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Dec 31, 2019
LSI Q2 2020 Earnings Report
LSI Industries achieved improved earnings on lower sales, driven by a transition towards higher-value sales mix.
Key Takeaways
LSI Industries reported improved earnings in Q2 2020 despite lower sales. Net income increased to $1.7 million, and EPS reached $0.07. The company also generated strong free cash flow of $13.8 million and reduced net debt to $9.2 million.
Sales of $82.4 million reflects success in demand-shaping initiatives.
EPS of $0.07 vs. $(0.61) prior year; Adjusted EPS of $0.06 vs $0.03 prior year.
Net Income of $1.7 million compared to net loss of $(15.8) million last year.
Free Cash Flow of $13.8 million.
LSI
LSI
LSI Revenue by Segment
Revenue by Segment
Lighting Segment Revenue
CapyFin.com Forward Guidance
LSI Industries is focused on gaining share in select vertical markets and generating profitable growth through accelerating innovation and focused sales efforts.
Positive Outlook
- The company is focused on higher margin applications and solutions.
- The business continues to generate strong free cash flow from operations.
- The graphics segment has now reported nine consecutive quarters of year-over-year growth.
- The company was awarded a four-year contract extension with ChevronTexaco.
- Recent product launches include: the next generation Alliance high bay; new distribution area light; new controls platform and configuration app for mobile devices; Low Profile recessed troffer with Lutron Wireless Integral fixture control; field selectable Troffers; and Pole retro-fit kits.
Challenges Ahead
- The company is pivoting away from low margin commodity business.
- This approach contributed to a near-term decline in total sales.
- Execution of our change in commercial policy is evident in the Lighting Segment where we elected to exit a supply relationship with a low-margin retail account during the fiscal second quarter.
- While this unfavorably impacts sales short-term, the improved mix contributed to a 420 basis point improvement in the Lighting Segment gross margin rate in the quarter, resulting in increased adjusted operating income.
- Advancements in graphics technology and the Company’s improved operating productivity have reduced the quantity of floor space required by the business.