million at year-end fiscal 2025. Available financial liquidity at the end of fiscal 2026 was $15.4 million versus $13 million at the previous year-end.

Of additional note, we raised net proceeds of $6.4 million in fiscal 2026 through the issuance of 500,000 shares of common stock, which provides us with growth capital and the ability to pay down amounts outstanding on our revolving credit facility. Plus, effective in May, we extended the maturity of our credit facility from June 30, 2027 to June 30, 2030. Regarding our outlook, as Sally noted, we have increased our expectations for growth and profitability for our current fiscal year, which began April 1st, having announced that we expect a continued increase in profitable growth in fiscal 2027 with positive adjusted EBITDA on revenue of between $95 million and $97 million. This concludes our prepared remarks. Operator, would you please commence the question and answer session?

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. We ask that you please limit yourself to three questions. If you have additional questions, please reenter the queue and queue. One moment for our first question. Our first question is going to come from the line of Eric Stine with Craig-Hallum Capital Group. Your line is open. Please go ahead.

Hi, Sally, hi, Per. Good morning.

Hello.

Hey. Obviously, strongest backlog that you've had in, gosh, four or five years. Just curious if you can give any commentary on what you're seeing early in fiscal 2027, and I know things are hard to predict, but is it fair to say that your confidence level is quite high? Do you expect to see these order trends and this backlog growth continue throughout fiscal 2027?

Yeah. Fiscal 2027, as noted in our backlog, and we're optimistic about it. It started strong. When we look at the backlog, it's pretty distributed amongst our various segments as well. We think we're off to a good start, and we'll continue to grow that backlog and execute the projects that we need to deliver on.

Yep. Okay. Maybe just on the-- You're executing on the outdoor lighting opportunity with one of your long-term customers. Maybe just an update on that was going to be split between Q4 and Q1 or maybe some in Q2. Maybe talk about the linearity of the revenues that you expect in fiscal 2027 when you factor that in.

I guess I'll take that as speaking to overall revenue expectations for the year. I think we just completed Q4, which had revenue north of $25 million. If you look at our guidance for 2026, I'm sorry, for 2027, I think our expectation is the revenue will play out relatively evenly over the year.

Okay. Got it. I guess for my last one, I'll just ask about, I know that this is an opportunity with a long-term customer. You've done 2,000+ sites, and I know that there was some opportunity that you could expand in these specific 200+ locations and maybe expand to some indoor work. Just any commentary on where that stands?

Yeah. That opportunity continues to move along in what I'd say a positive way. There's testing going on to finalize selections. We're optimistic that we'll continue with that opportunity.

When you say testing, is that testing, is it you being considered versus someone else, or is it just testing to figure out next steps?

Good clarification point. Within locations-

Okay.

..we don't believe anyone else is in the mix.

Understood. Okay. Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Sameer Joshi with H.C. Wainwright. Your line is open. Please go ahead.

Hey, good morning, Sally. Per. Congratulations on a strong year.

Thank you.

The outlook looks pretty good as well. On the Q4 2026, the LED lighting revenue in particular were pretty strong, $20+ million relative to $11 million-$13 million in the prior four quarters. Was this because of some contract timing, or are we seeing this strong performance and expecting it for the next few quarters?

Good morning. I'll start with this question. We expect this strength to continue within the segment, not only from the fourth quarter, but the coming quarters as well. It was really from a mix of the projects that we delivered. Some of the electrical contracting that we've been talking about was in there and, along with the services that we deliver within the segment as well. Our expectation is for this to continue in the coming quarters.

Yeah, I'm glad you mentioned the electrical contracting business. I think you have around $21 million in array of those projects with seven customers. Can you give us a little bit insight into what that electrical contracting work entails? Also, do you have working capital to service this kind of a backlog?

Yes, we have the working capital to service the backlog. In terms of more color on what some of these contracts look like, examples are, with some of our larger customers, work that we had not been doing before, but in terms of new store build-out and doing all of the electrical contracting within their new stores. Other examples are expanding work that we have within EV infrastructure and doing electrical contracting work in that realm as well. We're seeing it from logistics customers, retailers within some of the EV contracts that we have as well, where we're adding on additional work to those contracts.

Understood. Earlier this week or last week, you announced the entry into the data center AI domain, and you highlighted it on this call as well. Does the backlog that you spoke of include any of this? I know it is early days, but should we expect upside to this $95 million-$97 million based on your potential success in the data center markets?

Our backlog really does not reflect that currently. We do have high expectations for this segment. As you can imagine, though, we developed the product. We've been working closely with customers on this product, but we think that a lot of the revenue will come later in the year as these come online. Sorry, later in our fiscal year, and then in the coming years as well.

Okay. This last one, I think you have mentioned it in the commentary in the press release. Is the Voltrek earn-out payment done? Meaning, are all the payments done and no more earn-outs should be expected in coming quarters?

Yes. Per can expand on that.

Yeah. All payment requirements are fully satisfied so that you'll see none of that carry into fiscal 2027 or beyond.

Understood. Thanks a lot. Congrats on the progress and good luck.

Thank you.

Sure.

Thank you, one moment for our next question. Our next question comes from the line of Gowshi Sri with Singular Research. Your line is open. Please go ahead.

Good morning, everyone. Can you all hear me fine?

Yeah. Fine.

Good morning.

Good morning. Sally, congratulations to you and to your team completing your first year as CEO. Seemingly, a genuine turnaround is in progress. Impressive set of results.

Thank you.

I just wanted to have a few questions. A few questions designed to kind of stress test the momentum going into fiscal 2027. I know the gross margin came in at 37%. If we strip out the solar revenue, looks like it's around 33%-34%. Even if it's without around 31%, as we think about fiscal 2027, is that 31%-32% still kind of the right structural flow or does the mix shift towards electrical contracting, larger LED projects give you confidence that it can be sustained at a higher level?

I think we can sustain at what would be a high level for us, then we think we're very proud of the margins we achieved in fiscal 2026. In 2027, I think, a round number of 30% is probably the way to think about this as we enter the year. As I mentioned, somewhat subject to quarter-by-quarter mix shifts that can occur. Based on the infrastructure we put in place a year or so ago, plus some of the other changes we've made with the increases in sales volume, we believe that we can achieve margin at that level.

Got you. Net net, is Orion exiting the solar business? Will there be any noise still embedded in the fiscal 2027 numbers?

That was the last remaining bit of solar business we had left. That was a 30-year contract that we amended to essentially stop any further activity in the solar business. There will be no carry-forward activity in that area.

Yeah. I know you guys, in your last call, you were still at the early stages of electrical infrastructure. This seems like kind of a genuine segment now. Are you at a point where you're considering reporting it separately? What kind of revenue run rate should we think of as we think about fiscal 2027 and beyond?

Yeah, it's really something we haven't thought about breaking out separately at this point. It certainly has some momentum behind it, as we've stated in different releases that we've put out. That is managed largely in our services group. That's part of the turnkey services. At this point, we think that would remain managed by that group and reported. To the extent we have significant projects that come along, we would announce those as the orders are received.

Got you. I'll sneak in a last one on the EV side. With the battery energy storage deployment in California, what is the approximate revenue per side? Do you have a target number for 2027? Is it embedded in the $95, $97, or is it kind of still an upside to it?

It's part of our $95-$97. We think there's a lot of opportunity within that segment, whether it's through the EV work that we do or other work that we do with customers as well, but we're pretty early in that solution.

Awesome. Thank you, guys, and congratulations and good luck. I'll jump back in the queue.

Thank you.

Thank you.

Thank you. As a reminder, if you would like to ask a question, please press star one one on your telephone. Our next question comes from the line of Bill Dezellem with Tieton Capital Management. Your line is open. Please go ahead.

Great. Thank you. For clarification, that's Tieton Capital Management. Two questions to begin with. First of all, I have never gone into a data center and looked at the roof, or the ceiling, as the case may be. Would you walk us through what's different about your data center product and why they need anything different or special than any other four-walled box that has a ceiling?

I won't get too technical on the call, but what we've done is, we had a multipurpose linear light that we worked closely with the end users to make sure that it was hitting the right efficiency that they needed, as well as some certain other requirements that they had that were under NDA for some of it. It's a product that we've made, that we have customized for data centers. Another part of the interest from data centers was our ability to customize and make it within our Wisconsin facility to shorten the lead times, as well as their roll-outs and their needs grow.

Great. Thank you. That sales effort, is that taking place through ESCO partners, or are you going direct? How does that sales process look like it will unfold?

In particular, this started with our distribution channel and the partners within that channel. Because of our manufacturing and ability to customize, we think that this solution could be utilized by our other channels as well.

Great. Thank you. Relative to the ESCO and partner channels, you, in the last several quarters, enhanced the leadership in that arena. Would you bring us up to speed as to those activities and where we're at in the process of bringing that back to a well-oiled machine?

Bill, you cut out at the beginning of your question, but I think it is surrounding that channel specifically, the distribution channel?

It is, and the leadership changes-

Okay.

...that you made and the implications.

Month-over-month, we're growing in that channel and specifically working closely with customers. The leader of that channel brought this opportunity to us, and we've been working, obviously, for quite some time to bring it together. It is leadership like that that will help us expand in that channel and continue to grow and have the right strategy to not only the strategy to service that channel, also what other products do we need to bring to help us be stronger in that channel as well. We think there's a lot of opportunity there.

Sally, I will follow up on that last comment relative to products to service that channel. There are gaps that are meaningful revenue opportunities that you all are in process of addressing with your product lineup.

I think another product to speak to that we've talked about is a roadway product. That's another opportunity that we're working through the distribution channel as well. That's a product that goes on the streets and highways of America. We think that there's opportunity as well there.

Great. Thank you. Look forward to watching the future quarters unfold.

Thanks, Bill.

Thank you. This concludes our question and answer session. I will turn the call back to Sally Washlow for concluding remarks.

I want to thank everyone again for taking time today to join us. We look forward to updating investors on our first quarter FY 2027 call in August. We look forward to meeting with many of you, whether in person or virtually, between now and then. We will be presenting at a number of conferences, so please watch for our forthcoming announcements regarding scheduling. Please also reach out to our investor relations team to set up a meeting for any other information. Their contact information is at the bottom of today's press release. Many thanks again for your interest in Orion. I look forward to continuing to update you on our progress.

Thank you. This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.

Good morning, everyone, and welcome to Orion Energy Systems Fiscal 2026 Third Quarter Conference Call. [Operator Instructions] In this call, Sally Washlow, Orion's CEO; and Per Brodin, its CFO, will review the company's third quarter results and its fiscal 2026 and fiscal 2027 outlook. We will then open the call to investor questions. Today's call is being recorded. A replay will be posted in the Investors section of the company's website, orionlightning.com. I will now turn the call over to Per Brodin, Orion's CFO. Please go ahead.

Thank you, Michelle. First, 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 our 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'll turn the call over to Orion's CEO, Sally Washlow.

Thank you, Per. Good morning, everyone, and thank you for being with us today. I am delighted to report our results for Q3, our fifth straight quarter of positive adjusted EBITDA. In our last investor call, I said that we were on track to achieve 3 milestones in FY 2026. Milestone one, maintain our NASDAQ listing and maximize our opportunity for growth and shareholder value. As our shareholders can attest, we have checked that box. Milestone two, by the end of third quarter, the enactment of a growth, profitability and cost containment initiative that enables Orion to become a recognized long-term market leader. As today's earnings report can attest, we have checked that box too. And 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. As we announced 2 weeks ago, we believe we are on track to meet or exceed this milestone. The most illustrative way to bring you up to date about Orion is to review the 2 news items we announced a couple of weeks ago. First, we upticked our guidance range for our current fiscal year and set expectations for increasingly profitable growth in our next fiscal year, which begins April 1. We raised our FY '26 outlook to a range of between $84 million and $86 million in revenue at positive adjusted EBITDA. Again, that's up from our previous outlook of $84 million in revenue at or approaching positive adjusted EBITDA. Our guidance range increase was sparked by our Q3 expectations of about $21 million in revenue and our fifth straight quarter of positive adjusted EBITDA, which are indeed the results that we are reporting today. Additionally, we now expect positive adjusted EBITDA for the full FY '26, which ends March 31. We expect continued up and to the right profitable growth in FY '27 with positive adjusted EBITDA on revenue between $95 million and $97 million. We based our uptick on increasing orders and the success of our recent cost structure improvements. A few of these recent orders include an exterior lighting project valued between $14 million and $15 million beginning now in our current Q4 with the bulk of it completed in the first half of our FY 2027. This is an example how we expand our scope of work within our current customer base. We expect more of this expansion in FY '27, along with more new customer wins as well. Our strategy to expand the products and services we provide is exemplified by the recent 3-year renewal of a maintenance contract as well as our growing backlog. We grow our business by listening to our customers and developing the products and services they need. Another area of focus that we are continuing to quote and win more and more work is within electrical infrastructure, which we define as integrated offerings within our LED lighting and EV charging lines of business. An emerging example of this for some customers is our initial integration of a localized battery storage solution that enables facilities to minimize cost and maximize efficiency by drawing on stored energy. Another example is the Orion Voltrek announcement just this week of our latest work for the Boston Public School System, a $4 million installation of 105 EV charging stations and related infrastructure. Orion Voltrek is a recurring partner in the BPS initiative to electrify 100% of the district's 750 school buses, the largest school bus electrification program in the Northeast. As I've said before, a number of industrial, commercial and public sector facilities operated by some of the largest enterprises in the United States rely on Orion. Year after year, our largest long-time customers stay with us and grow with us because we deliver unsurpassed quality and unsurpassed ROI on an ongoing basis. One reason that they rely on us is that we are reliable, in part because our proprietary supply chain enables us to maximize efficiencies, minimize dwell times and avoid choke points. As they also know that our built from the ground-up supply chain also helps insulate us from the risk factors associated with the headlines of the day. Another reason our customers rely on us is that we earn more of their confidence the more we do with them. That includes retailers, 2 of the largest automakers on earth and one of the biggest school systems in America. Customers require the most demanding standards of efficiency, reliability and compliance, repeatedly increase our scope of work because we deliver on time and on budget. We see increasing market -- customer and market demand ahead of us as evidenced by our uptick expectations of growth and profitability through FY '27. We expect to benefit from market tailwinds, especially in building, reshoring and refurbishing industrial facilities ranging from data centers, to manufacturing plants, to big box retail stores and public sector buildings. EV fast charging continues to be an area of opportunity according to Paren research. While the U.S. EV charging market faced uncertainty in 2025, the most recent Paren report expects 8% growth in 2026. Paren also cites growth trends in ports per site and rip and replace of existing EV charging infrastructure. It foresees what it calls a private-led expansion and improved CPO economics. The report puts a premium on execution, quality and asset efficiency. We believe we have rightsized and recalibrated Orion for that environment that Paren describes, and we believe that puts us in position for market expansion, product extensibility and profitable growth. We could not be more energized about the remainder of the current fiscal year and the entirety of the next year. With that, let me turn to Orion's CFO, Per Brodin, to review our financial performance and outlook.

Thank you, Sally. Today, we reported fiscal Q3 '26 revenue of $21.1 million compared to $19.6 million in Q3 '25. LED lighting segment revenue was $12.1 million compared to $13.2 million in Q3 '25, reflecting decreased project activity and ESCO channel sales, partially offset by an increase in distribution channel sales. Orion's expanded LED lighting project pipeline and efforts to drive growth in the distribution channel are expected to continue to contribute to higher revenues in Q4 '26 and into fiscal '27. In addition, we are expecting a very strong Q4 from the turnkey Group. Lighting achieved a Q3 '26 gross margin of 30.6% versus the 30.2% in Q3 '25 with pricing increases, cost reductions and sourcing initiatives amplified by a more favorable Q3 '26 project and revenue mix contributing to this performance. Maintenance segment revenue increased 13% to $4.4 million in Q3 '26 from $3.9 million in Q3 '25, reflecting the benefit of new customer contracts and the expansion of some existing relationships. We achieved a maintenance segment gross margin of 25.5% in Q3 '26 versus 26.4% in Q3 '25. EV charging solutions revenue was $4.7 million in Q3 '26 compared to $2.4 million in Q3 '25, reflecting the expected completion of a significant project within the quarter. EV achieved a gross margin of 36.7% in Q3 '26 versus 30% in Q3 '25. Our overall gross profit margin increased to 30.9% versus 29.4% in Q3 '25, reflecting pricing and cost improvements in all segments, particularly LED lighting and EV. We expect our overall gross margin to remain strong in Q4 '26 and throughout fiscal '27 that will likely vary on a quarterly basis due to revenue mix and volume. Total operating expenses declined to $6.1 million in Q3 '26 from $7 million in Q3 '25, reflecting ongoing overhead and personnel expense reductions. Reflecting stronger gross margin and lower operating expenses, Orion's Q3 '26 net income was $160,000 or $0.04 per share compared to a net loss of $1.5 million or $0.46 per share in Q3 '25. Adjusted EBITDA improved to positive $761,000 in Q3 '26 versus $32,000 in Q3 '25, reflecting continued cost control and financial discipline. As Sally mentioned, this was Orion's fifth consecutive quarter of positive adjusted EBITDA. That puts our trailing 12-month adjusted EBITDA at $1.6 million on sales of $81.5 million. Year-to-date cash provided by operating activities was $400,000 through Q3 '26 compared to $1.3 million in the prior year period. During the year, we have also had a $1.3 million net paydown of our revolving credit borrowings. Net working capital was $8.9 million at Q3 '26 versus $8.7 million at year-end. Available financial liquidity was $11.8 million versus $13 million at year-end. Notably, we recently raised net proceeds of approximately $6.4 million through the issuance of 500,000 shares of common stock, which provides us with growth capital and the ability to pay down amounts outstanding on our revolving credit facility. Regarding our outlook, as Sally noted, last month, we increased our expectations for growth and profitability for our current fiscal year and set expectations for increasing growth and profitability in our next fiscal year, which begins April 1. We raised our fiscal '26 outlook to a range of between $84 million and $86 million in revenue at positive adjusted EBITDA. That's up from our previous outlook of about $84 million in revenue at or approaching positive adjusted EBITDA. And now we expect positive adjusted EBITDA for the full fiscal year '26, which ends March 31. We also announced that we expect a continued increase in profitable growth in fiscal '27 with positive adjusted EBITDA on revenue between $95 million and $97 million. And this concludes our prepared remarks. Operator, would you please now commence the question-and-answer session.

[Operator Instructions] Our first question comes from the line of Eric Stine with Craig-Hallum Capital Group.

So maybe just starting with the external lighting project, the $14 million to $15 million, obviously, very good to see. Just curious, I know some contribution in Q4, but maybe just for help on our side, any early thoughts on kind of linearity of revenue 1Q, 2Q of fiscal '27. And then it also sounds like you're pretty optimistic that -- I know you've been doing work with -- significant work with Home Depot over time, but that this $14 million to $15 million has some expansion potential with it as well.

Eric, it's Per. I think maybe the way to think about it is we did start with some of those projects in, say, late January of this quarter. We expect that effort to ramp in January, February and March and have said we expect the majority of that revenue to hit in the first half. And actually, we expect to be complete by the end of July. So I would think that there's some initial revenue ramp in the fourth quarter here of '26, then I would expect that over those first 5 months of fiscal '27, it will be a little bit more of a steady earnings on revenue.

Got it. That's helpful. And then the expansion potential [indiscernible] that project, if there is some, then maybe expand on that.

Yes. Eric, we think that there's potential expansion, as we've noted with -- in this customer. We work closely with them day in and day out. That probably would not be in the, we'll call it, the first half of the year as we continue to be a partner with them.

Okay. And then just second one quick. Very good to see the OpEx come down again. Per, I believe you termed it as a result of ongoing cost reduction initiatives. So where could that potentially go? I mean is this kind of a quarterly run rate we should think about? Or is there a potential further reduction?

We'll continue to try to manage those operating expenses as closely as we can. I think a lot of that effort, as you would suspect, ends up being finding cost savings to mitigate other cost increases. So I would think that ongoing expenses would be at that level or potentially slightly more, but probably at least in Q4 that that operating expense number would start with a 6.

[Operator Instructions] Our next question comes from the line of Gashi Rowe with Singular Research.

Can you hear me?

Yes.

Congratulations on your quarter. On the maintenance side, you clearly had some big win at a large retailer. I'm curious as to about the next tier of customers. Are you seeing those smaller midsized enterprises adopt a similar preventative maintenance model? Or is this still more of a one customer phenomenon at this stage?

Thank you. So no one to the scale that this large retailer is for us in that division, but we are seeing increases month-over-month within some of our other customers and continue to pursue new customers and contracts within the space.

Got you. And with the strong run of contract wins with a handful of large customers, can you talk about how you are underwriting the execution risk? I know in the past, you've seen some -- experienced some delays. Any kind of orders or penalties? How much room is there in your margins and guidance if one of these programs experiences the kind of delays that you have seen in the past?

I think that risk exists on an ongoing basis, and we say, temper our outlook with that potentiality. So I would say that we have tried to take into account any issues that might arise that we have at least some visibility to at this point.

Our next question comes from the line of [ Matt Dunn ] with Tieton Capital Management.

Great. That's Matt Dane with Tieton Capital. I wanted to ask about the distribution segment. You referenced that you're seeing some success there. Just wanted to get a little bit more color around that. What's driving that success? And what type of runway do you see with that as well?

Matt, so driving that success, we're out there with the customers expanding our relationships. As noted, we expanded the team that calls on that channel earlier this year, and that's proving to bear fruit. And also, we're looking at developing products from the request of customers in that channel as well. So we expect to engage further in the channel and deliver the products that they're asking for us to deliver as well.

Great. I did also want to ask about the infrastructure opportunity, electrical infrastructure opportunity. How much revenue are you getting from that newer area of your business to date? And I guess I just have a hard time really sizing how large the opportunity is over time. What can you share around all that?

So the shape of the revenue that we get is certainly evolving from what traditionally we'd say product sales and some of that even comes from the EV segment and the installation that we do there. But where -- and we're developing this. So I guess I don't have a hard number for you. But where we're getting some of these projects from is expansion within maybe an installation job that we had and there's expanded work to do on site. We're there, and they're requesting us to do that expansion of work, which can be 7 figures in terms of the scope of those jobs that they ask us to do. So initially, when we got there, we didn't expect it, and then it's further grown.

Okay. And so is it -- how significant is the revenue that is contributing so far? Or is it still -- it's really not a huge amount of revenue and it's more of a future expected additional revenue that is going to add?

Yes. We're continuing to build it. And as we build out our plans for next year, we look at what the potential of this could be.

Maybe a different way to think about it, Matt, is we have had some good wins on that standpoint, both from, I'll say, an overall win on a couple of jobs. And we've also had, to Sally's point, a couple of expansions on what started as lighting projects that is not yet fully in our results through the end of Q3. A lot of that is, I'll say, one business, but some of that will be recognized in Q4, and some of that will go into fiscal '27, and we're hoping to build on those successes as we go. So it's a little hard to size it at this point.

This concludes the question-and-answer session. I will turn the call back over to Sally Washlow for concluding remarks.

I want to thank everyone again for taking time to join us today. We look forward to updating investors on our fourth quarter call in early June. Between now and then, we look forward to meeting with many of you or to meet whether it's in person or virtually. We will be presenting at a number of conferences, so please watch for our forthcoming announcements regarding scheduling. Please also reach out to our Investor Relations team to set up a meeting or for any other information. Their contact information is at the bottom of today's press release. Many thanks again for your interest in Orion. I look forward to continuing to update you on our progress.

Thank you. This concludes today's conference call. You may all disconnect. Everyone, have a great day.

Good morning, everyone, and welcome to Orion Energy Systems Fiscal 2026 Second Quarter Conference Call. [Operator Instructions] In this call, Sally Washlow, Orion's CEO; and Per Brodin, 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 Investors section of the company's website, orionlighting.com. I will now turn the call over to Per Brodin, Orion's CFO.

Thank you, Rica. 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's 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 1/3 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 are on track to achieve 3 milestones in fiscal 2026. Milestone 1, 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 2, 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 3, 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 the 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 3-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 win 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 3 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 3 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 continence 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 1/3 was also a standout. This was largely achieved by continuing reductions in LED lighting fixture cost 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 a 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 connective 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 megatrends 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 megatrends, and it has solutions to not just serve them, but to accelerate them. With that, let me turn to Orion's CFO, Per Brodin, to review our financial performance and outlook.

Thank you, Sally. Today, we reported fiscal Q2 '26 revenue of $19.9 million as compared to $19.4 million in Q2 '25, with 2 of Orion's 3 segments growing year-over-year. LED lighting segment revenue decreased 2% to $10.7 million compared to $10.8 million in Q2 '25, reflecting increased project activity and distribution channel sales, offset by lower ESCO channel sales. Orion's expanded LED lighting project pipeline and efforts to drive growth in the distribution channel are expected to contribute to higher revenues in the back half of fiscal '26 versus fiscal '25. Lighting achieved a Q2 '26 gross margin of 27.5% versus 25.4% in Q2 '25, with pricing increases, cost reductions and sourcing initiatives being amplified by a more favorable Q2 '26 project and revenue mix. Maintenance segment revenue increased 18% to $4.5 million in Q2 '26 from $3.8 million in Q2 '25, reflecting the benefit of new customer contracts and the expansion of some existing relationships. We achieved a maintenance segment gross margin of 23.7% in Q2 '26 versus 15.3% in Q2 '25, as there was a significant inventory charge recorded in Q2 '25 as part of the segment restructuring. EV charging solutions revenue was $4.8 million in Q2 '26 compared to $4.7 million in Q2 '25, reflecting the expected completion of a significant project within the quarter. EV achieved a strong gross margin of 45.8% in Q2 '26 versus 23.7% in Q2 '25 due to a strong improvement in sales mix. Our overall gross margin increased 790 basis points to 31% versus 23.1% in Q2 '25, reflecting pricing and cost improvements in all segments, particularly LED lighting and maintenance. We expect overall gross margin to remain strong in fiscal '26, though it will likely vary on a quarter-by-quarter basis due to revenue mix and volume. Total operating expenses declined to $6.4 million in Q2 '26 from $7.7 million in Q2 '25, reflecting ongoing overhead and personnel expense reductions and earnout expense of $0.6 million in Q2 '25 that did not recur in 2026. We expect operating expense to approximate Q2 levels in the remaining 2 quarters this year. Reflecting stronger gross margin and lower operating expenses, Orion's Q2 '26 net loss improved to $0.6 million or $0.17 per share from a net loss of $3.6 million or $1.10 per share in Q2 '25. Adjusted EBITDA improved to a positive $0.5 million in Q2 '26 versus a negative $1.4 million in Q2 '25, reflecting cost control and financial discipline. As Sally mentioned, this was Orion's fourth consecutive quarter of positive adjusted EBITDA that puts our trailing 12-month adjusted EBITDA at $0.9 million on sales of $80 million. Year-to-date cash provided by operating activities improved to $1.3 million in Q2 '26 from a use of cash of $2.5 million in the prior year period, primarily due to the improved bottom line performance. During the year, we have also had a net paydown of our revolving credit borrowings by $1.25 million. Net working capital was $8.1 million at Q2 '26 versus $8.7 million at year-end, primarily reflecting the use of cash to pay down on the revolver. Available financial liquidity was $13.5 million versus $13 million at year-end. During the quarter, we issued $1 million of common stock and made $875,000 of cash payments to partially satisfy the Voltrek earn-out obligation. Turning to our fiscal '26 outlook. We have reiterated the fiscal '26 revenue growth expectation of 5% to approximately $84 million that we initiated in June. We have also reiterated that our revenue growth outlook positions Orion to approach or achieve positive adjusted EBITDA for the full fiscal year, depending on revenue mix. This growth outlook anticipates modest growth in LED lighting and electrical maintenance revenues and flat to slightly lower EV charging revenues. And this concludes our prepared remarks. Operator, would you please commence the question-and-answer session?

[Operator Instructions] Our first question comes from the line of Eric Stine of Craig-Hallum Capital Group.

So maybe just starting on the EV business. I mean, clearly, a positive development with clarity from the government. And I know that a lot of your business there has been through utility programs. But I guess I'm curious what you are seeing with some of your customers. And I think this maybe goes hand-in-hand with the energy infrastructure initiatives and a bundled offering. But I do know that part of the reason that you made this acquisition a while back is because your customers were requesting these capabilities. So just curious what you're seeing from your enterprise customers.

Eric, yes, we're absolutely seeing some of that from our enterprise customers, bringing whether it's an LED lighting project that would have started out as that, but bringing then EV charging into their parking lots as well. So that is some of the things that we're seeing in that. Our business was -- had a lot of utility programs, but I think you've seen in recent announcements, further expansion of the work with Boston Public Schools, MassDOT, as well as the state continues to build out its infrastructure and then hiring additional salespeople. We hired gentlemen based in our Florida office to help further expand our geographic reach as well. And we have a couple of other areas targeted that we're investigating right now and more to come on that.

Okay. And then, I mean, I guess, segue to energy infrastructure, is this something where you feel like you can accelerate some of that traction if you are going to the market with more of a bundled offering? Or maybe that's -- I'm not sure if that's how you think about it or not, but a bundled offering where, again, a customer just has one point of contact for everything that they want to do.

Yes. We're certainly looking at that, and a lot of it has been developed through customer requests. We're on site. They see the work that we do. An example of this would be it started as an LED lighting project, but maybe they need help bringing their facilities up to code. And then they turn to us to say, "Can you do that and manage that project for us as well?" So those are where the work in electrical infrastructure is expanding, and we're at the very beginning of this as well, but even energy storage so that they look to offload the peak time, so working to develop relationships to bring energy storage into their facilities as well.

Got it. Okay. Maybe last one. Just you had the maintenance agreement renewal. I think we can all kind of guess who that customer is. But just curious, maybe not to that size, given who that customer is, but what are you seeing on that front? Clearly, you are sounding more positive, although modest growth this year, certainly long term on the maintenance side. What are you seeing in terms of demand there from other enterprise customers?

So we have some other customers as well. It's a little bit of a slower build as we work with them. But month-over-month, that revenue is growing with them as well and the trust that they have in us. So we think that, that will continue to expand.

Our next question comes from the line of Sameer Joshi of H.C. Wainwright.

Just a little bit more on the EV outlook. I know you are expecting flat or slightly lower year-over-year growth there. But in terms of the strategy going forward, given that these funds are now -- the $5 billion are being made available, do you expect or are you planning to have some kind of a geographic expansion or maybe a roll-up with some other similar businesses that might increase the size of your EV offering?

Sameer, we are certainly looking at a geographic expansion. And of note, hiring a sales gentleman to lead our Jacksonville office and then other areas of the country as well. The teams are working on mapping out where we best have personnel and then also where there's a lot of EV infrastructure work going on. So we certainly expect further geographic expansion.

Understood. Switching to lighting. I think one of the things I may have misheard, but just making sure the $42 million to $45 million recurring revenue potential, is that over the life of the contract? Or what do those numbers represent?

Yes. It's a 3-year contract renewal. So that's over the life of the 3-year contract.

Okay. And then, of course, I should have started with congratulations on the cost control efforts and the results. But I also heard during the commentary from both of you, the word ongoing. Should we expect further improvements in gross margins to like mid-30s or near that level? And on the operating expense front, I have noticed in the last couple of quarters, your sales and marketing expense as a percent of revenues have reduced. Are there some synergies you are seeing there that we may have missed?

Yes, Sameer, I think a couple of thoughts on those questions. I'll try to catch all of them. On the expense line, I think what I tried to convey is that the Q2, the most recent quarter that we completed from an OpEx standpoint is the level that I think we expect for the next 2 quarters. We are -- I think some of the other comments are aimed at saying that we will continue to look for savings opportunities that are out there. But at the same time, we'll also look for opportunities that we may need to invest a little bit of money as we did with the salesperson in EV because we think that will have a good payback for us as we expand sales in the EV segment. From a margin standpoint, I don't think in the near term, we have an expectation of getting into the mid-30s. I think being in the neighborhood of the high 20s to 30% is probably more realistic. As I mentioned, there will definitely be some fluctuation there depending on mix as well as sales volumes that cover fixed costs within our COGS structure. So hopefully, that clarifies those two.

Yes, understood. Just last one maybe and just a clarification. The $875,000 paid during the quarter, were they part of -- on a GAAP accounting basis from a previous quarter? Or are these $875,000 included in the OpEx that are for the September ending quarter?

The $875,000 that was paid had been accrued as of March 31, as was the $1 million that was paid in equity. So we had the larger accrual at March 31, we made those two payments. And then there's still a remaining balance that as we've disclosed separately, is subject to arbitration. So we expect that to play out over the next quarter or so.

And has that been accrued or is that pending the settlement?

We've accrued what we believe is the appropriate amount, and that was accrued as of March 31.

[Operator Instructions] Our next question comes from the line of Bill Dezellem of Tieton Capital Management.

I have a group of questions. I'd like to start with the Lighting business. You brought in some talent to reignite ESCO distribution revenues. Would you please discuss whether there's been any tangible benefit yet? And I recognize it's very early to ask the question or whether that pipeline is still developing.

Bill, it's Per. Yes, I think in my remarks, I mentioned that in the quarter, our distribution channel revenues increased, and that's where the, I'll say, the main talent addition that we discussed back in the June time frame was mentioned. I think that he has landed on solid ground and with a running start of some sort because of his connections within the industry. And we think that he will continue to build that. That was consistent with another comment I made in my commentary. So I think the ESCO channel, we've not made recent investments from a sales standpoint in that channel, but that is a channel that we will also press on to ensure that we can maximize the opportunities on all 3 of the lighting channels.

So in spite of his short tenure, there already has been a benefit. So if that's the case, presumably one doesn't hit their full stride and at maximum performance in just a few months. So presumably, that business builds and that's part of what your comments were alluding to relative to the remainder of the year?

That's correct. And we have high expectations as we move forward into the next 2 years.

Great. And Per, did I hear you in response to my question, also say that you will be adding additional sales talent in the distribution arena? And if that is the case, are you essentially waiting for a little higher revenue so that you can pay for that individual who will then generate the next level and start layering on top of layers?

No, I did not say that. I'd say that it's something that would certainly be considered as the current executive continues to perform and as we evaluate other opportunities to grow that channel. But no firm plans at this time.

Okay. That's helpful. And then I'd like to shift to maintenance real quick. The quarter you said had a headwind because you had unprofitable maintenance contract that you walked away from. How much of a revenue headwind was that in the quarter?

So we -- I don't have the exact number right now at my fingertips, but it was from last quarter. So quarter-over-quarter as that -- or last year, I apologize. As those contracts lapse, then we're growing the business in other areas was the intent of that.

Last year, we essentially were wrapping up that contract in Q2 of fiscal '25. So there was headwind of a tough comp, but it was not -- I'd just say round numbers, it would have been less than $0.5 million.

Okay. And then did you add any notable business beyond your largest customer in the maintenance arena this quarter specifically?

We have continued to add some customers or growth within customers beyond the large customer. The large customer does take up a significant portion of it. So they're of note to us because they are growing every month, and we'll continue to watch their growth and further partner with them and gain more customers in that area.

Maybe another way to think about it, Bill, is we've gained new customers over the past year, and the business we're doing with them has expanded as we've moved forward in that relationship.

Per, I'm going to build off of that. Do you see an opportunity with those customers to continue to build further as you execute? Or are you now reaching kind of a steady-state run rate with them and you'll be needing to add additional -- not that you don't want to already, but you'll need to add additional customers to build revenue further?

I think it will be a little bit of both. The -- we don't believe we're at run rate with some of these newer customers. So we think that will continue to expand, and we think we will continue to attract new customers as we move forward.

Right. Okay. That is helpful. And then at a high level, do you see the maintenance business as a lead generator for product sales, whether it be lighting or EV?

I mean we are seeing some of that with the maintenance products. Product sales within that segment are increasing. So certainly, we look to all customer touch points as potential lead generators into other areas.

I guess, Sally, where I was going with that is, does it give you a special insight that you may not otherwise have if you weren't inside the customers' 4 walls doing the work?

Yes. So I guess to answer that part of it, absolutely, we see some of that with the expansion of some of the services that we're doing. Had we not been within the 4 walls of the customer and maybe doing work in other areas, and they're asking, "Can you project manage this part of bringing some of our systems up to code as well?" We wouldn't have gotten that business had we not been there working side-by-side with them.

That's helpful. And then I know I'm taking up a lot of time, but one additional question or clarification relative to the EV business. I heard I thought 2 different things in terms of your commentary. One is some level of caution for the remainder of the year for sales there, but that there's also more clarity on the EV rules and that bodes well for the future. So let me try to put a fine point on it here that the Q1 EV revenue was $2.7 million. Here in Q2, it was $4.8 million. Are you anticipating approximately holding at this $4.8 million for the next couple of quarters? Or do you continue to see some level of growth from the $4.8 million?

Yes. I think we're cautious on our guidance for the year because we ultimately lost a couple of months there with all the uncertainty at the beginning of the year. But our expectation is to be flat to a little bit down in EV for the year. But I think your numbers are right in the realm of what we expect to do for the next couple of quarters to deliver on that and start to regain some momentum from what was basically lost or at a standstill in the first quarter.

Our next question comes from the line of Steve Rudd of Blackwall.

Very encouraging results. Can you talk about the cost containment? I mean, obviously, we're seeing top line trend of growth from a cost containment and cost leveraging point of view or infrastructure leveraging point of view, how much more room do we have to go?

If I interpret your question properly. We think we have -- I'll step back. Earlier in the year, we think we rightsized the business so that we could be at or above breakeven in the $80 million to $83 million of revenue standpoint. And that's on an adjusted EBITDA basis. I think now that we have 4 consecutive quarters of positive adjusted EBITDA and $80 million of trailing 12 revenues, I think that's holding true. So -- and then if you look at our guidance, we obviously are expecting a little bit stronger performance in the second half compared to the first half to get to the $84 million. In terms of what we can deliver with the infrastructure that we have, we think that we can leverage this infrastructure quite a bit. There certainly are some variable costs such as commissions on sales. We always are happy to pay increases in commissions because that means our sales are increasing. So there'll be some things like that, that will come to us. But we think on an overall basis, we'll be able to leverage this infrastructure with a fair amount of revenue growth.

So it's your assessment at this point that you have your baseline costs exactly where you'd like them to be and not much more to be done there?

I'd say in general, yes. But to my -- one of my previous comments, you're always looking for opportunities for savings. And some of that you may need to try to find money to invest in growth opportunities, and that's the balance that we'll continue to work on as we move forward.

This concludes our Q&A session. I'll now turn the conference back to Sally Washlow for concluding remarks.

I want to thank everyone again for taking time to join us today. We look forward to updating investors on our third quarter call in early February. In the interim, we hope to have an opportunity to meet with many of you either in person or virtually. We will be presenting at a number of conferences, including the Craig-Hallum Alpha Select Conference on November 18. Details will be coming out tomorrow and the Singular "Best of the Undercovered" (sic) [ Uncovered ] conference on December 11. We will announce details via press releases. Please also reach out to our Investor Relations team with any questions or to set up a meeting. Their contact information is at the bottom of today's press release. Thank you again for your interest in Orion. I look forward to updating you on our progress next quarter.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.