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LSI Industries Inc. Reports Operating Results (10-Q)

May 03, 2012 | About:
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10qk

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LSI Industries Inc. (LYTS) filed Quarterly Report for the period ended 2012-03-31.

Lsi Industries has a market cap of $169 million; its shares were traded at around $6.54 with a P/E ratio of 46.9 and P/S ratio of 0.6. The dividend yield of Lsi Industries stocks is 3.4%.

Highlight of Business Operations:

Fiscal 2012 nine month net sales of $197,206,000 decreased $22.1 million or 10.1% as compared to the same period of fiscal 2011. Net sales were favorably influenced by increased net sales of the Lighting Segment (up $6.7 million or 4.7%) and the All Other Category (up $0.9 million or 21.7%). Net sales were unfavorably influenced by Graphics Segment (down $26.9 million or 47.7%), and the Electronic Components Segment (down $2.8 million or 17.6%). Net sales to the petroleum / convenience store market, the Company s largest niche market, were $54,696,000 or 27.7% of total net sales and $84,095,000 or 38.4% of total net sales in the first nine months of fiscal 2012 and 2011, respectively. The $29.4 million or 35% drop is primarily due to the completion of the program with 7-Eleven, Inc., who replaced traditional canopy, site and sign lighting with solid-state LED lighting. Net sales to this petroleum / convenience store customer are reported in both the Lighting and Graphics segments. Page 21 The Company s total net sales related to solid-state LED technology in light fixtures and video screens for sports, advertising and entertainment markets have been recorded as indicated in the table below. In addition, the Company sells certain elements of graphic identification programs that contain solid-state LED light sources.

LED net sales include sales of LED lighting products, certain graphics products containing LEDs, and LED video and sports screens. Third quarter fiscal 2012 LED net sales of $17,285,000 were $4.3 million or 33.5% higher than the same period of the prior year. The $17,285,000 total LED net sales and the $4.3 million increase are primarily the net result of Lighting Segment LED net sales of $16,702,000 (up $4.4 million or 35.8%) and Graphics Segment LED net sales of $0.1 million (down $0.2 million or 73.3%). First nine month fiscal 2012 total LED net sales of $53,598,000 and the $6.4 million or 13.6% increase over the same period of the prior year are primarily the net result of Lighting Segment LED net sales of $51.7 million (up $9.8 million or 23.4%), Graphics Segment LED net sales of $0.8 million (down $2.8 million or 76.9%) and All Other Category LED net sales of $1.1 million (down $0.6 million or 36.9%). (Net sales reflect the reclassification of the LED video screen product line from the Graphics Segment to the Lighting Segment. See Note 3.)

LED net sales include sales of LED lighting products, certain graphics products containing LEDs, and LED video and sports screens. Third quarter fiscal 2012 LED net sales of $17,285,000 were $4.3 million or 33.5% higher than the same period of the prior year. The $17,285,000 total LED net sales and the $4.3 million increase are primarily the net result of Lighting Segment LED net sales of $16,702,000 (up $4.4 million or 35.8%) and Graphics Segment LED net sales of $0.1 million (down $0.2 million or 73.3%). First nine month fiscal 2012 total LED net sales of $53,598,000 and the $6.4 million or 13.6% increase over the same period of the prior year are primarily the net result of Lighting Segment LED net sales of $51.7 million (up $9.8 million or 23.4%), Graphics Segment LED net sales of $0.8 million (down $2.8 million or 76.9%) and All Other Category LED net sales of $1.1 million (down $0.6 million or 36.9%). (Net sales reflect the reclassification of the LED video screen product line from the Graphics Segment to the Lighting Segment. See Note 3.)

Lighting Segment net sales of $149,411,000 in the first nine months of fiscal 2012 increased 4.7% from fiscal 2011 same period net sales of $142,700,000. The $6.7 million increase in Lighting Segment net sales is primarily the result of a $5.4 million or 8.3% net increase in lighting sales to our niche markets and national retail accounts, and a $1 million or 1.5% decrease in commissioned net sales to the commercial / industrial lighting market. The Company replaced certain commissioned sales representatives during fiscal 2012, which has the short-term effect of disrupting sales with a view towards strategic sales growth in the long-term. Lighting Segment sales to the international markets increased 21.4% to $10.2 million. Sales of lighting to the petroleum / convenience store market represented 27.9% and 30.0% of Lighting Segment net sales in the first nine months of fiscal years 2012 and 2011, respectively. Lighting Segment net sales of lighting to this, the Company s largest niche market, were down 2.0% from last year to $41,608,000. Included in the net change, and offsetting other increases, was a $9.6 million decrease related to the December 2010 conclusion of a program with 7-Eleven, Inc., who replaced traditional canopy, site and sign lighting with solid-state LED lighting. The petroleum / convenience store market has been, and will continue to be, a very important niche market for the Company. The Lighting Segment s net sales of light fixtures having solid-state LED technology totaled $50.3 million in the first nine months of fiscal 2012, representing a 22.8% increase from the first nine month of fiscal 2011 net sales of solid-state LED light fixtures of $40.9 million. The Lighting Segment s net sales related to LED video screens totaled $1.4 million, representing a 45.8% increase from the first nine months of fiscal 2011 sales of $1 million. Gross profit of $34,208,000 in the first nine months of fiscal 2012 increased $1.8 million or 5.5% from the same period in fiscal 2011, and increased from 22.3% to 22.6% as a percentage of Lighting Segment net sales (customer plus inter-segment net sales). The increase in amount of gross profit is due to the net effect of increased net sales, efficiencies gained in direct labor, decreased overhead absorption, increased employee compensation and benefits expense ($0.2 million), increased customer returns and concessions expense ($1.1 million), increased warranty expense ($0.2 million), decreased utility expense ($0.2 million), decreased outside service expense ($0.1 million), and decreased rent and lease expense ($0.2 million). An increase in warranty expense is directly related to the increase in sales of light fixtures having solid-state LED technology and therefore have a higher content of LSI developed proprietary components. Such warranty expenses are more common when new products containing new technologies are developed and introduced to the market. The Company has addressed the weaknesses of the earlier product designs and it is anticipated that a decrease in warranty expense will occur in future quarters.

Lighting Segment net sales of $149,411,000 in the first nine months of fiscal 2012 increased 4.7% from fiscal 2011 same period net sales of $142,700,000. The $6.7 million increase in Lighting Segment net sales is primarily the result of a $5.4 million or 8.3% net increase in lighting sales to our niche markets and national retail accounts, and a $1 million or 1.5% decrease in commissioned net sales to the commercial / industrial lighting market. The Company replaced certain commissioned sales representatives during fiscal 2012, which has the short-term effect of disrupting sales with a view towards strategic sales growth in the long-term. Lighting Segment sales to the international markets increased 21.4% to $10.2 million. Sales of lighting to the petroleum / convenience store market represented 27.9% and 30.0% of Lighting Segment net sales in the first nine months of fiscal years 2012 and 2011, respectively. Lighting Segment net sales of lighting to this, the Company s largest niche market, were down 2.0% from last year to $41,608,000. Included in the net change, and offsetting other increases, was a $9.6 million decrease related to the December 2010 conclusion of a program with 7-Eleven, Inc., who replaced traditional canopy, site and sign lighting with solid-state LED lighting. The petroleum / convenience store market has been, and will continue to be, a very important niche market for the Company. The Lighting Segment s net sales of light fixtures having solid-state LED technology totaled $50.3 million in the first nine months of fiscal 2012, representing a 22.8% increase from the first nine month of fiscal 2011 net sales of solid-state LED light fixtures of $40.9 million. The Lighting Segment s net sales related to LED video screens totaled $1.4 million, representing a 45.8% increase from the first nine months of fiscal 2011 sales of $1 million.

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