November 16, 2022
4½ Takeaways from our Visit to LSI Headquarters
LSI's people, products and processes reveal a unique winning approach to serving customers with lighting and display solutions.
Days after LSI industries reported its most recent quarterly earnings that revealed the company’s sixth consecutive quarter of double-digit percentage growth, Al Uszynski of inside.lighting visited LSI’s Cincinnati headquarters to learn more about the company and how it has been able to fully recover from the industry-wide Covid dip that is still dragging other companies down. What we discovered is a customer-focused company that exudes many positive, unique traits that have contributed to LSI’s impressive winning streak. Here are some of the more compelling takeaways:
1. CEO Jim Clark has succeeded in establishing a "Say-Do" culture
During LSI’s quarterly investor calls led by CEO Jim Clark, it is common to hear Clark refer to the importance of LSI having a high "say-do" ratio – which is employing a team of customer-focused professionals who “do what they say they are going to do.”
Early into our visit at LSI, it was easy to observe that the executives and the teams have embraced the “say-do” mantra, as at least three employees mentioned the phrase in conversations during the first 30 minutes of our visit. The teams of people with whom we met seemed laser focused on taking care of customers, partnering with LSI agents, delivering high-quality products on time and reinvesting in new products that customers value.
When Clark sat down with us, his casual and conversational style caused us to understand why the culture seems healthy – with no hierarchal worshiping or fear of executive level leaders. Clark expressed a strong passion for delivering results and by doing so by placing unwavering attention on what customers want and how they want to be treated. We enjoyed over an hour of Q&A with Clark and were impressed with his healthy balance of customer-focused vision and operationally-focused strategies.
LSI generated $306 million of revenue in 2020 and $316 million in 2021. When we first heard of Clark’s ambitions to be a $500 million company by 2025, we thought that might be a bit overzealous. Now, after meeting Clark and watching LSI recently post an impressive $127 million quarter we’ve learned not to underestimate LSI's dedication to the “say-do” ratio.
Above: LSI Industries CEO, Jim Clark, discusses company culture and growth with Al Uszynski of inside.lighting
2. "Made in America" supply chain advantage
As many industries are adjusting supply chain to be less reliant on products and components from Asia and other parts of the world, LSI's long-standing Made in America strategy has enabled recent success amidst global supply chain challenges.
LSI’s headquarters building in the Blue Ash section of Cincinnati includes a large assembly plant that produces many of the company’s finished goods, but the company’s operations are much more extensive and vertically integrated than we had originally imagined.
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A separate building adjacent to LSI’s headquarters building is home to its extensive steel pole production facility.
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Integrated circuit boards for LSI’s LED fixtures are sourced from LSI’s very own LED board plant, ADL, just a two-hour drive away off I-71 in Columbus, Ohio.
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In Burlington, North Carolina – the original home of Atlas Lighting – many LSI and Atlas fixtures are made that serve the stock-and-flow distribution channel.
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Just over the Ohio River in nearby Independence, Kentucky, LSI has another facility that specializes in metal fabrication.
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LSI has other North American facilities including display-building plants in Maine and Texas.
Poles, Poles, Poles: LSI has extensive steel pole-making capabilities in Blue Ash, Ohio.
3. “Solutions” is much more than a marketing term
“Solutions” is a very popular (and often overused) word that makers of lighting and controls frequently use to describe their product offerings. While the term might be appropriately used by many lighting companies, LSI’s “Solutions” seem to be much more extensive than the average lighting manufacturer.
Many people know that LSI is a leading choice for under-canopy lights at gas stations. But when their customers ask for an under-canopy optic that distributes light to illuminate the dark parking area between the gas pumps and the entrance to the convenience store, LSI responds with a specialized optic for that very purpose. When the same customer wants digital menu boards for inside the store, LSI provides that solution too. And when that customer needs specialized refrigerated displays, LSI has that too.
LSI’s vertical market approach is laser-focused. While the company makes general lighting fixtures that can be used in a myriad of commercial and industrial applications, they also get close to vertical markets which enables a special kind of customer knowledge and intimacy. Does the Parks & Rec person in your town believe that tennis court lighting and pickleball court lighting should be the same? Not so fast, there’s a reason that LSI is the official lighting partner of USA Pickleball. Looking for a lighting manufacturer that understands all of the nuances of how lighting and displays can help optimize a supermarket produce section? LSI understands the specialized needs of numerous types of retail applications.
LSI offers services, too. For more than 25 years, their ADAPT project management services have been provided to many of America’s largest corporations. With a focus on retailers, quick service restaurants, grocery stores and automotive dealerships, LSI can manage complex, multi-site construction, engineering and branding projects that must be perfectly aligned with the clients’ corporate identity standards.
4. A strong lighting culture
In the most recent quarter, LSI Industries had somewhat balanced revenue split between business segments, 53% Lighting and 47% Display Solutions. The company that was originally founded in 1976 as Lighting Systems Inc. has a culture that leads with lighting yet supports many of its regional and national account retail customers with uniquely customized signage and display solutions.
While the company has grown to offer extensive portfolio customizable display products for convenience stores, grocery retail, gas stations and other venues, the lighting culture at LSI is omnipresent. Engineering, applications, sales, marketing – the solutions that LSI provides its customers often start with specialized lighting applications. The other side of that coin though, is that if a quick service restaurant needs drive through menu boards, LSI is there to provide custom display solutions – and often times these relationships can blossom into customer relationships that enjoy a myriad of lighting and display solutions from LSI.
4½ LSI’s stock is up 59% in 2022
2022 has been a brutal year for financial markets. As of yesterday’s close, the S&P 500 is down 17% this year. Nasdaq is down 28%.
This is a ½ takeaway because we didn’t talk about LSI Industries stock (LYTS: Nasdaq) during our visit to LSI headquarters, but as we follow the business throughout the year, it’s hard to ignore the impressive gains that the stock has seen amidst an incredibly challenging geopolitical and inflationary environment.
LSI Industries stock started the year trading at $6.69 and closed yesterday at $10.67.
Sponsored content: Written by Al Uszynski. Brought to you by LSI Industries.
