F3Q10 (Qtr End 03/31/10) Earnings Call Transcript
April 22, 2010 3:00 pm ET
Bob Ready – Chairman, President & CEO
Ron Stowell – VP, CFO & Treasurer
Scott Ready – President of LSI Lighting Solutions Plus
Shawn Toney [ph] – SVP of Commercial and Industrial Lighting Group
David McCauley – President of LSI Graphic Solutions Plus
Glenn Wortman – Sidoti & Company
Jim Ricchiuti – Needham & Company
Rick D'Auteuil – Columbia Management
Jim Stone – PSK Advisors
Previous Statements by LYTS
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Good afternoon everyone and welcome to the third quarter earnings conference call. Today’s host will be Bob Ready, Chairman and Chief Executive Officer for LSI Industries. During the discussion all participant lines will be muted. (Operator instructions) Now without further delay, I’ll turn this call over to Mr. Ready.
Thank you, Matt. Good afternoon everybody. Before I start off with a few comments, with me today is David McCauley, President of the Graphics Group; Scott Ready, President of the Lighting Group; Ron Stowell, our Chief Financial Officer.
And I’ve invited Shawn Toney [ph] who is our Senior Vice President of our Commercial and Industrial Lighting Group. Shawn came to us just nine months ago. And I thought it would be important that Shawn sit in this meeting. In case there were some specific questions regarding the C&I part of our business and so – and also with me is Steve Brucker, our CIO.
So, with those introductions I think Ron wants to make his usual statement that he makes every time that we are on these calls. Ron?
Which is I would like to refer everybody to our Safe Harbor statement that have appeared on our Form 10-Q and 10-K and indicate that to the extent that we may be talking about some trends or items in the future but we will not have material non-public information to disclose today.
Thank you, Ron. You should have that pretty well done in fact now. I want to start off by kind of giving you a thumbnail sketch of the quarter. Obviously it was a difficult quarter as our third quarter normally is even in the best of times. But this was even a little bit more challenging for us. We had some very unusual weather that unfortunately shut down a number of days throughout the LSI operations throughout all of them, Kansas City, Rhode Island, North Canton, Cincinnati, even Dallas.
With that said though, obviously it was one of our strongest quarters for sure. But I want to be sure that people understand that during this very difficult economic time we have been working aggressively to kind of change the direction of our Company. And I say that in a way that basically all the development, new product development, the new marketing objectives, the international program, that we set a lot of seeds in place.
I think things now are looking a little bit brighter as we move forward. I am sure there are going to be a number of questions relating to the major rollout program for 7-Eleven. I know that during the last six or eight months specifically in the calendar ’09 as you all know we were very much involved with a very strong petroleum rollout program. The highlight of that for me personally happened yesterday morning at 11’O Clock. This is – at that specific hour the Vice President of 7-Eleven had a conference call of which we were invited and it was a recognition of job well done by LSI Industries in taking on such an aggressive program and the success of that program. And I am sure Scott will answer some questions in regard to that, regarding that.
But the success of that program – as you remember in prior calls, the interest was what’s going to happen beyond that. And I am very proud to say that because of the success of that program we do now have an order to roll out or continue to roll out a number north of 3000 sites, not specifically understanding how many. There is obviously a little bit of a change based on franchisee contracts, but it’s going to be a little bit north of 3000. They are the non-petroleum sites. It is a combination of graphics and lighting. The revenue per site obviously is a little bit less than the petroleum at this point because there aren’t any canopies or canopy fixtures.
But the important note is the success of the program and as 7-Eleven acknowledged on this conference call to a number of their own folks that we were invited, as I said, to participate is that their energy savings has been extremely important and very successful, which obviously generated the continuation of their behalf to move forward on the existing sites.
We will be cranking that program basically up next month as we are preparing now and getting our production process in place to start the program. We will be involved with not only producing the product but also installing the product. So, at this particular juncture in the economy for us it’s extremely important and we are very pleased to have it.
Our international program is up and running with Fred now officially leaving. He is over in the Middle East right now and I am very pleased to say that with the initial start we have our first major order out of the Middle East for a rather large parking garage concept with approximately the first order covering about 1700 fixtures and that’s probably one of three phases. So, it isn’t the number as much it is the importance of starting to get our program in place for people to recognize our capabilities.
The direction in Europe is still ongoing with our – in our last week or so of getting the completion of the KEMA testing process. As you probably remember just three months at this particular time we were talking about the KEMA certification. There are three parts to that. We’ve now been notified that the first two are in the paperwork process. The third part is about a week and a half away from final certification.
The frustration is that the folks over in the Netherlands who are part of the KEMA Group they are not quite as anxious as we are to get this thing going. We have been competing with vacation time and all kinds of different reasons, but through this very arduous direction we are now in our final stages. And obviously once that certification is finalized we’ll have a major marketing push, which we’ve been working on for months to get all of our docs [ph] set to kick off this program. And we’ll certainly let you know through a press release once that final certification has come about.