Earnings Call Transcript - OESX Q2 2021

Operator, Operator

Good day, ladies and gentlemen, and welcome to the Orion Energy Systems Fiscal 2021 Second Quarter Conference Call. As a reminder, today's conference is being recorded. I would now like to turn the conference over to Mr. Bill Jones. Sir, you may begin.

Bill Jones, CEO

Thank you, and good morning, everyone. Orion CEO, Mike Altschaefl, will open today's call with second quarter highlights and an update on the business outlook. Orion CFO, Bill Hull, will then review some additional financial items, after which we will open the call to questions. An archived replay of this call will be available later today in the Investor Relations section of Orion's corporate website. This call is taking place on Thursday, November 5, 2020. Remarks that follow and answers to questions include statements that the Company believes to be forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally include words such as believe, anticipate, expect or words of similar import. Likewise, statements that describe future plans, objectives or goals are also forward-looking statements. These forward-looking statements are subject to risks that could cause actual results to be materially different than expected. Such risks include, among others, matters that the Company has described in its press release issued this morning and its filings with the Securities and Exchange Commission. Except as described in these filings, the Company disclaims any obligation to update forward-looking statements. With that, let me turn the call over to Mike.

Mike Altschaefl, CEO

Thanks, Bill. Good morning, and thank you for joining today's call. Our call today will follow our normal format with me providing some overview commentary on the quarter and our outlook, followed by Bill's financial review and then opening the call to your questions. Also joining us on our call today is Per Brodin, our Executive Vice President. Per joined Orion last month and will become our new CFO following Bill's retirement after today. He has been working closely with Bill, our finance team and our senior management in order to ensure a smooth leadership transition. While we continue to have some impact from COVID-19-related delays during our fiscal 2021 second quarter, our results improved significantly over the first quarter, which was substantially impacted by COVID-19-related delays. Our Q2 revenue rose to $26.3 million versus $10.8 million in Q1. Our Q2 '21 results were below the record revenue of $48.3 million achieved in the year-ago period, principally due to COVID-19-related impacts. The second quarter benefited from the resumption of LED lighting retrofit activity with customers, particularly including the work that recommenced in early August on a national turnkey retrofit project for our largest customer. Importantly, our operating discipline, new product introductions and product mix enabled Orion to achieve an improved gross profit percentage in the second quarter compared to both the year-ago quarter and the first quarter of this year. In particular, we benefited from proactive cost management efforts and sourcing as well as in managing manufacturing and assembly costs, including higher absorption of our fixed costs. Our second quarter results also benefited from lower operating costs compared to the prior year, including some steps taken in March to contain costs in anticipation of the impact of COVID-19 on our near-term business prospects. Collectively, these factors enabled Orion to return to profitability in the second quarter, achieving net income of $1.2 million or $0.06 per share compared to a net loss of $2.2 million or $0.07 per share in the first quarter. I'm very proud of Orion's second quarter performance from both a top line and bottom line perspective as our team was able to quickly pivot our business back to a growth mode while also maintaining operating discipline. Orion's success in this regard is very apparent when compared to our fiscal 2020 Q4 results in which, on roughly comparable revenue, we had a net loss of about $500,000, which did include about $400,000 of one-time restructuring costs. Of greater significance for Orion was the rapid rebound in new business activity that occurred in the second quarter and remains very strong today. We are seeing a stronger-than-expected rebound in interest and activity in LED lighting and controls projects from new and existing customers in all three of our channels. We are also seeing very strong traction from recent new product introductions that are focused on delivering industry-leading illumination and energy efficiency at very competitive pricing. We are encouraged by the speed and breadth of the change in customer sentiment around energy-efficient LED lighting retrofit and new construction projects. We are experiencing unprecedented demand for project proposals for LED lighting projects targeted for the next 12 to 24 months. While it is difficult to know the precise cause of the increasing activity, what we are hearing, particularly from large customers, is that they are moving back to a business-as-usual posture and are focused on ways to drive improved operating efficiency and safety in their facilities. Orion is proving successful in developing new project opportunities by virtue of our expanded sales effort, combined with our unrivaled turnkey, design, build and install capabilities, with a nationwide reach in our growing track record of large project success. Additionally, we are discovering that as a result of COVID-19 work disruptions, many companies have significant unspent capital budgets and are considering LED lighting energy efficiency projects for these funds. Reflecting our pipeline of anticipated project work, combined with very strong customer interest and business development activity, our outlook has improved. We now anticipate both Q3 '21 and Q4 '21 revenue of at least $40 million in each quarter and fiscal 2021 annual revenue of at least $117 million. We also expect to be profitable in both the third and fourth quarters and for the full year of fiscal 2021. Finally, we continue to expect to achieve financial results in fiscal 2022 that should at least match those delivered in fiscal 2020. Our improved outlook is based on a number of factors outlined in today's release, which I will summarize. One, we anticipate approximately $41 million of product and service revenue from an existing large national retail customer in the second half of fiscal 2021 and a total of approximately $56 million of revenue from this customer for fiscal 2021; two, continued and growing project activity from a major global logistics provider that is expected to be a significant source of revenue over time; three, turnkey LED lighting retrofit solutions for a large specialty retailer's nationwide chain of stores, the first phase of which is expected to generate at least $8 million in revenue during the third and fourth quarters of fiscal 2021 with the balance of the project expected in fiscal 2022; four, we are seeing a growing relationship and greater potential revenue from customers on lighting controls for a global online retailer's facilities. To date, in fiscal 2020 and fiscal 2021, this customer has generated approximately $6 million in product revenue with future projects anticipated to begin in Q4 '21 and continue into fiscal 2022; five, we expect continued strength in business activity across a range of markets, including the manufacturing, retail, logistics, public sector and medical markets, as well as across all of our channels, as more companies seem engaged in pursuing cost-saving projects with strong ROI and relatively short payback periods; six, we also anticipate continued demand from long-standing public sector customers, including the U.S. military, the Veterans Administration and the U.S. Postal Service; seven, we expect solid revenue opportunities from several new products designed to deliver superior energy efficiency and quality at very attractive pricing. Our early strong customer and channel reception for these products supports this view; and eight, we are making good progress in building our new fourth channel, the Orion Maintenance Services business, and expect our efforts to create revenue opportunities soon. In summary, we are seeing business activity improving faster than we had anticipated on our last quarterly call. Of course, access to customer facilities remains critical to our pace and volume of product and service revenue. We have seen a dramatic rebound in activity but caution that COVID-19 remains a threat to our performance should an outbreak affect our operations or those of our customers or their facilities. We continue to believe that Orion remains well positioned for our fiscal 2022 results to return to levels achieved in fiscal 2020. This view is based on the strength of our product offerings and new products, our turnkey design, build, install capabilities, our expanding base and offerings of various IoT monitoring and control solutions, as well as revenue opportunities in lighting and electrical service maintenance. Again, I thank the entire Orion team for their hard work and dedication this year during a challenging and rapidly changing business environment. After ramping down projects, personnel and expenses rapidly at the close of fiscal 2020, we are now reversing course and ramping up to meet increasing customer demand for projects and proposals. Through this period, our primary concern remains the safety and well-being of our people, our customers and our partners. The safety precautions and strict protocols we have developed and implemented to address COVID-19 risks are proving successful. We are currently experiencing no material impacts to our business from COVID-19 and are working hard to maintain this result. With that overview, let me turn the call over to Bill Hull for additional perspective on our financial results. Bill?

Bill Hull, CFO

Thank you, Mike. Orion's second quarter revenue was $26.3 million as compared to $48.3 million in Q2 of '20 and $10.8 million in Q1 of '21. The year-over-year variance is mainly due to customers delaying projects in response to COVID-19 during the first two quarters of fiscal 2021. The year-ago second quarter was propelled by significant LED retrofit activity for a major national account. After halting work for this customer in March, we were able to resume their projects in early August. Reflecting these factors, Q2 '21 product revenue decreased to $20.3 million from $35.6 million in Q2 of '20, and service revenue declined to $6 million from $12.8 million. Second quarter gross profit percentage improved to 27.6% versus 26.5% in Q2 of '20, primarily due to new product introductions, cost mitigation and procurement and plant costs as well as the manufacturing and component efficiencies in the design of new products. Our gross profit percentage also improved 320 basis points on a sequential basis from 24.4% achieved in Q1 of '21 due to the factors noted above as well as efficiencies achieved on higher revenue. Operating expenses were reduced by 8.8% to $5.4 million in Q2 of '21 compared to $5.9 million in Q2 of '20 due to lower commissions on lower volumes as well as to some cost-containment efforts implemented at the outset of the pandemic. Reflecting lower revenue and some fixed expenses, Orion reported Q2 '21 net income of $1.9 million or $0.06 per diluted share versus net income of $6.7 million or $0.22 per diluted share in Q2 of '20. EBITDA was $2.3 million in Q2 of '21 compared to $7.3 million in Q2 of '20. Our tax loss carryforwards were approximately $75 million for federal tax purposes and $62 million for state tax purposes. That should provide a large shield for Orion's income taxes in coming periods. We ended the second quarter in a solid financial position with net working capital of $27.4 million, including $12.1 million in cash and cash equivalents, compared to working capital of $19.8 million at September 30, 2019. Shareholders' equity improved to $31.2 million at September 30, 2020, from $28.9 million at September 30, 2019. At the close of Q2 '21, Orion had $7.9 million drawn on its revolving credit facility versus $3.8 million outstanding in the prior year period. We believe our cash and expected future cash generation, combined with our borrowing capacity, provide a strong financial base for the Company to continue its growth trajectory. Now before I turn the call back to Mike, I would like to thank those of you on today's call with whom I've had the pleasure to speak with and to meet with during my tenure at Orion. As Mike mentioned earlier, I will be retiring from my role at Orion after today, making this my last conference call with our investors. Mike?

Mike Altschaefl, CEO

Thanks. I would also like to thank Bill for his many contributions to Orion over the last five years. Bill has been instrumental in helping to guide Orion back to significant growth and profitability. As mentioned earlier, Per Brodin will succeed Bill as our CFO and is participating on today's call. Per brings substantial financial, public company CFO and leadership experience to Orion. So welcome to Orion, Per.

Per Brodin, CFO

Thank you, Mike. I just want to say what an honor it is to join Orion at this exciting time, that I've been very impressed with the quality, dedication, and camaraderie of the team at all levels. I particularly appreciate the orderly transition that Bill has enabled and the opportunity to work with him over the past few weeks. I will conclude by saying that I look forward to working with and contributing to the Orion executive team and to building solid relationships with our investors. Orion has developed an exciting and substantial market opportunity, and I look forward to updating you about our progress on future calls. And with that, operator, I think we can proceed to the Q&A period.

Operator, Operator

Our first question comes from Craig Irwin from ROTH Capital Partners.

Craig Irwin, Analyst

Congratulations on the strong earnings this quarter, impressive results. So it looks like gross margins were the biggest variance versus my model. You guys are clearly getting traction there, and it's going all the way to the bottom line. Can you talk maybe a little bit more about the material sourcing and some of the other items that you called out in your prepared remarks? Will we see these continue to rise with improving utilization over the next few quarters? How should we think about potential for continued leverage on the gross margin side?

Mike Altschaefl, CEO

Sure. Great question, Craig. Thank you. I'll cover it somewhat, and Bill may have some things to add with maybe a little bit more detail. But we really were pleased with the increase in gross margins this quarter. I'm not going to say we were surprised, but we were pleased. And it's a variety of factors. One, certainly some additional volume going through our manufacturing facility helps when we are absorbing more of our fixed costs. And to answer part of your second question, going forward with what we expect for revenue in quarter three and quarter four with a significant amount of that revenue going through our manufacturing operations, we do see additional leverage opportunities for margin caused by higher volumes. We also, as a company, have a long history of always looking hard at our product and making sure we're doing whatever we can from a supply chain standpoint, cost reductions, efficiencies in our facilities. And we saw some of those improvements during this quarter, which helped the margin. And we also have introduced some products over the last six months that we think are well designed, very efficient and efficient for our customers from an installation standpoint as well as energy standpoint, and they've got really great margins to them because of the way we've been able to design the product. So it really was several factors coming together that helped boost the margin. And lastly, I would say, we continue to see a path to getting back to those 30%-plus margins that we have experienced in the past when we had higher-volume quarters. Bill, anything you'd like to add?

Bill Hull, CFO

No, I believe that covers everything well. However, I would like to add that when we take on a project, we usually have a plan in place for reducing costs over time. We might begin with a margin target to improve, and we create a timeline to achieve that, ensuring we stay on track with all the points Mike mentioned.

Craig Irwin, Analyst

Great. My next question is about the buildup of the over $40 million you mentioned for the December and March fiscal quarters. This provides excellent revenue visibility, and it’s exciting to have such clarity at this stage. Your recent press release about the major home improvement retailer gives us insights into how this comes together. Could you discuss the specific components contributing to the $41 million figure, and let us know what we should monitor for potential upside to that number?

Mike Altschaefl, CEO

Sure. We are pleased to provide more visibility for the next two quarters, which is somewhat unusual for us to do this early. Typically, we have been discussing results on a quarterly basis this fiscal year due to the circumstances. I want to reiterate that the biggest risk we face comes from the impacts of COVID-19, whether internally or among our customers. However, the current project activity and scheduled initiatives give us confidence in achieving the numbers we've discussed. We have already shown our capability by exceeding our Q2 target of at least $25 million, achieving over $26 million. Since June, we have shared specific details about our largest customers to enhance tracking and understanding of our current operations. The recent press release provides insights into the expected revenue from our project in the second half. The remainder of our projections is influenced by several factors I've mentioned. We are significantly ramping up our project with the specialty retailer, and the VA Hospital project in Las Vegas is set to start this quarter. We anticipate strong automotive business during Q3 and likely into Q4, along with new partnerships emerging. Furthermore, our distribution relationships with electrical contractors and ESCOs are also expected to grow, especially with the introduction of new products. Overall, we are witnessing strong business activity, with an increase in requests for proposals and project bids. Therefore, we feel confident about the outlook for the next two quarters.

Craig Irwin, Analyst

Great. And then last question, if I may, before I hop back in the queue. Can you maybe talk a little bit about your peak level of weekly installations, looking backwards, roughly how many facilities were you doing a week or a quarter? And then there's chatter out there in Wisconsin that you guys have hired a couple of dozen people into the lighting services business over the last few months. It sort of seems like that might add capacity for bigger peak. How should we look at potential weekly installs or potential installation capacity and the ability to execute on a demand surge, if that does materialize?

Mike Altschaefl, CEO

Sure. That's a great question. Starting with our large retail customer, we've previously mentioned that we can manage 20 to 30 sites per week for extended periods. This fall, we are reaching those peaks and expect to maintain that level through the project's completion, although there will be times during the holidays when we may not be on-site as much due to the retail nature of the business. Additionally, regarding the specialty retailer, we provided details about the 390 sites and approximately $8 million in revenue to highlight the significance of each site. While this project is different from our other large endeavors, it remains crucial to us, and so far, everything is progressing well. In this case, we might even see a higher number of weekly site completions as these projects typically take only one or two days to retrofit the spaces. In summary, between these two large customers, we could potentially handle 50 sites a week or more, along with the rest of our business activities. We've been ramping up our sourcing, manufacturing, and assembly operations significantly, and we have also increased the number of field personnel responsible for overseeing installations and other activities. It's been an exciting time, and we are pleased to be expanding our capabilities, which is why we've made several new hires in both assembly and field execution.

Operator, Operator

We have another question from the line of Sameer Joshi from H.C. Wainwright.

Sameer Joshi, Analyst

So my first question is sort of a follow-up on what Craig was asking about. In terms of resource allocation, because you have visibility because of these large accounts, should we expect working capital and operating expenses improvements over the next few quarters over and above what you already have?

Bill Hull, CFO

Let me respond this way. In the last quarter, we increased working capital to reach $26 million. This primarily involves receivables and inventory, which are expected to convert to cash relatively quickly. I believe we're currently at good levels. Receivables will increase in line with our revenue forecast. Regarding operating expenses, I would recommend looking at last year's levels, which should serve as a reliable indicator for where we might be headed.

Sameer Joshi, Analyst

Okay. One of the reasons for the question was that you have implemented certain cost reductions due to COVID, which may be feasible to make permanent. We were therefore expecting to see some improvements in costs.

Mike Altschaefl, CEO

Yes, we have mentioned several times that we took necessary actions at the end of March. At that time, no one knew how long or severe the COVID-19 situation would be. We have been pleasantly surprised by the quicker recovery in our business prospects, which is likely linked to the strong sectors we operate in and the success of our customers. I believe it is important to clarify that not all of the cost reductions will be permanent, as many of them are tied to activity levels. As we increase our volume, we will need to bring back our workforce accordingly. While there may be some lasting effects from the cuts, I do not expect them to lead to significant permanent cost reductions.

Sameer Joshi, Analyst

Understood. I have one more question. We discussed the revenue layering for the next two quarters. From my calculations, it appears that for the global logistics company, which you generate revenue from on a project-by-project basis, there's limited visibility. It seems to be around $4 million to $5 million per quarter. Is that the basis for your projection of the $41 million?

Mike Altschaefl, CEO

Well, we said earlier we were pleased to be able to provide a little bit more visibility for everybody on the next two quarters given what we have in the pipeline, what we expect to have happened. I think on the new relationship with the very sizable global logistics company is one that is still developing. And as we've mentioned a couple of times, it's going to be different than our very large customer in the retail industry and our specialty retailer where it's a set project, number of locations, and you kind of spell it all out for people. This is going to be project by project, and we are seeing it ramp up. It's been successful so far, and we still think it's going to have a substantial impact on revenues going forward. And it's harder for us to predict. So when we lay out our expectation of at least $40 million in the next two quarters, we take that into account when we're trying to look at it. So I think it's one that's going to be a little bit more on hindsight, frankly, of saying how much we generate from that relationship. But what I can tell people is that it is going well so far in the facilities we've been given the opportunity to work in, and we still see a lot of potential there.

Operator, Operator

We do have another question from the line of Eric Stine from Craig-Hallum.

Aaron Spychalla, Analyst

Yes. It's Aaron Spychalla on for Eric. Congrats on the quarter. And Bill, congrats on the retirement as well. Can you discuss the national account funnel, its size, how it's been trending, and the effect of the recent sales hires? Are you gaining better insights into the available market opportunities? Additionally, what is your current position in terms of market penetration as you evaluate these accounts?

Mike Altschaefl, CEO

We are very optimistic about our current position regarding larger national account opportunities. This optimism stems from our history of collaborating with large national accounts for the past 20 years, which has established a strong foundation. Recently, our success with larger accounts has provided compelling evidence of our capabilities. Additionally, we enhanced our team by bringing in experienced sales executives over a year ago. It takes time for these new hires to reconnect with their former relationships and navigate company budget cycles, which may have been somewhat delayed by COVID-19 starting in May. Nonetheless, we are beginning to see positive contributions from our new sales team members, along with continued strong performance from our long-standing executives. This combination is encouraging. The volume and size of projects we are engaged in is increasing, and we feel good about our more frequent invitations to these discussions. Given the vastness of the market, I refrain from discussing market share, as it is essential for us to excel and serve our customers well. There remains ample opportunity for substantial growth as we anticipate significant retrofit activity across North America transitioning to LED, alongside a growing role in the new construction market. Additionally, focusing on sectors like logistics, cold storage, distribution centers, and big-box retail, which are currently thriving and investing in expansions, is advantageous for us.

Aaron Spychalla, Analyst

Can you provide more details on the strength you're observing in RFP activities and discuss the ROI and payback period? I understand this varies by project, but I'm interested in a high-level overview of how these metrics have trended over the past few years as costs have decreased.

Mike Altschaefl, CEO

Yes. So generally, when a company migrates from fluorescent technology to LED technology, they are going to see about a 50% energy reduction, just apples-to-apples. When you then combine that with control technology, which is often being employed for dimming capabilities or occupancy so that the lights go off and no one is there, etc., that 50% can go up even more significantly. So I would say broadly on projects that we are working on, we see paybacks in the one- to four-year period. I've mentioned previously on our very large customer, our retail big-box retailer, that the paybacks there have been underneath two years in most situations. And so they are very, very fast. And so that's why we believe, as companies have capital available and with the movement towards additional green initiatives, carbon footprint reductions that our projects tend to be towards the top of the list of being funded because of the quick payback as well as meeting other objectives of a company from energy reduction, etc. So it's still very strong. And as you can imagine, if somebody is not already at fluorescent technology, if they're at pre-fluorescent technologies, the numbers almost double again and become very, very enticing. We also see that there's plenty of capital out there for companies that want to finance these activities. And so we really don't see capital as being that constraining. It's more when the companies have the projects, when they're ready to move on the projects, the capital is there or can be found and the paybacks are very strong.

Aaron Spychalla, Analyst

Sure. Okay. And then last question for me. You talked a little bit about the product initiatives and kind of the launch of those. Just any update on the UV products and the other products around kind of COVID and viruses and things like that?

Mike Altschaefl, CEO

Sure. I'll start with the UV aspect. We are making strides in this area. The main product we are focusing on, which we've discussed over the past few quarters, is the UV system that is being paired with an air movement solution designed for use in suspended ceilings or similar projects. This technology will be applicable in commercial offices, hospitals, and schools, enabling not only air circulation but also UV treatment as the air passes through. We are making strong progress, continuing our testing, and collaborating with a manufacturing partner. We anticipate launching this product in the market during the fourth quarter of fiscal 2021. We believe it will generate considerable interest, and we are also exploring additional UV lighting solutions. Our existing technology in the violet light spectrum, specifically the 405 nanometer range, remains effective against bacteria and has seen increased activity. Moreover, our focus remains on developing high-margin niche products, including investigations into horticultural applications and others, with some UV products expected to debut in the fourth quarter of fiscal 2021 along with additional offerings.

Operator, Operator

We do have another question from Marc Wiesenberger from B. Riley Securities.

Marc Wiesenberger, Analyst

Congratulations, Bill, on your upcoming retirement. You have mentioned that work for this national global logistics company is assigned on a project-by-project basis. I am curious about the lead times you have experienced and expect for the upcoming work. Could you also discuss their facilities? Are they consistent in terms of size and job specifications? Additionally, how do they compare in size to the facilities of your largest national customer at this time?

Mike Altschaefl, CEO

Sure, thanks. They have a significant number of facilities across North America, with sizes varying greatly, typically ranging from 50,000 square feet to more than 1 million square feet. This variance means that lead times can also differ. Smaller projects may progress quickly, especially if there's a tenant turnover and they want to upgrade to LED lighting, potentially completing the work in four to five weeks. In contrast, larger facilities require more planning and preparation, which could extend the timeframe to a couple of months. Overall, we see considerable opportunity due to the number of facilities they operate, many of which still need to transition to LED technology. As I mentioned previously, it can be challenging to provide visibility since our involvement is based on their scheduling. However, we believe this sector will see substantial growth over the next few years, lasting longer due to the necessary conversions. Regarding your earlier point, many of these projects will likely exceed the square footage of around 125,000 square feet that we discussed for our large retail box customer.

Marc Wiesenberger, Analyst

That's great to hear. As you're having kind of new and renewed discussions with your customers and the resurgence of COVID kind of potentially coming back, how are you and your customers potentially going to handle things differently than earlier in the year?

Mike Altschaefl, CEO

Sure. Some of the types of protocols we're doing, and I'll maybe talk both internally in our assembly operations as well as from a customer standpoint. Fortunately, we were very early to move towards base coverings in our facilities, which we think has had a very positive impact for us. We certainly have done all of the other types of things that one should be doing. We are very cognizant and educate and coach our people on the symptoms of having people stay home if they are exhibiting different symptoms for anyone entering our facilities. We have temperature checks and again checking symptoms within our assembly operations. We have spread things out to provide the ability for physical distancing, put out physical barriers where we can, doing everything we can to try to minimize the risk and reduce the risk. For our members. Likewise, externally, when working with customers, we first have to follow whatever protocols they have. But certainly, if our company's protocols are more stringent, we follow them. So again, face coverings, avoiding close contact, having physical distancing as much as possible, being aware of symptoms. So fortunately, for us, as we ramp back up heavily starting in August, it's gone relatively smoothly. Like many companies we're dealing with one-off situations frequently and working with our members to be careful for everybody. But we've had no significant work stoppages in the field so far. And that's why we've said a couple of times today, we caution everybody that, that is something we are watching because it could cause us to slow down if there is an activity externally. Now the good thing for us is, as it was asked by question earlier today, we might be in 40, 50, 60 sites per week. So it spreads out our risks somewhat in that many, many sites which continue to move forward. So we're continuing to increase our protocols and our compliance with those, we think, has had a positive result for us so far.

Marc Wiesenberger, Analyst

Got it. And one final one for me. In your discussions when you're looking to win new business, can you talk about the fact that your products are manufactured in the U.S.? And how is that potentially impacting customer decisions, if at all?

Mike Altschaefl, CEO

In certain circumstances, this is definitely a very positive situation. One reason is that there may be requirements for compliance with the Buy America Act, which necessitates manufacturing locally. Additionally, we believe there is an increasing preference among many U.S. companies to purchase American-made products. Furthermore, our risk related to the supply chain is somewhat reduced and managed by having our manufacturing facilities in the U.S., which addresses transportation and timeline issues. Moreover, part of our commitment to our customers and our success lies in our ability to deliver products quickly, often faster than most competitors. Generally, for standard products, we can deliver to customers in 10 to 15 business days, which is usually quicker than many others in the industry. Also, being able to control the supply chain has been beneficial for us. From the customer's perspective, we view this as a positive aspect. While there are instances where customers prioritize different attributes that we may source from external suppliers, we will accommodate these needs when it aligns with our customers' interests and our company's goals. Overall, we still believe that our U.S.-based manufacturing operations are advantageous. Another key aspect for us has always been our ability to offer project-related services, including installation, control features, and comprehensive solutions for customers, which we continue to see as our main differentiator from competitors and a reason for our success in retaining business by providing broader service capabilities to our clients.

Operator, Operator

That concludes the Q&A session. I will now turn the call over to Mr. Mike Altschaefl for closing remarks. Sir?

Mike Altschaefl, CEO

Great. Thank you, Annie. Again, I want to thank the Orion team for their hard work and operational excellence that has allowed us to bounce back from the COVID-19 delays and put us in a great position for a return to higher revenue and profitability going forward. Orion has regained its momentum. During the period of social distancing, we have participated in several virtual conferences, the most recent of which is recorded and available on our website. Our next event is Craig-Hallum's Alpha Select Conference on Tuesday, November 17. Please join us at events or contact our IR team with any questions or to schedule a call with management. The contact information is included on today's press release. So thanks again for joining today, and we really appreciate your time to listen in for the call. And I look forward to updating everybody on our fiscal 2021 Q3 call. Stay safe, and have a good day. Thank you.

Operator, Operator

Ladies and gentlemen, this conference call is now concluded. Thank you for attending today's presentation. You may now disconnect your lines.