LSI Industries Inc. · NASDAQ:LYTS
LSI Industries — Investor Presentation (May 2024)
41 slides from LSI Industries's investor presentation, May 2024
Slide 1: Investor Presentation May 2024
NASDAQ: LYTS INVESTOR PRESENTATION MAY 2024
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 – FY2023 Revenue $497M
COMPANY OVERVIEW – FY2023 REVENUE $497M • Leading vertically integrated commercial indoor/outdoor lighting and display solutions company – strong foundation with Serving Our entrenched position in growing vertical markets Marketplace from 11 Manufacturing • Multi-year focus on migration to higher-va
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% $30.0 4.1%
Slide 11: Key Messages
KEY MESSAGES Focused Execution on Earnings Quality Display Solutions Segment Update Solid execution F3Q24 sales (8%) below PY, while adjusted net Demand strength within refueling, c-store and QSR delivering sustained income +14% above PY, given continued price offset by fewer new project releases in
Slide 12: Consolidated Financial Results
CONSOLIDATED FINANCIAL RESULTS Total Net Sales ($M) Operating Income ($M) Continue to advance 8.2% 7.5% high-value vertical $117.5 $8.8 $8.8 market strategy $108.2 $7.7 $7.7 Lighting applications demand remains stable; Display Solutions mixed, with refueling/c-store F3Q23 F3Q24 remaining strong, and
Slide 13: Disciplined Working Capital Management
DISCIPLINED WORKING CAPITAL MANAGEMENT Total Working Capital ($M) Working capital increased sequentially, driven by increased $79.8 $73.3 $76.2 $75.8 $77.2 cash balance. Non-cash working capital has declined 4% vs. PY We continue to align inventory Margin MarginRate Rate levels with current demand 3
Slide 14: Strong Cash Generation, Balance Sheet Discipline
STRONG CASH GENERATION, BALANCE SHEET DISCIPLINE Free Cash Flow ($M)(1) During last 12 months, free cash $46.4 $45.4 flow generation of ~$43 million, $38.8 $43.8 $43.3 representing 84% free cash flow conversion (as % of TTM Adjusted EBITDA) $15.6 $11.7 $11.2 Margin Rate Margin Rate $9.2 $7.3 During
Slide 15: Fast Forward: Roadmap to FY28
FAST FORWARD Roadmap to FY28
Slide 16: Measuring Our Progress [FY20-FY23]
MEASURING OUR PROGRESS [FY20-FY23] In 2020, LSI launched The Path Forward, a value-creation framework designed to accelerate revenue growth, margin realization, and profitability – Achieved goals two years early Adj. EBITDA ($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: Acquisition of EMI Industries
LSI Industries Acquisition of EMI Industries
Slide 23: Transaction Overview
TRANSACTION OVERVIEW Transaction Highlights Strategic Highlights LSI has acquired EMI Industries (“EMI”) for $50 million cash on The bolt-on acquisition of EMI is a “strategic sequel” April 18, 2024 to the platform acquisition of JSI store fixtures in 2021 Transaction funded through availability on
Slide 24: Leading Retail Display Solutions Company
LEADING RETAIL DISPLAY SOLUTIONS COMPANY EMI’s unique value proposition EMI operates five U.S. based facilities that house design, EMI provides vertically merges product design, engineering and manufacturing activities integrated design, engineering and manufacturing capabilities with installation a
Slide 25: Highly Complementary Solutions Offering
HIGHLY COMPLEMENTARY SOLUTIONS OFFERING Product Offering C-Store Grocery Restaurants Solutions Offering Concept Phase Design & Engineering Millwork Products Metal Products Refrigeration EMI produces custom millwork with EMI designs and engineers metal-based EMI is experienced in both custom and Cust
Slide 26: Expanding Solution Set Within Target Verticals
EXPANDING SOULTION SET WITHIN TARGET VERTICALS Through Acquisition, LSI Continues to Enhance the Value Proposition to the Customer Grocery Case Study C-Store Case Study LSI LSI has strong presence has a strong presence within the store in the exterior interior, led by grocery refueling station and d
Slide 27: Significant Multi-Year Synergy Potential
SIGNIFICANT MULTI-YEAR SYNERGY POTENTIAL Facilities 11 5 16 Employees 1525 320 1845 Annual Revenue(1) $473.6 million $87.0 million $560.6 million Annual Adj. EBITDA(1) $51.5 million $5.5 million $57.0 million TTM Adj. EBITDA Margin(1) 10.9% 6.3% 10.2% (1) Reflects LSI TTM performance through 2QFY24
Slide 28: Vertical Applications
& uy EO VERTICAL ee | APPLICATIONS
Slide 29: 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 30: 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 ©2024 LSI INDUSTRIES 30
Slide 31: 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 ©2024 LSI INDUSTRIES 31
Slide 32: 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 ©2024 LSI INDUSTRI
Slide 33: Investment Conclusion
@ INVESTMENT CONCLUSION
Slide 34: 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 35: Appendix
APPENDIX
Slide 36: Statement on Non-GAAP Financial Measures
STATEMENT ON NON-GAAP FINANCIAL MEASURES This presentation includes adjustments to GAAP gross margin, operating income, net income, and earnings per share for the rolling five quarters ending March 31, 2024. Gross Margin, operating income, net income, and earnings per share, which exclude the impact
Slide 37: Non-GAAP Reconciliation
Non-GAAP RECONCILIATION LSI Industries Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Lighting Segment Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Net Sales [a] 117,470 123,636 123,441 109,005 108,186 Net Sales [c] 66,707 71,377 67,641 64,796 64,881 Gross Margin 32,204 35,864 36,589 31,536 31,210 Gross Margin
Slide 38: Non-GAAP Reconciliation
Non-GAAP RECONCILIATION LSI Industries Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Lighting Segment Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Net Sales [a] 117,470 123,636 123,441 109,005 108,186 Net Sales [a] 66,707 71,377 67,641 64,796 64,881 Operating Income 7,732 10,237 11,028 7,819 7,660 Operating In
Slide 39: Non-GAAP Reconciliation
Non-GAAP RECONCILIATION Diluted Diluted Diluted Diluted Diluted LSI Industries Q3 2023 EPS Q4 2023 EPS Q1 2024 EPS Q2 2024 EPS Q3 2024 EPS Net Income Reported $ 4,669 $ 0.16 $ 8,415 $ 0.28 $ 8,028 $ 0.27 $ 5,906 $ 0.20 $ 5,375 $ 0.18 Consulting Expense: Commercial Growth Initiatives 59 - 13 - - - 76
Slide 40: Non-GAAP Reconciliation
Non-GAAP RECONCILIATION Working Capital Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Total consolidated current assets $ 145,823 $ 149,876 $ 154,192 $ 141,393 $ 143,485 Total consolidated current liabilities $ 66,037 $ 76,562 $ 77,973 $ 65,554 $ 66,261 Consolidated working capital $ 79,786 $ 73,314 $ 76,
Slide 41: For Additional Questions, Please Contact
For Additional Questions, Please Contact 720.778.2415 Thank You, LSI Investor Relations