UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2020 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO ________________. Commission File No. 0-13375 LSI Industries Inc. (Exact name of registrant as specified in its charter) Ohio 31-0888951 (State or ot ...

Financial Data and Key Metrics Changes - Sales for the fiscal first quarter were $70 million, improving sequentially from Q4 but below the prior year as projected [18] - Net income was $2 million compared to $4.5 million in the same quarter last year, with prior year results including a non-recurring pretax gain of $4.8 million from a facility sale [18] - Adjusted net income increased 29% to $2.1 million versus $1.6 million in the same period last year [18] - Adjusted EBITDA was $4.7 million, representing 6.8% of sales, which is 90 basis points above last year [19] - The company generated $7.2 million of free cash flow in Q1, exiting with a total cash balance of $9.5 million and $75 million availability on the revolving credit facility [19] Business Line Data and Key Metrics Changes - The Graphics Segment experienced a sharp rebound, with sales just 4% below prior year levels, primarily due to ongoing project schedule delays [20] - Graphics sales in Mexico increased 88% year-over-year in the first quarter, with strong new business development activity [20] - Lighting sales were impacted by a pandemic-driven slowdown, but quotation and order activity increased steadily throughout the first quarter, generating an increased backlog entering Q2 [21] - Adjusted gross margin for lighting improved by 290 basis points to 30.5%, driven by a focus on higher value market applications and new product introductions [21] Market Data and Key Metrics Changes - The company noted fluctuations in construction activity depending on the region due to COVID, but reported little to no project cancellations [7] - There has been an increase in requests for short lead time projects, with the company able to respond effectively due to U.S.-based manufacturing and supply chain diversification [7] - The company is focusing on key vertical markets including petroleum, automotive, grocery, and warehousing, with notable wins in outdoor projects for a major e-retailer [9] Company Strategy and Development Direction - The company aims to become a $500 million entity with double-digit EBITDA by 2025, focusing on expanding vertical market presence, enhancing customer engagement, building services business, and accelerating growth through acquisitions [15] - The company is committed to moving away from price-sensitive, highly commoditized business towards higher value market applications [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the current environment, highlighting strong financial positioning with nearly $85 million of immediate liquidity available [16] - The management remains optimistic about future growth, both organically and through M&A, indicating that the best days are ahead [17] Other Important Information - The company declared a regular cash dividend of $0.05 per share, payable on November 17 to shareholders of record on November 9 [19] - The company introduced a new digital wallet solution for contactless payments at approximately 11,000 U.S. locations, which is expected to create further opportunities [14] Q&A Session Summary Question: Is the fiscal first quarter still expected to be the weakest for the year? - Management confirmed that Q1 was in line with expectations, noting challenges but no cancellations in project orders [25] Question: Is the new digital wallet product a one-time sale or does it have recurring revenue? - The digital wallet solution does not have a recurring revenue component, but management sees potential for future opportunities in contactless payment solutions [28] Question: What specific products are driving gross margin gains in the Lighting Segment? - Management indicated that higher-margin, project-related outdoor products are driving margin improvements, with a focus on optical control and customer value [34] Question: Can you provide details on the projects with the world's largest e-retailer? - Management confirmed opportunities in both retrofit and new facilities, emphasizing the importance of performance and being a good neighbor in project execution [36] Question: What is the timeline for completing the $100 million QSR program? - Management anticipates two years remaining in the schedule for the QSR program, with potential for follow-on business [41] Question: What characteristics are being sought in potential acquisition candidates? - Management is looking for opportunities that fit well with the LSI brand, focusing on adjacencies and broader solutions rather than traditional core lighting solutions [43]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO . Commission File No. 0-13375 LSI INDUSTRIES INC. (Exact name of Registrant as specified in its charter) Ohio (State or other jurisdiction of incorporation or organization) 10 ...

Fourth Quarter & Full-Year Fiscal 2020 Results August 20, 2020 DISCLAIMER Forward-Looking Statements and Non-GAAP Financial Measures This presentation includes "forward-looking statements" within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include all statements that do not relate solely to historical or current facts, and you can identify forward-looking statements because they contain words such as "believes," "expects," "may," "will," "out ...

Financial Data and Key Metrics Changes - Net income for Q4 was $1.5 million, up from $900,000 in the previous year, with earnings per diluted share increasing to $0.06 from $0.03 [22] - EBITDA rose to $3.9 million compared to $2.2 million in the prior year, while sales declined by 22% due to pandemic impacts [22][24] - Adjusted net income for the full year was $3.2 million, compared to $1 million in fiscal 2019, with adjusted earnings per share increasing to $0.12 from $0.04 [26] Business Line Data and Key Metrics Changes - In the lighting segment, adjusted operating income increased by 5% to $2.9 million, with a gross margin improvement of 520 basis points to 28.6% despite a sales decline to $41 million [27] - The graphics segment saw adjusted operating income rise to $2.2 million from $800,000 last year, with a sales decline of 6% due to pandemic-related delays [28] Market Data and Key Metrics Changes - The company reported strong cash flow generation, with $11.5 million of free cash flow in Q4, resulting in a cash balance of $3.5 million at the end of fiscal 2020, compared to net debt of $39.5 million at the end of Q4 fiscal 2019 [24] - The company maintained a strong graphics backlog and did not expect changes to large, multi-year customer program commitments despite potential project installation delays [28] Company Strategy and Development Direction - The company is shifting focus from low-value products to higher-value solutions, with plans to introduce 20 new products in 2021 [15][19] - Three new vertical markets will be added to the company's focus over the next year, aiming to enhance competitive positioning [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty due to COVID-19 but expressed confidence in the company's ability to adapt and create opportunities [19] - The company is prepared to pivot quickly based on market conditions and has multiple scenarios planned for growth [32][33] Other Important Information - The company eliminated nearly $40 million in debt over the last 12 months and is currently debt-free [10] - The company declared a regular cash dividend of $0.05 per share payable on September 8 for shareholders of record on August 31 [26] Q&A Session Summary Question: Outlook for growth in fiscal '21 - Management indicated that it is difficult to forecast growth due to the current state of flux but is prepared to pivot based on market reactions [32][33] Question: New verticals and resources for growth - Management is validating potential new verticals but did not disclose specifics, emphasizing the importance of building a better company before expanding [34][35] Question: Sustainability of lower operating costs - Management believes structural cost reductions can be maintained, with potential for additional opportunities, but also plans to make investments that may affect costs [36] Question: Margin expansion in the graphics segment - Management sees opportunities for margin improvement in the graphics segment as projects mature and efficiencies are gained [41] Question: Gross margin targets by segment - Management has targets for gross margin improvement but did not disclose specific figures, focusing on continuous improvement and efficiency [44][45] Question: Future communication strategies - Management expressed interest in hosting virtual meetings to discuss strategic initiatives but has not advanced plans significantly [51]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2020 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO ________________. Commission File No. 0-13375 LSI Industries Inc. (Exact name of registrant as specified in its charter) Ohio 31-0888951 (State or other ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q Commission File No. 0-13375 LSI Industries Inc. (Exact name of registrant as specified in its charter) Ohio 31-0888951 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 10000 Alliance Road, Cincinnati, Ohio 45242 (Address of principal executive offices) (Zip Code) (513) 793-3200 Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of ...

[PART I. Financial Information](index=3&type=section&id=PART%20I.%20Financial%20Information) [Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201.%20Financial%20Statements) The company's Q1 net income rose to $4.5 million, driven by a facility sale gain and improved operations [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net sales grew to $88.7 million, with a $4.8 million restructuring gain boosting net income to $4.5 million Consolidated Statements of Operations Highlights (Q1 FY2020 vs Q1 FY2019) | Metric | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | **Net Sales** | $88,701 thousand | $84,957 thousand | | **Gross Profit** | $21,855 thousand | $21,261 thousand | | **Operating Income** | $6,839 thousand | $2,934 thousand | | **Net Income** | $4,475 thousand | $1,749 thousand | | **Diluted EPS** | $0.17 | $0.07 | - A significant **restructuring gain of $4.8 million** was recognized in the quarter, which was the primary driver for the substantial increase in operating income[12](index=12&type=chunk) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $203.5 million while long-term debt was significantly reduced to $23.2 million Balance Sheet Summary | Metric | September 30, 2019 | June 30, 2019 | | :--- | :--- | :--- | | **Total Current Assets** | $107,538 thousand | $110,980 thousand | | **Total Assets** | $203,521 thousand | $201,100 thousand | | **Total Current Liabilities** | $45,172 thousand | $39,875 thousand | | **Long-Term Debt** | $23,181 thousand | $39,541 thousand | | **Total Shareholders' Equity** | $123,158 thousand | $119,937 thousand | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow improved to $6.4 million, with asset sales funding significant debt repayment Cash Flow Summary (Three Months Ended Sep 30) | Cash Flow Activity | 2019 | 2018 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $6,359 thousand | $2,188 thousand | | **Net Cash from Investing Activities** | $11,983 thousand | ($648) thousand | | **Net Cash from Financing Activities** | ($17,729) thousand | ($556) thousand | | **Increase in Cash** | $613 thousand | $984 thousand | - The company received **$12.3 million from the sale of assets**, which was the primary driver of positive cash flow from investing activities[25](index=25&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail new accounting standards adoption and segment performance, highlighting a facility sale gain - The company adopted ASU 2016-02, "Leases," effective July 1, 2019, resulting in the recognition of **right-of-use assets of $10.4 million** and **lease liabilities of $10.8 million** on the balance sheet[41](index=41&type=chunk)[42](index=42&type=chunk) Segment Performance (Three Months Ended Sep 30, 2019) | Segment | Net Sales | Operating Income | | :--- | :--- | :--- | | **Lighting** | $63,191 thousand | $9,159 thousand | | **Graphics** | $25,510 thousand | $1,017 thousand | | **Corporate & Eliminations** | N/A | ($3,337) thousand | - In Q1 FY2020, the company sold its New Windsor, New York facility, resulting in **net proceeds of $12.3 million** and a **gain of $4.8 million**, which is classified under restructuring activities[69](index=69&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) Net sales grew 4.4%, with a facility sale gain masking flat adjusted operating income [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Lighting segment income surged from a facility sale, while Graphics income fell despite sales growth - Lighting Segment sales increased by **2.9% to $63.2 million**, with operating income surging to **$9.2 million from $3.9 million**, mainly due to the **$4.8 million gain** on the sale of the New Windsor facility[85](index=85&type=chunk)[88](index=88&type=chunk) - Graphics Segment sales grew **8.4% to $25.5 million**, but operating income decreased by **57.4% to $1.0 million**, impacted by unfavorable customer program mix and costs related to the transition from print to digital[89](index=89&type=chunk)[90](index=90&type=chunk)[92](index=92&type=chunk) - On an adjusted basis, excluding the facility sale gain and other one-time costs, the company's **operating income was $2.3 million**, compared to $3.5 million in the prior-year period[84](index=84&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity improved with stronger operating cash flow and debt reduction, maintaining ample credit availability - Cash from operating activities **increased by $4.2 million YoY to $6.4 million**, driven by strategies to reduce accounts receivable DSO, increase inventory turns, and manage supplier payment terms[99](index=99&type=chunk) - The company has a **$75 million revolving line of credit** expiring in Q3 of fiscal 2022, with **$23.2 million borrowed** and **$51.8 million available** as of September 30, 2019[59](index=59&type=chunk)[102](index=102&type=chunk) - A regular quarterly cash dividend of **$0.05 per share** was declared in November 2019, continuing the indicated annual rate of $0.20 per share[107](index=107&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk exposure remained materially unchanged from the previous fiscal year-end - There have been **no material changes** in the Company's exposure to market risk since June 30, 2019[109](index=109&type=chunk) [Controls and Procedures](index=28&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management confirmed the effectiveness of disclosure controls and procedures as of the quarter-end - The Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2019, the company's **disclosure controls and procedures were effective**[111](index=111&type=chunk) - During the quarter, the company enacted additional controls related to the adoption of the **new lease accounting standard (ASU 2016-02)**[112](index=112&type=chunk) [PART II. Other Information](index=29&type=section&id=PART%20II.%20Other%20Information) [Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not conduct any unregistered sales of equity securities during the quarter - There were **no unregistered sales of equity securities** or use of proceeds to report for the quarter[114](index=114&type=chunk) [Other Information](index=29&type=section&id=ITEM%205.%20Other%20Information) Details key outcomes from the Annual Shareholders Meeting, including director elections and plan approvals - At the Annual Meeting on November 5, 2019, shareholders approved the **2019 Omnibus Award Plan**, which authorizes up to **2,650,000 new shares** for equity awards[114](index=114&type=chunk)[115](index=115&type=chunk) - Shareholders **elected all six director nominees**, ratified the appointment of Grant Thornton LLP as the independent auditor, and approved the company's executive compensation on an advisory basis[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk)[122](index=122&type=chunk) [Exhibits](index=30&type=section&id=ITEM%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including certifications and XBRL data - The exhibits filed with this report include incentive plan agreements, **CEO and CFO certifications** (Rule 13a-14(a) and Section 1350), and XBRL interactive data files[123](index=123&type=chunk)

```markdown PART I [ITEM 1. BUSINESS](index=5&type=section&id=ITEM%201.%20BUSINESS) LSI Industries Inc. is a performance-based outdoor lighting company that also provides indoor and specialty lighting, graphics, digital graphics, and electrical signage. The company offers comprehensive visual image solutions, primarily serving... [Our Company](index=5&type=section&id=Our%20Company) LSI provides visual image solutions (lighting, graphics, digital signage) for petroleum/convenience stores and national retailers - LSI provides **comprehensive visual image solutions** including lighting, graphics, digital signage, and professional services, primarily targeting **petroleum/convenience stores and national retailers**[15](index=15&type=chunk)[16](index=16&type=chunk) - The company spent **$5.3 million** on **research and development** in **fiscal 2019**, focusing on **product innovation**, especially **LED lighting**[17](index=17&type=chunk) [Business Segments](index=6&type=section&id=Business%20Segments%20(Lighting%20and%20Graphics)) LSI's business is organized into two segments: Lighting (72% of FY2019 net sales) and Graphics (28%), manufacturing LED lighting and visual image solutions respectively | Segment | FY2019 Net Sales (in thousands) | FY2018 Net Sales (in thousands) | | :------ | :------------------------------ | :------------------------------ | | Lighting | **$235,114** | **$260,613** | | Graphics | **$93,738** | **$81,410** | | **Total** | **$328,852** | **$342,023** | - **Lighting Segment** focuses on high-quality, competitively-priced outdoor and indoor **LED lighting** and controls for commercial, industrial, and multi-site retail markets[21](index=21&type=chunk)[23](index=23&type=chunk) - **Graphics Segment** manufactures and sells exterior and interior **visual image elements**, including integrated digital signage and menu boards, for **petroleum/convenience stores**, quick-service restaurants, and multi-site retail[24](index=24&type=chunk) [Our Competitive Strengths](index=7&type=section&id=Our%20Competitive%20Strengths) LSI's competitive advantages include its single-source provider position, market penetration, product innovation (LED), and strong customer relationships - LSI differentiates itself as a **single-source provider** offering integrated digital signage, graphics, lighting, and installation services, which simplifies **visual image program execution** for **customers**[26](index=26&type=chunk) - The company maintains strong, long-standing **customer relationships** and a focus on **product innovation**, particularly in **LED solutions**, to offer energy-efficient and low-maintenance products[28](index=28&type=chunk)[29](index=29&type=chunk) - LSI employs a **Lean Management System** (LSI Business System) for **continuous improvement**, aiming to increase **customer satisfaction** and **shareholder value**[33](index=33&type=chunk) [Sales, Marketing and Customers](index=8&type=section&id=Sales%2C%20Marketing%20and%20Customers) LSI sells lighting products through regional managers and representatives globally, while graphics products are sold via an internal sales force - **Lighting products** are sold primarily in the US, Canada, Mexico, Australia, and Latin America through regional sales managers and independent representatives, while **graphics products** are sold through an internal sales force[35](index=35&type=chunk) - LSI uses Image and I-Zone Marketing Centers to create computer-generated virtual prototypes and display products, aiding **customers** in design decisions and expanding product interest[37](index=37&type=chunk)[38](index=38&type=chunk) - **Sales** are partially seasonal, with installation of outdoor lighting and graphic systems in the northern states **decreasing** during the winter months[36](index=36&type=chunk)[47](index=47&type=chunk) [Manufacturing and Operations](index=8&type=section&id=Manufacturing%20and%20Operations) LSI designs and manufactures most products using lean principles, sourcing key raw materials from multiple suppliers, and operating ISO 9001:2015 certified facilities - The company designs, engineers, and manufactures most products using **lean manufacturing principles**, with periodic investments in new machinery and equipment[40](index=40&type=chunk) - Principal **raw materials** include steel, aluminum, **LEDs**, and various graphic substrates, sourced from multiple **suppliers** to mitigate **supply disruption risks**[41](index=41&type=chunk) - LSI operates eight manufacturing and office facilities in four U.S. states, with most operations **ISO 9001:2015 certified**[43](index=43&type=chunk)[44](index=44&type=chunk) [Goodwill and Intangible Asset Impairment](index=10&type=section&id=Goodwill%20and%20Intangible%20Asset%20Impairment) LSI recorded a **$20.165 million goodwill impairment** in the **Lighting Segment** in **fiscal 2019**, following a **$28.0 million impairment** in **fiscal 2018** | Fiscal Year | Goodwill Impairment (Lighting Segment) | Indefinite-Lived Intangible Asset Impairment | | :---------- | :------------------------------------- | :------------------------------------------- | | **2019** | **$20,165,000** | None | | **2018** | **$28,000,000** | None | [Competition](index=10&type=section&id=Competition) LSI faces strong competition across all segments, differentiating through product quality, performance, price, customer service, and patents - LSI operates in highly **competitive markets**, differentiating itself through **product quality**, performance, price, **customer service**, prompt delivery, and reputation, supported by product and process **patents**[46](index=46&type=chunk) [Additional Information](index=10&type=section&id=Additional%20Information) As of June 30, 2019, LSI had 1,065 full-time and 181 agency employees, with a **backlog of orders** of **$30.7 million** | Metric | June 30, 2019 | June 30, 2018 | | :----- | :------------ | :------------ | | **Backlog of Orders** | **$30.7 million** | **$28.8 million** | | Full-time **Employees** | **1,065** | N/A | | Agency **Employees** | **181** | N/A | [ITEM 1A. RISK FACTORS](index=10&type=section&id=ITEM%201A.%20RISK%20FACTORS) LSI faces various risks, including economic downturns, intense competition, raw material price volatility, and significant sales concentration in the petroleum/convenience store market - **Economic downturns**, **competitive pressures**, and **raw material price volatility** could adversely affect **operating results** and **margins**[53](index=53&type=chunk)[54](index=54&type=chunk)[56](index=56&type=chunk) - A **significant portion** (**32%** in **FY2019**) of **net sales** is concentrated in the **petroleum/convenience store market**, making the company **vulnerable** to changes in this industry[57](index=57&type=chunk) - **Risks** include the inability to develop and gain **customer acceptance** for new products, loss of **key personnel**, challenges in protecting **intellectual property**, and potential liabilities from product recalls or litigation[59](index=59&type=chunk)[61](index=61&type=chunk)[63](index=63&type=chunk)[67](index=67&type=chunk)[70](index=70&type=chunk) - Compliance with evolving **data privacy regulations** (e.g., GDPR, CCPA) and potential impacts from U.S. government trade actions (**tariffs**) pose **significant operational and financial risks**[73](index=73&type=chunk)[76](index=76&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=16&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company reported that there were no unresolved staff comments from the Securities and Exchange Commission - The company reported **no unresolved staff comments** from the SEC[77](index=77&type=chunk) PART II [ITEM 2. PROPERTIES](index=17&type=section&id=ITEM%202.%20PROPERTIES) LSI Industries Inc. operates nine manufacturing and office facilities across four U.S. states, totaling approximately 1.2 million square feet, with one facility in New Windsor, New York, classified as an asset held for sale | Description | Size (sq. ft.) | Location | Status | | :---------- | :------------- | :------- | :----- | | Corporate HQ & Lighting Mfg | **243,000** | Cincinnati, OH | Owned | | Lighting Pole Mfg | **122,000** | Cincinnati, OH | Owned | | Technology Center | **9,000** | Cincinnati, OH | Leased | | Lighting Fabrication Mfg | **96,000** | Independence, KY | Owned | | Graphics Office & Mfg | **183,000** | Houston, TX | Leased | | Graphics Office & Mfg | **212,000** | North Canton, OH | Owned | | Lighting Office & Mfg | **170,000** | New Windsor, NY | Owned and Leased (for sale) | | Lighting Office & Mfg | **57,000** | Columbus, OH | Owned | | Lighting Office & Mfg | **336,000** | Burlington, NC | Leased | - The **New Windsor, NY facility** (**170,000 sq. ft.**) is reported as an **asset held for sale** as of **June 30, 2019**, with the official sale expected in the **first quarter of fiscal 2020**[78](index=78&type=chunk) [ITEM 3. LEGAL PROCEEDINGS](index=17&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) LSI Industries Inc. is involved in various legal proceedings and claims, but management believes their ultimate disposition will not materially affect the company's financial position - LSI is party to various **legal proceedings** and claims, but management believes their ultimate disposition will **not materially affect** the company's **financial position** or **results**[80](index=80&type=chunk)[287](index=287&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=17&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) The company reported that there were no mine safety disclosures required for the period - The company reported **no mine safety disclosures**[80](index=80&type=chunk) [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=18&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) LSI's common stock trades on the NASDAQ Global Select Market under the symbol "LYTS," with approximately 653 shareholders of record as of August 23, 2019, and a consistent quarterly cash dividend policy since fiscal 1995 - LSI's **common stock** (LYTS) is traded on the **NASDAQ Global Select Market**, with approximately **653 shareholders of record** as of **August 23, 2019**[83](index=83&type=chunk) - The company has a **dividend policy** and has paid quarterly **cash dividends** since **fiscal 1995**, with an indicated annual rate of **$0.20 per share** for **fiscal 2019**[84](index=84&type=chunk) [ITEM 6. SELECTED FINANCIAL DATA](index=18&type=section&id=ITEM%206.%20SELECTED%20FINANCIAL%20DATA) This section of the report is marked as "Not applicable," indicating that selected financial data is not presented here - This section is marked as "**Not applicable**" in the report[85](index=85&type=chunk) [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=24&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) In fiscal 2019, LSI's **net sales decreased** by **3.9%** to **$328.85 million**, primarily due to a **decline** in the **Lighting Segment**, partially offset by **growth** in **Graphics** [Summary of Consolidated Results](index=24&type=section&id=Summary%20of%20Consolidated%20Results) **Fiscal 2019 net sales decreased** by **3.9%** to **$328.85 million**, primarily due to a **9.8% drop** in the **Lighting Segment**, partially offset by a **15.1% increase** in the **Graphics Segment** | Metric | FY2019 (in thousands) | FY2018 (in thousands) | Change (%) | | :------------------------ | :-------------------- | :-------------------- | :--------- | | **Net Sales** | **$328,852** | **$342,023** | **-3.9%** | | **Operating Loss** (reported) | **$(19,890)** | **$(21,652)** | **-8.1%** | | **Goodwill Impairment** | **$20,165** | **$28,000** | **-28.0%** | | **Adjusted Operating Income** | **$4,028** | **$9,612** | **-58.1%** | - The **decrease** in **net sales** was driven by a **$25.5 million** (**9.8%**) **decline** in the **Lighting Segment**, partially offset by a **$12.3 million** (**15.1%**) **increase** in the **Graphics Segment**[116](index=116&type=chunk) - Business performance in **FY2019** was impacted by disruptions from a CEO change, organizational restructuring, and unplanned projects, contributing to **decreased gross margin** and **operating earnings**[117](index=117&type=chunk) [Non-GAAP Financial Measures](index=27&type=section&id=Non-GAAP%20Financial%20Measures) LSI utilizes non-GAAP financial measures like **adjusted operating income**, **adjusted net income**, and **Adjusted EBITDA** to provide a clearer view of its ongoing operating performance | Metric (in thousands) | FY2019 | FY2018 | | :-------------------- | :----- | :----- | | **Operating Loss** (reported) | **$(19,890)** | **$(21,652)** | | **Goodwill impairment** | **20,165** | **28,000** | | **Restructuring & plant closure costs** | **3,073** | -- | | **Severance costs** | **560** | **128** | | **Transition & re-alignment costs** | **120** | **3,136** | | **Adjusted Operating Income** | **$4,028** | **$9,612** | | Metric (in thousands, except per share data) | FY2019 | FY2018 | | :-------------------------------------- | :----- | :----- | | **Net Loss** (reported) | **$(16,339)** | **$(19,541)** | | **Diluted EPS** (reported) | **$(0.63)** | **$(0.76)** | | **Net Income adjusted** | **$985** | **$5,714** | | **Diluted EPS adjusted** | **$0.04** | **$0.22** | | Metric (in thousands) | FY2019 | FY2018 | % Change | | :-------------------- | :----- | :----- | :------- | | **EBITDA** | **$(9,669)** | **$(11,430)** | **-15.4%** | | **Adjusted EBITDA** | **$14,249** | **$19,834** | **-28.2%** | | **Free Cash Flow** | **$8,873** | **$8,094** | **9.6%** | [Results of Operations](index=28&type=section&id=Results%20of%20Operations) The **Lighting Segment experienced** a **9.8% decrease** in **net sales** and a **20.4% drop** in **gross profit** in **FY2019**, impacted by **restructuring costs** and **competitive pressures** [Lighting Segment](index=28&type=section&id=Lighting%20Segment) The **Lighting Segment's net sales decreased** by **9.8%** to **$235.11 million** in **fiscal 2019** due to continued **market competitiveness** | Metric (in thousands) | FY2019 | FY2018 | Change (%) | | :-------------------- | :----- | :----- | :--------- | | **Net Sales** | **$235,114** | **$260,613** | **-9.8%** | | **Gross Profit** | **$55,119** | **$69,256** | **-20.4%** | | **Gross Profit %** | **23.4%** | **26.6%** | **-3.2 pp** | | **Operating Loss** | **$(12,211)** | **$(12,795)** | **-4.6%** | - The **Lighting Segment incurred** **$2.7 million** in **restructuring and plant closure costs** in **FY2019**, impacting **gross profit**[127](index=127&type=chunk) - **Adjusted operating income** for the **Lighting Segment decreased** by **$4.0 million** to **$11.2 million** in **FY2019**, primarily due to **reduced sales volume** and **gross profit**, partially offset by lower selling and administrative expenses[129](index=129&type=chunk) [Graphics Segment](index=28&type=section&id=Graphics%20Segment) The **Graphics Segment's net sales increased** by **15.1%** to **$93.74 million** in **fiscal 2019**, driven by **growth** in the **Petroleum** and **Quick Service Restaurant markets** | Metric (in thousands) | FY2019 | FY2018 | Change (%) | | :-------------------- | :----- | :----- | :--------- | | **Net Sales** | **$93,738** | **$81,410** | **15.1%** | | **Gross Profit** | **$18,602** | **$20,016** | **-7.1%** | | **Gross Profit %** | **19.8%** | **24.6%** | **-4.8 pp** | | **Operating Income** | **$3,112** | **$5,618** | **-44.6%** | - The **decline** in **gross profit margin** despite higher **sales** was due to a mix shift to large, **competitive print** and **digital technology projects** that initially generate lower **margins**[132](index=132&type=chunk) [Corporate and Eliminations](index=29&type=section&id=Corporate%20and%20Eliminations) Corporate and Eliminations reported an **operating loss** of **$(10.79) million** in **fiscal 2019**, a **25.3% decrease** from the prior year, primarily due to a **$3.1 million reduction** in **transition and re-alignment costs** | Metric (in thousands) | FY2019 | FY2018 | | :-------------------- | :----- | :----- | | **Operating Loss** | **$(10,791)** | **$(14,475)** | - The **decrease** in administrative expenses was primarily due to the absence of **$3.1 million** in **transition and re-alignment costs** in **FY2019**, which were present in **FY2018**[136](index=136&type=chunk) [Other Consolidated Matters to Report](index=29&type=section&id=Other%20Consolidated%20Matters%20to%20Report) **Net interest expense increased** to **$2.24 million** in **fiscal 2019**, and the company reported a **net loss** of **$(16.34) million**, an **improvement** from **$(19.54) million** in **fiscal 2018** | Metric (in thousands, except EPS) | FY2019 | FY2018 | | :-------------------------------- | :----- | :----- | | **Net Interest Expense** | **$2,240** | **$1,680** | | **Net Loss** | **$(16,339)** | **$(19,541)** | | **Diluted Loss Per Share** | **$(0.63)** | **$(0.76)** | - The **income tax benefit** in **FY2019** was **$5.93 million** (**26.6% effective rate**), including a **$0.93 million tax benefit** related to the reduction of a **valuation reserve** from the anticipated sale of the **New Windsor, New York facility**[138](index=138&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) LSI's **working capital increased** to **$71.1 million** at **June 30, 2019**, with a **current ratio** of **2.78:1**, and **cash generated from operating activities** remained **stable** at **$11.5 million** | Metric (in millions) | June 30, 2019 | June 30, 2018 | | :------------------- | :------------ | :------------ | | **Working Capital** | **$71.1** | **$67.9** | | **Current Ratio** | **2.78:1** | **2.61:1** | | **Net Inventories** | **$43.5** | **$51.0** | | **Cash from Operations** | **$11.5** | **$11.5** | - The company amended its **revolving line of credit** from **$100 million** to **$75 million** in **FY2019** to better match financing needs, with **$41.5 million available** as of **August 15, 2019**[145](index=145&type=chunk) - LSI expects to complete the sale of its **New Windsor, NY manufacturing facility** in **Q1 fiscal 2020**, generating approximately **$12 million** in gross proceeds[147](index=147&type=chunk) [Off-Balance Sheet Arrangements](index=31&type=section&id=Off-Balance%20Sheet%20Arrangements) LSI has no financial instruments with off-balance sheet risk, apart from operating leases, with total contractual obligations of **$31.84 million** at **June 30, 2019** | Contractual Obligations (in thousands) | Total | Less than 1 year | 1-3 Years | 3-5 Years | More than 5 years | | :----------------------------------- | :---- | :--------------- | :-------- | :-------- | :---------------- | | **Operating Lease Obligations** | **$12,183** | **$2,211** | **$4,357** | **$4,009** | **$1,606** | | **Purchase Obligations** | **$19,656** | **$19,656** | -- | -- | -- | | **Total Contractual Obligations** | **$31,839** | **$21,867** | **$4,357** | **$4,009** | **$1,606** | [Cash Dividends](index=31&type=section&id=Cash%20Dividends) In August 2019, the Board of Directors declared a regular quarterly **cash dividend** of **$0.05 per share**, maintaining the **fiscal 2019 annual rate** of **$0.20 per share** - The Board of Directors declared a quarterly **cash dividend** of **$0.05 per share** in **August 2019**, consistent with the **fiscal 2019 annual rate** of **$0.20 per share**[152](index=152&type=chunk) [Critical Accounting Policies and Estimates](index=31&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) LSI's financial statements require significant management estimates and judgments, particularly in **revenue recognition**, **doubtful accounts**, **inventory reserves**, **product warranties**, and **income tax provisions** - Key accounting policies requiring **significant management judgment** include **revenue recognition**, allowances for **doubtful accounts**, **inventory reserves**, **product warranties**, and **income tax provisions**[153](index=153&type=chunk)[154](index=154&type=chunk) [New Accounting Pronouncements](index=31&type=section&id=New%20Accounting%20Pronouncements) LSI adopted **ASU 2014-09** (**Revenue from Contracts with Customers**) on **July 1, 2018**, resulting in a **$0.591 million net increase** to **retained earnings** - The company adopted **ASU 2014-09** (**Revenue from Contracts with Customers**) on **July 1, 2018**, resulting in a **$0.591 million net increase** to **retained earnings**[217](index=217&type=chunk)[218](index=218&type=chunk) - LSI plans to adopt **ASU 2016-02** (**Leases**) on **July 1, 2019**, and expects to recognize **$9.5 million** to **$12.5 million** in **right-of-use assets** and corresponding **lease liabilities** on its **balance sheet**[155](index=155&type=chunk)[156](index=156&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=18&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) LSI is exposed to **market risks** from **variable interest rates** on its **$75 million line of credit**, **raw material price fluctuations** (62% of **cost of sales** in **FY2019**), and minimal foreign currency translation risk - LSI is exposed to **market risks** from **variable interest rates** on its **$75 million line of credit**, **raw material price fluctuations** (materials were **62%** of **cost of sales** in **FY2019**), and minimal foreign currency translation risk (**3%** of **sales** in pesos)[87](index=87&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) - The company mitigates **raw material price risk** through utilizing multiple **suppliers**, negotiating with existing **suppliers**, arranging stocking agreements, and implementing **price increases** to **customers**[90](index=90&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=32&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents LSI's audited consolidated financial statements for **fiscal years 2019** and **2018**, including statements of operations, comprehensive income, balance sheets, shareholders' equity, and cash flows, along with comprehensive notes [Management's Report On Internal Control Over Financial Reporting](index=32&type=section&id=Management%27s%20Report%20On%20Internal%20Control%20Over%20Financial%20Reporting) LSI's management concluded that the company's **internal control over financial reporting** was **effective** as of **June 30, 2019**, based on the **2013 COSO framework** - Management, including the CEO and CFO, concluded that the company's **internal control over financial reporting** was **effective** as of **June 30, 2019**, based on the **2013 COSO framework**[157](index=157&type=chunk)[161](index=161&type=chunk) [Report of Independent Registered Public Accounting Firm (Internal Control)](index=33&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20(Internal%20Control)) Grant Thornton LLP issued an **unqualified opinion** on the **effectiveness** of LSI's **internal control over financial reporting** as of **June 30, 2019**, based on the **COSO framework** - Grant Thornton LLP provided an **unqualified opinion** on the **effectiveness** of LSI Industries Inc.'s **internal control over financial reporting** as of **June 30, 2019**[164](index=164&type=chunk) [Report of Independent Registered Public Accounting Firm (Financial Statements)](index=34&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20(Financial%20Statements)) Grant Thornton LLP issued an **unqualified opinion** on the fair presentation of LSI's consolidated financial statements for the years ended **June 30, 2019** and **2018** - Grant Thornton LLP issued an **unqualified opinion** on the fair presentation of LSI's consolidated financial statements for **FY2019** and **FY2018**[172](index=172&type=chunk) - The company changed its method of accounting for **revenue from contracts with customers** in **FY2019** due to the adoption of **ASU 2014-09** (**Topic 606**)[174](index=174&type=chunk) [Consolidated Statements of Operations](index=35&type=section&id=Consolidated%20Statements%20of%20Operations) For **fiscal year 2019**, LSI reported **net sales** of **$328.85 million**, a **gross profit** of **$73.71 million**, and a **net loss** of **$(16.34) million** | Metric (in thousands, except per share) | FY2019 | FY2018 | | :-------------------------------------- | :----- | :----- | | **Net sales** | **$328,852** | **$342,023** | | **Cost of products and services sold** | **$253,621** | **$252,789** | | **Gross profit** | **$73,713** | **$89,234** | | **Operating (loss)** | **$(19,890)** | **$(21,652)** | | **Net (loss)** | **$(16,339)** | **$(19,541)** | | **Diluted (loss) per common share** | **$(0.63)** | **$(0.76)** | [Consolidated Statements of Comprehensive Income](index=36&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) LSI reported a **comprehensive loss** of **$(16.32) million** for **fiscal year 2019**, which includes the **net loss** of **$(16.34) million** and a foreign currency translation adjustment **gain** of **$16 thousand** | Metric (in thousands) | FY2019 | FY2018 | | :-------------------- | :----- | :----- | | **Net (Loss)** | **$(16,339)** | **$(19,541)** | | Foreign currency translation adjustment | **$16** | -- | | **Comprehensive (Loss)** | **$(16,323)** | **$(19,541)** | [Consolidated Balance Sheets](index=37&type=section&id=Consolidated%20Balance%20Sheets) As of **June 30, 2019**, LSI's **total assets** were **$201.10 million**, a **decrease** from **$229.52 million** in **2018** | Metric (in thousands) | June 30, 2019 | June 30, 2018 | | :-------------------- | :------------ | :------------ | | **ASSETS** | | | | **Cash and cash equivalents** | **$966** | **$3,178** | | **Accounts receivable, net** | **$54,728** | **$50,609** | | **Inventories** | **$43,512** | **$50,994** | | **Total current assets** | **$110,980** | **$110,081** | | **Net property, plant and equipment** | **$31,976** | **$43,703** | | **Goodwill** | **$10,373** | **$30,538** | | **Total assets** | **$201,100** | **$229,517** | | **LIABILITIES & SHAREHOLDERS' EQUITY** | | | | **Total current liabilities** | **$39,875** | **$42,199** | | **Long-Term Debt** | **$39,541** | **$45,360** | | **Total shareholders' equity** | **$119,937** | **$139,251** | | **Total liabilities & shareholders' equity** | **$201,100** | **$229,517** | [Consolidated Statements of Shareholders' Equity](index=39&type=section&id=Consolidated%20Statements%20of%20Shareholders%27%20Equity) **Total shareholders' equity decreased** from **$139.25 million** at **June 30, 2018**, to **$119.94 million** at **June 30, 2019**, primarily due to the **net loss** and **cash dividends paid** | Metric (in thousands) | June 30, 2019 | June 30, 2018 | | :-------------------- | :------------ | :------------ | | **Total Shareholders' Equity** | **$119,937** | **$139,251** | | **Net (Loss)** | **$(16,339)** | **$(19,541)** | | **Dividends** — **$0.20 per share** | **$(5,184)** | **$(5,154)** | | Cumulative effect of adoption of accounting guidance | **$591** | -- | [Consolidated Statements of Cash Flows](index=40&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) LSI generated **$11.49 million** in **net cash from operating activities** in **fiscal 2019**, consistent with the prior year, while **cash used in investing activities** was **$(2.59) million** | Metric (in thousands) | FY2019 | FY2018 | | :-------------------- | :----- | :----- | | **Net cash flows provided by operating activities** | **$11,491** | **$11,500** | | **Net cash flows (used in) investing activities** | **$(2,586)** | **$(1,868)** | | **Net cash flows (used in) financing activities** | **$(11,117)** | **$(9,493)** | | **(Decrease) Increase in cash and cash equivalents** | **$(2,212)** | **$139** | | **Cash and cash equivalents at end of year** | **$966** | **$3,178** | [Notes to Consolidated Financial Statements](index=41&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on LSI's accounting policies, including **revenue recognition** (adoption of **Topic 606**), segment information, **EPS calculation**, **inventory valuation**, **accrued expenses**, **goodwill** and **intangible assets** (including **significant impairments**), **debt**, **equity compensation**, **leases**, **income taxes** (impact of **TCJA**), and related party transactions [NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=41&type=section&id=NOTE%201%20%E2%80%94%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note details LSI's **significant accounting policies**, including **revenue recognition**, which was updated with the adoption of **ASU 2014-09** (**Topic 606**) on **July 1, 2018**, resulting in a **$0.591 million increase** to **retained earnings** - LSI recognizes **revenue** when performance obligations are satisfied, typically at shipment for products, and over time for customized products and installation services using a cost-based input method[189](index=189&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk) - The company adopted **ASU 2014-09** (**Topic 606**) on **July 1, 2018**, with a modified retrospective method, resulting in a **$0.591 million net increase** to **retained earnings**[217](index=217&type=chunk)[218](index=218&type=chunk) - LSI expects to adopt **ASU 2016-02** (**Leases**) on **July 1, 2019**, and anticipates recognizing **$9.5 million** to **$12.5 million** in **right-of-use assets** and **lease liabilities**[155](index=155&type=chunk)[156](index=156&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) | Warranty Liabilities (in thousands) | June 30, 2019 | June 30, 2018 | | :-------------------------------- | :------------ | :------------ | | Balance at beginning of period | **$6,876** | **$7,560** | | Additions charged to expense | **$5,190** | **$5,181** | | Deductions for repairs and replacements | **$(4,379)** | **$(5,865)** | | Balance at end of period | **$7,687** | **$6,876** | [NOTE 2 — BUSINESS SEGMENT INFORMATION](index=46&type=section&id=NOTE%202%20%E2%80%94%20BUSINESS%20SEGMENT%20INFORMATION) This note provides detailed financial information for LSI's two operating segments: **Lighting** and **Graphics**, along with Corporate and Eliminations | Metric (in thousands) | FY2019 Lighting | FY2019 Graphics | FY2018 Lighting | FY2018 Graphics | | :-------------------- | :-------------- | :-------------- | :-------------- | :-------------- | | **Net Sales** | **$235,114** | **$93,738** | **$260,613** | **$81,410** | | **Operating (Loss)/Income** | **$(12,211)** | **$3,112** | **$(12,795)** | **$5,618** | | **Capital Expenditures** | **$2,239** | **$342** | **$2,203** | **$1,038** | | **Depreciation and Amortization** | **$7,648** | **$1,594** | **$7,573** | **$1,542** | | **Identifiable Assets** | **$142,105** | **$40,914** | **$172,799** | **$39,881** | - The **Lighting Segment** focuses on outdoor and indoor lighting for various **markets**, while the **Graphics Segment** provides **visual image elements**, including digital signage and media content management[224](index=224&type=chunk)[226](index=226&type=chunk) [NOTE 3 — (LOSS) PER COMMON SHARE](index=48&type=section&id=NOTE%203%20%E2%80%94%20(LOSS)%20PER%20COMMON%20SHARE) LSI reported a basic and diluted **loss per common share** of **$(0.63)** for **fiscal 2019**, compared to **$(0.76)** for **fiscal 2018** | Metric (in thousands, except per share) | FY2019 | FY2018 | | :-------------------------------------- | :----- | :----- | | **Net (loss)** | **$(16,339)** | **$(19,541)** | | **Weighted average shares outstanding** (Basic) | **26,109** | **25,866** | | Basic **(loss) per share** | **$(0.63)** | **$(0.76)** | | **Diluted (loss) per share** | **$(0.63)** | **$(0.76)** | - Options to purchase **3,555,530 common shares** in **FY2019** and **2,802,420** in **FY2018** were not included in **diluted EPS calculation** because the exercise price was greater than the average fair **market value** of the **common shares** or due to a **net operating loss**[231](index=231&type=chunk) [NOTE 4 — INVENTORIES](index=49&type=section&id=NOTE%204%20%E2%80%94%20INVENTORIES) LSI's **net inventories decreased** by **$7.48 million** from **$50.99 million** at **June 30, 2018**, to **$43.51 million** at **June 30, 2019** | Inventory Category (in thousands) | June 30, 2019 | June 30, 2018 | | :-------------------------------- | :------------ | :------------ | | **Raw materials** | **$27,927** | **$31,795** | | **Work-in-process** | **$2,193** | **$3,833** | | **Finished goods** | **$13,392** | **$15,366** | | **Total Inventories** | **$43,512** | **$50,994** | - The company maintains an **inventory reserve** for obsolete and excess inventory, determined by considering specific known obsolete items and applying percentages based on **inventory turns**[202](index=202&type=chunk) [NOTE 5 — ACCRUED EXPENSES](index=49&type=section&id=NOTE%205%20%E2%80%94%20ACCURRED%20EXPENSES) **Total accrued expenses decreased** from **$24.27 million** at **June 30, 2018**, to **$21.21 million** at **June 30, 2019**, primarily due to a **reduction** in **compensation and benefits** and **accrued sales commissions** | Accrued Expense Category (in thousands) | June 30, 2019 | June 30, 2018 | | :-------------------------------------- | :------------ | :------------ | | **Compensation and benefits** | **$5,319** | **$9,394** | | **Customer prepayments** | **$1,768** | **$1,070** | | **Accrued sales commissions** | **$1,301** | **$2,274** | | **Accrued warranty** | **$7,687** | **$6,876** | | **Other accrued expenses** | **$5,136** | **$4,658** | | **Total Accrued Expenses** | **$21,211** | **$24,272** | [NOTE 6 — GOODWILL AND OTHER INTANGIBLE ASSETS](index=49&type=section&id=NOTE%206%20%E2%80%94%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS) **Goodwill decreased significantly** from **$30.54 million** at **June 30, 2018**, to **$10.37 million** at **June 30, 2019**, primarily due to a **$20.165 million impairment charge** recorded in the **Lighting Segment** in **fiscal 2019** | Goodwill (in thousands) | June 30, 2019 | June 30, 2018 | | :---------------------- | :------------ | :------------ | | **Goodwill, net** | **$10,373** | **$30,538** | | **Accumulated impairment losses** | **$(112,881)** | **$(92,716)** | - A **$20.165 million goodwill impairment** was recorded in the **Lighting Segment** in **FY2019** due to a sustained and **significant decline** in the company's **stock price**, leading to a full **impairment of goodwill** for one reporting unit[236](index=236&type=chunk) | Other Intangible Assets (in thousands) | June 30, 2019 Net Amount | June 30, 2018 Net Amount | | :------------------------------------- | :----------------------- | :----------------------- | | **Customer relationships** | **$23,493** | **$25,552** | | **Patents** | **$91** | **$121** | | **LED technology firmware, software** | **$3,702** | **$4,265** | | **Trade name** (amortized) | **$1,939** | **$2,049** | | **Trademarks and trade names** (indefinite-lived) | **$3,422** | **$3,422** | | **Total Other Intangible Assets** | **$32,647** | **$35,409** | [NOTE 7 — REVOLVING LINE OF CREDIT AND LONG-TERM DEBT](index=53&type=section&id=NOTE%207%20%E2%80%94%20REVOLVING%20LINE%20OF%20CREDIT%20AND%20LONG-TERM%20DEBT) In **February 2019**, LSI amended its secured **revolving line of credit**, reducing the facility from **$100 million** to **$75 million**, with **$39.5 million borrowed** and **$35.5 million available** as of **June 30, 2019** - LSI's secured **revolving line of credit** was reduced to **$75 million** (from **$100 million**) in **February 2019**, with **$39.5 million borrowed** and **$35.5 million available** as of **June 30, 2019**[247](index=247&type=chunk) - The **interest rate** on the **line of credit fluctuates** based on **LIBOR** plus an increment (**125-250 basis points**), and the company is in compliance with all **loan covenants**[247](index=247&type=chunk)[248](index=248&type=chunk) [NOTE 8 — CASH DIVIDENDS](index=54&type=section&id=NOTE%208%20%E2%80%94%20CASH%20DIVIDENDS) LSI paid **cash dividends** of **$5.18 million** in **fiscal 2019** and **$5.15 million** in **fiscal 2018**, maintaining an annual rate of **$0.20 per share** | Metric (in thousands) | FY2019 | FY2018 | | :-------------------- | :----- | :----- | | **Cash dividends paid** | **$5,184** | **$5,154** | | Annual **dividend rate per share** | **$0.20** | **$0.20** | [NOTE 9 — EQUITY COMPENSATION](index=54&type=section&id=NOTE%209%20%E2%80%94%20EQUITY%20COMPENSATION) LSI's **2012 Stock Incentive Plan** allows for various **equity awards**, including **stock options**, **Restricted Stock Units** (RSUs), and **Performance Stock Units** (PSUs) - The **2012 Stock Incentive Plan** allows for various **equity awards**, including **stock options**, RSUs, and PSUs, with **1,967,217 shares** reserved for issuance[250](index=250&type=chunk) | Stock Options (Shares) | June 30, 2019 | June 30, 2018 | | :--------------------- | :------------ | :------------ | | Outstanding | **2,749,626** | **3,298,677** | | Exercisable | **1,733,471** | **1,824,552** | | Granted during year | **972,900** | **794,537** | | Forfeited during year | **(1,406,548)** | **(467,609)** | - The company recorded **$876,333** in **stock option expense** in **FY2019**, a **decrease** from **$2,147,423** in **FY2018**[261](index=261&type=chunk) - As of **June 30, 2019**, **33,042 RSUs** and **56,550 PSUs** were unvested, with associated **expenses** of **$40,893** and **$62,474**, respectively, recorded in **FY2019**[266](index=266&type=chunk)[268](index=268&type=chunk) [NOTE 10 — LEASES AND PURCHASE COMMITMENTS](index=58&type=section&id=NOTE%2010%20%E2%80%94%20LEASES%20AND%20PURCHASE%20COMMITMENTS) LSI's **total contractual obligations**, including **operating leases** and **purchase commitments**, amounted to **$31.84 million** at **June 30, 2019**, with **$21.87 million due within one year** | Contractual Obligations (in thousands) | Total | Less than 1 year | 1-3 Years | 3-5 Years | More than 5 years | | :----------------------------------- | :---- | :--------------- | :-------- | :-------- | :---------------- | | **Operating Lease Obligations** | **$12,183** | **$2,211** | **$4,357** | **$4,009** | **$1,606** | | **Purchase Obligations** | **$19,656** | **$19,656** | -- | -- | -- | | **Total Contractual Obligations** | **$31,839** | **$21,867** | **$4,357** | **$4,009** | **$1,606** | - **Rental expense** for **operating leases** was **$2.65 million** in **fiscal 2019**, down from **$2.87 million** in **fiscal 2018**[273](index=273&type=chunk) [NOTE 11 — INCOME TAXES](index=58&type=section&id=NOTE%2011%20%E2%80%94%20INCOME%20TAXES) LSI reported a **total income tax benefit** of **$(5.93) million** in **fiscal 2019**, with an **effective tax rate** of **26.6%** | Metric (in thousands) | FY2019 | FY2018 | | :-------------------- | :----- | :----- | | **(Loss) before income taxes** | **$(22,268)** | **$(23,332)** | | **Total provision for income taxes (benefit)** | **$(5,929)** | **$(3,791)** | | **Effective tax rate** | **26.6%** | **16.3%** | | Deferred Income Tax (in thousands) | June 30, 2019 | June 30, 2018 | | :--------------------------------- | :------------ | :------------ | | **Deferred income tax asset before valuation allowance** | **$20,289** | **$14,902** | | **Valuation allowance** | **$(3,820)** | **$(4,749)** | | **Deferred income tax asset** | **$16,469** | **$10,153** | | **Deferred income tax liability** | **$(2,169)** | **$(2,045)** | | **Net deferred income tax asset** | **$14,300** | **$8,108** | - The company released a **$0.929 million valuation allowance** in **FY2019** related to a capital loss carryforward, anticipating a taxable capital gain from the **New Windsor facility sale**[281](index=281&type=chunk) [NOTE 12 — SUPPLEMENTAL CASH FLOW INFORMATION](index=61&type=section&id=NOTE%2012%20%E2%80%94%20SUPPLEMENTAL%20CASH%20FLOW%20INFORMATION) Supplemental **cash flow information** indicates that LSI made **cash payments** of **$2.22 million** for **interest** and **$0.09 million** for **income taxes** in **fiscal 2019** | Cash Payments (in thousands) | FY2019 | FY2018 | | :--------------------------- | :----- | :----- | | **Interest** | **$2,222** | **$1,582** | | **Income taxes** | **$86** | **$1,854** | [NOTE 13 — COMMITMENTS AND CONTINGENCIES](index=61&type=section&id=NOTE%2013%20%E2%80%94%20COMMITMENTS%20AND%20CONTINGENCIES) LSI is involved in various **legal proceedings** and claims, but management believes their ultimate disposition will **not materially affect** the company's **financial position** or **results** - LSI is party to various **legal proceedings** and claims, but management believes their ultimate disposition will **not materially affect** the company's **financial position** or **results**[287](index=287&type=chunk) [NOTE 14 – SEVERANCE COSTS](index=61&type=section&id=NOTE%2014%20%E2%80%93%20SEVERANCE%20COSTS) LSI recorded **severance charges** of **$0.56 million** in **fiscal 2019**, related to staffing reductions not associated with plant restructuring | Severance Costs (in thousands) | FY2019 | FY2018 | | :----------------------------- | :----- | :----- | | Accrual of expense | **$560** | **$1,900** | | Payments | **$(1,198)** | **$(363)** | | Balance at end of period | **$1,134** | **$1,772** | - Of the **$1.13 million accrued severance liability** at **June 30, 2019**, **$0.591 million** has been classified as a **current liability** and **$0.543 million** as a **long-term liability**[289](index=289&type=chunk) [NOTE 15 – RESTRUCTURING COSTS](index=61&type=section&id=NOTE%2015%20%E2%80%93%20RESTRUCTURING%20COSTS) LSI incurred **$1.81 million** in **restructuring costs** in **fiscal 2019**, mainly from closing facilities in **New Windsor, NY**, and Hawthorne, CA, with expected annual **savings** of **$4.0 million** - LSI incurred **$1.81 million** in **restructuring costs** in **FY2019**, mainly from closing facilities in **New Windsor, NY**, and Hawthorne, CA, with expected annual **savings** of **$4.0 million**[290](index=290&type=chunk)[291](index=291&type=chunk)[292](index=292&type=chunk) | Restructuring Costs (in thousands) | FY2019 | | :--------------------------------- | :----- | | **Severance and other termination benefits** | **$537** | | **Lease obligation** | **$99** | | **Impairment of fixed assets and accelerated depreciation** | **$427** | | Other | **$743** | | **Total** | **$1,806** | - The **New Windsor facility closure** alone incurred **$1.65 million** in **restructuring costs** and **$1.12 million** of **inventory write-downs** in **fiscal 2019**[290](index=290&type=chunk) [NOTE 16 — RELATED PARTY TRANSACTIONS](index=63&type=section&id=NOTE%2016%20%E2%80%94%20RELATED%20PARTY%20TRANSACTIONS) LSI engaged in **related party transactions**, including legal services from Keating Muething & Klekamp PLL (**$0.41 million** expense in **FY2019**) and **sales** of lighting fixtures to Wesco International (**$1.35 million revenue** in **FY2019**) | Related Party Transactions (in thousands) | FY2019 Expense/Revenue | FY2018 Expense/Revenue | | :-------------------------------------- | :--------------------- | :--------------------- | | Keating Muething & Klekamp PLL (Legal Services) | **$406** (Expense) | **$161** (Expense) | | Wesco International (Lighting Fixtures) | **$1,347** (Revenue) | **$3,200** (Revenue) | [NOTE 17 — SUMMARY OF QUARTERLY RESULTS (UNAUDITED)](index=64&type=section&id=NOTE%2017%20%E2%80%94%20SUMMARY%20OF%20QUARTERLY%20RESULTS%20(UNAUDITED)) This note provides unaudited quarterly financial results for **fiscal years 2019** and **2018**, detailing **net sales**, **gross profit**, **net income (loss)**, and **earnings (loss) per share** for each quarter | Metric (in thousands, except per share) | Q1 FY2019 | Q2 FY2019 | Q3 FY2019 | Q4 FY2019 | FY2019 Total | | :-------------------------------------- | :-------- | :-------- | :-------- | :-------- | :----------- | | **Net sales** | **$84,957** | **$89,541** | **$72,832** | **$81,522** | **$328,852** | | **Gross profit** | **$21,261** | **$19,656** | **$15,337** | **$17,459** | **$73,713** | | **Net income (loss)** | **$1,749** | **$(15,782)** | **$(3,168)** | **$862** | **$(16,339)** | | **Diluted EPS** | **$0.07** | **$(0.61)** | **$(0.12)** | **$0.03** | **$(0.63)** | | Metric (in thousands, except per share) | Q1 FY2018 | Q2 FY2018 | Q3 FY2018 | Q4 FY2018 | FY2018 Total | | :-------------------------------------- | :-------- | :-------- | :-------- | :-------- | :----------- | | **Net sales** | **$87,466** | **$92,305** | **$78,843** | **$83,409** | **$342,023** | | **Gross profit** | **$23,703** | **$25,307** | **$19,918** | **$20,306** | **$89,234** | | **Net (loss) income** | **$(15,629)** | **$(1,468)** | **$220** | **$(2,664)** | **$(19,541)** | | **Diluted EPS** | **$(0.61)** | **$(0.06)** | **$(0.01)** | **$(0.10)** | **$(0.76)** | [SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS](index=65&type=section&id=SCHEDULE%20II%20%E2%80%94%20VALUATION%20AND%20QUALIFYING%20ACCOUNTS) Schedule II provides a roll-forward of LSI's **valuation and qualifying accounts** for **fiscal years 2019** and **2018**, including the **allowance for doubtful accounts**, **inventory obsolescence reserve**, and **deferred tax asset valuation reserve** | Account (in thousands) | Balance Beginning of Period (FY2019) | Additions Charged to Costs and Expenses (FY2019) | Deductions (FY2019) | Balance End of Period (FY2019) | | :--------------------- | :----------------------------------- | :----------------------------------------------- | :------------------ | :----------------------------- | | **Allowance for Doubtful Accounts** | **$409** | **$776** | **$(306)** | **$879** | | **Inventory Obsolescence Reserve** | **$3,632** | **$3,641** | **$(2,668)** | **$4,605** | | **Deferred Tax Asset Valuation Reserve** | **$4,749** | **$0** | **$(929)** | **$3,820** | [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](index=19&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The company reported that there were no changes in or disagreements with accountants on accounting and financial disclosure during the period - The company reported **no changes** in or disagreements with accountants on accounting and financial disclosure[93](index=93&type=chunk) [ITEM 9A. CONTROLS AND PROCEDURES](index=19&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) LSI's management concluded that the company's **disclosure controls and procedures** were **effective** as of **June 30, 2019**, with no **material changes** in **internal control over financial reporting** during the **fiscal quarter** ended **June 30, 2019** - Management concluded that **disclosure controls and procedures** were **effective** as of **June 30, 2019**[95](index=95&type=chunk) - **No material changes** in **internal control over financial reporting** occurred during the **fiscal quarter** ended **June 30, 2019**[97](index=97&type=chunk) [ITEM 9B. OTHER INFORMATION](index=20&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) The company reported that there was no other information required to be disclosed in this section - The company reported **no other information** in this section[98](index=98&type=chunk) PART III [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](index=20&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) Information regarding LSI's directors, executive officers, and corporate governance is incorporated by reference from the company's Proxy Statement for its **2019 Annual Meeting of Shareholders** - Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's **2019 Annual Meeting of Shareholders Proxy Statement**[100](index=100&type=chunk) [ITEM 11. EXECUTIVE COMPENSATION](index=20&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Details concerning executive compensation are incorporated by reference from LSI's Proxy Statement filed for its **2019 Annual Meeting of Shareholders** - Information regarding executive compensation is incorporated by reference from the company's **2019 Annual Meeting of Shareholders Proxy Statement**[100](index=100&type=chunk) [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](index=20&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Information pertaining to the security ownership of certain beneficial owners and management, as well as related stockholder matters, is incorporated by reference from LSI's Proxy Statement for its **2019 Annual Meeting of Shareholders** - Information regarding security ownership and related stockholder matters is incorporated by reference from the company's **2019 Annual Meeting of Shareholders Proxy Statement**[100](index=100&type=chunk) [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](index=20&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) Information regarding certain relationships and related transactions, along with director independence, is incorporated by reference from LSI's Proxy Statement for its **2019 Annual Meeting of Shareholders** - Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's **2019 Annual Meeting of Shareholders Proxy Statement**[100](index=100&type=chunk) [ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES](index=20&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Information detailing principal accountant fees and services is incorporated by reference from LSI's Proxy Statement for its **2019 Annual Meeting of Shareholders** - Information regarding principal accountant fees and services is incorporated by reference from the company's **2019 Annual Meeting of Shareholders Proxy Statement**[100](index=100&type=chunk) PART IV [ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES](index=20&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists all documents filed as part of the **Form 10-K**, including consolidated financial statements, various corporate agreements, and **XBRL** data files - This section lists all exhibits and financial statement schedules filed with the **Form 10-K**, including consolidated financial statements, articles of incorporation, loan documents, stock incentive plans, and **XBRL data**[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk)[106](index=106&type=chunk) [ITEM 16. FORM 10-K SUMMARY](index=22&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) The company explicitly states that a **Form 10-K Summary** is not included in this annual report - The **Form 10-K Summary** is explicitly stated as "**Not included**" in this report[105](index=105&type=chunk) ```

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO ________________. Commission File No. 0-13375 LSI Industries Inc. (Exact name of registrant as specified in its charter) Ohio 31-0888951 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 10000 Alliance Road, Cincinnati, Ohio 45242 (Address of principal executive offices) (Zip Code) (513) 793-3200 Registrant's telephone n ...