LSI Industries Inc. (NASDAQ: LYTS) today
announced:
Second Quarter Summary
- Sales of $89.5 million or 3% below Q2 of the prior year
- GAAP Operating loss of $(20.3) million; Adjusted Operating
income $1.5 million
- GAAP EPS of $(0.61); Adjusted EPS of $0.03
- Recorded non-cash goodwill impairment charge of $20.2 million
related to the Lighting Segment
- Cash flow $4.5 million; declared regular quarterly cash
dividend of $0.05 per share
Net sales in the second quarter of fiscal 2019 were $89.5
million, a decrease of 3% compared to the $92.3 million reported in
the second quarter of the prior year. The second quarter
reported net loss of $(15.8) million compares to a net loss of
$(1.5) million in the same period of fiscal 2018. Reported
EPS was a loss of $(0.61) versus reported EPS loss of $(0.06) last
year. Reported results include a pre-tax, non-cash goodwill
impairment charge of $20.2 million to the Lighting Segment in the
second quarter, as well as $1.6 million in restructuring
charges.
Second quarter adjusted net income was $875 thousand versus $3.3
million in the same period 2018. Adjusted EPS was $0.03
compared to $0.12 prior year. The reconciliation of non-GAAP
performance is provided below.
The company generated positive free cash flow of $4.5 million in
the quarter, exiting the quarter with debt below prior year levels
and availability to an approved credit facility. The Company
declared a regular cash dividend of $.05 per share payable February
12, 2019 to shareholders of record on February 4, 2019.
Management Comments and Outlook
James A. Clark, President and Chief Executive Officer commented,
“In my two plus months with LSI, my priority has been focused on
meeting with our employees, agents, customers and suppliers to
better understand our key business processes. During this
process, I have attained a better understanding of our strong
business foundation, and the commitment of the employees and
partners to further grow and improve the business. I have also been
able to assess where we are in the transformation process and to
formulate additional changes required to drive our business
performance to the next level. Many of these items are
focused on execution, while select others may be more structural
and strategic.
“Our second quarter reflects the position of the business as we
transition to become more focused on key market segments and
applications where our products and solutions are valued by our
customers. This transition is disruptive, and this disruption is
felt as an adverse impact on sales and margins as we re-align our
sales and marketing focus in both business segments. We are not
satisfied with our second quarter results, but I am confident our
changes will result in profitable growth.
“The Graphics Segment generated sales growth of 12% versus prior
year while both gross margin and operating earnings declined.
The earnings decline was driven by a mix shift to large customers
in both print and digital technology applications. We have
been aggressive in developing solutions for the rapidly growing
digital graphics market, securing several large projects including
a national quick service restaurant (QSR) chain and a test platform
with a national petroleum company. Our solutions can be applied in
many applications ranging from hundreds to over one thousand
locations nationwide over a multi-year project lifecycle. However,
these large projects are competitive and initially generate lower
margins, which will improve over time. LSI’s penetration into the
Mexico market also contributed to the sales growth and represents a
significant opportunity for us over the next several
years.
“Our Lighting sales declined 8%, reflecting the continued
softness and competitiveness in both our project and stock and flow
markets, as well as the shift in emphasis to higher value-add
opportunities as noted above. Overall pricing was below prior
year levels for the quarter driven by select price moves in key
vertical markets and meeting specific competitive levels. This
combination of factors resulted in lower gross margins and
operating earnings compared to prior year. On the plus side, our
focused approach to vertical markets led to the award of a two year
contract to supply the outdoor lighting requirements for a large
national auto retailer. The contract represents $5.0 million
in sales annually for locations based throughout the
country.
“In terms of the Lighting Segment goodwill impairment, our
decline in stock price during the last quarter required an updated
analysis of the current fair market value of a reporting unit
within the Lighting Segment to its carrying value. The analysis
resulted in an adjustment to the goodwill asset on the balance
sheet. This non-cash adjustment resulted in the alignment of
carrying value to fair market value.
“Several key initiatives important to our transition remain on
schedule. The transfer of production and the closure related
to the New Windsor, New York facility are on schedule for
completion by the end of June. The project savings of $4 million
are also on track. We continue to invest in sales and
marketing talent possessing the competencies required to execute
our new focused commercial model. We have an interim Chief
Marketing Officer, Scott Coleman, in place as we continue our
search for a permanent candidate. The Chief Marketing Officer
is a new position chartered to develop the plans required to
navigate our evolving markets now and over the next several
years. Several sales resources were added in the second
quarter to strengthen and expand support capabilities to our
partners and customers, and we have recently hired a new Senior
Vice President of Operations, Mike Beck, who will be replacing our
retiring Vice President of Operations, Tom Palmer. Mike will be a
key driver to assure continued improvement in our strategic
operations initiatives.
“Moving forward, we will make decisions and investments that
build the business to achieve profitable and sustainable growth. I
plan to outline changes and critical investments needed in the
coming months. This effort and vision will build momentum which in
turn will generate sustained success. I am confident we can achieve
our objectives and look forward to providing updates on our
progress. We will be attending several equity research and
investment bank sponsored conferences later in the year to outline
our plans.”
Financial Highlights
|
Three Months Ended
December 31 |
|
|
|
Six Months Ended
December 31 |
|
|
(Unaudited) |
|
|
|
2018 |
|
|
|
2017 |
|
|
% Change |
|
(In thousands, except per share data) |
|
|
2018 |
|
|
|
2017 |
|
|
% Change |
|
$ |
89,541 |
|
|
$ |
92,305 |
|
|
-3 |
% |
|
Net Sales |
|
$ |
174,498 |
|
|
$ |
179,771 |
|
|
-3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(20,271 |
) |
|
|
4,547 |
|
|
n/m |
|
Operating (Loss) Income as reported |
|
|
(17,337 |
) |
|
|
(20,267 |
) |
|
n/m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,165 |
|
|
|
-- |
|
|
|
|
Goodwill impairment |
|
|
20,165 |
|
|
|
28,000 |
|
|
|
|
|
1,033 |
|
|
|
-- |
|
|
|
|
Restructuring and plant closure
costs |
|
|
1,623 |
|
|
|
-- |
|
|
|
|
|
492 |
|
|
|
83 |
|
|
|
|
Severance costs |
|
|
492 |
|
|
|
83 |
|
|
|
|
|
120 |
|
|
|
-- |
|
|
|
|
Transition and re-alignment
costs |
|
|
120 |
|
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,539 |
|
|
$ |
4,630 |
|
|
-67 |
% |
|
Operating Income as adjusted |
|
$ |
5,063 |
|
|
$ |
7,816 |
|
|
-35 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(15,782 |
) |
|
$ |
(1,468 |
) |
|
n/m |
|
Net (Loss) as reported |
|
$ |
(14,033 |
) |
|
$ |
(17,097 |
) |
|
n/m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
875 |
|
|
$ |
3,267 |
|
|
-73 |
% |
|
Net Income as adjusted |
|
$ |
3,078 |
|
|
$ |
5,001 |
|
|
-38 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(0.61 |
) |
|
$ |
(0.06 |
) |
|
n/m |
|
(Loss) per share (diluted) as reported |
|
$ |
(0.54 |
) |
|
$ |
(0.66 |
) |
|
n/m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.03 |
|
|
$ |
0.12 |
|
|
-75 |
% |
|
Earnings per share (diluted) as adjusted |
|
$ |
0.12 |
|
|
$ |
0.19 |
|
|
-37 |
% |
|
|
|
|
|
|
|
|
(amounts in thousands) |
|
|
|
|
12/31/18 |
|
6/30/18 |
|
|
Working Capital |
$ |
74,613 |
|
$ |
67,882 |
|
|
Total Assets |
$ |
225,078 |
|
$ |
229,517 |
|
|
Long-Term Debt |
$ |
48,372 |
|
$ |
45,360 |
|
|
Shareholders'
Equity |
$ |
124,325 |
|
$ |
139,251 |
|
|
Second Quarter Fiscal 2019 Results
Net sales in the second quarter of fiscal 2019 were $89,541,000,
down 3% from last year’s second quarter net sales of
$92,305,000. Lighting Segment net sales of $63,654,000
decreased 8% while Graphics Segment net sales of $25,887,000
increased 12% from last year’s second quarter net sales. The
Company recorded pre-tax restructuring and plant closure costs of
$1,033,000 related to the closure of its New Windsor, New York
facility in the Lighting Segment and recorded a pre-tax goodwill
impairment also in the Lighting Segment of $20,165,000. The Company
recorded $492,000 of severance costs related to a second quarter
reduction in work force and also recorded an additional $120,000 of
transition and re-alignment costs. The fiscal 2019 second quarter
net loss of $(15,782,000), or $ (0.61) per share, compares to the
fiscal 2018 second quarter net loss of $(1,468,000) or $(0.06) per
share. Earnings per share represents diluted earnings per
share.
First Half Fiscal 2019 Results
Net sales in the first half of fiscal 2019 were $174,498,000,
down 2.9% from last year’s first half net sales of
$179,771,000. Lighting Segment net sales of $125,086,000
decreased 9.1% while Graphics Segment net sales of $49,412,000
increased 17.2% from last year’s first half net sales. The Company
recorded pre-tax restructuring and plant closure costs of
$1,623,000 related to the closure of its New Windsor, New York and
Hawthorne, California facilities in the Lighting Segment and
recorded a pre-tax goodwill impairment also in the Lighting Segment
of $20,165,000. The Company recorded $492,000 of severance costs
related to a second quarter reduction in force and also recorded an
additional $120,000 of transition and re-alignment costs. The
fiscal 2019 first half net loss of $(14,033,000), or $ (0.54) per
share, compares to the fiscal 2018 first half net loss of
$(17,097,000) or $(0.66) per share. Earnings per share
represents diluted earnings per share.
Balance Sheet
The balance sheet at December 31, 2018 included current assets
of $125 million, current liabilities of $50.4 million and working
capital of $74.6 million, which includes cash of $9.6 million. The
current ratio was 2.5 to 1. The balance sheet also included
shareholders’ equity of $124.3 million and $48.4 million of
long-term debt. It is the Company’s priority to continuously
generate sufficient cash flow coupled with an approved credit
facility to adequately fund operations.
Cash Dividend Actions
The Board of Directors declared a regular quarterly cash
dividend of $0.05 per share in connection with the second quarter
of fiscal 2019 payable February 12, 2019 to shareholders of record
as of the close of business on February 4, 2019. The indicated
annual cash dividend rate is $0.20 per share. The Board of
Directors has adopted a policy regarding dividends which provides
that dividends will be determined by the Board of Directors in its
discretion based upon its evaluation of earnings both on a GAAP and
non-GAAP basis, cash flow requirements, financial condition, debt
levels, stock repurchases, future business developments and
opportunities, and other factors deemed relevant by the
Board.
Non-GAAP Financial Measures
This press release includes adjustments to GAAP operating
income, net income and earnings per share for the three and six
months ended December 31, 2018 and 2017. Operating income, adjusted
net income and earnings per share, which exclude the impact of a
goodwill impairment, severance costs, transition and re-alignment
costs, and restructuring, and plant closure costs are non-GAAP
financial measures. We believe that these are useful as
supplemental measures in assessing the operating performance of our
business. These measures are used by our management, including our
chief operating decision maker, to evaluate business results.
We exclude these non-recurring items because they are not
representative of the ongoing results of operations of our
business. Below is a reconciliation of these non-GAAP
financial measures to the net income and earnings per share
reported for the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SECOND QUARTER |
|
|
|
YEAR-TO-DATE |
|
|
2019 |
|
|
|
|
2018 |
|
|
|
(In thousands, except per share data) |
|
|
2019 |
|
|
|
|
2018 |
|
|
|
|
Diluted EPS |
|
|
Diluted
EPS |
|
|
|
|
Diluted EPS |
|
|
Diluted EPS |
|
|
|
|
|
Reconciliation of net income to adjusted net
income |
|
|
|
|
|
$ |
(15,782 |
) |
$ |
(0.61 |
) |
|
$ |
(1,468 |
) |
$ |
(0.06 |
) |
|
Net (Loss) as reported |
|
$ |
(14,033 |
) |
$ |
(0.54 |
) |
|
$ |
(17,097 |
) |
$ |
(0.66 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,361 |
|
|
0.60 |
|
|
|
-- |
|
|
-- |
|
|
Goodwill impairment |
|
|
15,361 |
|
|
0.60 |
|
|
|
17,361 |
|
|
0.67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
817 |
|
|
0.03 |
|
|
|
-- |
|
|
-- |
|
|
Restructuring and plant closure costs |
|
|
1,271 |
|
|
0.05 |
|
|
|
-- |
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
385 |
|
|
0.01 |
|
|
|
59 |
|
|
-- |
|
|
Severance costs |
|
|
385 |
|
|
0.01 |
|
|
|
59 |
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
94 |
|
|
-- |
|
|
|
-- |
|
|
-- |
|
|
Transition and re-alignment
costs |
|
|
94 |
|
|
-- |
|
|
|
-- |
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Impact from the reduction of the Deferred
Tax Assets |
|
|
|
|
|
|
|
|
-- |
|
|
-- |
|
|
|
4,676 |
|
|
0.18 |
|
|
|
|
-- |
|
|
-- |
|
|
|
4,676 |
|
|
0.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
875 |
|
$ |
0.03 |
|
|
$ |
3,267 |
|
$ |
0.12 |
|
|
Net Income adjusted |
|
$ |
3,078 |
|
$ |
0.12 |
|
|
$ |
5,001 |
|
$ |
0.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE: All adjustments are net of tax except for the
adjustment of the deferred tax assets |
|
|
|
|
|
|
|
|
About the Company
LSI Industries Inc. is a U.S.-based designer,
manufacturer and marketer of lighting, graphics and technology
solutions for both indoor and outdoor applications. The
Company is a leader in the primary markets it serves including
petroleum, automotive, quick serve restaurants, grocery, banking,
retail, renovation, parking and warehousing. Products are marketed
throughout North America by a network of independent sales
representatives and distributors, as well as through national
accounts. LSI partners with its customers to provide a full
range of design support, engineering, installation and project
management services. Headquartered in Blue Ash, Ohio, LSI currently
employs over 1,200 employees and operates eight facilities
throughout the U.S. The Company’s common shares are traded on the
NASDAQ Global Select Market under the symbol LYTS. Additional
information can be found on the Investor Relations page at
www.lsi-industries.com.
Forward-Looking Statements
For details on the uncertainties that may cause our actual
results to be materially different than those expressed in our
forward-looking statements, visit http://www.lsi-industries.com/fls
as well as our Annual Reports on Form 10-K and Quarterly Reports on
Form 10-Q which contain risk factors.
Conference Call
On January 23, 2019 at 2:00 p.m. EST, James (Jim) A. Clark,
President and Chief Executive Officer, and James (Jim) E. Galeese,
Executive Vice President and Chief Financial Officer, will discuss
the quarter’s financial results, which will contain forward looking
statements and other material information.
Access to the live Webcast will be available via the Investor
Relations page of the Company’s website:
http://www.lsi-industries.com
A replay of the Webcast will be posted to the Investor Relations
page of the Company’s website shortly after the completion of the
conference call, where it will be archived for three months.
For further information, contact Jim Galeese,
Executive Vice President and Chief Financial Officer at (513)
793-3200.
Additional note: Today’s news release, along
with past releases from LSI Industries, is available on the
Company’s internet site at www.lsi-industries.com or by email or
fax, by calling the Investor Relations Department at (513)
793-3200.
Condensed Consolidated Statements of
Operations
|
Three Months Ended
December 31 |
|
|
|
Six Months Ended
December 31 |
|
|
(Unaudited) |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
(In thousands, except per share data) |
|
|
2018 |
|
|
|
2017 |
|
|
|
$ |
89,541 |
|
|
$ |
92,305 |
|
|
|
Net Sales |
|
$ |
174,498 |
|
|
$ |
179,771 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69,486 |
|
|
|
66,998 |
|
|
|
Cost of Products Sold |
|
|
133,027 |
|
|
|
130,761 |
|
|
|
|
23 |
|
|
|
-- |
|
|
|
Severance Costs |
|
|
23 |
|
|
|
-- |
|
|
|
|
376 |
|
|
|
-- |
|
|
|
Restructuring Costs |
|
|
531 |
|
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,656 |
|
|
|
25,307 |
|
|
|
Gross Profit |
|
|
40,917 |
|
|
|
49,010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,148 |
|
|
|
20,677 |
|
|
|
Selling and Administrative Costs |
|
|
37,475 |
|
|
|
41,194 |
|
|
|
|
20,165 |
|
|
|
-- |
|
|
|
Goodwill Impairment |
|
|
20,165 |
|
|
|
28,000 |
|
|
|
|
469 |
|
|
|
83 |
|
|
|
Severance Costs |
|
|
469 |
|
|
|
83 |
|
|
|
|
25 |
|
|
|
-- |
|
|
|
Restructuring Costs |
|
|
25 |
|
|
|
-- |
|
|
|
|
120 |
|
|
|
-- |
|
|
|
Transition and re-alignment
costs |
|
|
120 |
|
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(20,271 |
) |
|
|
4,547 |
|
|
|
Operating (Loss)
Income |
|
|
(17,337 |
) |
|
|
(20,267 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
615 |
|
|
|
417 |
|
|
|
Interest
Expense |
|
|
1,133 |
|
|
|
820 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(20,886 |
) |
|
|
4,130 |
|
|
|
(Loss) Income Before
Taxes |
|
|
(18,470 |
) |
|
|
(21,087 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,104 |
) |
|
|
5,598 |
|
|
|
Income Tax
(Benefit) |
|
|
(4,437 |
) |
|
|
(3,990 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(15,782 |
) |
|
$ |
(1,468 |
) |
|
|
Net (Loss) |
|
$ |
(14,033 |
) |
|
$ |
(17,097 |
) |
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding |
|
|
|
|
|
|
|
26,083 |
|
|
|
25,858 |
|
|
|
Basic |
|
|
26,058 |
|
|
|
25,824 |
|
|
|
|
26,083 |
|
|
|
25,858 |
|
|
|
Diluted |
|
|
26,058 |
|
|
|
25,824 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Per Share |
|
|
|
$ |
(0.61 |
) |
|
$ |
(0.06 |
) |
|
|
Basic |
|
$ |
(0.54 |
) |
|
$ |
(0.66 |
) |
|
|
$ |
(0.61 |
) |
|
$ |
(0.06 |
) |
|
|
Diluted |
|
$ |
(0.54 |
) |
|
$ |
(0.66 |
) |
|
|
|
|
|
|
Condensed Consolidated Balance Sheets
|
|
|
|
(amounts in thousands) |
|
|
|
|
12/31/18 |
|
6/30/18 |
|
|
Current Asset |
$ |
125,022 |
|
$ |
110,081 |
|
|
Property, Plant and Equipment, net |
|
41,249 |
|
|
43,703 |
|
|
Other Assets |
|
58,807 |
|
|
75,733 |
|
|
Total Assets |
$ |
225,078 |
|
$ |
229,517 |
|
|
|
Current Liabilities |
$ |
50,409 |
|
$ |
42,199 |
|
|
Long-Term Debt |
|
48,372 |
|
|
45,360 |
|
|
Other Long-Term Liabilities |
|
1,972 |
|
|
2,707 |
|
|
Shareholders' Equity |
|
124,325 |
|
|
139,251 |
|
|
|
|
$ |
225,078 |
|
$ |
229,517 |
|
|
CONTACT: JIM GALEESE(513) 793-3200
LSI Industries (NASDAQ:LYTS)
過去 株価チャート
から 6 2024 まで 7 2024
LSI Industries (NASDAQ:LYTS)
過去 株価チャート
から 7 2023 まで 7 2024