LYTS - Earnings call transcript Q1 2021

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Operator

Greetings and welcome to the LSI Industries Fiscal First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Officer. Financial Chief Galeese, Jim Thank you begin. you may sir,

Jim Galeese

in also Good the our call market With We Investor issued risks Relations release, fiscal in conference management’s www.lsicorp.com. our like conference our to will would materially. opportunities call we release to begin call before a Chief press Information presentation prepared harbor and our you recent this Jim the statements line actual we results this opened release include with with quarter commentary appears of portion conclusion In remarks Clark. morning, XX-K Executive website on a quarter I responses call questions. safe these I’ll and as the may the summarizing results. conference presentation results. well President morning��s will everyone. I in first conjunction posted involve and open at to At corporate most LSI that, this questions XX-Q. fiscal turn of morning, will be about outlook. remarks, press as you refer that could statements Officer, differ call. Today’s this contained referenced our first Such for and to throughout our today’s which and forward-looking detailing over remind today’s the statement, business

Jim Clark

Good all for morning, today’s and Jim. you, call. you Thank thank joining

earlier about you press our give jump issued and details. in to from today, like to additional have would right seen likely some release have you I several we As things talk to

and has found adjust remaining and improvements remains the number actions. of forefront business. and COVID, at safety general have of ways overall the transformation committed despite while our our ongoing that note been Let a me first of the around conditions, and the we plans marketplace market by which Employee to hampered competitive to to activity, uncertainty

and with deal to continue employees, assuring suppliers in committed it be to daily. no for and to is longer customers to Although adoptable. something a new, COVID ways safe partners, We finding is our we and environment remain effective our continue

lighting project Now, for activity seen no project Construction again in I sales fluctuate continues were jumping region in have am business, which on delays cancellations. little to the committed that COVID encouraged quarter, but cancellations. our to we various caused has the into the although book, no notable [indiscernible], some down depending

seen requests the On time have projects a of short in for coin, other side increase and lead that we conversions. market competitive

possible. work to over previous diversifying is and the a Our accommodate time increase, working activity daily as allowing improvement inquiries convert are chain with these month-over-month number as short to many year also sequential U.S. our first our would manufacturing a and our supply continues opportunities I lead based we quarter. that quote last to rate in of us average our note in order to and like respond the hard to these of along throughout

We in see continuing that second improve are phase the quarter. to

quarter, products. is XXX margin years. approach lighting higher to a market-based basis highest ourselves and bringing in in for point away commitment move time, for a markets to business focus on now highly and we some can instead decision made we purposeful year price from mentioned over we a ago differentiate level our This demonstrated improvement value gross sensitive, As margins commoditized the to our where our

our quarter, outdoor automotive including for automotive, markets, farmer, sports grocery two have and warehousing, projects laser-focused the notable world’s early largest last lighting vertical. wins key transportation celebrated lighting. We on including e-retailer We projects in in petroleum, QSR, been stage the vertical and court some several in

are consistency in we rolled dealers the uniformity complete working between. to directly showroom, area assuring lot are cases, the whole service showroom to focused are lighting a projects site everything manufacturers then automotive we individual are to to from which develop and on specifications, approach with their solution out in and the providing In auto Our many lighting.

possibilities Distributors part our In have primarily had recovery strong. and and we business de-stocking We are quarter [indiscernible], here stock the momentum by strong are excited the come seen gaining that the quarter a flow in in ahead. we in fourth first the QX. been back of through have

shows the commercial order encouraged We of out and sales are activity additional trade overall leads Atlas improved where new absence engagement, brands two see process target opportunity is of in the activities in in our of marketing creating that related agent we inquiries. business and standpoint excited and for of to the and at that go. are we awareness From the on rate in partners rolling a a investing and value and side increase products are the our solutions and our our and in-person of agents customer markets. number vertical the and a develop will

populated material case with collateral slew it in we of our last a and website partners. for Just a studies introduced month, new

XXXX, we We advertising are in even more. new remain XX vertical introduce introduction intend and committed focus to products. investing markets added of new we we In the and products our to increased in in XXXX,

In for to marketing along different a fact is products, they and It ease the customers, development the assuring business of compete design quality, partners and more time This team, has real engineering investments maintaining in place. by product our ease than for with making Our in service. in our are of the are win entirely and we an looking shortened team, standard for manufacturing, overall competitiveness our market our underlines level. XX%. installation on of the new

I Turning we X% below our levels just happy pre-pandemic Graphics, in am prior year. with are near sales to to say graphics, attention

stages side, of the several new petroleum Our various development. strong pipeline in projects with remains on

Our business in increase. nicely Mexico approvals is government as installation and to recovering continue

we operational awarded and I pharma store in our and expanding This like projects showing and about re-branding would Ohio. large new one for dollar in QX, ship will facilities to improvements an use In a utilizes we near-field contactless have digital logistics we the quarter. We the been a U.S. pump solution including retailers. in Houston, multi-million our time Code and in management contract technology, we wallet solution XX,XXX right innovative project of for space, locations. approximately to existing good from have services smartphones of print are are this of our manage and pay This largest this petroleum Texas I business in capabilities proud and the install on two and couple communication comment grocery growth verticals selected grocery world’s project QR a and our pay product in program. the talked their produce openings contactless LSI’s customers the are been both at partner allowing installation wallet were to This project working of and for to as the pump use of for some the projects a on chains. and fashion. has makes Akron, to at Recently, work share previously digital

to about talk Lastly, going strategy I forward. our want

a is company with $XXX goal XXXX. to million Our in EBITDA double-digit be

leads our a means more our number and of products, build and number vertical is partners; expand better four higher forward deliver path for our engagement, services Our presence. creating we our designed commercial when customer our solutions of one, that value qualified and around change three, market services our two, focus: awareness elements: or do We number increase agents higher business. level developing and

our We have on number can success around acquisitions. growth which forward that; to investor have detail four, website great deck, the section. in greater our is we a more This found will be accelerate and Investors stories through here path share opportunity our outlined and in under

been take go If to challenges the not you have of encouraged look. have momentum you seen energy I develop. to and current I a by we environment, encourage the it, the am able Despite

us. Thank am financial We in comments best for days and of remain both time LSI. through $XX our nearly Galeese immediate on call performance. and financial M&A with on and position for a focused in the ahead and available. strong turn interest growing confident our again to I your With are that, million Jim over organically will Jim? you our are of We improving I business liquidity

Jim Galeese

everyone. X.X% QX, good was below year key statistics $XX as start and were income Jim by Net in projected. fiscal non-GAAP will you, the per for I period earnings quarter. last but Thank Sales first facility basis, million, versus in prior morning of from a sequentially net QX fiscal first quarter non-GAAP $X.XX financial versus highlighting Earnings to a $X.X On non-recurring pretax $X.XX were above a of $X.XX in sale. last It’s first share points note fiscal per share income the the same year. versus of $X.X to was last XX diluted last to million the results quarter of were quarter income compared important XX% $X.X year. resulting million include net basis were first $X.XX $X.X per share gain year. diluted increased of sales, of Adjusted from $X.X that EBITDA ‘XX, million $X million improving million in prior year. adjusted million year income

which of press to company’s dividend quarter. Our QX complete no The company along revolving payable million, is support key the with declared the balance flow credit GAAP long-term $XX and November availability invest strategic of $X.X $X.XX cash per on and was had X. exiting liquidity November company first our free with of release of Regular flexibility reconciliation quarter improved cash non-GAAP $X.X in of fiscal the allocation at the the The end first contained XX-Q. record cash results the provides generated The of quarter initiatives total to priorities. million on facility. million debt our capital shareholders in XX first in share

favorable schedule X sales in of major with the multiyear and XX% pre-pandemic the Mexico C-store decreased in Moving sharp experienced Market activity quarter remain the process year-over-year approaching unchanged. for Growth levels, to programs project first delays. result quarter. segments, continues with with remains a petroleum our strictly first companies ongoing in as X% two sales reportable Segment increasing the rebound in commitments Graphics largely sales the

New quarter cost fixture the several focus an resulted the architectural a with QX. results. many de-stocking adjusted high $X.X product lighting for Shifting on of to trend exiting significantly with pandemic the steadily first increased major lighting for from impact launched flow remains new new gross the programs margin manufacturing to our our business to representing increased by million lighting in products first cost the fiscal growth development activity to a quarter lower throughout and versus development and combination of backlog companies in be quarter, improve income a Graphics programs. first activity fourth quarter generating the entering quarters. range, million distributor order ongoing on sales. QX operating rate contributed project fourth increased next evidence Adjusted stabilized improving. design approved projected basis of Graphics closely of Graphics sales lower the quarter, is Distributor for projected were stock working improved teams as our increased program income Quotation increasing Year-over-year, XXXX. with has XXX including for efficiencies. year. Two and potential The in Segment and slowdown XX.X% that the new multiple to first is value driven products, market backlog activity also and one the reductions, significantly higher quarter, $X.X prior structure activity generated to market Leverage applications, continues point the in

now QX adjusted last $X.X moderator. to sales, of point X.X% an the million, year. of XX basis lighting to will improvement quarter income operating increasing was call back I the compared to turn First

Operator

comes Thank Our Please question. the Amit line from first your question you. Wainwright. with of with HC [Operator Dayal Instructions] proceed

Amit Dayal

is Thank commented still It results. that view? fiscal that everyone. strong than the Good first morning, the had better Last you. you weakest Do you expected. for quarter quarter could the year. be maintain Really

Jim Clark

canceling, wanted of some projects flare-ups electrical of on some up of that we morning, mean good labor construction number projects here of in order we been very call some today. minutes for permitting the Jim last experiencing of COVID there we’re that, we’re permits, have so orders the strong not and sites is out flow at in, just our pushing ago, haven’t last quarter. a some Typically, to We we held QX the call on still year, have committed, the later in inspections the the thanks better, the just I but had and general year mentioned comparison I think that joining our had as we’ve able Lighting comments Yes, customers a a Clark door that in on, to the haven’t been the we’re on get yet. this particularly into Amit, and that I QX remained knew coming project challenges, they’re product the cycle. goes

we going by be where the most lighting but up this any on getting was QX very we work normally thought to time did So, because site, be. confident that cancellations like there would feel we’re ended aren’t done of the feel is we about it

Amit Dayal

revenue just to on then this have interesting. digital your you other you believe here maybe do to product it And other moving facilities? customer or business deployment model similar seems it customers is also some more a If really same sounds Understood. could do recurring component over of wallet the for new this or products a with for and be solution opportunities you similar there within other

Jim Clark

I’m sorry.

so what on I out didn’t were hear referencing? that cut of part you You the question, first

Amit Dayal

wallet the Yes, digital product.

Jim Clark

Okay, very good.

Amit Dayal

Yes.

a one-time offering be recurring are opportunities the the solution? whether is, that wanted for sale the may what or and component see Just is there deployment this of revenue if to to it’s

Jim Clark

In model with as will we things, solution do of it, do in and opportunity, to do particularly it credit or payment chip continuing have updates, revenue that on have Mastercard so services definitely new companies This next focusing revenue build revenue to of mid-April install not we lot The that digital recurring associated recurring wallet any you that recurring but thing something multi-factor menu many may associated or get merchants XXXX. credit Visa building, digital a know, year, the that are potential of type back liability card card out. systems place. have side we with the not maintenance over in a system of a our is cards, system move by authentication of readers required to is or see EURO the

and and an We in Graphics there it’s to to methods. both and companies, Apple of play, So Android Apple etcetera a field petroleum, have is like capability payment pharma the near for use particular spaces have allow capability communications grocery this retail, incentive code a to we Pay case through group particularly in things alternative both whether Google and digital our the will wallet phones. QR Pay lot support

this of a into being no right There out This it’s And, something keypads of cards. to where There So, be particularly XX,XXX exchange fairly locations and time. roll opportunity contactless payment quarters. short us we see the going could this, important to you’re that now able demonstration is couple for is of no of option. creates amount next getting type press.

make own your using payment. that product You digital your mobile to the phone

but that So, component here there it, could to next be continue is no the revenue longer. quarters or something we to few recurring delivery it over

Amit Dayal

take Yes, Thank offline. Understood. my so I’ll you other questions much.

Jim Clark

time. you the you. on the Be Thank for today. Thank taking call

Operator

Thank you.

proceed the comes question. line Capital of Craig with your with Our from Irwin Please Partners. next ROTH question

Craig Irwin

or of Can Segments that of morning. products Hi, little products Lighting sort couple we margin ceiling the the bit prior of the group good are maybe benefit do of saw gains, in you continuation a would color if the about get a driving we helpful? the in this any from upward higher quarter talk to and is that the we specific mid-XXs, the gross margin are [indiscernible] and on be this are products what

Jim Clark

Good morning, thank for in their Yes. oriented. typically voice. are the The project and always on appreciate outdoor Craig hearing we call, products related your being you

from outdoor indoor, solution full margin have and very usually those We product combine a a when do we well we standpoint.

for we has as have are, lead, overwhelming we got combination of value, project in few we’re that those looking manufacturing are margin a our commoditized when back things think for move for is looking started can we control, found our we we was a a products, with believe indoor off, we’re aren’t looking we we optical indoor I that they lower we that outdoor, we priced customers years cut in lost and when focused, products. the

we projects do. we those to disciplined So, ‘XXs in buy possible. on type better very think in are the involved the more that are the projects do cost more I mid the

those very but we ‘XXs, back, lighting rate have that think from from in slightly mid get think get closer one a I the we slow is our probably ‘XXs it’s it positions best looking closer improvement start into and quarter-over-quarter our to I quite margin had and a to will in a some happy standpoint to of as time.

Jim Galeese

Galeese Jim comment I hard Craig. as margin on will rates Hi, here. We’ve that Yes. working forward. been move our well. to

and to that, launched We manufacturing are applications, course taken have There our contributing largest levers year nice footprint pleased to movement at. fixed contributed. to been being new all we actions probably right-size multiple we the design, products the that with very we where have savings, cost we also are but our last then seen XX have some higher-margins cost of the

So, margin a our the all continue levers, those and objective to moving to drive rate keep basis. improvement, on looking that continuously and year-over-year continue work we want to continuous gross it at is to lighting forward

Craig Irwin

Excellent.

they facilities, and there on of if facility you new or retrofit facilities large for expect Prologis here rent, Amazon, right. wanted can question we lot directly and we number ask of because where those release that’s largest and that of Was the of I are this process can the do tempo just that maybe lease Did assume basically opportunity for for in facilities in you the and Prologis done projects the put comment know actually you or Next and can the a of of know side your assets, what e-tailer, most their under side? just prior the the provider more more Amazon parking I many did you we a an is paying distribution two warehouses is building mentioned or about was to new Prologis see sort we Amazon. you world’s guess retrofitting

Jim Galeese

we our both owners, those yes, both is the input a the retrofit particular property two the certainly a in in and customer. were answer see from but to an So, in do of end-use of projects facilities. the new partners opportunity combination of lot These

articulate was ability In of we of in the performance the to lights. influenced believe kind fact, it that the

the a situation, of good to light were here light is being to the of able underlying lights, a in is good just that but lot, pollution, that the over to good light loading the sure the of just locations of lead Here we’re kind like terms of kind docks, in a having cut make articulate we the into off, able be and other in a not facility locations, neighbor parking how to also and in thing. type of not example good do performance and

think segment of that them, of I sure committed to we’re delivering. one the being certain they’re customer a they there a that being neighbor and – can we’re appreciate getting good customers making that is this and performance

demonstrate do saying by that I continue trying we’re trying is So, as – we and that leverage these to into opposed doing think it resonate a are to opportunity. will success two bigger story to something to and stories

Craig Irwin

Do December same the in backlog any in you for the quarter business execution customer? adding have from

Jim Galeese

don’t customer but now, right and the any say I this will backlogs – to just the that process or to that want anything. stuff I up about want but, comment respect I specifics don’t on to say I say I’ll

Craig Irwin

Okay, okay excellent.

that $XXX on announced million QSR release, the up in both the circle your to prepared as in well program program remarks July. you just in you then, the and mentioned the So large QSR,

us good that in it’s the be $XXX news, good supports you looking does to doubled or of of million Graphics here. for this the to mean approximate release, faster, million are business is number which What with over few graphics single really completing nice scope this more doubled years, can the see sort how us little timeline low going we at for a orders business getting $XXX understand You LSI’s share there, what said that some the may a next that really digit full momentum the in years? is than

Jim Galeese

have too is say mean schedule anticipating from two standpoint, a we have have demos be schedule a been that and a customer, strong much request years solution remaining a for front proposals piece position, now say getting our our little Yes, follow-on might opportunities, right success see traction single about pretty that coming are might and had right it right proposal we’re we orders proposed of this July quarter. time, in we and I comment be in we there believe able are and –a some additional is say will and But in sure now. we but it believe them the anything creating done but on of I likely two am the their we premature with premature little I in to we to project we just will run have discussions significant we now in to business year the in the be the and with follow-on a from I that initial

Craig Irwin

in Okay, learned question now at LSI last excellent. to there, you you’re are potentially are you’re move lessons the for than LSI and the if of what LSI years. obvious And characteristics isn’t last much a and like I It of it brand could of the looking some an Atlas where something with condition today? complete may, acquisition candidates if better here good missed been for steps then the that group either looks assets. were your there just has acquisition fit sheet you some the balance and basic How opportunistically position few acquisition a was from in

Jim Galeese

are some we I with not Well, gaining had that we’re with going Okay. around bit, very missteps I some job, they’ve of but momentum. has a all, a great I first and little done But to Atlas comment their debate been here significant and happy Atlas. think QX in recovery they am initially

mention our will next category whole product bringing they refreshed they we independent a have fact, which offering online, about just their in talk and will quarter. another series I In that are

and are through plans organically grow definitely to Our acquisition.

those well we acquisitions think Craig, some long be folks may to As ready have you we a fit been we but have have for time move. would things not – that in this

now, a we out board it’s we in Right that that – getting have and partner we on getting get you be us. could few things I different of think number a where the a lot might put up in story of only out a that bottom. we to filling that funnel a the folks We come we’re think and targets with in way the top is are what really doing different top with some as, the and those

So, we opportunistic do on being also plan core might very solutions. just what are locked we people lighting traditional and consider into not

adjacencies. at looking We’re

a We’re share things vertical where and have looking becoming get tend at conversation we so services the and of We where domain better with that’s value to to we customers. a to can is offer a a have customers, that then broader you seen us. a too, as manufacturer just equation product expertise, in go with can markets bigger mentioned, being just our have our customers, I wallet And solution of piece why supplier. different important be our

Craig Irwin

acquisition the that clarification, kind growth of assumption I in more both side potential of house? the you’re Graphics likely equal business you than of for complete point of rather see a an these side sides the of in or do correct much just Lighting And to the am for accretive your

Jim Galeese

a whether it’s maybe like if that things like and products customers, or it’s look are on list. something our add at not graphic I or audio on things to be additional to things that set traditional into getting expansion we’re structure us in our communications, that looking within signage is you we portfolio lot commoditization. of But that attractive continue want and our augment want see then there bring think graphics, me-too group perspective, about to solution we opportunities services, print just was if things to we or careful probably in to both, the digital to to digital but at. a lighting Graphics the from our And

Craig Irwin

the on results. Congratulations impressive quarter, progress Understood. this

Jim Galeese

too. the Thank Craig. you, Thanks for time

Operator

you. Thank

the have any like reached question-and-answer closing for the of over Clark remarks. end session. turn to We call back Mr. I’d to our

Jim Clark

a to on. again operator. thank of There you, it’s just everyone time. for want a the Thank taking going the is busy realize I year. I time lot

are questions if the it are progress or thank contact to please specific don’t We us. forward to one-on-one the make very next open you’d with you we you continue always have, talking that have look quarter. In very much to we Take to LSI, hesitate and like we’ll any happy to care. meantime, you

Operator

today’s concludes teleconference. you. Thank This

disconnect your for at lines have participation time. your wonderful and may a this you Thank You day.

LSI Industries (LYTS) 1 Nov 202021 Q1 Earnings call transcript