Orion Energy Systems returns to profitability on strong contract wins
Wisconsin-based energy management company raises 2026 outlook after securing major Fortune 100 renewal
Orion Energy Systems returned to profitability in its fiscal third quarter, beating analyst expectations and raising its full-year outlook after securing more than $56 million in contract renewals with a Fortune 100 customer.
The Manitowoc, Wisconsin-based provider of energy management solutions reported net income of $0.2 million, or $0.04 per share, for the quarter ended December 31, 2025. This compares with a net loss of $1.5 million, or $0.46 per share, in the same period a year earlier. Analysts had expected a loss of $0.02 per share.
Revenue rose 7.6% to $21.1 million from $19.6 million year-over-year, surpassing the $20.8 million consensus estimate. The company achieved positive operating income, a significant reversal from a $1.2 million operating loss in the third quarter of fiscal 2025. Adjusted EBITDA reached $0.8 million, or 3.6% of revenue, marking the fifth consecutive quarter of positive adjusted EBITDA.
"I am delighted to report my second full quarter as CEO of Orion, and it's especially gratifying to report this particular quarter," said Sally Washlow, who took the helm in October. "Our announcement a couple of weeks ago—increasing our growth and profitability outlook for FY 2026 and setting up-and-to-the-right expectations for FY 2027—was a significant milestone for this company."
Orion's performance was bolstered by substantial contract wins during the quarter. The company renewed a three-year maintenance agreement with its largest customer, a Fortune 100 enterprise, valued between $42 million and $45 million. The contract covers LED lighting system maintenance at approximately 2,050 locations nationwide and becomes effective in March 2026.
Additionally, Orion was awarded a separate $14 million to $15 million contract for exterior lighting from the same customer, building on momentum from previous lighting engagements announced in October.
"Q3 featured numerous customer wins, engagement extensions and project expansions," Washlow said. "This large customer wasn't the only one awarding us multi-million-dollar/multi-year engagements in Q3."
Segment performance showed a strategic shift in Orion's business mix. LED lighting revenue declined 8% to $12.1 million from $13.2 million, while maintenance revenue increased 13% to $4.4 million. The company's EV charging business surged 96% to $4.7 million from $2.4 million, driven by fleet installations.
Gross profit margin improved to 30.9% from 29.4% in the prior year, while operating expenses declined to $6.1 million from $7.0 million. Orion generated $0.4 million in cash from operating activities through the first nine months of fiscal 2026 and reduced outstanding borrowings on its revolving credit facility by $1.3 million to $5.75 million.
Building on the quarterly performance, management raised its fiscal 2026 revenue outlook to a range of $84 million to $86 million, up from approximately $84 million. The company also established initial guidance for fiscal 2027, projecting revenue between $95 million and $97 million, with positive adjusted EBITDA expected for the full year.
"The hallmarks of Q3 were continued improvements in growth, profitability and market expansion," Washlow said. "We expect this trend to continue in Q4—and in the forthcoming fiscal year. As we pointed out in our previous earnings announcement, there are tailwinds in all of our addressable markets. And we are demonstrating that we are not just riding those tailwinds. We are beginning to generate them."
Despite the strong results, Orion shares fell 3.8% to $13.89 in Thursday trading, giving the company a market capitalization of approximately $51 million. The stock has traded between $5.50 and $18.64 over the past 52 weeks. Analysts have an average price target of $18 on the stock, according to market data.
The company's balance sheet remains solid, with current assets of $32.8 million including $4.7 million in cash. Working capital improved to $8.6 million from $8.0 million at the end of September 2025, while total financial liquidity stood at $11.8 million.