What changed in this filing

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Item 1. Financial Statements

2025-02-07 compared with 2024-11-08 · 274 added, 145 removed, 603 unchanged (41% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

Three Months Ended

Six Months Ended

(In thousands, except per share data)

Cost of products and services sold

2 unchanged sentences

Interest expense

Other (income)/expense

Other expense (income)

Income before income taxes

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

Three Months Ended

Six Months Ended

(In thousands)

Foreign currency translation adjustment

4 unchanged sentences

(In thousands, except shares)

September 30,

Current assets

1 unchanged sentence

Accounts receivable, less allowance for credit losses of $ 869 and $ 848 , respectively

Refundable income tax

Refundable income taxes

Other current assets

6 unchanged sentences

Net property, plant and equipment

Intangible assets, net

Other intangible assets, net

Operating lease right-of-use assets

4 unchanged sentences

(In thousands, except shares)

September 30,

LIABILITIES & SHAREHOLDERS' EQUITY

16 unchanged sentences

Treasury shares, without par value

Key Executive Compensation

Deferred compensation plan

Retained earnings

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands, except per share data)

Common Shares

1 unchanged sentence

Key Executive

Accumulated Other

Comprehensive

Shareholders'

(In thousands, except per share data)

Income/(Loss)

1 unchanged sentence

Other comprehensive loss

Board stock compensation

Board stock compensation awards

ESPP stock Awards

7 unchanged sentences

Balance at September 30, 2023

Other comprehensive loss

Board stock compensation awards

ESPP stock Awards

Restricted stock units issued, net of shares withheld for tax withholdings

Shares issued for deferred compensation

Activity of treasury shares, net

Deferred stock compensation

Stock-based compensation expense

Stock options exercised, net

Dividends — $ 0.20 per share

Balance at December 31, 2023

Common Shares

Treasury Shares

Key Executive

Comprehensive

Shareholders'

Income/(Loss)

Balance at June 30, 2024

Other comprehensive loss

Board stock compensation

Board stock compensation awards

ESPP stock Awards

7 unchanged sentences

Balance at September 30, 2024

Other comprehensive loss

Board stock compensation awards

ESPP stock Awards

Restricted stock units issued, net of shares withheld for tax withholdings

Shares issued for deferred compensation

Activity of treasury shares, net

Deferred stock compensation

Stock-based compensation expense

Stock options exercised, net

Dividends — $ 0.20 per share

Balance at December 31, 2024

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(In thousands)

4 unchanged sentences

Deferred compensation plan

Stock compensation expense

ESPP discount

Stock compensation expense

Issuance of common shares as compensation

Loss on disposition of fixed assets

(Gain) loss on disposition of fixed assets

Allowance for credit losses

9 unchanged sentences

Acquisition of EMI

Proceeds from the sale of fixed assets

Purchases of property, plant and equipment

1 unchanged sentence

Cash Flows from Financing Activities

Payments on long-term debt

Borrowings on long-term debt

Payments of long-term debt

Borrowings of long-term debt

Cash dividends paid

Shares withheld on employees' taxes

Shares withheld for employees' taxes

Payments on financing lease obligations

11 unchanged sentences

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 September 30, 2024, the results of its operations for the three-month periods ended September 30, 2024, and 2023, and its cash flows for the three-month periods ended September 30, 2024, and 2023.

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 December 31, 2024, the results of its operations for the three and six-month periods ended December 31, 2024, and 2023, and its cash flows for the six-month periods ended December 31, 2024, and 2023.

These statements should be read in conjunction with the financial statements and footnotes included in the fiscal 2024 Annual Report on Form 10-K.

6 unchanged sentences

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.

Control is generally transferred at the 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.

29 unchanged sentences

(In thousands)

September 30, 2024

Display Solutions

December 31, 2024

December 31, 2023

Timing of revenue recognition

1 unchanged sentence

Products and services transferred over time

Three Months Ended

December 31, 2024

December 31, 2023

Type of Product and Services

LED lighting, digital signage solutions, electronic circuit boards

Poles and other display solutions elements

Poles, other display solution elements

Project management, installation services, shipping and handling

Three Months Ended

(In thousands)

September 30, 2023

Lighting Segment

Display Solutions Segment

Six Months Ended

December 31, 2024

December 31, 2023

Timing of revenue recognition

1 unchanged sentence

Products and services transferred over time

Six Months Ended

December 31, 2024

December 31, 2023

Type of Product and Services

LED lighting, digital signage solutions, electronic circuit boards

Poles and other display solutions elements

Poles, other display solution elements

Project management, installation services, shipping and handling

33 unchanged sentences

The Company accounted for this transaction as a business combination.

The Company has preliminarily allocated the purchase price of approximately $ 49.9 million which includes 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 is recorded as goodwill.

The Company has allocated the purchase price of approximately $ 49.9 million which includes 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 is recorded as goodwill.

This preliminary allocation is subject to the final determination of the purchase price which will be finalized in fiscal 2025, as well as the potential revision resulting from the finalization of pre-acquisition tax filings.

36 unchanged sentences

The fiscal 2024 unaudited pro forma operating income of $ 36.3 million excludes acquisition-related expenses of $ 1.0 million.

Twelve Months Ended

(in thousands;

Twelve Month Ended

Operating Income

16 unchanged sentences

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 months ended September 30, 2024, or 2023.

There was no concentration of accounts receivable at September 30, 2024, or 2023.

Summarized financial information for the Company’s operating segments is provided for the indicated periods and as of September 30, 2024, and September 30, 2023:

(In thousands)

There were no customers or customer programs representing a concentration of 10% or more of the Company’s consolidated net sales in the three and six months ended December 31, 2024, or 2023.

There was no concentration of accounts receivable at December 31, 2024, or 2023.

Summarized financial information for the Company’s operating segments is provided for the indicated periods and as of December 31, 2024, and December 31, 2023:

Three Months Ended

Six Months Ended

(In thousands)

Lighting Segment

12 unchanged sentences

Corporate and Eliminations

September 30, 2024

June 30, 2024

Identifiable Assets:

Total Assets:

Lighting Segment

5 unchanged sentences

The Company records a 10 % mark-up on intersegment revenues.

Any intersegment profit in inventory is eliminated in consolidation.

Any inter-segment profit in inventory is eliminated in consolidation.

Intersegment revenues were eliminated in consolidation as follows:

1 unchanged sentence

Three Months Ended

Six Months Ended

(In thousands)

3 unchanged sentences

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

Six Months Ended

BASIC EARNINGS PER SHARE

3 unchanged sentences

Weighted average shares outstanding

Basic income per share

Basic earnings per common share

DILUTED EARNINGS PER SHARE

3 unchanged sentences

Weighted average shares outstanding

Diluted income per share

Diluted earnings per common share

Anti-dilutive securities (b)

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.

Anti-dilutive securities were excluded from the computation of diluted net income per share for the three months ended September 30, 2024, and September 30, 2023, 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.

Anti-dilutive securities were excluded from the computation of diluted net income per share for the three and six months ended December 31, 2024, and December 31, 2023, 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.

NOTE 6 – INVENTORIES, NET

1 unchanged sentence

(In thousands)

September 30, 2024

June 30, 2024

Raw materials

5 unchanged sentences

(In thousands)

September 30, 2024

June 30, 2024

Accrued Expenses:

2 unchanged sentences

Accrued warranty

Operating lease liabilities

Accrued sales commissions

Accrued Freight

Operating lease liabilities

Finance lease liabilities

6 unchanged sentences

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 estimation of the fair value of the 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.

10 unchanged sentences

(In thousands)

Lighting Segment

Balance as of September 30, 2024

Balance as of December 31, 2024

Accumulated impairment losses

Goodwill, net as of September 30, 2024

Goodwill, net as of December 31, 2024

Balance as of June 30, 2024

2 unchanged sentences

The gross carrying amount and accumulated amortization by each major intangible asset class is as follows:

Other Intangible Assets

December 31, 2024

(In thousands)

September 30, 2024

Gross Carrying

Amortized Intangible Assets

Customer relationships

LED technology, software

LED technology firmware, software

Total Amortized Intangible Assets

3 unchanged sentences

Total Other Intangible Assets

(In thousands)

Other Intangible Assets

June 30, 2024

Gross Carrying

(In thousands)

Amortized Intangible Assets

Customer relationships

LED technology, software

LED technology firmware, software

Total Amortized Intangible Assets

3 unchanged sentences

Total Other Intangible Assets

Three Months Ended

Six Months Ended

(In thousands)

3 unchanged sentences

NOTE 9 - DEBT

The Company’s long-term debt as of September 30, 2024, and June 30, 2024, consisted of the following:

September 30,

The Company’s long-term debt as of December 31, 2024, and June 30, 2024, consisted of the following:

(In thousands)

4 unchanged sentences

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 annually in the amount of $ 3.6 million over a five -year period with a balloon payment of the remaining balance due on the last month.

Both facilities expire in the first quarter of fiscal 2027.

The principal of the term loan is repaid annually in the amount of $ 3.6 million over a five -year period with a balloon payment of the remaining balance due last month.

Interest on both the revolving line of credit and the term loan is charged based upon an increment over the Secured Overnight Financing Rate (SOFR) or a base rate, at the Company’s option.

1 unchanged sentence

The increment over the SOFR 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.

As of September 30, 2024, the Company’s borrowing rate against its revolving line of credit was 6.0 %.

The increment over the SOFR borrowing rate will be 100 basis points for the second quarter of fiscal 2025.

As of December 31, 2024, the Company’s borrowing rate against its revolving line of credit was 5.7 %.

The increment over the SOFR borrowing rate will be 100 basis points for the third quarter of fiscal 2025.

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 is required to comply with financial covenants that limit the ratio of indebtedness to EBITDA and require a minimum fixed charge ratio.

As of September 30, 2024, there was $ 41.6 million available for borrowing under the $ 75 million line of credit.

The Company is in compliance with all of its loan covenants as of September 30, 2024.

As of December 31, 2024, there was $ 50.2 million available for borrowing under the $ 75 million line of credit.

The Company is in compliance with all of its loan covenants as of December 31, 2024.

NOTE 10 - CASH DIVIDENDS

The Company paid cash dividends of $ 1.5 million and $ 1.4 million for the three months ended September 30, 2024, and September 30, 2023, respectively.

Dividends on restricted stock units in the amount of $ 0.2 million and $ 0.1 million were accrued as of both September 30, 2024, and 2023, respectively.

The Company paid cash dividends of $ 3.0 million and $ 2.8 million for the six months ended December 31, 2024, and December 31, 2023, respectively.

Dividends on restricted stock units in the amount of $ 0.2 million and $ 0.1 million were accrued as of both December 31, 2024, and 2023, respectively.

These dividends will be paid upon the vesting of the restricted stock units when shares are issued to the award recipients.

In November 2024, the Board of Directors declared a regular quarterly cash dividend of $ 0.05 per share payable November 26, 2024 , to shareholders of record as of November 18, 2024 .

In January 2025, the Board of Directors declared a regular quarterly cash dividend of $ 0.05 per share payable February 11, 2025 , to shareholders of record as February 3, 2025 .

The indicated annual cash dividend rate is $ 0.20 per share.

5 unchanged sentences

Except for Restricted Stock Unit ("RSU") grants which are time-based, participants in the Company's Long-Term Equity Compensation Plans are awarded the opportunity to acquire shares over a three-year performance measurement period tied to specific company performance metrics.

The number of shares that remain reserved for issuance under the 2019 Omnibus Plan is 1,438,315 as of September 30, 2024.

In the three months ended September 30, 2024, the Company granted 160,826 PSUs and 107,217 RSUs, both with a weighted average market value of $ 14.92 .

Stock compensation expense was $ 1.1 million and $ 1.2 million for both the three months ended September 30, 2024, and 2023, respectively.

The number of shares that remain reserved for issuance under the 2019 Omnibus Plan is 1,403,708 as of December 31, 2024.

In the first quarter of fiscal 2025, the Company granted 160,826 PSUs and 107,217 RSUs, both with a weighted average market value of $ 14.92 .

Stock compensation expense was $ 1.1 million and $ 0.8 million for the three months ended December 31, 2024, and 2023, respectively, and $ 2.2 million and $ 2.0 million in the six months ended December 31, 2024, and 2023, respectively.

In November of 2021, our board of directors approved the LSI Employee Stock Purchase Plan (“ESPP”).

3 unchanged sentences

During fiscal year 2025, employees purchased 8,000 shares.

At September 30, 2024, 239,000 shares remained available for purchase under the ESPP.

At December 31, 2024, 234,000 shares remained available for purchase under the ESPP.

NOTE 12 - SUPPLEMENTAL CASH FLOW INFORMATION

Six Months Ended

(In thousands)

Three Months Ended

Cash Payments:

9 unchanged sentences

The Company may occasionally issue a standby letter of credit in favor of third parties.

As of September 30, 2024, there were no such standby letters of credit issued.

As of December 31, 2024, there were no such standby letters of credit issued.

NOTE 14 - LEASES

8 unchanged sentences

The Company elected not to record these leases on the balance sheet.

The rent expense for these leases was immaterial for September 30, 2024, and 2023.

The rent expense for these leases was immaterial for December 31, 2024, and 2023.

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.

2 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands)

6 unchanged sentences

Total lease cost

Three Months Ended

Supplemental Cash Flow Information:

Six Months Ended

(In thousands)

Cash flows from operating leases

Fixed payments - operating lease cash flows

Fixed payments - operating cash flows

Liability reduction - operating cash flows

3 unchanged sentences

Operating Leases:

September 30, 2024

June 30, 2024

Total operating right-of-use assets

Accrued Expenses

Accrued expenses (Current liabilities)

Long-term operating lease liability

2 unchanged sentences

Weighted Average Discount Rate

Financing Leases

September 30, 2024

June 30, 2024

Finance Leases:

Buildings under finance leases

8 unchanged sentences

Maturities of Lease Liability:

Operating Lease Liabilities

Finance Lease Liabilities

Net Lease Commitments

Finance Lease

Total lease payments

8 unchanged sentences

Three Months Ended

Six Months Ended

Reconciliation of effective tax rate:

19 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands)

1 unchanged sentence

Display Solutions Segment

Total Net Sales

Operating Income (Loss) by Business Segment

Three Months Ended

Six Months Ended

(In thousands)

2 unchanged sentences

Corporate and Eliminations

Total Operating Income

Net sales of $138.1 million for the three months ended September 30, 2024, increased 12% as compared to net sales of $123.4 million for the three months ended September 30, 2023.

Lighting segment net sales of $58.4 million decreased 14% compared to prior year quarter net sales of $67.6 million.

The decline in Lighting segment sales can be attributed to lower large project activity resulting from the lengthening of the conversion period for these large projects, and overall lower non-residential construction activity.

Sales growth in the Refueling and Parking market verticals was offset by declines in Warehouse and other large project applications.

Net sales in the Display Solutions segment of $79.7 million increased 43% compared to the same quarter last year sales of $55.8 million.

The increase in net sales in the Display Solutions segment is the net result of $26.2 million in sales from the acquisition of EMI partially offset by the delayed timing of orders within the Grocery vertical.

Operating income of $9.1 million for the three months ended September 30, 2024, represents a 17% decrease from operating income of $11.0 million in the three months ended September 30, 2023.

Adjusted operating income, a Non-GAAP measure, was $11.9 million in the three months ended September 30, 2024, represents a 14% decline compared to $13.9 million in the three months ended September 30, 2023.

Net sales of $147.7 million for the three months ended December 31, 2024, increased 36% as compared to net sales of $109.0 million for the three months ended December 31, 2023.

The increase in net sales was attributed to a $45.3 million or 103% increase in net sales of the Display Solutions Segment, partially offset by a $6.6 million or 10% decline in net sales of the Lighting Segment.

The Display Solutions Segment generated organic growth of 50% driven by increased sales across all product categories and vertical markets supported mostly by the grocery, refueling/ C-Store, and QSR verticals.

The Company’s recent acquisition of EMI contributed an additional $23.4 million of the quarter-over-quarter sales growth of the Display Solutions Segment.

The decline in sales in the Lighting Segment is attributed to the comparison of quarter-over-quarter sales of large lighting projects.

In fiscal 2024, the Company had several large lighting projects, including a new EV plant complex that did not repeat in fiscal 2025.

While there was a decline in large lighting projects, small project activity increased over the prior year period.

Net sales of $285.8 million for the six months ended December 31, 2024, increased 23% as compared to net sales of $232.4 million for the six months ended December 31, 2023.

The increase in net sales was attributed to a $69.2 million or 69% increase in net sales of the Display Solutions Segment, partially offset by a $15.8 or 12% decline in net sales of the Lighting Segment.

The Display Solutions Segment generated organic growth of 20% driven by increased sales across all product categories and vertical markets supported mostly by the grocery, refueling/ c-Store, and QSR verticals.

The Company’s recent acquisition of EMI contributed an additional $49.6 million of the year-over-year sales growth of the Display Solutions Segment.

The decline in sales in the Lighting Segment is attributed to the comparison of year-over-year sales of large lighting projects.

In fiscal 2024, the Company had several large lighting projects, including a new EV plant complex that did not repeat in fiscal 2025.

While there was a decline in large lighting projects, small project activity increased over the prior year period.

Operating income of $8.5 million for the three months ended December 31, 2024, represents an 8% increase in operating income of $7.8 million in the three months ended December 31, 2023.

Adjusted operating income, a Non-GAAP measure, was $11.7 million in the three months ended December 31, 2024, compared to $9.9 million in the three months ended December 31, 2023.

Refer to “Non-GAAP Financial Measures” below for a reconciliation of Non-GAAP financial measures to U.S.

GAAP measures.

The decrease in operating income is the net result of a decrease in sales in the Lighting segment partially offset by an increase in sales in the Display Solutions segment which yield lower margins as a result of product mix.

The increase in net sales contributed to the increase in operating profit which was partially offset by a change in product mix between the Lighting Segment and Display Solutions Segment product lines.

Operating income of $17.6 million for the six months ended December 31, 2024, represents a 7% decrease from operating income of $18.8 million in the six months ended December 31, 2023.

Adjusted operating income, a Non-GAAP financial measure, was $23.6 million in the six months ended December 31, 2024, compared to adjusted operating income of $23.8 million in the six months ended December 31, 2023.

The increase in net sales was offset by a change in product mix between the Lighting Segment and Display Solutions Segment product lines.

Refer to “Non-GAAP Financial Measures” below for a reconciliation of Non-GAAP financial measures to U.S.

GAAP measures.

Non-GAAP Financial Measures

This report includes adjustments to GAAP operating income, net income, and earnings per share for the three months ended September 30, 2024, and 2023.

This report includes adjustments to GAAP operating income, net income, and earnings per share for the three months and six ended December 31, 2024, and 2023.

Operating income, net income, and earnings per share, which exclude the impact of long-term performance based compensation expense, the amortization expense of acquired intangible assets, commercial growth opportunity expense, acquisition costs, the lease expense on the step-up basis of acquired leases, and restructuring and severance costs, are non-GAAP financial measures.

1 unchanged sentence

We believe these non-GAAP measures will provide increased transparency to our core operating performance of the business.

Also included in this report are non-GAAP financial measures, including Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA and Adjusted EBITDA), Net Debt to Adjusted EBITDA, and Free Cash Flow.

We believe that these are useful as supplemental measures in assessing the operating performance of our business.

4 unchanged sentences

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 net income and earnings per share reported for the periods indicated along with the calculation of EBITDA, Adjusted EBITDA, Free Cash Flow, and Net Debt to Adjusted EBITDA.

Three Months Ended

2 unchanged sentences

Operating income as reported

Acquisition costs

Long-term performance based compensation

12 unchanged sentences

Restructuring/severance costs

Lease expense on the step-up basis of acquired leases

Consulting expense:

commercial growth opportunities

Tax rate difference between reported and adjusted net income

Net income adjusted

Effective in the first quarter of fiscal 2025, LSI will include the amortization expense related to acquired intangible assets as an add-back to its non-GAAP reconciliation.

Prior quarter non-GAAP reconciliations have been adjusted accordingly.

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):

Six Months Ended

Reconciliation of operating income to adjusted operating income:

(In thousands)

Operating income as reported

Acquisition costs

Long-term performance based compensation

Amortization expense of acquired intangible assets

Lease expense on the step-up basis of acquired leases

Restructuring/severance costs

Consulting expense:

commercial growth opportunities

Adjusted operating income

Reconciliation of net income to adjusted net income

Six Months Ended

(In thousands, except per share data)

Net income as reported

Long-term performance based compensation

Amortization expense of acquired intangible assets

Restructuring/severance costs

Acquisition costs

Lease expense on the step-up basis of acquired leases

Consulting expense:

commercial growth opportunities

Tax rate difference between reported and adjusted net income

3 unchanged sentences

Reconciliation of Net Income to Adjusted EBITDA

Three Months Ended

Reconciliation of net income to EBITDA and adjusted EBITDA

Six Months Ended

(In thousands)

1 unchanged sentence

Interest Expense, Net

Other expense (income)

Other (Income) Expense

Operating Income as reported

Depreciation and Amortization

Acquisition costs

Long-term performance based compensation

3 unchanged sentences

commercial growth opportunities

Acquisition costs

Adjusted EBITDA

Three Months Ended

Reconciliation of cash flow from operations to free cash flow

Three Months Ended

Six Months Ended

(In thousands)

6 unchanged sentences

Long-Term Debt

Debt as reported

Cash and cash equivalents as reported

Cash and cash equivalents

Adjusted EBITDA - Trailing 12 Months

Net Debt to Adjusted EBITDA

Three Months Ended

Six Months Ended

Organic compared to Inorganic Sales

Lighting Segment

Display Solutions Segment

- Comparable Display Solutions Sales

Total Display Solutions Sales

Total net sales

Total organic net sales

Results of Operations

THREE MONTHS ENDED SEPTEMBER 30, 2024, COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2023

THREE MONTHS ENDED DECEMBER 31, 2024, COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2023

Display Solutions Segment

Three Months Ended

(In thousands)

Operating Income

Display Solutions Segment net sales of $79.7 million in the three months ended September 30, 2024 increased 43% from net sales of $55.8 million in the same period in fiscal 2024.

The increase in net sales in the Display Solutions segment is the net result of $26.2 million in sales from the acquisition of EMI partially offset by the timing of orders within the Grocery vertical.

Gross profit of $15.0 million in the three months ended September 30, 2024 increased 13% from the same period of fiscal 2024.

Gross profit as a percentage of net sales in the three months ended September 30, 2024 decreased to 19% from 24% in the same period of fiscal 2024 impacted by product and vertical market mix.

Display Solutions net sales of $89.5 million increased 103% from same period in fiscal 2024.

This segment generated organic growth of 50% driven by increased sales across all major product categories and vertical markets supported mostly by the grocery, refueling/ c-Store, and QSR verticals.

The Company’s recent acquisition of EMI also contributed $23.4 million of the quarter-over-quarter sales growth of the Display Solutions Segment.

Gross profit of $15.8 million in the three months ended December 31, 2024 increased 79% from the same period of fiscal 2024.

Gross profit as a percentage of net sales in the three months ended December 31, 2024 decreased to 18% from 20% in the same period of fiscal 2024 impacted by product and vertical market mix.

The Company continues to maintain favorable program pricing and prudent cost management.

Operating expenses of $7.3 million in the three months ended September 30, 2024 increased 20% from the same period of fiscal 2024, primarily driven by the acquisition of EMI and by an investment in commercial initiatives to drive growth.

Display Solutions Segment operating income of $7.7 million in the three months ended September 30, 2024 increased 7% from the same period of fiscal 2024.

The increase of $0.5 million was driven by the net effect of an increase in net sales partially offset by the gross margin impact of product mix.

Operating expenses of $7.7 million in the three months ended December 31, 2024 increased 39% from the same period of fiscal 2024, primarily driven by the acquisition of EMI and by continued investment in commercial initiatives to drive growth.

Display Solutions Segment operating income of $8.1 million in the three months ended December 31, 2024 increased 146% from the same period of fiscal 2024.

The increase in operating income of $4.8 million was driven by the net effect of an increase in net sales partially offset by the gross margin impact of product mix.

Lighting Segment

Three Months Ended

(In thousands)

Operating Income

Lighting Segment net sales of $58.4 million in the three months ended September 30, 2024, decreased 14% compared to net sales of $67.6 million in the same period in fiscal 2024.

Sales growth in the Refueling and Parking market verticals was offset by declines in Warehouse and other large project applications.

Gross profit of $18.6 million in the three months ended September 30, 2024 decreased 20% from the same period of fiscal 2023.

Lighting Segment net sales of $58.2 million in the three months ended December 31, 2024, decreased 10% compared to net sales of $64.8 million in the same period in fiscal 2024.

The decline in sales is attributed to the comparison of quarter-over-quarter sales of large lighting projects.

In fiscal 2024, the Company had several large lighting projects, including a new EV plant complex that did not repeat in fiscal 2025.

While there was a decline in large lighting projects, small project activity increased over the prior year period.

Gross profit of $19.0 million in the three months ended December 31, 2024 decreased 16% from the same period of fiscal 2024.

The decline in gross profit is attributed to the decline in sales.

While overall demand levels were lower in the fiscal first quarter, selling prices and material input costs remain stable.

Operating expenses of $12.9 million in the three months ended September 30, 2024 decreased 11% from the same period of fiscal 2024, driven mostly by lower commission expense from lower sales, and effective cost management.

Lighting Segment operating income of $5.8 million for the three months ended September 30, 2024 decreased 34% from operating income of $8.8 million in the same period of fiscal 2024 primarily driven by decreased net sales.

While overall demand levels were lower in the fiscal second quarter, selling prices and material input costs remain stable.

Operating expenses of $13.1 million in the three months ended December 31, 2024 decreased 6% from the same period of fiscal 2024, driven mostly by lower commission expense from lower sales, and effective cost management.

Lighting Segment operating income of $6.0 million for the three months ended December 31, 2024 decreased 33% from operating income of $8.9 million in the same period of fiscal 2024 primarily driven by decreased net sales.

Corporate and Eliminations

Three Months Ended

(In thousands)

Operating (Loss)

The gross profit relates to the change in the intercompany profit in inventory elimination.

Operating expenses of $5.6 million in the three months ended December 31, 2024, increased 30% from the same period of fiscal 2024.

The increase in expense is primarily the result of continued investment in commercial initiatives to support the growth of the Company.

Also contributing to the quarter-over-quarter change was an increase in employee benefit costs.

Consolidated Results

The Company reported $0.7 million and $0.5 million of net interest expense in the three months ended December 31, 2024, and December 31, 2023, respectively.

The increase in interest expense is the result of the funds borrowed to acquire EMI in the fourth quarter of fiscal 2024 partially offset by decreased borrowing costs.

The Company also recorded other income of $0.4 million of other (income) in the three months ended December 31, 2024, of which is related to net foreign exchange currency transaction gains and losses through the Company’s Mexican and Canadian subsidiaries.

The $1.7 million of income tax expense in the three months ended December 31, 2024 represents a consolidated effective tax rate of 23.2%.

The $1.5 million of income tax expense in the three months ended December 31, 2023 represents a consolidated effective tax rate of 20.1%.

Impacting the effective tax rate of both reported periods was the favorable tax treatment of the Company’s long-term performance based compensation.

The Company reported net income of $5.6 million in the three months ended December 31, 2024 compared to net income of $5.9 million in the three months ended December 31, 2023.

Non-GAAP adjusted net income was $8.0 million for the three months ended December 31, 2024, compared to adjusted net income of $7.3 million for the three months ended December 31, 2023 (Refer to the Non-GAAP tables above).

The increase in Non-GAAP adjusted net income is primarily the net result of an increase in net sales partially offset by the profit margin impact of product mix.

Diluted adjusted earnings per share of $0.18 was reported in the three months ended December 31, 2024 compared to $0.20 diluted adjusted earnings per share in the same period of fiscal 2024.

The weighted average common shares outstanding for purposes of computing diluted earnings per share in the three months ended December 31, 2024 were 30,876,000 shares compared to 30,043,000 shares in the same period last year.

SIX MONTHS ENDED DECEMBER 31, 2024, COMPARED TO SIX MONTHS ENDED DECEMBER 31, 2023

Display Solutions Segment

Six Months Ended

(In thousands)

Operating Income

Display Solutions net sales of $169.2 million increased 69% from same period in fiscal 2024.

This segment generated organic growth of 20% driven by increased sales across all major product categories and vertical markets supported mostly by the grocery, refueling/ c-Store, and QSR verticals.

The Company’s recent acquisition of EMI also contributed $49.6 million of the year-over-year sales growth of the Display Solutions Segment.

Gross profit of $30.9 million in the six months ended December 31, 2024 increased 39% from the same period of fiscal 2024.

Gross profit as a percentage of net sales in the six months ended December 31, 2024 decreased to 18% from 22% in the same period of fiscal 2024 impacted by product and vertical market mix.

The Company continues to maintain favorable program pricing and prudent cost management.

Operating expenses of $15.0 million in the six months ended December 31, 2024 increased 29% from the same period of fiscal 2024, primarily driven by the acquisition of EMI and by continued investment in commercial initiatives to drive growth.

Operating income of $15.8 million in the six months ended December 31, 2024 increased 51% from the same period of fiscal 2024.

The increase in operating income of 5.3 million was driven by the net effect of an increase in net sales partially offset by the gross margin impact of product mix.

Lighting Segment

Six Months Ended

(In thousands)

Operating Income

Lighting Segment net sales of $116.6 million in the six months ended December 31, 2024, decreased 12% compared to net sales of $132.4 million in the same period in fiscal 2024.

The decline in sales in the Lighting Segment is attributed to the comparison of year-over-year sales of large lighting projects.

In fiscal 2024, the Company had several large lighting projects, including a new EV plant complex that did not repeat in fiscal 2025.

Contributing to the decline in large projects was the lengthening of the conversions cycle for these large projects.

While there was a decline in large lighting projects, small project activity increased over the prior year period.

Gross profit of $37.7 million in the three months ended December 31, 2024 decreased 18% from the same period of fiscal 2024.

The decline in gross profit is attributed to the decline in sales.

While overall demand levels were lower in the first half of fiscal 2025, selling prices and material input costs remain stable.

Operating expenses of $25.9 million in the six months ended December 31, 2024 decreased 9% from the same period of fiscal 2024, driven mostly by lower commission expense from lower sales, and effective cost management.

Lighting Segment operating income of $11.7 million for the six months ended December 31, 2024 decreased 33% from operating income of $17.6 million in the same period of fiscal 2024 primarily driven by decreased net sales.

Corporate and Eliminations

Six Months Ended

(In thousands)

Gross Profit (Loss)

Operating (Loss)

The gross profit (loss) relates to the change in the intercompany profit in inventory elimination.

Operating expenses of $4.3 million in the three months ended September 30, 2024, decreased 12% from the same period of fiscal 2024.

The decrease was primarily the result of cost containment initiatives across several of the Company’s cost categories.

Operating expenses of $10.0 million in the six months ended December 31, 2024, increased 7% from the same period of fiscal 2024.

The increase in expense is the result of an increase in investment in commercial initiatives to support the growth of the Company.

Also contributing to the year-over-year change was an increase in employee benefit costs.

Consolidated Results

The Company reported $0.9 million and $0.6 million of net interest expense in the three months ended September 30, 2024, and September 30, 2023, respectively.

The increase in interest expense is the result of the funds borrowed to acquire EMI Industries, LLC in the fourth quarter of fiscal 2024 partially offset by decreased borrowing costs.

The Company also recorded other income of ($0.1) million and $0.1 million of other expense in the three months ended September 30, 2024, and September 30, 2023, respectively, both of which is related to net foreign exchange currency transaction gains and losses through the Company’s Mexican and Canadian subsidiaries.

The $1.6 million of income tax expense in the three months ended September 30, 2024 represents a consolidated effective tax rate of 19.6%.

The $2.3 million of income tax expense in the three months ended September 30, 2023 represents a consolidated effective tax rate of 22.6%.

The Company reported $1.6 million and $1.0 million of net interest expense in the six months ended December 31, 2024, and December 31, 2023, respectively.

The increase in interest expense is the result of the funds borrowed to acquire EMI in the fourth quarter of fiscal 2024 partially offset by decreased borrowing costs.

The Company also recorded other income of $0.3 million and $0.1 million in the six months ended December 31, 2024, and December 31, 2023, respectively, both of which is related to net foreign exchange currency transaction gains and losses through the Company’s Mexican and Canadian subsidiaries.

The $3.3 million of income tax expense in the six months ended December 31, 2024 represents a consolidated effective tax rate of 21.3%.

The $3.8 million of income tax expense in the six months ended December 31, 2023 represents a consolidated effective tax rate of 21.5%.

Impacting the effective tax rate of both reported periods was the favorable tax treatment of the Company’s long-term performance based compensation.

The Company reported net income of $6.7 million in the three months ended September 30, 2024 compared to net income of $8.0 million in the three months ended September 30, 2023.

Non-GAAP adjusted net income was $8.0 million for the three months ended September 30, 2024, compared to adjusted net income of $9.6 million for the three months ended September 30, 2023 (Refer to the Non-GAAP tables above).

The Company reported net income of $12.3 million in the six months ended December 31, 2024 compared to net income of $13.9 million in the six months ended December 31, 2023.

Non-GAAP adjusted net income was $16.0 million for the six months ended December 31, 2024, compared to adjusted net income of $16.9 million for the six months ended December 31, 2023 (Refer to the Non-GAAP tables above).

The decrease in Non-GAAP adjusted net income is primarily the net result of an increase in net sales offset by the profit margin impact of product mix.

Diluted adjusted earnings per share of $0.22 was reported in the three months ended September 30, 2024 compared to $0.27 diluted adjusted earnings per share in the same period of fiscal 2024.

The weighted average common shares outstanding for purposes of computing diluted earnings per share in the three months ended September 30, 2024 were 30,530,000 shares compared to 29,955,000 shares in the same period last year.

Diluted adjusted earnings per share of $0.40 was reported in the six months ended December 31, 2024 compared to $0.47 diluted adjusted earnings per share in the same period of fiscal 2024.

The weighted average common shares outstanding for purposes of computing diluted earnings per share in the six months ended December 31, 2024 were 30,876,000 shares compared to 29,949,000 shares in the same period last year.

Liquidity and Capital Resources

1 unchanged sentence

For long-term liquidity indicators, the Company believes its 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 September 30, 2024, the Company had working capital of $86.8 million compared to $83.3 million at June 30, 2024.

The ratio of current assets to current liabilities was 2.1 to 1 for both September 30, 2024, and June 30, 2024.

The increase in working capital from June 30, 2024, to September 30, 2024, is primarily driven by a $2.1 million increase in net accounts receivable and a $2.9 million increase in cash partially offset by a $0.7 million decrease in refundable income taxes and a $0.9 million increase in current liabilities.

Net accounts receivable was $80.7 million and $78.6 million at September 30, 2024, and June 30, 2024, respectively.

DSO decreased to 54 days at September 30, 2024, from 58 days at June 30, 2024.

Net inventories of $71.3 million at September 30, 2024, increased $0.4 million from $70.9 million at June 30, 2024.

At December 31, 2024, the Company had working capital of $84.9 million compared to $83.3 million at June 30, 2024.

The ratio of current assets to current liabilities was 2.1 to 1 for both December 31, 2024, and June 30, 2024.

The increase in working capital from June 30, 2024, to December 31, 2024, was primarily driven by a $2.6 million increase in net accounts receivable partially offset by a $1.5 million decrease in net inventory.

Net accounts receivable was $81.2 million and $78.6 million at December 31, 2024, and June 30, 2024, respectively.

DSO decreased to 52 days at December 31, 2024, from 58 days at June 30, 2024.

Net inventories of $69.4 million at December 31, 2024, decreased $1.5 million from $70.9 million at June 30, 2024.

Lighting Segment net inventory decreased $1.7 million whereas net inventory in the Display Solutions Segment increased $0.2 million to support the growth in backlog resulting from an increase program activity.

1 unchanged sentence

The Company has a $25 million term loan and $75 million remaining in a secured revolving line of credit.

Both facilities expire in the third quarter of fiscal 2026.

As of September 30, 2024, $41.6 million of the credit line was available.

Both facilities expire in the first quarter of fiscal 2027.

As of December 31, 2024, $50.2 million of the credit line was available.

The Company is in compliance with all of its loan covenants.

The $100 million credit facility plus cash flows from operating activities are adequate for operational and capital expenditure needs for the remainder of fiscal 2025.

The Company generated $11.8 million of cash from operating activities in the three months ended September 30, 2024, compared to $10.6 million of cash generated from operating activities in the same period in fiscal 2024.

The Company generated $21.7 million of cash from operating activities in the six months ended December 31, 2024, compared to $19.9 million of cash generated from operating activities in the same period in fiscal 2024.

The Company continues to effectively manage its working capital while generating increasing cash flow from earnings in both fiscal years, resulting in strong cash flow from operations.

The Company used $0.8 million and $1.4 million of cash related to investing activities in the three months ended September 30, 2024, and September 30, 2023, respectively.

The Company invested $1.8 million and $3.3 million of cash related to investing activities in the six months ended December 31, 2024, and December 31, 2023, respectively.

The Company continues to invest in equipment and tooling to support sales growth.

The Company had a net use of cash of $8.1 million and $7.4 million related to financing activities in the three months ended September 30, 2024, and September 30, 2023, respectively.

The Company had a net use of cash of $19.1 million and $15.7 million related to financing activities in the six months ended December 31, 2024, and December 31, 2023, respectively.

The Company continues to generate positive cash flow from its operations in order to pay down its debt and fund its dividend payments to shareholders.

4 unchanged sentences

Cash Dividends

In November 2024, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable November 26, 2024, to shareholders of record as of November 18, 2024.

In January 2025, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable February 11, 2025, to shareholders of record as of February 3, 2025.

The indicated annual cash dividend rate for fiscal 2025 is $0.20 per share.

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements