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What changed in LSI INDUSTRIES INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of LSI INDUSTRIES INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+93 added−107 removedSource: 10-K (2023-09-08) vs 10-K (2022-09-09)

Top changes in LSI INDUSTRIES INC's 2023 10-K

93 paragraphs added · 107 removed · 81 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

18 edited+5 added−6 removed20 unchanged
Biggest changeWe have made investments in our marketing support team to continue to build awareness of LSI’s product and service capabilities. Our marketing approach and means of distribution vary by product line and by market. Manufacturing and Distribution We currently operate out of eleven manufacturing facilities located within six U.S. states and one province in Ontario, Canada.
Biggest changeOur marketing approach and means of distribution vary by product line and by market. Manufacturing and Distribution We currently operate out of eleven manufacturing facilities located within six U.S. states and one province in Ontario, Canada. We design, engineer and manufacture most of our lighting and visual display products through the utilization of lean manufacturing principles.
The Company markets its products and service capabilities to end users in multiple channels through a broad spectrum of marketing and promotional methods, including direct customer contact, trade shows, on-site and virtual training, print advertising in industry publications, product brochures and other literature, e Learning, the company website, as well social media.
The Company markets its products and service capabilities to end users in multiple channels through a broad spectrum of marketing and promotional methods, including direct customer contact, trade shows, on-site and virtual training, print advertising in industry publications, product brochures and other literature, e learning, the company’s website, as well social media.
An example is our digital signage business, where customers require us to carry an inventory of digital screens to meet the demands of a large rollout program. -6- Research and Development : We invest in the development of new products and solutions as well as the enhancement of existing product offerings to meet the needs of our customers.
An example is our digital signage business, where customers require us to carry an inventory of digital screens to meet the demands of a large rollout program. Research and Development : We invest in the development of new products and solutions as well as the enhancement of existing product offerings to meet the needs of our customers.
Increasingly, we have become the primary supplier of exterior and interior visual image and display elements for our customers. -5- Sales, Customers and Marketing The products and services we offer are sold primarily throughout the United States, but also in Canada, Mexico, Australia, and Latin America (approximately 5% of consolidated net sales are outside the United States).
Increasingly, we have become the primary supplier of exterior and interior visual image and display elements for our customers. - 5 - Sales, Customers and Marketing The products and services we offer are sold primarily throughout the United States, but also in Canada, Mexico, and Latin America (approximately 4% of consolidated net sales are outside the United States).
ITEM 1. BUSINESS Overview LSI Industries Inc. (LSI) is a leading producer of non-residential lighting and retail display solutions. Non-residential lighting consists of high-performance, American-made lighting solutions. The Company’s strength in outdoor lighting applications creates opportunities for it to introduce additional solutions to its valued customers.
ITEM 1. BUSINESS Overview LSI Industries Inc. (LSI) is a leading producer of non-residential lighting and retail display solutions. Non-residential lighting consists of high-performance, American-made lighting solutions. The Company’s strength in indoor and outdoor lighting applications creates opportunities for LSI to introduce additional solutions to its valued customers.
The Company offers a nonqualified deferred compensation plan, an equity-based incentive plan and an incentive plan that is based upon the achievement of the Company’s business plan goals, for certain employees. Information Concerning LSI Industries Inc. We file reports with the Securities and Exchange Commission (“SEC”) on Forms 10-K, 10-Q and 8-K.
The Company offers a nonqualified deferred compensation plan, an equity-based incentive plan and an incentive plan that is based upon the achievement of the Company’s business plan goals, for certain employees. Information Concerning the Company We file reports with the Securities and Exchange Commission (“SEC”) on Forms 10-K, 10-Q and 8-K.
We have 1,380 full-time employees and 149 agency employees as of June 30, 2022. We offer a comprehensive compensation and benefits program to our employees, including competitive wages, medical and dental insurance, and a 401(k)-retirement savings plan.
We have 1,540 full-time employees and 87 agency employees as of June 30, 2023. We offer a comprehensive compensation and benefits program to our employees, including competitive wages, medical and dental insurance, and a 401(k)-retirement savings plan.
In addition to these channels, we use social media to communicate to the public. It is possible that the information we post on social media could be deemed to be material to investors. We encourage investors, the media, and others interested in LSI to review the information we post on the social media channels listed on our Investor Relations website.
It is possible that the information we post on social media could be deemed to be material to investors. We encourage investors, the media, and others interested in LSI to review the information we post on the social media channels listed on our Investor Relations website. - 7 -
We make available free of charge through our internet website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practical after we electronically file them with the SEC. -7- The information found on our website is not part of, or incorporated by reference into, this or any other report we file with, or furnish to, the SEC.
We make available free of charge through our internet website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practical after we electronically file them with the SEC.
Our business is organized as follows: the Lighting Segment, which represented 51% of our fiscal 2022 net sales and the Display Solutions Segment, which represented 49% of our fiscal 2022 net sales. See Note 3 of Notes to Consolidated Financial Statements beginning on page 48 of this Form 10-K for additional information on business segments.
Our business is organized as follows: the Lighting Segment, which represented 55% of our fiscal 2023 net sales and the Display Solutions Segment, which represented 45% of our fiscal 2023 net sales. See Note 2 of Notes to Consolidated Financial Statements beginning on page 44 of this Form 10-K for additional information on business segments.
Net sales by segment are as follows (in thousands): 2022 2021 Lighting Segment $ 233,449 $ 189,000 Display Solutions Segment 221,671 126,612 Total Net Sales $ 455,120 $ 315,612 Lighting Segment Our Lighting Segment manufactures, markets, and sells outdoor and indoor lighting fixture and controls solutions in the commercial and industrial markets, including the following vertical markets: refueling and convenience store, parking lot and garage, quick-service restaurant, retail, grocery and pharmacy, automotive dealership, sports court and field, and warehouse.
Net sales by segment are as follows (in thousands): 2023 2022 Lighting Segment $ 272,451 $ 233,449 Display Solutions Segment 224,528 221,671 Total Net Sales $ 496,979 $ 455,120 Lighting Segment Our Lighting Segment manufactures, markets, and sells outdoor and indoor lighting fixture and controls solutions in the following vertical markets: refueling and convenience store, parking lot and garage, quick-service restaurant, retail, grocery and pharmacy, automotive dealership, sports court and field, and warehouse.
As a result of challenges encountered in the supply chain, we have increased our safety stock in certain components in order to mitigate potential disruption to our operations resulting from an anticipated shortage of certain components. We are not dependent on any one supplier for critical component parts.
When faced with supply chain challenges, we increase our safety stock in certain components in order to mitigate potential disruption to our operations resulting from an anticipated shortage of certain components. We are not dependent on any one supplier for critical component parts.
Sales are developed through a wide variety of contacts such as, but not limited to, national retail marketers, branded product companies, and franchised and dealer operations. In addition, sales are also achieved through recommendations from local architects, engineers, electrical distributors, and contractors.
These products and services are sold directly to the customer or a brand marketer acting as an intermediary. Sales are developed through a wide variety of contacts such as, but not limited to, national retail marketers, branded product companies, and franchised and dealer operations. In addition, sales are also achieved through recommendations from local architects, engineers, electrical distributors, and contractors.
Focusing on key vertical applications allows us to deliver unique product solutions, which in turn provide differentiated value to our customers. Our lighting fixtures, poles and brackets are produced in a variety of designs, styles, and finishes.
Focusing on key vertical applications allows us to deliver unique product solutions, which in turn provide differentiated value to our customers. Our lighting fixtures, poles and accessories are produced in a variety of design, aesthetics, and finishes. Application of our lighting fixtures vary to include surface, pole, and pendant mounted applications.
The second revenue stream is from selling standard products to stocking distributors, who subsequently provide products to electrical contractors and end users for a variety of lighting applications. Our display solution elements and related services, which in many instances are program-driven, are sold primarily through our own sales force.
The second revenue stream is from selling standard products to stocking distributors, who subsequently provide products to electrical contractors and end users for a variety of lighting applications. Our lighting products are primarily sold through manufacturer’s sales representatives and to a lesser degree directly through our own sales force.
In addition, we also focus on designing lighting system solutions and implementing strategies related to energy savings in all markets served. Display Solutions Segment The Display Solutions Segment manufactures, sells and installs exterior and interior visual image and display elements, including printed graphics, structural graphics, digital signage, menu board systems, store display fixtures, refrigerated displays, and custom display elements.
Display Solutions Segment The Display Solutions Segment manufactures, sells and installs exterior and interior visual image and display elements, including printed graphics, structural graphics, digital signage, menu board systems, store display fixtures, refrigerated displays, and custom display elements.
Competition We experience competition in both segments and in all markets we serve based on numerous factors, including price, brand name recognition, product quality, product design, prompt delivery, energy efficiency, customer relationships, reputation, and service capabilities.
Research and development costs related to both product and software development totaled $3.4 million and $3.6 million for the fiscal years ended June 30, 2023, and 2022, respectively. - 6 - Competition We experience competition in both segments and in all markets we serve based on numerous factors, including price, brand name recognition, product quality, product design, prompt delivery, energy efficiency, customer relationships, reputation, and service capabilities.
All orders are expected to be shipped or installed within twelve months. Environmental Regulations We are subject to a variety of federal, state, and local provisions regulating the discharge of materials into the environment or otherwise relating to the protection of the environment.
Working Capital For a discussion of our working capital, see “Liquidity and Capital Resources” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations." Environmental Regulations We are subject to a variety of federal, state, and local provisions regulating the discharge of materials into the environment or otherwise relating to the protection of the environment.
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Important functional variations include types of mounting, such as pole, bracket and surface, and the nature of the light requirement, such as but not limited to interior and exterior down-lighting, wall-wash lighting, canopy lighting, flood lighting, emergency exit lighting, area lighting and security lighting.
Added
Functional light distributions from our products varies depending upon application providing application specific photometric outputs including, but not limited to, interior and exterior downlighting, wall-wash lighting, canopy lighting, floodlighting, emergency exit lighting, industrial lighting, area and parking structure lighting and security lighting.
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We also offer a variety of lighting controls including sensors, photocontrols, dimmers, motion detection and Bluetooth systems to support our lighting fixtures. Our engineering professionals perform photometric analyses and wind load safety studies for our light fixtures.
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To further energy efficiency gains from our luminaires, we offer a suite of lighting control options including sensors, photocontrols, dimming, motion detection and circuit controllers in both analog and wireless technologies to further support the application of our luminaires and provide means to additional energy savings We design and certify to all applicable safety, photometric and performance standards including UL Solutions, Design Lights Consortium, International Dark-Sky Association, Norma Official Mexicana (NOM), and Institute for Printed Circuits (IPC).
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In addition, our light fixtures are certified to Universal Labs (UL), DesignLights Consortium (DLC), International Dark-Sky Association (IDA, for outdoor lighting) and Institute for Printed Circuits (IPC) standards, to name a few. Our lighting products utilize high efficient LED light sources. All of our products are designed for performance, reliability, ease of installation and service, as well as attractive appearance.
Added
Utilizing LED light sources, our products are designed for energy efficiency, reliability, performance, ease of installation and service while providing a high degree of overall aesthetic appeal. We focus on providing performance based, energy efficient lighting solutions implemented across all key vertical markets served.
Removed
The Company added four manufacturing facilities resulting from the acquisition of JSI Store Fixtures (May 2021), which included manufacturing facilities located in Maine, Utah, and Canada. We design, engineer and manufacture most of our lighting and visual display products through the utilization of lean manufacturing principles.
Added
Our display solution elements and related services, which in many instances are program-driven, are sold primarily through our own sales force. This revenue stream is from more significant program initiatives that often represent multiple sites over a period of time. These customers are usually established and have a long-term relationship with LSI.
Removed
Research and development costs related to both product and software development totaled $3.6 million and $3.7 million for the fiscal years ended June 30, 2022, and 2021, respectively.
Added
The information found on our website is not part of, or incorporated by reference into, this or any other report we file with, or furnish to, the SEC. In addition to these channels, we use social media to communicate to the public.
Removed
Working Capital For a discussion of our working capital, see “Liquidity and Capital Resources” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations." Backlog Orders We had a backlog of orders, which we believe to be firm, of $112.4 million and $89.7 million at June 30, 2022, and 2021, respectively.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

52 edited+7 added−20 removed48 unchanged
Biggest changeRisks Related to our Operations ● Sudden or unexpected changes in a customer’s creditworthiness could result in significant accounts receivable write-offs. ● Price increases, significant shortages of raw materials and components, shortages in transportation and an increase in fuel prices could adversely affect our operating margin. ● Our information technology systems are subject to certain cyber risks and could be subject to disasters that are beyond our control . ● Labor shortages or increases in labor costs could adversely impact our business and results of operations. ● If the Company’s products are improperly designed, manufactured, packaged, or labeled, the Company may need to recall those items, may have increased warranty costs, and could be the target of product liability claims. ● Changes in a customer’s demands and commitment to proprietary inventory could result in significant inventory write-offs. ● The turnover of independent commissioned sales representatives could cause a significant disruption in sales volume. ● The Company may be unable to sustain significant customer and/or channel partner relationships. ● A loss of key personnel or inability to attract qualified personnel could have an adverse effect on our operating results. ● Changes in a shift in product mix can have a significant impact on our gross margins. ● We may not recognize all revenues from our backlog or receive all payments anticipated under awarded projects and customer contracts. ● We may be required to write-off or impair capitalized costs or intangible assets in the future, or we may incur restructuring costs or other charges, each of which could harm our earnings. -8- Risks Related to Legal and Regulatory Matters ● The costs of litigation and compliance with environmental regulations, if significantly increased, could have an adverse effect on our operating profits. ● Potential changes in U.S. trade policies could have a material adverse effect on the Company.
Biggest changeRisks Related to our Operations ● Sudden or unexpected changes in a customer’s creditworthiness could result in significant accounts receivable write-offs. ● Price increases, significant shortages of raw materials and components, shortages in transportation and an increase in fuel prices could adversely affect our operating margin. ● Our information technology systems are subject to certain cyber risks and could be subject to interruptions that are beyond our control . ● Labor shortages or increases in labor costs could adversely impact our business and results of operations. ● If the Company’s products are improperly designed, manufactured, packaged, or labeled, the Company may need to recall those items, may have increased warranty costs, and could be the target of product liability claims. ● Changes in a customer’s demands and commitment to proprietary inventory could result in significant inventory write-offs. ● The turnover of independent commissioned sales representatives could cause a significant disruption in sales volume. ● The Company may be unable to sustain significant customer and/or channel partner relationships. ● A loss of key personnel or inability to attract qualified personnel could have an adverse effect on our operating results. ● Changes in a shift in product mix can have a significant impact on our gross margins. ● We may not recognize all revenues from our backlog or receive all payments anticipated under awarded projects and customer contracts.
Those uncertainties and risks include but are not limited to diversion of management’s attention; difficulty in retaining or attracting employees; negative impact on relationships and customers; obsolescence of current products and slow new product development; inability to produce products with quality, performance, and cost attributes equal to or better than provided by our competitors; and unforeseen difficulties in the implementation of the management operating structure.
Those uncertainties and risks include but are not limited to diversion of management’s attention; difficulty in retaining or attracting employees; negative impact on business relationships and customers; obsolescence of current products and slow new product development; inability to produce products with quality, performance, and cost attributes equal to or better than provided by our competitors; and unforeseen difficulties in the implementation of the management operating structure.
The operating environment for the grocery market continues to be characterized by the fragmentation of local, regional, and national retailers, including both retail and digital formats, market consolidation, intense competition, and entry of non-traditional competitors. Customer behavior shifted quickly and considerably during the pandemic, including a shift from food away from home to food at home.
The operating environment for the grocery market continues to be characterized by the fragmentation of local, regional, and national retailers, including both retail and digital formats, market consolidation, intense competition, and entry of non-traditional competitors. Customer behavior shifted quickly and considerably during the pandemic, including a shift from dining away from home to food at home.
On the other hand, these sales representative changes can be widespread as a result of the competitive nature of the lighting industry as LSI and its competition vie for the strongest sales agency in a particular region. The Company may be unable to sustain significant customer and/or channel partner relationships.
On the other hand, these sales representative changes can be widespread as a result of the competitive nature of the lighting industry as LSI and its competition vie for the strongest sales agency in a particular region. - 12 - The Company may be unable to sustain significant customer and/or channel partner relationships.
Significant tariffs or increases in the price of these raw materials and components could further increase the Company’s operating costs and materially adversely affect margins. The Company does, however, seek and qualify new suppliers, negotiate with existing suppliers, and arranges stocking agreements to mitigate risk of supply and price increases.
Significant tariffs or increases in the price of these raw materials and components could further increase the Company’s operating costs and materially adversely affect margins. The Company does, however, seek and qualify new suppliers, negotiate with existing suppliers, and arrange stocking agreements to mitigate risk of supply and price increases.
Although the Company attempts to pass along increased costs in the form of price increases or surcharges to its customers, the Company may be unsuccessful in doing so for competitive reasons. Even when price increases are successful, the timing of such price increases may lag significantly behind the incurrence of higher costs.
Although the Company attempts to pass along increased costs in the form of price increases to its customers, the Company may be unsuccessful in doing so for competitive reasons. Even when price increases are successful, the timing of such price increases may lag significantly behind the incurrence of higher costs.
Our information technology systems are subject to certain cyber risks and could be subject to disasters that are beyond our control . We depend heavily on the proper functioning and availability of our information, communications, and data processing systems, including operating and financial reporting systems, in operating our business.
Our information technology systems are subject to certain cyber risks and could be subject to interruptions that are beyond our control . We depend heavily on the proper functioning and availability of our information, communications, and data processing systems, including operating and financial reporting systems, in operating our business.
Various uncertainties and risks are associated with our approach to strategically penetrate certain market verticals, including but not limited to, the development, marketing and selling of new products and solutions, new product development, and the overall development, marketing, and selling of lighting and display solutions.
Various uncertainties and risks are associated with our approach to strategically penetrate existing and new market verticals, including but not limited to, the development, marketing and selling of new products and solutions, new product development, and the overall development, marketing, and selling of lighting and display solutions.
When combined with ongoing customer consolidation activity and periodic manufacturing and inventory initiatives, an uncertain macro-economic and political climate, including but not limited to a recession or inflationary pressures, and the effects of possible weakness in domestic and foreign financial and credit markets, could lead to reduced demand from our customers and increased price competition for our products, increased risk of excess and obsolete inventories and uncollectible receivables, and higher overhead costs as a percentage of revenue.
When combined with ongoing customer consolidation activity, an uncertain macro-economic and political climate, including but not limited to a recession or inflationary pressures, and the effects of possible weakness in domestic and foreign financial and credit markets, could lead to reduced demand from our customers and increased price competition for our products, increased risk of excess and obsolete inventories and uncollectible receivables, and higher overhead costs as a percentage of revenue.
To mitigate the risk of disruptions in the supply chain, we have increased our safety stock in certain components in order to mitigate a potential disruption to our operations resulting from an anticipated shortage of these same components.
To mitigate the risk of disruptions in the supply chain, we have on occasion increased our safety stock in certain components in order to mitigate a potential disruption to our operations resulting from an anticipated shortage of these same components.
The Company is also impacted by shortages and the availability of transportation of our products to our customers, in addition to rising fuel prices. The Company’s Lighting Segment has implemented price increases and surcharges with customers to offset raw material price increases along, rising transportation costs, and to mitigate the impact of trade tariffs.
The Company can also be impacted by shortages and the availability of transportation of our products to our customers, in addition to rising fuel prices. The Company’s Lighting Segment has implemented price increases with customers to offset raw material price increases along, rising transportation costs, and to mitigate the impact of trade tariffs.
The turnover of independent commissioned sales representatives could cause a significant disruption in sales volume. Commissioned sales representatives are critical to generating business in the Lighting Segment. From time to time, commissioned sales representatives representing a particular region resign or are terminated and replaced with new commissioned sales representatives.
The turnover of independent commissioned sales representatives could cause a significant disruption in sales volume. Commissioned sales representatives are critical to generating business in the Lighting Segment. From time to time, commissioned sales representatives representing a particular region resign, are terminated and replaced with new commissioned sales representatives, or consolidated with another local firm.
Any failure to identify and address or to prevent a cyber- or malware-attack could result in service interruptions, operational difficulties, loss of revenues or market share, liability to our customers or others, the diversion of corporate resources, injury to our reputation and increased service and maintenance costs.
Any failure to identify address or prevent malicious cyber activity could result in service interruptions, operational difficulties, loss of revenues or market share, liability to our customers or others, the diversion of corporate resources, injury to our reputation and increased service and maintenance costs.
Materials comprise the largest component of costs, representing approximately 66% and 62% of the cost of sales in 2022 and 2021, respectively. The Company’s operating results could be affected by the availability and price fluctuations of these materials.
Materials comprise the largest component of costs, representing approximately 63% and 66% of the cost of sales in 2023 and 2022, respectively. The Company’s operating results could be affected by the availability and price fluctuations of these materials.
Competitive pressures could affect prices we charge our customers or demand for our products, which could adversely affect our operating results. Additionally, customers for our products may attempt to reduce the number of vendors from which they purchase in order to reduce the size and diversity of their inventories and their transaction costs.
Aggressive pricing actions of our competitors could affect prices we charge our customers or demand for our products, which could adversely affect our operating results. Additionally, customers for our products may attempt to reduce the number of vendors from which they purchase in order to reduce the size and diversity of their inventories and their transaction costs.
Changes in the U.S. trade policy, U.S. social, political, regulatory, and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories and countries where we currently purchase component parts and sell products, and any resulting negative sentiments towards the United States as a result of such changes, could have an adverse effect on our business. -14- We rely on purchased components that are sourced from or manufactured in foreign countries.
Changes in the U.S. trade policy, U.S. social, political, regulatory, and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories and countries where we currently purchase component parts and sell products, and any resulting negative sentiments towards the United States as a result of such changes, could have an adverse effect on our business.
Any future successful cyber-attack or catastrophic natural disaster could significantly affect our operating and financial systems and could temporarily disrupt our ability to provide required services to our customers, impact our ability to manage our operations and perform vital financial processes, any of which could have a materially adverse effect on our business. -12- Labor shortages or increases in labor costs could adversely impact our business and results of operations.
Any future successful cyber-attack or catastrophic natural disaster could significantly affect our operating and financial systems and could temporarily disrupt our ability to provide required services to our customers, impact our ability to manage our operations and perform vital financial processes, any of which could have a materially adverse effect on our business.
Customers are granted an appropriate credit limit based upon the due diligence performed on the customer which includes, among other things, the review of the company’s financial statements and banking information, various credit checks, and payment history the customer has with the Company.
The Company takes a conservative approach when extending credit to its customers. Customers are granted an appropriate credit limit based upon the due diligence performed on the customer which includes, among other things, the review of the company’s financial statements and banking information, various credit checks, and payment history the customer has with the Company.
Risk Factor Summary Risks Related to Our Strategy ● Our financial condition and results of operations for future periods may be adversely impacted by epidemics, pandemics, outbreaks of infectious disease or similar public health threats and the resulting economic impact. ● Lower levels of economic activity in our end markets could adversely affect our operating results. ● Our business is cyclical and seasonal, and in downward economic cycles our operating profits and cash flows could be adversely affected. ● Our operating results may be adversely affected by unfavorable economic, political and market conditions. ● The inability to effectively execute our business strategies could adversely affect our financial condition and results of operations. ● The markets in which we operate are subject to competitive pressures that could affect selling prices, and therefore could adversely affect our operating results. ● We have a concentration of net sales to the refueling and convenience store and grocery markets, and any substantial change in this market could have an adverse effect on our business. ● The Company may pursue future growth through strategic acquisitions and investments, which may not yield anticipated benefits. ● If we do not develop the appropriate new products or if customers do not accept new products, we could experience a loss of competitive position which could adversely affect future revenues. ● If we are unable to adequately protect our intellectual property, we may lose some of our competitive advantage.
Risk Factor Summary Risks Related to Our Strategy ● Lower levels of economic activity in our end markets could adversely affect our operating results. ● Our operating results may be adversely affected by unfavorable economic, political and market conditions. ● The inability to effectively execute our business strategies could adversely affect our financial condition and results of operations. ● The markets in which we operate are subject to competitive pressures that could affect selling prices, and therefore could adversely affect our operating results. ● We have a concentration of net sales to the refueling and convenience store and grocery markets, and any substantial change in these markets could have an adverse effect on our business. ● The Company may pursue future growth through strategic acquisitions and investments, which may not yield anticipated benefits. ● If we do not develop the appropriate new products or if customers do not accept new products, we could experience a loss of competitive position which could adversely affect future revenues. ● If we are unable to adequately protect our intellectual property, we may lose some of our competitive advantage.
The price to be paid would be the greater of the highest price paid by such 15% owner in acquiring its shares or the highest trading price for a period of time prior to such person becoming a 15% owner; ● the votes of holders of 66 2/3% of all outstanding shares is required to amend our Articles of Incorporation and to approve mergers, reorganizations, and similar transactions; and advance notice requirements by shareholders for director nominations and actions to be taken at annual meetings. -15- Ohio corporation law contains provisions that may discourage takeover bids for our company that have not negotiated with the board of directors.
The price to be paid would be the greater of the highest price paid by such 15% owner in acquiring its shares or the highest trading price for a period of time prior to such person becoming a 15% owner; ● the votes of holders of 66 2/3% of all outstanding shares is required to amend our Articles of Incorporation and to approve mergers, reorganizations, and similar transactions; and advance notice requirements by shareholders for director nominations and actions to be taken at annual meetings.
Sales to the refueling and convenience store market are dependent upon the general conditions prevailing in and the profitability of the Petroleum industry and general market conditions.
The Company has a concentration of sales in the refueling and convenience store and grocery markets. Sales to the refueling and convenience store market are dependent upon the general conditions prevailing in and the profitability of the Petroleum industry and general market conditions.
Accordingly, information security and the continued development and enhancement of the controls and processes designed to protect our systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority for us. We have been, and in the future may be, subject to cybersecurity and malware attacks and other intentional hacking.
Accordingly, information security and the continued development and enhancement of the controls and processes designed to protect our systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority for us. We have been, and in the future may be, targeted by malicious cyber activity.
If the Company ’ s products are improperly designed, manufactured, packaged, or labeled, the Company may need to recall those items, may have increased warranty costs, and could be the target of product liability claims.
If the Company ’ s products are improperly designed, manufactured, packaged, or labeled, the Company may need to recall those items, may have increased warranty costs, and could be the target of product liability claims The Company may need to recall products if they are improperly designed, manufactured, packaged, or labeled, and the Company’s insurance may not provide full coverage for such recall events.
Any such shortage would decrease our ability to produce sufficient quantities of our product to serve our customers effectively. Such a shortage may also require us to pay higher wages for employees and incur a corresponding reduction in our profitability. Improvements in the economy and labor markets also could impact our ability to attract and retain key personnel.
Such a shortage may also require us to pay higher wages for employees and incur a corresponding reduction in our profitability. Improvements in the economy and labor markets also could impact our ability to attract and retain key personnel.
Future success of the Company will depend on, among other factors, the ability to attract and retain other qualified personnel, particularly executive management, research and development engineers, and sales professionals.
The Company’s management philosophy of cost-control results in a lean workforce. Future success of the Company will depend on, among other factors, the ability to attract and retain other qualified personnel, particularly executive management, research and development engineers, and sales professionals.
Economic and political conditions worldwide have from time to time contributed to slowdowns in our industry at large, as well as to the specific markets in which we operate.
Our operating results may be adversely affected by unfavorable economic, political and market conditions. Economic and political conditions worldwide have from time to time contributed to slowdowns in our industry at large, as well as to the specific markets in which we operate.
RISKS RELATED TO FINANCIAL MATTERS A significant decline in our stock price could adversely affect our ability to raise additional capital. The market price of our common stock has experienced fluctuations in fiscal 2021 and prior years.
RISKS RELATED TO FINANCIAL MATTERS A significant decline in our stock price could adversely affect our ability to raise additional capital. The market price of our common stock can experience significant fluctuations.
Import tariffs and potential import tariffs have resulted or may result in increased prices for these imported goods and materials and, in some cases, may result or have resulted in price increases for domestically sourced goods and materials.
Some of our purchased components are sourced from or manufactured in foreign countries. Import tariffs and potential import tariffs have resulted or may result in increased prices for these imported goods and materials and, in some cases, may result or have resulted in price increases for domestically sourced goods and materials.
Potential changes in U.S. trade policies could have a material adverse effect on the Company.
Risks Related to Legal and Regulatory Matters ● Potential changes in U.S. trade policies could have a material adverse effect on the Company.
The Company has increasingly manufactured certain of those components and products in its own facilities. Widespread product recalls could result in significant losses due to the costs of a recall, the destruction of product inventory, penalties, and lost sales due to the unavailability of a product for a period of time.
Widespread product recalls could result in significant losses due to the costs of a recall, the destruction of product inventory, penalties, and lost sales due to the unavailability of a product for a period of time.
In addition, a delay in the receipt of revenues, even if such revenues are eventually received, may cause our operating results for a particular quarter to fall below our expectations.
If we do not receive all of the revenues we currently expect to receive, our future operating results could be adversely affected. In addition, a delay in the receipt of revenues, even if such revenues are eventually received, may cause our operating results for a particular quarter to fall below our expectations.
While the Company maintains positive, and in many cases long-term relationships with these channel partners, the loss of a number of channel partners or substantial decrease in the volume of purchases from a major channel partner or group of channel partners could adversely affect the Company. -13- A loss of key personnel or inability to attract qualified personnel could have an adverse effect on our operating results.
While the Company maintains positive, and in many cases long-term relationships with these channel partners, the loss of a number of channel partners or substantial decrease in the volume of purchases from a major channel partner or group of channel partners could adversely affect the Company.
Operating results can be negatively impacted by volatility in these markets. Future downturns in any of the markets we serve could adversely affect our overall sales, profitability, and cash flow.
Future downturns in any of the markets we serve could adversely affect our overall sales, profitability, and cash flow.
Our information systems are protected through physical and software security as well as redundant backup systems, however, as cyber-attacks continue to evolve, we are committed to investing in our cyber defenses in order to mitigate the risks.
We have significantly enhanced and will continue to improve our cybersecurity controls in order to minimize the likelihood or impact of a malicious cyber activity. - 11 - Our information systems are protected through physical and software security as well as redundant backup systems, however, as cyber-attacks continue to evolve, we are committed to investing in our cyber defenses in order to mitigate the risks.
Our customers have the right under some circumstances to terminate contracts or defer the timing of our shipments or installments and their payments to us. We may not receive all of the revenues from our backlog. If we do not receive all of the revenues we currently expect to receive, our future operating results will be adversely affected.
We may not recognize all revenues from our backlog or receive all payments anticipated under awarded projects and customer contracts. Our customers have the right under some circumstances to terminate contracts or defer the timing of our shipments or installments and their payments to us. We may not receive all of the revenues from our backlog.
Risks Related to Financial Matters ● A significant decline in our stock price could adversely affect our ability to raise additional capital. ● Anti-takeover provisions in our organizational documents and in Ohio law could make difficult or delay a change in management or negatively impact our share price.
Risks Related to Financial Matters ● A significant decline in our stock price could adversely affect our ability to raise additional capital. ● Recent increases in inflation and interest rates in the United States and elsewhere could adversely affect our business. ● Anti-takeover provisions in our organizational documents and in Ohio law could make difficult or delay a change in management or negatively impact our share price. - 8 - RISKS RELATED TO OUR STRATEGY Lower levels of economic activity in our end markets could adversely affect our operating results.
Some of our software systems are utilized by third parties who provide outsourced processing services which may increase the risk of a cyber-security incident. We have invested and continue to invest in technology security initiatives, employee training, information technology risk management and disaster recovery plans.
Some of our software systems are provided and/or utilized by third parties who maintain responsibility for mitigating cybersecurity risk We have invested and continue to invest in technology security initiatives, employee training, information technology risk management and disaster recovery plans.
We rely heavily on our employees and any shortage of qualified labor could adversely affect our business. If we are not successful in our recruiting and retention efforts due to general labor shortages or otherwise, we could encounter a shortage of qualified employees in future periods.
If we are not successful in our recruiting and retention efforts due to general labor shortages or otherwise, we could encounter a shortage of qualified employees in future periods. Any such shortage would decrease our ability to produce sufficient quantities of our product to serve our customers effectively.
The Company’s future success depends on the ability to attract and retain highly skilled technical, managerial, marketing and finance personnel, and, to a significant extent, upon the efforts and abilities of senior management. The Company’s management philosophy of cost-control results in a lean workforce.
A loss of key personnel or inability to attract qualified personnel could have an adverse effect on our operating results. The Company’s future success depends on the ability to attract and retain highly skilled technical, managerial, marketing and finance personnel, and, to a significant extent, upon the efforts and abilities of senior management.
Lower levels of economic activity in our end markets could adversely affect our operating results. Our businesses operate in several market segments including the refueling and convenience store markets, parking lot and garage markets, quick-service restaurant market, retail and grocery store markets, the automotive market, the warehouse market, and the sports complex market, to name a few.
Our businesses operate in several market segments including the refueling and convenience store markets, parking lot and garage markets, quick-service restaurant market, retail and grocery store markets, the automotive market, the warehouse market, and the sports complex market. Operating results can be negatively impacted by volatility in these markets.
These measures could also result in increased costs for goods imported into the U.S. or may cause us to adjust our foreign supply chain. Either of these could require us to increase prices to our customers which may reduce demand, or, if we are unable to increase prices, result in lowering our margin on products sold.
These measures could also result in increased costs for goods imported into the U.S. or may cause us to adjust our foreign supply chain.
We have a concentration of net sales to the refueling and convenience store and grocery markets, and any substantial change in this market could have an adverse effect on our business. The Company has a concentration of sales in the refueling and convenience store and grocery markets.
We may not have sufficient resources to continue to make such investments and we may be unable to maintain our competitive position. - 9 - We have a concentration of net sales to the refueling and convenience store and grocery markets, and any substantial change in these markets could have an adverse effect on our business.
While the Company is frequently monitoring its outstanding receivables with its customers, the risk does exist that a customer with large credit exposure is unable to make payment on its outstanding receivables which could result in a significant write-off of accounts receivable. -11- Price increases, significant shortages of raw materials and components, shortages in transportation and an increase in fuel prices could adversely affect our operating margin.
At any given time, the Company can have a significant amount of credit exposure with its larger customers. While the Company is frequently monitoring its outstanding receivables with its customers, the risk does exist that a customer with large credit exposure is unable to make payment on its outstanding receivables which could result in a significant write-off of accounts receivable.
In addition, in recent years, including in fiscal 2021, the stock market has experienced significant price and volume fluctuations. This volatility has had a significant effect on the market prices of securities issued by many companies for reasons unrelated to their operating performance.
This volatility of the stock market has had a significant effect on the market prices of securities issued by many companies for reasons unrelated to their operating performance. These market fluctuations, regardless of the cause, may materially and adversely affect our stock price, regardless of our operating results, and this could impact our ability to raise capital.
In addition, our trade secrets and proprietary know-how may otherwise become known or be independently discovered by others. No guarantee can be given that others will not independently develop substantially equivalent proprietary information or techniques, or otherwise gain access to our proprietary technology.
In addition, our trade secrets and proprietary know-how may otherwise become known or be independently discovered by others.
To remain competitive, we will need to invest continuously in research and development, manufacturing, marketing, customer service and support, and our distribution networks. We may not have sufficient resources to continue to make such investments and we may be unable to maintain our competitive position.
To remain competitive, we will need to invest continuously in research and development, manufacturing, marketing, and customer service and support.
We cannot predict future trade policy or the terms of any renegotiated trade agreements and their impacts on our business.
Either of these could require us to increase prices to our customers which may reduce demand, or, if we are unable to increase prices, result in lowering our margin on products sold. - 13 - We cannot predict future trade policy or the terms of any renegotiated trade agreements and their impacts on our business.
In addition, actions by our competitors, our customer’s financial constraints, and industry factors or otherwise, could have an adverse effect on our business in either of these markets. -10- The Company may pursue future growth through strategic acquisitions and investments, which may not yield anticipated benefits The Company has strengthened its business through strategic acquisitions including the fiscal 2021 acquisition of JSI and may continue to do so as opportunities arise in the future.
The Company may pursue future growth through strategic acquisitions and investments, which may not yield anticipated benefits The Company has grown and strengthened its business through strategic acquisitions and will continue to do so as opportunities arise in the future in order to meet the Company’s growth objectives.
These market fluctuations, regardless of the cause, may materially and adversely affect our stock price, regardless of our operating results, and this could impact our ability to raise capital. Anti-takeover provisions in our organizational documents and in Ohio law could make difficult or delay a change in management or negatively impact our share price.
In addition, a continued increase in interest rates will further result in increased interest expense. Anti-takeover provisions in our organizational documents and in Ohio law could make difficult or delay a change in management or negatively impact our share price.
RISKS RELATED TO OUR OPERATIONS Sudden or unexpected changes in a customer ’ s creditworthiness could result in significant accounts receivable write-offs. The Company takes a conservative approach when extending credit to its customers.
No guarantee can be given that others will not independently develop substantially equivalent proprietary information or techniques, or otherwise gain access to our proprietary technology. - 10 - RISKS RELATED TO OUR OPERATIONS Sudden or unexpected changes in a customer ’ s creditworthiness could result in significant accounts receivable write-offs.
Such provisions could limit the price that investors might be willing to pay in the future for our shares of common stock. Additionally, shareholders may act by written consent without a meeting only if such written consent is signed by all shareholders. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Ohio corporation law contains provisions that may discourage takeover bids for our company that have not negotiated with the board of directors. Such provisions could limit the price that investors might be willing to pay in the future for our shares of common stock.
The Company may need to recall products if they are improperly designed, manufactured, packaged, or labeled, and the Company’s insurance may not provide full coverage for such recall events. Many of the Company's products and solutions have become complex and include sophisticated and sensitive electronic components.
Many of the Company's products and solutions have become complex and include sophisticated and sensitive electronic components. The Company has manufactured certain of those components and products in its own facilities.
Removed
RISKS RELATED TO OUR STRATEGY Our financial condition and results of operations for future periods may be adversely impacted by epidemics, pandemics, outbreaks of infectious disease or similar public health threats and the resulting economic impact. The occurrence of regional epidemics or a global pandemic such as COVID-19 may adversely affect our operations, financial condition, and results of operations.
Added
In addition, actions by our competitors, our customer’s financial constraints, and industry factors or otherwise, could have an adverse effect on our business in either of these markets.
Removed
The COVID-19 pandemic has had widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices.
Added
Price increases, significant shortages of raw materials and components, shortages in transportation and an increase in fuel prices could adversely affect our operating margin.
Removed
The extent to which global pandemics impact our business going forward will depend on factors such as the duration and scope of the pandemic; governmental, business, and individuals' actions in response to the pandemic; and the impact on economic activity including the possibility of recession or financial market instability.
Added
Labor shortages or increases in labor costs could adversely impact our business and results of operations. We rely heavily on our employees and any shortage of qualified labor could adversely affect our business.
Removed
Infectious diseases, including COVID-19 and its variants, continue to spread globally, resulting in authorities implementing numerous measures to try to contain them, including but not limited to, travel bans and restrictions, quarantines, shelter in place orders, and shutdowns.
Added
RISKS RELATED TO LEGAL AND REGULATORY MATTERS Potential changes in U.S. trade policies could have a material adverse effect on the Company.
Removed
These measures have impacted previous operating results and may continue to impact our workforce and operations, the operations of our customers, and those of our respective vendors and suppliers if the diseases continues to spread resulting in further mandated actions.
Added
Recent increases in inflation and interest rates in the United States and elsewhere could adversely affect our business. We are exposed to fluctuations in inflation and interest rates, which could negatively affect our business, financial condition, and results of operations. The United States and other jurisdictions have recently experienced high levels of inflation.
Removed
We have experienced some limited disruptions in supply from some of our suppliers, although the disruptions to date have not been significant. Additionally, infectious diseases cause disruption to the construction markets, as well as inventory de-stocking by our distributors, both of which had a negative impact on our sales.
Added
If the inflation rate continues to increase, it will likely affect our expenses, including, but not limited to, employee compensation and labor expenses along with the cost of various goods and services the Company purchases, and we may not be successful in offsetting such cost increases.
Removed
Restrictions on access to our manufacturing facilities or on our support operations or workforce, or similar limitations for our vendors and suppliers, and restrictions or disruptions of transportation, such as reduced availability of air transport, port closures, and increased border controls or closures, could limit our capacity to meet customer demand, lead to increased costs and have a material adverse effect on our financial condition and results of operations.
Added
Additionally, shareholders may act by written consent without a meeting only if such written consent is signed by all shareholders. - 14 -
Removed
Our business is cyclical and seasonal, and in downward economic cycles our operating profits and cash flows could be adversely affected. Historically, sales of our products have been subject to cyclical variations caused by changes in general economic conditions.
Removed
The demand for our products reflects the capital investment decisions of our customers, which depend upon the general economic conditions of the markets that our customers serve. During periods of expansion in construction and industrial activity, we generally have benefited from increased demand for our products.
Removed
Conversely, downward economic cycles in these industries result in reductions in sales and pricing of our products, which may reduce our profits and cash flow. During economic downturns, customers also tend to delay purchases of new products.
Removed
The cyclical and seasonal nature of our business could at times adversely affect our liquidity and financial results. -9- Our operating results may be adversely affected by unfavorable economic, political and market conditions.
Removed
At any given time, the Company can have a significant amount of credit exposure with its larger customers.
Removed
We have significantly enhanced and will continue to improve our cybersecurity controls in order to minimize the likelihood or impact of a cybersecurity or malware attack.
Removed
We may not recognize all revenues from our backlog or receive all payments anticipated under awarded projects and customer contracts. We had backlog of orders of approximately $112.4 million and $89.7 million, as of June 30, 2022, and June 30, 2021, respectively, with respect to expected future revenues.
Removed
We may be required to write-off or impair capitalized costs or intangible assets in the future, or we may incur restructuring costs or other changes, each of which could harm our earnings.
Removed
In accordance with generally accepted accounting principles in the United States, we capitalize certain expenditures and advances relating to our acquisitions, pending acquisitions, project development costs, interest costs related to project financing and certain other assets. In addition, we have considerable unamortized assets.
Removed
From time to time in future periods, we may be required to incur a charge against earnings in an amount equal to any unamortized capitalized expenditures and advances, net of any portion thereof that we estimate will be recoverable, through sale or otherwise, relating to: (i) any operation or other asset that is being sold, permanently shut down, impaired or has not generated or is not expected to generate sufficient cash flow; (ii) any project that is not expected to be successfully completed; and (iii) any goodwill or other intangible assets that are determined to be impaired.
Removed
As a result of such actions, we would expect to incur restructuring expenses and accounting charges which may be material and may have a material effect on our financial condition. RISKS RELATED TO LEGAL AND REGULATORY MATTERS The costs of litigation and compliance with environmental regulations, if significantly increased, could have an adverse effect on our operating profits.
Removed
We are, and may in the future be, a party to any number of legal proceedings and claims, including those involving patent litigation, product liability, employment matters, and environmental matters, which could be significant. Given the inherent uncertainty of litigation, we can offer no assurance that existing litigation or a future adverse development will not have a material adverse impact.
Removed
We are also subject to various laws and regulations relating to environmental protection and the discharge of materials into the environment, and it could potentially be possible we could incur substantial costs as a result of the noncompliance with or liability for clean up or other costs or damages under environmental laws.

Item 2. Properties

Properties — owned and leased real estate

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Biggest change(includes 4,000 sq. ft. of office space) Bangor, ME Leased 10) Display Solutions manufacturing 77,000 sq. ft. Collingwood, ON Leased 11) Display Solutions office 1,000 sq. ft. Gloucester, MA Leased 12) Display Solutions manufacturing 68,000 sq. ft. Payson, UT Leased The Company considers these 12 operating facilities adequate for its current level of operations. -16-
Biggest change(includes 4,000 sq. ft. of office space) Bangor, ME Leased 10) Display Solutions manufacturing 77,000 sq. ft. Collingwood, ON Leased 11) Display Solutions office 1,000 sq. ft. Gloucester, MA Leased 12) Display Solutions manufacturing 68,000 sq. ft. Payson, UT Leased 13) Display Solutions warehouse 5,400 sq. ft. Queretaro, Mexico Leased

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed3 unchanged
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES LSI’s shares of common stock are traded on the NASDAQ Global Select Market under the symbol “LYTS.” At August 31, 2022, there were approximately 581shareholders of record. The Company believes this represents approximately 3,000 beneficial shareholders.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES LSI’s shares of common stock are traded on the NASDAQ Global Select Market under the symbol “LYTS.” At August 31, 2023, there were approximately 550 registered holders of record of our common stock.
The Company has paid annual cash dividends beginning in fiscal 1987 through fiscal 1994, and quarterly cash dividends since fiscal 1995. The Company’s indicated annual rate for payment of a cash dividend at the end of fiscal 2022 was $0.20 per share.
The Company has paid annual cash dividends beginning in fiscal 1987 through fiscal 1994, and quarterly cash dividends since fiscal 1995. The Company’s indicated annual rate for payment of a cash dividend at the end of fiscal 2023 was $0.20 per share.
The repurchase program may be suspended or discontinued at any time. The Company did not repurchase any shares in the fiscal year ended June 30, 2022. ITEM 6. [RESERVED]
The repurchase program may be suspended or discontinued at any time. The Company did not repurchase any shares in the fiscal year ended June 30, 2023. ITEM 6. . [RESERVED]

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeITEM 6. [RESERVED] 18 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 18 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 18 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 19 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 19 ITEM 9A. CONTROLS AND PROCEDURES 20
Biggest changeITEM 6. [RESERVED] 16 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 16 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 16 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 17 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 17 ITEM 9A. CONTROLS AND PROCEDURES 18 ITEM 9B.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−0 removed6 unchanged
Biggest changeThe Company does, however, seek and qualify new suppliers, negotiate with existing suppliers, and arranges stocking agreements to mitigate risk of supply shortages and price increases. The Company’s Lighting Segment has implemented price increases with customers to offset raw material price increases and to mitigate the impact of trade tariffs.
Biggest changeThe Company does, however, seek and qualify new suppliers, negotiate with existing suppliers, and arranges stocking agreements to mitigate risk of supply and price increases. The Company’s Lighting Segment has implemented price increases with customers to offset raw material price increases.
Raw Material Price Risk The Company purchases large quantities of raw materials and components such as are steel, aluminum, aluminum castings, fabrications, LEDs, power supplies, powder paint, steel tubing, wire harnesses, acrylic, silicon and glass lenses, inks, various graphics substrates such as Aluminum Composite Material (ACM), Expanded PVC sheet (EPVC), vinyl film, styrene, foamboards, wood and wood laminates, condensing units, and digital screens.
Raw Material Price Risk The Company purchases large quantities of raw materials and components such as steel, aluminum, aluminum castings, fabrications, LEDs, power supplies, powder paint, steel tubing, wire harnesses, acrylic, silicon and glass lenses, inks, various graphics substrates such as Aluminum Composite Material (ACM), Expanded PVC sheet (EPVC), vinyl film, styrene, foamboards, wood and wood laminates, condensing units, and digital screens.
The Company’s Display Solutions Segment generally establishes new sales prices, reflective of the then current raw material prices, for each program as it begins, with further price increases throughout the life of the program when warranted. -18- Foreign Currency Translation Risk The Company has minimal foreign currency risk with respect to its Mexican and Canadian subsidiaries.
The Company’s Display Solutions Segment generally establishes new sales prices, reflective of the then current raw material prices, for each program as it begins with further price increases throughout the life of the program when warranted. - 16 - Foreign Currency Translation Risk The Company has minimal foreign currency risk with respect to its Mexican and Canadian subsidiaries.
Although an interruption of these supplies and components could disrupt our operations, we believe generally that alternative sources of supply exist and could be readily arranged. We have increased our safety stock in certain components in order to mitigate a potential disruption to our operations resulting from an anticipated shortage of these same components.
Although an interruption of these supplies and components could disrupt our operations, we believe generally that alternative sources of supply exist and could be readily arranged. We have, on occasion, increased our safety stock in certain components in order to mitigate a potential disruption to our operations resulting from an anticipated shortage of these same components.
The sales transacted by these subsidiaries in pesos and Canadian dollars combined represents approximately 3.6% of the Company’s fiscal 2022 consolidated net sales. All other business conducted by the Company is in U.S. dollars.
The sales transacted by these subsidiaries in pesos and Canadian dollars combined represents approximately 4% of the Company’s fiscal 2022 consolidated net sales. All other business conducted by the Company is in U.S. dollars.
For the fiscal year ended June 30, 2022, the raw material component of cost of goods sold subject to price risk was approximately $226.7 million. The Company does not actively hedge or use derivative instruments to manage its risk in this area.
For the fiscal year ended June 30, 2023, the raw material component of cost of goods sold subject to price risk was approximately $226.3 million. The Company does not actively hedge or use derivative instruments to manage its risk in this area.

Other LYTS 10-K year-over-year comparisons