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

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 EndedDecember 31

Six Months EndedDecember 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

 

DilutedEPS

DilutedEPS

DilutedEPS

DilutedEPS

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 adjustednet 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 EndedDecember 31

(Unaudited; In thousands)

 

Six Months EndedDecember 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 EndedDecember 31

(Unaudited; In thousands)

 

Six Months EndedDecember 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

DilutedEPS

DilutedEPS

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

DilutedEPS

DilutedEPS

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

DilutedEPS

DilutedEPS

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

%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250123811047/en/

INVESTOR & MEDIA CONTACT Noel Ryan, IRC 720.778.2415 [e-mail]