LSI(LYTS) - 2025 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The company's Q3 FY2025 financial statements show a 22.5% sales increase driven by Display Solutions, though net and operating income declined Condensed Consolidated Statements of Operations Q3 FY2025 net sales rose to $132.5 million, but operating income decreased to $6.2 million and net income fell to $3.9 million Consolidated Statements of Operations Highlights (In thousands, except per share data) | Metric | Q3 2025 | Q3 2024 | YoY Change | Nine Months 2025 | Nine Months 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net Sales | $132,481 | $108,186 | +22.5% | $418,310 | $340,632 | +22.8% | | Gross Profit | $32,843 | $31,210 | +5.2% | $101,351 | $99,335 | +2.0% | | Operating Income | $6,235 | $7,660 | -18.6% | $23,825 | $26,507 | -10.1% | | Net Income | $3,883 | $5,375 | -27.8% | $16,212 | $19,309 | -16.0% | | Diluted EPS | $0.13 | $0.18 | -27.8% | $0.53 | $0.64 | -17.2% | Condensed Consolidated Balance Sheets As of March 31, 2025, total assets increased to $384.6 million, driven by acquisitions, with liabilities and equity also rising Balance Sheet Summary (In thousands) | Account | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Current Assets | $185,511 | $162,499 | | Goodwill | $63,204 | $57,397 | | Other intangible assets, net | $79,607 | $73,916 | | Total Assets | $384,565 | $348,800 | | Total Current Liabilities | $89,192 | $79,207 | | Long-term debt | $51,789 | $50,658 | | Total Liabilities | $162,852 | $144,445 | | Total Shareholders' Equity | $221,713 | $204,355 | Condensed Consolidated Statements of Cash Flows Nine-month operating cash flow was $28.6 million, with investing activities using $25.3 million primarily for the CBH acquisition Cash Flow Summary (Nine Months Ended March 31, In thousands) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash flows provided by operating activities | $28,619 | $32,297 | | Net cash flows used in investing activities | ($25,321) | ($4,594) | | Net cash flows used in financing activities | ($3,212) | ($22,401) | | Increase in cash and cash equivalents | $191 | $5,347 | | Cash and cash equivalents at end of period | $4,301 | $7,175 | - The acquisition of Canada's Best Holdings (CBH) for $22.8 million (net of cash acquired) was the primary driver of cash used in investing activities[28] Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, recent acquisitions like EMI and CBH, segment performance, and the $0.05 quarterly dividend - On April 18, 2024, the company acquired EMI Industries, LLC for $50.0 million to expand its presence in the Grocery, C-Store, and QSR/Restaurant markets[43] - On March 11, 2025, the company acquired Canada's Best Holdings (CBH) for a total consideration of $27.4 million, including a potential earnout, to expand its retail fixture and store design solutions[50] - The company paid a quarterly cash dividend of $0.05 per share, with an indicated annual rate of $0.20 per share[77] Management's Discussion and Analysis (MD&A) Management attributes Q3 sales growth to Display Solutions' 70% increase, offsetting Lighting's decline, despite a 19% drop in operating income - Q3 net sales increased 22% YoY, driven by a 70% increase in the Display Solutions Segment, which included $23.8 million from the EMI and CBH acquisitions and 15% organic growth[94] - The Lighting Segment's sales declined 9% in Q3 due to the comparison against several large lighting projects in the prior year that did not repeat[94] - Q3 operating income decreased 19% to $6.2 million, and adjusted operating income was $9.7 million[96] - The company generated $27.1 million in cash from operations in the first nine months of fiscal 2025 and had $32.2 million available for borrowing under its credit facility as of March 31, 2025[132][133] Results of Operations Q3 FY2025 Display Solutions sales surged 70% with 15% organic growth, while Lighting sales fell 9%, impacting consolidated net income Display Solutions Segment Performance (Q3 YoY) | Metric | Q3 2025 | Q3 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $73,514K | $43,304K | +70% | | Gross Profit | $12,457K | $9,645K | +29% | | Operating Income | $4,510K | $4,064K | +11% | - Display Solutions' Q3 organic growth was 15%, with acquisitions of EMI and CBH contributing an additional $23.8 million in sales[103] Lighting Segment Performance (Q3 YoY) | Metric | Q3 2025 | Q3 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $58,967K | $64,882K | -9% | | Gross Profit | $20,384K | $21,564K | -6% | | Operating Income | $7,154K | $7,268K | -2% | - Lighting Segment's gross margin improved from 33% to 35% in Q3, driven by a higher mix of value applications, stable pricing, and cost management, despite lower sales[108] Liquidity and Capital Resources Working capital increased to $96.3 million, with $27.1 million in operating cash flow and $32.2 million available on the credit line - Working capital was $96.3 million at March 31, 2025, up from $83.3 million at June 30, 2024, with the current ratio remaining stable at 2.1 to 1[129] - The company has a $75 million secured revolving line of credit expiring in Q1 of fiscal 2027, with $32.2 million available as of March 31, 2025[132] - Cash from operating activities for the nine months ended March 31, 2025, was $27.1 million, compared to $32.3 million in the prior year period[133] Quantitative and Qualitative Disclosures About Market Risk No material changes in the company's exposure to market risk have occurred since June 30, 2024 - There have been no material changes in the company's exposure to market risk since June 30, 2024[140] Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective[142] - No changes in internal control over financial reporting occurred during the fiscal quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[143] PART II. OTHER INFORMATION Other Information This section references prior risk factors and adds a new one concerning potential adverse impacts from changes in trade policies - A new risk factor has been added regarding potential adverse impacts from changes in United States and international trade policies, including tariffs, which could disrupt supply chains and increase costs[146][147] Exhibits This section lists exhibits filed with Form 10-Q, including officer certifications and Inline XBRL data files - The report includes required certifications from the Principal Executive Officer and Principal Financial Officer, as well as Inline XBRL filings[148]