LSI Industries Inc (LYTS) 2007 Q2 法說會逐字稿

Welcome to your LSI Industries conference call. Today's first speaker will be Mr. [Steve Breniger], and he is the Chief Information Officer for LSI. As a reminder, your conference call is being recorded and all lines will be muted throughout a portion of today's conference call. Now, without delay, I will turn your conference call over to your first speaker.

Good afternoon, everyone and welcome to the second quarter investor conference call for LSI Industries. I just wanted to take a moment to let those of you who haven't joined us previously know that we do have supplemental visuals that will be accompanying today's presentation that are available to you by visiting the LSI Industries website, which is www.lsi-industries.com. Click on the Investor Relations button at your lower left and you'll be taken to a link where you can watch the slides as we're being presented today. Now I'd like to introduce our CEO and President, Mr. Bob Ready.

Thanks, Steve. Good afternoon, everybody. It's nice to have you on today. As in prior discussions, I have with me the three divisional presidents for both Lighting, Graphics and Technology and Ron Stowell, our Chief Financial Officer. Like in prior meetings, we're going to talk a little bit about the direction of the quarter and the first half of the year and get into much more detail through the direction and presentation of the three individual presidents.

I'd first like to start off by discussing with you how the press release was generated on January 8th. Obviously with today's release, the numbers looked certainly a lot better than the initial press release, which we gave you a range. And, it's important to realize that at the time, which was a little bit earlier than normal, we were being prepared to attend a conference that was put on by Needham in New York. Based on the preliminary numbers that we had at that particular time, we knew we were going to fall a little bit short of our projected analyst forecast and we felt it was very important to certainly put out a press release indicating what our first estimates were. I'm pleased to say that when everything finally did come together, that the quarter was better than maybe initially thought, and I'm also pleased to say that you will find in the discussion with the presidents that had a few things happened that were definitely in the forecast, we would have been right on the number that was out there.

But be that as it may, things overall for the company are doing very well. We're very excited about some of the information we're going to share with you today.

We're going to start off with our core business with Scott Ready, the president of Lighting Group. He's going to -- I'm sorry, I'm jumping ahead of myself. Before we jump in with Scott, I'm going to have Ron Stowell go through some financial highlights just to kind of set the stage for the three presidents. And upon conclusion of Fred's -- from Technology -- his presentation, I would like to finish up with giving you kind of a feel for what's coming in the future. And with that I'll turn it over to Ron Stowell, our Chief Financial Officer.

Good afternoon, everybody. I'll first start off with a reference to our Safe Harbor statement. You can see that in the press releases that we issued as well as our 10k and 10q. When's important today is we do not have any material nonpublic information that will be discussed.

The first slide that I have is a graph, and visually, you can see that our second quarter sales of $81.6 million is trending very nicely. In fact, it is a record for any second quarter that LSI has reported and is the second-highest quarterly sales ever, with the highest being our first quarter of fiscal '07. The operating income for the first half -- and I'll make a mention here that the financial slides you'll see are very much the slides that we've typically presented on a quarterly basis. Some of them I will not actually show and present. They will be at the end of this presentation file, and they're there on our website for reference if you go to the pdf file that has this presentation.

So for the first half, our operating income of $17.1 million, was 8.6% of sales and I'll just point out that the different levels of profitability for each of the segments with Lighting at 7.4% of sales, that's very consistent with the first quarter. Graphics segment of 13.7% that is up from what our first quarter was and Technology segment for the first half is at 16.9%. So you can see a different weighting of profitability at the operating income level for each segment. Then graphically, again, you can see the trend and we've got a very nice increasing trend on a quarter-by-quarter basis for the operating income.

Net income for the quarter was a little over $5 million. That's a 29% increase from the second quarter last year. And that was on I think a sales increase of 11%. So we had some leverage there for certain, that turned out to be $0.23 per share. And for the half at $10.5 million, that represents a 39% increase at the net income line and of course that then is $0.48 cents per share.

Our balance sheet at December 31st remains as strong as it's always been. We've had certainly some increases in receivables and inventories. What all I would say is that we're working on the receivables, the collection from our customers is simply a matter of timing. Yes, our D.S.O.'s a little higher than we'd like to be, but we're confident in the ability to collect those receivables. Inventories have grown, but they've grown substantially in support of the programs that we have and we're working on fulfilling or, in a couple cases that may have been delayed from shipment in the second quarter, thereby leaving some inventory on the balance sheet.

Working capital is strong at over $85 million. And as of December 31st, we have a little over $24 million of debt. And actually, as a debt-to-equity ratio, that's 1.4, a very low leverage. And, in today as we speak, it's lower yet because we've got about $18.2 million of debt as our cash flow has, in fact, improved in these first three-and-a-half weeks in January. And then as we would be expected to go forward in the third quarter, we would expect to generate positive cash flow. Of course, we've got a dividend to pay, but nonetheless, generate positive cash flow that would probably reduce that debt even further.

Our second quarter dividend was declared to be paid at $0.13 per share. That's the same as our first quarter and did represent a $0.54 per share indicated annual rate. That's an increase of 8.3% over the indicated annual rate from fiscal '06. Graphically, you can see in a five-year presentation a very nice increase of dividends on an annual basis, and you also see a special year-end dividend that was paid for fiscal 2006. And with that, I'll turn it to Scott Ready.

Thank you, Ron. Certainly, the Lighting is segment this quarter was a little disappointed in our results. We worked hard for those of you who followed the company and followed the presentations we've made in the recent past, I'll kind of review for you and bring those folks that are new to the conference up to speed a little bit on our strategy.

The Lighting group has played a significant role certainly to the development of the company's direction. In the last several years, we've worked very hard to diversify our direction, and allow the resources and the assets of the company and the experience we've developed over the years to increase its ability to serve many additional markets. Our core markets, the niche markets as we refer to them -- the automotive, the QSR -- are still very, very critical markets for the company.

However, we do see and continue to see cyclicality as a result of involvement with programs and national account opportunities that are outside those original niche markets that do affect our quarter-to-quarter performance. We're very confident with our strategy. We're very confident where the company is today, but the second quarter is a good example of how with a little bit of shift in one particular time frame we can end up a little disappointed as compared to our original plan. Our plan has been aggressive. We have felt, given the information provided to us by our national account partners and our niche market accounts, that we had a good opportunity to do a little bit better in the second quarter than we ended up showing. That doesn't take away at all from the confidence of the organization, the confidence of the company in our strategic direction.

We had a little bit less second quarter spending than we traditionally have had from these national accounts. Year end budgets which typically contributed some to the business in the second quarter simply didn't materialize. We had several national accounts begin to move a little bit earlier into their retail holiday mode, which did affect some shipments in the second quarter. Again, we don't see a reduction in opportunity.

We don't see a reduction in volume overall, but more a shift in timing and a shift of some of that business into the third quarter. We took some aggressive steps during the second quarter to ensure that the effect of this softer volume did not have a significant impact on the income side. And as we can see here, our operating income through fiscal year-to-date '07 now, again, is about a tenth of a percent less than what it was last year at this time. So I'm pleased with the efforts that the team has made. We've worked hard to ensure that the leverage is available as volume increases and will increase in the future. But, we've done a good job, we think, maintaining our income as we have reacted to the timing and the shifts of volume out of the second quarter.

Our strategic direction remains intact. We have done a lot of work, as I said, to diversify and really focus a great deal on multi-market strategy with the original emphasis on the niche markets and really a new emphasis on the commercial industrial marketplace. We found a growing acceptance of LSI. as a reliable alternative to some of the big four C.N.I. lighting suppliers. This has been earned through the work that we've done establishing a secure and an aggressive group of agents through product development that has created new opportunities for us with product. And I'll touch on that here in a moment.

A number of you, I know, have asked and continue to ask, what is the impact of the petroleum business on our results for the quarter and certainly results for the year expected? I will tell you that we do have several active programs. Through the second quarter, they did not ramp up at a rate that we had expected, based on the information provided. However, they do remain active, they do remain favorable and we expect the third quarter, frankly, to be strong in that area. The petroleum and the automotive markets both have the opportunity to prevent -- excuse me, to provide us with a tremendous amount of opportunity in the future and our strategy requires that we remain committed to those markets. But we really do much more than that now. And as a company, we combine those original markets, niche market strength. We've improved and continue to improve. You may have heard -- I know you've heard this from me in the past, but it's an ongoing process to continue to improve the customer service performance through the focused one-stop shop. This is something that's very, very important to our efforts in the commercial industrial marketplace.

We're offering today a broader range of products to a broader group of customers in a much more simplified manner than we ever have in the past. We are increasingly using the system that we spent so much money and time installing throughout the organization. In the Lighting groups -- the lighting companies, I should say -- within the Lighting group have worked very hard to use the automation now provided to us in a cost-control fashion and very aggressive coordination fashion and I think you see the results of that even as the volume was soft during the second quarter and our ability to hold on to the income level that we did show. Certain markets offer us tremendous opportunities as we look forward. Again, the non-residential commercial market remains strong.

The building segment of our economy in that area is continuing to be very encouraging. We have spent a great deal of time and will continue to do so bringing new products to that market. Specifically, products that have higher margin opportunity, more spec-oriented, as we call them, driven by features and aesthetics that will command higher pricing and higher margins. The other segment of the commercial-industrial market that's performed well for us recently, and continues to offer a tremendous promise, is the energy market, with a focused effort now in the last six months of not only bringing products, but bringing a marketing direction and a sales team geared specifically for that effort. And our success right there continues to improve. We've done some great projects and we have some good national account opportunities as we look forward using the basis of what we do in the Lighting group, and that is selling a positive and effective solution, more than just the product, the customer service that goes along with it before and after the sale and the right total cost of ownership solution for our customers.

Overall, the outlook remains very positive. We're very dedicated and committed to the strategy we have voiced over the past year. It remains intact and remains very favorable. We have certainly a great deal of optimism about our ability to bring new products to the market and specifically new products that integrate solid state LED technologies. They will present us and form, if you will, a greater and greater percentage of our opportunity as we move forward. Many of these products are going to create the opportunity to firm up niche market volume.

While the markets do remain somewhat soft, the opportunities that exist in those original niche markets are tremendous. And the integration of LED technology and the application both in new construction, but more importantly, in retro fit because of the position LSI. has and the population of product that LSI. has in the marketplace today, due to the last ten years of success, offers a tremendous opportunity. and you're going to see the application of LED technology, solid state lighting technology, into those markets, and that's the greatest opportunity to firm up the volume opportunity in those original national account and niche market areas. David, would you like to take it from here?

Sure. Thank you, Scott. And good afternoon to our audience. Good news to report today here. Moving my first slide out for you. The Graphics segment, a record first half, near record second quarter in sales; just a shade below 2005's second quarter in the sales, but if we move to next segment here, operating income, that is a record for any six-month period or one-half year. Some nice increases from last year. You can see where we doubled the profit in the second quarter, 101% and year-to-date 88. I guess it's important to remind you that January 2006, I was kind of in Scott's position saying well, we've had some delays in programs and customers have held up, and they want to do a little more tweaking, etc. That's kind of what happened here.

That pent-up demand, those delays came loose along with standard business and additional increase in business, allowed to us have some records here. More importantly with both the Lighting and a little bit of the Technology coming up short in the second quarter, it's nice when one of us can jump aboard and level the ship. When we're all hitting and clicking, that's when we exceed expectations. Moving on past the result of the quarter, on your screen you'll see the QSR logo. I talked about this last time some. I don't have it on my screen now, hopefully it's on yours -- there it comes. QSR, again, stands for Quick Service Restaurant. I touched upon this last time, but I want to re-emphasize it, expand upon it, and bring this to the new listeners who we feel we have a lot of new listeners today because of the new mix of business that we're bringing in with our Technology group that we added six months ago.

Again, I remind you that the quick service restaurants, there's three times as many outlets out there compared to the convenience petroleum sites that we've been doing business with over the years. So there's over 400,000 sites, and one common thread about these sites, most of them are outdated. They're tired and they need a new image. And there's, if you was to interview this group and ask them what are the main drivers for image, the four common answers you would hear is Graphics, Lighting, Technology, and menu boards. Well, in a short version, that is LSI. We provide those products. We provide those services. We install, engineer, design those products. So again, we're very excited about this group. On the screen, you'll just see a small scattering of some of our existing customers and prospects.

One that we talked about five months ago, we made an announcement that we received -- we're honored to receive a large order from Dairy Queen, D.Q. commonly referred to as, and we have finished all of the prototyping, we're in large process of manufacturing for 5600 sites that will receive a complete interior menu board. You'll see one of those at the top of your screen now. And 3600 of the sites will receive the exterior menu board, drive-thru menu board.

Just a reminder, to keep you educated on this strong market that we like here in the QSR, over 65% of the business is done through the drive-thru and not in the store. So those lighting elements outside the store and that drive-thru menu board and any technologies especially with the LED boards that Seiko brings to the product line, outdoors become very valuable.

Moving on, my most favorite slide, this is probably the fourth time I've used it in the last 15 presentations that have gone on record participating in, is the merger acquisition, the alliance, co-branding, the opportunity everywhere slide. The mergers and acquisitions in the US -- excuse me, worldwide in 2006 set a record that was $4 trillion in 2007 could beat that number. I've seen predictions that it will, but even if it's close to that number, that is wonderful information for LSI. because it drives our business. It's a big driver of the business.

One more piece of advice about this merger and acquisition activity; when the action happens, when the announcement happens, an average until the identification or the new image is to be implemented, usually is about a year and a half, so the one that you hear tomorrow doesn't mean it's going to be done tomorrow. If in fact I'm extremely accurate on that number, you'll see that those acquisitions in the year 2006 will bring fruit in 2007 and 2008.

Next slide shows the word "competition." I decided to put that in there today because as we go on our conference trips to the various analysts, the various seminars, the question comes up to me to the Graphics portion, I'm speaking of the Graphics portion only now, who is your competition? I have a hard time with that. First of all, if I would give some of the names, they won't be household words or recognizable. They're private companies. They're much smaller. The graphics business is very, very fragmented. We're a giant. We're the leader there. They're not near as diverse and obviously they're not on a national scale in most cases. So, I don't want to say that we don't have any competition, but that's why our margins are extremely good for this business and again, we're built to service the larger sites, the real dollar muscle in the country.

Lastly, technologies. Speaking again in the graphics area only, the addition of the Saco to the LSI. brings their existing products or many of their existing products into the Graphics group. I'll give you three examples beyond billboards now. Many times people get stuck on the billboard portion. The standard billboard is thought of as an outdoor billboard at 14 foot by 48. But I'm talking smaller billboards and smaller signage. Saco's very capable, has some existing products there that are thousand being feathered into the Graphics line. One would be the Edgelet thin profile sign holder along with their Graphics manufacturing capabilities and our ability to deliver messages to these signs. That's going to be a hot item into the future. Exterior video boards again smaller to medium range size with high definition, outdoor. Right now that's an underserved market. There's a large demand and again, LSI. has the answer for it.

And a third example is the outdoor lighting that they have in a graphical or color array. The ability to change colors of a bridge or a building or any object that it's projected on is really a graphical scene that encourages and creates atmosphere and ambience. This will be a nice addition to our product line. Beyond the existing product line we have, there's obviously a request from our customers we've had over the years pent-up demand. Now we have a way of putting some R & D and developing these products that are asked for, but not delivered yet to the industry. So we're very excited about that.

In conclusion, I'll give you the growth drivers that I do every quarter and continue to say that the customer program's delayed in fiscal 2006 continue to accelerate beyond our expectations. Opportunities are very strong. the standard business from this customer remains and will be very strong throughout the calendar year of 2007. Again, our customers keep crying for and telling us about a combined package for their image of Lighting, Graphics and Technology is very encouraging. Therefore, as usual, my outlook remains very positive. Bob, I'll turn it back over to you for the introduction of Fred or any questions or comments you may have for me.

Thank you, David. There's only one thing I observed in your presentation, and that was that the Dairy Queen program is really not in the stage of rollout. It's really in the production stage, and I believe we're receiving orders now, based on all of the visits that the installer or installation crews have done the surveys on the stores, and I believe that orders are being written and entered now, and I think we're really talking about soft rollout in March and the real heavy rollout starting in April. Is that right, David?

Right. I neglected to mention that. We're in a strong manufacturing process, and to be very exacting, 60 days from now will be our first billings because our installs will start at the point, so at the very end of March is our soft rollout going full speed ahead from that point on.

And it's about 30 to 60 days, a little slower than we initially thought. We'll really excited about this great opportunity.

To take a really, a very challenging rollout, I think the Dairy Queen rollout of all of the ones that we have done as a corporation are going to be the most challenging because they have a variety of stores all different sizes and many, many different locations, but we have the people and we have the experience and certainly we now have the product to really fulfill what Dairy Queen is looking for an exceptional image rollout on their menu systems. As we said that really the heavy part is going to start in April. Would I like to take a moment and introduce Saco and a little bit more direct than I have in the past. I believe that we have a number of new shareholders on board today. And I'd like to share with you just my vision as we look forward to where the Technology part of our business really is going to fall in place. There's no question that the direction that was taken and the acquisition of Saco, which was really the beginning of our commitment to our new generation of lighting fixtures was an absolute, as far as I'm concerned, grand slam home run.

What I have learned in the last few months as being part of the Saco family is a lot more information as it relates to so many other opportunities. Obviously there was a lot of interest on the billboard market, and I think that those who are aware of that industry know that we have some formal competitors out there, some larger competitors, but the market is so huge and the demand we believe is going to be so strong that LSI.'s capability as a manufacturer of metal products, and that's our Lighting division, is going to be an absolute positive enhancement to developing what we believe to be the best solid state hardware -- software, I should say, utilizing the white light source, the LED source in this billboard market. We have in here today Fred Jalbout who is the President and the Founder and, I would also like to announce, the single largest individual shareholder.

At one time, I had that honor, but Fred, in his wisdom and certainly in his vision looked at the LSI concept and our approach of Lighting and Graphics that we call the Image Solution and now the addition of the Technology, saw the opportunity and not speaking for Fred, but his actions speak louder than his words that he took a fair amount, 50% stock ownership in his sale of his company to LSI Fred and [Jonathan Labay], our Vice President of Sales are on key here to share with you some of the things that are going to happen. Guys, we've got about ten or fifteen minutes at most. I know you've got a lot of things to say so I'm going to turn it over to you. Fred if you would, please, take it from here.

Yes, thank you, Bob. Good afternoon, everyone. Let's start with the result of the second quarter. If we look at the sales and the gross margin, they were lower than the first quarter. And this is due to a five billboard. We were ready to ship them in December, but they were postponed to be shipped in the third quarter and that effects the result of the second quarter. But if we look at sales up-to-date, year-to-date and the gross margin year-to-date, they are very good. You can see that the gross margin is very solid and stable over 32% as before.

Again, if we look at operating income, it's the same thing for the second quarter is lower than the first quarter but if we look at year-to-date, we see it's in very good average and we did around $1.4 million over 16% of the net sales, and it's a good result. Now if we go to the business side, I would like to let you know that the integration of the LSI / Saco into LSI Lighting segment and Graphic is been going very good and is performing as we thought it will perform.

Again, our team of engineering and the design side been working right now for a good time together with the engineering of the Lighting segment and the Graphic segment first to double up new product that would be implemented into the rest of LSI product line, and at the same time they working together to integrate to the existing product or upgrade it to offer it through the sales channel that already exists at LSI Lighting and Graphic site. We believe that this will bring a great future for the company in total, where we will be a unique company that it can offer full solution to our clients from the video board to lighting to solid state LED lighting, traditional lighting to graphic. Especially in the Graphic, we'll have the mix of a digital signage and the graphic signage and that will give really the opportunity to put LSI as a unique supplier that can offer a turnkey job to our supplier. In addition, there is lots of new product that will be introduced in the near future. I believe that things will take a little bit of time but the result will be great.

Many people will ask the question sometime, what will make the LSI / Saco product different from other competitors? Especially today, we all know that the market of billboard is one of the largest markets into our business. Well, I'm going to really summarize that in a few words that will make it easy for everyone to understand it about our video board. Our video board, the quality of the picture, the vivid color and the view angle, they are unique to those application. The hardware design and the software design that drive our LED a lower power consumption without affecting the brightness, that would result in a lower power consumption from other board exists. And also will make the lifetime of the board longer. The processing of the image in high definition from the front end into the LED itself, using our own software to treat the image and to actually color correct the picture and display it in the best way up on the screen on the LED screen.

This method is a unique method that Saco developed those in the last I would say ten years, our experience actually working with LED for the last 20 years made our product unique and different than anyone. Again, the way we build our board, it's made in modular system where it's very easy to put together and at the same time, it gave lower weight from other board that exist in the market. Since we not driving with high power our board, that eliminates lots of heat and the use of extra metal and heating to be used on the board. That again, it gives an advantage that it's a lower cost to maintain it and to service it.

Now in the end, I will turn it to Jonathan [Labay]. He will talk about the various market and the application that you are working on right now. Thank you.

Thank you, Fred, and good afternoon to everybody. As Bob was mentioning earlier it's been six months since LSI and LSI / Saco have come together. And as we've mentioned in some previous calls, we're in the process of evaluating how to best use the strengths of LSI to increase our capacity, manufacture colid state products. I'm glad to say that we not only identified the strength but in the process of integrating them to satisfy the company in the future.

With the increased demand on our LED video board products, LSI has committed its resources to build up capacity to deliver high volumes of LED electronic screens to the billboard market and other technology-driven markets. So not only are we a strong innovator in our marketplace, but with this initiative, we are positioning ourselves to be one of the major players in these markets.

At the same time that we are ramping up for manufacturing, we're not sitting still on the sales side. We've put together an aggressive platform so what we've done is we're in the process of enhancing our sales strategy by combining the LSI Graphics sales team and LSI / Saco sales team. This enhanced effort's going to allow us to offer a full digital signage and graphics solution to LED video boards, indoor digital media, printed graphics, control software, and any of the combination of what I just mentioned. The ability to offer a full package like this is what makes LSI a unique and noticeable company in the industry. The approach, this approach that we're in the process of building, obviously, we always use feedback from our customers and it's already started to generate some new opportunities for us. We presently have some solutions under evaluation with some of our key customers.

In our current markets, sports remains a strong leader for us through our partners ANC Sports. We've done a great job enhancing their presence in that market. Billboard market, digital signage in general is very rapidly expanding, and we believe it's going to be an important market for LSI as we gear up to become a major player.

On the entertainment side, you can see on one of the slides there, the entertainment market and its uniqueness continues to push the development of our core products and Nocturne Productions has done a tremendous job at positioning the LSI / Saco Smart Vision products as the products to be used on the major tours. So you can expect to see some of our products with your favorite artists. On the -- from a solid state lighting point of view, with white light being our primary focus, and as Scott and Fred mentioned earlier, our Lighting and Technology groups are developing some very interesting stuff for the market. Successful prototyping and education with some of our customers is generating a lot of interest in our solid state development. Our goal here is to use our experience, our unique capability to control solid state technology and of course our strong manufacturing capacity to deliver powerful, reliable solid state products to the market. And of course we want to do this on a large scale. Bob, I want to turn it back to you.

Thank you, Jonathan. Thank you, Fred. As a wrap-up, I'd like to share with you the vision of the future of the corporation. I think it's a fair thing to say that where our company is going now on a priority basis is to put all of our assets to work in developing the next generation of billboards. We believe that this market is so big and has so much opportunity that it certainly warrants our involvement and our production capacity and capabilities to enter this market with what we believe to be the best solid state support system in the video process of that market. And it goes far beyond that.

I sit here looking at the future of the company and understanding that the last 30 years, we have developed a company that is really unique. If you look at all of our competitors and all of the things that we do, you can't find a competitor that does all of the things that we do as a package. And I believe that that's the right direction to go because of our involvement with the large national retail because of our involvement with the large national retail segment of our economy, the opportunity that we have to develop the next generation of light fixtures, which I believe after 44 years of being in this industry is going to open some great R. & D. development on the lighting fixture side of the business because of the LED source. The fact that we have a company that has some tremendous R. & D. capacity and Technology and has proven that over the 20 years that Saco has been in business, and the fact that we're in the graphics business that really we have developed over the years probably the largest player in the North American market that supplied the type of indoor and outdoor graphics that we do.

There's no question about the fact that the vulnerability that we've experienced in this lumpy business is that we are one of the biggest companies to supply the big rollout programs. And I think that's great. From the standpoint of looking at the ability that we have to generate the kind of dollars and the financial stability in our balance sheet allows us to continue to invest in product development, acquisitions and the last, but not least, a service level that we believe is going to define LSI in a much stronger position than the rest of our competition. The Technology side of our business will be the driving force. The core business will be there and we are committed to establishing and maintaining the market share and growing this at the proper levels that we feel are important to the margin side of our business.

Certainly from an asset standpoint, the production facilities that are now in place are equal to anybody, and I mean anybody, that is in the production side of the type of boards and I'm talking about the billboard market, of anybody out there today. The time is to put this together and we're going to do it right and we're not going to do it overnight, but the obvious is that the market is there, LSI is positioned to do it, we've got the financial stability to do it, and we certainly have the commitment of the management team. As a result of the vision that has been put together over the 30 years, nothing, in my opinion, could be more stabilized than the guy that sold his company to us and believed in the vision and took 50% stock. Fred Jalbout is as committed to this as I am, and because of the direction that we're taking as a corporation and our commitment to the markets that we're going to take this technology into, this is a new beginning of a company that has a great future. We will maintain a commitment to our rep force in the Lighting side and certainly our employee direction as it relates to our Graphics business. And we're going to enhance that as shared with you as part of our marketing strategy to bring the technology business into reality through our direct sales force.

As most of you are aware of, manufacturer reps represent our Lighting division. That doesn't mean that there isn't a place for them in the future. But certainly today, we believe that our sales force that's already in place under our own direct control makes the most sense to bring the message and the products into fruition in the markets that we serve.

And in closing, I want to thank the shareholders. I certainly want to thank the employees of LSI who will be listening to this message. I personally am looking forward to 2008. I think '07 as I am on record saying will be our biggest year yet, but if everything goes well the way we are now positioning ourselves in the directions that we're taking, even 2008 could be a stronger year. And with that, I want to thank everybody for your time and just keep an eye on LSI This is a good time to own LSI stock. With that, I turn it back to Dawn. Thank you very much, everybody. Have a good day.