LYTS - Earnings call transcript Q1 2020

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Operator

Greetings, and welcome to the LSI Industries Fiscal First Quarter 2020 Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded.

pleasure your my Chief Jim now Officer. Financial is to host introduce Galeese, It sir. you, Thank

begin. may You

Jim Galeese

Good conference morning, first contained www.lsi-industries.com. issued posted Relations this be conjunction everyone. portion We will the in a morning, call. market before with throughout corporate in referenced detailing this opened conference the of call presentation our the we our Information fiscal release, quarter presentation In a results. today's also press Investor release at website

you morning's that questions actual remind involve commentary and call I include refer to to would opportunities about results statements management's most the questions. responses materially. line I outlook. as as you these call on conclusion may this and like press differ risks and prepared fiscal Such conference XX-Q. to summarizing today's could Today's our the we our Harbor release forward-looking recent statements the begin business and quarter will Safe statement, our for with remarks first of remarks, will our appears well XX-K At which results. in open

to will over the call Clark. that, I With turn Jim

Jim Clark

thank morning, everyone. This with LSI. week Jim, you. my one-year marks Good anniversary

year look there and made the changes see As throughout is I being encouraged progress is steady I'm effects the the of back, I a can cultural occurring last and that we've shift made.

and This quarter demonstrates LSI's that investors customers days our employees, best ahead our and to us. our partners are of agents,

indicator prior are say commercial we happy but that strong potential QX with one making future. XXXX, increase million. fiscal reported for Sales great step results Continuing filling all X% Head represents we to results sales process comments our of year the position. to on these sales filled effort, our our and now we're regional changes and our are more of sales closer positions organization holds year, of I'm we've for at our in sales an Looking the This importantly over a $XX.X

last put we've we sales team is been build workaround customer Simply year. calls, out still previous in mentioned the aware working go. bearing our we ways to to have sales our our the are increase over and I As however, hard fruit team contact

attended October, of in we see Institute Association - their Georgia. activity Stores industry's This - had positive constructive Graphics National trade Convenience I of and Petroleum annual PEI to a LSI and very opportunity NACS, is In and and Atlanta growth in the America of had show all largest customers. Equipment pace the with the the number show is conversations this high. and North meet our segment. in to petroleum-oriented should We continue are that and talk indications Lighting trade

have You us petro-oriented last XXX a seen may in release our as we Mexico. install from month press celebrated

We expect segment momentum and we this good more. have in

to few what independent opportunity the a work front they our lines months They with also we and suggestions we increase I and strength them. closely their road, several agents. with over connection. next to here advantage on projects shared are their are folks that of niche-oriented opportunity of openly had frustrations, vertical efforts open our the On These with visit on again the meeting better. be competitive can present we and them do the the is our to continue and of will will There strong sales

working encouraged louder decades. was we was split direction for stay and Grocery to We've should had this available with XXXX. calendar been our visit with I They than Also shared segment increase opportunity conversations, of customer this of The consistent and market go always projects slowed with our planning had year felt that that a the in last speak Actions meeting. visit next and the out the customers. I things they're see over in of multiple coming work back suppliers. year words, being updates some the to between but Pharma October, -- few big larger one over to years our if

in regarding We had as Lastly, will momentum committed our a us remain Lighting segment and Outdoor complete our including sales to mention full our but of a we to indoor and solution competitive give quarter. suite last our commercial manufacturer. effort, want that positive stay lighting very bringing outdoor I a advantage customers us products, differentiate to do

focused Let around from embracing on where meeting short, mid marketing, and The lie and team may plans. engineering. sales productive and it include we members and goal inside offsite an Last product tool me development comment another box, the was engineering, process to added innovation. look at opportunities pleased product was now. list on that possibility. and long-term switch management month, held our I'm It to and focused very we was right and a constrained our of to think meeting our greatest say

improvements product on initiatives The rationalization, the product report and angle to have everything incremental a cost-out end tied broader front about attack to I team the specific markets. new products. to but took say steady improvements this about thinking in innovation, we're performance-based into which and of that future, vertical different of are more solutions, happy SKU from I'm of stream

continuing several On delivery. the our and operations focused front, processes team on initiatives on-time lean has quality,

cycle happens commitment, and quote being I'm by is be final it full-view full understanding the problems two is projects and the be with looking conducting how when, over the manufacturing, involved and study the months can shared This installation and scheduling who avoided. of order can by studied end-to-end order that an view so last and parts to what customer. most documented life the goal increasing availability, at a from shipping entry, of they've of is excited One been initial

we customer the lot goal lower our a of and cost. areas discovered are with within several and all already providing confident reduced that We've are grasp errors better service, of and there improvement

received. cash and at proceeds happy sheet ratio This financial say of of net couple debt to because management of along operation to good our the outstanding the Windsor the by debt stands almost year New the reduced last improve this as The $XX.X overall continues gives notes. to August to has possible were A I'm other adjusted in balance scope continues completed XX% expand. in and flow project and flexibility and was and of closing important to and plenty X.X. location million powder maturity organizational be us dry what's opportunistic our EBITDA is net to with it

Canton continuing more. our facility, project This we technology to We is options improve in our quarter. a We this work our effective XX% I'll do overall Canton. North to currently the an are produced a next share opportunity reduction operations to but and and or and of great changes simply North in not footprint have is goal reducing our evaluations related cost. while space more need have is

with service. lighting profitably export, period Lighting believe Looking do prove quarter. support remains this to that our second quarter and high-performance work during and still remains but I business. stable fiscal can transition, the forward a I right volatile and results expect grow first market solutions our have and execution innovation, that proven source also conditions LSI our We through focus, the those we graphics continue of will for planning with

look turn will deeper it at I financials. to a our Galeese that back Jim for With over

Jim Galeese

Jim. you, Thank

million. financial diluted with growth. Graphics both Net were start per $X.X segments was me quarter the summarizing EBITDA million $X.XX statistics. increased generating key $XX.X briefly Total Lighting was income Earnings first and $X.X by to and Let million. share sales X%

contained of the quarter million, first million restructuring first pre-tax facility free press charges over New and from the $X.XX business over expenditures. cash quarter as include per $XX million sale of non-GAAP million adjusted from EBITDA in flow including resulting million published $XXX,XXX as complete million. non-GAAP in Windsor sale EPS results release $X.X in The adjusted generated the well results As $X a XX-Q. operations share reconciliation basis net a $XXX,XXX. GAAP adjusted in $X.X was with $XX flow from on QX in and approximately facilities our gain sale capital income A proceeds cash of and $X.X is On of

prior decreased improvements reflecting and process $XX in results with a year XX% working working as capital both improvement XX%, Inventory, of realized dollars manufacturing million Working capital. sourcing component of days implemented. and being capital decreased from of the or

has outstanding last $XX XX over or million over reduced the XX% debt months. been Net

Jim stands mentioned, million dividend with X.X. regular A for $X.XX net debt shareholders November of ratio at leverage now $XX.X share debt cash EBITDA As was of on a XX. per November to of XX adjusted record payable declared

XX.X%. adjusted Light. improved particularly including strong, and Next, reportable starting retail Sales C-store. increasing of sales target product of our I'll to gross achieved parking, in segments, year. were XX%, points above was with Outdoor with XXX basis $XX Lighting million, last growth X% verticals margin petroleum on briefly comment automotive, performance two

price margin favorable points adjustment to initial mix the New contributed $X.X Adjusted from including XX% realize operating continue cost to items Windsor the Several the the where and increase, a excluding in the improved price, of year comparable vertical onetime increased on a closure. results. of rate, several included savings favorable basis we million prior income market applications in

adjusted $X.X of XX% was quarter sales. EBITDA First Lighting or million

early-stage was petroleum impacted prior QSR the a petroleum or to income programs. was by Growth by segment for including of Shifting improved operating improved future strong inventory of projects, the sequentially was $X.X for with sales of levels verticals, million from and X% Momentum the QX, mix X%. customer potential for petroleum, multiple Graphics. work impact sales. Graphics and adjusted below potential driven Graphics first and lower but new backlog Income the growth Graphics and in quarter, continued of development projects. development work grocery. was significant absorption increasing remains EBITDA Graphics year. segment

back the return now call I'll moderator. the to

Operator

time, you. conducting session. this we be question-and-answer [Operator Instructions] At you. the Thank will Thank

Irwin Please question. with comes Capital first with Partners. Our your Craig question from Roth proceed

Craig Irwin

thanks taking questions. Good for morning my and

always going quite I us Is on headwinds this Graphics the digital this the in Can this little there. you quarter. a digital this nicely the flattish certain the there's outlook talk bit year year? talked we and being for about for seem what seeing on really improving to this business signage. in segment you're possibly So outperform previously the have impact growth more gave X.X% quarter? quarter? about Did pluses less to customers We from an in the minuses growth in signage know, the of

Jim Clark

Craig, Good here. for in. Jim morning, joining Clark, Thanks

of continued. we've kind talked branded or Graphics you and a and petroleum-related there's Graphics. think times, Petroleum, are large three we've are it about few are we pieces number Graphics side, early-stage Digital those Graphics the but petroleum what in projects it if On Graphics then been Graphics to a call about of

number gosh and Graphics, reimage we there show said, show. a you refresh were at Institute is standpoint, we trade double you doing digit, large least the and the will you the almost I branded are on puts digit. meet up some that if the but our a Like satisfaction could petroleum from up continue double were to On from Digital print strong your just a and locations we've minutes pretty strong. their NACS work they're the few what comments of to back show customers had very remain that trade I takes which and Petroleum came them and I and in tell of with mixes, -- but been the mentioned their from opportunity all high. PEI of I saying Equipment three to trade very ago level that the And my kind was commitment just -- and

I've of tell the I'm the one the I the to away Pharma meetings remainder into large been the very came of So, I performance you encouraged I'm bullish. got to including and year for from quarter our this Grocery year you and customers, next and

Craig Irwin

hear. to good That's

more balance in continue flow right there's works of net quarter Windsor, your cash you're see. opportunity a quarter? $X.X balance That's exiting million, to common out squeeze a thing of So, you continuing me cash. And where describe not kind in in Can there's free $X for surprised the New sheet results maybe even so take squeeze to the for versus to now bit the your facility. an us is quarter, little you if maybe one to a you're that the facility thing million sale income for the what the the sheet in

Jim Clark

other pretty good Well, just a in generate the of that the those as to changes. be I midst by it think mean, brought you up cash able accomplishment team I was to

not certainly more. couple yes the So, quarter Canton But materialize a not do North facility, may a to project. us isn't or for longer I'm room there I It it's there mentioned saying three. for able standpoint. we've of things quarters. the do been an the still are some to expect us movement that for to wouldn't to kind from of But in operations make last see I

it, think we was be not saw to I'm also that got comment, want may a there team but looking making think I things But after there it. some other were able at. as few to fruit I we've everybody go that, say able get the were that low-hanging I we we're to to

but So, I a cadence continue anything right don't for I I those to want will and will say now, to commit look opportunities. good that operational

Craig Irwin

hear. to good hear. good That's That's to

on Is growth focus looks for like you're potential is essentially avenues business been It looks on returns? here. executed the or is gentle sort or year I phase you talk the mean, pretty the up stabilized But we're enhance accommodative. stays for looking margins done. this operational lifting like for side? you other the So, right that's shareholder heavy it improvement and next about to the now well hopefully environment can of what's some

Jim Clark

we'll combination all I levers for And as answer question, keep that. I we I it's of execute investment us say those of informed team. community I and us the say of and again a operationally that I'll I've against always since room think, and of there's still I, said in continue here Craig when just the had, got a that. pulling whole just will to speak I some I think to

kind I right commercial some that use word right have here of think the We and opportunities stability now. we

of we've good got think to I now. a operate platform off

takes the in And team, on going but and been. faster I'm I've we We've putting that And think effort sales that side. commercial while our commercially a And of to focus lot and it's the topline, get on just filled is mentioned possibility. out we obviously the excited sales our move new the time is It I in can been commercial now. to has that about and going our now and customers rhythm our for is But be of a commercially. to it talent the of groove a products company. margin. learn side be not lot

And to to want one I and continue have have very we that. comment focus that time. robust talked our line. to product last add to we'll have indoor I We'll where invest want respect in in it do continue about We a to available.

a performance to want great be have a And ourselves we reputation great is indoor They've the outdoor But in general solutions. products. rule. differentiate So, I we with will product synonymous as LSI the on outdoor think, outdoor. really leading and with us that. I outdoor got see

over And away you'll XXXX business think -- calendar quality we lower-quality trading higher-quality be I those see that will that I And moving will you'll over see occur XXXX, continue here business. -- from year because, next year, we're off but be some some months to into for the improvements. two

the you're I'm sometimes to volume on decision for on higher business going but And trade-off to that some topline have happens headwind I'm suggesting when a be earnings. of we're some have making headwind, that you're a little sometimes you not may the that -- quality just when going topline, saying to accept

Craig Irwin

any want Acuity leader conglomerate Do help about targeting that find years all us when on opportunities trial was comment you for and the of process being made company. your Do Juno, you LSI at by of probably from fresh how that those see distributors in scoop can go is see the given specific do orphaned to something this a interesting I specific was revenue bought outdoor? opportunities ago by lot lighting outdoor some for competitive call? on sold great Juno product for fired discuss competitor the in and outdoor another look LSI that of any and this up it and opportunities? call? the you you you with -- in by Many customers. a opportunity those So don't bought is being Or to large the distributors got guess was is here Or that

Jim Clark

I think just that the name our product available one execution, some are development and our commitment best really I story, the pages and best there. best mean, to have two to outdoor very that that outdoor products -- that the their I is of discipline and and LSI solutions. still own there's the in continuing we made think delivering solutions it's

and think I I But can customers be can. up many to right phone that I get be looking and going senior I in the truly that So, in leverage potentially folks certainly some they provide our what's a going anytime the agents to and best to know going platform? around kind like on of now, there's management we industry many tomorrow is and there latent and as as to of disruption Who including I'm stable think and of who same, as the our committed, who's yes, we'll the that look a inherent there's pick say, hold can a opportunity the folks we talk today, team? do to

Craig Irwin

or And Great. still LSI is other, core question growth if versus seeing may. you legacy products, put if LSI? comment for Atlas and rates LSI and if can if synergies an questions the channel products a not last of know from the is be you bunch we're about Atlas there's Atlas product manufacturing then whether going I may outperforming don't forward? the similar there to opportunity them Do could take this approach you in any the I through at incremental provide there see but color? used of it one

Jim Clark

flow they And they certainly best know know -- do they're where they I business volume, they do do best we know I purchasing well. like right that. Atlas a where where what do pricing things and But well. we stock think are they well We served know they at they perform And think stand-alone agreements, that. as in synergies side I and share when now. look the they

lines in -- real is fighting cadence market are market like other. they go trading commercial opportunity And and we've make constant each and we We we I I back-off after of sure I standpoint. business slightly each the complementing overall, the goes But and other in from to real to that. some stuff, although a that the and different not don't that have like a I be like after LSI done want the there's across the state is think than don't

together, synergies On the the type we all work collaboratively for sourcing thing. our end, we of of back and look certainly we that trade ideas, from

with dial a to if So Certainly, few look every but turn that. notches where I'm happy more can now. I'll are that I'm year I happy right they

Craig Irwin

That’s hear. again my Thanks and good the see taking questions progress. great to continued for it’s to

Jim Clark

Craig. Thanks,

Operator

Thank you.

Securities. next JMP comes from proceed Our question with with Osha your question. Please Joseph

Joseph Osha

are Hello, gentlemen. How you?

Jim Galeese

Good morning, Joe.

Jim Clark

Good Joe. morning,

Joseph Osha

some in So, was want Craig back to issue interested hit do I capital. of this and what of working I come to

You've is improvement, of generated lot excellent. a which

capital Just million for looking at in million me company seems in it Slide like a kind working quarter revenue X, is probably pretty generating of per to $XX efficient. $XX

you've I'm of me Is do you that headway. there? So that wondering, think like mirror. seem eyeballing of or this, most are made probably those true to it rearview the in But a improvements lot would there's more

Jim Galeese

inventory Hi, to in Galeese we ago not were Joe, we and six here. and notably, be needed capital recognized our working We've as efficient to that nine months inventory management. most Jim as

leader that. earlier supply a of initiatives as Mike the and Jim number has progress at so, Beck, a the team improve rest been and in great our of operations mentioned on made the press and chain release, And as work we've been to we've organization. outlined sourcing our of hard And by

is on we the or think key of working and in we're all mid-XXs clicking get target for to in for I the our capital, to there can be terms our our days low-XXs, so cylinders. So if really metrics us dollars is

left So there's bit a there.

how of key to seeing statistically, out it happen product the just the about it's expectation initiatives makes to level But the our not we on business time the a improvement it better, it how the that factory actions, get behind is and faster, customers. made that your

we So good there left improvements we still a of have Joe. and bit the feel opportunity about

Jim Clark

do not to being have Joe, that. second not think The And finished it's continue is -- Jim is that finished. we'll opportunity. Clark story And here. I I'd

Joseph Osha

Okay.

Looking is begins to to target at whether whether you're at ways so another opportunity financing curious there there times whether to stable business EBITDA, to sheet, any balance part absolutely you. debt look behavior there's I'm show to as a of that as the to also different has, which the good more down necessarily? And X.X debt? it approach for

Jim Clark

this. Well, it We a strong is good we have number about were -- we've just had financial partner. funny of conversations do

talking levers. are any We let's looking operating in that a rhythm -- been -- touch lever we say, don't good reserve I always don't all one. just at We're about. as those we're we've and not

can't the let's mind our we the certainly What maybe end not on one now. we say of I might is in have touch radar. right is say that that year, by but anything immediately

other a some I've comments financial flexibility differently. in at was the we mentioned The right of to lot an look different opportunity things things us now where to and are thing gives us gives at and look

And I to plans on a through. I breathe feel those So are spot. and carry opportunity right got got momentum still and us table now. like some we've we've the like things will we're to a that in look and good feel at good all

Joseph Osha

okay. I there's So -- not mean

to times we to not wanted to down So say hard one there debt take this a goal is EBITDA. to

that? It's market is big might could line yet you're to it not if your it's mean of Or enough in go EBITDA that don't You -- obviously, the you or credit? line top not huge something I level. I with like Term case know imagine business. B happy the existing

Jim Clark

right answer we're happy say enough. now I'd simple the is

happy. are We

equation, the you financial to good -- both a sides have partner when are you fair partners know good financial right? be on want of You

Joseph Osha

Yes. Yes. Yes.

interesting from You standpoints. competitive environment two the at of sort me mentioned looking indoors. to It's

CRE for Eaton trade outdoor with to say be some route and the example. disarray happening On one could the trade be you hand they're may G-Trade, wonder the in you've you going got the what's

the in really just in really, businesses these indoor. time big competitive would environment? you and guys versus why And necessarily for curious a trading context also you time that you at portfolio of of hand companies or other the that's are how not competitive continue wondering, core outdoor? in point On I'm how want all in necessarily areas spend like these some area to the to -- where this focus indoor strength much you the view manifesting of what on the have hammering about again in just this maybe

Jim Clark

markets Well, attempting Joe, say it's I our well, binary, mean, but start I'm into is to have very outside line able right? not come a So entire those we customer -- project be what a the the look product our through in the want we to have right? at the serves vertical we vertical when to into on we markets and inside. solution all follow set way that

saying is reverse to What a to we just very that, see mean it. balance minimizing we're maybe large those want I our -- two. happen starting put indoor I'm between that I to do don't like to exposure. product and is won't It where the with outdoor doesn't

good portfolio good and for indoor. solution very set are They very

I think top of very question compete for is outdoor in drives earning we just that, do can compete as mentioned It's and a well. at that, of the your higher the quality you us. comment and we

my XX% had way it than I choice, if indoor I'd XX% the see rather So other outdoor around.

Joseph Osha

about it? even outdoor some it. may with a Graphics to almost view it think or be kind along indoor good so, pulling business as you Is way of And that

Jim Clark

different want our auto at complex whole at the look suite. at to we look at deliver look and we vertical business, markets, look to maintain and retrofit ability we dealerships, vertical C-stores, markets our be we a look whole we to solutions we have they able sure We make that Absolutely. bunch Yes. at of

we focus vertical instead bring just and suppler. as and a we recognized our lighting a -- best the experts And think may it way we I on way to certainly but being is vertical markets. experts our are of is the and we it I in can domain say credibility the When be to articulate a commoditized outdoor, think, indoor differentiation markets best articulate

Yes. in other I of able that we I'm in markets of markets solution we're we oriented and the we're an on. to expertise we have not in vertical verticals any the of that's opposed many bring everything, it, a but because focused do a play key expert as have lot set to to that, but LSI,

Joseph Osha

Okay. And me. then, the for last one

in platforms Just so Graphics, day actually interesting bringing improvements information of targeting are advertising. and like other content outdoor reading was I that at looking to Google big and about forth an the talking some the article

It was just pretty some wondering might customers there your that more of I'm and customers interesting. put advanced in sort some potential be of Graphics just get or they outdoor potentially content now haven't of paid out invested at looking whether given necessarily who And the that for? could

Jim Clark

all everything services -- terms about of seat the this our materials we our the with Graphics. digital, in into I've spanning way advanced a our from -- talked we're We're capability. recognized and often. think of we in the very the I of get Because before in because print table history have at in under-recognized Graphics every -- and

to of of the have terms but the have Many us set our the ability across adaptable in interruption that to skill into on or are we're Mexico it. or the we permits customers terms arrive in table, happy States because and very correctly, make business at reach whatever of is deployment the it United solution, are is that and case that is the and into done correctly, time, sure factored the business the project managed materials

things into right now days adjusting on that's temperatures experience drinks is technology at on favoring of extensive. and the that. fly, pricing like looking adapting, and coming outside The cold we depth have over That hot it cold drinks

the to the to table. with installs, at stuff, able the the when really technology foundational to capability, ability what all ability that LSI roll that the recognize We're customers those solution overall it's to we're that's those ability manage but our deploy solutions, adapt

just of We'll to keep technology we'll to partner a try we're if be partner, those not a the Google, way, with a stay technology Google try not curve. partner. partner in ahead We're by We'll necessarily going to the technology. stay with -- the compete with going to

Joseph Osha

Yeah, yeah.

day, Well, Okay. control but could go I'll I myself. all

So thank very much. you

Jim Clark

Thank Joe. welcome, You're you.

Operator

you. Thank

session. of We the have end question-and-answer reached our

So the comments. to additional any back to I'd for concluding over like pass floor Mr. Clark

Jim Clark

again I attention. to time the just say for want your thank and you

I being stability represents it's of. think well-articulated that what's able the LSI was through I quarter that call a and this about think platform possible to operate and at off about today it's it

I a levers lot of we pull. have to think left

lot a their for left I and a Have here the partners, in continued good business. the the investors own thank have We commitment. of the our afternoon, customers, opportunity employees everyone.

Operator

thank today's for disconnect we teleconference. and you may at does participation Again, Ladies this your this your and you conclude gentlemen, time. lines

LSI Industries (LYTS) 8 Nov 192020 Q1 Earnings call transcript