April 19, 2024
LSI Industries Acquires EMI Industries for $50 Million
Above: EMI millwork displayed above hoagie menu board at a Wawa store. Photo: EMI Industries
Strategic move bolsters company’s path to $800 million in sales by 2028
In a strategic move to enhance its market position and expand its capabilities, LSI Industries Inc. has announced the acquisition of EMI Industries for a purchase price of $50 million in an all-cash transaction. This acquisition is set to bolster LSI's Display Solutions segment, particularly enhancing its offerings in the convenience store and grocery sectors. EMI is a Florida-based metal and millwork manufacturer of standard and customized fixtures, displays, and food equipment.
In recent quarters LSI Industries, a $474 million company, has derived approximately 60% of its revenue from its Lighting Segment. The acquisition of EMI Industries, primarily aligned with LSI's Display Solutions segment, similarly follows the strategic pattern observed in the 2021 acquisition of JSI Store Fixtures. While JSI’s acquisition enabled LSI to cross-utilize customer relationships and drive new opportunities in display and signage, the addition of EMI is poised to similarly enrich LSI’s integrated offerings, albeit with a stronger emphasis on specialized retail fixtures and custom millwork solutions.
In 2023, LSI stated that part of its 5-year plan is to deliver $800 million in sales and $100 million adjusted profit by fiscal year 2028. The EMI acquisition is a strategic step towards achieving that goal.
This is a Display Segment Move, But it Matters to the Lighting Segment
The acquisition of JSI Store Fixtures in 2021 was an important part of a pivotal turnaround for LSI Industries, which had been experiencing a series of underperforming quarters. This strategic acquisition significantly bolstered LSI's revenues and profits, highlighting the potential of targeted acquisitions to help drive financial recovery and growth. More importantly, it provided LSI with a gateway to deepen engagements with JSI’s existing customer base, opening up new avenues in display and lighting markets.
Similarly, the recent acquisition of EMI Industries may help replicate this successful model. EMI, known for its customized solutions catering to large regional customers like Wawa, Cumberland Farms, and RaceTrac, brings a strong customer base that aligns with LSI’s focus markets. By integrating EMI’s custom millwork and specialized display products, LSI anticipates a seamless entry into these established relationships, presenting an opportunity to introduce LSI's existing product lines.
As LSI deepens is roots with convenient stores, gas stations, quick service restaurants and supermarkets on the display and signage side, this may open the door to numerous new lighting opportunities in stores, under canopies and in parking lots.
Financials
In fiscal year 2023, EMI Industries recorded revenues of approximately $87.0 million and an adjusted EBITDA of $5.5 million. LSI financed the acquisition using available cash and credit facilities, achieving a post-transaction leverage ratio of approximately 1.3x net debt to adjusted EBITDA, which maintains LSI's strong financial standing.
| Year | Company | Revenues (M) | EBITDA (M) | Acquisition Cost (M) | EBITDA Multiple |
|---|---|---|---|---|---|
| 2021 | JSI | $70 | $10 | $90 | 9.0 |
| 2024 | EMI | $87 | $5.5 | $50 | 9.1 |
This acquisition is slightly larger in scale revenue-wise compared to the previous acquisition of JSI Store Fixtures, which at the time reported revenues of about $70 million. LSI's strategy in managing the financial aspects of the EMI acquisition reflects a similar approach used in the JSI acquisition, emphasizing effective internal financial management and controlled debt levels to support strategic growth through acquisitions.
“EMI has established one of the most respected fixture and equipment brands in our industry. At LSI, we share EMI’s customer-centric commitment to performance excellence and look forward to leveraging our combined capabilities as we enter the next phase of strategic growth. We are excited to welcome the more than 300 employees and experienced leadership to the LSI team.”
— James Clark, CEO, LSI Industries
The acquisition of EMI Industries is a calculated move by LSI to consolidate its position in the display solutions market while leveraging synergies to tap into a broader customer base. This strategy not only aims to enhance immediate financial performance but also positions the company for sustainable long-term growth.
