- Earnings call transcript Q1 2023

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Operator

Ladies and gentlemen, greetings and welcome to the LSI Industries Fiscal First Quarter 2023 Results 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, Jim Galeese, CFO. go-ahead. Please

James Galeese

conjunction and the joining. detailing call market first results. everyone, press issued our presentation you we website quarter before release at Relations release opened In our in thank the morning, a portion We for a fiscal also Investor Good posted this of conference corporate with this morning, www.lsicorp.com.

complete will measures reconciliation conference call, operating certain non-GAAP for Information and transparency is today's results. first non-GAAP contained XX-K. included contained press of throughout A in quarter GAAP in be referenced this release our improved presentation of results are and our

actual Please may could refer I responses to include as note to press differ outlook. appears our and about you recent call well Safe as statements morning's and our conference business and our this today's risks most results that forward-looking XX-K involve commentary release, Such in materially. questions statement, management's which Harbor statements on opportunities XX-Q. and

our results. begin we line with questions. Today's these conclusion for will open first remarks, At fiscal remarks call prepared of the the will summarizing quarter

the over I'll turn Chief call Jim that, to and LSI Executive With Officer, President Clark.

James Clark

Jim. Good today. Thank you morning for joining us all. you, Thank

strong press results the seen first likely had and pleased the As you've quarter our very release, company efforts we I'm from of our and the a with and entire team.

on-top team challenging top all the the in last year. flow. performance by folks quarter XX.X% same Net market free-cash just more up were to million a and $XXX XX% solid a almost adjusted doubled compared Sales great company. across Again, than a in EBITDA million at income of $XX of

permitting year. issue, XX% a a challenges, that were this continue occur those up strong, Display were as the one were the and who constrained across to Our big the provides supply-chain first supplier impacted ongoing on quarter Despite component quarter by graphics for prior segment but country. they orders issues we the sales were both specifically, Solutions

margin more a gross operating opposed rate income improved same Our points period basis year-ago. as and XX% the than increased XXX to

in about the opportunities test a and We're us. we number projects engaged of in of front feel good

to Our the of ongoing focus vertical product to very forward move line well installations and deployment new in our with offerings. up customers continue that our market continue mix projects current and with

Moving had onto in-flow segment. our project strong a business improvement. We stock by our compared to sales outstanding an and increased Lighting business with order strong quarter enjoyed Both year-ago. growth a and orders and double-digits rate margin

and have indoor market product on we of significant introductions a Although we basket of new and whereas strong customers. product-line. These of always a very we and solutions enjoyed and particularly products of number gained and are to strategy, a a have existing effort The robust reflection a introducing strengthened focus ever-increasing by indoor our do had our quarter our traction, continued line vertical new to an some provide outdoor lighting, services great results customers. our strong

filling of of mounting a installation the a products, adaptor the the the with demand was from Earlier we Conference, competitive strong didn't provides and upgrade to see the path a this feeling The in jointly COVID. booth, was extremely take extremely gap. Association folks LSI when in for which ready cuts see number show you also introduction new both this NACCS, look There ready and see mount canopy show mount. It's this the attended rebounding in National great one LSI to maintenance a -- Las Vegas. your quick-service and at lined-up market future. the three a the Store products well-attended four time outside of see The month product. conference a start at deep is just just including and show solution like it lighting, while any a and true significantly called of was JSI Convenience under

are We continue ourselves many to believe that more to lighting opportunities there differentiate category. in the

We functionality all serve laser-focused ways serve We're exploring that new the solutions. and continue markets overall we to ways our innovate on lateral into finding to other features our well and to with bring currently fit expansion vertical as markets as to find strategy.

XXXX, the many see uncertainty general year in and the the the put fiscal we us As of developing we despite first-quarter behind opportunities look-forward economy. to

most quarter's of our constraints issues our we and revenue never been the supply we work issues strong permitting continued agent We're and issues way create, that ongoing challenges to well-positioned speak Although in this a numbers cases improvement. a relationships for ability. found biggest and some quarter, within customer look-forward stronger to and remain challenges, to these second have

With that call Galeese the back I'll our over for a Jim look at financials. deeper turn to

James Galeese

our Growth Thank as was well as you, performance. improved realized growth verticals, our Lighting improving substantially Jim. as expansion Margin multiple first continued and margin with in QX key LSI year. EBITDA quarter growth. well. strong fiscal double-digit Sales across basis versus sixth QX And gross both delivered product of with XX% adjusted a and Solutions in last increases all income, operating margins generating Display points metrics consecutive income quarter segments. strong of XXX represents net

significant and led XX.X% margin aligning encouraged selling successfully approximately increased ongoing $X.XX to to contributing improvement, performance management. requirements, per the income inflation, with We're QX to of multiple prior earnings project and year share cost Adjusted by the EBITDA both Improved are $X.XX quarter, service execution the leverage, improvement. produced volume that realizing meeting margin year-over-year in improved solid quarter. factors prices in double mix continued customer demand our in segments

cash a quarter the growth. sales of generation flow of stabilization quarters QX of additional higher the year. in $XX.X usage inventory capital enabled of challenges million in following third free-cash represents free-cash investing fiscal and last has mitigate versus increased Working several to positive consecutive substantially million QX quarter, $X.X to flow Free-cash earnings conversion support flow. supply-chain

to forward. cash-flow moving to XX Improved continue reduced X.X the to month net-debt of cash-flow positive expect times. ratio We EBITDA trailing

markets Lighting operating doubled. than segment to Compared levels an increased Strong Shifting basis and These activity our was institutional XX%, vertical We're also sales sales sales last delivered where good growth gross more high performance. in position. sports lighting XX%, of quarter. multiple attractive margin warehousing. income markets, and of excellent to continue points refueling strengthen making and led other include applications parking, the in to by increased progress XXX marketing year and our automotive C-store, for including markets. efforts

volume Solutions favorable. backlog, and and strong C-store. in was by Order and XX% levels basis at remained cases for with a Sales selling XXXX, solutions. margin gross Following Refrigerated the increased We Lighting in was we growth XX% short-term. realization sales increases prior and offset fiscal continued by impact continued above to QX activity vertical display these income both non-Refrigerated Display the fueling led are quarter. expect above improved the orders verticals operating current points also the is pricing price fiscal in the remain Growth service X%, with stable and year-over-year capabilities. of at leverage multiple improved and healthy in QX the increased last Overall, food of a us enabling and enter graphic to impact demand favorable grocery inflation high-level, for driven print increases was of for the segment year. increase year Performance same-period XXX price The XX%. in

Rico. site a for installations Puerto initial completed we And QX. change in activity throughout will global oil QX branding company install In continue

driven by customer we were of our improved all major driven backlog continued was year year. XX% Mexico programs at in above margin addition QX display for strong our digital pricing In remains last QX board combined QSR reflect install XX% across for and started proposal markets solution Solutions the by quarter for and project activity activity have our expansion, regional These menu with Display mix. vertical Orders entering our partnerships. Canada. is the in our gross above high-level. customer The ongoing programs a improvements last on Customer

we LSI to as earnings year the margin and continued rates fiscal favorable For compared period growth last looking-forward, prior to well. and year expect in QX

debt allocation priorities, our and growth which include cost in continue investments diligent, We verticals, managing target initiatives. on to and focusing be reduction capital sales

I'll now turn back session. call question-and-answer the the moderator the for to

Operator

conducting this from Our Capital the will ahead. Instructions] and Ladies Accretive gentlemen [Operator be session. question-and-answer you. question of line Fearon go from Please Thank Rick at is Partners. a first time we

Richard Fearon

particular just that more are deliver net-debt now and at EBITDA these with confirmation exactly say $XXX X.X EBITDA and morning, what results over Jim here you and $XX and a making a goal very Jim quarterly you times million such in run-rate on so. impressive stated quarterly progress revenue of million $XXX your we EBITDA Good would that for and in significant in congratulations towards years Jim LSI million another ago outstanding revenue, $XX quarter. generate of million standing And and that truly couple are of

future lessons or this guess can as in thoughtful question is, would of are both know of to combination and XX types there about My situations to what have extremely very acquisitions LSI that, in that avoid applied corollary how products now LSI it's acquisition been JSI organically I successful be -- about I since just future? the that that May I a business you're the chooses ’XX, M&A. and months being via to likely businesses grow

James Clark

a Well, participating us. JSI thank for great comments I in Jim was for Thank you and Rick, call. good for Yeah. morning you today's Clark here. the mean, fit

Using we need because a It some Whole fit. saw some be a a markets that very ago number we're JSI markets what goes Market grow, Fresh disrupting or those lateral in. that that market-oriented depth in can could way was of call expansion expansion will markets stated mostly the the products As of verticals and you kind of number this a as you in few those offer we of was market if particular in all we we the the of had we of had. either to vertically the do we grocers we and we us of the know a a to real Foods of looked within services going grocery back to we of expand thesis, and were for vertical depth XXXX. of looked this companies kind the and grocery years with that a In help saw we're would reasons case at disruption the or the and natural early traditional horizontal a believe or

of company we had lot does do company and it Not didn't proven say, have that high, require something our a It what looked with but cold restructuring [indiscernible] only saw did we lot good terms culture with behind it, a of things. fit it a of the of to those in out. see like ratio had, finish JSI momentum that type a

very well. fit JSI So,

to want look to to businesses we continue keeping through be us, we like grow M&A to Growth organically fit are filled us. to important for that. we'll and important both But funnel to JSI did think that profile continue continually that very to and our I for going M&A. looking is companies want like grow,

terms likely be our I from field things In companies from. of have we away are where would that potential avoid. that in investment are definitely don't that think that the take left mean, things the growth mission. for us the we or segments Things off wherein. the would far stay of would we or I Those

Richard Fearon

have envisioning Thanks, and that's avenues, drivers M&A opportunities synergies growth especially point. future LSI have are know you and team or you verticals feel -- additional the within at But up do I is identified are this from today believe C-stores. between it of the there helpful. represent you that business and, channels exciting that and the within other significant grocery And coming JSI that organic you most the opened

James Clark

early ratio, growth. I that about that We I very part, which that over M&A back quarters have candidly do a and a mean Yeah. but organic just about thanks we've M&A we a would a great about just organic. months JSI, the against double-digit talked five we And saying was be would we're we last had it. again the for going the fact it. transacted obviously on say executing XX mean do on having what and portion question high and to talked be would portion and going ago

balance is to we the there pursue so And kind and continue in-balance. that of keeping

a of we of some saw in, markets with at saw we of opportunity share to look to but that base the we vertical had to opportunity JSI, serve the some trust the had. When prior relationships, the you the continue each of years service also the we're like an customer company us

think Convenience So upfront and know in We programs and we going store us convert a you have right it, programs it we think about and number is those, the with is going market years talked had acquisition those environments, story this test JSI in to those we more. a in presence to we bring a develop. in C-store on of we service hope tests behind have like those we of LSI we and our and the both JSI we grocery it good stores big fits a sites that have to number now and a LSI can and in-line in JSI with grocery, we of very future kind -- in in have a to way just a stay compelling do good look did much very serve product-line both that to type of markets. when strengthens so those JSI of there, take

our both is and want continue through growth in sure growth, We us. to to to and important goal to in standpoint. continue organic that we M&A matters this business stay balance about that it's relevant through is to general make scale think from balance and have but So we

Richard Fearon

Sure for really the focused solutions guys come been have Sure, able example, [indiscernible] to with Terry with JSI C-stores, minds maybe putting excite Terry's your, wasn't side-by-side thoughts your with the verticals customers. that together new on with sort that that -- he up you for of approach -- two great I'm

James Clark

there. same involved is think team on Yes, but person, he'd of but mean, it leader what team a also -- whole I one sure just was can exactly another call and right-off visible I and to goes the if so. is say it's this of a and it's about folks mind below JSI, of could there's the XX of brother folks my of I'll It's very I think Mark -- is top XX a Terry highly that, Terry underline I'm say his LSI not a in thing. certainly is.

leadership with team happy, behind very us. we're strong it’s So just a good

Richard Fearon

both similar seem know. to part I leaders fit of and be is But magic, very that finding the cultural

I guess to might acquisitions? thoughts or share issuances for versus so, Can growth, utilizing require some you capital back stock about And additional investment. some relating that equity currency that inorganic

James Clark

public sources in execute to Yeah. plans. what to with our want and and I What forward same mean -- a the growth I obviously, and this that keeps retain against a conference we're think of sure to company, confident continues can that make sure being in so our and people to executing comes do at want and right? to time us comes we burden opportunities invest uses, we terms it are invest in share we serve how down those There shareholders and to interesting. have investors our the we in options story the go-forward are make big speak we against and

So my personal around preference desk. is always

equity with I is -- it's that responsible we're making fits our act use. first sure do free-cash other strategy times, We ratio in stuff talked -- at with the of to to, that debt us leverage that that see our our on being times it but pay And a right to think this below down that to our make for something you flow table calls. use and to it cash of ready We think JSI the about and we with is way it's to we that's to front and we're us. down, sure X.X ability X.X the debt move in in not do of do want terms now. opportunities here not want but continue we've I certainly quarter piece into it certainly our

Richard Fearon

but run-rate I -- the to I sense. calls arrow it's it's on I've kind you it's quiver look -- conference optionality, on you consider which $XX That that just which, on know before, last growing just to of XX%, enterprise undervalued a fairly makes declining. stock if question priced at -- seems Both common now down know gets twice this instrument when of price some on have this million is net-debt with you another kind the will only EBITDA of which above $XXX and really and gives trailing mean not It a quarter-after-quarter my revenue million XX month I million and asked $XX of grossly what's now and $XXX I unfair value that been trailing we that. almost it of that million business of EBITDA. around

the that a is market learning still is about. this story So public

I think micro wealth is ETFs, invest incredibly just doing coming who the are stories days blind through these management coverage to anyone space compelling research small which in the inefficient, it's it from this. there's in and microcap caps no business incredibly like

Board know guess reducing are thoughts $XX a of debt, about or I looking there been so, recent an what at you're events XXbX-X is stock priority activating buyback share of for the repurchase still authorization current And with program that order your of million that? sort I has --

James Clark

total we about maintain decisions. to our Well. of And sure and relationship what's be we continuity shareholders right? that return, there It's the and smart be for shareholder make always for want making -- best do

big year very capital we example, use an to completely but landscape a spoken it that LSI a we a earlier to is of -- opportunity agree responsible they're you calendar with in certainly we think to look very the it’s invest doing, want something manageable our companies buyback. pretty I've levels. impressive. we I this And year what's you, program grow, out program, you that stock as look there. the committed I across part before authorized when we're As can landscape and willing that say, our allocation bring And and have our debt earlier we having to program, that did well model. dividend Board saw a authorized with down And this to to remain it be do

considering our quarterly, assured just put review certainly of this you we what we in best we're best It will to we're point thought, just return against say things and the that in-place it. for committed doing say to be fact we money it this I our And it creates the that yes. it answer that [indiscernible] if can can back so is constantly would seriously program shareholder that we execute effect do So don't be is, is I aware we that it. -- happens says and put the just we will at the

Richard Fearon

That's synergies the fantastic value sort has extremely know another helpful, over full-price, opportunities the as that great price, you hard creating you was of JSI us It's worth sheet of but that at. what as quantify, mentioned at pretty cultural that bringing it's look what opportunity opportunities, future is acquisition, for also of were which at and very example Jim. Thank and sort assembled is exciting -- I landscape And immeasurable to fit among team you. seem as the at the business of the at think fair JSI off-balance it then here is and trading you bite makes twice a the many apple, the trades is on LSI the exciting. but

for encouraging thank Board way So there And quarter of our a authorized you yes, I and this own stock going-forward. more of business hard to the work within repurchase to are of that your for it own and like again thanks opportunities thinking program.

James Clark

Thanks, Rick.

Operator

Thank you.

of from comes Our Dayal question from next ahead. Wainwright. Please go Amit the H.C. line

Amit Dayal

by guys. the Thank Congrats Good morning, quarter you. way. the on

about going-forward? and commentary stay? improvements you here be could Jim on for modeling these to whether are stickiness improvements, these we comment margin Just on should how thinking these of Any

James Clark

for -- convert that, done have think now. equate very sticky, -- forward our comfortable the is right Yeah. to make with the kind mission continue looking make make effect our a of two-ways a margins them I progress is that. and comes we to producing runway that that I room relative ability it that think lot way, to to left -- when our efficient that to responsible there's it mean pricing, manner one creating the value an for we're in still productivity I we're we we've on customers look that we're that. And and in to of They're we

and think demonstrate, team again, I years The partners the we're been of we we've to the second delivering couple but value. is, the that a And that certainly able to that it's we've people, are. able demonstrate products certainly over been last

I them can do And runway believe think still have do I we some where believe of I so between they that the two ahead the we -- are that keep and of margins us. that

Amit Dayal

the I about of segment, How these you. and the which seasonal the but grocery know the thank should in given for operate the fourth expected calendar we is Okay, regional fiscal stronger period some quarter quarter guys -- than results maybe think next first-quarter? given et-cetera, channels.

James Clark

Yeah.

it, And I plus anticipate visibility into don't inquiries a as QX was months remains slowdown Orders on don't any we coming QX very we our we're we strong remained of visibility. we're strong our backlog So, right have strong, with strong, six sometimes remained do quarter, happy quote our days said and remains call, activity strong. or XX will last tell anything, have even but now. we XX you

frustrating that we're don't understand which which lumpiness and and visibility. causes a continue thing truly I how don't permitting causes now the some forward type of those most frankly relative things of do permitting they probably persist slowdown with but right to dealing it. So in-construction our to I issues is understand general

We still issues. supply-chain balance some

that I’m few my our think up a stronger and have noted even for the in stronger is been where much much ago, but with happy have I component that supply-chain. one singular jammed it that just been digital you been would it even hadn't was, program minutes very that would in comments just

us outdoor some activity consideration, does those all starting With -- our weather our still cold Thanksgiving into all have of of now, QX. things the Cold in those a business. factored winter things. of I with we But in of in vertical holidays to fairly those seasonality expect strong have markets, things do type Christmas fact kind of with pretty through some some affect

Amit Dayal

X% Projections rest you. for are in of strong. the of think we annual so Thank XX%, growth. How year-over-year calling given is you sort delivering to year growth, are Understood. or about X% XX% the the percent coming the estimates execution consensus should

James Clark

a it's question. mean great I Yeah.

I I list didn't -- got but saying, to four it top still dealing XX years we've that is two, with we we're have was and I narrow think as permitting down today -- we our that deal supply-chain things the with ago.

So to where that we're our ability they to hadn't continue -- about cheap, harder, to comps where quarter getting historically more important I $$XXX million never to $XXX grow it's we is are get million have ever. something quarters critically difficult. the we talking But that's us. mean broken $XXX million

I grow. to feel about ability continue confident our to So

double-digit, factor-in you keep these we goal quarter-over is basis, sure. certainly Our that's raising -- have a to for comparable but quarters could internal on bar do the we're certainly

and we On remain be are commercial just we're the on. continuing some and working in people country. through consternation thing on just backlog always are understand staffing growth every and there's optimistic it a and I remains city-level about strong either through path But across a markets second mention large or know so still we're in a that, handled to seems or vertical at like our causes whatever the that. massive And the take permitting electrical while building overall, and usually those folks often that that don't projects issues, things some it that permits state to is that just the one all like things that once

Amit Dayal

Appreciate all That's I Jim. for my questions take you, have I'll Thank it. now. offline. other

James Clark

and for for thank thank questions in. calling Amit, you the you

Operator

the I gentlemen President we Jim question-and-answer like to end for turn you. to Thank have would comments. reached the CEO Mr. and. and of Clark, Ladies session the conference and closing

James Clark

We're ground second just I the the would the we focused we're about very optimistic understands company very continue team, guidance sure -- that of right just to I is that to on happy Everybody the create remain with behalf lot I Yeah. and and very momentum achieve we in of the a in that results growth. got think making say first-quarter. the under a results, company of We quarter. the of these do here today. opportunity to of it's our now, on return can covered lot grow unique to good important what us. shareholders cheaply we've very we're would all behind

for with to holidays but I thank It's to you Take that little just call. we'll in. to calling our happy online a care. say So want next everyone and early, look-forward

Operator

you The of conference you. Thank participation. your now has LSI concluded. Industries Thank for

You lines. may your now disconnect

LSI Industries (LYTS) 2 Nov 222023 Q1 Earnings call transcript