LSI Industries Inc. (NASDAQ:LYTS) today announced
that it has completed the acquisition of all the capital stock of
Atlas Lighting Products, Inc., a Burlington, NC manufacturer of
high-quality LED lighting products sold into the electrical
distribution market. For the fiscal year ended December 25,
2016, Atlas’ revenues were $56.5 million, and operating income was
$8.8 million after adding back adjustments of private company
expenses estimated to be $3.6 million. Similarly, adjusted
EBITDA is estimated to have been approximately $9.7 million.
Net of cash, Atlas’ balance sheet was debt-free at December 25,
2016. Founded in 1992, Atlas has operated as an S Corporation
since its formation.
The terms of the agreement include a cash payment of $96.9
million, plus 200,000 five-year warrants to purchase LSI’s common
stock at an exercise price of $9.95, for a total consideration of
$97.5 million. Funding will be provided by a combination of
cash on hand and $66 million from a new $100 million commercial
bank facility provided by PNC Bank.
Dennis W. Wells, Chief Executive Officer and President,
commented, “I am very excited to announce the acquisition of Atlas
Lighting Products. This highly strategic acquisition, the
largest in LSI’s history, will immediately broaden our lighting
product offering, expand our sourcing capabilities, improve our
profit margins, and provide significant revenue and cost synergies.
“Atlas’ line of quick-ship standard products, including floods,
wallpacks, linear, pole mount, and high bay fixtures, complement
LSI’s custom product lines with minimal overlap, providing our
customers with a very complete LED lighting product
portfolio. LSI intends to keep the Atlas brand, a
well-regarded name in the electrical distribution market, and we
will maintain independent agent networks for both the LSI and the
Atlas product lines. During our early integration planning,
we have identified numerous product cross selling opportunities
thereby providing an increased range of products to sales agencies
and distribution partners in both sales channels, and resulting in
synergistic revenue growth opportunities at LSI.
“In addition to LSI’s and Atlas’ complementary product lines, we
anticipate significant cost synergies with this acquisition.
Atlas has forged sourcing channels in Asia which we plan to utilize
throughout LSI’s existing businesses. These sourcing
relationships, along with additional cost savings that we have
identified during our due diligence, are expected to benefit LSI in
the near-term, while savings resulting from the elimination of
private company expenses will have an immediate benefit. We
intend to implement The LSI Business System to maximize the savings
potential.
“Over the course of the past several months I have become very
impressed with Atlas’ management group, and am pleased to welcome
all of its employees to LSI. We intend to maintain the Atlas
facility in Burlington, NC, and have signed a seven-year lease with
multiple renewal options.
“Given the complementary product offerings of LSI and Atlas,
combined with the expected revenue and cost synergies, I anticipate
that this acquisition will be accretive to LSI’s results beginning
in fiscal 2018, and will accelerate our efforts to achieve
above-market rate revenue growth and improve our gross and
operating margins. It is an exciting time to be in the
lighting industry, and I am confident that the combination of LSI
and Atlas will provide numerous growth opportunities.”
James H. Bennett, President of Atlas Lighting Products,
commented, “I am thrilled to join forces with LSI Industries.
I have always known LSI as a quality manufacturer of custom
lighting fixtures, and am looking forward to continuing in my role
as President of Atlas Lighting, working with Dennis and the LSI
team to grow the business.”
Rector Samuel (Sam) Hunt III, Chairman and Chief Executive
Officer, commented, “After 25 years in the lighting business, I am
pleased to announce my retirement. I am confident that my
business will be in good hands under the management of Dennis
Wells, Jim Bennett and the entire LSI team, and I wish them great
success going forward.”
Conference Call
LSI will host a conference call to discuss this acquisition on
February 22, 2017 at 2:00 p.m. ET. Dennis W. Wells, Chief
Executive Officer and President, will lead the call. Access to
the live Webcast is 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 within two hours of the completion of the
conference call.
"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, failure of an acquisition or acquired company
to achieve its plans or objectives generally, unexpected
difficulties in integrating acquired businesses, the ability to
retain key employees of acquired businesses, unfavorable economic
and market conditions, the results of asset impairment assessments,
the ability to maintain an effective system of internal control
over financial reporting, the ability to remediate any material
weaknesses in internal control over financial reporting and any
other risk factors that are identified herein. 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
We are a customer-centric company that positions itself as a
value-added, trusted partner in developing superior image solutions
through our world-class lighting, graphics, and technology
capabilities. Our core strategy of "Lighting + Graphics +
Technology = Complete Image Solutions" differentiates us from our
competitors.
We are committed to advancing solid-state LED 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 provide sophisticated
lighting and energy management control solutions to help customers
manage their energy performance. Further, we provide a full
range of design support, engineering, installation and project
management services to our customers.
We are a vertically integrated U.S.-based manufacturer
concentrating on serving customers in North America and Latin
America. Our major markets include commercial / industrial
lighting, petroleum / convenience store and multi-site retail
(including automobile dealerships, restaurants and national retail
accounts). Headquartered in Cincinnati, Ohio, LSI has
facilities in Ohio, California, Kentucky, New York, North Carolina
and Texas. The Company’s common shares are traded on the
NASDAQ Global Select Market under the symbol LYTS.
For further information, contact Dennis Wells,
Chief Executive 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.
CONTACT:
DENNIS WELLS
(513) 793-3200
LSI Industries (NASDAQ:LYTS)
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