{"url_path":"/sec/oesx/10-k/2026/item-1","section_key":"item-1","section_title":"Item 1 BUSINESS","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-04","source_url":"https://www.sec.gov/Archives/edgar/data/1409375/0001193125-26-257468-index.html","accession_number":"0001193125-26-257468","cik":"0001409375","ticker":"OESX","issuer_name":"ORION ENERGY SYSTEMS, INC.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1409375/0001193125-26-257468-index.html","primary_entity_key":"0001409375","primary_entity_name":"ORION ENERGY SYSTEMS, INC."},"word_count":3034,"has_tables":true,"body_markdown":"ITEM 1. BUSINESS\n\nAs used herein, unless otherwise expressly stated or the context otherwise requires, all references to “Orion,” “we,” “us,” “our,” “Company” and similar references are to Orion Energy Systems, Inc. and its consolidated subsidiaries.\n\nOverview\n\nWe provide state-of-the-art light emitting diode (“LED”) lighting systems, wireless Internet of Things (“IoT”) enabled control solutions, commercial and industrial electric vehicle charging infrastructure solutions and lighting and electrical maintenance services. We help our customers achieve their sustainability, energy savings and carbon footprint reduction goals through innovative technology and exceptional service. We sell our products and services into many vertical markets within the broader commercial and industrial market segment. Primary verticals include: big box retail, manufacturing, warehousing/logistics, commercial office, federal and municipal government, healthcare and schools. Our services consist of turnkey installation (lighting and EV) and system maintenance. Virtually all of our sales occur within North America.\n\nOur principal customers include large national account end-users, electrical distributors, electrical contractors and energy service companies (“ESCOs”). Our lighting products are either manufactured at our leased production facility located in Manitowoc, Wisconsin, or sourced through our global supply chain with contract manufacture partners.\n\nWe differentiate ourselves from our competitors by offering very efficient light fixtures (measured in lumens per watt) coupled with our project management services to national account customers to retrofit their multiple locations. Our comprehensive services include initial site surveys and audits, utility incentive and government subsidy management, engineering design, and project management from delivery through to installation and controls integration and commissioning. In addition, we began to offer lighting and electrical maintenance services in fiscal 2021. In October 2022, we acquired Voltrek LLC (\"Voltrek\"), which leveraged our project management and maintenance expertise into the EV sector. In fiscal 2026, we expanded our services to include electrical contracting, which is an increasingly growing area of customer activity. We believe that providing all of these services enables us to support a long-term business relationship with our customers and results in an increase in our recurring revenue.\n\nOur lighting products consist primarily of LED lighting fixtures, many of which include IoT enabled control systems provided by third parties. We believe the market for LED lighting products continues to grow. Due to their size and flexibility in application, we also believe that LED lighting systems can address opportunities for retrofit applications that cannot be satisfied by other lighting technologies.\n\nOther than our multi-year maintenance service contracts, we generally do not have long-term contracts with our customers for product or turnkey services that provide us with recurring annual revenue. We typically generate substantially all of our lighting revenue from sales of lighting systems and related services to governmental, commercial and industrial customers on a project-by-project basis. We also perform work under global services or product purchasing agreements with major customers with sales completed on a purchase order basis. The loss of, or substantial reduction in sales to, any of our significant customers, or our current single largest customer, or the termination or delay of a significant volume of purchase orders by one or more key customers, could have a material adverse effect on our results of operations in any given future period.\n\nWe typically sell our lighting systems in replacement of our customers’ existing lighting fixtures. We call this replacement process a \"retrofit\". We frequently sell our products and services directly to our customers and in many cases we provide design and installation services as well as project management services. We also sell our lighting systems on a wholesale basis, principally to electrical distributors, electrical contractors and ESCOs which then resell to their own customers.\n\nThe gross margins of our products can vary significantly depending upon the types of products we sell, with gross margins typically ranging from 10% to 50%. As a result, a change in the total mix of our sales among higher or lower gross margin products can cause our profitability to fluctuate from period to period.\n\nOur fiscal year ends on March 31. We refer to our current fiscal year which ends on March 31, 2027 as \"fiscal 2027\". We refer to our most recently completed fiscal year, which ended on March 31, 2026, as “fiscal 2026”, and our prior fiscal year which ended on\n\n6\n\n \n\nMarch 31, 2025 as \"fiscal 2025\". In each fiscal year, our fiscal first quarter of each fiscal year ends on June 30, our fiscal second quarter ends on September 30, our fiscal third quarter ends on December 31, and our fiscal fourth quarter ends on March 31.\n\nReportable Segments\n\nReportable segments are components of an entity that have separate financial data that the entity's chief operating decision maker (\"CODM\") regularly reviews when allocating resources and assessing performance. Our CODM is our chief executive officer.\n\nFor financial results by reportable segment, please refer to Note 17 – Segment Data in our consolidated financial statements included in Item 8. of this Annual Report.\n\nLighting Segment\n\nOur lighting segment develops and sells lighting products and provides construction and engineering services for our commercial lighting and energy management systems. Our lighting segment provides engineering, design, lighting products and in many cases turnkey solutions for large national accounts, governments, municipalities, schools and other customers. Our lighting segment sells mostly through direct sales and also through manufacturer representative agencies and to the wholesale contractor markets through ESCOs and contractors.\n\nMaintenance Segment\n\nOur maintenance segment provides retailers, distributors and other businesses with maintenance, repair and replacement services for the lighting and related electrical components deployed in their facilities.\n\nEV Segment\n\nOur EV segment offers leading electric vehicle charging expertise and provides EV turnkey installation solutions with ongoing support to all commercial verticals.\n\nProducts and Services\n\nOur historical primary focus has been the sale of our LED lighting fixtures with integrated controls technology and related installation services. We will continue to focus on these products and services, as well as on expanding our maintenance service offerings and our EV charging station solutions.\n\nCurrently, a significant amount of our lighting products are manufactured at our leased production facility location in Manitowoc, Wisconsin, although as the LED market continues to evolve but subject to tariff impacts, we are increasing the sourcing of products and components from third parties in order to expand our product offerings. We are focused on researching, developing and/or acquiring new innovative LED products and technologies for the retrofit markets. We plan to continue developing creative new LED retrofit products in order to offer our customers a variety of integrated energy management services, such as system design, project management and installation. We third party source all of the EV charging stations and components that are installed by our EV segment.\n\nProducts\n\nOur lighting and maintenance segments market fixtures for both interior and exterior use, including our LED high bay fixtures, LED troffer retrofits and smart lighting controls. Our smart lighting controls provide both lighting control options and data intelligence capabilities for building managers to log, monitor and analyze use of space, energy savings, and provide physical security of space.\n\nIn addition, in October 2022, we acquired Voltrek, which offers leading EV charging expertise and provides turnkey EV installation solutions with ongoing support to all commercial verticals. We believe there are growth opportunities for Voltrek both in its existing northeast geographic market, as well as on a national basis. We also plan to continue attempting to cross sell our EV charging solutions to our historical market channels and customers and vice versa.\n\n7\n\n \n\nOther Products. We also offer our customers a variety of other LED fixtures to address their lighting and energy management needs, including fixtures designed for agribusinesses, parking lots, retail, mezzanine, outdoor applications and private label resale.\n\nWarranty Policy. Our warranty policy generally provides for a limited five-year warranty on our LED products, although we do offer warranties ranging up to 10 years for certain LED products. Drivers, LED chips, EV charging stations and other electrical components are excluded from our standard warranty as they are covered by separate warranties offered by the original equipment manufacturers. We coordinate and process customer warranty inquiries and claims, including inquiries and claims relating to ballast and lamp components, through our customer service department.\n\nServices\n\nWe provide a range of lighting-related energy management, EV installation and electrical contracting services to customers, including:\n\n•\ncomprehensive site assessment, which includes a review of the current lighting and controls including IoT enabled devices requirements and energy usage at the customer’s facility;\n\n•\nservices to EV charging customers including site audit, engineering, grant filing, installation, commissioning and network services;\n\n•\nsite field verification, or SFV, during which we perform a test implementation of our energy management system at a customer’s facility;\n\n•\nutility incentive and government subsidy management, where we assist our customers in identifying, applying for and obtaining available utility incentives or government subsidies;\n\n•\nengineering design, which involves designing a customized system to suit our customers' facility lighting and energy management needs, and providing the customer with a written analysis of the potential energy savings and lighting and environmental benefits associated with the designed system;\n\n•\nproject management, which involves us working with or serving as the electrical contractor in overseeing and managing all phases of implementation from delivery through installation for a single facility or through multi-facility roll-outs tied to a defined project schedule;\n\n•\ninstallation services, for our products, which we provide through our national network of qualified third-party installers;\n\n•\ncomplete facility design commissioning of IoT enabled control devices\n\n•\nrecycling in connection with our retrofit installations, where we remove, dispose of and recycle our customer’s legacy lighting fixtures;\n\n•\nelectrical services, which include battery storage installation, new construction electrical contracting, electrical infrastructure management;\n\n•\nlighting, electrical system and EV maintenance services including both preventative and reactive services; and\n\n•\nother services that comprise a small amount of our revenue.\n\n \n\nOur Customers\n\nWe primarily target commercial, institutional and industrial customers who have warehousing, retail, manufacturing and office facilities. In fiscal 2026, one customer accounted for 26.0% of our total revenue. In fiscal 2025, that same customer accounted for 18.1% of our total revenue, and in fiscal 2024, this same customer accounted for 25.6% of our total revenue. As we continue to attempt to diversify our customer base by expanding our reach to national accounts, ESCOs, the agent-driven distribution channel, lighting maintenance customers and the EV market, we expect to continue to derive a significant percentage of our revenue from contracts with one or a limited number of customers. These contracts are entered into in the ordinary course of business and typically provide that we will deliver products and services on a work order or purchase order basis and any purchase order may be terminated prior to shipment. Our maintenance work orders or contracts may be for discrete projects or may have multi-year terms. These contracts generally do not guarantee that the customer will buy our products or services.\n\n8\n\n \n\nThe amount and concentration of our revenues with one or more customers may fluctuate on a year to year or quarter to quarter basis depending on the number of purchase orders issued by our customers. The loss of a significant customer or the termination of a material volume of purchase orders (or the underlying agreements) could have a material adverse effect on our results of operations.\n\nSales and Marketing\n\nWe sell our products and services in one of three ways: (i) directly as a result of Orion/Voltrek offering turnkey installation services; (ii) indirectly selling lighting products through independent sales agencies and broadline North American distributors; and (iii) through ESCOs. As of the end of fiscal 2026, we had 36 ESCO partners and independent lighting agencies representing us in substantially all of North America. We work cooperatively with our indirect channels through participation in national trade organizations and by providing product and sales training.\n\nWe have historically focused our marketing efforts on developing brand awareness through customer education, participation in trade shows and energy management seminars. These efforts have included participating in national, regional and local trade organizations, exhibiting at trade shows, executing targeted digital campaigns, advertising in select publications, public relations campaigns, social media and other lead generation and brand-building initiatives.\n\nCompetition\n\nThe market for energy-efficient lighting products, EV charging solutions and maintenance services is fragmented. We face strong competition primarily from manufacturers and distributors of lighting products and services as well as electrical contractors. We compete primarily on the basis of technology, cost, performance, quality, customer experience, energy efficiency, customer service and marketing support. We compete against other value-added resellers and electrical contractors in the EV charging market. We compete against a variety of service providers for lighting maintenance.\n\nThere are a number of lighting fixture manufacturers that sell LED products that compete with our lighting product lines. Lighting companies such as Acuity Brands, Inc., Signify Co., Cree Lighting, LSI Industries, Inc. and Current Lighting Solutions, LLC, are some of our main competitors within the commercial office, retail and industrial markets. We are also facing increased competition from manufacturers in low-cost countries.\n\nIntellectual Property\n\nAs of March 31, 2026, we had been issued over 90 United States patents and have applied for a number of additional United States patents. The patented and patent pending technologies cover various innovative elements of our products, including our LED fixtures and controls. Our patented LDRTM product enables significantly faster installation than competitor's commercial office lighting products. Our smart lighting control offerings enable our lighting fixtures to deliver the desired amount of light when it is needed most.\n\nWe believe that our patent portfolio as a whole is material to our business and that the loss of these patents could significantly and adversely affect our business, operating results, and prospects.\n\nBacklog\n\nBacklog represents the amount of revenue that we expect to realize in the future as a result of firm, committed orders. Our backlog as of March 31, 2026 and March 31, 2025 totaled $30.1 million and $17.3 million, respectively. We generally expect our backlog to be recognized as revenue within one year. Backlog does not include any amounts for contracted maintenance services.\n\nManufacturing and Distribution\n\nWe lease an approximately 266,000 square foot primary manufacturing and distribution facility located in Manitowoc, Wisconsin, where many of our products are manufactured. We utilize both solar and wind power to support the energy requirements for our manufacturing facility, allowing us to reduce our carbon footprint.\n\n9\n\n \n\nWe generally maintain a significant supply of raw material and purchased and manufactured component inventory. We contract with transportation companies to ship our products and manage all aspects of distribution logistics. We generally ship our products directly to the end user.\n\nResearch and Development\n\nOur research and development efforts are centered on developing new LED products and technologies and enhancing existing products. The products, technologies and services we are developing are focused on increasing end user energy efficiency and enhancing lighting output. Over the last three fiscal years, we have focused on developing additional LED products, resulting in our development and commercialization of several new suites of LED interior high bay products. Some of the products we have developed are designed to be produced in our manufacturing facility in Manitowoc, Wisconsin while others are sourced from contract manufacturers.\n\nWe operate a research and development lab and test facilities in our Jacksonville, Florida and Manitowoc, Wisconsin locations.\n\nRegulatory Matters\n\nOur operations are subject to federal, state, and local laws and regulations governing, among other things, emissions to air, discharge to water, the remediation of contaminated properties and the generation, handling, storage, transportation, treatment, and disposal of, and exposure to, waste and other materials, as well as laws and regulations relating to occupational health and safety. We believe that our business, operations, and facilities are being operated in compliance in all material respects with applicable environmental and health and safety laws and regulations.\n\nState, county or municipal statutes often require that a licensed electrician be present and supervise each retrofit project. Further, all installations of electrical fixtures are subject to compliance with electrical codes in virtually all jurisdictions in the United States. In cases where we engage independent contractors to perform our retrofit projects, we believe that compliance with these laws and regulations is the responsibility of the applicable contractor.\n\nOur Corporate and Other Available Information\n\nWe were incorporated as a Wisconsin corporation in April 1996 and our corporate headquarters are located at 2210 Woodland Drive, Manitowoc, Wisconsin 54220. Our Internet website address is www.orionlighting.com. Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the \"Exchange Act\"), are available through the investor relations page of our internet website free of charge as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (\"SEC\"). We are not including the information contained on our website as part of, or incorporating it by reference into, this report.\n\nHuman Capital\n\nAs of March 31, 2026, we had 174 full-time employees. We also employ temporary employees in our manufacturing facility as demand requires. Our employees are not represented by any labor union, and we have never experienced a work stoppage or strike due to employee relations.\n\nWe are an employee-centric organization, maintaining a safe and respectful environment that provides opportunity for our employees.\n\nWe believe our employees are among our most important resources and are critical to our continued success. We focus significant attention on attracting and retaining talented and experienced individuals to manage and support our operations. We pay our employees competitively and offer a broad range of company-paid benefits, which we believe are competitive with others in our industry.\n\n10\n\n \n\nWe are committed to hiring, developing and supporting a diverse and inclusive workplace. Our management teams and all of our employees are expected to exhibit and promote honest, ethical and respectful conduct in the workplace. We will not tolerate discrimination or harassment in any form. All of our employees must adhere to a code of conduct that sets standards for appropriate behavior and includes required annual training on preventing, identifying, reporting and stopping any type of unlawful discrimination.\n\n11"}