GlobeNewswire Inc | Aug 19, 2021 06:30AM EDT

August 19, 2021

CINCINNATI, Aug. 19, 2021 (GLOBE NEWSWIRE) -- LSI Industries Inc. (NASDAQ: LYTS, or the Company), a leading U.S. based manufacturer of commercial lighting and display solutions, today announced results for the fourth quarter and full-year fiscal 2021.

FOURTH QUARTER 2021 SUMMARY

-- Net Sales increased 53% versus Prior Year, organic sales increased 39% -- Completed acquisition of JSI Store Fixtures on May 21, 2021 -- Net Income of $0.2 million; Adjusted Net Income of $3.3 million -- Diluted EPS of $0.01, including $0.08 of acquisition related expense -- Adjusted EPS $0.12 versus $0.07 prior year

FISCAL YEAR 2021 SUMMARY

-- Net Sales increased 3% from prior year to $316 million -- Net Income of $5.9 million; Adjusted Net Income of $9.8 million -- Diluted EPS of $0.21; Adjusted EPS of $0.36 versus $0.15 prior year -- EBITDA of $16.1 million; Adjusted EBITDA of $21.1 million -- Free Cash Flow $25.8 million

LSI generated significant year-over-year growth in net sales and profitability during the fiscal fourth quarter, capitalizing on both improved demand across both its lighting and display markets while continuing to expand its presence within higher growth, higher-margin verticals. Fourth quarter and fiscal 2021 results include approximately five weeks of financial contributions from the JSI Store Fixtures (JSI) acquisition completed on May 21, 2021.

The Company reported net income of $0.2 million, or $0.01 per diluted share in the fourth quarter 2021, versus net income of $1.5 million, or $0.06 per diluted share, in the prior year period. Fourth quarter 2021 results include $2.9 million or $0.08 per share of JSI acquisition related expenses.

LSI reported adjusted net income of $3.3 million, or $0.12 per diluted share, compared to $1.8 million or $0.07 per diluted share in the prior period. A reconciliation of GAAP and non-GAAP financial results is included in this press release.

For the twelve months ended June 30, 2021, LSI reported net income of $5.9 million, or $0.21 per diluted share versus net income of $9.6 million or $0.36 per share in the prior year. Prior year results include an $8.5 million pre-tax gain on sale of facilities. On an adjusted basis, the Company reported net income of $9.8 million, or $0.36 per diluted share in fiscal 2021, versus $4.1 million, or $0.15 per share in fiscal 2020. LSI generated Adjusted EBITDA of $21.1 million in fiscal 2021, versus $15.6 million in the prior year.

As of June 30, 2021, the Company had $68 million in long-term debt, including borrowings related to the purchase of JSI, resulting in a ratio of net debt to pro forma trailing twelve month Adjusted EBITDA of 2.5x. At the end of the fourth quarter, LSI had $32 million available under its $100 million credit facility due fiscal 2026.

The Company declared a regular cash dividend of $0.05 per share payable on September 7, 2021, to shareholders of record on August 30, 2021.

MANAGEMENT COMMENTARY

James A. Clark, President and Chief Executive Officer commented, We have continued to expand our presence within growing, high-value lighting and display markets, while positioning the business to capitalize on early indications of a broader sector recovery. Our collective focus on launching new products, customer engagement, technological innovation and operational discipline contributed to strong year-over year growth in adjusted EBITDA and profitability during both the fourth quarter and full-year fiscal 2021, creating significant momentum as we look ahead to fiscal 2022.

The LSI team delivered 39% year-over-year organic sales growth in the fourth quarter, and 22% sequential growth from the third quarter, a tribute to the diligent execution efforts of our more than 1,100 employees. We successfully navigated various supply chain disruptions during the quarter, while continuing to leverage our North American design and manufacturing capabilities to service our diverse customer base.

In May, we completed the acquisition of JSI, a transaction that serves to materially increase our total addressable market opportunity within the growing grocery and convenience store verticals, while driving meaningful revenue synergies across our combined product portfolio. This business combination creates a leading integrated provider of lighting and display 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," continued Clark.

Both the LSI and JSI teams have demonstrated professionalism and leadership throughout the business combination, resulting in a seamless integration process. We are exceptionally pleased with the high-caliber of our new colleagues, their customer-centric culture, and their commitment to product innovation, all of which aligns with how we do business. In the short period since closing on the transaction, our integration team has identified incremental revenue synergies, together with immediate cost savings not previously identified.

We have renamed the 'Graphics' segment to 'Display Solutions' to reflect the comprehensive offering the business combination provides. Beginning with these fourth quarter results, we will publish under the 'Lighting' and 'Display Solutions' segments, noted Clark.

Fiscal fourth quarter sales for our Display Solutions segment increased 93% versus prior year, reflecting organic growth of 54% with five weeks of JSI sales contributing the balance. Organic growth was led by our digital signage offering, which continues to benefit from our large QSR program that remains in-process. The program was approximately 40% complete at the end of June. Separately, we have continued to increase our book of business with a fast-growing grocery chain in the Southwest, where we are providing a broad range of display products. On balance, development activity on potential new programs across multiple verticals and customers remains robust. Display Solutions generated strong results in the period, with operating income of $3.7 million, or 70% above the prior-year period.

The Lighting segment generated sales growth of 30% in the fiscal fourth quarter, with significant increases in both project business and sales through distributor stock. Distributor stock sales increased more than 50% on a year-on-year basis, driven by increased current demand, and confidence by distributors to increase stock levels which were significantly reduced during the pandemic. Project quotation activity also remains very strong, particularly with respect to our recently expanded High Bay product range, as well as the recently introduced Opulence architectural area lighting family of products, which will complement our current Mirada commercial line. Operating income for the Lighting segment increased significantly versus the prior year period, driven by increased sales volume and gross margin rate expansion.

We are well positioned entering fiscal 2022, noted Clark. The cross-selling opportunities between LSI and JSI are significant, creating a pathway for multi-year growth. These acquisition-related synergies, together with organic investments in sales, marketing, and new products, positions us to create substantial value for our customers, employees and investors, concluded Clark.

CONFERENCE CALL

A conference call will be held today at 11:00 A.M. ET to review the Companys 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: 877-407-4018Conference ID: 13721147 Call Replay: 844-512-2921Replay Passcode: 13721147

Areplay of the conference call will be available between August 19, 2021 and September 2, 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 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 Companys 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. LSIs 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.

Financial Highlights

Three Months Ended Twelve Months Ended June 30 (Unaudited) June 30 (In 2021 2020 % thousands, 2021 2020 % Change except per Change share data) $ 97,015 $ 63,470 53 % Net Sales $ 315,612 $ 305,558 3 % Operating 1,046 1,846 -43 % Income as 8,030 13,076 -39 % reported 2,938 - Acquisition 2,938 - costs Stock 660 105 compensation 1,977 599 expense 20 273 Severance 41 346 costs Restructuring (17 ) 329 and plant (14 ) (7,038 ) closure costs (gains) Operating $ 4,647 $ 2,553 82 % Income as $ 12,972 $ 6,983 86 % adjusted $ 198 $ 1,513 -87 % Net Income as $ 5,868 $ 9,592 -39 % reported $ 3,315 $ 1,825 82 % Net Income as $ 9,763 $ 4,089 139 % adjusted Earnings per $ 0.01 $ 0.06 -83 % share $ 0.21 $ 0.36 -42 % (diluted) as reported Earnings per $ 0.12 $ 0.07 71 % share $ 0.36 $ 0.15 140 % (diluted) as adjusted

(amounts in thousands) June 30, June 30, 2021 2020Working Capital $ 54,113 $ 51,209Total Assets $ 286,821 $ 172,263Long-Term Debt $ 68,178 $ -Other Long-Term Liabilities $ 16,578 $ 11,914Shareholders' Equity $ 131,170 $ 125,700

Three Months Ended June 30, 2021 Results

Net sales for the three months ended June 30, 2021 were $97.0 million, up 53% from the three months ended June 30, 2020 net sales of $63.5 million. Lighting Segment net sales of $52.7 million increased 30% and Display Solutions Segment net sales of $44.3 million increased 93% from last years fourth quarter net sales. Net income for the three months ended June 30, 2021 was $0.2 million, or $0.01 per share, compared to $1.5 million or $0.06 per share for the three months ended June 30, 2020. Earnings per share represents diluted earnings per share.

Twelve Months Ended June 30, 2021 Results

Net sales for the twelve months ended June 30, 2021 were $315.6 million, up 3% from the twelve months ended June 30, 2020 net sales of $305.6 million. Lighting Segment net sales of $189.0 million decreased 8% and Display Solutions Segment net sales of $126.6 million increased 27% from last years net sales. Net income for the twelve months ended June 30, 2021 was $5.9 million, or $0.21 per share, compared to $9.6 million or $0.36 per share for the twelve months ended June 30, 2020. Earnings per share represents diluted earnings per share.

Balance Sheet

The balance sheet at June 30, 2021 included current assets of $125.0 million, current liabilities of $70.9 million and working capital of $54.1 million, which includes cash of $2.3 million. The current ratio was 1.8 to 1. The balance sheet also included shareholders equity of $131.2 million and long-term debt of $68.2 million. It is the Companys 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 third quarter of fiscal 2021, payable September 7, 2021 to shareholders of record as of the close of business on August 30, 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 and twelve months ended June 30, 2021 and 2020. Operating income, net income and earnings per share, which exclude the impact of acquisition costs, stock compensation expense, severance costs and restructuring and plant closure costs (gains), 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 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 and Organic Sales Growth.

Three Months Ended Twelve Months EndedJune 30 June 30 (In thousands, 2021 2020 except per 2021 2020 share data) Diluted Diluted Reconciliation Diluted Diluted EPS EPS of net income EPS EPS to adjusted net income$ 198 $ 0.01 $ 1,513 $ 0.06 Net Income as $ 5,868 $ 0.21 $ 9,592 $ 0.36 reported 2,161 0.08 - - Acquisition 2,161 0.08 - - costs Stock 485 0.02 74 - compensation 1,497 0.05 447 0.02 expense 15 - 192 0.01 Severance 32 - 252 0.01 costs Restructuring (13 ) - 231 0.01 and plant (11 ) - (5,557 ) (0.21 ) closure costs (gains) Tax impact due to the change in the 468 0.02 (185 ) (0.01 ) estimated 216 0.01 (645 ) (0.02 ) annual tax rate used for GAAP reporting purposes $ 3,315 $ 0.12 $ 1,825 $ 0.07 Net Income $ 9,763 $ 0.36 $ 4,089 $ 0.15 adjustedNOTE: All adjustments are net of tax except for the adjustment of the taximpact from the change in the estimated annual tax rate

Three Months Ended (Unaudited; Twelve Months Ended June 30 In thousands) June 30 EBITDA and 2021 2020 % Adjusted 2021 2020 % Change EBITDA Change Operating $ 1,046 $ 1,846 -43 % Income as $ 8,030 $ 13,076 -39 % reported Depreciation 2,171 2,023 and 8,114 8,654 Amortization $ 3,217 $ 3,869 -17 % EBITDA $ 16,144 $ 21,730 -26 % 2,938 - Acquisition 2,938 - costs Stock 660 105 compensation 1,977 599 expense 20 273 Severance 41 346 costs Restructuring (17 ) 329 and plant (14 ) (7,038 ) closure costs (gains) $ 6,818 $ 4,576 49 % Adjusted $ 21,086 $ 15,637 35 % EBITDA Three Months Ended (Unaudited; Twelve Months Ended June 30 In thousands) June 30 Free Cash 2021 2020 % Flow 2021 2020 % Change Change Cash Flow $ 3,375 $ 12,613 -73 % From $ 28,009 $ 29,710 -6 % Operations Proceeds from - 118 Sale of Fixed - 20,150 Assets (716 ) (1,201 ) Capital (2,233 ) (2,739 ) Expenditures $ 2,659 $ 11,530 -77 % Free Cash $ 25,776 $ 47,121 -45 % Flow

Reconciliationof net sales to organic netsales Q4 2020 Q4 2021 % Q3 2021 Q4 2021 % Variance Variance Lighting $ 40,559 $ 52,729 30.0 % $ 45,740 $ 52,729 15.3 %SegmentDisplaySolutions $ 22,911 $ 44,286 93.3 % $ 26,464 $ 44,286 67.3 %SegmentTotal Net $ 63,470 $ 97,015 52.9 % $ 72,204 $ 97,015 34.4 %SalesLess: JSI - 9,084 - 9,084 Total Organic $ 63,470 $ 87,931 38.5 % $ 72,204 $ 87,931 21.8 %Net Sales Q4 2020 Q4 2021 % Variance DisplaySolutions $ 22,911 $ 44,286 93.3 % SegmentLess: JSI - 9,084 Total DisplaySolutionsSegment $ 22,911 $ 35,202 53.6 % Organic NetSales

Condensed Consolidated Statement of Operations

Three Months Ended Twelve Months EndedJune 30 (Unaudited) June 30 (In thousands, 2021 2020 except per 2021 2020 share data)$ 97,015 $ 63,470 Net Sales $ 315,612 $ 305,558 74,118 47,386 Cost of 236,637 230,944 Products Sold 10 93 Severance 15 104 Costs (17 ) 222 Restructuring (14 ) 980 (Gains) Costs 22,904 15,769 Gross Profit 78,974 73,530 Selling and 21,848 13,738 Administrative 70,918 68,783 Costs 10 180 Severance 26 242 Costs - 5 Restructuring - (8,571 ) Costs (Gains) 1,046 1,846 Operating 8,030 13,076 Income 44 (120 ) Other Expense (153 ) 513 (Income) 96 78 Interest 267 870 Expense, net 906 1,888 Income Before 7,916 11,693 Taxes 708 375 Income Tax 2,048 2,101 $ 198 $ 1,513 Net Income $ 5,868 $ 9,592 Weighted Average Common Shares Outstanding 26,846 26,355 Basic 26,692 26,274 27,719 26,649 Diluted 27,440 26,473 Earnings Per Share$ 0.01 $ 0.06 Basic $ 0.22 $ 0.37 $ 0.01 $ 0.06 Diluted $ 0.21 $ 0.36

Condensed Balance Sheet

(amounts in thousands) June 30, June 30, 2021 2020Current Assets $ 125,008 $ 85,858Property, Plant and Equipment, net 30,552 26,535Other Assets 131,261 59,870Total Assets $ 286,821 $ 172,263 Current Liabilities $ 70,895 $ 34,649Long-Term Debt 68,178 -Other Long-Term Liabilities 16,578 11,914Shareholders' Equity 131,170 125,700 $ 286,821 $ 172,263

INVESTOR & MEDIA CONTACT

Noel Ryan, IRC720.778.2415LYTS@vallumadvisors.com