LSI Industries Inc.

Good day, and welcome to the LSI Industries Fiscal First Quarter 2025 Results Conference Call. Today, all participants will be in a listen-only mode. Should you need assistance during today's call, please signal for a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star then 2. Please note that today's event is being recorded. I would now like to turn the conference over to Mr. Jim Galise, CFO. Please go ahead, sir.

Welcome, everyone, and thank you for joining today's call. We issued a press release before the market opened this morning detailing our fiscal 25 first quarter results. In addition to this release, we also posted a conference call presentation in the investor relations section of our corporate website. Information contained in this presentation will be referenced throughout today's conference call. Included are certain non-GAAP measures for improved transparency of our operating results. A complete reconciliation of GAAP and non-GAAP results is contained in our press release and 10-Q. Please note 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, for more details. Today's call will begin with remarks summarizing our fiscal first 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, and good morning all. Thank you for joining us this morning. Today we'll be discussing our first quarter 2025 earning results. As you have likely noted from our earnings release, sales are up 12% year over year thanks to very robust project activity in our refueling C-Store space, increased activity in our grocery market in our display solution segment, along with strong sales from EMI, which we acquired back in April of 2024. EBITDA for the quarter was in excess of $13 million, with free cash flow over $11 million. Net debt is under one times at 0.8. Jim Gilles will give more specifics in a few minutes. We continue to have a very strong project and quote activity level across all vertical segments. But order timing remains a bit choppy as large project activity continues to push from a timing perspective, and grocery remains mired in court hearings, which we expect will resolve by the end of this calendar year. Our thesis around vertical market orientation remains very attractive to us, and the durability of our model continues to gain strength as we work to offer more and more goods and services to the markets and customers we focus on. Within our display solution segment, we continue to execute on an elevated backlog in project activity in the refueling sea source phase from awards we achieved in fiscal 2024. We anticipate that that project activity will remain elevated through 2025, but thanks to investments made in prior years, we have the capacity to handle our current demand and more. Although our grocery segment continues to remain under a partial cloud of uncertainty, there has been a market increase in activity with order rates up over 90% year over year and remaining strong early into the second quarter. You may have noticed in our press release, I commented that our book-to-bill ratio is 1.3 times in the first quarter based on the success and demand of our R290 cases, along with significantly increased activity in our non-refrigerated display cases. We're excited about this building activity level in grocery, And I expect the momentum will continue to build as the fiscal year progresses. Activity at EMI, which we acquired back in April, reached record performance levels in its first quarter as part of LSI. We've been working closely with the entire team at EMI to create and leverage opportunities spanning from commercial to operational, procurement to manufacturing. And we anticipate that we'll have a couple of years' worth of synergies to harvest and grow. The team at EMI has been outstanding to work with. They've been thoughtful, engaged, energetic, and the integration is going exceedingly well. On our lighting segment, lighting activity in large projects has experienced some headwinds over the last few months, mostly in regards to timing. We've not lost any of the large projects that we've been working on, to the best of my knowledge, but things have remained cloudy and protracted from a timing perspective. There's not one common theme to these timing delays, but it does underline the project timing volatility we've been commenting on over the last few quarters. Staying within lighting, I'm happy to say that we recently released our next generation of our outdoor lighting product called Velocity. Velocity offers a unique approach to outdoor lighting from its performance to aesthetics to its modular construction and build options. In the design of this new fixture, We built on top of our prior investments in adaptability and customization and our ready mount technology, providing a product that offers next generation performance along with reduced installation time and weight reduction. This is a significant investment for LSI and Velocity builds on our very popular Murata series of outdoor products. LSI has always had a very robust indoor product lighting portfolio But the strength of our brand has always been associated with outdoor lighting, and Velocity should pay dividends for years to come. Last month, in early October, LSI along with JSI and EMI attended NACS, the National Association of Convenience Stores, and PEI, the Petroleum Equipment Institute show. These shows are combined into one and coexist alongside of each other. This is the world's largest trade show associated with convenience stores, and attracts large group of attendees from refueling through grocery. LSI had a record turnout at our event that we hosted through the week, and the customer engagement was the strongest I can remember. The combination of LSI, JSI, and EMI created connections that span from entirely new customers to existing customers working in different departments across a wide customer base. We're encouraged by the engagement levels and we look forward to leveraging the contacts we made at this event. We accomplished a lot through this quarter. We continue to build a stronger, more capable business with a durable platform equipped to deliver profitable growth consistent with our growth objectives outlined in our fast-forward plan. We are using experiences of our management team to effectively integrate EMI and optimize other parts of our operations. We believe that we have significant growth opportunities in front of us, and we remain committed to growing our business while balancing the needs of our customers, shareholders, and employees alike. With that, I'll turn the call over to Jim Gilles for a closer look at our financials.

Jim? Thank you, Jim. Q1 was a solid start to the 2025 fiscal year, with sales of $138 million, adjusted EBITDA over $13 million, strong cash flow, an increased order rate, and EMI integration progressing at an accelerated pace. Sales increased 12% in Q1, including the first full quarter of EMI performance. Comparable sales, which exclude EMI, reflect continued growth in multiple verticals, including refueling C-Store, QSR, and parking, offset by ongoing soft sales in the grocery vertical, and less large project activity in lighting. Total first quarter comparable orders increased 6% over prior year, led by the grocery vertical, where orders rebounded in a strong way. Our total comparable backlog exiting Q1 increased over 10% compared to the prior year period. A higher earnings conversion to cash generated a strong cash flow of 11 million in the quarter. Our balance sheet remains healthy, as the high level of cash flow reduced net debt to $42 million, a TTM leverage ratio of 0.8 times. Adjusted net income of $8 million resulted in adjusted earnings per share of $0.26 for the quarter. Please note that at the beginning of the fiscal 25 first quarter, we are including amortization expense related to the acquired intangible assets as an add-back to our non-GAAP reconciliations. With our increased level of acquisition activity in recent years and inorganic growth being integral part of our strategic growth plan, this change will provide increased transparency to our core operating performance. Next, a few comments on each of our two reportable segments. It was a very active quarter for display solutions, as total sales increased 43%, including the first full quarter of VMI. Comparable sales for Q1 increased 17% sequentially from the June ending quarter while finishing several points below prior year. The refueling C-Store vertical had a robust quarter with comparable sales increasing 16%, demonstrating the high level of new store and store renovation market activity combined with LSI's recent large program wins. EMI contributed additional sales increasing the overall growth rate for this vertical. We're encouraged by the resumption of order activity in the grocery vertical. We previously commented on our ongoing engagement with grocery customers on planned programs, and program release activity is finally beginning to occur. Order activity was broad-based from both a customer and product perspective. New DOE refrigerant standards are effective January 1st 2025, and grocery companies are beginning to transition to the environmentally friendly R290 refrigerant. We exit Q1 with a significantly increased backlog in grocery and expect favorable order levels to continue. We're currently ramping up production capabilities at both our refrigeration and millwork display facilities to support anticipated demand. QSR sales also increased substantially in Q1, led by incremental impact of EMI. Project code activity is steady, and the backlog in QSR also increased. Operating margin for display solutions was 10.1%, reflecting the mix of market, vertical, and product sales, as well as the addition of EMI. In summary for display solutions, Comparable orders increased 22% in Q1 versus last year, exiting Q1 with a measurably increased backlog. We expect double-digit organic sales growth in Q2 versus the prior year. Operating margins will improve with the expected increase in volume and more favorable mix. For lighting, we're seeing market performance fluctuate across verticals and project size. Q1 sales increased double digits, in refueling C-Store and parking applications also increased. This was offset by fewer large projects, specifically in the warehouse and automotive verticals. The number of large projects termed hold for release by contractors has increased over the last quarter. This is known committed business, but part of the length and quote to order conversion process. Smaller project activity remains very healthy. and overall quote levels remain at a consistent rate. Looking forward, we expect large project activity releases to begin in Q2, improving the sales outlook for the second half of fiscal 25. Operating margin was 10.1% in Q1, with selling prices and material input costs remaining stable, supporting margin development as sales volume improves. For both segments, one of our capital allocation priorities is continued investment in commercial growth initiatives, both capital for new products as well as working with our channel partners and customers on accelerating the adoption rate of new products and expanding and realizing our substantial cross-selling opportunities.

I'll now turn the call back to the moderator for the question and answer session. Thank you.

We will now begin the question and answer session. As a reminder, to ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw it, please press star then two. At this time, we will pause momentarily to assemble our roster. And today's first question comes from Aaron Spichala with Craig Hellam. Please proceed.

Yeah, good morning, Jim and Jim. Thanks for taking the questions. You know, maybe first on C-Store, you know, obviously commentary on the strong backlog there. Can you just give an update on where you're at with the rollouts of a couple of those larger programs and just how does that pipeline look, you know, overall given, you know, industry dynamics like the move to fresh food and some of the M&A that we've been seeing there?

Yeah, well, good morning, Aaron, and thanks for being on the call. Yeah, C-STOR, I think that we've talked about it the last two quarters. The order of volume that we got in 2024 is going to carry us out, you know, even back then is 12 to 18 months, and we've added a number of projects on top of that. So, I mean, the simplest terms, the backlog we have is going to carry us through 2025, fiscal 2025. And as I mentioned in my comments just a few minutes ago, Thanks to some planning we did, you know, over the last, you know, two prior years, we have the capacity to handle more. But we have, you know, pretty full slate for 12 to 18 months at this point.

All right. Understood. And then, you know, maybe can you just give us an update on some of the pilots that you've had, you know, refrigerated in C stores and some of the other broader pilots in QSR? You want to update there how those have been going, and if you're seeing or expect any of those to kind of turn into, you know, larger projects moving forward?

Yeah. So, you know, as you've probably seen, and I think you just mentioned, there's a lot of activity in the C-Store space, and there's a lot of pent-up demand in the grocery space. I think that, you know, with the administrative change, the administration changing in Washington, you know, on a go-forward basis, we're hopeful that The headwinds that we've had with grocery will resolve itself here by the end of the year. But in terms of pilots, our big pilot programs have been in place now for better than six months. They're all based around the transition from our 448 and 449 solution over to our R290 environmentally friendly refrigerated solution. And everything on those testing and on those projects has gone stellar. We're into a normal, what I call a normalized kind of distribution curve now using R290 and 448. We will abandon the use of the hydrocarbon refrigerants here at the end of December, and we'll be going on a go-forward basis with R290, you know, starting January 1st on a go-forward basis. But the feedback we've received, The manufacturing process, our workforce, our availability in terms of components and parts, our testing have all gone very well, and we're very excited about being able to offer this product and having a very competitive position to compete against traditional refrigerants. Some of the central rack stuff, we feel very strong about our opportunities going into calendar year 25. Aaron, Jim G. here.

Just to add to what Jim said, we are now in multiple different C-Store chains with our refrigerated and non-refrigerated displays. The customer acceptance of that has gone very well. They're very pleased with the sell-through that that's generating, and we're very optimistic about the continued growth and penetration in the C-Store chains. utilizing mobile display units.

Great. Thanks for the call there. And then just maybe last for me, you know, on EMI, strong performance, good start there. Can you just kind of give some maybe early examples of some of the commercial synergies and just how you're thinking about those and then also cost synergies with some of the margin expansion targets you've laid out there?

Well, we've always been excited about, you know, our thesis is really about that kind of multiple arrows, one target, you know, being centered around vertical markets and being able to solve a lot of the customer's problems with kind of one belly button to push on. And, you know, I will say that we walked into JSI very excited about that. And, you know, we were able to aggregate together our dimensional signage in grocery, our lighting technology, in grocery and then are refrigerated, you know, in non-refrigerated products in grocery. We learned a lot through the acquisition and the integration of JSI. And I think going into EMI, we were much earlier, you know, much more directful in terms of the type of relationships and the way we wanted the introductions to happen. And I will give EMI credit. Their relationships with the customer who were probably at a little bit of a higher strategic level. And that, from a commercial standpoint, it couldn't have gone better. Now, I brought this up many times in the past. We're a project-based business. We certainly have a third of our business is kind of one-off, two-offs, that type of thing. But the bigger part of our business are these multi-site, hundreds if not thousands of site projects. These things take you know, 12 to 18 months to kind of develop, digest, and execute. It doesn't mean that we won't pick up, you know, a dozen locations here or two dozen there or anything like that. But to get into the very large project business, I do want to just say everybody should have some patience. It will take some time. And we saw that play out with JSI. You know, it took probably closer to two years for us to really get traction where the customers understood our relationship and the compatibility and the ability to kind of come out of the factory with signage already pre-installed, with lighting products that are associated with that to get the uniformity we talk about in terms of the look and feel of the products that are in there. So I'm very encouraged commercially on the introductions. I mentioned in my call, NACS, I will tell you that We had all the brands in there, EMI, JSI, LSI, and we had all of our customers coming, but it was almost like a family reunion a little bit where we had a customer coming from a particular company and then their coworkers coming and meeting across the trade show booth, so to speak. It was really pretty exciting to see and lay that groundwork about that where one company You're buying from one source. The senior management teams here, the divisional people are here. You have access. So it was very exciting. On the operational side, EMI is a very well-run company. We're very proud and happy to have the management team stayed there. Alan and Dave Mueller, Alan Harville and Dave Mueller are staying with the company. They've run the company very well. But as a larger company, you know, and particularly one that's brought in all this operational discipline, we're able to share a lot of those learnings and a lot of those activities and a lot of those programs with them, and the receptivity on EMI's side has been outstanding. I was down in the factory two weeks ago. I had an opportunity to walk the floor and talk to a lot of people on the floor, and I will tell you consistently the one comment was, the first comment was, wow, your guys coming from JSI are really good guys. We really like them. They didn't come in here and start, you know, barking out orders or anything. They came in here. They're a good partnership. And then the second comment was universally really excited about, you know, the continuing improvements we can make. And I will tell you that, you know, some of the improvements we've made already just in terms of layout and product flow, and material on the floor, and small things like that have already yielded improvements. And the bigger things, the procurement, the kind of consolidated purchasing, those type of things, those will continue to go. Like I said in my comments, I think we have years of synergy here that we're going to be able to harvest, and we'll harvest it at the right pace so that we don't exhaust anybody or create friction. But we're really excited about it, and they've done an outstanding job. Very proud of the whole team there.

That's good to hear. Great color. Thank you both. I'll turn it over.

And our next question comes from George Gianarchos with Canaccord. Please proceed.

Good morning, guys, and thank you so much for taking my questions. I'm just curious as to you mentioned that there are fluctuating demand levels within some of your vertical markets. You did You provided some detail around that, but is there, to the extent you can tell, a common thread between the markets that have strength and those that don't? Is it just maybe size-related, or are there – can you kind of unpack a little bit what particular verticals are showing varying trends? Thank you.

Yeah, George, thanks for attending. Thanks for the question. I mean, you know, there's always fluctuations that we see within all these verticals. I would say if I was going to call any out, and I did make a comment earlier, I was saying that there doesn't seem to be any kind of common thread between these projects, although I will say from a project standpoint, our larger projects seem to be moving at a slower pace, regardless of vertical market or one-off kind of large project activity. They just seem to be more choppy than I've ever seen, you know, or I've seen in the last 10 years, certainly. Specific to verticals, there are a couple that are definitely feeling, you know, I think have a little bit more headwind. Warehousing is definitely down. You know, there's some other markets that have picked up. QSR is up. C-Store is up spectacularly. I mean, you know, I couldn't overstate the activity in C-Store. Grocery is recovering nicely. You saw the numbers here in this quarter and early indicators coming into the second quarter say it'll continue to do very well. Automotive is flat, maybe slightly downish. And automotive, I think I've talked about it since the pandemic. Automotive has resisted every comment made about it, every press release made about it, all the forecasts around automotive, at least from our perspective, have been absolutely 180 degrees out to the story that was written. It's been very strong, but it is a little flat right now over the last two quarters we've seen that. No other market, no other vertical market stands out to me. I'd say that the majority of the impact in lighting are the large projects. You know, we had some really large projects, you know, last year, consistently last year, and those just seem to be None of them, I don't feel like we've lost any of them, but they've consistently been pushing out, pushing out. Quote activity has still remained at that very elevated level. It hasn't dropped at all. It's not, it hasn't grown right now, but it hasn't dropped and it's a very elevated level. Requoting has slowed down a little bit. We, you know, we're constantly, you know, to keep consistent with our pricing and inventory supply chain, whether it benefits, you know, whether we have reductions or we have increases. We re-quote, you know, our quotes have an expiration to them, and that has been pretty steady. It hasn't, that activity, that re-quote activity hasn't come back a lot, and that's usually an indicator to us that the commitment's there, the timing's not right. And so I would just say most of the headwinds we had in lighting have been large project activity. Our small project and our big projects Our multi-site project activities remain pretty steady, but large project has been off.

Thank you for that. And as a follow-up, you know, obviously inorganic growth is a big part of your strategy. You define net leverage as of the first fiscal quarter at less than one turn. To what extent does a certain amount of time need to pass for you to consider additional bolt-on acquisitions, or should we just assume that given that EMI appears to have gone well that you'll consider those in the near term? Thank you.

Yeah, you know, I'm actually glad you brought up the question. I think that we've touched on it in the past. we want to be very fiscally responsible and we also want to look at our resources within the company, our ability to integrate, our ability to make sure that we have a plan and we're executing against it. Certainly with a project like EMI, it shortens that window that we would normally kind of look at. They're very receptive to the changes. We have a lot of opportunity. We have our time horizon that gives us time. So, you know, the best thing I could say is that we're consistently looking. We have a funnel of opportunities we've been working. I don't see anything that would stop us from moving forward if the right opportunity came in front of us. If we could execute at it with the same type of strategies that we had with JSI and EMI, I would say that, you know, it's very likely we're doing something in calendar year 25.

Thank you.

The next question comes from Amit Dayal with HC Wainwright. Please proceed.

Thank you. Good morning, everyone. Nice to see the execution continue to come through despite some challenges in some of the end markets, Jim. On the gross margin, this quarter, it seemed it was a little bit lower than the prior quarter. Any particular reason for that, or is it just the product mix that you saw this quarter?

Yeah, so I mean, I think we've talked about this before. When you look at the two segments, the gross margin performance, lighting versus display solutions, are significantly different. But when you look at operating side, when you look down in the EBITDA they kind of balance out, right? And a lot of that is because of our channel in lighting versus our channel in display solutions where we're direct in display solutions, where we have some direct in partnerships in lighting. The models are just different. Also in display solutions, you saw the recovery occur in our grocery side. It was a good piece of it was refrigeration, but an equal piece was non-refrigerated, and the margins are generally lower in that non-refrigerated millwork type display side. Also, I would say that, you know, we took corrective actions last year when things began to slow down in grocery. As quickly as they slowed down, you can see from the numbers they picked up almost equally in Q1, 90% improvement, we had to ramp back up and there were costs associated with that and there's inefficiencies associated with that. So I think that it's important to realize that the two segments have very different margin profiles on gross margin, but when you look down at the bottom line, they all come together. So I would encourage you to make sure you're looking at the two components. And then in terms of any of the weakness in gross margin, I think it's temporary. as we work through that ramp up and as we get a better balance between refrigerated, non-refrigerated, and some of our dimensional graphic sales. So, you know, given the ramp up we had to do, I'm pretty happy with it.

Understood. Thank you for that, Colin. And then, you know, you commented earlier that you're expecting sort of double-digit growth year-over-year for 2Q fiscal. You know, with EMI now, going sort of, you know, full-fledged, should we expect sort of that type of performance or year-over-year improvement compared to last year's quarters through this fiscal year?

All right, well, I'm going to have to hit the rewind button because I don't remember saying double-digit growth. I want double-digit growth. For display. Oh, for display, yes, yeah. Yeah, I mean, I think that, you know, if you – I mean, you have to add in there's a recovery going on. We feel, you know, certainly based on Q1 – And the early indicators in Q2, we feel like grocery, just as we've discussed for the better part of a year, there was going to be a tipping point at some point where the grocery market in general was going to have to start to reinvest and not be able to stay on the sidelines. We've also commented that we fully believe that there wasn't going to be any decisions prior to the election. And I think given the incoming administration, it probably favors that that project moves forward, or at least the obstacle, the mountain isn't as big as it was maybe a week ago. But with all of that said, we're starting to see that cork come out of the barrel with just maintenance and required investments and strategic execution by a broad base of our customers in that display solution side. So we do think that coupled with EMI, we are going to have that kind of growth in display solution. And, you know, I never like to give too much guidance or forecasting looking out, but we feel pretty strong about, you know, almost certainly Q2 and into Q3 and likely through the year. But, you know, I don't want to put myself on a hook on that. You guys have been following us long enough. Our say-do ratio is very important to us. We would rather, you know, we would rather always over-deliver and under-commit than do the other way around. There's a lot of variables. There's a lot of things that could happen, but we feel pretty strongly about what's going on in display solutions.

Yeah, makes sense. Thank you for that, Gene. Just last one for me, you know, for this new refrigerant product, I'm wondering if there are other markets you could potentially enter outside of the core grocery, you know, segment you're targeting initially for this

There absolutely is. And remember, part of our thesis is that these displays become a grab and grow center for the convenience store market, which continues to expand the goods and services they're offering in their engagement with their customer. And we've already had a number of customers that we're in pilots with or that have just assumed regular purchase rhythm with putting these refrigerated R290 displays in their facilities. So We think that there is a long-term opportunity there that could match and be on par with grocery. It's just what the speed of that looks like, because this is kind of a transformational change for them and something that they're adding. I will say that coming off of NACS, it was a common and consistent topic of discussion. And I don't want to get too far ahead of myself. But we're taking the technology that we have right now, particularly combining it with what EMI has done, and I brought this up when we acquired EMI. Remember, our specialty is open-air, open-case refrigeration. EMI does a lot of closed-door refrigeration. I will give you some insight. JSI will be the center of excellence for refrigeration in terms of the technology, the design, and all of that. EMI will continue to be the center of excellence in the construction of the displays, of the cases. Our ability to manufacture and customize these cases now with both open and closed-door cases is something that will evolve over the next couple of years, and we will definitely leverage it.

Got it. Thank you for all that, Colin. I'll get back at you.

The next question is from Rick Fearon with Accretive Capital Partners. Please proceed.

Good morning, Jim and Jim, and congrats on another solid quarter. So the 90% increase in order rates on the grocery side sounds incredibly promising. And you mentioned the stronger margins from refrigerated displays. Just wondered if you had any additional color you could share on the nature of incoming orders, sort of refrigerated versus non-refrigerated and the backlog you're working through now as compared to first quarter?

It's a complicated question, right? Because what we see before an order is, you know, the quote, the pilot, the project design, those discussions. What we're always kind of blind to, and it accelerated a little bit through this, you know, Albertson's Kroger merger, is the timing. I would say, you know, I can comfortably say that the activity level in terms of those conversations, test systems, evaluation have all been going very strong. The non-refrigerated displays, they've been, you know, that accounts for a big piece of that uptick we had in Q1. And we can see out into Q2 and a little bit into Q3. We expect that demand to remain strong. very solid going out into Q2 into Q3. What's still a little bit murky is the speed at which the refrigerated displays come. And it doesn't surprise me because we're going into what we call a quiet period, right? As we come into November, December, January, a lot of our grocery market, they're not doing a lot of work in the stores. They are really focused on holiday activity from Halloween right through Thanksgiving, Christmas, into New Year's, and in some cases all the way in through February and March with Easter and that type of thing. But what we do start to see in the beginning of the year, in the beginning of the calendar year, January, February timeframe, we start to see that planning and that activity getting ready for the seasonal vegetables, blueberries, strawberries, all those type of things which really lend themselves very well to that open air casing, so I think we're probably a quarter early in terms of having great visibility, but we're encouraged at what we see so far, and we expect that we'll continue to see an uptick in the refrigerated sales side of things. Certainly, we had a lot of activity in Q1, and everything says that we'll continue to have that in Q2, but we're really excited about what we could be shipping in Q3.

That's helpful. Thanks, Jim. The evolution of the Kroger-Robertson merger will hopefully release a lot of that demand that's been pent up. So you answered a question about both on acquisitions and inorganic growth, and exciting to hear that process continues to be active and your expectation of something in the next 12 months. I was curious about with the strength of the balance sheet and your really strong free cash flow, are there other sort of organic growth opportunities that are accelerated by the additional cash generation things that otherwise you may have kind of put on hold until you felt, okay, we're on really solid footing? I mean, a debt-to-EBITDA ratio below 1% or 1 times is exciting stuff.

Yeah, I mean, the answer is absolutely yes. You know, I'll use EMI, just a conversation we were just having, I'll use it as an example. EMI has, you know, closed-door refrigerated cases, but JSI has more of the, we'll call it the technical capability to execute and improve those cases and understand, you know, their testing and their design side, and our lead engineer and his team up at At JSI, it becomes an immediate opportunity organically for EMI. EMI enables us to do it, or EMI creates the opportunity. JSI's technology and engineering resources allow us to execute against it. So we are very well and very much invested in trying to leverage a lot of those things. And as we've talked about consistently in our fast-forward plan and in our execution, we look at growth in two ways. One is creating and acquiring more of the share of wallet and the customers in the segments we're in. And the second is expanding or adding additional vertical markets. And I think there's a segment of those vertical markets that are always in a kind of an ebb and flow. And I talked about automotive as an example. Automotive is kind of flat right now. And we're there prepared. We have the products and we have the relationships and we have the relationships with the automobile manufacturers. We have the relationship with the large auto groups. We have the relationships with the large integrators that work on auto dealerships. As that slow, warehouse is slow, we turn our attention to different markets where we go in and experiment. Parking, as an example, after a couple years of being slow, particularly coming out of the pandemic, parking is showing increased activity. So we look to move between some of those verticals. And by having a portfolio of them, we can move with the ebbs and flows and hope that they're kind of, their sine waves are kind of opposed to each other. Well, one's down, another one's up. And so within our portfolio, we have those additional vertical markets that we look to expand on and we look to kind of put more investment, more energy into while another vertical market's down.

that's helpful jim thanks for all the wonderful color and the hard work from you and the team appreciate it yeah thank you at this time we are showing no further questioners in the queue and this does conclude our question and answer session i would now like to turn the conference back over to mr jim clark for any closing remarks i i really think we covered a lot in this call so i don't have any extensive comments here to close the call except to say

I'm sure you can all see the activity, you know, this was before, you know, this existed last month and a few months before, but there's a lot of activity in the C-Store space. We're engaged in all of it. There is a lot of synergies that have been created with EMI coming on board, you know, both commercially and operationally. We talked about them, but I'm very excited about it. And I'm glad that we feel like we're coming to some resolution on grocery and much that we've spoken about over the last year is kind of executing exactly in the timing that we've been kind of anticipating. We do anticipate by year's end that there'll be great clarity to this one way or the other. And regardless of which way it goes, we feel like there's an opportunity for us. So we're very excited about, you know, the outlook where, you know, we don't feel as though lighting's under any particular pressure. It's just a timing thing. We're very excited about Display Solutions. I think that we have, you know, some real good opportunity in front of us, and we're excited as a team to continue to execute and look for those opportunities and maximize it. And I just want to say to everybody that's on the call, thank you for your continued interest, your continued confidence, and your continued support. And with that, we'll draw the call to a close.

Thank you. The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect.