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

September 02, 2009 | About:

LSI Industries Inc. (LYTS) filed Quarterly Report for the period ended 2009-03-31.

LSI Industries is an Image Solutions company combining integrated design manufacturing & technology to supply its own high quality lighting fixtures and graphics elements for applications in the retail specialty niche & commercial markets. The Company's Lighting Segment produces high performance products dedicated to the outdoor architectural outdoor indoor architectural indoor and accent/downlight markets. The Graphics Segment provides a vast array of products and services including signage menu board systems active digital signage decorative fixturing design support engineering & project management for custom programs for today's retail environment. The Company's Technology Segment develops and designs high performance light engines digital signage and other products using LED lighting technology including large format LED video screens for the entertainment & sports markets. LSI's major markets are the petroleum convenience store multisite retail & the commer Lsi Industries Inc. has a market cap of $151 million; its shares were traded at around $7 with a P/E ratio of 233.4 and P/S ratio of 0.7. The dividend yield of Lsi Industries Inc. stocks is 2.9%. Lsi Industries Inc. had an annual average earning growth of 8% over the past 5 years.

Highlight of Business Operations:

Lighting Segment net sales of $33,562,000 in the third quarter of fiscal 2009 decreased 22.9% from fiscal 2008 third quarter net sales of $43,554,000. The $10.0 million decrease in Lighting Segment net sales is primarily the result of a $3.8 million or 15% decrease in commissioned net sales to the commercial / industrial lighting market, and a $6.2 million or 33% net decrease in lighting sales to our niche markets of petroleum / convenience stores, automotive dealerships, and national retail accounts. Sales of lighting to the petroleum / convenience store market represented 20% and 15% of Lighting Segment net sales in the third quarters of fiscal years 2009 and 2008, respectively. Net sales of lighting to this, the Company’s largest niche market, were up nearly 2% from last year to $6,706,000. The petroleum / convenience store market has been, and will continue to be, a very important niche market for the Company. Net sales of products and services related to solid-state LED lighting totaled $1.8 million and $1.0 million in the three month periods ended March 31, 2009 and 2008, respectively.

Graphics Segment net sales of $11,327,000 in the third quarter of fiscal 2009 decreased 20.8% from fiscal 2008 third quarter net sales of $14,305,000. The $3.0 million decrease in Graphics Segment net sales is primarily the result of completion of programs for certain graphics customers, including an image conversion program for a national drug store retailer ($1.2 million decrease), two petroleum / convenience store customers’ programs ($2.4 million decrease) and changes in volume or completion of other graphics programs. These decreases were partially offset by increased net sales to certain other customers, including a reimaging program for a grocery customer ($0.6 million increase), and sales of solid-state LED video screens for sports markets ($1.1 million increase). Sales of graphics products and services to the petroleum / convenience store market represented 41% and 53% of Graphics Segment net sales in the third quarters of fiscal years 2009 and 2008, respectively. Net sales of graphics to this, the Company’s largest niche market, were down nearly 39% from last year to $4,623,000. The petroleum / convenience store market has been, and will continue to be, a very important niche market for the Company. Net sales of products and services related to solid-state LED video screens totaled $1.2 million in the three month period ended March 31, 2009, with no such sales in the same period last year.

Selling and administrative expenses, which includes Corporate administration expenses, of $2,657,000 in the third quarter of fiscal year 2009 decreased $1.2 million. Changes of expense between years include decreased employee compensation and benefits expense ($0.4 million), decreased customer relations expense ($0.2 million), decreased research and development expense ($0.2 million), decreased legal fees ($0.2 million), decreased depreciation expense ($0.1 million) and decreased warranty expense ($0.1 million).

Selling and administrative expenses of $22,123,000 in the first nine months of fiscal year 2009 decreased $1.7 million, and decreased to 17.5% as a percentage of Lighting Segment net sales from 17.6% in the same period last year. Employee compensation and benefits expense increased $0.1 million in the first nine months of fiscal 2009 as compared to the same period last year, and other changes of expense between years include decreased sales commission expense ($1.6 million), decreased advertising and literature expense ($0.2 million), increased bad debt expense ($0.1 million), increased research and development expense ($0.6 million), decreased customer relations expense ($0.2 million) and increased outside services expense ($0.1 million).

Graphics Segment net sales of $46,354,000 in the first nine months of fiscal 2009 decreased 35.5% from fiscal 2008 nine month net sales of $71,814,000. The $25.5 million decrease in Graphics Segment net sales is primarily the result of completion of programs for certain graphics customers, including an image conversion program for a national drug store retailer ($4.8 million decrease), two petroleum / convenience store customers’ programs ($28.5 million decrease) and changes in volume or completion of other graphics programs. These decreases were partially offset by increased net sales to certain other customers, including a reimaging program for a grocery customer ($8.4 million increase), and sales of solid state LED video screens for sports markets ($6.2 million increase). Sales of graphics products and services to the petroleum / convenience store market represented 38% and 67% of Graphics Segment net sales in the first nine months of fiscal years 2009 and 2008, respectively. Net sales of graphics to this, the Company’s largest niche market, were down nearly 64% from last year to $17,515,000. The petroleum / convenience store market has been, and will continue to be, a very important niche market for the Company. Net sales of products and services related to solid state LED video screens totaled $6.2 million in the nine month period ended March 31, 2009, with no such sales in the same period last year.

Selling and administrative expenses of $7,096,000 in the first nine months of fiscal year 2009 decreased $1.7 million, and increased to 15.3% as a percentage of Graphics Segment net sales from 12.3% in the same period last year. Employee compensation and benefits expense decreased $0.7 million in the first nine months of fiscal 2009 as compared to the same period last year, and other changes of expense between years include decreased bad debt expense ($0.3 million), decreased customer relations expense ($0.3 million), decreased outside services expense ($0.3 million) decreased travel and entertainment ($0.1 million), decreased research and development ($0.1 million) and decreased supplies expense ($0.1 million).

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