LSI Industries Inc. (NASDAQ: LYTS, “LSI” or the “Company”) a
leading U.S. based manufacturer of display solutions and
indoor/outdoor lighting, today reported financial results for its
fiscal 2022 fourth quarter and full year ended June 30, 2022.
FISCAL 2022 FOURTH
QUARTER
- Net Sales +31% y/y to a single quarter record $127.5
million
- Net Income of $5.2 million; Adjusted Net Income of $6.0
million
- Diluted EPS of $0.18; Adjusted EPS of $0.21 versus $0.12 last
year
- EBITDA of $9.7 million; Adjusted EBITDA $10.6 million or
8.3%/sales
- Free Cash Flow +200% y/y to $8.0 million
FISCAL 2022 FULL YEAR
- Net Sales +44% y/y to $455.1 million
- Net Income of $15.0 million; Adjusted Net Income of $18.0
million
- Diluted EPS of $0.54; Adjusted EPS of $0.64 versus $0.36 prior
year
- EBITDA of $31.3 million; Adjusted EBITDA of $35.1 million, +66%
y/y
LSI delivered record fiscal 2022 fourth quarter results as
continued strengthening demand in its core display solutions and
lighting markets, targeted price actions, domestic manufacturing
footprint, and robust order fulfillment capabilities contributed to
year-over-year growth in revenue, margin realization and
profitability.
The Company reported net sales of $127.5 million in the fourth
quarter, an increase of 31% versus the prior year period. Reported
net income was $5.2 million, or $0.18 per diluted share in the
fourth quarter, versus net income of $0.2 million, or $0.01 per
diluted share, in the prior year period. Fourth quarter 2021
results included $2.9 million or $0.08 per share of JSI acquisition
related expenses.
The Company reported EBITDA of $9.7 million in the fourth
quarter, and adjusted EBITDA increased 56% to $10.6 million. Free
cash flow, defined by operating cash flow less capital
expenditures, increased to $8.0 million in the fourth quarter 2022,
compared to $2.7 million in the prior-year period. During the first
half of fiscal 2022, the Company implemented several large
inventory investments designed to mitigate supply chain
disruptions, while continuing to meet customer delivery
requirements and ensure product availability. Following the
completion of these inventory investments, free cash generation
improved during the second half of fiscal 2022, with positive cash
generation in the third quarter followed by stronger cash
generation in the fourth quarter.
For the twelve months ended June 30, 2022, LSI reported sales of
$455.1 million, an increase of 44% versus the full year fiscal
2021. Net income was $15.0 million, or $0.54 per diluted share,
versus net income of $5.9 million or $0.21 per share in the prior
year. The Company reported adjusted net income of $18.0 million, or
$0.64 per diluted share in fiscal 2022, versus $9.8 million, or
$0.36 per share in fiscal 2021. LSI generated adjusted EBITDA of
$35.1 million in fiscal 2022, versus $21.1 million in the prior
year. A reconciliation of GAAP and non-GAAP financial results is
included in this press release.
As of June 30, 2022, the Company had $76.0 million in net
long-term debt, decreasing the ratio of net debt to trailing twelve
month Adjusted EBITDA to 2.2x. At the end of the fourth quarter,
LSI had $20.0 million available under its credit facility due
fiscal 2026.
The Company declared a regular cash dividend of $0.05 per share
payable on September 6, 2022, to shareholders of record on August
29, 2022.
MANAGEMENT COMMENTARY
“During fiscal 2022, we continued to advance our vertical market
strategy within higher-margin, targeted display solutions and
lighting markets, culminating in record fourth quarter revenue, and
substantially improved profitability,” stated James A. Clark,
President, and CEO of LSI. “Sales growth, price realization,
disciplined inventory management and customer order delivery
capabilities positioned us to achieve significant earnings
improvement on both a sequential and year-over-year basis,
successfully navigating what remains a challenging operating
environment.
“Our vertical market strategy has strengthened our market focus
while improving our quality of earnings,” continued Clark. “In the
fourth quarter, adjusted operating and EBITDA margins increased by
160 and 130 basis points respectively, with broad-based margin
expansion realized across both our Display Solutions and Lighting
segments, despite rampant commodity price inflation and persistent
supply chain-related disruptions.
“Within our Lighting segment, fourth quarter sales increased 29%
on a year-over-year basis, and 19% sequentially from the fiscal
third quarter, capitalizing on secular industry growth and
leveraging our supply chain and U.S. based manufacturing. Sales
increased in both project and distributor stock business, each
generating 20+% growth versus last year. Full year fiscal 2022
sales increased 24%, driven by broad-based growth across multiple
market verticals, product lines and sales channels. The fourth
quarter Lighting segment adjusted gross margin rate was 31.1%, or
200 basis points above the fourth quarter of fiscal 2021.
Incremental sales volume in target verticals, inventory
availability and higher average selling prices served to offset
ongoing cost pressures.
“We purposely built lighting inventory levels in the first half
of fiscal 2022 to support rising market demand and mitigate
escalating supply chain challenges,” stated Clark. “As the supply
chain situation continued to improve, we worked to reduce
inventories which improved cash conversion in the fourth quarter.
Product availability has been a key advantage for LSI throughout
the last year, and we expect availability and our customer service
to continue to be a differentiator in fiscal 2023. Lighting project
quotation and order levels remain favorable in the fourth quarter,
and we enter the first quarter of fiscal 2023 with a strong
backlog.
“Fiscal fourth quarter sales for the Display Solutions segment
increased 35%, reflecting continued growth in key vertical markets,
highlighted by grocery and quick-serve restaurants (QSR).
“LSI completed the acquisition of JSI one year ago, in the
fourth quarter of fiscal 2021. The business combination created a
leading integrated provider of display and lighting solutions to
the North American grocery, convenience, and specialty store
channels, one uniquely positioned to capitalize on a multi-year
period of growth and investment in these markets. We are extremely
pleased with the performance of JSI in our first full year since
the acquisition, with results exceeding our initial expectations.
The business achieved stand-alone growth in sales and
profitability, launched new products, and, together with LSI, has
aggressively pursued cross-selling opportunities across our
combined organizations, the benefits of which are expected to
support continued, profitable, growth in fiscal 2023,” continued
Clark.
“During fiscal 2022, we continued to successfully service our
large, multi-year QSR digital menu board program, and were awarded
additional business because of our excellent performance on the
program,” continued Clark. “While the refueling/c-store vertical
continues to be impacted by site scheduling delays, we have been
successful in winning new customers, including a re-branding
opportunity with a global oil company expanding in Puerto Rico. LSI
has been appointed to provide a turnkey solution, supplying both
product and installation services. This is another example of our
relationship with a long-standing customer engaging us to partner
in a new business opportunity. We anticipate this geographic
expansion will result in more than $10 million of new business in
the first half of fiscal 2023.
“I want to recognize all the LSI and JSI team members for their
stellar efforts throughout fiscal 2022,” concluded Clark. “Our
employees successfully managed multiple challenges, demonstrated
strong collaboration and ability to adapt, while delivering
exceptional service and value to our customers. During fiscal 2022,
we continued to strengthen our business, achieving balanced
performance across both reportable segments. Looking ahead, our
solid backlog, combined with the benefits of recent investments in
sales, marketing, and new products, all serve to position LSI for
sustained growth entering fiscal 2023 and beyond,” concluded
Clark.
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: 877-407-4018 Conference ID:
13721147
Call Replay: 844-512-2921 Replay Passcode:
13721147
A replay of the conference call will be available between August
19, 2022 and September 2, 2022. 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 traded over the NASDAQ Stock Exchange under the symbol
LYTS. The company manufactures non-residential lighting and retail
display solutions. Non-residential lighting consists of
high-performance, American-made lighting solutions. The Company’s
strength in outdoor lighting applications creates opportunities for
it to introduce additional solutions to its valued customers.
Retail 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
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 EndedJune 30 Twelve Months EndedJune 30
(Unaudited)
2022
2021
% Change
(In thousands, except per
share data)
2022
2021
% Change
$
127,470
$
97,015
31%
Net sales
$
455,120
$
315,612
44%
7,175
1,046
586%
Operating income as reported
21,201
8,030
164%
822
660
25%
Stock compensation expense
3,288
1,977
66%
112
2,938
NM
Acquisition costs
473
2,938
NM
6
20
NM
Severance costs
11
41
-73%
-
(17
)
NM
Restructuring costs
-
(14
)
-100%
$
8,115
$
4,647
75%
Operating income as adjusted
$
24,973
$
12,972
93%
$
5,176
$
198
2514%
Net income as reported
$
15,032
$
5,868
156%
$
6,008
$
3,315
81%
Net income as adjusted
$
18,003
$
9,763
84%
$
0.18
$
0.01
1700%
Earnings per share (diluted) as reported
$
0.54
$
0.21
157%
$
0.21
$
0.12
75%
Earnings per share (diluted) as adjusted
$
0.64
$
0.36
78%
(amounts in thousands) June 30, June 30,
2022
2021
Working capital
$
84,298
$
54,113
Total assets
$
311,080
$
286,821
Long-term debt
$
76,025
$
68,178
Other long-term liabilities
$
12,667
$
16,578
Shareholders' equity
$
147,769
$
131,170
Three Months Ended June 30, 2022
Results
Net sales for the three months ended June 30, 2022, were $127.5
million, up 32% from the three months ended June 30, 2021, reported
net sales of $97 million. Lighting Segment net sales of $67.8
million increased 29% and Display Solutions Segment net sales of
$60 million increased 35% from last year’s third quarter net sales.
Net income for the three months ended June 30, 2022 was $5.2
million, or $0.18 per share, compared to $0.2 million or $0.01 per
share for the three months ended June 30, 2021. Earnings per share
represents diluted earnings per share.
Twelve Months Ended June 30, 2022
Results
Net sales for the twelve months ended June 30, 2022, were $455.1
million, up 44% from the twelve months ended June 30, 2021,
reported net sales of $315.6 million. Lighting Segment net sales of
$233.4 million increased 24% and Display Solutions Segment net
sales of $221.7 million increased 75% from last year’s net sales.
Net income for the twelve months ended June 30, 2022, was $15
million, or $0.54 per share, compared to $5.9 million or $0.21 per
share for the twelve months ended June 30, 2021. Earnings per share
represents diluted earnings per share.
Balance Sheet
The balance sheet on June 30, 2022, included current assets of
$160 million, current liabilities of $74.6 million and working
capital of $84.3 million, which includes cash of $2.5 million. The
current ratio was 2.1 to 1. The balance sheet also included
shareholders’ equity of $147.8 million and long-term debt of $76
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 fourth quarter of fiscal 2022, payable September
7, 2022, to shareholders of record as of the close of business on
August 30, 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 twelve
months ended June 30, 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 Twelve Months Ended June
30 June 30
2022
2021
(In thousands, except per share data)
2022
2021
DilutedEPS DilutedEPS DilutedEPS
DilutedEPS Reconciliation of net income to adjusted net
income
$
5,176
$
0.18
$
198
$
0.01
Net income as reported
$
15,032
$
0.54
$
5,868
$
0.21
744
0.03
485
0.02
Stock compensation expense
2,594
0.09
1,497
0.05
88
-
2,161
0.08
Acquisition costs
373
0.01
2,161
0.08
-
-
15
-
Severance costs
4
-
32
-
-
-
(13
)
-
Restructuring costs
-
-
(11
)
-
-
-
468
0.02
Tax impact due to the change in the estimated annual tax
rateused for GAAP reporting purposes
-
-
216
0.01
$
6,008
$
0.21
$
3,315
$
0.12
Net income adjusted
$
18,003
$
0.64
$
9,763
$
0.36
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 EndedJune 30 (Unaudited; In
thousands) Twelve Months EndedJune 30
EBITDA and Adjusted
EBITDA
2022
2021
% Change
2022
2021
% Change
$
7,175
$
1,046
586%
Operating Income as reported
$
21,201
$
8,030
164%
2,485
2,171
Depreciation and amortization
10,118
8,114
$
9,660
$
3,217
200%
EBITDA
$
31,319
$
16,144
94%
822
660
Stock compensation expense
3,288
1,977
112
2,938
Acquisition costs
473
2,938
6
20
Severance costs
11
41
-
(17
)
Restructuring costs
-
(14
)
$
10,600
$
6,818
55%
Adjusted EBITDA
$
35,091
$
21,086
66%
Three Months EndedJune 30 (Unaudited; In
thousands) Twelve Months EndedJune 30
Free Cash Flow
2022
2021
% Change
2022
2021
% Change
$
8,975
$
3,375
166%
Cash flow from operations
$
(3,693
)
$
28,009
-113%
(955
)
(716
)
Capital expenditures
(2,231
)
(2,233
)
$
8,020
$
2,659
202%
Free cash flow
$
(5,924
)
$
25,776
-123%
Net Debt to Adjusted EBITDA Ratio June 30,
(amounts in thousands)
2022
Current Maturity of Debt
$
3,571
Long-Term Debt
76,025
Total Debt
$
79,596
Less: Cash
(2,462
)
Net Debt
$
77,134
Adjusted EBITDA - Trailing Twelve Months
$
35,091
Net Debt to Adjusted EBITDA Ratio
$
2.20
Three Months EndedJune 30 Twelve Months EndedJune
30 (Unaudited)
2022
2021
(In thousands, except per
share data)
2022
2021
$
127,470
$
97,015
Net sales
$
455,120
$
315,612
95,012
74,118
Cost of products sold
345,912
236,637
-
10
Severance costs
-
15
-
(17
)
Restructuring costs
-
(14
)
32,458
22,904
Gross profit
109,208
78,974
25,275
21,848
Selling and administrative costs
87,995
70,918
8
10
Severance costs
12
26
7,175
1,046
Operating Income
21,201
8,030
115
44
Other expense (income)
148
(153
)
682
96
Interest expense, net
1,968
267
6,378
906
Income before taxes
19,085
7,916
1,202
708
Income tax
4,053
2,048
$
5,176
$
198
Net income
$
15,032
$
5,868
Weighted
Average Common Shares Outstanding
27,485
26,846
Basic
27,286
26,692
28,146
27,719
Diluted
27,993
27,440
Earnings Per Share
$
0.19
$
0.01
Basic
$
0.55
$
0.22
$
0.18
$
0.01
Diluted
$
0.54
$
0.21
(amounts in thousands) June 30, June
30,
2022
2021
Current assets
$
158,917
$
125,008
Property, plant and equipment, net
27,158
30,552
Other assets
125,005
131,261
Total assets
$
311,080
$
286,821
Current maturities of long-term debt
$
3,571
$
-
Other current liabilities
71,048
70,895
Long-term debt
76,025
68,178
Other long-term liabilities
12,667
16,578
Shareholders' equity
147,769
131,170
$
311,080
$
286,821
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version on businesswire.com: https://www.businesswire.com/news/home/20220818005231/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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