8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) January 26, 2023

LSI INDUSTRIES INC.

(Exact name of Registrant as Specified in its Charter)

Ohio	01-13375	31-0888951
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

10000 Alliance Road, Cincinnati, Ohio	45242
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code (513) 793-3200

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	LYTS	NASDAQ

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (17CFR §240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Item 2.02 Results of Operation and Financial Condition.

On January 26, 2023, LSI Industries Inc. (“LSI” or the “Company”) issued a press release announcing operating results for the second fiscal quarter ending December 31, 2022. A copy of the press release is furnished with this Form 8-K as Exhibit 99.1 and is incorporated by reference herein.

Item7.01.Regulation FD Disclosure.

On January 26, 2023, LSI is hosting a conference call for the benefit of its investors to discuss the results set forth in the press release described in Item 2.02 above. A copy of the presentation, which is available at www.lsicorp.com, related to this conference call is attached as Exhibit 99.2 to this report and is incorporated by reference herein.

LSI’s presentation discloses certain financial results both in accordance with generally accepted accounting principles (“GAAP”) and on a non-GAAP basis with adjustments for certain items. LSI’s management believes that presentation of these non-GAAP financial measures and their related reconciliations are useful to investors because the non-GAAP financial measures provide investors with a basis for comparing the results to financial results from prior periods.

Information in the presentation contains forward-looking statements regarding future events and performance of LSI. All such forward-looking statements are based largely on LSI’s experience and perception of current conditions, trends, expected future developments and other factors, and on management’s expectations, and are subject to risks and uncertainties that could cause actual results to differ materially, including, but not limited to, those factors described in the presentation and in LSI’s filings with the Securities and Exchange Commission. LSI disclaims any intention or obligation to update or revise any financial or other projections or other forward-looking statements, whether because of new information, future events or otherwise.

The information in each of Item 2.02 and Item 7.01 of this Form 8-K and in the press release attached as Exhibit 99.1 and the presentation attached as Exhibit 99.2 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in each of Item 2.02 and Item 7.01 of this Form 8-K and each of Exhibit 99.1 and Exhibit 99.2 shall not be incorporated by reference in any filing (whether made before or after the date hereof) or any other document under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in any such filing, except as shall be expressly set forth by specific reference in any such filing or document.

Item9.01 Financial Statements and Exhibits.

(d) Exhibits

ExhibitNo.	Description
99.1	LSI Press Release dated January 26, 2023 reporting financial results
99.2	Conference Call Presentation
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

LSI INDUSTRIES INC.

BY:/s/ James E. Galeese

James E. Galeese

Executive Vice President, Chief

Financial Officer

Dated: January 26, 2023

EX-99.1

Exhibit 99.1

LSI INDUSTRIES REPORTS FISCAL 2023 SECOND QUARTER RESULTS

AND DECLARES QUARTERLY CASH DIVIDEND

CINCINNATI, OH. January 26, 2023 – LSI Industries Inc. (NASDAQ: LYTS, “LSI” or the “Company”) a leading U.S. based manufacturer of display solutions and indoor/outdoor lighting, today reported fiscal second quarter financial results for the three months ended December 31, 2022.

FISCAL 2023 SECOND QUARTER

● Net Sales +16% y/y to $128.8 million

● Net Income +107% y/y to $6.4 million; Adjusted Net Income of $7.6 million

● Diluted EPS of $0.22; Adjusted EPS of $0.26

● EBITDA of $11.5 million; Adjusted EBITDA $13.0 million or 10.1%/sales

● Free Cash Flow of $8.9 million

● Net debt declines to $60.1 million, or 1.3x TTM Adjusted EBITDA

LSI delivered strong year-over-year increases in both sales and profitability in the fiscal second quarter, driven by broad-based commercial demand across both the lighting and display solutions businesses, continued price discipline and a more profitable sales mix.

The Company reported net sales of $128.8 million in the fiscal second quarter, an increase of 16% versus the prior-year period. LSI reported net income of $6.4 million, or $0.22 per diluted share in the fiscal second quarter, versus $3.1 million, or $0.11 per diluted share in the prior-year period. Adjusted net income for the fiscal second quarter was $7.6 million, or $0.26 per diluted share, compared to $4.2 million, or $0.15 per diluted share last year.

LSI reported Adjusted EBITDA of $13.0 million for the fiscal second quarter, or an increase of 54% versus the prior-year period. The company reported an Adjusted EBITDA margin rate of 10.1%, an increase of 250 bps versus the prior year period. The improved margin rate was driven by a combination of volume growth, improved price realization, disciplined cost management and a more favorable sales mix. A reconciliation of GAAP to non-GAAP financial results is included in the attached press release schedules.

LSI generated free cash flow of $8.9 million in the fiscal second quarter, increasing free cash flow for the first half of fiscal 2023 to $19.0 million. Net debt decreased from $77.1 million entering the fiscal year to $60.1 million at the end of the fiscal second quarter, reducing the ratio of net debt to trailing twelve-month adjusted EBITDA to 1.3x, from 2.2x last fiscal year.  

The Company declared a regular cash dividend of $0.05 per share payable on February 14, 2023, to shareholders of record on February 6, 2023.

LSI Industries Second Quarter 2023 Results

January 26, 2023

MANAGEMENT COMMENTARY

“LSI delivered strong second quarter results, highlighted by substantial year-over-year growth in sales and profitability, along with improvements to other key operating metrics,” stated James A. Clark, President, and Chief Executive Officer of LSI. “Our performance reflects balanced sales and margin performance attained across our two reportable segments, while continuing to successfully navigate a demanding operating environment.

“During the second quarter, our Lighting and Display Solutions segments each achieved double-digit sales growth and margin expansion, versus the prior year period,” continued Clark. “Total Adjusted EBITDA increased 54% year-over-year in the quarter, while Adjusted EBITDA margin exceeded 10% for another consecutive quarter. We continue to grow our share-of-wallet within key verticals markets, building upon a growing base of loyal customers, while demonstrating the value of our one-stop, integrated lighting, display and merchandising solutions within underserved and emerging growth applications.”

“As expected, our business continues to generate strong cash flow from operations,” continued Clark. “With trailing twelve-month free cash flow conversion approaching 70%, we’ve continued to direct capital toward debt reduction, consistent with our current allocation priorities. During the last year, we’ve reduced net debt by more than $25 million and ended the second quarter with net leverage at 1.3x. We anticipate continued, positive free cash flow generation as we enter the second half of our fiscal year, positioning us to further reduce debt levels while increasing availability under our existing credit facility.

“In the second quarter, we successfully completed a $12+ million rebranding project involving approximately 200 refueling sites in Puerto Rico for a major oil company. Most of these sites were rebranded during the second quarter, as we successfully delivered on the demanding scheduling requirements of the customer. Following the successful completion of this project, which was our first ever project in Puerto Rico, we continue to evaluate additional early-stage international market opportunities that could represent exciting new entry points for our business.

“Also in the second quarter, one of the nation’s largest grocery chains awarded LSI a major display case expansion and replacement project, committing to purchase more than $12 million of refrigerated and non-refrigerated displays during the next nine months. The award follows the successful completion of an earlier project with the same customer, which represented a similar number of stores and revenue profile. Our grocery customers continue to invest in programs to enhance the customer shopping experience and generate incremental sales,” noted Clark. “LSI is well positioned to capitalize on these opportunities, partnering with a number of grocery chains on their specific branding and technological requirements.

“The Lighting segment continued its strong momentum during the second quarter, generating year-over-year sales growth of 17%, while operating earnings improved 45% versus prior year. Sales growth was broad-based, with significant increases in all vertical market applications. Our new product development activity the last two years prioritized improving and expanding our indoor product range for select vertical markets which, when combined with our widely accepted outdoor portfolio, creates a powerful, value-added solution set. Indoor sales continue to accelerate, achieving second quarter sales growth of 32%. Our enhanced offering has increased the number of orders containing both indoor and outdoor products, serving to increase our average order size.

Page 2 of 9

LSI Industries Second Quarter 2023 Results

January 26, 2023

“Display Solutions segment sales increased 15% versus the prior year second quarter, reflecting volume growth across a number of our key verticals. Our order fulfillment and service execution for these made-to-order custom specification projects have been excellent, meeting or exceeding demanding delivery requirements despite ongoing delays and changes to customer installation schedules, permitting and component availability. The Display Solutions segment gross margin improved 620 bps year-over-year, given favorable program pricing and improved sales mix. Operating income margin improved to 12.8% compared to 7.4% in the fiscal second quarter last year.

Clark concluded, “We delivered a solid second quarter and we exit the fiscal first half with continued momentum across our business. Demand levels in key vertical markets remain favorable, our backlog is healthy, customers increasingly recognize the value of our solutions, manufacturing and supply chain execution remain on-point, and positive cash flow and debt reduction are expected to continue. Looking ahead, despite ongoing pressures on the general economy, we remain optimistic about the second half of the fiscal year and the long-term prospects of our markets. We’ll continue our emphasis on balancing short-term execution with long-term investments to build the business and achieve profitable growth in the years ahead.”

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 software.

Details of the conference call are as follows:

Call Dial-In: 1-877-407-4018         

Conference ID:                  13735537

Call Replay: 1-844-512-2921         

Replay Passcode: 13735537

A replay of the conference call will be available between January 26, 2023, and February 9, 2023.  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 lighting applications creates opportunities 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 approximately 1,400 people at 11 manufacturing plants in the U.S. and Canada. Additional information about LSI is available at www.lsicorp.com.

Page 3 of 9

LSI Industries Second Quarter 2023 Results

January 26, 2023

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. 

INVESTOR & MEDIA CONTACT

Noel Ryan, IRC

720.778.2415

LYTS@vallumadvisors.com

Page 4 of 9

LSI Industries Second Quarter 2023 Results

January 26, 2023

Three Months Ended December 31								Six Months Ended December 31
							(Unaudited)
2022		2021		% Change			(In thousands, except per share data)	2022		2021		% Change
$	128,804	$	111,143		16	%	Net sales	$	255,873	$	217,540		18	%
	9,038		4,422		104	%	Operating income as reported		19,059		8,866		115	%
	1,002		1,130		-11	%	Stock compensation expense		1,553		1,686		-8	%
	-		340		NM		Acquisition costs		-		340		NM
	33		-		NM		Severance costs		46		-		NM
	486		-		NM		Consulting expense: Commercial Growth Initiatives		789		-		NM
$	10,559	$	5,892		79	%	Operating income as adjusted	$	21,447	$	10,892		97	%
$	6,417	$	3,105		107	%	Net income as reported	$	12,678	$	6,238		103	%
$	7,627	$	4,241		80	%	Net income as adjusted	$	14,704	$	7,781		89	%
$	0.22	$	0.11		100	%	Earnings per share (diluted) as reported	$	0.44	$	0.22		100	%
$	0.26	$	0.15		73	%	Earnings per share (diluted) as adjusted	$	0.51	$	0.28		82	%

	(amounts in thousands)
	December 31,		June 30,
	2022		2022
Working capital	$	84,891	$	84,298
Total assets	$	296,283	$	311,080
Long-term debt	$	59,250	$	76,025
Other long-term liabilities	$	11,583	$	12,667
Shareholders' equity	$	161,316	$	147,769

Three Months Ended December 31, 2022, Results

Net sales for the three months ended December 31, 2022, were $128.8 million, up 16% from the three months ended December 31, 2021, net sales of $111.1 million. Lighting Segment net sales of $66.8 million increased 17% and Display Solutions Segment net sales of $62.0 million increased 15% from last year’s second quarter net sales. Net income for the three months ended December 31, 2022, was $6.4 million, or $0.22 per share, compared to $3.1 million or $0.11 per share for the three months ended December 31, 2021. Earnings per share represents diluted earnings per share.

Six Months Ended December 31, 2022, Results

Net sales for the six months ended December 31, 2022, were $255.9 million, up 18% from the six months ended December 31, 2021, net sales of $217.5 million. Lighting Segment net sales of $134.4 million increased 24% and Display Solutions Segment net sales of $121.5 million increased 11% from last year’s net sales. Net income for the six months ended December 31, 2022 was $12.7 million, or $0.44 per share, compared to $6.2 million or $0.22 per share for the six months ended December 31, 2021. Earnings per share represents diluted earnings per share.

Page 5 of 9

LSI Industries Second Quarter 2023 Results

January 26, 2023

Balance Sheet

The balance sheet at December 31, 2022, included current assets of $149.0 million, current liabilities of $64.1 million and working capital of $84.9 million, which includes cash of $2.8 million. The current ratio was 2.3 to 1. The balance sheet also included shareholders’ equity of $161.3 million and long-term debt of $59.3 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 2023, payable February 14, 2023, to shareholders of record as of the close of business on February 6, 2023. 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, 2022, and 2021. Operating income, net income, and earnings per share, which exclude the impact of stock compensation expense, commercial growth opportunity expense, and severance 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), and Free Cash Flow. 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 Net Debt to Adjusted EBITDA.

Page 6 of 9

LSI Industries Second Quarter 2023 Results

January 26, 2023

Three Months Ended									Six Months Ended
December 31									December 31
2022				2021				(In thousands, except per share data)	2022				2021
		Diluted EPS				Diluted EPS		Reconciliation of net income to adjusted net income			Diluted EPS				Diluted EPS
$	6,417	$	0.22	$	3,105	$	0.11	Net income as reported	$	12,678	$	0.44	$	6,238	$	0.22
	785		0.03		867		0.03	Stock compensation expense		1,341		0.05		1,274		0.05
	-		-		269		0.01	Acquisition costs		-		-		269		0.01
	26		-		-		-	Severance costs		38		-		-		-
	399		0.01		-		-	Consulting expense: Commercial Growth Initiatives		647		0.02		-		-
$	7,627	$	0.26	$	4,241	$	0.15	Net income adjusted	$	14,704	$	0.51	$	7,781	$	0.28

Three Months Ended December 31							(Unaudited; In thousands)	Six Months Ended December 31
2022		2021		% Change			EBITDA and Adjusted EBITDA	2022		2021		% Change
$	9,038	$	4,422		104	%	Operating Income as reported	$	19,059	$	8,866		115	%
	2,419		2,538				Depreciation and amortization		4,840		5,101
$	11,457	$	6,960		65	%	EBITDA	$	23,899	$	13,967		71	%
	1,002		1,130				Stock compensation expense		1,553		1,686
	-		340				Acquisition costs		-		340
	33		-				Severance costs		46		-
	486		-				Consulting expense: Commercial Growth Initiatives		789		-
$	12,978	$	8,430		54	%	Adjusted EBITDA	$	26,287	$	15,993		64	%

Three Months Ended December 31									(Unaudited; In thousands)	Six Months Ended December 31
2022			2021			% Change			Free Cash Flow	2022			2021			% Change
$	9,481		$	(8,654	)	n/m			Cash flow from operations	$	20,064		$	(16,543	)		NM
	(561	)		(448	)		25	%	Capital expenditures		(994	)		(745	)		33	%
$	8,920		$	(9,102	)	n/m			Free cash flow	$	19,070		$	(17,288	)		NM

	(amounts in thousands)
Net Debt to Adjusted EBITDA Ratio	December 31,			June 30,
(amounts in thousands)	2022			2022
Current Maturity of Debt	$	3,571		$	3,571
Long-Term Debt		59,250			76,025
Total Debt	$	62,821		$	79,596
Less: Cash		(2,765	)		(2,462	)
Net Debt	$	60,056		$	77,134
Adjusted EBITDA - Trailing Twelve Months	$	45,387		$	35,091
Net Debt to Adjusted EBITDA Ratio		1.3			2.2

Page 7 of 9

LSI Industries Second Quarter 2023 Results

January 26, 2023

Three Months Ended December 31					(Unaudited)	Six Months Ended December 31
2022			2021		(In thousands, except per share data)	2022		2021
$	128,804		$	111,143	Net sales	$	255,873	$	217,540
	94,646			85,695	Cost of products sold		186,964		167,582
	18			-	Severance costs		31		-
	34,140			25,448	Gross profit		68,878		49,958
	24,600			20,687	Selling and administrative costs		49,015		40,752
	15			-	Severance costs		15		-
	486			-	Consulting expense: Commercial Growth Initiatives		789		-
	-			339	Acquisition costs		-		340
	9,039			4,422	Operating Income		19,059		8,866
	(54	)		9	Other expense (income)		158		88
	1,258			529	Interest expense, net		2,046		763
	7,835			3,884	Income before taxes		16,855		8,015
	1,418			779	Income tax		4,177		1,777
$	6,417		$	3,105	Net income	$	12,678	$	6,238
			Weighted Average Common Shares Outstanding
	28,078			27,292	Basic		27,874		27,144
	29,204			28,067	Diluted		28,766		27,895
					Earnings Per Share
$	0.23		$	0.11	Basic	$	0.45	$	0.23
$	0.22		$	0.11	Diluted	$	0.44	$	0.22

Page 8 of 9

LSI Industries Second Quarter 2023 Results

January 26, 2023

	(amounts in thousands)
	December 31,		June 30,
	2021		2022
Current assets	$	149,025	$	158,917
Property, plant and equipment, net		25,786		27,158
Other assets		121,472		125,005
Total assets	$	296,283	$	311,080
Current maturities of long-term debt	$	3,571	$	3,571
Other current liabilities		60,563		71,048
Long-term debt		59,250		76,025
Other long-term liabilities		11,583		12,667
Shareholders' equity		161,316		147,769
	$	296,283	$	311,080

Page 9 of 9

EX-99.2

Exhibit 99.2

XML

Document And Entity Information	Jan. 26, 2023
Document Information [Line Items]
Entity, Registrant Name	LSI INDUSTRIES INC.
Document, Type	8-K
Document, Period End Date	Jan. 26, 2023
Entity, Incorporation, State or Country Code	OH
Entity, File Number	01-13375
Entity, Tax Identification Number	31-0888951
Entity, Address, Address Line One	10000 Alliance Road
Entity, Address, City or Town	Cincinnati
Entity, Address, State or Province	OH
Entity, Address, Postal Zip Code	45242
City Area Code	513
Local Phone Number	793-3200
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock
Trading Symbol	LYTS
Security Exchange Name	NASDAQ
Entity, Emerging Growth Company	false
Amendment Flag	false
Entity, Central Index Key	0000763532