LSI Industries Inc.

Greetings and welcome to LSI Industries Fiscal Second Quarter 2021 Conference Call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jim Galeese, Chief Financial Officer. Thank you. You may begin.

Good morning, everyone. We issued a press release before the market opened this morning detailing our fiscal second quarter results. In conjunction with this release, we also posted a conference call presentation in the investor relations portion of our corporate website at www.lsicorp.com. Information contained in this presentation will be referenced throughout today's conference call. included our certain non-GAAP measures for improved transparency of our operating results. A complete reconciliation of second quarter GAAP and non-GAAP results is contained in our press release and 10-Q. I would like to remind you that management's commentary and responses to questions on today's conference call may include forward-looking statements about our business outlook. Such statements involve risks and opportunities, and actual results could differ materially. I refer you to our safe harbor statement, which appears in this morning's press release, as well as our most recent 10K and 10Q. Today's call will begin with remarks summarizing our fiscal second quarter results. At the conclusion of these prepared remarks, we will open the line for questions. With that, I'll turn the call over to LSI President and Chief Executive Officer, Jim Clark.

Good morning, all, and Happy New Year. Thank you for joining today's call. In 2019, we sat down as a team to transform our company with the purpose of developing and refining our focus in creating a growth-oriented, competitive, and defensible position in the marketplace. The underpinning of our strategy has been around the development of vertical markets where we can better serve and understand the needs of our customers with the goal of adding value to differentiate ourselves from our competitors and general market commoditization. This differentiation is achieved not only through our product offerings, but how we design and package those products along with the services we offer. In this aspect, LSI is unique in the way we work with our agents and partners and how we use lighting, graphics, and our installation services to better serve our customers. I'm happy to say that our results in this quarter in the midst of a pretty challenging environment, go to underline the progress we're making on this strategy. Sales are up sequentially, quarter over quarter, margins are up, operating income is up, net income is up, and earnings per share are up versus prior year. This progress cautiously emboldens us as a team to continue a responsible investment in our strategy and acceleration of our plans. Over the last few quarters, I have talked about the investments we're making, including the release of new products, the increasing use of intelligence and controls in our devices, and the investments of additional and commercial resources, along with the expansion of our vertical market focus. Now, in some cases, our vertical market focus is simply a matter of refreshing or adjusting our position in certain markets to accommodate for overall change. In others, it's an expansion in our existing markets with new services or products, and yet in others, it's an introduction of entirely new markets. and several of our established markets. We enjoy strong preference and brand awareness based on decades of experience and an understanding of the market needs and opportunities. We work closely with our niche agents, our general agents and distribution partners to understand not only the customer's articulated need or request, but also the opportunity to see and develop solutions to address the unmet needs. We're able to introduce forward-looking thinking and improvements on design and specifications of the projects which increases our value as a partner. We add value throughout the use of different graphics materials, sensors, controls, optics, light cutoff, and we improve the ease of installation and performance of our products in such areas as uniformity and durability, all resulting in less maintenance, longer operating life, and lower overall cost of ownership. These principles span across our solution sets, whether it's in lighting or graphics. The commercial effort we are investing in is oriented around qualifying our customers' goals, highlighting our strengths, and focusing on those projects where we can create competitive advantages. Last year in our automotive vertical, we designed a custom-built large indoor fixture in partnership with one of the world's largest Japanese automakers. The goal was to have a fixture that would properly highlight their product in showrooms across the country with the right color temperature, intensity, and uniformity. The project was not simply bid out, but instead it was an engineered solution that leveraged our unique capabilities, including design and manufacturing, along with a network of partners across the country to assure proper application and installation. In this case, LSI worked with the customer as a partner and not simply as a manufacturer or supplier. Last quarter, I mentioned a contactless payment project with one of the world's largest oil retailers. In this case, we helped design and deploy a payment option allowing customers to pay at a pump using a mobile application. LSI worked with the customer and a team of their partners to print the QR code and an embedded near field chip into a series of graphics. And then we managed the deployment and the installation in just over 11,500 locations. These locations included anywhere from two to 16 plus pumps at each site. The project was in the works for over a year, but the deployment was scheduled to be completed from start to finish in just over three and a half months. I'm happy to say that we're more than 70% through this deployment and things are moving along well. In fact, just this week, we were awarded another 1,100 locations in addition to the 11,500 locations on the initial project spec. Last month, We issued a press release announcing our partnership as the official lighting partner of the USA Pickleball. Pickleball is one of the largest growing sports in the United States, and it's part of the sports courts industry, which includes tennis, paddle, basketball, and others. As the official lighting partner of the USA Pickleball Association, we'll have much improved visibility to one of the fastest growing sports in the U.S. This partnership goes to underline our strength in an offering in the sports court market. For decades, LSI has provided solutions to this market, and with a refreshed product offering in this space and more to come in the future, we see a real growth opportunity ahead of us. This week, we issued a press release announcing that we awarded a $20 million contract to provide indoor digital menu board systems to one of the world's largest fast food retailers. This is a follow-on order to the $100 million awarder announced last year and goes to further illustrate our ability to expand our share of wallet and our overall offering in a key vertical market we compete in. These projects all go to underline the strength of our strategy and the opportunities in front of us. Next week, we'll be hosting our agent and partner meeting as well as LSI's national sales meeting. These meetings will occur virtually and as of today, we have over 500 agents and partners registered and planning to attend. We will be sharing a roadmap of our plans for the future years, including the introduction of 25 plus new products in the upcoming quarters and the expansion of our existing vertical markets. We are all glad to have a calendar year 2020 behind us. Employee and partner safety remains at the top of our list as we start calendar 20 year 21. I'm proud of how the team at LSI has found a way to not just survive in the current environment, but also to thrive. With that, I will turn the call back over to Jim Galeese for a closer look at our financials.