LSI Acquires EMI Industries for $50 Million in
Accretive, All-Cash Transaction
Transaction Expands Display Solutions
Capabilities Within Grocery, Convenience Store & Restaurant
Markets
LSI to Host EMI Industries Acquisition
Conference Call at 11 a.m. ET on April 19, 2024
LSI Industries Inc. (NASDAQ: LYTS, “LSI” or the “Company”), a
leading U.S. based manufacturer of commercial lighting and display
solutions, today announced the acquisition of privately held EMI
Industries (“EMI”) for an all-cash purchase price of $50
million.
Florida-based EMI is an award-winning metal and millwork
manufacturer of standard and customized fixtures, displays, and
food equipment for the convenience store, grocery, and restaurant
industries. For more than 40 years, EMI has worked closely with
customers to develop innovative custom solutions that drive
in-store customer traffic, elevate brand identity, and enhance the
shopping experience. EMI serves a diverse, well-established
customer base ranging in size from regional brands with several
hundred site locations to national and international brands
operating thousands of sites. EMI designs and manufactures products
from five production facilities across the United States.
“LSI continues to build the premier commercial lighting and
retail display solutions business in North America,” stated James
A. Clark, President and Chief Executive Officer. “The addition of
EMI serves to broaden our product and services capabilities within
retail fixtures, displays and food equipment. Consistent with our
Fast Forward strategy introduced last year, the acquisition
positions us to further capitalize on the ongoing, multi-year
investment cycle evident across the grocery, refueling/c-store, and
restaurant markets.
“As we bring together our complementary products, services, and
technologies, there are significant cross-selling opportunities
that enable us to be a single-source provider to more customers
throughout North America,” continued Clark. “The combination
represents a major step forward in our ability to serve a growing
portfolio of national retail chains that value our integrated,
solutions-based approach, which emphasizes quality, reliability,
and deep technical expertise.”
“EMI has established one of the most respected fixture and
equipment brands in our industry,” stated Clark. 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.”
Alan Harvill, President and CEO of EMI Industries, stated, “LSI
is an industry leader with a proven record of growth and value
creation. We are proud to become the newest part of the LSI team
and look forward to unlocking the powerful potential of the
combined businesses.”
Clark concluded, “As outlined within our Fast Forward strategic
plan, LSI intends to drive net sales growth by more than 60%
between fiscal year 2023 and fiscal year 2028, with approximately
half of this growth supported by acquisition-related contributions.
Looking ahead, we will continue to develop leading positions within
growing, high-value market verticals that expand our capabilities
and reach while continuing to scale our solutions-based platform as
we drive long-term value creation for our shareholders.”
FINANCIAL AND TRANSACTION OVERVIEW
In the full year calendar 2023, EMI reported total revenue and
adjusted EBITDA of approximately $87.0 million and $5.5 million,
respectively. Upon closing, the transaction will be immediately
accretive to LSI on an adjusted earnings per share basis.
LSI funded the acquisition of EMI utilizing cash and
availability under its existing credit facility. At closing, LSI
anticipates that its pro-forma ratio of net debt outstanding to
trailing twelve-month adjusted EBITDA will be approximately 1.3x.
LSI intends to significantly reduce net leverage within the
business during the next 24 months, supported by anticipated growth
in pro-forma free cash flow from the combined entities.
As part of the transaction, the Company will welcome EMI’s more
than 300 employees to LSI, while retaining EMI’s experienced
leadership team, including President and CEO Alan Harvill, together
with each of its five facilities. Following the closing of the
transaction, EMI will remain an independent brand, given its
established commercial presence in the market. LSI anticipates EMI
will become part of LSI’s display solutions segment on a reporting
basis moving forward.
COMPELLING TRANSACTION RATIONALE
- EMI further establishes LSI as a market-leading business of
scale within the retail display solutions market. Following the
successful acquisition of JSI Store Fixtures in 2021, EMI
significantly expands LSI’s presence in the grocery, convenience
store and QSR/restaurant verticals. The combined business provides
considerable commercial and operational synergies to be realized
over the next several years.
- Business combination provides a one-stop, end-to-end
integrated solution to LSI customers. The addition of EMI
positions LSI to further enhance its unique value proposition with
customers across the full continuum of product design, manufacture,
installation, and post-sale support. LSI believes its integrated
approach will further entrench its value as a trusted partner
equipped to support the full project management lifecycle.
- Complementary EMI and LSI customer lists provide for
significant commercial synergy potential. While the two
companies share specific customers, many do not overlap,
representing a significant cross-selling opportunity for LSI. The
business combination also expands our capability to attract new
customers in existing markets.
- Transaction capitalizes on a multi-year investment cycle
within key vertical markets. EMI is one of the largest
privately held retail fixture and food equipment companies in the
North America, with a diverse base of recurring, long-term
customers. LSI believes its acquisition of EMI will position it to
further capitalize on the ongoing, multi-year capital investment
programs within the convenience store, grocery, and restaurant
industries as operators seek to adapt to evolving consumer
preferences and behaviors
- Transaction is immediately accretive to LSI’s adjusted
earnings per share. EMI is expected to deliver adjusted
earnings per share accretion to LSI upon closing of the
transaction, excluding acquisition-related revenue and cost
synergies. On a post-synergy basis, LSI believes it will steadily
expand EMI’s margin performance in future years, positioning LSI to
deliver double-digit EBITDA margin within the legacy EMI business
within the first 24 months following the close of the
transaction.
- Transaction is consistent with inorganic growth priorities
outlined within LSI’s Fast Forward strategy. LSI’s Fast Forward
Strategy seeks to deliver sustained commercial expansion,
operational excellence, and disciplined capital allocation,
consistent with the Company’s focus on long-term value creation. As
outlined within the Fast Forward strategy, LSI remains focused on
adding scale and competencies within both new and existing vertical
markets. By fiscal year 2028, LSI projects net sales growth of more
than 60%, Adjusted EBITDA growth of more than 100% and Adjusted
EBITDA margin expansion of approximately 250+ basis points, or
12.5% of net sales, as supported through a balance of organic and
inorganic investments.
EMI INDUSTRIES ACQUISITION CONFERENCE CALL
A conference call will be held tomorrow, April 19, 2024, at 11
a.m. ET to review LSI’s acquisition of EMI Industries and conduct a
question-and-answer session.
A webcast of the conference call and accompanying presentation
materials will be available in the Investor Relations section of
LSI Industries’ website at www.lsicorp.com. Individuals can also
participate by teleconference dial-in. To listen to a live
broadcast, go to the site at least 15 minutes prior to the
scheduled start time to register, download and install any
necessary audio software.
Details of the conference call are as follows:
Live Call Dial-In:
877-407-4018
Call Replay:
844-512-2921
Replay ID:
13745502
ABOUT LSI INDUSTRIES
Headquartered in Cincinnati, LSI Industries (NASDAQ: LYTS)
specializes in the creation of advanced lighting, graphics, and
display solutions. The Company’s American-made products, which
include lighting, print graphics, digital graphics, refrigerated,
and custom displays, are engineered to elevate brands in
competitive markets. With a workforce of 1,600 employees and 11
facilities throughout North America, LSI is dedicated to providing
top-quality solutions to its clients. Additional information about
LSI is available at www.lsicorp.com.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements.
Forward-looking statements may be identified by words such as
“estimates,” “anticipates,” “encourage,” “projects,” “plans,”
“expects,” “can,” “intends,” “believes,” “seeks,” “may,” “will,”
“should,” or the negative versions of those words and similar
expressions and by the context in which they are used. Such
statements, whether expressed or implied, are based upon current
expectations of the Company and speak only as of the date made.
Actual results could differ materially from those contained in or
implied by such forward-looking statements as a result of a variety
of risks and uncertainties over which the Company may have no
control. These risks and uncertainties include, but are not limited
to, risks that the benefits from the transaction may not be fully
realized or may take longer to realize than expected, including as
a result of changes in general economic and market conditions,
interest and exchange rates, monetary policy, laws and regulations
and their enforcement, and the degree of competition in the
geographic and business areas in which LSI and EMI operate;
uncertainties regarding the ability of LSI and EMI to promptly and
effectively integrate their businesses; uncertainties regarding the
reaction to the transaction of the companies’ respective customers,
employees, and counterparties; and risks relating to the diversion
of management time on transaction-related issues. For details on
additional risks and uncertainties that may cause our actual
results to be materially different than those expressed in our
forward-looking statements, visit https://investors.lsicorp.com as
well as our Annual Reports on Form 10-K and Quarterly Reports on
Form 10-Q which contain risk factors. The Company does not
undertake and hereby disclaims any duty to update any
forward-looking statements to reflect subsequent events or
circumstances.
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version on businesswire.com: https://www.businesswire.com/news/home/20240418876900/en/
INVESTOR & MEDIA CONTACT Noel Ryan, IRC 720.778.2415
LYTS@vallumadvisors.com
LSI Industries (NASDAQ:LYTS)
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