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Orion Energy Systems, Inc. (OESX - Free Report) announced preliminary results for third-quarter fiscal 2023 that reflected project delays and slower-than-expected activity. The company also lowered its revenue expectation for the full year.
Orion’s shares declined 2.7% in the trading session and 4.5% in the after-hour trading session on Jan 23.
The company's shares have plunged 40.4% compared with the Zacks Building Products-Lightning industry's decline of 28.8%.
Image Source: Zacks Investment Research
Fiscal Q3 Preliminary Results
Orion’s preliminary third-quarter results depict the impact of certain factors like continuous delays in the initiation of certain large customer projects along with slower project activity in its electrical contractor distribution channel. Owing to these factors, the company reported fiscal third-quarter revenuesof $20 million, reflecting a decrease of 34.9% from the year-ago period. That said, the quarterly revenues improved sequentially from $17.6 million.
The preliminary quarterly revenues of the company missed the Zacks Consensus Estimate of $25.1 million.
Fiscal third-quarter gross margin of 25% improved from 24.9% a year ago but contracted from 25.3% in the prior-reported quarter. Moreover, the company expects cash flow from operations to be positive in the quarter.
At the end of the fiscal third quarter, the company’s liquidity was $19 million, including $8 million of cash and cash equivalents and $11 million in availability under its credit facility.
Revised Outlook
Depending on the current business environment, economic challenges and pandemic-related constraints the company has revised its 2023 financial outlook and initiated its fiscal year 2024 revenue growth rate expectation.
For fourth-quarter of fiscal 2023, the company expects revenues to improve sequentially. It expects the quarter to be the strongest quarter of fiscal 2023 and likely will exceed year-ago’s revenue of $22.1 million.
Overall, Orion now expects fiscal 2023 revenues between $77 million and $80 million, lower than the earlier expectation of $90 million-$110 million. Delays in the activation of large Department of Defense (DoD) and automotive projects have pushed anticipated revenues from these projects into the fourth quarter of fiscal 2023 and fiscal 2024.
The automotive projects shifted start from the third-quarter to the fourth-quarter of fiscal 2023. The $9 million DoD project is expected to start from the first-quarter of fiscal 2024. Also, sales through the lighting distribution channel were slow due to a softening economic environment. This eventually shifts a significant amount of revenues to the last quarter of 2023 and fiscal 2024.
Despite these challenges, the company expects the maintenance business, with its recurring revenues, and EV business to accelerate as they initiate cross-selling activities, drawing significant revenues in fiscal 2024. These factors will help revenues to grow in fiscal 2024 compared to fiscal 2023.
The revenue growth rate of fiscal year 2024 is expected to be 30%, which is comparatively more than fiscal 2023.
United Rentals currently sports a Zacks Rank #1. Shares of the company have gained 41.1% in the past six-month period. The long-term earnings growth rate of the company is 18.2%.
The Zacks Consensus Estimate for URI’s 2023 sales and EPS suggests growth of 11.8% and 15.3%, respectively.
CRH currently flaunts a Zacks Rank #1. Shares of CRH have rallied 24.6% in the past six months.
The Zacks Consensus Estimate for CRH’s 2024 sales and EPS suggests growth of 3.5% and 11%, respectively, from the year-ago period’s reported levels.
Dycom currently carries a Zacks Rank #1. DY has a trailing four-quarter earnings surprise of 142.9%, on average. Shares of the company have gained 16.3% in the past year.
The Zacks Consensus Estimate for DY’s fiscal 2024 sales and EPS suggests growth of 7.3% and 28.1%, respectively, from the year-ago period’s reported levels.
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Orion (OESX) Preliminary Q3 Results Depict Delay, View Updated
Orion Energy Systems, Inc. (OESX - Free Report) announced preliminary results for third-quarter fiscal 2023 that reflected project delays and slower-than-expected activity. The company also lowered its revenue expectation for the full year.
Orion’s shares declined 2.7% in the trading session and 4.5% in the after-hour trading session on Jan 23.
The company's shares have plunged 40.4% compared with the Zacks Building Products-Lightning industry's decline of 28.8%.
Image Source: Zacks Investment Research
Fiscal Q3 Preliminary Results
Orion’s preliminary third-quarter results depict the impact of certain factors like continuous delays in the initiation of certain large customer projects along with slower project activity in its electrical contractor distribution channel. Owing to these factors, the company reported fiscal third-quarter revenuesof $20 million, reflecting a decrease of 34.9% from the year-ago period. That said, the quarterly revenues improved sequentially from $17.6 million.
The preliminary quarterly revenues of the company missed the Zacks Consensus Estimate of $25.1 million.
Fiscal third-quarter gross margin of 25% improved from 24.9% a year ago but contracted from 25.3% in the prior-reported quarter. Moreover, the company expects cash flow from operations to be positive in the quarter.
At the end of the fiscal third quarter, the company’s liquidity was $19 million, including $8 million of cash and cash equivalents and $11 million in availability under its credit facility.
Revised Outlook
Depending on the current business environment, economic challenges and pandemic-related constraints the company has revised its 2023 financial outlook and initiated its fiscal year 2024 revenue growth rate expectation.
For fourth-quarter of fiscal 2023, the company expects revenues to improve sequentially. It expects the quarter to be the strongest quarter of fiscal 2023 and likely will exceed year-ago’s revenue of $22.1 million.
Overall, Orion now expects fiscal 2023 revenues between $77 million and $80 million, lower than the earlier expectation of $90 million-$110 million. Delays in the activation of large Department of Defense (DoD) and automotive projects have pushed anticipated revenues from these projects into the fourth quarter of fiscal 2023 and fiscal 2024.
The automotive projects shifted start from the third-quarter to the fourth-quarter of fiscal 2023. The $9 million DoD project is expected to start from the first-quarter of fiscal 2024. Also, sales through the lighting distribution channel were slow due to a softening economic environment. This eventually shifts a significant amount of revenues to the last quarter of 2023 and fiscal 2024.
Despite these challenges, the company expects the maintenance business, with its recurring revenues, and EV business to accelerate as they initiate cross-selling activities, drawing significant revenues in fiscal 2024. These factors will help revenues to grow in fiscal 2024 compared to fiscal 2023.
The revenue growth rate of fiscal year 2024 is expected to be 30%, which is comparatively more than fiscal 2023.
Key Picks
Orion currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Construction sector are United Rentals, Inc. (URI - Free Report) , CRH plc (CRH - Free Report) and Dycom Industries, Inc. (DY - Free Report) .
United Rentals currently sports a Zacks Rank #1. Shares of the company have gained 41.1% in the past six-month period. The long-term earnings growth rate of the company is 18.2%.
The Zacks Consensus Estimate for URI’s 2023 sales and EPS suggests growth of 11.8% and 15.3%, respectively.
CRH currently flaunts a Zacks Rank #1. Shares of CRH have rallied 24.6% in the past six months.
The Zacks Consensus Estimate for CRH’s 2024 sales and EPS suggests growth of 3.5% and 11%, respectively, from the year-ago period’s reported levels.
Dycom currently carries a Zacks Rank #1. DY has a trailing four-quarter earnings surprise of 142.9%, on average. Shares of the company have gained 16.3% in the past year.
The Zacks Consensus Estimate for DY’s fiscal 2024 sales and EPS suggests growth of 7.3% and 28.1%, respectively, from the year-ago period’s reported levels.