Q4 2022 LSI Industries Inc Earnings Call
Greetings and welcome to LSI industries fiscal fourth quarter 2022 earnings conference call.
At this time all participants are in 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 Gooch cheat sheet.
Officer. Thank you you may begin.
Good morning, everyone and thank you for joining.
We issued a press release before the market opened this morning detailing our fiscal 'twenty, two fourth quarter and full year results.
In conjunction with this release, we also posted a conference call presentation in the Investor Relations portion of our corporate website at Www Dot LSI Corp Dot com.
Information contained in this presentation will be referenced throughout today's conference call.
<unk> are certain non-GAAP measures for improved transparency of our operating results.
Complete reconciliation of GAAP and non-GAAP results is contained in our press release and 10-K.
Please note that managements 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 10-K and 10-Q.
Today's call will begin with remarks, summarizing our fiscal fourth quarter and full year results at.
At the conclusion of these prepared remarks, we will open the line for questions.
With that I'll turn the call over to <unk>, President and Chief Executive Officer, Jim Clark.
Thank you Jim and good morning, all thank you for joining us today.
You know, we're here discussing our fourth quarter and full year results.
The short version of the story is we had a great year.
Before we go into the specifics so let me take you back a short three years ago to 2019.
As a management team, we sat down with a commitment to our shareholders in the market that we believe $500 million company with double digit EBITDA in 2025.
Sales at that time were teetering around $300 million EBITDA was approximately 3% and our company's momentum was a bit flat.
We set out to design and execute a plan, which was to make our company a better company before we made it a bigger company.
We engaged our workforce strengthened our relationship with our customers and agents and put together a focus on specific vertical markets, where we believed we could add value and differentiate ourselves as a key partner.
We were choosy about the markets we selected.
We look for vertical opportunities that matched up well with our core competencies.
We have the right ingredients for sustainable growth.
And we do recognize the value and differentiation we were trying to achieve.
Good example of that vertical market selection was grocery.
Back in 2019 before the pandemic, we felt there was a real opportunity for remodel and new store development in the grocery space.
There are traditional grocers, where being disrupted by customer experiences of new entrants like whole foods fresh market and Amazon.
The big guys and groceries wanted to change the look and feel their stores.
Pete on a different level.
In LSI was the perfect fit.
We provided high efficiency energy saving low maintenance outdoor lighting, coupled with graphics and signage on the buildings moving indoors, we offered high quality high efficiency indoor lighting with modern engaging graphics and signage to the interior of the stores.
We also offered project management project management and.
And a full turnkey solution that took a lot of the burden off the store team and allowed them to focus on other activities.
Looking further into the grocery vertical we look for ways to grow and increase our value.
And we identify GSI fixtures is a great complement to the solutions, we were already providing.
With the acquisition of GSI in May of 2021, we added refrigerated and Standalone displays and we were able to create a continuity in the look and the feel of the products is only possible. When these solutions come from one company.
This year grocery was our number one vertical market, replacing C store and refueling stations for the first time in the company's history.
The best part is we have other vertical markets, we feel represent growth opportunities that could be just as strong as grocery and continue to propel us forward.
Given all of this today, we celebrate our four consecutive quarters with sales over $100 million in each quarter and a total sales revenue of $455 million.
Seven 7% adjusted EBITDA for the year.
Eight 3% adjusted EBITDA in the fourth quarter.
All underpinned by a very robust pipeline as we work into our first quarter of 2023.
Great pricing discipline margin management and sales execution would be the theme for 2023, and clearly our goal of $500 million is well within reach.
You can be assured we'll be sitting down in the next quarter or two to play out our next target.
As I said, we have good reason to celebrate.
Not merely talked about our plans, but we put those plans into action and have shown the results.
Going back to 2019, we also made the decision to re sure as much of our supply chain as possible.
At that time around 80% of our materials are coming from overseas.
I'm happy to say today that number is around 30% and we moved almost 70% of our sourcing to domestic and North American suppliers.
Along with that move we decided strategically increased our inventory levels, but.
The lumpiness of the supply chain and transportation delays in the supply chain, we're interfering with our ability to deliver our products on time.
We increased our inventory by almost $20 million in the first half of the year.
As you know this impacted free cash flow a bit in the first half of the year, but in doing so you reduce the inefficiencies in our manufacturing process.
And improved our overall profitability effectiveness and on time delivery.
This performance was noticed it was noticed by our agents our customers and our competitors.
We took share in the market and we create stickiness with these new customers by maintaining our commitments and reliability as a good strong partner.
Simply put.
We did not have to start and stop our manufacturing processes because of limited parts availability.
I expect that on a comparable basis, our inventory levels will remain elevated for some time.
It just makes sense to have it maintain a higher level of inventory and take a lot of the uncertainty out of our processes.
With that said it does not mean that we cannot tune that level some in <unk>.
You may have already noted we are bringing inventory levels down.
This has resulted in improved cash flow, which was positive for the third and fourth quarter.
And I expect that performance will be maintained.
Given this youll also note that our debt has improved below $77 million and our debt ratio is around two 2%.
This is a good cash flow business and we will continue to take down debt and consider other opportunities as our company continues to perform.
In closing I want to recognize and say thank you to the almost 1400 employees of LSI.
Along with our agents and partners.
None of this would be possible without a great team of people and strong leaders.
Dedication of our people the participation engagement and leadership are truly remarkable.
The last few years have not been easy on any business or person.
The constant narrative that hard times are just around the corner can be exhausting.
But it reminds me of the saying that hard times create strong people and strong people create good times.
We're not in charge of the broader economy.
I can tell you that we have strong people and because of that I'm confident we can continue to create good times.
I am pleased and excited about the momentum we have developed I see robust order and quote activity leading into our new year.
And I Hope you will continue to take a close look at LSI.
The solid execution. This team continues to provide.
We have a lot of runway in front of us.
With that I'll turn the call back over to Jim <unk> for a closer look at the numbers.
Thank you Jim.
We finished fiscal 'twenty, two with a strong fourth quarter net.
Net sales were a record 127 million growth of 31% over prior year, a 16% increase sequentially from Q3 with both reportable segments generating significant growth.
Fiscal fourth quarter earnings also improved significantly as non-GAAP earnings per diluted share were 21.
Compared to <unk> 12 per share last year.
And adjusted EBITDA increased to $10 6 million or 56% over last year.
Margin expansion was a strong focus throughout fiscal 'twenty, two and the business attained our highest levels in the fourth quarter.
With our adjusted operating margin, improving 160 basis points versus last year, and adjusted EBITDA, increasing 130 basis points to eight 3% of sales.
Incremental sales growth in target market verticals, selling price align with inflationary impacts and disciplined cost management productivity all contributed to margin expansion.
For the fiscal year, the business executed at a high level throughout the year with all four quarters generating significant year over year sales and earnings growth, Despite a challenging operating environment.
Sales increased 44% to a record $455 million.
Adjusted net income improved to 18 million, 84% above prior year and.
And adjusted earnings per diluted share increased to 64.
Versus 35.
Last year.
Adjusted EBITDA increased to $35 million or.
We're 66% above fiscal 'twenty one.
In fact, these results represent the highest EPS and adjusted EBITDA attainment and a number of years.
We discussed in previous calls to purposeful decision to invest in inventory.
Specifically in the first half of the fiscal year to mitigate supply chain challenges and support sales growth.
And improving supply chain allowed us to reduce inventory levels in Q4 contributing to a higher rate of earnings conversion to cash.
As a result pre cash flow increased to $8 million in the fourth quarter.
Improved cash flow served to reduce net long term debt to $77 million in Q4, lowering the ratio of net debt to trailing 12 month adjusted EBITDA to two two times.
Our regular cash dividend of <unk> <unk> per share was declared payable September 7th for shareholders of record on August 30th.
Shifting to segment performance both segments achieved substantial increases in sales and operating income for the quarter, improving both sequentially from Q3 and to prior year.
Sales for the lighting segment increased 29% year over year in Q4, continuing strong growth in key vertical markets.
Lighting generated a gross margin rate of 31% in the quarter 210 basis points above prior year.
Collecting additional volume leverage and successfully aligning selling price with inflation.
For the fiscal year lighting sales increased 24%.
Both was balanced with double digit growth realized in multiple market verticals and through both the project and distributor stock channels.
Growth was driven by multiple factors new products expanded selling efforts several effective marketing programs for both our channel partners and end users and product availability enabled by our investment in incremental inventory.
Lighting enters fiscal 'twenty, three with continued momentum with favorable quotation and order activity. Our last three months book to Bill ratio over one and a backlog of approximately 30% above prior year.
Fourth quarter sales for our display solutions segment increased 35% versus last year led by the grocery and quick serve restaurant verticals.
Growth in grocery was led not only by continued strong demand for GSI display cases across national multiple chains.
But our printed graphics also had a solid quarter with several key accounts.
Ports to solution selling approach, we're utilizing in the grocery vertical.
We continue to successfully execute the major QLED, sorry, digital menu Board program initiated in fiscal 'twenty one.
And begun supporting the additional awards received resulting from our performance.
Activity for both will run through fiscal 'twenty, three and beyond.
For the full fiscal year display solutions sales increased 75%, including the impact of the <unk> acquisition, which occurred in the fourth quarter fiscal 'twenty one.
All display solution vertical markets realized increased sales, except refueling, which was down slightly because of the ongoing site construction delays.
Program proposal activity remains at a very high level, However, and we recently received a rebranding program from a major oil company, providing a turnkey solution, including both product and installation services for locations in Puerto Rico.
We anticipate this program will generate more than $10 million of new revenue in the first half of fiscal 'twenty three.
Fiscal 'twenty to operating income for display solutions increased to $18 1 million or eight 2% of sales funnel.
Fundamentals for the market verticals in this segment remain positive in our outlook is favorable as we enter fiscal 'twenty three.
I will now return the call back to the moderator.
Thank you, ladies and gentlemen at this time well be conducting a question and answer session. If you'd like to ask a question you May press star one on your telephone keypad.
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Our first question comes from the line of Amit Dayal with H C. Wainwright. Please proceed with your question.
Thank you good morning, everyone. I appreciate you taking my questions.
Most of my questions I'll, just based around the outlook.
For next year, you know relative to the 500 million dollar revenue target with Garnet Greening side. It looks like you're almost there would it be too aggressive to assume that you could hit that number in fiscal 'twenty three.
Well first of all thanks for joining and good to hear you.
I'm always trying to or we are always trying to just make sure we deliver on what we say.
Environmentally theres still a lot of challenges I feel very positive about the first quarter and I feel positive about where we can be in the year I'm not.
I don't want to commit that we're going to hit the 500, but I will say that based on the momentum we've generated over the last few years were certainly on our way through it.
Understood.
And then you know operating leverage Hasnt grown significantly our adjusted operating income grew by I think over 150% while revenues grew about 44%.
Is this sort of the level of adjust.
Adjusted EBITDA margins, we can expect in a more steady fashion for at least fiscal 'twenty three for you guys.
Yeah, Hi, Amit this is Jim <unk> here.
Yes.
Worked hard if you go back a couple of years, we identified that we needed to to work on our margin expansion and so if you look at what we've accomplished over the last several years in this area, where we're very proud of that it's no accident and its involved multiple levers both commercial initiatives and operational initiative.
And we're going to continue to work both of those levers and we do see that we can maintain and continue to enhance both our operating and EBITDA margins moving forward.
Yes, the book to Bill ratio entering the fourth quarter was $1 one is it stronger.
During the first quarter of Green tree.
I'm sorry, I meant it was book to Bill ratio of one point okay.
<unk>.
Coming into Q wanted it's remaining at that level.
We take a daily look at it obviously, but we're right at that level.
The backlog by back backlog mix guys.
Could you maybe give a little bit more granularity on what is in the mix, maybe just from a percentage.
So the different revenue sources.
But you know our two reportable segments or display solutions and lighting and if you go back a couple of years. We were 70 30 today, we're 50 50 and it stays there it's staying there.
Balance we have.
Couple of large projects that we tend to work.
And then most of it is smaller infill product, but from a mix standpoint.
It's 50 50, right now whites and display solutions.
Thank you Jim.
Really good to see such a strong execution in this type of environment. So congratulations on that I'll take my other questions offline. Thank you.
<unk>.
Our next question comes from the line of George G. I don't know right gets with Canaccord. Please proceed with your question.
Hey, guys. Thanks for taking my questions I appreciate it.
Just maybe to start.
I'm curious as to what led to the decision to reduce inventory are you seeing things in the marketplace that suggests that supply chain loosening such that you felt comfortable bringing down inventories and continued and increasing your position to gain share in the marketplace.
Yes, George Thank you for joining.
You hit the nail on the head, we're just seeing a couple of them.
Supply issues kind of strengthen and get more reliable and so we knew that about $20 million is where we wanted to be I don't think we ever got excessively heavy.
I think that we're going to on a year over year basis on a comparable youre going to see us carrier heavy inventory heavier inventory likely for years to come from historical low from historical levels.
And the reason for that is to take out some of that variation in supply chain and transportation in that but we have definitely seen some improvement and we want to be we want to be diligent about taking advantage of that and reducing some of the positions. We had had that's all it is it is not it has nothing to do with weaker.
Cells or or volume or anything like that just some of those items have stabilized and we see it as an opportunity.
Is there still an opportunity to maintain.
Even higher inventory levels, how do you balance that versus buybacks versus I'm, assuming there's some technology obsolescence that you have to deal with.
I'm, just curious as to how that math works out pretty well.
So working backwards from what you just said we try to the way we try to manage our inventory is driven by a couple of things. One is availability right. We don't want to have the orders and not be able to ship the product and I think that over the last couple of years, that's been a significant competitive advantage for us is that.
It was really about availability and we made sure that we looked at the key components and the ones that we felt were at highest risk and we made sure we had sufficient inventory to carry us through that the second element. We look at is technology and obsolescence, we do not want to get upside down on something that is moving towards obsolete.
But it's something we've done over the last three years has really looked at reengineering, our products and part of that reengineering was cost.
<unk> performance, but also just uniformity in parts that we use across our product line. So that's a big lever for us in hedging against obsolescence, but even with those we're very careful about where we stock up on anything that could be subject to obsolescence and then the third.
It is like I said the supply chain is getting more reliable.
For us in particular, we tried to move from offshore to onshore and we did this pre pandemic.
Who would have known but it was part of our plan.
We were about a.
80, 20 offshore if you went back four years ago, we were about 80 20 offshore.
Today, we're about 30% offshore and 70% domestic in North America.
And so all three of those levers just give us an opportunity to kind of take down that inventory a little bit.
George didn't release here in the last couple of years, we've launched a record number of new products right and we've done a really nice job on the phase in phase out process of that despite the ongoing supply chain challenges. So we're confident moving forward as we continue to go through technology.
<unk> are just phase in and phase out of new products that we're going to be able to manage the inventory situations effectively.
Just a second question has to do with the strength in your business. I mean, you guys are putting up.
Really great results and you juxtapose that next to some of the.
Things that we're reading.
In the paper about economic weakness I mean, how do you balance what you read about and you've kind of alluded to on the call versus the strength you're seeing in the business. I mean are you hearing any anecdotes from customers about issues or is it full steam ahead.
Or are you gaining so much market share in your opinion that you've been able to buttress yourselves from any macroeconomic weakness.
No.
Not we're certainly not immune to anything that could happen to the broader economy. We're all consumers here, we're all seeing.
Pain points in terms of inflation from gasoline to groceries, and you know and obviously, we're seeing the supply chain issues workout and all kinds of different places whether it's you know.
The availability of if you wanted to buy a new car or machine upgrades. We wanted to do here all of those type things when we look at our business though.
There's a lot of the decisions. We made early on are what's giving us the momentum to work through this we are not seeing a slowdown in quote activity.
We're certainly not seeing a slowdown in demand as evidenced by the numbers that were just publishing here in Q4 and you look at Q3 and you look at Q2 before that I know the narrative is out there you know relative to you know hard times and.
Just kind of the broader economy, and we're aware of it.
But I will tell you honestly, we're just not seeing the.
The impact although were pre loaded.
To be ready if we do.
Got it and then I can focus on your margin targets have you.
Given us targets that accompany that $500 billion in sales are.
Should we just assume sort of similar leverage that you have shown over the last year.
Yes, I think as Jim <unk> mentioned earlier, we've still got levers, we can pull and Theres two things I'll say one is as we get bigger we get more efficient or utilization improves we did a lot of restructuring three years ago. We sold some properties, we consolidated a number of operations, but when we did.
That we left capacity in our in the locations that we maintain and that we.
Capped.
And as we continue to absorb some of that capacity, we become more efficient that hits margin.
The second thing is I think.
Right now there is still a lot of inefficiency that's built in because of the supply chain challenges workforce issues those type of things.
I believe as those things continue to stabilize we already have put to work in.
We'll just benefit automatically as those things stabilize reducing inventory obviously, the higher inventory you have the more youre moving around the more you're storing the more work that is and just from an efficiency standpoint, that's not great, but we need to do that right now to assure availability and all those type of things and <unk>.
Worked out very well for us, but as we reduce inventory as you know as our workforce kind of stabilizes continues to stabilize the supply chain stabilizes, we have some natural efficiencies it will benefit and youll see that in margin.
Thank you and maybe a final question you announced a buyback which is great any guide.
Guidance on the timing of that buyback is it open ended do you expect to be finished with that.
A number of months that'd be great. If you can give us a little guidance on that thank you.
Yeah. The buyback is definitely open ended and we looked at it as a management team and as a board and said at the levels that our stock was trading at it just did not make sense.
Our capital models are pretty well defined where flexible we look at them. All the time, but you know that for us that an investment kind of take our kind of at the top of that pyramid and the reason why we would focus on that only is because it gives us opportunities.
And in terms of investment we make investments that we think can generate a higher return.
And then maybe some other activities. We can do and then we have in that mix the buyback and as the stock price goes up you know what.
I think the market naturally says hey, listen your money might be best served doing.
Paying down debt and reloading and being able to be a little bit more opportunistic in the market or make some investments that we have a.
The gain productivity so right now it's still on the table. It's still you know in our top two top three mix.
But we don't have I can't say that we have any specific plans to pull the trigger for optics or anything else. We wanted to make financial sense and obviously as we were looking at the stock price today as the stock goes up it makes less and less sense.
But if it if the stock did get depressed are saddled again, you can be assured we would we would act on it.
Well, thanks for taking the time and congratulations on a great quarter and executing in a tough environment.
George and I can't say, thank you enough for taking the time I know it was a challenge so I appreciate the extra effort.
Of course.
Our next question comes from the line of Rick Fearon with accretive capital Partners. Please proceed with your question.
Hey, good morning, Jim and Jim and congrats on another terrific quarter.
Yes, Thank you Rick.
So first question is just around the forecasting of Ellisize growth today, and Jim you started off by comparing.
The state of affairs three years ago.
Parent today that the company has transformed into a much more diversified business more orders larger number of customers constituting that revenue base and so guests just.
I wonder about your commentary around the forecasting today versus three years ago.
The predictability of that the stability of sales as you see it whether some of the lumpiness of sales.
Ironed out with.
The transformation of the company.
Yeah, I mean, I think that is a great question, Rick and I think from a company's perspective from a company standpoint, yes, we've become much more stable and have better visibility our forecasting is better our commitments from our customers our salespeople our agent is much better in <unk>.
It all works environmentally a lot of that progress has offset just by the current environment and I don't think anybody's immune to it.
So much instability in the general kind of economic market.
We're not only trying to forecast what will do and what our Asia will do but what their customers are due.
And then what their suppliers will do to them.
And we've seen it run the gamut in terms of.
New surprise all the time.
At one point of comp.
Copper wire and another pointed sheet rocket another pointed acoustical ceiling tiles or asphalt for parking lots.
So there is a lot of.
Cause to be cautious relative to making any bold statements.
Forecasting and what we see the future to be but I can tell you. This you know.
And I've said, it before and I think that we followed through every time, we've said it our quote activity remains very strong.
Historic levels and our.
Order activity remains strong and as mentioned in the beginning our book to Bill remains elevated so.
All of those indicators say, we're going to be strong, but I don't.
For me to be on the spot and try to forecast out more than six to eight weeks I just don't want to be that guy that gets caught.
But I.
I will say that generally I am I.
I'm very optimistic.
Understood and it would seem that.
The greater focus on the grocery vertical.
<unk> provides a little less cyclicality and the sales.
At least vs the petroleum and.
I guess that leads to another question, which is regarding additional.
Verticals that you've targeted are are you able to talk about some of the you had alluded to some.
Some opportunities to grow outside these verticals that you've identified are there things that.
You can speak to today or.
Should we hold off to hear about that.
Yeah, I mean, I'd, rather hold off on any specifics on expanded verticals because it serves a couple of purposes and one of them, which is just frankly, our guys are our agents our guys.
We want to stay narrowly focused on the verticals, we've already identified that do create great growth opportunities for us.
Grocery is something that we had identified far before the pandemic and I talked about it a little bit in my comments in the beginning which were that we saw disruption going on and so we saw an opportunity there the pandemic kind of accelerated in groceries, right, where we kind of forecasted it would be.
Petro the refueling stations.
They arent necessarily any weaker.
They are just under pressure frankly, it's permitting and things like that.
The underlying infrastructure state federal local municipality.
Are just slower to recover and they're holding up projects, it's not activity, it's not interest it's not quote.
It's just getting them to be converted where.
Frankly folks can go out and put a shovel in the ground and start some of these projects.
Even with that I think that if the tempo had remained high and in Petro. We still would have won with grocery I mean grocery was just such a powerful combination for us.
And it's all around that broader share of wallet.
We're in a specific vertical and we're just offering more in terms of our solution.
One component is the product side, but don't forget we do project management for.
For a lot of these and these have been very important element for us to win when I think about our digital menu board.
It's now in excess of $125 million contract and a big component of that was our ability to manage that nationwide and to make sure. The deployments went good. That's the same formula we are using it as an element in that formula.
Petroleum and C store refueling.
Another element with grocery.
So that's a big win for us automotive.
Automotive, we've been very strong in but it's under pressure right now that the market in generals are under pressure, but of the projects that are coming up we think we're taking share in that.
Warehouse is something that has just.
Frankly.
Almost four times, our art pieces relative to where we thought we would be.
And we've been able to survey so that that's what's most important.
The demand came and we Werent, we werent caught.
Again, because of a lot of uniformity between our part the way we make our different products, we were able to shift.
And meet that demand. So all of the verticals were in were doing good and I'll just say this we're experimenting with some others.
But we like to do it in a smaller group so that we don't.
We want to attract attention from anybody in case, it's not going to meet our requirements in terms of velocity of growth and sustainability. We don't want things that are a flash in the pan.
If we're going to invest we want things that have legs under it can go five 710 15 years.
Understood that makes sense. Thanks for thanks for that color, Jim and then regarding geographic.
Growth and some of the slowdowns, you're experiencing a couple of quarters ago in Mexico, those have been alleviated as well.
Yeah, I mean, I'll talk specifically on Mexico, Mexico has opened back up again, but it is still about half of what we expected again no representation of loss projects or interest in fact.
In this situation. It is again, a broader kind of government approvals and transactions and getting paperwork across the desk nothing.
Nothing to do with us, but everything from permitting to.
Transfer of assets.
Real estate transactions and things like that with that said you know.
Canada.
Canada opened up.
<unk> opened up.
Six months ago.
That has definitely picked up activity there.
And you noticed and Jim <unk> his comments and in our press release.
We have a very good sized win in Puerto Rico, with a petroleum customer which is not only a.
Good project a great project.
But it's a new customer for us too.
Congrats on that and just I mean, it's exciting to hear additional international markets opening up so that's.
That is really encouraging.
Two other questions just regarding margins and the margin improvement continues to be really impressive definitely doing a lot of things right and I'm curious with respect to kind of keeping that momentum going.
If you've been able to identify other niche oriented sort of add on sales that that might be bundled together higher margin business when you're in these projects on the ground that can kind of continue to improve.
Your gross margins.
Yes.
Great question and frankly.
It goes back to that broader share of wallet right, which is if we're going to walk in and get the confidence of the customer we want to solve as many of their problems as we can and when we're on site. When we're doing the project management. When we are managing the logistics in the background. It gives us tremendous flexibility.
Ability to work around delays it might happen somewhere else, where we can pivot and accelerate something while were delayed by something else.
We have a list of who.
And we're constantly contributing to it and scratching things off and trying to figure out a way in but we do have a list of our vertical markets and things that we think we could add.
And sometimes we're successful in the conversations.
With companies that might have these products are ways that we might be able to engineer them and sometimes things are on the sideline GSI is a great example, GSI was.
You know kind of purposely sourced if you will.
And we were very fortunate to be able to get together with such a good strong company.
And added to our portfolio, we have others that are out there like that and this goes back to.
Some of the questions. We were just talking about in terms of prioritization stock buyback debt reduction investments.
And those are things, we think we continue to invest in and as long as the stock.
Price remains elevated then we can focus on those things and we do have a list that were pursuing.
And then after that it's just there's a lot of cards that have to fall in place.
Thanks for some of that commentary Jim that less.
Question is more of a comment since you've addressed the stock repurchases and I would just encourage.
Your management team.
As you sit with the board and think about valuations at all.
The multiple of sales that the company trades at.
Less than one time sales, where EBITDA soon should be 10% of sales really is.
I got to believe from your perspective frustrating, but.
From our perspective, it's just it's an opportunity.
This company trades continues to trade at this kind of discount and certainly as compared to some of the competitors, albeit they are.
Larger, but as LSI grows.
It should certainly grow into multiples like that it just seems like there's an extraordinary opportunity even at today's prices too.
To retire some of those shares the benefit of course being.
You're buying.
Buying back more of what we all have already come to LOE, which is this business GSI part of it you are buying more of GSI you are retiring a dividend payment. So there is some benefit there that those shares don't need to pay their dividends going forward and of course, reducing this.
Share count improves your EPS.
I just encourage you to.
When you think about what is clearly a dynamic valuation of the company as the company grows and becomes more profitable.
Uhm goes up as well and the stock price.
In my mind anyway reflects an extraordinary opportunity so.
Not to belabor it further but just incur.
We encourage you to continue thinking about.
Deploying some capital into stock repurchases.
I appreciate that comment Rick and I want you to know this does not fall on deaf ears.
By the management team not by me and not by the board.
We want to be very opportunistic and.
If the stock repurchase rises to the best opportunity you can be assured all execute against it we will execute against it.
Yes.
I'd take you absolutely face value on that so thanks, Jim and thanks, Thanks for the hard work and congrats on a fantastic quarter again.
Yes. Thank you.
This concludes our question and answer session I'd like to hand, the call back to management for closing remarks.
I just wanted to say that this is the end of our fiscal year were happy new year, we're actually into a new year here. Our first quarter is starting off very very solid and I'm very encouraged by it but I wanted to take a minute to just thank the effort of the whole team the management team the cheer outstanding F.
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I can't tell you how dynamic and how much work they all put in and how they are constantly trying to look at things and solve problems from different angles and I also want to say thanks to all the team members that are here, we're almost 1400 employees strong now and we.
Every business is only as strong as the people that are in it.
And for those of the employees that are listening or family members or people that know folks here I just wanted to say thanks, none of this would be possible. If we didn't have as strong a team as we do as good of people as we do so for all the people that are on the call or reading the transcript. Thank you for taking the interest and we'll look forward to.
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The next call.
Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.
Yes.