LSI Industries Inc. (LYTS) Reports Q2 Fiscal 2024 Results: Net Income Dips Slightly Amidst ...
Net Sales: Reported at $109.0 million, a decrease of 15% from the previous year.
Net Income: Decreased by 8% to $5.9 million, or $0.20 per diluted share.
Adjusted EBITDA: Remained stable at $11.1 million, with a margin rate of 10.1%.
Free Cash Flow: Generated $7.3 million in the quarter, contributing to a trailing twelve-month total of nearly $44.0 million.
Debt Reduction: Net debt to Adjusted EBITDA ratio improved significantly to 0.4x from 1.3x year-over-year.
Dividend: Declared a quarterly cash dividend of $0.05 per share.
On January 25, 2024, LSI Industries Inc (NASDAQ:LYTS) released its 8-K filing, detailing the financial results for the fiscal 2024 second quarter ended December 31, 2023. The company, a leading provider of corporate visual image solutions, including lighting and display products for various markets, faced a challenging quarter with a temporary pause in demand within its grocery vertical due to a pending merger of two large industry participants.
Despite these challenges, LSI Industries managed to increase its market share across multiple high-value vertical markets and reported a net income of $5.9 million, or $0.20 per diluted share, on sales of $109.0 million. The adjusted gross profit margin saw an increase of 240 basis points to 29.0%, attributed to a higher-value sales mix, focused price discipline, and strong cost control. The company's Adjusted EBITDA stood at $11.1 million, maintaining an Adjusted EBITDA margin rate of 10.1%, consistent with the prior year's quarter.
LSI Industries' financial achievements are particularly noteworthy given the company's strategic focus on quality of earnings and capital discipline. The strong free cash flow generation of $7.3 million during the quarter, and nearly $44.0 million on a trailing twelve-month basis, has allowed the company to reduce its net debt ratio significantly, from 1.3x to 0.4x, enhancing its balance sheet flexibility and enabling strategic investments for growth.
Income Statement and Balance Sheet Highlights
LSI Industries reported a decrease in net sales by 15% compared to the same quarter in the previous year, with the Lighting Segment net sales down by 3% and Display Solutions Segment net sales down by 29%. The company's operating income as adjusted was $8.7 million, a decrease of 18% year-over-year. However, net income as reported showed a 10% increase for the six months ended December 31, 2023, compared to the same period in the previous year.
The balance sheet reflects a solid financial position with working capital of $75.8 million and a current ratio of 2.2 to 1. Total assets were reported at $287.5 million, with long-term debt at $18.0 million, showcasing the company's ability to manage its liabilities effectively.
Management Commentary and Future Outlook
James A. Clark, President and CEO of LSI Industries, commented on the company's resilience and strategic execution, highlighting the solid second-quarter results despite market disruptions. Clark emphasized the company's successful cross-selling initiatives and the positive demand outlook within key verticals, particularly convenience stores and grocery chains. He also noted the strategic positioning of the company to capitalize on expected increases in project activity and demand.
"Our solid second quarter performance demonstrates the benefits of building strong market positions in multiple, high-value vertical markets, further strengthening relationships with customers and partners, combined with a disciplined approach to capital allocation," said Clark.
LSI Industries remains optimistic about the future, with management expecting grocery demand to begin increasing in the fiscal third quarter and accelerate throughout the fiscal fourth quarter and into fiscal 2025.
For a more detailed analysis and additional information, investors and interested parties are encouraged to review the full 8-K filing.
Explore the complete 8-K earnings release (here) from LSI Industries Inc for further details.
This article first appeared on GuruFocus.
