LYTS - Earnings call transcript Q2 2018

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Operator

Good day, ladies and gentlemen and welcome to the Q2 2018 LSI Industries Ink's, Earnings 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]. I would now like to introduce your host for today's conference Mr. President. and CEO Wells, Dennis Sir, you begin. may

Dennis Wells

discuss Welcome would like good with QX going morning. that This I and our to we're that Wells Dennis results morning. to pleased is I'm and this start saying by

continued solid I distributors, comp I we our capture results results and turned what bottom announced upon agents, a out can call our perspective folks, over sales our XX the XX a we that to to that I summary a line the slugging basis QX would it difficult think to on line softness In months. business. are respectable, nicely way markets. they the been you there in our build top assure grow in last is our our earlier. daily quite given certainly In respectable

improvement quarterly our Our up are results, especially however, cost showing second quarter. definitely in efforts, the

me a step minute. for back Let

on ourselves. line two fiscal margin. set July XX% our we started gross the in momentum faster grow we One, gain towards market. Two, achieving year As our X, to for our goals primary top

report growth me company. want LED. achieve segment, towards new on every Lowe new represents moving our briefly Let a comment, Steven in ultimate this sales quarter I percent us, very best product initiatives. a high of LED for a to each XX% XXX% our XX% prior to We're plus management achieve QX a I'm for our closer that objective. to LED to us lighting being led in goal pleased report XX lighting sales. of our is us top guiding This in to by increased on our team In regards a That product these versus out line each year. lighting

the continues achieve base led the branding. Burlington, and flow John and select key in team acquisition Bagwell, synergy again cross solid business, delivered The an and of Our to expansion quarter. by in product North distribution performance stock participates Carolina, the in targets, part including the which Atlas Atlas team, down sales of

year forces Next acquisition. LSI. one very the month, we We're will of with celebrate pleased with this Atlas anniversary joining

Our half PowerPlay position, They year. to in this to improve Kimmel, rate XX% the produced a market. Randy growth our first of team lighting the led ability in continued and innovation compete by our

and are programs in to relates participate investing new products it in in a solutions. our market in controls as investment We in with stronger in lighting people, here I'm segment. technology and smart in this pleased way continued lighting to order

platforms, good impact sales to which of in SmartVision although quarter, quite lighting are going products LED the we forward. stage and early adoption launched in showing generate a a expect Airlink new Our progress. few We products, positive

launched our fixture. vertical market. is first The our a complete and Vertex Scottsdale market the one under-canopy in redesign position petroleum intended the This to leading solidify of is and C-store

Our that we was high growing product warehouse the the bay quarter, launched designed new service in to segment. call Alliance

of family, outdoor new offering. our an Lastly this lighting area versions family, have Mirada we launched it's

silicone optical new assure us year, both new I this recognize by me this here strong and the launches. more first system. the so Papa. have use lead Chris announce team efforts product family for many Steven that remember coming yet engineering stay where want might You do we the Lowe, by we future to in more Chris is to design products tuned

excess year. new and had his generated significantly last team forget to invest adding job well, great delivered our earnings. of growing year graphics improved traditional by and a quarter, Megler months. Graphics quarter job by lead Jeff is done our times in over team year launching starting equipment, team, excellent sales XXX% versus growth led digital they customers platform as state prior did the printing and off, an and Not customers. graphics business, helping generating XX a our graphics versus improve they've Nice the Turning to to signage job a us again the sales heavily was to abilities SOAR segment, We our to this team. pay nice that solid last and XX% of in number here A operating signage increasing with in to strategic this the which Dave by The art lead service industry. some of new prior Croskey, improvement

the Our gross margin. we started XX% to as towards moving momentum, second was initiative year our regain

sold each of minute about So goods with talk let material. of starting the cost me components, a

We material continue of to be very areas management. aggressive in all

productivity impact of select the this far along offset certain action with pricing material so year efforts Our inflation. had

However, eye we commodity watchful a to keep on prices. continue

need you inflationary the remember, higher that negative a now had impact market a gross margin steel the that at level keep movement eye our now graphics have As forward. aluminum, cardboard some certain prices watchful might in and in the rapid of going and increases We utilized inflation products. very, commodity year. incur indicate very and are unexpected lighting We to prices could which on and price polycarb. forecasters last The in stabilized additional material experienced production very on steel,

way average about towards turn our its gross achieving detail. to XX% to now mike waste. our a Operations. at margin We of Executive and advanced in half greater These the multiyear improvement and XX.X%. appeared the of X,XXX engage am program our our causing I'll are the be rationalization by component gross which here manufacturing We discuss financials tremendous in Our to on leadership CFO year associates on of to showing with areas any the LSI of we cost, is all over of facility elimination all labor XXX rapid first Jim track, efforts our of life goal improvements, last back upwards with Vice margin. moving the LSI. year reaching of President a pleased Galeese, business inflation, I year. to of system for under encourage our Palmer, return Barring events Tom conduct associates in overhead every our along our lean becoming material

James Galeese

you, levels. prior X%. QX with points year. in diluted in by Adjusted Dennis, year providing XXXX. and increased resulted on X% of reconcile GAAP income purposes be Thank earnings financial a reported Fiscal XX to QX highlight per on quarter comparability improving items This sales above comments increased good to non-GAAP morning, the operating performance second Adjusted share versus QX the our $XX which or performance. $X.XX prior operating basis everyone. income XX% for the similar compared then basis non-GAAP to adjusted I'll for million $X.XX were and margin net

year, statistic EBITDA. a increase throughout QX that addition, EBITDA year million $X.X visibility give was In to more million XX%. I prior is versus adjusted of an adjusted $X.X

adjusted a XX% EBITDA $XX.X first half was increase half over $X.X First XXXX million, of million.

results value the $XX,XXX. a with QX legislation. XX% held the reflect QX sheet. result corporate balance to million to required differed of a in against as assets tax value restructuring include the of the Job GAAP taxes these results Act The charge from of Moving The reported cut The on $X.X assets impact of GAAP net tax GAAP a tax and adjustment XX%. future declined results. rate charge of the reduction reflects income also tax loss in small because

detailed As million the our In $X.X and loss of a share a and of press earnings net $X.XX. we per result, non-GAAP quarter XXXX. above the business of provide measures reported release, XXXX second a reconciliation loss GAAP for

inflation Lighting represented XXX Sales The sales QX and with prior a on Next, let year. of erosion. productivity XX% for emphasis reflecting operating earnings above operating was XX% sales price technology. to growth year. a Lighting briefly reportable was improved mentioned LED richer two versus QX sales and sales of start our adjusted comment gross prior improvement margin sales me higher both from our strong improved driven lighting an I'll $XX intentional away X.X%. categories rate segments, prior Dennis to offset XX% XXX basis in on rate material performance QX basis margin mix increased LED, in increasing for million. which across The lighting. points the quality, by shift LED all margin with the cost conventional lighting QX X% point. income was all year to versus

our its The to sales last business the graphics was digital grow increased business SOAR, prior with to with operating XX% increased shift first business increasing of increase XXX% by Sales and in points result XX% X.X%. year. also led delivered as activity rate. graphics. in half entering both declined a is earnings generating to as a margins a Operating basis earnings solid quarter Phillips XXX and again projected. above I'll Now The million. plus sales QX phase The $XX signage XX which

petroleum a of QX and receivable line has of and both X were sales the $XXX,XXX than we're generated metrics, select Phillips for since depreciation in by and the demand. in interns initiatives ensure closely continue expenditures less by obtaining new petroleum successful business of in increased significant capital and Shifting availability activity XX. million compensating line in cash to positive QX, However, approximately business flow credit. our in Working in other non- drive business fiscal timing. the inventory specific we Capital resulting decreased XXXX to quarter day has accounts manage to considerable marginally margin CapEx related with that growth X. second end in ratio to our Inventory the to

Tax the is Cut to both investment Management return Job generate In non-residential December, subject taxes. in growth this a & new lighting for me demand and Act, TCJA cut President generating products. and retrofit thinking construction law. signed increase the tax Let will stimulate into of in

of future the per from cash XX%, and XX% In net federal reduction share income, earnings to corporation tax addition, the TCJA impact in favorably result a we as to flow. expect LSI rate

the as full at fiscal for impact discussion realized year be to XXXX approximately the XX%. of will fiscal rate effective estimated XXXX, XXXX. Dennis. back in With now fiscal to company's our we year discrete XX% with that compared effective The consolidated rate full before be will items I'll TCJA For currently tax blended approximately that turn forecast income XX%

Dennis Wells

in our a would sale large expected bit participate markets, period, longer in like few over to the forward. a to graphics Thank and the our X% lighting market annually. are on growth markets of the market signing make term now you, the which and comments we Both range Jim. look very a I X% the and

our based cause to can situation. the be during is of market I've the and contract In to However which is the have What about markets. is down period. to to to term the both at by soft contracted. markets our sometimes economic delayed LSI do quite develop have as difficult, given information factors a our several market contraction. knowledge, it's both political markets into This here past, information Much metrics codes susceptible log upon any continue time I those by to or this available. We called all is we're mean single-digit us expand which expand describe flat soft We we log around moment, months; used that for sizable a to impossible At perfect and to the short CRM are knowledge it's system our us and term to CRM codes. work. able not system appeared pre-PL This real pipeline. a of at it's

that last at those of over primary internally The year. shows extended metrics a appears we call we to the temporary on become jam. a spending jam by sales the customers. normal talk as agents, which as end reasons One us log for talk the our through log to to as sometimes time to reason IPO number code period has cycle be progresses I the this customers, internal a by our pause distributors, talk we to capital of end significantly for to

is moving noticed we under medium to small the the that have codes. LSI we that thing serviced the slowest size call are projects Another brand

have projects been Our markets summary, or flow than business as the smaller as at the impacted moment. participate in our brand the not Atlas and medium much size stock and larger we XXX,XXX greater and soft In the under projects. seen those are

trending rebound. to upwards. the such Recent market the of and positive DAJ index are see indicters are index ISA signs as starting a we However,

that the the than and and mentioned, not motivated QX, fiscal There customers I year impact Number will XXXX. and a jam. enacted developments drive spending focused. the to stay these as lighting technology projects. I will likely productivity break focus calendar newly do to we in control be management team our to products we hopeful are log help earlier. to continue clear, we to outlined on Jim cost faster tax confident will that I us influence want want to to more work As that the customers am as will which move priorities legislation With being that focus out later on two and are their relates investment with it I forward point new are be have but one, potential growing market a signage diligently on said, significant that do initiatives. and continue and includes in to new number going capital

Our materialize. on to business conditions capitalize will be market they improving positioned as

Our working results, positive generating These even a on team soft second is in quarter efforts do our right are our results indicate, in market environment. priorities. impact a the

As background I I in the me years want an our Lighting invaluable partner team, has difference during already extensive thank the LSI who Stowell Business. was CFO he Ron. lighting conclude to with I special want and welcome Ron for a a us. XXXX, now Also, been to last our Ron his tenure to joined December I Ron executive you to thanks give the an company XX. the of President in has short and quite Ron since XX made retired has is to Newbold

up So, Q&A team welcome to session. to Ron. I can and open the the mike now our back turn will moderator we the

Operator

Instructions] line Genuity. Canaccord from comes with And of Quealy [Operator John first question the our

Your now open. line is

John Quealy

and good thanks folks. first Hey, quarter congrats And morning call. conference opening the the up on for

I improvement, could pretty business Dennis So in already obviously in a coming can some think gave it's quarter going channel. it the graphics outlook for you backlog on happened color different that lumpier good in with what you in about was store if the you was or convenient gas end? the that segment? cadence the the talk first quarter, just question, - on some been through,

Dennis Wells

system sales so through to of we John. takes in number some morning CRM Good graphics working Right. our We the been business, on projects months use have same do some the cycle. for, move

with been coming petroleum in. Jim is blessed we've starting Phillips then mentioned, other XX couple as and As to nice projects wane, projects non-petroleum some

our is graphics So, during opportunity quarter. force We're some sales in hard. difference there some business and our shift short also here; SOAR, installed the the pleased with in out were projects working made nice

John Quealy

stock talking QX Okay or great, in portfolio. the and there on we of about, the inflows Atlas some softness right about suffered report then out were the

alleviated that's comment that can specifically riding different factors and like are Sounds you expect? the you underneath experiencing on or you

Dennis Wells

quarter the they've February, is Bagwell appeared know services leading and year Atlas, but, the team business, ago. nice Jeff spec, a Gender John direction. by are by soft, So, a quarter, stock as has you little Atlas, flow required in almost really and right second QX very down there their

John Quealy

comment reform Dennis in new echoed been and build that's hopefully some capital fit other your tax activity, lighting. peers retro around driving, expenditure by and

But, the base? about it to distribution that the around starting probably about that conversations can you could obviously time talk QX had you with QX, or you tracking system, need see us frame projects or to PNL. sales you've to elevated QX, into get to are the your If more hits already CRM hit makes QX hits time sense we get talk

Dennis Wells

day make a other Sure, that of do money LED if a with to their with our place ROI meeting cuts, all remind had sales very to left and the tax from is specific we comes the and invest, we a people they its over customers, it. call CRM those ask back go sales great have and the

I on doing. and am are group. we each every thing of type a that's So, following up

John Quealy

again in, back great. Okay, I'll thanks hop guys.

Operator

Irwin our Thank Partners. from you. ROTH line comes [Operator next of Instructions] And the question with Capital Craig

Your open. now line is

Craig Irwin

Good thanks questions. for morning, my and taking

Dennis Wells

Craig. Good morning,

Craig Irwin

couple pretty ask next working Can a you are thing to about of really of over right And, availability one And, for relative quarters quarters. couple I where I you've there's likely progress? there what's margins gross the the the for it's resting last over the lot margin the is factors maybe number been what years over going side, contravening to look the are number area talk we quite of on what about to Obviously, found should you, encouraging understand how an next quarters, pricing how gains there? the a is to focused now. margins. that Dennis, wanted of

Dennis Wells

It's want a be is of them involved. engaged, we a great LSI our in question. X,XXX system. believer to business the where we engage all huge I'm This employees,

we is more. of very very there culture am So big in participating We I workforce, of point to all are must competitive. people need see I to that most in to but comes proud manufacture we overnight, be able that. a give is credit fashion. with proud component the And work we the as hit. the the lean a are our USA, we of that responsibility that that we changing, deliver products competitive them we improvement. this for gross We our that. XX% to think that be margin won't continue But,

we're find inflation trying off and come I'm at XX year, not us our product get our But, are ways use those. we knocked months bit, use Prices to to little margin So, steel, products guys. our more less here gross like of of kind proud make stabilizes improve price. this, day USA. how new found the plastic, in to for ways cardboard, but a last down, design when last have group to that sourcing around We've looking in how and our things way competitive they we sure out there higher around every the

James Galeese

things Couple Craig, add to of James that. I'll here.

productivity add, new products. around quite internal our mentioned we value about bit to the addition In initiatives a

products business right level of of on are feature design well to as really have we a really our going refreshes are our on that the functionality to both activity and we perspective, as high cost these now. And, new in Our so but reduction area sales from measurable new equation market. cost and go important our a also not products a existing, our as represent only part enhanced downs cost

Craig Irwin

very thank both that. have level. Great, The you for I question next high is

seeing released has when President the there in bit or and sort out regarding we're now, plodding out in bit first seeing we And, us, So, Trump rational a to for similar good stimulus seeing and last in lighting of like? that for that on actually backend guess January in the Trump, last the term likelier maybe about a year some in weeks the lighthouse can market potential was ago character commentary ice. seems eight to in market years Can think beneficial of dollars went of little similar Schumer I Is the and whether after turning what stimulus headwind. it we the elected years and election would you press dose are XXXX-XXXX not drafted started program, time the little this discussing some that very the program frame a you out trillion It this to about, comment more as saw maybe stimulus stimulus are you more be between of that action to behavior talking the that Obama was they lighting frame? back subsidies. year. been many prior, program was the when see It the what were of saw, we dollar couple a you what short

Dennis Wells

question. cause projects especially this that moving comes forward. lighting when word pick that there's our end and to not CapEx them great log signing will It's on customers of it used start anymore a stimulus for I here. but to lot and have am to pause hopeful talking them we've here, are I those about LED quoted jam, quotes not the ROI, a issue us great

this to you of have So, hoping don't more Jim that that tactical there? at to I believe the you something But, am just happen. more there point. and add that want do will very know timing I focused

James Galeese

there if all high both as positive ourselves, of is as for at of that down. Yeah, that we for and construction the and comes it type view thing any would course level infrastructure bill takes account a industry - a

Craig Irwin

that? and Are people on waiting pausing

Dennis Wells

to think actually influence be could I and a bill that better No, tax coming actually relative infrastructure. is activity the any

tax structure bill, an from top infrastructure So, and create of I if momentum would more any that, comes forward to just environment. look even something from favorable seeing build that the on a

Craig Irwin

question. Great there out then a another of turbulence There's the lot very level and market. high in

ago. largest since opportunity. You quarter just of of often participant And had performance very post creates kind their had this the a worst turbulence they've in great the the recession couple weeks

your see opportunity sharp to that position opportunities, have really real the eye harder sharp benefit see. specific quarters in there against the any market. observers You with would and we change can to you it And about to that of opportunities for Juno in maybe from maybe to But tell industry. that you'll be discuss see you that years back understanding it for couple volatility, us want the able ownership a LSI sure couple next a made if or market at are were you and able real do because a the volatility seeing I'm to of hopefully external you some us of was coming us this are in say you of identify

Dennis Wells

peer My of focused the company a we're scrapping our for well, our for we're on our for this LSI top shareholders. two available. response focused and plan is about here year, undermining every but around return objectives talking on about providing businesses I our and good there as danger turning the just read out and business, day were

Craig Irwin

quarter. Great. Well, taking questions. a for Thanks on congratulations my strong

Dennis Wells

Thanks Craig.

Operator

return the Thank to Mr. call you. the And I'd I'm showing in to queue. any Dennis further like further questions for remarks. Wells no

Dennis Wells

a and Thanks the for joining have call great day.

Operator

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

LSI Industries (LYTS) 25 Jan 182018 Q2 Earnings call transcript