LSI Industries : Q2 2021 LSI Industries Inc Earnings

SECOND QUARTER FISCAL 2021 RESULTS

CONFERENCE CALL PRESENTATION January 21, 2021

DISCLAIMER

This presentation contains "forward-lookingstatements"-that is, statements related to future events within the meaning of the Private Securities Litigation Reform Act of 1995. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In this context, forward-looking statements often address our expected future business, financial performance, financial condition and results of operations, often contain words such as "estimates," "targets," "anticipates," "hopes," "projects," "plans," "expects," "intends," "believes," "seeks," "may," "will," "see," "should" and similar expressions and the negative versions of those words, and may be identified by the context in which they are used. Such statements, whether expressed or implied, are based upon current expectations of LSI and speak only as of the date made. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from those expressed or implied. Forward-looking statements include statements that address activities, events or developments that LSI expects, believes or anticipates will or may occur in the future, such as earnings estimates (including projections and guidance) and other predictions of financial performance. Forward-looking statements are based on LSI's experience and perception of current conditions, trends, expected future developments and other factors it believes are appropriate under the circumstances and are subject to numerous risks and uncertainties, many of which are beyond LSI's control. These risks and uncertainties include, but are not limited to the following: the impact of competitive products and services; product and pricing demands, and market acceptance risks; LSI's reliance on third-party manufacturers and suppliers; LSI's stock price volatility; potential costs associated with litigation, other proceedings and regulatory compliance; LSI's ability to develop, produce and market quality products that meet customers' needs; information technology security threats and computer crime; reliance on key customers; financial difficulties experienced by customers; the cyclical and seasonal nature of our business; the adequacy of reserves and allowances for doubtful accounts; failure of an acquisition or acquired company to achieve its plans or objectives generally; unexpected difficulties in integrating acquired businesses; the ability to retain key employees, including key employees of acquired businesses; unfavorable economic and market conditions; the results of asset impairment assessments; risks related to disruptions or reductions in business operations or prospects due to pandemics, epidemics, widespread health emergencies, or outbreaks of infectious diseases such as the coronavirus disease COVID-19; and the other risk factors LSI describes from time to time in SEC filings. You are cautioned to not place undue reliance on these forward-looking statements. LSI does not guarantee any forward-looking statement, and actual results may differ materially from those projected. LSI undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, circumstances or otherwise. Additional descriptions of risks, uncertainties and other matters can be found in our annual reports on Form 10-K and quarterly reports on Form 10-Q that we file with the SEC and are incorporated herein by reference. Our public communications and other reports may contain forward-looking projected financial information that is based on current estimates and forecasts. Actual results could differ materially.

©2021 LSI INDUSTRIES

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KEY MESSAGES

Advancing Business Transformation

Continued strategic focus on higher margin vertical market applications, customer driven new product development, manufacturing excellence and disciplined capital management

Improved Consolidated Financial Results

9% quarter-over-quarter sales improvement; Year-over- year growth in adjusted gross profit rate, adjusted operating income, adjusted EBITDA and adjusted net income

Margin Expansion Across Segments

Focus on higher-value business resulted in 140 bps and

280 bps of gross margin rate expansion on a year-over- year basis in both the Lighting and Graphics segments, respectively

Stable Free Cash Flow Supports Growth in Liquidity

Generated $5.3 million of free cash flow in F2Q21; no long-term debt outstanding; total cash and credit facility availability of $89 million at end of F2Q21

Ongoing Investment in Commercial Initiatives

Focused on new product development launches, investment in new business development resources and product marketing programs

Near-Term Market Outlook

With the resurgence of COVID, market recovery may remain inconsistent, over the near-term

©2021 LSI INDUSTRIES

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CONSOLIDATED FINANCIAL RESULTS

• Sequential sales growth despite pandemic-related market challenges
• Graphics sales increased, while Lighting sales maintained prior- quarter levels
• Higher operating income driven by 160 bps improvement in gross margin and continued lower operating expenses

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Total Net Sales ($M)

		9% q/q sales growth
$82.4	$70.0	$76.4

F2Q20F1Q21F2Q21

Net Income ($M)

			+47% y/y increase in Adjusted Net Income
				$2.2	$2.5
$1.7			$1.7
					$0.08 per	$0.09 per
$0.07 per	$0.07 per		share
	share
share	share
	F2Q20				F2Q21
		Reported Net Income		Adjusted Net Income

Operating Income ($M)

		130 bps y/y improvement to 4.1% of sales
			$2.7	$3.1
$2.3
$1.8
		F2Q20			F2Q21
		Reported Operating Income		Adjusted Operating Income

Non-GAAP Adjusted EBITDA ($M)

+15% y/y increase in Adjusted EBITDA

$5.1

$4.4

F2Q20

F2Q21

©2021 LSI INDUSTRIES

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