LSI Industries Acquires EMI Industries, Expanding Store Fixtures and Food Service Equipment Business - Seite 2

Clark concluded, “As outlined within our Fast Forward strategic plan, LSI intends to drive net sales growth by more than 60% between fiscal year 2023 and fiscal year 2028, with approximately half of this growth supported by acquisition-related contributions. Looking ahead, we will continue to develop leading positions within growing, high-value market verticals that expand our capabilities and reach while continuing to scale our solutions-based platform as we drive long-term value creation for our shareholders.”

FINANCIAL AND TRANSACTION OVERVIEW

In the full year calendar 2023, EMI reported total revenue and adjusted EBITDA of approximately $87.0 million and $5.5 million, respectively. Upon closing, the transaction will be immediately accretive to LSI on an adjusted earnings per share basis.

LSI funded the acquisition of EMI utilizing cash and availability under its existing credit facility. At closing, LSI anticipates that its pro-forma ratio of net debt outstanding to trailing twelve-month adjusted EBITDA will be approximately 1.3x. LSI intends to significantly reduce net leverage within the business during the next 24 months, supported by anticipated growth in pro-forma free cash flow from the combined entities.

As part of the transaction, the Company will welcome EMI’s more than 300 employees to LSI, while retaining EMI’s experienced leadership team, including President and CEO Alan Harvill, together with each of its five facilities. Following the closing of the transaction, EMI will remain an independent brand, given its established commercial presence in the market. LSI anticipates EMI will become part of LSI’s display solutions segment on a reporting basis moving forward.

COMPELLING TRANSACTION RATIONALE

• EMI further establishes LSI as a market-leading business of scale within the retail display solutions market. Following the successful acquisition of JSI Store Fixtures in 2021, EMI significantly expands LSI’s presence in the grocery, convenience store and QSR/restaurant verticals. The combined business provides considerable commercial and operational synergies to be realized over the next several years.
• Business combination provides a one-stop, end-to-end integrated solution to LSI customers. The addition of EMI positions LSI to further enhance its unique value proposition with customers across the full continuum of product design, manufacture, installation, and post-sale support. LSI believes its integrated approach will further entrench its value as a trusted partner equipped to support the full project management lifecycle.
• Complementary EMI and LSI customer lists provide for significant commercial synergy potential. While the two companies share specific customers, many do not overlap, representing a significant cross-selling opportunity for LSI. The business combination also expands our capability to attract new customers in existing markets.
• Transaction capitalizes on a multi-year investment cycle within key vertical markets. EMI is one of the largest privately held retail fixture and food equipment companies in the North America, with a diverse base of recurring, long-term customers. LSI believes its acquisition of EMI will position it to further capitalize on the ongoing, multi-year capital investment programs within the convenience store, grocery, and restaurant industries as operators seek to adapt to evolving consumer preferences and behaviors
• Transaction is immediately accretive to LSI’s adjusted earnings per share. EMI is expected to deliver adjusted earnings per share accretion to LSI upon closing of the transaction, excluding acquisition-related revenue and cost synergies. On a post-synergy basis, LSI believes it will steadily expand EMI’s margin performance in future years, positioning LSI to deliver double-digit EBITDA margin within the legacy EMI business within the first 24 months following the close of the transaction.
• Transaction is consistent with inorganic growth priorities outlined within LSI’s Fast Forward strategy.