LYTS LSI Industries Inc

CINCINNATI, April 27 /PRNewswire-FirstCall/ -- LSI Industries Inc. (NASDAQ:LYTS) today reported operating results for the third quarter ended March 31, 2006. Financial Highlights (In thousands, except per Three Months Ended Nine Months Ended share data; unaudited) March 31 March 31 2006 2005 % Change 2006 2005 % Change Net Sales $64,504 $67,814 (4.9)% $208,726 $210,448 (0.8)% Operating Income $ 3,519 $ 3,214 9.5% $ 15,372 $ 16,218 (5.2)% Net Income $ 2,415 $ 2,422 (0.3)% $ 9,990 $ 10,530 (5.1)% Earnings Per Share (diluted) $ 0.12 $ 0.12 -- $ 0.49 $ 0.53 (7.5)% 3/31/06 6/30/05 Working Capital $ 72,741 $ 67,189 Total Assets $173,035 $172,637 Debt $ -- $ -- Shareholders' Equity $142,090 $138,040 Third Quarter 2006 Results Net sales in the third quarter of fiscal 2006 were $64,504,000, a 5% decrease from last year's third quarter net sales of $67,814,000. Fiscal 2006 third quarter net income of $2,415,000 ($0.12 per share) decreased less than 1% from the $2,422,000 ($0.12 per share) reported last year in the same period. Lighting Segment net sales increased 14% to $45.9 million, and Graphics Segment net sales decreased 33% to $18.6 million. Net sales to the petroleum / convenience store market, a major market for the Company, represented 24% and 21% of total net sales in the third quarter of fiscal years 2006 and 2005, respectively. Third quarter fiscal 2006 results include a non-cash compensation expense of $85,000 related to stock option expense, with no similar expense recorded in fiscal 2005. Earnings per share represent diluted earnings per share. Nine Months 2006 Results Net sales in the first nine months of fiscal 2006 were $208,726,000, a 1% decrease from last year's nine months net sales of $210,448,000. Fiscal 2006 nine month net income of $9,990,000 ($0.49 per share) decreased 5% from the $10,530,000 ($0.53 per share) reported last year in the same period. Lighting Segment net sales increased 10% to $145.0 million, and Graphics Segment net sales decreased 19% to $63.7 million. Net sales to the petroleum / convenience store market represented 25% of total net sales in the first nine months of both fiscal years 2006 and 2005. Fiscal 2006 nine month results include a non-cash compensation expense of $340,000 related to stock option expense, with no similar expense recorded in fiscal 2005. Additionally, the first nine months of fiscal 2006 include a non-cash net of tax charge of $361,000 that was recorded in the first quarter related to the variable accounting treatment of a deferred compensation plan. Company Comments Bob Ready, President and Chief Executive Officer, commented, "Our third quarter operating results were about as expected and gained momentum as the quarter unfolded. Based on our view of the fourth quarter, we believe it is appropriate to increase fiscal 2006 full year guidance. Our new sales guidance is $272 million to $279 million, up from $265 million to $275 million. Diluted per share guidance is now $0.66 to $0.71, up from $0.64 to $0.70. Fiscal 2007 promises to be a very good year for both our lighting and graphics business as we execute on several major national programs. In addition, we plan to introduce several new energy efficient lighting products, some including the use of LED (light emitting diodes) technology, to the marketplace. On the graphics side, we have just completed the installation of our third high-speed digital press as part of our overall capacity expansion. We expect favorable year-over-year quarterly comparisons for both graphics and lighting during fiscal 2007. Our financial condition is solid with shareholders' equity of over $142 million, no long-term debt, a current ratio of 3.6 to 1.0, and an unused $50 million commercial bank credit facility. We are actively considering selective acquisitions as part of moving LSI Industries forward in deploying our core strategy of 'Lighting + Graphics + Technology = Complete Image Solutions.' Our strong cash flow and balance sheet support the Company's cash dividend policy, which we consider an important element along with higher share prices, in creating shareholder value. I look forward to reporting to you on new corporate developments as well as future operating results." Fiscal 2006 Guidance Increased For the fiscal year ending June 30, 2006, management expects net sales to be in the range of $272 million to $279 million and per share diluted earnings to be between $0.66 and $0.71. The per share estimates assume an increase in weighted average common shares outstanding from 20.1 million in fiscal 2005 to approximately 20.4 million in fiscal 2006. The sales and earnings guidance provided in this press release does not include the impact of any acquisitions the Company might complete during fiscal 2006. Balance Sheet The balance sheet at March 31, 2006 included current assets of $101.2 million, current liabilities of $28.5 million and working capital of $72.7 million. The current ratio was a strong 3.6 to 1. The Company has shareholders' equity of $142.1 million and no long-term debt. The Company has borrowing capacity as of March 31, 2006 of the full $50 million of its commercial bank facility. With continued strong cash flow, a sound and conservatively capitalized balance sheet, and a $50 million credit facility, LSI Industries' financial condition is sound and capable of supporting the Company's planned growth, including acquisitions. Cash Dividend Action The Board of Directors declared a regular cash dividend of $0.12 per share payable May 16, 2006 to shareholders of record as of May 9, 2006. This indicated annual rate of $0.48 per share represents a 20% increase over the fiscal 2005 annual rate of $0.40 per share. LSI Industries has paid regular cash dividends since 1989 and has increased its regular indicated cash dividend rate thirteen times during the period. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This document contains certain forward-looking statements that are subject to numerous assumptions, risks or uncertainties. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Forward-looking statements may be identified by words such as "estimates," "anticipates," "projects," "plans," "expects," "intends," "believes," "seeks," "may," "will," "should" or the negative versions of those words and similar expressions, and by the context in which they are used. Such statements are based upon current expectations of the Company and speak only as of the date made. Actual results could differ materially from those contained in or implied by such forward-looking statements as a result of a variety of risks and uncertainties. These risks and uncertainties include, but are not limited to, the impact of competitive products and services, product demand and market acceptance risks, reliance on key customers, financial difficulties experienced by customers, the adequacy of reserves and allowances for doubtful accounts, fluctuations in operating results or costs, unexpected difficulties in integrating acquired businesses, and the ability to retain key employees of acquired businesses. The Company has no obligation to update any forward-looking statements to reflect subsequent events or circumstances. About the Company LSI Industries is an Image Solutions company, combining integrated design, manufacturing, and technology to supply its own high quality lighting fixtures and graphics elements for applications in the retail, specialty niche, and commercial markets. The Company's Lighting Segment produces high performance products dedicated to the outdoor, architectural outdoor, indoor, architectural indoor and accent/downlight markets. The Graphics Segment provides a vast array of products and services including signage, menu board systems, active digital signage, decorative fixturing, design support, engineering and project management for custom programs for today's retail environment. LSI's major markets are the petroleum / convenience store, multi-site retail (including automobile dealerships, restaurants and national retail accounts) and the commercial / industrial lighting markets. LSI employs approximately 1,700 people in thirteen facilities located in Ohio, California, New York, North Carolina, Kansas, Kentucky, Rhode Island, Tennessee, and Texas. The Company's common shares are traded on the Nasdaq National Market under the symbol LYTS. Additional note: Today's news release, along with past releases from LSI Industries, is available on the Company's internet site at http://www.lsi-industries.com/ or by email or fax, by calling the Investor Relations Department at (513) 793-3200. Condensed Income Statements Three Months Ended Nine Months Ended (in thousands, except per March 31 March 31 share data; unaudited) 2006 2005 2006 2005 Net sales $64,504 $67,814 $208,726 $210,448 Cost of products sold 49,451 52,435 156,124 157,258 Gross profit 15,053 15,379 52,602 53,190 Selling and administrative expenses 11,534 12,165 37,230 36,786 Goodwill Impairment -- -- -- 186 Operating income 3,519 3,214 15,372 16,218 Interest (income) expense, net (152) 32 (324) 166 Income before income taxes 3,671 3,182 15,696 16,052 Income tax expense 1,256 760 5,706 5,522 Net income $ 2,415 $ 2,422 $ 9,990 $ 10,530 Earnings per common share Basic $ 0.12 $ 0.12 $ 0.50 $ 0.53 Diluted $ 0.12 $ 0.12 $ 0.49 $ 0.53 Weighted average common shares outstanding Basic 20,201 19,780 20,159 19,771 Diluted 20,393 20,109 20,480 20,043 Condensed Balance Sheets (in thousands, unaudited) March 31, June 30, 2006 2005 Current Assets $101,192 $ 98,804 Property, Plant and Equipment, net 49,457 51,084 Other Assets 22,386 22,749 $173,035 $172,637 Current Liabilities $ 28,451 $ 31,615 Other Long-Term Liabilities 2,494 2,982 Shareholders' Equity 142,090 138,040 $173,035 $172,637 DATASOURCE: LSI Industries Inc. CONTACT: Bob Ready, Chief Executive Officer and President, or Ron Stowell, Vice President, Chief Financial Officer, and Treasurer of LSI Industries Inc., +1-513-793-3200 Web site: http://www.lsi-industries.com/

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