LSI Industries : Q2 2023 LSI Industries Inc Earnings

Second Quarter

Fiscal 2023 Results

Conference Call

January 26, 2023

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 ofthose 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; substantial changes to the refueling and convenience store and grocery markets; 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; LSI's ability to adequately protect intellectual property; information technology security threats and computer crime; reliance on customers and partner relationships; financial difficulties experienced by customers; the cyclical and seasonal nature of our business; the adequacy of reserves and allowances for doubtful accounts; the failure of investments, acquisitions or acquired companies to achieve their plans or objectives generally; unexpected difficulties in integrating acquired businesses; the inability to effectively execute our business strategies; the ability to retain key employees, including key employees of acquired businesses; labor shortages or an increase in labor costs; changes in shift in product mix; unfavorable economic, political, and market conditions, including interest rate fluctuations; changes in U.S. trade policy; the results of asset impairment assessments; risks related to disruptions or reductions in business operations or prospects due to international conflicts and wars, pandemics, epidemics, widespread health emergencies, or outbreaks of infectious diseases such as the coronavirus disease COVID-19; price increases of materials; significant shortages of materials; shortages in transportation; increases in fuel prices; sudden or unexpected changes in customer creditworthiness; not recognizing all revenue or not receiving all customer payments; write-offs or impairment of capitalized costs or intangible assets in the future or restructuring costs; anti-takeover provisions in LSI's organizational documents and in Ohio law; and the other risk factors LSI describes from time to time in SEC filings. There may be additional risks of which we are not presently aware or that we currently believe are immaterial which could have an adverse impact on our business.

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. Actualresults could differ materially.

©2023 LSI INDUSTRIES

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30.226%.1%

MarginMarginRateRate

KEY MESSAGES

Strong F2Q23 performance led by continued y/y Sales volume growth, disciplined pricing, and improved mix

Reported y/y growth in sales, operating income, net income, adjusted EBITDA and free cash flow

Balanced growth across Lighting and Display Solutions

Sustained growth across key performance indicators

Net sales +16% y/y; adj. operating income +79% y/y; adjusted net income +80% y/y; supported by continued growth in commercial sales volumes, disciplined pricing

Continued margin rate expansion across segments

Adj. EBITDA margin +250 bps y/y to 10.1% - 2nd consecutive quarter of above 10% EBITDA margin; Lighting segment and Display Solutions EBITDA margin +160 bps y/y and 510 bps y/y, respectively

Vertical market strategy driving sustained sales growth

Strong organic share gains in targeted vertical markets; Lighting Segment sales increased 17% y/y, supported by strength across indoor and outdoor; Display Solutions segment sales +15% y/y due to strength in fueling/c-store and grocery/merchandising.

Significant, improved free cash flow generation

Generated more than $30 million in LTM free cash flow through the end of F2Q23; FCF increased $18 million y/y in F2Q23; FCF conversion approaching 70%

Segments

Net leverage at its lowest level in 7 quarters

Focused capital allocation strategy

Reduced total net debt outstanding by$0$.25/ million on an LTM basis; Net leverage ofShare1.3x at 12/31/22; total cash and availability of $33 million

Positive momentum entering 2H Fiscal 2023

Outlook encouraging as commercial demand remains active, total backlog remains above prior- year levels and operational execution remains on- point; anticipate positive free cash flow generation to continue; Working towards Fiscal 2023 second-half results to meet or exceed record fiscal 2022 second-half results

©2023 LSI INDUSTRIES

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CONSOLIDATED FINANCIAL RESULTS

Project wins in both existing vertical markets and underserved markets with profitable growth potential

Adjusted EBITDA +54% y/y; Adjusted EBITDA margin rate +250 bps

y/y to 10.1%

Total Net Sales ($M)

$128.8

$111.1

F2Q22F2Q23

Operating Income ($M)

	$10.6
	$9.0
	$5.9
$4.4
F2Q22	F2Q23

Reported Operating Income		Adjusted Operating Income

Second consecutive quarter of EBITDA margin above 10%

80% y/y growth in adjusted net income

Net Income ($M)

		$7.6
		$6.4
	$4.2	Adj. EPS
$3.1
	Adj. EPS	$0.26
	$0.15
	share	share
F2Q22	F2Q23
Reported Net Income	Adjusted Net Income

Non-GAAP Adjusted EBITDA ($M)

		$13.0
	$8.4
			Margin Rate
	Margin Rate
		10.1%
	7.6%
	F2Q22		F2Q23

©2023 LSI INDUSTRIES

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LIGHTING SEGMENT UPDATE

17% y/y sales growth - leveraging growing position in targeted vertical markets

Indoor lighting sales +32% y/y; Outdoor lighting +20% y/y

Lighting Segment Sales ($M)

$66.8

$57.3

F2Q22F2Q23

Lighting Segment Adj. Gross Margin ($M)

		$20.5
	$16.9
		Margin Rate
	Margin Rate
		30.6%
	29.5%
	F2Q22		F2Q23

Adjusted EBITDA margin +160 bps y/y to 12.4%

Lighting backlog trending above prior- year period

Quoting steady at elevated level

Lighting Segment Adj. Operating Income ($M)

$6.9

25/

$4.7

perper

Lighting Segment Adjusted EBITDA ($M)

$8.3

$6.2

	Margin Rate	Margin Rate
	12.4%
	10.8%

F2Q22

F2Q23

F2Q22

F2Q23

©2023 LSI INDUSTRIES

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