LSI INDUSTRIES INC 10-Q

lyts20220331_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 MARCH 31, 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 NASDAQ Global 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 April 29, 2022, there were 26,654,990 shares of the registrant's common stock, no par value per share, outstanding.               LSI INDUSTRIES INC. FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2022   INDEX     Begins on Page PART I.  Financial Information             ITEM 1. Financial Statements (Unaudited)               Condensed Consolidated Statements of Operations 3     Condensed Consolidated Statements of Comprehensive Income 4     Condensed Consolidated Balance Sheets 5     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 23           ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 31           ITEM 4. Controls and Procedures 31         PART II.  Other Information             ITEM 5. Other Information 32           ITEM 6. Exhibits 32         Signatures 33   Page 2       PART I.    FINANCIAL INFORMATION   ITEM 1.    FINANCIAL STATEMENTS   LSI INDUSTRIES INC.   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)       Three Months Ended     Nine Months Ended       March 31     March 31   (In thousands, except per share data)   2022     2021     2022     2021                                     Net Sales   $ 110,111     $ 72,204     $ 327,651     $ 218,597                                     Cost of products and services sold     83,318       54,112       250,900       162,519                                     Severance costs     -       -       -       5                                     Restructuring costs     -       -       -       3                                     Gross profit     26,793       18,092       76,751       56,070                                     Selling and administrative expenses     21,627       15,996       62,719       49,070                                     Severance costs     5       -       5       16                                     Operating income     5,161       2,096       14,027       6,984                                     Interest (income)     -       ( 2 )     -       ( 4 )                                   Interest expense     524       54       1,287       175                                     Other (income) expense     ( 55 )     43       33       ( 197 )                                   Income before income taxes     4,692       2,001       12,707       7,010                                     Income tax expense     1,074       529       2,851       1,340                                     Net income   $ 3,618     $ 1,472     $ 9,856     $ 5,670                                                                       Earnings per common share (see Note 5)                                 Basic   $ 0.13     $ 0.05     $ 0.36     $ 0.21   Diluted   $ 0.13     $ 0.05     $ 0.35     $ 0.21                                                                       Weighted average common shares outstanding                                 Basic     27,378       26,771       27,220       26,642   Diluted     28,083       27,727       27,945       27,352     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     Nine Months Ended       March 31     March 31   (In thousands)   2022     2021     2022     2021                                     Net Income   $ 3,618     $ 1,472     $ 9,856     $ 5,670                                     Foreign currency translation adjustment     46       ( 54 )     11       93                                     Comprehensive Income   $ 3,664     $ 1,418     $ 9,867     $ 5,763     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)       March 31,     June 30,   (In thousands, except shares)   2022     2021                     ASSETS                                   Current assets                                   Cash and cash equivalents   $ 1,248     $ 2,282                     Accounts receivable, less allowance for credit losses of $ 421 and $ 256 , respectively     73,618       57,685                     Inventories     78,364       58,941                     Refundable income taxes     1,029       1,275                     Other current assets     4,299       4,825                     Total current assets     158,558       125,008                     Property, Plant and Equipment, at cost                 Land     4,010       3,984   Buildings     24,454       24,393   Machinery and equipment     67,446       65,928   Buildings under finance leases     2,033       2,033   Construction in progress     665       933         98,608       97,271   Less accumulated depreciation     ( 70,626 )     ( 66,719 ) Net property, plant and equipment     27,982       30,552                     Goodwill     44,388       43,788                     Other intangible assets, net     69,162       72,773                     Operating lease right-of-use assets     9,464       11,579                     Other long-term assets, net     3,001       3,121                     Total assets   $ 312,555     $ 286,821     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)       March 31,     June 30,   (In thousands, except shares)   2022     2021                     LIABILITIES & SHAREHOLDERS' EQUITY                                   Current liabilities                 Current maturities of long-term debt   $ 3,571     $ -   Accounts payable     38,697       32,977   Accrued expenses     32,903       37,918                     Total current liabilities     75,171       70,895                     Long-term debt     81,387       68,178                     Finance lease liabilities     1,316       1,521                     Operating lease liabilities     9,068       10,890                     Other long-term liabilities     3,068       4,167                     Commitments and contingencies (Note 13)     -       -                         Shareholders' Equity                 Preferred shares, without par value; Authorized 1,000,000 shares, none issued     -       -   Common shares, without par value; Authorized 50,000,000 shares; Outstanding 26,642,320 and 26,517,836 shares, respectively     138,082       132,526   Treasury shares, without par value     ( 5,457 )     ( 2,450 ) Deferred compensation plan     5,457       2,450   Retained earnings (loss)     4,403       ( 1,405 ) Accumulated other comprehensive income     60       49                     Total shareholders' equity     142,545       131,170                     Total liabilities & shareholders' equity   $ 312,555     $ 286,821     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     Amount     Number Of Shares     Amount     Compensation Amount     Comprehensive Income (Loss)     Earnings (Loss)     Shareholders' Equity   Balance at June 30, 2020     26,466     $ 127,713       ( 180 )   $ ( 1,121 )   $ 1,121     $ ( 93 )   $ ( 1,920 )   $ 125,700                                                                     Net Income     -       -       -       -       -       -       5,670       5,670   Other comprehensive income     -       -       -       -       -       93       -       93   Stock compensation awards     35       242       -       -       -       -       -       242   Restricted stock units issued     28       -       -       -       -       -       -       -   Shares issued for deferred compensation     141       1,096       -       -       -       -       -       1,096   Activity of treasury shares, net     -       -       ( 128 )     ( 990 )     -       -       -       ( 990 ) Deferred stock compensation     -       -       -       -       990       -       -       990   Stock compensation expense     -       1,317       -       -       -       -       -       1,317   Stock options exercised, net     128       962       -       -       -       -       -       962   Dividends — $ 0.20 per share     -       -       -       -       -       -       ( 4,010 )     ( 4,010 )                                                                   Balance at March 31, 2021     26,798     $ 131,330       ( 308 )   $ ( 2,111 )   $ 2,111     $ -     $ ( 260 )   $ 131,070           Common Shares     Treasury Shares     Key Executive     Accumulated Other     Retained     Total       Number Of             Number Of             Compensation     Comprehensive     Earnings     Shareholders'       Shares     Amount     Shares     Amount     Amount     Income     (Loss)     Equity   Balance at June 30, 2021     26,863     $ 132,526       ( 346 )   $ ( 2,450 )   $ 2,450     $ 49     $ ( 1,405 )   $ 131,170                                                                     Net Income     -       -       -       -       -       -       9,856       9,856   Other comprehensive income     -       -       -       -       -       11       -       11   Stock compensation awards     30       225       -       -       -       -       -       225   Restricted stock units issued, net of shares withheld for tax withholdings     80       ( 250 )     -       -       -       -       -       ( 250 ) Shares issued for deferred compensation     412       3,089       -       -       -       -       -       3,089   Activity of treasury shares, net     -       -       ( 401 )     ( 3,007 )     -       -       -       ( 3,007 ) Deferred stock compensation     -       -       -       -       3,007       -       -       3,007   Stock compensation expense     -       2,466       -       -       -       -       -       2,466   Stock options exercised, net     5       26       -       -       -       -       -       26   Dividends — $ 0.20 per share     -       -       -       -       -       -       ( 4,048 )     ( 4,048 )                                                                   Balance at March 31, 2022     27,390     $ 138,082       ( 747 )   $ ( 5,457 )   $ 5,457     $ 60     $ 4,403     $ 142,545     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)       Nine Months Ended       March 31   (In thousands)   2022     2021                     Cash Flows from Operating Activities                 Net income   $ 9,856     $ 5,670   Non-cash items included in net income                 Depreciation and amortization     7,632       5,943   Deferred income taxes     26       332   Deferred compensation plan     3,089       1,096   Stock compensation expense     2,466       1,317   Issuance of common shares as compensation     225       242   Loss on disposition of fixed assets     57       -   Allowance for doubtful accounts     205       ( 15 ) Inventory obsolescence reserve     752       1,226                     Changes in certain assets and liabilities                 Accounts receivable     ( 16,104 )     ( 6,867 ) Inventories     ( 20,175 )     ( 2,817 ) Refundable income taxes     247       ( 444 ) Accounts payable     5,695       10,450   Accrued expenses and other     ( 3,708 )     1,269   Customer prepayments     ( 2,931 )     7,232   Net cash flows (used in) provided by operating activities     ( 12,668 )     24,634                     Cash Flows from Investing Activities                 Purchases of property, plant and equipment     ( 1,276 )     ( 1,517 ) Adjustment to JSI acquisition purchase price     500       -   Net cash flows used in investing activities     ( 776 )     ( 1,517 )                   Cash Flows from Financing Activities                 Payments of long-term debt     ( 113,195 )     -   Borrowings of long-term debt     130,006       -   Cash dividends paid     ( 3,989 )     ( 3,963 ) Shares withheld for employees' taxes     ( 250 )     ( 28 ) Payments on financing lease obligations     ( 196 )     ( 178 ) Proceeds from stock option exercises     26       962   Net cash flows provided by (used in) financing activities     12,402       ( 3,207 )                   Change related to foreign currency     8       101                     (Decrease) increase in cash and cash equivalents     ( 1,034 )     20,011                     Cash and cash equivalents at beginning of period     2,282       3,517                     Cash and cash equivalents at end of period   $ 1,248     $ 23,528     The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.   Page 8     LSI INDUSTRIES INC.   NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)     NOTE 1   -   INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS   The interim condensed consolidated financial statements are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, and rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the interim financial statements include all normal adjustments and disclosures necessary to present fairly the Company’s financial position as of March 31, 2022, the results of its operations for the three and nine -month periods ended March 31, 2022 and 2021, and its cash flows for the nine -month periods ended March 31, 2022 and 2021. These statements should be read in conjunction with the financial statements and footnotes included in the fiscal 2021 Annual Report on Form 10 -K. Financial information as of June 30, 2021 has been derived from the Company’s audited consolidated financial statements.     NOTE 2   -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   Consolidation:   A summary of the Company’s significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company’s fiscal 2021 Annual Report on Form 10 -K.   Revenue Recognition:   The Company recognizes revenue when it satisfies the performance obligation in its customer contracts or purchase orders. Most of the Company’s products have a single performance obligation which is satisfied at a point in time when control is transferred to the customer. Control is generally transferred at time of shipment when title and risk of ownership passes to the customer. For customer contracts with multiple performance obligations, the Company allocates the transaction price and any discounts to each performance obligation based on relative standalone selling prices. Payment terms are typically within 30 to 90 days from the shipping date, depending on the terms with the customer. The Company offers standard warranties that do not represent separate performance obligations.   Installation is a separate performance obligation, except for the Company’s digital signage products. For digital signage products, installation is not a separate performance obligation as the product and installation is the combined item promised in digital signage contracts. The Company is not always responsible for installation of products it sells and has no post-installation responsibilities other than standard warranties.   A number of the Company's display solutions and select lighting products are customized for specific customers. As a result, these customized products do not have an alternative use. For these products, the Company has a legal right to payment for performance to date and generally does not accept returns on these items. The measurement of performance is based upon cost plus a reasonable profit margin for work completed. Because there is no alternative use and there is a legal right to payment, the Company transfers control of the item as the item is being produced and therefore, recognizes revenue over time. The customized product types are as follows:     ● Customer specific branded print graphics   ● Electrical components based on customer specifications   ● Digital signage and related media content   The Company also offers installation services for its display solutions elements and select lighting products. Installation revenue is recognized over time as the customer simultaneously receives and consumes the benefits provided through the installation process.   Page 9     For these customized products and installation services, revenue is recognized using a cost-based input method: recognizing revenue and gross profit as work is performed based on the relationship between the actual cost incurred and the total estimated cost for the performance obligation.   On occasion, the Company enters into bill-and-hold arrangements on a limited basis. Each bill-and-hold arrangement is reviewed and revenue is recognized only when certain criteria have been met: ( 1 ) the customer has requested delayed delivery and storage of the products by the Company because the customer wants to secure a supply of the products but lacks storage space; (ii) the risk of ownership has passed to the customer; (iii) the products are segregated from the Company’s other inventory items held for sale; (iv) the products are ready for shipment to the customer; and (v) the Company does not have the ability to use the products or direct them to another customer.   Disaggregation of Revenue   The Company disaggregates the revenue from contracts with customers by the timing of revenue recognition because the Company believes it best depicts the nature, amount, and timing of its revenue and cash flows. The table below presents a reconciliation of the disaggregation by reportable segments:       Three Months Ended   (In thousands)   March 31, 2022     March 31, 2021       Lighting Segment     Display Solutions Segment     Lighting Segment     Display Solutions Segment   Timing of revenue recognition                                 Products and services transferred at a point in time   $ 49,283     $ 41,231     $ 39,497     $ 12,550   Products and services transferred over time     7,843       11,754       6,243       13,914       $ 57,126     $ 52,985     $ 45,740     $ 26,464         Nine Months Ended   (In thousands)   March 31, 2022     March 31, 2021       Lighting Segment     Display Solutions Segment     Lighting Segment     Display Solutions Segment   Timing of revenue recognition                                 Products and services transferred at a point in time   $ 144,006     $ 114,099     $ 119,478     $ 42,991   Products and services transferred over time     21,656       47,890       16,793       39,335       $ 165,662     $ 161,989     $ 136,271     $ 82,326         Three Months Ended   (In thousands)   March 31, 2022     March 31, 2021       Lighting Segment     Display Solutions Segment     Lighting Segment     Display Solutions Segment   Type of Product and Services                                 LED lighting, digital signage solutions, electronic circuit boards   $ 47,196     $ 6,906     $ 40,298     $ 8,595   Poles, printed graphics, display fixtures     9,358       35,536       5,071       11,809   Project management, installation services, shipping and handling     572       10,543       371       6,060       $ 57,126     $ 52,985     $ 45,740     $ 26,464         Nine Months Ended   (In thousands)   March 31, 2022     March 31, 2021       Lighting Segment     Display Solutions Segment     Lighting Segment     Display Solutions Segment   Type of Product and Services                                 LED lighting, digital signage solutions, electronic circuit boards   $ 136,701     $ 31,885     $ 118,681     $ 20,546   Poles, printed graphics, display fixtures     27,403       99,965       16,299       41,526   Project management, installation services, shipping and handling     1,558       30,139       1,291       20,254       $ 165,662     $ 161,989     $ 136,271     $ 82,326     Page 10     Practical Expedients and Exemptions     ● The Company’s contracts with customers have an expected duration of one year or less, as such, the Company applies the practical expedient to expense sales commissions as incurred, and has omitted disclosures on the amount of remaining performance obligations.   ● Shipping costs that are not material in context of the delivery of products are expensed as incurred.   ● The Company’s accounts receivable balance represents the Company’s unconditional right to receive payment from its customers with contracts. Payments are generally due within 30 to 90 days of completion of the performance obligation and invoicing, therefore, payments do not contain significant financing components.   ● The Company collects sales tax and other taxes concurrent with revenue-producing activities which are excluded from revenue. Shipping and handling costs are treated as fulfillment activities and included in cost of products and services sold on the Consolidated Statements of Operations.   Reclassifications   Certain amounts reported in the prior year in Note 7 have been reclassified to conform to the current year’s presentation.   New Accounting Pronouncements:   In October 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2021 - 08, “Business Combinations (Topic 805 ): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” creating an exception to the recognition and measurement principles in ASC 805. The amendment requires that entities apply ASC 606, “Revenue from Contracts with Customers,” rather than using fair value, to recognize and measure contracts assets and contract liabilities from contracts with customers acquired in a business combination. The ASU is effective for fiscal years beginning after December 15, 2022, and interim periods therein. Early adoption is permitted, including adoption in an interim period, regardless of whether a business combination occurs in that period. The guidance should be applied prospectively; however, an entity that elects to early adopt in an interim period should apply the amendments to all business combinations that occurred during the fiscal year that includes that interim period. The Company is evaluating the impact this guidance may have on its consolidated financial statements and related disclosures.   On July 1, 2020, the Company adopted ASU 2016 - 13, "Financial Instruments - Credit Losses (Topic 326 ): Measurement of Credit Losses on Financial Instruments" (ASC 326 or "CECL"), which amended the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. The adoption of ASU 2016 - 13 did not have a material impact on the consolidated financial statements and related disclosures.   In March 2020 and January 2021, the FASB issued ASU 2020 - 04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting” and ASU 2021 - 01, “Reference Rate Reform: Scope,” respectively. Together, the ASUs provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance is effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The adoption of this guidance did not have a material impact on the consolidated financial statements and related disclosures.     NOTE   3  —  ACQUISITION OF JSI STORE FIXTURES   On  May 21, 2021,  the Company acquired  100 % of the issued and outstanding shares of capital stock of JSI Store Fixtures (JSI), a Maine-based provider of retail commercial display solutions, for $ 93.7  million. The acquisition of JSI expands the Company’s total addressable markets within the grocery and convenience store verticals. The Company funded the acquisition with a combination of cash on hand and $ 71.6  million from the credit facility.   The Company accounted for this transaction as a business combination. The Company preliminarily allocated the purchase price of approximately $ 93.7  million, which included an estimate of customary post-closing purchase price adjustments to the assets acquired and liabilities assumed at estimated fair values, and the excess of the purchase price over the aggregate fair values was recorded as goodwill. During the second quarter of fiscal 2022, goodwill increased by $ 0.6 million. The increase is the net difference between the original estimate of recovery from the pre-funded working capital and the final cash received of $ 0.5 million. The preliminary allocation is subject to the finalization of pre-acquisition tax filings, which are expected to be finalized in the fourth quarter of fiscal 2022. The preliminary allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed as of  May 21, 2021,  is as follows:       May 21, 2021                       as initially             May 21, 2021   (In thousands)   reported     Adjustments     as adjusted   Cash and cash equivalents   $ 4,067     $ -     $ 4,067   Accounts receivable, net     9,252       -       9,252   Inventories     9,898       -       9,898   Property, plant and equipment     7,076       -       7,076   Other assets     7,440       -       7,440   Intangible assets     45,760       -       45,760   Accounts payable     ( 4,199 )     -       ( 4,199 ) Accrued liabilities     ( 8,434 )     -       ( 8,434 ) Deferred tax liability     ( 10,583 )     -       ( 10,583 ) Identifiable assets     60,277       -       60,277   Goodwill     33,415       600       34,015   Net purchase consideration   $ 93,692     $ 600     $ 94,292     Page 11     The gross amount of accounts receivable is $ 9.3  million.   Goodwill recorded from the acquisition of JSI is attributable to the impact of the positive cash flow from JSI in addition to expected synergies from the business combination. The intangible assets include amounts recognized for the fair value of the trade name, technology assets, non-compete agreements and customer relationships. The fair value of the intangible assets was determined based upon the income (discounted cash flow) approach. The following table presents the details of the intangible assets acquired at the date of acquisition:       Estimated     Estimated Useful   (In thousands)   Fair Value     Life (Years)   Tradename   $ 8,680     Indefinite life   Technology asset     4,900       7   Non-compete     260       5   Customer relationship     31,920       20       $ 45,760             The fair market value write-up of the property, plant, and equipment totaled $ 1.8 million. Transaction costs related to the acquisition totaled $ 2.9 million in the fourth quarter of fiscal 2021.   Pro Forma Impact of the Acquisition of JSI   (unaudited)   The following table represents unaudited pro forma results of operations and gives effect to the acquisition of JSI as if the transaction had occurred on  July 1, 2019.  The unaudited pro forma results of operations have been prepared for comparative purposes only and are  not  necessarily indicative of what would have occurred had the business combination been completed at the beginning of the period or the results that  may  occur in the future. Furthermore, the unaudited pro forma financial information does  not  reflect the impact of any synergies or operating efficiencies resulting from the acquisition of JSI.   The unaudited pro forma financial information for the  twelve  months ended  June 30, 2021  and  June 30, 2020  is prepared using the acquisition method of accounting and has been adjusted to give effect to the pro forma events that are: ( 1 ) directly attributable to the acquisition; ( 2 ) factually supportable; and ( 3 ) expected to have a continuing impact on the combined results. The unaudited pro forma operating income of $ 19.3  million for fiscal 2021 excludes acquisition-related expenses of $ 2.9  million.       Twelve Months Ended       June 30   (In thousands, unaudited)   2021     2020   Net sales   $ 391,000     $ 362,541                     Gross profit   $ 97,947     $ 86,399                     Operating income   $ 19,312     $ 13,878     Page 12       NOTE 4 - SEGMENT REPORTING INFORMATION   The accounting guidance on Segment Reporting establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in financial statements. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (the Company’s Chief Executive Officer or “CODM”) in making decisions on how to allocate resources and assess performance. The Company’s  two  operating segments are Lighting and Display Solutions (formerly known as the Graphics Segment), with  one  executive team under the organizational structure reporting directly to the CODM with responsibilities for managing each segment. Corporate and Eliminations, which captures the Company’s corporate administrative activities, is also reported in the segment information.   The Lighting Segment includes non-residential outdoor and indoor lighting fixtures utilizing LED light sources that have been fabricated and assembled for the Company’s markets, primarily the petroleum/convenience markets, parking lot and garage markets, quick-service restaurant market, retail and grocery store markets, the automotive market, the warehouse market, and the sports complex market. The Company also offers a variety of lighting controls to complement its lighting fixtures which include sensors, photocontrols, dimmers, motion detection and Bluetooth systems. The Company also services lighting product customers through the commercial and industrial project, stock and flow, and renovation channels. The Lighting Segment also includes the design, engineering and manufacturing of electronic circuit boards, assemblies and sub-assemblies which are sold directly to customers.   The Company acquired JSI in the  fourth  quarter of fiscal  2021,  and consolidated it into the former Graphics Segment, which has been rebranded as the Display Solutions Segment, to more closely align the Company’s comprehensive product offering with the markets it serves. The Display Solutions Segment manufactures, sells and installs exterior and interior visual image and display elements, including printed graphics, structural graphics, digital signage, menu board systems, display fixtures, refrigerated displays, and custom display elements. These products are used in visual image programs in several markets including the petroleum/convenience markets, parking lot and garage markets, quick-service restaurant market, retail and grocery store markets, the automotive market, the warehouse market, and the sports complex market. The Display Solutions Segment implements, installs and provides program management services related to products sold by the Display Solutions Segment and by the Lighting Segment.   The Company’s corporate administration activities are reported in the Corporate and Eliminations line item. These activities primarily include intercompany profit in inventory eliminations, expense related to certain corporate officers and support staff, the Company’s internal audit staff, expense related to the Company’s Board of Directors, equity compensation expense for various equity awards granted to corporate administration employees, certain consulting expenses, investor relations activities, and a portion of the Company’s legal, auditing and professional fee expenses. Corporate identifiable assets primarily consist of cash, invested cash (if any), refundable income taxes (if any), and deferred income taxes.   There were no customers or customer programs representing a concentration of 10% or more of the Company’s consolidated net sales in the three or nine months ended March 31, 2022 or March 31, 2021.  There was no concentration of accounts receivable at March 31, 2022 or June 30, 2021.    Page 13     Summarized financial information for the Company’s operating segments is provided for the indicated periods and as of March 31, 2022 and March 31, 2021:       Three Months Ended     Nine Months Ended   (In thousands)   March 31     March 31       2022     2021     2022     2021   Net Sales:                                 Lighting Segment   $ 57,126     $ 45,740     $ 165,662     $ 136,271   Display Solutions Segment     52,985       26,464       161,989       82,326       $ 110,111     $ 72,204     $ 327,651     $ 218,597                                     Operating Income (Loss):                                 Lighting Segment   $ 4,959     $ 3,797     $ 13,921     $ 9,519   Display Solutions Segment     4,556       1,230       12,142       6,196   Corporate and Eliminations     ( 4,354 )     ( 2,931 )     ( 12,036 )     ( 8,731 )     $ 5,161     $ 2,096     $ 14,027     $ 6,984                                     Capital Expenditures:                                 Lighting Segment   $ 272     $ 605     $ 624     $ 1,249   Display Solutions Segment     185       17       660       84   Corporate and Eliminations     74       15       ( 8 )     184       $ 531     $ 637     $ 1,276     $ 1,517                                     Depreciation and Amortization:                                 Lighting Segment   $ 1,450     $ 1,566     $ 4,361     $ 4,795   Display Solutions Segment     1,021       278       3,068       940   Corporate and Eliminations     60       76       203       208       $ 2,531     $ 1,920     $ 7,632     $ 5,943         March 31, 2022     June 30, 2021   Identifiable Assets:                 Lighting Segment   $ 149,062     $ 132,169   Display Solutions Segment     158,415       147,354   Corporate and Eliminations     5,078       7,298       $ 312,555     $ 286,821     The segment net sales reported above represent sales to external customers. Segment operating income, which is used in management’s evaluation of segment performance, represents net sales less all operating expenses. Identifiable assets are those assets used by each segment in its operations.   The Company records a 10 % mark-up on intersegment revenues. Any intersegment profit in inventory is eliminated in consolidation. Intersegment revenues were eliminated in consolidation as follows:       Three Months Ended     Nine Months Ended   (In thousands)   March 31     March 31       2022     2021     2022     2021   Lighting Segment inter-segment net sales   $ 5,683     $ 6,880     $ 27,406     $ 15,998                                     Display Solutions Segment inter-segment net sales   $ 54     $ 46     $ 289     $ 159     The Company’s operations are located solely within North America. As a result, the geographic distribution of the Company’s net sales and long-lived assets originate within North America.   Page 14       NOTE 5 -   EARNINGS PER COMMON SHARE   The following table presents the amounts used to compute basic and diluted earnings per common share, as well as the effect of dilutive potential common shares on weighted average shares outstanding (in thousands, except per share data):       Three Months Ended     Nine Months Ended       March 31     March 31       2022     2021     2022     2021                                     BASIC EARNINGS PER SHARE                                                                   Net income   $ 3,618     $ 1,472     $ 9,856     $ 5,670                                     Weighted average shares outstanding during the period, net of treasury shares     26,642       26,467       26,606       26,384   Weighted average vested restricted stock units outstanding     31       20       26       16   Weighted average shares outstanding in the Deferred Compensation Plan during the period     705       284       588       242   Weighted average shares outstanding     27,378       26,771       27,220       26,642                                     Basic income per share   $ 0.13     $ 0.05     $ 0.36     $ 0.21                                                                       DILUTED EARNINGS PER SHARE                                                                   Net income   $ 3,618     $ 1,472     $ 9,856     $ 5,670                                     Weighted average shares outstanding:                                                                   Basic     27,378       26,771       27,220       26,642                                     Effect of dilutive securities (a):                                 Impact of common shares to be issued under stock option plans, and contingently issuable shares, if any     705       956       725       710   Weighted average shares outstanding     28,083       27,727       27,945       27,352                                     Diluted income per share   $ 0.13     $ 0.05     $ 0.35     $ 0.21                                     Anti-dilutive securities (b)     1,427       654       1,043       1,017       (a) Calculated using the “Treasury Stock” method as if dilutive securities were exercised and the funds were used to purchase common shares at the average market price during the period.     (b) Anti-dilutive securities were excluded from the computation of diluted net income per share for the three and nine months ended March 31, 2022 and March 31, 2021 because the exercise price was greater than the average fair market price of the common shares or because the assumed proceeds from the award’s exercise or vesting was greater than the average fair market price of the common shares.   Page 15       NOTE 6  –  INVENTORIES, NET   The following information is provided as of the dates indicated:       March 31,     June 30,   (In thousands)   2022     2021                     Inventories:                 Raw materials   $ 53,534     $ 40,567   Work-in-progress     2,789       4,757   Finished goods     22,041       13,617   Total Inventories   $ 78,364     $ 58,941       NOTE 7   - ACCRUED EXPENSES   The following information is provided as of the dates indicated:       March 31,     June 30,   (In thousands)   2022     2021                     Accrued Expenses:                 Customer prepayments   $ 8,421     $ 11,352   Compensation and benefits     8,029       10,051   Accrued warranty     4,337       5,295   Accrued freight     3,213       1,629   Accrued sales commissions     2,458       2,568   Accrued FICA     1,179       1,190   Operating lease liabilities     1,070       1,424   Finance lease liabilities     272       263   Accrued income tax     -       434   Other accrued expenses     3,924       3,712   Total Accrued Expenses   $ 32,903     $ 37,918       NOTE 8   -   GOODWILL AND OTHER INTANGIBLE ASSETS   The carrying values of goodwill and other intangible assets with indefinite lives are reviewed at least annually for possible impairment. The Company  may  first  assess qualitative factors in order to determine if goodwill and indefinite-lived intangible assets are impaired. If through the qualitative assessment it is determined that it is more likely than  not  that goodwill and indefinite-lived assets are  not  impaired,  no  further testing is required. If it is determined more likely than  not  that goodwill and indefinite-lived assets are impaired, or if the Company elects  not  to  first  assess qualitative factors, the Company’s impairment testing continues with the estimation of the fair value of the reporting unit using a combination of a market approach and an income (discounted cash flow) approach, at the reporting unit level. The estimation of the fair value of reporting unit requires significant management judgment with respect to revenue and expense growth rates, changes in working capital and the selection and use of an appropriate discount rate. The estimates of the fair value of reporting units are based on the best information available as of the date of the assessment. The use of different assumptions would increase or decrease estimated discounted future operating cash flows and could increase or decrease an impairment charge. Company management uses its judgment in assessing whether assets  may  have become impaired between annual impairment tests. Indicators such as adverse business conditions, economic factors and technological change or competitive activities  may  signal that an asset has become impaired.   The Company identified its reporting units in conjunction with its annual goodwill impairment testing. Following the acquisition of JSI, the Company has a total of  three  reporting units that contain goodwill. One reporting unit is within the Lighting Segment and  two  reporting units are within the Display Solutions Segment. The tradename intangible assets have an indefinite life and are also tested separately on an annual basis. The Company relies upon a number of factors, judgments and estimates when conducting its impairment testing including, but  not  limited to, the Company’s stock price, operating results, forecasts, anticipated future cash flows and marketplace data. There are inherent uncertainties related to these factors and judgments in applying them to the analysis of goodwill impairment.   Page 16     As of  March 1, 2022 ,  the Company performed its annual preliminary goodwill impairment test on the three  reporting units that contain goodwill. The preliminary goodwill impairment test of the reporting unit in the Lighting Segment passed with a business enterprise value of $ 31.6  million or  18 % above the carrying value of the reporting unit including goodwill. The preliminary goodwill impairment test of one reporting unit with goodwill in the Display Solutions Segment passed with an estimated business enterprise value of $ 12.2  million or  1,316 % above the carrying value of the reporting unit including goodwill. The preliminary goodwill impairment test of the second reporting unit with goodwill in the Display Solutions Segment passed with an estimated business enterprise value of $ 100.4 million or 12 % above the carrying value of the reporting unit including goodwill. The definitive impairment test is expected to be completed in the fourth  quarter of fiscal 2022 .  It is anticipated that the results of the definitive test will not  change when the test is complete.   The following table presents information about the Company's goodwill on the dates or for the periods indicated:   (In thousands)           Display               Lighting     Solutions               Segment     Segment     Total   Balance as of March 31, 2022                         Goodwill   $ 70,971     $ 62,105     $ 133,076   Measurement period adjustment     -       600       600   Accumulated impairment losses     ( 61,763 )     ( 27,525 )     ( 89,288 ) Goodwill, net as of March 31, 2022   $ 9,208     $ 35,180     $ 44,388                             Balance as of June 30, 2021                         Goodwill   $ 70,971     $ 28,690     $ 99,661   Goodwill acquired     -       33,415       33,415   Accumulated impairment losses     ( 61,763 )     ( 27,525 )     ( 89,288 ) Goodwill, net as of June 30, 2021   $ 9,208     $ 34,580     $ 43,788     The Company has two indefinite-lived intangible assets. The Company performed its annual review of indefinite-lived intangible assets as of  March 1, 2022  and determined there was  no  impairment. The preliminary impairment test of the first indefinite-lived intangible asset passed with a fair market value of $ 17.0  million or  396 % above its carrying value. The preliminary impairment test of the second indefinite-lived intangible asset passed with a fair market value of and $ 10.6 million or 22 % above its carrying value. The definitive indefinite-lived impairment test is expected to be completed in the  fourth  quarter of fiscal  2022 .  It is anticipated that the results of the definitive test will  not  change when the test is complete.   The gross carrying amount and accumulated amortization by each major intangible asset class is as follows:       March 31, 2022   (In thousands)   Gross                       Carrying     Accumulated     Net       Amount     Amortization     Amount   Amortized Intangible Assets                         Customer relationships   $ 62,083     $ 13,546     $ 48,537   Patents     268       260       8   LED technology firmware, software     20,966       14,303       6,663   Trade name     2,658       1,021       1,637   Non-compete     260       45       215   Total Amortized Intangible Assets     86,235       29,175       57,060                             Indefinite-lived Intangible Assets                         Trademarks and trade names     12,102       -       12,102   Total indefinite-lived Intangible Assets     12,102       -       12,102                             Total Other Intangible Assets   $ 98,337     $ 29,175     $ 69,162     Page 17         June 30, 2021   (In thousands)   Gross                       Carrying     Accumulated     Net       Amount     Amortization     Amount   Amortized Intangible Assets                         Customer relationships     $ 62,083     $ 10,967     $ 51,116   Patents     268       237       31   LED technology firmware, software     20,966       13,415       7,551   Trade name     2,658       939       1,719   Non-compete     260       6       254   Total Amortized Intangible Assets     86,235       25,564       60,671                             Indefinite-lived Intangible Assets                         Trademarks and trade names     12,102       -       12,102   Total indefinite-lived Intangible Assets     12,102       -       12,102                             Total Other Intangible Assets   $ 98,337     $ 25,564     $ 72,773         Three Months Ended     Nine Months Ended       March 31     March 31   (In thousands)   2022     2021     2022     2021                                     Amortization Expense of Other Intangible Assets   $ 1,198     $ 671     $ 3,611     $ 2,012     The Company expects to record annual amortization expense as follows:   (In thousands)                   2022   $ 4,808   2023   $ 4,760   2024   $ 4,760   2025   $ 4,760   2026   $ 4,754   After 2026   $ 36,829       NOTE 9   -   DEBT   The Company’s long-term debt as of March 31, 2022 and June 30, 2021 consisted of the following:       March 31,     June 30,   (In thousands)   2022     2021                     Secured line of credit   $ 61,774     $ 68,178   Term loan, net of debt issuance costs of $ 30 and $ 0 , respectively     23,184       -   Total debt     84,958       68,178   Less: amounts due within one year     3,571       -   Total amounts due after one year, net   $ 81,387     $ 68,178     Page 18     In September 2021, the Company amended its existing $ 100 million secured line of credit, to a $ 25 million term loan and $ 75 million remaining as a secured revolving line of credit. Both facilities expire in the third quarter of fiscal 2026. The principal of the term loan is repaid $ 3.6 million annually over the five -year period with a balloon payment of the remaining balance due on the last month. Interest on both the revolving line of credit and the term loan is charged based upon an increment over the LIBOR rate or a base rate, at the Company’s option. The base rate is calculated as the highest of (a) the Prime rate, (b) the sum of the Overnight Funding Rate plus 50 basis points and (c) the sum of the Daily LIBOR Rate plus 100 basis points as long as a Daily LIBOR rate is offered, ascertainable and not unlawful. The increment over the LIBOR borrowing rate fluctuates between 100 and 225 basis points, and the increment over the Base Rate fluctuates between 0 and 125 basis points, both of which depend upon the ratio of indebtedness to earnings before interest, taxes, depreciation, and amortization (“EBITDA”), as defined in the line of credit agreement. The increment over LIBOR borrowing rate will be 200 basis points for the first quarter of fiscal 2023.  The fee on the unused balance of the $ 75 million committed line of credit fluctuates between 15 and 25 basis points. Under the terms of this line of credit, the Company has agreed to a negative pledge of real estate assets and is required to comply with financial covenants that limit the ratio of indebtedness to EBITDA and require a minimum fixed charge ratio. As of March 31, 2022, there was $ 13.2 million available for borrowing under the $ 75 million line of credit.   The Company is in compliance with all of its loan covenants as of March 31, 2022.     NOTE 10   -   CASH DIVIDENDS   The Company paid cash dividends of $ 4.0 million in both the nine months ended March 31, 2022 and March 31, 2021. Dividends on restricted stock units in the amount of $ 0.1 million were accrued as of both March 31, 2022 and 2021. These dividends will be paid upon the vesting of the restricted stock units when shares are issued to the award recipients. In April 2022, the Board of Directors declared a regular quarterly cash dividend of $ 0.05 per share payable May 17, 2022 to shareholders of record as of May 9, 2022 . The indicated annual cash dividend rate is $ 0.20 per share.     NOTE 11  –  EQUITY COMPENSATION   In November 2019, the Company’s shareholders approved the 2019 Omnibus Award Plan ( “2019 Omnibus Plan”). The purpose of the 2019 Omnibus Plan is to provide a means through which the Company may attract and retain key personnel and to provide a means by which directors, officers, and employees can acquire and maintain an equity interest in the Company. The number of shares that remain reserved for issuance under the 2019 Omnibus Plan equates to 1,569,938 as of March 31, 2022. The 2019 Omnibus Plan implements the use of a fungible share ratio that consumes 2.5 available shares for every full value share awarded by the Company as stock compensation. The 2019 Omnibus Plan allows for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), performance stock units (“PSUs”) and other stock-based awards.   In the nine months ended March 31, 2022, the Company granted 189,980 PSUs and 145,781 RSUs, both with a weighted average fair market value of $ 8.16 . Stock compensation expense was $ 0.8 million and $ 0.4 million for the three months ended March 31, 2022 and 2021, respectively, and $ 2.5 million and $ 1.3 million in the nine months ended March 31, 2022 and 2021, respectively.     NOTE 12   -   SUPPLEMENTAL CASH FLOW INFORMATION       Nine Months Ended   (In thousands)   March 31       2022     2021   Cash Payments:                 Interest   $ 1,067     $ 71   Income taxes   $ 3,581     $ 1,473                     Non-cash investing and financing activities                 Issuance of common shares as compensation   $ 225     $ 242   Issuance of common shares to fund deferred compensation plan   $ 3,089     $ 1,096       NOTE 13 - COMMITMENTS AND CONTINGENCIES   The Company is party to various negotiations, customer bankruptcies, and legal proceedings arising in the normal course of business. The Company provides reserves for these matters when a loss is probable and reasonably estimable. The Company does not disclose a range of potential loss because the likelihood of such a loss is remote. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, cash flows or liquidity.   The Company may occasionally issue a standby letter of credit in favor of third parties. As of March 31, 2022, there were no such standby letters of credit issued.   Page 19       NOTE 14 – SEVERANCE COSTS   The activity in the Company’s accrued severance liability is as follows for the periods indicated:       Nine Months     Nine Months     Fiscal Year       Ended     Ended     Ended       March 31,     March 31,     June 30,   (In thousands)   2022     2021     2021                             Balance at beginning of period   $ 13     $ 639     $ 639   Accrual of expense     5       21       41   Payments     ( 18 )     ( 555 )     ( 667 ) Balance at end of period   $ -     $ 105     $ 13       NOTE 15 - LEASES   The Company leases certain manufacturing facilities along with a small office space, several forklifts, several small tooling items and various items of office equipment. The Company also acquired buildings, machinery and forklift leases with the acquisition of JSI, as well as one sublease. All but two of the Company’s leases are operating leases. Leases have a remaining term of one to seven years some of which have an option to renew. The Company does not assume renewals in determining the lease term unless the renewals are deemed reasonably certain. The lease agreements do not contain any material residual guarantees or material variable lease payments.   The Company has periodically entered into short-term operating leases with an initial term of twelve months or less. The Company elected not to record these leases on the balance sheet. For the three and nine months ended March 31, 2022 and 2021, the rent expense for these leases is immaterial.   The Company has certain leases that contain lease and non-lease components and has elected to utilize the practical expedient to account for these components together as a single lease component.   Lease expense is recognized on a straight-line basis over the lease term. The Company used its incremental borrowing rate when determining the present value of lease payments.       Three Months Ended     Nine Months Ended       March 31     March 31   (In thousands)   2022     2021     2022     2021                                     Operating lease cost   $ 868     $ 576     $ 2,617     $ 1,714   Financing lease cost:                                 Amortization of right of use assets     74       73       221       218   Interest on lease liabilities     19       22       61       69   Variable lease cost     22       -       65       2   Sublease income     ( 94 )     -       ( 283 )     -   Total lease cost   $ 889     $ 671     $ 2,681     $ 2,003     Page 20     Supplemental Cash Flow Information:     Nine Months Ended       March 31   (In thousands)   2022     2021                     Cash flows from operating leases                 Fixed payments - operating cash flows   $ 2,669     $ 1,707   Liability reduction - operating cash flows   $ 2,271     $ 1,397                     Cash flows from finance leases                 Interest - operating cash flows   $ 61     $ 69   Repayments of principal portion - financing cash flows   $ 196     $ 178     Operating Leases:   March 31,     June 30,       2022     2021                     Total operating right-of-use assets   $ 9,464     $ 11,579                     Accrued expenses (Current liabilities)   $ 1,070     $ 1,424   Long-term operating lease liability     9,068       10,890   Total operating lease liabilities   $ 10,138     $ 12,314                     Weighted Average remaining Lease Term (in years)     3.27       3.93                     Weighted Average Discount Rate     4.81 %     4.81 %   Finance Leases:   March 31,     June 30,       2022     2021                     Buildings under finance leases   $ 2,033     $ 2,033   Equipment under finance leases     30       30   Accumulated depreciation     ( 561 )     ( 339 ) Total finance lease assets, net   $ 1,502     $ 1,724                     Accrued expenses (Current liabilities)   $ 272     $ 263   Long-term finance lease liability     1,316       1,521   Total finance lease liabilities   $ 1,588     $ 1,784                     Weighted Average remaining Lease Term (in years)     5.03       5.78                     Weighted Average Discount Rate     4.86 %     4.86 %   Page 21     Maturities of Lease Liability:   Operating Lease Liabilities     Finance Lease Liabilities     Operating Subleases     Net Lease Commitments   2022   $ 1,029     $ 105     $ ( 94 )   $ 1,040   2023     3,583       342       ( 377 )     3,548   2024     3,280       337       ( 377 )     3,240   2025     2,131       362       ( 31 )     2,462   2026     829       362       -       1,191   Thereafter     221       303       -       524   Total lease payments   $ 11,073     $ 1,811     $ ( 879 )   $ 12,005   Less: Interest     ( 935 )     ( 223 )             ( 1,158 ) Present Value of Lease Liabilities   $ 10,138     $ 1,588             $ 10,847       NOTE 16 – INCOME TAXES   The Company's effective income tax rate is based on expected income, statutory rates and tax planning opportunities available in the various jurisdictions in which it operates. For interim financial reporting, the Company estimates the annual income tax rate based on projected taxable income for the full year and records a quarterly income tax provision or benefit in accordance with the anticipated annual rate. The Company refines the estimates of the year's taxable income as new information becomes available, including actual year-to-date financial results. This continual estimation process often results in a change to the expected effective income tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected income tax rate. Significant judgment is required in determining the effective tax rate and in evaluating tax positions.   The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law in March 2020. The CARES Act allowed the Company to carry back a federal net operating loss to prior tax years, offset taxable income in those earlier tax years and request a refund of income taxes that were paid at a higher statutory tax rate. The Company recognized tax benefits of $ 0.4 million in the first quarter of fiscal 2021 for utilizing the net operating losses in the prior tax years.       Three Months Ended     Nine Months Ended       March 31     March 31       2022     2021     2022     2021   Reconciliation of effective tax rate:                                                                   Provision for income taxes at the anticipated annual tax rate     22.4 %     23.8 %     23.4 %     24.3 % Uncertain tax positions     0.5       0.8       ( 0.8 )     ( 1.3 ) Tax rate changes     -       -       -       ( 5.0 ) Share-based compensation     -       1.8       ( 0.2 )     1.1   Effective tax rate     22.9 %     26.4 %     22.4 %     19.1 %   Page 22       ITEM 2. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   Note About Forward-Looking Statements   This report includes estimates, projections, statements relating to our business plans, objectives, and expected operating results that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this report, including this section. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. We describe risks and uncertainties that could cause actual results and events to differ materially in in our Annual Report on Form 10-K in the following sections: “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures about Market Risk,” and “Risk Factors.” All of those risks and uncertainties are incorporated herein by reference. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.   The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of operations and financial condition of LSI Industries Inc. MD&A is provided as a supplement to, and should be read in conjunction with, our Annual Report on Form 10-K for the year ended June 30, 2021, and our financial statements and the accompanying Notes to Financial Statements (Part I, Item 1 of this Form 10-Q).   Our condensed consolidated financial statements, accompanying notes and the “Safe Harbor” Statement, each as appearing earlier in this report, should be referred to in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations.   Summary of Consolidated Results   Net Sales by Business Segment     Three Months Ended     Nine Months Ended       March 31     March 31   (In thousands)   2022     2021     2022     2021                                     Lighting Segment   $ 57,126     $ 45,740     $ 165,662     $ 136,271   Display Solutions Segment     52,985       26,464       161,989       82,326       $ 110,111     $ 72,204     $ 327,651     $ 218,597     Operating Income (Loss) by Business Segment     Three Months Ended     Nine Months Ended       March 31     March 31   (In thousands)   2022     2021     2022     2021                                     Lighting Segment   $ 4,959     $ 3,797     $ 13,921     $ 9,519   Display Solutions Segment     4,556       1,230       12,142       6,196   Corporate and Eliminations     (4,354 )     (2,931 )     (12,036 )     (8,731 )     $ 5,161     $ 2,096     $ 14,027     $ 6,984     Net sales of $110.1 million for the three months ended March 31, 2022 increased $37.9 million or 53% as compared to net sales of $72.2 million for the three months ended March 31, 2021. Net sales of the Display Solutions Segment increased $26.5 million or 100% and net sales of the Lighting Segment increased $11.4 million or 25%.   Net sales of $327.7 million for the nine months ended March 31, 2022 increased $109.1 million or 50% as compared to net sales of $218.6 million for the nine months ended March 31, 2021. Net sales of the Display Solutions Segment increased $80.0 million or 97% and net sales of the Lighting Segment increased $29.4 million or 22%.   Page 23     Operating income of $5.2 million for the three months ended March 31, 2022 represents a $3.1 million increase from operating income of $2.1 million in the three months ended March 31, 2021. Adjusted operating income, a Non-GAAP measure, was $6.0 million in the three months ended March 31, 2022 compared to $2.5 million in the three months ended March 31, 2021. Refer to “Non-GAAP Financial Measures” below for a reconciliation of Non-GAAP financial measures to U.S. GAAP measures.   Operating income of $14.0 million for the nine months ended March 31, 2022 represents a $7.0 million increase from operating income of $7.0 million in the nine months ended March 31, 2021. Adjusted operating income, a Non-GAAP measure, was $16.9 million in the nine months ended March 31, 2022 compared to $8.3 million in the nine months ended March 31, 2021. Refer to “Non-GAAP Financial Measures” below for a reconciliation of Non-GAAP financial measures to U.S. GAAP measures.   Non-GAAP Financial Measures   We believe it is appropriate to evaluate our performance after making adjustments to the as-reported U.S. GAAP operating income, net income, and earnings per share. Adjusted operating income, net income and earnings per share, which exclude the impact of stock compensation expense, acquisition costs, severance costs and restructuring costs are Non-GAAP financial measures. Also included below are Non-GAAP financial measures including Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA and Adjusted EBITDA), Free Cash Flow, Net Debt and Organic Net Sales. We believe that these adjusted supplemental measures are useful in assessing the operating performance of our business. These supplemental measures are used by our management, including our chief operating decision maker, to evaluate business results. Although the impacts of some of these items have been recognized in prior periods and could recur in future periods, we exclude these items because they provide greater comparability and enhanced visibility into our results of operations. These non-GAAP measures may be different from non-GAAP measures used by other companies. In addition, the non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations, in that they do not reflect all amounts associated with our results as determined in accordance with U.S. GAAP. Therefore, these measures should be used only to evaluate our results in conjunction with corresponding GAAP measures. Below is a reconciliation of these Non-GAAP measures to operating income, net income, and earnings per share for the periods indicated along with the calculation of EBITDA and Adjusted EBITDA, Free Cash Flow, Net Debt and Organic Net Sales.   Reconciliation of operating income to adjusted operating income:     Three Months Ended       March 31   (In thousands)   2022     2021                     Operating Income as reported   $ 5,161     $ 2,096                     Stock compensation expense     780       415                     Acquisition costs     21       -                     Severance costs     5       -                     Adjusted Operating Income   $ 5,967     $ 2,511     Reconciliation of net income to adjusted net income     Three Months Ended       March 31   (In thousands, except per share data)   2022     2021                 Diluted EPS               Diluted EPS                                         Net Income as reported   $ 3,618       $ 0.13     $ 1,472       $ 0.05                                         Stock compensation expense     576   (1)     0.02       314   (4)     0.01                                         Acquisition costs     16   (2)     -       -         -                                         Severance costs     4   (3)     -       -         -                                         Tax impact due to the change in the estimated annual tax rate used for GAAP reporting purposes     -         -       44         -                                         Net Income adjusted   $ 4,214       $ 0.15     $ 1,830       $ 0.07     Page 24     The following represents the income tax effects of the adjustments in the tables above, which were calculated using the estimated combined U.S., Canada and Mexico effective income tax rates for the periods indicated (in thousands):   (1) $204 (2) $5 (3) $1 (4) $101   Reconciliation of operating income to adjusted operating income:     Nine Months Ended       March 31   (In thousands)   2022     2021                     Operating Income as reported   $ 14,027     $ 6,984                     Stock compensation expense     2,466       1,317                     Acquisition costs     361       -                     Severance costs     5       21                     Restructuring costs     -       3                     Adjusted Operating Income   $ 16,859     $ 8,325     Reconciliation of net income to adjusted net income     Nine Months Ended       March 31   (In thousands, except per share data)   2022     2021                 Diluted EPS               Diluted EPS                                         Net Income as reported   $ 9,856       $ 0.35     $ 5,670       $ 0.21                                         Stock compensation expense     1,850   (1)     0.07       1,012   (4)     0.04                                         Acquisition costs     285   (2)     0.01       -         -                                         Severance costs     4   (3)     -       17   (5)     -                                         Restructuring costs     -         -       2   (6)     -                                         Tax impact due to the change in the estimated annual tax rate used for GAAP reporting purposes     -         -       (254 )       (0.01 )                                       Net Income adjusted   $ 11,995       $ 0.43     $ 6,447       $ 0.24     The following represents the income tax effects of the adjustments in the tables above, which were calculated using the estimated combined U.S., Canada and Mexico effective income tax rates for the periods indicated (in thousands):   (1) $616 (2) $76 (3) $1 (4) $305 (5) $4 (6) $1   Page 25     The reconciliation of reported net income and earnings per share to adjusted net income and earnings per share may not agree due to rounding differences and due to the difference between basic and dilutive weighted average shares outstanding in the computation of earnings per share.   Reconciliation of operating income to EBITDA and Adjusted EBITDA     Three Months Ended     Nine Months Ended       March 31     March 31   (In thousands)   2022     2021     2022     2021                                     Operating Income as reported   $ 5,161     $ 2,096     $ 14,027     $ 6,984                                     Depreciation and Amortization     2,531       1,920       7,632       5,943                                     EBITDA   $ 7,692     $ 4,016     $ 21,659     $ 12,927                                     Stock compensation expense     780       415       2,466       1,317                                     Acquisition costs     21       -       361       -                                     Severance costs     5       -       5       21                                     Restructuring costs     -       -       -       3                                     Adjusted EBITDA   $ 8,498     $ 4,431     $ 24,491     $ 14,268     Reconciliation of cash flow from operations to free cash flow     Three Months Ended     Nine Months Ended       March 31     March 31   (In thousands)   2022     2021     2022     2021                                     Cash Flow from Operations   $ 3,875     $ 11,217     $ (12,668 )   $ 24,634                                     Capital expenditures     (531 )     (637 )     (1,276 )     (1,517 )                                   Free Cash Flow   $ 3,344     $ 10,580     $ (13,944 )   $ 23,117     Reconciliation of Net Debt     March 31,     June 30,   (In thousands)   2022     2021                     Current portion and long-term debt as reported   $ 84,958     $ 68,178                     Less:                 Cash and cash equivalents as reported     1,248       2,282                     Net Debt   $ 83,710     $ 65,896     Reconciliation of net sales to organic net sales     Three Months Ended     Nine Months Ended       March 31     March 31   (In thousands)   2022     2021     2022     2021                                     Lighting Segment   $ 57,126     $ 45,740     $ 165,662     $ 136,271   Display Solutions Segment     52,985       26,464       161,989       82,326   Total net sales     110,111       72,204       327,651       218,597   Less:                                 JSI     29,045       -       72,952       -   Total organic net sales   $ 81,066     $ 72,204     $ 254,699     $ 218,597     Page 26     Results of Operations   THREE MONTHS ENDED MARCH 31, 2022 COMPARED TO THREE MONTHS ENDED MARCH 31, 2021   Lighting Segment     Three Months Ended       March 31   (In thousands)   2022     2021                     Net Sales   $ 57,126     $ 45,740   Gross Profit   $ 16,654     $ 14,159   Operating Income   $ 4,959     $ 3,797     Lighting Segment net sales of $57.1 million in the three months ended March 31, 2022 increased 25% from net sales of $45.7 million in the same period of fiscal 2021. The sales growth was across all key vertical markets, with significant contributions from new and enhanced products.   Gross profit of $16.7 million in the three months ended March 31, 2022 increased $2.5 million or 18% from the same period of fiscal 2021. Gross profit as a percentage of net sales was 29.2% in the three months ended March 31, 2022 compared to 31.0% in the same period of fiscal 2021. Gross profit as a percentage of net sales decreased as selling price realization lagged the increase in input and transportation costs.   Operating expenses of $11.7 million in the three months ended March 31, 2022 increased $1.3 million from the same period of fiscal 2021, primarily driven by higher commission expense as a result of higher sales.   Lighting Segment operating income of $5.0 million for the three months ended March 31, 2022 increased $1.2 million from operating income of $3.8 million in the same period of fiscal 2021 primarily driven by sales volume.   Display Solutions Segment     Three Months Ended       March 31   (In thousands)   2022     2021                     Net Sales   $ 52,985     $ 26,464   Gross Profit   $ 10,171     $ 3,933   Operating Income   $ 4,556     $ 1,230     Display Solutions Segment net sales of $53.0 million in the three months ended March 31, 2022 increased $26.5 million or 100% from net sales of $26.5 million in the same period in fiscal 2021. The increase is driven primarily by the acquisition of JSI.   Gross profit of $10.2 million in the three months ended March 31, 2022 increased $6.2 million or 159% from the same period of fiscal 2021. Gross profit as a percentage of net sales in the three months ended March 31, 2022 was 19.2% compared to 14.9% in the same period of fiscal 2021. Gross profit as a percentage of net sales reflects both the accretive effect of the JSI acquisition and improvements to core business margins.   Operating expenses of $5.6 million in the three months ended March 31, 2022 increased $2.9 million from $2.7 million in the same period of fiscal 2021, primarily driven by the inclusion of three months of results for JSI.   Display Solutions Segment operating income of $4.5 million in the three months ended March 31, 2022 increased $3.3 million from operating income of $1.2 million in the same period of fiscal 2021. The increase in operating income was primarily driven by an increase in sales.   Page 27     Corporate and Eliminations     Three Months Ended       March 31   (In thousands)   2022     2021                     Gross (Loss) Profit   $ (32 )   $ -   Operating (Loss)   $ (4,354 )   $ (2,931 )   The gross (loss) profit relates to the change in the intercompany profit in inventory elimination.   Operating expenses of $4.3 million in the three months ended March 31, 2022 increased $1.4 million or 48% from the same period of fiscal 2021. The net increase was due to increased incentive plan expense and acquisition integration costs.   Consolidated Results   We reported $0.5 million and $0.1 million of net interest expense in the three months ended March 31, 2022 and March 31, 2021, respectively. The increase in interest expense from fiscal 2021 to fiscal 2022 is the result of higher levels of debt outstanding on our credit facility. We also recorded other (income)/expense in the three months ended March 31, 2022 and March 31, 2021, related to net foreign exchange currency transaction gains and losses through our Mexican and Canadian subsidiaries.   The $1.1 million of income tax expense in the three months ended March 31, 2022 represents a consolidated effective tax rate of 22.9%. The $0.5 million of income tax expense in the three months ended March 31, 2021 represents a consolidated effective tax rate of 26.4%.   We reported net income of $3.6 million in the three months ended March 31, 2022 compared to net income of $1.5 million in the three months ended March 31, 2021. Non-GAAP adjusted net income was $4.2 million for the three months ended March 31, 2022 compared to adjusted net income of $1.8 million for the three months ended March 31, 2021 (Refer to the Non-GAAP tables above). The increase in Non-GAAP adjusted net income is primarily the net result of an increase in sales. Diluted earnings per share of $0.13 was reported in the three months ended March 31, 2022 as compared to $0.05 diluted earnings per share in the same period of fiscal 2021. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the three months ended March 31, 2022 were 28,083,000 shares compared to 27,727,000 shares in the same period last year.   NINE MONTHS ENDED MARCH 31, 2022 COMPARED TO NINE MONTHS ENDED MARCH 31, 2021   Lighting Segment     Nine Months Ended       March 31   (In thousands)   2022     2021                     Net Sales   $ 165,662     $ 136,271   Gross Profit   $ 49,009     $ 41,689   Operating Income   $ 13,921     $ 9,519     Lighting Segment net sales of $165.7 million in the nine months ended March 31, 2022 increased 22% from net sales of $136.3 million in the same period in fiscal 2021 The sales growth was across all key vertical markets, with significant contributions from new and enhanced products.   Gross profit of $49.0 million in the nine months ended March 31, 2022 increased $7.3 million or 18% from the same period of fiscal 2021. Gross profit as a percentage of net sales was 29.6% in the nine months ended March 31, 2022 compared to 30.6% in the same period of fiscal 2021. Gross profit as a percentage of net sales decreased as selling price realization lagged the increase in input and transportation costs.   Operating expenses of $35.1 million in the nine months ended March 31, 2022 increased $2.9 million from the same period of fiscal 2021, primarily driven by higher commission expense as a result of higher sales and non-recurring cost savings due to COVID-19 in the prior year.   Page 28     Lighting Segment operating income of $13.9 million for the nine months ended March 31, 2022 increased $4.4 million from operating income of $9.5 million in the same period of fiscal 2021 primarily driven by sales volume.   Display Solutions Segment     Nine Months Ended       March 31   (In thousands)   2022     2021                     Net Sales   $ 161,989     $ 82,326   Gross Profit   $ 27,766     $ 14,381   Operating Income   $ 12,142     $ 6,196     Display Solutions Segment net sales of $162.0 million in the nine months ended March 31, 2022 increased $79.7 million or 97% from net sales of $82.3 million in the same period in fiscal 2021. The increase is primarily driven by the acquisition of JSI.   Gross profit of $27.8 million in the nine months ended March 31, 2022 increased $13.4 million or 93% from the same period of fiscal 2021. Gross profit as a percentage of net sales in the nine months ended March 31, 2022 was 17.1% compared to 17.5% in the same period of fiscal 2021. Gross profit as a percentage of net sales reflects both the accretive effect of the JSI acquisition and improvements to core business margins, partially offset by the impact of input costs.   Operating expenses of $15.6 million in the nine months ended March 31, 2022 increased $7.4 million from $8.2 million in the same period of fiscal 2021, primarily driven by the inclusion of nine months of results for JSI and non-recurring cost savings due to COVID-19 in the prior year.   Display Solutions Segment operating income of $12.1 million in the nine months ended March 31, 2022 increased $5.9 million from operating income of $6.2 million in the same period of fiscal 2021. The increase of $5.9 million was primarily driven by an increase in sales.   Corporate and Eliminations     Nine Months Ended       March 31   (In thousands)   2022     2021                     Gross (Loss) Profit   $ (24 )   $ -   Operating (Loss)   $ (12,036 )   $ (8,731 )   The gross (loss) profit relates to the change in the intercompany profit in inventory elimination.   Operating expenses of $12.0 million in the nine months ended March 31, 2022 increased $3.3 million or 38% from the same period of fiscal 2021. The net increase was due to increased incentive plan expense and acquisition integration costs, as well as non-recurring cost savings due to COVID-19 in the prior year.   Consolidated Results   We reported $1.3 million and $0.2 million of net interest expense in the nine months ended March 31, 2022 and March 31, 2021, respectively. The increase in interest expense from fiscal 2021 to fiscal 2022 is the result of higher levels of debt outstanding on our credit facility. We also recorded other expense/(income) in the nine months ended March 31, 2022 and March 31, 2021, related to net foreign exchange currency transaction losses and gains through our Mexican and Canadian subsidiaries.   The $2.9 million of income tax expense in the nine months ended March 31, 2022 represents a consolidated effective tax rate of 22.4%. The $1.3 million income tax expense in the nine months ended March 31, 2021 represents a consolidated effective tax rate of 19.1% and was driven by a favorable deferred tax asset adjustment related to a net operating loss carryback from the CARES Act.   We reported net income of $9.9 million in the nine months ended March 31, 2022 compared to net income of $5.7 million in the nine months ended March 31, 2021. Non-GAAP adjusted net income was $12.0 million for the nine months ended March 31, 2022 compared to adjusted net income of $6.4 million for the nine months ended March 31, 2021. (Refer to the Non-GAAP tables above). The increase in Non-GAAP adjusted net income is primarily the net result of an increase in sales. Diluted earnings per share of $0.35 was reported in the nine months ended March 31, 2022 as compared to $0.21 diluted earnings per share in the same period of fiscal 2021. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the nine months ended March 31, 2022 were 27,945,000 shares compared to 27,352,000 shares in the same period last year.   Page 29     Liquidity and Capital Resources   We consider our level of cash on hand, borrowing capacity, current ratio and working capital levels to be our most important measures of short-term liquidity. For long-term liquidity indicators, we believe our ratio of long-term debt to equity and our historical levels of net cash flows from operating activities to be the most important measures.   At March 31, 2022, we had working capital of $83.4 million compared to $54.1 million at June 30, 2021. The ratio of current assets to current liabilities was 2.11 to 1 compared to a ratio of 1.76 to 1 at June 30, 2021. The increase in working capital from June 30, 2021 to March 31, 2022 is primarily driven by a $19.4 million increase in net inventory, $15.9 million increase in net accounts receivable, and a $5.0 million decrease in accrued expenses, partially offset by a $5.7 million increase in accounts payable, a $3.5 million increase in current maturities of long-term debt, and a $1.8 million decrease in cash and other current assets.   Net accounts receivable was $73.6 million and $57.7 million at March 31, 2022 and June 30, 2021, respectively. DSO decreased to 55 days at March 31, 2022 from 56 days at June 30, 2021.   Net inventories of $78.4 million at March 31, 2022 increased $19.4 million from $58.9 million at June 30, 2021. The increase of $19.4 million is the result of an increase in gross inventory of $19.2 million and a decrease in obsolescence reserves of $0.2 million. Lighting Segment net inventory increased $14.8 million, to support our product availability initiative to capitalize on new, short-lead time opportunities and to mitigate the ongoing supply chain challenges. Net inventory in the Display Solutions Segment increased $4.6 million, to support several ongoing programs.   Cash generated from operations and borrowing capacity under our credit facility is our primary source of liquidity. In September 2021, we amended our existing $100 million secured line of credit, to a $25 million term loan and $75 million remaining as a secured revolving line of credit. Both facilities expire in the third quarter of fiscal 2026. As of March 31, 2022, $13.2 million of the credit line was available. We are in compliance with all of our loan covenants. We believe that our $100 million credit facility plus cash flows from operating activities are adequate for operational and capital expenditure needs for the next 12 months. However, as the future impact of COVID-19 and the escalation of supply chain challenges on the economy and our operations evolves, we will continue to assess our liquidity needs.   We used $12.7 million of cash from operating activities in the nine months ended March 31, 2022 compared to a source of cash of $24.6 million in the nine months ended March 31, 2021. The decrease in net cash flows from operating activities is the result of increases in inventory and accounts receivable and decreases in accrued expense and customer prepayments, partially offset by improved earnings and an increase in accounts payable.   We used $0.8 million and $1.5 million of cash related to investing activities in the nine months ended March 31, 2022 and March 31, 2021, respectively. Capital expenditures decreased from $1.5 million in the nine months ended March 31, 2021 to $1.3 million in the nine months ended March 31, 2022. We received $0.5 million of cash related to the settlement of working capital adjustments from the acquisition of JSI.   We had a source of cash of $12.4 million related to financing activities in the nine months ended March 31, 2022 compared to a use of cash of $3.2 million in the nine months ended March 31, 2021. The $15.6 million change in cash flow was the net result of an increase in the borrowings on the line of credit to support the growth in working capital. Most of the growth in working capital can be attributed to the increase in inventory to ensure product availability for critical sales growth initiatives and to mitigate supply chain challenges.   We have on our balance sheet financial instruments consisting primarily of cash and cash equivalents, short-term investments, revolving lines of credit, and long-term debt. The fair value of these financial instruments approximates carrying value because of their short-term maturity and/or variable, market-driven interest rates.   Off-Balance Sheet Arrangements   We have no financial instruments with off-balance sheet risk and have no off-balance sheet arrangements.   Cash Dividends   In April 2022, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable May 17, 2022 to shareholders of record as of May 9, 2022. The indicated annual cash dividend rate for fiscal 2022 is $0.20 per share. The Board of Directors has adopted a policy regarding dividends which indicates that dividends will be determined by the Board of Directors in its discretion based upon its evaluation of earnings, cash flow requirements, financial condition, debt levels, stock repurchases, future business developments and opportunities, and other factors deemed relevant.   Page 30     Critical Accounting Policies and Estimates   A summary of our significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company’s fiscal 2021 Annual Report on Form 10-K.   ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   Except for the broad effects of the COVID-19 pandemic as a result of its negative impact on the global economy and major financial markets, there have been no material changes in our exposure to market risk since June 30, 2021. Additional information can be found in Item 7A, Quantitative and Qualitative Disclosures About Market Risk, which appears on page 13 of the Annual Report on Form 10-K for the fiscal year ended June 30, 2021.   ITEM 4.    CONTROLS AND PROCEDURES   Disclosure Controls and Procedures   We maintain disclosure controls and procedures (as such term is defined Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within required time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.   We conducted, under the supervision of our management, including the Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2022, our disclosure controls and procedures were effective. Management believes that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q are fairly presented in all material respects in accordance with GAAP for interim financial statements, and the Company’s Chief Executive Officer and Chief Financial Officer have certified that, based on their knowledge, the condensed consolidated financial statements included in this report fairly present in all material respects the Company’s financial condition, results of operations and cash flows for each of the periods presented in this report.   Changes in Internal Control   There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended March 31, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.   Page 31     PART II.    OTHER INFORMATION   ITEM 5. OTHER INFORMATION   On November 2, 2021, LSI Industries Inc. (the “Company”) held its annual meeting of shareholders (the “Meeting”). One of the proposals for the shareholders to consider was an amendment to the Company’s Articles of Incorporation (the “Articles”) to increase the number of authorized shares of common stock from 40,000,000 to 50,000,000 (the “Amendment”). At the meeting the Amendment was reported as approved by shareholders. However, after the Meeting, the Company identified an inadvertent discrepancy related solely to disclosure and counting of broker non-votes and the Amendment proposal in the Meeting’s proxy statement. Although the counting of these broker non-votes would likely not have any effect on the approval of the Amendment, the Company, out of an abundance of caution, has determined to deem the Amendment not to be valid and will seek another vote and shareholder approval to amend its Articles to increase its authorized shares of common stock at a later date and subject to a new proxy statement. The Company has not issued any of the additional shares approved at the Meeting.   ITEM 6.    EXHIBITS   Exhibits:   31.1 Certification of Principal Executive Officer required by Rule 13a-14(a)     31.2 Certification of Principal Financial Officer required by Rule 13a-14(a)     32.1 Section 1350 Certification of Principal Executive Officer     32.2 Section 1350 Certification of Principal Financial Officer     101.INS Inline XBRL Instance Document     101.SCH Inline XBRL Taxonomy Extension Schema Document     101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document     101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document     101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document     101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document     104 Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101)   Page 32     SIGNATURES   Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.     LSI Industries Inc.                     By: /s/ James A. Clark       James A. Clark       Chief Executive Officer and President       (Principal Executive Officer)                     By: /s/ James E. Galeese       James E. Galeese       Executive Vice President and Chief Financial Officer       (Principal Financial Officer)   May 6, 2022         Page 33