LSI(US:LYTS)2020-08-20 17:37Financial Data and Key Metrics Changes - Net income for Q4 was $1.5 million, up from $900,000 in the previous year, with earnings per diluted share increasing to $0.06 from $0.03 [22] - EBITDA rose to $3.9 million compared to $2.2 million in the prior year, while sales declined by 22% due to pandemic impacts [22][24] - Adjusted net income for the full year was $3.2 million, compared to $1 million in fiscal 2019, with adjusted earnings per share increasing to $0.12 from $0.04 [26] Business Line Data and Key Metrics Changes - In the lighting segment, adjusted operating income increased by 5% to $2.9 million, with a gross margin improvement of 520 basis points to 28.6% despite a sales decline to $41 million [27] - The graphics segment saw adjusted operating income rise to $2.2 million from $800,000 last year, with a sales decline of 6% due to pandemic-related delays [28] Market Data and Key Metrics Changes - The company reported strong cash flow generation, with $11.5 million of free cash flow in Q4, resulting in a cash balance of $3.5 million at the end of fiscal 2020, compared to net debt of $39.5 million at the end of Q4 fiscal 2019 [24] - The company maintained a strong graphics backlog and did not expect changes to large, multi-year customer program commitments despite potential project installation delays [28] Company Strategy and Development Direction - The company is shifting focus from low-value products to higher-value solutions, with plans to introduce 20 new products in 2021 [15][19] - Three new vertical markets will be added to the company's focus over the next year, aiming to enhance competitive positioning [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty due to COVID-19 but expressed confidence in the company's ability to adapt and create opportunities [19] - The company is prepared to pivot quickly based on market conditions and has multiple scenarios planned for growth [32][33] Other Important Information - The company eliminated nearly $40 million in debt over the last 12 months and is currently debt-free [10] - The company declared a regular cash dividend of $0.05 per share payable on September 8 for shareholders of record on August 31 [26] Q&A Session Summary Question: Outlook for growth in fiscal '21 - Management indicated that it is difficult to forecast growth due to the current state of flux but is prepared to pivot based on market reactions [32][33] Question: New verticals and resources for growth - Management is validating potential new verticals but did not disclose specifics, emphasizing the importance of building a better company before expanding [34][35] Question: Sustainability of lower operating costs - Management believes structural cost reductions can be maintained, with potential for additional opportunities, but also plans to make investments that may affect costs [36] Question: Margin expansion in the graphics segment - Management sees opportunities for margin improvement in the graphics segment as projects mature and efficiencies are gained [41] Question: Gross margin targets by segment - Management has targets for gross margin improvement but did not disclose specific figures, focusing on continuous improvement and efficiency [44][45] Question: Future communication strategies - Management expressed interest in hosting virtual meetings to discuss strategic initiatives but has not advanced plans significantly [51]