Earnings Results under Review: LSI Industries Inc. (NASDAQ: LYTS)

On Thursday, Shares of LSI Industries Inc. (NASDAQ: LYTS) lost -0.48% to $8.24. The stock opened its trade at $8.31 and after floating in a price range of $8.22 to $8.38; the stock grabbed the investor’s attention and traded 18,228 shares as compared to its average daily volume of 106.62K shares. The stock’s institutional ownership stands at 75.10%.

LSI Industries Inc. (LYTS) recently declared:

Net sales in the second quarter of fiscal 2018 were $92.305M, a boost of 8% contrast to the $85.658M stated in the second quarter of the prior year. The Company stated a one-time after-tax charge of $4.676M to reduce the value of its deferred tax assets as a result of the new lower corporate tax rate included in the recently enacted “Tax Cut and Jobs Act” (TCJA) legislation. As a result, the Company stated a GAAP net loss of $(1.468M). See reconciliation in Non-GAAP measures below.  Adjusted net income was $3.267M in Q2 FY 2018 as compared to $2.477M in Q2 FY 2017.  GAAP EPS after the tax adjustment was a loss of $(0.06) as compared to $0.08 in the second quarter of FY 2017.  Adjusted EPS of $0.12 is $0.02 above second quarter of the prior year.  The Company declared a regular cash dividend of $0.05 per share payable February 13, 2018 to shareholders of record on February 5, 2017.

Second Quarter Fiscal 2018 Results:

Net sales in the second quarter of fiscal 2018 were $92.305M, up 7.8% from last year’s second quarter net sales of $85.658M.  Lighting Segment net sales of $69.174M were up 6.3% from last year’s second quarter net sales and Graphics Segment net sales increased 12.4% to $23.131M. The former Technology Segment net sales and operating results are now included in the Lighting Segment and prior year segment results have been revised accordingly. In the second quarter of fiscal 2017 the Company recorded pre-tax restructuring costs of $697.0K ($640.0K was expensed in Cost of Products Sold and $57.0K was expensed in Selling and Administrative expenses).  The Company incurred net pre-tax other severance expense of $83.0K and $28.0K in the second quarter of fiscal 2018 and fiscal 2017, respectively. The fiscal 2018 second quarter net loss of $(1.468M), or $(0.06) per share, contrast to the fiscal 2017 second quarter net income of $2.006M or $0.08 per share. The fiscal 2018 second quarter net loss includes a one-time after-tax charge of $4.70M tax adjustment related to the revaluation of the Company’s deferred tax assets as a result of the lower tax rates included in the Tax Cut and Jobs Act. Earnings per share represent diluted earnings per share.

First Half Fiscal 2018 Results:

Net sales in the first half of fiscal 2018 were $179.771M, a boost of 5.9% as contrast to last year’s first half net sales of $169.817M.  Lighting Segment net sales increased 5.5% to $137.602M and Graphics Segment net sales increased 6.8% to $42.169M. The former Technology Segment net sales and operating results are now included in the Lighting Segment and prior year segment results have been revised accordingly. In the first half of fiscal 2017 the Company recorded pre-tax restructuring costs of $1.353M ($1.143M was expensed in Cost of Products Sold and $210.0K was expensed in Selling and Administrative expenses) and plant closure costs related to an inventory write-down of $400.0K as the Company exited the manufacturing of fluorescent lighting fixtures  — combining to a total of $1.753M. Moreover, the Company recorded other severance costs of $83.0K and $173.0K in the first half of fiscal 2018 and 2017, respectively. The first half fiscal 2018 net loss of $(17.097M), or $(0.66), contrast to the fiscal 2017 first half net income of $2.835M, or $0.11 per share. The fiscal 2018 first half net loss includes a one-time after-tax charge of $4.70M related to the revaluation of the Company’s deferred tax assets as a result of the lower tax rates included in the Tax Cut and Jobs Act and a pre-tax goodwill impairment in the Lighting Segment of $28.000M. Earnings per share represent diluted earnings per share.

Balance Sheet:

The balance sheet at December 31, 2017 included current assets of $115.30M, current liabilities of $42.50M and working capital of $72.80M, which includes cash of $3.20M.  The current ratio was 2.7 to 1.  The Company has shareholders’ equity of $142.30M and $52.10M of long-term debt on its balance sheet as of December 31, 2017. With continued strong cash flow, a sound balance sheet, and $47.90M available in its credit facility, LSI Industries believes its financial condition is sound and is capable of supporting the Company’s planned growth, counting acquisitions, if any.

LYTS has a market value of $212.05M while its EPS was booked as $-0.66 in the last 12 months. The stock has 25.61M shares outstanding. In the profitability analysis, the company has gross profit margin of 26.10% while net profit margin was -5.00%. Beta value of the company was 1.68; beta is used to measure riskiness of the security. Analyst recommendation for this stock stands at 1.70.

 I am Wayne Parsons and I have over 16 years experience in the financial services industry giving me a vast understanding of how news affects the financial markets. I am an active day trader spending the majority of my time analyzing earnings reports and watching commodities and derivatives. I have a Masters Degree in Economics from Westminster University with previous roles counting Investment Banking.

Email: wayne.parsons@nasdaqexpress.com

Wayne Parsons

 I am Wayne Parsons and I have over 16 years experience in the financial services industry giving me a vast understanding of how news affects the financial markets. I am an active day trader spending the majority of my time analyzing earnings reports and watching commodities and derivatives. I have a Masters Degree in Economics from Westminster University with previous roles counting Investment Banking.Email: wayne.parsons@nasdaqexpress.com