LSI Industries Inc. (Nasdaq: LYTS, “LSI” or the “Company”) a
leading U.S. based manufacturer of commercial lighting and display
solutions, today reported financial results for the fiscal 2025
second quarter ended December 31, 2024.
FISCAL 2025 SECOND QUARTER
RESULTS
- Net sales of $147.7 million, + 36% y/y
- Organic net sales +14% y/y
- Net income of $5.6 million, or $0.18 per diluted share
- Adjusted Net Income $8.0 million or $0.26 per diluted
share
- EBITDA of $11.5 million; Adjusted EBITDA of $13.3 million
- Free cash flow of $8.8 million
- Ratio of net debt to TTM Adjusted EBITDA of 0.6x
LSI delivered significant year-over-year growth in sales and
profitability in the fiscal second quarter, driven by broad-based
demand strength across its vertical markets. Fiscal second quarter
results benefitted from solid organic growth within the Display
Solutions segment, together with contributions from the EMI
acquisition completed in April 2024.
The Company reported net sales of $147.7 million in the fiscal
second quarter, an increase of 36% versus the prior year period.
Net sales, excluding contributions from the EMI acquisition,
increased 14% versus the fiscal second quarter of 2024.
LSI reported net income of $5.6 million, or $0.18 per diluted
share, in the second quarter, while adjusted net income was $8.0
million, or $0.26 per diluted share. The Company generated adjusted
EBITDA of $13.3 million or 9.0% of net sales, an increase of more
than 20% versus the year-ago period. A reconciliation of GAAP and
non-GAAP financial results is included in this press release.
The Company generated free cash flow of $8.8 million in the
second quarter, or nearly $41.4 million on a trailing twelve-month
basis. Given continued strength in cash generation, LSI reduced its
ratio of net debt to trailing twelve-month Adjusted EBITDA to 0.6x,
down from 1.3x at the time of the EMI acquisition in April 2024. At
the end of the second quarter, LSI had cash and availability on its
credit facility totaling $67 million.
The Company declared a regular cash dividend of $0.05 per share
payable on February 11, 2025, to shareholders of record on February
3, 2025.
MANAGEMENT COMMENTARY
“LSI delivered 14% organic sales growth in the fiscal second
quarter, supported by strong demand across our core refueling,
c-store, and grocery verticals,” stated James A. Clark, President
and Chief Executive Officer of LSI. “Including contributions from
our most recent acquisition of EMI, which continues to perform
ahead of initial expectations, LSI generated total sales growth of
36% in the second quarter, while adjusted net income, adjusted
EBITDA and free cash flow generation all increased
on-a-year-over-year basis.
“Our integrated, solutions-based model is gaining significant
traction in the marketplace, positioning us for a solid start to
our fiscal third quarter,” continued Clark. “Second quarter order
rates increased versus the prior year, resulting in a 12%
year-over-year increase in backlog entering the fiscal third
quarter. Display Solutions segment orders increased 25% on a
year-over-year basis in the second quarter driven by balanced
growth across all major verticals. We anticipate that order rates
will remain positive into the second half of our fiscal year, given
current and projected customer activity across our vertical
markets.
“Our Display Solutions segment generated organic sales growth of
50% in the second quarter, driven by increased sales across product
categories and vertical markets. We continue to execute on a
significant backlog of multi-year contracts with large national and
international refueling/c-store customer programs where our
integrated solutions remain in high demand. Notably, second quarter
sales to refueling/c-store customers increased by more than 60%,
when compared to the year-ago period. We enter the third quarter
with an increased backlog and expect strong sales growth to
continue into the fiscal second half.
“The grocery vertical generated sales growth over 50% in the
quarter driven by the resurgence in refrigerated and
non-refrigerated display case demand,” stated Clark. “Termination
of the proposed merger between two large grocery industry
participants was announced in December 2024. Uncertainty over the
proposed merger caused the industry to defer both maintenance and
key program investments over the last eighteen months. We began to
experience a resurgence in demand during the fiscal first quarter,
which accelerated in the second quarter, as expectations that a
judicial decision was imminent.
“In the fiscal second quarter, we successfully managed the
Department of Energy legislation requiring end of life production
for refrigerated display cases utilizing the current R448
technology at calendar year-end, with conversion to R290 and other
technologies effective January 1, 2025. We worked closely with our
customers to proactively plan and adopt the technology transition,
including the launch of our new R290 product line. We are well
positioned to capitalize on increased demand levels for display
case products throughout the calendar year.
“EMI delivered a solid performance in the second quarter,
contributing to the over 100% total sales growth for Display
Solutions. EMI sales were $23.4 million, substantially above what
is historically a softer period for store renovations as our
customers focus on the critical holiday shopping season. Sales were
driven by favorable performance in the QSR, refueling/c-store and
Grocery verticals.
“Within the Lighting segment, overall sales were lower
year-over-year against a challenging prior year comparison. Last
year, we had several large lighting projects, including a
multi-million-dollar installation at a new EV battery plant
complex, that did not recur in the current year. While small
project activity levels were healthy during the second quarter,
those projects were not sufficient to offset softness in large
project activity, resulting in a 10% year-over-year decline in
Lighting segment sales.
“Importantly, Lighting segment project quote activity remains
above prior-year levels, contributing to a segment book-to-bill of
1.1 exiting the second quarter which, on a historical basis, is
elevated entering a seasonally slower period for our construction
markets. While our Lighting segment backlog was 6% above the prior
year exiting the second quarter, we expect order rates to
accelerate as we enter the second half of our fiscal year.
“Innovation and new product vitality remains a central focus for
our business. Over the last four years, we’ve launched more than 30
new products each year. In fiscal 2025, we anticipate more than 40
new product launches and refreshes, consistent with an innovation
roadmap created to exceed specific customer requirements across
each vertical market. During the second quarter, we launched
multiple commercial programs designed to further accelerate
adoption of our recent product launches, including our V-LOCITY
series of outdoor area lights, new continuous indoor Linear
fixtures, and Zone High Bay for sports court applications. Enhanced
training and marketing programs for our sales force, agency
partners, and customers have led to accelerated adoption of new
products, consistent with our commercial strategy.”
Clark concluded, “LSI remains well positioned to drive
continued, profitable growth entering the second half of our fiscal
year 2025. Order rates and backlog remain strong; demand conditions
across most end-markets are robust; and we’re capitalizing on
favorable, multi-year secular opportunities where our vertically
integrated, solutions-based model is uniquely suited to support our
growing base of customers. We also continue to prioritize a
combination of organic and inorganic growth, as outlined within our
Fast Forward strategy, while maintaining our disciplined,
returns-driven approach toward capital deployment.”
FISCAL 2025 SECOND QUARTER CONFERENCE CALL
A conference call will be held today at 11:00 A.M. ET to review
the Company’s financial results and conduct a question-and-answer
session.
A webcast of the conference call and accompanying presentation
materials will be available in the Investor Relations section of
LSI Industries’ website at www.lsicorp.com. Individuals can also
participate by teleconference dial-in. To listen to a live
broadcast, go to the site at least 15 minutes prior to the
scheduled start time to register, download and install any
necessary audio software.
Domestic Live: 877-407-4018 International Live:
201-689-8471
To listen to a replay of the teleconference, which subsequently
will be available through February 6, 2025
Domestic Replay: 844-512-2921 International
Replay: 412-317-6671
Conference ID: 13751021
ABOUT LSI INDUSTRIES
Headquartered in Cincinnati, LSI Industries (NASDAQ: LYTS)
specializes in the creation of advanced lighting, graphics, and
display solutions. The Company’s American-made products, which
include lighting, print graphics, digital graphics, millwork, metal
and refrigerated products, and custom displays, are engineered to
elevate brands in competitive markets. With a workforce of
approximately 1,900 employees and 16 facilities throughout North
America, LSI is dedicated to providing top-quality solutions to its
clients. Additional information about LSI is available at
www.lsicorp.com.
FORWARD-LOOKING STATEMENTS
For details on the uncertainties that may cause our actual
results to be materially different than those expressed in our
forward-looking statements, visit https://investors.lsicorp.com as
well as our Annual Reports on Form 10-K and Quarterly Reports on
Form 10-Q which contain risk factors.
Three Months Ended December
31
Six Months Ended
(Unaudited)
December 31
2024
2023
(In thousands, except per
share data)
2024
2023
$
147,734
$
109,005
Net sales
$
285,829
$
232,446
112,804
77,438
Cost of products sold
217,147
163,943
69
-
Expense on step-up basis of
acquired lease
136
-
-
31
Severance costs and
restructuring costs
38
378
34,861
31,536
Gross profit
68,508
68,125
1,669
849
Long-term performance based
compensation
2,853
2,174
-
4
Severance costs and
restructuring costs
22
10
1,408
1,190
Amortization expense of
acquired intangible assets
2,816
2,380
-
-
Acquisition costs
48
-
81
-
Consulting expense: commercial
growth initiatives
81
19
23,244
21,674
Selling and administrative
costs
45,098
44,695
8,459
7,819
Operating Income
17,590
18,847
382
(29
)
Other (income) expense
322
67
728
453
Interest expense, net
1,603
1,019
7,349
7,395
Income before taxes
15,665
17,761
1,702
1,489
Income tax
3,336
3,827
$
5,647
$
5,906
Net income
$
12,329
$
13,934
Weighted
Average Common Shares Outstanding
29,930
29,024
Basic
29,761
28,890
30,876
30,043
Diluted
30,709
29,949
Earnings
Per Share
$
0.19
$
0.20
Basic
$
0.41
$
0.48
$
0.18
$
0.20
Diluted
$
0.40
$
0.47
(amounts in thousands) December 31 June 30,
2024
2024
Current assets
$
163,405
$
162,499
Property, plant and equipment, net
31,534
32,959
Other assets
149,606
153,342
Total assets
$
344,545
$
348,800
Current maturities of long-term debt
$
3,571
$
3,571
Other current liabilities
74,977
75,636
Long-term debt
34,615
50,658
Other long-term liabilities
14,267
14,580
Shareholders' equity
217,115
204,355
$
344,545
$
348,800
Three Months Ended December 31, 2024
Results
Net sales for the three months ended December 31, 2024, were
$147.7 million representing an increase of 36% compared to the
three months ended December 31, 2023, net sales of $109.0 million.
Lighting Segment net sales of $58.2 million decreased 10% and
Display Solutions Segment net sales of $89.5 million increased 103%
from last year’s second quarter net sales. Net income for the three
months ended December 31, 2024, was $5.6 million, or $0.18 per
share, compared to $5.9 million or $0.20 per share for the three
months ended December 31, 2023. Earnings per share represents
diluted earnings per share.
Six Months Ended December 31, 2024
Results
Net sales for the six months ended December 31, 2024, were
$285.8 million representing a 23% increase from the six months
ended December 31, 2023, net sales of $232.4 million. Lighting
Segment net sales of $116.6 million decreased 12% and Display
Solutions Segment net sales of $169.2 million increased 69% from
last year’s net sales. Net income for the six months ended December
31, 2024, was $12.3 million, or $0.40 per share, compared to $13.9
million or $0.47 per share for the six months ended December 31,
2023. Earnings per share represents diluted earnings per share.
Balance Sheet
The balance sheet at December 31, 2024, included current assets
of $163.4 million, current liabilities of $78.5 million and working
capital of $84.9 million, which includes cash of $4.7 million. The
current ratio was 2.1 to 1. The balance sheet also included
shareholders’ equity of $217.1 million and long-term debt of $34.6
million. It is the Company’s priority to continuously generate
sufficient cash flow, coupled with an approved credit facility, to
adequately fund operations.
Cash Dividend Actions
The Board of Directors declared a regular quarterly cash
dividend of $0.05 per share in connection with the second quarter
of fiscal 2025, payable February 11, 2025, to shareholders of
record as of the close of business on February 3, 2025. The
indicated annual cash dividend rate is $0.20 per share. The Board
of Directors has adopted a policy regarding dividends which
provides that dividends will be determined by the Board of
Directors in its discretion based upon its evaluation of earnings
both on a GAAP and non-GAAP basis, cash flow requirements,
financial condition, debt levels, stock repurchases, future
business developments and opportunities, and other factors deemed
relevant by the Board.
Non-GAAP Financial
Measures
This press release includes adjustments to GAAP operating
income, net income, and earnings per share for the three and six
months ended December 31, 2024, and 2023. Operating income, net
income, and earnings per share, which exclude the impact of
long-term performance based compensation expense, the amortization
expense of acquired intangible assets, commercial growth
opportunity expense, acquisition costs, the lease expense on the
step-up basis of acquired leases, and restructuring and severance
costs, are non-GAAP financial measures. We further note that while
the amortization expense of acquired intangible assets is excluded
from the measures, the revenue of the acquired companies is
reflected in the measures and the acquired assets contribute to
revenue generation. We exclude these items because we believe they
are not representative of the ongoing results of the operations of
the business. Also included in this press release are non-GAAP
financial measures, including Earnings Before Interest, Taxes,
Depreciation and Amortization (EBITDA and Adjusted EBITDA), Net
Debt to Adjusted EBITDA, Free Cash Flow, and organic sales growth.
We believe that these are useful as supplemental measures in
assessing the operating performance of our business. These measures
are used by our management, including our chief operating decision
maker, to evaluate business results, and are frequently referenced
by those who follow the Company. These non-GAAP measures may be
different from non-GAAP measures used by other companies. In
addition, the non-GAAP measures are not based on any comprehensive
set of accounting rules or principles. Non-GAAP measures have
limitations, in that they do not reflect all amounts associated
with our results as determined in accordance with U.S. GAAP.
Therefore, these measures should be used only to evaluate our
results in conjunction with corresponding GAAP measures. Below is a
reconciliation of these non-GAAP measures to net income and
earnings per share reported for the periods indicated along with
the calculation of EBITDA, Adjusted EBITDA, Free Cash Flow, Net
Debt to Adjusted EBITDA, and organic sales growth.
Three Months EndedDecember 31 Six Months EndedDecember
31 (Unaudited)
2024
2023
% Change (In thousands, except per share data)
2024
2023
% Change
$
147,734
$
109,005
36
%
Net sales
$
285,829
$
232,446
23
%
8,459
7,819
8
%
Operating income as reported
17,590
18,847
-7
%
1,669
849
Long-term performance based compensation
2,853
2,174
81
-
Consulting expense: commercial growth initiatives
81
19
-
-
Acquisition costs
48
-
1,408
1,190
Amortization expense of acquired intangible assets
2,816
2,380
69
-
Expense on step-up basis of acquired lease
136
-
-
35
Severance costs and Restructuring costs
60
388
$
11,686
$
9,893
18
%
Operating income as adjusted
$
23,584
$
23,808
-1
%
$
5,647
$
5,906
-4
%
Net income as reported
$
12,329
$
13,934
-12
%
$
7,996
$
7,249
10
%
Net income as adjusted
$
15,977
$
16,859
-5
%
$
0.18
$
0.20
-7
%
Earnings per share (diluted) as reported
$
0.40
$
0.47
-14
%
$
0.26
$
0.24
7
%
Earnings per share (diluted) as adjusted
$
0.52
$
0.56
-8
%
Three Months Ended Six Months Ended December
31 December 31
2024
2023
(In thousands, except per share data)
2024
2023
DilutedEPS DilutedEPS DilutedEPS
DilutedEPS Reconciliation of net income to adjusted net
income
$
5,647
$
0.18
$
5,906
$
0.20
Net income as reported
$
12,329
$
0.40
$
13,934
$
0.47
1,294
0.04
625
0.02
Long-term performance based compensation
2,161
$
0.07
1,599
0.05
1,090
0.04
885
0.03
Amortization expense of acquired intangible assets
2,132
$
0.07
1,755
0.06
62
-
-
-
Consulting expense: commercial growth initiatives
62
$
-
13
-
-
-
34
-
Severance costs and Restructuring costs
45
$
-
290
0.01
-
-
-
-
Acquisition costs
50
-
-
53
-
-
-
Expense on step-up basis of acquired lease
103
$
0.01
-
-
(150
)
-
(201
)
(0.01
)
Tax rate difference between reported and adjustednet income
(905
)
$
(0.03
)
(732
)
(0.03
)
$
7,996
$
0.26
$
7,249
$
0.24
Net income adjusted
$
15,977
$
0.52
$
16,859
$
0.56
Three Months EndedDecember 31 (Unaudited; In
thousands)
Six Months EndedDecember 31 Net Income to Adjusted
EBITDA
2024
2023
% Change
2024
2023
% Change
$
5,647
$
5,906
Net income as reported
$
12,329
$
13,934
1,702
1,489
Income tax
3,336
3,827
728
453
Interest expense, net
1,603
1,019
382
(29
)
Other (income) expense
322
67
$
8,459
$
7,819
8
%
Operating Income as reported
$
17,590
$
18,847
-7
%
3,018
2,357
Depreciation and amortization
5,958
4,728
$
11,477
$
10,176
13
%
EBITDA
$
23,548
$
23,575
0
%
1,669
849
Long-term performance based compensation
2,853
2,174
81
-
Consulting expense: commercial growth initiatives
81
19
-
-
Acquisition costs
48
-
69
-
Expense on step-up basis of acquired lease
136
-
-
35
Severance costs and Restructuring costs
60
388
$
13,296
$
11,060
20
%
Adjusted EBITDA
$
26,726
$
26,156
2
%
9.0
%
10.1
%
Adjusted EBITDA as a percentage of sales
9.4
%
11.3
%
Three Months EndedDecember 31 (Unaudited; In
thousands)
Six Months EndedDecember 31 Free Cash Flow
2024
2023
% Change
2024
2023
% Change
$
9,891
$
9,276
7
%
Cash flow from operations
$
21,737
$
19,868
9
%
(1,066
)
(1,956
)
Capital expenditures
(1,825
)
(3,349
)
$
8,825
$
7,320
21
%
Free cash flow
$
19,912
$
16,519
21
%
Net Debt to Adjusted EBITDA Ratio December 31
June 30 (amounts in thousands)
2024
2024
Current maturity of debt
$
3,571
$
3,571
Long-term debt
34,615
50,658
Total debt
$
38,186
$
54,229
Less: cash
(4,712
)
(4,110
)
Net debt
$
33,474
$
50,119
Adjusted EBITDA - trailing twelve months
$
52,006
$
51,436
Net debt to adjusted EBITDA ratio
0.6
1.0
Organic compared to Inorganic Sales Q2 2024
Q2 2025 % Variance
Lighting Segment
$
64,796
$
58,210
-10
%
Display Solutions Segment -
Comparable Display Solutions Sales
$
44,209
$
66,133
50
%
- EMI
$
-
$
23,391
Total Display Solutions Sales
$
44,209
$
89,524
103
%
Total net sales
$
109,005
$
147,734
36
%
Less: EMI
-
23,391
Total organic net sales
$
109,005
$
124,343
14
%
Reconciliation of net income to adjusted net income - Six
quarter view FY 2024 DilutedEPS
DilutedEPS Q1 2024 Q2 2024 Net income
reported
$
8,028
$
0.27
$
5,906
$
0.20
Consulting expense: commercial growth initiatives
13
-
-
-
Amortization expense of acquired intangible assets
870
0.03
885
0.03
Severance costs/Restructuring costs
256
0.01
34
-
Long-term performance based compensation
974
0.03
625
0.02
Tax rate difference between reported and adjusted net income
(531
)
(0.02
)
(201
)
(0.01
)
Net income adjusted
$
9,610
$
0.32
$
7,249
$
0.24
Adjusted net income %
7.8
%
6.7
%
FY 2024 DilutedEPS DilutedEPS Q3
2024 Q4 2024 Net income reported
$
5,375
$
0.18
$
5,668
$
0.19
Acquisition costs
-
-
722
0.02
Amortization expense of acquired intangible assets
888
0.03
1,028
0.04
Severance costs/Restructuring costs
101
-
5
-
Long-term performance based compensation
767
0.03
906
0.03
Tax rate difference between reported and adjusted net income
-
(25
)
-
Net income adjusted
$
7,131
$
0.24
$
8,304
$
0.28
Adjusted net income %
6.6
%
6.4
%
FY 2025 DilutedEPS DilutedEPS Q1
2025 Q2 2025 Net income reported
$
6,682
$
0.22
$
5,647
$
0.18
Acquisition costs
36
-
-
-
Consulting expense: commercial growth initiatives
-
-
62
-
Amortization expense of acquired intangible assets
1,042
0.03
1,090
0.04
Lease expense on the step-up basis of acquired leases
50
-
53
-
Severance costs/Restructuring costs
45
-
-
-
Long-term performance based compensation
881
0.03
1,294
0.04
Tax rate difference between reported and adjusted net income
(755
)
(0.02
)
(150
)
-
Net income adjusted
$
7,981
$
0.26
$
7,996
$
0.26
Adjusted net income %
5.8
%
5.4
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250123811047/en/
INVESTOR & MEDIA CONTACT Noel Ryan, IRC 720.778.2415
LYTS@vallumadvisors.com
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