LSI Industries Inc. · NASDAQ:LYTS
LSI Industries — Sidoti Conference March 2021
31 slides from LSI Industries's conference presentation, March 2021
Slide 1: LSI Industries Investor Presentation March 2021
LSI INDUSTRIES INVESTOR PRESENTATION March 2021
Slide 2: Disclaimer
DISCLAIMER Forward-Looking Statements and Non-GAAP Financial Measures 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 histo
Slide 3: Company Overview
COMPANY OVERVIEW Introduction to LSI Industries
Slide 4: Introduction: LSI is Positioned for Profitable Growth
INTRODUCTION LSI is Positioned for Profitable Growth • 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
Slide 5: LSI Profile
LSI PROFILE American-Made Lighting and Graphics Solutions LSI 1976 Cincinnati, OH LYTS 1,100 7 95% By The Numbers Year Founded Headquarters NASDAQ Employees # of Locations Sales in US FY20 Financial Summary Total Revenue Mix (1) Geographic Locations Sales $305M Adj. EBITDA $15M / 4.9% Graphics Segme
Slide 6: Why LSI Wins in Our Focus Markets
WHY LSI WINS IN OUR FOCUS MARKETS How We Differentiate 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 S
Slide 7: Vertical Market Focus
VERTICAL MARKET FOCUS Customize Solutions Serving High-Value Applications 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
Slide 8: Vertical Market Focus: Paths to Market
VERTICAL MARKET FOCUS Paths to Market Channel Direct Projects Stock and Flow Direct Quote/Bid Process Local Distributor Stock Availability C-Suite, Specifications, Architects, Other Lighting Solutions Graphics Solutions Services ©2021 LSI INDUSTRIES 8
Slide 9: Strong Customer Engagement
STRONG CUSTOMER ENGAGEMENT Target Verticals with End-User Specific Lighting & Graphics Applications 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 9
Slide 10: Growing Our Commercial Business
GROWING OUR COMMERCIAL BUSINESS Awarded $100 Million Quick-Service Restaurant Program in April 2020 • $100 Million, Three-Year Award Through Calendar Year-End 2022 • Installing LSI Digital Menu Boards at More than 6,000 Locations for One of the Largest Fast-Food Chains in North America • Under The T
Slide 11: Business Transformation
BUSINESS TRANSFORMATION During the Last 18-Months, Built a Foundation for Sustainable Growth The Opportunity The Outcome January 2019 June 2020 (End of LSI Fiscal Year) • Lack Of Commercial Focus – • Increased Sales and Share in Top Three Vertical Markets, Strategic Drift Resulting in Increased Oper
Slide 12: COVID-19 Business Response
COVID-19 BUSINESS RESPONSE Maintaining Safe, Reliable Operations, While Reducing Operating Costs EMPLOYEE SAFETY COST REDUCTIONS BUSINESS CONTINUITY OUR MARKET RESPONSE • LSI Operates as a Supplier to • Reduced Total SG&A by Nearly • We Continue to Monitor • Emergency & Safety Lighting Customers Ope
Slide 13: Consolidated Financial Results
CONSOLIDATED FINANCIAL RESULTS Year-Over-Year Increase in Adj. Operating Income, Adj. Net Income & Adj. EBITDA Total Net Sales ($M) Operating Income ($M) 130 bps Y/Y Improvement to 4.1% of Sales 9% Q/Q Sales Growth • Sequential Sales Growth Despite Pandemic-Related Market Challenges $82.4 $3.1 $70.0
Slide 14: Stable Free Cash Flow Generation
STABLE FREE CASH FLOW GENERATION Generated Fiscal First-Half 2021 Free Cash Flow of $12.5M Free Cash Flow – F2Q20 vs. F2Q21 ($M) Free Cash Flow – TTM F2Q20 vs. TTM F2Q21 ($M)(1) • Generated Nearly $20 Million in Free Cash Flow, $34.9 Less Asset Sales, on a TTM $13.8 $13.8 Basis $27.5 $22.6 $19.7 • A
Slide 15: Disciplined Balance Sheet Management
DISCIPLINED BALANCE SHEET MANAGEMENT No Long-Term Debt Outstanding; Cash and Financing Availability of More than $100M+ Net Debt Outstanding ($M) $52 Million Improvement to Net Cash Positive in Under Two Years • Cash Balance of $13.6 Million at the End of F2Q21 $13.6 $9.5 2• No Long-Term Debt Outsta
Slide 16: The Path Forward
THE PATH FORWARD Bridging to 2025
Slide 17: The Path Forward: Targeting $500 Million Revenue in Fiscal 2025
THE PATH FORWARD Targeting $500 Million of Revenue & Double-Digit EBITDA in Fiscal 2025 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
Slide 18: Expand Our Vertical Focus
EXPAND OUR VERTICAL FOCUS Increase SOW and SAM with Current Customers 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 INDU
Slide 19: Expand Our Vertical Focus: Growth in New Verticals
EXPAND OUR VERTICAL FOCUS Growth in New Verticals 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-
Slide 20: Change Our Customer Engagement
CHANGE OUR CUSTOMER ENGAGEMENT Migrating Closer Toward the Customer 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
Slide 21: Build a Services Business
BUILD A SERVICES BUSINESS Addresses Customer Pain Point 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 Advan
Slide 22: Grow Through Acquisition
GROW THROUGH ACQUISITION Focused on Complementary and Adjacent Spaces 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
Slide 23: Projected Financials
PROJECTED FINANCIALS $500M Sales and Double-Digit EBITDA in 2025 Projected Sales ($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 Existi
Slide 24: 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 25: Appendix
APPENDIX
Slide 26: 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 27: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Q2 2020 Q1 2021 Q2 2021 Diluted EPS Diluted EPS Diluted EPS Net Income $ 1,743 $ 0.07 $ 1,990 $ 0.07 $ 2,208 $ 0.08 Restructuring and plant closure costs 223 0.01 2 - - - Severance costs 44 - - - 17 - Stock compensation expense 161 0.01 380 0.01 318 0.01 Tax impact due to the
Slide 28: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION LSI Industries Q2 2020 Q1 2021 Q2 2021 Operating Income 1,760 2,202 2,686 Restructuring and plant closure costs (gains) 276 3 - Severance costs 54 - 21 Stock compensation expense 199 505 397 Adjusted Operating Income 2,289 2,710 3,104 Depreciation and amortization 2,152 2,033
Slide 29: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Lighting Segment Q2 2020 Q1 2021 Q2 2021 Graphics Segment Q2 2020 Q1 2021 Q2 2021 Net Sales [a] 53,436 45,405 45,126 Net Sales [c] 28,941 24,601 31,261 Operating Income 3,150 3,588 2,134 Operating Income 1,362 1,823 3,143 Restructuring and plant closure costs (gains) (2) - -
Slide 30: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Debt 39,541 23,181 10,437 7,919 - - - Less: Cash 966 1,579 1,248 820 3,517 9,463 13,584 Net Debt Outstanding 38,575 21,602 9,189 7,099 (3,517) (9,463) (13,584) Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Net cash flows (used
Slide 31: For Access to Our Full Investor Presentation
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