CINCINNATI — LSI Industries Inc. today announced results for the second quarter fiscal 2021.
LSI delivered improved year-over-year growth in profitability during the fiscal second quarter, supported by a higher margin sales mix across both its Graphics and Lighting segments that more than offset adverse market conditions related to the COVID-19 pandemic.
The Company reported net income of $2.2 million, or $0.08 per diluted share for the fiscal second quarter, versus net income of $1.7 million or $0.07 per diluted share in the prior year period. LSI reported adjusted net income of $2.5 million, or $0.09 per diluted share for the quarter, compared to $1.7 million, or $0.07 per diluted share last year. Fiscal second quarter EBITDA was $4.7 million, or 20% above prior year, and adjusted EBITDA was $5.1 million.
The Company generated free cash flow of $5.3 million for the quarter, increasing its total cash and equivalents to $13.6 million as of December 31, 2020. The Company had no long-term debt at the end of the fiscal second quarter, with $75 million available on its existing credit facility.
The Company declared a regular cash dividend of $0.05 per share payable February 9, 2021 to shareholders of record on February 1, 2021.
James A. Clark, President and Chief Executive Officer commented, “Our improved second quarter profitability was a testament to the versatility of the LSI team, as together we successfully managed through a resurgence of pandemic related market and supply chain disruptions. Despite these challenges, we generated sequential sales growth compared to the first quarter, while our gross margin rate, operating income, net income and earnings per share all improved versus the prior year period.
Our Graphics segment generated sales growth of 8% versus the prior year, adapting to fluctuating customer project schedules throughout the quarter. Despite the challenges, we were successful in meeting our commitment to produce, ship and install “digital wallet” integration service solutions to 11,000 sites for an existing petroleum retailer. The quarter also reflects a steady mix of site release activity covering our six major, multi-year customer programs. Our Graphics gross margin rate improved 280 bps while adjusted operating income improved 90% to $3.2 million in the period. Our Graphics backlog remains strong, and new program development activity remains robust. We expect that site installations for the digital solution project at a major QSR retailer will increase substantially during the second half of the fiscal year.
Lighting segment sales for the second quarter were flat with the first quarter, despite being adversely impacted by pandemic related factors during the period. We’ve experienced project quotation rates above prior year levels for the last several months, but the quote-to-order conversion period has lengthened, a reflection of the challenges evident in developing construction plans and installation schedules during the pandemic. Lighting segment gross margin exceeded 30%, improving 140 bps versus the prior year, driven by our sharpened focus on pricing, cost management and business quality. We expect project activity to improve in the coming months, although the timing of project release activity may remain uneven during this period.
While current market conditions remain impacted by the pandemic, we continue to invest in multiple commercial initiatives intended to drive profitable growth moving forward. These initiatives include the introduction of new products, the addition of key sales resources, expanding our entry into new and existing market verticals and purposeful marketing and communications programs.
For example, the pace of new product launch activity in Lighting continues to accelerate, as five new products were launched in the second quarter alone, along with several cost-down design programs and various feature and function enhancements. Most notable is the next generation Vertex™ Canopy product, which provides industry-leading lighting optic capabilities, further strengthening our leading position in this product category.
Looking forward, we expect to release a record number of new products in the second half of fiscal 2021. We have a well-positioned, extremely competitive and successful outdoor product portfolio that we intend to further expand, including the launch of the Witness wall-pack fixture. This innovative solution integrates the lighting benefits of an exterior wall pack fixture with security camera recording capabilities, providing a low-cost security solution for certain market applications. In addition, we will introduce our Opulence™ architectural area lighting family of products, which will complement our current Mirada™ commercial line, providing a comprehensive outdoor area lighting solution for all major vertical markets.
For indoor applications, our new product vitality rate will increase substantially as we launch a succession of new products that provide additional price points, improved aesthetics, multiple technology enablement options and simplified ease of contractor installation.
Despite current market headwinds, we are investing in additional sales resources, intending to expand our sales team by approximately 10%. These resources are being strategically deployed to target vertical market opportunities, provide additional focus on end-customers and expand our existing services business. In addition, we consider it extremely important to elevate the level of collaboration with our external sales agency partners. In late January, we plan to conduct a combined internal/external partner virtual sales meeting to align priorities and growth plans for 2021 and the years ahead.
Respecting pandemic safety protocols in effect across the country, we have expanded our digital communications capabilities to effectively engage with our partners and customers. We are leveraging various tools to conduct virtual meetings and training programs, as well as numerous daily consultation and solution building sessions. In addition, we have launched various marketing programs designed to promote solution capabilities in key vertical markets. We are a leading provider of high-performance lighting solutions for sports and recreation facilities, and we recently announced that LSI is now the official lighting partner of USA Pickleball. Population trends and an increasing focus on personal health and wellness are contributing to growth in Pickleball and all sport court activities.
While pandemic-related market disruptions may persist in the near-term, we will continue to position the business for execution on our growth plans while investing in the people, products and opportunities that will enable us to capitalize on a future market recovery,” concluded Clark.Tagged with financial results, LSI