LSI Industries Reports Fiscal 2025 Second Quarter Results and Declares Quarterly Cash Dividend

CINCINNATI--(BUSINESS WIRE)-- LSI Industries Inc. (Nasdaq: LYTS, “LSI” or the “Company”) a leading U.S. based manufacturer of commercial lighting and display solutions, today reported financial results for the fiscal 2025 second quarter ended December 31, 2024.

FISCAL 2025 SECOND QUARTER RESULTS

• Net sales of $147.7 million, + 36% y/y
• Organic net sales +14% y/y
• Net income of $5.6 million, or $0.18 per diluted share
• Adjusted Net Income $8.0 million or $0.26 per diluted share
• EBITDA of $11.5 million; Adjusted EBITDA of $13.3 million
• Free cash flow of $8.8 million
• Ratio of net debt to TTM Adjusted EBITDA of 0.6x

LSI delivered significant year-over-year growth in sales and profitability in the fiscal second quarter, driven by broad-based demand strength across its vertical markets. Fiscal second quarter results benefitted from solid organic growth within the Display Solutions segment, together with contributions from the EMI acquisition completed in April 2024.

The Company reported net sales of $147.7 million in the fiscal second quarter, an increase of 36% versus the prior year period. Net sales, excluding contributions from the EMI acquisition, increased 14% versus the fiscal second quarter of 2024.

LSI reported net income of $5.6 million, or $0.18 per diluted share, in the second quarter, while adjusted net income was $8.0 million, or $0.26 per diluted share. The Company generated adjusted EBITDA of $13.3 million or 9.0% of net sales, an increase of more than 20% versus the year-ago period. A reconciliation of GAAP and non-GAAP financial results is included in this press release.

The Company generated free cash flow of $8.8 million in the second quarter, or nearly $41.4 million on a trailing twelve-month basis. Given continued strength in cash generation, LSI reduced its ratio of net debt to trailing twelve-month Adjusted EBITDA to 0.6x, down from 1.3x at the time of the EMI acquisition in April 2024. At the end of the second quarter, LSI had cash and availability on its credit facility totaling $67 million.

The Company declared a regular cash dividend of $0.05 per share payable on February 11, 2025, to shareholders of record on February 3, 2025.

MANAGEMENT COMMENTARY

“LSI delivered 14% organic sales growth in the fiscal second quarter, supported by strong demand across our core refueling, c-store, and grocery verticals,” stated James A. Clark, President and Chief Executive Officer of LSI. “Including contributions from our most recent acquisition of EMI, which continues to perform ahead of initial expectations, LSI generated total sales growth of 36% in the second quarter, while adjusted net income, adjusted EBITDA and free cash flow generation all increased on-a-year-over-year basis.

“Our integrated, solutions-based model is gaining significant traction in the marketplace, positioning us for a solid start to our fiscal third quarter,” continued Clark. “Second quarter order rates increased versus the prior year, resulting in a 12% year-over-year increase in backlog entering the fiscal third quarter. Display Solutions segment orders increased 25% on a year-over-year basis in the second quarter driven by balanced growth across all major verticals. We anticipate that order rates will remain positive into the second half of our fiscal year, given current and projected customer activity across our vertical markets.

“Our Display Solutions segment generated organic sales growth of 50% in the second quarter, driven by increased sales across product categories and vertical markets. We continue to execute on a significant backlog of multi-year contracts with large national and international refueling/c-store customer programs where our integrated solutions remain in high demand. Notably, second quarter sales to refueling/c-store customers increased by more than 60%, when compared to the year-ago period. We enter the third quarter with an increased backlog and expect strong sales growth to continue into the fiscal second half.

“The grocery vertical generated sales growth over 50% in the quarter driven by the resurgence in refrigerated and non-refrigerated display case demand,” stated Clark. “Termination of the proposed merger between two large grocery industry participants was announced in December 2024. Uncertainty over the proposed merger caused the industry to defer both maintenance and key program investments over the last eighteen months. We began to experience a resurgence in demand during the fiscal first quarter, which accelerated in the second quarter, as expectations that a judicial decision was imminent.

“In the fiscal second quarter, we successfully managed the Department of Energy legislation requiring end of life production for refrigerated display cases utilizing the current R448 technology at calendar year-end, with conversion to R290 and other technologies effective January 1, 2025. We worked closely with our customers to proactively plan and adopt the technology transition, including the launch of our new R290 product line. We are well positioned to capitalize on increased demand levels for display case products throughout the calendar year.

“EMI delivered a solid performance in the second quarter, contributing to the over 100% total sales growth for Display Solutions. EMI sales were $23.4 million, substantially above what is historically a softer period for store renovations as our customers focus on the critical holiday shopping season. Sales were driven by favorable performance in the QSR, refueling/c-store and Grocery verticals.

“Within the Lighting segment, overall sales were lower year-over-year against a challenging prior year comparison. Last year, we had several large lighting projects, including a multi-million-dollar installation at a new EV battery plant complex, that did not recur in the current year. While small project activity levels were healthy during the second quarter, those projects were not sufficient to offset softness in large project activity, resulting in a 10% year-over-year decline in Lighting segment sales.

“Importantly, Lighting segment project quote activity remains above prior-year levels, contributing to a segment book-to-bill of 1.1 exiting the second quarter which, on a historical basis, is elevated entering a seasonally slower period for our construction markets. While our Lighting segment backlog was 6% above the prior year exiting the second quarter, we expect order rates to accelerate as we enter the second half of our fiscal year.

“Innovation and new product vitality remains a central focus for our business. Over the last four years, we’ve launched more than 30 new products each year. In fiscal 2025, we anticipate more than 40 new product launches and refreshes, consistent with an innovation roadmap created to exceed specific customer requirements across each vertical market. During the second quarter, we launched multiple commercial programs designed to further accelerate adoption of our recent product launches, including our V-LOCITY series of outdoor area lights, new continuous indoor Linear fixtures, and Zone High Bay for sports court applications. Enhanced training and marketing programs for our sales force, agency partners, and customers have led to accelerated adoption of new products, consistent with our commercial strategy.”

Clark concluded, “LSI remains well positioned to drive continued, profitable growth entering the second half of our fiscal year 2025. Order rates and backlog remain strong; demand conditions across most end-markets are robust; and we’re capitalizing on favorable, multi-year secular opportunities where our vertically integrated, solutions-based model is uniquely suited to support our growing base of customers. We also continue to prioritize a combination of organic and inorganic growth, as outlined within our Fast Forward strategy, while maintaining our disciplined, returns-driven approach toward capital deployment.”

FISCAL 2025 SECOND QUARTER 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.

Domestic Live: 877-407-4018
International Live: 201-689-8471

To listen to a replay of the teleconference, which subsequently will be available through February 6, 2025

Domestic Replay: 844-512-2921
International Replay: 412-317-6671

Conference ID: 13751021

ABOUT LSI INDUSTRIES

Headquartered in Cincinnati, LSI Industries (NASDAQ: LYTS) specializes in the creation of advanced lighting, graphics, and display solutions. The Company’s American-made products, which include lighting, print graphics, digital graphics, millwork, metal and refrigerated products, and custom displays, are engineered to elevate brands in competitive markets. With a workforce of approximately 1,900 employees and 16 facilities throughout North America, LSI is dedicated to providing top-quality solutions to its clients. 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 Ended December 31										Six Months Ended
								(Unaudited)		December 31
2024				2023				(In thousands, except per share data)		2024				2023
$	147,734			$	109,005			Net sales		$	285,829			$	232,446
	112,804				77,438			Cost of products sold			217,147				163,943
	69				-			Expense on step-up basis of acquired lease			136				-
	-				31			Severance costs and restructuring costs			38				378
	34,861				31,536			Gross profit			68,508				68,125
	1,669				849			Long-term performance based compensation			2,853				2,174
	-				4			Severance costs and restructuring costs			22				10
	1,408				1,190			Amortization expense of acquired intangible assets			2,816				2,380
	-				-			Acquisition costs			48				-
	81				-			Consulting expense: commercial growth initiatives			81				19
	23,244				21,674			Selling and administrative costs			45,098				44,695
	8,459				7,819			Operating Income			17,590				18,847
	382				(29	)		Other (income) expense			322				67
	728				453			Interest expense, net			1,603				1,019
	7,349				7,395			Income before taxes			15,665				17,761
	1,702				1,489			Income tax			3,336				3,827
$	5,647			$	5,906			Net income		$	12,329			$	13,934
								Weighted Average Common Shares Outstanding
	29,930				29,024			Basic			29,761				28,890
	30,876				30,043			Diluted			30,709				29,949
								Earnings Per Share
$	0.19			$	0.20			Basic		$	0.41			$	0.48
$	0.18			$	0.20			Diluted		$	0.40			$	0.47

		(amounts in thousands)
		December 31			June 30,
		2024			2024
Current assets		$	163,405		$	162,499
Property, plant and equipment, net			31,534			32,959
Other assets			149,606			153,342
Total assets		$	344,545		$	348,800
Current maturities of long-term debt		$	3,571		$	3,571
Other current liabilities			74,977			75,636
Long-term debt			34,615			50,658
Other long-term liabilities			14,267			14,580
Shareholders' equity			217,115			204,355
		$	344,545		$	348,800

Three Months Ended December 31, 2024 Results

Net sales for the three months ended December 31, 2024, were $147.7 million representing an increase of 36% compared to the three months ended December 31, 2023, net sales of $109.0 million. Lighting Segment net sales of $58.2 million decreased 10% and Display Solutions Segment net sales of $89.5 million increased 103% from last year’s second quarter net sales. Net income for the three months ended December 31, 2024, was $5.6 million, or $0.18 per share, compared to $5.9 million or $0.20 per share for the three months ended December 31, 2023. Earnings per share represents diluted earnings per share.

Six Months Ended December 31, 2024 Results

Net sales for the six months ended December 31, 2024, were $285.8 million representing a 23% increase from the six months ended December 31, 2023, net sales of $232.4 million. Lighting Segment net sales of $116.6 million decreased 12% and Display Solutions Segment net sales of $169.2 million increased 69% from last year’s net sales. Net income for the six months ended December 31, 2024, was $12.3 million, or $0.40 per share, compared to $13.9 million or $0.47 per share for the six months ended December 31, 2023. Earnings per share represents diluted earnings per share.

Balance Sheet

The balance sheet at December 31, 2024, included current assets of $163.4 million, current liabilities of $78.5 million and working capital of $84.9 million, which includes cash of $4.7 million. The current ratio was 2.1 to 1. The balance sheet also included shareholders’ equity of $217.1 million and long-term debt of $34.6 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 second quarter of fiscal 2025, payable February 11, 2025, to shareholders of record as of the close of business on February 3, 2025. 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 six months ended December 31, 2024, and 2023. Operating income, net income, and earnings per share, which exclude the impact of long-term performance based compensation expense, the amortization expense of acquired intangible assets, commercial growth opportunity expense, acquisition costs, the lease expense on the step-up basis of acquired leases, and restructuring and severance costs, are non-GAAP financial measures. We further note that while the amortization expense of acquired intangible assets is excluded from the measures, the revenue of the acquired companies is reflected in the measures and the acquired assets contribute to revenue generation. We exclude these items because we believe they are not representative of the ongoing results of the 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), Net Debt to Adjusted EBITDA, Free Cash Flow, and organic sales growth. 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, Net Debt to Adjusted EBITDA, and organic sales growth.

Three Months Ended December 31								Six Months Ended December 31
							(Unaudited)
2024			2023		% Change		(In thousands, except per share data)	2024			2023		% Change
$	147,734		$	109,005	36	%	Net sales	$	285,829		$	232,446	23	%
	8,459			7,819	8	%	Operating income as reported		17,590			18,847	-7	%
	1,669			849			Long-term performance based compensation		2,853			2,174
	81			-			Consulting expense: commercial growth initiatives		81			19
	-			-			Acquisition costs		48			-
	1,408			1,190			Amortization expense of acquired intangible assets		2,816			2,380
	69			-			Expense on step-up basis of acquired lease		136			-
	-			35			Severance costs and Restructuring costs		60			388
$	11,686		$	9,893	18	%	Operating income as adjusted	$	23,584		$	23,808	-1	%
$	5,647		$	5,906	-4	%	Net income as reported	$	12,329		$	13,934	-12	%
$	7,996		$	7,249	10	%	Net income as adjusted	$	15,977		$	16,859	-5	%
$	0.18		$	0.20	-7	%	Earnings per share (diluted) as reported	$	0.40		$	0.47	-14	%
$	0.26		$	0.24	7	%	Earnings per share (diluted) as adjusted	$	0.52		$	0.56	-8	%

Three Months Ended													Six Months Ended
December 31													December 31
2024						2023						(In thousands, except per share data)		2024							2023
			Diluted EPS						Diluted EPS							Diluted EPS							Diluted EPS
												Reconciliation of net income to adjusted net income
$	5,647		$	0.18		$	5,906		$	0.20		Net income as reported	$	12,329		$	0.40			$	13,934		$	0.47
	1,294			0.04			625			0.02		Long-term performance based compensation		2,161		$	0.07				1,599			0.05
	1,090			0.04			885			0.03		Amortization expense of acquired intangible assets		2,132		$	0.07				1,755			0.06
	62			-			-			-		Consulting expense: commercial growth initiatives		62		$	-				13			-
	-			-			34			-		Severance costs and Restructuring costs		45		$	-				290			0.01
	-			-			-			-		Acquisition costs		50							-			-
	53			-			-			-		Expense on step-up basis of acquired lease		103		$	0.01				-			-
	(150	)		-			(201	)		(0.01	)	Tax rate difference between reported and adjusted net income		(905	)	$	(0.03	)			(732	)		(0.03	)
$	7,996		$	0.26		$	7,249		$	0.24		Net income adjusted	$	15,977		$	0.52			$	16,859		$	0.56

Three Months Ended December 31											(Unaudited; In thousands)		Six Months Ended December 31
											Net Income to Adjusted EBITDA
	2024				2023			% Change						2024				2023			% Change
$	5,647			$	5,906						Net income as reported		$	12,329			$	13,934
	1,702				1,489						Income tax			3,336				3,827
	728				453						Interest expense, net			1,603				1,019
	382				(29	)					Other (income) expense			322				67
$	8,459			$	7,819			8	%		Operating Income as reported		$	17,590			$	18,847			-7	%
	3,018				2,357						Depreciation and amortization			5,958				4,728
$	11,477			$	10,176			13	%		EBITDA		$	23,548			$	23,575			0	%
	1,669				849						Long-term performance based compensation			2,853				2,174
	81				-						Consulting expense: commercial growth initiatives			81				19
	-				-						Acquisition costs			48				-
	69				-						Expense on step-up basis of acquired lease			136				-
	-				35						Severance costs and Restructuring costs			60				388
$	13,296			$	11,060			20	%		Adjusted EBITDA		$	26,726			$	26,156			2	%
	9.0	%			10.1	%					Adjusted EBITDA as a percentage of sales			9.4	%			11.3	%
Three Months Ended December 31											(Unaudited; In thousands)		Six Months Ended December 31
											Free Cash Flow
	2024				2023			% Change						2024				2023			% Change
$	9,891			$	9,276			7	%		Cash flow from operations		$	21,737			$	19,868			9	%
	(1,066	)			(1,956	)					Capital expenditures			(1,825	)			(3,349	)
$	8,825			$	7,320			21	%		Free cash flow		$	19,912			$	16,519			21	%

Net Debt to Adjusted EBITDA Ratio		December 31				June 30
(amounts in thousands)			2024				2024
Current maturity of debt		$	3,571			$	3,571
Long-term debt			34,615				50,658
Total debt		$	38,186			$	54,229
Less: cash			(4,712	)			(4,110	)
Net debt		$	33,474			$	50,119
Adjusted EBITDA - trailing twelve months		$	52,006			$	51,436
Net debt to adjusted EBITDA ratio			0.6				1.0

Organic compared to Inorganic Sales		Q2 2024			Q2 2025			% Variance
Lighting Segment		$	64,796		$	58,210		-10	%
Display Solutions Segment
- Comparable Display Solutions Sales		$	44,209		$	66,133		50	%
- EMI		$	-		$	23,391
Total Display Solutions Sales		$	44,209		$	89,524		103	%
Total net sales		$	109,005		$	147,734		36	%
Less:
EMI			-			23,391
Total organic net sales		$	109,005		$	124,343		14	%

Reconciliation of net income to adjusted net income - Six quarter view
	FY 2024
				Diluted EPS						Diluted EPS
	Q1 2024						Q2 2024
Net income reported	$	8,028		$	0.27		$	5,906		$	0.20
Consulting expense: commercial growth initiatives		13			-			-			-
Amortization expense of acquired intangible assets		870			0.03			885			0.03
Severance costs/Restructuring costs		256			0.01			34			-
Long-term performance based compensation		974			0.03			625			0.02
Tax rate difference between reported and adjusted net income		(531	)		(0.02	)		(201	)		(0.01	)
Net income adjusted	$	9,610		$	0.32		$	7,249		$	0.24
Adjusted net income %		7.8	%					6.7	%

	FY 2024
				Diluted EPS					Diluted EPS
	Q3 2024					Q4 2024
Net income reported	$	5,375		$	0.18	$	5,668		$	0.19
Acquisition costs		-			-		722			0.02
Amortization expense of acquired intangible assets		888			0.03		1,028			0.04
Severance costs/Restructuring costs		101			-		5			-
Long-term performance based compensation		767			0.03		906			0.03
Tax rate difference between reported and adjusted net income		-					(25	)		-
Net income adjusted	$	7,131		$	0.24	$	8,304		$	0.28
Adjusted net income %		6.6	%				6.4	%

	FY 2025
				Diluted EPS						Diluted EPS
	Q1 2025						Q2 2025
Net income reported	$	6,682		$	0.22		$	5,647		$	0.18
Acquisition costs		36			-			-			-
Consulting expense: commercial growth initiatives		-			-			62			-
Amortization expense of acquired intangible assets		1,042			0.03			1,090			0.04
Lease expense on the step-up basis of acquired leases		50			-			53			-
Severance costs/Restructuring costs		45			-			-			-
Long-term performance based compensation		881			0.03			1,294			0.04
Tax rate difference between reported and adjusted net income		(755	)		(0.02	)		(150	)		-
Net income adjusted	$	7,981		$	0.26		$	7,996		$	0.26
Adjusted net income %		5.8	%					5.4	%

 

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INVESTOR & MEDIA CONTACT

Noel Ryan, IRC

720.778.2415

LYTS@vallumadvisors.com

Source: LSI Industries Inc.