LYTS - Earnings call transcript Q3 2024

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Operator

Greetings. Welcome to the LSI Industries Fiscal 2024 Third Quarter Results Conference Call. [Operator Instructions] I will now turn the conference over to your host, Jim Galeese, Chief Financial Officer.

You may begin.

James Galeese

Welcome, everyone, and thank you for joining. release 'XX market third press detailing this a fiscal our quarter issued before opened the morning, We results.

At our Investor In also addition be certain section referenced the included conference statement, presentation non-GAAP posted about for results our materially. to call I call details. third remarks, we turn Information of questions. Relations involve are a conference fiscal the throughout risks contained our outlook. in we summarizing to management's harbor call presentation will this Jim Executive LSI statements Clark. you XX-Q. operating open Today's this of questions with Officer, quarter With the this could conference corporate website. release, will prepared appears measures remarks conclusion GAAP for press morning's call contained and which over today's and in results is improved opportunities more will Please and to in reconciliation President release and differ and release that line results. Such and complete transparency in results. of of begin on press Chief A call refer these commentary forward-looking actual our responses I'll safe business may note to our statements non-GAAP our that, today's the include for

James Clark

out that and quarter closing for on XXXX today's us our we're fourth Thank third call. fiscal joining Jim, hard speak you, as you morning truly to good today. into Thank believe all. and quarter well It's we year our of

year, for Things the adjusted Working to while execution are the quarter results related the team XXXX, still while these current basis. being and X%, some down the headwinds to and end earnings opportunities. XX% the away have capitalize the company prepared the our on year a team been over facing in we resiliency developing half through up continues to the we've operating fiscal total just year-over-year busy, pause developing are We months on on second of well. were sales to our our from X continued just only ongoing the execute XXXX. net begun management plans LSI Despite challenges, and income focus and for of vertical. These underline third a was grocery fully with demonstrate of operate

they based the out insight national customer LSI As This in and size has our products plan, goods value million has we the a operating manufacturer EBITDA the is This the as EMI customers This where verticals. our is and of store a for all position developed provides investors, more EMI and of ranging to strategy long-established our our of acquisition key acquisition component plan customers approach over the services. a our our our milestone. opportunities multiple several and published alike in offer known into intend XXXX. that goals week, A solution $XXX XX.X% and served aware, see for years, number sales the well million set last to and strategic advanced to recognize understand reach us plan, you and Forward higher-value our well for to last Fast in developing verticals, in we've customers. and plan, significant are in that its earnings, and company employees in by fast-forward sales multiyear Late can our of announced brand to fits mentioned additional grow brands The and we our this experience. as a is path services Tampa, target which has LSI with multiyear grocery, well Florida, The we $XXX identifying food to from the industry accelerates hundred of site regarding equipment the improved fixture and investment An a from years, cycle. history Industries. than LSI C-stores, they acquisition and have in several consumer in they shopping this growth image regional in and international base, and and QSR of previous well-established industries. sites. published in-store business further a of profitability. EMI to means expands restaurant serve to been display planned of increase EMI I exploit opportunities in investment locations strategy. and as further XX growth participants information convenience acquisition enhances brands thousands grocery calls, EMI positions as and take

culture discussed LSI before, when type always looking of any at to synergies an are commercial and company we've As important element transaction.

shown EMI Our stay a has plans future. EMI experienced last highly and to well the into with that team over board the months on LSI few with management work

EMI, are see X/X. In the and other of are to X/X terms synergies, of customer and X/X In commercial shared. about the about the customers of we customers LSI and new X/X of while are about JSI, X/X, combined new a basis company combined words, customers to X/X

opportunities identified across customer result, base. our substantial cross-selling expanded a As we've

in own working quick-serve and a was chicken customer thought a look combined customers, chain a both with letting fact, out forward of as and words, regards to restaurant business to know his this with large reach In do EMI, great In combination. he already, us common LSI we one they us to entity. had us they

quality and all at see these that but ability EMI production make to opportunities, we LSI of And EMI won't improve from Aside to we confident our from products believe technology whereas opportunities these perfect in capabilities they metal cold each overnight, and are fact, and refrigeration EMI, combined the fabrication work combined customer and capabilities our a and helped learn benefits together, in service will purchasing see combination, commercial share of both base. lower our in capabilities JSI EMI product adjacent other. other. integration and and and EMI will We power provide profits. and team in costs, fixture refrigeration We business. we today improving a will and can and JSI opportunities the with working and number customer help JSI and JSI capabilities design help operational complement while each space, EMI the to and offer customers. get we millwork work

working few Over explore we In EMI full quarters, work immediately friendly the as last year and solution total adjusted customers of LSI including reported company. to an our the we the these per has this full those R-XXX EMI EMI few calendar on revenues million value to due offer allowing earnings to opportunities, the an basis. LSI next offering. of the who XXXX, will in with EBITDA underwent over refrigerated performance months introduction of $X.X having $XX EMI an be will environmentally been million. JSI accretive EMI of diligence share solution, with

leaving Our existing at purchase price of net approximately from funded million X.Xx. revolver, our $XX debt our was fully

XXX targeted employees set LSI This in add meaningful additional manufacturing about Rhode $XXX locations Georgia, will solutions and step and Florida, of make We towards markets. Dallas, provides to acquisition our X our a Texas. located vertical products, in Jersey, helps million and expanded an services and Island New goal

we is We continue have experimenting vertical piece an important markets. and do. to more plan, with and our growth customers Organic securing new our new work efforts in of

and New remain new introductions healthy LSI. on product development product at a pace

in month, partners agent in attention fact, slated to It's here of a ever. one we will our largest meetings And agents high our and Our remains agent our have meeting outreach next currently Cincinnati. be with priority.

I'll $XXX lot our We a lot goal. a Galeese million have remain reaching about the the of turn and over excited do for We of front back at of committed our Jim? to future what to to closer With look us. work call that, financials. a opportunities offers. in Jim We're

James Galeese

execution quality we of In earnings. focus strong on Jim. continued and Thank our you, fiscal QX,

expenditures the income other continuing For strong business flow, per net LSI share, capital expansion margin the and invest rate growth quarter, generated with to increased while increased cash all initiatives. earnings and and in

environment Our material margin XX $X.XX Adjusted contributed. per our EBITDA adjusted pause for significant and robust example, increased a in display mix, improved activity gross with in as basis solutions for last our net continued improvement to market the C-store, share refueling wins income initiated. moderating input to stable Results cost activity XX.X%, large share. release margin programs recent increased generated improved contributing drove performance margin points adjusted earnings pricing, factors XXX basis In growth and to productivity quarter expansion. the $X.XX year, favorable vertical grocery. ranging to third Multiple these points versus were levels achieved rate the for factory a while for were divergent all in with program site

the of increased increase store creates services. release perimeter the refueling per in to technology proposed importance was our provide. refueling solid to activity for slow products adoption levels fundamentals from ongoing range work source refresh X contact multiple our 'XX lighting unique but of comprehensive C-store vertical in by We with disruption interior site entering of clarity fourth Our throw and programs product Many continued progress of rate and high these being provider Archer more value is growth The the with merger the pending outlook underlying Conversely, fiscal on grocery remain strengthens the The maintain plans site and continues and recognize our programs. demand site to multiyear deferred This to for industry these the expected grocery programs quarter for the strong system. customers by fiscal sites investment schedules differentiation continue. support specify caused systems with and single forward and of remains in customers offset refresh large only customers. merger. revenue levels The as participants. the C-store grocery

has was project as performance quote lighting verticals for as well activity Overall, fiscal year prior project market Lighting, QX For across size. above levels. varied

However, on period the we stable small this XX% pricing, basis part gross and material fourth project conversion lengthening the book-to-bill income rate was period, trend in moderating X% QX stable costs project margin activity as continuing for as well the verticals, lengthen, prior the period, quarter. above year ratio the projects. continue XXX The level conversion quarter Despite quote-to-order increase X. larger experiencing increased particularly across for operating quote-to-order reflecting to activity sales. factory lighting of lower Small we're in product. the healthy Lighting was the and adjusted points input above expect multiple to also remains

capital in flow cash million allocation. cash and million. few quarter, Free cash a flow over comments the TTM $XX $XX was with on our Next,

debt $X and adjusted lowered cash debt net generation of EBITDA to of our March flow net ratio Solid million reduced to X.Xx as to XX.

Industries EMI We successful growth generating that earn-to-invest identified week, as both earnings part reducing acquisition with in last the debt initiatives Last as in organic flow, execute model, positioning to significantly the and we our have and growth. increased plan. Fast-forward the inorganic on of our business announced several been of years inorganic cash and strategic

We basis, XXXX to debt expect On X segment, LSI's cash to X QX. combined at reduce entities achieve years, supporting significantly the EMI in targets. of Solutions a flows fiscal reporting a our the beginning outstanding next the over impact become Display will with partial part of beginning investment cycle

back now quarters The and company X. event-driven of XX As the dividend reflects durability and to The and turn total performance of our durability regular business strengthen markets. per I'll May on our overcoming the a will LSI third call key results of performance. diversity of of the last shareholders, of addition May part solid markets our session. to while to our EMI question-and-answer payable shareholders the cash and model. customers achieve demonstrates capital moderator declared allocation of In the for summary, share quarter return X diversity $X.XX further record to of can interruptions

Operator

of Instructions] Aaron first Spychalla And with our the Craig-Hallam. question line comes [Operator from

Aaron Spychalla

period And give conversion continues there? lengthen. bit more just that? you to kind good any little talked see factors that of front the then of me, X leading activity you gating kind about. you the also Can Is pretty mentioned to book-to-bill the and verticals broad-based for that First a that on that lighting above on detail quotation behind or order seeing you're

James Galeese

Yes.

enough, Interestingly Our remains remember, the whole serve. grocery. even lighting. few And that all impacted segment a broad-based across is only of in segments points down the we're slowdown terms in by lighting very we lighting

had not the So goes by had gap What question, grocery. I was think to sorry? growth created we it underlying opportunities there second I'm this

Aaron Spychalla

conversion or gating kind of order what's Yes, just just going period, there? on factors on the

James Galeese

Yes.

And of this more to continues though It takes. the period how days that we over anything the added the and and activity the losing of that of conversion pointing us track it from to have anything, initial that lengthen. coming of inquiry would couple for length. just just indicate that we that noticed And the certain only incoming time here better even beginning the trend year a ratio that it time particularly it's the as takes in been quote-to-order quote analysis that and lumpy. it's noted think extended that gives normalized I we've to that business time continues relative part it it. it just it's year, time, our stay out periods then at couple it's to that, now to And extended we observation that cycle, from close I do order, that for from last to we're another back or a quarters, to we long had we initial days quotes, but to we've doesn't an say

Aaron Spychalla

and give awards how have pilots mention you update QSR. refrigerated I see in been the program to large there? to And C-stores those term? some had here or you've in know turning of QSR. near broader those recent an new awards good like Can And are C-store to then program Any in the and pilots for then and awards and just if note on also going

James Galeese

Yes.

we last through. to that last take notable have projects quarter, going years work of couple And are to wins mentioned we those So a did from us that are quarter.

big that this say there. So was quarter. project I wins anything there in notable can't

will say a test number out, you Although locations. we as I have of pointed just much,

everything our number and right refrigerated R-XXX lighting from a graphics and products of products. products, We some have through of test our

we have that this but that number and no So notable are test reconfiguration, big underline. could quarter systems of there out in wins a I

Operator

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

Sameer Joshi

EMI lower integration, has EMI margin. a the EBITDA On

synergies, we improving expect this because you look cost to and eliminations? resources should resources, any So like incorporate just common or of leverage do sales at higher

James Galeese

opportunities to improvement working them the more fairly Most the we that on the to on just XX hope and collaboratively lot ways we'll call that from to on of have answer of see synergies a synergies go know we is been find and folks disciplined think X.X the cost above. I obviously, project to standpoint, create. anticipate that in saying all this not just everything have the we're following enough of long of us a as to opportunity quarters, operators, there, side, synergy aspects, to wins. improvement And on anything within I side, now, the not large all believe year, made sit back-of-the-house lower combination months, not XX going them happen significant margin that efficient, operational performing but It product right sometimes with with on side, create that that to just for are business, we of the we a then just a us. and of making are, we on purchasing would they operational months. weeks commercial or years commercial momentum those but commercial They usually underline these sometimes deal in takes doesn't from a with it

that individual EMI months kick combination, wins wins XX, the some the LSI we'll road. XX to would have big I but expect So I'm down the X, in of sure X,

Sameer Joshi

And just synergies on possible I mentioned more the a Are R-XXX there cooperation such JSI Are there follow-up think technological on technological that. quick synergies? EMI possible? solution. you

James Galeese

EMI Both those believe choose, will solutions. don't that in definitely mentioned us. of R-XXX bit currently we development. LSI's to But could from looking and in They touch to a necessarily. common. EMI just has opportunities not each significantly just all that product that. a Absolutely. exploiting so type for thing, one against that take work And the more. see it And have same. months benefit and that the a X does of we Again, technology, refrigerant forward are looking little us all are in just to not to solution But They're underlying be refrigerated are that. infrastructure that of we'll X, to We of testing terms other that there. introduce you I'll the they EMI compressor on JSI compete get front X,

Sameer Joshi

bit just works. a then to in that merger grocery just switching the And the is little

I be the around with sold represent updated like for and from upside that plan, was XXX stores? additional divestiture happens. you signage this the XXX which process recently and submitted Does to restarting for think from combined company if there calls just the it then branding new stores new

James Galeese

legacy Yes. entirely because Well, brand new we their be believe stores XXX that entirely coming those completely an to will brand. from to be need rebranded almost they'll

So And merger are brands principles those on rebranding, opportunities what that of depending those will plans terms and still the of from X out offer the type melded stores, in that that we the stores do new would with thing all the be reformats, together. co-branding, how other believe plays store the opportunities. of

stores completely you've store which new would So got a XXX minimum. opportunity, be around

way to business to and to to a And X benefit to existing of to that of is against be Or competing going that of stores? boom store off? going a we is the think be lastly, be a significant going to You've against. are other a last other been got they're a to who the as figure the And combination of lagging just of sitting the out general on have competitors they've working their And stores been got the through you've I add combined little would part us. the it sold it sideline, rebranding between that competing maintain be this. to X piece trying to Are going that's going this is going who be the rebranded the brand? principles. then its component updates X kind they then as to Is

potentially apple out. on are shake depending bites how looking the X of things we at So

Operator

Genuity. from question of Canaccord comes Leanne Hayden next line our with the And

Leanne Hayden

to is marketplace, from permitting the are been new see with? in to come improvement? this terms supply start, constraints part Or whether permits? we reality should Or to you this of has there a continuing transformers or and Just an is

James Clark

about And and of thing. all why explain product accommodate products. also would But these I to extended I helps being. Yes, extended the that in for we've type period and of time and chain it the I unsteady. But industries, normality it quote-to-conversion would been electrical the the we definitely delivery talking of remain conversion pre-XXXX and times about project state the that still impacted of because check work new can't over continue but say that, I lengthening that's It's and an for the do at some and it's new our a as some have delivery on help that top thing. go reality, way and of that these we new ratio. I think is definitely reality to customers to that of our type and cycle next that certain about talked terms over now underline go of list. directly think just down to anything next of in explain that few to launch disruptions longer new I they think our that just it supply of come few we as that time, least on it years does categorize at quarters or business. to of maybe Switchgear being years, or business equipment of just the lead as will supplies reality realities

Leanne Hayden

several a your facilities. facilities manufacturing and have you've own acquired lot You then of manufacturing

any about wage talk inflation that impact could going please forward? financials of you sort your can So

James Clark

of wage of inflation. note terms isn't speak anything in of There to

sure with particular, our enough in we try the employee-first our folks us. compelling stay competitive company. an been and employees, are that to always and have are wages wages We starting offer for We those to make to type manufacturing

inflationary in on I even post the wages we that period think path have prior that that happened COVID. been to

it's threat So like significant tried it, the part accommodate. And component. not significant for have a large labor cost. towards I an but the said, that don't of we're us, always it I to It's to think or We've product going overwhelming we our employee-friendly. component changes of exceedingly there's any is not any work think to

Operator

of end remarks. CEO, the session. Clark call the And question-and-answer over we have reached and I'll back to turn President for closing now Jim the

James Clark

We're excited I our dial beginning EMI do Well, just taking for to working on to continue time to We're into about a about and have learn again in want just say to that very integration LSI. to We more little normal you the bit happen process. think of the the team bring significantly. fold. addition don't importantly, capture. thank EMI can have and we believe the of a companies terms overnight customers will a we there. And We good do benefit. But path forward to think you I the that expect lot we anything our see benefit have more to that synergies we believe both will team. in

a and one-stop we We forward shop have able look the value the shareholders to and circled And allows our to to around in specializing just our expand to and continue EMI idea certain to our of to we're us verticals. that offer benefit customers alike. customers, the

forward to Take So with I in, say call. look that, and for thank on our you next you to I'll care. speaking calling just

Operator

concludes may this you this and for at today's Thank And lines you participation. time. your your disconnect conference,

LSI Industries (LYTS) 25 Apr 242024 Q3 Earnings call transcript