LSI Industries Inc. · NASDAQ:LYTS
LSI Industries — 22nd Annual Global Investment Conference 2020
24 slides from LSI Industries's conference presentation, September 2020
Slide 1: LSI Industries Investor Presentation Fall 2020
LSI INDUSTRIES INVESTOR PRESENTATION FALL 2020 Cincinnati, OH 22nd Annual Global Investment Conference September 14-16, 2020
Slide 2: Disclaimer
DISCLAIMER 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-lookin
Slide 3: Company Overview
COMPANY OVERVIEW Introduction to LSI Industries
Slide 4: Introduction
INTRODUCTION • Integrated Lighting/Graphics 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 5: LSI Profile
LSI PROFILE LSI 1976 Cincinnati, OH LYTS 1,100 7 95% By The Numbers Year Founded Headquarters NASDAQ Employees # of Locations Sales in US 2020 Financial Summary Total Revenue Mix (1) Geographic Locations Sales $305M Adj. EBITDA $15M / 4.9% Working Graphics $51.2M Segment Capital 4 33% Free Cash Flow
Slide 6: 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 7: Vertical Market Focus
VERTICAL MARKET FOCUS Vertical Markets Automotive Petroleum QSR Retail & Grocery Parking Sports Complex Warehouse Market Driven Portfolio Lighting Solutions Graphics Solutions Services Indoor Outdoor Controls > Printed Graphics > Creative Services > Structural Graphics > Site Surveys > High Bay > Ar
Slide 8: 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 Graphics Solutions Services ©2020 LSI INDUSTRIES 8
Slide 9: 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 ©2020 LSI INDUSTRIES 9
Slide 10: Growing Our Commercial Business
GROWING OUR COMMERCIAL BUSINESS • $100 Million, Three-Year Award Through Calendar Year-End 2022 • Installing LSI Digital Menu Boards at More than 6,000 Locations for One of the Largest Fast-Food Chains in North America • Under The Terms of the Award, LSI Will Manufacture the Menu Boards and Perform
Slide 11: Business Transformation
BUSINESS TRANSFORMATION The Opportunity The Outcome January 2019 June 2020 (End of LSI Fiscal Year) • Lack Of Commercial Focus – • Increased Sales and Share in Top Three Vertical Markets, Strategic Drift Resulting in Increased Operating Income and Free Cash Flow • Focused on the Sale Of Discrete • A
Slide 12: COVID-19 Business Response
COVID-19 BUSINESS RESPONSE EMPLOYEE SAFETY COST REDUCTIONS BUSINESS CONTINUITY OUR MARKET RESPONSE • LSI Operates as a Supplier to • Reduced Total SG&A by Nearly • We Continue to Monitor • Emergency & Safety Lighting Customers Operating in 20% in F4Q20, When Potential Market Disruptions Critical Inf
Slide 13: Consolidated Performance Indicators
CONSOLIDATED PERFORMANCE INDICATORS Total Sales ($M) Non-GAAP Earnings Per Share ($M) 1 Fiscal 2020 Financials Reflect $328.9 Improved Earnings, EPS, Cash Generation; Margin Rate $0.12 Expansion; Lower Operating Costs $305.6 $0.04 2 Lower Sales Driven By: FY19 FY20 FY19 FY20 2 • Shift Away From Low
Slide 14: Disciplined Balance Sheet Management
DISCIPLINED BALANCE SHEET MANAGEMENT Net Debt Outstanding ($M) Net Debt / TTM Adjusted EBITDA 1 Reduced Debt Outstanding $38.6 by $39.5 Million on a Y/Y 2.7 x Basis; No LT Debt Outstanding $21.6 1.7 x 2 Stronger Balance Sheet and Enhanced Liquidity Provides Flexibility to Accelerate Investment in Pr
Slide 15: The Path Forward: Bridging to 2025
THE PATH FORWARD Bridging to 2025
Slide 16: The Path Forward
THE PATH FORWARD EXPAND CHANGE BUILD GROW Our Vertical Focus Our Customer Engagement 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 17: 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 ©2020 LSI INDUSTRIES 17
Slide 18: Expand Our Vertical Focus: 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 19: 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 20: 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 21: 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 22: Projected Financials
PROJECTED FINANCIALS Projected Sales ($M) Projected Adj. EBITDA ($M) 1 Sales Growth a Combination of Organic 10.0% and Inorganic Initiatives $500 $50 $425 7.0% 2 EBITDA Increase Driven $305 4.9% $30 by Continued Improvement to Gross Margin Rates for Existing $15 Business, Combined with Leverage Gene
Slide 23: Investment Summary
INVESTMENT SUMMARY American-Made Company Positioned for Profitable Growth EXPAND Our Vertical • Integrated Lighting / Graphics Solutions Company with Adjacent Growth Focus Opportunities in Services Businesses • Strong Foundation With Entrenched Position in Target Vertical Market CHANGE Applications;
Slide 24: Thank You
THANK YOU
LSI Industries — 22nd Annual Global Investment Conference 2020 on 6ix