Financial Highlights

• Q3’19 revenue rose 23% sequentially to $16.3M versus $13.2M in Q2'19.
• Gross margin improved 630 basis points to 25.6% in Q3’19 versus Q2'19.
• Total operating expenses were $4.8M in Q3’19, same as Q2’19, versus $6.5M in Q3’18, reflecting the benefit of continuing cost reductions and continued cost discipline.
• Net loss narrowed to ($0.7M) or ($0.02) per share versus ($2.4M) or ($0.08) per share in Q2’19.
• EBITDA loss narrowed to ($0.1M) in Q3’19 versus ($1.8M) in Q2'19.
• In January, Orion announced an $11M letter of intent to retrofit a number of an existing customer's facilities and $3.6M in awards for LED lighting solutions for US Government facilities, demonstrating significant progress with national accounts and public sector customers.    
• Management is reiterating prior directional goal of 5-10% revenue growth in fiscal year 2019.

CEO Commentary

Mike Altschaefl, Orion’s CEO and Board Chair, commented, “Orion’s sequential revenue improvement in Q3'19 was principally due to expected strength from large national account customers, a favorable trend we expect will continue in the fourth quarter and into fiscal 2020.

“Orion’s turnkey design, engineering, manufacturing and project management capabilities represent a very clear competitive advantage for us among large enterprises seeking to benefit from the illumination benefits and energy savings of LED lighting across hundreds of locations nationwide. Few LED lighting providers are organized to serve every step of a custom retrofit project in a comprehensive, non-disruptive and timely fashion, from custom fixture design and initial site surveys to final installations. Incrementally, we are also able to help customers deploy state-of-the-art control systems that provide even greater long-term value from their lighting system investments.

"Looking forward, we are actively pursuing national account opportunities that leverage our customized, comprehensive turnkey project solutions, while also expanding our addressable market with high-quality, basic lighting systems to meet the needs of value-oriented customer segments served by our other market channels. Given our unique value proposition, capabilities and focus on customer service, we are optimistic about our business prospects and working to build sales momentum with existing and new customers.”

Updated Financial Outlook

Orion’s order bookings were $13.0M in Q3'19 and $45.1M for the first nine months of fiscal 2019, an increase of 1% over the first nine months of fiscal 2018. This order activity yielded an order backlog of $5.1M at the close of Q3’19, compared to $8.4M at the close of Q2’19. Reflecting Orion’s anticipated order activity and revenue to date, principally in the area of national accounts, management is reiterating its fiscal 2019 revenue growth goal of 5-10% communicated in its Q2’19 results announcement. Orion reminds investors that its stated financial goals are directional targets - not explicit forecasts or projections.

Q3’19 Results
Orion’s Q3’19 revenue declined 5.6% to $16.3M compared to $17.3M in Q3'18 but improved 23.4% compared to Q2’19.

Gross margin declined to 25.6% in Q3'19 versus gross margin of 29.6% in Q3'18, principally reflecting less overhead absorption on lower revenue in the recent period. Gross margin continued to improve sequentially to 25.6% in Q3’19, compared to 19.3% in Q2'19 due to higher revenue, improved mix and cost management efforts.

Orion’s Q3’19 net loss improved to ($0.7M), or ($0.02) per share, versus ($1.4M), or ($0.05) per share in Q3’18, principally due to the impact of lower operating costs, which more than offset a decrease in gross profit. Orion's net loss was ($2.4M), or ($0.08) per share, in Q2'19.

Orion’s Q3’19 negative EBITDA narrowed to ($0.1M) from ($0.8M) in Q3'18. 

Balance Sheet & Cash Flow
At the end of Q3’19, Orion had $6.6M in cash and cash equivalents and $3.3M in borrowings under its revolving credit facility. Net working capital was $8.6M and shareholder's equity totaled $18.7M. Cash flow from operating activities was a use of cash of $0.5M during the quarter.

During Q3'19 Orion secured a new $20.15 million revolving credit facility with Western Alliance Bank to increase its financing capacity and provide liquidity for operations and growth. The new facility replaced a $15 million facility, subject to borrowing base requirements on eligible receivables and inventory.