Earnings call transcript Q4 2023

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Operator

Greetings, and welcome to LSI Industries Fiscal Fourth Quarter 2023 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

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

You may begin.

Jim Galeese

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

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

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

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

Jim Clark

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

performance customers agents, team now, the partners we of X,XXX so efforts also you’ve of for to members a strong very effort along last solid network the confidence to and or vast and performance, thanks and we strong and few is year. our LSI. work our at the seen As the over serve. thanks the of likely number fourth It’s by the with close a years, had quarter and This year’s

of real choice high-quality and contributions a LSI journey LSI. of and many prouder partner their of help that their I in milestone so be could to agents history in partners help to achieve be customers, grow. business us Our the deliver not solutions trust of the

of in than wholly finished we we financial goal the shy I’m over as million and million million to X with published of company as quite ago, year that an of developed a finished years goal company a struggling of in debt years that very in for $XX we X EBITDA our free being that plan. about that double-digit million million have years a was the we EBITDA million. met $XX and million position EBITDA, year earlier a to just a $XX $XXX say our and We reduced full cash over for this did strong and and just Just sales XXXX. to year we of performance $XXX flow just $XX about X generated net $XXX accomplishment hit It’s happy ago.

we of in which isn’t we’ll call in As the hit folks and of a our plan sales sales. on published Fast you floor doing road our team, be plan outlines ambitious operations $XXX team an in original plan. get management plan it team. nearly updated we of with through million back time, in March seasoned But million It as right advantage many our The performance and team our to manufacturing this in $XXX our sales million EBITDA XXXX. $XXX to Forward map know, to

in on it their markets customers others. designed c-store, variety us in sports vertical markets, serve grocery, as cannot catalog And like of to and businesses. differentiated. M&A. Much commodity our it goods continues our zeroing organic growth It offerings original them initiative balance value and among services and manufacturing, those those that on are to and activities and way our plan, are strategic provide courts, to potential they allows through run and vertical high to deliver for markets. a focus a automotive and of goods a services Those developed that calls of warehousing They to and such help

years, spotlight The and product allows been year. solutions opportunity the less award-winning than regularly more every X and our was LSI past each our the customers we REDiMount introducing canopy to Over have installers, our install lighting efficiently and more XX REDiMount. year, products the time to Last our new them. and with cost

service in it vastly allows addition, and which our relationship customers everyone for it creates process benefits. In installation with simplified and long-term a upgrade

chemicals. of pace introduction again This year, products refrigerant that more ozone-depleting virtually in uses environmentally of from the ozone-depleting XX an refrigerated a footprint friendly, zero away a with man-made move continue no we next-generation potential. no refrigerants with and will display our warming new XXXX, into than solution development global has solution This product will innovation gas being that organic that and flagship and

generation We solution this R-XXX and the the an products of in QX adding of Maine now house are with facility of manufacturing in first that process additional taking XXXX. orders in QX will in delivering goal

$XXX continues to interest orders country an back, ever-expanding the X burger the install of to a division chains. fortunate board menu gain to project be for one of digital digital outdoor Our quick-serve across in million boards were awarded base years customers. from world’s we largest menu

supplier made quality manufacturing significant design as not manage We ourselves have customer partner that but a project a project and support. installation also can very we’ve solution, name wholly completed the with and and satisfied post-sale the that the management, a of only and for

provider. like revenue ongoing and oversized be has activities recurring And order customers done Chinese services, design to gap tacos. chicken, team of I’m sales associated happy done there ongoing outstanding that With our work of remote to infilling by that, an just small to variety of differentiate management and $XXX once from job content – project, award a with a burgers With solutions lot to say are the but ourselves and fill million things with complete. have of a as that as revenue food an to company doing this a continue growing to full this we we have a

vertical to think to place will continue and solution, displays we excited our of other marketing a strategy. very the this expand run, in areas long digital We’re in find

innovate and Lighting product expand advanced offering. always a its division robust and been offering. solutions. always lighting indoor continues has known Our very product and But for had LSI services control it’s industry-leading its outdoor lighting to also

ability and to Our the LSI, pay deliver these customers continued investors. has to to markets dividends our we serve solutions vertical for our

runway We believe a of has lot LSI left.

in folks team lighting, base a that to of our refrigerated We and service project have and digital continue our solutions. growth solutions and ready displays, print management are of expanding

flow. strategy confident to in market We and well margin opportunities seek cost manage competitive out feel our a and and continued a forces. while have is grow and to thought ability and plan to that changing out price, We conditions productivity managing cash adaptable

the that, With Galeese, who on to call will and additional turn Jim details provide our fourth I’ll over year performance. full quarter

Jim Galeese

Improved with $X.XX, earnings increase. Fourth drove fourth combined EBITDA $X.XX, points reported quarter for compares last $XX quarter $X.XX A $X.XX. quarter. respectively, This LSI. fourth last In and the per capped and XX% Jim. income for year. fourth XX% QX, million year EPS a year $XXX EBITDA margin above at a were the effective summary, margin lower you, quarter in of realize profitability of continue solid successful year-over-year increased business XX.X%, prior adjusted basis operating with adjusted sales The adjusted of generated above tax share to on XXX year with Thank million. expansion quarter to rate

The reported lower and tax EPS rate $X.XX EPS. contributed to $X.XX to adjusted

XX% Full share full million, million. increased to XX% fiscal Adjusted XX over sales the basis share. prior $XXX represents considerable growth. EBITDA to XXX the per $XX all year. over adjusted year-over-year margin in year, to million, net $XX full quarters earnings year points For increased increased This year rate improvement the per EPS to highest Adjusted years. X% representing and adjusted XX.X%, EBITDA expanding income showing company’s to increased $X.XX with

year efficiency free was earnings Cash fourth and $XX year flow quarter of throughout significantly million. flow cash million. capital approximately positive Our generation $XX working with of improved culminating full the cash generated

was organic XX debt flexibility initiatives our by allocation XX% We applied net X.Xx. of million, ratio the of trailing our level reduced to $X.XX plan. X the outlined both for per Lower the to $XX lowering as a debt. cash outstanding EBITDA reduce in to to August adjusted was dividend cash capital payable flow last of months sheet was share shareholders debt of debt ‘XX regular XX-month over in record inorganic priority and strategic A pursue XX. fiscal provides growth in balance X-year September updated to on and declared, Strong

increasing growth markets, in the warehousing continued on a sales quarter with consecutive particularly representing period. QX compared healthy few and key activity applications, to of Now in the automotive. ongoing X% Growth our reflects growth prior ninth performance. year segment vertical parking Lighting comments

achieved in growth XX%, fiscal applications. ‘XX, lighting increased indoor year sales with outdoor double-digit For and both

vitality the XXX of basis Our in improved markets gross assessment quarter improved The these and to year. our expanding taking margin is the fourth the lighting are combination and share above to that margin the outperforming overall XX%, full priority rate rate a of position points verticals. in we XX% key last market, year and

with We X. Quotation Level Steady ratio favorable a a and level entered above high book-to-bill QX were project fiscal ‘XX a with at bookings

but We large in slowing project and projects, some remains small healthy. are medium seeing activity

modified, and holding experience constantly because quote-to-order committed release. product and budgetary conversion of to periods, projects, are continue lengthening financing order These delaying are but specs are final We being these but steady. purposes, requirements

vary by overall costs commodity, pricing. aligned input costs but remains with and Pricing material steady input remain

expected, quarter our quarter menu peak the As Display the year fourth board period prior as year was large declined digital versus a Solutions prior for order. sales

menu improved with drove XXX rate and space. and reflecting Full enter refueling sales. margin the We improving c-store QSR to basis but gross Solutions market and XX% digital inquiry margin and in Display and increased Display customer active pricing, and XX.X% realized income sales operating year levels points particularly initiatives, the of excluding when year X%, branding expansion. improving in of income with very the order, sales verticals. grocery fiscal along ongoing board significant ‘XX c-store The program expansion increased higher-value the for rate increased image Full the strength XX% refueling operating rate with applications, grocery, investment mix the

are very In in experiencing high product new addition, scheduled in for fiscal launch case interest our refrigerated-display of ‘XX. we QX

We fiscal taking shipment fiscal beginning in will QX. for late in begin QX orders

The market solid was commercial our positioned LSI. efforts In fiscal on year effective continued and is enter a and steady margin this healthy build operational We a management. success. it ‘XX support and strong will fiscal at well with summary, execution level to for quarter

moderator. return the the now call will to I back

Operator

your you. comes Thank Instructions] with [Operator with Spychalla the from first Please proceed question. Aaron Craig-Hallum. Our question line of

Aaron Spychalla

Jim the questions. Yes. morning, and Jim. for Good Thanks taking

just then And talked half. first the Can stronger the more be First or bit evaluating and seem half on on you the more for FY that little of good Can that you you than from a go factors customers talk at about into factors in in, deck, CapEx a return to that? looking being you’re investment just Display paybacks or insulated some the about second projects? other trends. when of other just I just macro of the saw kind have me, about broadly little market the ‘XX and versus talk that Lighting are had

Jim Clark

external Thanks others, shielded getting not around we’re want morning, any we within everyone. and would picked, we the and Good this is those question. as markets, to respond things vertical less their also our our in how add mean, or they call. for based Thanks on to customers’ them then really be vertical for And how of before to look and more strategy to markets improve form Aaron. the we help fewer macro as as kind anybody and we’ve And any we businesses a more we from opposed else. for of function overall to business. can talked But anything selected pressures to kind than that. Yes, like I value something

we’ve picked will. not but with are more They’re resistant, that. that aligned they’re markets you if generally the So immune,

so. the just thought the So in on just that’s out markets And this that that their across invest look solid are and interestingly to move as or over longer-term of of fire. We grocery – last vertical will X customers these kind at plans. enough, like keep and been the you strategy has will be a a through markets our but automotive or cycles still years c-store pretty to proven or

the in strength and half minutes it some for to mind going I this introducing mentioned products top a few the is the terms newer we’re In be at ago, probably of just us, of of second demand opportunity And have and of a have lot product we think warming zero of XXX-Refrigerated introduction solution. our a with zero it’s ozone, global is it’s contributor. lot a a going it. we year to

winter say being in then we we that I QX or lost QX perspective second months. have such little a of participation. lighter months just are lastly, seasonality a would participation, real interest It’s And installations demand seasonality anything. the now winter reality usually got where right have bit or of driver doing reflect half. numbers It’s exterior So are the you’re a do the during these aware the see to nothing on we’ll deals from us. and with as that or growth the But

Jim Galeese

And Aaron, it thing in that quote-to-order The about continuing. only Galeese the QX mentioned I very to and we lengthening that, is Jim conversion covered thoroughly add here. is started would rate Jim, sometime

of a condensed half first year. bit that That from So stabilized will the us in will the the affect by half. the the and second norm hopefully, door be and little more out

operating that So in environment. normal be a will more

Aaron Spychalla

That date, FY obviously, about and about more Right. runway on just bit talked a And think makes there. the margins provide some levers progress then great sense. you some and to just might that’s Can as how second the Right. we little you of of detail left just job, key on ‘XX? margins,

Jim Clark

a good know like Fast our And is set objectives. think about you I good goals we’re plan on our the Forward we that and Well, how up to indication pretty of planning. web

the of are from we things we a some gated of things procurement commodity do lot moving those pricing, We things operationally a of down. kind standpoint. standpoint, variations, But have from are number can manufacturing input a still feel a ongoing by

not are our things company good bit a feel Labor externally. still I good, it’s is much very been up. still bit a doing with as very it’s it, mean unsteady. and really moving Some we we’ve as but unsteady. within just And

right outside. implement timing so and want and the that is you’re programs things – while refine it’s do And continue not trying implement to some of raining because to initiate to we the are just it’s

when of better wait runway. but those stable, – to And become plans we some say we implement when that I for just to more it’s more So things have have the things that. to

the We I to a stuff, I’m performance from margin And was issues, allow can of But just do couple and partners we’re We things plans that, us to and think the that. like more stable those. incrementally there’s wheel can teams, reflected think have things they’ll bit we talking just things. see again, little and efficient implementing our implement become installation the you about talking like permitting another external turns be if that I’m those of not and more margin. in internal, environment about

Jim Galeese

Aaron, one particular – has by expansion been we’re very driven our not been margin things element. one about very of balanced, encouraged the it’s

certainly has volume contributor, higher a So certainly that. applications, the been higher over mix quality year quality so playing into last

of pricing and that. – of customer the value program, lot really spend this right on to solutions ability recognizing providing representing the the and Our we a getting time we’re by

And pricing. sharp on we’re input material eye costs, etcetera. of our costs, design lot on always So a time savings, we then a spend keeping

to the driven over margin we’ve to now serve couple contributing last the of those all years. expansion So

Aaron Spychalla

But Thanks just just of maybe allocation flow generation Right, kind an cash that. You down and mention debt pay last organic inorganic. continuing color over maybe saw nice really for X.X years. you the and And there. to on more capital right. the of Can last, then just maybe some update priorities? give the free

Jim Clark

going the to any we’ve see models our Yes. that I don’t think you’re in used changes past. material capital in

us dollar see time. inflated from any are that, radical to that a standpoint, for past be you performance. going with we But of some cost to our just to beyond think some way general and I don’t give changes inflation the the for have total things

Jim Galeese

see Our the intermediate priority items. remaining short We same. the term in Correct.

Aaron Spychalla

opportunity I anything the then And much new kind of improved? that Okay. with you think outlook mean, M&A kind we as anything on balance of the sheet about

Jim Clark

thoughts in what the think a mean – bit lot we the I this, think now. have talk bit mean is to opportunities. now. environment I’ve water in Yes. that always about. the environment a know oars looking but said for always I’ll better a it’s of the think I is right say I – just tricky on I’ll past. there’s a right our We We better we subject

owners business businesses a ongoing our think with of their in. faced I stabilization and continue how struggles lot smaller faced they with there’s put of to want are or much to

the multiples. you’ve activity think that ago, us a of did of a But these like as know, year I stratospheric of while. a change slowed the for And as our the better tone capital in than been level and you cost today some and down lot is such conversations strong. I following I

disciplined. very We’re

and into not We’re has fits value perspective, just from fits it buyers and how our there then the but it be got culture. strategy financial our how disciplined to into a

Aaron Spychalla

question. Appreciate that. me. it it for That’s Thanks Right. over. Right. I for the taking turn will

Jim Clark

Aaron. thanks, Okay,

Operator

next Gianarikas Our line of comes your question with Canaccord from Genuity. with Please question. George proceed the

George Gianarikas

our taking for Hi, good conference last for thanks my questions. Thanks coming And week. to morning.

Jim Clark

It great it too. morning, and thank Good thing, I invite. the conference had a whole was Yes. George, was certainly see you great full dance and appreciate you. card and a We to the through

George Gianarikas

That’s hear. great to

on start, macroeconomic just couple So the maybe of environment. to questions a

in changed with saw you’ve issues mentioned going quarter swimmingly. so last seen last quarter different issues consternation the you’re of character sort about but same that signs that a the you of you rates, it expressed close as quarter that the expressed Or the – quarter? – You is also some that things this of customer changing? some is you expressed seeing of marketplace the you there – some – and some that just the last address there character seen these issues well. maybe about What Are you are weren’t you’ve – about small are that has seeing exactly issue

Jim Clark

Yes.

is it’s project I’ll of First not word, It’s one it’s interest. up all, just activity. sum not it – It’s quote activity, timing. in which not

quote of that those in activity request rate remain actual if down and had the lengthening that And And the final the will, the in for by and on of been will, you the years, final – that you has we’re the decision agreement has things you those the initial we’ve seeing general, the a between of All on lengthening. the couple last same and a lengthening if increased if for What then, is the will. of discussion. quote execution pace the process, kind quarter-over-quarter. project way, sit project

now, indicated were at It’s if we stable that kind arm, They – up closed have from that but that XXth, that through our we XX. in right closing a I saw a traditionally, will. we systems just – an note are just things that the to brought closing planning going June you XXth. extended now of close close things July And until in XXth, it June on we perspective, on thought on timing sense are might didn’t we happen May or –

projects. We are any not losing

We that once we where forward. okay, point are we that to get are are ready just like, seeing we to move

I our the order We okay, lots have factors it. are we some give a of just think And purchase you of lengthened time has just noticed me let base that in between, there for is bit. customer done,

things releases funding there of that. things in be think them reasons lots are is external. could There like it. of construction. and are I new final They for Most like

to of when more get up a have timing tightened banks you in developers When signatures and process just labor couple paperwork you in that, to the get all about such looking taking as even number done. subcontractors project at going. a some know, and for – just the are internally, the and to talking external things keep are that, issues, As people either are it’s all is checks like and the the cases, like we remodels we or

have So, want it. overplay to transparent, fair, I mention and not I it. we always of to just just we do very think kind it’s wanted been

Jim Galeese

remain the George, sound. very key verticals in of secular some our trends

And to If at receive remains to refresh, grocery, level strengthening driven you by image branding, QSR, things. look we that’s of with c-store, the two respect fueling inquiry healthy. extremely continue

to factors, of their things solutions our customer also R-XXX are experience competitive the for and continue environment look so where We consideration with forth. more into, as energy-efficient environmental that’s plays but

that have sectors so they invest. are these very have and They done continue performing well. financially, very been So, well to

these it trends to secular some as So, key to then just we in pretty remaining healthy verticals Jim’s in see some – our of timing. comes point, down

George Gianarikas

Alright.

issues, no just So, cancellations, so timing to speak.

Jim Clark

said, this, but spring an have and track right. in up final it’s Yes. It’s and of just science through because from initial We to actual project hasn’t and but it’s of manufacturing we to to right I at an honest, accordion. order be an be inquiry it extended And – and I just a anymore, an now bit look that we And lengthened expectation development obviously level anything, of we delivery. have and popped not – like to too, candid kind not perfect seen or have the It’s spec to kind – order here. want little extended. It’s to then extension.

in an are things compress us, phase and on extended We so. can then

George Gianarikas

And how are maybe think issues time? is had last that, the with Alright. getting that, quarter you expressed before a I on environment, permits quarter, you some permitting

Jim Clark

Yes.

that stabilized. that, wholly think I has

a And at Canada But just yes, still for issue years But now in norm may permitting it’s just just time that’s has Mexico. or there. it’s it’s domestically, stabilized. norm that extended But very the now. – an down are the new states We less new months. of in right be the

George Gianarikas

will help kind a You the gave guidance can you you as discussed to you whether be bridge should ‘XX qualitative am to ‘XX. previous think ‘XX, curious year? I – ‘XX We fiscal question. us growth of do some around

Jim Clark

are we one month the right year into think now. I

two-month can will that – know lighting, me is on premature to limited have it I tell actual some – think that I that guess for window or we I from ‘XX of let’s that that more on that talked I or kind don’t display it’s in the ‘XX. we timing to side. order. that related but do you lengthening expect and I such, So, within visibility, And has we signs forecast that quote positive in timing say a think have, I construction the limited with to window schedules say, remain about

see be days, timing-related that ability overreacted issues to So, at concern that XX XX worry could that market And I I the any pick off don’t side days. what continue that pushes up to will our the quarter quarter is something next in about see grow. about in public is do one I any given time.

done kind going of keep why don’t the it. that’s I where of – But anything So, reasons see anything we off too see of us us are I we mentioned take going. don’t to far that’s track –

Jim Galeese

continue the to We will feel confident, we market, right. outperform

So, solid the our feel point, the quality also maintaining end And wherever about as being. well. to may market up of Jim’s we earnings

George Gianarikas

segue look great my you the regard to last you to does question. a M&A targets? That’s to at much With accretion environment, matter when how earnings

Jim Clark

kind work a that, like that you have mean think team accretive something focus right demonstrated but with of dilutive certainly create that of ability tell to and kind will to from we the value, beginning. are would also I management I with Well, the we I on things is

we that might be think would anything that would dilutive. be would do initially we it consider that I that

not point that it a long. much at of that accretive, we assured, something paying make to and You away accretive will plan can some accretion. are make did If not too we sure too washes we that be we take have premium a want

mentioned or just of what maybe are There tell look disciplined metrics, its but investors, into we at we orphans our into we we try strategy. are I importantly, no is at you the to performance question, how look will. our sense I don’t don’t and culture. would with And is peg, as fits Aaron’s just force kind lastly, want we hole, then to square having our it at We matter financial no you to is choosy. it round it look what a if lastly So, strategy. not just And take

by factors make I are those underline So, all of our with am now. decisions, I just – the right saying but help disciplined would environment encouraged but and we

in general maybe things. on results, market the I or is based based more our think maybe based of those all of there us, on combination on a front of maybe

George Gianarikas

it. Appreciate Thanks.

Jim Clark

Yes. questions. George, for the thank you

Operator

of from next line Our question question. your Sameer comes proceed with with Wainwright. Joshi the H.C. Please

Sameer Joshi

guys. Thanks Good Hey my questions. morning. for taking

have couple battery on that The disclosed dollar the a opportunity the terms facility you Just orders. of going scope order, in EV manufacturing forward?

Jim Clark

like say what it’s represent I improvement anything. digit, would haven’t, to a We in or our is quarter any single it doesn’t double-digit

We that of wanted are excited a on about and it, roll-in to and type But roll-out we constant projects, these of share news. we basis.

are that the of order, that. also that a know been large the I our that while backfilling has so, like think against executing of I you hits there that delivery number projects project a project, $XXX we around digital like all board executing year at questions or over last million menu it’s Well, once. were we

like trying facility, the we big the have see level. And a in we not of locally. to, pride project project, community that do concept also and because are only that, locally, because but make our how wanted a and participate of, we a to same composition are when wherever it of we their a EV want outside for like West was a facility, way region, also sure that Utah local for are extends we the maintain the within the of the in work extends by that, but it’s project elevated we way, doesn’t Ohio, big But so in delivering employees Ohio level. area. to we what that that of have those visible okay, note buying to consider you our Coast, on this order spike of to in Ohio make see allows rise to to to and Texas to project, a immediately whole But that our customers we the that like this buying turns The EV attention like people that

to And were be on it. of we why We highlighted X frank, now. right that’s So, It’s completely are excited that we about project. sizable Phase working it. a

will have. the be those there big anomaly get. where level doesn’t maybe rise else to in one we it It’s something just we or any larger of anything. quarter another But the So, created projects

Sameer Joshi

few Thanks capacity the Is is of being planned is expansion or Understood. just it on that any And side, is significant that, there there display million for that. underway. CapEx dollars? a involved already in the couple

Jim Clark

we Nothing million the of got first within plan that. one was – But Yes. and it’s prior – is things of dollars, plan, it’s consistent costs or I the significant. adjusted first of questions our minus already $X included like it couple or capital It million a for inflationary and yes, it’s and not remains our around so. kind and plus our again, with year’s think

We in been years, up have this. staging have we our for been prior –

So, there new facility, are that incremental been have made investments facility. has one just we into we now consolidating

Sameer Joshi

time see ask Understood. just How do mentioned delays? you in way your delays. is, few these of And any a of does then capital lead terms impact you delay, operating things Another requirements? question because and on working to impact the that profits OpEx

Jim Clark

any I mid-single they digit No. significantly, think normalize. there They don’t rise be would quarters disrupt if quarter quarter-by-quarter took adjustments two to could together, on a the you they basis. level But a where but

Sameer Joshi

Okay.

year-over-year. leverage in of percent And be so – expected to operating a will words, expense In should operating the…? should be expect lower we other be as revenue

Jim Clark

the so is I yes, – a is that think that things against do mean can efficiencies our see year, you those a up. I kind is is timing look that’s pull, execute of still that you just opportunity. lot And ongoing can there and think the of there whole, job on XXXX and we of lot still them. steps that Well, I levers one to that Yes. of if a incremental at we create this And to right,

Sometimes are improvement. steps step and we it look continued step you and we basis, a see But can if aggregated on taking forward sometimes half forward. an two are you that taking half at back a

Jim Galeese

in that are add just flex. there operating they expense, will I Sameer, do variable so costs some

agency So, you like if things bit commissions pay go because of down somewhere, a it. softness is don’t [ph], there

with line manage able our we expectations. operating margin will to – So, in there OpEx is be our

Sameer Joshi

the versus from Understood. of And the – then lighting display. rather distribution or contribution

quarter, – the few from this And better proportion if that does around forward? in expected going imply so, it of had a revenues quarters? you lighting. gross Is think that margin trend is I XX.X% next

Jim Clark

statements the I making in – lighting about and more a here, general, any am think of I sensitivity to talked blanket solutions not does. display No, has but than we that seasonality

always not of think it those of outside kind see range. go that will this in markers. going you XX-XX, I It’s to XX-XX hovering

time, about think display field, play a we solutions. in terms all lighting the are and between going XXs you If the of football it to

Sameer Joshi

And gross margin implications?

Jim Clark

regards what In mean…? you

Sameer Joshi

plus Because your margins and segment Lighting I are gross display XX% think are lower…

Jim Clark

Yes, much different business profile.

line other… I happens – apples-to-apples The and at the the bottom stuff between that the businesses, get in differences to capital look you look is in one a that intensive If comparison, you an middle – yes, than being two top at revenue reflection margin. operating the really think you the order line of the more the

Jim Galeese

other, lower the than OpEx gross as higher the but Sameer, you margin rate other a may a have has know. One

they as operating pretty you at the wash close. they So, margin, are bottom know, out

Sameer Joshi

in the Thanks that. have past. Yes. this discussed for And we

Jim Clark

of that a other different walk. margins you are further just they to are don’t structure. not and see fundamentally just kind – I to one It’s gross equal Just just comment. one businesses, different other the it’s ever going think

at That’s your income. important So, that I op measure. think line to look top true and it’s really

Sameer Joshi

last now? just is opportunity one. you are big is then And how that R-XXX, for this refrigerated display looking right big Understood. How that the at

Jim Clark

whole within fits still is you it share. it than buy we if portable magnitude could us think we market It’s take and it’s refrigerated additional bigger than leading I edge, – The a to technology lot for mean that bigger a a create that just market. serve. will, of I opportunity refrigerated display think we Well, the

Jim Galeese

And to the mobile refrigerated market display grow. continues

Jim Clark

To grow, right.

list. get us we going out the fight to bigger earn and door. for right to is. now, those go So, to market on take. the need – every get we And in demonstrated we stickiness be and opportunity once to we much do we once earn But to is new go not go do with it there We a good to out our always our customer very that, get – and we every have our have thing our is continued hold regard need pretty that, we hold than opportunities, amount tremendous job customer about have of nobody beating high we sure make our we out and to them. is the to customers But opportunity of going And is down holding loyalty, we be through is performance on and dollar. project to we still a and we – every

Sameer Joshi

my and for thanks luck. color that taking Thanks questions. for Good

Jim Clark

Sameer. Thank Alright. you, Thanks.

Operator

line of comes Our Partners. proceed next with question. Fearon Rick Accretive your Please from Capital with question the

Rick Fearon

menu and fantastic Jim Good the Hi. congrats board business. job nice morning on quarter, Jim, backfilling on and another

already regarding questions my couple of is product of I like get It’s M&A, a little a the versus represent. build regarding or And have more the mostly find. about R-XXX is – maybe acquisition mean your seems as to to to the just the you exciting into philosophy, specific refrigerants opportunity with buy security, considerations, some and question you up. extensions internally acquisitions specific doing REDiMount, Jim, hard now, only come new Just this yes, are good right what the are you success, sort

are to organically? seeing versus guys what So, on how side would will you the think interesting be accomplish hear growth you it you much M&A

Jim Clark

morning good joining and the and call, Well, thanks for Rick the for thanks comments.

organic growth piece our have a want M&A real and as and plan, we you a you if organic component prior look plan, the a XXXX this at XXXX growth fast led M&A. of look between with And growth and forward all, XXXX and In our of of and and in of First was that. – the XXXX, of our at have XXXX those both end contributor. execution with fast discussion close, are that. the sake forward plan, and for are real the to to M&A of organic make the discipline want that around balanced in majority – comes the They contributor sure but as we we We growth, organic still minority we alignment business. in plan

the able buy well-run us market, the acquiring the see but being our in very making market, not it the we versus In I make be side. is In equipment. There some are am business. we that terms security, varies not type of interested security security manufacturer, in capabilities. and in and want well-organized, – to are of I don’t that maybe interested security manufacturers equipment of fabrication in in equipment by definitely value to through thing, of plenty deliver a we security our metal right.

Jim Galeese

market. to Access

Jim Clark

one. increases but it group market we which to us to more management another really, our then about and our customer. to is Adapt And lot, is Access goods value group, our which a services just customer allows talk to base, project that our offer

in much services when to look goods something we and offer, have have but it as and it. extension the the as security, necessarily don’t see we design, we it own installation to the the So, like of we at an we and make delivery integration as

because into it or will we Now, have when to – of And use and we it are We say we engaged with segment, making already am not we are else, will and source in an we like the counters a materials that or this as we I – just would be somewhere equation example, make let’s going checkout actively – capabilities already similar do of It’s and closer do you were counters. lot lot but things doesn’t lot things reflect example. probably the anything. that I technology to that something go like are an talk use the as checkout getting that. that, about a anything that just going, a necessarily for a we anything required

of more can value a hey, we our because add of of already get at be look internal might start, strong that this but capabilities. a, can So, acquisition us a lot

of it changes at how So, might versus M&A on depending buy, and we make be. that it, that’s what kind look target

Rick Fearon

it That’s which Jim. of extensions When sort And about in I great is think like higher-margin you do presumably little of the opportunities as just that would correct I recurring of your into Thanks. product, the stuff customers, service raised there that – able – if is sort is revenue recurring recurring road. leading talk with like of the component revenue color, other right, benefits, of down revenue stream, might that, consistent not your kind are to me or with security my a counters, be then a wrong, bit certainly of to – business But but two with into a does obviously fall stream. really mind. but background, of experience, kind getting be question have sort but selling there communication checkout you is you that counters, of like – you sort the checkout but where category some other and refrigerant you a am that to

Jim Clark

a mean I that did great connection there. Yes. I think kind you just of

type market, counter revenue. checkout but be or might refrigerated is to kind not of any display some in fixed the service belt-driven right. and think non-refrigerated There really there I recurring it, fall is of more the

security surveillance. recurring you towards you associated in intrusion that. offer contact is a times, in them things a within go the look this their that, and a term a that in proximity lean at revenue you there we to customer. to commercial we are with tends hold zero is to seeing convenience put assistance. it standpoint, stickiness that partner And way However, a But the and on and market, there up contribution are and are something the to basis, strong you But our as and look when to months market closer security are next a and good at are initial from view many is you it’s happening customer, well-established for and on to no longer is recurring like from the or not listen, in able a or a that six the – on going things kind – want the more stream continue something. revenue meaningful often, the with But solution not act to create focus and income business a the only of business model of

triple-digit are boards It’s digital And our menu revenue a example that very good expanding to The And focused of we good we for model. start. a recurring ways on continue so look it. no are matter going contributor to not it’s that overnight, we quickly. happens going can make what revenue a be to it’s But or something not that be happen. there, income happens to and

we work, We and pick it. process we want shovel it’s And to fits to it doing have are going but going in within sure that of market be all our the are make strategy. to vertical – to

Rick Fearon

thanks and work. color additional the the quarter. for for Thanks great this makes. luck all That Good

Jim Clark

Yes. Thank you.

Operator

queue. I comments. like closing further are There back to hand would to questions the in for no the call management

Jim Clark

just call the get on after. want all for take to follow us say those I again or who the thank time you to Yes. of

high what has always consistently execution. to ratio. a I story been say/do refer as And about Our

suppliers, Our is connected to just we plan tells – our and I philosophy our our fast planning shows remains customers. And there available think and say/do it’s investors, are to ratio. just – partners available you document our what our the that it’s high forward And employees, there for a it that around and roadmap you a plan with consistent XXXX do. execution but that and and our on extends out our and also for website. published It’s

thank just with will for LSI you forward would and talking to on we following the of investment and I to you care. look that, Take next So, the consideration, say continued quarter.

Operator

your for teleconference. Ladies and you gentlemen, this participation. Thank does conclude today’s

You time and have day. this may your disconnect wonderful lines a at

LSI Industries (LYTS) 17 Aug 232023 Q4 Earnings call transcript