James Galeese; Chief Financial Officer, Executive Vice President; LSI Industries Inc
Sameer Joshi; Analyst; H. C. Wainwright & Co., LLC
George Gianarikas; Analyst; Canaccord Genuity Group Inc.
Greetings and welcome to LSI Industries' fiscal 2025 second-quarter results conference call.
(Operator Instructions) As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host, Mr. Jim Galeese. Thank you. You may begin.
Welcome, everyone and thank you for joining today's call.
We issued a press release before the market opened this morning detailing our fiscal '25 second-quarter results. In addition to this release, we also posted a conference call presentation in the Investor Relations section of our corporate website.
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 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 for more details.
Today's call will begin with remarks summarizing our fiscal second-quarter results. At the conclusion of these prepared remarks, we will open the line for questions.
With that, I'll turn the call over at LSI President and Chief Executive Officer, Jim Clark.
Thank you, Jim, and good morning, all. Thank you for joining us this morning. Today, we'll be discussing our second quarter in mid-year 2025 earning results.
So we're halfway through our fiscal year and as you've likely seen from our press release this morning, we had a very good quarter with some strong orders across the board.
The Grocery segment has begun to recover while the Refueling projects and QSR segment continue to move forward with projects booked throughout the remainder of our fiscal year and they extend through the calendar year.
We saw strong growth in our Display Solutions segment and additional growth in our refrigeration business, this quarter. EMI, who we acquired early last year continues to do very well. And the entire team at EMI has been an immediate asset to our company.
Net sales for the quarter were above $147 million with adjusted EBITDA above $13 million and free cash flow of almost $9 million, leaving our TTM net debt ratio at 0.6 times leverage. Jim Galeese will provide more of the financial details in a few minutes.
I think the key word for Q2 is growth, particularly as it relates to organic growth. Whereas top-line sales were up 36% on a year-over-year basis, 14% of that growth was organic. And I think it continues to show the opportunities we have in front of us.
Lighting had some top-line crashes in Q2 but activity inquiries remain strong. The Display Solutions segments shine, though, across the board, creating a compelling story for the quarter.
We continue to have very strong project and quote activity levels across all vertical segments. But order timing and mix remains a bit choppy. And I think you see some of that choppiness in Q2.
As we've been discussing for some time now, we anticipated a recovery in our Grocery segment as a proposed merger between two of the larger grocery players in the United States achieved some clarity. Unfortunately, the courts in the State of Washington, Colorado did not support the merger based on antitrust and competitive concerns. But through their findings, they did give some clarity in the market and many of the update and remodel projects that have been on hold have begun to move forward.
The choppiness that I was referring to is in relation to the surge of orders that came through in the last quarter. When order mix and demand slowed last year, we made some immediate changes to our manufacturing process and overall workforce. When the surge of orders came through in the last quarter, we needed to ramp up quickly. And because of this [Phoenix pass] ramp-up, we were a little bit less efficient than we would normally be. And I think you see some of that affecting our margin a bit.
The good news is we did not miss a beat and we didn't leave any orders on the table. In fact, we were able to capture some orders from competitors that were not able to respond in a timely fashion. We anticipate that those order opportunities remain high for some time and we'll be ready to serve our customers.
Right now, it's hard to tell what this volume increase will look like in the long term and what part of it is a surge in pent-up demand versus what part is the customer's longer-term plans. I feel we'll develop more clarity around this order momentum as we move through the winter and early spring. But all in all, we expect order activity to remain robust for some time.
On the refrigeration side of the business, we've worked hard over the last few months to wind down our inventory of our R448 products and fully transition to R290. A change in the EPA rulings around synthetic refrigerants makes this a smart move for LSI and we're looking for this solution to continue to be a product of choice and a competitive advantage for LSI -- for us and for our customers into the future.
Our Lighting segment small project activity continues to move along nicely with strong quote activity and project opportunities. But in a comparative view, our large project activity has experienced some headwinds over the last few months and activity is a bit slower.
We remain vertically focused in our efforts but I did want to mention, much like the EV battery plant we had last year, we are actively engaged in a number of larger projects this year, including a half a dozen data centers and chip manufacturing facilities, but they're all moving slower and the mix of products used in these projects is a bit different. I feel like we have good momentum but timing is just proving to be a bit tricky right now.
Staying within Lighting, I'm happy to say that interest in our next generation of our outdoor lighting product called V-LOCITY has been very strong. I mentioned V-LOCITY in our last call and it offers a total update to our core outdoor lighting offering, from its performance to its aesthetics to its modular construction and build options. We anticipate that it will be complementary to our current flagship outdoor product offering called Mirada and it will create some openings for new project opportunities that Mirada just didn't offer.
As I mentioned before, in the design of this new fixture, we built on top of our prior investments in adaptability, customization, and our REDiMount technology, providing a product that offers next generation performance along with reduced installation time and weight reduction. This is a significant investment for LSI and it continues to underline and illustrate our commitment to new product development and our product vitality.
Next week, we'll be hosting our National Sales Meeting in Cincinnati. This is an opportunity for our internal LSI sales folks to get together from around the country and learn a little bit more about the company, the efforts of each other, our successes and our challenges. I know that most of our folks are hoping for some warmer weather but I know they're going to be generally excited to listen, learn, and network with each other. We always learn so much about our company, our customers, and our competitors from these meetings. And I'm genuinely excited for everyone to get together for this great event.
Our thesis around vertical market orientation remains very attractive to us. And our model continues to gain strength as we work to offer more and more goods and services to the markets and customers we focus on.
We accomplished a lot this quarter. We continue to build a stronger, more capable business with a strong platform equipped to deliver profitable growth consistent with our growth objectives outlined in our Fast Forward plan.
We are using the experiences of our management team to effectively integrate EMI and optimize other parts of our operations on an ongoing basis. We believe that we have significant growth opportunities in front of us and we remain committed to growing our business while balancing the needs of our customers, our shareholders, and our employees alike.
With that, I'll turn the call back over to Jim Galeese for a closer look at our financials. Jim?
James Galeese
Thank you, Jim.
Our fiscal second-quarter results reflect improved year-over-year performance in all major financial metrics. Growth was realized in both total and comparable sales. Adjusted EPS and EBITDA both increased. And cash generation was, again, strong.
Total sales for the quarter was 36% and comparable organic sales increased 14%. Growth was driven by the Display Solutions segment where total sales doubled and organic growth of 50% was realized. Multiple verticals were responsible for the increase including the demand resurgence in Grocery and continued site implementations in our Refueling vertical, covering multiple customer programs.
Second-quarter adjusted earnings per share were $0.26 versus $0.24 last year. And adjusted EBITDA was $13.3 million or 20% above the prior year quarter. Free cash flow was $8.8 million and $20 million for the second quarter and first half, respectively, 21% above the first half of last year.
Solid cash generation has reduced net debt to $33 million at the end of the fiscal second quarter. Consequently, we have reduced our leverage ratio by more than half, from 1.3 times to 0.6 times since the acquisition of EMI, nine months ago in April 2024.
Looking forward to Q3 in the second half of the year, we exit fiscal Q2 with a total comparable backlog, excluding EMI, 14% above prior year. While performance varies across verticals and product segments, total comparable orders increased 4% versus last year, contributing to the increased backlog.
Now, a few comments on the segment performance. Display Solutions had a robust quarter as project activity continues in the Refueling/C-Store vertical, including strong contributions from specific customer programs in Mexico and Central America.
To accentuate our scope of capabilities, LSI provided product and/or services for approximately 1,000 Refueling/C-Store sites in Q2, meeting the demanding requirements for multiple large customers with sites located throughout North and Central America. This represents our highest quarter in many years.
Our service business continued to realize significant growth in the quarter, as customers continue to see the value of our end-to-end product integration capabilities. Service revenue increased over 100% in Q2, with average service per revenue site continuing to grow while the share of LSI project containing both products and services continues to expand. We expect steady growth in service revenue for the Refueling/C-Store vertical, moving forward.
Jim referenced a resurgence in the Grocery vertical demand. Sales increased over 60% in this vertical with two levers impacting demand: customers-releasing programs previously put on hold and shipments of refrigerated display cases utilizing our R448 technology which can no longer be produced after December 31, 2024. Our manufacturing team did a great job meeting the accelerated demand requirements and managing the overall phase-in/phase-out process of the DOE-mandated technology change.
Display Solutions operating income doubled in Q2 compared to the previous year, driven by organic growth along with the addition of EMI. Operating margin improved 100 basis points, reflecting volume leverage while absorbing incremental one-time costs required to ramp up production to successfully support the volume increase.
For the Lighting segment, sales for the quarter were below prior year as we continue to experience wide fluctuations in demand across verticals and project size. Demand strain continues in small project activity while larger project activity remains choppy, particularly in indoor applications. Overall project quote trends continue to increase with the total value unfavorably impacted by the project size mix. Large project orders in Q2 did improve, sequentially, over Q1, contributing to the Q2 backlog increasing 6% over the previous year.
Working closely with all our independent agency partners, contractors, and key-end customers, all indicate larger project design and proposal work is improving. And expect that activity to translate into a measurable pick-up in orders as we progress through calendar year 2025.
In summary, Q2 was a successful quarter for LSI, with increased financial performance, solid organic growth in many of our key verticals, noteworthy operations execution, growing customer recognition of our integral solution capabilities, and the ongoing successful integration and performance of EMI.
EMI enhances LSI's position with many key customers and the reverse is true as well. Teams have identified key cross-selling opportunities, with progress made on numerous opportunities. All contribute to the increasing momentum as we enter the second half of the fiscal year.
I'll now turn the call back to the moderator for the question-and-answer session.
Operator
(Operator instructions)
Aaron Spychalla, Craig-Hallum Capital Group.
Aaron Spychalla
Good morning, Jim and Jim. Thanks for taking the questions.
First for me, can you just talk a little bit -- it sounds like you expect the strength to continue here in the second half, combination of backlog and orders and, maybe, a pick-up of activity.
So just want to unpack that a little bit. And then, maybe, just talk a little bit about seasonality here, potentially in the third quarter, off of a strong second quarter. Just curious, your thoughts there.
James Clark
Well, good morning. Thanks for calling, Aaron. Good to hear you on the call.
Listen, we've been talking, we've been under this cloud that's been impacting Grocery for two years. As we said a number of times, our preference would have been that the project moved forward but certainty -- at least some type of certainty -- was going to be a good result no matter what.
As you know, the courts in Colorado and Washington voted against the merger -- the two big players in the grocery sector, that merger -- and so when that went in the direction it did, it gave some clarity and I think it opened up the gates for projects and programs that were being held back.
We got a big surge in Q2 as you see from the numbers. There was a lot of inefficiency in that, as I mentioned in the comments here and we mentioned a little bit in the press release, because we had to ramp back up quickly. We didn't want to leave any orders on the table and that type of thing.
What's hard for us to see right now, as we sit here, on January 23 is sorting out what was surged? What is the remainder of the pent-up demand look like? And what is the normal run rate look like, going forward?
So we're going to need another quarter to give you a lot of clarity on that. But the short answer is we do anticipate that we'll remain at an elevated rate on the Display Solutions side, particularly as it relates to Grocery and the work we're doing in the convenience store, Refueling side.
We anticipate those to remain at an elevated rate through Q3 and Q4. Maybe not quite at the same rate as Q2 but still at an elevated rate.
Aaron Spychalla
All right, thanks for that.
And then on growth margins. I know you've been navigating some issues there for a long time. Can you just, maybe, talk about the trajectory of growth and EBITDA margins as we move into the back half? You touched on some of those inefficiencies in the quarters, do we see improvements there as we move forward?
James Clark
I think the whole story that LSI -- if I were to tell the five-year story of LSI, it is about that continual focus on operational efficiency utilization effectiveness and that equals margin. Anytime we step out of that and we become less efficient, the byproduct is an impact on margin.
So when you look at what happened in Q2, we didn't know what the timing would look like. We knew that there was going to be pent-up demand, there was going to be demand related to it. We had a choice -- a fork in the road, so to speak -- absorb the cost and let the clock tick until that opportunity presented itself or have a plan and be ready to execute when those orders came in.
We took the latter. We had a plan; we executed it but there was inherent efficiencies in it. You're bringing back a lot of people all at once, we talked about scaling up the workforce. We have a new product design that we're not pumping out on a daily basis. So there's some inefficiency in learning how to manufacture that best. There's some challenges around materials to make sure we get the materials in. So those are the inefficiencies that we experienced and those will carry into Q3 a bit too.
I don't anticipate that the margins will be any lower -- not that they were low by the way -- but that they'll probably match Q2, maybe a little bit of incremental improvement. But as we move through this, the consecutive quarters in front of that, we'll get that efficiency back and we'll start performing back up to that level that we like.
There was also a couple of things in there. I know I've mentioned it but I want to remind everybody, when we brought EMI on board, their performance is lower than LSI's performance. And we knew that and EMI knows that and they've done a phenomenal job of moving that needle already. We've done a phenomenal job, collectively, of moving it. But they're still a little less efficient and they're still a little less profitable from a margin standpoint. And that's a program that will take us 12 to 18 months to move that needle.
And then the last thing, I just want to bring it up because I haven't talked about it out loud but with the port strikes occurring in -- the potential for port strike, ports went on strike the East Coast, that gummed up some materials for us.
And then there was the potential of another issue, here, in January. That got settled but we made the management decision some four or five months back that we were going to hedge our bet and reroute a lot of materials through the West Coast at an additional cost.
If the port strike had happened, we would have had the materials and we would have executed against that. If it didn't, then we would have burdened ourselves with some extra cost. But it was worth the risk. So we did do that and we're going to be burning off those additional costs over last quarter and into the third quarter here.
But it was still a bet. We would have made it all over again based on the information we had. But those are things that have impacted our margins a little bit.
Aaron Spychalla
Understood. Thanks for the color.
And then just, maybe, last for me. Curious, your thoughts on some of the proposed tariffs and what that might mean for your business and, maybe, competitive position in the market as well.
James Clark
Well, remember -- again, I'll go back to -- if I could retell the whole five-year story in thirty seconds, but, way back, even before COVID, we made the decision to onshore and we're very proud to carry a flag that says American-made.
It's not popular to be a US manufacturer of some products that could be considered commodity like lighting or things like that. But we made that decision back in 2019. We were, at that time, 20% domestic-, 80% foreign-sourced. Today, we are 70% domestic-, 30% foreign-sourced.
I don't have a crystal ball in terms of what the tariffs will look like and how they'll impact us on any level or anybody else in the mix here. But I will say because of our domestic focus, the impact should be marginal and it should be less significant than anybody else would be exposed to.
So we don't manufacture in Mexico, we export from the US to Mexico. We do have some final assembly in Mexico but I think those tariffs would be a reverse situation, incoming from Mexico, and we don't do that.
We have a Canadian operation. We do move things across the border from Canada to the US and from the US to Canada. So we'll have an eye on that. But the way our Canadian operation works, it can be 100% standalone, within the country, to support Canadian operations and Canadian customers. And we have enough business there and we have supply relationships already that are stable. If we needed to, we could have minimal trading or minimal inventory moving across the border for our Canadian versus US operations.
And then rest of world, most of our activities in the Caribbean and other places that could -- I don't see anything on the board that would impact any of those. But a majority of those or almost all of them are us exporting there. So I don't anticipate any impact.
With all that said, depending on how the cards land and what those tariffs look like, I think we'll be least affected in our sectors and best prepared to manage through whatever those look like.
James Galeese
Aaron, Jim G. here.
Just to build on what Jim said, first of all, our exposure is limited from the previous actions we've taken, as Jim noted. But in addition to that, we do have a complete, contingency plan, both for our tier-one suppliers as well as tier two, meaning our direct suppliers. But then, also, our direct suppliers, they source foreign material from foreign sources as well. So we've got both tiers covered.
In fact, so what we do source from China -- that's probably the most visible top-of-mind of everybody -- these days, what we do source today, what's remaining, we've already moved about 20% of what's remaining out of there. So as Jim said, we feel very comfortable where we're at and we are proactive in developing plans to address this situation.
James Clark
By the way, that doesn't mean that it wouldn't be a kick in the knees. It just means we'd get back up again.
Aaron Spychalla
Right. No, understood. Thanks for taking the questions and congrats on the quarter. I'll turn it over. Thank you.
Operator
Sameer Joshi, H. C. Wainwright.
Sameer Joshi
Hey. Good morning, Jim and Jim and congrats on the quarter.
I think, just stepping back, would you give us a refresher on how you launch new products? I think you're planning 40 new products this year and in terms of your product road map and visibility and agility or quickness, how does that work? Just give us a quick refresher.
James Clark
So what you would see if you go back and listen to all my calls or you look at anything that we release, I always reference that we have 20-plus new products each year. Last year, my Head of Marketing sat down and said: you're underselling us because there really hasn't been a year in the last five years we haven't launched less than 30 new products and close to 40. So I continue to say 20-plus new products but they're always, I've been told always, has been in excess of 30.
Our new product launches fall into three buckets. There is an existing product which is refreshed or reengineered, maybe new components, maybe we're able to find more efficiency in it or lower cost components or whatever it is. So that's one version of a new product.
The second is a category change or what I would say is we're expanding within that category, maybe we have a small, medium, and large wall sconce and we're adding some type of feature pendant mount for it or we're adding an extra-large wall sconce or something like that. So that might be something within our family. And this extends across refrigeration and lighting there -- I'm just using this as a kind of an example, I'm using lighting but it extends to all products.
And then the third is a launch of a totally new product. And the V-LOCITY, as an example, is a brand-new category. We try to minimize our cannibalization of existing product; we try to make it complementary; we try to make it serve a new set of targets within the market, new capabilities, that type of thing. It may overlap with some of the capabilities of an existing product like, in this case, I just mentioned V-LOCITY, it overlaps with Mirada. Mirada has been one of our most successful products we've ever had. But it doesn't overlap in a way where it completely cannibalizes it.
Maybe let's say a third. So a third of it, a third of our customers are going to stay in the Mirada family and they're going to be completely -- it's going to serve them for years to come. A third of our customers will be debating: "Hey, do I want to move? Do I want to stay with Mirada? Or do I move to V-LOCITY?" And then, a third of our customers will say: "you know what, Mirada wasn't able to handle this but V-LOCITY is so I'm definitely going to V-LOCITY."
In terms of how we launch it, it is very comprehensive, right? It starts before the product's available. It's education to our own team, which will be doing some of our upcoming sales meeting next weekend. It is education and preparation to our specifiers, the engineers that work with our products, our agents, our technical resources (meaning, our tech support teams), our engineering teams, our manufacturing teams getting ready to manufacture and use that product.
And then, the last is when the product becomes available. It's that external launch which we use social media, LinkedIn. We're not Facebook Ad people or anything but we use all the social media to introduce it plus advertising, plus all of those.
And then there's all the technical background that is going on during that time: sourcing the products, running through manufacturing, looking for the manufacturing efficiencies. And that'll keep going on as we gain more and more experience with that product.
Sameer Joshi
Great. Thanks for that refresher. I think it is going to be helpful for us to understand the future.
Just digging a little bit deeper into the EMI growth, it has shown really good growth. Just wanted to understand what the reason for that is. Is it any kind of cross-selling? Is it any kind of synergies that you're realizing from that? Like, working together?
I do understand that you are working on the efficiencies and cost side but the top line seems to be really doing well.
James Clark
I know that we've talked about this before on these calls, but when we look at M&A, right? We look at: "Does it fit in our sector? Does it fit in that Fast Forward plan? Is it part of our strategic plan?"
The second thing we look at, obviously, is we look at the financials and the performance of the company and all of that.
But just as important as those two -- the kind of third leg of the stool -- we look for the culture of the company and how we're going to integrate. We don't want to take somebody that is a die-hard Yankee fan and try to get them to be a Red Sox fan. It's just we don't want to do that. We want to find groups that are closer to our work ethic, our culture, they have similar goals and aspirations. And we look to unlock those efficiencies that lend a hand. As you know, we work very hard to try to retain the talent that's there. And in all cases, we have. And so, I look at JSI and we were very happy with the velocity and the momentum we were able to create with JSI.
We learned from each of these experiences, coming into EMI. We looked at that culture and we looked at what we can do, mechanically, meaning efficiency and margin improvement and all of that. But we look at that culture and we recognize -- there was preplanning -- we got a closer alignment, culturally. And then we look at our customer base, those customer relationships and how we position, how they communicate, and it was a really good fit.
And by the way, I would be remiss in saying it's a really good team, too, across the board. EMI, from the senior leadership through the highly-valued administrative pieces of that company right down through the workforce and the manufacturing team, they're good people, they're a good company. And I think the combination was really one of those one plus one equals three. And we were really able to create a lot of momentum.
That efficiency is definitely carried over to cross-selling opportunities. And I want to underline that the type of project work we're in, we can spend 12 to 18 months before we get a purchase order and it can be another 12 to 18 to 36 months that we deploy that. So what you're seeing -- remember, EMII has been with us for just over nine months now -- you're seeing a lot of early wins but I think the real story is the future wins. But they could still be 12 months down the road, 18 months down the road.
But we're very happy with the EMI. It's the people there.
Sameer Joshi
Sounds good. Thanks for that color.
And then, this last one. Based on what you just described, are there any significant acquisitions that you may be looking at? Like, the stock is doing well. I just wanted to see how management views that.
James Clark
We have worked hard. We've talked about this before and I hope it comes up on every call because I welcome the opportunity to underline it, we work very hard to originate deals and create relationships.
These are relationships that take a very long time to mature, right? And say: "Hey, listen, we want to know more about your company. Maybe there's a way to for us to work together? You know, if you ever decide that you're looking for options, we would be interested in talking?
Those conversations take place all the time. We spend a lot of time trying to create those relationships with companies we think would fit very well with us. We have great relationships with our financial partners that do give us opportunity and exposure to projects that are out on the street, memorandums about companies that are in a process. And we look at a lot of those.
We are very disciplined buyers, right? If we're looking at something, it's not about value, it's not about whether we're paying the absolute best price -- we obviously would like to get the lowest price all the time -- but we'll pay the money that the company is worth and we'll paint a picture that says it's worth more or it's worth less and we don't mind writing the check. We just want to make sure it fits well.
So with all of that said, I think we have a pretty good pipeline for M&A activity. It is very likely we will do something in this calendar year.
Another one, we look at M&A in two flavors: incremental, which is a project the size of like an EMI; and transformational, which would be something that would be -- magnitude half the size of our company, something like that. And we look at a mix of them all the time. And we just are very selective about who we're going to pick and how it fits.
But I would just say that we have a slate and we will likely do something within this calendar year.
Sameer Joshi
Great, thanks. Congratulations, once again, and good luck.
James Galeese
Thank you.
Operator
George Gianarikas, Canaccord Genuity.
George Gianarikas
Hi. Thank you for squeezing me in.
I do have a couple of questions first about the surge in order activity. I just wanted to clarify. Is that exclusively in the grocery market or were there other verticals that you saw an increased level of activity in?
Thank you.
James Clark
So a majority of the surge was definitely related to the grocery market. But I've been mentioning this for a couple of quarters now, we're knocking the cover off of it right now in our Petroleum C-Store space and we anticipate that that will remain with very heady for at least the calendar year, which will carry us through the rest of our fiscal year and into the first half of our fiscal year, next year. So I don't want the momentum there to get lost.
And I also want to mention QSR, particularly as it relates to EMI. They've done very well and some of the larger QSR customers, they have a number of projects that have been locked up for different reasons -- leadership changes, a few other things -- and we see a lot of potential there.
But the majority of the surge that occurred in Q2 was Grocery-related. And we have spent a lot of time over the, unfortunately, last 12 to 18 months saying that we can see this delay in execution, we can see this delay in remodels, we can see the demand of building up. And what we did see here in Q2 was a release of some of that demand. We're very happy with it though. But it's Grocery, it's QSR, it's our Petroleum Refueling/C-Store space.
George Gianarikas
Have you had to manage customers' expectations in other verticals? You talked about having to hurry up and get orders out the door. Has there been a delay in the delivery of product to other verticals and other customers that we've had to manage expectations and, maybe, lead times have extended a little bit?
James Clark
No, none. Our plan has always been to be very efficient, particularly with capacity utilization. But remember, our Fast Forward plan, we plan to grow so we've built in capacity into that growth and every time we grow, every time we get a little bit bigger, we add a little bit more capacity. So we were anticipating this.
We had the capabilities to do it. It's just that there is inherent inefficiency in it because we only have two options. One is to just stay at a ready-state and absorb the costs associated with that or execute quickly and accept the inefficiencies that come along with that. But we have not pushed any business off.
As I mentioned, we were able to capture some business. And our say-do ratio is very important to us, to our customers too. We don't talk in terms of their needed delivery date; we talk in terms of our ability to deliver when we receive an order. So if a customer says to us: "I need all of this on February 1" and we're talking on October 1, we say: "Great." Then the order needs to be in no later than X.
If they're still saying: "Hey, we need it February 1" and it's January 23, we're not going to turn around and say: "Okay, we'll deliver on February 1." We're going to say: "Wait a minute, if you give us the order on the 23, this is how long it will take..."
And we're always willing to say to them: "If this is important, we will find a way to deliver it. But the only way we can do that will be overtime or expediting or bringing in other partners to help us do that. Do you want us to do that? And do you want to pay for that?"
George Gianarikas
And then maybe, lastly, you've mentioned in the past of certain bottlenecks around permitting, maybe other supply chain issues, has there been any change in the cadence of getting permits or maybe in getting equipment or supplies?
James Clark
I'll break that into two pieces. On the permitting side, I think things have normalized. If we were to look at this in January of 2018, the time to go from a plan to a permit to an inspection would have definitely been shorter than it is today. The only thing that has changed is, now, we have all -- meaning us, our customers, other contractors, other subcontractors on the site -- accustomized ourselves or changed our planning cycles to say: 'All right, permitting takes longer than it did five years ago." That's number one.
On the supply chain side, I think LSI, as a company, has done a good job of making sure that we have our supply chain in order. Typically, when I'm talking about supply chain in regards to our company, it doesn't mean that we don't get impacted every once in a while, it's generally about: we're ready to go out and do a project but the concrete contractor hasn't been able to get on site yet because an additive is missing for this project that they had. And so everything's been pushed a couple weeks or days or whatever it is.
That's how both of these go.
George Gianarikas
Great. Thank you so much.
James Clark
And there is one thing I want to say, just in general. Our Latin America business has really started to pick up again lately. And this is still lingering from COVID, that we didn't get on the same execution rate that we had in post-COVID or even prior to COVID. So the volume there or the momentum, the velocity in Latin America has picked up for us too. So we're happy about that.
George Gianarikas
All right. Thank you.
Operator
We have reached the end of the question-and-answer session. I'd now like to turn the call back over to Jim Clark for closing comments.
James Clark
Well, I think we covered a lot in that Q&A. I'm sorry there aren't more because we're excited about the quarter. I would be remiss if I did not mention this is a team effort. There are 2,000 people here at LSI that make this happen every day, every quarter, every year. I have a lot of confidence in them. I'm grateful that they're always here and willing to execute. And I'm proud of the culture that we have here.
We have plans to continue to grow. You are all welcome to take a look at our Fast Forward plan. We're very committed to executing against that. And this is just another step towards that plan.
There are some inefficiencies that we're picking up, right now, between these surges in Q2 and Q3. There's work to be done on our lighting side to regain that momentum we had there. But we're very happy with the momentum we've been able to create.
We're very happy with the partner that we're able to be to our customers. We're continually encouraged with our customers' understanding of our ability to come in and provide a solution for a lot of their challenges, not just one or two.
And I will say that particularly on our -- it's our larger and our smaller customers, but when we're able to come in and be a partner that executes across so many aspects of the businesses that they have and be a reliable partner, it just makes our job so much easier and it makes their job so much easier. And we're benefiting from that and we'll remain committed to that.
Thank you for taking the time for the call today. Thank you for your continued confidence in LSI and our team here. And I look forward to talking on the next quarter. Take care.
Operator
This includes today's conference. You may disconnect your lines at this time and we thank you for your participation.
