LSI Industries Inc. (NASDAQ:LYTS) Q1 2024 Earnings Call Transcript

Jim Clark: Yes, absolutely. The inquiry rate on the R-290 is very high. It’s got to — there’s a lot of complexity behind it aside from the product itself and the benefits. There’s field service capabilities and enough of the HVAC industry being trained with natural gases and things like that. So, there is a great excitement, but there are also challenges. I’d put it — this is not a great analogy, but it’s one I think that people can understand, it’s just like electric cars, right? Maybe some people feel the underlying proposal is solid, but the infrastructure is not there, all the charging stations, all the things you need to really make it take off, including the generation of just power. But same thing in the R-290, I think the value proposition is well understood, our ability to manufacture it and everything, but there are other components that need to make sure we’re keeping pace with it or that is keeping pace with our ability to deliver.

And all of those are always part of the conversation. So, I would say the interest is very high, and we expect that this is a product that will have legs for many years to come.

Richard Fearon: That’s exciting. And the last comment/question, evolves this sort of involves the grocery vertical that you spent a lot of time talking about today, and you may mention of this, but it just seems that the massive merger here that’s been disruptive at the moment. It has the potential of creating some massive refresh programs. And I guess, do you think that’s a fair way of thinking about the possible outcome of this grocery merger?

Jim Clark: I do. I do. I mean, wholeheartedly, I do. I mean, you got to think — we look at kind of three pieces, if you were to break it down. One, it’s clear that there’s going to be a disposition of somewhere between 400 and 600 locations that are no longer going to be part of those primary banners. So, those 400 to 600 locations unquestionably will need a brand image refresh. That goes without saying. Then the merger itself, we don’t have all the details on this, but that will create — that’s going to create an immediate opportunity just for the work that has been sidelined for a while right now. I mean, you can imagine you don’t want to do a lot of capital spend and be moving things around. I think they’re doing a very good job of keeping their business going and serving their customers and stuff, but these longer program initiatives without knowing what the final result is going to look like, I don’t think people are rushing to do a lot of work in that arena.

So, the way we look at it is the quote could literally come out of the barrel on the back side of this thing and we’ll be ready to support them in whatever direction they want — they decide to go. And we do look at it and say there could be a very sizable upside on the back end of this. Not just normal course of business — not just normal course of business stuff, either, but it just to fit in with whatever this new look is going to be or whatever this new brand or image is going to be.

Richard Fearon: Well, it does sound very predictable and very tangible. So, that’s pretty exciting to think about. And so, the quote activity remains high. And apart from this delay, it sounds like things continue to move in the right direction. And I just wanted to thank you and Jim and your team for the hard work.

Jim Clark: Yes. Thank you. It is a whole team here. I try to make sure we always comment on it, but there’s 1,600 people here who make it all happen every day, and they’re just as excited about what the future holds as we are. So, —

Richard Fearon: Thanks again.

Operator: There are no further questions at this time. I would now like to turn the floor over to Jim Clark for closing comments.