LSI(US:LYTS)2025-11-06 17:00Financial Data and Key Metrics Changes - The company reported Q1 sales of $157 million, representing a 14% increase compared to the same quarter last year [14] - Adjusted EBITDA for the quarter was $15.7 million, with an EBITDA margin of 10% [14] - Adjusted earnings per share improved to $0.31, a 19% increase from $0.26 in the prior year quarter [14] Business Line Data and Key Metrics Changes - Lighting segment sales increased by 18% compared to the prior year, following a 12% growth in the previous quarter [14][15] - Display solutions saw an 11% increase in total sales, driven by recovery in the grocery vertical and ongoing projects in refueling convenience stores [17][18] Market Data and Key Metrics Changes - The grocery vertical is experiencing a recovery, with customers formulating investment plans despite short-term guidance [18] - The refueling convenience store market remains favorable, with a large national program projected to continue through the end of calendar year 2026 [17] Company Strategy and Development Direction - The company aims to be a one-stop partner for customers across various vertical markets, expanding its product and service offerings [7][8] - A focus on operational efficiency and talent development is emphasized for fiscal year 2026, with plans to optimize processes and improve service [13][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory for lighting and display solutions, citing strong demand and successful project conversions [25][34] - The company is aware of potential seasonality effects in the grocery segment but remains optimistic about overall growth for the fiscal year [29][39] Other Important Information - Free cash flow for Q1 was slightly negative due to increased working capital, specifically accounts receivable [19] - The company amended and extended its credit facility, increasing availability to $125 million and extending the term to September 2030 [19] Q&A Session Summary Question: Can you discuss the growth outlook for the lighting segment? - Management indicated that the growth is primarily driven by volume rather than price, with stable pricing observed [22][23] Question: What is the outlook for grocery customers' spending? - Management noted that while Q2 comparisons may not match last year's exceptional growth, they expect continued growth in the grocery segment [26][29] Question: How is the company addressing operational efficiency? - The company is focusing on improving operational efficiency and investing in its workforce to enhance performance [31] Question: What is the company's view on the macro environment and customer investment hesitancy? - Management believes that their offerings are seen as investments rather than expenses, and they expect continued growth across various markets [48][49] Question: What is the current state of the M&A environment? - The company remains active in pursuing acquisitions and has a strong pipeline for potential opportunities [52][54]