LSI Industries Inc. · NASDAQ:LYTS
LSI Industries — 41st Annual Growth Conference 2021
32 slides from LSI Industries's conference presentation, August 2021
Slide 1: Investor Presentation – 41st Annual Growth Conference
INVESTOR PRESENTATION AUGUST 2021 41st Annual Growth Conference
Slide 2: Disclaimer
DISCLAIMER Certain of the statements in this presentation may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which are subject to various risks and uncertainties including, but not limited to, those set forth in our press releases and our perio
Slide 3: Introduction
INTRODUCTION • Integrated Lighting/Display Solutions Company with Adjacent Growth Opportunities in Services Businesses • Strong Foundation With Entrenched Position in Target Vertical Market Applications; Selectively Expanding; Where We Focus, We Win • Turnkey Program Integrator Capabilities; Design,
Slide 4: LSI Profile
LSI PROFILE LSI 1976 Cincinnati, OH LYTS 1,400 11 By The Numbers Year Founded Headquarters NASDAQ Employees # of Locations LSI FY20 Financials (1) Total Revenue Mix (1) Geographic Locations Sales $305M $305M $375M Graphics Adj. EBITDA $15M / 4.9% Segment Display 46 2 33% Solutions % Free Cash Flow $
Slide 5: Why LSI Wins in Our Focus Markets
WHY LSI WINS IN OUR FOCUS MARKETS Generalists Focused Specialists • Conglomerates • Vertical / Application Solutions Driven • Standard / High Volume • End-User Driven Specifications • “Telephone Book” Portfolio • Competency with Modification and Customization • Convert Focused Specialist to Standard
Slide 6: Vertical Market Focus
VERTICAL MARKET FOCUS Vertical Markets Automotive Petroleum QSR Retail & Grocery Parking Sports Complex Warehouse Market Driven Portfolio Lighting Solutions Display Solutions Services Indoor Outdoor Controls > Printed Graphics > Creative Services > Structural Graphics > Site Surveys > High Bay > Are
Slide 7: Vertical Market Focus
VERTICAL MARKET FOCUS Channel Direct Projects Stock and Flow Direct Quote/Bid Process Local Distributor Stock Availability C-Suite, Specifications, Architects, Other Lighting Solutions Display Solutions Services ©2021 LSI INDUSTRIES 7
Slide 8: Strong Customer Engagement
STRONG CUSTOMER ENGAGEMENT Leading Partners Our Solutions Enhance the Value Proposition of our Customers Customers Contracts Range from 100’s to 1,000’s 4 of Locations 3 ©2021 LSI INDUSTRIES 8
Slide 9: The Power of Integration
GROWING OUR COMMERCIAL BUSINESS • $100 Million, Three-Year Award Through Fiscal Year-End 2022 • Installing LSI Digital Menu Boards at More than 6,000 Locations for One of the Largest Fast-Food Chains in North America • Under The Terms of the Award, LSI Will Manufacture the Menu Boards and Perform th
Slide 10: Consolidated Financial Results
CONSOLIDATED FINANCIAL RESULTS Total Net Sales ($M) Operating Income ($M) $3.0 Million Y/Y Improvement Return to Y/Y Growth in Consolidated Net Sales • Return to Y/Y Net Sales $2.6 $2.5 Growth in F3Q21 Driven by $71.0 $72.2 $2.1 Continued Growth in Digital QSR Program ($0.5) 2• Higher Operating Inco
Slide 11: Stable Free Cash Flow Generation
STABLE FREE CASH FLOW GENERATION Free Cash Flow – F3Q20 vs. F3Q21 ($M) Free Cash Flow – TTM F3Q20 vs. TTM F3Q21 ($M)(1) • Generated Nearly $35 $40.4 $10.6 $10.6 Million in Free Cash Flow, Less Asset Sales, on a TTM $34.6 $34.5 Basis $3.5 • As Noted, Prior-Year Free $20.4 2 Cash Flow Contains Cash Pr
Slide 12: Disciplined Balance Sheet Management
DISCIPLINED BALANCE SHEET MANAGEMENT Total Availability ($M) • Total Availability of $123.5 Million at the End of the Fiscal Third Quarter Cash at 3/31/21 • Acquired JSI Store Fixtures $23.5 Million for $90 Million Cash in May 2 2021 • LSI Anticipates that its Pro- Forma Ratio of Net Debt Outstandin
Slide 13: The Path Forward
THE PATH FORWARD Bridging to 2025
Slide 14: The Path Forward: Expand, Change, Build, Grow
THE PATH FORWARD & EXPAND CHANGE BUILD GROW Our Vertical Focus OurCustomerEngagement Services Business Through Acquisition Provide Differentiated Transition to High- Shift from “Client Focus on Bolt-On Value through Direct Value Channel Support” Model to a Acquisitions that Engagement of Both Engage
Slide 15: Expand Our Vertical Focus
EXPAND OUR VERTICAL FOCUS EXPAND EXPAND Share of Wallet Served Available Market Focused Growth Within our Expand Partnership Model Customer Base by Building to New Customers within a Upon Current Relationships Vertical and Vertical Knowledge ©2021 LSI INDUSTRIES 15
Slide 16: Expand Our Vertical Focus: New Verticals Criteria
EXPAND OUR VERTICAL FOCUS New Verticals EXPAND Increase Addressable Market Niche, Non-Commoditized Market Supports Margin Expansion Criteria • • • High Barriers to Entry • Low Price Sensitivity • Stable, Growing End-Markets • Leverages Our Unique Value Proposition • Customer-Driven Unique Value • Re
Slide 17: Change Our Customer Engagement
CHANGE OUR CUSTOMER ENGAGEMENT Go-Forward End-User Focus Engage Beyond The Agent • There is Value in Having Both Agency and Direct Relationships Grow Direct • As we Move Higher on the Value Chain with More Customer Specialized Products, Access to the Customer is Relationships Increasingly Critical •
Slide 18: Build a Services Business
BUILD A SERVICES BUSINESS SCALABLE • Provide a Differentiated Customer Value SERVICE MODEL Proposition • Margin Shift to Higher FUTURE EXPANSION Professional Services • Turnkey Installations Profile • Maintenance Contracts SERVICE BUSINESS • ESCO Services • Unique Advantage Over • End-to-End Integra
Slide 19: Grow Through Acquisition
GROW THROUGH ACQUISITION Criteria • Vertical Enhancement • Geography TARGETS • Vertical Expansion • Adjacent Space Stronger Balance Sheet • Strong Vertical Position • Complementary to Core and Enhanced • Market Insulation • Expanded Capabilities Liquidity ATTRIBUTES • Focused Specialist • Broadens S
Slide 20: JSI Transaction Overview
JSI TRANSACTION OVERVIEW Building our Presence Within Growing, Complementary Vertical Markets Transaction Terms Financial Highlights Timing and Transition • Transaction closed on May 21, 2021 • JSI generated full-year 2020 revenue • JSI integration process will commence and Adjusted EBITDA of $70 mi
Slide 21: Compelling Transaction Rationale
COMPELLING TRANSACTION RATIONALE Building a Leading Commercial Lighting and Retail Display Solutions Company Creates a Diversified Business of Scale Compelling Growth Platform Within with Meaningful Cross-selling Strategic, Growing Market Vertical Opportunities Capitalizes on Significant, Multi-Year
Slide 22: JSI Store Fixtures
JSI STORE FIXTURES JSI is a Leading Provider of Retail Display Solutions to Grocery & C-Store Verticals Established Market Leader Rapidly Growing, High-Margin Manufacturer of Merchandising Solutions • Milo, Maine corporate headquarters Multi-channel growth opportunity in $2.2 billion market that is
Slide 23: Established, Multi-Channel Product Portfolio
ESTABLISHED, MULTI-CHANNEL PRODUCT PORTFOLIO JSI’s Innovative Products Maintain Freshness, Promote Food Safety, Drive Traffic Diversified Based of Large, Long-Tenured National Customer Accounts • JSI serves 13 of the top 20 pure-play NA grocers • Average customer tenure is 15 years • Organic growth
Slide 24: Projected Financials
PROJECTED FINANCIALS Projected Sales ($M) Projected Adj. EBITDA ($M) 10.0% Sales Growth a Combination $500 of Organic and Inorganic $50 Initiatives $425 7.0% $305 4.9% $30 EBITDA Increase Driven by $15 Continued Improvement to Gross Margin Rates for Existing Business, Combined with Leverage Generate
Slide 25: Investment Summary
INVESTMENT SUMMARY American-Made Company Positioned for Profitable Growth EXPAND Our Vertical • Integrated Lighting / Display Solutions Company with Adjacent Growth Focus Opportunities in Services Businesses • Strong Foundation With Entrenched Position in Target Vertical Market CHANGE Applications;
Slide 26: Appendix
APPENDIX
Slide 27: Statement on Non-GAAP Financial Measures
STATEMENT ON NON-GAAP FINANCIAL MEASURES This presentation includes adjustments to GAAP operating income, net income and earnings per share for the three months ended December 31, 2020 and 2019. Operating income, net income and earnings per share, which exclude the impact of restructuring and plant
Slide 28: Non-GAAP Reconciliation
Non-GAAP RECONCILIATION LSI Industries Q3 2020 Q2 2021 Q3 2021 Lighting Segment Q3 2020 Q2 2021 Q3 2021 Operating Income 2,631 2,686 2,096 Net Sales [a] 49,013 45,126 45,740 Restructuring and plant closure costs (gains) (3,055) - - Operating Income 1,102 2,134 3,797 Severance costs 19 21 - Restructu
Slide 29: Non-GAAP Reconciliation
Non-GAAP RECONCILIATION LSI Industries Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Debt 39,541 23,181 10,437 7,919 - - - - Less: Cash 966 1,579 1,248 820 3,517 9,463 13,584 23,528 Net Debt Outstanding 38,575 21,602 9,189 7,099 (3,517) (9,463) (13,584) (23,528) LSI Industries Q3 2
Slide 30: Non-GAAP Reconciliation
Non-GAAP RECONCILIATION LSI Industries Q3 2020 Q3 2021 Net Sales [a] 71,010 72,204 Gross Margin 15,942 18,092 Severance costs 11 - Restructuring and plant closure costs (gains) 223 - Adjusted Gross Margin [b] 16,176 18,092 Adjusted Gross Margin % [b] / [a] 22.8% 25.1% Lighting Segment Q3 2020 Q3 202
Slide 31: Non-GAAP Reconciliation
Non-GAAP RECONCILIATION Q3 2020 Q2 2021 Q3 2021 Diluted EPS Diluted EPS Diluted EPS Net Income $ 1,861 $ 0.07 $ 2,208 $ 0.08 $ 1,472 $ 0.05 Restructuring and plant closure (gains) costs (2,565) (0.10) - - - - Severance costs 16 - 17 - - - Stock compensation expense (86) - 318 0.01 314 0.01 Tax impac
Slide 32: For additional questions, please contact – Thank you
For additional questions, please contact 720.778.2415 Thank you, LSI Investor Relations