LSI Industries Inc (LYTS) 2005 Q4 法說會逐字稿

Good afternoon and welcome to the LSI fourth quarter results conference call. Today's host will be Mr. Bob Ready, Chief and Founder of LSI.

Good afternoon everybody. This is Bob Ready. Welcome to our fourth quarter combined year-end conference call. I have with me today Mr. Ron Stowell, our Chief Financial Officer; Scott Ready, President of the Lighting Group; and David McCauley, President of the Graphics Group.

As per the last conference call, we're working on this format to try to bring more visual aid to you as far as some of the slides that you'll be seeing, for those folks who were watching it. Steve (ph), if you would, mention how the folks may be able to access our web page as well.

Just like our last conference call, the slides that are supporting the information you're going to hear about today are available via webcast by visiting our web site, which is www.LSI-Industries.com. Click on the investor relations button at the lower left, and you'll be directed to a page that has a link to the webcast that you can watch while we are discussing the topics today.

Thank you Steve. To start off I want to say to everybody thanks for taking the time to listen to our conference. We obviously have been very pleased with the results of not only the fourth quarter but certainly the year of fiscal 2005.

We spent a great deal of time the last year reorganizing our Company. We have shared as much information on that as we could over the last conference calls. We just sat and shared with you the direction that we have taken in order to consolidate our businesses into two business segments.

We made major, major changes in the last year in the lighting part of our business. Two years ago we did the same thing with our Graphics Group. And I think we are really beginning to see the results of the things that we have done in order to strengthen our Company.

The economic condition of the country has been certainly fair. I wouldn't say it has been overwhelming. Our continuation to expand our lighting business is directly related to the commercial industrial part. The petroleum part of our business, which we are so well known for, it continues to show some very promising opportunities. As most of you are aware, it has been pretty slow over the past couple of years.

But what's encouraging is that we do have a lot more dialogue with a number of major oil companies that are showing some interest now in revitalizing their image. It has been pretty soft, as most of you are aware, for the last three or four years. The encouragement is that we are seeing this kind of dialogue. And the interest that they are showing to LSI specifically, because of the tremendous strength that we have developed over the years and becoming a one source stop.

Many of our competitors in the oil business or in the petroleum business are either no longer with us or very, very much weaker as to (technical difficulty) their ability to do the type of things that we can do. A lot of them lost interest because it has been a very, very soft market.

As a matter of fact, I met with a lot of our employees today. And I reminded them that in 1985 when we took LSI public, we were doing approximately $28 to $29 million in the petroleum business and on the lighting. It -- with interest in 2005 and looking at the numbers in lighting with the petroleum industry, we are only doing -- we only did about 34 million. Which when you look back 20 years, you would never have dreamed that an industry as big as the petroleum industry is, that we would see that kind of a change. But it's the change that we felt, and we felt it deeply.

But the encouraging part of it, of course, is that we have weathered that storm. We have strengthened our Company to grow in other areas, which is certainly shown in the results of the fiscal 2005. And the encouraging part is that as these companies became a little bit older in their image, and the interest that they have, they are coming to LSI.

We have new products. We have developed new abilities in the graphics and lighting that we feel will support their needs. And certainly gives us a great opportunity, when and if they happen, to add to the strength of the growth of the Company.

One of our greatest accomplishments over the year was obviously the reduction in our debt, or actually the elimination of our debt. So once again LSI starts off a new fiscal year with a tremendous amount of financial power. And hopefully with the interest on some of the larger national accounts for both graphics and lighting, it certainly gives our customers a very strong feeling about the financial wherewithal. And that we are the kind of Company that is going to be around for many years to come to support their re-imaging.

I am not going to get into a lot of detail on the whys and wherefores. I think the numbers stand for themselves. I am most encouraged by the areas of reduction in inventories. Certainly the emphasis, as I said, on our balance sheet, the tremendous direction that has been taken on the consolidation of the businesses as it relates to the two business segments. The fact that our J.D. Edwards OneWorld able implementation is almost behind his.

We just finished up the last major business as segment in the lighting group, the Midwest operations on full J.D. Edwards. We only have a couple of smaller operations to go. Every day it becomes stronger. I think that the emphasis now for us as a continuation of internal review. We believe there is still a lot of work to be done in reference to cutting costs, becoming more competitive, and certainly looking at the opportunities of acquisitions as we strengthen our balance sheet. And now we are in the hunt for trying to find the right Company that fits the LSI strategy.

I would like to take this opportunity to introduce Scott Ready, the President of -- I'm sorry. Excuse me, I'm getting ahead of myself. Ron Stowell just gave me a hard look. So I think I'm supposed to introduce our Chief Financial Officer, who really will go through all the numbers and hopefully answer a lot of the questions that have been asked in the past. Ron?

Thank you, Bob. I will start off with our standard Safe Harbor statement, which says our remarks today will be related to our expectations with regard to a number of activities in which the Company is engaged. Reliance should not be placed upon such forward-looking statements, because they involve risks and uncertainties which may cause our actual results to differ materially from those which we're going to talk about or which we may imply.

Those risks and uncertainties are discussed in our Forms 10-K and 10-Q that are filed with the Securities and Exchange Commission and in the recent press releases. We do not have any material nonpublic information that will be discussed today. I do apologize for having to read that, but it is necessary.

On to the net sales for the quarter. We had 71,992,000, which is an 8% growth from the fourth last year. That breaks down 45.1 million with the Lighting segment and 26.9 million with the Graphics segment. 63% of the volume was related to Lighting and 37% related to Graphics. Those of you that have the chart will note a little bit of a reduction in the Lighting segment that is actually mostly associated, in this quarter, with a reduction in sales from our wire harness business unit.

The next slide is a graph of each of the four quarters of sales for the past three years. What you will note here, and we'll move on then, is growth in all quarters on a year-over-year basis. On a full year basis, again, you'll see growth in this three-year chart, starting at 213 million in '03.

We had 282 million in sales in '05, which is a 17% growth. That breaks down into Lighting segment at 177 million; Graphics segment, 105.4 million. And the breakout there is pretty close to the fourth quarter, 63% Lighting, 37% Graphics. We've had nice growth. And following the first three quarters, the Graphics segment has been growing at a faster pace this year than the Lighting segment. 29% with Graphics and about 11% in Lighting. That is due to some of large programs that we have had in the Graphics segment.

Here is some information on the petroleum convenience store market. It is our single largest market today. For the full year it is 25%. And the combined Lighting and Graphics sales have been $70.1 million, which is up 5.3% for the year.

Operating income for the fourth quarter was 7,583,000. It is up 10.5% from the prior year, and it is breaking out stronger this time in Lighting with 3,514,000 and Graphics at 4,069,000. The growth rate there is similar to the sales. The growth in the Graphics income is larger than it is in the Lighting, again due to the larger sales growth.

Operating income graph, again, for the three years, quarter to quarter, you'll see increases in all quarters year-over-year. I'll comment there's a huge increase in the fourth quarter this year, something like 288%. It is in part due to some inventory adjustments that we had flow through the fourth quarter in '04.

The table on the operating income, we had a 70% increase this year to achieve 23,801,000. And that breaks down 9,394,000 for the Lighting segment, 14,407,000 for the Graphics segment. And kind of the reverse on the percentage from each segment, it's (ph) 61% of that is from the Graphics segment, 39% from Lighting.

We do have the next slide. There is a gross margin presentation where we have got -- 19.1 million on the quarter. And that is at a rate of 26.5% of sales for a 34% increase over the prior year. For the full year it's 72.3 million, 25.6% of net sales. Increases both in dollars as well as percentage of net sales. When we have increased volume we typically have had increased leverage that has increased the percentages, and you have seen that here. The year has a 21.5% increase in the gross margin.

We do have customer concentration in first, in our net sales. Wal-Mart was a little over $30 million, or about 11% of fiscal '05 net sales. And they were 9.9 million or 14% in the fourth quarter of '05. In all other periods, they were less than -- well, last year they were less than 10%.

From a receivables standpoint we have a concentration that we're very comfortable with. And that again is Wal-Mart at 17% of net sales -- of receivables as of 6/30/05.

The effective income tax rate as it turned out for the year was 36.1%. That is higher than we (technical difficulty) had (ph) reported and estimated at the end of the third quarter due to an increased federal rate with our higher taxable income, as well as increased state income taxes. So the fourth quarter is coming out relatively high at 39.8%. But we came through with the 36.1% for the year.

Net income for the quarter, as you saw in our press release, 4,575,000. That's actually a 293% increase. These are nice percentages to talk about. And $0.23 per share for the year, 15 105, a 74% increase with $0.75 per share. Graphically for the three years '03, '04 and '05, again you can see certainly an increasing trend in our net income.

For those of you that keep models, the shares that we have for computing diluted earnings per share were 20,226,000 in the fourth quarter and 20,087,000 in the full year. They both are less than 1% up from last year.

Balance sheet data, a good part of this I think was -- some of this was on the press release. You'll notice a large increase in cash on the next slide, which we will get to in a minute. You'll notice a large decrease in debt. So we have had great cash flow.

Receivables came in at 59 days at the end of June '05 at $46.7 million. The notable thing here is the inventories, and Bob mentioned that. Our inventories at 39.5 million are down $8.2 million this year, and I would say that we have done that with no reduction in the ability to serve our customers. So our operations people have done a fantastic job in that, and we hope to see them continue some of that reduction as to go forward. Working capital is still very strong. It is $67.2 million.

Here is the next slide that shows no debt at all as of 6/30, and it is pretty much for the whole fourth quarter, most of the fourth quarter. We have no debt on our balance sheet. Shareholders' equity has grown. It is a strong 138,509,000 with total assets at 172.6 million.

Capital expenditures this year were 3,630,000. It is a little less than we had last year, but it just is due to the timing of when we are spending capital. We're supporting our growth. We mentioned before that we are expecting to have a facilities expansion on the East Coast in our Graphics operation in Rhode Island. And when that kicks off, that will increase our CapEx. I would suspect we are going to be in the $7 million range or so for fiscal '06.

Depreciation and amortization for the year 6,974,000. And it has been pretty consistent on a quarter to quarter basis, with $1.7 million in the fourth quarter of this year. These slides have comparative numbers, so people can track that by referencing this presentation.

Cash flow from operating activities, very strong this year, both in the fourth quarter and the full year. 27 482 (ph) for the full year. And the primary drivers are increased net income, because we had about $12.1 million last year. So increased net income and the inventory reduction of $8.2 million. The fourth quarter is strong, again, for those same reasons.

Coming to the end of my presentation. You saw in the press release cash dividend actions that were taken, and I wanted to reinforce those speared because they are important to us as a Company. And we believe they're very important to shareholders as they view LSI and view their investment in LSI. The Board declared a regular quarterly cash dividend of $0.10 per share. They also declared a special year end cash dividend of $0.10 per share. So we are going to pay a total of $0.20 per share on September 13 to all shareholders of record as of September 6.

In addition, the Board indicated their -- an increase in the quarterly dividend rate for fiscal '06 to take it up 20% to $0.12 per share. That will be an indicated annual rate of $0.48 per share. And again, I've got a graph showing the three years just ended as well as fiscal '06, should we in fact -- the Board declare and we make the payments at that $0.12 per share rate as a significant trend of increased cash dividend payments, while at the same time the debt has been reduced to zero.

With that I will turn it back to Bob.

Thanks Ron. Obviously we are very pleased. We still have a lot of work to do. We certainly have a very strategic direction. And I would like to introduce David McCauley, the President of our Graphics Group, and Scott. They are going to work together.

Kind of give you a little bit of a feel for how things are, where we are going, what we are interested in doing in our strategic thinking, and then I will take it back and wrap up. David, why don't you kick it off?

Thank you, Bob, and good afternoon to all the listeners. Needless to say we are very pleased, again, with the quarter in the year. Certainly our goal is to provide many more of those.

Before I talk about fiscal 2006, I'd like to recap on some of the typical business (technical difficulty) that fiscal 2005 presented. If you looked on your monitor, our first slide shows a job that we provided for the QSR industry for a particular customer. We visited 7000 sites.

What you're looking at is an outdoor drive-thru menu board. Aside of that photo, the individuals standing above the menu board. Right side you'll see the adder. The adder what we did in the last 6 months approximately. 1,000 (ph) sites. The menu board itself we did about four years ago for the same chain and rode that program out.

We are hopeful to do more of these for different companies this year. It is quite the trend, because the expansive menu offerings of these QSRs carry it on the existing menu boards, and we hope to have more adders this year. It certainly a business we're marketing and going after.

Nice part about this is, again, I think I mentioned last conference, that it is a lighting and graphics product. Everything you see is backlit there. Get a portion in the inside to every menu board. Again, backlit with lights and graphics, lighting providing for a total image.

David, if I might add, one of the things that is important to remember -- this is Scott Ready with the Lighting Group -- is that as we bring the organization from a cultural and a system standpoint closer and closer together, and I will speak about that in a few moments from a Lighting perspective. But it makes this type of coordination between products so much more effective in a program like this. Effective from a more rollout standpoint but also effective from an income opportunity standpoint for us.

Great. Moving on to the next slide, this is a typical convenience store chain, a smaller chain. We visited 250 of their sites, almost all of their sites. Again, an upgrade to their food area. In order to add to their revenue stream, they need to cleanup these sites. In the QSRs and the convenience store business, there is 0.5 million sites out there. (indiscernible) stores in particular need to get more traffic by the female audience. Where they need fast, clean, and friendly restaurants in the food service areas. Again, this is very typical of a smaller chain.

Next slide shows a prototype for another hot industry. This is the communications industry, the cell phone people. Happens to be a prototype that was built a warehouse. And we love this industry because it stays so hot that it changes almost yearly because of the different models of cell phone and the different technology made in this industry.

Next item on your screen is what we refer to as a big box store, typically 40,000 square feet or larger. Sometimes these same big box stores are what we call category killers, big (ph) cases. A typical chain would (technical difficulty) 40 (ph) stores a year and maybe remodel 100 or 200 stores a year. And of course these big box stores use a lot of LSI lighting, whether it be the fluorescent or some other offering that we have.

Next site is kind of a hybrid breed situation of a convenience store, fast food. This particular item here even has digital signage in it. Need to be well-lit, they're heavy with graphics, very colorful, (technical difficulty) entertaining, very inviting. Seeing a lot of this type business and expect to see a lot of that in 2006.

David, I will also add that the listeners, and hopefully those that have been able to acquire the slides on the web site link, will be able to appreciate by looking at a photograph like this the high-end nature of the retail application, and the opportunity that we have working together to draw into those higher end retailers and higher end applications. Some of the lighting products that offer us opportunity for growth in both volume and income.

Great. The last site (ph) here is -- this is a major bookstore. Many of them throughout the country. Again it falls into the big box type store. This particular store, again, has a lot of graphics, a lot of color. Again, it had active digital signage. You can see the stream right in the middle of your page there. Digital signage area that we have been talking about, it's starting to move faster. As the quarter calls come in the future, we will have more to report on that.

The last slide here I'm going to put up is a collage which you have seen here over the last 5 minutes. I will continue now breaking into fiscal '06.

We're looking -- (multiple speakers)

David, this is Bob. I think for the folks that don't have the screen at this point where they are listening, I think I would like to suggest that you wrap up really the whole strategic thinking of what we have developed here. And being the fact that we are now becoming more and more of a one-stop shop for real image products and services, that there is such a high potential in volume because of the tremendous numbers of different locations, whether it be casual dialing -- dining, fast food dining, convenience stores. And this is our lifestyle as a country.

I think that uniqueness of the development of all these different products really lends itself to opportunity. And I think that is what your presentation is showing, is that we are building upon success. And our success over the past three or four years of developing and bringing our companies into a unit of one business segment, and then investing in strong equipment capability, is really providing the kind of unique service that these types of customers are going to need, because the volume is so high and the timing is so quick. Is that a fair analysis of what you feel?

You are right on, Bob, and I will expand upon that. It is pretty much where I was going to head there. So again, we'll take what we've learned here in '05, expand into '06 in terms of lowering our costs and fine-tuning our best practices that we acquired over the last two years.

We will have continued improvement and sharing of the resources, the people, plant, and equipment. That is really what made '05 quite the year, and there's still room for improvement. On the sales side, our sales team, they have been quite active with the customers and prospects, especially in the traditional markets. (technical difficulty) seem (ph) very healthy now, and we hope this matures into revenue streams, as historically done this in the past. And therefore we expect it to do that in the future.

One of the things I would like that add, because I think this is the informal way that we want to show the folks that are listening to us and looking at what we have, is the interest that I see coming. It had happened for both Cincinnati and for North Canton, where we have had a major player in the convenience food business and the petroleum side. Actually came to both locations and actually interviewed us to be sure that we are as good as they think we are, and that we think we are. And they wanted a blessing to say if we are going to do some of these things, do you have the capabilities? Because the volume is going to be so strong.

I think all the years that we have been doing this, I've never quite had a direction from a customer that they are actually interviewing the vendor in the way they were interviewing us to look at our capacity capability. I like that, because we have spent 2.5 years working through all these downtrends in our economy and trying to bolster our markets, while at the same time building a new lighting commercial industrial, and have the kind of capacity capability because we invested wisely in high-volume equipment. I think that is a fair analysis of where we are today based on where we are going for tomorrow.

Great. In fact, our customers the prospects -- they are continuing to have their mergers and acquisitions and joint ventures. This activity historically brings us more opportunity. We've had some big programs come to an end recently, but these customers still remain with us and additional small programs are ongoing.

In '05 we had a few surprise pieces of business come our way. No reason not to expect this scenario to happen again. In fact, it is easy to make that statement, because as Bob said, we built this organization to be the premier provider of the fast, large, demanding pullout programs and have become the vendor of choice for such programs of our prospects and throughout the industry.

In closing, I will leave you with this final comment. I feel we are positioned well with our state-of-the-art equipment, our talented personnel, unique product lines. But we look to add to more of all of these, to the plant space, the equipment, products and -- while continuing on the acquisition path for a good candidate that fits in the program.

Bob I will turn it back over to you or Scott, if you want to jump in now.

I will take back for a minute or two and wrap up on this end -- on your end of it. I think one of the things for me is a tremendous reward for 2005. Certainly the numbers indicate that things are a lot better than they have been in awhile. I look beyond the numbers. I look through the numbers. I like to see really what the heartbeat of this Company is, and what the results are going to be like.

So as I look at the cultural changes, and I am speaking specifically on the Graphics side, and some of the things that we have done and the capability, developing installation management, our Adapt group that has been streamlined now, moved into North Canton, which is a tremendous move that David and his team embraced, and really brought them on the LSI calendar so to speak.

One of the major, major companies in this country and in this world that we provided this rollout program for that David referred to doing 5 or 6, 7000 stores, the folks who are responsible for that sent me a letter, and basically said in that letter that the LSI rollout was by far one of the best, if not the best that they have ever experienced. And in that letter there was a quote. And the person responsible for this program said we as a Company have set a new standard. It is a gold standard for all future rollouts. And LSI is the Company that provided that standard.

That told me something that we, with all the time and effort that we've worked on the Graphics business and certainly working on our installation process, has really matured now. And companies of major size are beginning to recognize that LSI is a kind of Company that isn't existent anywhere else.

We worked so hard to become more exclusive in the arena of growth. The Graphics business is a unique part of LSI's strategy. It is a profitable side. It is an opportunity to do more acquisitions. And one of David's charges this year is to bring to me some candidates for a good, strong acquisition for the Graphics business. Financially, we are in the best position we have ever been. Strategically, we are in that position to grow that kind of business. We have got the people, we've got the power and we certainly have the energy to go out there and develop that Graphics side.

Now that said, I am going to have Scott tell you a little bit about the Lighting, because we really are emerging now as a team effort of 1 plus 1 equal 3. I'm really proud of the job that the folks have done in 2005 in getting us to where we are today. Scott, if you would, please.

Yes, thank you. Again, this Scott Ready. We had a tremendous year for the Lighting Group. It has been a year really characterized by transition. As you may, depending upon your knowledge of our Company, recall, this Company has been putting together a variety of lighting operations over the last 10 to 15 years, all in an effort to position ourselves with a capability that will allow us to go into the market and expand our market penetration. Not only in the markets that we have served traditionally, but some of the markets that we have not served traditionally, such as the commercial market where there is such a huge volume potential.

The brands that you see on the screen now have been rolled together to form Lighting Solutions Plus. Lighting Solutions Plus really says it all. We talk about the unique approach that LSI is taking to our overall business. Lighting is a critical element to it, the solutions bringing together more than narrow product lines, and frankly bringing together those service levels that are required to reach beyond our current market opportunities.

And of course the Plus; the Plus continues to reinforce the relationship and the opportunities that exist by combining lighting and graphics. Especially with some of the retailers that are out there today and as David has mentioned, our focus is to watch what goes on in that marketplace and watch the mergers and watch the changes that occur, because the larger those organizations are getting the more they are relying on companies like LSI to be that one-stop shop, and to provide those products and services that they need.

Now I wish that I could say that we've had the dramatic results that the Graphics side of the businesses had this year. But we -- our successes and our growth have been very, very strong on the internal side. The process of pulling these organizations together, providing an opportunity in the marketplace where the brand, LSI, becomes the strong and well-recognized brand, has been what we accomplished to a great degree over the last year.

The coordination efforts are beginning to now return the kind of results that we anticipated. And the -- I will call it steady increase in income opportunity is starting to prove itself out.

Next slide please. In an effort to bring this together from a marketing perspective, we now have all of our products grouped together in a Lighting Solutions Plus brand. These are products that cross the range of indoor, emergency, architectural, outdoor and so forth. And now present under the LSI brand an opportunity and a company in our traditional markets where we have had a tremendous amount of success holding our market share.

As Bob mentioned earlier, understanding that when we look at the volume, which is the highest it has been for collection of lighting companies in the history of our Company at nearly $180 million, and we compare that with the volume that we had years ago in our core petroleum niche lighting to our current core petroleum niche lighting, I hope you can appreciate the degree of change that has occurred in the organization to make that possible.

These are changes that have come as a result of our systems improvements, our capital, equipment, and people improvements. David mentioned the kind of focus that we have on the Graphics side, and the Lighting side equals that. We are investing in each one of our lighting operations over the last year and are, again, putting those operations in a coordinated effort through purchasing efforts, through engineering efforts, through manufacturing efforts, to offer in the range of a package opportunity if you will, the broader scope of lighting products.

What is important about what we're doing is the brand recognition that we're having with the marketplace. We are building the LSI Lighting Solutions Plus brand, and we are doing that to reflect the needs of some of the larger brands in this marketplace. The petroleum, the automotive, the fast food are certainly the core building blocks of that effort. But moving on beyond that and the type of relationships now we have on different ends of the business. This -- as you notice, the brands shown on this slide, the Sears, the CVS, the Harley-Davidson, excuse me, slide is a little smaller for me. These are all important steps in putting LSI in the forefront from a lighting perspective.

One more slide. From a commercial industrial perspective we have made great gains in our effort to provide a coordinated package. Our increased ability to service this marketplace, not only with product but with billing and with different types of product combinations now that are increasing our capabilities beyond where they have been in the past.

The next year we are going to continue to focus on the day-to-day fine tuning of what we have built over last year. The lighting industry remains tough. The pressures from materials remains tough. We have in the last part actually twice over fiscal '05 been able to increase pricing on a general basis with our customers and our product lines. But the pricing will remain competitive and we expect it to remain competitive.

Frankly, our opportunity to increase our profits still focuses on what we can do through our combined internal efforts and our increased efficiencies to take advantage of a greater volume opportunity that presents itself in the commercial industrial market, and translating that into greater income opportunity through the focus that we have on our internal efforts and coordination.

The one thing that I think is of interest, and I think it is very well worth mentioning. When you look at LSI and you break the Company apart as we do, and looking at the fact that we are unique, we've developed this ability to sell an image program, not only sell it but install it. We have developed this ability to bring to the large national market a choice, giving them an opportunity to look at other alternatives.

The interesting part of it as I look at it, and it is a challenging industry. The lighting industry, I've been in it 43 years. It has always been a challenge and it will be a challenge for another 43 years. But what is interesting to me is there are a lot of numbers flowing around. And whether the numbers are true or not, it's estimated that the C&I market is around $7 billion. We do as a Company $180 million. That is peanuts compared to what the opportunities are out there, and part of that $180 million is the niche market of the petroleum business.

I think where we are heading is that we are developing this Company with a strategy that really shows opportunity. But it is selective opportunity. And I am not necessarily tuned to the direction of growing my business 20 and 30% every year. I know you as shareholders and analysts would love to see that, but I look at developing this Company as we have for 30 years on a very stable foundation.

We have done a lot of work in a very, very difficult market and eliminated debt. I think that stands very well for a corporation that is in a market that is very, very competitive. My goal personally is to now look at strong acquisition opportunities to grow our business and maybe more specifically on the Graphics side. Not taking away from the Lighting side, not definitely sending a message to reps or customers out there that LSI is not interested in growing its Lighting business, because we will grow our Lighting business. We are committed to it and we're pretty good at it.

But the graphics business does offer us a different market. It is a fragmented market. In the Lighting business, we have four major corporations that own 60 to 65% of the commercial industrial business. So we are still the little guys in the pond. But what I like about it is that we can start nitpicking around the edges. And if I can grow my Lighting business 10, 12, 14% and on $150 million, we have got a lot of opportunity out there.

If I can stabilize that with growth on the Graphics side where it's a fragmented business, there aren't many players if any like LSI. And we can grow that based on all the right things that we've done over the past two or three years and look for acquisitions, we have got a great company here that has great potential.

The word that came to me from the market is people view us as a lumpy Company. Well, I'm not quite sure what that truly means. But, yes, do we have ups-and-downs? Sure we do. Because we are not like all the other companies out there. We are not necessarily in that rat race of just trying to bid against each other. We have really taken our Company in a lot of different paths to really protect ourselves, because we live in a society and culture that you really can't put any real strong future into.

What I've done in trying to bring all of our companies together is really make available to our shareholders a good Company that has got a strong foundation, that is financially strong and pay the dividends that we are paying. Whether we are lumpy or we're not lumpy, the fact of the matter is that we are growth Company and we have the ability, based on all the directions that we put in place, to continue on with our growth.

I do not want our Company to be dependent on one or two large national rollout programs. But we sure as hell will take them when they are offered to us, because we have the capacity to do it. I think where we really are going to see improvement at LSI is new product introduction. That is high on our priority. We believe that is very instrumental part of profitable growth, and we will continue to do so.

The technology part of our business is an ongoing investment, if you want to call it that. It is not taking a lot of money. But we sure have a lot of interest in it, because we believe as time goes on technology is going to be an instrumental part of every facet of the life of the American, and we are going to be right there with it.

Certainly last but not least, the petroleum business. Coming back to the petroleum business. Everybody looks at LSI as the petroleum Company. We are a lot more than that when you remember the statistic that in 1985 we went public with 28 million in sales, and 2005 we had 34 million in sales. It is a changing market. It is a changing direction. But the oil business offers us tremendous opportunity when they decide they are going to invest.

Now we have heard a lot of talk about the profits of the oil companies today. And they are real. And I can't sit here and honestly tell you that I know for a fact that these oil companies are going to spend money on re-imaging. I can only go by historic value. And these folks are making a ton of money, and there hasn't been a lot of re-imaging for four or five years. And there's opportunity as we work on energy reduction, and certainly re-imaging some opportunities that seem to be coming to us.

What I've learned over all the years I've been doing this, especially in these niche markets, when one starts it they all start looking at it. They all start looking at their own image. And of course one of the things that is challenging in this image business today, is that price is a determining factor. In all probability more than necessarily image.

However, these folks are investing heavily in the convenience food store part of it, because the day-to-day business for the jobber and the independent out there on a price -- on a profit -- a gallon of gasoline is not very strong. They recognize they are going to have to get folks into those stores.

They recognize that just the price of the gallon of gasoline can send it to somebody else. So they have to be competitive. But once they get them on the island, they have got to get them in the store. Because people are not going to be buying as much gas as they used to. There is a national trend to start slowing that process down. Now whether we as a country made up of Americans who love to travel, I don't know how that is all going to pan out. But what we have to offer is a choice.

We have got some great lighting products and we have got some great graphic products. And we have got a Company now that is stabilized. We have a Company now that is centralized, and we got a Company that is financially strong. So I'm sitting here today telling you, our shareholders and our analysts, that I feel pretty good about the future. We have got a lot of work to do and we are going to work hard at it.

We've still got a lot of internal operations to work on. The opportunity in New York with Lightron, and I will bring it out, is really looking much, much better. We turned the corner and we are beginning to see -- we have a strategy now to get them running and running hard. That is a tremendous opportunity for growth, and I am talking about financial growth.

Because to be quite honest with you, it as being a drain. We have hung in there. We've invested in it because we believe in it and we believe the product line. We believe in the people, and we believe that it is going to be a strong addition to the future. We've been able to carry that and fight through all the other problems that we've had in the economy, and certainly with the change in our market share. And we have come out today with a strong financial balance sheet, a great dividend policy and I think a future that really stands in the light of what LSI has done as a 30-year-old Company.

So, I would like to say goodbye. I would like to thank you for your time. And I appreciate the opportunity that our presidents have had to share with you some of the things that are going on, and I look forward to hopefully continuing to grow our business in a very, very strong manner.

With that, this conference call is completed. Thanks everybody.