Orion Energy Systems, Inc. (OESX) Q1 2017 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Orion Energy’s First Quarter Fiscal 2017 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]. As a reminder, this conference is being recorded. I would now like to introduce your host for today’s conference, Gary Abbott. Sir, you may begin.

Thank you. Good afternoon everyone and thank you for joining Orion Energy Systems’ first quarter fiscal 2017 conference call. Participating in today’s call will be John Scribante, Orion’s Chief Executive Officer; and Bill Hull, Orion’s Chief Financial Officer. John will open today’s call by providing comments related to Orion’s quarterly results and business outlook. Bill will then discuss the financial results for the first quarter of fiscal 2017 and subsequently open the call to questions from the audience. Additionally, for anyone who is not able to listen to today’s entire call, an archived version will be available later this evening. Please visit the Investor Relations section of Orion’s corporate Web site to access the replay. Before John begins his commentary, I’d like to review Orion’s Safe Harbor statement. This call is taking place on August 02, 2016. Remarks that follow, including 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 are generally identified as such because the context of such statements will include words such as believe, anticipate, expect 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 the risks that could cause actual results to be materially different. Those risks include, among others, matters that the company has described in its press release issued this afternoon and in its filings with the Securities and Exchange Commission. Except as described in these filings, the company disclaims any obligation to update these forward-looking statements, which may not be updated until the company’s next quarterly conference call, if at all. With that, I’ll now turn the call over to John Scribante. John?

Thank you, Gary, and good afternoon, everybody, and thank you for joining in on our call today. Today I’ll be talking about business in some detail and then I’ll turn the call back over to Bill, our Chief Financial Officer, to talk about our financial results in the quarter. So to begin with, I’d like to say that I’m very happy with where we are today. We’re on track to grow by 10% to 20% this year and to do this with expanding gross margins and tight expense controls. We originally expected revenue to be a bit higher than we achieved in the first quarter of fiscal '17, but we haven’t changed our internal goals. So going forward, we just want to be a little more conservative with our external expectations for two reasons. First, as you can see, we are a bit short on revenue in the first quarter but we grew our backlog significantly. Our backlog was $12.6 million at the end of the first quarter, up from 5.6 million and 5.2 million in the prior and year-ago quarters, respectively. This backlog represents the amount of revenue that we expect to realize in the near future as a result of firm committed purchase orders. It’s important because business momentum can be seen in terms of our reported revenue plus backlog. And when comparing that sum to the year-ago period, it gives us confidence that we’re doing very well. Our first quarter revenue plus backlog grew 29% from the first quarter of last year. This is very good news but it also speaks to the timing of delivery of large orders and the corresponding timing of revenue flow within the year. Since we are not in the position to try and predict the timing of revenue, that is one of the reasons to be more conservative with our guidance. Additionally, we want to be more conservative in our revenue outlook because we are still in the early stages of developing our sales agency channels. In a moment, I’ll discuss this in more detail, but want to call it out as a prime reason why Orion had a slow start to the year. Essentially, we haven’t changed our internal management targets for the year but we have reevaluated our assumptions on how quickly this new channel will contribute to revenue. With all this said, let’s take a closer look at our business. First, from a historical perspective, it wouldn’t be unusual for the first half of our fiscal year to represent just 40% to 45% of our total annual revenue. This wasn’t the case in our fiscal 2016 as the back half slowed due to the industrial sector slowdown. But it’s more along the lines of what we’d expect in a normal year. This occurs because our fiscal third quarter typically sees a budget flush by our industrial customers and our fiscal fourth quarter usually reflects budget reloading. Indeed, we pushed hard in our March quarter and that cost us a bit in the early part of our June quarter. However, that is not to say that our business is slowing; to the contrary. We are doing more strategic deals than we have done in recent quarters through our enterprise account sales group. The one strategic deal that we announced a few weeks ago was with a large regional retailer and so far we have shipped them orders worth 1.5 million and about 2.3 million of projects for this customer. This customer has 156 sites that are currently approved for field evaluation and is just the tip of the iceberg, because they have several hundred sites in total. In addition, we have several more strategic opportunities that we are working on and hope to close them in the very near future. Now let’s talk about the specifics of our first quarter of fiscal '17. Our sales were down a bit versus a year ago, however, if we parse the numbers you can actually get a clear picture of why our results are better than they appear on the surface. First, LED products were 75% of total lighting product revenue in the first quarter and grew by 19% in the year-over-year period. To contrast, LED products were only 61% in the year-ago quarter. The fact that Orion has consistently seen LED products represent about three-fourths of our lighting product sales for the past few quarters validates our assertion that we are well ahead of the industry in terms of transitioning to LED lighting. In fact, we believe that the industry is probably somewhere between 55% and 65% LED sales, so others will likely have more of a transition ahead of them. This represents less risk for Orion and greater opportunities. At the same time, our legacy products and services are declining but the impact of this is largely behind us, specifically the growth in LED products is expected to overtake the decline in legacy products and services and drive the growth of our consolidated revenue through the remainder of the fiscal year. More importantly, high margin business is growing quickly and low margin business is becoming less and less of a drag. We have different factors influencing our sales and I’d like to discuss these at this time. First, our short-term picture looks good from the vantage point of the pace of our bookings. When we examine the pace of bookings in the first quarter, we are currently running well ahead of where the company was this time last year. This is due in part to the recent large account wins but also supports our growth expectations for 2017. In addition to the pace of bookings, we measure field service requests, which is a longer term indicator that is a proxy for potential growth in our sales pipeline. Specifically, when a customer asked us to do a site survey, that survey usually follows with a proposal and we have closed a large number of these. Importantly, our field service request activity picked up significantly in the recent months and this also gives us confidence in the longer term. As part of our plan to drive greater efficiency and expand our reach, we committed new resources to a select group of new sales agency partners. These agents will help us reach traditional distribution in lighting integration companies. This should expand our market presence dramatically and increase our opportunity over time. These new agents are off to a good start but they haven’t quite made up all of the foregone revenue from small ESCO partners that we redirected towards distribution in our channel pivot in early 2016. And for this reason, we’ve taken a more conservative stance with regards to how quickly our new agent partners will ramp up, and this is one of the major reasons that we’ve decided to revise our fiscal 2017 guidance. These new agents are off to a good start but due to high standards of selection, we were slightly slower to sign on the agents compared to what we had originally expected. Our plan kicked off in January but it took months to get the right agents in place to ensure solid coverage in each region. Specifically, a lot of the agents weren’t in place at the start of the first quarter and a very significant number of them were still onboarding into the first quarter. That’s a key reason to why the first quarter got off to a bit of a slow start. However, the good news is that we have a terrific group in place today and are approaching a full national coverage as we stand. In fact, we now have approximately 90% coverage in the United States. As you may recall, we expanded our channel to include agent-driven distribution sales because we knew that over a long term, our new agency partners have the potential to deliver revenue that is in order of magnitude bigger than what we were doing with just our ESCO customers. To give you some perspective, our previous channel addressed about 13% of the industrial and commercial lighting market. Now with the expansion of our channel through the addition of these new agency partners, we have the potential to reach over three-quarters of our target market. That is why we need to be successful with this new channel. It’s just too important to ignore now and now is the time to invest in it and build it when our enterprise account business is so strong. I’d like to turn the call over to Bill to discuss our financial results during the quarter.

Thanks, John. I’d like to thank everyone for listening today. I’m going to review the quarterly results and share a few details with regard to our business trends, and then we’ll take questions. First, I would like to discuss our revenue. Total revenue was 15.6 million in the first quarter of fiscal 2017. This was down 6% compared to the year-ago period. We have reached the point where LED product represents our core business, as they have become the focus of almost all of our customers. LED products represented 75% of total lighting product sales and grew by 19% in the quarter. Legacy fluorescent and services revenue accounted for the majority of the remaining revenue and declined by 39% in the first quarter when compared to the year-ago period. The decline in legacy fluorescent and services revenue were primary contributors to the year-to-year decline in total revenue. Our enterprise accounts orders represented 44% of total fiscal first quarter sales while channel sales represented 56%. As John discussed, we are expanding our sales to include distribution sales through agencies. As such, we expect to see a shift toward pure distribution sales over time. Additionally, please keep in mind that we fulfill virtually all of our business through channel partners today and a role that our enterprise sales plays is in support of national accounts that are partially fulfilled throughout the channel. Continuing with our revenue commentary, it is also informative to understand that we have intentionally redirected the smallest ESCO partners, distribution and consolidated around our most successful ESCOs. Essentially, we’ve gone from over 100 ESCO partners at the beginning of this year to about a dozen today that represent most of the volume. The impact of redirecting a larger number of small ESCO partners was felt on the revenue line, but should be more than made up by new agency partners over time. As John described it, the new agency partners now open up a new channel which services the largest segment of the industrial lighting market as well as the segment where we previously did not participate. That evolution didn’t come without a short-term cost in terms of lower revenue from ESCOs, which ironically was much larger than the year-to-year decline in revenue. Effectively, this means we were able to redirect a larger number of small ESCO partners to distribution while successfully maintaining the majority of the revenue from that segment by focusing on the top tier ESCOs. Nonetheless, this approach resulted in fewer transactions in the first quarter but also led to higher margin business and very strong growth in backlog. In the first quarter, we shipped approximately 2,300 customer orders at an average price of $6,700. This was down from 3,100 orders in the first quarter of fiscal 2016 but the average order size rose significantly from 5,300 in the comparable quarter of last year. We also fulfilled 23 large orders over $1,000 in the first quarter of 2017, which was the same number as we filled in the corresponding year-ago quarter. The decline in total orders was largely expected and should recover as the agency channel grows. In addition, the year-to-year increase in average deal size reflects strong sales of relatively high price, high margin products in the quarter, most notably in our high bay lighting lines. As previously mentioned, our backlog was strong. Backlog stood at 12.6 million on June 30, 2016, which represented the highest level in two and a half years. It grew by 142% in the first quarter of fiscal 2017 versus a comparable year-ago quarter. As John mentioned, a good way to measure our progress is by comparing revenue plus backlog in the current quarter and the same metric in prior quarters. For Q1 of fiscal '17, total revenue plus backlog grew 29% versus the comparable period a year ago. Our backlog reflects strong bookings that we expect to ship in the next several quarters which should lead to a corresponding increase in revenue. As such, this gives us an extra degree of confidence in our ability to show solid growth this year. To summarize our revenue picture, our LED products are driving growth, we built backlog, our sales efforts are strong and a drag from legacy products and services should moderate going forward as those products approach run rate levels. Switching to the gross margin side, we showed significant progress in this year’s first fiscal quarter. Our gross margin was 25.8% in the recent quarter and this was up from 22.7% in the comparable year-ago quarter. This increase was due to a number of factors including favorable product mix and strength in overall product margins. On the product mix side, our gross margin benefitted from excellent growth in our high margin, high bay products, which grew significant faster than overall LED product sales. We target reaching a 30% gross margin by the end of this fiscal year. In order to accomplish that, we will need to continue to see growth from high margin LED products and maintain strong margins on our other product lines and service lines. We’re optimistic that we can accomplish this goal because we are seeing strong growth from some of our highest margin products. Additionally, we expect to see margins stabilize or increase on lower margin products as new higher margin versions of our higher volume products are released in the coming months. The increase in gross margins drove our first quarter gross profit up from the prior year, despite slightly lower revenue in the same period. This factor, coupled with relatively flat operating expenses, a small increase in other income and a tax benefit were enough to reduce our net loss in the first quarter of fiscal 2017 versus a comparable year-ago period. Our net loss shrank from 3.7 million in the first quarter of fiscal 2016 to 2.9 million in the recent quarter. Our net loss per share also improved from a loss of $0.13 in the first quarter of fiscal '16 to a loss of $0.11 in the recent period. Moving to the balance sheet, our capital position remains strong as of June 30, 2016. We have 14.2 million in cash and 3.3 million in combined short- and long-term debt. Our net working capital was 28.4 million and our book value was 43.5 million or $1.55 per outstanding share. At this time, I would like to say a word about our guidance for fiscal 2017. As we previously mentioned, we are revising our expectations for two primary reasons. First, we built significant backlog in the first quarter. But the timing of product shipments may result in revenue being pushed out, as we experienced in the first quarter. While growing backlog is a good thing, especially when it grows as much as it did in the quarter, we expect to continue to see strong sales and this may affect the timing of future revenue, so we want to be a little bit more conservative with our estimates so the timing of revenue doesn’t impact us as significantly in future quarters. Secondarily but equally important in our thinking, the tradeoff between the impact of redirecting small ESCO partners to distribution versus the potentially offsetting ramp of our new agency partners. Since we want to be conservative with our expectations for these new agency partners, we don’t want to assume they will make up the whole difference from lower revenue from small ESCOs in the short term. With that being said, we continue to believe that we have the potential to hit our prior revenue target but we want to guide external expectations toward a more comfortable 10% to 20% revenue growth in fiscal 2017. At the same time, our gross margin goal remains unchanged. We are still aiming for a 30% gross margin by the end of fiscal 2017 with caveat that just depends on product mix, which we are currently steering in the right direction. On that note, I would like to conclude our prepared comments and turn the call back over to the operator to address any questions.

Thank you. [Operator Instructions]. Our first question comes from Amit Dayal with Rodman & Renshaw. Your line is now open.

Thank you. Just a question on the LED sales sequentially, there’s a little bit of a decline. Are you comfortable with the 75% level contribution being maintained over the rest of the year?

Sure. I think that’s a very fair expectation. I’m still amazed that there’s still fluorescent products that are being purchased out there and that will continue for a while. But we have some new products that we’re going to be announcing in the next month or so. We’ve got also a lot of our newer customers, larger customers – the enterprise account customers are demanding more LED product as a share now that the costs are reasonable for them. And then I think just in general the fluorescent will still have a life. I wish I could say that that no longer needs to be part of our business, but customers continue to buy it. It’s still good margins and as long as the margins stay in line and our customers demand it, we’ll continue to sell it. But I would expect as we go forward that 75% is a pretty reasonable number for the next 12 months or so that we’ll stay right in that 75% to 80% range.

Understood. And just to get a sense of the backlog, the 7.5 million in the last quarter, is that all fulfilled? And this 12 million number, is this all new orders?

Yes, so I think the last quarter we were about 5.6 million in backlog, so there’s about 7 plus in new incremental backlog. And the bulk of that is new orders. Not all of that will convert this current quarter but a fair amount will.

Understood. And can we assume mostly LED-related backlog?

No. It’s going to be – it’s still probably in that same mix that we talked about, that 75-25 mix.

Understood. And just maybe a last one from me. You mentioned there are potential strategic deals in the pipeline. Are they similar in size to what you recently announced, any color on that would be helpful?

It’s all over the board. We’re going into the summer months where we see a lot more business in the institutional side and less industrial. And those projects tend to be more LED and I would say not as significant in terms of top dollars size than our industrial and retail projects. The retail projects tend to be very, very large. The industrial is sort of second large and then the institutional ones is quite a bit of a mix. So I think in the summer timeframe you’re going to see more LED sales because of the high institutional stuff and then probably a mix of smaller than what we – the last couple that we’ve announced, those are high-lighted projects because they’re significant but there’s a lot of smaller projects that are still very meaningful in the business.

Got it. That’s all I have. I’ll get back in queue. Thank you.

Thank you. Our next question comes from Craig Irwin with ROTH Capital. Your line is now open.

Good evening and thank you for taking my questions.

Hi, Craig.

So first question is, the $12.6 million in backlog, congratulations on the big booking there. Can you maybe parse out for us what percentage of that is already committed to ship in '17? Do you have a 12-month backlog number you might be able to share with us?

I think virtually all of that should convert in this fiscal year, yes. All those projects are scheduled for either shipment or construction and completion this year. It will be early in the year. That’s an easier job to accomplish. When we get towards the end of the year, big backlogs like that may sell out. Some of these projects are in the four and five-month from a construction cycle point of view, so we shouldn’t have any problem getting them in this year.

Great, that’s good news. The second question is about the P&L. So G&A and sales and marketing are coming in just a slight bit lighter than we’d expected. Was there any actions you took in the first quarter maybe to taper down expenses? Should we expect this to rise over the next couple of quarters as we see revenue shipments also off your backlog? How should we think about G&A progression this year and if there was anything one time in the first quarter, if you could share that?

Hi, Craig. It’s Bill. I would just stay where you were before – I gave guidance a quarter ago and what that would look like. But we’re just trying to maintain our cost, control our cost where we can. And if we see something we don’t think we need to spend at this point in time. If it’s not going to benefit the business at this particular point in time, we’ll just push it out. So I don’t think there’s any particular one-time items that you have to think about. It’s just cost control; that’s what it is.

Okay, excellent. And then balance sheet control, that’s something that Orion’s been showing over the last couple of quarters, cash preservation. Can you talk about maybe any opportunities to maybe squeeze the balance sheet any further? And if you could clarify for us the $2.6 million benefit from asset sales, what that was in the quarter?

So that was about – so we received the 2.6 million, so net that to cash and that was 2.5. That transaction closed at the end of June.

That was the sale leaseback transaction of our manufacturing facility.

Right. And as far as what we’re continuing to work on, it’s really a focus on working capital management. So you can see, we made improvements in accounts receivable and we made some improvements in inventory. We still expect to make more there. So I think between managing the fixed assets we need to have, so we raised 2.6 million with the sale of the building and focusing on working capital. And really inventory is an area we’re looking at right now. That’s where we see some of that which I’ll call tightening the belt.

Got it. So then just returning to the liner fluorescent products, this has been about $4 million for the last several quarters and it has not really been dropping off expect for maybe the year-ago comparison. Can you say whether or not there’s a particular customer group or particular application where this is strong for us? And can you maybe comment about the margins there, about whether or not the margins are big enough [ph] to offset the frictional cost to selling the products?

Sure. So the customer that tends to buy that product is a high bay fluorescent and where we find that going into is tenants of REIT properties or tenants of other rental warehouse facilities where they want the energy efficiency benefit over, say, an HID but they don’t want to invest any more than they’re willing to abandon after, say, a three-year lease or a five-year lease. There’s markets where there’s high rebates and they can have a very low upfront entry point, get the energy efficiency benefits that fluorescent provides which may not be as good as LED, but it’s still significant and it’s not – with the utility incentives, there’s not enough there to worry about once you exit the property. Again, I would expect that as long as there’s utility incentives for fluorescent products that we will continue to sell that product. And congested segments to the United States in the Northeast, California, few other pockets around the country we still see those shipments continue to go.

Great. And then last question, if I may. There’s a competitor of yours expressing quite a lot of excitement about the grocery market, the cold storage market as an opportunity for an ISON light fixture. They’re just more expensive and has different controls than what you offer. Can you comment about whether or not you’re also seeing the elevated activity among this customer base? And if you would call him out as one of the most interesting customer groups, so if there are others that you see as more interesting for Orion right now?

Sure. So the cold storage was an early adopter in fluorescent because the benefits of reducing the heat load of the cooling systems. And groceries are also customers that have refrigerator, air condition space or climate-controlled space. So any time you have the cooling load reduction benefit that you get by taking lighting BTUs off, they’re always going to be the early adopter and they’re always going to be a big market for Orion and certainly our competitors as well. We have had some phenomenal success in the cold storage space over the years in our high bay fluorescent and we retain virtually all those customers going forward in terms of the LED adoption. And they’ve been an early adopter. I think we shipped our first LED high bay in the cold storage about four or five years ago. So they’ve been part of our very early mix of transition. On groceries, that would be certainly a big opportunity for anybody. There’s tens of thousands of grocery stores in the United States and they provide a great opportunity. I think any of the retailers also are looking for a fresh image. Any time you walk into, whether it’s a grocery store or a drug store and you kind of see old dingy lighting when the one across the street has bright fresh lighting. The merchandizing people have more to say on the retail conversions than the energy people do. So we find ourselves talking more to people that are tending to the look of the facility more so than the energy efficiency of it. But they obviously get to fund it out of the energy savings. So those are very good opportunities for us. And then you mentioned controls slightly. Our controls are optional, so you can add demand control, any sort of lighting control systems on any of our high bay products or on our commercial products as well. So I think we’re very, very well positioned in this space. Now that we’ve opened up our product portfolio to some very successful companies out there that are interested in selling our product into distribution, it gives us even a broader reach into those markets.

Great. Thanks again for taking my questions.

Yes, thanks for your questions, Craig.

Thank you. Our next question comes from James Burian with Wells Fargo Advisors. Your line is now open.

Thank you. In regards to the win that you got with the major regional retailer where there’s over 700 locations, you state in your press release that it’s an average approximate cost of $65,000 per site. I do the math and that’s $45 million over two to three years. How much of that is to Orion? How much is not to Orion?

Well, so in terms of the numbers that we put forth on the $65,000 on average per facility that’s 100% to Orion. The business that we were awarded was to fulfill the product and to the extent that there’s turnkey labor in there as well to contract that project for their lighting retrofit program as they’re renovating the retail locations.

So is the labor included in that 65,000 or not?

Yes.

Okay, it doesn’t go all to Orion then?

Well, the revenue all goes to Orion and then we subcontract the labor.

And are you going to break that out for us at some point?

That will show up in the services section in all of our reporting. You’ll see product sales and then you’ll see services sales. So that will be in the services section.

Thank you.

Thank you. Our next question comes from George Gaspar [ph], a private investor. Your line is now open.

Good afternoon.

Hi, George.

A couple of questions, one on actual manufacturing operations and one on R&D. Can you just highlight changes in employment in the past quarter and how you’re looking currently in this quarter now versus the last quarter? And any other incidental changes that you’ve made in the manufacturing site since you made this transition on selling the building?

Sure. So in terms of the firm employment numbers, I can’t speak specifically but I do know that we have added some personnel to help fulfill some of the more recent demand that we’ve had in the range between 7 and 10 additional to the staff that we have. We have about – again, I don’t want to speak real specific just because I don’t have the facts in front of me but we have approximately 150 people working out of that, and that includes some flex type people that will come in during surge periods. But it’s been a seamless transition. We’ve consolidated a little bit of our space. We gave up 60,000 square feet of space to our new landlord and we relocated about half of that down to a third-party logistics facility in the Southeast to handle some customers that we have down there that – some long-term customers that we had. It’s a lot easier to shift full truckloads to a logistics center and then divide it up more locally. So that gave us an opportunity to take advantage of that. We have – the volume of orders have increased and so we’re fulfilling those orders with the staff that we have with a slight addition, as I mentioned, between 7 and 10 or so people. But it’s been a seamless transition to us. We really haven’t seen any or experienced any issues. The workforce is solid and we continue to grow it. The skill set that we have out there is exceptional. The flexibility that we have built into our manufacturing facility is very unique. You can throw orders at it and we can ship them out the next day if we had to. Standard lead times are 10 days and most of the product goes out between 5 and 10 days. But if somebody needs it the next day – our ability to flex the operation in all directions to absorb that, it really is a testament to our variable cost model that we’ve been deploying on capital allocation and variable cost model that we’ve been deploying over the last year and a half to allow us to take on whatever orders come at it, fund the capacity to deal with it and not be sitting on excess capacity when we don’t want it. So I would say so far it’s been very good.

Okay. Thank you for that. And then on the R&D progress side, can you give us a little color as to where you are? And you’ve implied that there was going to be some product announcements out 30 days or more. What are you concentration on here? Where are you tending to drive your additional R&D? Can you describe that at all?

Yes, I’ll give you some texture there. I don’t want to preannounce any products but I will give you some direction around that. So first of all, we’re staying very focused on the primary product lines that we have, which is our high bay line. It’s been a very successful sector in the market for us over the last two decades and we continue to see that as a competitive advantage going forward. So sum of what we’re doing right now is just keeping up technology roads on that product line. So some R&D dollars are going into making the high bay just continue to support the new technology as it develops with new chips and electronics in that. And then the same on the LDR commercial line. That continues to evolve. We released a month or so ago some lower cost options that actually had a higher margin, so lower ASPs but higher margin than our prior designs. As we go forward, you’re going to see much more in the controls area, much more enabling our products to become more smart. We’ve always had a smart building strategy and we’re really going to be introducing some more robust options in the smart building segment. And then we’re also going to see particularly on the commercial side more niche applications. Applications where we would have less pricing pressure from competitive products and solve more specific business issues other than just energy savings. So that will give you an idea of where our strategy is around product development as to not follow the cost down but to innovate to give us pricing power going forward.

Okay. And John if I could just squeeze this in. You’ve implied in the past on your past quarters that you’re looking to get to breakeven, it sounded like by the end of the current fiscal year. Can you get to where you’re at breakeven bottom line this year?

We’re aiming for that and I got to tell you it is on my mind inside and out every single day how we get there. And it’s really a matter of a few more quarters, a little more time. Virtually all of our internal indicators as well as the ones that we publish, we continue to show strength and growth and margin expansion and EPS growth, even the bookings, all the indictors are there. And it’s really just executing on our sales strategy right now. And it’s very feasible that if we deliver the numbers that we think we can, then we can hit profitability. I think it’s just a matter of every single day you continue to thrust the accelerator on the revenue side. And we had a little bit of a slow start, as I discussed in my prepared comments, but we can make that up. That’s not an impossibility. It’s just we wanted to be a little more conservative here just to make sure that we’re transparent.

Okay. Thank you kindly for that.

Thank you, George.

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

Well, thank you, everybody. I’d like to just conclude by saying that we remain in very good shape to deliver a very solid year of revenue and margin growth and continued innovation in our products. And we had a great start to the year from a bookings perspective and we have great momentum. So thank you again and look forward to talking to you in a few months.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone, have a great day.