Adam Prior – IR John Scribante – CEO Scott Jensen – CFO.

Steve Dyer – Craig-Hallum Capital George Gaspar [ph] – Private Investor Craig Irwin – ROTH Capital Partners.

Good day, ladies and gentlemen, and welcome to Orion Energy’s Second Quarter Fiscal 2015 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. (Operator Instructions) And as a reminder, this conference is being recorded.

I would like to introduce your host for today’s conference, Mr. Adam Prior of The Equity Group. Sir, you may begin..

Thank you. The company issued the announcement of Orion’s fiscal 2015 second quarter and first half results this afternoon. The company has made available supplemental information document and accompanying slide presentation on its website at www.oesx.com in the Investor Relations section. I will now read the Safe Harbor statement.

Remarks that follow, including answers to questions, include statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are generally identified as such because of the context of such statements will include words, such as believe, anticipate, expects or words of similar import. Similarly, 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. Those risks include among others matters that we have described in our press release issued this afternoon and in our filings with the Securities and Exchange Commission.

Except as described in these filings, we disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly conference call, if at all. With us from Orion is John Scribante, Orion’s Chief Executive Officer; and Scott Jensen, Chief Financial Officer. With that, I’ll turn the call over to John.

Please go ahead, John..

Thank you, and good afternoon, everybody. Let me first start by saying that we had a strong order bookings quarter and we are well positioned to achieve our year-end revenue in line with our guidance.

While our bookings are strong and now ahead of the first half of our prior year’s booking space, much of the revenue will land in our third quarter due to our customers construction schedules. So we are confident that we will achieve our plan for this year.

During the last quarter, we increased our reseller network to cover more territory than ever, reaching over 70 ESCO resellers, and given only a few months left in the year for capital budgets, order velocity is increasing.

While some are still debating their technology choices, the LED debate is mostly resolved, and component costs are beginning to level off. All of this lends itself to a brighter future for Orion.

Next, let me provide an explanation of the long-term inventory impairment charge that we reported during the quarter and also provide some clarity around our gross margins and the initiatives underway to improve our LED product margins.

For the quarter, we reported a non-cash impairment charge of $12.1 million, related to our long-term inventory, capitalized development costs and patent investment into our wireless controls product offering. This inventory was purchased over seven years ago, and was initially developed for use with high bay florescent fixtures.

While we had some success during our fiscal ‘14 year in increasing our control sales, unit volumes declined significantly during the quarter, coupled with continuing acceleration of LED market adoption, the improved performance of LED lighting products and greater energy savings resulting from these retrofits, we believe that this leaves complex industrial controls as a difficult incremental sale.

We will continue to support our customers who have purchased this product with warranty and technical support services. And in terms of our product margins, the accelerated shift to LED, which reached 50% of our product sales in September, well ahead of expectation, added a strain on our supply chain.

Simply stated, material availability at the cost we had planned was outpaced by sales orders.

In the past several weeks, we accelerated our supply chain initiatives to bring in material at lower costs, as well as reduced expenses through improved labor efficiencies, and we expect increasing unit volumes to provide Orion with greater LED component purchasing power.

These initiatives have led to improvements in LED margins in this current third quarter and we expect this trend to continue. As these costs have begun to rationalize, sales momentum has improved in each of our target markets.

The return on investment and energy efficiency gains in LED projects are beginning to break through the noise in the marketplace. We’re beginning to see it firsthand. LED sales made up 39% of our lighting revenue in the quarter, the highest ever, and up from 5% this time last year.

We expect that growth in our LED sales will eclipse the decline in HIF lighting during the third quarter, and plan to realize lighting growth on a year-over-year basis. And as stated earlier, our supply chain is catching up and we expect to return to normal margins very soon.

We also ended the quarter with the largest lighting backlog in the company’s history, predominantly LED. This is a result of our expanded sales organization and customers gaining comfort with LED over HIF and Orion’s value proposition.

Some of our wins in the second quarter include; two separate orders from large national retail chains for LED fixtures sold through one of our resellers. Retail chains are an ideal customer for us as their lighting needs are typically 24x7 and can achieve a faster return on investment.

We feel these customers are strong candidates to expand their order flow after they have had an opportunity to first test the products. Second, a contract with a new global industrial customer for 1,373 fixtures to be installed in their facilities in Michigan. We won this contract because we could shift within five days.

Their original vendor could not do the same. And we are now position to win future business with this customer, based on our ability to deliver on our promise. Third, we recently started working with a project with a global manufacturing facility – for a manufacturing facility with a global company.

We shipped over 100 piece ordered last month and they will continue to take delivery monthly until they’ve replaced all the fixtures in their facility over 800.

This is very significant to us because this notable company also offers its own LED Troffer product for sale, at a lower cost in the market, and yet they still chose Orion over their own product, because of the product benefits that the LDR offers.

And we won a $2.1 million contract for five different facilities from a large federal agency, which we will continue to pursue for future business. While our federal business strategy is a patient one, we are seeing the results starting to develop.

What’s driving these sales are our unique relationships with our customers, and easing capital spending environment for energy efficiency projects, more clarity about the benefits and the new technology platforms, and finally, our growing and increasingly engaged Orion’s sales network across the country.

Previously we discussed how the hesitancy in the retrofit market of whether to choose LED products over fluorescent has presented a large pause in sales. This air pocket in addition to our exit of the legacy non-core solar energy business, explains our decrease in revenues year-over-year.

The air pocket is a direct consequence of delayed customer decision making in a retrofit sale.

These customers were educating themselves on the benefits of LED during this period, and as the amount of information noise in the market stalled their decision, because in a retrofit project, they have time to make these decisions compared to a new construction sale where other factors drive the decision.

And as previously stated, our bookings rate has increased recently, and is making up for the first half stall and is now ahead of last year-to-date. The economic and performance benefits are there.

There are numerous reports that LED light penetration across the entire lighting marketing will approach 70% by 2020 and we feel that this may even be a conservative estimate for the retrofit space. The technology will continue to improve as component manufacturers compete, and this will lead to greater energy performance in LED.

In terms of Orion excels at converting these electronic components into thermal and optical benefits, the delivered the lowest total cost of ownership, the growing efficiencies and improved payback time is helping to accelerate these decision processes.

Our customers value the energy gains, light performance, innovation and easy installation that Orion offers. The three markets that Orion targets are sizable, and they are accelerating rapidly, are still largely untapped in terms of LED conversion.

And Orion’s recent expansion of products containing our ISON technology has provided us with an unmistakable competitive advantage in the marketplace. For office and interior spaces, which our LED Troffer Door Retrofit product addresses, we estimate the market size to be between 900 million and 1 billion fixtures in U.S. alone.

So far we believe the LED adoption in this space as a percent, has been miniscule. And with over 20,000 project installations with our legacy products, we expect the LDR to continue to be a major driver of sales, to both, new customers as well as our massive install base.

For industrial locations, which is addressed by Orion’s High Bay products, has historically been our sweet spot. We believe the market size here is between 60 and 70 million fixtures in the U.S.

Our Apollo branded products provide great price point solution, while our ISON class Orion-branded products, provide the best value for the total cost of ownership buyer.

As you may know, ISON is our proprietary thermal and optical technology protected by dozens of patents and allows buyers to choose lower voltage Orion fixtures to deliver the same light compared to our competitors.

For exterior application, which covers parking areas and auto dealerships and the like, we estimate that market to be just under 55 million fixtures in U.S.

Our recent release of the industry’s first user configurable modular fixtures allowing the customer to uniquely design its own look and light output, fully equipped with our unique auxiliary direct feature, which can enable other devices such as video cameras, sound and other network components, providing a customer experience unmatched in the industry.

Today, we are on full scale development of the significant and regular release of new products to take advantage of these nascent markets. We recently began to leverage the strong sales from our LDR by introducing new suites of LED high bay, exterior and office fixtures for our customers.

These products built up the history of quality and performance of previous Orion offerings. We’ve had a very strong response from our resellers who attended our Annual Sales Summit in October, where products were first introduced. We started taking orders for these new products that day.

We’re staying in front of the market through investments in research and development in energy efficient products, with functionality that is superior to our competitors. We will compete effectively by delivering more value than that of from our competitors.

We expect to accelerate our product development cycle as we move forward and plan on adding new products to our existing portfolio in the coming quarters. Our second quarter results reflected much of these expenses and margin alignment with these changes. This has been a balancing act to-date and we recognize it.

However, we have the outmost confidence that the company has made the necessary investments to grow well into the future. After two years of turning this company around, we are heading in the right direction and well positioned to accelerate our performance.

With that, let me turn the call over to Scott for a review of our financials, and I’ll return with some closing remarks..

Thank you, John. I’ll briefly discuss financials, but I encourage everyone to review our supplemental package and press release. Orion’s total revenue was $13.4 million for the fiscal 2015 second quarter, compared to $27.5 million in the prior year period.

The predominant reason for lower revenues was the result of the expected decline in our non-core solar business of $8.9 million. As noted in the past, we are no longer focused on the solar business, and we expect to generate approximately $1.5 million of solar revenue in fiscal 2015.

The remainder of the decline was due to construction-related delays in the lighting business that John alluded to earlier. However, we have been encouraged by a growing backlog and a growing pipeline of new product orders.

As of September 30, the company had the largest lighting backlog in the company’s history, with $11.8 million in LED and HIF lighting orders.

Product revenue from Orion’s LED products increased to $5.2 million or 39.2% of total lighting product revenues during the fiscal 2015 second quarter, compared to $1 million or 5.4% of total lighting product revenues in the prior year period.

Due to recent product releases and reseller interest, we believe LED product sales will continue to grow and reach between 50% to 70% of our total product revenues during the second half of our fiscal year 2015.

Company narrowed its expectations of total revenues for fiscal 2015 to range between $80 million and $88 million, adjusted from an initial range of $80 million to $105 million.

At the beginning of the year, we’ve provided a wide range, and now have greater visibility as our sales ramp and thus are tightening the range, and we are confident that our current backlog, reseller growth and sales pipeline supports our current guidance.

As John noted earlier, our gross profit and margin was impacted by the non-cash impairment charge for our long-term wireless controls inventory of approximately $12.1 million, which was included in our cost to product revenue.

This legacy inventory was developed and purchase commitments made over seven years ago, and we’ve worked diligently to try and salvage this inventory investment.

We undertook numerous channel checks in terms of the value of the inventory, and determined that the high bay industrial transition to more energy efficient LED products has diminished the value of our existing industrial controls. We felt it was appropriate to take a charge at this time and do not expect this to affect future quarters.

Two years ago, we adopted a nimble strategy on inventory management, and our resulting core product inventory turns have been strong. Additionally, we continue to scrutinize and measure the market transition to LED products to protect us against inventory valuation and obsolescence risk.

Total gross margin excluding this impairment charge was 11.8% for the fiscal 2015 second quarter, compared to 28.5% for the prior year period, largely as a result of the decline in fluorescent lighting product revenue, and the related impact of fixed expenses within our manufacturing facility, and also impacted by our increasing LED product mix and component costs.

We’re targeting gross margins for fiscal 2015 full-year to range between 18% to 20% and before the impact of the impairment charge. Our estimate is based upon the current cost and production improvements and initiatives that John previously discussed.

We do expect gross margins to widen as revenue volume escalates and economies of scale begin to improve. If our facilities were operating at $250 million in revenue capacity, we believe gross margins would return to our original expectations in the 40% range.

We recorded a net loss for the fiscal 2015 second quarter of $18.3 million or $0.84 per share, which includes a $12.1 million or $0.56 per share non-cash impairment charge, related to the long-term wireless controls inventory and investments.

In the prior year period, we reported net income of $2.4 million or $0.11 per diluted share, which included a $2.2 million tax benefit, related to deferred-tax liabilities, resulting from the acquisition of Harris Lighting. Quickly moving through the balance sheet. Orion remains in a solid financial position to carry out all of its initiatives.

As of September 30, the company has working capital of $24.3 million, compared to $33.1 million at March 31, 2014. We continue to pay down total debt during the fiscal 2015 first half, decreasing total debt by $1.6 million to $5 million as of September 30, compared to $6.6 million as of March 31. With that, let me turn the call back over to John.

John?.

Thank you. Let me conclude by reviewing the strategies we are executing in order to take full advantage of this market potential. First, our products. Orion has and will continue to set the standards for the leading products in the market. In the past it was fluorescent, now it is LED.

We offer and develop top of the line products in terms of efficiency, performance, modularity and fixture life, and we’ll continue to do so. We know that the bar is constantly raised by competitors, and the best way to compete is to raise the bar ourselves. Our new ISON LED exterior Area Light is a perfect example.

The design and modularity of this product is ground breaking to the market, and at the same time, it delivers the lowest total cost of ownership. In having both of our competitively priced, Apollo product line as well as our ISON class high-performance products, it provides a solution for both ends of the market.

Next, we will further expand our reseller network until we have captured all of the opportunity while still providing our resellers with ample room to grow. During the first half of this fiscal year, we added 40 new resellers to our network, and they are building a pipeline of sales opportunities. We understand these companies.

We understand how they operate, how they sell, how they install, and most importantly, how they need to be treated. Our commitment to deliver the best customer experience in the industry is paramount, and that is why we offer products with the fastest install times, the fastest shipping in the industry.

That is why we package our products in easy to handle and on-the-job site packaging. We offer design, engineering and customer support that best suits these companies and helps them to become profitable. We no longer operate like the previous Orion. So a new vision deserved a new brand.

We want our customers and resellers to know we are a different organization, a better organization and with a demonstrable focus on delivering the best LED solutions to the retrofit market, and our new brand message reflects that vision and culture.

In a relatively short amount of time, we re-branded the company, developed an optimal sales structure, expanded and repositioned our product line with the right products targeting the right markets, and have aggressively engaged to growing network of well-established resale partners.

We accomplished all of this in advance of our customers’ year-end budget decisions, and now have the products in place, that provides our customers with modularity and cost savings to make their decisions easier.

We did not take the least path of resistance to get to there, but we feel that these initiatives and the investments that we have made, position Orion to deliver tangible increases in shareholder value in the coming quarters and into fiscal ‘16. Our strategies are working, and we are very confident about our near-term and long-term performance.

With that, Scott and I would be happy to take your questions..

(Operator Instructions) Our first question comes from the line of Steve Dyer of Craig-Hallum. Your line is open..

Hi..

Hello Steve..

Hi Steve..

As you look at revenue, kind of the cadence of the last two quarters of the fiscal year, obviously it sounds like Q3 will be larger than Q4.

Do you think Q3 – would you expect that’s going to be up year-over-year, I know you had some solar last year as well, but just trying to kind of think about modeling the last two quarters appropriately?.

Yes, we do expect our lighting revenue now to increase on the lighting side year-over-year, and you’ll start to see Q3 in the solar revenue is going to taper off and start to decline as well in the prior year..

Okay. And as I look at your gross margin guidance for the year, it implies even kind of in the back half of the year here, low 20s.

Why wouldn’t that be a little bit higher than that, if you’re kind of picking up a lot of the overhead absorption and so forth? Is it component costs still or why wouldn’t that be a bit better, particularly in Q3?.

It is component costs, Steve, as we work through some of the inventory that we already have. It is specific to a product line on the LED side. We also are evaluating the new products that were just launched in early October. We know that those have higher-than-normal company margins.

And so we’re evaluating the order flow and trying to be conservative around that, in terms of contribution from new products..

And then the 30% next fiscal year.

What is that based on? Is that based on assuming nicely higher revenue from lighting or lower component costs, or both?.

It’s both. It’s a function of increasing revenue as our pipeline grows, as we add resellers, as our new products gain traction in the marketplace.

And then it’s focused on cost-containment initiatives efficiencies, as we have really converted the plant over from a fluorescent production facility to an LED production facility, and we get better and we get longer runs around product orders, and just leveraging that price power too on the LED component side..

Okay. As you take a step back, it seems certainly that the industry is very much in its infancy at least at this point, and a lot of the retrofit guys have the luxury of kind of waiting and seeing.

When do you sort of think this – when do you think it kind of hits its inflection point? Obviously big penetration is expected by 2020, but is ‘16 the real breakout year, or how do you think about that?.

Steve, I would agree with that. And I think it’s even sooner than that. We’re seeing tides turn right now in our booking space, the order flow. Unfortunately some of the revenue gets shelved into backlog from last quarter just due to construction schedules.

Those revenues could have showed up, if it wasn’t for just some issues at the job site with getting access in being available. So that gives us a lot of confidence. Our forecasts for the quarters are very strong. We see orders that were people were sitting on their hands and making evaluations now start to release those orders.

So we feel very confident about the back half of our year and going into next year. As I had indicated, our month of September, we had 50% of our revenues were LED. That was well ahead of our expectation. You may recall I’ve said in the past that I talk by the end of our fiscal year we’d be at 50%. And as a result, it really outpaced our supply chain.

And while we were working towards certain component availability at the cost that we needed, it just – the orders we had onslaught of orders in one product line, it really put the squeeze on us. And that will fix itself.

That’s a very correctable issue that, as a matter of fact, we’re ahead of right now, and as I alluded to, you’ll start to see that margin improvement on that product line occur. And to Scott’s point, we have launched a new product set which we expect to really return margins to where they belong in this company.

So the inflection point, I wish I could predict everything, but my sense is that it is upon us, and we’ll be ready for it here in the next several months, in the next couple of months..

Okay. And then last question for me and I’ll hop back in the queue. Operating expenses jumped a bit in the quarter.

Is this a run rate, or was there anything sort of one-time in nature that would suggest those will fall back?.

Yes, so we had fair number of costs relates to the product launches, research development, certification, testing costs. We’ve had the re-branding initiative as well, and we’re continuing to expand the reseller and territory manager base within U.S. markets..

So it sounds like some of those will come out but….

Some of those will not recur, right..

Okay. Thank you..

Thank you..

Thank you. Our next question comes from the line of George Gaspar, Private Investor. Sir, your line is open..

Yes, good afternoon..

Hi George..

Good afternoon everyone.

Could you relate on this impairment charge that you took? How usable is that inventory at this point going forward, and is it a total write-off, or is that still usable, that can be utilized in say the next six months to a year?.

Yes, so we’ve impaired a significant portion of that inventory, and really took it down to a marketable value.

The challenge that we’ve had George is with LED component costs coming down with the efficiencies improving, the energy savings is so significant that the incremental investment for a customer based around our cost structure of the development of those controls, we couldn’t sell them. So it’s a viable technology in the marketplace.

It’s unique to the industrial space right now, and that’s been a lagging market when you think about LED adoption. We’ve seen faster adoption in the commercial office and retail space. And so we can take it to market, but it was inappropriately valued and it needed to be adjusted..

Okay, good. And is there – can you relate what you still have as far as inventory, and that particular line that has [indiscernible]..

Sure. Yes, we kept of the original $12.1 million impairment we left $0.5 million of value. We believe that we can move through that in the next 12 months..

I see..

With it appropriately priced..

Okay, all right. And then a question on the new exterior product line applications.

Can you highlight the most promising near-term, where the reaction is coming on the positive side for you looking out, what those specific applications are?.

Sure. So we launched two product lines. We launched what I’ll call a moderately priced or a broad-based priced product, meaning that, it could be priced to be very, very competitive.

And it’s really designed for the industrial park, the water treatment plants, the industrial facilities were the elegance of the fixture is not necessary and it’s more about performance and price.

So that, as I alluded to in my comments, the Apollo line is designed for that buyer who is looking for the low-end cost to get a project done with still the warrantees and performance that Orion has stood for in the past.

The ISON product, which is utilizing proprietary optics and our thermal management, as well as that modular – if you saw our slide deck that we posted today, and also the products that we launched on our web, the modular capability of that, this is really designed for your auto dealership, the customer parking lot and the business park, all the area parking.

And that’s a product line that we intend to further expand into more applications as well, more outside area of parking applications, but that’s a very high efficient products.

It is a little more priced – little more premium on the price, but for the total cost of ownership buyer who is looking for the best value and having the greatest performance over time is going to live with this product. This is one that we offer extended warrantees up to 10 years on, and it’s because of our confidence in the thermal technologies.

So that’s an exciting product for us. It was a whole [Technical Difficulty] because not having that product line. And so we expect that to be an incremental contributor to our businesses going forward..

Okay, all right. And then a question on the revenue forecast that you have now, the $80 million to $88 million.

If I just take the $80 million range number and subtract out the revenue stream from the first half, this suggests that effectively second half revenue would be in the $53 million-plus range or basically 100% increase over the first half?.

Correct..

And that’s basically the way you’re looking at it then?.

Well, historically if you looked at the trends, the seasonal trends in our business, that line is up pretty close to what we’ve done over the last several years. In addition, you got to factor in that $12 million backlog that we have contributing to the quarters going forward.

We’re still very confident of being able to achieve that target range that we gave..

Okay. And then one question here on stock-based compensation. There is a slight increase in the six months versus the previous share, 785,000 versus 676,000.

Where is that increase compensation on stock base going within this organization?.

George, is the question trend, or the question the increase year-over-year?.

I am looking at the year-over-year increase..

Yes, okay. So the increase is really driven around as we look at long-term incentive and properly valuing those awards at the date they are granted. We’ve had a significant increase in the stock price year-over-year. And so that gets valued at current market.

So any award that was granted earlier this year is going to carry a higher stock compensation expense versus the prior year..

I see, okay. All right, thank you..

Thank you, George..

Thank you. Our next question comes from the line of Craig Irwin of ROTH Capital Partners. Sir your line is open..

Good evening, and thank you for taking my questions. So John, when I look at the success in LED lighting market, the fact that you’ve been able to double revenues sequentially increase it five-folds year-over-year, obviously there is no issue with stickiness on the customer side there.

You look at the conventional lighting guys, many of them report challenges pushing this business at anything closer to the growth rates you’ve been achieving.

Can you maybe talk about whether or not this is a product that’s driving this more than anything, or do you see this is a channel [ph], the way that you approach the channel differently than these competitors? And as another question there, if there is an opportunity to add additional products in there, or if potential acquisition might benefit in this really high rate of growth?.

Sure. If I don’t answer your question, keep poking at me, because there is a lot going into this.

I think historically we’ve been such a sales-driven company, and a company that when we see this opportunity while it’s still a transition, and there is no doubt, we had a rough quarter in just getting through the quarter, getting through all the changes having an onslaught of LED orders with a product that is just a showstopper in the marketplace, the LDR.

All of these things – they’re great problems to have, but they do create some backend waves in the organization when you’re moving a lot of product to a manufacturing facility was tooled out for fluorescent and now your rapidly changing them.

So we have a lot of struggle going through, but the ability to bring new product to market and to drop that product into a sales channel that is expanding, is growing. And our strategy is very, very different than many of our competitors.

It’s a strategy that does not rely on traditional methods of go-to-market, it’s a strategy that is very forward and aggressive and disruptive. And we believe it’s the right strategy. And having a product development focus today.

We spent the last year and a half really turning the organization around, and now we’re a very sales-driven, very product-driven, people-driven company, that it just – it became very natural for us, and it really took us back into the days where we had our rapid growth in the HIF business, where we approached the channel very differently than all of the traditional lighting companies, and we took a product to market that was very unique.

And all of the same tendencies and same strategies work very, very well for us in LED. Our complicating issue today is we’re really managing two very different businesses. The decline of an HIF fully tooled, fully developed business, to a rapidly evolving, highly transitioning LED business.

And keeping both of those trains on the track and moving forward is very difficult. Now, the good news is, is that we see the LED train moving much faster and pulling business through, whereas the HIF while we’ll continue to support that, there is a still a market there and there is still opportunities in that market.

For instance a company who may have 12 months left on their lease and doesn’t want to invest a lot of money, they may opt for some energy efficiency in a lower cost quicker payback, but LED is getting there, and it’s getting there quick.

So I think it’s really the different approach that we have always taken to the market, and the success in our sales organization, on top of some pretty innovative products, is what’s leading to our success..

Thank you.

And I guess as a second part to this, one of the things that I always saw is the brilliance of the way that Neal has set up the company originally, the fact that you completely avoid the middleman, mainly one guy touches the fixture before it actually gets installed over the customer versus some of the very large incumbents out there four or five guys, and the fixture 25 to 30 points on margin there, really allows you – historically allowed Orion an opportunity to sell strong products at a more profitable margins in a better price than competitors.

Is this something that structurally is still available for you in the LED market? Is this something that really plugs into their channel that was built over the last couple of years, and benefits from that same structure in the market?.

Well, yes, I’ll give Neal credit for that. The legacy of this business going direct, it was very disruptive. And it clearly gave us the scar tissue and gave us the ability and the seasonality of our sales people to go after an LED market, which is very, very disruptive.

And what I mean by that is you have entrants into the marketplace today that can’t get access to the existing channels because they are new players. They struggle with that.

Our market strategy is straight and true and the good news is there is a lot of people in this company that truly know how to go after that business in the same fashion, which is well established in our business, to go win that business. So we continue to support that. We’re not entirely opposed to these other things, but we’re not reliant on them.

So you may see some of our product moving through those channels but they become more opportunistic or driven specifically by a customer need..

Great. And then last question, if I may. So I don’t subscribe to this service, but I know there is a company based in Princeton that offers a very thorough analysis of all the budgets for lighting subsidies across the North American market.

And I understand they were reporting that a high percentage of those subsidy programs were depleted starting this fall, something north of 50% were starting to see limited funds or no funds available.

Does that impact your quarter in anyway? Is this something that you monitor closely, and is this something that contributes to the bit of the hockey stick that we’re seeing in your revenue forecasts this year?.

I’m pretty – well, couple of comments. One is, that isn’t anything new.

Year-over-year they are always running out of money and they are always reloading and it’s very – some more established incentive programs they’ve got it budgeted and figured out and some of the newer markets that have newer incentives, they’ll burn through them and they don’t manage them to the extent that they can stand with the demand.

So they will come and go throughout. And one of the advantages of our reseller network is where one incentive drops off, another one pops up somewhere else. So it’s really easy to remobilize and redeploy sales into other markets.

In terms of, did it impact our business? I’m not aware of any material impact that a lack of an incentive played in our quarter..

Great. Thanks again for taking my questions..

Thanks Craig..

You bet. Thanks for your questions..

Thank you. We have a follow-up question from the line of George Gaspar [ph], Private Investor. Sir, your line is open..

Yes, thanks you. I’d like to ask you for some additional on the mix of your competitors moving from the fluorescent – the efficiency of florescent area.

How did that competition look? And as you transitionalize now over into this LED area, what changes are you experiencing in terms of the competitive atmosphere and the number of companies that are in the various fields? And then also, could you highlight on this exterior lighting fixture, if that’s – is the resellers are key on that side of the market as opposed to let’s say those straight LED side of the market you’ve been on?.

I think what the competitors are doing in the marketplace right now is, to some degree to the prior question, there is a lot of people out there struggling. And so you’re navigating around people that are moving product on price basis.

You take the strength that Orion has traditionally brought and continues to bring, even currently and will always bring, and that is a value proposition, a story to be told.

So while market price will always have a drag on the market, highly trained sales people and highly trained resellers and people with relationships and the abilities to serve their customers have the opportunity to win a majority share of that business.

So there is always going to be a price drag, but we believe that by providing both ends of the market with the solution, those that are looking for a total cost of ownership solution, we will always outpace the competitors. And those that are competing on cost, we have some products that can do that as well.

So really depends on what you value as a customer. In terms of our resellers, the mix. We are experiencing some of our more – I guess our longer term resellers making the transition from an industrial sale to a commercial sale. There are some struggles there.

And if you’re not used to calling on the property management and the asset managers of a real-estate trust or a privatively owned real-estate company, it’s different than calling on facility managers of the industrial park. So it’s just training and education and we continue to have our regular training sessions and outreach.

And the more territory managers that we put out in the field to work with our resale customer, that is showing progress. So again we believe that in-market sales strategy to support our resellers is the right strategy..

Okay. And just one follow-on John on this. This reseller market with the significant number of additions of resellers that you added here, that you’ve described in your release.

Then basically these resellers are concentrating on the LED side of the market?.

I would say as a general statement, yes.

There is – I think almost all of our resellers quite frankly are focusing on the LED business and will pick-up the florescent if it’s the right move, but if you’re not representing LED as your primary solution in today’s market, certainly giving customers options and doing the right financial evaluation to serve their particular objectives is certainly important, but that’s the game today.

That I think in large regard has been resolved, LED is the future and we’ll continue to support that..

Okay. Thank you, and good luck going forward here in the next couple of quarters. If you meet your targets, it will be an impressive turnaround to say the least..

I appreciate your confidence, George..

Thank you, George..

Thank you. At this time, I’m showing no further questions. I would like to turn the call back over to John Scribante for closing remarks..

All right. Well, thank you. It’s been, as I had indicated, it was a tough quarter to get through, but the good news is we’re through it and we’ve got great opportunity ahead of us. Next couple of quarters are going to be very, very busy for us. We appreciate your support and we look forward to talking to you soon. Thank you and have a great day..

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the program. You may all disconnect. Everyone have a great day..