LSI Industries Inc. · NASDAQ:LYTS
LSI Industries — Investor Presentation (November 2023)
37 slides from LSI Industries's investor presentation, November 2023
Slide 1: Investor Presentation November 2023
NASDAQ: LYTS INVESTOR PRESENTATION NOVEMBER 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% $30.0 4.1%
Slide 11: Key Messages
KEY MESSAGES Focused Strategy Execution Display Solutions Segment Update Strong F1Q24 results F1Q24 sales 3% below PY due to Display Display Solutions segment declined 6% y/y, as Solutions project timing; adjusted EBITDA +13%; industry events in the Grocery vertical disrupting highlighted by adjuste
Slide 12: Consolidated Financial Results
CONSOLIDATED FINANCIAL RESULTS Total Net Sales ($M) Operating Income ($M) Strong focus on quality 10.3% of earnings, led by 8.6% operating and EBITDA $127.1 $123.4 $12.7 $10.9 $11.0 margin expansion $10.0 +23% y/y growth in adjusted net income +13% y/y growth in adjusted F1Q23 F1Q24 EBITDA F1Q23 F1Q
Slide 13: Disciplined Working Capital Management
DISCIPLINED WORKING CAPITAL MANAGEMENT Total Working Capital ($M) Working capital declined 13% $88.0 $87.4 vs. PY, driven by Y/Y and sequential decline in product $82.3 inventories $76.2 DIO reduced 9 days versus PY $73.3 Margin MarginRate Rate 30.6% 22.1% Project inventory should remain at current
Slide 14: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES Free Cash Flow ($M)(1) During last 12 months, free cash flow generation of ~$45 million, representing 85% $15.6 free cash flow conversion (as $11.7 % of TTM Adjusted EBITDA) $10.1 $9.2 $8.9 Margin MarginRate Rate During last 12 months, 30.6% 22.1% Reduced net debt outst
Slide 15: Fast Forward: Roadmap to FY28
FAST FORWARD Roadmap to FY28
Slide 16: Measuring Our Progress [FY20-FY23]
MEASURING OUR PROGRESS [FY20-FY23] In 2020, LSI launched The Path Forward, a value-creation framework designed to accelerate revenue growth, margin realization, and profitability – Achieved goals two years early Adj. EBITDA ($M) Adj. EBITDA Margin (%) $500 $497 60 12% 10.4% 10.0% 50 10% 40 $50 $52 8
Slide 17: Measuring Our Progress [FY20-FY23]
MEASURING OUR PROGRESS [FY20-FY23] Established a High “Say-Do”, Delivered Continuous Improvement on Strategic Plan The Path Forward delivered on its initial targets ahead of plan, driven by organizational improvements across operations, manufacturing and sales/marketing ✓ Implemented vertical market
Slide 18: Measuring Our Progress [FY20-FY23]
MEASURING OUR PROGRESS [FY20-FY23] Revenue Growth ($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 $15 2.0% 2020* M&A Organic 202
Slide 19: Introducing Our Fast Forward Initiative
INTRODUCING OUR FAST FORWARD INITIATIVE Current Focus Forward Focus ✓ Applications Outside and Inside the Building ✓ Vertical and Horizontal Application Specific New ✓ Entrenched Presence in Attractive End-Market Verticals Products Accelerating Growing Well Above Industry Average ✓ Complementary Bol
Slide 20: Fast Forward Expand End-Market Focus
FAST FORWARD EXPAND END-MARKET FOCUS Current Focus Forward Focus ✓ Expansion in Services ✓ Adjacent Opportunities Tied to Our Vertical Market Strategy ✓ Safety & Security ✓ Leverage Trends in Energy, Infrastructure and Evolving Consumer Habits ✓ Apply Technological Developments ✓ Identify and Grow N
Slide 21: Fast Forward Financial Targets [FY23-FY28]
FAST FORWARD FINANCIAL TARGETS [FY23-FY28] Revenue Growth ($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 22: 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 23: Vertical Applications
& uy EO VERTICAL ee | OAPPLICATIONS
Slide 24: 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 25: 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 25
Slide 26: 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 26
Slide 27: 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 28: Investment Conclusion
@ INVESTMENT CONCLUSION
Slide 29: 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 30: Appendix
APPENDIX
Slide 31: 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 three months ended September 30, 2023, and 2022. Gross Margin, operating income, net income, and earnings per share, which exclude the impact of long-t
Slide 32: Non-GAAP Reconciliation
Non-GAAP RECONCILIATION LSI Industries Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Net Sales [a] 127,069 128,804 117,470 123,636 123,441 Operating Income 10,021 9,038 7,732 10,237 11,028 Consulting Expense: Commercial Growth Initiatives 303 486 75 - 19 Severance costs/Restructruing costs 12 33 20 353 Lo
Slide 33: Non-GAAP Reconciliation
Non-GAAP RECONCILIATION Lighting Segment Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Net Sales [a] 67,534 66,833 66,707 71,377 67,641 Operating Income 9,157 6,755 6,529 9,192 8,753 Severance costs/Restructruing costs 13 18 - 20 - Long-Term Performance Based Compensation 42 113 97 119 92 Adjusted Operati
Slide 34: Non-GAAP Reconciliation
Non-GAAP RECONCILIATION Diluted Diluted Diluted Diluted Diluted LSI Industries Q1 2023 EPS Q2 2023 EPS Q3 2023 EPS Q4 2023 EPS Q1 2024 EPS Net Income Reported $ 6,262 $ 0.22 $ 6,417 $ 0.22 $ 4,669 $ 0.16 $ 8,415 $ 0.28 $ 8,028 $ 0.27 Consulting Expense: Commercial Growth Initiatives 226 0.01 399 0.0
Slide 35: Non-GAAP Reconciliation
Non-GAAP RECONCILIATION Lighting Segment Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Net Sales [c] 67,534 66,833 66,707 71,377 67,641 Gross Margin 22,280 20,457 20,278 23,746 23,280 Severance costs/Restructruing costs 13 18 - - - Adjusted Gross Margin [d] 22,293 20,475 20,278 23,746 23,280 Adjusted Gros
Slide 36: Working Capital and Inventory
WORKING CAPITAL AND INVENTORY Free Cash Flow Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Cash Flow from Operations $ 10,583 $ 9,481 $ 12,486 $ 17,038 $ 10,592 Less: Capital Expenditures $ (434) $ (561) $ (759) $ (1,454) $ (1,393) Free Cash Flow $ 10,149 $ 8,920 $ 11,727 $ 15,584 $ 9,199 Net Debt Outstan
Slide 37: For Additional Questions, Please Contact
For Additional Questions, Please Contact 720.778.2415 Thank You, LSI Investor Relations
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