Fiscal Fourth Quarter 2023 Results Conference Call August 17, 2023 Such statements, whether expressed or implied, are based upon current expectations of LSI and speak only as of the date made. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from those expressed or implied. Forward-looking statements include statements that address activiti ...

Financial Data and Key Metrics Changes - The company reported fourth quarter earnings per share of $0.28, with adjusted EPS at $0.30, compared to $0.18 and $0.21 for the prior year quarter, reflecting improved profitability and a lower effective tax rate [22] - Full year sales increased to $497 million, representing a 9% year-over-year growth, while adjusted net income increased 61% to $29 million, and adjusted earnings per share increased 55% to $0.99 per share, marking the highest full year EPS in over 20 years [46] - The adjusted EBITDA for the full year increased to $52 million, with the adjusted EBITDA margin rate expanding 270 basis points to 10.4% [46] Business Line Data and Key Metrics Changes - Display Solutions sales for the full year increased by 1%, but increased by 13% when excluding a large digital menu board order, indicating ongoing strength in grocery, c-store, and QSR market verticals [25] - Lighting sales increased by 5% in Q4, marking the ninth consecutive quarter of growth, with full year lighting sales increasing by 17% [47] - The gross margin rate for lighting improved to 33% in Q4, while the full year margin rate improved to 32%, 190 basis points above last year [47] Market Data and Key Metrics Changes - The company entered fiscal '24 with a project quotation level steady at a high level, and Q4 bookings were favorable with a book-to-bill ratio above 1 [24] - There is a noted slowing in large projects, but small and medium project activity remains healthy, with lengthening quote-to-order conversion periods being observed [24] - The company continues to see strong inquiry levels for branding and image initiatives, particularly in the refueling c-store and grocery space [25] Company Strategy and Development Direction - The company aims to reach $800 million in sales and nearly $100 million in EBITDA performance by 2028, with a balanced approach to growth through organic activities and M&A [14][16] - The strategic focus is on high potential vertical markets such as grocery, c-store, warehousing, manufacturing, automotive, and sports courts, with differentiated goods and services designed for these markets [16] - The introduction of more than 20 new products is planned for 2024, including a next-generation environmentally friendly refrigerated display solution [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage and seek out continued productivity and cost opportunities while managing price, margin, and cash flow [20] - The company noted that while there are external pressures affecting timing, the overall inquiry levels and project activity remain healthy [39] - Management highlighted that the macroeconomic environment is stable, but there are extended timelines for project execution due to external factors such as financing and labor issues [79] Other Important Information - The company reduced its net debt to about $35 million, lowering the ratio of net debt to trailing 12-month adjusted EBITDA to 0.7x, providing balance sheet flexibility for growth initiatives [23] - A regular cash dividend of $0.05 per share was declared, payable September 5 for shareholders of record on August 28 [23] Q&A Session Summary Question: Factors influencing the second half of FY '24 being stronger than the first half - Management indicated that while they are not shielded from macroeconomic factors, their strategy focuses on vertical markets that are more resistant to economic cycles, which has proven effective over the past five years [51] Question: Update on capital allocation priorities - Management stated that there would be no material changes in capital allocation models, with a focus on organic growth and maintaining a disciplined approach to M&A opportunities [55] Question: M&A outlook and environment - Management expressed optimism about the current M&A environment, noting that they are actively looking for opportunities but remain disciplined in their approach to ensure strategic fit and cultural alignment [58] Question: Impact of lead time delays on operating profits - Management indicated that while there could be mid-single digit adjustments on a quarter-by-quarter basis due to delays, these do not significantly disrupt overall quarterly performance [89] Question: Size of the opportunity for the R-290 refrigerated display - Management emphasized the importance of earning every project and maintaining customer loyalty, noting that while the market is larger than their current share, they need to actively pursue new opportunities [93]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for LSI Industries Inc [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Presents LSI Industries Inc.'s unaudited condensed consolidated financial statements and detailed notes for Q3 and YTD fiscal 2023 [CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Details the company's net sales, gross profit, operating income, net income, and EPS for the specified periods | Metric (In thousands, except per share data) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Nine Months Ended March 31, 2023 | Nine Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Net Sales | $117,470 | $110,111 | $373,343 | $327,651 | | Gross profit | $32,204 | $26,793 | $101,082 | $76,751 | | Operating income | $7,732 | $5,161 | $26,791 | $14,027 | | Net income | $4,669 | $3,618 | $17,347 | $9,856 | | Basic EPS | $0.16 | $0.13 | $0.62 | $0.36 | | Diluted EPS | $0.16 | $0.13 | $0.60 | $0.35 | [CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) Presents net income and other comprehensive income components, such as foreign currency translation adjustments | Metric (In thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Nine Months Ended March 31, 2023 | Nine Months Ended March 31, 2022 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Net Income | $4,669 | $3,618 | $17,347 | $9,856 | | Foreign currency translation adjustment | $117 | $46 | $192 | $11 | | Comprehensive Income | $4,786 | $3,664 | $17,539 | $9,867 | [CONDENSED CONSOLIDATED BALANCE SHEETS](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Outlines the company's financial position, including assets, liabilities, and shareholders' equity at specific dates | Metric (In thousands) | March 31, 2023 | June 30, 2022 | | :-------------------------------- | :------------- | :------------ | | **ASSETS** | | | | Cash and cash equivalents | $1,350 | $2,462 | | Accounts receivable, net | $69,288 | $77,750 | | Inventories | $67,661 | $74,421 | | Total current assets | $145,822 | $158,917 | | Net property, plant and equipment | $25,264 | $27,158 | | Goodwill | $45,030 | $45,030 | | Other intangible assets, net | $64,394 | $67,964 | | Total assets | $291,019 | $311,080 | | **LIABILITIES & SHAREHOLDERS' EQUITY** | | | | Current maturities of long-term debt | $3,571 | $3,571 | | Accounts payable | $24,749 | $34,783 | | Accrued expenses | $37,717 | $36,264 | | Total current liabilities | $66,037 | $74,618 | | Long-term debt | $46,002 | $76,025 | | Total shareholders' equity | $167,743 | $147,769 | | Total liabilities & shareholders' equity | $291,019 | $311,080 | [CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20SHAREHOLDERS'%20EQUITY) Details changes in shareholders' equity, reflecting net income, dividends, and equity compensation impacts - Total shareholders' equity increased from **$147,769 thousand** at June 30, 2022, to **$167,743 thousand** at March 31, 2023, primarily driven by net income of **$17,347 thousand** and increases in common shares issued for compensation and stock option exercises, partially offset by cash dividends paid[21](index=21&type=chunk)[22](index=22&type=chunk) [CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS](index=10&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Summarizes cash flows from operating, investing, and financing activities for the reporting periods | Metric (In thousands) | Nine Months Ended March 31, 2023 | Nine Months Ended March 31, 2022 | | :----------------------------------------------------- | :------------------------------- | :------------------------------- | | Net cash flows provided by (used in) operating activities | $32,548 | $(12,668) |\n| Net cash flows (used in) investing activities | $(1,753) | $(776) |\n| Net cash flows (used in) provided by financing activities | $(31,985) | $12,402 |\n| (Decrease) in cash and cash equivalents | $(1,112) | $(1,034) |\n| Cash and cash equivalents at end of period | $1,350 | $1,248 | [NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=11&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [NOTE 1 - INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=11&type=section&id=NOTE%201%20-%20INTERIM%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Confirms the interim financial statements are unaudited and prepared in accordance with GAAP - The interim financial statements are unaudited and prepared in accordance with GAAP for interim financial information, including all normal adjustments and disclosures necessary to present fairly the Company's financial position, results of operations, and cash flows as of and for the periods ended March 31, 2023 and 2022[28](index=28&type=chunk) [NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=11&type=section&id=NOTE%202%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Outlines key accounting policies, including revenue recognition and the impact of new accounting standards - Revenue is generally recognized at the point of shipment when control transfers to the customer, except for customized products and installation services, where revenue is recognized over time using a cost-based input method due to no alternative use and a legal right to payment[30](index=30&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) Disaggregation of Revenue by Timing and Type (Three Months Ended March 31, In thousands) | Segment / Type of Revenue | 2023 (Lighting) | 2023 (Display Solutions) | 2022 (Lighting) | 2022 (Display Solutions) | | :--------------------------------------- | :-------------- | :----------------------- | :-------------- | :----------------------- | | Products and services transferred at a point in time | $57,249 | $42,378 | $49,283 | $41,231 | | Products and services transferred over time | $9,458 | $8,385 | $7,843 | $11,754 | | **Total Net Sales** | **$66,707** | **$50,763** | **$57,126** | **$52,985** | | LED lighting, digital signage, electronic circuit boards | $55,894 | $4,907 | $47,196 | $6,906 | | Poles, printed graphics, display fixtures | $9,920 | $37,019 | $9,358 | $35,536 | | Project management, installation, shipping | $893 | $8,837 | $572 | $10,543 | Disaggregation of Revenue by Timing and Type (Nine Months Ended March 31, In thousands) | Segment / Type of Revenue | 2023 (Lighting) | 2023 (Display Solutions) | 2022 (Lighting) | 2022 (Display Solutions) | | :--------------------------------------- | :-------------- | :----------------------- | :-------------- | :----------------------- | | Products and services transferred at a point in time | $173,917 | $136,894 | $144,006 | $114,099 | | Products and services transferred over time | $27,157 | $35,375 | $21,656 | $47,890 | | **Total Net Sales** | **$201,074** | **$172,269** | **$165,662** | **$161,989** | | LED lighting, digital signage, electronic circuit boards | $165,839 | $17,883 | $136,701 | $31,885 | | Poles, printed graphics, display fixtures | $32,681 | $120,173 | $27,403 | $99,965 | | Project management, installation, shipping | $2,554 | $34,213 | $1,558 | $30,139 | - The Company is evaluating the impact of ASU 2021-08 on business combinations, which requires applying ASC 606 to contract assets and liabilities acquired[37](index=37&type=chunk) [NOTE 3 - SEGMENT REPORTING INFORMATION](index=13&type=section&id=NOTE%203%20-%20SEGMENT%20REPORTING%20INFORMATION) Details financial performance and assets for the Lighting and Display Solutions operating segments - The Company operates two segments: Lighting and Display Solutions. The Lighting Segment focuses on LED lighting fixtures and controls for various markets, while the Display Solutions Segment provides visual image and display elements, including digital signage and project management services[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) Segment Financial Information (Three Months Ended March 31, In thousands) | Metric | 2023 (Lighting) | 2023 (Display Solutions) | 2022 (Lighting) | 2022 (Display Solutions) | | :-------------------- | :-------------- | :----------------------- | :-------------- | :----------------------- | | Net Sales | $66,707 | $50,763 | $57,126 | $52,985 | | Operating Income | $6,529 | $5,501 | $4,959 | $4,556 | Segment Financial Information (Nine Months Ended March 31, In thousands) | Metric | 2023 (Lighting) | 2023 (Display Solutions) | 2022 (Lighting) | 2022 (Display Solutions) | | :-------------------- | :-------------- | :----------------------- | :-------------- | :----------------------- | | Net Sales | $201,074 | $172,269 | $165,662 | $161,989 | | Operating Income | $22,441 | $19,759 | $13,921 | $12,142 | Identifiable Assets by Segment (In thousands) | Segment | March 31, 2023 | June 30, 2022 | | :---------------------- | :------------- | :------------ | | Lighting Segment | $142,656 | $152,431 | | Display Solutions Segment | $140,666 | $152,302 | | Corporate and Eliminations | $7,697 | $6,347 | | **Total Identifiable Assets** | **$291,019** | **$311,080** | [NOTE 4 - EARNINGS PER COMMON SHARE](index=15&type=section&id=NOTE%204%20-%20EARNINGS%20PER%20COMMON%20SHARE) Presents basic and diluted earnings per common share calculations for the reporting periods Earnings Per Common Share (In thousands, except per share data) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Nine Months Ended March 31, 2023 | Nine Months Ended March 31, 2022 | | :-------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Net income | $4,669 | $3,618 | $17,347 | $9,856 | | Basic EPS | $0.16 | $0.13 | $0.62 | $0.36 | | Diluted EPS | $0.16 | $0.13 | $0.60 | $0.35 | | Weighted average common shares outstanding (Basic) | 28,306 | 27,378 | 28,012 | 27,220 | | Weighted average common shares outstanding (Diluted) | 29,611 | 28,083 | 29,055 | 27,945 | [NOTE 5 – INVENTORIES, NET](index=17&type=section&id=NOTE%205%20%E2%80%93%20INVENTORIES,%20NET) Provides a breakdown of inventory components, including raw materials, work-in-progress, and finished goods Inventories, Net (In thousands) | Category | March 31, 2023 | June 30, 2022 | | :-------------- | :------------- | :------------ | | Raw materials | $49,946 | $51,637 | | Work-in-progress | $7,800 | $3,029 | | Finished goods | $9,915 | $19,755 | | **Total Inventories** | **$67,661** | **$74,421** | [NOTE 6 - ACCRUED EXPENSES](index=17&type=section&id=NOTE%206%20-%20ACCRUED%20EXPENSES) Details the various categories of accrued expenses, such as customer prepayments and compensation Accrued Expenses (In thousands) | Category | March 31, 2023 | June 30, 2022 | | :------------------------ | :------------- | :------------ | | Customer prepayments | $3,847 | $6,416 | | Compensation and benefits | $12,683 | $9,611 | | Accrued warranty | $5,127 | $4,491 | | Operating lease liabilities | $1,290 | $1,274 | | Accrued sales commissions | $5,629 | $4,783 | | Accrued freight | $3,625 | $3,680 | | Accrued FICA | $546 | $1,122 | | Finance lease liabilities | $325 | $275 | | Accrued income tax | $- | $109 | | Other accrued expenses | $4,645 | $4,503 | | **Total Accrued Expenses** | **$37,717** | **$36,264** | [NOTE 7 - GOODWILL AND OTHER INTANGIBLE ASSETS](index=18&type=section&id=NOTE%207%20-%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS) Discusses goodwill impairment testing, and provides a breakdown of other intangible assets and amortization - The Company performed its annual preliminary goodwill impairment test as of March 1, 2023, for its three reporting units (one in Lighting, two in Display Solutions), and all units passed the test with significant business enterprise values above their carrying values. The definitive test is expected in Q4 fiscal 2023 with no anticipated changes[52](index=52&type=chunk) Goodwill, Net (In thousands) | Segment | March 31, 2023 | June 30, 2022 | | :---------------------- | :------------- | :------------ | | Lighting Segment | $9,208 | $9,208 | | Display Solutions Segment | $35,822 | $35,822 | | **Goodwill, net** | **$45,030** | **$45,030** | Other Intangible Assets, Net (In thousands) | Category | March 31, 2023 (Net Amount) | June 30, 2022 (Net Amount) | | :---------------------------- | :-------------------------- | :------------------------- | | Customer relationships | $45,121 | $47,683 | | LED technology firmware, software | $5,480 | $6,368 | | Trade name (amortized) | $1,529 | $1,609 | | Trademarks and trade names (indefinite-lived) | $12,102 | $12,102 | | **Total Other Intangible Assets** | **$64,394** | **$67,964** | Expected Annual Amortization Expense (In thousands) | Year | Amount | | :---------- | :----- | | 2023 | $4,808 | | 2024 | $4,760 | | 2025 | $4,760 | | 2026 | $4,760 | | 2027 | $4,754 | | After 2027 | $32,020 | [NOTE 8 - DEBT](index=20&type=section&id=NOTE%208%20-%20DEBT) Outlines the company's long-term debt, including credit facilities and compliance with loan covenants Long-Term Debt (In thousands) | Category | March 31, 2023 | June 30, 2022 | | :------------------------ | :------------- | :------------ | | Secured line of credit | $29,930 | $57,275 | | Term loan, net | $19,643 | $22,321 | | **Total debt** | **$49,573** | **$79,596** | | Less: amounts due within one year | $3,571 | $3,571 | | **Total amounts due after one year, net** | **$46,002** | **$76,025** | - As of March 31, 2023, the Company had **$45.1 million** available for borrowing under its **$75 million** revolving line of credit, with a borrowing rate of **6.3%**. The Company is in compliance with all loan covenants[57](index=57&type=chunk)[58](index=58&type=chunk) [NOTE 9 - CASH DIVIDENDS](index=20&type=section&id=NOTE%209%20-%20CASH%20DIVIDENDS) Reports cash dividends paid and declared, including the quarterly and annual dividend rates - The Company paid cash dividends of **$4.1 million** for the nine months ended March 31, 2023, and declared a regular quarterly cash dividend of **$0.05 per share** in April 2023, indicating an annual rate of **$0.20 per share**[59](index=59&type=chunk) [NOTE 10 – EQUITY COMPENSATION](index=21&type=section&id=NOTE%2010%20%E2%80%93%20EQUITY%20COMPENSATION) Details changes to the equity compensation plan and the associated stock compensation expense - Shareholders approved an amendment to the 2019 Omnibus Award Plan, increasing authorized shares by **2,350,000**. As of March 31, 2023, **2,463,673 shares** remained reserved for issuance. Stock compensation expense was **$0.9 million** for the three months and **$2.3 million** for the nine months ended March 31, 2023[60](index=60&type=chunk)[61](index=61&type=chunk) [NOTE 11 - SUPPLEMENTAL CASH FLOW INFORMATION](index=21&type=section&id=NOTE%2011%20-%20SUPPLEMENTAL%20CASH%20FLOW%20INFORMATION) Provides additional details on cash payments for interest and income taxes, and non-cash activities Supplemental Cash Flow Information (In thousands) | Category | Nine Months Ended March 31, 2023 | Nine Months Ended March 31, 2022 | | :------------------------------------------- | :------------------------------- | :------------------------------- | | Cash Payments: Interest | $2,325 | $1,067 |\n| Cash Payments: Income taxes | $7,808 | $3,581 |\n| Non-cash investing and financing activities: Issuance of common shares as compensation | $270 | $225 |\n| Non-cash investing and financing activities: Issuance of common shares to fund deferred compensation plan | $1,530 | $3,089 |\n| Non-cash investing and financing activities: Issuance of common shares to fund ESPP plan | $97 | $- | [NOTE 12 - COMMITMENTS AND CONTINGENCIES](index=21&type=section&id=NOTE%2012%20-%20COMMITMENTS%20AND%20CONTINGENCIES) Addresses legal proceedings and other commitments, noting no material adverse effects are anticipated - The Company is involved in various legal proceedings in the normal course of business but management believes their ultimate disposition will not have a material adverse effect on financial position, results of operations, cash flows, or liquidity. No standby letters of credit were issued as of March 31, 2023[63](index=63&type=chunk)[64](index=64&type=chunk) [NOTE 13 - LEASES](index=21&type=section&id=NOTE%2013%20-%20LEASES) Describes the company's operating and finance leases, including lease terms, costs, and liabilities - The Company leases manufacturing facilities, office space, and equipment, with most being operating leases. Lease terms range from one to seven years, with some renewal options. Total lease cost for the nine months ended March 31, 2023, was **$2,650 thousand**[65](index=65&type=chunk)[69](index=69&type=chunk) Operating and Finance Lease Information (In thousands) | Category | March 31, 2023 | June 30, 2022 | | :------------------------------------- | :------------- | :------------ | | Total operating right-of-use assets | $6,770 | $8,664 | | Total operating lease liabilities | $7,405 | $9,514 | | Weighted Average remaining Lease Term (Operating) | 2.52 years | 3.05 years | | Total finance lease assets, net | $1,196 | $1,410 | | Total finance lease liabilities | $1,361 | $1,521 | | Weighted Average remaining Lease Term (Finance) | 4.06 years | 4.80 years | | Weighted Average Discount Rate | 4.86% | 4.86% | Maturities of Lease Liability (In thousands) | Year | Operating Lease Liabilities | Finance Lease Liabilities | Net Lease Commitments | | :---------- | :-------------------------- | :------------------------ | :-------------------- | | 2023 | $1,235 | $182 | $1,323 | | 2024 | $3,399 | $337 | $3,359 | | 2025 | $2,253 | $362 | $2,584 | | 2026 | $952 | $362 | $1,314 | | 2027 | $323 | $303 | $626 | | Thereafter | $4 | $- | $4 | | **Total lease payments** | **$8,166** | **$1,546** | **$9,210** | | Less: Interest | $(761) | $(185) | $(946) | | **Present Value of Lease Liabilities** | **$7,405** | **$1,361** | **$8,264** | [NOTE 14 – INCOME TAXES](index=24&type=section&id=NOTE%2014%20%E2%80%93%20INCOME%20TAXES) Explains the consolidated effective tax rate and factors influencing its changes for the periods - The consolidated effective tax rate increased to **32.6%** for the three months ended March 31, 2023 (from **22.9%** in 2022), and to **27.0%** for the nine months ended March 31, 2023 (from **22.4%** in 2022). This increase is primarily due to higher pre-tax profits in higher-taxing jurisdictions (Puerto Rico and Canada) and unfavorable discrete tax adjustments[73](index=73&type=chunk)[99](index=99&type=chunk)[113](index=113&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=25&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Analyzes the company's financial performance, liquidity, and capital resources for the reported periods [Note About Forward-Looking Statements](index=25&type=section&id=Note%20About%20Forward-Looking%20Statements) Highlights that the report contains forward-looking statements subject to risks and uncertainties - The report contains forward-looking statements, identified by words like 'believe,' 'expect,' and 'will,' which are subject to risks and uncertainties that could cause actual results to differ materially. The Company undertakes no obligation to update these statements[74](index=74&type=chunk) [Summary of Consolidated Results](index=25&type=section&id=Summary%20of%20Consolidated%20Results) Provides an overview of consolidated net sales and operating income, segmented by business unit Net Sales by Business Segment (In thousands) | Segment | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Nine Months Ended March 31, 2023 | Nine Months Ended March 31, 2022 | | :---------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Lighting Segment | $66,707 | $57,126 | $201,074 | $165,662 | | Display Solutions Segment | $50,763 | $52,985 | $172,269 | $161,989 | | **Total Net Sales** | **$117,470** | **$110,111** | **$373,343** | **$327,651** | Operating Income (Loss) by Business Segment (In thousands) | Segment | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Nine Months Ended March 31, 2023 | Nine Months Ended March 31, 2022 | | :---------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | 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) | | **Total Operating Income** | **$7,732** | **$5,161** | **$26,791** | **$14,027** | - Net sales for the three months ended March 31, 2023, increased **7% YoY** to **$117.5 million**, driven by a **17% growth** in the Lighting Segment, partially offset by a **4% decline** in the Display Solutions Segment due to timing of shipments and program transitions. For the nine months, net sales increased **14% YoY** to **$373.3 million**, with growth in both segments[78](index=78&type=chunk)[79](index=79&type=chunk) - Operating income for the three months ended March 31, 2023, increased by **$2.6 million** to **$7.7 million**, and for the nine months, it increased by **$12.8 million** to **$26.8 million**. This improvement was attributed to increased volume, a higher value sales mix, price discipline, improved program pricing, and effective cost management[80](index=80&type=chunk)[81](index=81&type=chunk) [Non-GAAP Financial Measures](index=26&type=section&id=Non-GAAP%20Financial%20Measures) Reconciles GAAP to Non-GAAP financial measures, including Adjusted Operating Income, Net Income, EBITDA, and Free Cash Flow - The Company uses Non-GAAP financial measures, including Adjusted Operating Income, Adjusted Net Income, EBITDA, Adjusted EBITDA, and Free Cash Flow, to provide greater comparability and enhanced visibility into operating performance by excluding items such as long-term performance-based compensation, severance, acquisition, and consulting costs[82](index=82&type=chunk) Reconciliation of Operating Income to Adjusted Operating Income (In thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Nine Months Ended March 31, 2023 | Nine Months Ended March 31, 2022 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Operating Income as reported | $7,732 | $5,161 | $26,791 | $14,027 | | Long-Term Performance Based Compensation | $968 | $780 | $2,521 | $2,466 | | Consulting expense: Commercial Growth Initiatives | $75 | $- | $864 | $- | | Acquisition Costs | $- | $21 | $- | $361 | | Severance costs | $- | $5 | $46 | $5 | | **Adjusted Operating Income** | **$8,775** | **$5,967** | **$30,222** | **$16,859** | Reconciliation of Net Income to Adjusted Net Income (In thousands, except per share data) | Metric | Three Months Ended March 31, 2023 (Net Income) | Three Months Ended March 31, 2023 (Diluted EPS) | Three Months Ended March 31, 2022 (Net Income) | Three Months Ended March 31, 2022 (Diluted EPS) | | :---------------------------------------- | :--------------------------------------------- | :---------------------------------------------- | :--------------------------------------------- | :---------------------------------------------- | | Net Income as reported | $4,669 | $0.16 | $3,618 | $0.13 | | Long-Term Performance Based Compensation | $769 | $0.03 | $576 | $0.02 | | Consulting expense: Commercial Growth Initiatives | $59 | $- | $- | $- | | Acquisition Costs | $- | $- | $16 | $- | | Severance costs | $- | $- | $4 | $- | | **Net Income adjusted** | **$5,497** | **$0.19** | **$4,214** | **$0.15** | | Metric | Nine Months Ended March 31, 2023 (Net Income) | Nine Months Ended March 31, 2023 (Diluted EPS) | Nine Months Ended March 31, 2022 (Net Income) | Nine Months Ended March 31, 2022 (Diluted EPS) | | :---------------------------------------- | :-------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :--------------------------------------------- | | Net Income as reported | $17,347 | $0.60 | $9,856 | $0.35 | | Long-Term Performance Based Compensation | $2,107 | $0.08 | $1,850 | $0.07 | | Consulting expense: Commercial Growth Initiatives | $708 | $0.02 | $- | $- | | Acquisition costs | $- | $- | $285 | $0.01 | | Severance costs | $38 | $- | $4 | $- | | **Net Income adjusted** | **$20,200** | **$0.70** | **$11,995** | **$0.43** | Reconciliation of Operating Income to EBITDA and Adjusted EBITDA (In thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Nine Months Ended March 31, 2023 | Nine Months Ended March 31, 2022 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Net Income as reported | $4,669 | $3,618 | $17,347 | $9,856 | | Income Tax | $2,257 | $1,074 | $6,434 | $2,851 | | Interest Expense, net | $877 | $524 | $2,924 | $1,287 | | Other expense (income) | $(71) | $(55) | $86 | $33 | | Operating Income as reported | $7,732 | $5,161 | $26,791 | $14,027 | | Depreciation and Amortization | $2,455 | $2,531 | $7,295 | $7,632 | | **EBITDA** | **$10,187** | **$7,692** | **$34,086** | **$21,659** | | Long-term performance based compensation | $968 | $780 | $2,521 | $2,466 | | Consulting Expense - Commercial Growth Initiatives | $75 | $- | $864 | $- | | Acquisition Costs | $- | $21 | $- | $361 | | Severance costs | $- | $5 | $46 | $5 | | **Adjusted EBITDA** | **$11,230** | **$8,498** | **$37,517** | **$24,491** | Reconciliation of Cash Flow from Operations to Free Cash Flow (In thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Nine Months Ended March 31, 2023 | Nine Months Ended March 31, 2022 | | :-------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Cash Flow from Operations | $12,486 | $3,875 | $32,548 | $(12,668) |\n| Capital expenditures | $(759) | $(531) | $(1,754) | $(1,276) |\n| **Free Cash Flow** | **$11,727** | **$3,344** | **$30,794** | **$(13,944)** | Net Debt to Adjusted EBITDA (In thousands) | Metric | March 31, 2023 | March 31, 2022 | | :------------------------------------ | :------------- | :------------- | | Total Debt | $49,573 | $84,958 | | Less: Cash and cash equivalents | $(1,350) | $(1,248) | | **Net Debt** | **$48,223** | **$83,710** | | Adjusted EBITDA - Trailing 12 Months | $48,117 | $31,309 | | **Net Debt to Adjusted EBITDA Ratio** | **1.0** | **2.7** | [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Compares the company's financial performance for the three and nine months ended March 31, 2023 and 2022 [THREE MONTHS ENDED MARCH 31, 2023, COMPARED TO THREE MONTHS ENDED MARCH 31, 2022](index=30&type=section&id=THREE%20MONTHS%20ENDED%20MARCH%2031,%202023,%20COMPARED%20TO%20THREE%20MONTHS%20ENDED%20MARCH%2031,%202022) Analyzes the financial performance of Lighting and Display Solutions segments for the three-month period Lighting Segment Performance (Three Months Ended March 31, In thousands) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :-------------------- | :------ | :------ | :--------- | :--------- | | Net Sales | $66,707 | $57,126 | $9,581 | 17% | | Gross Profit | $20,278 | $16,654 | $3,624 | 22% | | Operating Income | $6,529 | $4,959 | $1,570 | 32% | - Lighting Segment net sales grew **17%** due to continued growth in indoor and outdoor applications across multiple verticals, supported by new product introductions and diverse price-points. Gross profit margin improved to **30.4%** from **29.2%** due to increased sales, focus on competitive verticals, and price discipline[89](index=89&type=chunk)[90](index=90&type=chunk) Display Solutions Segment Performance (Three Months Ended March 31, In thousands) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :-------------------- | :------ | :------ | :--------- | :--------- | | Net Sales | $50,763 | $52,985 | $(2,222) | (4)% | | Gross Profit | $11,927 | $10,171 | $1,756 | 17% | | Operating Income | $5,501 | $4,556 | $945 | 21% | - Display Solutions Segment net sales decreased **4%** due to changes in shipment timing and the completion of large digital signage programs, transitioning to new ones. Despite lower sales, gross profit margin improved significantly to **23.5%** from **19.2%** due to improved program pricing and a favorable project mix[93](index=93&type=chunk)[94](index=94&type=chunk) - Consolidated net income for the three months ended March 31, 2023, was **$4.7 million**, up from **$3.6 million** in the prior year, with diluted EPS of **$0.16** compared to **$0.13**. The effective tax rate increased to **32.6%** from **22.9%** due to higher pre-tax profits in higher-taxing jurisdictions[99](index=99&type=chunk)[100](index=100&type=chunk) [NINE MONTHS ENDED MARCH 31, 2023, COMPARED TO NINE MONTHS ENDED MARCH 31, 2022](index=31&type=section&id=NINE%20MONTHS%20ENDED%20MARCH%2031,%202023,%20COMPARED%20TO%20NINE%20MONTHS%20ENDED%20MARCH%2031,%202022) Analyzes the financial performance of Lighting and Display Solutions segments for the nine-month period Lighting Segment Performance (Nine Months Ended March 31, In thousands) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :-------------------- | :------- | :------- | :--------- | :--------- | | Net Sales | $201,074 | $165,662 | $35,412 | 21% | | Gross Profit | $63,015 | $49,009 | $14,006 | 29% | | Operating Income | $22,441 | $13,921 | $8,520 | 61% | - Lighting Segment net sales increased **21%** for the nine months, driven by broad-based growth across all vertical market applications and strengthened lighting offerings. Gross profit margin improved to **31.3%** from **29.6%** due to increased sales, focus on competitive verticals, and price discipline[101](index=101&type=chunk)[102](index=102&type=chunk) Display Solutions Segment Performance (Nine Months Ended March 31, In thousands) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :-------------------- | :------- | :------- | :--------- | :--------- | | Net Sales | $172,269 | $161,989 | $10,280 | 6% | | Gross Profit | $38,061 | $27,766 | $10,295 | 37% | | Operating Income | $19,759 | $12,142 | $7,617 | 63% | - Display Solutions Segment net sales increased **6%** for the nine months, primarily due to growth in grocery and refueling/convenience-store verticals. Gross profit margin significantly improved to **22.1%** from **17.1%** due to increased sales, improved program pricing, and a favorable sales mix[105](index=105&type=chunk)[106](index=106&type=chunk) - Consolidated net income for the nine months ended March 31, 2023, was **$17.3 million**, up from **$9.9 million** in the prior year, with diluted EPS of **$0.60** compared to **$0.35**. The effective tax rate increased to **27.0%** from **22.4%** due to higher pre-tax profits in higher-taxing jurisdictions[113](index=113&type=chunk)[114](index=114&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's working capital, cash flow, debt, and available credit for future operations - Working capital decreased to **$79.8 million** at March 31, 2023, from **$84.3 million** at June 30, 2022, primarily due to decreases in net accounts receivable (**$8.5 million**) and net inventory (**$6.7 million**), partially offset by a **$10.0 million** decrease in accounts payable[116](index=116&type=chunk)[117](index=117&type=chunk)[119](index=119&type=chunk) - The Company generated **$32.5 million** in cash from operating activities for the nine months ended March 31, 2023, a significant improvement from a **$12.7 million** use of cash in the prior year, driven by effective working capital management and improved earnings[121](index=121&type=chunk) - As of March 31, 2023, **$45.1 million** was available under the **$75 million** revolving line of credit, which, along with cash from operations, is deemed adequate for operational and capital expenditure needs for the remainder of fiscal 2023[120](index=120&type=chunk) - Cash used in financing activities was **$32.0 million** for the nine months ended March 31, 2023, primarily for debt reduction, compared to a **$12.4 million** source of cash in the prior year. This reduction was supported by improved working capital and earnings, and **$3.1 million** from stock option exercises[123](index=123&type=chunk) [Off-Balance Sheet Arrangements](index=34&type=section&id=Off-Balance%20Sheet%20Arrangements) Confirms the absence of financial instruments with off-balance sheet risk or arrangements - The Company has no financial instruments with off-balance sheet risk or off-balance sheet arrangements[125](index=125&type=chunk) [Cash Dividends](index=34&type=section&id=Cash%20Dividends) Reports the latest declared cash dividend and the company's annual dividend rate - In April 2023, the Board of Directors declared a regular quarterly cash dividend of **$0.05 per share**, payable May 16, 2023, to shareholders of record as of May 8, 2023, maintaining an indicated annual rate of **$0.20 per share**[126](index=126&type=chunk) [Critical Accounting Policies and Estimates](index=34&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Refers to the summary of significant accounting policies in the prior fiscal year's annual report - A summary of the Company's significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company's fiscal 2022 Annual Report on Form 10-K[127](index=127&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=34&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) States that there have been no material changes in market risk exposure since June 30, 2022 - No material changes in market risk exposure have occurred since June 30, 2022[128](index=128&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=35&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control [Disclosure Controls and Procedures](index=35&type=section&id=Disclosure%20Controls%20and%20Procedures) Affirms the effectiveness of the company's disclosure controls and procedures as of March 31, 2023 - As of March 31, 2023, the Company's disclosure controls and procedures were deemed effective by the Chief Executive Officer and Chief Financial Officer[130](index=130&type=chunk) [Changes in Internal Control](index=35&type=section&id=Changes%20in%20Internal%20Control) Reports no material changes in internal control over financial reporting during the second quarter - No material changes in internal control over financial reporting occurred during the second quarter ended March 31, 2023[131](index=131&type=chunk) [PART II. OTHER INFORMATION](index=35&type=section&id=PART%20II.%20OTHER%20INFORMATION) Contains additional information not covered in Part I, including other disclosures and exhibits [ITEM 5. OTHER INFORMATION](index=35&type=section&id=ITEM%205.%20OTHER%20INFORMATION) Indicates that there is no other information to report in this section - No other information is reported in this section[133](index=133&type=chunk) [ITEM 6. EXHIBITS](index=36&type=section&id=ITEM%206.%20EXHIBITS) Lists all exhibits filed with the Form 10-Q, including certifications and interactive data files - Exhibits include certifications (31.1, 31.2, 32.1, 32.2), Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE), and the Cover Page Interactive Data File (104)[135](index=135&type=chunk) [SIGNATURES](index=37&type=section&id=SIGNATURES) Confirms the official signing of the report by the company's principal executive and financial officers - The report was signed on behalf of LSI Industries Inc. by James A. Clark, Chief Executive Officer and President, and James E. Galeese, Executive Vice President and Chief Financial Officer, on May 5, 2023[137](index=137&type=chunk)[138](index=138&type=chunk)

LSI Industries Inc. (NASDAQ:LYTS) Q3 2023 Results Conference Call April 27, 2023 11:00 AM ET Company Participants Jim Galeese - Chief Financial Officer Jim Clark - President and Chief Executive Officer Conference Call Participants Aaron Spychalla - Craig-Hallum Amit Dayal - HCI Wainwright George Gianarikas - Canaccord Rick Fearon - Accretive Capital Partners Operator Good day, and welcome to the LSI Industries Fiscal Third Quarter 2023 Results Conference Call [Operator Instructions]. I would now like to tur ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents the company's unaudited condensed consolidated financial statements and related notes [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Presents unaudited condensed consolidated financial statements, including operations, balance sheets, cash flows, and related notes [Condensed Consolidated Statements of Operations](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Details the company's revenues, costs, and net income over specific reporting periods Condensed Consolidated Statements of Operations (In thousands, except per share data) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net Sales | $128,804 | $111,143 | $255,873 | $217,540 | | Gross profit | $34,140 | $25,448 | $68,878 | $49,958 | | Operating income | $9,038 | $4,422 | $19,059 | $8,866 | | Net income | $6,417 | $3,105 | $12,678 | $6,238 | | Basic EPS | $0.23 | $0.11 | $0.45 | $0.23 | | Diluted EPS | $0.22 | $0.11 | $0.44 | $0.22 | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) Presents net income and other comprehensive income components, such as foreign currency translation adjustments Condensed Consolidated Statements of Comprehensive Income (In thousands) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :-------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net Income | $6,417 | $3,105 | $12,678 | $6,238 | | Foreign currency translation adjustment | $68 | $9 | $75 | ($35) | | Comprehensive Income | $6,485 | $3,114 | $12,753 | $6,203 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Summarizes the company's assets, liabilities, and shareholders' equity at specific points in time Condensed Consolidated Balance Sheets (In thousands) | Metric | December 31, 2022 | June 30, 2022 | | :-------------------- | :---------------- | :------------ | | Cash and cash equivalents | $2,765 | $2,462 | | Accounts receivable, net | $67,352 | $77,750 | | Inventories | $73,205 | $74,421 | | Total current assets | $149,025 | $158,917 | | Total assets | $296,283 | $311,080 | | Total current liabilities | $64,134 | $74,618 | | Long-term debt | $59,250 | $76,025 | | Total shareholders' equity | $161,316 | $147,769 | | Total liabilities & shareholders' equity | $296,283 | $311,080 | [Condensed Consolidated Statements of Shareholders' Equity](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20SHAREHOLDERS%27%20EQUITY) Outlines changes in shareholders' equity, including net income, stock compensation, and dividends Condensed Consolidated Statements of Shareholders' Equity (In thousands) | Metric | Balance at June 30, 2022 | Net Income | Other comprehensive loss | Stock compensation awards | Restricted stock units issued, net | Shares issued for deferred compensation | Activity of treasury shares, net | Deferred stock compensation | Stock compensation expense | Stock options exercised, net | Dividends — $0.20 per share | Balance at December 31, 2022 | | :-------------------- | :----------------------- | :--------- | :----------------------- | :------------------------ | :--------------------------------- | :-------------------------------------- | :------------------------------- | :-------------------------- | :------------------------- | :--------------------------- | :---------------------------- | :--------------------------- | | Common Shares (Amount) | $139,500 | - | - | $173 | ($465) | $1,087 | - | - | $1,415 | $1,278 | - | $142,988 | | Treasury Shares (Amount) | ($5,927) | - | - | - | - | - | ($1,061) | - | - | - | - | ($6,988) | | Key Executive Compensation | $5,927 | - | - | - | - | - | - | $1,061 | - | - | - | $6,988 | | Accumulated Other Comprehensive Income (Loss) | $45 | - | $75 | - | - | - | - | - | - | - | - | $120 | | Retained Earnings | $8,224 | $12,678 | - | - | - | - | - | - | - | - | ($2,694) | $18,208 | | Total Shareholders' Equity | $147,769 | $12,678 | $75 | $173 | ($465) | $1,087 | ($1,061) | $1,061 | $1,415 | $1,278 | ($2,694) | $161,316 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Reports cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (In thousands) | Metric | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :-------------------- | :---------------------------- | :---------------------------- | | Net cash flows provided by (used in) operating activities | $20,062 | ($16,543) | | Net cash flows used in investing activities | ($994) | ($245) | | Net cash flows (used in) provided by financing activities | ($18,779) | $15,445 | | Cash and cash equivalents at end of period | $2,765 | $914 | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Provides detailed explanations of accounting policies, segment information, and specific financial items [NOTE 1 - Interim Condensed Consolidated Financial Statements](index=11&type=section&id=NOTE%201%20-%20INTERIM%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Explains the basis of preparation for the unaudited interim financial statements, adhering to GAAP and SEC rules - The interim financial statements are unaudited and prepared in accordance with **GAAP** for interim financial information and **SEC rules**. They include all normal adjustments and disclosures necessary to present fairly the Company's financial position as of **December 31, 2022**, and results of operations and cash flows for the periods ended **December 31, 2022** and **2021**[29](index=29&type=chunk) [NOTE 2 - Summary of Significant Accounting Policies](index=11&type=section&id=NOTE%202%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Details the company's revenue recognition policies and other significant accounting principles - Revenue is recognized when performance obligations are satisfied, typically at shipment for products, or over time for customized products and installation services where control transfers as work is performed. The Company applies practical expedients for contracts with expected duration of one year or less, expensing sales commissions as incurred and omitting disclosures on remaining performance obligations[31](index=31&type=chunk)[33](index=33&type=chunk)[43](index=43&type=chunk) Disaggregation of Revenue by Timing of Recognition (In thousands) | Metric | Lighting Segment 2022 | Display Solutions Segment 2022 | Lighting Segment 2021 | Display Solutions Segment 2021 | | :------------- | :-------------------- | :----------------------------- | :-------------------- | :----------------------------- | | Products and services transferred at a point in time | $58,591 | $47,027 | $50,141 | $35,437 | | Products and services transferred over time | $8,242 | $14,944 | $7,135 | $18,430 | | **Total** | **$66,833** | **$61,971** | **$57,276** | **$53,867** | Disaggregation of Revenue by Type of Product and Services (In thousands) | Metric | Lighting Segment 2022 | Display Solutions Segment 2022 | Lighting Segment 2021 | Display Solutions Segment 2021 | | :------------- | :-------------------- | :----------------------------- | :-------------------- | :----------------------------- | | LED lighting, digital signage solutions, electronic circuit boards | $54,410 | $5,801 | $47,626 | $12,551 | | Poles, printed graphics, display fixtures | $11,632 | $41,683 | $9,079 | $31,127 | | Project management, installation services, shipping and handling | $791 | $14,487 | $571 | $10,189 | | **Total** | **$66,833** | **$61,971** | **$57,276** | **$53,867** | [NOTE 3 - Segment Reporting Information](index=13&type=section&id=NOTE%203%20-%20SEGMENT%20REPORTING%20INFORMATION) Provides financial data for the company's Lighting and Display Solutions operating segments - The Company operates in **two** segments: Lighting and Display Solutions. The Lighting Segment focuses on non-residential LED lighting fixtures and electronic circuit boards. The Display Solutions Segment manufactures and installs visual image and display elements, including digital signage and project management services[41](index=41&type=chunk)[42](index=42&type=chunk) Segment Net Sales (In thousands) | Segment | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :---------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Lighting Segment | $66,833 | $57,276 | $134,366 | $108,536 | | Display Solutions Segment | $61,971 | $53,867 | $121,507 | $109,004 | | **Total Net Sales** | **$128,804** | **$111,143** | **$255,873** | **$217,540** | Segment Operating Income (Loss) (In thousands) | Segment | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :---------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Lighting Segment | $6,754 | $4,623 | $15,912 | $8,962 | | Display Solutions Segment | $7,762 | $3,837 | $14,258 | $7,586 | | Corporate and Eliminations | ($5,478) | ($4,038) | ($11,111) | ($7,682) | | **Total Operating Income** | **$9,038** | **$4,422** | **$19,059** | **$8,866** | Segment Identifiable Assets (In thousands) | Segment | December 31, 2022 | June 30, 2022 | | :---------------------- | :---------------- | :------------ | | Lighting Segment | $143,741 | $152,431 | | Display Solutions Segment | $145,722 | $152,302 | | Corporate and Eliminations | $6,820 | $6,347 | | **Total Identifiable Assets** | **$296,283** | **$311,080** | [NOTE 4 - Earnings Per Common Share](index=17&type=section&id=NOTE%204%20-%20EARNINGS%20PER%20COMMON%20SHARE) Calculates basic and diluted earnings per share based on net income and weighted average shares outstanding Earnings Per Common Share (In thousands, except per share data) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net income | $6,417 | $3,105 | $12,678 | $6,238 | | Weighted average shares outstanding (Basic) | 28,078 | 27,292 | 27,874 | 27,144 | | Basic income per share | $0.23 | $0.11 | $0.45 | $0.23 | | Weighted average shares outstanding (Diluted) | 29,204 | 28,067 | 28,766 | 27,895 | | Diluted income per share | $0.22 | $0.11 | $0.44 | $0.22 | [NOTE 5 – Inventories, Net](index=18&type=section&id=NOTE%205%20%E2%80%93%20INVENTORIES%2C%20NET) Details the composition of inventories, including raw materials, work-in-progress, and finished goods Inventories, Net (In thousands) | Inventories | December 31, 2022 | June 30, 2022 | | :------------------------- | :---------------- | :------------ | | Raw materials | $51,532 | $51,637 | | Work-in-progress | $6,844 | $3,029 | | Finished goods | $14,829 | $19,755 | | **Total Inventories** | **$73,205** | **$74,421** | [NOTE 6 - Accrued Expenses](index=18&type=section&id=NOTE%206%20-%20ACCRUED%20EXPENSES) Lists various accrued liabilities, such as customer prepayments, compensation, and warranty obligations Accrued Expenses (In thousands) | Accrued Expenses | December 31, 2022 | June 30, 2022 | | :------------------------------ | :---------------- | :------------ | | Customer prepayments | $3,940 | $6,416 | | Compensation and benefits | $9,865 | $9,611 | | Accrued warranty | $4,516 | $4,491 | | Operating lease liabilities | $1,347 | $1,274 | | Accrued FICA | $3,528 | $1,122 | | Finance lease liabilities | $3,348 | $275 | | Accrued income tax | $396 | $109 | | Other accrued expenses | $281 | $4,503 | | Accrued sales commissions | $6,049 | - | | Accrued Freight | - | - | | **Total Accrued Expenses** | **$33,270** | **$36,264** | [NOTE 7 - Goodwill and Other Intangible Assets](index=18&type=section&id=NOTE%207%20-%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS) Reports goodwill and other intangible assets, including customer relationships and LED technology, and their amortization - Goodwill and indefinite-lived intangible assets are reviewed at least annually for impairment, using qualitative factors or a combination of market and income approaches. The Company has **three** reporting units with goodwill: one in Lighting and two in Display Solutions[54](index=54&type=chunk)[55](index=55&type=chunk) Goodwill, Net (In thousands) | Segment | December 31, 2022 | June 30, 2022 | | :---------------------- | :---------------- | :------------ | | Lighting Segment | $9,208 | $9,208 | | Display Solutions Segment | $35,822 | $35,822 | | **Goodwill, net** | **$45,030** | **$45,030** | Other Intangible Assets, Net (In thousands) | Asset Class | December 31, 2022 Net Amount | June 30, 2022 Net Amount | | :-------------------------- | :----------------------------- | :----------------------- | | Customer relationships | $45,975 | $47,683 | | LED technology firmware, software | $5,775 | $6,368 | | Trademarks and trade names (indefinite-lived) | $12,102 | $12,102 | | **Total Other Intangible Assets** | **$65,584** | **$67,964** | Amortization Expense of Other Intangible Assets (In thousands) | Period | 2022 | 2021 | | :-------------------- | :--- | :--- | | Three Months Ended Dec 31 | $1,190 | $1,198 | | Six Months Ended Dec 31 | $2,380 | $2,413 | [NOTE 8 - Debt](index=20&type=section&id=NOTE%208%20-%20DEBT) Details the company's debt facilities, including secured line of credit and term loan, and compliance with covenants Debt (In thousands) | Debt | December 31, 2022 | June 30, 2022 | | :------------------ | :---------------- | :------------ | | Secured line of credit | $42,310 | $57,275 | | Term loan, net | $20,511 | $22,321 | | **Total debt** | **$62,821** | **$79,596** | | Less: amounts due within one year | $3,571 | $3,571 | | **Total amounts due after one year, net** | **$59,250** | **$76,025** | - The Company's debt facilities include a **$25 million** term loan and a **$75 million** secured revolving line of credit, both expiring in fiscal **2026**. As of **December 31, 2022**, the borrowing rate on the revolving line of credit was **6.1%**, and **$32.7 million** was available for borrowing. The Company is in compliance with all loan covenants[60](index=60&type=chunk)[61](index=61&type=chunk) [NOTE 9 - Cash Dividends](index=20&type=section&id=NOTE%209%20-%20CASH%20DIVIDENDS) Reports cash dividends paid and declared, indicating the company's dividend policy - The Company paid cash dividends of **$2.7 million** in both the six months ended December 31, 2022, and 2021. A quarterly cash dividend of **$0.05 per share** was declared in January 2023, indicating an annual rate of **$0.20 per share**[62](index=62&type=chunk) [NOTE 10 – Equity Compensation](index=21&type=section&id=NOTE%2010%20%E2%80%93%20EQUITY%20COMPENSATION) Outlines the company's equity compensation plans, including authorized shares and stock compensation expense - Shareholders approved an amendment to the 2019 Omnibus Award Plan in November 2022, increasing authorized shares by **2,350,000**. As of **December 31, 2022**, **2,637,095** shares remained reserved. Stock compensation expense was **$0.8 million** for the three months and **$1.4 million** for the six months ended **December 31, 2022**[63](index=63&type=chunk)[64](index=64&type=chunk) [NOTE 11 - Supplemental Cash Flow Information](index=21&type=section&id=NOTE%2011%20-%20SUPPLEMENTAL%20CASH%20FLOW%20INFORMATION) Provides additional details on cash payments for interest and income taxes, and non-cash investing/financing activities Cash Payments (In thousands) | Metric | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :--------------------------- | :---------------------------- | :---------------------------- | | Interest | $1,689 | $627 | | Income taxes | $4,299 | $2,820 | | Non-cash investing and financing activities | | Issuance of common shares as compensation | $173 | $150 | | Issuance of common shares to fund deferred compensation plan | $1,087 | $2,569 | [NOTE 12 - Commitments and Contingencies](index=21&type=section&id=NOTE%2012%20-%20COMMITMENTS%20AND%20CONTINGENCIES) Discusses legal proceedings and other commitments, assessing their potential financial impact - The Company is involved in various legal proceedings in the normal course of business and provides reserves when losses are probable and estimable. Management believes the ultimate disposition of these matters will not materially adversely affect the Company's financial position, results of operations, cash flows, or liquidity[66](index=66&type=chunk) [NOTE 13 - Leases](index=21&type=section&id=NOTE%2013%20-%20LEASES) Details the company's lease arrangements for facilities and equipment, including lease costs and liabilities - The Company leases manufacturing facilities, office space, and equipment, primarily through operating leases with terms of **one to seven years**. Lease expense is recognized on a straight-line basis[68](index=68&type=chunk)[70](index=70&type=chunk) Total Lease Cost (In thousands) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :-------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Operating lease cost | $885 | $870 | $1,776 | $1,749 | | Financing lease cost | $91 | $94 | $183 | $189 | | Sublease income | ($116) | ($94) | ($232) | ($188) | | **Total lease cost** | **$882** | **$892** | **$1,771** | **$1,794** | Operating Lease Liabilities (In thousands) | Metric | December 31, 2022 | June 30, 2022 | | :-------------------------- | :---------------- | :------------ | | Total operating right-of-use assets | $7,548 | $8,664 | | Total operating lease liabilities | $8,304 | $9,514 | | Weighted Average remaining Lease Term (in years) | 2.72 | 3.05 | | Weighted Average Discount Rate | 4.82% | 4.81% | Maturities of Lease Liability (In thousands) | Year | Operating Lease Liabilities | Finance Lease Liabilities | Operating Subleases | Net Lease Commitments | | :--- | :-------------------------- | :------------------------ | :------------------ | :-------------------- | | 2023 | $2,134 | $207 | ($189) | $2,152 | | 2024 | $3,399 | $337 | ($377) | $3,359 | | 2025 | $2,253 | $362 | ($31) | $2,584 | | 2026 | $952 | $362 | - | $1,314 | | 2027 | $323 | $303 | - | $626 | | Thereafter | $4 | - | - | $4 | | **Total lease payments** | **$9,065** | **$1,571** | **($597)** | **$10,039** | [NOTE 14 – Income Taxes](index=23&type=section&id=NOTE%2014%20%E2%80%93%20INCOME%20TAXES) Explains the company's effective income tax rate and its reconciliation to the statutory rate - The Company's effective income tax rate is based on expected income and statutory rates, with quarterly adjustments to reflect the anticipated annual rate[73](index=73&type=chunk) Reconciliation of Effective Tax Rate | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Provision for income taxes at the anticipated annual tax rate | 21.5% | 23.8% | 24.0% | 24.0% | | Uncertain tax positions | (1.2)% | (3.9)% | - | (1.5)% | | Tax rate changes | (1.9)% | - | - | - | | Share-based compensation | (0.3)% | 0.1% | 0.8% | (0.3)% | | **Effective tax rate** | **18.1%** | **20.0%** | **24.8%** | **22.2%** | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=24&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management's discussion and analysis of financial condition, results of operations, non-GAAP measures, and liquidity [Summary of Consolidated Results](index=24&type=section&id=Summary%20of%20Consolidated%20Results) Summarizes the company's consolidated net sales and operating income performance across segments Consolidated Net Sales by Business Segment (In thousands) | Segment | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :---------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Lighting Segment | $66,833 | $57,276 | $134,366 | $108,536 | | Display Solutions Segment | $61,971 | $53,867 | $121,507 | $109,004 | | **Total Net Sales** | **$128,804** | **$111,143** | **$255,873** | **$217,540** | - Net sales increased by **16%** to **$128.8 million** for the three months ended December 31, 2022, and by **18%** to **$255.9 million** for the six months ended December 31, 2022, driven by double-digit growth in both Lighting (**17%** and **24%**) and Display Solutions (**15%** and **12%**) segments[79](index=79&type=chunk)[80](index=80&type=chunk) - Operating income for the three months ended December 31, 2022, increased by **$4.6 million** to **$9.0 million**, and for the six months, it increased by **$10.2 million** to **$19.1 million**, attributed to increased volume, higher-value sales mix, price discipline, and effective cost management[81](index=81&type=chunk)[82](index=82&type=chunk) [Non-GAAP Financial Measures](index=25&type=section&id=Non-GAAP%20Financial%20Measures) Reconciles GAAP to Non-GAAP financial measures, providing enhanced visibility into operating performance - The Company uses Non-GAAP financial measures, including Adjusted Operating Income, Adjusted Net Income, EBITDA, Adjusted EBITDA, Free Cash Flow, and Net Debt to Adjusted EBITDA, to provide greater comparability and enhanced visibility into operating performance by excluding items such as stock compensation, severance, and consulting expenses related to commercial growth initiatives[83](index=83&type=chunk) Reconciliation of Operating Income to Adjusted Operating Income (In thousands) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Operating Income as reported | $9,038 | $4,422 | $19,059 | $8,866 | | Stock compensation expense | $1,002 | $1,130 | $1,553 | $1,686 | | Consulting expense: Commercial Growth Initiatives | $486 | - | $789 | - | | Acquisition Costs | - | $340 | - | $340 | | Severance costs | $33 | - | $46 | - | | **Adjusted Operating Income** | **$10,559** | **$5,892** | **$21,447** | **$10,892** | Reconciliation of Net Income to Adjusted Net Income (In thousands, except per share data) | Metric | Three Months Ended Dec 31, 2022 | Diluted EPS 2022 | Three Months Ended Dec 31, 2021 | Diluted EPS 2021 | | :------------------------------------------ | :------------------------------ | :--------------- | :------------------------------ | :--------------- | | Net Income as reported | $6,417 | $0.22 | $3,105 | $0.11 | | Stock compensation expense | $785 | $0.03 | $867 | $0.03 | | Consulting expense: Commercial Growth Initiatives | $399 | $0.01 | - | - | | Acquisition Costs | - | - | $269 | $0.01 | | Severance costs | $26 | - | - | - | | **Net Income adjusted** | **$7,627** | **$0.26** | **$4,241** | **$0.15** | Reconciliation of Operating Income to EBITDA and Adjusted EBITDA (In thousands) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Operating Income as reported | $9,038 | $4,422 | $19,059 | $8,866 | | Depreciation and Amortization | $2,419 | $2,538 | $4,840 | $5,101 | | **EBITDA** | **$11,457** | **$6,960** | **$23,899** | **$13,967** | | Stock compensation expense | $1,002 | $1,130 | $1,553 | $1,686 | | Consulting Expense - Commercial Growth Initiatives | $486 | - | $789 | - | | Acquisition Costs | - | $340 | - | $340 | | Severance costs | $33 | - | $46 | - | | **Adjusted EBITDA** | **$12,978** | **$8,430** | **$26,287** | **$15,993** | Reconciliation of Cash Flow from Operations to Free Cash Flow (In thousands) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :-------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Cash Flow from Operations | $9,481 | ($8,654) | $20,064 | ($16,543) | | Capital expenditures | ($561) | ($448) | ($994) | ($745) | | **Free Cash Flow** | **$8,920** | **($9,102)** | **$19,070** | **($17,288)** | Net Debt to Adjusted EBITDA (In thousands) | Metric | December 31, 2022 | June 30, 2022 | | :-------------------------- | :---------------- | :------------ | | Total Debt | $62,821 | $79,596 | | Less: Cash and cash equivalents | ($2,765) | ($2,462) | | **Net Debt** | **$60,056** | **$77,134** | | Adjusted EBITDA - Trailing 12 Months | $45,387 | $35,091 | | **Net Debt to Adjusted EBITDA** | **1.3** | **2.2** | [Results of Operations (Three Months Ended December 31, 2022 vs 2021)](index=28&type=section&id=THREE%20MONTHS%20ENDED%20DECEMBER%2031%2C%202022%2C%20COMPARED%20TO%20THREE%20MONTHS%20ENDED%20DECEMBER%2031%2C%202021) Compares the company's financial performance for the three months ended December 31, 2022, against the prior year [Lighting Segment](index=28&type=section&id=Lighting%20Segment_3M) Analyzes the Lighting Segment's net sales, gross profit margin, and operating income for the three-month period - Lighting Segment net sales increased **17%** to **$66.8 million**, driven by broad-based growth across vertical markets and enhanced product offerings. Gross profit margin improved to **30.6%** from **29.5%**, leading to a **45.9%** increase in operating income to **$6.8 million**[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) [Display Solutions Segment](index=30&type=section&id=Display%20Solutions%20Segment_3M) Analyzes the Display Solutions Segment's net sales, gross profit margin, and operating income for the three-month period - Display Solutions Segment net sales increased **15%** to **$62.0 million**, primarily due to growth in grocery and refueling/convenience-store verticals. Gross profit margin significantly improved to **22.1%** from **15.9%**, resulting in a **102.3%** increase in operating income to **$7.8 million**[97](index=97&type=chunk)[98](index=98&type=chunk)[100](index=100&type=chunk) [Corporate and Eliminations](index=30&type=section&id=Corporate%20and%20Eliminations_3M) Discusses changes in corporate operating expenses and eliminations for the three-month period - Operating expenses for Corporate and Eliminations increased by **$1.5 million** to **$5.5 million**, mainly due to higher performance-based incentive plan expenses and **$0.5 million** in commercial growth initiative consulting expenses[102](index=102&type=chunk) [Consolidated Results](index=31&type=section&id=Consolidated%20Results_3M) Summarizes consolidated net interest expense, effective tax rate, net income, and diluted EPS for the three-month period - Net interest expense increased to **$1.3 million** from **$0.5 million** due to higher borrowing costs. The effective tax rate was **18.1%** (2022) compared to **20.1%** (2021). Net income rose to **$6.4 million** from **$3.1 million**, with diluted EPS increasing to **$0.22** from **$0.11**[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk) [Results of Operations (Six Months Ended December 31, 2022 vs 2021)](index=31&type=section&id=SIX%20MONTHS%20ENDED%20DECEMBER%2031%2C%202022%2C%20COMPARED%20TO%20SIX%20MONTHS%20ENDED%20DECEMBER%2031%2C%202021) Compares the company's financial performance for the six months ended December 31, 2022, against the prior year [Lighting Segment](index=31&type=section&id=Lighting%20Segment_6M) Analyzes the Lighting Segment's net sales, gross profit margin, and operating income for the six-month period - Lighting Segment net sales increased **24%** to **$134.4 million**, driven by broad-based growth. Gross profit margin improved to **31.8%** from **29.8%**, leading to a **77%** increase in operating income to **$15.9 million**[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk) [Display Solutions Segment](index=32&type=section&id=Display%20Solutions%20Segment_6M) Analyzes the Display Solutions Segment's net sales, gross profit margin, and operating income for the six-month period - Display Solutions Segment net sales increased **12%** to **$121.5 million**, primarily from grocery and refueling/convenience-store verticals. Gross profit margin improved to **21.5%** from **16.1%**, resulting in an **88%** increase in operating income to **$14.3 million**[109](index=109&type=chunk)[110](index=110&type=chunk)[112](index=112&type=chunk) [Corporate and Eliminations](index=32&type=section&id=Corporate%20and%20Eliminations_6M) Discusses changes in corporate operating expenses and eliminations for the six-month period - Operating expenses for Corporate and Eliminations increased by **$3.4 million** to **$11.1 million**, driven by higher performance-based incentive plan expenses and **$0.8 million** in commercial growth initiative consulting expenses[114](index=114&type=chunk) [Consolidated Results](index=32&type=section&id=Consolidated%20Results_6M) Summarizes consolidated net interest expense, effective tax rate, net income, and diluted EPS for the six-month period - Net interest expense increased to **$2.0 million** from **$0.8 million** due to higher borrowing costs. The effective tax rate was **24.8%** (2022) compared to **22.2%** (2021). Net income rose to **$12.7 million** from **$6.2 million**, with diluted EPS increasing to **$0.44** from **$0.22**[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's working capital, cash flows, debt, and ability to meet operational and capital needs - Working capital marginally increased to **$84.9 million** at December 31, 2022, from **$84.3 million** at June 30, 2022, with the current ratio improving to **2.32 to 1** from **2.13**. DSO decreased to **52 days** from **55 days**, and net inventories decreased by **$1.2 million**[119](index=119&type=chunk)[120](index=120&type=chunk) - Cash generated from operations was **$20.1 million** for the six months ended December 31, 2022, a significant improvement from a use of **$16.5 million** in the prior year, primarily due to effective working capital management and improved earnings[122](index=122&type=chunk) - The Company used **$18.8 million** in financing activities, primarily to pay down its line of credit, compared to a source of **$15.4 million** in the prior year. As of December 31, 2022, **$32.7 million** was available under the **$75 million** revolving credit facility, which, along with operating cash flows, is deemed adequate for fiscal 2023 operational and capital expenditure needs[121](index=121&type=chunk)[124](index=124&type=chunk) - The Board of Directors declared a regular quarterly cash dividend of **$0.05 per share** in January 2023, maintaining an indicated annual rate of **$0.20 per share**[127](index=127&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=34&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Reports no material changes in the company's market risk exposure since June 30, 2022 - No material changes in market risk exposure since **June 30, 2022**[129](index=129&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=34&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Confirms effective disclosure controls and procedures, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of **December 31, 2022**[131](index=131&type=chunk) - No material changes in internal control over financial reporting occurred during the second quarter ended **December 31, 2022**[132](index=132&type=chunk) [PART II. OTHER INFORMATION](index=35&type=section&id=PART%20II.%20OTHER%20INFORMATION) Provides additional information not covered in the financial statements, including market risk, controls, and exhibits [ITEM 5. OTHER INFORMATION](index=35&type=section&id=ITEM%205.%20OTHER%20INFORMATION) Indicates no other information to report for the period - No other information to report[135](index=135&type=chunk) [ITEM 6. EXHIBITS](index=35&type=section&id=ITEM%206.%20EXHIBITS) Lists exhibits filed with Form 10-Q, including certifications and Inline XBRL documents - Exhibits include certifications (**31.1**, **31.2**, **32.1**, **32.2**) and Inline XBRL documents (**101.INS**, **101.SCH**, **101.CAL**, **101.DEF**, **101.LAB**, **101.PRE**, **104**)[136](index=136&type=chunk) [SIGNATURES](index=36&type=section&id=SIGNATURES) Contains authorized signatures for the Form 10-Q report, confirming submission - The report is signed by James A. Clark, Chief Executive Officer and President, and James E. Galeese, Executive Vice President and Chief Financial Officer, on **February 7, 2023**[139](index=139&type=chunk)[140](index=140&type=chunk)

LSI Industries Inc. (NASDAQ:LYTS) Q2 2023 Earnings Conference Call January 26, 2023 11:00 AM ET Company Participants Jim Galeese - Chief Financial Officer Jim Clark - President and Chief Executive Officer Conference Call Participants George Gianarikas - Canaccord Genuity Aaron Spychalla - Craig-Hallum Amit Dayal - H.C. Wainwright Operator Greetings and welcome to the LSI Industries Fiscal Second Quarter 2023 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I ...

Financial Performance Highlights - Total net sales increased by 16% year-over-year, reaching $128.8 million in F2Q23 compared to $111.1 million in F2Q22 [34][38] - Adjusted EBITDA margin rate increased by 250 bps year-over-year to 10.1% in F2Q23 [37] - Adjusted net income grew by 80% year-over-year [39] - The company generated over $30 million in free cash flow (FCF) in the last twelve months [34] - Net leverage decreased from 3.1x to 1.3x [74] Segment Performance - Lighting segment sales increased by 17% year-over-year [18] - Indoor lighting sales increased by 32% year-over-year, and outdoor lighting sales increased by 20% year-over-year [18] - Display Solutions segment sales increased by 15% year-over-year [34][49] - Display Solutions segment secured an additional $12 million order from a large grocery chain in F2Q23 [23] - Lighting segment adjusted EBITDA margin increased by 160 bps year-over-year to 12.4% [18] - Display Solutions segment adjusted EBITDA margin increased by 510 bps year-over-year to 14.4% [23] Working Capital and Debt Management - Total working capital was reduced by 6% sequentially [28] - Total inventory decreased by 9% sequentially [72] - Net debt outstanding was reduced by $25 million in the last twelve months [34][74]

First Quarter Fiscal 2023 Results Conference Call November 2, 2022 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 this context, forward-looking statements often address our expected future business, financial performance, financial condition and results of ope ...

LSI Industries Inc. (NASDAQ:LYTS) Q1 2023 Results Conference Call November 2, 2022 11:00 AM ET Company Participants James Galeese - EVP and CFO James Clark - President and CEO Conference Call Participants Richard Fearon - Accretive Capital Partners Amit Dayal - H.C. Wainwright & Co, LLC Operator Ladies and gentlemen, greetings and welcome to the LSI Industries Fiscal First Quarter 2023 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Unaudited statements show significant growth in net sales, net income, and operating cash flow for the quarter [Condensed Consolidated Statements of Operations](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Quarterly net sales grew 19.4% to $127.1 million, driving a 100.6% increase in net income to $6.3 million Consolidated Statements of Operations Highlights (Unaudited) | (In thousands, except per share data) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | **Net Sales** | $127,069 | $106,397 | | **Gross Profit** | $34,738 | $24,510 | | **Operating Income** | $10,021 | $4,444 | | **Net Income** | $6,262 | $3,133 | | **Diluted EPS** | $0.22 | $0.11 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Total assets grew to $319.5 million, supported by increased shareholders' equity from retained earnings Condensed Consolidated Balance Sheet Highlights (Unaudited) | (In thousands) | September 30, 2022 | June 30, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $170,407 | $158,917 | | **Total Assets** | $319,501 | $311,080 | | **Total Current Liabilities** | $79,935 | $74,618 | | **Total Liabilities** | $165,772 | $163,311 | | **Total Shareholders' Equity** | $153,729 | $147,769 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Net cash from operations improved significantly to $10.6 million from a $7.9 million use in the prior year Consolidated Statements of Cash Flows Highlights (Unaudited) | (In thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | **Net cash provided by (used in) operating activities** | $10,583 | $(7,889) | | **Net cash (used in) investing activities** | $(434) | $(297) | | **Net cash (used in) provided by financing activities** | $(3,590) | $8,505 | | **Increase in cash and cash equivalents** | $6,566 | $288 | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Notes detail key accounting policies, segment operations, debt compliance, and dividend declarations - Revenue is recognized when control transfers to the customer, which is at the time of shipment for most products. For customized products and installation services, revenue is recognized over time using a cost-based input method[31](index=31&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk) - The company operates through two reportable segments: **Lighting and Display Solutions**. The Lighting segment focuses on non-residential lighting fixtures and controls, while the Display Solutions segment provides visual image and display elements[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) - As of September 30, 2022, the company had a $75 million secured revolving line of credit and a $25 million term loan, with **$18.9 million available for borrowing**. The company was in compliance with all loan covenants[61](index=61&type=chunk)[62](index=62&type=chunk) - In November 2022, the Board of Directors declared a **quarterly cash dividend of $0.05 per share**, indicating an annual rate of $0.20 per share[63](index=63&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=23&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management attributes strong sales and income growth to robust demand and effective cost management [Summary of Consolidated Results](index=23&type=section&id=Summary%20of%20Consolidated%20Results) Consolidated net sales rose 19% to $127.1 million, driven by growth in both business segments - Net sales increased by **$20.7 million (19%) YoY**, driven by growth in both the Lighting (32%) and Display Solutions (8%) segments[81](index=81&type=chunk) - Operating income increased by **$5.6 million**, attributed to higher volume, a better sales mix, pricing actions offsetting inflation, and cost management[82](index=82&type=chunk) [Non-GAAP Financial Measures](index=24&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures show improved Adjusted EBITDA and a reduced Net Debt to Adjusted EBITDA ratio of 1.7x Reconciliation of Operating Income to Adjusted EBITDA | (In thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | **Operating Income as reported** | $10,021 | $4,444 | | Depreciation and Amortization | $2,421 | $2,563 | | **EBITDA** | **$12,442** | **$7,007** | | Adjustments (Stock comp, consulting, severance) | $866 | $556 | | **Adjusted EBITDA** | **$13,308** | **$7,563** | Net Debt to Adjusted EBITDA | (In thousands, except ratio) | September 30, 2022 | September 30, 2021 | | :--- | :--- | :--- | | **Net Debt** | $68,518 | $77,026 | | **Adjusted EBITDA - Trailing 12 Months** | $40,836 | $30,907 | | **Net Debt to Adjusted EBITDA** | **1.7** | **2.5** | [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Both Lighting and Display Solutions segments reported strong sales growth and significant margin expansion - Lighting Segment net sales increased **32% YoY**, with gross margin improving to **33.0% from 30.2%** due to pricing actions and cost control[91](index=91&type=chunk)[92](index=92&type=chunk) - Display Solutions Segment net sales grew **8% YoY**, with gross margin expanding to **20.9% from 16.4%** due to pricing and favorable project mix[94](index=94&type=chunk)[95](index=95&type=chunk) - Corporate operating expenses increased by **$2.0 million**, primarily due to higher performance-based incentive compensation driven by improved business results[99](index=99&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity strengthened with increased working capital and a significant positive swing in operating cash flow - Working capital increased to **$90.5 million** at Sep 30, 2022, from $84.3 million at June 30, 2022[105](index=105&type=chunk) - Net inventories increased by **$6.1 million to $80.5 million** to mitigate supply chain risks and support ongoing programs[107](index=107&type=chunk) - The company generated **$10.6 million in cash from operations**, a $18.5 million positive swing from the prior year, due to improved earnings and working capital management[109](index=109&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) No material changes in the company's market risk exposure were reported for the period - There have been **no material changes** in the company's market risk exposure since June 30, 2022[116](index=116&type=chunk) [Controls and Procedures](index=30&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective with no material changes - The CEO and CFO concluded that as of September 30, 2022, the company's disclosure controls and procedures were **effective**[118](index=118&type=chunk) - **No changes** in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[119](index=119&type=chunk) [PART II. OTHER INFORMATION](index=31&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Other Information](index=31&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No other information was reported for the period - None[122](index=122&type=chunk) [Exhibits](index=31&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q, including certifications and XBRL data - Filed exhibits include the Fiscal Year 2023 Long-Term and Short-Term Incentive Plans, CEO and CFO certifications (Rule 13a-14(a) and Section 1350), and Inline XBRL documents[124](index=124&type=chunk) [Signatures](index=32&type=section&id=SIGNATURES) The report was duly signed by the CEO and CFO on November 4, 2022 - The report was signed on **November 4, 2022**, by the Principal Executive Officer and Principal Financial Officer[127](index=127&type=chunk)[128](index=128&type=chunk)