Announces $15 Million Share Repurchase
Program
Declares Quarterly Cash Dividend
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 third quarter of
fiscal year 2022.
FISCAL THIRD QUARTER
2022
- Net sales +53% y/y to $110.1 million, organic net sales +12%
y/y
- Lighting sales +25% y/y; Display Solutions sales +100% y/y
- Net Income +146% y/y to $3.6 million, or $0.13 per diluted
share
- Adjusted net income +130% y/y to $4.2 million, or $0.15 per
diluted share
- Adjusted EBITDA +92% y/y to $8.5 million
- Announces $15 million share repurchase authorization
LSI achieved strong year-over-year increases in both net sales
and profitability in the fiscal third quarter, driven by
broad-based commercial demand across both the lighting and display
solutions businesses, increased price realization, and
contributions from the JSI Store Fixtures acquisition (“JSI”)
completed in May 2021.
The Company reported third quarter net sales of $110.1 million,
an increase of 53% versus the prior year period. Net sales
excluding contributions from the JSI acquisition, increased 12%
versus fiscal third quarter of 2021.
LSI reported net income of $3.6 million, or $0.13 per diluted
share in the third quarter, versus $1.5 million, or $0.05 per
diluted share, in the prior-year period. Adjusted net income was
$4.2 million, or $0.15 per diluted share for the third quarter of
fiscal 2022, compared to $1.8 million, or $0.07 per diluted share,
last year.
The Company reported Adjusted EBITDA of $8.5 million in the
fiscal third quarter, an increase of 92% versus the prior-year
period. A reconciliation of GAAP and non-GAAP financial results is
included in this press release.
LSI generated free cash flow of $3.3 million in the quarter,
including $6.4 million of discretionary investments in additional
inventory intended to support existing elevated backlog levels and
order rates. At the end of the third quarter, the Company’s ratio
of net debt to trailing twelve month Adjusted EBITDA declined to
2.6x, compared to 2.8x at the end the fiscal second quarter
2022.
The Company declared a regular quarterly cash dividend of $0.05
per share payable May 17, 2022 to shareholders of record on May 9,
2022.
MANAGEMENT COMMENTARY
“The LSI team delivered exceptional fiscal third quarter
performance highlighted by significant year-over-year growth in
revenue and profitability, accomplished in an ongoing challenging
operating environment,” stated James A. Clark, President, and Chief
Executive Officer of LSI. “Sales exceeded $100 million for the
third consecutive quarter, contributing to operating income, net
income, and diluted earnings per share all more than double prior
year results. Our adjusted operating margin improved 190 bps, while
our adjusted EBITDA margin expanded 160 bps.”
“Throughout the last year, we deliberately grew inventory levels
to ensure product availability during a period of prolonged global
supply chain disruption,” continued Clark. “As order rates and
backlog levels accelerated, LSI was well equipped to support rising
demand with additional inventory coupled with US based
manufacturing capabilities. Last quarter, we continued to secure
new business wins by taking advantage of short-lead time project
opportunities. For example, LSI was successful in securing interior
lighting for a considerable number of locations for one of the
nation’s largest warehouse retailers, as an existing supplier could
not meet specified delivery requirements. As the existing provider
of exterior lighting to this customer, we capitalized on this
service gap, while demonstrating the benefit of our fully
integrated vertical market solutions. Product availability has been
an advantage for LSI during a period of increased market demand and
tight construction installation schedules.”
“Sales and order activity increased across most of our major
vertical markets during the third quarter,” continued Clark.
“Within the grocery sector, we continued to service the $17 million
order for refrigerated display fixtures to one of the nation’s
largest grocery store chains, shipping to approximately 200
locations. To date, we have already received $12 million in
additional orders from the same grocery customer, for shipment
scheduled in fiscal 2023. Within the c-store market, customer
inquiries for introduction to JSI display products is growing
rapidly, with an initial pilot with a large c-store chain planned
to commence in the fiscal fourth quarter.”
“In the fiscal third quarter, LSI won an important contract in
the quick serve restaurant (QSR) market with a large brand focused
on the chicken segment,” continued Clark. “Under the terms of the
contract, LSI will provide exterior drive-thru digital menu board
systems and interior digital signage to this customer, who
currently operates more than 2,500 restaurants worldwide. In
addition, we were recently awarded an extension to our existing
large QSR program, expanding the program to provide menu board
solutions to the customer’s Canadian locations. Revenue from this
large existing QSR program is now expected to extend into fiscal
2024.”
“Within our Lighting segment, sales increased 25% in the third
quarter, representing the fourth consecutive quarter of
double-digit growth, when compared to prior year. Sales growth was
broad based, with all key vertical markets reporting year-over-year
improvement. Our new and feature/function enhanced products,
including our own controls platform, are having a significant
impact. Customers embrace not only the products designed for
specific applications, but also the multiple price point offerings
positioned to meet diverse project budget requirements. The
Lighting gross margin rate of 29.2% for the third quarter was
consistent sequentially with the second quarter, reflecting our
ability to effectively align price to input and transit cost
inflation.
“Within our Display Solutions segment, sales grew 100% compared
to the prior year, including contributions from the JSI
acquisition. Inquiry and quote activity is high in each of the
three major product categories within this segment, including
conventional graphics, digital signage, and display fixtures.
Similar to Lighting, we are experiencing growth in our target
vertical markets including Grocery and QSR. The Display Solution
gross margin rate improved 430 bps, reflecting both the accretion
effect of JSI and improvements to core business margins.
“In addition, we announced today that our Board of Directors
authorized a $15 million share repurchase program, consistent with
our balanced approach toward capital allocation and commitment to
shareholder value creation. This authorization reflects our
continued confidence in both the underlying strength of our
end-markets, together with the significant profitable growth
opportunities for LSI moving forward.
“In summary, our business is in a strong position as we look to
the fourth quarter and year ahead,” stated Clark. “Third quarter
order rate was strong, achieving a book-to-bill ratio over 1.0. As
a result, our backlog entering the fiscal fourth quarter increased
sequentially from the third quarter, while being significantly
above prior year levels. Market indicators remain favorable and
quote levels remain at a high level. On balance, recent market
share gains with new and existing customers, together with
effective and consistent operational execution, supported by
improved demand fundamentals across our end markets, position us to
drive sustained growth for the balance of the year and into fiscal
2023.”
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 in order 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:
13728792
Call Replay:
1-844-512-2921
Replay Passcode:
13728792
A replay of the conference call will be available between April
28, 2022 and May 12, 2022. To listen to a replay of the
teleconference via webcast, please visit the Investor Relations
section of LSI’s 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.
Financial Highlights
Three Months Ended March
31
Nine Months Ended March
31
(Unaudited)
2022
2021
% Change
(In thousands, except per
share data)
2022
2021
% Change
$
110,111
$
72,204
53
%
Net sales
$
327,651
$
218,597
50
%
5,161
2,096
146
%
Operating income as reported
14,027
6,984
101
%
780
415
88
%
Stock compensation expense
2,466
1,317
87
%
21
-
NM
Acquisition costs
361
-
NM
5
-
NM
Severance costs
5
21
-76
%
-
-
NM
Restructuring costs
-
3
-100
%
$
5,967
$
2,511
138
%
Operating income as adjusted
$
16,859
$
8,325
103
%
$
3,618
$
1,472
146
%
Net income as reported
$
9,856
$
5,670
74
%
$
4,214
$
1,830
130
%
Net income as adjusted
$
11,995
$
6,447
86
%
$
0.13
$
0.05
160
%
Earnings per share (diluted) as reported
$
0.35
$
0.21
67
%
$
0.15
$
0.07
114
%
Earnings per share (diluted) as adjusted
$
0.43
$
0.24
79
%
(amounts in thousands)
March 31,
June 30,
2022
2021
Working capital
$
83,387
$
54,113
Total assets
$
312,555
$
286,821
Long-term debt
$
81,387
$
68,178
Other long-term liabilities
$
13,452
$
16,578
Shareholders' equity
$
142,545
$
131,170
Three Months Ended March 31, 2022
Results
Net sales for the three months ended March 31, 2022 were $110.1
million, up 53% from the three months ended March 31, 2021 reported
net sales of $72.2 million. Lighting Segment net sales of $57.1
million increased 25% and Display Solutions Segment net sales of
$53.0 million increased 100% from last year’s third quarter net
sales. Net income for the three months ended March 31, 2022 was
$3.6 million, or $0.13 per share, compared to $1.5 million or $0.05
per share for the three months ended March 31, 2021. Earnings per
share represents diluted earnings per share.
Nine Months Ended March 31, 2022
Results
Net sales for the nine months ended March 31, 2022 were $327.7
million, up 50% from the nine months ended March 31, 2021 reported
net sales of $218.6 million. Lighting Segment net sales of $165.7
million increased 22% and Display Solutions Segment net sales of
$162.0 million increased 97% from last year’s net sales. Net income
for the nine months ended March 31, 2022 was $9.9 million, or $0.35
per share, compared to $5.7 million or $0.21 per share for the nine
months ended March 31, 2021. Earnings per share represents diluted
earnings per share.
Balance Sheet
The balance sheet at March 31, 2022 included current assets of
$158.6 million, current liabilities of $75.2 million and working
capital of $83.4 million, which includes cash of $1.2 million. The
current ratio was 2.1 to 1. The balance sheet also included
shareholders’ equity of $142.5 million and long-term debt of $81.4
million. It is the Company’s priority to continuously generate
sufficient cash flow, coupled with our credit facility, to
adequately fund operations.
Cash Dividend Actions
The Board of Directors declared a regular cash dividend of $0.05
per share for the third quarter of fiscal 2022, payable May 17,
2022 to shareholders of record as of the close of business on May
9, 2022. 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 nine
months ended March 31, 2022 and 2021. Operating income, net income
and earnings per share, which exclude the impact of stock
compensation expense, acquisition costs, severance costs 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 Nine Months Ended March 31
March 31
2022
2021
(In thousands, except per share data)
2022
2021
DilutedEPS DilutedEPS Reconciliation of net income
to adjusted net income DilutedEPS DilutedEPS
$
3,618
$
0.13
$
1,472
$
0.05
Net income as reported
$
9,856
$
0.35
$
5,670
$
0.21
576
0.02
314
0.01
Stock compensation expense
1,850
0.07
1,012
0.04
16
-
-
-
Acquisition costs
285
0.01
-
-
4
-
-
-
Severance costs
4
-
17
-
-
-
-
-
Restructuring costs
-
-
2
-
-
-
44
-
Tax impact due to the change in the estimated annual tax rate
used for GAAP reporting purposes
-
-
(254
)
(0.01
)
$
4,214
$
0.15
$
1,830
$
0.07
Net income adjusted
$
11,995
$
0.43
$
6,447
$
0.24
NOTE: All adjustments are net of tax except for the adjustment
of the tax impact from the change in the estimated annual tax
rate
Three Months Ended March
31
(Unaudited; In
thousands)
Nine Months Ended March
31
EBITDA and Adjusted
EBITDA
2022
2021
% Change
2022
2021
% Change
$
5,161
$
2,096
146
%
Operating Income as reported
$
14,027
$
6,984
101
%
2,531
1,920
Depreciation and amortization
7,632
5,943
$
7,692
$
4,016
92
%
EBITDA
$
21,659
$
12,927
68
%
780
415
Stock compensation expense
2,466
1,317
21
-
Acquisition costs
361
-
5
-
Severance costs
5
21
-
-
Restructuring costs
-
3
$
8,498
$
4,431
92
%
Adjusted EBITDA
$
24,491
$
14,268
72
%
Three Months Ended March
31
(Unaudited; In thousands)
Nine Months Ended March
31
Free Cash Flow
2022
2021
% Change
2022
2021
% Change
$
3,875
$
11,217
-65
%
Cash flow from operations
$
(12,668
)
$
24,634
-151
%
(531
)
(637
)
Capital expenditures
(1,276
)
(1,517
)
$
3,344
$
10,580
-68
%
Free cash flow
$
(13,944
)
$
23,117
-160
%
Three Months Ended March
31
(Unaudited; In thousands)
Nine Months Ended March
31
Reconciliation of net sales to organic net sales
2022
2021
% Change
2022
2021
% Change
$
57,126
$
45,740
24.9
%
Lighting Segment
$
165,663
$
136,271
21.6
%
$
52,985
$
26,464
100.2
%
Display Solutions Segment
$
161,988
$
82,326
96.8
%
$
110,111
$
72,204
52.5
%
Total Net Sales
$
327,651
$
218,597
49.9
%
29,045
-
JSI
72,952
-
$
81,066
$
72,204
12.3
%
Total organic net sales
$
254,699
$
218,597
16.5
%
Condensed
Consolidated Statement of Operations
Three Months EndedMarch 31
Nine Months EndedMarch 31
(Unaudited)
2022
2021
(In thousands, except per
share data)
2022
2021
$
110,111
$
72,204
Net sales
$
327,651
$
218,597
83,318
54,112
Cost of products sold
250,900
162,519
-
-
Severance costs
-
5
-
-
Restructuring costs
-
3
26,793
18,092
Gross profit
76,751
56,070
21,627
15,996
Selling and administrative
costs
62,719
49,070
5
-
Severance costs
5
16
5,161
2,096
Operating Income
14,027
6,984
(55
)
43
Other expense (income)
33
(197
)
524
52
Interest expense, net
1,287
171
4,692
2,001
Income before taxes
12,707
7,010
1,074
529
Income tax
2,851
1,340
$
3,618
$
1,472
Net income
$
9,856
$
5,670
Weighted
Average Common Shares Outstanding
27,378
26,771
Basic
27,220
26,642
28,083
27,727
Diluted
27,945
27,352
Earnings
Per Share
$
0.13
$
0.05
Basic
$
0.36
$
0.21
$
0.13
$
0.05
Diluted
$
0.35
$
0.21
Condensed Balance
Sheet
(amounts in thousands)
March 31,
June 30,
2022
2021
Current assets
$
158,558
$
125,008
Property, plant and equipment, net
27,982
30,552
Other assets
126,015
131,261
Total assets
$
312,555
$
286,821
Current maturities of long-term debt
$
3,571
$
-
Other current liabilities
71,600
70,895
Long-term debt
81,387
68,178
Other long-term liabilities
13,452
16,578
Shareholders' equity
142,545
131,170
$
312,555
$
286,821
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version on businesswire.com: https://www.businesswire.com/news/home/20220428005357/en/
INVESTOR CONTACT Noel Ryan, IRC 720.778.2415
LYTS@vallumadvisors.com
MEDIA CONTACT Cliff Spurlock Marketing Communications
Manager 513.372.3143 cliff.spurlock@lsicorp.com
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