LSI Industries Inc. (Nasdaq:LYTS)
today:
- reported second quarter net sales of $71,082,000, an increase
of 3% as compared to $68,774,000 in the same period of the prior
fiscal year;
- reported a second quarter (and first half) pre-tax non-cash
goodwill impairment charge of $2,141,000 (or $1,552,000 after tax);
- reported a second quarter net loss of $(2,450,000) or $(0.10)
per share as compared to net income of $772,000 or $0.03 per share
for the same period of the prior fiscal year;
- reported first half net sales of $145,801,000, an increase of
9% as compared to $134,269,000 in the same period of the prior
fiscal year; and
- reported a first half net loss of $(620,000) or $(0.03) per
share as compared to net income of $2,096,000 or $0.09 per share
for the same period of the prior fiscal year
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Financial Highlights |
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(In thousands, except per |
Three Months Ended |
Six Months Ended |
share data; unaudited) |
December 31 |
December 31 |
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2012 |
2011 |
% Change |
2012 |
2011 |
% Change |
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Net Sales |
$71,082 |
$68,774 |
3% |
$145,801 |
$134,269 |
9% |
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Operating Income (loss) |
$(2,709) |
$1,219 |
n/m |
$318 |
$3,397 |
(91)% |
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Net Income (loss) |
$(2,450) |
$772 |
n/m |
$(620) |
$2,096 |
n/m |
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Earnings (loss) per |
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share (diluted) |
$(0.10) |
$0.03 |
n/m |
$(0.03) |
$0.09 |
n/m |
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12/31/12 |
6/30/12 |
Working Capital |
$78,597 |
$83,702 |
Total Assets |
$167,778 |
$175,226 |
Long-Term Debt |
$ nil |
$ nil |
Shareholders' Equity |
$142,184 |
$149,368 |
Second Quarter Fiscal 2013 Results
Net sales in the second quarter of fiscal 2013 were $71,082,000,
an increase of 3% as compared to last year's second quarter net
sales of $68,774,000. Lighting Segment net sales increased 0.4% to
$53,743,000 with sales to national accounts and niche markets
increasing 1.7%, sales to the Commercial / Industrial lighting
market decreasing 4.1%, sales of $745,000 related to LED video
screens decreasing 35.6%, and lighting sales to international
markets of $4,241,000 increasing 33.2%. In the other reportable
business segments, Graphics Segment net sales increased 4.4% to
$10,532,000, Electronic Components Segment net sales increased
17.7% to $4,959,000 and net sales of the All Other Category
increased 96.2% to $1,848,000. The Company's second quarter net
sales to the Petroleum / Convenience Store market were
approximately $21.9 million, representing a $1.1 million or 5.2%
increase over the same period of the prior year. In the second
quarter of fiscal 2013, the Company reduced the contingent earn-out
liability related to the March 2012 acquisition of Virticus
Corporation and recorded pre-tax income of $705,000 primarily in
the Corporate Administrative expenses, with no comparable item in
the second quarter of fiscal 2012. The Company reported a non-cash
$2,141,000 goodwill impairment in the Electronic Components Segment
in the second quarter of fiscal 2013 with no corresponding
impairment in the second quarter of fiscal 2012. The fiscal 2013
second quarter net loss of $(2,450,000), or $(0.10) per share,
compares to fiscal 2012 second quarter net income of $772,000, or
$0.03 per share. Earnings per share represents diluted
earnings per share.
First Half Fiscal 2013 Results
Net sales in the first half of fiscal 2013 were $145,801,000, an
increase of 9% as compared to last year's first half net sales of
$134,269,000. Lighting Segment net sales increased 6.7% to
$109,534,000 with sales to national accounts and niche markets
increasing 8.4%, sales to the Commercial / Industrial lighting
market decreasing 5.7%, sales of $5,018,000 related to LED video
screens increasing 272.6%, and lighting sales to international
markets of $7,981,000 increasing 27.8%. In the other
reportable business segments, Graphics Segment net sales increased
3.4% to $21,277,000, Electronic Components Segment net sales
increased 24.3% to $10,713,000 and net sales of the All Other
Category increased 80.2% to $4,277,000. The Company's first
half net sales to the Petroleum / Convenience Store market were
approximately $41.5 million, representing a $4.0 million or 10.6%
increase over the same period of the prior year. In the first half
of fiscal 2013, the Company reduced the contingent earn-out
liability related to the March 2012 acquisition of Virticus
Corporation and recorded pre-tax income of $705,000 primarily in
the Corporate Administrative expenses, with no comparable item in
the first half of fiscal 2012. The Company reported a
$2,141,000 goodwill impairment in the Electronic Components Segment
in the first half of fiscal 2013 as compared to a $258,000 goodwill
impairment in the Graphics Segment in the first half of fiscal
2012. The fiscal 2013 first half net loss of $(620,000), or
$(0.03) per share, compares to fiscal 2012 first half net income of
$2,096,000, or $0.09 per share. Earnings per share represents
diluted earnings per share.
Balance Sheet
The balance sheet at December 31, 2012 included current assets
of $102.0 million, current liabilities of $23.4 million and working
capital of $78.6 million, which includes cash of $14.5
million. The current ratio was 4.4 to 1. The Company has
shareholders' equity of $142.2 million, no long-term debt, and
borrowing capacity on its commercial bank facilities as of December
31, 2012 of $34.7 million. With continued strong cash flow, a
sound and conservatively capitalized balance sheet, and $35 million
in credit facilities, LSI Industries believes its financial
condition is sound and capable of supporting the Company's planned
growth, including acquisitions, if any.
Cash Dividend Actions
In December 2012, the Board of Directors accelerated payment
into December 2012 of the fiscal 2013 second quarter regular
quarterly cash dividend of $0.06 per share. Also, an
additional cash dividend of $0.12 per share was paid in December
2012. The indicated annual cash dividend rate for fiscal 2013
is $0.24 per share. The declaration and amount of any cash and
stock dividends will be determined by the Board of Directors in its
discretion based upon its evaluation of earnings, cash flow
requirements and future business developments and opportunities,
including acquisitions, if any.
Company Comments
Robert J. Ready, Chief Executive Officer, commented, "As I write
this message early in the third quarter, I am pleased to say that
we now have before us a world-class opportunity that has the
potential to have a major positive impact on our lighting revenues
later this fiscal year. But first I want to comment briefly on
our second quarter. Results were heavily impacted by a number
of accounting elements. First, we took a goodwill impairment
charge of $2.14 million in our Electronic Components Segment in
connection with our acquisition of Virticus. This was a
non-cash charge and should not be interpreted as a reduction in our
intermediate and long-term outlook for this important part of our
company. Virticus is making solid progress and is an important
part of our 'one-stop' capabilities. Second, during the
quarter we also conducted a careful and rigorous analysis of our
inventory, particularly as it related to our technologically
advanced solid-state products and components. We have been on
the leading edge of developing new solid-state LED products,
including technology advances, since we entered the market with the
acquisition of SACO Technologies in 2006. As such, we have had
to cope with adjusting our inventory levels and obsolescence
factors on a different and more rapid basis than our conventional
lines of lighting products. After careful review, we decided
to take the conservative, and we believe appropriate, position of
providing an additional inventory reserve in the aggregate amount
of $1.9 million (approximately $1.6 million after a U.S.-only tax
benefit) during the second quarter. The result of these
inventory reserves is an improved quality of an already strong,
debt-free balance sheet. As a further accounting action, we
reduced the contingent earn-out liability related to the
acquisition of Virticus, and thereby recorded pre-tax income of
$705,000 ($511,000 after income tax effect) primarily under the
category of Corporate Administrative expenses. We believe
these actions were appropriate and will provide greater clarity and
visibility into the earnings of LSI Industries as we move through
the second half of fiscal 2013 and into fiscal 2014.
"As we look forward, we will be introducing important new
solid-state lighting products during the third and fourth quarters,
as well as solidifying a very new and substantial opportunity to
expand our reach further into the commercial and industrial
lighting market. In this regard so far in the third quarter,
we have already entered into new agreements with six leading
specification-grade independent agent organizations covering key
domestic markets. We plan to tell you more about this major
game-changing development later in the quarter, but suffice to say,
it is expected to have a substantial impact on lighting revenues as
well as a down-the-line favorable influence on graphics sales.
"We continue to make important industry leading progress in
solid-state LED lighting, utilizing our technology, assets,
knowledge of what the market wants, and product design capabilities
to fulfill these needs. During the second quarter, our
advanced solid-state LED products represented about 33% of total
lighting sales.
"Although the second quarter was difficult for our Graphics
business, we expect quite dramatic improvement during the third and
fourth quarters based on a large retail grocery re-imaging project
and additional new sales.
"I look forward to reporting to you more about our new
opportunities soon. Of course, we continue to look for ways to
improve efficiencies, will likely need to add to our manufacturing
capabilities to meet expected higher demand, and will continue to
stay conservatively financed with a strong balance sheet."
Non-GAAP Financial Measures
This press release includes adjustments to GAAP net income for
the three month period ended December 31, 2012 and the six month
periods ended December 31, 2012 and 2011. Adjusted net income
(loss) and earnings (loss) per share, which excludes the impact of
goodwill impairment and reversal of a contingent Earn-Out
liability, are non-GAAP financial measures. We believe that it
is useful as a supplemental measure in assessing the operating
performance of our business. This measure is 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 this
non-GAAP measurement to the net income reported for the periods
indicated.
(in thousands, except per share data;
unaudited) |
Second Quarter |
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Diluted |
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Diluted |
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FY 2013 |
EPS |
FY 2012 |
EPS |
Reconciliation of net income (loss)
to adjusted net income (loss): |
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Net income (loss) and
earnings (loss) per share as reported |
$(2,450) |
$(0.10) |
$772 |
$0.03 |
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Adjustment for the reversal of
a contingent Earn-Out liability, inclusive of the income tax
effect |
(511) |
(0.02) |
-- |
-- |
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Adjustment for goodwill impairment,
inclusive of the income tax effect |
1,552 |
0.06 |
-- |
-- |
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Adjusted net income (loss)
and earnings (loss) per share |
$(1,409) |
$(0.06) |
$772 |
$0.03 |
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(in thousands, except per share data;
unaudited) |
First Half |
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Diluted |
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Diluted |
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FY 2013 |
EPS |
FY 2012 |
EPS |
Reconciliation of net income (loss)
to adjusted net income: |
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Net income (loss) and earnings (loss) per
share as reported |
$(620) |
$(0.03) |
$2,096 |
$0.09 |
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Adjustment for the reversal of
a contingent Earn-Out liability, inclusive of the income tax
effect |
(511) |
(0.02) |
-- |
-- |
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Adjustment for goodwill impairment,
inclusive of the income tax effect |
1,552 |
0.06 |
258 |
0.01 |
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Adjusted net income and earnings per
share |
$421 |
$0.02 |
$2,354 |
$0.10 |
"Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995
This document contains certain forward-looking statements that
are subject to numerous assumptions, risks or
uncertainties. The Private Securities Litigation Reform Act of
1995 provides a safe harbor for forward-looking
statements. Forward-looking statements may be identified by
words such as "estimates," "anticipates," "projects," "plans,"
"expects," "intends," "believes," "seeks," "may," "will," "should"
or the negative versions of those words and similar expressions,
and by the context in which they are used. Such statements,
whether expressed or implied, are based upon current expectations
of the Company and speak only as of the date made. Actual
results could differ materially from those contained in or implied
by such forward-looking statements as a result of a variety of
risks and uncertainties over which the Company may have no
control. These risks and uncertainties include, but are not
limited to, the impact of competitive products and services,
product demand and market acceptance risks, potential costs
associated with litigation and regulatory compliance, reliance on
key customers, financial difficulties experienced by customers, the
cyclical and seasonal nature of our business, the adequacy of
reserves and allowances for doubtful accounts, fluctuations in
operating results or costs whether as a result of uncertainties
inherent in tax and accounting matters or otherwise, unexpected
difficulties in integrating acquired businesses, the ability to
retain key employees of acquired businesses, unfavorable economic
and market conditions, and the results of asset impairment
assessments. You are cautioned to not place undue reliance on
these forward-looking statements. In addition to the factors
described in this paragraph, the risk factors identified in our
Form 10-K and other filings the Company may make with the SEC
constitute risks and uncertainties that may affect the financial
performance of the Company and are incorporated herein by
reference. The Company does not undertake and hereby disclaims
any duty to update any forward-looking statements to reflect
subsequent events or circumstances.
About the Company
Leadership. Strength. Innovation. Those are the
key values behind the smart vision upon which LSI Industries Inc.
was founded when established in 1976. Today LSI demonstrates
this in our dedication to advancing technology throughout all
aspects of our business. We are a vertically integrated
manufacturer who combines integrated technology, design and
manufacturing to produce the most efficient, high quality products
possible. Everything we build is done right here in one of our
US plants.
We are committed to advancing solid-state technology to make
affordable, high performance, energy efficient lighting and custom
graphic products that bring value to our customers. We have a
vast offering of innovative solutions for virtually any lighting or
graphics application. In addition, we can provide
sophisticated lighting and energy management control solutions to
help customers manage their energy performance. Further, we
can provide design support, engineering, installation and project
management for custom graphics rollout programs for today's retail
environment.
LSI is a U.S. manufacturer with marketing / sales efforts
throughout the world with concentration currently on North America,
Latin America, Australia, New Zealand, Asia, Europe and the Middle
East. Our major markets include the commercial / industrial
lighting, petroleum / convenience store, multi-site retail
(including automobile dealerships, restaurants and national retail
accounts), sports and entertainment markets. Headquartered in
Cincinnati, Ohio, LSI has facilities in Ohio, Kansas, Kentucky, New
York, North Carolina, Oregon, Rhode Island, Texas and Montreal,
Canada. The Company's common shares are traded on the NASDAQ
Global Select Market under the symbol LYTS.
The LSI Industries Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=3646
For further information, contact either Bob
Ready, Chief Executive Officer, or Ron Stowell, Vice President,
Chief Financial Officer, and Treasurer 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 |
Six Months Ended |
(in thousands, except
per |
December 31 |
December 31 |
share data; unaudited) |
2012 |
2011 |
2012 |
2011 |
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Net sales |
$71,082 |
$68,774 |
$145,801 |
$134,269 |
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Cost of products and services sold |
57,200 |
53,848 |
114,048 |
103,879 |
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Gross profit |
13,882 |
14,926 |
31,753 |
30,390 |
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Selling and administrative expenses |
14,450 |
13,707 |
29,294 |
26,735 |
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Goodwill impairment |
2,141 |
-- |
2,141 |
258 |
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Operating income (loss) |
(2,709) |
1,219 |
318 |
3,397 |
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Interest expense (income), net |
(18) |
37 |
2 |
77 |
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Income (loss) before income taxes |
(2,691) |
1,182 |
316 |
3,320 |
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Income tax expense (benefit) |
(241) |
410 |
936 |
1,224 |
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Net income (loss) |
$(2,450) |
$772 |
$(620) |
$2,096 |
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Income (loss) per common share |
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Basic |
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Diluted |
$(0.10) |
$0.03 |
$(0.03) |
$0.09 |
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$(0.10) |
$0.03 |
$(0.03) |
$0.09 |
Weighted average common shares
outstanding |
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Basic |
24,307 |
24,298 |
24,306 |
24,295 |
Diluted |
24,391 |
24,341 |
24,382 |
24,348 |
Condensed Consolidated Balance Sheets
(in thousands, unaudited) |
December 31, |
June 30, |
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2012 |
2012 |
Current Assets |
$101,998 |
$106,623 |
Property, Plant and Equipment, net |
43,302 |
42,526 |
Other Assets |
22,478 |
26,077 |
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$167,778 |
$175,226 |
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Current Liabilities |
$23,401 |
$22,921 |
Long-Term Debt |
-- |
-- |
Other Long-Term Liabilities |
2,193 |
2,937 |
Shareholders' Equity |
142,184 |
149,368 |
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$167,778 |
$175,226 |
CONTACT: BOB READY OR
RON STOWELL
(513) 793-3200
LSI Industries (NASDAQ:LYTS)
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LSI Industries (NASDAQ:LYTS)
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