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LSI Industries Inc. (LYTS)
F2Q09 (Qtr End 12/31/08) Earnings Call
January 23, 2009, 10:00 am ET
Bob Ready - Chairman, President and CEO
Scott Ready - President of LSI Lighting Solutions Plus
David McCauley - President of LSI Graphic Solutions Plus
Ron Stowell - VP and CFO
Fred Jalbout – President of LSI Saco Technologies Inc.
Glenn Wortman - Sidoti & Company
Josh Baribeau - Canaccord Adams
James Ricchiuti - Needham & Company
Previous Statements by LYTS
» LSI Industries Inc. F4Q09 (Qtr End 30/06/09) Earnings Call Transcript
» LSI Industries Inc. F1Q09 (Qtr End 9/30/2008) Earnings Call Transcript
» LSI Industries, Inc. F4Q08 (Qtr End 06/30/08) Earnings Call Transcript
Now without further delay I will turn your call over to Mr. Bob Ready.
Thank you. Good morning everybody. As you are probably aware of the fact, we really don't have any slides this morning. We felt that the conference call this morning should be really more of a Q&A, but as always there is a lot of information on our webpage and financial results are there as well, later today. So that you guys, people can follow-up on that and is always will be available as well.
I think somebody just chipped on-board there, we were having some international technology problems with Fred out of Canada. Fred, are you on-board?
That was his line with the hold music. One moment.
Okay. Well anyway. As an opening my comments are obviously very-very straight forward as it relates to the economy. It's obviously a very-very tough time out there. No surprises to anybody.
LSI is in a very-very straight forward direction. We really [batted] down one of the hatches, so to speak. And really structuring our business plan around the expected volume, as we understand it today.
The automotive industry as we all know is in rather dire straights. The trade show that we have coming up in February will give us some more indication of how the dealers are really faring. But there is no question that for time being we'll see a very, very slowdown direction in the automotive industry.
The retail economy, it speaks for itself based on the results of Christmas, as we all know that Christmas season is the area that the retailers depend on most for their year. And as we all know that was a very, very tough year for the retailers.
Our national account business all of our primary customers are more or less on a wait and see attitude. It is just tough out there, the commercial/industrial business continues to shrink, there is certainly an indication by the announcement of some of our competitors in the directions that they are taking.
For LSI, my guidance to our management team and to the rest of our employees is to really focus in two areas. The two areas obviously are at the continuation of keeping our balance sheet strong, this is a commandment here, has been for 32 years. And everybody understands that, that is our goal. We can accomplish it in many ways and certainly the efforts that are in place now to align our company through the existing markets and the volume of those markets is in place.
The second part of the direction is obviously to do the best we can to improve the bottom line and we're doing it in a manner that will not cut the heart out of this company.
Its my personal opinion based on history, that with our large customer base and certainly the efforts that we have put forth in the years to build that relationship, build that confidence with our large customers that LSI is the kind of company that can handle the best and the diverse. The diversity that comes into an economy like we are experiencing now and we've proven that many times before and we'll prove that to them again.
What's more interesting I think about some of this is that we are beginning to see some of our competitors on a fall to the wayside. Just couple of weeks ago one of our larger competitors in the graphics business filed Chapter 7.
Those are indications of I am sure it's still worst to come. And from our perspective I think it does open opportunity even more so than during our best years of increasing our market share, and developing a direction with our customer base like they've never seen before. The ability to supply lighting and graphics, and influence that with technology, and last but not least our ability to install.
It is important to note that even as tough as the market is out there, there is a lot of dialog going on with some of our larger customers. I am not in a position to share it by name, or even by market because things would obviously be put together to-on-to. But it's encouraging that people are now starting to look at things and look at things a little bit differently and if history proves itself as it has in the past. When this starts to come back this pent-up need will break out. And it's so important that LSI maintains its capability, its financial stability to react to those needs and get our company back on a strong growth direction as we were prior to this.
It's also important to remember that we are in the last quarter now of all those major roll-out programs that were successful in later part of '07 and '08 that will be behind us and as we start to move forward that ability to match that, obviously will be behind us.
What we are going to do this morning is, I am going to turn the meeting over to Scott. Scott Ready is the President of our Lighting Group. And then we will talk to David, and if we can find Fred, we'll even have Fred on-board. We will have Fred to bring you up-to-date on what we are doing on the international plans.
So, with that I would like to turn it over to Scott, and if you would Scott, kind of bring the folks up-to-date and where we are with all of our LED technology.
Sure, good morning. Second quarter was really not a great surprise in any area for us. We continue to see the shrinkage not only in volume opportunity translate into some tougher pricing and margin pictures. We absorbed really, I think the remaining part of the inventory that carry a little higher material costs this second quarter, and we look forward to some hopefully favorable conditions as we move into the third quarter on that front.
What's really exciting about where we are today with everything that we have in place, is the degree of acceptance we are seeing in our solid-state lighting. Our day-to-day business will continue to be flat in the trenches as it always has been. And again, we see no reason to believe that we won't see a very similar level of volume at this point in time in a similar level of margin.
However, the improving environment for LED lighting, both improving from a customer perspective as well as from an LSI perspective, given the work that we have done to develop and translate the original platform that was introduced a year ago is really very, very encouraging right now.