lyts20241231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2024, OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO ________________.

Commission File No. 0-13375

LSI Industries Inc.

(Exact name of registrant as specified in its charter)

Ohio

31-0888951

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer Identification No.)

10000 Alliance Road, Cincinnati, Ohio		45242
(Address of principal executive offices)		(Zip Code)
(513) 793-3200
Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which

registered

Common Stock, no par value

LYTS

NASDAQ Global Select Market

Indicate by checkmark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

YES ☒ NO ☐

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒	Emerging growth company ☐
Non-accelerated filer ☐	Smaller reporting company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ NO ☒

As of January 29, 2025, there were 29,921,385 shares of the registrant's common stock, no par value per share, outstanding.

LSI INDUSTRIES INC.

FORM 10-Q

FOR THE QUARTER ENDED DECEMBER 31, 2024

INDEX

PART I. FINANCIAL INFORMATION		3

ITEM 1.	FINANCIAL STATEMENTS	3

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS		3

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME		4

CONDENSED CONSOLIDATED BALANCE SHEETS		5

CONDENSED CONSOLIDATED BALANCE SHEETS		6

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY		7

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS		8

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS		9

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	31

ITEM 4.	CONTROLS AND PROCEDURES	31

PART II. OTHER INFORMATION		32

ITEM 5.	OTHER INFORMATION	32

ITEM 6	EXHIBITS	32

SIGNATURES		33

Page 2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended					Six Months Ended
	December 31					December 31
(In thousands, except per share data)	2024		2023			2024		2023

Net Sales	$	147,734	$	109,005		$	285,829	$	232,446

Cost of products and services sold		112,873		77,469			217,321		164,321

Gross profit		34,861		31,536			68,508		68,125

Selling and administrative expenses		26,402		23,717			50,918		49,278

Operating income		8,459		7,819			17,590		18,847

Interest expense		728		453			1,603		1,019
Other expense (income)		382		(29	)		322		67

Income before income taxes		7,349		7,395			15,665		17,761

Income tax expense		1,702		1,489			3,336		3,827

Net income	$	5,647	$	5,906		$	12,329	$	13,934


Earnings per common share (see Note 5)
Basic	$	0.19	$	0.20		$	0.41	$	0.48
Diluted	$	0.18	$	0.20		$	0.40	$	0.47


Weighted average common shares outstanding
Basic		29,930		29,024			29,761		28,890
Diluted		30,876		30,043			30,709		29,949

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 3

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended					Six Months Ended
	December 31					December 31
(In thousands)	2024			2023		2024			2023

Net Income	$	5,647		$	5,906	$	12,329		$	13,934

Foreign currency translation adjustment		(48	)		71		(157	)		15

Comprehensive Income	$	5,599		$	5,977	$	12,172		$	13,949

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 4

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	December 31,			June 30,
(In thousands, except shares)	2024			2024

ASSETS

Current assets

Cash and cash equivalents	$	4,712		$	4,110

Accounts receivable, less allowance for credit losses of $869 and $848, respectively		81,266			78,626

Inventories		69,426			70,913

Refundable income taxes		2,677			3,197

Other current assets		5,324			5,653

Total current assets		163,405			162,499

Property, Plant and Equipment, at cost
Land		4,029			4,010
Buildings		24,729			24,757
Machinery and equipment		76,443			74,204
Buildings under finance leases		2,033			2,033
Construction in progress		987			1,611
		108,221			106,615
Less accumulated depreciation		(76,687	)		(73,655	)
Net property, plant and equipment		31,534			32,960

Goodwill		57,456			57,397

Other intangible assets, net		71,100			73,916

Operating lease right-of-use assets		15,517			15,912

Other long-term assets, net		5,533			6,116

Total assets	$	344,545		$	348,800

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 5

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	December 31,			June 30,
(In thousands, except shares)	2024			2024

LIABILITIES & SHAREHOLDERS' EQUITY

Current liabilities
Current maturities of long-term debt	$	3,571		$	3,571
Accounts payable		32,322			32,192
Accrued expenses		42,655			43,444

Total current liabilities		78,548			79,207

Long-term debt		34,615			50,658

Finance lease liabilities		468			636

Operating lease liabilities		10,694			11,267

Other long-term liabilities		3,105			2,677

Commitments and contingencies (Note 13)

Shareholders' Equity
Preferred shares, without par value; Authorized 1,000,000 shares, none issued		-			-
Common shares, without par value; Authorized 50,000,000 shares; Outstanding 29,891,100 and 29,222,414 shares, respectively		159,926			156,365
Treasury shares, without par value		(9,261	)		(8,895	)
Deferred compensation plan		9,261			8,895
Retained earnings		57,144			47,788
Accumulated other comprehensive income		45			202

Total shareholders' equity		217,115			204,355

Total liabilities & shareholders' equity	$	344,545		$	348,800

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 6

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

	Common Shares				Treasury Shares						Key Executive		Accumulated Other						Total
	Number Of				Number Of						Compensation		Comprehensive			Retained			Shareholders'
(In thousands, except per share data)	Shares		Amount		Shares			Amount			Amount		Income/(Loss)			Earnings			Equity

Balance at June 30, 2023		28,488	$	148,691		(922	)	$	(7,166	)	$	7,166	$	339		$	28,548		$	177,578

Net Income		-		-		-			-			-		-			8,028			8,028
Other comprehensive loss		-		-		-			-			-		(56	)		-			(56	)
Board stock compensation awards		9		113		-			-			-		-			-			113
ESPP stock Awards		3		57																57
Restricted stock units issued, net of shares withheld for tax withholdings
Shares issued for deferred compensation		32		437		-			-			-		-			-			437
Activity of treasury shares, net		-		-		(30	)		(417	)		-		-			-			(417	)
Deferred stock compensation		-		-		-			-			417		-			-			417
Stock-based compensation expense				1,220		-			-			-		-			-			1,220
Stock options exercised, net		70		549		-			-			-		-			-			549
Dividends — $0.20 per share		-		-		-			-			-		-			(1,380	)		(1,380	)

Balance at September 30, 2023		28,878	$	151,067		(952	)	$	(7,583	)	$	7,583	$	283		$	35,196		$	186,546

Net Income		-		-		-			-			-		-			5,906			5,906
Other comprehensive loss		-		-		-			-			-		71			-			71
Board stock compensation awards		7		112		-			-			-		-			-			112
ESPP stock Awards		4		41		-			-			-		-			-			41
Restricted stock units issued, net of shares withheld for tax withholdings
Shares issued for deferred compensation		36		506		-			-			-		-			-			506
Activity of treasury shares, net		-		-		(36	)		(505	)		-		-			-			(505	)
Deferred stock compensation		-		-		-			-			505		-			-			505
Stock-based compensation expense		-		814		-			-			-		-			-			814
Stock options exercised, net		107		628		-			-			-		-			-			628
Dividends — $0.20 per share		-		-		-			-			-		-			(1,446	)		(1,446	)

Balance at December 31, 2023		29,060	$	152,924		(988	)	$	(8,088	)	$	8,088		354		$	39,656		$	192,934

	Common Shares					Treasury Shares						Key Executive			Accumulated Other						Total
	Number Of					Number Of						Compensation			Comprehensive			Retained			Shareholders'
	Shares		Amount			Shares			Amount			Amount			Income/(Loss)			Earnings			Equity

Balance at June 30, 2024		29,222	$	156,365			(1,036	)	$	(8,895	)	$	8,895			202		$	47,788		$	204,355

Net Income		-		-			-			-			-			-			6,682			6,682
Other comprehensive loss		-		-			-			-			-			(109	)		-			(109	)
Board stock compensation awards		8		113			-			-			-			-			-			113
ESPP stock Awards		3		45			-			-			-			-			-			45
Restricted stock units issued, net of shares withheld for tax withholdings		492		(204	)		-			-			-			-			-			(204	)
Shares issued for deferred compensation		32		487			-			-			-			-			-			487
Activity of treasury shares, net		-		-			42			140			-			-			-			140
Deferred stock compensation		-		-			-			-			(140	)		-			-			(140	)
Stock-based compensation expense				1,047			-			-			-			-			-			1,047
Stock options exercised, net		39		248			-			-			-			-			-			248
Dividends — $0.20 per share		-		-			-			-			-			-			(1,481	)		(1,481	)

Balance at September 30, 2024		29,796	$	158,101			(994	)	$	(8,755	)	$	8,755		$	93		$	52,989		$	211,183

Net Income		-		-			-			-			-			-			5,647			5,647
Other comprehensive loss		-		-			-			-			-			(48	)		-			(48	)
Board stock compensation awards		7		112			-			-			-			-			-			112
ESPP stock Awards		5		65			-			-			-			-			-			65
Restricted stock units issued, net of shares withheld for tax withholdings		26		(374	)																	(374	)
Shares issued for deferred compensation		27		507			-			-			-			-			-			507
Activity of treasury shares, net		-		-			(28	)		(506	)		-			-			-			(506	)
Deferred stock compensation		-		-			-			-			506			-			-			506
Stock-based compensation expense		-		1,141			-			-			-			-			-			1,141
Stock options exercised, net		30		374			-			-			-			-			-			374
Dividends — $0.20 per share		-		-			-			-			-			-			(1,492	)		(1,492	)

Balance at December 31, 2024		29,891	$	159,926			(1,022	)	$	(9,261	)	$	9,261		$	45		$	57,144		$	217,115

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 7

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended
	December 31
(In thousands)	2024			2023

Cash Flows from Operating Activities
Net income	$	12,329		$	13,934
Non-cash items included in net income
Depreciation and amortization		5,958			4,728
Deferred income taxes		558			(591	)
Deferred compensation plan		994			943
ESPP discount		110			98
Stock compensation expense		2,188			2,034
Issuance of common shares as compensation		225			225
(Gain) loss on disposition of fixed assets		(17	)		141
Allowance for credit losses		21			25
Inventory obsolescence reserve		131			234

Changes in certain assets and liabilities
Accounts receivable		(2,661	)		5,496
Inventories		1,356			3,330
Refundable income taxes		223			1,087
Accounts payable		130			(6,070	)
Accrued expenses and other		(44	)		(6,529	)
Customer prepayments		236			783
Net cash flows provided by operating activities		21,737			19,868

Cash Flows from Investing Activities
Acquisition of EMI		(59	)		-
Proceeds from the sale of fixed assets		46			26
Purchases of property, plant and equipment		(1,825	)		(3,349	)
Net cash flows used in investing activities		(1,838	)		(3,323	)

Cash Flows from Financing Activities
Payments of long-term debt		(96,265	)		(96,600	)
Borrowings of long-term debt		80,222			82,921
Cash dividends paid		(2,973	)		(2,826	)
Shares withheld for employees' taxes		(578	)		(244	)
Payments on financing lease obligations		(168	)		(156	)
Proceeds from stock option exercises		622			1,177
Net cash flows used in financing activities		(19,140	)		(15,728	)

Change related to foreign currency		(157	)		15

Increase in cash and cash equivalents		602			832

Cash and cash equivalents at beginning of period		4,110			1,828

Cash and cash equivalents at end of period	$	4,712		$	2,660

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 8

LSI INDUSTRIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The interim condensed consolidated financial statements are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, and rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the interim financial statements include all normal adjustments and disclosures necessary to present fairly the Company’s financial position as of December 31, 2024, the results of its operations for the three and six-month periods ended December 31, 2024, and 2023, and its cash flows for the six-month periods ended December 31, 2024, and 2023. These statements should be read in conjunction with the financial statements and footnotes included in the fiscal 2024 Annual Report on Form 10-K. Financial information as of June 30, 2024, has been derived from the Company’s audited consolidated financial statements.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation:

A summary of the Company’s significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company’s fiscal 2024 Annual Report on Form 10-K.

Revenue Recognition:

The Company recognizes revenue when it satisfies the performance obligation in its customer contracts or purchase orders. Most of the Company’s products have a single performance obligation which is satisfied at a point in time when control is transferred to the customer. Control is generally transferred at the time of shipment when title and risk of ownership passes to the customer. For customer contracts with multiple performance obligations, the Company allocates the transaction price and any discounts to each performance obligation based on relative standalone selling prices. Payment terms are typically within 30 to 90 days from the shipping date, depending on the terms with the customer. The Company offers standard warranties that do not represent separate performance obligations.

Installation is a separate performance obligation, except for the Company’s digital signage products. For digital signage products, installation is not a separate performance obligation as the product and installation is the combined item promised in digital signage contracts. The Company is not always responsible for installation of products it sells and has no post-installation responsibilities other than standard warranties.

A number of the Company's display solutions and select lighting products are customized for specific customers. As a result, these customized products do not have an alternative use. For these products, the Company has a legal right to payment for performance to date and generally does not accept returns on these items. The measurement of performance is based upon cost plus a reasonable profit margin for work completed. Because there is no alternative use and there is a legal right to payment, the Company transfers control of the item as the item is being produced and therefore recognizes revenue over time. The customized product types are as follows:

●

Customer specific branded print graphics

●

Electrical components based on customer specifications

●

Digital signage and related media content

The Company also offers installation services for its display solutions elements and select lighting products. Installation revenue is recognized over time as the customer simultaneously receives and consumes the benefits provided through the installation process.

For these customized products and installation services, revenue is recognized using a cost-based input method: recognizing revenue and gross profit as work is performed based on the relationship between the actual cost incurred and the total estimated cost for the performance obligation.

Page 9

On occasion, the Company enters into bill-and-hold arrangements on a limited basis. Each bill-and-hold arrangement is reviewed and revenue is recognized only when certain criteria have been met: (1) the customer has requested delayed delivery and storage of the products by the Company because the customer wants to secure a supply of the products but lacks storage space; (ii) the risk of ownership has passed to the customer; (iii) the products are segregated from the Company’s other inventory items held for sale; (iv) the products are ready for shipment to the customer; and (v) the Company does not have the ability to use the products or direct them to another customer.

Disaggregation of Revenue

The Company disaggregates the revenue from contracts with customers by the timing of revenue recognition because the Company believes it best depicts the nature, amount, and timing of its revenue and cash flows. The table below presents a reconciliation of the disaggregation by reportable segments:

	Three Months Ended
(In thousands)	December 31, 2024				December 31, 2023
	Lighting Segment		Display Solutions Segment		Lighting Segment		Display Solutions Segment
Timing of revenue recognition
Products and services transferred at a point in time	$	48,366	$	68,046	$	54,619	$	29,268
Products and services transferred over time		9,844		21,478		10,176		14,942
	$	58,210	$	89,524	$	64,795	$	44,210

	Three Months Ended
	December 31, 2024				December 31, 2023
	Lighting Segment		Display Solutions Segment		Lighting Segment		Display Solutions Segment
Type of Product and Services
LED lighting, digital signage solutions, electronic circuit boards	$	47,580	$	9,310	$	53,116	$	8,791
Poles, other display solution elements		9,945		60,726		10,968		24,829
Project management, installation services, shipping and handling		685		19,488		711		10,590
	$	58,210	$	89,524	$	64,795	$	44,210

	Six Months Ended
	December 31, 2024				December 31, 2023
	Lighting Segment		Display Solutions Segment		Lighting Segment		Display Solutions Segment
Timing of revenue recognition
Products and services transferred at a point in time	$	96,577	$	130,140	$	112,271	$	69,256
Products and services transferred over time		20,069		39,043		20,165		30,754
	$	116,646	$	169,183	$	132,436	$	100,010

	Six Months Ended
	December 31, 2024				December 31, 2023
	Lighting Segment		Display Solutions Segment		Lighting Segment		Display Solutions Segment
Type of Product and Services
LED lighting, digital signage solutions, electronic circuit boards	$	95,009	$	17,746	$	108,607	$	17,724
Poles, other display solution elements		20,338		116,429		22,351		59,698
Project management, installation services, shipping and handling		1,299		35,008		1,478		22,588
	$	116,646	$	169,183	$	132,436	$	100,010

Page 10

Practical Expedients and Exemptions

●

The Company’s contracts with customers have an expected duration of one year or less, as such, the Company applies the practical expedient to expense sales commissions as incurred and has omitted disclosures on the amount of remaining performance obligations.

●

Shipping costs that are not material in context of the delivery of products are expensed as incurred.

●

The Company’s accounts receivable balance represents the Company’s unconditional right to receive payment from its customers with contracts. Payments are generally due within 30 to 90 days of completion of the performance obligation and invoicing; therefore, payments do not contain significant financing components.

●

The Company collects sales tax and other taxes concurrent with revenue-producing activities which are excluded from revenue. Shipping and handling costs are treated as fulfillment activities and included in cost of products and services sold on the Consolidated Statements of Operations.

New Accounting Pronouncements:

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to SEC's Disclosure Update and Simplification Initiative. This ASU amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company will monitor the removal of various requirements from the current regulations in order to determine when to adopt the related amendments, but it does not anticipate that the adoption of the new guidance will have a material impact on the Company’s consolidated financial statements and related disclosures. The Company will continue to evaluate the impact of this guidance on its consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU expands reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The standard requires interim and annual disclosure of significant segment expenses that are regularly provided to the chief operating decision-maker ("CODM") and included within the reported measure of a segment’s profit or loss, requires interim disclosures about a reportable segment’s profit or loss and assets that are currently required annually, requires disclosure of the position and title of the CODM, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, and contains other disclosure requirements. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the effect of this new guidance on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires additional disclosures of various income tax components that affect the rate reconciliation based on the applicable taxing jurisdictions, as well as the qualitative and quantitative aspects of those components. The standard also requires information pertaining to taxes paid to be disaggregated for federal, state and foreign taxes, and contains other disclosure requirements. This ASU is effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025, with early adoption permitted. The Company is currently evaluating the effect of this new guidance on its consolidated financial statements and related disclosures.

NOTE 3 — ACQUISITION OF EMI INDUSTRIES, LLC

On April 18, 2024, the Company entered into and consummated the transactions contemplated by an asset purchase agreement with EMI Industries, LLC (EMI), a Florida-based metal and millwork manufacturer of standard and customized fixtures, displays and equipment for the convenience store, supermarket and restaurant industries, for $50.0 million, of which $0.1 million of the purchase price was retained pending a review of the acquired working capital. In the first quarter of fiscal 2025, the company funded an additional $59,000 related to the final settlement of the acquired working capital. The Company incurred acquisition-related costs totaling $1.0 million which are included in the selling and administrative expense line of the consolidated statements of operations. The acquisition of EMI is expected to increase the Company’s total addressable markets within the grocery, quick service restaurant and convenience store verticals. The Company funded the acquisition totaling $49.9 million with a combination of cash on hand and from the $75 million revolving line of credit.

Page 11

The Company accounted for this transaction as a business combination. The Company has allocated the purchase price of approximately $49.9 million which includes an estimate of customary post-closing purchase price adjustments to the assets acquired and liabilities assumed at estimated fair values, and the excess of the purchase price over the aggregate fair values is recorded as goodwill. This preliminary allocation is subject to the final determination of the purchase price which will be finalized in fiscal 2025, as well as the potential revision resulting from the finalization of pre-acquisition tax filings. The preliminary allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed as of April 18, 2024, is as follows:

(In thousands)	April 18, 2024 as initially reported			Adjustments		April 18, 2024 as adjusted

Accounts Receivable	$	11,386		$	-	$	11,386
Inventory		12,246			-		12,246
Property, Plant and Equipment		7,719			-		7,719
Operating Lease Right-Of-Use Assets		8,734			-		8,734
Other Assets		1,176			-		1,176
Intangible Assets		15,670			-		15,670
Accounts Payable		(7,103	)		-		(7,103	)
Accrued Expenses		(6,308	)		-		(6,308	)
Operating Lease Liabilities		(5,987	)		-		(5,987	)
Identifiable Assets		37,533			-		37,533
Goodwill		12,367			59		12,426
Net Purchase Consideration	$	49,900		$	59	$	49,959

The gross amount of accounts receivable acquired was $11.9 million.

Goodwill recorded from the acquisition of EMI is attributable to the impact of the positive cash flow from EMI in addition to expected synergies from the business combination. The goodwill resulting from the acquisition is deductible for tax purposes. The trade name and technology used an income (relief from royalty) approach, the non-compete used an income (with or without) approach, and the customer relationships used an income (excess earnings) approach. The following table presents the details of the intangible assets acquired at the date of acquisition:

(in thousands)	Estimated Fair Value		Estimated Useful Life (Years)


Tradename	$	4,880	Indefinite life
Technology assets		3,160		7
Non-compete		140		5
Customer relationships		7,490		20
	$	15,670

EMI’s post-acquisition results of operations for the period from April 18, 2024, through June 30, 2024, are included in the Company’s Consolidated Statements of Operations. Since the acquisition date, net sales of EMI for the period from April 18, 2024, through June 30, 2024, were $18.1 million and operating income was $0.7 million. The operating results of EMI are included in the Display Solutions Segment.

Pro Forma Impact of the Acquisition of EMI (Unaudited)

The following table represents unaudited pro forma results of operations and gives effect to the acquisition of EMI as if the transaction had occurred on July 1, 2022. The unaudited pro forma results of operations have been prepared for comparative purposes only and are not necessarily indicative of what would have occurred had the business combination been completed at the beginning of the period or the results that may occur in the future. Furthermore, the unaudited pro forma financial information does not reflect the impact of any synergies or operating efficiencies resulting from the acquisition of EMI.

The unaudited pro forma financial information for the twelve months ended June 30, 2024, and June 30, 2023, is prepared using the acquisition method of accounting and has been adjusted to reflect the pro forma events that are: (1) directly attributable to the acquisition; (2) factually supportable; and (3) expected to have a continuing impact on the combined results. The fiscal 2024 unaudited pro forma operating income of $36.3 million excludes acquisition-related expenses of $1.0 million.

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	Twelve Months Ended June 30
(in thousands; unaudited)
	2024		2023
Sales	$	535,849	$	578,169

Gross Profit	$	141,788	$	147,967

Operating Income	$	36,303	$	38,798

NOTE 4 - SEGMENT REPORTING INFORMATION

The accounting guidance on Segment Reporting establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in financial statements. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (the Company’s Chief Executive Officer or “CODM”) in making decisions on how to allocate resources and assess performance. The Company’s two operating segments are Lighting and Display Solutions, with one executive team under the organizational structure reporting directly to the CODM with responsibilities for managing each segment. Corporate and Eliminations, which captures the Company’s corporate administrative activities, is also reported in the segment information.

The Lighting Segment includes non-residential outdoor and indoor lighting fixtures utilizing LED light sources that have been fabricated and assembled for the Company’s markets, primarily the refueling and convenience store markets, parking lot and garage markets, quick-service restaurant market, retail and grocery store markets, the automotive market, the warehouse market, and the sports court and field market. The Company also services lighting product customers through the commercial and industrial project, stock and flow, and renovation channels. In addition to the manufacture and sale of lighting fixtures, the Company offers a variety of lighting controls to complement its lighting fixtures which include sensors, photocontrols, dimmers, motion detection and Bluetooth systems. The Lighting Segment also includes the design, engineering and manufacturing of electronic circuit boards, assemblies and sub-assemblies which are sold directly to customers.

The Display Solutions Segment manufactures, sells and installs exterior and interior visual image and display elements, including printed graphics, structural graphics, digital signage, menu board systems, millwork display fixtures, refrigerated displays, food equipment, countertops, and other custom display elements. These products are used in visual image programs in several markets including the refueling and convenience store markets, parking lot and garage markets, quick-service and casual restaurant market, retail and grocery store, and other retail markets. The Company accesses its customers primarily through a direct sale model utilizing its own sales force. Sales through distribution represents a small portion of Display Solutions sales. The Display Solutions Segment also provides a variety of project management services to complement our display elements, such as installation management, site surveys, permitting, and content management which are offered to our customers to support our digital signage.

The Company’s corporate administration activities are reported in the Corporate and Eliminations line item. These activities primarily include intercompany profit in inventory eliminations, expense related to certain corporate officers and support staff, the Company’s internal audit staff, expense related to the Company’s Board of Directors, equity compensation expense for various equity awards granted to corporate administration employees, certain consulting expenses, investor relations activities, and a portion of the Company’s legal, auditing, and professional fee expenses. Corporate identifiable assets primarily consist of cash, invested cash (if any), refundable income taxes (if any), and deferred income taxes.

There were no customers or customer programs representing a concentration of 10% or more of the Company’s consolidated net sales in the three and six months ended December 31, 2024, or 2023. There was no concentration of accounts receivable at December 31, 2024, or 2023.

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Summarized financial information for the Company’s operating segments is provided for the indicated periods and as of December 31, 2024, and December 31, 2023:

	Three Months Ended						Six Months Ended
(In thousands)	December 31						December 31
	2024			2023			2024			2023
Net Sales:
Lighting Segment	$	58,210		$	64,795		$	116,646		$	132,436
Display Solutions Segment		89,524			44,210			169,183			100,010
	$	147,734		$	109,005		$	285,829		$	232,446

Operating Income (Loss):
Lighting Segment	$	5,972		$	8,856		$	11,731		$	17,609
Display Solutions Segment	$	8,127			3,302			15,834			10,521
Corporate and Eliminations		(5,640	)		(4,339	)		(9,975	)		(9,283	)
	$	8,459		$	7,819		$	17,590		$	18,847

Capital Expenditures:
Lighting Segment	$	509		$	1,151		$	1,221		$	2,013
Display Solutions Segment	$	529			529			576			1,048
Corporate and Eliminations		28			276			28			288
	$	1,066		$	1,956		$	1,825		$	3,349

Depreciation and Amortization:
Lighting Segment	$	1,281		$	1,293		$	2,493		$	2,602
Display Solutions Segment	$	1,656			989			3,291			1,965
Corporate and Eliminations	$	81			75			174			161
	$	3,018		$	2,357		$	5,958		$	4,728

	December 31, 2024		June 30, 2024
Total Assets:
Lighting Segment	$	119,006	$	130,695
Display Solutions Segment		215,824		208,248
Corporate and Eliminations		9,715		9,857
	$	344,545	$	348,800

The segment net sales reported above represent sales to external customers. Segment operating income, which is used in management’s evaluation of segment performance, represents net sales less all operating expenses. Identifiable assets are those assets used by each segment in its operations.

The Company records a 10% mark-up on intersegment revenues. Any inter-segment profit in inventory is eliminated in consolidation. Intersegment revenues were eliminated in consolidation as follows:

Inter-segment sales
	Three Months Ended					Six Months Ended
(In thousands)	December 31					December 31
	2024		2023			2024		2023
Lighting Segment inter-segment net sales	$	6,053	$	5,286		$	12,037	$	12,150

Display Solutions Segment inter-segment net sales	$	133	$	(15	)	$	304	$	440

Page 14

NOTE 5 - EARNINGS PER COMMON SHARE

The following table presents the amounts used to compute basic and diluted earnings per common share, as well as the effect of dilutive potential common shares on weighted average shares outstanding:

	Three Months Ended				Six Months Ended
	December 31				December 31
	2024		2023		2024		2023

BASIC EARNINGS PER SHARE

Net income	$	5,647	$	5,906	$	12,329	$	13,934

Weighted average shares outstanding during the period, net of treasury shares		28,848		27,979		28,681		27,858
Weighted average vested restricted stock units outstanding		72		76		81		78
Weighted average shares outstanding in the Deferred Compensation Plan during the period		1,010		969		999		954
Weighted average shares outstanding		29,930		29,024		29,761		28,890

Basic earnings per common share	$	0.19	$	0.20	$	0.41	$	0.48


DILUTED EARNINGS PER SHARE

Net income	$	5,647	$	5,906	$	12,329	$	13,934

Weighted average shares outstanding:

Basic		29,930		29,024		29,761		28,890

Effect of dilutive securities (a):
Impact of common shares to be issued under stock option plans, and contingently issuable shares, if any		946		1,019		948		1,059
Weighted average shares outstanding		30,876		30,043		30,709		29,949

Diluted earnings per common share	$	0.18	$	0.20	$	0.40	$	0.47


Anti-dilutive securities (b)		265		-		265		-

(a)

Calculated using the “Treasury Stock” method as if dilutive securities were exercised and the funds were used to purchase common shares at the average market price during the period.

(b)

Anti-dilutive securities were excluded from the computation of diluted net income per share for the three and six months ended December 31, 2024, and December 31, 2023, because the exercise price was greater than the average fair market price of the common shares or because the assumed proceeds from the award’s exercise or vesting was greater than the average fair market price of the common shares.

Page 15

NOTE 6 – INVENTORIES, NET

The following information is provided as of the dates indicated:

	December 31,		June 30,
(In thousands)	2024		2024

Inventories:
Raw materials	$	49,388	$	52,644
Work-in-progress		6,891		6,244
Finished goods		13,147		12,025
Total Inventories	$	69,426	$	70,913

NOTE 7 - ACCRUED EXPENSES

The following information is provided as of the dates indicated:

	December 31,		June 30,
(In thousands)	2024		2024

Accrued Expenses:
Customer prepayments	$	8,714	$	8,475
Compensation and benefits		9,110		9,704
Accrued warranty		6,653		6,623
Operating lease liabilities		5,619		5,560
Accrued sales commissions		2,691		3,937
Accrued Freight		2,353		2,270
Accrued FICA		492		513
Finance lease liabilities		327		324
Other accrued expenses		6,696		6,038
Total Accrued Expenses	$	42,655	$	43,444

NOTE 8 - GOODWILL AND OTHER INTANGIBLE ASSETS

The carrying values of goodwill and other intangible assets with indefinite lives are reviewed at least annually for possible impairment. The Company may first assess qualitative factors in order to determine if goodwill and indefinite-lived intangible assets are impaired. If through the qualitative assessment it is determined that it is more likely than not that goodwill and indefinite-lived assets are not impaired, no further testing is required. If it is determined more likely than not that goodwill and indefinite-lived assets are impaired, or if the Company elects not to first assess qualitative factors, the Company’s impairment testing continues with the estimation of the fair value of the reporting unit using a combination of a market approach and an income (discounted cash flow) approach, at the reporting unit level. The estimation of the fair value of the reporting unit requires significant management judgment with respect to revenue and expense growth rates, changes in working capital and the selection and use of an appropriate discount rate. The estimates of the fair value of reporting units are based on the best information available as of the date of the assessment. The use of different assumptions would increase or decrease estimated discounted future operating cash flows and could increase or decrease an impairment charge. Company management uses its judgment in assessing whether assets may have become impaired between annual impairment tests. Indicators such as adverse business conditions, economic factors and technological change or competitive activities may signal that an asset has become impaired.

The Company identified its reporting units in conjunction with its annual goodwill impairment testing. The Company has a total of four reporting units that contain goodwill. One reporting unit is within the Lighting Segment and three reporting units are within the Display Solutions Segment. The tradename intangible assets have an indefinite life and are also tested separately on an annual basis. The Company relies upon a number of factors, judgments and estimates when conducting its impairment testing including, but not limited to, the Company’s stock price, operating results, forecasts, anticipated future cash flows, and marketplace data. There are inherent uncertainties related to these factors and judgments in applying them to the analysis of goodwill impairment.

Page 16

The following table presents information about the Company's goodwill on the dates or for the periods indicated:

Goodwill				Display
(In thousands)	Lighting			Solutions
	Segment			Segment			Total
Balance as of December 31, 2024
Goodwill	$	70,971		$	75,773		$	146,744
Accumulated impairment losses		(61,763	)		(27,525	)		(89,288	)
Goodwill, net as of December 31, 2024	$	9,208		$	48,248		$	57,456

Balance as of June 30, 2024
Goodwill	$	70,971		$	75,714		$	146,685
Accumulated impairment losses		(61,763	)		(27,525	)		(89,288	)
Goodwill, net as of June 30, 2024	$	9,208		$	48,189		$	57,397

The gross carrying amount and accumulated amortization by each major intangible asset class is as follows:

Other Intangible Assets	December 31, 2024
(In thousands)	Gross
	Carrying		Accumulated		Net
	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	69,573	$	23,227	$	46,346
Patents		268		268		-
LED technology firmware, software		24,126		17,876		6,250
Trade name		2,658		1,319		1,339
Non-compete		400		217		183
Total Amortized Intangible Assets		97,025		42,907		54,118

Indefinite-lived Intangible Assets
Trademarks and trade names		16,982		-		16,982
Total indefinite-lived Intangible Assets		16,982		-		16,982

Total Other Intangible Assets	$	114,007	$	42,907	$	71,100

Other Intangible Assets	June 30, 2024
(In thousands)	Gross
	Carrying		Accumulated		Net
	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	69,573	$	21,332	$	48,241
Patents		268		268		-
LED technology firmware, software		24,126		17,058		7,068
Trade name		2,658		1,265		1,393
Non-compete		400		168		232
Total Amortized Intangible Assets		97,025		40,091		56,934

Indefinite-lived Intangible Assets
Trademarks and trade names		16,982		-		16,982
Total indefinite-lived Intangible Assets		16,982		-		16,982

Total Other Intangible Assets	$	114,007	$	40,091	$	73,916

Page 17

	Three Months Ended				Six Months Ended
	December 31				December 31
(In thousands)	2024		2023		2024		2023

Amortization Expense of Other Intangible Assets	$	1,408	$	1,190	$	2,816	$	2,380

The Company expects to record annual amortization expense as follows:

(In thousands)
2025	$	5,739
2026	$	5,733
2027	$	5,512
2028	$	5,125
2029	$	4,497
After 2029	$	30,328

NOTE 9 - DEBT

The Company’s long-term debt as of December 31, 2024, and June 30, 2024, consisted of the following:

	December 31,		June 30,
(In thousands)	2024		2024

Secured line of credit	$	24,803	$	38,766
Term loan, net of debt issuance costs of $10 and $14, respectively		13,383		15,463
Total debt	$	38,186	$	54,229
Less: amounts due within one year		3,571		3,571
Total amounts due after one year, net	$	34,615	$	50,658

In September 2021, the Company amended its existing $100 million secured line of credit, to a $25 million term loan and $75 million remaining as a secured revolving line of credit. Both facilities expire in the first quarter of fiscal 2027. The principal of the term loan is repaid annually in the amount of $3.6 million over a five-year period with a balloon payment of the remaining balance due last month. Interest on both the revolving line of credit and the term loan is charged based upon an increment over the Secured Overnight Financing Rate (SOFR) or a base rate, at the Company’s option. The base rate is calculated as the highest of (a) the Prime rate, (b) the sum of the Overnight Funding Rate plus 50 basis points and (c) the sum of the Daily SOFR Rate plus 100 basis points. The increment over the SOFR borrowing rate fluctuates between 100 and 225 basis points, and the increment over the Base Rate fluctuates between 0 and 125 basis points, both of which depend upon the ratio of indebtedness to earnings before interest, taxes, depreciation, and amortization (“EBITDA”), as defined in the line of credit agreement. As of December 31, 2024, the Company’s borrowing rate against its revolving line of credit was 5.7%. The increment over the SOFR borrowing rate will be 100 basis points for the third quarter of fiscal 2025. The fee on the unused balance of the $75 million committed line of credit fluctuates between 15 and 25 basis points. Under the terms of this line of credit, the Company is required to comply with financial covenants that limit the ratio of indebtedness to EBITDA and require a minimum fixed charge ratio. As of December 31, 2024, there was $50.2 million available for borrowing under the $75 million line of credit.

The Company is in compliance with all of its loan covenants as of December 31, 2024.

NOTE 10 - CASH DIVIDENDS

The Company paid cash dividends of $3.0 million and $2.8 million for the six months ended December 31, 2024, and December 31, 2023, respectively. Dividends on restricted stock units in the amount of $0.2 million and $0.1million were accrued as of both December 31, 2024, and 2023, respectively. These dividends will be paid upon the vesting of the restricted stock units when shares are issued to the award recipients. In January 2025, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable February 11, 2025, to shareholders of record as February 3, 2025. The indicated annual cash dividend rate is $0.20 per share.

Page 18

NOTE 11 – EQUITY COMPENSATION

In November 2022, the Company's shareholders approved the amendment and restatement of the 2019 Omnibus Award Plan ("2019 Omnibus Plan") which increased the number of shares authorized for issuance under the plan by 2,350,000 and removed the Plan's fungible share counting feature. The purpose of the 2019 Omnibus Plan is to provide a means to attract and retain key personnel and to align the interests of the directors, officers, and employees with the Company's shareholders. The plan also provides a vehicle whereby directors and officers may acquire shares in order to meet the ownership requirements under the Company's Stock Ownership Policy. The 2019 Omnibus Plan allows for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units RSUs, performance stock units ("PSUs") and other awards. Except for Restricted Stock Unit ("RSU") grants which are time-based, participants in the Company's Long-Term Equity Compensation Plans are awarded the opportunity to acquire shares over a three-year performance measurement period tied to specific company performance metrics. The number of shares that remain reserved for issuance under the 2019 Omnibus Plan is 1,403,708 as of December 31, 2024.

In the first quarter of fiscal 2025, the Company granted 160,826 PSUs and 107,217 RSUs, both with a weighted average market value of $14.92. Stock compensation expense was $1.1 million and $0.8 million for the three months ended December 31, 2024, and 2023, respectively, and $2.2 million and $2.0 million in the six months ended December 31, 2024, and 2023, respectively.

In November of 2021, our board of directors approved the LSI Employee Stock Purchase Plan (“ESPP”). A total of 270,000 shares of common stock were provided for issuance under the ESPP. Employees may participate at their discretion and are able to purchase, through payroll deduction, common stock at a 10% discount on a quarterly basis. Employees may end their participation at any time during the offering period, and participation ends automatically upon termination of employment with the company. During fiscal year 2025, employees purchased 8,000 shares. At December 31, 2024, 234,000 shares remained available for purchase under the ESPP.

NOTE 12 - SUPPLEMENTAL CASH FLOW INFORMATION

	Six Months Ended
(In thousands)	December 31
	2024		2023
Cash Payments:
Interest	$	1,460	$	1,006
Income taxes	$	2,321	$	3,375

Non-cash investing and financing activities
Issuance of common shares as compensation	$	225	$	225
Issuance of common shares to fund deferred compensation plan	$	994	$	943
Issuance of common shares to fund ESPP plan	$	110	$	98

NOTE 13 - COMMITMENTS AND CONTINGENCIES

The Company is party to various negotiations, customer bankruptcies, and legal proceedings arising in the normal course of business. The Company provides reserves for these matters when a loss is probable and reasonably estimable. The Company does not disclose a range of potential loss because the likelihood of such a loss is remote. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, cash flows or liquidity.

The Company may occasionally issue a standby letter of credit in favor of third parties. As of December 31, 2024, there were no such standby letters of credit issued.

NOTE 14 - LEASES

The Company leases certain manufacturing facilities along with a small office space, several forklifts, several small tooling items, and various items of office equipment. All but two of the Company’s leases are operating leases. Leases have a remaining term of one to seven years some of which have an option to renew. The Company does not assume renewals in determining the lease term unless the renewals are deemed reasonably certain. The lease agreements do not contain any material residual guarantees or material variable lease payments. The number of operating leases increased in fiscal 2024 as a result of the acquisition of EMI; most of EMI’s operating leases are building leases.

Page 19

The Company has periodically entered into short-term operating leases with an initial term of twelve months or less. The Company elected not to record these leases on the balance sheet. The rent expense for these leases was immaterial for December 31, 2024, and 2023.

The Company has certain leases that contain lease and non-lease components and has elected to utilize the practical expedient to account for these components together as a single lease component.

Lease expense is recognized on a straight-line basis over the lease term. The Company used its incremental borrowing rate when determining the present value of lease payments.

	Three Months Ended					Six Months Ended
	December 31					December 31
(In thousands)	2024		2023			2024			2023

Operating lease cost	$	1,610	$	993		$	3,231		$	1,900
Financing lease cost:
Amortization of right of use assets		73		73			145			146
Interest on lease liabilities		10		14			22			28
Variable lease cost		-		22			7			44
Sublease income		-		(116	)		(39	)		(232	)
Total lease cost	$	1,693	$	986		$	3,366		$	1,886

Supplemental Cash Flow Information:	Six Months Ended
	December 31
(In thousands)	2024		2023

Cash flows from operating leases
Fixed payments - operating cash flows	$	3,298	$	1,778
Liability reduction - operating cash flows	$	2,813	$	1,537

Cash flows from finance leases
Interest - operating cash flows	$	21	$	28
Repayments of principal portion - financing cash flows	$	168	$	156

Operating Leases:	December 31,			June 30,
	2024			2024

Total operating right-of-use assets	$	15,517		$	15,912

Accrued expenses (Current liabilities)	$	5,619		$	5,560
Long-term operating lease liability		10,694			11,267
Total operating lease liabilities	$	16,313		$	16,827

Weighted Average remaining Lease Term (in years)		3.40			3.49

Weighted Average Discount Rate		5.82	%		5.90	%

Page 20

Finance Leases:	December 31,			June 30,
	2024			2024

Buildings under finance leases	$	2,033		$	2,033
Equipment under finance leases		-			41
Accumulated depreciation		(1,355	)		(1,232	)
Total finance lease assets, net	$	678		$	842

Accrued expenses (Current liabilities)	$	327		$	324
Long-term finance lease liability		468			636
Total finance lease liabilities	$	795		$	960

Weighted Average remaining Lease Term (in years)		2.33			2.83

Weighted Average Discount Rate		4.86	%		4.86	%

Maturities of Lease Liability:	Operating Lease Liabilities			Finance Lease Liabilities			Operating Subleases			Net Lease Commitments
2025	$	5,619		$	327		$	(38	)	$	5,908
2026		5,360			362			-			5,722
2027		4,337			150			-			4,487
2028		1,319			-			-			1,319
2029		972			-			-			972
Thereafter		489			-			-			489
Total lease payments	$	18,096		$	839		$	(38	)	$	18,897
Less: Interest		(1,783	)		(44	)					(1,827	)
Present Value of Lease Liabilities	$	16,313		$	795					$	17,070

NOTE 15 – INCOME TAXES

The Company's effective income tax rate is based on expected income, statutory rates, and tax planning opportunities available in the various jurisdictions in which it operates. For interim financial reporting, the Company estimates the annual income tax rate based on projected taxable income for the full year and records a quarterly income tax provision or benefit in accordance with the anticipated annual rate. The Company refines the estimates of the year's taxable income as new information becomes available, including actual year-to-date financial results. This continual estimation process often results in a change to the expected effective income tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected income tax rate. Significant judgment is required in determining the effective tax rate and in evaluating tax positions.

	Three Months Ended						Six Months Ended
	December 31						December 31
	2024			2023			2024			2023
Reconciliation of effective tax rate:

Provision for income taxes at the anticipated annual tax rate		26.7	%		25.6	%		26.2	%		26.3	%
Uncertain tax positions		(1.5	)		(2.8	)		(0.2	)		(0.6	)
Deferred Income Tax Adjustment		-			-			1.1			-
Share-based compensation		(2.0	)		(2.7	)		(5.8	)		(4.2	)
Effective tax rate		23.2	%		20.1	%		21.3	%		21.5	%

Page 21

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Note About Forward-Looking Statements

This report includes estimates, projections, statements relating to our business plans, objectives, and expected operating results that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this report, including this section. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “focus,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. We describe risks and uncertainties that could cause actual results and events to differ materially in in our Annual Report on Form 10-K in the following sections: “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures about Market Risk,” and “Risk Factors.” All of those risks and uncertainties are incorporated herein by reference. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of operations and financial condition of LSI Industries Inc. MD&A is provided as a supplement to, and should be read in conjunction with, our Annual Report on Form 10-K for the year ended June 30, 2024, and our financial statements and the accompanying Notes to Financial Statements (Part I, Item 1 of this Form 10-Q).

Our condensed consolidated financial statements, accompanying notes and the “Safe Harbor” Statement, each as appearing earlier in this report, should be referred to in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Summary of Consolidated Results

Net Sales by Business Segment	Three Months Ended				Six Months Ended
	December 31				December 31
(In thousands)	2024		2023		2024		2023

Lighting Segment	$	58,210	$	64,795	$	116,646	$	132,436
Display Solutions Segment		89,524		44,210		169,183		100,010
	$	147,734	$	109,005	$	285,829	$	232,446

Operating Income (Loss) by Business Segment	Three Months Ended						Six Months Ended
	December 31						December 31
(In thousands)	2024			2023			2024			2023

Lighting Segment	$	5,972		$	8,856		$	11,731		$	17,609
Display Solutions Segment		8,127			3,302			15,834			10,521
Corporate and Eliminations		(5,640	)		(4,339	)		(9,975	)		(9,283	)
	$	8,459		$	7,819		$	17,590		$	18,847

Net sales of $147.7 million for the three months ended December 31, 2024, increased 36% as compared to net sales of $109.0 million for the three months ended December 31, 2023. The increase in net sales was attributed to a $45.3 million or 103% increase in net sales of the Display Solutions Segment, partially offset by a $6.6 million or 10% decline in net sales of the Lighting Segment. The Display Solutions Segment generated organic growth of 50% driven by increased sales across all product categories and vertical markets supported mostly by the grocery, refueling/ C-Store, and QSR verticals. The Company’s recent acquisition of EMI contributed an additional $23.4 million of the quarter-over-quarter sales growth of the Display Solutions Segment. The decline in sales in the Lighting Segment is attributed to the comparison of quarter-over-quarter sales of large lighting projects. In fiscal 2024, the Company had several large lighting projects, including a new EV plant complex that did not repeat in fiscal 2025. While there was a decline in large lighting projects, small project activity increased over the prior year period.

Page 22

Net sales of $285.8 million for the six months ended December 31, 2024, increased 23% as compared to net sales of $232.4 million for the six months ended December 31, 2023. The increase in net sales was attributed to a $69.2 million or 69% increase in net sales of the Display Solutions Segment, partially offset by a $15.8 or 12% decline in net sales of the Lighting Segment. The Display Solutions Segment generated organic growth of 20% driven by increased sales across all product categories and vertical markets supported mostly by the grocery, refueling/ c-Store, and QSR verticals. The Company’s recent acquisition of EMI contributed an additional $49.6 million of the year-over-year sales growth of the Display Solutions Segment. The decline in sales in the Lighting Segment is attributed to the comparison of year-over-year sales of large lighting projects. In fiscal 2024, the Company had several large lighting projects, including a new EV plant complex that did not repeat in fiscal 2025. While there was a decline in large lighting projects, small project activity increased over the prior year period.

Operating income of $8.5 million for the three months ended December 31, 2024, represents an 8% increase in operating income of $7.8 million in the three months ended December 31, 2023. Adjusted operating income, a Non-GAAP measure, was $11.7 million in the three months ended December 31, 2024, compared to $9.9 million in the three months ended December 31, 2023. Refer to “Non-GAAP Financial Measures” below for a reconciliation of Non-GAAP financial measures to U.S. GAAP measures. The increase in net sales contributed to the increase in operating profit which was partially offset by a change in product mix between the Lighting Segment and Display Solutions Segment product lines.

Operating income of $17.6 million for the six months ended December 31, 2024, represents a 7% decrease from operating income of $18.8 million in the six months ended December 31, 2023. Adjusted operating income, a Non-GAAP financial measure, was $23.6 million in the six months ended December 31, 2024, compared to adjusted operating income of $23.8 million in the six months ended December 31, 2023. The increase in net sales was offset by a change in product mix between the Lighting Segment and Display Solutions Segment product lines. Refer to “Non-GAAP Financial Measures” below for a reconciliation of Non-GAAP financial measures to U.S. GAAP measures.

Non-GAAP Financial Measures

This report includes adjustments to GAAP operating income, net income, and earnings per share for the three months and six ended December 31, 2024, and 2023. Operating income, net income, and earnings per share, which exclude the impact of long-term performance based compensation expense, the amortization expense of acquired intangible assets, commercial growth opportunity expense, acquisition costs, the lease expense on the step-up basis of acquired leases, and restructuring and severance costs, are non-GAAP financial measures. We further note that while the amortization expense of acquired intangible assets is excluded from the non-GAAP financial measures, the revenue of the acquired companies is included in the measures and the acquired assets contribute to the generation of revenue. We believe these non-GAAP measures will provide increased transparency to our core operating performance of the business. Also included in this report are non-GAAP financial measures, including Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA and Adjusted EBITDA), Net Debt to Adjusted EBITDA, Free Cash Flow, and organic sales growth. We believe that these are useful as supplemental measures in assessing the operating performance of our business. These measures are used by our management, including our chief operating decision maker, to evaluate business results, and are frequently referenced by those who follow the Company. These non-GAAP measures may be different from non-GAAP measures used by other companies. In addition, the non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations, in that they do not reflect all amounts associated with our results as determined in accordance with U.S. GAAP. Therefore, these measures should be used only to evaluate our results in conjunction with corresponding GAAP measures. Below is a reconciliation of these non-GAAP measures to net income and earnings per share reported for the periods indicated along with the calculation of EBITDA, Adjusted EBITDA, Free Cash Flow, Net Debt to Adjusted EBITDA, and organic sales growth.

Page 23

	Three Months Ended
Reconciliation of operating income to adjusted operating income:	December 31
	2024		2023
(In thousands)

Operating income as reported	$	8,459	$	7,819

Long-term performance based compensation		1,669		849

Amortization expense of acquired intangible assets		1,408		1,190

Lease expense on the step-up basis of acquired leases		69		-

Restructuring/severance costs		-		35

Consulting expense: commercial growth opportunities		81		-

Adjusted operating income	$	11,686	$	9,893

Reconciliation of net income to adjusted net income	Three Months Ended
	December 31
(In thousands, except per share data)	2024						2023
					Diluted EPS						Diluted EPS

Net income as reported	$	5,647			$	0.18	$	5,906			$	0.20

Long-term performance based compensation		1,294		(1)		0.04		625		(5)		0.02

Amortization expense of acquired intangible assets		1,090		(2)		0.04		885		(6)		0.03

Restructuring/severance costs		-				-		34		(7)		-

Lease expense on the step-up basis of acquired leases		53		(3)		-		-				-

Consulting expense: commercial growth opportunities		62		(4)		-		-				-

Tax rate difference between reported and adjusted net income		(150	)			-		(201	)			(0.01	)

Net income adjusted	$	7,996			$	0.26	$	7,249			$	0.24

Effective in the first quarter of fiscal 2025, LSI will include the amortization expense related to acquired intangible assets as an add-back to its non-GAAP reconciliation. Prior quarter non-GAAP reconciliations have been adjusted accordingly.

The following represents the income tax effects of the adjustments in the tables above, which were calculated using the estimated combined U.S., Canada and Mexico effective income tax rates for the periods indicated (in thousands):

⁽¹⁾ $375

⁽²⁾$318

⁽³⁾$16

⁽⁴⁾$19

⁽⁵⁾$224

⁽⁶⁾$305

⁽⁷⁾$1

Page 24

	Six Months Ended
Reconciliation of operating income to adjusted operating income:	December 31
	2024		2023
(In thousands)

Operating income as reported	$	17,590	$	18,847

Acquisition costs		48		-

Long-term performance based compensation		2,853		2,174

Amortization expense of acquired intangible assets		2,816		2,380

Lease expense on the step-up basis of acquired leases		136		-

Restructuring/severance costs		60		388

Consulting expense: commercial growth opportunities		81		19

Adjusted operating income	$	23,584	$	23,808

Reconciliation of net income to adjusted net income	Six Months Ended
	December 31
(In thousands, except per share data)	2024							2023
					Diluted EPS							Diluted EPS

Net income as reported	$	12,329			$	0.40		$	13,934			$	0.47

Long-term performance based compensation		2,161		(1)		0.07			1,599		(7)		0.05

Amortization expense of acquired intangible assets		2,132		(2)		0.07			1,755		(8)		0.06

Restructuring/severance costs		45		(3)		-			290		(9)		0.01

Acquisition costs		50		(4)		-			-				-

Lease expense on the step-up basis of acquired leases		103		(5)		0.01			-				-

Consulting expense: commercial growth opportunities		62		(6)		-			13		(10)		-

Tax rate difference between reported and adjusted net income		(905	)			(0.03	)		(732	)			(0.03	)

Net income adjusted	$	15,977			$	0.52		$	16,859			$	0.56

(1) $692

(2) $684

(3) $15

(4) ($2)

(5) $33

(6) $19

(7) $575

(8) $625

(9) $98

(10) $6

Page 25

Reconciliation of Net Income to Adjusted EBITDA	Three Months Ended					Six Months Ended
	December 31					December 31
(In thousands)	2024		2023			2024		2023
Net Income - Reported	$	5,647	$	5,906		$	12,329	$	13,934

Income Tax		1,702		1,489			3,336		3,827
Interest Expense, Net		728		453			1,603		1,019
Other (Income) Expense		382		(29	)		322		67
Operating Income as reported	$	8,459	$	7,819		$	17,590	$	18,847

Depreciation and Amortization		3,018		2,357			5,958		4,728

EBITDA	$	11,477	$	10,176		$	23,548	$	23,575

Long-term performance based compensation		1,669		849			2,853		2,174
Restructuring/severance costs		-		-			60		19
Lease expense on the step-up basis of acquired leases		69		-			136		-
Consulting expense: commercial growth opportunities		81		-			81		-
Acquisition costs		-		35			48		388

Adjusted EBITDA	$	13,296	$	11,060		$	26,726	$	26,156

Reconciliation of cash flow from operations to free cash flow	Three Months Ended						Six Months Ended
	December 31						December 31
(In thousands)	2024			2023			2024			2023

Cash Flow from Operations	$	9,891		$	9,276		$	21,737		$	19,868

Capital expenditures		(1,066	)		(1,956	)		(1,825	)		(3,349	)
							`
Free Cash Flow	$	8,825		$	7,320		$	19,912		$	16,519

Net Debt to Adjusted EBITDA	December 31			June 30
(In thousands)	2024			2024

Current portion and long-term debt as reported	$	3,571		$	3,571
Long-Term Debt		34,615			50,658
Total Debt		38,186			54,229
Less: Cash and cash equivalents		(4,712	)		(4,110	)

Net Debt	$	33,474		$	50,119

Adjusted EBITDA - Trailing 12 Months	$	52,006		$	51,436

Net Debt to Adjusted EBITDA		0.6			1.0

	Three Months Ended								Six Months Ended
Organic compared to Inorganic Sales	Dec 2024		Dec 2023		% Variance				Dec 2024		Dec 2023		% Variance

Lighting Segment	$	58,210	$	64,796		-10	%		$	116,646	$	132,437		-12	%
Display Solutions Segment
- Comparable Display Solutions Sales		66,133		44,209		50	%			119,588		100,010		20	%
- EMI		23,391		-						49,595		-
Total Display Solutions Sales		89,524		44,209		103	%			169,183		100,010		69	%
Total net sales		147,734		109,005		36	%			285,829		232,447		23	%
Less:
EMI		23,391		-				`		49,595		-
Total organic net sales	$	124,343	$	109,005		14	%		$	236,234	$	232,447		2	%

Page 26

Results of Operations

THREE MONTHS ENDED DECEMBER 31, 2024, COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2023

Display Solutions Segment	Three Months Ended
	December 31
(In thousands)	2024		2023

Net Sales	$	89,524	$	44,210
Gross Profit	$	15,820	$	8,838
Operating Income	$	8,127	$	3,302

Display Solutions net sales of $89.5 million increased 103% from same period in fiscal 2024. This segment generated organic growth of 50% driven by increased sales across all major product categories and vertical markets supported mostly by the grocery, refueling/ c-Store, and QSR verticals. The Company’s recent acquisition of EMI also contributed $23.4 million of the quarter-over-quarter sales growth of the Display Solutions Segment.

Gross profit of $15.8 million in the three months ended December 31, 2024 increased 79% from the same period of fiscal 2024. Gross profit as a percentage of net sales in the three months ended December 31, 2024 decreased to 18% from 20% in the same period of fiscal 2024 impacted by product and vertical market mix. The Company continues to maintain favorable program pricing and prudent cost management.

Operating expenses of $7.7 million in the three months ended December 31, 2024 increased 39% from the same period of fiscal 2024, primarily driven by the acquisition of EMI and by continued investment in commercial initiatives to drive growth.

Display Solutions Segment operating income of $8.1 million in the three months ended December 31, 2024 increased 146% from the same period of fiscal 2024. The increase in operating income of $4.8 million was driven by the net effect of an increase in net sales partially offset by the gross margin impact of product mix.

Lighting Segment	Three Months Ended
	December 31
(In thousands)	2024		2023

Net Sales	$	58,210	$	64,795
Gross Profit	$	19,034	$	22,698
Operating Income	$	5,972	$	8,856

Lighting Segment net sales of $58.2 million in the three months ended December 31, 2024, decreased 10% compared to net sales of $64.8 million in the same period in fiscal 2024. The decline in sales is attributed to the comparison of quarter-over-quarter sales of large lighting projects. In fiscal 2024, the Company had several large lighting projects, including a new EV plant complex that did not repeat in fiscal 2025. While there was a decline in large lighting projects, small project activity increased over the prior year period.

Gross profit of $19.0 million in the three months ended December 31, 2024 decreased 16% from the same period of fiscal 2024. The decline in gross profit is attributed to the decline in sales. While overall demand levels were lower in the fiscal second quarter, selling prices and material input costs remain stable.

Operating expenses of $13.1 million in the three months ended December 31, 2024 decreased 6% from the same period of fiscal 2024, driven mostly by lower commission expense from lower sales, and effective cost management.

Lighting Segment operating income of $6.0 million for the three months ended December 31, 2024 decreased 33% from operating income of $8.9 million in the same period of fiscal 2024 primarily driven by decreased net sales.

Page 27

Corporate and Eliminations	Three Months Ended
	December 31
(In thousands)	2024			2023

Gross Profit	$	7		$	-
Operating (Loss)	$	(5,640	)	$	(4,339	)

The gross profit relates to the change in the intercompany profit in inventory elimination.

Operating expenses of $5.6 million in the three months ended December 31, 2024, increased 30% from the same period of fiscal 2024. The increase in expense is primarily the result of continued investment in commercial initiatives to support the growth of the Company. Also contributing to the quarter-over-quarter change was an increase in employee benefit costs.

Consolidated Results

The Company reported $0.7 million and $0.5 million of net interest expense in the three months ended December 31, 2024, and December 31, 2023, respectively. The increase in interest expense is the result of the funds borrowed to acquire EMI in the fourth quarter of fiscal 2024 partially offset by decreased borrowing costs. The Company also recorded other income of $0.4 million of other (income) in the three months ended December 31, 2024, of which is related to net foreign exchange currency transaction gains and losses through the Company’s Mexican and Canadian subsidiaries.

The $1.7 million of income tax expense in the three months ended December 31, 2024 represents a consolidated effective tax rate of 23.2%. The $1.5 million of income tax expense in the three months ended December 31, 2023 represents a consolidated effective tax rate of 20.1%. Impacting the effective tax rate of both reported periods was the favorable tax treatment of the Company’s long-term performance based compensation.

The Company reported net income of $5.6 million in the three months ended December 31, 2024 compared to net income of $5.9 million in the three months ended December 31, 2023. Non-GAAP adjusted net income was $8.0 million for the three months ended December 31, 2024, compared to adjusted net income of $7.3 million for the three months ended December 31, 2023 (Refer to the Non-GAAP tables above). The increase in Non-GAAP adjusted net income is primarily the net result of an increase in net sales partially offset by the profit margin impact of product mix. Diluted adjusted earnings per share of $0.18 was reported in the three months ended December 31, 2024 compared to $0.20 diluted adjusted earnings per share in the same period of fiscal 2024. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the three months ended December 31, 2024 were 30,876,000 shares compared to 30,043,000 shares in the same period last year.

SIX MONTHS ENDED DECEMBER 31, 2024, COMPARED TO SIX MONTHS ENDED DECEMBER 31, 2023

Display Solutions Segment	Six Months Ended
	December 31
(In thousands)	2024		2023

Net Sales	$	169,183	$	100,010
Gross Profit	$	30,851	$	22,148
Operating Income	$	15,834	$	10,521

Display Solutions net sales of $169.2 million increased 69% from same period in fiscal 2024. This segment generated organic growth of 20% driven by increased sales across all major product categories and vertical markets supported mostly by the grocery, refueling/ c-Store, and QSR verticals. The Company’s recent acquisition of EMI also contributed $49.6 million of the year-over-year sales growth of the Display Solutions Segment.

Gross profit of $30.9 million in the six months ended December 31, 2024 increased 39% from the same period of fiscal 2024. Gross profit as a percentage of net sales in the six months ended December 31, 2024 decreased to 18% from 22% in the same period of fiscal 2024 impacted by product and vertical market mix. The Company continues to maintain favorable program pricing and prudent cost management.

Operating expenses of $15.0 million in the six months ended December 31, 2024 increased 29% from the same period of fiscal 2024, primarily driven by the acquisition of EMI and by continued investment in commercial initiatives to drive growth.

Page 28

Operating income of $15.8 million in the six months ended December 31, 2024 increased 51% from the same period of fiscal 2024. The increase in operating income of 5.3 million was driven by the net effect of an increase in net sales partially offset by the gross margin impact of product mix.

Lighting Segment	Six Months Ended
	December 31
(In thousands)	2024		2023

Net Sales	$	116,646	$	132,436
Gross Profit	$	37,658	$	45,978
Operating Income	$	11,731	$	17,609

Lighting Segment net sales of $116.6 million in the six months ended December 31, 2024, decreased 12% compared to net sales of $132.4 million in the same period in fiscal 2024. The decline in sales in the Lighting Segment is attributed to the comparison of year-over-year sales of large lighting projects. In fiscal 2024, the Company had several large lighting projects, including a new EV plant complex that did not repeat in fiscal 2025. Contributing to the decline in large projects was the lengthening of the conversions cycle for these large projects. While there was a decline in large lighting projects, small project activity increased over the prior year period.

Gross profit of $37.7 million in the three months ended December 31, 2024 decreased 18% from the same period of fiscal 2024. The decline in gross profit is attributed to the decline in sales. While overall demand levels were lower in the first half of fiscal 2025, selling prices and material input costs remain stable.

Operating expenses of $25.9 million in the six months ended December 31, 2024 decreased 9% from the same period of fiscal 2024, driven mostly by lower commission expense from lower sales, and effective cost management.

Lighting Segment operating income of $11.7 million for the six months ended December 31, 2024 decreased 33% from operating income of $17.6 million in the same period of fiscal 2024 primarily driven by decreased net sales.

Corporate and Eliminations	Six Months Ended
	December 31
(In thousands)	2024			2023

Gross Profit (Loss)	$	(1	)	$	(1	)
Operating (Loss)	$	(9,975	)	$	(9,283	)

The gross profit (loss) relates to the change in the intercompany profit in inventory elimination.

Operating expenses of $10.0 million in the six months ended December 31, 2024, increased 7% from the same period of fiscal 2024. The increase in expense is the result of an increase in investment in commercial initiatives to support the growth of the Company. Also contributing to the year-over-year change was an increase in employee benefit costs.

Consolidated Results

The Company reported $1.6 million and $1.0 million of net interest expense in the six months ended December 31, 2024, and December 31, 2023, respectively. The increase in interest expense is the result of the funds borrowed to acquire EMI in the fourth quarter of fiscal 2024 partially offset by decreased borrowing costs. The Company also recorded other income of $0.3 million and $0.1 million in the six months ended December 31, 2024, and December 31, 2023, respectively, both of which is related to net foreign exchange currency transaction gains and losses through the Company’s Mexican and Canadian subsidiaries.

The $3.3 million of income tax expense in the six months ended December 31, 2024 represents a consolidated effective tax rate of 21.3%. The $3.8 million of income tax expense in the six months ended December 31, 2023 represents a consolidated effective tax rate of 21.5%. Impacting the effective tax rate of both reported periods was the favorable tax treatment of the Company’s long-term performance based compensation.

Page 29

The Company reported net income of $12.3 million in the six months ended December 31, 2024 compared to net income of $13.9 million in the six months ended December 31, 2023. Non-GAAP adjusted net income was $16.0 million for the six months ended December 31, 2024, compared to adjusted net income of $16.9 million for the six months ended December 31, 2023 (Refer to the Non-GAAP tables above). The decrease in Non-GAAP adjusted net income is primarily the net result of an increase in net sales offset by the profit margin impact of product mix. Diluted adjusted earnings per share of $0.40 was reported in the six months ended December 31, 2024 compared to $0.47 diluted adjusted earnings per share in the same period of fiscal 2024. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the six months ended December 31, 2024 were 30,876,000 shares compared to 29,949,000 shares in the same period last year.

Liquidity and Capital Resources

The Company considers its level of cash on hand, borrowing capacity, current ratio and working capital levels to be its most important measures of short-term liquidity. For long-term liquidity indicators, the Company believes its ratio of long-term debt to equity and our historical levels of net cash flows from operating activities to be the most important measures.

At December 31, 2024, the Company had working capital of $84.9 million compared to $83.3 million at June 30, 2024. The ratio of current assets to current liabilities was 2.1 to 1 for both December 31, 2024, and June 30, 2024. The increase in working capital from June 30, 2024, to December 31, 2024, was primarily driven by a $2.6 million increase in net accounts receivable partially offset by a $1.5 million decrease in net inventory.

Net accounts receivable was $81.2 million and $78.6 million at December 31, 2024, and June 30, 2024, respectively. DSO decreased to 52 days at December 31, 2024, from 58 days at June 30, 2024.

Net inventories of $69.4 million at December 31, 2024, decreased $1.5 million from $70.9 million at June 30, 2024. Lighting Segment net inventory decreased $1.7 million whereas net inventory in the Display Solutions Segment increased $0.2 million to support the growth in backlog resulting from an increase program activity.

Cash generated from operations and borrowing capacity under the Company’s line of credit is its primary source of liquidity. The Company has a $25 million term loan and $75 million remaining in a secured revolving line of credit. Both facilities expire in the first quarter of fiscal 2027. As of December 31, 2024, $50.2 million of the credit line was available. The Company is in compliance with all of its loan covenants. The $100 million credit facility plus cash flows from operating activities are adequate for operational and capital expenditure needs for the remainder of fiscal 2025.

The Company generated $21.7 million of cash from operating activities in the six months ended December 31, 2024, compared to $19.9 million of cash generated from operating activities in the same period in fiscal 2024. The Company continues to effectively manage its working capital while generating increasing cash flow from earnings in both fiscal years, resulting in strong cash flow from operations.

The Company invested $1.8 million and $3.3 million of cash related to investing activities in the six months ended December 31, 2024, and December 31, 2023, respectively. The Company continues to invest in equipment and tooling to support sales growth.

The Company had a net use of cash of $19.1 million and $15.7 million related to financing activities in the six months ended December 31, 2024, and December 31, 2023, respectively. The Company continues to generate positive cash flow from its operations in order to pay down its debt and fund its dividend payments to shareholders.

The Company has on its balance sheet financial instruments consisting primarily of cash and cash equivalents, revolving lines of credit, and long-term debt. The fair value of these financial instruments approximates carrying value because of their short-term maturity and/or variable, market-driven interest rates.

Off-Balance Sheet Arrangements

The Company has no financial instruments with off-balance sheet risk and have no off-balance sheet arrangements.

Cash Dividends

In January 2025, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable February 11, 2025, to shareholders of record as of February 3, 2025. The indicated annual cash dividend rate for fiscal 2025 is $0.20 per share. The Board of Directors has adopted a policy regarding dividends which indicates that dividends will be determined by the Board of Directors in its discretion based upon its evaluation of earnings, cash flow requirements, financial condition, debt levels, stock repurchases, future business developments and opportunities, and other factors deemed relevant.

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Critical Accounting Policies and Estimates

A summary of our significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company’s fiscal 2024 Annual Report on Form 10-K.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our exposure to market risk since June 30, 2024. Additional information can be found in Item 7A, Quantitative and Qualitative Disclosures About Market Risk, which appears on page 16 of the Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as such term is defined Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized, and reported within required time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

We conducted, under the supervision of our management, including the Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2024, our disclosure controls and procedures were effective. Management believes that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q are fairly presented in all material respects in accordance with GAAP for interim financial statements, and the Company’s Chief Executive Officer and Chief Financial Officer have certified that, based on their knowledge, the condensed consolidated financial statements included in this report fairly present in all material respects the Company’s financial condition, results of operations and cash flows for each of the periods presented in this report.

Changes in Internal Control

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibits:

19.1	Insider trading Policy Amended and Restated effective January 22, 2025

31.1	Certification of Principal Executive Officer required by Rule 13a-14(a)

31.2	Certification of Principal Financial Officer required by Rule 13a-14(a)

32.1	Section 1350 Certification of Principal Executive Officer

32.2	Section 1350 Certification of Principal Financial Officer

101.INS Inline XBRL Instance Document

101.SCH Inline XBRL Taxonomy Extension Schema Document

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	LSI Industries Inc.


	By:	/s/ James A. Clark
		James A. Clark
		Chief Executive Officer and President
		(Principal Executive Officer)


	By:	/s/ James E. Galeese
		James E. Galeese
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)
February 7, 2025

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