Q1 2026 LSI Industries Inc Earnings Call

Greetings, and welcome to the LSI Industries, fiscal 2026 first quarter results conference. Call at this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Should anyone 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 Galis Chief Financial Officer. Thank you. You may begin.

Welcome, everyone, and thank you for joining today's call.

We issued a press release before the market opened this morning. Detailing our fiscal 26 first quarter results.

In addition to this release, we also posted a conference call presentation in the investor relations section of our corporate website.

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, everyone. I appreciate you taking the time to join us today. This morning, we're going to be reviewing our first quarter results for fiscal year 2026.

As you likely saw in our earnings release, we close the first quarter with strong performance across the board.

Both our display Solutions and lighting businesses, achieve double digit growth. And I'm very pleased with our continued. Momentum and encouraged by our robust pipeline of opportunities. In both new construction and remodels. As we move towards calendar year 2026.

LSI is established a solid footing in the vertical markets, we serve

We continue to broaden our portfolio of products and services. While building stronger awareness of our capabilities across these markets

There's a lot to cover in terms of our q1 performance and Jim go will walk through the specifics in the financials in a few minutes.

But before we do that, I wanted to shift to 2 topics that have been on the top of my mind over the past year.

First, our investor Outreach.

Over the past several months LSI has expanded our engagement with the investment Community attending more conferences than usual.

including a major industrial conferences in Chicago next week and another in California shortly after

These events. Bring together investors with bearing familiarity with LSI and what stands out to me. Most is how much that understanding and misunderstanding of LSI has evolved over the last 5 years.

Today, even those new to LSI, have a much clearer picture of what we do. The customers, we serve and the opportunities ahead.

In the past, many thought of us as only a lighting company.

We'd spend much of our time. Explaining our broader capabilities, such as Refrigeration print and digital menu boards. In-store kiosk, countertops checkout, stands beverage centers Bakery cases and so much more

The conversation is easier today but I can still sense curiosity about the full scope of what LSI offers and why I believe we're creating an entirely new category of Integrated Solutions for our customers.

6 years ago, LSI made a strategic decision to focus on a select group of vertical markets.

We chose those vertical markets based on our existing strengths and on the disruption within those markets that we expected would create long-term growth opportunities.

Today, we serve a number of evolving markets, including grocery convenience stores, refueling Quick, Serve restaurants, Sports lighting, warehousing automotive and a dozen or so others.

In each of these markets, our goal is simple to offer a comprehensive range of products and services that makes LSI a true 1-stop partner for our customers.

Think of us as the Home Depot or Lowe's of the vertical markets, we serve

A customer may reach out to us for lighting much like our Shopper goes into Home. Depot for a gallon of paint.

But we can provide far more and that's where the real opportunity lies. Very few competitors can match the breadth and depth of what LSI offers

For example, a grocery customer might contact us about indoor lighting or open are refrigerated displays.

That initial discussion often expands to include other areas such as Bakery cases checkout, counters produce displays aisle, markers Deli, counters, beverage centers, Etc.

The same is true in gas stations and convenience stores and quicker of restaurants and others.

What begins as a single product or solution offer grows into multiple opportunities.

Now, I realize that most of you on the call today, understand this well, but I wanted to take a moment to just reinforce how much potential this model continues to create for us.

Of this, I see significant Runway ahead of us.

The second topic I wanted to touch on is seasonality and the year-over-year comparisons that arise from time to time.

Last year around this time. The grocery industry was navigating uncertainty surrounding a proposed merger between 2 of the largest US grocery chains.

When that merger was ultimately abandoned in Q2.

The grocery sector resumed its expansion and renovation activities.

That shift along with other activity and opportunities. In our refueling markets, created, a surge of demand for LSI in Q2 of last year, particularly in our display Solutions.

It resulted in more than 100% growth in our display solution segments during Q2.

About half of that growth was organic driven largely by over 60%, organic growth in the grocery segment alone.

I mentioned this not to provide guidance or caution, but simply to note that Q2 comparisons this year, will naturally reflect that extraordinary period of growth last year.

And year-over-year results May not match last year's exceptional levels.

I'm bringing it up early just in case it comes up later.

Lastly, a few words on our integration progress.

As a shared last quarter, both Emi and Canada's best store fixtures are exceeding. Our expectations from an integration standpoint. I'm very pleased with our progress. And with the progress we have underway,

Alan Harbaugh who leads Emi in Nelson. Wesley of JSI are currently developing a plan to align our entire sales and Manufacturing operations across both platforms.

That effort will take time likely the better part of a year, but it will drive significant efficiencies and unlock new opportunities for those businesses and our broader business.

Canada's best, which joined us just over 6. Months ago, delivered, 1 of their strongest quarters in their company's history.

The integration has been strong and seamless and were thrilled with their performance.

As always the foundation of LSI, success lies in our culture.

A culture that's built on accountability adaptability and what we call a high State due ratio.

This mindset continues to drive our growth and our execution excellence.

And I want to sincerely, thank the entire LSI for their commitment and focus.

Looking ahead to fiscal and calendar year 2026, we remain dedicated to advancing our Fast Forward strategic plan.

Internally. This will be a year of focus on our people developing Talent from within optimizing, our processes and finding new ways to improve our day-to-day operations while continuing to provide Superior Service to our customers,

Again, I just think there's a lot of opportunity in front of us, and I'm thrilled.

In closing, I want to thank you for your continued confidence in LSi.

We have tremendous opportunities ahead of us. I'm excited about what we'll achieve together.

With that, I'll turn the call back over to Jim goes for more detailed. Look at our financial performance.

good morning, all

Q1 was a solid start to our fiscal 2026 here. With sales of $157 million, adjusted EVA of $15.7 million had an even better margin rate of 10%.

Adjusted earnings per share, improved to 31 cents, compared to 26, Cents in a prior year quarter, and increase of 19%.

All achieved while successfully managing a challenging environment of tariffs material input, cost fluctuations and component availability.

Sales of 157 million represents a 14% increase versus q1 last year with organic or comparable, sales, increasing 7% in a quarter driven by continued growth in lighting and sustained, high performance and display Solutions.

Sales also increased modestly. Sequentially caring for the momentum from our strong fourth quarter of fiscal 25.

next, a few comments on the performance of each of our 2 report segments,

Lighting first quarter sales, increased 18% versus prior year.

Following fourth quarter fiscal, 25 sales growth of 12%.

Several areas are contributing to the Double Digit growth rate starting with our vertical Market approach.

Our priority verticals are outperforming broader non-res construction, indices providing a larger market opportunity.

As our purpose-built products, provide features and functions which outperformed competitive products.

This combined, with our domestic production lead time and delivery capability provides a competitive advantage.

We have converted multiple and customer counts to LSI in recent months.

And we are aware of at least 1 competitor, who is experienced significant delivery issues.

Recent lighting order levels, suggest your rear sales growth will continue in the fiscal. Second quarter.

Our team has been successful. In managing the broader supply chain challenges, impacting primarily the lighting segment.

Our strong focus on margin management along with increased volume generated, a 170 basis, point Improvement in gross, margin and 43% increase in adjusted operating income.

Moving to display Solutions demand, activity remains at a high level.

With total sales increasing 11% in the first quarter.

Performance was led by the continued recovery and the grocery vertical and sustained program site release activity in refueling sea store.

Multiple programs continue in refueling sea store, including a large National program projected to continue through the end of calendar year 26.

As mentioned in the press release proposal and concept work for future programs continues with multiple customers.

In October, the largest sea store chain in the US published plans to build hundreds of new stores over the next several years deploying, a larger store footprint and focus on in-store and beverage sales.

The secular growth outlook for the refueling. Sea store, vertical remains favorable.

Steady demand patterns continued in q1 for refrigerated and non-refrigerated display cases in the grocery vertical.

Grocery customers continue to formulate their go forward investment plans but planning guidance remains short term.

We continue to effectively manage Demand with the guidance provided

Our focus on designing products for specific applications applies to display solutions, in addition to lighting.

In the first quarter, we were awarded a multi-million dollar display case project for a large National ger based on the quality and functionality of our products. As we are not the low-cost bid on the project.

Okay. It is Best Holdings. Acquired in March of this calendar year, we delivered an exceptional quarter. We remain excited about the opportunities within the growing Canadian market, where we serve multiple verticals, including our strong established presence serving banking and financial institution customers.

To produce solid cash generation the last several years and we expect to deliver solid cash flow again in fiscal 26.

Free cash flow for q1 or slightly negative. However, has improved earnings were all set by an increase in working capital.

Specifically an increase in accounts receivable.

The receivables increase was driven by 2 factors timing of sales in the quarter. And secondly, an inadvertent delay and project billing for 2 large accounts.

The delay was a result of these customers, changing their invoicing address and the change, not properly, communicated and processed.

these are large long-standing blue-chip, customers and the invoicing has been updated, these receivables will be current in Q2

lastly, with our current credit facility approaching 1 year before expiration, we amended an extended, the existing facility

The amended facility increases, our availability to 125 million and extends the term for 5 additional years to September 2030.

This further ensures. We have the liquidity to support the Strategic growth of the business moving forward.

Exiting the quarter we have more than 80 million dollars of available liquidity. While net leverage remains below 1 time.

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

Up your handset. Before pressing the star keys.

1 moment, please while we pull for questions.

The first question is from Aaron spela from Craig, Halen Capital group. Please go ahead.

Yeah, good morning, Jim and Jim, thanks for taking the questions. Um, first, you know, on our end, maybe just starting with lighting. Um, obviously, you know, good quarter. Sounds like the outlook's good there. Um, and most of it seems like it's coming from volume. Can you just maybe talk about, you know, volume versus price there and then just tell your thinking about growth and and kind of margins in that business as as we look towards, uh, fiscal 2026. How does that Pipeline? And and kind of book to Bill look in that business.

Yeah, Aaron Jim here. Jim Clark here. Thanks for the question. Thanks for joining the call. Uh, yeah, I mean, it is almost exclusively a volume. You know, our pricing has been fairly stable here for, for at least a couple of quarters, a little bit incrementally up. But uh, you know, for the most part it's been stable. The majority of that increase you're seeing in lighting is definitely volume. Uh, we've been, uh, We've benefited from a couple of very large, uh, opportunities that uh, you know, we've gotten pieces of uh, you know, over the last 2 quarters and I think that we're going to see even more in the coming quarters.

Hi, Jim, I don't know if you want to talk to Jim G here just to uh add on to what, you know, Jim said, yes. We feel, uh, very confident about our lighting business, where it's positioned, we reference that we've we've been successful in several key account conversions. You know, that's going to provide a nice, uh, stable business moving, you know, forward and our team. I got to give our team credit. They're doing an excellent job, you know, managing the, uh, the whole tariff and and some instability. In the, in the supply chain driven by tariffs, uh, we take, uh, we have a very strong focus on our project, quotation process ensuring, we're referencing the most current costs Etc. You know, so this effective, uh, project quotation process along with the volume is what allowed us to achieve this, you know, 170 basis, point Improvement. You know, in in gross margin and

As we, uh, as I mentioned in my comments that, uh, you know, we see this growth carrying forward into Q2.

All right. Um, thank you for for that color. And then, you know, appreciate the, the commentary on, um, seasonality and and kind of, you know, the rapid Snapback we saw in grocery last year, but still sounds like the pipeline is, is strong there. Uh, you're expecting growth, you know, for for the full fiscal year. Can you maybe just, you know, talk a little bit about what you're

See in there. Is it is it kind of more you know? Uh rational um you know, measured spend from your grocery customers. Um um

Yeah, just just some color, there would be helpful.

Yeah. Uh, so you know, 2 things on that and I thought we would be, you know, kind of proactive on our comments relative to that, just to reset the stage a little bit. Uh, number 1, Q2 of last year, we had growth in in grocery obviously, because of the settlement on the, uh, merger on the proposed merger and there was all that pent up demand. And as you know, when we got that slug of business, we had to really, you know, we had to staff up. We had to bring materials in quickly and we made a strategic decision back then to do that and serve the customers based on, you know, a number of the quotes they had in front of us and a number of in front of them. And a number of the commitments we had made and I think it served us well because I do feel as though a lot of that has stabilized now, and our order patterns are getting back to much more uh uh normality uh greater deal of normality, in terms of,

Customer requests and demands for delivery and that type of thing. Remember that typically in our grocery segment, the time between November 1st and and we'll say Valentine's Day is kind of a hands-off the stores. Want to focus on stocking up their stores, being ready for Thanksgiving Christmas, uh, New Year's holiday,

Holiday, uh, and that goes right on through, basically Valentine's Day in in some a little bit longer.

Last year, all of that was ignored because they had deferred a lot of Maintenance and they had, you know, across the industry by the way, it's not just 1 or 2 customer. It was across the whole segment.

Although we still have growth in it. So I'm I'm very encouraged about the direction we're going. I'm just trying to call out the fact that if you look at Q2 of last year compared to Q2 of this year, we're likely not to have a 100% growth, right? 50% of which was organic and, uh, uh, Aaron, I'll just add to that, you know, our best forward indicator, you know about, uh, you know, activities. And so forth is our involvement in proposal and concept work, you know, with these companies and I think we mentioned in the, you know, in the press release and calm and our comments. Both that, you know, that that activity remains very healthy. So that's a, that's a pretty good barometer as to how we see these markets develop, you know, over the next, you know, 122 24 months.

Appreciate that. Uh, and then maybe you just want more if I could and you know, operational efficiency and and kind of capabilities, uh, Jim see you kind of touched on you know, Staffing up and and bringing materials in. I mean you just kind of talk about some of the priorities you know, from an operational standpoint uh here in in FY 2600, in the coming quarters.

Yeah, well I I did make comment in, in my, uh, prepared remarks that, you know, and I've made this, you know, in our last quarter call too. We're putting a lot of time and effort into our people this year. I mean, we always take care of our people. It's a people first business. Uh, you know, we don't make anything that other companies don't make. We just think that we deliver it in a much better and efficient, more efficient manage and that's

Starts with our people and uh you know, we are looking for that operational efficiency. We are turning the dial in collection with our people to look for ways that we can be more operationally efficient. And that's part of that story on our way to 12 and a half percent, uh, even uh, that efficiency has to be there. And we are putting that time and effort in there. And I'm very happy with the progress. We continue to make

All right. Uh understood thanks for taking the questions, I'll turn it over.

Okay.

The next question is from Alex. Ragel from Texas Capitol. Please go ahead.

Thank you, and good morning, gentlemen. Nice quarter. Um, as it relates to lighting, you mentioned that it could be up in the second quarter. How are you thinking about growth for the balance of the year in lighting?

Um, I we feel encouraged. Uh, we we think that, uh, you know, there's a lot more and Jim just mentioned in a minute ago, a lot of our business. Uh, you know, it has a 18 18 to 24 month development cycle. And so things that we have been working on for the better part of a year in some cases longer. You know, those are really starting to materialize now and we look at that along with our what we'll call Our Kind of flow business. The the business that comes in through our agency Network and that type of thing and we're very encouraged by what we see in lighting. Um,

You know, I I don't want to go, I don't want to get too far out over my skis, but I, I anticipate that, we'll, we'll continue to see growth and lighting through the year.

Yeah, and I'll just, you know, add to Jim's comments. And we had commented, uh, in the, uh, prepared remarks, you know, that our primary verticals, uh, where we focus lighting, you know, they are healthier than the broader, you know, non-residential commercial Market, you know. So number 1 that provides opportunity and then, secondly, you know, we are making we continue because our products are built for specific applications. Not just general applications continuing to make share inroads, you know, with uh, certain key accounts to uh, enable us then to, uh, improve and grow our share position. So the combination of both gives us a, uh, you know, we're we're as Jim said, we're uh, we're optimistic about the lighting projection for the balance of the fiscal year and I would say, I'm enthusiastic on top of it. So we'll, you know, we'll see what. We'll, we'll see, how that plays out but we feel pretty good.

And then as it relates to the sea store Outlook, you know, it did included the possibility of rolling out of 1 large project and into another fairly large program. Pretty smoothly in 2026. Is this still tracking or could you possibly stack the second 1?

additional projects, and we have a whole, you know, kind of

Second wrong to the ladder if you will that we're able to enable if if the projects uh, you know, take off beyond that. We uh, work a first in in in skeleton, second shift right now. So from a utilization, standpoint just Staffing up, our second shift gives us another 20% on top of the 20, we have right now. So we have the capability to kind of expand a lot of its timing in the, in the way it tends to work out. Uh, you know, I don't know how these guys know what each other's doing. But I will tell you that, you know, and I'm talking about a subset of, you know, 20 plus customers. They all kind of know when somebody's making a, you know, a big program investment and, uh, it just kind of interesting how they layer in. I, I I'm not concerned about our capacity capability.

And then if I could ask 1 last question, uh, groceries down in the second quarter, we had up for the year. Can you talk about your confidence and visibility into achieving this growth 2026?

Yeah, well, I mean, I think what we were pointing out in terms of the second quarter is just that there's some seasonality that was, uh, you know, that was unique last year. They, you know, the grocery industry as a whole tends to really monitor what's going on in the stores during, you know, November, December, and January. Those timeframes are very busy for them. They put a lot of inventory.

On the floor, uh, you know, to, to deal with the rush that comes in, they really don't want a lot of construction going on inside the store during that time. And last year represented kind of anomaly, that doesn't mean that the business just goes to zero. We still have a lot of kind of stock and flow business that we're doing. And I mean, that in the sense that, you know, we've got orders, and we've got pre-scheduled installation and we're doing things at night and we're, you know, all of that. But if you look at it on a comparative basis to last year, I just want to kind of remind everybody that there was a slug of business that came in last year that was pent up demand overall. We think the demand is higher than prior years levels. And in Q2, we anticipate that, if you normalize last year you would see growth, you know, continued growth in Q2, you're just not going to see the 100% growth in the 50 organic growth, which grocery made up almost

60% of that organic growth. So I just want to kind of temper everyone.

Very helpful. Thank you.

The next question is from emit dial from HC, Wayne Right? Please go ahead.

Thank you. Uh, good morning, everyone. Most of my questions have been already discussed guys, um, but you know, from a pricing Improvement perspective,

Are we getting close to being capped on that front and you know what, potentially could be the impact on future margins? You know, um if if that were to play out

I mean you were saying are, are we getting I, I missed that 1 Word. Are we getting it to the top of our pricing or I I guess I missed it at least. Yeah. At least for the near term, do you feel like you maybe sort of being constrained at this point and given sort of inflationary, um, you know, hesitancy in the market, uh, from being able to raise prices? Maybe the way you have been able to over the last 18 months.

Yeah, I mean I I think that, you know, we've brought this up before we're we're we're the best partner, our customers going to have because we're not trying to over-leverage the inflation or commod. You know, materials pricing going up. We're trying we you know we work very hard to be fair and deliver a fair product for a fair price. Um, you know, it's it's interesting to see the variability in terms of the actual effects that flow through on tariffs and all of that. So the agreements that we have with the majority of our customers is if the material input price goes up, you know, our selling price is going to go up. But if it goes down or if it's holding, we're going to hold that with the customer. So I mean, I think that there's still going to be some price very

Creations going on driven by input cost. But uh, you know, I mean, I I think we're holding a fair price. I think we're going to hold it. I don't think that our customers are going to be pressuring us for lower prices. I think we're competitive, uh, but I think we're delivering a fair price. A fair product, a good product, a great product for fair price, right now. Yeah. And I'm and I would just add that as you know, we're principally a project business.

Looking forward here, uh, tariffs and other things have become more stable. So we do look in the, you know, in the near term, for things to be, you know, to be stable along the pricing front. Right now we don't see a need to, uh, to make any kind of uh, sizable changes there. However, we remain very alert, you know, too many any uh, changes that may occur, you know, in our uh, in our cost structure particularly around material input, costs teams, doing a good job as I mentioned before. Yeah. And I and, and I think that Aaron had the first question was asking about, uh, you know, what's volume and what's price and you're seeing, you know, I'd say the majority of what you're seeing in increased sales is volume. Uh, you know where you know the the pricing we remain alert to it as Jim was just saying but you know we're taking we continue to take share and and our what I was trying to underline a little bit in my prepared comments was the the whole theme of us being able to be a 1.

Stop Shop and offer more continues to take, hold and that you know and that represents volume for us. So we're very happy about it.

That is very helpful, guys. Thank you. Um and just you know the recent sort of re-emergence of these headlines around. Um some consumer softness, you know some of these retail oriented stocks have you know, pulled back quite substantially. Um, you play into some of these, you know, sectors, any view on sort of how, you know, the macro environment

Um, for you is looking like, I mean, it seems, you know, you seem pretty positive about, you know, the next few Quarters at least. Um, but any sense of whether there is some hesitancy, you know, with customers in terms of how they are planning future Investments, given some of these recent softness, um, if you can share any call on that, I think that would be helpful for everyone.

Yeah, well, it's, it's weird. Just matching a minute ago. A lot of our businesses Project based business, right? So these projects tend to

You know, be well, thought out, uh, you know, 18 to 24 month development cycle. And then, in some cases, you know, anywhere between 6 and 18 months of a deployment cycle. In some cases longer we have not picked up on anything that will disrupt that. But I will tell you that if they are facing headwinds, we are part of the solution. We're not just an expense or an investment because when they're investing in their stores, when they're investing in the environment that they're that their customers are engaging in their stores. There is a direct correlation between increased sales and the products and the services we deliver. When a customer makes a decision to invest in the Aesthetics of their location. When they make the decision to invest in the in the field and the look and feel of their location, those all translate to increase sales for them. So, uh, you know, we're part of the solution as opposed to being, you know, part of the burden or part of the caustic equation.

We see, you know, the petroleum market and the Sea Store Market continuing to grow when you look at entrance like Wawa and sheets and buckies. And, you know, Circle K and and all of these folks that are, you know, real leaders in that sea Store Market, we see continued growth, uh, we see continued growth in the, uh, you know, Big Oil locations. Texaco Exxon Mobil. These guys that are now competing with these new entrance. Uh, you know, they want to make sure they maintain their position and share.

Grocery continues to grow. I mean uh, you know, grocery has uh, you know, had some pent up demand. Like I said, overall the industry did through those merger discussions and it was mostly around. If you were a competitor to any 1 of those 2 that were thinking emerging you were like, okay, where am I going to have to compete? And where am I going to have to invest?

With better Clarity around that right now. I think that we continue to see growth in investment in that and and qsr, you know, we're seeing you know maybe that that 1's a little disrupted. You know you're seeing you're seeing um spurts. What I'll say is spurts, you know, 1 Guy is up and investing and another guy is staying you know, holding steady. Um so maybe within those top 3 in you know as it relates to the display of solution, we're seeing a little bit more, you know, disruption there. But again, nothing nothing that causes us. Great concern.

The other markets, you know, we see a lot of growth in our Sports Court. Um, you know, warehousing is actually recovering. We, you know, I I would say that a year and a half ago there was kind of more headwinds and warehousing is is uh, picking up activity again.

You know. So overall, if I look at a, a broad swath of our markets, I feel pretty good.

Thank you for that, Jim. That's all I was appreciate it.

Question is from George genericas from canaccord genuity. Please go ahead.

Thank you for uh fitting me in. Appreciate it. Uh I just had 1 question and any thoughts on the m&a environment? Thanks.

George good to hear you. Um and yeah, I mean we remain very active. Uh, I do think that you know, as um we benefited over the last few years of the successful Acquisitions, we've done, I think every time we're able to talk about an acquisition in this case Canada's best had, you know, almost a record setting quarter for them. I think that that bodes well for us, it, it talks to the market, it talks to the owners of these businesses that like to hear that success story. I, I think that the interest rates have helped, you know, clip the wings a little bit of the PE multiples that sometimes are out there. Uh, we heard a a comment the other day that there's more PE firms in the US right now than there are McDonald's. Franchises and you know why that's important to us is because, you know, in many cases, those are competitors of ours, uh, you know, when we're looking at different opportunities different acquisition opportunities. I think we remain well invested we

Spend a lot of time doing our own self origination meaning creating relationships with businesses that we think would be a synergistic fit with with LSI, we try to engage owners, you know, maybe before they're even thinking of selling, we try to create those relationships. And, you know, it's just investment kind of like planning a seed. So I think our pipeline looks very good right now. I think that we've demonstrated to our shareholders and our employees and our customers that we're good stewards. And and we execute well at this, we respect the cultures of the businesses, we look to acquire, um, I I feel pretty good about our Pipeline and you know and I'm hopeful that, you know, 2020 our fiscal year 2026 will will yield some benefits in terms of the m&a side.

You know, and as you know, George, you know, our ours is a vertical market-based strategy versus you know, like product strategy approach. So, as a result in m&a, we we cast a wide net.

Right. And uh, you know, so through the years, you've seen that us acquiring um, companies that get us into product segments, that we were not in previously and why is that because it fits so? Well, well into our vertical Market strategy approach

Thank you.

Thanks George.

There are no further questions at this time. I'd like to turn the floor. Back over to Jim Clark for closing comments.

I just want to say thank you again for everybody to take in the time to, you know, remain invested in, in connected with LSI and what we're doing. I feel very good about fiscal year 26. I think we have a lot of runway in front of us. I really feel like we're, you know, we continue to gain Traction in our whole vertical Market thesis our customer base our competitors. Our, uh, you know, better, understand how we compete and how we, uh, work in the market and I believe all of those things bode. Well for us. Uh, even I, I just said, I mentioned competitors on purpose, because they understand that we're, we're competing quite differently, right? It's not just in their competing on 1 product, we have or, or 1 element that we're manufacturing. It's more of a true solution set and I think that that drives higher value for our customers and higher value for our shareholders and our companies. So I'm very encouraged about what the future holds and I I you know, I'm hopeful that here on

Our next quarter, we'll even have more good news to share.

So with that I'll say thank you and good day.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.