LSI Industries Inc.

and welcome to the LSI industry's fiscal quarter 2023 remote conference call. All participants will be in this lovely night. If you need assistance, please call your conference specialist by phone or start a call at I-0. After 27 days, there will be an opportunity to ask questions. To ask a question, you may press star and 1 on the teleconference tab. To withdraw your question, please press star and 2. Good morning, everyone, and thank you for joining.

We issued a press release before the market opened this morning detailing our peaceful third 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.lsi.org. Information contained in this presentation will be referenced throughout today's conference call, included are certain non-GAAP measures to improve transparency of our operating results. A complete reconciliation of third quarter GAAP and non-GAAP results is contained in our press release and 10Q. Please note that narration 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 can be considered. I refer you to our state harvest statement, which appears in this morning's press release, as well as our most recent 10-K and 10-Q. Today's call will begin with remarks summarizing our fiscal 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. Thank you, Jim. Good morning, all. Thank you for joining us on today's call. As you've likely seen from our press release, we had another strong quarter in our Q3 fiscal 23. It's hard to believe that we are over just about 60 days from the end of our fiscal year, and I could not be prouder of the efforts and progress of our employees, agents, and partners, as well as the continuing confidence of our customers, choosing LSI to be the partner of choice. Sales for the quarter were up more than 7% year-over-year, with net income up over 29%. We had a strong free cash flow performance, and I'm happy to say our net debt is below $50 million with a one-time net leverage ratio. We are in a good spot going into the first quarter of the year, and Jim's release provides a deep view guide of the financials in a few minutes. Fighting provided another strong quarter of growth, with sales increasing 17% and operating income increasing 31% in what is historically a weaker quarter for LSI against a very strong third quarter last year. As you may have noted last week, we published a press release providing an overview of a recent win with a large easy battery manufacturing plant being built in Kentucky. This is one of the largest manufacturing development projects in Kentucky's history, and it says a lot about the confidence of the customer in LSI that we were chosen to be the lighting provider for this project. It also says a lot about the culture of our selling efforts and the capabilities of our company. As you all know, we have a manufacturing facility in Kentucky, and I'm thrilled that we were able to support a project of this size and complexity for folks that live and work in Kentucky. Thank you to everyone to recognize the importance of this decision. Over the last few weeks, we've had a flurry of customer and agent activity in our facility for both lighting and display solutions. It's great to have the opportunity to sit down and talk with these folks that are making decisions that impact their company's performance. Just this week, we have more than 30 of our top automotive agents in-house for training and discussions. I can honestly say that almost all of our conversations contain an acknowledgement and an appreciation for the values we hold dear, the culture of our company, and the focus on meeting our commitments. Our vertical market orientation and respect for our customers continues to pay dividends, and I'm confident that it will never go out of style and hopefully never go unnoticed. Speaking of our district solutions group, we continue to work on a large number of developing opportunities and projects, including ongoing activity in our digital and print venue boards, along with a 450-site renovation project for a large oil company. Our mobile display group, offering both refrigerated and non-refrigerated displays, had a record-breaking performance in the third quarter, while building some real momentum in the C-Store refueling marketplace. Our ability to offer even more goods and services to our grocery and C-Store customers underlines the opportunities we see in front of us, and I'm thrilled with the progress we are making. New products and innovations continue to be a cornerstone of our performance over the last few years, and I'm happy to say that the company continues to demonstrate our commitment to ongoing investments in this area. Last quarter, I talked about a number of new product introductions in our writing segment, including the ready mouse. This quarter, I'm happy to announce a very meaningful investment in the display solutions group. The continued growth in this segment and opportunities in the future We're extending our efficiency to our refrigerated displays group, adding more than 65,000 square feet of manufacturing, research, and development space. More importantly, we're adding the capacity and capability to provide next-generation refrigerated solutions with the addition of an R-298 product. R-298 is an environmentally friendly, non-toxic, propane-based gas refrigerant It is free of ozone-depleting properties and currently one of the most climate-friendly solutions available, and we're excited to be able to offer this option to our customers. I don't mention this topic on these calls, but I'd like to point out that LSI is making a real impact on the environment. From energy savings that are provided by our LED solutions to reduction in light pollution and the use of ozone-friendly products to the way we run our factories, We're proud to be doing our part to uniquely and positively impact the environment. Going into Q4, our quote activity and prospects across all sectors remain strong. We're still facing some headwinds, but we believe that many opportunities lie in front of us and continue to work to improve both our top line and bottom line. With that, we'll turn the call over to Jim Belize for our look at our financials. Thank you, Jim. Q3 was an active quarter from several perspectives. We delivered a solid quarter of financial performance, demonstrated durable, sustained operational execution, and we continue to make progress on key growth initiatives. I'll briefly comment on all three. Let me start with summary financials. Sales for the quarter were 7% above last year, building on the record setting just for third quarter last year. adjusted operating income, net income, and EBITDA all increased, with adjusted operating income increasing 47%, while adjusted EBITDA of $11.2 million improved 32%. Rate expansion was achieved in all margin categories, with adjusted operating income and adjusted EBITDA improving 210 to 190 basis points respectively. Volume, coupled with improved program pricing, available program notes all contributed to the rate expansion adjusted diluted earnings per share were 19 cents versus 15 cents last year increasing our year-to-date earnings per share to 70 cents 62 percent above prior year pps of 43 cents free cash flow generation was strong for the quarter 11.7 million increasing our fiscal year-to-date cash flow to $31 million. Increased earnings and a reduction in working capital was responsible for this significant year-over-year improvement. Inventory decreased for the second consecutive quarter, while successfully supporting 7% sales growth, reflecting ongoing stabilization and reliability in the supply chain. Our strong free cash flow reduced net debt to $48 million at the end of the quarter, net debt increasing $35 million over the last 12 months. As a result, the ratio of net debt to trailing 12-month adjusted EBITDA declined to an even one-times. Lower debt levels provide the financial stability and optionality for the business moving forward. As part of our capital allocation, the company declared a regular cash dividend of $0.05 per share, payable on May 16, to shareholders of record on May 8th. Now some great comments on segment performance. Lighting had an excellent course, with sales increasing 17% and operating income increasing 31%. It's continuing to make progress in the market, increasing sales in all major verticals. I referenced both initiatives in my opening comment, and we have multiple in lighting.

Lighting has historically had a strong position in outdoor applications, but as part of our overall political market strategy and objective of increasing our customer share of wallets, they have been strengthening our capabilities for indoor applications.

As a result, our growth rate for indoor applications is measurably above our total growth rate, enhancing our overall position with customers. Location activities providing remain healthy, and float levels equal to the high SQ3 levels last year. As we've mentioned previously, we are experiencing a lengthening close-to-order conversion period, which has increased the backlog of outstanding quotes. While we expect activity to remain healthy, a lengthening close-to-order conversion could cause timing fluctuations moving forward. For the display solution segment, earnings increased measurably on slightly lower sales. Total Q3 sales were down 4% driven by the forecast decrease in digital signage shipments as the large QSR program peaked in the second half of fiscal 22. This will also impact digital signage sales in Q4 as we transition into the indoor phase of the program as well as early phase activity in other programs. Order and inquiry demand remains steady in other verticals and products. including mobile display cases to the grocery vertical and static or print graphics to the petroleum seashore environment. Operating income for display solutions increased 23% on slightly lower sales, driven by a 430 basis point improvement in gross margin, affecting strong improved program management pricing and favorable program mix. We continue to aggressively pursue growth initiatives in the display solution segment as well. To highlight, in March, we announced release of additional manufacturing space, providing additional capacity to support the ongoing market demand for refrigerated and display cases, and as been mentioned, support the planned introduction of new products.

In addition, cross-selling initiatives continue, including several pilot projects or display cases into the .

In summary, Q3 was a successful career for LSI with improved financial performance and continued progress on our growth initiatives. Given the current environment of broader economic uncertainties, we continue to be diligent, maintaining a strong focus on operational execution, including margin and cash flow management.

I will now return the call back to the moderator for the question and answer session. Thank you. We will now begin the question and answer session. To ask a question, you may press star and 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset and start pressing the key. To withdraw your question, please press star and 2. At this time, we will pause momentarily to review our last question. This question comes from Aaron . Please go ahead.

Good morning, Jim and Jim. Thanks for taking the questions.

You know, first on QSR, maybe just a little bit on the at the end, but just maybe an update on the large digital menu award. Sounds like we're kind of wrapping that up, at least coming up with a portion. You can just see, you know, translating to a new pilot award for a new customer. Can you hear a little more details on potential size, you know, anything on rollout or timing there? Yeah. Good morning, Aaron. Jim Clark here. Thanks for the question. I mean, the QSR, particularly on digital menu board, continues to do well. You know, we have rolled off substantially off of the big program. I think our peak was probably – 2.2, 2.3 of last year and we've been working that down as that project became wholly complete. We have picked up other elements with that particular customer specifically doing what started off as a $20 million indoor order now moving to a $30 million indoor order. It's just timing and coordination on their side right now so we don't anticipate that taking off until q1 of next year but subsequent to that we've been infilling it for quite some time with other customers and we do have another couple larger projects that we've been looking at that you know we're very hopeful but i would say that what you're not going to see is um you know a big drop off you're just going to see the beginning project was large but then we had time to develop all of these smaller, medium-sized projects. And there are still large projects sitting out there. If you think about what happened to them during an inflationary period, anybody that had a static menu board, a front menu board, was really at a disadvantage to move their pricing. And it's really created a sense of awareness. I won't say urgency, but awareness, and with some sense of speed counts. So we're happy with the activity that's going on there. And all the activity you see moving forward is really just an infill as that project has, you know, kind of substantially completed. Good. Thanks for the color there. And then, you know, maybe second, just to see the margin extension, especially, you know, incremental margins given the supply chain challenges. Can you just maybe give us an update there? You kind of mentioned some stabilization, but, you know, what are you seeing in the market? Is this permitting still kind of the biggest push points? And then just how do you think in margins, you know, committee terms over the near term? Yeah, so depending on the projects we're doing, any type of retrofit or anything like that permitting is the number one issue we're running into. Sometimes we're delayed by progress of, you know, maybe another contractor or something like that. Admin construction, you know, has just a litany of things that are putting pressure on it. Permitting is one. you know, switchgear, I'm sure you guys hear all the time. From what we understand, and we get close to a lot of the electrical guys, you know, switchgear, you know, still massive demand, half the jack orders, and just time taking to fill. But, you know, from a margin standpoint, it was primarily mixed, you know, a very favorable mix, and good piping discipline as allow us to maintain those margins. All right. And then, you know, maybe last for me, just, you know, anything on fiscal 23 targets you kind of provided back in March, you know, maybe an early read on the fourth quarter. I know you have a nice comp year over year there as well. And then just thinking about the season that kind of talks on conversion cycles once again. You're saying, I'm just going to make sure I understood that right, fiscal 24 targets or fiscal 23 targets? No, just kind of, I think that's March when you gave kind of the fast forward, you know, there was some FY23, so just kind of any early read on what the first quarter might look like. I mean, I think it's going to remain fairly strong. We're anticipating staying right in the range that we expected to land in. You know, we certainly have our eye on on fully completing that, you know, hitting that half-billion-dollar mark, but, you know, it's just a lot of market conditions, you know, continuing to win on every front, and, you know, we anticipate, you know, a solid Q4, but I wouldn't want to give any specific guidance right now, but I think it's safe to say we'll be darn close to our goals. All right.

Understood. Thanks. I will turn it over. Thank you. The next question comes from Amit Kail with HC Unite. Please go ahead.

Good morning, everyone. I appreciate you taking my questions. And then congrats on another really small quarter. Jim, to begin with, maybe on the operating margin and cash flow side, is there room for operating leverage to continue coming through I think we're ready.

Are you at a point now where you need to ask for more resources? Hi, I'm at Tim Belise here.

No, there certainly is room. If we're successful in continuing to meet our growth objectives, that provides the leverage to continue to see large and great expansion, but as well as invest in some of the key resources in order to make that happen. So it's not an either-or approach.

continue to grow the business that provides the leverage for margin expansion and also providing the opportunity to continue key reinvestments.

And you see some of those investments we're making on the, you know, I mentioned in the beginning of the call, you know, our step into, you know, next generation refrigerants on our refrigerated line with the RT90. You know, last quarter we talked extensively about the exception of our ready mount product. You know, we continue to be committed to investing in new products and in new markets and so I think there's still, from Jim's point of view, still a lot of opportunity for us.

Understood. You know, before you all this and any sort of price writing data, is there an impact on

the interest rate environment on how, you know, customers are thinking about reducing orders or, you know, just, you know, I mean, we're not, you know, I certainly don't want to be the guy that says there's no impact, but I'm going to tell you that if we're not seeing it from a day-to-day business standpoint, meaning incoming orders and inquiries are certainly not being affected by the interest rate environment, I do think that there are still a number of external things that are going on that are affecting, you know, a continuing case like we are, and most of them are external to us. Labor resources, permitting, switchgear. We've heard, and in fact, we've heard it from our people, and then we just saw an article in the Wall Street Journal maybe a week ago or so, talking about large project demand, that it's all still there, but A lot of the ultra-large contractors and stuff are being very selective, actually turning projects down, mostly because you can train around personnel and equipment and product. But we're certainly not being exposed to that, you know, in terms of our ability to deliver. But we are being exposed only in the sense that some of those projects are slowing, not slowing in terms of demand, but just moving along slower than we would have anticipated.

Yes, you understood. So, last one for me, on the lighting side, how is the customer base changing in comparison maybe a year or two ago? Is it more sort of industrial customers, you know, with this onshore trend that is going on, especially in, you know, for manufacturing type of development. Are we seeing more of those types of customers come through versus, you know, what you might have had previously? I think we're seeing growth across the board in general.

What we are seeing, you know, I wish I could say that all of our customers appreciate the domestic manufacturing and that they all turn a blind eye to import products. Unfortunately, they don't. I was I was extremely happy that this RGV win. You know, they considered that an important element. And I really liked the fact that we have a factory in Kentucky. You know, being here in Ohio, we're very close to that facility. And we have people that are making these products that live and work in the state and live and work in joining states that will, you know, be contributing to this project. It's a big project, and we're very proud to you know, be associated with it. And I know that our folks will be driving by and pointing it out for a long time. I wish there was more of that that went on, that there was more, you know, the recognition of, you know, U.S. tilt and U.S. company and that type of thing. But where it is strong, it's strong. And where it's not, it's, you know, we're still able to compete. We, you know, we make a good product. We're proud of it. We're managing price really well. We're managing our margin really well. Product quality is strong, and so we have a lot of compelling reasons for folks to buy from us, and it would be nice, though, if the made in America was a stronger level.

Have you named the EV management?

I did not. We did not. But I would just say it's one of the big three. Okay.

Could I follow on?

Thank you so much. Very good. Next question comes from George. Go ahead. Hey, guys. How are you doing today? Very good, George.

How are you?

Good to hear you. Okay. My question.

So, you mentioned some of the timing issues and some of the delays that you're seeing in the marketplace, but you still expect to see a good close to the year and to the year capability target. So, I just, you can help us understand how to quantify this impact. Are you just kind of getting a color in the marketplace? Yes. as opposed to any sort of articulating any sort of financial impact to the firm as it goes up here?

Yeah, I mean, I think that's accurate. We're just giving observations of what's going on outside, you know, factors outside of our control. You know, we, I think that over the last few years, we've kind of bucked the trend about, you know, macro things, you know, things happening in the macro market, if you will, versus things that are happening to us, you know, From an internal standpoint, the observation that I think Tim was trying to underline is quote activity, you know, quarter after quarter after quarter, and I'm talking, you know, eight, nine, ten quarters, we've been seeing an increase in quote activity. We try to draw a parallel between how many inquiries there are and what that activity is as to an early indicator of how much we'll get in orders. It doesn't, you know, it's not steady enough to be an absolute connector or anything like that. It is an interesting statistic to look at. I think that we've picked up on lately, and when I say lately, I mean, you know, three to five, maybe even six months, is we're seeing initial inquiry to the picking up and finalization of the quarter. The activities are being tied, but the time between that first inquiry and the time between the second and the close inquiry, is lengthening. And most of the time it's lengthening not because there's demand, not because interest rates went up, and not because there's a lack of projects, but because, you know, projects are just getting extended and they're either ongoing things with, you know, supply chains of other suppliers or labor issues or projects being put in the queue and just, you know, the contractors not being able to get to them. And we're just I'm just making mention that we noticed that. As you know, lighting is late cycle, right, in a construction project.

So it's so dependent on other forms of completion.

Right.

So it sounds like you're saying that the supply chain situation that you've heard from others is improving. You're saying it's getting worse. By the way, you're not the only one to mention it. You had a company last night. specifically mentioned switchgear as an issue in building out a facility in North Carolina, which is interesting.

Yeah, if you're in the electrical product industry, meaning, you know, we're dependent on copper wire and switchgear and switches and everything leading right up to our fixture to energize it and power it, you know, switchgear is definitely a, you know, a pain point going on right now. I mean, it has been. It has been since, you know, basically, you know, April of 20, a month after, you know, we went into lockdown, and it just hasn't, it has not recovered yet.

Interesting. What about the permits? You mentioned permits over the last couple of years. I'm curious as to whether there's any improvement in receiving permits and any

I think it's, I think that we're through the worst part and it's just going to, this is the new normal. You know, the reality of the situation is they built quite a backlog of projects. You know, some towns, cities are great and some are just awful. But, you know, I think that we've taken the brunt of the pain. And, you know, the situation is beginning to improve, but I would still say that it will be a ongoing issue for at least another year, maybe two years. I mean, simply put, many of the cities and townships, you know, have one or two guys and they have a normal backlog of 10 projects and now they have 100. And they're not, you know, they don't have the budget or they're not hiring people or whatever, for whatever reason. not doing anything to work down that backlog, and I think it's just going to take a while for it to completely stabilize. Got it.

And Eddie, since you're here, pun intended for a second, you talked about in your fast-forward strategy outline about a lot of your growth changing on additional M&As. We expect that more closure on some of the targets. Are you waiting for the economic environment to clear before you initiate on any acquisitions? Any acquisitions would be much appreciated.

Yeah, well, you know, acquisition development is an ongoing process. We have never stopped. We keep that tunnel filled. We have always said, or I've always said that, you know, we would, if the right opportunity presented itself, regardless of where we were, you know, we would certainly consider if they cause additional pause or we may need the deal to be structured differently or be at a different level, you know, as our debt's a little bit higher. But us getting down below 1.0 isn't necessarily the only gate that we need. I'm not overly worried about economic conditions. We're very aware of them. We will be very strategic and very thoughtful and calculative about, you know, is it the right time? Is it the right, you know, is this the right opportunity? But the bottom line is, acquisition isn't a part of our go-forward plan. It actually is a smaller part. And we are just going to look for the right opportunity. And if it materializes, you know, in the next three months, you know, we'll certainly, I think, we're in a better spot to be able to capitalize on it. And if it takes 13 months, you know, we'll take that time. We're disciplined investors.

How do you think about the financial metrics or the lens through which you view these acquisitions? Do they all have to be exceeded for earnings?

I think that they all ultimately have to be accreted for earnings, but if we saw something that may be slightly dilutive initially, but we think can create a great return for our shareholders and the people in the company and propel us forward, we are certainly structured to be able to kick on a challenge like that, and we would certainly consider it. But, you know, we're always trying to look out for the best interest of our shareholders, you know, in balance that short-term, long-term component of it.

Okay. Well, maybe last question. Since you participate in several verticals across the economy, I'm curious if you should, in the colors, you talked about lengthening, lengthening close to the glitter cycle. Are there any particular verticals that you're seeing that more come out

Well, I would say right now, I mean, just specifically, I'll add two parts to that. I'll say right now, automotive is moving at an incredible speed. And they've come back with a vengeance and they're really, you know, there's a lot of inquiry and they're really willing to invest. You know, warehouses slowed a bit. You know, I mean, I think that it's just a more cautious approach. But what's taken right over underneath that is large manufacturing investments in, you know, kind of, you know, U.S. manufacturing, if you will. The EV power plant is a good example of it. You know, there's a number of large headline-grabbing projects going on. But there's also lots that are not grabbing headlines but are going on. And so we're seeing those large projects. there's a lot of activity around that. Now that is probably the one that's most sensitive to lengthening, you know, lengthening cycle because they're working this, they're moving forward, but then all of a sudden, you know, the concrete guys need, you know, the next two months to get their project done. Or the, you know, the basic, you know, rough in for electrical is taking a bit longer because you know, switch boxes or cables not available or whatever it is. So those are the ones that we see. It's more acute that we see the complexity adding to the lengthening because it requires so many more components and pieces. A smaller project, it seems as though some of the folks are able to hustle to find alternative sources. But when you're trying to find, you know, 50 feet of I-beam is a lot easier than when you're trying to find 5,000 feet of I-beam, you know, so it might be some of that.

Thank you, guys. Appreciate it. Okay. Our next question comes from . Go ahead.

Good morning, and I can ask another terrific question. I was interested in the new product development 1990 reference is really exciting, one of those things that kind of fits in nicely with a industry trend towards environmental profits and all that. I know last year you know kind of new products as we're getting that. Are you still running at roughly coming product annual sort of new product and annual cycle and are there other things that, you know, we can kind of expect to be introduced this year, but it'll be very tight with drivers. I mean, it seems like certainly the O290 can be one of those, and, you know, I was wondering if anyone else. Yeah, Rick, good to hear you. Thank you for following the question. But first of all, you know, we were just going over, I was just talking with the marketing department, tribe development and engineering a couple weeks ago, And I was saying about how important it is that we keep that rhythm up and we keep the investment going. And, you know, I love the fact that we get to say, you know, 20-plus products. And the reality is they were starting to add them up and show them to me, and every year they've been in excess of 20. And I think that pace will continue for quite some time. I mean, I have the tendency of looking at, our future development plans, and we're already, you know, scheduled out now, starting to talk about 2025. So I think that piece will keep up. There's two avenues we have in new products. Completely new product, R290 and ReadyMount would be something like that. And then products that we're, you know, going through additional enhancements or cross out initiatives or things like that, there could be a new category product or something. I'm happy to say that, you know, we basically, for the most part, have 20 brand new organic products on the roadmap, 20 plus, you know, again, going out for at least 24 months. And I don't mention this a lot, but we are an outdoor-oriented company, and we really want to see outdoor use as kind of the lead. But our indoor product line, which has always been very strong, has really taken on legs of its own over the last couple of years. And, you know, we have spent a lot of that development time on that, and it has been paying off in stage for us. Our share, when we start to look at our mix between indoor and outdoor, we still always favor the outdoor mix, but I'll tell you, it's getting a lot closer to 50-50 than I would have ever imagined. And you're seeing, you know, the growth in the outdoor, but you're seeing, you know, maybe two X growth on the indoor. And so it's great because what you're seeing is us being able to provide just that much more of a solution, which has always been the foundation of our growth strategy. Either more vertical markets or deeper into the vertical markets we're in. And when indoor continues to improve, One of the things is if we're getting more of indoor on those projects we're on. So that just goes to underline getting that greater share of wallet. That's great, and that's actually really exciting to make sure that helps in the seasonality as well. And I'm curious when it comes to margin on indoor products, I'm guessing when you're rolling out something like the R29, the DCMS, bump up uh in from the margin there or use as that part of the business code maybe starts uh you know being bored and after are both scanning some of those margins in case or you know there's some changes It's too early to tell on the R290 side. It will be mostly at the end of this calendar year before we're delivering R290 solutions with enough color to tell you, but certainly our intentions are, you know, to give our customers a very competitive product and compelling reason to move to it, offset by a learning curve that goes along with, you know, manufacturing with the type of technology and investments and the startup that goes with it. On the indoor versus outdoor, you know, we're very disciplined around what we're going to do for lighting, and if we can't keep those margin levels comparative, we're not interested in doing something that's dilutive to our overall position in lighting. So the answer to your question is the indoor product is very competitive with our outdoor product in terms of margin and performance. I'm sure once you've been working on a larger project to this point, you're offering additional services or products that in and of itself is a margin enhancement just so you don't have to get crews in there to take it to those projects that are already there. So the last question I'd like to ask you on this is, you know, the deribrating of the company is somewhat important for these processes, and do you have sort of a one-time I'm sure that has been interactive and just a general overview of status parameters and any things specific to those areas that you'd like to strengthen that

you know, it's going to be vertical or it's going to be vertical. I'm sure there's going to be an opposite and that's going to be part of its, you know, value.

And then I know, you know, time is just going to be connected with each other. And that's, that's what gives all of us a lot of confidence. And just in terms of size or just in terms of industries, it might be the same thing. You know, I would say that we're optimistic. We will look and consider everything or most things that we feel would contribute to our ability to grow, but in a way that is financially responsible and stable. I'm glad you mentioned culture. I know that we've talked about it before, and I'm glad you mentioned it because I underlined it. So much of this has to start with a cultural fit. If If we're round and they're square or we're a triangle and they're, you know, an octagon, I don't know if we want to go through all that work to try to mesh them together. There's just this opportunity where we can find something that creates momentum, CSI being a good example of what can be done when you're measuring, you know, the tangible with the intangible. As far as how far out over our keys we would get, I mean, I think that anybody that's followed us for any length of time knows we're, you know, I'll just use the word again, we're disciplined. We want this to be, we're building a great company here. We're building a bigger company. We want this to be palatable for our employees, for our shareholders, and for our customers. And what we don't want to do is do something that risks that. So everything's on the table, but it would, you know, we would, it would have to be, the right opportunity, and I would just say to you as an investor, you can be confident that we would put every opportunity through the ringer, but we'll also require to meet a certain threshold for it to be, for us to have been as well as we could.

Thank you, Jeff.

Thank you, Jeff, all the confidence we need, and just wanted to say thank you to you, We appreciate it.

You're welcome. Let's conclude that question and answer session. I would like to turn the conference back over to Jim Clark.

Thank you, operator. I would just say, again, thank you for taking the time to listen and learn a little bit more about LSI. Everybody that takes the time to get on the phone. and listen to what we're doing just becomes that much more informed and that much more has a greater understanding of what we're doing here. I think that, you know, we're going to have a good fiscal 2023, and it's hard for me to believe, as I mentioned in the beginning comments, that, you know, we're wholly, you know, two months, 50 some odd days away from the end of our fiscal year. You can be assured that we're doing our best. to, you know, hit the next objective, hit the next goal for us. And we're already moved on to our path forward plan for 2028. And, you know, we're excited to hit that next level of growth and achievement and do it in a way that keeps our employees, our customers, and our shareholders all happy. So with that, I'll just say good afternoon and thank you again for the time.

Take care. The conference is now completed. Thank you for attending today's presentation. You may now disconnect.