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Mar 31, 2024
LSI Q3 2024 Earnings Report
LSI Industries reported mixed results for Q3 2024, with decreased sales offset by improved margins and strategic acquisitions.
Key Takeaways
LSI Industries reported Q3 2024 results with net sales of $108.2 million and net income of $5.4 million, or $0.18 per diluted share. While sales declined due to lower demand in the grocery vertical, the company saw improvements in margin realization and profitability. The acquisition of EMI Industries was announced subsequent to the quarter's end, expanding LSI's capabilities in display solutions.
Net sales reached $108.2 million, reflecting an 8% decrease year-over-year.
Net income was $5.4 million, or $0.18 per diluted share, compared to $4.7 million, or $0.16 per share in the prior-year period.
Adjusted EBITDA margin rate improved to 10.4%, up 80 basis points.
Acquisition of EMI Industries for $50 million in cash was announced, expanding display solutions capabilities.
LSI
LSI
LSI Revenue by Segment
Revenue by Segment
Lighting Segment Revenue
CapyFin.comDisplay Solutions Revenue
CapyFin.com Forward Guidance
LSI anticipates refueling/c-store project site activity to remain elevated throughout the fourth quarter and into fiscal 2025. EMI financial results will be consolidated in LSI financial results beginning with the fiscal 2024 fourth quarter, reflecting a partial quarter impact.
Positive Outlook
- Refueling/c-store project site activity to remain elevated throughout the fourth quarter and into fiscal 2025.
- The addition of EMI is an excellent strategic fit for LSI, expanding our product and service capabilities for display solutions market applications, particularly in the c-store, grocery, and restaurant verticals.
- As we bring together our complementary products, services, and technologies, there are significant cross-selling opportunities that will enable us to be a single-source provider to more customers in more locations.
- The business combination represents a major step forward in our ability to serve a growing portfolio of national retail chains, and capitalize on the ongoing, multi-year investment cycle occurring in these markets.
- Looking ahead, we will continue to pursue leading positions within growing, high-value vertical markets that expand our capabilities and reach, generating profitable growth and driving long-term value creation for our shareholders.
Challenges Ahead
- grocery vertical remains unfavorably impacted by the proposed merger of two industry participants, and longer than expected regulatory review.
- While program refresh activity within grocery is below prior-year levels, we believe the underlying fundamentals of the grocery vertical remain compelling, given expectations for a multi-year refresh cycle across the industry over the coming years.
- order conversion period continues to lengthen, specifically for larger projects.
- Third quarter sales of $108.2 million declined from prior-year levels largely due to ongoing lower demand in the grocery vertical market related to the delay in the proposed merger of two large industry participants.
- LSI intends to significantly reduce net leverage within the business during the next 24 months, supported by anticipated growth in pro-forma free cash flow from the combined businesses.
Revenue & Expenses
Visualization of income flow from segment revenue to net income