UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

~~_________________________~~

FORM 10-Q

☒		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, ~~2021~~2022 OR

☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO ________________.

Commission File No. 0-13375

LSI Industries Inc.

(Exact name of registrant as specified in its charter)

Ohio

31-0888951

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer Identification No.)

10000 Alliance Road, Cincinnati, Ohio		45242
(Address of principal executive offices)		(Zip Code)
(513) 793-3200
Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	LYTS	NASDAQ Global Select Market

Indicate by checkmark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer ☐		Accelerated filer ☒	Emerging growth company ☐
	Non-accelerated filer ☐		Smaller reporting company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ NONo ☒

As of April ~~23, 2021,~~29, 2022, there were ~~26,498,775~~26,654,990 shares of the registrant's common stock, no par value per share, outstanding.

~~Page 1~~

LSI INDUSTRIES INC.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, ~~2021~~2022

INDEX

				Begins on Page
PART I. Financial Information

	ITEM 1.	Financial Statements (Unaudited)

		Condensed Consolidated Statements of Operations	3
		Condensed Consolidated Statements of Comprehensive Income	4
		Condensed Consolidated Balance Sheets	5
		Condensed Consolidated Statements of Shareholders’ Equity	7
		Condensed Consolidated Statements of Cash Flows	8

		Notes to Condensed Consolidated Financial Statements	9

	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2123

	ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	31

	ITEM 4.	Controls and Procedures	31

PART II. Other Information


	ITEM 5.	Other Information	32

	ITEM 6.	Exhibits	32

Signatures			33

Page 2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	March 31						March 31						March 31						March 31
(In thousands, except per share data)	2021			2020			2021			2020			2022			2021			2022		2021

Net Sales	$	72,204		$	71,010		$	218,597		$	242,088		$	110,111		$	72,204		$	327,651	$	218,597

Cost of products and services sold		54,112			54,834			162,519			183,558			83,318			54,112			250,900		162,519

Severance costs		0			11			5			11			0			0			0		5

Restructuring costs		0			223			3			758			0			0			0		3

Gross profit		18,092			15,942			56,070			57,761			26,793			18,092			76,751		56,070

Selling and administrative expenses		15,996			17,032			49,070			55,045			21,627			15,996			62,719		49,070

Severance costs		0			8			16			62			5			0			5		16

Restructuring gains		0			(3,729	)		0			(8,576	)

Operating income		2,096			2,631			6,984			11,230			5,161			2,096			14,027		6,984

Interest (income)		(2	)		(1	)		(4	)		(3	)		0			(2	)		0		(4	)

Interest expense		54			129			175			795			524			54			1,287		175

Other expense (income)		43			642			(197	)		633
Other (income) expense														(55	)		43			33		(197	)

Income before income taxes		2,001			1,861			7,010			9,805			4,692			2,001			12,707		7,010

Income tax expense		529			0			1,340			1,726			1,074			529			2,851		1,340

Net income	$	1,472		$	1,861		$	5,670		$	8,079		$	3,618		$	1,472		$	9,856	$	5,670


Earnings per common share (see Note 4)
Earnings per common share (see Note 5)
Basic	$	0.05		$	0.07		$	0.21		$	0.31		$	0.13		$	0.05		$	0.36	$	0.21
Diluted	$	0.05		$	0.07		$	0.21		$	0.31		$	0.13		$	0.05		$	0.35	$	0.21


Weighted average common shares outstanding
Basic		26,771			26,301			26,642			26,250			27,378			26,771			27,220		26,642
Diluted		27,727			26,623			27,352			26,423			28,083			27,727			27,945		27,352

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 3

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended						Nine Months Ended					Three Months Ended					Nine Months Ended
	March 31						March 31					March 31					March 31
(In thousands)	2021			2020			2021		2020			2022		2021			2022		2021

Net Income	$	1,472		$	1,861		$	5,670	$	8,079		$	3,618	$	1,472		$	9,856	$	5,670

Foreign currency translation adjustment		(54	)		(116	)		93		(110	)		46		(54	)		11		93

Comprehensive Income	$	1,418		$	1,745		$	5,763	$	7,969		$	3,664	$	1,418		$	9,867	$	5,763

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 4

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31,			June 30,			March 31,			June 30,
(In thousands, except shares)	2021			2020			2022			2021

ASSETS

Current assets

Cash and cash equivalents	$	23,528		$	3,517		$	1,248		$	2,282

Accounts receivable, less allowance for doubtful accounts of $241 and $273, respectively		44,974			37,836
Accounts receivable, less allowance for credit losses of $421 and $256, respectively								73,618			57,685

Inventories		40,390			38,752			78,364			58,941

Refundable income tax		3,233			2,776
Refundable income taxes								1,029			1,275

Other current assets		4,277			2,977			4,299			4,825

Total current assets		116,402			85,858			158,558			125,008

Property, Plant and Equipment, at cost
Land		3,943			3,933			4,010			3,984
Buildings		20,667			20,638			24,454			24,393
Machinery and equipment		68,444			67,796			67,446			65,928
Buildings under finance leases		2,033			2,033			2,033			2,033
Construction in progress		778			440			665			933
		95,865			94,840			98,608			97,271
Less accumulated depreciation		(71,713	)		(68,305	)		(70,626	)		(66,719	)
Net property, plant and equipment		24,152			26,535			27,982			30,552

Goodwill		10,373			10,373			44,388			43,788

Other Intangible Assets, net		27,948			29,960
Other intangible assets, net								69,162			72,773

Operating Lease Right-of-Use Assets		7,673			8,663
Operating lease right-of-use assets								9,464			11,579

Other Long-Term Assets, net		10,546			10,874
Other long-term assets, net								3,001			3,121

Total assets	$	197,094		$	172,263		$	312,555		$	286,821

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 5

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

March 31,

June 30,

(In thousands, except shares)

2021

2020

LIABILITIES & SHAREHOLDERS' EQUITY

Current liabilities

Accounts payable
$ 25,003 $ 14,216
Accrued expenses
30,302 20,433

Total current liabilities
55,305 34,649

Long-Term Debt
0 0

Finance Lease Liabilities
1,568 1,755

Operating Lease Liabilities
8,105 9,021

Other Long-Term Liabilities
1,046 1,138

Commitments and Contingencies (Note 12)
- -

Shareholders' Equity

Preferred shares, without par value;

Authorized 1,000,000 shares, none issued
0 0
Common shares, without par value;

Authorized 40,000,000 shares;

Outstanding 26,490,385 and 26,286,009 shares, respectively
131,330 127,713
Treasury shares, without par value
(2,111
)
(1,121
)
Deferred compensation plan
2,111 1,121
Retained (loss)
(260
)
(1,920
)
Accumulated other comprehensive income (loss)
0 (93
)

Total shareholders' equity
131,070 125,700

Total liabilities & shareholders' equity
$ 197,094 $ 172,263

	March 31,			June 30,
(In thousands, except shares)	2022			2021

LIABILITIES & SHAREHOLDERS' EQUITY

Current liabilities
Current maturities of long-term debt	$	3,571		$	0
Accounts payable		38,697			32,977
Accrued expenses		32,903			37,918

Total current liabilities		75,171			70,895

Long-term debt		81,387			68,178

Finance lease liabilities		1,316			1,521

Operating lease liabilities		9,068			10,890

Other long-term liabilities		3,068			4,167

Commitments and contingencies (Note 13)		-			-

Shareholders' Equity
Preferred shares, without par value; Authorized 1,000,000 shares, none issued		0			0
Common shares, without par value; Authorized 50,000,000 shares; Outstanding 26,642,320 and 26,517,836 shares, respectively		138,082			132,526
Treasury shares, without par value		(5,457	)		(2,450	)
Deferred compensation plan		5,457			2,450
Retained earnings (loss)		4,403			(1,405	)
Accumulated other comprehensive income		60			49

Total shareholders' equity		142,545			131,170

Total liabilities & shareholders' equity	$	312,555		$	286,821

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 6

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

	Common Shares				Treasury Shares						Key Executive			Accumulated Other			Retained			Total			Common Shares				Treasury Shares						Key Executive		Accumulated Other			Retained			Total
(In thousands, except per share data)	Number Of Shares		*Amount*		Number Of Shares			*Amount*			Compensation Amount			Comprehensive Income (Loss)			Earnings (Loss)			Shareholders' Equity			Number Of Shares		Amount		Number Of Shares			Amount			Compensation Amount		Comprehensive Income (Loss)			Earnings (Loss)			Shareholders' Equity

Balance at June 30, 2019		26,176	$	125,729		(209	)	$	(1,468	)	$	1,468			16		$	(5,808	)	$	119,937
Balance at June 30, 2020																								26,466	$	127,713		(180	)	$	(1,121	)	$	1,121	$	(93	)	$	(1,920	)	$	125,700

Net Income		-		0		-			0			0			0			8,079			8,079			-		0		-			0			0		0			5,670			5,670
Other comprehensive loss		-		0		-			0			0			(110	)		0			(110	)
Other comprehensive income																								-		0		-			0			0		93			0			93
Stock compensation awards		48		225		0			0			0			0			0			225			35		242		0			0			0		0			0			242
Restricted stock units issued		21		0		0			0			0			0			0			0			28		0		0			0			0		0			0			0
Shares issued for deferred compensation		54		296		0			0			0			0			0			296			141		1,096		0			0			0		0			0			1,096
Activity of treasury shares, net		0		0		42			411			0			0			0			411			0		0		(128	)		(990	)		0		0			0			(990	)
Deferred stock compensation		-		0		-			0			(413	)		0			0			(413	)		-		0		-			0			990		0			0			990
Stock compensation expense		-		494		-			0			0			0			0			494			-		1,317		-			0			0		0			0			1,317
Stock options exercised, net		29		174		0			0			0			0			0			174			128		962		0			0			0		0			0			962
Dividends — $0.20 per share		-		0		-			0			0			0			(3,958	)		(3,958	)
Cumulative effect of adoption of accounting guidance		-		0		-			0			0			0			(428	)		(428	)
Dividends — $0.20 per share																								-		0		-			0			0		0			(4,010	)		(4,010	)

Balance at March 31, 2020		26,328	$	126,918		(167	)	$	(1,057	)	$	1,055		$	(94	)	$	(2,115	)	$	124,707
Balance at March 31, 2021																								26,798	$	131,330		(308	)	$	(2,111	)	$	2,111	$	0		$	(260	)	$	131,070

	Common Shares				Treasury Shares						Key Executive		Accumulated Other			Retained			Total			Common Shares					Treasury Shares						Key Executive		Accumulated Other		Retained			Total
	Number Of				Number Of						Compensation		Comprehensive			Earnings			Shareholders'			Number Of					Number Of						Compensation		Comprehensive		Earnings			Shareholders'
	Shares		Amount		Shares			Amount			Amount		Income (Loss)			(Loss)			Equity			Shares		Amount			Shares			Amount			Amount		Income		(Loss)			Equity

Balance at June 30, 2020		26,466	$	127,713		(180	)	$	(1,121	)	$	1,121		(93	)	$	(1,920	)	$	125,700
Balance at June 30, 2021																							26,863	$	132,526			(346	)	$	(2,450	)	$	2,450	$	49	$	(1,405	)	$	131,170

Net Income		-		0		-			0			0		0			5,670			5,670			-		0			-			0			0		0		9,856			9,856
Other comprehensive income		-		0		-			0			0		93			0			93			-		0			-			0			0		11		0			11
Stock compensation awards		35		242		0			0			0		0			0			242			30		225			0			0			0		0		0			225
Restricted stock units issued		28		0		0			0			0		0			0			0
Restricted stock units issued, net of shares withheld for tax withholdings																							80		(250	)		0			0			0		0		0			(250	)
Shares issued for deferred compensation		141		1,096		0			0			0		0			0			1,096			412		3,089			0			0			0		0		0			3,089
Activity of treasury shares, net		0		0		(128	)		(990	)		0		0			0			(990	)		0		0			(401	)		(3,007	)		0		0		0			(3,007	)
Deferred stock compensation		-		0		-			0			990		0			0			990			-		0			-			0			3,007		0		0			3,007
Stock compensation expense		-		1,317		-			0			0		0			0			1,317			-		2,466			-			0			0		0		0			2,466
Stock options exercised, net		128		962		0			0			0		0			0			962			5		26			0			0			0		0		0			26
Dividends — $0.20 per share		-		0		-			0			0		0			(4,010	)		(4,010	)
Dividends — $0.20 per share																							-		0			-			0			0		0		(4,048	)		(4,048	)

Balance at March 31, 2021		26,798	$	131,330		(308	)	$	(2,111	)	$	2,111	$	0		$	(260	)	$	131,070
Balance at March 31, 2022																							27,390	$	138,082			(747	)	$	(5,457	)	$	5,457	$	60	$	4,403		$	142,545

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 7

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended						Nine Months Ended
	March 31						March 31
(In thousands)	2021			2020			2022			2021

Cash Flows from Operating Activities
Net income	$	5,670		$	8,079		$	9,856		$	5,670
Non-cash items included in net income
Depreciation and amortization		5,943			6,631			7,632			5,943
Deferred income taxes		332			2,637			26			332
Deferred compensation plan		1,096			296			3,089			1,096
Stock compensation expense		1,317			494			2,466			1,317
Issuance of common shares as compensation		242			225			225			242
Gain on disposition of fixed assets		0			(8,510	)
Loss on disposition of fixed assets								57			0
Allowance for doubtful accounts		(15	)		(105	)		205			(15	)
Inventory obsolescence reserve		1,226			1,720			752			1,226

Changes in certain assets and liabilities
Accounts receivable		(6,867	)		8,322			(16,104	)		(6,867	)
Inventories		(2,817	)		(1,981	)		(20,175	)		(2,817	)
Refundable income taxes		(444	)		(1,170	)		247			(444	)
Accounts payable		10,450			1,015			5,695			10,450
Accrued expenses and other		1,269			(258	)		(3,708	)		1,269
Customer prepayments		7,232			(298	)		(2,931	)		7,232
Net cash flows provided by operating activities		24,634			17,097
Net cash flows (used in) provided by operating activities								(12,668	)		24,634

Cash Flows from Investing Activities
Purchases of property, plant and equipment		(1,517	)		(1,538	)		(1,276	)		(1,517	)
Proceeds from the sale of fixed assets		0			20,040
Net cash flows (used in) provided by investing activities		(1,517	)		18,502
Adjustment to JSI acquisition purchase price								500			0
Net cash flows used in investing activities								(776	)		(1,517	)

Cash Flows from Financing Activities
Payments of long-term debt		0			(169,671	)		(113,195	)		0
Borrowings of long-term debt		0			138,049			130,006			0
Cash dividends paid		(3,963	)		(3,958	)		(3,989	)		(3,963	)
Shares withheld for employees' taxes		(28	)		(124	)		(250	)		(28	)
Payments on financing lease obligations		(178	)		0			(196	)		(178	)
Proceeds from stock option exercises		962			174			26			962
Net cash flows used in financing activities		(3,207	)		(35,530	)
Net cash flows provided by (used in) financing activities								12,402			(3,207	)

Change related to foreign currency		101			(215	)		8			101

Increase (Decrease) in cash and cash equivalents		20,011			(146	)
(Decrease) increase in cash and cash equivalents								(1,034	)		20,011

Cash and cash equivalents at beginning of period		3,517			966			2,282			3,517

Cash and cash equivalents at end of period	$	23,528		$	820		$	1,248		$	23,528

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 8

LSI INDUSTRIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The interim condensed consolidated financial statements are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, and rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the interim financial statements include all normal adjustments and disclosures necessary to present fairly the Company’s financial position as of March 31, ~~2021,~~2022, the results of its operations for the three and nine ~~month~~-month periods ended March 31, ~~2021~~2022 and ~~2020,~~2021, and its cash flows for the nine ~~month~~-month periods ended March 31, ~~2021~~2022 and ~~2020.~~2021. These statements should be read in conjunction with the financial statements and footnotes included in the fiscal ~~2020~~2021 Annual Report on Form 10-K. Financial information as of June 30, ~~2020~~2021 has been derived from the Company’s audited consolidated financial statements.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation:

A summary of the Company’s significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company’s fiscal ~~2020~~2021 Annual Report on Form 10-K. ~~Significant changes to our accounting policies as a result of adopting Accounting Standards Update (“ASU”)~~ ~~2016~~-02 ~~(“ASU~~ ~~2016~~-~~02”~~~~), “Leases (Topic~~ ~~842~~~~)” (ASC~~ ~~842~~~~) in the~~ ~~first~~ ~~quarter of fiscal~~ ~~2020~~ ~~are discussed below.~~

Revenue Recognition:

The Company recognizes revenue when it satisfies the performance obligation in its customer contracts or purchase orders. Most of the Company’s products have a single performance obligation which is satisfied at a point in time when control is transferred to the customer. Control is generally transferred at time of shipment when title and risk of ownership passes to the customer. For customer contracts with multiple performance obligations, the Company allocates the transaction price and any discounts to each performance obligation based on relative standalone selling prices. Payment terms are typically within 30 to 90 days from the shipping date, depending on the terms with the customer. The Company offers standard warranties that do not represent separate performance obligations.

Installation is a separate performance obligation, except for the Company’s digital signage products. For digital signage products, installation is not a separate performance obligation as the product and installation is the combined item promised in digital signage contracts. The Company is not always responsible for installation of products it sells and has no post-installation responsibilities other than standard warranties.

A number of the Company's ~~Graphics~~display solutions and select ~~Lighting~~lighting products are ~~highly~~ customized for specific customers. As a result, these customized products do not have an alternative use. For these products, the Company has a legal right to payment for performance to date and generally does not accept returns on these items. The measurement of performance is based upon cost plus a reasonable profit margin for work completed. Because there is no alternative use and there is a legal right to payment, the Company transfers control of the item as the item is being produced and therefore, recognizes revenue over time. The customized product types are as follows:

●

Customer specific branded print graphics ~~branding~~

●

Electrical components based on customer specifications

●

Digital signage and related media content

The Company also offers installation services for its ~~Graphics~~display solutions elements and select ~~Lighting~~lighting products. Installation revenue is recognized over time as ~~our~~the customer simultaneously receives and consumes the benefits provided through the installation process.

Page 9

For these customized products and installation services, revenue is recognized using a cost-based input method: recognizing revenue and gross profit as work is performed based on the relationship between the actual cost incurred and the total estimated cost for the ~~contract.~~performance obligation.

On occasion, the Company enters into bill-and-hold arrangements on a limited basis. Each bill-and-hold arrangement is reviewed and revenue is recognized only when certain criteria have been met: (1) the customer has requested delayed delivery and storage of the products by the Company because the customer wants to secure a supply of the products but lacks storage space; (ii) the risk of ownership has passed to the customer; (iii) the products are segregated from the Company’s other inventory items held for sale; (iv) the products are ready for shipment to the customer; and (v) the Company does not have the ability to use the products or direct them to another customer.

~~Page~~ 9

Disaggregation of Revenue

The Company disaggregates the revenue from contracts with customers by the timing of revenue recognition because the Company believes it best depicts the nature, amount, and timing of its revenue and cash flows. The table below presents a reconciliation of the disaggregation by reportable segments:

	Three Months Ended				Nine Months Ended				Three Months Ended
(In thousands)	March 31, 2021				March 31, 2021				March 31, 2022				March 31, 2021
	Lighting Segment		Graphics Segment		Lighting Segment		Graphics Segment		Lighting Segment		Display Solutions Segment		Lighting Segment		Display Solutions Segment
Timing of revenue recognition
Products and services transferred at a point in time	$	39,497	$	12,550	$	119,478	$	42,991	$	49,283	$	41,231	$	39,497	$	12,550
Products and services transferred over time		6,243		13,914		16,793		39,335		7,843		11,754		6,243		13,914
	$	45,740	$	26,464	$	136,271	$	82,326	$	57,126	$	52,985	$	45,740	$	26,464

	Nine Months Ended
(In thousands)	March 31, 2022				March 31, 2021
	Lighting Segment		Display Solutions Segment		Lighting Segment		Display Solutions Segment
Timing of revenue recognition
Products and services transferred at a point in time	$	144,006	$	114,099	$	119,478	$	42,991
Products and services transferred over time		21,656		47,890		16,793		39,335
	$	165,662	$	161,989	$	136,271	$	82,326

	Three Months Ended				Nine Months Ended				Three Months Ended
	March 31, 2021				March 31, 2021
(In thousands)									March 31, 2022				March 31, 2021
	Lighting Segment		Graphics Segment		Lighting Segment		Graphics Segment		Lighting Segment		Display Solutions Segment		Lighting Segment		Display Solutions Segment
Type of Product and Services
LED lighting, digital signage solutions, electronic circuit boards	$	40,298	$	8,595	$	118,681	$	20,546	$	47,196	$	6,906	$	40,298	$	8,595
Poles, printed graphics, non-LED lighting		5,071		11,809		16,299		41,526
Poles, printed graphics, display fixtures										9,358		35,536		5,071		11,809
Project management, installation services, shipping and handling		371		6,060		1,291		20,254		572		10,543		371		6,060
	$	45,740	$	26,464	$	136,271	$	82,326	$	57,126	$	52,985	$	45,740	$	26,464

	Nine Months Ended
(In thousands)	March 31, 2022				March 31, 2021
	Lighting Segment		Display Solutions Segment		Lighting Segment		Display Solutions Segment
Type of Product and Services
LED lighting, digital signage solutions, electronic circuit boards	$	136,701	$	31,885	$	118,681	$	20,546
Poles, printed graphics, display fixtures		27,403		99,965		16,299		41,526
Project management, installation services, shipping and handling		1,558		30,139		1,291		20,254
	$	165,662	$	161,989	$	136,271	$	82,326

Page 10

Practical Expedients and Exemptions

●

The Company’s contracts with customers have an expected duration of one year or less, as such, the Company applies the practical expedient to expense sales commissions as incurred, and has omitted disclosures on the amount of remaining performance obligations.

●

Shipping costs that are not material in context of the delivery of products are expensed as incurred.

●

The Company’s accounts receivable balance represents the Company’s unconditional right to receive payment from its customers with contracts. Payments are generally due within 30 to 90 days of completion of the performance obligation and invoicing, therefore, payments do not contain significant financing components.

●

The Company collects sales tax and other taxes concurrent with revenue-producing activities which are excluded from revenue. Shipping and handling costs are treated as fulfillment activities and included in cost of products and services sold on the Consolidated Statements of Operations.

Reclassifications

Certain amounts reported in the prior year in Note 7 have been reclassified to conform to the current year’s presentation.

New Accounting Pronouncements:

OnIn ~~July 1, 2019,~~October 2021, the ~~Company adopted~~Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” creating an exception to the recognition and measurement principles in ASC 805. The amendment requires that entities apply ASC 606, “Revenue from Contracts with Customers,” rather than using fair value, to recognize and measure contracts assets and contract liabilities from contracts with customers acquired in a business combination. The ASU is effective for fiscal years beginning after ~~2016~~December 15, 2022, -02 ~~using~~and interim periods therein. Early adoption is permitted, including adoption in an interim period, regardless of whether a ~~modified-retrospective transition method, under which it elected~~ ~~not~~business combination occurs in that period. The guidance should be applied prospectively; however, an entity that elects to ~~adjust comparative periods.~~early adopt in an interim period should apply the amendments to all business combinations that occurred during the fiscal year that includes that interim period. The Company ~~elected the package of practical expedients permitted under the new guidance. In addition, the Company elected accounting policies to~~ ~~not~~ ~~record short-term leases on the balance sheet and to~~ ~~not~~ ~~separate lease and non-lease components.~~

The Company’s most significant leases are those related to certain manufacturing facilities along with a small office space. Besides these real estate leases, most other leases are insignificant and consist of leases related to a vehicle, forklifts and various office equipment. The adoption of the new lease standard resulted in the recognition of right-of-use assets (“ROU assets”) of $10.4 million, lease liabilities of $10.8 million which includesis evaluating the impact ~~of existing deferred rents~~this guidance may have on its consolidated financial statements and ~~tenant improvement allowances and a $0.4 million adjustment to retained earnings on the consolidated balance sheets as of~~ ~~July 1, 2019~~ ~~for the Company’s real estate leases. The adoption of the standard resulted in~~ no ~~material impact to the consolidated statements of operations or consolidated statements of cash flow.~~related disclosures.

On July 1, 2020, the Company adopted ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (ASC 326 or "CECL"), which amended the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. The adoption of ASU 2016-13 did not have a material impact on the consolidated financial statements and related disclosures.

~~Page~~ 10

In March 2020 and January 2021, the FASB issued ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting” and ASU 2021-01, “Reference Rate Reform: Scope,” respectively. Together, the ASUs provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance is effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The ~~Company is currently evaluating the impact~~adoption of this guidance did ~~may~~ nothave a material impact on ~~its~~the consolidated financial statements and related ~~disclosures, if adopted.~~

~~Subsequent Events:~~

~~The Company has evaluated subsequent events for potential recognition and disclosure through the date the consolidated financial statements were filed.~~ No ~~items were identified during this evaluation that required adjustment to or disclosure in the accompanying consolidated financial statements.~~disclosures.

NOTE3 — ACQUISITION OF JSI STORE FIXTURES

On May 21, 2021, the Company acquired 100% of the issued and outstanding shares of capital stock of JSI Store Fixtures (JSI), a Maine-based provider of retail commercial display solutions, for $93.7 million. The acquisition of JSI expands the Company’s total addressable markets within the grocery and convenience store verticals. The Company funded the acquisition with a combination of cash on hand and $71.6 million from the credit facility.

The Company accounted for this transaction as a business combination. The Company preliminarily allocated the purchase price of approximately $93.7 million, which included an estimate of customary post-closing purchase price adjustments to the assets acquired and liabilities assumed at estimated fair values, and the excess of the purchase price over the aggregate fair values was recorded as goodwill. During the second quarter of fiscal 2022, goodwill increased by $0.6 million. The increase is the net difference between the original estimate of recovery from the pre-funded working capital and the final cash received of $0.5 million. The preliminary allocation is subject to the finalization of pre-acquisition tax filings, which are expected to be finalized in the fourth quarter of fiscal 2022. The preliminary allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed as of May 21, 2021, is as follows:

	May 21, 2021
	as initially					May 21, 2021
(In thousands)	reported			Adjustments		as adjusted
Cash and cash equivalents	$	4,067		$	-	$	4,067
Accounts receivable, net		9,252			-		9,252
Inventories		9,898			-		9,898
Property, plant and equipment		7,076			-		7,076
Other assets		7,440			-		7,440
Intangible assets		45,760			-		45,760
Accounts payable		(4,199	)		-		(4,199	)
Accrued liabilities		(8,434	)		-		(8,434	)
Deferred tax liability		(10,583	)		-		(10,583	)
Identifiable assets		60,277			-		60,277
Goodwill		33,415			600		34,015
Net purchase consideration	$	93,692		$	600	$	94,292

Page 11

The gross amount of accounts receivable is $9.3 million.

Goodwill recorded from the acquisition of JSI is attributable to the impact of the positive cash flow from JSI in addition to expected synergies from the business combination. The intangible assets include amounts recognized for the fair value of the trade name, technology assets, non-compete agreements and customer relationships. The fair value of the intangible assets was determined based upon the income (discounted cash flow) approach. The following table presents the details of the intangible assets acquired at the date of acquisition:

	Estimated		Estimated Useful
(In thousands)	Fair Value		Life (Years)
Tradename	$	8,680	Indefinite life
Technology asset		4,900		7
Non-compete		260		5
Customer relationship		31,920		20
	$	45,760

The fair market value write-up of the property, plant, and equipment totaled $1.8 million. Transaction costs related to the acquisition totaled $2.9 million in the fourth quarter of fiscal 2021.

Pro Forma Impact of the Acquisition of JSI(unaudited)

The following table represents unaudited pro forma results of operations and gives effect to the acquisition of JSI as if the transaction had occurred on July 1, 2019. The unaudited pro forma results of operations have been prepared for comparative purposes only and are not necessarily indicative of what would have occurred had the business combination been completed at the beginning of the period or the results that may occur in the future. Furthermore, the unaudited pro forma financial information does not reflect the impact of any synergies or operating efficiencies resulting from the acquisition of JSI.

The unaudited pro forma financial information for the twelve months ended June 30, 2021 and June 30, 2020 is prepared using the acquisition method of accounting and has been adjusted to give effect to the pro forma events that are: (1) directly attributable to the acquisition; (2) factually supportable; and (3) expected to have a continuing impact on the combined results. The unaudited pro forma operating income of $19.3 million for fiscal 2021 excludes acquisition-related expenses of $2.9 million.

	Twelve Months Ended
	June 30
(In thousands, unaudited)	2021		2020
Net sales	$	391,000	$	362,541

Gross profit	$	97,947	$	86,399

Operating income	$	19,312	$	13,878

Page 12

NOTE 4 - SEGMENT REPORTING INFORMATION

The accounting guidance on Segment Reporting establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in financial statements. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (the Company’s Chief Executive Officer or “CODM”) in making decisions on how to allocate resources and assess performance. The Company’s ~~two~~2 operating segments are Lighting and Display Solutions (formerly known as the Graphics Segment), with one executive team under the organizational structure reporting directly to the CODM with responsibilities for managing each segment. Corporate and Eliminations, which captures the Company’s corporate administrative activities, is also reported in the segment information.

The Lighting Segment includes non-residential outdoor and indoor lighting fixtures utilizing ~~both traditional and~~ LED light sources that have been fabricated and assembled for the Company’s markets, ~~which~~ primarily ~~consist of~~the petroleum/convenience ~~stores,~~markets, parking lot and garage markets, quick-service restaurant market, retail and grocery store markets, the automotive ~~dealerships, quick-service restaurants, grocery~~market, the warehouse market, and ~~pharmacy stores, and retail/national accounts.~~the sports complex market. The Company ~~serves these~~also offers a variety of lighting controls to complement its lighting fixtures which include sensors, photocontrols, dimmers, motion detection and Bluetooth systems. The Company also services lighting product customers through the commercial and industrial project, stock and flow, and renovation channels. The Lighting Segment also includes the design, engineering and manufacturing of electronic circuit boards, assemblies and sub-assemblies which are sold directly to customers.

The Company acquired JSI in the fourth quarter of fiscal 2021, and consolidated it into the former Graphics Segment, ~~designs,~~which has been rebranded as the Display Solutions Segment, to more closely align the Company’s comprehensive product offering with the markets it serves. The Display Solutions Segment manufactures, sells and installs exterior and interior visual image and display elements, ~~such as traditional~~including printed graphics, ~~interior branding, electrical and architectural signage, active~~structural graphics, digital signage, ~~along with the management of media content related to digital signage and~~ menu board systems, ~~that are either digital or print by design.~~display fixtures, refrigerated displays, and custom display elements. These products are used in visual image programs in several markets including the petroleum/convenience ~~store market,~~markets, parking lot and garage markets, quick-service restaurant market, ~~the~~retail and grocery store markets, the automotive market, the warehouse market, and ~~pharmacy markets, as well as customers with multi-site retail operations.~~the sports complex market. The ~~Graphics~~Display Solutions Segment implements, installs and provides program management services related to products sold by the ~~Graphics~~Display Solutions Segment and by the Lighting Segment.

The Company’s corporate administration activities are reported in the Corporate and Eliminations line item. These activities primarily include intercompany profit in inventory eliminations, expense related to certain corporate officers and support staff, the Company’s internal audit ~~expenses,~~staff, expense related to the Company’s Board of Directors, equity compensation expense for various equity awards granted to corporate administration employees, certain consulting expenses, investor relations activities, and a portion of the Company’s legal, auditing and professional fee expenses. Corporate identifiable assets primarily consist of cash, invested cash (if any), refundable income taxes (if any), and deferred income taxes.

There ~~was~~were 0 customers or customer programs representing a concentration of10% or more of the Company’s consolidated net sales in the three ~~and~~or nine months ended March 31, ~~2021~~2022 ~~and~~or ~~2020.~~March 31, 2021. There was 0 concentration of accounts receivable at March 31, ~~2021~~2022 or June 30, ~~2020.~~2021.

Page 1113

Summarized financial information for the Company’s operating segments is provided for the indicated periods and as of March 31, ~~2021~~2022 and March 31, ~~2020:~~2021:

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
(In thousands)	March 31						March 31						March 31						March 31
	2021			2020			2021			2020			2022			2021			2022			2021
Net Sales:
Lighting Segment	$	45,740		$	49,013		$	136,271		$	165,640		$	57,126		$	45,740		$	165,662		$	136,271
Graphics Segment		26,464			21,997			82,326			76,448
Display Solutions Segment														52,985			26,464			161,989			82,326
	$	72,204		$	71,010		$	218,597		$	242,088		$	110,111		$	72,204		$	327,651		$	218,597

Operating Income (Loss):
Lighting Segment	$	3,797		$	1,102		$	9,519		$	13,411		$	4,959		$	3,797		$	13,921		$	9,519
Graphics Segment		1,230			4,015			6,196			6,394
Display Solutions Segment														4,556			1,230			12,142			6,196
Corporate and Eliminations		(2,931	)		(2,486	)		(8,731	)		(8,575	)		(4,354	)		(2,931	)		(12,036	)		(8,731	)
	$	2,096		$	2,631		$	6,984		$	11,230		$	5,161		$	2,096		$	14,027		$	6,984

Capital Expenditures:
Lighting Segment	$	605		$	126		$	1,249		$	1,013		$	272		$	605		$	624		$	1,249
Graphics Segment		17			234			84			279
Display Solutions Segment														185			17			660			84
Corporate and Eliminations		15			59			184			246			74			15			(8	)		184
	$	637		$	419		$	1,517		$	1,538		$	531		$	637		$	1,276		$	1,517

Depreciation and Amortization:
Lighting Segment	$	1,566		$	1,650		$	4,795		$	5,089		$	1,450		$	1,566		$	4,361		$	4,795
Graphics Segment		278			347			940			1,107
Display Solutions Segment														1,021			278			3,068			940
Corporate and Eliminations		76			83			208			435			60			76			203			208
	$	1,920		$	2,080		$	5,943		$	6,631		$	2,531		$	1,920		$	7,632		$	5,943

	March 31, 2021		June 30, 2020		March 31, 2022		June 30, 2021
Identifiable Assets:
Lighting Segment	$	121,245	$	118,819	$	149,062	$	132,169
Graphics Segment		36,738		35,021
Display Solutions Segment						158,415		147,354
Corporate and Eliminations		39,111		18,423		5,078		7,298
	$	197,094	$	172,263	$	312,555	$	286,821

The segment net sales reported above represent sales to external customers. Segment operating income, which is used in management’s evaluation of segment performance, represents net sales less all operating expenses. Identifiable assets are those assets used by each segment in its operations.

The Company records a 10% mark-up on intersegment revenues. Any intersegment profit in inventory is eliminated in consolidation. Intersegment revenues were eliminated in consolidation as follows:

	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
(In thousands)	March 31				March 31				March 31				March 31
	2021		2020		2021		2020		2022		2021		2022		2021
Lighting Segment inter-segment net sales	$	6,880	$	744	$	15,998	$	2,415	$	5,683	$	6,880	$	27,406	$	15,998

Graphics Segment inter-segment net sales	$	46	$	153	$	159	$	251
Display Solutions Segment inter-segment net sales									$	54	$	46	$	289	$	159

The Company’s operations are located solely within North America. As a result, the geographic distribution of the Company’s net sales and long-lived assets originate within North America.

Page 1214

NOTE 45 - EARNINGS PER COMMON SHARE

The following table presents the amounts used to compute basic and diluted earnings per common share, as well as the effect of dilutive potential common shares on weighted average shares outstanding (in thousands, except per share data):

	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	March 31				March 31				March 31				March 31
	2021		2020		2021		2020		2022		2021		2022		2021

BASIC EARNINGS PER SHARE

Net income	$	1,472	$	1,861	$	5,670	$	8,079	$	3,618	$	1,472	$	9,856	$	5,670

Weighted average shares outstanding during the period, net of treasury shares		26,467		26,151		26,384		26,087		26,642		26,467		26,606		26,384
Weighted average vested restricted stock units outstanding		20		6		16		7		31		20		26		16
Weighted average shares outstanding in the Deferred Compensation Plan during the period		284		144		242		156		705		284		588		242
Weighted average shares outstanding		26,771		26,301		26,642		26,250		27,378		26,771		27,220		26,642

Basic income per share	$	0.05	$	0.07	$	0.21	$	0.31	$	0.13	$	0.05	$	0.36	$	0.21


DILUTED EARNINGS PER SHARE

Net income	$	1,472	$	1,861	$	5,670	$	8,079	$	3,618	$	1,472	$	9,856	$	5,670

Weighted average shares outstanding:

Basic		26,771		26,301		26,642		26,250		27,378		26,771		27,220		26,642

Effect of dilutive securities (a):
Impact of common shares to be issued under stock option plans, and contingently issuable shares, if any		956		322		710		173		705		956		725		710
Weighted average shares outstanding		27,727		26,623		27,352		26,423		28,083		27,727		27,945		27,352

Diluted income per share	$	0.05	$	0.07	$	0.21	$	0.31	$	0.13	$	0.05	$	0.35	$	0.21


Anti-dilutive securities (b)		654		1,875		1,017		2,038		1,427		654		1,043		1,017

(a)

Calculated using the “Treasury Stock” method as if dilutive securities were exercised and the funds were used to purchase common shares at the average market price during the period.

(b)

Anti-dilutive securities were excluded from the computation of diluted net income per share for the three and nine months ended March 31, ~~2021~~2022 and March 31, ~~2020~~2021 because the exercise price was greater than the average fair market price of the common shares or because the assumed proceeds from the award’s exercise or vesting was greater than the average fair market price of the common shares.

Page 1315

NOTE 56 -– INVENTORIES, NET

The following information is provided as of the dates indicated:

	March 31,		June 30,		March 31,		June 30,
(In thousands)	2021		2020		2022		2021

Inventories:
Raw materials	$	28,915	$	27,331	$	53,534	$	40,567
Work-in-progress		1,423		1,566		2,789		4,757
Finished goods		10,052		9,855		22,041		13,617
Total Inventories	$	40,390	$	38,752	$	78,364	$	58,941

NOTE 67 - ACCRUED EXPENSES

The following information is provided as of the dates indicated:

March 31,

June 30,

(In thousands)

2021

2020

Accrued Expenses:

Customer prepayments
$ 8,938 $ 1,698
Compensation and benefits
6,738 5,271
Accrued warranty
5,786 6,956
Accrued FICA
2,239 730
Accrued sales commissions
2,039 1,289
Operating lease liabilities
304 376
Finance lease liabilities
248 239
Other accrued expenses
4,010 3,874
Total Accrued Expenses
$ 30,302 $ 20,433

	March 31,		June 30,
(In thousands)	2022		2021

Accrued Expenses:
Customer prepayments	$	8,421	$	11,352
Compensation and benefits		8,029		10,051
Accrued warranty		4,337		5,295
Accrued freight		3,213		1,629
Accrued sales commissions		2,458		2,568
Accrued FICA		1,179		1,190
Operating lease liabilities		1,070		1,424
Finance lease liabilities		272		263
Accrued income tax		0		434
Other accrued expenses		3,924		3,712
Total Accrued Expenses	$	32,903	$	37,918

NOTE 78 - GOODWILL AND OTHER INTANGIBLE ASSETS

The carrying values of goodwill and other intangible assets with indefinite lives are reviewed at least annually for possible impairment. The Company may first assess qualitative factors in order to determine if goodwill and indefinite-lived intangible assets are impaired. If through the qualitative assessment it is determined that it is more likely than not that goodwill and indefinite-lived assets are not impaired, no further testing is required. If it is determined more likely than not that goodwill and indefinite-lived assets are impaired, or if the Company elects not to first assess qualitative factors, the Company’s impairment testing continues with the estimation of the fair value of the reporting unit using a combination of a market approach and an income (discounted cash flow) approach, at the reporting unit level. The estimation of the fair value of reporting unit requires significant management judgment with respect to revenue and expense growth rates, changes in working capital and the selection and use of an appropriate discount rate. The estimates of the fair value of reporting units are based on the best information available as of the date of the assessment. The ~~fair value measurements of the reporting units are based on significant inputs~~ ~~not~~ ~~observable in the market and thus represent Level~~ 3 ~~measurements as defined by ASC~~ ~~820~~ ~~“Fair Value Measurements.” The~~ use of different assumptions would increase or decrease estimated discounted future operating cash flows and could increase or decrease an impairment charge. Company management uses its judgment in assessing whether assets may have become impaired between annual impairment tests. Indicators such as adverse business conditions, economic factors and technological change or competitive activities may signal that an asset has become impaired.

The Company identified its reporting units in conjunction with its annual goodwill impairment testing. ~~The~~Following the acquisition of JSI, the Company has a total of ~~two~~3 reporting units that contain goodwill. ~~There is~~ ~~one~~One reporting unit is within the Lighting Segment and ~~one~~2 reporting ~~unit~~units are within the ~~Graphics~~Display Solutions Segment. The tradename intangible assets have an indefinite life and are also tested separately on an annual basis. The Company relies upon a number of factors, judgments and estimates when conducting its impairment testing including, but not limited to, the Company’s stock price, operating results, forecasts, anticipated future cash flows and marketplace data. There are inherent uncertainties related to these factors and judgments in applying them to the analysis of goodwill impairment.

Page 16

As of March 1, ~~2021,~~ 2022,the Company performed its annual preliminary goodwill impairment test on the ~~two~~3 reporting units that contain goodwill. The preliminary goodwill impairment test of the reporting unit in the Lighting Segment passed with a business enterprise value of ~~$28.2~~$31.6 million or ~~26%~~18% above the carrying value of the reporting unit including goodwill. The preliminary goodwill impairment test of one reporting unit with goodwill in the Display Solutions Segment passed with an estimated business enterprise value of $12.2 million or 1,316% above the carrying value of the reporting unit including goodwill. The preliminary goodwill impairment test of the secondreporting unit with goodwill in the ~~Graphics~~Display Solutions Segment passed with an estimated business enterprise value of ~~$11.4~~$100.4 million or ~~2,065%~~12% above the carrying value of the reporting unit including goodwill. The definitive impairment test is expected to be completed in the fourth quarter of fiscal ~~2021.~~2022 ~~It is anticipated that the results of the definitive test will~~ ~~not~~ ~~change when the test is complete.~~

~~Page~~ 14

~~The following table presents information about the Company's goodwill on the dates or for the periods indicated:~~

Goodwill

(In thousands)

Lighting

Graphics

Segment

Segment

Total

Balance as of March 31, 2021

Goodwill
$ 70,971 $ 28,690 $ 99,661
Accumulated impairment losses
(61,763
)
(27,525
)
(89,288
)
Goodwill, net as of March 31, 2021
$ 9,208 $ 1,165 $ 10,373

Balance as of June 30, 2020

Goodwill
$ 86,711 $ 28,690 $ 115,401
Accumulated impairment losses
(77,503
)
(27,525
)
(105,028
)
Goodwill, net as of June 30, 2020
$ 9,208 $ 1,165 $ 10,373

~~In the~~ ~~second~~ ~~quarter of fiscal~~ ~~2021,~~ ~~the Company wrote-off the goodwill and impairment loss for a dissolved entity. The net impact to the consolidated financial statements, including the goodwill, net balance, was zero.~~

~~The Company performed its annual review of indefinite-lived intangible assets as of~~ ~~March 1, 2021~~ and determined there was 0 impairment. The preliminary indefinite-lived intangible impairment test passed with a fair market value of $15.7 million or 358% above its carrying value. The definitive indefinite-lived impairment test is expected to be completed in the ~~fourth~~ ~~quarter of fiscal~~ ~~2021.~~. It is anticipated that the results of the definitive test will not change when the test is complete.

The following table presents information about the Company's goodwill on the dates or for the periods indicated:

(In thousands)				Display
	Lighting			Solutions
	Segment			Segment			Total
Balance as of March 31, 2022
Goodwill	$	70,971		$	62,105		$	133,076
Measurement period adjustment		0			600			600
Accumulated impairment losses		(61,763	)		(27,525	)		(89,288	)
Goodwill, net as of March 31, 2022	$	9,208		$	35,180		$	44,388

Balance as of June 30, 2021
Goodwill	$	70,971		$	28,690		$	99,661
Goodwill acquired		0			33,415			33,415
Accumulated impairment losses		(61,763	)		(27,525	)		(89,288	)
Goodwill, net as of June 30, 2021	$	9,208		$	34,580		$	43,788

The Company has two indefinite-lived intangible assets. The Company performed its annual review of indefinite-lived intangible assets as of March 1, 2022 and determined there was 0 impairment. The preliminary impairment test of the first indefinite-lived intangible asset passed with a fair market value of $17.0 million or 396% above its carrying value. The preliminary impairment test of the second indefinite-lived intangible asset passed with a fair market value of and $10.6 million or 22% above its carrying value. The definitive indefinite-lived impairment test is expected to be completed in the fourth quarter of fiscal 2022. It is anticipated that the results of the definitive test will not change when the test is complete.

The gross carrying amount and accumulated amortization by each major intangible asset ~~class:~~class is as follows:

Other Intangible Assets	March 31, 2021
							March 31, 2022
(In thousands)	Gross						*Gross*
	Carrying		Accumulated		Net		*Carrying*		*Accumulated*		*Net*
	Amount		Amortization		Amount		*Amount*		*Amortization*		*Amount*
Amortized Intangible Assets
Customer relationships	$	30,163	$	10,273	$	19,890	$	62,083	$	13,546	$	48,537
Patents		268		230		38		268		260		8
LED technology firmware, software		16,066		13,215		2,851		20,966		14,303		6,663
Trade name		2,658		911		1,747		2,658		1,021		1,637
Non-compete								260		45		215
Total Amortized Intangible Assets		49,155		24,629		24,526		86,235		29,175		57,060

Indefinite-lived Intangible Assets
Trademarks and trade names		3,422		-		3,422		12,102		-		12,102
Total indefinite-lived Intangible Assets		3,422		-		3,422		12,102		-		12,102

Total Other Intangible Assets	$	52,577	$	24,629	$	27,948	$	98,337	$	29,175	$	69,162

Page 1517

	June 30, 2021
(In thousands)	*Gross*
	*Carrying*		*Accumulated*		*Net*
	*Amount*		*Amortization*		*Amount*
Amortized Intangible Assets
Customer relationships	$	62,083	$	10,967	$	51,116
Patents		268		237		31
LED technology firmware, software		20,966		13,415		7,551
Trade name		2,658		939		1,719
Non-compete		260		6		254
Total Amortized Intangible Assets		86,235		25,564		60,671

Indefinite-lived Intangible Assets
Trademarks and trade names		12,102		-		12,102
Total indefinite-lived Intangible Assets		12,102		-		12,102

Total Other Intangible Assets	$	98,337	$	25,564	$	72,773

Other Intangible Assets

June 30, 2020

(In thousands)

Gross

Carrying

Accumulated

Net

Amount

Amortization

Amount

Amortized Intangible Assets

Customer relationships
$ 35,563 $ 14,129 $ 21,434
Patents
338 277 61
LED technology firmware, software
16,066 12,852 3,214
Trade name
2,658 829 1,829
Total Amortized Intangible Assets
54,625 28,087 26,538

Indefinite-lived Intangible Assets

Trademarks and trade names
3,422 - 3,422
Total indefinite-lived Intangible Assets
3,422 - 3,422

Total Other Intangible Assets
$ 58,047 $ 28,087 $ 29,960

~~In the~~ ~~second~~ ~~quarter of fiscal~~ ~~2021,~~ the Company wrote-off intangible assets’ gross carrying amount and accumulated amortization for a dissolved entity. The net impact to the consolidated financial statements, including the total other intangible assets, was zero.

Three Months Ended

Nine Months Ended

March 31

March 31

(In thousands)

2021

2020

2021

2020

Amortization Expense of Other Intangible Assets
$ 671 $ 670 $ 2,012 $ 2,016

	Three Months Ended				Nine Months Ended
	March 31				March 31
(In thousands)	2022		2021		2022		2021

Amortization Expense of Other Intangible Assets	$	1,198	$	671	$	3,611	$	2,012

The Company expects to record annual amortization expense as follows:

(In thousands)

2021	$	2,682
2022	$	2,461	$	4,808
2023	$	2,412	$	4,760
2024	$	2,412	$	4,760
2025	$	2,412	$	4,760
After 2025	$	14,159
2026			$	4,754
After 2026			$	36,829

NOTE 89 - ~~REVOLVING LINE OF CREDIT~~DEBT

The Company’s long-term debt as of March 31, 2022 and June 30, 2021 consisted of the following:

	March 31,		June 30,
(In thousands)	2022		2021

Secured line of credit	$	61,774	$	68,178
Term loan, net of debt issuance costs of $30 and $0, respectively		23,184		0
Total debt		84,958		68,178
Less: amounts due within one year		3,571		0
Total amounts due after one year, net	$	81,387	$	68,178

Page 18

In ~~March~~September 2021, the Company amended its existing $100 million secured line of credit, to a ~~$100~~$25 million ~~facility from a~~term loan and $75 million ~~facility that expires~~remaining as a secured revolving line of credit. Both facilities expire in the third quarter of fiscal 2026. The principal of the term loan is repaid $3.6 million annually over the five-year period with a balloon payment of the remaining balance due on the last month. Interest on both the revolving line of credit and the term loan is charged based upon an increment over the LIBOR rate or a base rate, at the Company’s option. The base rate is calculated as the highest of (a) the Prime rate, (b) the sum of the Overnight Funding Rate plus 50 basis points and (c) the sum of the Daily LIBOR Rate plus 100 basis points as long as a Daily LIBOR rate is offered, ascertainable and not unlawful. The increment over the LIBOR borrowing rate fluctuates between 100 and ~~200~~225 basis points, and the increment over the Base Rate fluctuates between 0 and ~~100~~125 basis points, both of which depend upon the ratio of indebtedness to earnings before interest, taxes, depreciation, and amortization (“EBITDA”), as defined in the line of credit agreement. The increment over LIBOR borrowing rate will be ~~100~~200 basis points for the ~~fourth~~first quarter of fiscal ~~2021.~~2023. The fee on the unused balance of the ~~$100~~$75 million committed line of credit fluctuates between 15 and ~~22.5~~25 basis points. Under the terms of this line of credit, the Company has agreed to a negative pledge of real estate assets and is required to comply with financial covenants that limit the ratio of indebtedness to EBITDA and require a minimum ~~interest coverage~~fixed charge ratio. As of March 31, ~~2021,~~2022, there ~~were 0 borrowings against~~was $13.2 million available for borrowing under the $75 million line of ~~credit, and $100.0 million was available as of that date.~~credit.

The Company is in compliance with all of its loan covenants as of March 31, ~~2021.~~2022.

~~Page~~ 16

NOTE 910 - CASH DIVIDENDS

The Company paid cash dividends of $4.0 million in both the nine months ended March 31, ~~2021~~2022 and March 31, ~~2020.~~2021. Dividends on restricted stock units in the amount of ~~$109,685 and $59,077~~$0.1 million were accrued as of both March 31, ~~2021~~2022 and ~~2020,~~2021. ~~respectively.~~ These dividends will be paid upon the vesting of the restricted stock units when shares are issued to the award recipients. In April ~~2021,~~2022, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable May ~~11, 2021~~17, 2022 to shareholders of record as of May ~~3, 2021.~~9, 2022. The indicated annual cash dividend rate is $0.20 per share.

NOTE 1011 – EQUITY COMPENSATION

In November 2019, the Company’s shareholders approved the 2019 Omnibus Award Plan (“2019 Omnibus Plan”). The purpose of the 2019 Omnibus Plan is to provide a means through which the Company may attract and retain key personnel and to provide a means by which directors, officers, and employees can acquire and maintain an equity interest in the Company. The number of shares that remain reserved for issuance under the 2019 Omnibus Plan ~~is 2,722,480~~equates to 1,569,938 as of March 31, ~~2021.~~2022. The 2019 Omnibus Plan implements the use of a fungible share ratio that consumes 2.5 available shares for every full value share awarded by the Company as stock compensation. The 2019 Omnibus Plan allows for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), performance stock units (“PSUs”) and other stock-based awards.

In the nine months ended March 31, ~~2021,~~2022, the Company granted ~~318,406 non-qualified stock options with a weighted average exercise price of $6.86, 134,017~~189,980 PSUs and 145,781 RSUs, both with a weighted average fair market value of ~~$6.80 and 133,126 RSUs with a weighted average fair value of $6.81.~~$8.16. Stock compensation expense was ~~$0.4~~$0.8 million and ~~($0.1)~~$0.4 million for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively, and $2.5 million and $1.3 million ~~and $0.5 million for~~in the nine months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively.

NOTE 1112 - SUPPLEMENTAL CASH FLOW INFORMATION

	Nine Months Ended				Nine Months Ended
(In thousands)	March 31				March 31
	2021		2020		2022		2021
Cash Payments:
Interest	$	71	$	889	$	1,067	$	71
Income taxes	$	1,473	$	8	$	3,581	$	1,473

Non-cash investing and financing activities
Issuance of common shares as compensation	$	242	$	225	$	225	$	242
Issuance of common shares to fund deferred compensation plan	$	1,096	$	296	$	3,089	$	1,096

NOTE 1213 - COMMITMENTS AND CONTINGENCIES

The Company is party to various negotiations, customer bankruptcies, and legal proceedings arising in the normal course of business. The Company provides reserves for these matters when a loss is probable and reasonably estimable. The Company does not disclose a range of potential loss because the likelihood of such a loss is remote. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, cash flows or liquidity.

The Company may occasionally issue a standby letter of credit in favor of third parties. As of March 31, ~~2021,~~2022, there were 0 such standby letters of credit issued.

Page 1719

NOTE 1314 – SEVERANCE COSTS

The activity in the Company’s accrued severance liability is as follows for the periods indicated:

Nine Months

Nine Months

Fiscal Year

Ended

Ended

Ended

March 31,

March 31,

June 30,

(In thousands)

2021

2020

2020

Balance at beginning of period
$ 639 $ 1,134 $ 1,134
Accrual of expense
21 73 344
Payments
(555
)
(481
)
(839
)
Balance at end of period
$ 105 $ 726 $ 639

~~The $0.1 million severance reserve reported as of~~ ~~March 31, 2021~~ ~~has been classified as a current liability and will be paid out over the next~~ ~~twelve~~ ~~months.~~

~~NOTE~~ 14– ~~RESTRUCTURING COSTS~~

~~In the~~ ~~first~~ ~~quarter of fiscal~~ ~~2020,~~ the Company sold its New Windsor, New York facility. The net proceeds from the sale were $12.3 million resulting in a gain of $4.8 million. The Company also incurred additional restructuring costs totaling $0.2 million in the ~~first~~ ~~quarter of fiscal~~ ~~2020~~ ~~related to the closure of the New Windsor facility, which impacted both the Lighting and Graphics segment.~~

~~Restructuring costs incurred in the~~ ~~second~~ ~~quarter of fiscal~~ ~~2020~~ ~~related to the realignment of the Company’s manufacturing footprint at its Houston, Texas facility, which impacted the Graphics segment.~~

~~In the~~ ~~third~~ ~~quarter of fiscal~~ ~~2020,~~ ~~the Company sold its North Canton, Ohio facility. The net proceeds from the sale were $7.7 million resulting in a net gain of $3.7 million. Restructuring charges incurred in the~~ ~~third~~ ~~quarter of fiscal~~ ~~2020~~ ~~related to the relocation of the North Canton facility, which impacted the Graphics Segment. The Company also incurred $0.5 million of expense to write-down inventory which is~~ ~~not~~ ~~included in the tables below.~~

~~The following table presents information about restructuring costs for the periods indicated:~~

Three Months Ended

Nine Months Ended

March 31

March 31

(In thousands)

2021

2020

2021

2020

Exit costs
$ 0 $ 235 $ 3 $ 419
Impairment of fixed assets and accelerated depreciation
0 0 0 49
Gain on sale of facility
0 (3,741
)
0 (8,562
)
Manufacturing realignment costs
0 0 0 276
Total
$ 0 $ (3,506
)
$ 3 $ (7,818
)

~~The following table presents a roll forward of the beginning and ending liability balances related to the restructuring costs:~~

Balance as of

Balance as of

June 30,

Restructuring

March 31,

(In thousands)

2020

Expense

Payments

Adjustments

2021

Severance and termination benefits
$ 27 $ 0 $ 0 $ 0 $ 27
Other restructuring costs
0 3 (3
)
0 $ 0
Total
$ 27 $ 3 $ (3
)
$ 0 $ 27

	Nine Months			Nine Months			Fiscal Year
	Ended			Ended			Ended
	March 31,			March 31,			June 30,
(In thousands)	2022			2021			2021

Balance at beginning of period	$	13		$	639		$	639
Accrual of expense		5			21			41
Payments		(18	)		(555	)		(667	)
Balance at end of period	$	0		$	105		$	13

NOTE 15 - LEASES

The Company leases certain manufacturing facilities along with a small office space, several forklifts, several small tooling items and various items of office equipment. The Company also acquired buildings, machinery and forklift leases with the acquisition of JSI, as well as one sublease. All but ~~one~~two of the Company’s leases are operating leases. Leases have a remaining term of one to seven years some of which have an option to renew. The Company does not assume renewals in determining the lease term unless the renewals are deemed reasonably certain. The lease agreements do not contain any material residual guarantees or material variable lease payments.

~~Page~~ 18

The Company has periodically entered into short-term operating leases with an initial term of twelve months or less. The Company elected not to record these leases on the balance sheet. For the three and nine months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the rent expense for these leases is immaterial.

The Company has certain leases that contain lease and non-lease components and has elected to utilize the practical expedient to account for these components together as a single lease component.

Lease expense is recognized on a straight-line basis over the lease term. The Company used its incremental borrowing rate when determining the present value of lease payments. The adoption of the new lease standard resulted in the recognition of ROU assets of $10.4 million and lease liabilities of $10.8 million which includes the impact of existing deferred rents and tenant improvement allowances on the consolidated balance sheets as of ~~July 1, 2019~~ ~~for the Company’s real estate leases. The adoption of the new standard resulted in~~ no ~~material impact to the consolidated statements of operations or consolidated statements of cash flow.~~

	Three Months Ended				Nine Months Ended				Three Months Ended					Nine Months Ended
	March 31				March 31				March 31					March 31
(In thousands)	2021		2020		2021		2020		2022			2021		2022			2021

Operating lease cost	$	576	$	574	$	1,714	$	1,736	$	868		$	576	$	2,617		$	1,714
Financing lease cost:
Amortization of right of use assets		73		0		218		0		74			73		221			218
Interest on lease liabilities		22		0		69		0		19			22		61			69
Variable lease cost		0		0		2		0		22			0		65			2
Sublease income										(94	)		0		(283	)		0
Total lease cost	$	671	$	574	$	2,003	$	1,736	$	889		$	671	$	2,681		$	2,003

Supplemental Cash Flow Information:

Nine Months Ended

March 31

(In thousands)

2021

2020

Cash flows from operating leases

Fixed payments - operating cash flows
$ 1,707 $ 1,707
Liability reduction - operating cash flows
$ 1,397 $ 1,334

Cash flows from finance leases

Interest - operating cash flows
$ 69 $ 0
Repayments of principal portion - financing cash flows
$ 178 $ 0

~~Operating Leases:~~

March 31,

June 30,

2021

2020

Total operating right-of-use assets
$ 7,673 $ 8,663

Accrued expenses (Current liabilities)
$ 304 $ 376
Long-term operating lease liability
8,105 9,021
Total operating lease liabilities
$ 8,409 $ 9,397

Weighted Average remaining Lease Term (in years)
3.99 4.59

Weighted Average Discount Rate
4.86
%
4.85
%

Page 1920

Supplemental Cash Flow Information:

	Nine Months Ended
	March 31
(In thousands)	2022		2021

Cash flows from operating leases
Fixed payments - operating cash flows	$	2,669	$	1,707
Liability reduction - operating cash flows	$	2,271	$	1,397

Cash flows from finance leases
Interest - operating cash flows	$	61	$	69
Repayments of principal portion - financing cash flows	$	196	$	178

~~Finance Leases:~~

March 31,

June 30,

2021

2020

Buildings under finance leases
$ 2,033 $ 2,033
Accumulated depreciation
(266 ) (48 )
Total finance lease assets, net
$ 1,767 $ 1,985

Accrued expenses (Current liabilities)
$ 248 $ 239
Long-term finance lease liability
1,568 1,755
Total finance lease liabilities
$ 1,816 $ 1,994

Weighted Average remaining Lease Term (in years)
6.08 6.83

Weighted Average Discount Rate
4.86 % 4.86 %

Operating Leases:	March 31,			June 30,
	2022			2021

Total operating right-of-use assets	$	9,464		$	11,579

Accrued expenses (Current liabilities)	$	1,070		$	1,424
Long-term operating lease liability		9,068			10,890
Total operating lease liabilities	$	10,138		$	12,314

Weighted Average remaining Lease Term (in years)		3.27			3.93

Weighted Average Discount Rate		4.81	%		4.81	%

~~Maturities of Lease Liability:~~

Operating
Lease
Liabilities

Finance
Lease
Liabilities

2021
$ 914 $ 149
2022
2,362 329
2023
2,351 329
2024
2,037 335
2025
1,469 362
Thereafter
435 665
Total lease payments
9,568 2,169
Less: Interest
(1,159 ) (353 )
Present Value of Lease Liabilities
$ 8,409 $ 1,816

Finance Leases:	March 31,			June 30,
	2022			2021

Buildings under finance leases	$	2,033		$	2,033
Equipment under finance leases		30			30
Accumulated depreciation		(561	)		(339	)
Total finance lease assets, net	$	1,502		$	1,724

Accrued expenses (Current liabilities)	$	272		$	263
Long-term finance lease liability		1,316			1,521
Total finance lease liabilities	$	1,588		$	1,784

Weighted Average remaining Lease Term (in years)		5.03			5.78

Weighted Average Discount Rate		4.86	%		4.86	%

Page 21

Maturities of Lease Liability:	Operating Lease Liabilities			Finance Lease Liabilities			Operating Subleases			Net Lease Commitments
2022	$	1,029		$	105		$	(94	)	$	1,040
2023		3,583			342			(377	)		3,548
2024		3,280			337			(377	)		3,240
2025		2,131			362			(31	)		2,462
2026		829			362			0			1,191
Thereafter		221			303			0			524
Total lease payments	$	11,073		$	1,811		$	(879	)	$	12,005
Less: Interest		(935	)		(223	)					(1,158	)
Present Value of Lease Liabilities	$	10,138		$	1,588					$	10,847

NOTE 16 – INCOME TAXES

The Company's effective income tax rate is based on expected income, statutory rates and tax planning opportunities available in the various jurisdictions in which it operates. For interim financial reporting, the Company estimates the annual income tax rate based on projected taxable income for the full year and records a quarterly income tax provision or benefit in accordance with the anticipated annual rate. The Company refines the estimates of the year's taxable income as new information becomes available, including actual year-to-date financial results. This continual estimation process often results in a change to the expected effective income tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected income tax rate. Significant judgment is required in determining the effective tax rate and in evaluating tax positions.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law in March 2020. The CARES Act allowed the Company to carry back a federal net operating loss to prior tax years, offset taxable income in those earlier tax years and request a refund of income taxes that were paid at a higher statutory tax rate. The Company recognized tax benefits of ~~$0.3 million in the~~ ~~third~~ ~~quarter of fiscal~~ ~~2020~~ ~~and~~ $0.4 million in the first quarter of fiscal 2021 for utilizing the net operating losses in the prior tax years. ~~The Company sold its North Canton, Ohio facility in the~~ ~~third~~ ~~quarter of fiscal~~ ~~2020~~ ~~which generated a capital gain and allowed the Company to utilize a capital loss carryforward. The resulting tax benefit reduced the anticipated full year fiscal~~ ~~2020~~ ~~estimated effective income tax rate.~~

	Three Months Ended						Nine Months Ended
	March 31						March 31
	2022			2021			2022			2021
Reconciliation of effective tax rate:

Provision for income taxes at the anticipated annual tax rate		22.4	%		23.8	%		23.4	%		24.3	%
Uncertain tax positions		0.5			0.8			(0.8	)		(1.3	)
Tax rate changes		0			0			0			(5.0	)
Share-based compensation		0			1.8			(0.2	)		1.1
Effective tax rate		22.9	%		26.4	%		22.4	%		19.1	%

Three Months Ended

Nine Months Ended

March 31

March 31

2021

2020

2021

2020

Reconciliation of effective tax rate:

Provision for income taxes at the anticipated annual tax rate
23.8
%
10.8
%
24.3
%
16.7
%
Uncertain tax positions
0.8 1.5 (1.3 ) (0.3 )
Tax rate changes
0 (16.7 ) (5.0 ) (2.5 )
Shared-based compensation
1.8 4.4 1.1 3.7
Effective tax rate
26.4
%
0
%
19.1
%
17.6
%

Page 2022

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Note About Forward-Looking Statements

This report includes estimates, projections, statements relating to our business plans, objectives, and expected operating results that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this report, including this section. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. We describe risks and uncertainties that could cause actual results and events to differ materially in in our Annual Report on Form 10-K in the following sections: “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures about Market Risk,” and “Risk Factors.” All of those risks and uncertainties are incorporated herein by reference. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of operations and financial condition of LSI Industries Inc. MD&A is provided as a supplement to, and should be read in conjunction with, our Annual Report on Form 10-K for the year ended June 30, ~~2020,~~2021, and our financial statements and the accompanying Notes to Financial Statements (Part I, Item 1 of this Form 10-Q).

Our condensed consolidated financial statements, accompanying notes and the “Safe Harbor” Statement, each as appearing earlier in this report, should be referred to in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

~~COVID-19 Pandemic~~

The COVID-19 pandemic continues to impact business activity across industries in the U.S. and worldwide, including, but not limited to, workforce and supply chain disruptions. We remain committed to taking actions to address the health, safety and welfare of our employees, customers, agents and suppliers. Future developments, such as the actions taken by governmental authorities in response to future outbreaks that are highly uncertain and unpredictable, will determine the extent to which COVID-19 continues to impact our results of operations and financial conditions. See the risk factor captioned “Our financial condition and results of operations for fiscal 2021 and future periods may be adversely affected by the recent novel coronavirus disease (“COVID-19”) outbreak or other outbreaks of infectious disease or similar public health threats and the resulting economic impact” in Item 1A, Risk Factors, included in Part I of our Annual Report on Form 10-K for the fiscal year ended June 30, 2020 for an additional discussion of risks related to COVID-19.

Summary of Consolidated Results

Net Sales by Business Segment

Three Months Ended

Nine Months Ended

March 31

March 31

(In thousands)

2021

2020

2021

2020

Lighting Segment
$ 45,740 $ 49,013 $ 136,271 $ 165,640
Graphics Segment
26,464 21,997 82,326 76,448
$ 72,204 $ 71,010 $ 218,597 $ 242,088

Net Sales by Business Segment

	Three Months Ended				Nine Months Ended
	March 31				March 31
(In thousands)	2022		2021		2022		2021

Lighting Segment	$	57,126	$	45,740	$	165,662	$	136,271
Display Solutions Segment		52,985		26,464		161,989		82,326
	$	110,111	$	72,204	$	327,651	$	218,597

Operating Income (Loss) by Business Segment

~~Page 21~~

Operating Income (Loss) by Business Segment
	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	March 31						March 31						March 31						March 31
(In thousands)	2021			2020			2021			2020			2022			2021			2022			2021

Lighting Segment	$	3,797		$	1,102		$	9,519		$	13,411		$	4,959		$	3,797		$	13,921		$	9,519
Graphics Segment		1,230			4,015			6,196			6,394
Display Solutions Segment														4,556			1,230			12,142			6,196
Corporate and Eliminations		(2,931	)		(2,486	)		(8,731	)		(8,575	)		(4,354	)		(2,931	)		(12,036	)		(8,731	)
	$	2,096		$	2,631		$	6,984		$	11,230		$	5,161		$	2,096		$	14,027		$	6,984

Net sales of $110.1 million for the three months ended March 31, 2022 increased $37.9 million or 53% as compared to net sales of $72.2 million for the three months ended March 31, ~~2021 increased $1.2 million or 2% as compared to net sales of $71.0 million for the three months ended March 31, 2020.~~2021. Net ~~sales were driven by increased net~~ sales of the ~~Graphics~~Display Solutions Segment ~~(an increase of $4.5~~increased $26.5 million or ~~20%), partially offset by decreased~~100% and net sales of the Lighting Segment ~~(a decrease of $3.3~~increased $11.4 million or ~~7%)~~25%.

Net sales of $327.7 million for the nine months ended March 31, 2022 increased $109.1 million or 50% as compared to net sales of $218.6 million for the nine months ended March 31, ~~2021 decreased $23.5~~2021. Net sales of the Display Solutions Segment increased $80.0 million or ~~10% as compared to net sales of $242.1 million for the nine months ended March 31, 2020. Net sales were driven by decreased~~97% and net sales of the Lighting Segment ~~(a decrease of~~increased $29.4 million or ~~18%), partially offset by increased net sales of the Graphics Segment (an increase of $5.9 million or 8%)~~22%.

Page 23

Operating income of ~~$2.1~~$5.2 million for the three months ended March 31, ~~2021~~2022 represents a ~~$0.5~~$3.1 million ~~decrease~~increase from operating income of ~~$2.6~~$2.1 million in the three months ended March 31, 2020. The $0.5 decrease from fiscal 2020 was impacted by the sale of the North Canton, Ohio facility in the third quarter of fiscal 2020 which resulted in a pre-tax gain of $3.7 million. When the impact of the sale of the North Canton facility, other restructuring and plant closure costs, stock compensation expense and severance costs are removed from the2021. Adjusted operating ~~results, adjusted operating~~ income, ~~(loss),~~ a Non-GAAP measure, was $6.0 million in the three months ended March 31, 2022 compared to $2.5 million in the three months ended March 31, ~~2021 compared to ($0.5) million in the three months ended March 31, 2020.~~2021. Refer to “Non-GAAP Financial Measures” ~~below.~~below for a reconciliation of Non-GAAP financial measures to U.S. GAAP measures.

Operating income of ~~$7.0~~$14.0 million for the nine months ended March 31, ~~2021~~2022 represents a ~~$4.2~~$7.0 million ~~decrease~~increase from operating income of ~~$11.2~~$7.0 million in the nine months ended March 31, 2020. The $4.2 million decrease from fiscal 2020 was impacted by the sale of the New Windsor, New York facility in the first quarter of fiscal 2020, which resulted in a pre-tax gain of $4.8 million and the sale of the North Canton, Ohio facility in the third quarter of fiscal 2020, which resulted in a pre-tax gain of $3.7 million. When the impact of the sales of the New Windsor and North Canton facilities, other restructuring and plant closure costs, stock compensation expense and severance costs are removed from the operating results, adjusted2021. Adjusted operating income, a Non-GAAP measure, was $16.9 million in the nine months ended March 31, 2022 compared to $8.3 million in the nine months ended March 31, ~~2021 compared to $4.4 million in the nine months ended March 31, 2020.~~2021. Refer to “Non-GAAP Financial Measures” ~~below.~~

Asbelow for a reconciliation of ~~March 31, 2021, we reported a cash balance of $23.5 million and no long-term debt. We believe that our liquidity position is adequate~~Non-GAAP financial measures to ~~meet our projected needs in the reasonably foreseeable future.~~U.S. GAAP measures.

Non-GAAP Financial Measures

We believe it is appropriate to evaluate our performance after making adjustments to the as-reported U.S. GAAP operating income, net income, and earnings per share. Adjusted operating income, net income and earnings per share, which exclude the impact of ~~restructuring and plant closure costs (gains),~~ stock compensation expense, acquisition costs, severance costs and ~~severance~~restructuring costs are Non-GAAP financial measures. Also included below are Non-GAAP financial measures including Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA and Adjusted EBITDA), Free Cash Flow, Net Debt and Organic Net ~~Debt.~~Sales. We believe that these adjusted supplemental measures are useful in assessing the operating performance of our business. These supplemental measures are used by our management, including our chief operating decision maker, to evaluate business results. Although the impacts of some of these items have been recognized in prior periods and could recur in future periods, we exclude these items because they provide greater comparability and enhanced visibility into our results of operations. These non-GAAP measures may be different from non-GAAP measures used by other companies. In addition, the non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations, in that they do not reflect all amounts associated with our results as determined in accordance with U.S. GAAP. Therefore, these measures should be used only to evaluate our results in conjunction with corresponding GAAP measures. Below is a reconciliation of these Non-GAAP measures to operating income, net income, and earnings per share for the periods indicated along with the calculation of EBITDA and Adjusted EBITDA, Free Cash Flow, Net Debt and Organic Net ~~Debt.~~Sales.

Reconciliation of operating income to adjusted operating income:

	Three Months Ended
	March 31
(In thousands)	2022		2021

Operating Income as reported	$	5,161	$	2,096

Stock compensation expense		780		415

Acquisition costs		21		-

Severance costs		5		-

Adjusted Operating Income	$	5,967	$	2,511

Reconciliation of net income to adjusted net income

	Three Months Ended
	March 31
(In thousands, except per share data)	2022					2021
				Diluted EPS					Diluted EPS

Net Income as reported	$	3,618		$	0.13	$	1,472		$	0.05

Stock compensation expense		576	(1)		0.02		314	(4)		0.01

Acquisition costs		16	(2)		-		-			-

Severance costs		4	(3)		-		-			-

Tax impact due to the change in the estimated annual tax rate used for GAAP reporting purposes		-			-		44			-

Net Income adjusted	$	4,214		$	0.15	$	1,830		$	0.07

Page 2224

Reconciliation of operating income to adjusted operating income (loss):
Three Months Ended

March 31

(In thousands)

2021

2020

Operating Income as reported
$ 2,096 $ 2,631

Stock compensation expense
415 (103 )

Severance costs
- 19

Restructuring, plant closure costs (gains) and related inventory write-downs
- (3,055 )

Adjusted Operating Income (Loss)
$ 2,511 $ (508 )

Reconciliation of net income to adjusted net income (loss)

Three Months Ended

March 31

(In thousands, except per share data)

2021

2020

Diluted EPS

Diluted EPS

Net Income as reported
$ 1,472 $ 0.05 $ 1,861 $ 0.07

Stock compensation expense
314 (1) 0.01 (86 )(2) -

Severance costs
- - 16 (3) -

Restructuring, plant closure costs (gains) and related inventory write-downs
- - (2,565 )(4) (0.10 )

Tax impact due to the change in the estimated annual tax rate used for GAAP reporting purposes
44 - (300 ) (0.01 )

Net Income (Loss) adjusted
$ 1,830 $ 0.07 $ (1,074 ) $ (0.04 )

The following represents the income tax effects of the adjustments in the tables above, which were calculated using the estimated combined U.S., Canada and Mexico effective income tax rates for the periods indicated (in thousands):

⁽¹⁾$204

⁽²⁾$5

⁽³⁾$1

⁽⁴⁾$101

~~(2)~~ ~~($17)~~

~~(3)~~ $3

~~(4)~~ ~~($490)~~

Reconciliation of operating income to adjusted operating income:

Reconciliation of operating income to adjusted operating income:
	Nine Months Ended					Nine Months Ended
	March 31					March 31
(In thousands)	2021		2020			2022		2021

Operating Income as reported	$	6,984	$	11,230		$	14,027	$	6,984

Stock compensation expense		1,317		494			2,466		1,317

Acquisition costs							361		-

Severance costs		21		73			5		21

Restructuring, plant closure costs (gains) and related inventory write-downs		3		(7,367	)
Restructuring costs							-		3

Adjusted Operating Income	$	8,325	$	4,430		$	16,859	$	8,325

~~Page 23~~

Reconciliation of net income to adjusted net income

Reconciliation of net income to adjusted net income
	Nine Months Ended														Nine Months Ended
	March 31														March 31
(In thousands, except per share data)	2021							2020							2022					2021
					Diluted EPS							Diluted EPS						Diluted EPS						Diluted EPS

Net Income as reported	$	5,670			$	0.21		$	8,079			$	0.31		$	9,856		$	0.35	$	5,670			$	0.21

Stock compensation expense		1,012		(1)		0.04			373		(4)		0.01			1,850	(1)		0.07		1,012		(4)		0.04

Acquisition costs																285	(2)		0.01		-				-

Severance costs		17		(2)		-			60		(5)		-			4	(3)		-		17		(5)		-

Restructuring, plant closure costs (gains) and related inventory write-downs		2		(3)		-			(5,788	)	(6)		(0.22	)
Restructuring costs																-			-		2		(6)		-

Tax impact due to the change in the estimated annual tax rate used for GAAP reporting purposes		(254	)			(0.01	)		(459	)			(0.02	)		-			-		(254	)			(0.01	)

Net Income adjusted	$	6,447			$	0.24		$	2,265			$	0.09		$	11,995		$	0.43	$	6,447			$	0.24

⁽¹⁾$616

⁽²⁾$76

⁽³⁾$1

⁽⁴⁾$305

~~(2)~~ ⁽⁵⁾$4

~~(3)~~ ⁽⁶⁾$1

~~(4)~~ ~~$121~~

~~(5)~~ ~~$13~~

~~(6)~~ ~~($1,579)~~

Page 25

The reconciliation of reported net income and earnings per share to adjusted net income and earnings per share may not agree due to rounding differences and due to the difference between basic and dilutive weighted average shares outstanding in the computation of earnings per share.

Reconciliation of operating income to EBITDA and Adjusted EBITDA

	Three Months Ended					Nine Months Ended					Three Months Ended				Nine Months Ended
	March 31					March 31					March 31				March 31
(In thousands)	2021		2020			2021		2020			2022		2021		2022		2021

Operating Income as reported	$	2,096	$	2,631		$	6,984	$	11,230		$	5,161	$	2,096	$	14,027	$	6,984

Depreciation and Amortization		1,920		2,080			5,943		6,631			2,531		1,920		7,632		5,943

EBITDA	$	4,016	$	4,711		$	12,927	$	17,861		$	7,692	$	4,016	$	21,659	$	12,927

Stock compensation expense		415		(103	)		1,317		494			780		415		2,466		1,317

Acquisition costs												21		-		361		-

Severance costs		-		19			21		73			5		-		5		21

Restructuring, plant closure costs (gains) and related inventory write-downs		-		(3,055	)		3		(7,367	)
Restructuring costs												-		-		-		3

Adjusted EBITDA	$	4,431	$	1,572		$	14,268	$	11,061		$	8,498	$	4,431	$	24,491	$	14,268

Reconciliation of cash flow from operations to free cash flow

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	March 31						March 31						March 31						March 31
(In thousands)	2021			2020			2021			2020			2022			2021			2022			2021

Cash Flow from Operations	$	11,217		$	(3,806	)	$	24,634		$	17,097		$	3,875		$	11,217		$	(12,668	)	$	24,634

Proceeds from sale of fixed assets		-			7,700			-			20,032

Capital expenditures		(637	)		(419	)		(1,517	)		(1,538	)		(531	)		(637	)		(1,276	)		(1,517	)

Free Cash Flow	$	10,580		$	3,475		$	23,117		$	35,591		$	3,344		$	10,580		$	(13,944	)	$	23,117

Reconciliation of Net Debt

	March 31,		June 30,
(In thousands)	2022		2021

Current portion and long-term debt as reported	$	84,958	$	68,178

Less:
Cash and cash equivalents as reported		1,248		2,282

Net Debt	$	83,710	$	65,896

Reconciliation of net sales to organic net sales

	Three Months Ended				Nine Months Ended
	March 31				March 31
(In thousands)	2022		2021		2022		2021

Lighting Segment	$	57,126	$	45,740	$	165,662	$	136,271
Display Solutions Segment		52,985		26,464		161,989		82,326
Total net sales		110,111		72,204		327,651		218,597
Less:
JSI		29,045		-		72,952		-
Total organic net sales	$	81,066	$	72,204	$	254,699	$	218,597

Page 24

Reconciliation of Net Debt

March 31,

June 30,

(In thousands)

2021

2020

Long-Term Debt as reported
$ - $ -

Less:

Cash and cash equivalents as reported
23,528 3,517

Net Debt
$ (23,528 ) $ (3,517 )

Results of Operations

THREE MONTHS ENDED MARCH 31, ~~2021~~2022 COMPARED TO THREE MONTHS ENDED MARCH 31, ~~2020~~2021

Lighting Segment

Three Months Ended

March 31

(In thousands)

2021

2020

Net Sales
$ 45,740 $ 49,013
Gross Profit
$ 14,159 $ 12,637
Operating Income
$ 3,797 $ 1,102

Lighting Segment

	Three Months Ended
	March 31
(In thousands)	2022		2021

Net Sales	$	57,126	$	45,740
Gross Profit	$	16,654	$	14,159
Operating Income	$	4,959	$	3,797

Lighting Segment net sales of ~~$45.7~~$57.1 million in the three months ended March 31, ~~2021 decreased 7%~~2022 increased 25% from net sales of ~~$49.0~~$45.7 million in the same period inof fiscal ~~2020.~~2021. The ~~decrease is due to the impact of COVID-19 disruptions in construction~~sales growth was across all key vertical markets, ~~however; the sales gap versus the prior year continues to narrow, having improved each quarter of the current fiscal year.~~with significant contributions from new and enhanced products.

Gross profit of ~~$14.2~~$16.7 million in the three months ended March 31, ~~2021~~2022 increased ~~$1.5~~$2.5 million or ~~12%~~18% from the same period of fiscal ~~2020.~~2021. Gross profit as a percentage of net sales was ~~31.0%~~29.2% in the three months ended March 31, ~~2021~~2022 compared to ~~25.8%~~31.0% in the same period of fiscal ~~2020. The growth in gross~~2021. Gross profit as a percentage of net sales ~~reflects our continued focus on~~decreased as selling price realization lagged the ~~entire lighting model, including higher value applications, price management, new~~increase in input and ~~cost reduced products and supply chain and operations productivity.~~transportation costs.

~~Selling and administrative~~Operating expenses of ~~$10.4~~$11.7 million in the three months ended March 31, ~~2021 decreased $1.2~~2022 increased $1.3 million from the same period of fiscal ~~2020,~~2021, primarily driven by ~~programs to reduce spending~~higher commission expense as a result of ~~the pandemic.~~higher sales.

Lighting Segment operating income of ~~$3.8~~$5.0 million for the three months ended March 31, ~~2021~~2022 increased ~~$2.7~~$1.2 million from operating income of ~~$1.1~~$3.8 million in the same period of fiscal ~~2020~~2021 primarily ~~due to higher gross profit and lower operating expenses, partially offset~~driven by ~~lower sales.~~sales volume.

Graphics Segment

Three Months Ended

March 31

(In thousands)

2021

2020

Net Sales
$ 26,464 $ 21,997
Gross Profit
$ 3,933 $ 3,293
Operating Income
$ 1,230 $ 4,015

Display Solutions Segment

	Three Months Ended
	March 31
(In thousands)	2022		2021

Net Sales	$	52,985	$	26,464
Gross Profit	$	10,171	$	3,933
Operating Income	$	4,556	$	1,230

~~Graphics~~Display Solutions Segment net sales of ~~$26.5~~$53.0 million in the three months ended March 31, ~~2021~~2022 increased ~~$4.5~~$26.5 million or ~~20%~~100% from net sales of ~~$22.0~~$26.5 million in the same period in fiscal 2021. The increase ~~in sales~~ is driven primarily ~~due to growth in our Quick-Service Restaurants vertical.~~by the acquisition of JSI.

Gross profit of ~~$3.9~~$10.2 million in the three months ended March 31, ~~2021~~2022 increased ~~$0.6~~$6.2 million or ~~19%~~159% from the same period of fiscal ~~2020.~~2021. Gross profit as a percentage of net sales in the three months ended March 31, ~~2021~~2022 was ~~consistent with gross~~19.2% compared to 14.9% in the same period of fiscal 2021. Gross profit as a percentage of net sales inreflects both the ~~same period~~accretive effect of ~~fiscal 2020.~~the JSI acquisition and improvements to core business margins.

~~Selling and administrative~~Operating expenses of ~~$2.7~~$5.6 million in the three months ended March 31, ~~2021~~2022 increased ~~$3.4~~$2.9 million from ~~($0.7)~~$2.7 million in the same period of fiscal ~~2020. Selling and administrative expenses in~~2021, primarily driven by the inclusion of three months ~~ended March 31, 2020 were reduced by the $3.7 million pre-tax gain on the sale~~ of ~~the North Canton, Ohio facility. When the $3.7 million gain is removed from the third quarter of fiscal 2020~~ results ~~selling and administrative expenses remained relatively flat in fiscal 2021 compared to the prior year.~~for JSI.

~~Graphics~~Display Solutions Segment operating income of ~~$1.2~~$4.5 million in the three months ended March 31, ~~2021 decreased $2.8~~2022 increased $3.3 million from operating income of ~~$4.0~~$1.2 million in the same period of fiscal ~~2020.~~2021. The ~~decrease of $2.8 million~~increase in operating income was primarily ~~as a result of the $3.7 million pre-tax gain on the sale of the North Canton, Ohio facility~~driven by an increase in the third quarter of fiscal 2020. When all Non-GAAP items are removed from both fiscal years, Non-GAAP adjusted operating income for the three months ended March 31, 2021 was $1.2 million, or $0.2 million higher than Non-GAAP adjusted operating income of $1.0 million for the three months ended March 31, 2020 (refer to the Non-GAAP table below for a reconciliation of Graphics Segment operating income (loss) to adjusted operating income). The increase is primarily due to improved gross profit margin.sales.

Page 2527

Reconciliation of Graphics Segment operating income to adjusted operating income:

Three Months Ended

March 31

(In thousands)

2021

2020

Operating Income
$ 1,230 $ 4,015
Stock compensation expense
8 (28 )
Severance
- 27
Restructuring and plant closure costs (gains)
- (3,044 )
Adjusted operating income
$ 1,238 $ 970

Corporate and Eliminations

Corporate and Eliminations
	Three Months Ended						Three Months Ended
	March 31						March 31
(In thousands)	2021			2020			2022			2021

Gross Profit (Loss)	$	-		$	12
Gross (Loss) Profit							$	(32	)	$	-
Operating (Loss)	$	(2,931	)	$	(2,486	)	$	(4,354	)	$	(2,931	)

The gross (loss) profit ~~(loss)~~ relates to the change in the intercompany profit in inventory elimination.

~~Administrative~~Operating expenses of ~~$2.9~~$4.3 million in the three months ended March 31, ~~2021~~2022 increased ~~$0.4~~$1.4 million or ~~18%~~48% from the same period of fiscal ~~2020.~~2021. The net increase was ~~primarily~~ due to ~~an increase in stock compensation~~increased incentive plan expense ~~due to prior year forfeitures~~ and ~~an increase in the employer match related to the deferred compensation plan as result of additional participants.~~acquisition integration costs.

Consolidated Results

We reported ~~$52,000~~$0.5 million and ~~$128,000~~$0.1 million of net interest expense in the three months ended March 31, ~~2021~~2022 and March 31, ~~2020,~~2021, respectively. The increase in interest expense from fiscal 2021 to fiscal 2022 is the result of higher levels of debt outstanding on our credit facility. We also recorded other (income)/expense ~~of $43,000 and $642,000~~ in the three months ended March 31, ~~2021~~2022 and March 31, ~~2020, respectively, which is~~2021, related to net foreign exchange currency transaction gains and losses through our Mexican ~~subsidiary.~~and Canadian subsidiaries.

InThe $1.1 million of income tax expense in the three months ended March 31, ~~2021, we recorded~~2022 represents a consolidated effective tax rate of 22.9%. The $0.5 million of income tax expense ~~which~~in the three months ended March 31, 2021 represents a consolidated effective tax rate of 26.4%. In

We reported net income of $3.6 million in the three months ended March 31, ~~2020, we recorded less than $1,000 of tax expense, which was driven by a favorable deferred tax asset adjustment related~~2022 compared to ~~a NOL carryback from the CARES Act.~~

~~We reported~~ net income of $1.5 million in the three months ended March 31, ~~2021 compared to~~2021. Non-GAAP adjusted net income ~~of $1.9~~was $4.2 million infor the three months ended March 31, ~~2020. Non-GAAP~~2022 compared to adjusted net income ~~was~~of $1.8 million for the three months ended March 31, 2021 ~~compared to adjusted net loss of ($1.1) million for the three months ended March 31, 2020~~ (Refer to the Non-GAAP tables above). The increase in Non-GAAP adjusted net income is primarily the net result of an ~~improved gross profit margin, a reduction~~increase in ~~operating expenses and decreased interest expense, partially offset by decreased net~~ sales. Diluted earnings per share of ~~$0.05~~$0.13 was reported in the three months ended March 31, ~~2021~~2022 as compared to ~~$0.07~~$0.05 diluted earnings per share in the same period of fiscal ~~2020.~~2021. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the three months ended March 31, ~~2021~~2022 were ~~27,727,000~~28,083,000 shares as compared to ~~26,623,000~~27,727,000 shares in the same period last year.

~~Page 26~~

NINE MONTHS ENDED MARCH 31, ~~2021~~2022 COMPARED TO NINE MONTHS ENDED MARCH 31, ~~2020~~2021

Lighting Segment

Nine Months Ended

March 31

(In thousands)

2021

2020

Net Sales
$ 136,271 $ 165,640
Gross Profit
$ 41,689 $ 45,357
Operating Income
$ 9,519 $ 13,411

Lighting Segment

	Nine Months Ended
	March 31
(In thousands)	2022		2021

Net Sales	$	165,662	$	136,271
Gross Profit	$	49,009	$	41,689
Operating Income	$	13,921	$	9,519

Lighting Segment net sales of ~~$136.3~~$165.7 million in the nine months ended March 31, ~~2021 decreased 18%~~2022 increased 22% from net sales of ~~$165.6~~$136.3 million in the same period in fiscal ~~2020.~~2021 The ~~decrease is due to the impact of COVID-19 disruptions in construction~~sales growth was across all key vertical markets, ~~however; the sales gap versus the prior year continues to narrow, having improved each quarter of the current fiscal year.~~with significant contributions from new and enhanced products.

Gross profit of ~~$41.7~~$49.0 million in the nine months ended March 31, ~~2021 decreased $3.7~~2022 increased $7.3 million or 8%18% from the same period of fiscal ~~2020.~~2021. Gross profit as a percentage of net sales was ~~30.6%~~29.6% in the nine months ended March 31, ~~2021~~2022 compared to ~~27.4%~~30.6% in the same period of fiscal ~~2020. The growth in gross~~2021. Gross profit as a percentage of net sales ~~reflects our continued focus on~~decreased as selling price realization lagged the ~~entire lighting model, including higher value applications, price management, new~~increase in input and ~~cost reduced products and supply chain and operations productivity.~~transportation costs.

~~Selling and administrative~~Operating expenses of ~~$32.2~~$35.1 million in the nine months ended March 31, ~~2021~~2022 increased ~~$0.3~~$2.9 million from ~~$31.9 million in~~ the same period of fiscal 2020. Selling and administrative expenses in the nine months ended March 31, 2020 were reduced by the $4.8 million pre-tax gain on the sale of the New Windsor facility. When the $4.8 million gain is removed from the fiscal 2020 results, selling and administrative expenses in fiscal 2021, ~~decreased from the prior year,~~primarily driven by ~~programs to reduce spending~~higher commission expense as a result of higher sales and non-recurring cost savings due to COVID-19 in the ~~pandemic.~~prior year.

Page 28

Lighting Segment operating income of ~~$9.5~~$13.9 million for the nine months ended March 31, ~~2021 decreased $3.9~~2022 increased $4.4 million from operating income of ~~$13.4~~$9.5 million in the same period of fiscal ~~2020~~2021 primarily ~~due to the $4.8 million pre-tax gain on the sale~~driven by sales volume.

Display Solutions Segment

	Nine Months Ended
	March 31
(In thousands)	2022		2021

Net Sales	$	161,989	$	82,326
Gross Profit	$	27,766	$	14,381
Operating Income	$	12,142	$	6,196

Display Solutions Segment net sales of ~~the New Windsor facility in fiscal 2020. Non-GAAP adjusted operating income was $9.7~~$162.0 million in the nine months ended March 31, ~~2021 compared to adjusted operating income~~2022 increased $79.7 million or 97% from net sales of ~~$8.8~~$82.3 million in the same period in fiscal 2021. The increase is primarily driven by the acquisition of JSI.

Gross profit of $27.8 million in the nine months ended March 31, ~~2020 (refer~~2022 increased $13.4 million or 93% from the same period of fiscal 2021. Gross profit as a percentage of net sales in the nine months ended March 31, 2022 was 17.1% compared to 17.5% in the ~~Non-GAAP table below for~~same period of fiscal 2021. Gross profit as a ~~reconciliation~~percentage of ~~Lighting Segment operating income~~net sales reflects both the accretive effect of the JSI acquisition and improvements to ~~adjusted operating income).~~core business margins, partially offset by the impact of input costs.

Reconciliation of Lighting Segment operating income to adjusted operating income:

Nine Months Ended

March 31

(In thousands)

2021

2020

Operating Income
$ 9,519 $ 13,411
Stock compensation expense
199 91
Severance
2 18
Restructuring and plant closure costs (gains)
- (4,674 )
Adjusted operating income
$ 9,720 $ 8,846

Graphics Segment

Nine Months Ended

March 31

(In thousands)

2021

2020

Net Sales
$ 82,326 $ 76,448
Gross Profit
$ 14,381 $ 12,384
Operating Income
$ 6,196 $ 6,394

~~Page 27~~

~~Graphics Segment net sales~~Operating expenses of ~~$82.3~~$15.6 million in the nine months ended March 31, ~~2021~~2022 increased ~~$5.9~~$7.4 million ~~or 8%~~ from ~~net sales of $76.4~~$8.2 million in the same period of fiscal 2021, primarily driven by the inclusion of nine months of results for JSI and non-recurring cost savings due to COVID-19 in ~~fiscal 2020. The increase in sales is from growth in our Grocery and Quick-Service Restaurants verticals partially offset by a reduction in our Petroleum vertical.~~the prior year.

~~Gross profit~~Display Solutions Segment operating income of ~~$14.4~~$12.1 million in the nine months ended March 31, ~~2021~~2022 increased $2.0 million or 16% from the same period of fiscal 2020. Gross profit as a percentage of net sales increased to 17.5% in the nine months ended March 31, 2021 compared to 16.2% in the same period in fiscal 2020, primarily within our Petroleum and Grocery verticals.

~~Selling and administrative expenses of $8.2 million increased $2.2~~$5.9 million from ~~$6.0~~operating income of $6.2 million in the same period of fiscal ~~2020. Selling and administrative expenses in the nine months ended March 31, 2020 were reduced by the $3.7~~2021. The increase of $5.9 million pre-tax gain on the sale of the North Canton, Ohio facility. When the $3.7 million gain is removed from the fiscal 2020 results, selling and administrative expenses in fiscal 2021 decreased from the prior year,was primarily driven by ~~programs to reduce spending as a result of the pandemic.~~an increase in sales.

Graphics Segment operating income of $6.2 million in the nine months ended March 31, 2021 decreased $0.2 million from operating income of $6.4 million in the same period of fiscal 2020. Non-GAAP adjusted operating income was $6.3 million in the nine months ended March 31, 2021 compared to adjusted operating income of $3.7 million in the nine months ended March 31, 2020 (refer to the Non-GAAP table below for a reconciliation of Graphics Segment operating income to adjusted operating income). The increase is primarily due to improved gross profit margin.Corporate and Eliminations

Reconciliation of Graphics Segment operating income to adjusted operating income:

Nine Months Ended

March 31

(In thousands)

2021

2020

Operating Income
$ 6,196 $ 6,394
Stock compensation expense
113 19
Severance
13 44
Restructuring and plant closure costs (gains)
3 (2,711 )
Adjusted operating income
$ 6,325 $ 3,746

Corporate and Eliminations
	Nine Months Ended						Nine Months Ended
	March 31						March 31
(In thousands)	2021			2020			2022			2021

Gross Profit (Loss)	$	-		$	20
Gross (Loss) Profit							$	(24	)	$	-
Operating (Loss)	$	(8,731	)	$	(8,575	)	$	(12,036	)	$	(8,731	)

The gross (loss) profit relates to the change in the intercompany profit in inventory elimination.

~~Administrative~~Operating expenses of ~~$8.7~~$12.0 million in the nine months ended March 31, ~~2021 remained relatively consistent with~~2022 increased $3.3 million or 38% from the same period of fiscal 2021. The net increase was due to increased incentive plan expense and acquisition integration costs, as well as non-recurring cost savings due to COVID-19 in the prior ~~year period.~~year.

Consolidated Results

We reported $1.3 million and $0.2 million of net interest expense in the nine months ended March 31, 2022 and March 31, 2021, ~~compared~~respectively. The increase in interest expense from fiscal 2021 to ~~$0.8~~fiscal 2022 is the result of higher levels of debt outstanding on our credit facility. We also recorded other expense/(income) in the nine months ended March 31, 2022 and March 31, 2021, related to net foreign exchange currency transaction losses and gains through our Mexican and Canadian subsidiaries.

The $2.9 million ~~net interest~~of income tax expense in the nine months ended March 31, ~~2020. The decrease in interest expense from fiscal 2020 to fiscal 2021 is the result~~2022 represents a consolidated effective tax rate of lower levels of debt outstanding on our line of credit. We also recorded other income of $0.2 million in the nine months ended March 31, 2021 compared to other expense of $0.6 million in the nine months ended March 31, 2020, which is related to net foreign exchange currency transaction gains and losses through our Mexican subsidiary.

22.4%. The $1.3 million income tax expense in the nine months ended March 31, 2021 represents a consolidated effective tax rate of 19.1% and was driven by a favorable deferred tax asset adjustment related to a net operating loss carryback from the CARES Act. ~~The $1.7~~

We reported net income of $9.9 million ~~income tax expense~~ in the nine months ended March 31, ~~2020 represents a consolidated effective tax rate of 17.6%. The effective tax rate is mostly driven by the following: 1) a discrete item related~~2022 compared to stock-based compensation expense; 2) a deferred tax asset adjustment related to a NOL carryback from the CARES Act; and 3) the utilization of a capital loss carryforward related to the capital gain on the sale of the North Canton, Ohio facility.

~~Page 28~~

~~We reported~~ net income of $5.7 million in the nine months ended March 31, ~~2021 compared to~~2021. Non-GAAP adjusted net income ~~of $8.1~~was $12.0 million infor the nine months ended March 31, ~~2020. Non-GAAP~~2022 compared to adjusted net income ~~was~~of $6.4 million for the nine months ended March 31, ~~2020 compared to adjusted net income of $2.3 million for the nine months ended March 31, 2020~~2021. (Refer to the Non-GAAP tables above). The increase in Non-GAAP adjusted net income is primarily the net result of an ~~improved gross profit margin, decreased interest expense and other expense, partially offset by decreased net~~increase in sales. Diluted earnings per share of ~~$0.21~~$0.35 was reported in the ~~mine~~nine months ended March 31, ~~2021~~2022 as compared to ~~$0.31~~$0.21 diluted earnings per share in the same period of fiscal ~~2020.~~2021. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the nine months ended March 31, ~~2021~~2022 were ~~27,352,000~~27,945,000 shares as compared to ~~26,423,000~~27,352,000 shares in the same period last year.

Page 29

Liquidity and Capital Resources

We consider our level of cash on hand, borrowing capacity, current ratio and working capital levels to be our most important measures of short-term liquidity. For long-term liquidity indicators, we believe our ratio of long-term debt to equity and our historical levels of net cash flows from operating activities to be the most important measures.

At March 31, ~~2021,~~2022, we had working capital of ~~$61.1~~$83.4 million compared to ~~$51.2~~$54.1 million at June 30, ~~2020.~~2021. The ratio of current assets to current liabilities was ~~2.10~~2.11 to 1 as compared to a ratio of ~~2.48~~1.76 to 1 at June 30, ~~2020.~~2021. The ~~$9.9 million~~ increase in working capital from June 30, ~~2020~~2021 to March 31, ~~2021~~2022 is primarily driven by a ~~$20.0~~$19.4 million increase in ~~cash, $7.1~~net inventory, $15.9 million increase in net accounts receivable, ~~$1.8~~and a $5.0 million ~~increase~~decrease in ~~other current assets and $1.6 million increase in net inventory,~~accrued expenses, partially offset by a ~~$10.8~~$5.7 million increase in accounts payable, ~~and~~ a ~~$9.6~~$3.5 million increase in ~~accrued expenses. While working capital has increased, non-cash working capital decreased as we continue to effectively manage it~~current maturities of long-term debt, and a $1.8 million decrease in ~~the face of constantly changing market conditions due to COVID-19.~~cash and other current assets.

Net accounts receivable was ~~$45.0~~$73.6 million and ~~$37.8~~$57.7 million at March 31, ~~2021~~2022 and June 30, ~~2020,~~2021, respectively. DSO decreased to 5255 days at March 31, ~~2021~~2022 from 56 days at June 30, ~~2020. We believe that our receivables are ultimately collectible or recoverable, net of certain reserves, and that aggregate allowances for doubtful accounts are adequate.~~2021.

Net inventories of ~~$40.4~~$78.4 million at March 31, ~~2021~~2022 increased ~~$1.6~~$19.4 million from ~~$38.8~~$58.9 million at June 30, ~~2020.~~2021. The increase of ~~$1.6~~$19.4 million is the result of an increase in gross inventory of ~~$2.2~~$19.2 million and ~~an increase~~a decrease in obsolescence reserves of ~~$0.6~~$0.2 million. ~~Based on a strategy of balancing inventory levels with customer service and the timing of shipments,~~Lighting Segment net inventory increased ~~$1.8~~$14.8 million, to support our product availability initiative to capitalize on new, short-lead time opportunities and to mitigate the ongoing supply chain challenges. Net inventory in the ~~Lighting~~Display Solutions Segment ~~and $0.2~~increased $4.6 million, ~~in the Graphics segment in the nine months ended March 31, 2021.~~to support several ongoing programs.

Cash generated from operations and borrowing capacity under our ~~line of~~ credit facility is our primary source of liquidity. In ~~March~~September 2021, ~~the Company~~we amended ~~its~~our existing $100 million secured line of credit, to a ~~$100~~$25 million ~~facility from a~~term loan and $75 million ~~facility, with $100 million~~remaining as a secured revolving line of ~~the credit line available as of April 23, 2021. This $100 million five-year credit line expires~~credit. Both facilities expire in the third quarter of fiscal 2026. As of March 31, 2022, $13.2 million of the credit line was available. We are in compliance with all of our loan covenants. We believe that our $100 million ~~line of~~ credit facility plus cash flows from operating activities are adequate for ~~fiscal 2021~~ operational and capital expenditure ~~needs.~~needs for the next 12 months. However, as the future impact of COVID-19 and the escalation of supply chain challenges on the economy and our operations evolves, we will continue to assess our liquidity needs.

We ~~generated $24.6~~used $12.7 million of cash from operating activities in the nine months ended March 31, ~~2021 as~~2022 compared to ~~$17.1~~a source of cash of $24.6 million in the ~~same period of fiscal 2020.~~nine months ended March 31, 2021. The ~~$7.5 million increase~~decrease in net cash flows from operating activities is the result of ~~our~~increases in inventory and accounts receivable and decreases in accrued expense and customer prepayments, partially offset by improved earnings ~~as well as a $9.4 million~~and an increase in accounts payable, $7.5 million increase in customer project prepayments and $2.1 million increase in Accrued FICA from deferred payroll taxes allowed under the CARES Act, partially offset by an increase of $15.2 million in accounts receivable.payable.

We used $0.8 million and $1.5 million of cash related to investing activities in the nine months ended March 31, 2021 as compared to $18.5 million of cash provided by investing activities in the same period of fiscal 2020, resulting in a decrease of $20.0 million. Capital expenditures were $1.5 million in both the nine months ended2022 and March 31, 2021, ~~and March 31, 2020. We sold our New Windsor manufacturing facility for $12.3 million and our North Canton facility for $7.7~~respectively. Capital expenditures decreased from $1.5 million in the nine months ended March 31, ~~2020, which was~~2021 to $1.3 million in the ~~primary contributing factor~~nine months ended March 31, 2022. We received $0.5 million of cash related to the ~~decrease in cash flow~~settlement of working capital adjustments from ~~investing activities from fiscal 2020 to fiscal 2021.~~the acquisition of JSI.

We ~~used $3.2 million~~had a source of cash of $12.4 million related to financing activities in the nine months ended March 31, ~~2021~~2022 compared to ~~$35.5~~a use of cash of $3.2 million in the nine months ended March 31, ~~2020.~~2021. The ~~$32.3~~$15.6 million change in cash flow was ~~primarily~~ the net result of ~~payments~~an increase in the borrowings on the line of ~~long-term debt~~credit to support the growth in ~~excess~~working capital. Most of ~~borrowings which was primarily driven by cash flow from operations and cash flow from investments due~~the growth in working capital can be attributed to the ~~sale of the New Windsor~~increase in inventory to ensure product availability for critical sales growth initiatives and ~~North Canton facilities.~~to mitigate supply chain challenges.

~~Page 29~~

We have on our balance sheet financial instruments consisting primarily of cash and cash equivalents, short-term investments, revolving lines of credit, and long-term debt. The fair value of these financial instruments approximates carrying value because of their short-term maturity and/or variable, market-driven interest rates.

Off-Balance Sheet Arrangements

We have no financial instruments with off-balance sheet risk and have no off-balance sheet arrangements.

Cash Dividends

In April ~~2021,~~2022, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable May ~~11, 2021~~17, 2022 to shareholders of record as of May ~~3, 2021.~~9, 2022. The indicated annual cash dividend rate for fiscal ~~2021~~2022 is $0.20 per share. The Board of Directors has adopted a policy regarding dividends which indicates that dividends will be determined by the Board of Directors in its discretion based upon its evaluation of earnings, cash flow requirements, financial condition, debt levels, stock repurchases, future business developments and opportunities, and other factors deemed relevant.

Page 30

Critical Accounting Policies and Estimates

A summary of our significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company’s fiscal ~~2020~~2021 Annual Report on Form 10-K.

As a result of the adoption of ASU 2016-13, the Company has updated its critical accounting policy related to trade account receivables and allowances for credit losses effective July 1, 2020 from the critical accounting policies previously disclosed in our audited financial statements for the year ended June 30, 2020 as follows:

All trade account receivables are reported net of allowances for credit losses. The allowances for credit losses represent management’s best estimate of the credit losses expected from our trade account receivables over the life of the underlying assets. Assets with similar risk characteristics are pooled together for determination of their current expected credit losses. The Company regularly performs detailed reviews of our pooled assets to evaluate the collectability of receivables based on a combination of past, current, and future financial and qualitative factors that may affect customers’ ability to pay. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations, a specific reserve is recorded against amounts due to reduce the recognized receivable to the amount reasonably expected to be collected.

~~Page 30~~

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Except for the broad effects of the COVID-19 pandemic as a result of its negative impact on the global economy and major financial markets, there have been no material changes in our exposure to market risk since June 30, ~~2020.~~2021. Additional information can be found in Item 7A, Quantitative and Qualitative Disclosures About Market Risk, which appears on page 1213 of the Annual Report on Form 10-K for the fiscal year ended June 30, ~~2020.~~2021.

ITEM 4.CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as such term is defined Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within required time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

We conducted, under the supervision of our management, including the Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, ~~2021,~~2022, our disclosure controls and procedures were effective. Management believes that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q are fairly presented in all material respects in accordance with GAAP for interim financial statements, and the Company’s Chief Executive Officer and Chief Financial Officer have certified that, based on their knowledge, the condensed consolidated financial statements included in this report fairly present in all material respects the Company’s financial condition, results of operations and cash flows for each of the periods presented in this report.

Changes in Internal Control

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended March 31, ~~2021,~~2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Page 31

PART II. OTHER INFORMATION

ITEM 5. OTHER INFORMATION

~~None.~~On November 2, 2021, LSI Industries Inc. (the “Company”) held its annual meeting of shareholders (the “Meeting”). One of the proposals for the shareholders to consider was an amendment to the Company’s Articles of Incorporation (the “Articles”) to increase the number of authorized shares of common stock from 40,000,000 to 50,000,000 (the “Amendment”). At the meeting the Amendment was reported as approved by shareholders. However, after the Meeting, the Company identified an inadvertent discrepancy related solely to disclosure and counting of broker non-votes and the Amendment proposal in the Meeting’s proxy statement. Although the counting of these broker non-votes would likely not have any effect on the approval of the Amendment, the Company, out of an abundance of caution, has determined to deem the Amendment not to be valid and will seek another vote and shareholder approval to amend its Articles to increase its authorized shares of common stock at a later date and subject to a new proxy statement. The Company has not issued any of the additional shares approved at the Meeting.

ITEM 6.EXHIBITS~~EXHIBITS~~

Exhibits:

~~10.1~~	~~Fifth Amendment to Loan Documents dated as of March 30, 2021 between LSI and PNC Bank, National Association (incorporated by reference to LSI’s Form 8-K filed on April 1, 2021).~~

31.1	Certification of Principal Executive Officer required by Rule 13a-14(a)

31.2	Certification of Principal Financial Officer required by Rule 13a-14(a)

32.1	Section 1350 Certification of Principal Executive Officer

32.2	Section 1350 Certification of Principal Financial Officer

101.INS	Inline XBRL Instance Document

101.SCH	Inline XBRL Taxonomy Extension Schema Document

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101)

~~101.INS Inline XBRL Instance Document~~

~~101.SCH Inline XBRL Taxonomy Extension Schema Document~~

~~101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document~~

~~101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document~~

~~101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document~~

~~101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document~~

~~104 Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101)~~

Page 32

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	LSI Industries Inc.


	By:	/s/ James A. Clark
		James A. Clark
		Chief Executive Officer and President
		(Principal Executive Officer)


	By:	/s/ James E. Galeese
		James E. Galeese
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)
~~April 28, 2021~~May 6, 2022

Page 33

Other Intangible Assets	June 30, 2020
(In thousands)	Gross
	Carrying		Accumulated		Net
	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	35,563	$	14,129	$	21,434
Patents		338		277		61
LED technology firmware, software		16,066		12,852		3,214
Trade name		2,658		829		1,829
Total Amortized Intangible Assets		54,625		28,087		26,538

Indefinite-lived Intangible Assets
Trademarks and trade names		3,422		-		3,422
Total indefinite-lived Intangible Assets		3,422		-		3,422

Total Other Intangible Assets	$	58,047	$	28,087	$	29,960

	Balance as of									Balance as of
	June 30,		Restructuring							March 31,
(In thousands)	2020		Expense		Payments			Adjustments		2021

Severance and termination benefits	$	27	$	0	$	0		$	0	$	27
Other restructuring costs		0		3		(3	)		0	$	0
Total	$	27	$	3	$	(3	)	$	0	$	27

	Operating Lease Liabilities			Finance Lease Liabilities
2021	$	914		$	149
2022		2,362			329
2023		2,351			329
2024		2,037			335
2025		1,469			362
Thereafter		435			665
Total lease payments		9,568			2,169
Less: Interest		(1,159	)		(353	)
Present Value of Lease Liabilities	$	8,409		$	1,816