LSI Industries Reports Lower Lighting Revenue Amid Mixed Results

LSI announced its fiscal Q4 2024 earnings, highlighting solid revenue growth and improved margins despite a dip in lighting sales. CEO James Clark and CFO James Galeese shared key financial results during a call with investors and expressed optimism for the year ahead.

Revenue Growth and Strategic Expansion

For Q2 2024, LSI reported a 4% increase in sales, reaching $129 million. This growth was largely driven by the acquisition of EMI Industries in April, which added a new business segment to LSI’s portfolio. CEO James Clark credited the company’s success to its focus on expanding product offerings and delivering value in core markets.

“We added a new business segment with the purchase of EMI Industries in April, and we continue to expand LSI’s value to our customers by broadening our product and solutions offerings,” Clark said.

For the full year 2024, LSI posted strong results. Adjusted EBITDA rose 11%, with margins improving by 60 basis points year-over-year. Free cash flow exceeded $38 million, allowing LSI to reinvest in new growth initiatives and product development.

For lighting, fiscal ’24 was a solid year with operating income increasing 5%, driven by a 200 basis point improvement in gross margin rate achieved on 4% lower sales. LSI outperformed the broader industry, reflecting continued active project levels in our key verticals and share gains.

Innovation and Market Leadership

Clark highlighted LSI’s ability to outperform competitors in key markets, even as the grocery sector faced challenges throughout 2024. “Our execution as a company and as a management team remains high,” Clark stated. “I’m proud of the company’s ability to adapt and focus on delivering results to our customers and shareholders.”

The company continues to push innovation, especially in its lighting and refrigeration segments. In 2024, LSI launched more than 25 new products, including an environmentally friendly refrigeration line that uses R290, a natural refrigerant with no harmful effects. Clark described this move as crucial for expanding the company’s market presence while supporting environmental goals.

In 2025, LSI plans to introduce a new lighting product line called Velocity. This line will offer customers high-performance solutions at competitive prices. Although lighting sales declined slightly in 2024, Clark emphasized LSI’s confidence in its market position. “Our agent networks and vertical market focus continue to create growth opportunities,” he noted.

Strategic Acquisitions and Financial Impact

The acquisition of EMI Industries was a key topic during the earnings call. CFO James Galeese explained that EMI’s partial-quarter contribution boosted LSI’s Display Solutions segment sales by 22% compared to last year. This growth extended to print and digital graphics and display case orders.

Clark expressed satisfaction with EMI’s integration, emphasizing that the cultural alignment and operational synergies have been successful. “The integration has gone very well. Culturally, they’re a great fit. We’re pleased with the progress and excited about the synergies we’re identifying,” he said.

Looking forward, LSI expects EMI to contribute significantly to EBITDA growth. The company aims to enhance margins through operational improvements and cross-selling opportunities.

Financial Strategy and Growth Outlook

LSI remains in a solid financial position for future growth. The company reduced its net debt to $50 million, maintaining a net debt-to-EBITDA ratio of 1x. This gives LSI the flexibility to pursue additional strategic investments. Adjusted earnings per share for Q2 stood at $0.24, reflecting stable pricing and effective cost management.

Despite ongoing macroeconomic uncertainty, Galeese emphasized that LSI’s core markets remain solid. For instance, the Display Solutions backlog in the refueling C-store vertical is strong, with several large customer programs lined up for 2025.

The grocery segment, which faced challenges for much of 2024, showed signs of recovery in Q4. Display case orders increased year-over-year for the first time in five quarters, signaling a potential rebound.

“We anticipate a recovery in our grocery vertical as customers resume in-store refresh programs. We’re also seeing favorable activity continue into July and August,” Clark said.

Fostering a Culture of Performance and Integrity

LSI’s focus on maintaining a high “say-do ratio” was a recurring theme throughout the earnings call. This commitment to fulfilling promises across all aspects of the business has allowed the company to remain adaptable and continue seeking growth opportunities.

“We often talk internally about our say-do ratio,” Clark shared. “This commitment to high performance extends to our customers, shareholders, coworkers, suppliers, and agents. It underscores our ability to adapt and continue seeking growth opportunities.”

Looking Ahead: Growth and Market Leadership

LSI’s management team expressed confidence in the company’s strategic direction and growth prospects for fiscal 2025. Continued investments in innovation, operational excellence, and customer relationships position LSI for sustained profitability and market leadership.

As LSI enters the new fiscal year, it remains focused on delivering quality solutions and maintaining its competitive edge in key markets.

Read more details about Q 2024 earnings here.

Read the article from 3Q 2024 here.