Slide 1: First Quarter Fiscal 2021 Results Conference Call Presentation
FIRST QUARTER FISCAL 2021 RESULTS CONFERENCE CALL PRESENTATION OCTOBER 29, 2020
Slide 2: Disclaimer
DISCLAIMER This presentation contains “forward-looking statements”—that is, statements related to future events within the meaning of the Private Securities Litigation Reform Act of 1995. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In t
Slide 3: Key Messages
KEY MESSAGES Advancing Business Strong Consolidated Financial Improved Margin Expansion Transformation Results Continued strategic focus on higher margin Gross margin rate improved 140 bps to 26.1% vertical market applications, customer driven Year-over-year growth in adjusted gross with focus on hi
Slide 4: Consolidated Financial Results
CONSOLIDATED FINANCIAL RESULTS Total Net Sales ($M) Operating Income ($M)(1) $88.7 90 bps y/y improvement to 3.9% of sales • COVID driven lower F4Q20 $6.8 backlog unfavorably $70.0 impacted F1Q21 sales $2.6 $2.2 $2.7 • Improved operating F1Q20 F1Q21 income driven by increased customer activity withi
Slide 5: Lighting Segment Update
LIGHTING SEGMENT UPDATE Lighting Segment Sales ($M) Lighting Segment Gross Margin ($M) • Revenue increased $63.2 290 bps y/y improvement to 30.5% of sales sequentially from F4Q20 but finished below F1Q20, driven by pandemic- $45.4 related reduction in F4Q20 $17.4 $17.2 project backlog $13.8 $13.8 •
Slide 6: Graphics Segment Update
GRAPHICS SEGMENT UPDATE • Improved volume and lower operating expenses contributed to y/y growth Graphics Segment Sales ($M) Graphics Segment Gross Margin ($M) in segment operating 20 bps y/y decline to 18.1% of sales income and Adjusted $25.5 $24.6 EBITDA $4.6 $4.7 • Order releases for the QSR $4.4
Slide 7: Improved Working Capital Management
IMPROVED WORKING CAPITAL MANAGEMENT Total Working Capital ($M) Total Inventory ($M) • Non-cash working capital declined 25% y/y with Non-cash working capital multiple working capital declined 25% y/y Inventory declined components contributing 13% y/y $1.6 $9.5 $43.1 • Maintaining inventory levels fo
Slide 8: Growth in Free Cash Flow Generation
GROWTH IN FREE CASH FLOW GENERATION Free Cash Flow - F1Q20 vs. F1Q21 ($M)(1) Free Cash Flow – TTM F1Q20 vs. TTM F1Q21 ($M)(1,2) • Excluding asset sales, F1Q21 and TTM free cash flow 111% y/y improvement both increased significantly on a y/y basis $36.0 $28.2 $18.3 20% y/y improvement $25.7 • Buildin
Slide 9: Disciplined Balance Sheet Management
DISCIPLINED BALANCE SHEET MANAGEMENT Net Debt Outstanding ($M) Net Debt / TTM Adjusted EBITDA 2.7 x $38.6 $31.1 million dollar change to net cash positive • The improved liquidity provides capital allocation flexibility to invest in $21.6 1.7 x strategic growth initiatives $9.2 $7.1 0.7 x 0.5 x ($3.
Slide 10: The Path Forward
THE PATH FORWARD EXPAND CHANGE BUILD GROW Our Vertical Focus OurCustomer 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 Engagem
Slide 11: Expand Our Vertical Focus
EXPAND OUR VERTICAL FOCUS EXPAND EXPAND Share of Wallet Served Available Market Focused Growth Within our Expand Partnership Model to Customer Base by Building Upon New Customers within a Vertical Current Relationships and Vertical Knowledge ©2020 LSI INDUSTRIES 11
Slide 12: Expand Our Vertical Focus: New Verticals Criteria
EXPAND OUR VERTICAL FOCUS New Verticals EXPAND Increase Addressable Market • • Criteria Niche, Non-Commoditized Market Supports Margin Expansion • High Barriers to Entry • Low Price Sensitivity • Stable, Growing End-Markets • Leverages Our Unique Value Proposition • Customer-Driven Unique Value Prop
Slide 13: 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 14: Build a Services Business
BUILD A SERVICES BUSINESS • Provide a Differentiated Customer Value SCALABLE 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 15: 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 16: 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 17: Appendix
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Slide 18: 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 September 30, 2020 and 2019. Operating income, net income and earnings per share, which exclude the impact of restructuring and plant
Slide 19: Non-GAAP Reconciliation
Non-GAAP RECONCILIATION Q1 2020 Q4 2020 Q1 2021 Diluted EPS Net Income $ 4,475 $ 0.17 $ 1,513 $ 0.06 $ 1,990 $ 0.07 Restructuring and plant closure costs (gains) (3,446) (0.13) 231 0.01 2 - Severance costs - - 192 0.01 - - Stock compensation expense 299 0.01 74 - 380 0.01 Tax impact due to the chang
Slide 20: Non-GAAP Reconciliation
Non-GAAP RECONCILIATION LSI Industries Q1 2020 Q1 2021 Lighting Segment Q1 2020 Q1 2021 Net Sales [a] 88,701 70,006 Net Sales [a] 63,191 45,405 Gross Margin 21,855 18,272 Gross Margin 17,219 13,826 Restructuring and plant closure costs (gains) 258 3 Restructuring and plant closure costs (gains) 204
Slide 21: Non-GAAP Reconciliation
Non-GAAP RECONCILIATION LSI Industries Q1 2020 Q4 2020 Q1 2021 Lighting Segment Q1 2020 Q4 2020 Q1 2021 Operating Income 6,839 1,846 2,202 Net Sales [a] 63,191 40,559 45,405 Restructuring and plant closure costs (gains) (4,588) 329 3 Operating Income 9,159 2,712 3,588 Severance costs - 273 - Restruc
Slide 22: Non-GAAP Reconciliation
Non-GAAP RECONCILIATION LSI Industries Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Debt 23,181 10,437 7,919 - - Less: Cash 1,579 1,248 820 3,517 9,463 Net Debt Outstanding 21,602 9,189 7,099 (3,517) (9,463) LSI Industries Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Net cash flows (used in) provided by opera
Slide 23: Thank you, LSI Investor Relations
For access to our full investor presentation, please visit our investor relations website at https://investors.lsicorp.com or contact our investor relations team at 720.778.2415 Thank you, LSI Investor Relations