LSI Industries Inc. (LYTS) Bundle
Understanding LSI Industries Inc. (LYTS) Revenue Streams
Understanding LSI Industries Inc.’s Revenue Streams
Net Sales by Business Segment
| Segment | Net Sales (2024) | Net Sales (2023) | Percentage Change |
|---|---|---|---|
| Lighting Segment | $58,437,000 | $67,641,000 | -14% |
| Display Solutions Segment | $79,658,000 | $55,800,000 | +43% |
| Total Net Sales | $138,095,000 | $123,441,000 | +12% |
The total net sales of $138.1 million for the three months ended September 30, 2024, represent a 12% increase compared to net sales of $123.4 million for the same period in 2023. This growth is primarily driven by a significant increase in the Display Solutions segment, which saw sales rise by 43% due to the acquisition of EMI Industries, LLC.
The Lighting segment, however, experienced a decline of 14% with net sales decreasing from $67.6 million in 2023 to $58.4 million in 2024. This decline is attributed to lower large project activity and overall reduced non-residential construction activity, despite growth in specific market verticals.
Year-over-Year Revenue Growth Rate
Analyzing the year-over-year revenue growth rates provides insight into the company's performance over time:
| Year | Net Sales | Growth Rate |
|---|---|---|
| 2023 | $123,441,000 | - |
| 2024 | $138,095,000 | +12% |
The company recorded a year-over-year growth rate of 12% in net sales, indicating a positive trend in overall revenue generation despite challenges in specific segments.
Contribution of Different Business Segments to Overall Revenue
The contribution of each segment to the overall revenue is crucial for understanding the company’s financial health:
| Segment | Revenue Contribution (2024) | Revenue Contribution (2023) |
|---|---|---|
| Lighting Segment | 42.3% | 54.8% |
| Display Solutions Segment | 57.7% | 45.2% |
In 2024, the Lighting segment contributed approximately 42.3% to total revenue, down from 54.8% in 2023. Conversely, the Display Solutions segment's contribution rose to 57.7%, reflecting a strategic shift towards this higher-growth area.
Analysis of Significant Changes in Revenue Streams
Several significant changes in revenue streams have been observed:
- Display Solutions segment net sales increased by $23.9 million due to the acquisition of EMI Industries, which contributed $26.2 million in sales.
- Lighting segment sales decreased by $9.2 million, primarily due to reduced activity in large projects.
- Overall, the revenue mix is shifting towards Display Solutions, highlighting a potential strategic focus on this segment for future growth.
The company’s revenue dynamics illustrate a transition in business focus, with the Display Solutions segment gaining prominence, while the Lighting segment faces challenges that may require strategic adjustments to regain its growth trajectory.
A Deep Dive into LSI Industries Inc. (LYTS) Profitability
A Deep Dive into LSI Industries Inc. (LYTS) Profitability
Gross Profit, Operating Profit, and Net Profit Margins
| Metric | 2024 (Q1) | 2023 (Q1) |
|---|---|---|
| Net Sales | $138,095,000 | $123,441,000 |
| Gross Profit | $33,647,000 | $36,589,000 |
| Operating Income | $9,131,000 | $11,028,000 |
| Net Income | $6,682,000 | $8,028,000 |
| Gross Profit Margin | 24.3% | 29.6% |
| Operating Profit Margin | 6.6% | 8.9% |
| Net Profit Margin | 4.8% | 6.5% |
In the three months ended September 30, 2024, the company reported net sales of $138.1 million, an increase of 12% compared to the same period in 2023. However, gross profit decreased to $33.6 million, resulting in a gross profit margin of 24.3%, down from 29.6% the previous year.
Trends in Profitability Over Time
| Year | Net Sales | Gross Profit | Operating Income | Net Income |
|---|---|---|---|---|
| 2024 | $535,849,000 | $141,788,000 | $36,303,000 | $27,155,000 |
| 2023 | $578,169,000 | $147,967,000 | $38,798,000 | $30,056,000 |
The overall profitability trend shows a decline in gross profit, operating income, and net income from 2023 to 2024, reflecting challenges in maintaining margins amid rising costs.
Comparison of Profitability Ratios with Industry Averages
| Metric | LYTS (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | 24.3% | 30.0% |
| Operating Profit Margin | 6.6% | 10.0% |
| Net Profit Margin | 4.8% | 8.0% |
When compared to industry averages, the company is underperforming in gross, operating, and net profit margins, which may indicate operational inefficiencies or higher costs.
Analysis of Operational Efficiency
The company has been focusing on cost management strategies, yet operating expenses increased by 20% year-over-year, primarily due to the acquisition of EMI Industries and investments in growth initiatives. Operating expenses amounted to $24.5 million for the quarter.
Despite these challenges, the gross margin percentage shows signs of stability, indicating effective pricing strategies amid fluctuating input costs. The operational efficiency can be further analyzed through the following metrics:
| Metric | 2024 | 2023 |
|---|---|---|
| Operating Expenses | $24,516,000 | $25,561,000 |
| Cost of Goods Sold | $104,448,000 | $86,852,000 |
| EBITDA | $13,430,000 | $15,096,000 |
The data reflects a need for enhanced operational efficiency and tighter cost control measures to improve profitability metrics moving forward.
Debt vs. Equity: How LSI Industries Inc. (LYTS) Finances Its Growth
Debt vs. Equity: How LSI Industries Inc. Finances Its Growth
Debt Levels
As of September 30, 2024, LSI Industries Inc. reported a total debt of $47.7 million. This includes both short-term and long-term obligations:
- Current portion of long-term debt: $3.6 million
- Long-term debt: $44.1 million
The company also had cash and cash equivalents amounting to $7.0 million, resulting in a net debt of $40.7 million.
Debt-to-Equity Ratio
LSI Industries Inc. has a debt-to-equity ratio of 0.8 as of September 30, 2024. This is compared to the industry average of approximately 1.1, indicating a more conservative approach to leveraging.
Recent Debt Issuances and Credit Ratings
In the last quarter, LSI Industries secured a $25 million term loan and maintains a $75 million secured revolving line of credit, with $41.6 million available under this facility as of September 30, 2024. The company is in compliance with all loan covenants and has a credit rating that reflects its financial stability.
Debt Financing vs. Equity Funding
LSI Industries balances its financing through both debt and equity. The total equity as of September 30, 2024, is approximately $58.9 million, leading to a capital structure that is 44% debt and 56% equity. The company has historically opted for debt to finance growth initiatives while keeping equity dilution minimal.
| Financial Metric | Value |
|---|---|
| Total Debt | $47.7 million |
| Current Portion of Long-Term Debt | $3.6 million |
| Long-Term Debt | $44.1 million |
| Cash and Cash Equivalents | $7.0 million |
| Net Debt | $40.7 million |
| Debt-to-Equity Ratio | 0.8 |
| Industry Average Debt-to-Equity Ratio | 1.1 |
| Total Equity | $58.9 million |
| Debt as Percentage of Capital | 44% |
| Equity as Percentage of Capital | 56% |
Assessing LSI Industries Inc. (LYTS) Liquidity
Assessing LSI Industries Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio was 2.1, indicating that the company has $2.1 in current assets for every $1 in current liabilities.
Quick Ratio: The quick ratio, which excludes inventory from current assets, also stands at approximately 1.3 as of the same date.
Analysis of Working Capital Trends
Working capital increased from $83.3 million on June 30, 2024, to $86.8 million on September 30, 2024. This increase is attributed to:
- A rise in net accounts receivable, increasing by $2.1 million.
- An increase in cash by $2.9 million.
- A decrease in refundable income taxes by $0.7 million.
- An increase in current liabilities by $0.9 million.
Cash Flow Statements Overview
| Cash Flow Category | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) |
|---|---|---|
| Cash Flow from Operating Activities | $11,846 | $10,592 |
| Cash Flow from Investing Activities | ($818) | ($1,393) |
| Cash Flow from Financing Activities | ($8,060) | ($7,439) |
| Net Cash Increase | $2,859 | $1,705 |
Potential Liquidity Concerns or Strengths
Liquidity is underpinned by:
- A cash balance of $6.97 million as of September 30, 2024.
- Access to a $75 million revolving line of credit, with $41.6 million available as of the same date.
- Compliance with all loan covenants, supporting ongoing operational liquidity.
Cash flow from operations has improved year-over-year, reflecting effective working capital management. The company generated $11.8 million from operating activities in Q1 2024, up from $10.6 million in Q1 2023.
Overall, the company maintains a robust liquidity position, supported by strong cash flow generation and sufficient credit facilities to meet operational and capital expenditure needs.
Is LSI Industries Inc. (LYTS) Overvalued or Undervalued?
Valuation Analysis
In evaluating the financial health of the company, we look closely at its valuation metrics, specifically the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
The trailing twelve months (TTM) P/E ratio is currently 16.4, calculated from the latest net income of $6.7 million and a diluted earnings per share (EPS) of $0.22.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.5. This is derived from the current book value per share of approximately $3.88 and the current stock price of $5.82.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is reported at 9.2, calculated using an enterprise value of $66.8 million and adjusted EBITDA of $7.3 million.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated significantly, starting at $5.00 and peaking at $7.50. Currently, it trades at $5.82, reflecting a 16.4% decrease from its peak.
Dividend Yield and Payout Ratios
The company has declared a quarterly cash dividend of $0.05 per share, yielding an annual dividend yield of approximately 3.4%. The dividend payout ratio is around 22%, based on the latest earnings figures.
Analyst Consensus on Stock Valuation
Analysts have a mixed outlook on the stock, with a consensus rating of Hold. The average price target among analysts is $6.50, suggesting potential upside from the current trading price.
| Valuation Metric | Current Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | 16.4 |
| Price-to-Book (P/B) Ratio | 1.5 |
| Enterprise Value-to-EBITDA (EV/EBITDA) Ratio | 9.2 |
| Current Stock Price | $5.82 |
| Dividend Yield | 3.4% |
| Dividend Payout Ratio | 22% |
| Analyst Consensus Rating | Hold |
| Average Analyst Price Target | $6.50 |
Key Risks Facing LSI Industries Inc. (LYTS)
Key Risks Facing LSI Industries Inc. (LYTS)
Overview of internal and external risks impacting the company’s financial health:
- Industry Competition: The company faces intense competition in the lighting and display solutions sectors. In the three months ended September 30, 2024, net sales in the Lighting Segment decreased to $58.4 million from $67.6 million in the same period last year, a decline of 14% .
- Regulatory Changes: Changes in environmental regulations and standards can impact operational costs and product compliance, necessitating ongoing investments in compliance measures.
- Market Conditions: Economic downturns can lead to reduced spending in non-residential construction, affecting demand for the company’s products. The company reported an operating income of $5.8 million in the Lighting Segment for the three months ended September 30, 2024, down 34% from $8.8 million .
Discussion of operational, financial, or strategic risks highlighted in recent earnings reports or filings:
- Operational Risks: The company reported a decrease in gross profit to $18.6 million for the Lighting Segment, a 20% decline from the previous year . This decline is attributed to lower sales and changes in product mix.
- Financial Risks: The company has a long-term debt of $44.1 million as of September 30, 2024 . This represents a significant financial obligation that may impact liquidity and operational flexibility.
- Strategic Risks: The company’s acquisition of EMI Industries, LLC has added to its operational complexity, with acquisition costs reported at $48,000 . The integration of new businesses poses risks in achieving projected synergies and maintaining operational efficiency.
Mitigation strategies or plans:
- Cost Management Initiatives: The company reported a decrease in operating expenses by 11% to $12.9 million, driven by effective cost management .
- Diversification Strategies: The company is focusing on expanding its product offerings in higher-growth markets, such as Display Solutions, which saw a 43% increase in net sales to $79.7 million .
- Liquidity Management: As of September 30, 2024, the company had working capital of $86.8 million, up from $83.3 million . This indicates a strong liquidity position to navigate operational challenges.
| Risk Factor | Description | Impact | Mitigation Strategy |
|---|---|---|---|
| Industry Competition | Intense competition in lighting and display solutions sectors. | Sales decline of 14% in Lighting Segment. | Diversification into higher-growth markets. |
| Regulatory Changes | Changes in environmental regulations affecting costs. | Increased compliance costs. | Investments in compliance measures. |
| Market Conditions | Economic downturns reducing spending. | Lower demand for products. | Focus on cost management and liquidity. |
| Operational Risks | Decline in gross profit due to lower sales. | Operating income decrease of 34%. | Effective cost management initiatives. |
| Financial Risks | Long-term debt obligations impacting liquidity. | Potential financial strain. | Liquidity management with working capital. |
| Strategic Risks | Complexity from acquisitions affecting operations. | Integration challenges and synergy realization. | Focused integration strategies post-acquisition. |
Future Growth Prospects for LSI Industries Inc. (LYTS)
Future Growth Prospects for LSI Industries Inc. (LYTS)
Analysis of Key Growth Drivers
The company has recently expanded its market presence through the acquisition of EMI Industries, which contributed $26.2 million in sales during the three months ended September 30, 2024. This represents a significant driver for growth within the Display Solutions segment, which reported net sales of $79.7 million, a 43% increase from $55.8 million in the same period last year .
Future Revenue Growth Projections and Earnings Estimates
For the fiscal year 2025, the company anticipates a revenue growth trajectory based on the integration of newly acquired operations and enhanced product offerings. The total net sales for the three months ended September 30, 2024, reached $138.1 million, up from $123.4 million in the previous year, reflecting a 12% increase . Analysts project that this growth trend will continue, with earnings per share estimated at $0.26 for fiscal 2025 .
Strategic Initiatives and Partnerships
The company has entered strategic partnerships aimed at enhancing its product offerings and market reach. The acquisition of EMI Industries not only bolstered its sales figures but also allowed for a broader array of display solutions, positioning the company favorably within competitive markets. Additionally, ongoing investments in commercial initiatives are expected to drive further growth .
Competitive Advantages Positioning for Growth
LSI Industries possesses several competitive advantages, including a robust portfolio of LED lighting solutions and display technologies tailored for diverse market segments. The company reported an operating income of $9.1 million for the three months ended September 30, 2024, despite challenges in the Lighting segment, where net sales decreased to $58.4 million from $67.6 million . This resilience highlights the company's ability to adapt and maintain profitability even amidst market fluctuations.
| Metric | Q1 2024 | Q1 2023 | Change (%) |
|---|---|---|---|
| Net Sales | $138.1 million | $123.4 million | +12% |
| Display Solutions Segment Sales | $79.7 million | $55.8 million | +43% |
| Lighting Segment Sales | $58.4 million | $67.6 million | -14% |
| Operating Income | $9.1 million | $11.0 million | -17% |
| Earnings Per Share (Diluted) | $0.22 | $0.27 | -18.5% |
As of September 30, 2024, the company reported a net debt to adjusted EBITDA ratio of 0.8, indicating strong financial health and capacity to invest in growth opportunities . With a favorable cash flow from operations of $11.8 million, LSI Industries is well-positioned for continued investment in its growth initiatives .
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Updated on 16 Nov 2024
Resources:
- LSI Industries Inc. (LYTS) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of LSI Industries Inc. (LYTS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View LSI Industries Inc. (LYTS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.