MILO – LSI Industries Inc., one of the main U.
MILO – LSI Industries Inc., a leading US manufacturer of commercial lighting and graphics solutions, announced on Monday the acquisition of JSI Store Fixtures (“JSI”) from RFE Investment Partners for a purchase price of cash of $ 90 million.
JSI, based in Milo, is a leading provider of retail commercial display solutions throughout North America. For more than 30 years, JSI has provided major supermarket, convenience and specialty store chains with branded display solutions focused on improving customer experience and growing store revenues. Multi-year growth in demand for fresh food, ready-to-go meals and changing consumer buying habits have led to increased demand for JSI’s displays through a deep base of established national accounts. JSI solutions are designed, developed, manufactured and marketed from four facilities located in the United States and Canada.
“JSI is an established market leader in the retail display solutions industry, with a history of growth and innovation, attractive margin profile and loyal following of customers in supermarket verticals. , convenience stores and specialty stores are highly complementary to LSI’s existing portfolio of lighting and graphics solutions. Said James A. Clark, President and CEO.
“This acquisition will significantly increase LSI’s total number of addressable markets in the grocery and convenience verticals, while generating significant revenue synergies across our combined product portfolio, in line with our long-term strategic direction. Clark continued. “At the business level, the combination of LSI’s graphic display operations and JSI’s display luminaires, along with our broad portfolio of lighting and program management solutions, will provide a unique and compelling value proposition for businesses. new and existing customers. ”
“Just as the combination of our lighting and graphics business has led to the creation of a commercially successful complementary product offering, the addition of JSI follows a similar model, which allows us to further diversify our revenues and our customers within higher margin products. markets, ”Clark continued. “Pro-forma for the transaction, we remain on track to achieve annual sales of $ 500 million and annual adjusted EBITDA of $ 50 million by the end of fiscal 2025.”
“We are delighted to join the LSI family,” said Terry Awalt, CEO of JSI. “Our shared commitment to product innovation, customer-centric relationships, performance excellence and profitable growth position LSI as an ideal partner to evolve the JSI brand in the years to come. Our established presence within the supermarket vertical, when combined with LSI’s leadership position in the c-store vertical, creates a compelling opportunity that we believe will result in significant revenue synergies over the long term. term for combined activities.
JSI has a long-term track record of consistent financial execution characterized by sustained growth in revenue, operating income, adjusted EBITDA and free cash flow. In full year 2020, JSI reported total revenue and Adjusted EBITDA of approximately $ 70 million and $ 10 million, respectively, resulting in an above-average Adjusted EBITDA margin. of the last 12 months of LSI. At closing, the transaction will be immediately accretive to LSI on the basis of adjusted earnings per share.
LSI funded the all-cash acquisition of JSI using its existing cash balance and availability under its $ 100 million credit facility. At closing, LSI expects its pro forma net outstanding debt to twelve-month adjusted EBITDA ratio to be approximately 2.6 times. LSI intends to significantly reduce its net indebtedness within the business in the first 24 months following closing, supported by the expected growth in pro forma free cash flow from the combined entities.
As part of the transaction, LSI will welcome more than 300 JSI employees to LSI, while retaining the experienced leadership of JSI, including Awalt, as well as each of its four facilities. After the transaction closes, JSI will remain an independent brand, given its established presence in the market. LSI anticipates that JSI will be part of LSI’s graphics segment on a reporting basis in the future.
The justification for the transaction includes:
Creates a diversified business of scale with significant cross-selling opportunities in growing vertical markets. The combination of LSI and JSI will create a leading integrated provider of lighting and display solutions for North American supermarket, convenience and specialty store chains. JSI’s established presence in the grocery industry, along with LSI’s market leadership position in petroleum convenience stores and QSR channels, are highly complementary, creating the potential for significant, multi-year revenue synergies.
Provides a compelling growth platform with an established product portfolio and customer base. LSI estimates that the North American refrigeration and remote lighting market is approximately $ 1.7 billion per year and growing. JSI is one of the largest food equipment companies in North America, with a diverse base of long-term repeat customers including Whole Foods, Kroger, Target, Albertsons, Ahold Delhaize and Sprouts, among others.
Capitalizes on a significant multi-year investment cycle in the grocery sector. The North American grocery industry is engaged in a multi-year investment cycle designed to drive growth in in-store traffic and more than 38,000 grocery stores in the United States, representing $ 700 billion in annual sales. Increased investment in store renovations, changing formats, cost-effective energy-saving solutions and new on-the-go options have stimulated customers’ appetites for aesthetically appealing refrigeration solutions and appliances and compliant. LSI believes that its time spent on site and its share of the wallet for its lighting and graphics solutions in the grocery industry will be significantly improved by the acquisition of JSI.
The transaction immediately increases LSI’s adjusted earnings per share. JSI is expected to provide LSI with a significant increase in adjusted earnings per share in the first year following the closing of the transaction, excluding any revenue synergies related to the acquisition. LSI anticipates that a combination of continued above-market revenue growth, along with significant opportunities for further margin expansion, could potentially support an incremental increase, over time.
Headquartered in Blue Ash, Ohio (in the Cincinnati area), LSI Industries is a leading manufacturer of American-made high performance lighting solutions. The company’s strength in outdoor lighting applications enables it to provide additional solutions to its valued customers. LSI’s interior and exterior products and services, including its digital and print graphics capabilities, are valued by architects, engineers, distributors and contractors for their quality, reliability and innovation. The company’s products are widely used in automobile dealerships, gas stations, quick service restaurants, grocery stores and drugstores, retail establishments, sports complexes, parking lots and garages, as well as buildings. commercial and industrial. LSI has approximately 1,100 employees at seven manufacturing plants in the United States, including its corporate headquarters. Further information on LSI is available at www.lsicorp.com.
JSI is a Milo-based designer and manufacturer of high quality refrigerated and non-refrigerated merchandising displays for the grocery and convenience store industry. JSI’s merchandising displays are used by many of the largest retail food chains in North America. JSI has established itself as an innovator and a leader in its niche, with dominant market shares in its main product categories.
RFE Investment Partners is a private equity firm specializing in making controlling investments in small companies established in the North American market. RFE is a longtime Connecticut-based company founded in 1980 with over 40 years of experience in lower-middle market investing. RFE’s investment strategy is to acquire well-managed, growing small businesses and prepare them for the exit of strategic private equity and mid-market private equity buyers. RFE is currently investing from Fund IX. For more information, please visit www.rfeip.com.