lyts20220930

lyts20220930_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

_________________________

FORM 10-Q

☒		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022, OR

☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO ________________.

Commission File No. 0-13375

LSI Industries Inc.

(Exact name of registrant as specified in its charter)

Ohio

31-0888951

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer Identification No.)

10000 Alliance Road, Cincinnati, Ohio		45242
(Address of principal executive offices)		(Zip Code)
(513) 793-3200
Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	LYTS	NASDAQGlobal Select Market

Indicate by checkmark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒	Emerging growth company ☐
Non-accelerated filer ☐	Smaller reporting company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 28, 2022, there were 27,777,410 shares of the registrant's common stock, no par value per share, outstanding.

LSI INDUSTRIES INC.

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2022

INDEX

PART I. FINANCIAL INFORMATION			3

ITEM 1.		FINANCIAL STATEMENTS	3

	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS		3

	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME		4

	CONDENSED CONSOLIDATED BALANCE SHEETS		5

	CONDENSED CONSOLIDATED BALANCE SHEETS		6

	CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY		7

	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS		8

	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS		9

ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	20

ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	26

ITEM 4.		CONTROLS AND PROCEDURES	26

PART II. OTHER INFORMATION			27

ITEM 5.		OTHER INFORMATION	27

ITEM 6.		EXHIBITS	27

	SIGNATURES		28

Page 2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended
	September 30
(In thousands, except per share data)	2022		2021

Net Sales	$	127,069	$	106,397

Cost of products and services sold		92,319		81,887

Severance costs		12		-

Gross profit		34,738		24,510

Selling and administrative expenses		24,717		20,066

Operating income		10,021		4,444

Interest expense		788		234

Other expense		213		79

Income before income taxes		9,020		4,131

Income tax expense		2,758		998

Net income	$	6,262	$	3,133


Earnings per common share (see Note 4)
Basic	$	0.23	$	0.12
Diluted	$	0.22	$	0.11


Weighted average common shares outstanding
Basic		27,641		26,996
Diluted		28,664		27,743

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 3

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended
	September 30
(In thousands)	2022		2021

Net Income	$	6,262	$	3,133

Foreign currency translation adjustment		7		(44	)

Comprehensive Income	$	6,269	$	3,089

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 4

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30,			June 30,
(In thousands, except shares)	2022			2022

ASSETS

Current assets

Cash and cash equivalents	$	9,028		$	2,462

Accounts receivable, less allowance for credit losses of $508 and $499, respectively		75,449			77,750

Inventories		80,457			74,421

Refundable income taxes		1,118			1,041

Other current assets		4,355			3,243

Total current assets		170,407			158,917

Property, Plant and Equipment, at cost
Land		4,010			4,010
Buildings		24,469			24,495
Machinery and equipment		67,115			66,762
Buildings under finance leases		2,033			2,033
Construction in progress		563			618
		98,190			97,918
Less accumulated depreciation		(71,913	)		(70,760	)
Net property, plant and equipment		26,277			27,158

Goodwill		45,030			45,030

Other intangible assets, net		66,774			67,964

Operating lease right-of-use assets		7,826			8,664

Other long-term assets, net		3,187			3,347

Total assets	$	319,501		$	311,080

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 5

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30,			June 30,
(In thousands, except shares)	2022			2022

LIABILITIES & SHAREHOLDERS' EQUITY

Current liabilities
Current maturities of long-term debt	$	3,571		$	3,571
Accounts payable		41,133			34,783
Accrued expenses		35,231			36,264

Total current liabilities		79,935			74,618

Long-term debt		73,975			76,025

Finance lease liabilities		1,174			1,246

Operating lease liabilities		7,381			8,240

Other long-term liabilities		3,307			3,182

Commitments and contingencies (Note 12)		-			-

Shareholders' Equity
Preferred shares, without par value; Authorized 1,000,000 shares, none issued		-			-
Common shares, without par value; Authorized 40,000,000 shares; Outstanding 27,777,410 and 27,484,514 shares, respectively		140,599			139,500
Treasury shares, without par value		(6,439	)		(5,927	)
Deferred compensation plan		6,439			5,927
Retained earnings		13,078			8,224
Accumulated other comprehensive income		52			45

Total shareholders' equity		153,729			147,769

Total liabilities & shareholders' equity	$	319,501		$	311,080

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 6

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

	Common Shares					Treasury Shares						Key Executive		Accumulated Other			Retained			Total
(In thousands, except per share data)	Number Of Shares					Number Of Shares						Compensation Amount		Comprehensive Income (Loss)			Earnings (Loss)			Shareholders' Equity
(In thousands, except per share data)	Number Of Shares		Amount			Number Of Shares			Amount			Compensation Amount		Comprehensive Income (Loss)			Earnings (Loss)			Shareholders' Equity

Balance at June 30, 2021		26,863	$	132,526			(346	)	$	(2,450	)	$	2,450	$	49		$	(1,405	)	$	131,170

Net Income		-		-			-			-			-		-			3,133			3,133
Other comprehensive loss		-		-			-			-			-		(44	)		-			(44	)
Stock compensation awards		10		75			-			-			-		-			-			75
Restricted stock units issued, net of shares withheld for tax withholdings		79		(247	)		-			-			-		-			-			(247	)
Shares issued for deferred compensation		263		2,042			-			-			-		-			-			2,042
Activity of treasury shares, net		-		-			(261	)		(2,021	)		-		-			-			(2,021	)
Deferred stock compensation		-		-			-			-			2,021		-			-			2,021
Stock compensation expense		-		556			-			-			-		-			-			556
Stock options exercised, net		3		16			-			-			-		-			-			16
Dividends — $0.20 per share		-		-			-			-			-		-			(1,328	)		(1,328	)

Balance at September 30, 2021		27,218	$	134,968			(607	)	$	(4,471	)	$	4,471	$	5		$	400		$	135,373

	Common Shares					Treasury Shares						Key Executive		Accumulated Other		Retained			Total
	Number Of Shares					Number Of Shares						Compensation Amount		Comprehensive Income (Loss)		Earnings (Loss)			Shareholders' Equity
	Number Of Shares		Amount			Number Of Shares			Amount			Compensation Amount		Comprehensive Income (Loss)		Earnings (Loss)			Shareholders' Equity

Balance at June 30, 2022		27,484	$	139,500			(822	)	$	(5,927	)	$	5,927	$	45	$	8,224		$	147,769

Net Income		-		-			-			-			-		-		6,262			6,262
Other comprehensive loss		-		-			-			-			-		7		-			7
Stock compensation awards		12		75			-			-			-		-		-			75
Restricted stock units issued, net of shares withheld for tax withholdings		201		(66	)		-			-			-		-		-			(66	)
Shares issued for deferred compensation		80		539			-			-			-		-		-			539
Activity of treasury shares, net		-		-			(77	)		(512	)		-		-		-			(512	)
Deferred stock compensation		-		-			-			-			512		-		-			512
Stock compensation expense		-		551			-			-			-		-		-			551
Stock options exercised, net		-		-			-			-			-		-		-			-
Dividends — $0.20 per share		-		-			-			-			-		-		(1,408	)		(1,408	)

Balance at September 30, 2022		27,777	$	140,599			(899	)	$	(6,439	)	$	6,439	$	52	$	13,078		$	153,729

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 7

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended
	September 30
(In thousands)	2022			2021

Cash Flows from Operating Activities
Net income	$	6,262		$	3,133
Non-cash items included in net income
Depreciation and amortization		2,421			2,563
Deferred income taxes		350			(13	)
Deferred compensation plan		539			2,042
Stock compensation expense		551			556
Issuance of common shares as compensation		75			75
Loss on disposition of fixed assets		2			14
Allowance for doubtful accounts		8			10
Inventory obsolescence reserve		250			572

Changes in certain assets and liabilities
Accounts receivable		2,293			(6,260	)
Inventories		(6,286	)		(9,578	)
Refundable income taxes		(77	)		138
Accounts payable		6,350			8,359
Accrued expenses and other		(1,943	)		(6,663	)
Customer prepayments		(212	)		(2,837	)
Net cash flows provided by (used in) operating activities		10,583			(7,889	)

Cash Flows from Investing Activities
Purchases of property, plant and equipment		(434	)		(297	)
Net cash flows (used in) investing activities		(434	)		(297	)

Cash Flows from Financing Activities
Payments of long-term debt		(47,123	)		(42,533	)
Borrowings of long-term debt		45,073			52,659
Cash dividends paid		(1,408	)		(1,326	)
Shares withheld for employees' taxes

SEC Form 10-Q filed by LSI Industries Inc.