November 8, 2022
5 Big Questions: LSI Industries’ Winning Streak
Above (L to R): LSI executives Pablo Leguina, Mike Prachar and Chris Papa
We catch up with LSI execs to learn how the company has been able to accelerate through its COVID recovery
CINCINNATI, OHIO — Days after LSI Industries (Nasdaq: LYTS) published its most recent quarterly results revealing the company’s sixth consecutive quarter of double-digit percentage growth, inside.lighting caught up with LSI executives to learn more details behind the company’s impressive 18-month winning streak. Company revenues for the quarter ended September 30 were $127 million.
LSI executives who lead marketing, sales and engineering sat down with us to explain the innerworkings and consistent, recent growth of LSI’s two business segments, Lighting and Display Solutions:
Mike Prachar, Chief Marketing Officer
Pablo Leguina, Senior Vice President, Sales
Chris Papa, Senior Vice President, Engineering
Despite having a 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. In May 2021, LSI acquired JSI Store Fixtures for $90 million to help bolster its offerings of refrigerated and non-refrigerated merchandising displays for the grocery and convenience store market.
We caught up with the LSI executive team to discuss strategy, products and what the near-term future may look like as the company seeks to build upon the steady growth of its lighting and displays business.
1. Revenues and profits have been trending nicely for six consecutive quarters. What do you attribute to the impressive, faster-than-usual recovery from the 2020 COVID economy?
Leguina: It really comes down to discipline and focus – the discipline on how we run the business, how we work with our agents and how we stay focused on the markets we serve.
Prachar: More keys to our growth include getting closer to our customers while being engaged with our agents. In addition to that, we have a strong focus on developing products that address the markets which we serve.
Above: LSI’s Pablo Leguina and Mike Prachar demonstrate REDiMount to Al Uszynski of inside.lighting
2. LSI seems to focus on several key vertical markets – what are they – and how much of your success has been due to strong vertical market performance?
Papa: Everyone makes products, but our approach to market is a focus on providing needed solutions to our customers in the verticals we serve. Our recent REDiMount™ launch is an example of a product that simplifies and increases the quality of canopy light installations with significantly less time to install. Our specially designed CT Court Optic is another example with its tailored optical distribution maximizing placement of light on the court's playing surface with minimal backlight spill.
Leguina: Our core business, which is lighting, has seen consistent quarter-over-quarter growth, and much of that has been driven by vertical markets like grocery, quick service restaurants, auto dealerships, convenience stores and others.
Prachar: Vertical markets drive our business. It’s who we are. Vertical markets are the root of our DNA – it’s how our company started and it’s what makes us different than a lot of companies in this industry. There are a lot of companies in lighting, and some struggle to differentiate. Trying to differentiate with product is one approach, but you can’t be everything to everybody – but part of our recovery as an organization was getting back to the basics and focused on what is core to us, and that’s our verticals.
3. It’s been five years since LSI acquired Atlas Lighting. How would you describe Atlas Lighting’s performance thus far and its integration with LSI?
Prachar: We have a better understanding of the entire customer process now, with Atlas because they brought in a different customer base than we had previously been focused on. Our understanding of contractors is better, stock-and-flow is better, and it gives us a better holistic view of the lighting industry that allow us to provide even better service and products to all our customers.
Leguina: Performance-wise, Atlas has progressed well and the synergies with LSI have been great. Because of Atlas, we have a new channel to market in the stock-and-flow area where LSI wasn’t as strong before the acquisition. And we use Atlas’ Burlington, North Carolina facility as an LSI facility – expanding our already-strong U.S. manufacturing footprint.
4. How has the acquisition of JSI Store Fixtures impacted your business and pulled in lighting opportunities?
Leguina: JSI has been an excellent addition to LSI because it has further strengthened our relevance in key markets that we’re very close to – grocery and convenience stores – which have been going through a bit of a transformation. So for us it has added another layer of importance with that customer base and because of it we’ve seen our sales funnel grow to include lighting opportunities that we didn’t have before the acquisition.
Prachar: We are vertical driven in our objectives and JSI was a fantastic fit to a target vertical as well as a complement to our refueling or petroleum vertical which is an opportunity for those customers, too. JSI provides great synergy – culturally and product-wise – and it’s an extension of who we are, which made them a great addition.
5. The market still seems finicky and many companies in C&I related businesses are braced for a recession. What is LSI doing to navigate potentially unpredictable or shrinking markets ahead?
Leguina: We are still seeing a lot of activity. We are certainly aware of growing concerns for future markets conditions, but when we look at the vertical markets where we play, they’re all still in a growth mode. They’re not shrinking. Even though growth is not as high, it’s still growing. Quick service restaurants delayed projects in recent years, so they’re all still renovating and making more improvements. Grocery is still growing and investing. For us, we see lots of activity.
Prachar: Addressing any potential future economic challenges will be similar to how we were able to grow during the COVID period. That means that we must stay true to the discipline and focus that has enabled all our recent, strong growth during somewhat challenging times. A focus on working the basics – prospecting, products, customer focus – as long as we keep working those levers and maintaining a high “say-do ratio”, we are confident in our direction.
Leguina: Related to this, we did not let a single person go during COVID, and we are really proud of that. The people here are our most important asset, so for us we feel that when we take care of our people they will take care of our customers and build more loyalty in the process.
Bonus Question: What LSI products are creating the most buzz with your customers right now?
Leguina: Opulence is an architectural outdoor lighting family that has been getting high marks from specifiers and customers for its wide selection, modern aesthetics and excellent performance. Furthermore, Clarity is a signature indoor line that is generating a lot of interest from customers across our entire business.
Prachar: Our entire sports lighting offering is really getting lots of attention. Court installations for growing sports like pickleball – or general parks & recreation field lighting applications continue to see a lot of activity. Perhaps our most exciting new product is an installer-friendly canopy lighting product called REDiMount™ that enables canopy installations to occur with increased speed, quality and reliability.
Above: LSI’s Brian Daley leads discussion about LSI's lighting controls integration capabilities