LSI Industries Inc. (NASDAQ:LYTS) Q3 2023 Results Conference Call April 27, 2023 11:00 AM ET

Company Participants

Jim Galeese - Chief Financial Officer

Jim Clark - President and Chief Executive Officer

Conference Call Participants

Aaron Spychalla - Craig-Hallum

Amit Dayal - HCI Wainwright

George Gianarikas - Canaccord

Rick Fearon - Accretive Capital Partners

Operator

Good day, and welcome to the LSI Industries Fiscal Third Quarter 2023 Results Conference Call [Operator Instructions]. I would now like to turn the conference over to Jim Galeese, Chief Financial Officer.

Jim Galeese

Good morning, everyone, and thank you for joining. We issued a press release before the market opened this morning, detailing our fiscal third quarter results. In conjunction with this release, we also posted a conference call presentation in the Investor Relations portion of our corporate Web site at www.lsicorp.com. 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 third quarter 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 as well as our most recent 10-K and 10-Q. Today's call will begin with remarks summarizing our fiscal third 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's President and Chief Executive Officer, Jim Clark.

Jim Clark

Thank you, Jim, and good morning all. Thank you for joining us on today's call. As you've likely seen from our press release, we had another strong quarter in our Q3 fiscal '23. It's hard to believe that we are over -- just about 60 days from the end of our fiscal year, and I could not be prouder of the efforts and progress of our employees, agents and partners as well as the continuing confidence of our customers choosing LSI to be the partner of choice. Sales for the quarter were up more than 7% year-over-year with net income up over 29%. We had a strong free cash flow performance, and I'm happy to say our net debt is below $50 million with a 1x net leverage ratio. We are in a good spot going into the fourth quarter of the year, and Jim Galeese will provide a deeper dive of the financials in a few minutes. Lighting provided another strong quarter of growth with sales increasing 17% and operating income increasing 31% in what is historically a weaker quarter for LSI and against a very strong third quarter last year. As you may have noted last week, we published a press release providing an overview of a recent win with a large EV battery manufacturing plant being built in Kentucky. This is one of the largest manufacturing development projects in Kentucky's history, and it says a lot about the confidence of the customer in LSI that we were chosen to be the lighting provider for this project. It also says a lot about the focused nature of our selling efforts and the capabilities of our company. As you all know, we have a manufacturing facility in Kentucky, and I'm thrilled that we were able to support a project of this size and complexity with folks that live and work in Kentucky. Thank you to everyone that recognize the importance of this decision.