OESX - NASDAQ

Good morning, everyone, and welcome to Orion Energy Systems Fiscal 2025 Third Quarter Conference Call. [Operator Instructions]. I will now turn the call over to Bill Jones, Investor Relations, to begin.

Thank you, Olivia, and good morning to everyone joining this call today. Mike Jenkins, Orion's CEO; and Per Brodin, CFO, will review the company's Q3 '25 results and outlook. And following the prepared remarks, we'll open the call to investor questions. Today's conference is being recorded. A replay will be posted on Orion's corporate website, orionlighting.com, in the Investors section. As a reminder, prepared remarks and answers to questions that follow will include statements that are forward-looking under the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally include words such as anticipate, believe, expect, project or similar words. Also, any statements describing future goals or objectives, company plans or outlook are also forward-looking. Such forward-looking statements are subject to various risks that could cause actual results to differ materially from current expectations. Risks include, among other matters, those that Orion has described in its press release issued this morning and in its filings with the Securities and Exchange Commission. Except as described therein, Orion disclaims any obligation to update or revise forward-looking statements, which are made as of today. Reconciliations of certain non-GAAP financial metrics to the nearest GAAP measures are also provided in today's press release. And with that, I will now turn the call over to Orion's CEO, Mr. Mike Jenkins.

Thanks, Bill, and thank you all for joining us today. As highlighted in today's press release, we have had significant developments and progress in quarter 3, yet our revenue performance was disappointing. I believe the actions we have taken over the past year have put Orion in a stronger position for substantially improved performance in fiscal '26 on both top and bottom lines. I will let Per walk you through our Q3 results, and I will focus my remarks on actions we have taken to position Orion for meaningful revenue growth as well as substantial bottom line improvements as we move forward. On the revenue side, over the past few months, we have landed 7 new LED lighting contracts and opportunities with revenue potential of $100 million to $200 million over the next 5 years. This new business is the result of changes we have been making in our sales, marketing, product and services offerings to better meet customer needs. Building on this success, we are reorganizing our operations to further enhance and focus our go-to-market approaches, which has been resonating with long-term and new customers. We have also continued to work on business process improvements that lower our overall fixed cost -- fixed operating costs to reduce our revenue breakeven level and increase the contribution from incremental revenue. This is work that we needed to do as it is important in helping us to manage through inevitable variability in the timing of large orders. We have also made substantial progress over the past 18 months in improving product and service margins. In our Lighting business, cost engineering, enhancing our plant layout and supply chain strategies have allowed us to redesign products and processes so that we are able to deliver the same high performance but at lower cost of goods. As a result, we have been able to remove total cost from our manufacturing site. This engineering and product know-how has also helped us produce TritonPro, which is a line of products designed to provide more price-sensitive customers with a competitive product line with strong performance. TritonPro margins are accretive to our overall Lighting margin, considering they do not require a lot of fixed costs as they are produced through a network of contract manufacturers to Orion specifications. As we have discussed at length, margins in our Maintenance business have made a substantial rebound due to strategic pricing and restructuring decisions made last year. Orion's total quarter 3 '25 blended gross margin percentage improved 490 basis points to 29.4%. This is the second highest quarterly rate in 7 years as a result of all of our work in the above areas. Considering the increase in gross margin as well as reductions to fixed costs, we have reduced Orion's annual breakeven point by at least 20% to between $78 million and $85 million, depending on our revenue mix from approximately $105 million to $115 million over the past 2 years. Progress on our revenue breakeven was reflected in slightly positive quarter 3 adjusted EBITDA. Stepping back to look at larger industry trends, the lighting industry as a whole has faced headwinds due to higher interest rates, a slowdown in new commercial construction projects and uncertainty around the economy. Despite this backdrop, as I mentioned, Orion has landed a strong base of new projects that we outlined in today's press release. Looking forward, the substantial return on investment, typically 1 to 4 years moving from fluorescent to LED and better light quality that are provided by our LED lighting solutions should continue to make LED retrofit projects compelling capital investments. Adding urgency for LED retrofits is the rollout of mandates that prohibit the sale of fluorescent lighting fixtures and the replacement tubes due to the safety and environmental issues they pose. Of particular concern is the danger of mercury utilized in fluorescent tubes and the safety challenges of handling and disposing them. In addition, there are substantial energy efficiency, maintenance and illumination benefits from converting to LED lighting. There are now 14 states which have either or in the process of adopting these fluorescent bans. It is important to note that these mandates are fully state-driven and are not tied to federal regulations nor funding. Please go to our website at orionlighting.com for more information regarding these bans. Turning to our Voltrek EV Charging Solutions business. We expect a strong close to fiscal '25 from projects, including some under Eversource Energy’s ‘EV Make Ready’ program that were previously expected in quarter 3, '25. Revenue from the EV Charging segment is up 48% year-to-date, and Voltrek, a pioneer in EV Charging Solutions is well positioned to continue its growth trajectory in fiscal '26. Of course, the prospect of federal funding for EV charging is now unclear as the new administration has sought to halt disbursements under the $5 billion Electric Vehicle Infrastructure Act or NEVI program. It is too early to tell ultimately where the NEVI funding program is going. Importantly, Orion has very little exposure to NEVI-funded projects in our fiscal '26 outlook, though the elimination or reduction of funding tax credits and rebates could impact the plans of some customers. Despite this near-term uncertainty, we remain bullish about our growth prospects in our EV Charging business as evidenced by the value of our pipeline growing sequentially in the quarter. Orion Voltrek is a strong player in the EV charging solutions space with a broad portfolio of successful projects across the country. As a result, we believe we are uniquely positioned to address the EV charging station needs of larger corporate and public sector organizations with large footprints. Even today, there is a very pressing need to build out additional infrastructure to properly support the current installed base of EVs, and that need grows each day as new vehicle shipments continue to expand the installed base of commercial and consumer electric vehicles. Even with reduced federal support, we believe the market opportunity is sufficiently large to continue Voltrek's growth in fiscal '26 and longer term. Whether EVs eventually comprise 25% or 50% or more of all domestic vehicles, the infrastructure to properly support those vehicles will still need to be substantially expanded. Turning to our Electrical Maintenance business. We believe it provides a very solid long-term platform on which to build a growing base of recurring revenue with excellent cross-fertilization potential with LED lighting. We also believe this business will benefit from the increasing complexity, interactivity and importance of electrical systems, monitoring and controls. Following our restructuring of this business, we are now in a position to begin adding new customers, and we have closed one significant account, which will begin in Q4 and is expected to grow to $2 million to $5 million per annum. As we often mentioned, our year-to-date maintenance revenue has been impacted by pricing increases that resulted in the intentional loss of a few large unprofitable customers. Importantly, these actions have allowed us to solidify our business and bring our gross margin percentage back into the range that is positively contributing to our company. The gross margin in maintenance rebounded over 2,000 basis points to 26.4% in Q3 '25, up from 6.2% in Q3 '24. In addition, we have begun to win new business from existing and new customers that provides a solid base to grow upon. With that as a backdrop, I'd like to discuss the reorganization of our business that we disclosed in today's release. The purpose of this reorganization is to focus our team and resources to better serve our customers and enhance our revenue and profit opportunities while also working to streamline our operating overhead. We anticipate $1.5 million of further annual cost reductions through targeted staffing eliminations. Also, senior management and the Board have agreed to forgo 10% of their salaries and retainers through the balance of fiscal '25 and until business performance improves. We are reorganizing our 3 business segments into 2 commercial business units or CBUs, that target very different end customer needs. The first unit, Solutions, is focused on developing and executing our LED Lighting, EV Charging and Maintenance Services business for large and complex corporate, government and super ESCOs where we provide turnkey solutions as well as to other sector -- private sector accounts. The Solutions CBU focuses on combining leading products and technology with services to create a strong value proposition. Services provided include activities like site audits, custom product and systems engineering, installation, commissioning, system maintenance and overall project management. The second unit, Partners, will focus on accelerating LED lighting and EV charging product sales by catering to the unique needs and dynamics of Orion's distribution partners, including energy service companies or ESCOs and our distributors and agents. These channels require a portfolio of products to meet their needs for levels of efficiencies and price points. To better serve this market, Orion has developed new product lines such as TritonPro that balance smart design, performance and energy efficiency with more competitive price points. These new products have been well received, and our partners have built a significant mutual pipeline of new projects using TritonPro. Our focus through the new structure is to get even closer with our customers through dedicated teams to discover our customers' unmet and future needs. We will be able to take this insight into our product and services development process to provide greater value and the ability to capture more new business. Orion has already commenced these realignments and expects the new structure to be fully implemented and effective as financial reporting segments as of April 1, 2025. Orion has built a strong platform of very competitive product and service solutions that help our customers meet their energy savings, workplace safety and sustainability goals. In addition, we deliver the highest levels of lighting and electrical project expertise with elite customer service and delivery. We now have an expanding project pipeline of opportunities across our business, which give us strong confidence for the coming quarters. Reflecting the impact of the change in timing of new business projects, we have reduced our fiscal '25 revenue outlook to a range of $77 million to $83 million. This outlook implies Q4 '25 revenue of $19 million to $25 million, which would be approximately in line or better than any of our first 3 quarters of this year. This outlook is based on the current business climate, initial revenue expected from large national LED projects as well as significant sequential rebound in Orion's Voltrek EV Charging Solutions business. Due to stronger-than-anticipated new maintenance service opportunities, we now expect fiscal '25 maintenance services revenue to decrease by approximately $2 million to $3 million in fiscal '25 versus our initial expectation of a $4 million to $5 million decline. Looking ahead and considering a growing base of customers and large projects expected to engage over the next several quarters, we believe Orion is well positioned to achieve double-digit revenue growth and positive adjusted EBITDA in fiscal 2026. We plan to provide a more specific fiscal '26 revenue outlook when we report Q4 '25 results in June. Now I'll turn it over to Per Brodin.

Thanks, Mike. As we reported, our Q3 revenue of $19.6 million was impacted by customer changes in the timing in LED and EV charging project starts as well as reduced activity in the lighting distribution channel, which impacted Orion and the overall industry, partly due to slower new construction and economic uncertainties. Q3 revenue in 2025 was $19.6 million versus $26 million in Q3 '24 and $19.4 million last quarter. The year-over-year comparison was impacted by delays as well as a large Department of Defense project in Europe that had benefited the prior year period. As highlighted in today's press release and Mike's remarks, there are several LED lighting projects that we expect to begin in the coming months that will benefit our fiscal Q4 and 2026 results. Our EV Charging segment, which is up 48% year-to-date, was also impacted by project timing in the quarter with Q3 '25 revenues of $2.4 million versus $2.8 million in Q3 '24. We expect a strong Q4, which will benefit from construction service contracts related to Eversource Energy's EV Make Ready program and a large public school bus EV project for Boston Public Schools. In maintenance, $3.9 million of Q3 revenues were higher than expected, driven by new opportunities with existing customers, though below Q4 '24 revenues due to the intentional roll-off of unprofitable Stay-Lite legacy contracts. Our overall gross profit percentage or gross profit margin increased nearly 500 basis points to 29.4% from 24.5% in Q3 '24. Sequentially, gross margin improved more than 600 basis points from Q2. A large portion of that was due to profitability improvement in maintenance services, as we've discussed. Also, as we've demonstrated, margin improvement in lighting, where gross profit was 30.1% versus 27.4% in Q3 '24, even on lower revenues in the current year period. That improvement is due to both mix and structure. By structure, I mean we've taken steps to lower our manufacturing costs on our base products through reengineering and efficiency efforts in the plant. Mix refers to revenue that includes more sourced product, which carries less fixed cost and more variable cost and is above 30% margin, so it's accretive overall. The spend toward more sourced product is a testament to the strength of our TritonPro line and the strategic decision that we made in 2023 with its launch that expanded our reach and leadership in more value-oriented LED market segments. We expect this mix shift and structural changes to continue to positively impact our lighting margins into the future, which should become even more evident in stronger revenue quarters. On prior calls, we've talked a lot about the gross margin improvement in our Maintenance business, and we said we expect it to reach a normalized level in Q3 '25, more in line with the overall business. We demonstrated this in Q3 with a 26.4% gross margin, which is more in line with where our overall business has been and within the range that we expect for maintenance going forward. Our EV gross margin was 30% in Q3 '25, also very strong. And of course, our gross margins will continue to vary some depending on projects and revenue level due to fixed costs. Reflecting on the turnaround and maintenance and our overall outlook, we expect Orion's blended gross margin to remain strong in Q4 '25 and sustained through fiscal 2026. Operating expenses decreased 16.9% or $1.4 million to $7 million in Q3 '25 from $8.4 million in Q3 '24 due mainly to lower fixed costs, including employee and compensation-related reductions and a $600,000 reduction in Voltrek earn-out expense accrual. As mentioned previously, Orion has been working hard on process improvement, which enables us to remove inefficiencies and costs from our business. The improvement in gross margin, combined with lower operating expenses led to Orion's Q3 '25 net operating loss improving to $1.5 million or $0.05 per share from $2.3 million or $0.07 per share in Q3 '24. Cash generated from operations was $3.8 million in Q3 '25 due to strong accounts receivable conversion. Year-to-date, we generated $1.3 million of cash in operating activities and paid down $2.5 million under our revolving credit facility, including $1.5 million paid in Q3 '25. Our cash balance increased to $7.5 million in Q3 from $5.2 million at prior year-end. Also, in early Q3, we extended the maturity date of our revolving credit line with Bank of America by 1.5 years from December 2025 to June 2027. Current assets less current liabilities or net working capital was $10.5 million at the close of Q3 '25 compared to $13.1 million last quarter and $16.7 million at year-end. Lower current assets reflect our significant efforts to drive our inventory levels down. Considering our growth expectations and Orion's financial liquidity, we believe we are well positioned to fund our business and growth goals through fiscal '25 and beyond. And now, Olivia, you may begin the Q&A session.

[Operator Instructions] Our first question coming from the line of Eric Stine with Craig-Hallum Capital Group.

Mike, and Per, so maybe can we just talk about the pipeline first. I just want to make sure I'm clear on this. So you talked about 7 new customers and projects, $100 million to $200 million. Are those in your pipeline? Are you saying that that's what you think that the -- you've had a number of announcements, both maintenance and project here over the last couple of months. Are you referring to what you think that those awards can become? I'm just trying to figure out, is that business you have in hand? Do you need to still close that? And you also talk about a number of large opportunities approaching final stages of negotiation. So just wondering what's in each bucket?

Yes. Thanks, Eric. Good question. So what we talked about and what we've released is closed-won business. And so those projections are of the closed-won, which means we do believe that we will actualize revenue in that range from $100 million to $200 million over the next 5 years as a result. Separate from that, as you referenced, there are several other large significant opportunities, which are in the final stages of the pipeline, and we hope to make further announcements in the near future.

Got it. And so I mean, any color -- and if you can't, I get it, but any color on maybe you're talking about large projects and getting close, how much that might increase that $100 million to $200 million, maybe how that's spread across lighting, charging, maintenance? Any color would be great.

Sure. I would say that the magnitude of those opportunities is certainly in the 8 figures per annum. And that's about kind of as tight a range as I want to give at this point being that they're still in the pipeline and not yet closed. These -- what we are seeing is these opportunities between the closed and pipeline are coming from what I would say is a pretty diverse customer base. So when you look through what has already been announced and won, it was in the press release today, you see sectors such as building products retailers, a couple of very significant ESCO opportunities, one that is very involved in what we would call the mush market, which is the municipal university schools and hospital space, additional expansion with core customers and of course, our Automotive business rebounding, continue to rebound as well heading into fiscal '26. The new -- the other projects, which are in the pipeline also involve some additional sectors as well.

Got it. Okay. And then maybe last one for me. Just I know it's been an ongoing source of frustration, just the project pushouts. Is there any thought you've given or ways that you think you could better maybe anticipate some of these project changes? Or I mean, potentially when you're thinking about annual guidance, maybe factoring that in better? Or just some thoughts because I know -- I mean, this has been a pretty frequent occurrence here over the last number of quarters and longer.

Sure. Yes. For sure, it is a source of frustration for management as well when some of these projects, either new business coming in despite our constant communication, those things can slip based on the customer's time line or in some cases, projects which have been well planned are postponed for other reasons. One of the things certainly that we plan to do for fiscal '26 is to take a -- and we announced it in this -- today's release as well, is to really reset our costs and our breakeven point so that even should we get impacted by any delays in revenue that we can be profitable. And that's really our focus. We do believe we can -- with all this new business that has already been won and is in the pipe that we can continue to -- we can grow the top line double digits, but we're also focusing on being very sharp on costs and establishing a new breakeven point so that we're assured that we will be profitable.

Our next question coming from the line of Amit Dayal with H.C. Wainwright.

Just following up on Eric's question about the $100 million to $200 million outlook from the backlog side of things. How much of that is exposure to any government contracts or opportunities?

Yes. None of that pipeline is really focused at all on the federal space. As I mentioned earlier, some of it is in the municipal space. But really none of it is tied to federal.

Understood. And then with respect to the inventory, maybe can you share what the inventory is comprised of right now? And is there anything within that, that may be written off as you go through the reorganization process?

No, we have been working very hard on our inventory as a company over the last 18 months and have reduced it substantially. I think we've got a very productive inventory at this point in time, and we're not expecting any significant write-offs as a result of the restructuring.

Understood. And on the maintenance side, how are you sort of targeting new customer wins? Are you using maybe outside help for this? Or is it just an internal sales force that is trying to go and get deals done to build that customer base out?

Yes. We're always looking to use partners and kind of network for opportunities. But the ones that have been announced thus far have been internally generated. Certainly, we've bolstered our sales team with some experienced people from the industry, and those individuals have helped provide some new opportunities to us. We think that we've got the right infrastructure, capabilities, capacity now to leverage for new business. And now that we've solidified the base, we are profitable. I think we're in a good position to start moving forward with new business.

Our next question coming from the line of Gowshi Sri with Singular Research.

Can you hear me?

Yes.

All right. On the $100 million to $200 million revenue potential, what's the assumptions that are driving the low end to the high end? And how much of that is pricing and how much of that is EV growth?

Sure. So in a range like that, we have timing -- these projects and these new customers obviously have phases to them. These are quite large, and there's a series of rollout assumptions that go into them. So what we're trying to be is transparent that there is a range of outcomes in the new business that are not always within our control. And so we're just trying to do a better job of exposing the range of what we think these could be. We do think that that's a realistic range at this point in time. Regarding EV, a lot of these opportunities are more on the lighting side. We have -- and I referenced this in my comments earlier that we have expanded our pipeline of EV opportunities sequentially quarter-over-quarter. So despite the obvious noise coming around the federal space right now, we continue to expand our pipeline. So we think we've got some nice growth opportunities in that area as well. But they're not listed in the $100 million to $200 million.

Awesome. In terms of the project delays, I know you've mentioned most of that is factor around the macro factors and is that customer readiness, is that funding availability. As you -- are there any -- in order to kickstart these projects, are you guys -- as you look forward, is there any discussion around pricing adjustments or enhanced services as you try to motivate the clients to proceed with their projects?

Yes. Most of our project -- I mean, substantially all of our projects have a very good ROI for customers. So they are motivated. Typically, the factors that create delays are not influenced by necessarily our pricing. Finance can influence it along with the overall macro factors we discussed or just things going on in their own business. And so therefore, they shift their capital from one area to another and defer a project for a little bit. So there's a wide variety of those things. We're constantly looking at opportunities, obviously, to where opportunities are closed, if there's a delay to see what the source of that delay is and whether or not it's something we can solve. That includes financing options through third parties that we work with quite regularly.

Okay. And can you give us any color on that $5 million project with the automotive OEMs that you guys have mentioned in your press release?

Yes. So that's just an indication that we have 2 primary OEMs that we do a lot of work with. We cycle through their -- we do their new facilities. We cycle through and do retrofits throughout their footprint every probably 7 years, and we're seeing that cycle improve, number one, in terms of going through all the facilities. And number two, I would say, and as referenced before, one of these OEMs is very focused on the fluorescent bans, which are coming. And so we're seeing an acceleration of their footprint as a result of the fluorescent bans, any areas that have not yet been touched to get those converted to LED.

Okay. And on the final question, with the current political climate as it is, I know you have had a few federal government DoD like projects. Is there any color on that front in terms of engagement in terms of the change in the policy?

Yes. I think we're going to have to wait and see where this all shakes out. Clearly, it's rapidly evolving. I can say, as mentioned in my remarks, we're not really -- we don't see any impacts directly from NEVI or federal funding on our projects and none of that should impact our fiscal '26 outlook. We were impacted with one project in -- that was basically for a government entity that went through and as DOGE kind of went into that entity and restructured things, that project was placed on hold. And that was a 7-figure project. It was not due to federal funding, but it was due to essentially that organization getting reorganized. So that's the only impact that we've seen, which was unfortunate, but we don't see anything moving forward. Yes. Maybe one other -- sorry, follow-on point to that last point is we do continue to see great opportunities. You know that we've worked with the Department of Defense and some other entities in the government on the lighting projects. We do see projects moving forward on both those fronts unaffected, so.

And our next question coming from the line of Bill Dezellem with Tieton Capital Management.

First of all, relative to the new business unit structure that you're doing, would you please walk us through the practical benefits of that new structure and what that ultimately will accomplish from the customer perspective and what the customer will see that's different?

Sure. Bill, the new structure, essentially, what it does is it aligns our sales -- primarily our sales and demand creation teams with execution capabilities and creates distinct focus between what we're calling the Solutions or Turnkey business and our Partner business. Traditionally, this organization has been more functionally focused. So you have one sales team, and that sales team has some opportunities which are partners, some opportunities which are turnkey. What we're trying to do is create very strong alignment between the front end of our business and the operational and execution side of our business so that we really are embedded with our customers. We understand their needs and where we need to have some divergent strategies when it comes to product lines, pricing, ways we promote things or other service offerings that we're able to do that because we have very crystal clear vision of what our customer needs are and how to sell and execute against those.

And Mike, how is that different from the way you were -- either are structured now or before you began implementing those changes?

Sure. So again, this is primarily on the front side of our business and particularly our sales organization has, again, had the ability to focus on a wide variety of opportunities, whether they be ESCOs or distribution or solutions oriented. What this does is it basically creates clean lines for our sales and go-to-market approach that everybody is focused on either the partner side of the business or the solution side. So again, going back to TritonPro as an example, one of the things that we were hearing loud and clear from our partners was that the market was shifting. They needed additional competitive offerings, which we responded to. I think we did that quite well. And that's driven some growth and opportunities on that side of the business. And that's something that if we had just focused on the solutions side, we probably would have got there, but it probably would have been later than having that insight coming from the ESCOs and then reacting to it. So I think moving forward, this will allow us to be even faster in terms of reacting to market needs and be very tailored in our offering to them.

And are you finding with your salespeople that some of them are just better suited, whether it's their genetic makeup or their relationships that they have for direct business or through ESCOs?

Absolutely. Great question, Bill. Yes, I mean some people are absolutely better based on their experience and how to manage things because it is a difference in how to manage solutions-based service-oriented selling versus through partners and with partners. And so yes, the team is -- we're aligning our people based on their capabilities, experience and aptitude to one of those 2 segments moving forward.

Maybe taking this one step further, it appears that you are winning new business at a faster rate. So congratulations on that success. The question is why? And how repeatable is that? And maybe tied into that question is, to what degree have you already been at some level, your salespeople been kind of falling into line of focused on the OEMs or focused on the partners. And as a result, that's actually what's leading to this success at closing business?

Yes. We have added some new salespeople, as I referenced before, some other people from the industry. I think they've brought us some great skills, talents and accounts that we could go after and win. As often is the case, it's not one single thing that we do. It's a combination or accumulation of actions that we've been taking, both on the marketing side of the business and the sales side of the business that is allowing us to pick up these new accounts. Certainly, moving forward, we see the value of focus, and that's really what we want to do. And we believe through that focus in the organization, we'll continue to see this level of momentum and acceleration.

Great. And then additionally, relative to the incentives, and I guess this question is most focused on the lighting side of the business. The incentives that your customers are receiving, are those coming from the federal level, the state level, the utilities themselves? Where are the predominant originators of the incentives?

Great question. It's primarily the utilities, local utilities, which are providing the vast majority of lighting incentives.

And so all of the things that we're hearing in the news relative to the federal government and cutting back really has no impact. This is all tied to the utilities trying to manage the additional watts that they need to produce as time goes forward?

Absolutely. Yes, well said.

Congrats on the margin improvement.

Thanks, Bill.

[Operator Instructions] And our next question coming from the line of Andrew Shapiro with Lawndale Capital Management.

Just 2 follow-up questions with respect to your press release. One was the management and Board were taking a 10% salary and retainer cut. Can you clarify, is this a deferral and thus accrual or a complete give up or give back?

Yes. We're foregoing that for the balance of this year and then until business performance improves in general. So we're foregoing it.

Can you clarify the word forgo? Again, is it a giveback? Or is it deferral and accrual, meaning the cash savings only for the time being?

It's a give up.

We will not be accruing funds for the compensation.

Okay. And then I appreciate you sharing the pain. And can you update us on the company's NASDAQ listing status, the time line and various milestones and where we're at on the clock?

Sure. We are in the I'll call it, the initial 180-day period in which we're allowed to regain compliance. That 180-day period expires in mid-March, I believe it's March 19. If we are not in compliance by the end of that period, we are allowed to apply for an extension for another 180 days. If we're not in compliance by mid-March, I would believe we would apply for that 180-day extension. And our thought is that with execution on our plan that within that -- either within this period or the next period, our hope and thought is that we would regain compliance and move on from there.

And in an application for extension, typically, you have to present a road map or a plan for what the company would do to regain compliance. Is the thought, as you just described, solely based on execution of said plan? Or are there other options that you are preparing to or would be prepared to put on the table to maintain said listing?

That's something that is subject to further evaluation as we move toward that time frame. But if there are other things that we believe we need to do, we would include that in that application.

Okay. And when does the company's annual meeting typically take place and when you'd have to decide whether you're putting forward a reverse split or some other kind of shareholder vote action?

Not sure I heard that quite right, but if the question was when our typical annual meeting timing is, that's usually in early August of each year.

Okay. So in the -- yes, so in the next window, if you were to pursue a reverse stock split, which isn't necessarily the optimal way of dealing with the issue, but it is a way of dealing with it. That's, I guess, when you'd have to decide you're going to put a matter up for vote for the shareholders?

Yes, I believe that's true.

This concludes our Q&A session. I'll now turn the conference back to Mike Jenkins for closing remarks.

Thank you all again for joining us today. We look forward to updating investors on our fiscal 2025 fourth quarter call, and we hope to see or speak with you at upcoming investor conferences, which we will announce separately via press release. Please contact our Investor Relations team for any additional questions regarding today's call or to schedule a meeting. Their contact information is in today's press release. Once again, thank you for attending our call.