CINCINNATI — LSI Industries Inc. today announced results for the fiscal fourth quarter 2019.
Net sales were $81.5 million in the fiscal fourth quarter 2019, a decrease of 2% compared to $83.4 million in the fourth quarter 2018. Reported net income was $0.9 million, or $0.03 per diluted share, versus a loss of $(2.7 million), or $(0.10) per diluted share, in the fourth quarter 2018. Reported fiscal fourth quarter 2019 results include pre-tax restructuring charges and a favorable tax adjustment that resulted in a net favorable impact of $0.03 per share in the period. The tax adjustment relates to the pending sale of the New Windsor facility.
Adjusted EBITDA was $3.3 million in fiscal fourth quarter 2019, versus $3.6 million in the same period of 2018. Free cash flow for the quarter was $4.8 million, reflecting continued emphasis on balance sheet management. Cash flow generated in the quarter served to reduce outstanding debt by $4.3 million. Reconciliation of our GAAP and non-GAAP financial results is included later in this release.
Earlier in August, 2019, the Company secured final approval from the town of New Windsor, NY for the sale of its manufacturing facility. The Company currently anticipates the formal sale of the property to be completed on or before September 30, 2019 for approximately $12 million, consistent with prior estimates.
The Company declared a regular cash dividend of $0.05 per share payable September 12, 2019 to shareholders of record on September 3, 2019.
Management Commentary
James A. Clark, President and Chief Executive Officer commented, “Our fourth quarter reflects the initial impact of our restructuring which began last year. Sales and Adjusted EBITDA performance represents a stair-step improvement from the third quarter, although slightly below prior year. Our sales performance versus prior year was the best in five quarters; completing the New Windsor production transfer improves capacity utilization and generates an annual cost savings; and our new product pipeline is developing, with several key launches scheduled over the next several quarters. We generated strong free cash flow in the fourth quarter that resulted in further debt reduction, reflecting our ongoing commitment to disciplined balance sheet management. We finished the fiscal year with total debt below $40 million, and proceeds from the sale of the New Windsor facility will provide liquidity to further reduce our debt from current levels as well as invest in the business.
“Our sales team has embraced the focus on higher value, performance-based market applications. They are aggressively driving this plan in collaboration to end-users with our sales agency partners. Our fourth quarter order book increased on a mid-single digit basis when compared to prior year, with bookings reflecting an improving mix, and price realization resulting from the May price increase announcement. Our sales organization remains a high priority, and we’re committed to expanding and strengthening our selling capabilities.
“Our shift toward higher-end applications is also driving a more focused product development roadmap,” stated Clark. “We have several key new products scheduled for release in the first half of calendar 2020, and I’m inspired by the increased emphasis on defining market requirements, and the efforts to reduce our speed to market. This approach is also allowing us to objectively evaluate and address certain applications and products that are not performing to expectations. We’ve added several key resources to the product management function which will accelerate our product roadmap plans.
“In addition to developing a more focused sales and product development strategy, we continue to drive activities in our operations and supply chain to improve asset utilization and reduce costs. The transfer of production operations from our New Windsor facility to existing facilities in Ohio and Kentucky was completed during the fiscal fourth quarter, and all new lines are projected to be operating at pre-transfer levels by the end of September 2019. In addition, several structural improvements to our supply chain were implemented, generating lower inventory levels and improved vendor lead-times.
“We are committed to disciplined balance sheet management, as evidenced by our continued focus on debt reduction. Looking ahead, our capital allocation priorities include debt reduction, investment in high-impact initiatives that support our ongoing business transformation and continued payment of our quarterly cash dividend.
“While fiscal year 2019 was a period of significant change and disruption for our business, we are motivated by evidence of multiple progress points that validate the actions we have taken thus far,” concluded Clark. “Entering fiscal year 2020, significant work remains ahead of us, however, we are encouraged that momentum has begun to build, supported by a team committed to achieving consistent, balanced results across our key market verticals and product segments.”
Tagged with financial results, LSI