LSI Industries Inc. · NASDAQ:LYTS
LSI Industries — Investor Presentation (September 2023)
40 slides from LSI Industries's investor presentation, September 2023
Slide 1: Investor Presentation September 2023
NASDAQ: LYTS INVESTOR PRESENTATION SEPTEMBER 2023
Slide 2: Disclaimer
DISCLAIMER This presentation contains “forward-looking statements”—that is, statements related to future events within the meaning of the Private Securities Litigation Reform Act of 1995. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In t
Slide 3: Company Overview
COMPANY OVERVIEW
Slide 4: Company Overview – $497M Revenue
COMPANY OVERVIEW – $497M REVENUE • Leading vertically integrated commercial indoor/outdoor lighting and display solutions company – strong foundation with entrenched position in growing vertical markets Serving Our Marketplace from • Multi-year focus on migration to higher-value solutions culminated
Slide 5: Uniquely Positioned in Target Markets
UNIQUELY POSITIONED IN TARGET MARKETS • Conglomerates • Vertical / Application Solutions Driven • Standard / High Volume • End-User Driven Specifications • “Telephone Book” Portfolio • Competency with Modification and Customization • Convert Focused Specialist to Standard Volume • Strong Engineering
Slide 6: Vertical Market Focus
VERTICAL MARKET FOCUS Vertical Markets Automotive Refueling & C-Store QSR Retail & Grocery Parking Sports Complex Warehouse Market Driven Portfolio Lighting Solutions Display Solutions Services Indoor Outdoor Controls • Printed Graphics • Creative Services • Structural Graphics • Site Surveys • High
Slide 7: Innovation
INNOVATION Customer / Market Driven Opportunities Strong Vertical Alignment • 40+ New or Improved Products Launched Annually • 100+ New or Improved Products Over the Last 3 Years International PCT Application No. PCT/US2022/031165 • 30+% of Sales Come from New Products • Robust Product Development P
Slide 8: Professional Services
PROFESSIONAL SERVICES Program Management • Program Managed LSI Digital Menu Boards at More than 6,500 Locations for One of the Largest Fast-Food • Surveys Chains in North America • Take-Offs / Specifications • $100 Million, Three-Year Award Through Calendar Year-End 2022. Positioned LSI for $30 Mill
Slide 9: Strong Customer Engagement
STRONG CUSTOMER ENGAGEMENT • We provide integrated lighting and display solutions to a growing base of long-tenured customer brands • Our marketing, technical and program management expertise provide customers with a one-stop solution that is unique in the markets we serve • Our customer contracts r
Slide 10: Sustained Multi-Year Growth
SUSTAINED MULTI-YEAR GROWTH • Focused growth in +17.6% +81.7% higher margin 3-Year CAGR 3-Year CAGR targeted verticals, Adj. Operating Income ($MM) Adj. Operating Margin (%) improved operational $497.0 $50.0 8.4% 10.0% execution and $455.1 $40.0 8.0% disciplined capital $305.6 $315.6 5.5% $30.0 4.1%
Slide 11: Key Messages
KEY MESSAGES Strong commercial and operational execution Lighting; sales growth continues; Long-term Strong F4Q23 results F4Q23 sales 3% below PY due to Display market demand fundamentals remain intact Solutions project timing, while TTM sales +9% ; Lighting Segment sales increased 5% y/y, highlight
Slide 12: Consolidated Financial Results
CONSOLIDATED FINANCIAL RESULTS Total Net Sales ($M) Operating Income ($M) 8.4% Delivered record $497.0 fiscal fourth quarter $455.1 5.5% $37.0 $42.0 and full-year 2023 9.5% $25.0 results 6.4% $21.2 $127.5 $123.6 $11.7 $8.1 $10.2 $7.2 Strong full-year growth in net sales, operating income, adjusted E
Slide 13: Lighting Segment Update
LIGHTING SEGMENT UPDATE Lighting Segment Sales ($M) Lighting Segment Adj. Gross Margin ($M) 5% y/y sales growth on $272.5 31.9% challenged PY comparison – $233.4 30.0% $86.8 leveraging growing position in targeted vertical markets $70.1 33.3% 31.1% Strong demand within Margin Rate $67.8 $71.4 Parkin
Slide 14: Display Solutions Segment Update
DISPLAY SOLUTIONS SEGMENT UPDATE Display Solutions Segment Sales ($M) Display Solutions Segment Adj. Gross Margin ($M) 12% y/y sales decline due to 22.3% project timing in F4Q23, but $221.7 $224.5 increased 13% for the full- 17.6% $50.2 year 2023, excluding $100 23.2% $39.1 million digital menu boar
Slide 15: Disciplined Working Capital Management
DISCIPLINED WORKING CAPITAL MANAGEMENT Total Working Capital ($M) Reduced total working $90.5 capital in F4Q23 by 10% y/y $84.9 $84.3 and 5% sequentially $79.8 $75.5 Reduced total inventory by more than $10 million in Margin MarginRate Rate fiscal 2023, supporting a 30.6% 22.1% reduction in working
Slide 16: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES Free Cash Flow ($M)(1) During last 12 months, free cash flow generation of ~$46 $15.6 million; $8 y/y improvement in F4Q23 free cash flow $11.7 $10.2 During last 12 months, $8.9 $8.0 Margin MarginRate Rate Reduced net debt 30.6% 22.1% outstanding by $44 million; net lev
Slide 17: Fast Forward: Five-Year Roadmap to FY28
FAST FORWARD Out Five-Year Roadmap to FY28
Slide 18: Measuring Our Progress [FY20-FY23]
MEASURING OUR PROGRESS [FY20-FY23] In 2020, LSI launched The Path Forward, a value-creation framework designed to accelerate revenue growth, margin realization, and profitability – Achieved goals two years early Adj. EBITDA ($M) Adj. EBITDA Margin (%) $500 $497 60 12% 10.4% 10.0% 50 10% 40 $50 $52 8
Slide 19: Measuring Our Progress [FY20-FY23]
MEASURING OUR PROGRESS [FY20-FY23] Established a High “Say-Do”, Delivered Continuous Improvement on Strategic Plan The Path Forward delivered on its initial targets ahead of plan, driven by organizational improvements across operations, manufacturing and sales/marketing ✓ Implemented vertical market
Slide 20: Measuring Our Progress [FY20-FY23]
MEASURING OUR PROGRESS [FY20-FY23] Revenue Growth ($M) Adjusted EBITDA ($M) / Margin (%) Adjusted Diluted EPS ($) $100 $497 $497 ($M) Adjusted EBITDA ($MM) Adjusted EBITDA Margin (%) $0.99 $91 $306 $60 10.4% 12.0% $50 10.0% $40 8.0% $30 5.1% $52 6.0% $20 4.0% $0.15 $10 $15 2.0% 2020* M&A Organic 202
Slide 21: Introducing Our Fast Forward Initiative
INTRODUCING OUR FAST FORWARD INITIATIVE Current Focus Forward Focus ✓ Applications Outside and Inside the Building ✓ Vertical and Horizontal Application Specific New ✓ Entrenched Presence in Attractive End-Market Verticals Products Accelerating Growing Well Above Industry Average ✓ Complementary Bol
Slide 22: Fast Forward Expand End-Market Focus
FAST FORWARD EXPAND END-MARKET FOCUS Current Focus Forward Focus ✓ Expansion in Services ✓ Adjacent Opportunities Tied to Our Vertical Market Strategy ✓ Safety & Security ✓ Leverage Trends in Energy, Infrastructure and Evolving Consumer Habits ✓ Apply Technological Developments ✓ Identify and Grow N
Slide 23: Fast Forward Financial Targets [FY23-FY28]
FAST FORWARD FINANCIAL TARGETS [FY23-FY28] Revenue Growth ($M) Adjusted EBITDA ($M) / Margin (%) $160 $800 Adjusted EBITDA ($MM) Adjusted EBITDA Margin (%) $143 $120 12.5% 14.0% $497 $100 12.0% 10.0% $80 10.4% 8.0% $60 $100 6.0% $40 $52 4.0% $20 2.0% $0 0.0% 2023 M&A Organic 2028 FY23 (A) FY28 Growt
Slide 24: Fast Forward Strategic Priorities
FAST FORWARD STRATEGIC PRIORITIES Enterprise Growth Partner of Choice Business Excellence Capital Allocation Expand Our Vertical Markets and Build & Leverage Partners and Focus on Total Value Creation Balanced & Disciplined Approach Solutions Offering Ecosystems to Driving Shareholder Value ✓ Deeper
Slide 25: Vertical Applications
& uy EO VERTICAL ee | APPLICATIONS
Slide 26: Refueling & Convenience Store
REFUELING & CONVENIENCE STORE CANOPY FASCIA LED ACM FASCIA PRINTED 3D CANOPY LOGOS UNDER CANOPY ILLUMINATION GRAPHICS LED ILLUMINATION LED FIXTURES INDOOR LIGHTING DIMENSIONAL SIGNAGE & GRAPHICS DIGITAL MENUS GRAB-N-GO REFRIGERATION FIXTURES INDOOR GRAPHICS / FIXTURES AREA, SOFFIT, & WALL MOUNTED LI
Slide 27: Grocery
GROCERY AREA LIGHTING DIMENSIONAL & POLES SIGNAGE & GRAPHICS PEDESTRIAN & WALL MOUNTED LIGHTING TASK & DECORATIVE LIGHTING PARKING LOT INDOOR LIGHTING FRESH REFRIGERATION DIMENSIONAL FIXTURES SIGNAGE & GRAPHICS INDOOR DISPLAY FIXTURES INDOOR GRAPHICS / LIGHTING ©2023 LSI INDUSTRIES 27
Slide 28: Automotive
AUTOMOTIVE HIGH BAY LIGHTING WALL MOUNTED & TASK LIGHTING FAÇADE FIXTURES OUTDOOR VEHICLE DELIVERY FIXTURES SERVICE BAY ARCHITECTURAL & TROFFER LIGHTING GRAPHIC & AREA LIGHTS / POLES DIGITAL SIGNAGE SOLUTIONS OUTDOOR SHOWROOM ©2023 LSI INDUSTRIES 28
Slide 29: Quick Serve Restaurants (QSR)
QUICK SERVE RESTAURANTS (QSR) DRIVE THRU LIGHTING AREA LIGHTS / POLES DIGITAL SIGNAGE WALL MOUNTED & DIGITAL FAÇADE FIXTURES MENU SERVICE DRIVE THRU / MENU BOARDS DIGITAL SIGNAGE & MENU SERVICE INDOOR LIGHTING DIMENSIONAL SIGNAGE & GRAPHICS OUTDOOR LIGHTING INDOOR LIGHTING / MENUS ©2023 LSI INDUSTRI
Slide 30: Investment Conclusion
@ INVESTMENT CONCLUSION
Slide 31: Environmental, Social & Governance
ENVIRONMENTAL, SOCIAL & GOVERNANCE Environmental Factors Social Factors Governance Factors LSI takes its commitment to the As America strives to become more A key component of our approach to environment very seriously. As demand energy-efficient, our products allow ESG is our Code of Business Ethic
Slide 32: Investment Summary
INVESTMENT SUMMARY Enterprise Growth Partner of Choice Business Excellence Capital Allocation Expand Our Vertical Markets and Build & Leverage Partners and Focus on Total Value Creation Balanced & Disciplined Approach Solutions Offering Ecosystems to Driving Shareholder Value ✓ Deeper Penetration in
Slide 33: Appendix
APPENDIX
Slide 34: Statement on Non-GAAP Financial Measures
STATEMENT ON NON-GAAP FINANCIAL MEASURES This presentation includes adjustments to GAAP operating income, net income and earnings per share for the twelve months ended June 30, 2022 and 2021. Operating income, net income and earnings per share, which exclude the impact of stock compensation expense,
Slide 35: Non-GAAP Reconciliation
Non-GAAP RECONCILIATION LSI Industries Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Net Sales [a] 127,470 127,069 128,804 117,470 123,636 Operating Income 7,175 10,021 9,038 7,732 10,237 Acquisition costs 112 - - - - Consulting Expense: Commercial Growth Initiatives - 303 486 75 - Severance costs/Restruc
Slide 36: Non-GAAP Reconciliation
Non-GAAP RECONCILIATION Lighting Segment Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Net Sales [a] 67,786 67,534 66,833 66,707 71,377 Operating Income 7,022 9,157 6,755 6,529 9,192 Severance costs/Restructruing costs 3 13 18 - 20 Stock compensation expense 90 42 113 97 119 Adjusted Operating Income 7,11
Slide 37: Non-GAAP Reconciliation
Non-GAAP RECONCILIATION Three Months Ended Twelve Months Ended June 30 June 30 2023 2022 (In thousands, except per share data) 2023 2022 Diluted Diluted Diluted Diluted EPS EPS Reconciliation of net income to adjusted net income EPS EPS $ 8,415 $ 0.28 $ 5,176 $ 0.18 Net income as reported $ 25,762 $
Slide 38: Non-GAAP Reconciliation
Non-GAAP RECONCILIATION Full Year LSI Industries Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY 22 FY 23 Net Sales [a] 127,470 127,069 128,804 117,470 123,636 455,121 496,979 Gross Margin 32,458 34,738 34,139 32,204 35,864 109,209 136,945 Severance costs - 13 18 - - - 31 Adjusted Gross Margin [b] 32,458
Slide 39: Working Capital and Inventory
WORKING CAPITAL AND INVENTORY Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Total consolidated current assets $ 158,917 $ 170,407 $ 149,025 $ 145,823 $ 149,876 Total consolidated current liabilities $ 74,619 $ 79,935 $ 64,109 $ 66,036 $ 74,333 Consolidated working capital $ 84,298 $ 90,472 $ 84,916 $ 79,7
Slide 40: For Additional Questions, Please Contact
For Additional Questions, Please Contact 720.778.2415 Thank You, LSI Investor Relations
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