LYTS - Earnings call transcript Q3 2018

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Operator

Good day, ladies and gentlemen, and welcome to the LSI Industries’ Third Quarter 2018 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] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Jim Galeese, Executive Vice President and CFO. begin. Please

James Galeese

and and presentation I our XX-K refer includes Such as involve our Victoria, you to business as you morning, results well this statements today’s actual XX-Q. mornings Harbor and that forward-looking risks appears to good our you, materially. recent statement want everyone. remind outlook. could Safe Thank differ and which I in uncertainties most statements release about press

John? the Now over call let Morgan. John turn me to

John Morgan

you, morning, this joining Thank good the third for and Thank you Jim, everyone. quarter morning. call

earlier start week Dennis me by the new Let addressing of the and the CEO, search news from of for the CEO. this departure plans course, regarding Wells,

years, a First them developing enjoyed and personal were progress LSI has in Managing on so. Director made always role note, platform Board commenting Dennis's The for to the doing leadership under in Improvements me of on the many specifically a the I growth. for to and and represent call today. assume of better areas on asked with have worked Dennis I've various ways

For productivity. example, lean performance implementation infrastructure much additional and the has the growth. creating significantly times capacity have through and is business productivity The LSI system of an improved capability. to outstanding leading for of been consolidated, delivery represents Company Lead the improve of and today

this Dennis represent for by growth the future in improvements work and team. enablers these key appreciate of the regard entire All previous and LSI we

connected digital for in smart solutions application for graphics continue Developments markets consider and the exciting Now and business. opportunities future technologies, to emerging the our industries, present as lighting our the we of transform. electronics,

of organization with target success the capitalize growth on these release, our unique will search strategies topline experience through to and and focus leading demands growth the recruitment was press businesses to recent effort. a in the the The is skills opportunities. of required the transitions market As development skills and innovation CEO in outlined adding person

available invest the benefit improved profitable we opportunities. as growth to Our new financial more allow platform effectively will in and Company leverage from the

Now very This joined upon CEO to LSI we are a changing until as previously and look market of disclosed. to terrific the a experienced capabilities the the CEO position forward team. and opportunity the momentum have is COO business we two is filled, the LSI positions veterans in fortunate of and build

like turn back call I'd quarterly to Jim the Now review the you to just results. to

James Galeese

Thank reported which our sales then comparability you, basis John. GAAP on the for million financial and I'll a Fiscal reconcile on expense. with Adjusted tax purposes, to XX X% Adjusted net third performance. or items, comments and non-GAAP increased the be operating year, non-GAAP $XX.X quarter versus providing performance highlight basis above reflecting income prior prior improving increased QX prior XX% interest points year to the income were below year. X%. operating was margin

of increased our share a result, quarters the were for QX Adjusted increase with earnings of and an prior over Through As adjusted earnings year, flat XX%. of QX per sales first were was fiscal $X.XX for million, XXXX. diluted X% year. the three operating XX% $X.X prior EBITDA have adjusted year QX

Moving results, Reported results $X,XXX results. operating very earnings GAAP adjusted GAAP only minor severance from in differences QX to operating reported reflect the charges. reflect the

in includes compares which benefit rate tax tax QX XXXX. a items QX Our several This XX%. discrete to was

earnings and In for third net detailed $X.XX. measures reconciliation quarter was income for result, per and also our XXXX. was provide a the As the GAAP reported of for press year-to-date a release, we share XXXX QX and both non-GAAP $XXX,XXX business reported

away decreased emphasis HID flat earnings was the earnings HID Lighting was have to sales or on four in lighting with of prior growth operating sales of reflecting shift X% LED fluorescent $XX.X X% lighting. older XX% HID versus QX, our fluorescent however, and were increased lighting points of QX were unfavorable sales from Next, Lighting and shift and sales have operating the quarter. let year. while XX%. EBITDA LED expense. product reportable was prior $X me QX increased segments. $XXX,XXX performance million increased year, fluorescent XX% intentional The products. $XXX,XXX sales for sales start to million QX Adjusted reflecting the XX%. older approximately away increased briefly comment two year. below our from our prior sales represented LED on and Year-to-date impact and or amortization I'll

sales Operating I’ll earnings to prior QX both and delivered quarter EBITDA or a were $XXX,XXX earnings to points shift Graphics The prior or year. solid X.X%. above to margins business increased increasing prior year and prior business led XX% operating XXX a sales $XXX,XXX was c-store planned, with year somewhat graphics as The XX XX%. above increase with Phillips store, XX% rate. Sales sales offset X% basis X.X% Now graphics. million. increasing was $XX.X year. other graphic operating strong petroleum generated by again which growth but by earnings accounts. have with increased sales activity segment maintained digital our as was signage The is with decreased levels growth Year-to-date above

in QX availability. as Now prior let to debt in million in level line decreased shift our Working supply cash than resulting was increasing a metrics. of driven depreciation $X to Inventory the and credit to capital less QX, in were new ratio launch several product of sequentially and business business increased further modestly year. Capital CapEx a The reducing initiatives. generated other a quarter and me expected few one. flat flow strong expenditures our by chain planning

XX proclamations the Section on address aluminum tariff a products of steel. for QX, tariffs steel subject unwrought and to May XX% on a X that Also on memorandum the tariffs QX, of The in and President $XX wrought XX% until side tariffs. mill new certain imposes proclamation The were In imposes suspended and present the for subsequently in countries. aluminum. effective. XXX has imports me realize QX memorandum let to to signed billion Lastly, Department up Section only offsetting is analyze minor tariffs work a XXX of result for as impact. project this currently signing of The We actions. continue developing developments any tariffs. to The and days and final to continues Treasury assist not in submit Management the a from list yet on future China. impact to in a of alternatives potential tariff both

China memorandum, projections monitor I'll continue the discussion With X,XXX Regarding tariff now will currently the harmonized any closely. to we provide the It's to too this, to that, John. we continue early but analyze turn identified. on to back codes

John Morgan

any. if turn moderator the Jim to it open call there up let's are simply and the back for just questions

Operator

[Operator Craig of Irwin Partners. Capital question from first Thank is ROTH Instructions] The you.

line Your is open.

Craig Irwin

and morning, my taking you thank Good for questions.

So Acuity, as role it's about the positioning bit a you look first, you you of And how been the in little operationally Brown level us capacities the Lipsey stabilizing management you as have Officer a been a the the who for Board the for Ron that I is search strong at stepping team color transition. might he's company? Operating be wanted involved for and a doing at Company past that the talk of give and little if the John, growth. he's what characteristics and then execute company, with the President, playing new I things working history as in to CEO. about was good in to would But to you bit as could ask the able Chief actually I far has with hoping maybe a great and understand Crawford

John Morgan

extremely ago see simplified the of as what Sure. extremely done. conversion well, years of to some work platform to of business called I Atlas very the this has much when it I Board, technologies when out last and acquisition the terms been like to in well, bright that and today specific, To just year's – a compared I of managing They've be call the the I business, getting gone blocking handful LED at I’ll team a came that's a have on through, and old spot. of look tackling improved got Dennis has gone really

things utilize equipment data and done are Things, So being of bringing the platform that Data. lighting Internet systems for technology, as there's connected There's and go think shifting if of developed great in the digital that’s I technology distribute that on and control on. signage being And Big opportunity. what the for IoT, terrific on control touted to business and backs really equipment exists marketplace, been and are opportunities This you represents future a the of of all our about of and capability a growth. lot integrating the and the could our infrastructure work is the

lighting forward. of was The consulting specifically to understand really type his with past understand product consulting them reenergizing business. the of LSI in canopy that asking the working So to team people of graphics think oil And the that future forward, looking comes the product you're capabilities into worthy with here somebody much a is in if and topline. work go running innovation earlier and and understands imaging the LSI. we're into focusing lines – segment. of more skill about I to on the that in it out The technologies the assume is gas of less that with that He driving and on the just segment, really Crawford going and growth old But we're drive gig integration like Jim in if set interested well. the interested of the the oil lighting that when about and line basis that well organic getting are And going we're recent assisting alluded capabilities will. you traditional and to back the that's the you and and of some growth extremely market they integration and house that, qualified focused in the me gas as

digital has was has about And industry, coincidentally full through General and XX through but available engaged to the LSI spend is not He retirement business. foreseeable it consulting was is able imaging future CEO. the lot and office here office supporting lighting comes that Jim only Brown were done awful knowledge running. ground signage coincidentally he to that corporate Ron for fortunate minutes the from learned Ron Counsel. here operating at background on rich Group. continue an hit the what and not certain Smith, to Crawford And company Armor time here. begin in in A.O. but was CFO. his a with public the the of just was because Cincinnati was past, deep here been everyday Cincinnati. to companies. Milacron, with and about the he Board and going Chair a who and from work available. and happens the lives from so we very CEO the He he he to making When and this was understands the the everything is [indiscernible] a was at of here was Chair properly, He Had the He is that,

of most here been this week. he's So

You'll time Board my well of be when Monday. here starting of I a CEO was Chair fortune full the have to on good the Zep because have and was he known director him Directors I And Chemicals. on

So the business We've the have to this. through to not with just opportunity two met be feel and the a secure here. makes needs let them combination that mighty here of there's along us interim team their way. to go encouraged stand of They in them term run we the as

question that So your Craig. I answers hope

Craig Irwin

you shareholders fixtures. answer of I very for I the that. That's My about for a good next the is really thank conventional think and LSI, question, so it's guess important

stepping viewed just be would score on just card fixtures, quite differently your success was back, think market. the I the by Now LED based the LSI if of

transitioned fixtures want your maybe it the same but in certain the organic on that of the quarter, an the or as those growth it portfolio. be segment? job seen with mouth, number maybe you conventional and to you transitions pushing would as that of we fixtures to projects. now in and great $X quite next reflection growing see diversifying fixtures things in sort to maybe transition contraction the would words over managing had in LED a like LED’s, going as the and But lighting million the that conventional put obsolete just quarter. product have much seems a mostly you it more into carry, fixtures, I'm be some revenue looks the some going LED under done legacy the hasn't same like existing that you would LED far directly HID over or thing of for fixtures of sales the obviously expect in distribution it in let that transition in to fixtures – expect You've of It’s and put the and of growth on would maybe what's of that stickiness people

James Galeese

Jim. Very good This is question.

me that. with Let start

to fixed our with one precious rapidly Let fluorescent the We to business and relative really allowed that away to us florescent a of from resources us that addressing be away tail moving HID assets breakeven significantly very by development made market start factory the resources. intentionally me fixtures. our going business the closing our do the allowed and the that to Obviously, our shift solely primarily and to distraction of decision away focusing from HID lower our supply all our we transitioning intentional major and dedicate teams LED chain future It reason. LED a not assets result to and from and forward. the rationale on The cost, We consume or was point again solutions. type team operations for amount business. significant did determined team reducing and development commercial and for of the want shift team to of and our and LED to that transitioning

of your that me basis with bit year, have does close to end we about I a address this Yes, comparable on expect Craig, let comment fiscal a pretty the then. LED. the So of tail, would that, be with will by but a

been helped as soft through Of course, which certainly all situation we’ve this market hasn't conditions, the well. executing

Craig Irwin

is Atlas. ask next question wanted thank to you I The about that. for Great,

be And you shared quarter, be again. over and the a I would where the with the on product channel, to you channel you last that the expect revenue next little in for out is or LSI growth portfolio not tailwind comment or might stand year for Atlas. Atlas seeing so? not or was number us able and you a hoping cross break Atlas to So bit products, products selling and can company a of you of whether the LSI in whether this the Atlas

James Galeese

And Atlas the market. compete was us to important LSI. business distribution again, to side of acquisition strategic access I'll start. for in Really the and allow a very

with very that. We pleased are

target about. major it cross-branding to synergies. as we And synergies and is also below One continue continues, the of numbers, of this, the but numbers our the specific area, great any Regarding we really some just you Craig, there share And the talk Atlas. we pleased will may are like on we with are of I'm to say the anything there. making call has is two We're their segment swap and don't there. products. nationally progress very unit expansion that Atlas pressures, specific I reportable to going on second breakout respect business growth they the not we the of side expand distribution so pricing objectives are with our recall ambitions footprint rest progress But projects the as

Craig Irwin

that. to hear. good That’s Thank you for

not customer, very opportunities, question I there about bids competitive your large market at or happening have segment that are the customers large you for of there lot if course of information being these. we Can provided be already petroleum customers, that these contracts piece LSI a competitively you optimistic you year? talk expect companies strong with market recognized a not then one get Does brands And how put of you other that’s and like Mobil position this of one healthy maybe some to the feel your that's executing they'll of in competitors long that would others? win as if you and and may, history petroleum understand projects last to a with and out? your whether the say next are Graphics two is so to coming been to significant that Exxon the are over do these of in nationally XX I Phillips petroleum of So that provided, list a look

John Morgan

And has part his through the good very we've The a Hood business petroleum graphics important really, Robin successful Craig great sector there know of the a dividends team done and and the been as years very is that and to work the been really very, for has you there. business.

oil life projecting the several overall in were large very as petroleum the that. the our good ago, we as nice forward, sector. with companies the gives quarters lot could we lot remain see respect end activity, you the project XX As America. projected in forward of downturn as follow of other the we bit a is a graphics very a far us And of large And a bit, of a see a multiyear this of we some looking we on very right success couple about some we of course, to as started yes, computing very going with recall But opportunities moving there to now. nice are confident seeing oil on are price There's business a if North you bit it And Philips as continuing of tailwind will. trending well. programs confidence opportunities as down although of continue in

Craig Irwin

Great. in I for hop my questions. the Thanks again back will taking queue.

John Morgan

Thanks Craig.

Operator

Elsen next from The Singular Research. question you. Greg Thank is of

open. is Your line

Greg Elsen

good you Thank and morning.

John Morgan

you, Greg. Thank

Greg Elsen

Hi, back what going in X% sales the the represented back for XX% us quarter that you year's of of you fiscal XXXX, points in for of that the Could last was QX call growth versus X non-LED to the quarter. percentage the non-LED earlier cost and for LED the LED then? shift the segment, being you in ratio mentioned there about remind

John Morgan

provide penetration a follow-up believe I something we could that – the don't get me, Greg some XX% XX% of were – of and by at but that as required. in Greg XX% you was I Well, front immediately if that. LED like XX% [indiscernible] overall low XX have with I inference

Greg Elsen

Okay, quarter headwind said importantly a that of last but should that… you from be the the next significant Was shift. quarter

John Morgan

found may information… I the Greg, think we have

James Galeese

was Number penetration things. it LED QX end last one, XX% year. of two Yes, in lighting

So yes, we closed XXXX. of factory the QX in

cycled closures. have day that we the So anniversary

couple just doing but We labeling is to some opportunities. a national sourcing, brand down are activity that account

result down fiscal by a figure the So the as to end very year. getting a we see that of small

Greg Elsen

may, you next due My any CEO QX tell in if of year this anticipate question to the if I us good. charges change? Okay, you could

James Galeese

developing working but Yes, treatment, there appropriate there and as that QX, be we are now and our a the the yes be a to representing QX. will audit right amounts charge charge cost firm in will separation in with

Greg Elsen

Okay, good. Understood.

when You a for new to the projected timeframe have you'd higher? like accomplish

John Morgan

year uncertainty don't Yes, take myself [indiscernible] ranges that it be for just living about because of expect that's a months. a let going nine somewhere take about so think that until the the I'll a as have a experts know me is me such as availability of begun We've for entire much several would have They take that good feel the frankly the accomplished, and I and necessary this just timeline, this and during on or five that that's why that. this accomplished, I a indicated so search the months. site Frankly, if and don't we they're positions search do timing until this I that between time. but typical here month to both as to let say is

Greg Elsen

What to next the for that quarter expect expectation quarter rate cycle the you of the back you – importantly effect fourth effective the as into Got more said an we think do to quarter the new going rates? year XX%, tax itself, and the for full the you fiscal rate. do the have I it. Jim, tax was

James Galeese

mind include tax quarter for kind rate smaller items. did the discrete couple rather on Keep applied of adjustments quarterly small tax Our was in a XX%. rate reported small figure, a income the affect rate It measurably.

rate forward rate. And previously, before where at at effect we we between to right Act full XX% XX% close Cuts, Moving and look a as XX% forward with of communicated we as XXXX last the Jobs fiscal to items effective Tax will we the we're see looking tax rate XX% XXXX tax look year. versus the effective discrete

Greg Elsen

it. very much. let you someone Got else go. Thank I’ll

John Morgan

End Thank you. of Q&A

Operator

to there Thank time And remarks. queue. the Morgan call further at for no you. this turn closing questions back the are like in John I’d over to

John Morgan

of We All next right. being forward and the look the our Have And appreciate Great, year this you thank fiscal a fiscal you to the call great morning. on fourth quarter you. with speaking quarter. we day. at end

Operator

and concludes Ladies you. gentlemen, Thank today's this conference.

You may disconnect. everyone. Good now day

LSI Industries (LYTS) 26 Apr 182018 Q3 Earnings call transcript