LSI Industries Inc. (NASDAQ: LYTS, “LSI” or the “Company”) a
leading U.S. based manufacturer of indoor/outdoor lighting and
display solutions, today announced results for the first quarter of
fiscal year 2022.
First Quarter 2022 Results
- Net sales of $106.4 million, growth of 52% versus prior
year
- Organic net sales increased 19% versus prior year
- Net income of $3.1 million; Adjusted net income $3.5
million
- EPS of $0.11 per diluted share; Adjusted EPS of $0.13
- EBITDA of $7.0 million; Adjusted EBITDA of $7.6 million
- Significant year-over-year increase in Comparable
Quote/Order/Backlog levels
LSI reported strong year-over-year increases in both net sales
and profitability for the fiscal first quarter, driven by a
combination of organic growth in both its Lighting and Display
Solutions segments, coupled with the first full quarter of
financial contribution from the JSI Store Fixtures acquisition
(“JSI”) completed in May, 2021.
The Company reported first quarter net sales of $106.4 million,
an increase of 52% versus the prior year period. Net sales
excluding the contributions from the JSI acquisition, increased 19%
versus the fiscal first quarter of 2021. LSI reported net income of
$3.1 million, an increase of 57% compared to the prior year period.
Adjusted net income was $3.5 million, or $0.13 per diluted share,
versus $2.1 million or $0.08 in the prior year period. Adjusted
EBITDA increased 59% year-over-year to $7.6 million in the first
quarter. A reconciliation of GAAP and non-GAAP financial results is
included in this press release.
LSI capitalized on strong demand conditions across its core
Lighting and Display Solutions markets, while successfully managing
the escalating challenges prevalent in the industrial operating
environment. In response to lengthening supplier lead-times and
intensified transit reliability issues, the Company invested in
additional inventory in the first quarter, minimizing material
availability risks. During a period of increased demand and rising
backlog, LSI effectively leveraged its vertically integrated
operations platform to meet customer order commitments throughout
the first quarter.
At the end of the first quarter, the Company’s total debt
outstanding was $78 million, with a ratio of net debt to trailing
twelve months Adjusted EBITDA of 2.5x. LSI had total cash and
availability on its $100 million credit facility of $24 million at
quarter end.
The Company declared a regular cash dividend of $0.05 per share
payable November 23, 2021 to shareholders of record on November 15,
2021.
Management Commentary
“During the first quarter, we continued to execute on our
long-term strategic priorities, while successfully navigating what
continues to be a challenging macro environment,” stated James A.
Clark, President and Chief Executive Officer of LSI Industries.
“Quarterly net sales exceeded $100 million for the first time in
the history of the company, supported by a combination of strong
organic growth and JSI-related contributions. Adjusted EBITDA
increased nearly 60% versus the first quarter last year, while
Adjusted EBITDA margin improved both on a sequential basis and
year-over-year basis. The LSI team demonstrated a strong ability to
execute effectively in changing, uncertain conditions, being quick
to pivot as supply and freight disruptions occurred.
“For most of last year, one of our commercial priorities
involved development of an effective product pricing strategy
during a period of rising input costs. However, in the first
quarter, our focus shifted increasingly toward availability,
specifically with respect to raw materials, key componentry,
skilled labor, and freight. Normally we touch an order once in the
quote to cash process, but for an increasing number of orders this
has expanded to multiple touch points. This involves additional
collaboration and communication with our suppliers, agency
partners, and customers, to ensure delivery expectations are
met.
“With order and backlog rates continuing to increase, we’ve
taken proactive measures to ensure we meet our customer
commitments, including an investment in additional inventory. These
measures proved to be critical in generating our strong first
quarter organic sales growth. Overall market conditions remain
encouraging, as project quote levels in both the Lighting and
Display Solutions segments remain well above prior year. Order
rates are solid despite a longer quote-to-order conversion period,
and our backlog, particularly for key market verticals, is
considerably above prior year.
“The Lighting segment generated sales growth of 13% in the
fiscal first quarter, with operating earnings improving 19% to $4.4
million. Project business increased 15% with sales improving in
several key verticals including parking, automotive, and
warehousing. The growth in warehousing is driven by new products
launched in the second half of fiscal 2021, as our multiple price
point product offering continues to gain market acceptance and
quote/order levels continue to increase.
“The Lighting gross margin rate finished above 30%, improving
100 bps sequentially from the fourth quarter of fiscal 2021 and
consistent with the full-year fiscal 2021 rate. Material input and
supply chain costs continued to increase in the quarter, but we
were successful in adjusting selling prices and driving
productivity to mitigate these cost increases. Our project backlog
exiting the first quarter is considerably above prior year levels,
with more than $5 million of new orders within the petroleum
vertical awarded in late September. These orders were influenced
heavily by product availability, together with the capability to
fulfill these orders by the end of the fiscal second quarter.
“Sales for the Display Solutions segment sales increased 124% to
$55.1 million, reflecting a full quarter impact of the JSI
acquisition. Organic growth, excluding the JSI acquisition, was
also strong, increasing 29%. Adjusted operating income was $3.8
million for the first quarter, versus $1.9 million in the prior
year quarter.
“JSI had a strong quarter, with total sales of $23.3 million,
driven by both refrigeration and non-refrigeration products for
both new and existing customers. JSI project quotation activity
remains robust, reflecting the ongoing investment in merchandising
solutions by national and regional chains in the grocery vertical.
Revenue in our digital signage business increased 145%,
year-over-year, led by the ongoing program with a large national
QSR chain. The outdoor menu board portion of the program is
approximately halfway complete and will continue through the first
quarter of fiscal year 2023. First quarter activity in the
petroleum vertical was slowed by site scheduling delays resulting
from construction product shortages, all unrelated to LSI. The
programs will be released in subsequent months during fiscal
2022.
“In summary, we continued to build momentum during the first
quarter, advancing our market vertical driven strategy, while
continuing to deliver consistent growth and profitability. While we
expect the operating environment to remain challenged over the
near-term, we will continue to be proactive, leveraging our diverse
supply chain, maintaining strong cost discipline, and allocating
resources toward higher-value vertical markets that position us to
achieve both sales growth and margin expansion moving forward.
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.
Details of the conference call are as follows:
Call
Dial-In: |
1-877-407-4018 |
Conference ID: |
13723643 |
|
|
Call Replay: |
1-844-512-2921 |
Replay Passcode: |
13723643 |
A replay of the conference call will be available between
November 3, 2021 and November 17, 2021. To listen to a replay of
the teleconference via webcast, please visit the Investor Relations
section of LSI Industries’ website at www.lsicorp.com.
ABOUT LSI INDUSTRIES
Headquartered in Greater Cincinnati, LSI is a publicly held
company with shares listed on the NASDAQ Stock Market under the
symbol LYTS. The Company manufactures non-residential lighting and
display solutions. Non-residential lighting consists of
high-performance, American-made lighting solutions. The Company’s
strength in outdoor lighting applications creates opportunities to
introduce additional solutions to its valued customers. Display
solutions consist of graphics solutions, digital signage, and
technically advanced food display equipment for strategic vertical
markets. LSI’s team of internal specialists also provide
comprehensive project management services in support of large-scale
product rollouts. The Company employs about 1,400 people at 11
manufacturing plants in the U.S. and Canada. Additional information
about LSI is available at www.lsicorp.com.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements.
Forward-looking statements may be identified by words such as
“estimates,” “anticipates,” “encourage,” “projects,” “plans,”
“expects,” “can,” “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. 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.
INVESTOR CONTACT
Noel Ryan,
IRC720.778.2415LYTS@vallumadvisors.com
|
Financial Highlights |
|
|
|
Three Months EndedSeptember 30 |
(Unaudited) |
|
(In thousands, except per share data) |
|
|
2021 |
|
|
|
2020 |
|
|
% Change |
Net sales |
|
$ |
106,397 |
|
|
$ |
70,006 |
|
|
52 |
% |
|
|
|
|
|
|
|
Operating income as reported |
|
|
4,444 |
|
|
|
2,202 |
|
|
102 |
% |
|
|
|
|
|
|
|
Stock compensation expense |
|
|
556 |
|
|
|
505 |
|
|
|
Restructuring costs |
|
|
- |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
Operating income as adjusted |
|
$ |
5,000 |
|
|
$ |
2,710 |
|
|
85 |
% |
|
|
|
|
|
|
|
Net income as reported |
|
$ |
3,133 |
|
|
$ |
1,990 |
|
|
57 |
% |
|
|
|
|
|
|
|
Net income as adjusted |
|
$ |
3,540 |
|
|
$ |
2,075 |
|
|
71 |
% |
|
|
|
|
|
|
|
Earnings per share (diluted) as reported |
|
$ |
0.11 |
|
|
$ |
0.07 |
|
|
57 |
% |
|
|
|
|
|
|
|
Earnings per share (diluted) as adjusted |
|
$ |
0.13 |
|
|
$ |
0.08 |
|
|
63 |
% |
|
|
|
|
|
|
|
|
|
(amounts in
thousands) |
|
|
September
30, |
|
June
30, |
|
|
2021 |
|
2021 |
Working capital |
|
$ |
67,110 |
|
$ |
54,113 |
Total assets |
|
$ |
299,588 |
|
$ |
286,821 |
Long-term debt |
|
$ |
74,700 |
|
$ |
68,178 |
Other long-term liabilities |
|
$ |
15,713 |
|
$ |
16,578 |
Shareholders' equity |
|
$ |
135,373 |
|
$ |
131,170 |
|
|
|
|
|
Three Months Ended September 30, 2021
Results
Net sales for the three months ended September 30, 2021 were
$106.4 million, up 52% from the three months ended September 30,
2020 net sales of $70.0 million. Lighting Segment net sales of
$51.3 million increased 13% and Display Solutions Segment net sales
of $55.1 million increased 124% from last year’s first quarter net
sales. Net income for the three months ended September 30, 2021 was
$3.1 million, or $0.11 per share, compared to $2.0 million or $0.07
per share for the three months ended September 30, 2020. Earnings
per share represents diluted earnings per share.
Balance SheetThe balance sheet at September 30,
2021 included current assets of $140.9 million, current liabilities
of $73.8 million and working capital of $67.1 million, which
includes cash of $2.6 million. The current ratio was 1.9 to 1. The
balance sheet also included shareholders’ equity of $135.4 million
and long-term debt of $74.7 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 first quarter of
fiscal 2022, payable November 23, 2021 to shareholders of record as
of the close of business on November 15, 2021. 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 months
ended September 30, 2021 and 2020. Operating income, net income and
earnings per share, which exclude the impact of stock compensation
expense and restructuring costs, are non-GAAP financial measures.
We exclude these items because we believe they are not
representative of the ongoing results of 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), Free
Cash Flow and Organic Net Sales. 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 and Organic Net Sales.
|
|
Three Months
Ended |
|
|
September 30 |
(In thousands, except per share data) |
|
2021 |
|
|
2020 |
|
|
|
|
DilutedEPS |
|
|
DilutedEPS |
Reconciliation of net income to adjusted net
income |
|
|
|
|
Net income as reported |
|
$ |
3,133 |
$ |
0.11 |
|
$ |
1,990 |
|
$ |
0.07 |
|
|
|
|
|
|
|
|
Stock compensation expense |
|
|
407 |
|
0.02 |
|
|
380 |
|
|
0.01 |
|
|
|
|
|
|
|
|
Restructuring costs |
|
|
- |
|
- |
|
|
2 |
|
|
- |
|
|
|
|
|
|
|
|
Tax impact due to the change in the estimated annual tax
rate used for GAAP reporting purposes |
|
|
- |
|
- |
|
|
(297 |
) |
|
(0.01 |
) |
|
|
|
|
|
|
|
Net income adjusted |
|
$ |
3,540 |
$ |
0.13 |
|
$ |
2,075 |
|
$ |
0.08 |
|
NOTE: All adjustments are net of tax except for the
adjustment of the tax impact from the change in the estimated
annual tax rate |
|
|
|
|
|
|
|
|
(Unaudited; In thousands) |
|
Three Months EndedSeptember 30 |
|
EBITDA and Adjusted EBITDA |
|
|
|
|
2021 |
|
|
|
2020 |
|
|
% Change |
|
Operating Income as reported |
|
$ |
4,444 |
|
|
$ |
2,202 |
|
|
102 |
% |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
2,563 |
|
|
|
2,033 |
|
|
|
|
EBITDA |
|
$ |
7,007 |
|
|
$ |
4,235 |
|
|
65 |
% |
|
|
|
|
|
|
|
|
|
Stock compensation expense |
|
|
556 |
|
|
|
505 |
|
|
|
|
Restructuring costs |
|
|
- |
|
|
|
3 |
|
|
|
|
Adjusted EBITDA |
|
$ |
7,563 |
|
|
$ |
4,743 |
|
|
59 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited; In thousands) |
|
Three Months EndedSeptember 30 |
|
Free Cash Flow |
|
|
|
|
2021 |
|
|
|
2020 |
|
|
% Change |
|
Cash flow from operations |
|
$ |
(7,889 |
) |
|
$ |
7,639 |
|
|
NM |
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(297 |
) |
|
|
(405 |
) |
|
|
|
Free cash flow |
|
$ |
(8,186 |
) |
|
$ |
7,234 |
|
|
NM |
(Unaudited; In thousands) |
|
Three Months EndedSeptember 30 |
Reconciliation of net sales to organic net
sales |
|
|
|
2021 |
|
|
2020 |
|
% Change |
Lighting Segment |
|
$ |
51,260 |
|
$ |
45,405 |
|
12.9 |
% |
Display
Solutions Segment |
|
$ |
55,137 |
|
$ |
24,601 |
|
124.1 |
% |
Total Net Sales |
|
$ |
106,397 |
|
$ |
70,006 |
|
52.0 |
% |
Less: |
|
|
|
|
|
|
JSI |
|
|
23,347 |
|
|
- |
|
|
Total
Organic Net Sales |
|
$ |
83,050 |
|
$ |
70,006 |
|
18.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember 30 |
|
|
|
|
|
2021 |
|
|
2020 |
|
% Change |
Display
Solutions Segment |
|
$ |
55,137 |
|
$ |
24,601 |
|
124.1 |
% |
Less: |
|
|
|
|
|
|
JSI |
|
|
23,347 |
|
|
- |
|
|
Total
Display Solutions Segment Organic Net Sales |
|
$ |
31,790 |
|
$ |
24,601 |
|
29.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statement of
Operations
|
|
Three Months EndedSeptember 30 |
(Unaudited) |
|
|
|
|
|
|
|
(In thousands, except per share data) |
|
2021 |
|
2020 |
Net sales |
|
$ |
106,397 |
|
$ |
70,006 |
|
|
|
|
|
|
Cost of products sold |
|
|
81,887 |
|
|
51,731 |
|
Restructuring costs |
|
|
- |
|
|
3 |
|
|
|
|
|
|
Gross profit |
|
|
24,510 |
|
|
18,272 |
|
|
|
|
|
|
Selling and administrative costs |
|
|
20,066 |
|
|
16,070 |
|
|
|
|
|
|
Operating Income |
|
|
4,444 |
|
|
2,202 |
|
|
|
|
|
|
Other (income) expense |
|
|
79 |
|
|
(105 |
) |
Interest expense, net |
|
|
234 |
|
|
57 |
|
|
|
|
|
|
Income before taxes |
|
|
4,131 |
|
|
2,250 |
|
|
|
|
|
|
Income tax |
|
|
998 |
|
|
260 |
|
|
|
|
|
|
Net income |
|
$ |
3,133 |
|
$ |
1,990 |
|
|
|
|
|
|
Weighted Average Common Shares Outstanding |
|
|
|
|
Basic |
|
|
26,996 |
|
|
26,520 |
|
Diluted |
|
|
27,743 |
|
|
26,968 |
|
|
|
|
|
|
Earnings Per Share |
|
|
|
|
Basic |
|
$ |
0.12 |
|
$ |
0.08 |
|
Diluted |
|
$ |
0.11 |
|
$ |
0.07 |
|
|
|
|
|
|
Condensed Balance Sheet
|
|
|
|
|
|
|
|
(amounts in
thousands) |
|
|
|
September
30, |
|
June
30, |
|
|
|
|
2021 |
|
|
2021 |
|
Current assets |
|
$ |
140,912 |
|
$ |
125,008 |
|
Property, plant and equipment, net |
|
|
29,456 |
|
|
30,552 |
|
Other assets |
|
|
129,220 |
|
|
131,261 |
|
Total assets |
|
$ |
299,588 |
|
$ |
286,821 |
|
|
|
|
|
|
|
Current maturities of long-term debt |
|
$ |
3,571 |
|
$ |
- |
|
Other current liabilities |
|
|
70,231 |
|
|
70,895 |
|
Long-term debt |
|
|
74,700 |
|
|
68,178 |
|
Other long-term liabilities |
|
|
15,713 |
|
|
16,578 |
|
Shareholders' equity |
|
|
135,373 |
|
|
131,170 |
|
|
|
$ |
299,588 |
|
$ |
286,821 |
|
|
|
|
|
|
|
LSI Industries (NASDAQ:LYTS)
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