LSI Industries Inc. (Nasdaq:LYTS)
today:
- reported third quarter net sales of $68,603,000, a decrease of
less than (1)% as compared to $68,996,000 in the same period of the
prior fiscal year;
- reported third quarter net income of $393,000, or $0.02 per
share, as compared to a net loss of $(1,009,000), or $(0.04) per
share, for the same period of the prior fiscal year;
- reported nine month net sales of $231,784,000, an increase of
3% as compared to $225,605,000 in the same period of the prior
fiscal year;
- reported nine month net income of $3,508,000, or $0.14 per
share, an increase of 103% as compared to net income of $1,726,000,
or $0.07 per share, for the same period of the prior fiscal year;
and
- declared a regular quarterly cash dividend of $0.03 per share
payable May 12, 2015 to shareholders of record May 5, 2015.
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Financial Highlights |
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(In thousands, except per share data;
unaudited) |
Three Months Ended |
Nine Months Ended |
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March 31 |
March 31 |
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2015 |
2014 |
% Change |
2015 |
2014 |
% Change |
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Net Sales |
$ 68,603 |
$ 68,996 |
(1)% |
$ 231,784 |
$ 225,605 |
3% |
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Operating Income (Loss) as reported |
$ 582 |
$ (946) |
n/m |
$ 5,340 |
$ 3,404 |
57% |
Severance costs (income) |
(295) |
-- |
n/m |
662 |
-- |
n/m |
Self-insured death benefit |
1,000 |
-- |
n/m |
1,000 |
-- |
n/m |
(Loss) on sale of assets,
net |
-- |
-- |
n/m |
222 |
-- |
n/m |
Operating Income (Loss) as adjusted
(a) |
$ 1,287 |
$ (946) |
n/m |
$ 7,224 |
$ 3,404 |
112% |
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Net Income (Loss) as reported |
$ 393 |
$ (1,009) |
n/m |
$ 3,508 |
$ 1,726 |
103% |
Net income (Loss) as adjusted |
$ 842 |
$ (1,009) |
n/m |
$ 4,807 |
$ 1,726 |
179% |
Earnings (loss) per share (diluted) as
reported |
$0.02 |
$ (0.04) |
n/m |
$ 0.14 |
$ 0.07 |
100% |
Earnings (loss) per share (diluted) as
adjusted |
$0.03 |
$ (0.04) |
n/m |
$ 0.20 |
$ 0.07 |
186% |
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3/31/15 |
6/30/14 |
Working Capital |
$ 81,093 |
$ 76,788 |
Total Assets |
$ 174,198 |
$ 169,888 |
Long-Term Debt |
$ nil |
$ nil |
Shareholders' Equity |
$141,436 |
$138,412 |
(a) The Company incurred net
pre-tax severance costs (income) of $(295,000) and $662,000 in the
third quarter and nine month periods of fiscal 2015,
respectively. Additionally, the Company recorded a $1,000,000
self-insured death benefit expense in the third quarter related to
the Company's former Chairman and Chief Executive Officer. The
Company also sold a manufacturing facility as well as a subsidiary
in the first quarter of fiscal 2015, both of which netted to a
pre-tax net loss of $222,000. Operating income (loss), net
income (loss), and earnings (loss) per share (diluted) before
severance costs, self-insured death benefit expense, and sale of
assets are Non-GAAP financial measures (see pages 4 and 5).
Management Comments and Outlook
Dennis W. Wells, Chief Executive Officer and President,
commented, "We are making steady progress in improving the
profitability of LSI Industries. I commented in the last
quarterly press release that my mission was to achieve higher
earnings, increase cash dividends and develop shareholder
value. Although only one quarter has passed since making this
statement, so far so good. A quick review seems
appropriate. First, for the third quarter ended March 31,
2015, LSI achieved a profit during its seasonally weakest quarter
of the fiscal year―this has not happened since fiscal
2011. Second, we increased the indicated annual cash dividend
rate again and it now stands at $0.12 per share. Third, the
share price of LSI has increased significantly and recently reached
a 52-week high.
"Before I continue with our quarterly business review, it is
with sadness that I report on the passing of Robert J. Ready,
founder and previous Chairman and CEO of LSI Industries. Bob
was a legend and driving force in the company and the lighting
industry for nearly four decades. He will be deeply missed by
his associates, friends and family.
"Our third quarter earnings would have been even higher if net
sales had not been impacted by harsh winter conditions that
resulted in temporary plant closures, delayed shipments and
pushed-back customer orders. Additionally, the Longshoreman's
strike in California disrupted component shipments, which
negatively impacted our production. Order entry has increased
substantially as we enter the fourth quarter, which bodes well for
future product shipments and revenues. For the first nine
months of fiscal 2015, LED sales represented 57% of total lighting
sales. As was recently announced, LSI was awarded a
significant national re-imaging program for Phillips 66 that ties
together both our lighting and graphics capabilities. This
program will positively impact the fourth quarter and, quite
likely, the next two fiscal years. The pre-order pipeline for
lighting and graphics is very healthy and, as we often say,
opportunity is everywhere for our full service Lighting + Graphics
= Image strategy.
"With the hiring of Andy Foerster as Chief Technology Officer,
we completed the formation of LSI's new executive leadership
team. Our comprehensive LSI Business System was officially
launched with many related initiatives underway, including a new
business segment reporting structure (Lighting, Graphics and
Technology) that permits us to better manage the
business. Lean transformation, material cost reduction,
technology development, and new integrated plans for image sales
are just a few of the formal programs underway. With regard to
sales, we have been turning our focus towards muscle-building our
sales force, and have already made a few strong hires in the
Lighting Segment. As we enter the fourth fiscal quarter, we
are beginning to see improvements in both orders and shipments in
the Lighting Segment. On the Graphics side, we are excited by
improvements that we are seeing in the general business
environment, as more and more customers begin to look at the need
to refresh their image. Additionally, at our recently
completed National Sales Meeting, we introduced a new program to
focus efforts and incentivize our team on cross-selling
opportunities for lighting and graphics products, further
strengthening our position as an Image company. In short, we
are absolutely focused on building sales and increasing the
profitability of LSI Industries. I continue to be impressed
with the people, the products, and the facilities at LSI, and I
look forward to reporting our progress."
Change in Reportable Business Segments
With a new Chief Executive Officer and a new view on how the
Company will be managed, the Company has restructured its business
segments to be in alignment with the financial information received
by the Chief Executive Officer as the Chief Operating Decision
Maker ("CODM"). The Company's three business segments are
Lighting, Graphics, and Technology, each of which has a segment
president who is responsible for that business and reports to the
CODM. An All Other Category as well as Corporate and
Eliminations will also be reported in the business segment
information. As a result of the restructuring of the Company's
business segments in the third quarter of fiscal 2015, all prior
period business segment information has been revised so as to be
comparable with the new reporting structure.
The changes made and realignment of the Company's reportable
operating business segments involved the following:
- The business segment formerly known as the Electronic
Components Segment was renamed as the Technology Segment.
- The Smartvision LED Video Screen product line was moved out of
the Lighting Segment and into the Technology Segment.
- The Company's installation management business (LSI Adapt) and
the menu board business (LSI Images) were moved out of the All
Other Category and into the Graphics Segment.
Third Quarter Fiscal 2015 Results
Net sales in the third quarter of fiscal 2015 were $68,603,000,
a decrease of less than (1)% as compared to last year's third
quarter net sales of $68,996,000. Lighting Segment net sales
decreased 7.0% to $48,865,000, Graphics Segment net sales increased
25.6% to $13,363,000, Technology Segment net sales increased 15.5%
to $6,375,000 and All Other Category net sales decreased to zero as
a result of the sale early in fiscal 2015 of the only subsidiary
reported therein. In the third quarter of fiscal 2015 the
Company recorded a net pre-tax severance cost reversal of $295,000,
and a $1,000,000 self-insured death benefit expense, with no
comparable items in the third quarter of fiscal 2014. The
fiscal 2015 third quarter net income of $393,000, or $0.02 per
share, compares to the fiscal 2014 third quarter net loss of
$(1,009,000), or $(0.04) per share. Earnings per share
represents diluted earnings per share.
Nine Month Fiscal 2015 Results
Net sales in the first nine months of fiscal 2015 were
$231,784,000, an increase of 3% as compared to last year's first
nine month net sales of $225,605,000. Lighting Segment net
sales decreased 1.9% to $164,382,000, Graphics Segment net sales
increased 23.0% to $49,656,000, Technology Segment net sales
increased 7.4% to $17,705,000 and All Other Category net sales
decreased 96% to $41,000 as a result of the sale early in fiscal
2015 of the only subsidiary reported therein. In the first
nine months of fiscal 2015 the Company recorded $662,000 of pre-tax
severance costs, and a $1,000,000 self-insured death benefit
expense with no comparable expenses in the first nine months of
fiscal 2014. Also in the first nine months of fiscal 2015 the
Company recorded a $343,000 pre-tax gain on the sale of a
manufacturing facility in the Graphics Segment, sold a subsidiary
that had been reported in the All Other Category for $1,928,000 and
recorded a pre-tax loss of $565,000 in Corporate Administrative
expenses, and recorded a $101,000 income tax benefit related to the
utilization of a portion of this long-term capital loss, all with
no comparable items in the first nine months of fiscal
2014. The fiscal 2015 nine month net income of $3,508,000, or
$0.14 per share, increased 103.2% from fiscal 2014 nine month net
income of $1,726,000, or $0.07 per share. Earnings per share
represents diluted earnings per share.
Balance Sheet
The balance sheet at March 31, 2015 included current assets of
$112.3 million, current liabilities of $31.2 million and working
capital of $81.1 million, which includes cash of $28.0
million. The current ratio was 3.6 to 1. The Company has
shareholders' equity of $141.4 million, no long-term debt, and
borrowing capacity on its commercial bank facility as of March 31,
2015 of $30.0 million. With continued strong cash flow, a
sound and conservatively capitalized balance sheet, and $30 million
in credit facilities, LSI Industries believes its financial
condition is sound and capable of supporting the Company's planned
growth, including acquisitions, if any.
Cash Dividend Actions
The Board of Directors declared a regular quarterly cash
dividend of $0.03 per share payable May 12, 2015 to shareholders of
record as of May 5, 2015. The indicated annual cash dividend
rate is $0.12 per share. The Board of Directors has adopted a
policy regarding dividends which indicates that dividends will be
determined by the Board of Directors in its discretion based upon
its evaluation of earnings, cash flow requirements, financial
condition, debt levels, stock repurchases, future business
developments and opportunities, and other factors deemed
relevant.
Non-GAAP Financial Measures
This press release includes adjustments to GAAP net income and
earnings per share for the three and nine month periods ended March
31, 2015. Adjusted net income and earnings per share, which
excludes the impact of severance costs, self-insured death benefit
expense, the sale of a manufacturing facility, the sale of a
subsidiary, and the tax benefit of utilization of a portion of the
related long-term capital loss are non-GAAP financial
measures. We believe that it is useful as a supplemental
measure in assessing the operating performance of our
business. This measure is used by our management, including
our chief operating decision maker, to evaluate business
results. We exclude these non-recurring items because they are
not representative of the ongoing results of operations of our
business. Below is a reconciliation of these non-GAAP
measurements to the net income (loss) and earnings (loss) per share
reported for the periods indicated.
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(in thousands, except per share data;
unaudited) |
Third Quarter |
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Diluted |
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Diluted |
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FY 2015 |
EPS |
FY 2014 |
EPS |
Reconciliation of net income (loss) to
adjusted net income (loss): |
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Net income (loss) and earnings
(loss) per share as reported |
$ 393 |
$ 0.02 |
$ (1,009) |
$ (0.04) |
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Adjustment for net severance
costs, inclusive of the income tax effect |
(188) |
(0.01) |
-- |
-- |
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Adjustment for self-insured
death benefit expense, inclusive of the income tax effect |
637 |
0.03 |
-- |
-- |
Adjusted net income (loss) and earnings
(loss) per share |
$ 842 |
$ 0.03 |
$ (1,009) |
$ (0.04) |
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(in thousands, except per share data;
unaudited) |
Nine Month |
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Diluted |
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Diluted |
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FY 2015 |
EPS |
FY 2014 |
EPS |
Reconciliation of net income to adjusted net
income: |
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Net income and earnings per
share as reported |
$ 3,508 |
$ 0.14 |
$ 1,726 |
$ 0.07 |
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Adjustment for severance
costs,inclusive of the income tax effect |
422 |
0.02 |
-- |
-- |
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Adjustment for self-insured
death benefit expense, inclusive of the income tax effect |
637 |
0.03 |
-- |
-- |
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Adjustment for the gain on
the sale of a manufacturing facility, inclusive of the income
tax effect |
(224) |
(0.01) |
-- |
-- |
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Adjustment for the loss on sale
of a subsidiary |
565 |
0.02 |
-- |
-- |
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Income tax effect of
utilization of a long-term capital loss |
(101) |
-- |
-- |
-- |
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Adjusted net income and earnings per
share |
$ 4,807 |
$ 0.20 |
$ 1,726 |
$ 0.07 |
"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, whether expressed or implied, 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 over which the
Company may have no control. These risks and
uncertainties include, but are not limited to, the impact of
competitive products and services, product demand and market
acceptance risks, potential costs associated with litigation and
regulatory compliance, reliance on key customers, financial
difficulties experienced by customers, the cyclical and seasonal
nature of our business, the adequacy of reserves and allowances for
doubtful accounts, fluctuations in operating results or costs
whether as a result of uncertainties inherent in tax and accounting
matters or otherwise, unexpected difficulties in integrating
acquired businesses, the ability to retain key employees of
acquired businesses, unfavorable economic and market conditions,
the results of asset impairment assessments, the Company's ability
to maintain an effective system of internal control over financial
reporting, our ability to remediate any material weaknesses in our
internal control over financial reporting and any other risk
factors that are identified herein. You are cautioned to
not place undue reliance on these forward-looking
statements. In addition to the factors described in this
paragraph, the risk factors identified in our Form 10-K and other
filings the Company may make with the SEC constitute risks and
uncertainties that may affect the financial performance of the
Company and are incorporated herein by reference. The
Company does not undertake and hereby disclaims any duty to update
any forward-looking statements to reflect subsequent events or
circumstances.
About the Company
Leadership. Strength. Innovation. These are the
key values upon which LSI Industries Inc. was founded in
1976. Today LSI demonstrates these values in our dedication to
advancing technology throughout all aspects of our
business. From product solutions to production techniques, we
are committed to American innovation through technology. The
fundamental core strategy of LSI Industries is "Lighting + Graphics
+ Technology = Complete Image Solution."
We are a vertically integrated manufacturer which combines
technology, design and manufacturing to produce efficient, high
quality lighting and graphics products. We are dedicated to
advancing solid-state LED technology to make affordable, high
performance, energy efficient lighting and custom graphic products
that provide value to our customers. We offer design support,
engineering, installation and project management for custom
lighting and graphics rollout programs for the retail
environment.
Our major markets include commercial / industrial lighting,
petroleum / convenience store and multi-site retail (including
automobile dealerships, restaurants and national retail
accounts).
For further information, contact either Dennis
Wells, Chief Executive Officer and President, or Ron Stowell, Vice
President, Chief Financial Officer, and Treasurer at (513)
793-3200.
Additional note: Today's news release,
along with past releases from LSI Industries, is available on the
Company's internet site at www.lsi-industries.com or by email or
fax, by calling the Investor Relations Department at (513)
793-3200.
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Condensed Consolidated Statements of
Operations |
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Three Months Ended |
Nine Months Ended |
(in thousands, except per share data;
unaudited) |
March 31 |
March 31 |
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2015 |
2014 |
2015 |
2014 |
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Net sales |
$ 68,603 |
$ 68,996 |
$ 231,784 |
$ 225,605 |
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Cost of products and services sold |
52,298 |
55,281 |
176,316 |
176,011 |
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Gross profit |
16,305 |
13,715 |
55,468 |
49,594 |
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Selling and administrative expenses |
15,723 |
14,661 |
50,128 |
46,190 |
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Operating income (loss) |
582 |
(946) |
5,340 |
3,404 |
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Interest expense, net |
3 |
17 |
17 |
41 |
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Income (loss) before income
taxes |
579 |
(963) |
5,323 |
3,363 |
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Income tax expense |
186 |
46 |
1,815 |
1,637 |
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Net income (loss) |
$ 393 |
$ (1,009) |
$ 3,508 |
$ 1,726 |
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Income (loss) per common share |
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Basic |
$ 0.02 |
$ (0.04) |
$ 0.14 |
$ 0.07 |
Diluted |
$ 0.02 |
$ (0.04) |
$ 0.14 |
$ 0.07 |
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Weighted average common shares
outstanding |
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Basic |
24,528 |
24,401 |
24,470 |
24,376 |
Diluted |
24,463 |
24,609 |
24,550 |
24,545 |
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Condensed Consolidated Balance
Sheets |
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(in thousands, unaudited) |
March 31, |
June 30, |
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2015 |
2014 |
Current Assets |
$ 112,263 |
$ 106,077 |
Property, Plant and Equipment,
net |
43,385 |
44,282 |
Other Assets |
18,550 |
19,529 |
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$ 174,198 |
$ 169,888 |
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Current Liabilities |
$ 31,170 |
$ 29,289 |
Long-Term Debt |
-- |
-- |
Other Long-Term
Liabilities |
1,592 |
2,187 |
Shareholders' Equity |
141,436 |
138,412 |
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$ 174,198 |
$ 169,888 |
CONTACT: DENNIS WELLS or
RON STOWELL
(513) 793-3200
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