LSI Industries

This is the kind of company that's all around you all of the time. You're usually attracted to their products and other companies rely on that fact to attract you to their products. And you really don't realize that you're looking at this company's products. You see them but you don't really notice them. Welcome to the world of LSI Industries. 
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​LSI Industries Inc. provides corporate visual image solutions in the United States, Canada, Australia, Latin America, Europe, and the Middle East. It operates through Lighting, Graphics, and Technology segments. The Lighting segment manufactures and markets outdoor and indoor lighting and lighting controls for the commercial, industrial, niche, and multi-site retail markets, including the petroleum/convenience store, quick-service, and automotive markets. It primarily offers exterior area, interior, canopy, and landscape lightings; and lighting controls, light poles, lighting analysis, and photometric layouts, as well as solid-state LED solutions. The Graphics segment manufactures and sells exterior and interior visual image elements used in graphics displays and visual image programs in various markets, including the petroleum/convenience store market and multi-site retail operations. It provides signage and canopy graphics, pump dispenser graphics, building fascia graphics, decals, interior signage and marketing graphics, aisle markers, wall mural graphics, fleet graphics, prototype program graphics, digital signage and media content management, and installation services for graphics products. The Technology segment designs, engineers, and manufactures electronic circuit boards, assemblies, lighting controls, and solid state LED video displays for use in OEM, transportation, commercial, industrial, entertainment, sports, and medical markets. LSI Industries Inc. was founded in 1976 and is headquartered in Cincinnati, Ohio.
(Summary) (Company) (Chart)

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13 April 2016
Price $13.06
1yr Target $15.00
Analysts 1
Dividend $0.20
Payout Ratio 52.63%

1yr Cap Gain 14.85%
Yield 1.53%
1yr Tot Return 16.38%
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P/E 34.55
PEG 1.73
Beta 1.51
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EPS (ttm) $0.38
EPS next yr $0.51
EPS next 5yr 20.00%
1yr Price Support $10.20

​Market Cap $316.97 Mil
Revenues $315.30 Mil
Earnings $9.60 Mil
Profit Margin 3.04%

Quick Ratio 2.50
Current Ratio 3.90
Debt/Equity 0.00
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1yr RevGR 2.80%
3yr RevGR 4.62%
5yr RevGR 3.88%

1yr EarnGR 525.00%
3yr EarnGR 17.14%
5yr EarnGR 28.47%

​1yr DivGR 11.00%
3yr DivGR 3.53%
5yr DivGR 5.92%

ROA 5.20%
ROE 6.50%
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LSI Graphic Solutions

Operating Units 
 
LSI Industries is a leading provider of comprehensive corporate visual image solutions through the combination of extensive digital and screen graphics capabilities, a wide variety of high quality indoor and outdoor lighting products, lighting control systems, and related professional services. They also provide graphics and lighting products and professional services on a stand-alone basis. LSI Industries is the leading provider of corporate visual image solutions to the petroleum/convenience store industry and they use their leadership position to penetrate national retailers and multi-site retailers, including quick service and casual restaurants, retail chain stores and automobile dealerships. In addition, they are a provider of digital solid-state LED (light emitting diode) video screens to sports stadiums and arenas. They design and develop all aspects of their solid-state LED lighting and video screens, from the electronic circuit board, to the software to drive and control the LEDs, to the structure of the LED product. 
 
LSI Industries is expanding the traditional commercial/industrial lighting market by combining their LED product innovation and lighting control solutions with a strong emphasis on high service levels, U.S. manufactured products and market focused solutions. They offer a complete line of energy efficient exterior and interior lighting products and their lighting and graphic solutions are targeted to both energy retrofit and new construction markets.
 
The integration of the company's graphics, lighting, technology and professional services capabilities allows their customers to outsource the development of an entire visual image program from the planning and design stage through installation. The company's approach is to combine standard, high-production lighting products, custom graphics applications and professional services to create complete customer-focused visual image solutions. They also offer products and services on a stand-alone basis to service their existing image solutions customers, to establish a presence in a new market or to create a relationship with a new customer. 

The company's focus on product development and innovation creates products that are essential components of their customers’ corporate visual image strategy. LSI Industries spending on research and development was $5.6 million in fiscal 2015, $8.2 million in fiscal 2014, and $6.5 million in fiscal 2013.  Representative customers include BP, Chevron Texaco, 7-Eleven, ExxonMobil, Shell, Burger King, Dairy Queen, Taco Bell, Wendy’s, Best Buy, CVS Caremark, JC Penney, Target Stores, Wal-Mart Stores, Chrysler, Ford, General Motors, Nissan, and Toyota. LSI services their customers at the corporate, franchise and local levels. 
 
The company is organized into three segments and a catch all category: (1) the Lighting Segment, which represented 71% of our fiscal 2015 net sales; (2) the Graphics Segment, which represented 21% of our fiscal 2015 net sales; (3) the Technology Segment, which represented 7% of our fiscal 2015 net sales; and an All Other Category, which reported net sales of less than 1% in fiscal 2015.
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​Lighting Segment 
 
The Lighting Segment manufactures and markets outdoor and indoor lighting and lighting controls for the commercial, industrial, niche, and multi-site retail markets, including the petroleum/convenience store, quick-service, and automotive markets. The products are designed and manufactured to provide maximum value and meet the high-quality, competitively-priced product requirements of the company's niche markets. LSI generally avoids specialty or custom-designed, low-volume products for single order opportunities and concentrate on proprietary products used by their national account customers in large volume. Their concentration is on our high-volume, standard product lines that meet their customers’ needs and by focusing their product offerings, they normally achieve significant manufacturing and cost efficiencies. 
 
LSI's lighting fixtures, poles and brackets are produced in a variety of designs, styles and finishes. Important functional variations include types of mounting, such as pole, bracket and surface, and the nature of the light requirement, such as down-lighting, wall-wash lighting, canopy lighting, flood-lighting, area lighting and security lighting. Their engineering staff performs photometric analyses and wind load safety studies for all light fixtures and also designs their fixtures and lighting systems. Their lighting products utilize a wide variety of different light sources, including solid-state LED, high-intensity discharge metal-halide, and fluorescent. Major products and services offered within the lighting segment include: exterior area lighting, interior lighting, canopy lighting, landscape lighting, lighting controls, light poles, lighting analysis, and photometric layouts. All of these products are designed for performance, reliability, ease of installation and service, as well as attractive appearance. The company also has a focus on designing lighting system solutions and implementing strategies related to energy savings in substantially all markets served. 
 
LSI offers their customers expertise in developing and utilizing high-performance solid-state LED solutions, which when combined with the company’s lighting fixture expertise and technology, has the potential to result in a broad spectrum of white light LED fixtures that offer equivalent or improved lighting performance with significant energy and maintenance savings as compared to the present metal halide and fluorescent lighting fixtures. 
 
Lighting Segment net sales of $219,920,000 in fiscal 2015 decreased 1.2% from fiscal 2014 net sales of $222,604,000. The Lighting Segment’s net sales of light fixtures having solid-state LED technology totaled $127.0 million in fiscal 2015 (58% of total lighting net sales), representing a $27.1 million or 27.2% increase from fiscal 2014 net sales of solid-state LED light fixtures of $99.9 million (45% of total lighting net sales). There was a reduction in the company’s traditional lighting sales (metal halide and fluorescent light sources) from fiscal 2014 to fiscal 2015 as customers converted from traditional lighting to light fixtures having solid-state LED technology.
 
Graphics Segment 
 
The Graphics Segment manufactures and sells exterior and interior visual image elements related to graphics. These products are used in graphics displays and visual image programs in several markets, including the petroleum / convenience store market and multi-site retail operations. The company's extensive lighting and graphics expertise, product offering, visual image solution implementation capabilities and other professional services represent significant competitive advantages. They work with corporations and design firms to establish and implement cost effective corporate visual image programs. They also offer installation management services for those customers who require the installation of interior or exterior products (utilizing pre-qualified independent subcontractors throughout the United States).

The business can be significantly impacted by participation in a customer’s “image conversion program,” especially if it were to involve a “roll out” of that new image to a significant number of that customer’s and its franchisees’ retail sites. The impact to LSI can be very positive with growth in net sales and profitability. This can be followed in subsequent periods by lesser amounts of business or negative comparisons following completion of an image conversion program. An image conversion program can potentially involve any or all of the following improvements, changes or refurbishments at a customer’s retail site: interior or exterior lighting (see discussion above about our lighting segment), interior or exterior store signage and graphics, and installation of these products in both the prototype and roll out phases of their program.  
 
The major products and services offered within the Graphics Segment include the following: signage and canopy graphics, pump dispenser graphics, building fascia graphics, decals, interior signage and marketing graphics, aisle markers, wall mural graphics, fleet graphics, prototype program graphics, digital signage and media content management, and installation services for graphics products. 
 
The Graphics Segment net sales of $64,895,000 in fiscal 2015 increased $13.9 million or 27.3% from fiscal 2014 net sales of $50,970,000.  The $13.9 million increase in Graphics Segment net sales is primarily the net result of image conversion programs and sales to several petroleum / convenience store customers ($3.0 million net increase), a national drug store retailer ($0.4 million decrease), several quick-service restaurant chains ($8.4 million increase), two commercial customers ($0.9 million increase), one banking customer ($0.8 million increase), and changes in volume or completion of several other smaller graphics programs in various markets ($1.3 million increase). The Graphics Segment net sales of graphic identification products that contain solid-state LED light sources and LED lighting for signage totaled $1.4 million in fiscal 2015, representing a $1.0 million decrease from fiscal 2014 net sales of $2.4 million.
 
Technology Segment 
 
The Technology Segment designs, engineers, and manufactures electronic circuit boards, assemblies, lighting controls and large format solid state LED video displays. Applications for these products include but are not limited to OEM, transportation, commercial, industrial, entertainment, sports, and medical markets.  This segment also has significant inter-segment sales to the Lighting Segment to support that segment’s customer sales of solid-state LED lighting and lighting controls.    
 
Technology Segment net sales of $23,001,000 in fiscal 2015 decreased $1.5 million or 6.2% from fiscal 2014 net sales of $24,515,000. The $1.5 million decrease in Technology Segment net sales is primarily the net result of a $0.5 million decrease in sales to the telecommunications market, a $0.3 million decrease in sales to the transportation market, a $1.4 million increase in sales to original equipment manufacturers, a $0.3 million increase in sales to the medical markets, a $2.8 million decrease in sales to the sports market, and a $0.4 million increase in sales to various other markets. In addition to the Segment’s decrease in customer sales, its inter-segment sales decreased 14.1% due to decreased intercompany demand of LED circuit board assemblies used in light fixtures having solid-state LED technology. The Technology Segment’s net sales related to LED video screens totaled $2.3 million in fiscal 2015, representing a $2.8 million or 55.1% decrease from fiscal 2014 net sales of $5.0 million.
 

​My Perspective
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This is a pretty small company and not normally one I would be interested in, but it showed up on one of my screens and I found the chart rather interesting. I also liked the fact that this company had no debt and it could cover its liabilities several times over ensuring the continuation and growth of their dividend. 

Unfortunately it looks like I found this three weeks too late. Three weeks ago an investor could have snapped up these shares for $11 per share which would have increased the estimated one year stock growth to 36.36% and the yield to 1.81%.  

As a result, I place this company on my watch list with the intent to start a position on any pullback below $12 and near its 20 week moving average. 

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