Note 3 - Segment Reporting Information

9 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE 3 - SEGMENT REPORTING INFORMATION

The accounting guidance on Segment Reporting establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in financial statements. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (the Company’s Chief Executive Officer or “CODM”) in making decisions on how to allocate resources and assess performance. The Company’s two operating segments are Lighting and Display Solutions (formerly known as the Graphics Segment), with one executive team under the organizational structure reporting directly to the CODM with responsibilities for managing each segment. Corporate and Eliminations, which captures the Company’s corporate administrative activities, is also reported in the segment information.

The Lighting Segment includes non-residential outdoor and indoor lighting fixtures utilizing LED light sources that have been fabricated and assembled for the Company’s markets, primarily the refueling and convenience store markets, parking lot and garage markets, quick-service restaurant market, retail and grocery store markets, the automotive market, the warehouse market, and the sports court and field market. The Company also services lighting product customers through the commercial and industrial project, stock and flow, and renovation channels. In addition to the manufacture and sale of lighting fixtures, the Company offers a variety of lighting controls to complement its lighting fixtures which include sensors, photocontrols, dimmers, motion detection and Bluetooth systems. The Lighting Segment also includes the design, engineering and manufacturing of electronic circuit boards, assemblies and sub-assemblies which are sold directly to customers.

The Display Solutions Segment manufactures, sells and installs exterior and interior visual image and display elements, including printed graphics, structural graphics, digital signage, menu board systems, display fixtures, refrigerated displays, and custom display elements. These products are used in visual image programs in several markets including the refueling and convenience store markets, parking lot and garage markets, quick-service restaurant market, retail and grocery store markets, the automotive market, the warehouse market, and the sports court and field market. The Display Solutions Segment also provides a variety of project management services to complement our display elements, such as installation management, site surveys, permitting, and content management which are offered to our customers to support our digital signage.

The Company’s corporate administration activities are reported in the Corporate and Eliminations line item. These activities primarily include intercompany profit in inventory eliminations, expense related to certain corporate officers and support staff, the Company’s internal audit staff, expense related to the Company’s Board of Directors, equity compensation expense for various equity awards granted to corporate administration employees, certain consulting expenses, investor relations activities, and a portion of the Company’s legal, auditing, and professional fee expenses. Corporate identifiable assets primarily consist of cash, invested cash (if any), refundable income taxes (if any), and deferred income taxes.

There were no customers or customer programs representing a concentration of 10% or more of the Company’s consolidated net sales in the three and nine months ended March 31, 2023, or March 31, 2022. There was no concentration of accounts receivable at March 31, 2023. One customer in the Display Solutions Segment represents $8.5 million or 10.9% of the Company’s accounts receivable at June 30, 2022.

Summarized financial information for the Company’s operating segments is provided for the indicated periods and as of March 31, 2023, and March 31, 2022:

	Three Months Ended				Nine Months Ended
(In thousands)	March 31				March 31
	2023		2022		2023		2022
Net Sales:
Lighting Segment	$	66,707	$	57,126	$	201,074	$	165,662
Display Solutions Segment		50,763		52,985		172,269		161,989
	$	117,470	$	110,111	$	373,343	$	327,651

Operating Income (Loss):
Lighting Segment	$	6,529		$	4,959		$	22,441		$	13,921
Display Solutions Segment		5,501			4,556			19,759			12,142
Corporate and Eliminations		(4,298	)		(4,354	)		(15,409	)		(12,036	)
	$	7,732		$	5,161		$	26,791		$	14,027

Capital Expenditures:
Lighting Segment	$	402	$	272	$	725		$	624
Display Solutions Segment		338		185		1,038			660
Corporate and Eliminations		19		74		(9	)		(8	)
	$	759	$	531	$	1,754		$	1,276

Depreciation and Amortization:
Lighting Segment	$	1,344	$	1,450	$	4,113	$	4,361
Display Solutions Segment		1,044		1,021		2,993		3,068
Corporate and Eliminations		67		60		189		203
	$	2,455	$	2,531	$	7,295	$	7,632

	March 31, 2023		June 30, 2022
Identifiable Assets:
Lighting Segment	$	142,656	$	152,431
Display Solutions Segment		140,666		152,302
Corporate and Eliminations		7,697		6,347
	$	291,019	$	311,080

The segment net sales reported above represent sales to external customers. Segment operating income, which is used in management’s evaluation of segment performance, represents net sales less all operating expenses. Identifiable assets are those assets used by each segment in its operations.

The Company records a 10% mark-up on intersegment revenues. Any intersegment profit in inventory is eliminated in consolidation. Intersegment revenues were eliminated in consolidation as follows:

Inter-segment sales
	Three Months Ended				Nine Months Ended
(In thousands)	March 31				March 31
	2023		2022		2023		2022
Lighting Segment inter-segment net sales	$	5,101	$	5,683	$	16,312	$	27,406
Display Solutions Segment inter-segment net sales	$	175	$	54	$	139	$	289

The Company’s operations are located solely within North America. As a result, the geographic distribution of the Company’s net sales and long-lived assets originate within North America.