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

NOTE 8-REVOLVING LINE OF CREDIT

In ~~February 2019,~~ March 2021, the Company amended its secured line of credit to a ~~$75~~$100 million facility from a ~~$100~~$75 million facility ~~in order to better match its financing needs with an appropriate borrowing capacity. The line of credit~~that expires in the third quarter of fiscal ~~2022.~~2026. Interest on the revolving line of credit is charged based upon an increment over the LIBOR rate ~~as periodically determined,~~ or ~~at the bank’s~~a base ~~lending~~ 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 ~~as periodically determined,~~ fluctuates between ~~125~~100 and ~~250~~200 basis points, ~~depending~~and the increment over the Base Rate fluctuates between 0 and 100 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 ~~125~~100 basis points for the fourth quarter of fiscal ~~2020.~~2021. The fee on the unused balance of the ~~$75~~$100 million committed line of credit ~~is 20~~fluctuates between 15 and 22.5 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 ~~fixed charge~~interest coverage ratio. As of March 31, ~~2020,~~ 2021, there ~~was $7.9 million borrowed~~were 0 borrowings against the line of credit, and ~~$67.1~~$100.0 million was available as of that date. ~~Based on the terms of the line of credit and the maturity date, the debt has been classified as long term.~~

The Company is in compliance with all of its loan covenants as of March 31, ~~2020.~~2021.

Page 16

NOTE 9-CASH DIVIDENDS

The Company paid cash dividends of ~~$3,958,000 and $3,882,000~~$4.0 million in both the nine months ended March 31, ~~2020~~ 2021 and ~~2019, respectively.~~ March 31, 2020. Dividends on restricted stock units in the amount of ~~$59,077~~$109,685 and ~~$40,798~~$59,077 were accrued as of March 31, ~~2020~~ 2021 and ~~2019,~~2020, respectively. These dividends will be paid upon the vesting of the restricted stock units when shares are issued to the award recipients. In April ~~2020,~~ 2021, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable May ~~12, 2020~~ 11, 2021 to shareholders of record as of May ~~4, 2020.~~ 3, 2021. The indicated annual cash dividend rate is $0.20 per share.

~~Page 16~~

NOTE 10 – 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 ~~2019 Omnibus Plan replaced the 2012 Stock Incentive Plan (“2012 Stock Plan”). The~~ number of shares ~~of common stock authorized for issuance under the 2019 Omnibus Plan is 2,650,000 which were combined with the remaining shares available under the 2012 Stock Plan. The number of shares~~that remain reserved for issuance under the 2019 Omnibus Plan is ~~3,812,997, all of which are available for future grant or award~~2,722,480 as of March 31, ~~2020.~~ 2021. 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 ~~non-qualified~~ stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), performance stock units (“PSUs”) and other stock-based awards.

In the ~~third quarter of fiscal 2020,~~ nine months ended March 31, 2021, the Company granted ~~150,000 inducement~~318,406 non-qualified stock options with ana weighted average exercise price of ~~$6.51. In the first quarter of fiscal 2020, the Company granted 455,429 non-qualified serviced-based stock options~~$6.86, 134,017 PSUs with ~~an exercise price of $3.83 and 199,310 Performance Stock Units and 81,917 Restricted Stock Units at~~ a weighted average fair value of ~~$3.83.~~$6.80 and 133,126 RSUs with a weighted average fair value of $6.81. Stock compensation expense was ~~$(103,000)~~$0.4 million and ~~$224,000~~($0.1) million for the three months ended March 31, ~~2020~~ 2021 and ~~2019,~~2020, respectively, and ~~$494,000~~$1.3 million and ~~$951,000~~$0.5 million for the nine months ended March 31, ~~2020~~ 2021 and ~~2019,~~2020, respectively.

NOTE 1111-SUPPLEMENTAL CASH FLOW INFORMATION

	Nine Months Ended				Nine Months Ended
(In thousands)	March 31				March 31
	2020		2019		2021		2020
Cash Payments:
Interest	$	889	$	1,669	$	71	$	889
Income taxes	$	8	$	3	$	1,473	$	8

Non-cash investing and financing activities
Issuance of common shares as compensation	$	225	$	265	$	242	$	225
Issuance of common shares to fund deferred compensation plan	$	296	$	257	$	1,096	$	296

NOTE 1212- 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, ~~2020,~~ 2021, there were no0 such standby letters of credit issued.

Page 17

NOTE 113–3 – 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)

2020

2019

2019

Balance at beginning of period
$ 1,134 $ 1,772 $ 1,772
Accrual of expense
73 534 560
Payments
(481 ) (956 ) (1,198 )
Balance at end of period
$ 726 $ 1,350 $ 1,134

	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

~~Of the total $726,000~~The $0.1 million severance reserve reported as of March 31, ~~2020, $612,000~~ 2021 has been classified as a current liability and will be paid out over the next twelve months. ~~The remaining $114,000 has been classified as a long-term liability.~~

~~Page 17~~

NOTE 114–4 – 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. ~~Restructuring~~The Company also incurred additional restructuring costs ~~incurred~~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. The realignment occurred as the result of the movement of equipment related to the closure of the New Windsor facility along with preparations to receive additional equipment resulting from the relocation of the North Canton, Ohio facility.

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 ~~will relocate the production at the North Canton facility to a smaller, leased facility in Akron, Ohio during the fourth quarter of fiscal 2020. The Company~~ also incurred ~~$451,000~~$0.5 million of expense to write-down inventory which is not included in the tables below.

~~Total restructuring costs were $235,000 and $744,000 for the three and nine months ended March 31, 2020, respectively.~~

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

	Three Months Ended					Nine Months Ended					Three Months Ended					Nine Months Ended
	March 31					March 31					March 31					March 31
(In thousands)	2020			2019		2020			2019		2021		2020			2021		2020

Severance benefits	$	-		$	263	$	-		$	484
Exit costs											$	0	$	235		$	3	$	419
Impairment of fixed assets and accelerated depreciation		-			-		49			228		0		0			0		49
Facility repairs		-			52		-			99
Gain on sale of facility		(3,741	)		-		(8,562	)		-		0		(3,741	)		0		(8,562	)
Exit costs		235			53		419			113
Manufacturing realignment costs		-			-		276			-		0		0			0		276
Total	$	(3,506	)	$	368	$	(7,818	)	$	924	$	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		Balance as of									Balance as of
	June 30,		Restructuring							March 31,		June 30,		Restructuring							March 31,
(In thousands)	2019		Expense		Payments			Adjustments		2020		2020		Expense		Payments			Adjustments		2021

Severance and termination benefits	$	236	$	-	$	(209	)	$	-	$	27	$	27	$	0	$	0		$	0	$	27
Other restructuring costs		-		695		(695	)		-	$	-		0		3		(3	)		0	$	0
Total	$	236	$	695	$	(904	)	$	-	$	27	$	27	$	3	$	(3	)	$	0	$	27

~~Page 18~~

NOTE 15 - LEASES

The Company leases certain manufacturing facilities along with a small office space, ~~a company vehicle,~~ several forklifts, several small tooling items and various items of office equipment. All but oneof the Company’s leases are operating ~~leases and are included in other long-term assets with the corresponding liability in other long-term liabilities.~~leases. Leases have a remaining term of 1one to 5seven 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 and 2020, 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 ~~right-of-use~~ROU assets ~~(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
(In thousands)	March 31, 2020		March 31, 2020		2021		2020		2021		2020

Operating lease cost	$	574	$	1,736	$	576	$	574	$	1,714	$	1,736
Financing lease cost:
Amortization of right of use assets						73		0		218		0
Interest on lease liabilities						22		0		69		0
Variable lease cost						0		0		2		0
Total lease cost					$	671	$	574	$	2,003	$	1,736

~~Supplemental Cash Flow Information:~~
	~~Nine months ended~~
~~(In thousands)~~	~~March 31, 2020~~

~~Operating cash flows from operating leases~~
~~Fixed payments~~		~~1,707~~
~~Liability reduction~~		~~1,334~~

~~Operating Leases:~~
	~~At March 31, 2020~~

~~Total operating right-of-use asset (Other long-term assets)~~		~~9,050~~


~~Accrued expenses (Current liabilities)~~		~~362~~
~~Long-term operating lease liability (Other long-term liabilities)~~		~~9,440~~
		~~9,802~~


~~Weighted Average remaining Lease Term (in years)~~		~~4.81~~

~~Weighted Average Discount Rate~~		~~4.85~~	%

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:

Maturities of Lease Liability:

2020
955
2021
2,303
2022
2,279
2023
2,244
2024
1,917
Thereafter
1,683
Total lease payments
11,381
Less: Interest
(1,579 )
Present Value of Lease Liabilities
9,802

	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 19

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	%

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

NOTE 116–6 – 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 ~~utilize~~carry back a ~~Net Operating Loss (NOL) Carryback resulting~~federal net operating loss to prior tax years, offset taxable income in those earlier tax years and request a ~~revaluation~~refund of ~~its deferred~~income taxes that were paid at a higher statutory tax ~~assets creating a favorable impact~~rate. The Company recognized tax benefits of $0.3 million in the third quarter of fiscal ~~2020. In addition,~~2020 and $0.4 million in thefirst 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 ~~resulting in a book gain of $3.7 million. The sale~~ which generated a capital gain ~~during~~and allowed the ~~quarter resulting in a tax benefit due~~Company to ~~the utilization of~~utilize a capital loss ~~carryforward, which~~carryforward. The resulting tax benefit reduced the anticipated full year fiscal 2020 estimated effective income tax rate.

In the first quarter of fiscal 2020, the Company sold its New Windsor, New York facility resulting in a book gain of $4.8 million. The Company was able to utilize a deferred tax asset of $864,000 related to the sale of the facility.

	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	%

~~In the second quarter of fiscal 2019, a deferred tax asset of $4.8 million was created as a result of the impairment of goodwill in the Lighting reporting unit.~~

Three Months Ended

Nine Months Ended

March 31

March 31

2020

2019

2020

2019

Reconciliation of effective tax rate:

Provision for income taxes at the anticipated annual tax rate
10.8
%
(0.7
)%
16.7
%
13.6
%
Uncertain tax positions
1.5 (0.1 ) (0.3 ) 0.6
Deferred income tax adjustments
(16.7 ) - (2.5 ) 6.7
Shared-based compensation
4.4 (3.6 ) 3.7 (0.9 )
Effective tax rate
-
%
(4.4
)%
17.6
%
20.0
%

Page 20

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

N~~ote~~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, ~~2019,~~2020, 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.

~~Overview~~COVID-19 Pandemic~~; Recent Developments~~

LSI Industries is a leading producer of high-performance, American-made lighting solutions. Our strength in outdoor lighting applications creates opportunities for us to introduce additional solutions to our valued customers. LSI’s indoor and outdoor products and services, including our digital and print graphics capabilities, are valued by architects, engineers, distributors and contractors for their quality, reliability and innovation. Our products are used extensively in automotive dealerships, petroleum stations, quick service restaurants, grocery stores and pharmacies, retail establishments, sports complexes, parking lots and garages, and commercial and industrial buildings.

~~Although we are aggressively managing our response to the recent~~The COVID-19 pandemic ~~primarily through our focus on employee~~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 ~~customer service~~ and support and cost-effective business continuity, the pandemic’s impact on our full year fiscal 2020 results and beyond is uncertain. We believe that the most significant elements of uncertainty relate to the intensity and duration of the impact on construction, renovation, and consumer spending as well as the abilitywelfare of our sales channels, supply chains, manufacturing, and distribution to continue to operate with minimal disruption for the remainder of fiscal 2020 and beyond, all of which could negatively impact our financial position, results of operations, cash flows, and outlook. While we remain fully operational at all manufacturing facilities and practice safe engagement with ouremployees, customers, agents and ~~suppliers, we~~suppliers. Future developments, such as the actions taken by governmental authorities in response to future outbreaks that are attempting to mitigate the possible impacts of the COVID-19 pandemic on our business by taking certain expense management actions. Also, even though we have not recently experienced any issues with our supply chains, we have taken steps to diversify our supply chains so that we are not dependent on a sole supplier for certain raw materials. Because the durationhighly uncertain and ~~resulting economic disruption of the COVID-19 pandemic are unknown and impossible to~~unpredictable, will determine ~~at this time, we are uncertain regarding~~ the extent to which ~~the~~ COVID-19 ~~pandemic could have a material adverse effect on~~continues to impact our ~~ability to operate,~~ results of operations and financial conditions. See the risk factor captioned “Our financial condition ~~liquidity~~ and ~~capital investments.~~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.

Net Sales by Business Segment

Three Months Ended

Nine Months Ended

March 31

March 31

(In thousands)

2020

2019

2020

2019

Lighting Segment
$ 49,013 $ 52,785 $ 165,640 $ 177,871
Graphics Segment
21,997 20,047 76,448 69,459
$ 71,010 $ 72,832 $ 242,088 $ 247,330

Summary of Consolidated Results

Operating Income (Loss) by Business Segment
Net Sales 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)	2020			2019			2020			2019			2021		2020		2021		2020

Lighting Segment	$	1,102		$	691		$	13,411		$	(13,911	)	$	45,740	$	49,013	$	136,271	$	165,640
Graphics Segment		4,015			(898	)		6,394			2,350			26,464		21,997		82,326		76,448
Corporate and Eliminations		(2,486	)		(2,066	)		(8,575	)		(8,049	)
	$	2,631		$	(2,273	)	$	11,230		$	(19,610	)	$	72,204	$	71,010	$	218,597	$	242,088

Page 21

~~Summary Comments~~

As we mentioned in the prior two quarters, we are transitioning from low margin commodity business to focus on higher margin applications and solutions, resulting in lower sales in the short term and improved margins.

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

Lighting Segment	$	3,797		$	1,102		$	9,519		$	13,411
Graphics Segment		1,230			4,015			6,196			6,394
Corporate and Eliminations		(2,931	)		(2,486	)		(8,731	)		(8,575	)
	$	2,096		$	2,631		$	6,984		$	11,230

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 decreased $1.8 million or 3% as compared to net sales of $72.8 million for the three months ended March 31, 2019.~~2020. Net sales were ~~favorably influenced~~driven by increased net sales of the Graphics Segment (an increase of ~~$1.9~~$4.5 million or ~~10%~~20%) ~~more than~~, partially offset by decreased net sales of the Lighting Segment (a decrease of ~~$3.8~~$3.3 million or 7%).

Net sales of $218.6 million for the nine months ended March 31, 2021 decreased $23.5 million or 10% as compared to net sales of $242.1 million for the nine months ended March 31, ~~2020~~2020. Net sales were driven by decreased ~~$5.2 million or 2% as compared to~~ net sales of ~~$247.3~~the Lighting Segment (a decrease of $29.4 million ~~for the nine months ended March 31, 2019. Net sales were favorably influenced~~or 18%), partially offset by increased net sales of the Graphics Segment (an increase of ~~$7.0~~$5.9 million or ~~10%) more than offset by decreased net sales of the Lighting Segment (a decrease of $12.2 million or 7%~~8%).

Operating income of ~~$2.6~~$2.1 million for the three months ended March 31, ~~2020~~2021 represents a ~~$4.9~~$0.5 million ~~improvement~~decrease from operating ~~loss~~income of ~~($2.3)~~$2.6 million in the three months ended March 31, ~~2019.~~2020. The ~~$4.9 million improvement~~$0.5 decrease from ~~operating loss in~~ fiscal ~~2019~~2020 was impacted by the sale of the North Canton, Ohio facility in the third quarter of fiscal 2020 which ~~favorably~~ resulted in a pre-tax gain of $3.7 million. When the impact of the sale of the North Canton facility, other restructuring and ~~other~~ plant closure costs, stock compensation expense and severance costs are removed from the operating results, adjusted operating ~~loss,~~income (loss), a Non-GAAP measure, was ~~($0.4)~~$2.5 million in the three months ended March 31, ~~2020~~2021 compared to ($~~1.9)~~0.5) million in the three months ended March 31, ~~2019.~~2020. Refer to “Non-GAAP Financial Measures” below. The improvement in adjusted operating loss was the net result of higher value sales mix, lower selling and administrative expenses and cost savings from the closure of the New Windsor, New York facility.

Operating income of ~~$11.2~~$7.0 million for the nine months ended March 31, ~~2020~~2021 represents a ~~$30.8~~$4.2 million ~~improvement~~decrease from an operating ~~loss~~income of ~~($19.6)~~$11.2 million in the nine months ended March 31, ~~2019.~~2020. The ~~$30.8~~$4.2 million ~~improvement~~decrease from ~~operating loss in~~ fiscal ~~2019~~2020 was impacted by the sale of the New Windsor, New York facility in the first quarter of fiscal 2020, which ~~favorably~~ 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 ~~favorably~~ resulted in a pre-tax gain of $3.7 million, and a pre-tax $20.2 million goodwill impairment charge in the second quarter of fiscal 2019 with no comparable event in fiscal 2020. The period-over-period improvement in operating income was partially offset by a one-time adjustment to a Company benefit plan in fiscal 2019 which resulted in a favorable pre-tax adjustment to earnings of $1.2 million. When the impact of the sales of the New Windsor and North Canton facilities, ~~the goodwill impairment charge and~~ other restructuring and plant closure costs, stock compensation expense and severance costs are removed from the operating results, adjusted operating income, a Non-GAAP measure, was ~~$3.9~~$8.3 million in the nine months ended March 31, ~~2020~~2021 compared to ~~$3.2~~$4.4 million in the nine months ended March 31, ~~2019.~~2020. Refer to “Non-GAAP Financial Measures” below. The increase in adjusted operating income was the net result of higher value sales mix, lower selling and administrative expenses and cost savings from the closure of the New Windsor, New York facility.

~~Page 22~~

As 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 to meet our projected needs in the reasonably foreseeable future.

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 ~~goodwill impairment, severance costs, transition and re-alignment costs, and~~ restructuring and plant closure costs (gains), stock compensation expense and severance 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 and Net Debt. 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. WeAlthough 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 ~~are not representative of the ongoing~~provide greater comparability and enhanced visibility into our results of ~~operations of our business.~~operations. 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 ~~EBIDTA~~EBITDA and Adjusted EBITDA, Free Cash Flow and Net Debt.

Reconciliation of operating income (loss) to adjusted operating income (loss):

Three Months Ended

March 31

(In thousands)

2020

2019

Operating Income (Loss) as reported
$ 2,631 $ (2,273 )

Restructuring, plant closure (gain) costs and related inventory write-downs
(3,055 ) 368

Severance costs
19 42

Adjusted Operating Loss
$ (405 ) $ (1,863 )

Page 22

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 (loss) to adjusted net income (loss)

Three Months Ended

March 31

(In thousands, except per share data)

2020

2019

Diluted EPS

Diluted EPS

Net Income (Loss) as reported
$ 1,861 $ 0.07 $ (3,168 ) $ (0.12 )

Restructuring, plant closure (gain) costs and related inventory write-downs
(2,769 )
(1)
(0.10 ) 115
(3)
-

Severance costs
17
(2)
- (14 )
(4)
-

Tax impact due to the change in the estimated annual tax rate used for GAAP reporting purposes
(174 ) (0.01 ) 897 0.03

Net Loss adjusted
$ (1,065 ) $ (0.04 ) $ (2,170 ) $ 0.08

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. and Mexico effective income tax rates for the periods ~~indicated. The income tax effects were as follows~~indicated (in thousands):

⁽¹⁾~~($286)~~$101

⁽²⁾$2($17)

⁽³⁾ ~~$253~~$3

⁽⁴⁾ ~~$56~~($490)

Reconciliation of operating income (loss) to adjusted operating income:

Nine Months Ended

March 31

(In thousands)

2020

2019

Operating Income (Loss) as reported
$ 11,230 $ (19,610 )

Restructuring, plant closure (gain) costs and related inventory write-downs
(7,367 ) 1,991

Severance costs
73 534

Goodwill impairment
- 20,165

Transition and re-alignment costs
- 120

Adjusted Operating Income
$ 3,936 $ 3,200

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

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

Stock compensation expense		1,317		494

Severance costs		21		73

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

Adjusted Operating Income	$	8,325	$	4,430

Page 23

Reconciliation of net income (loss) to adjusted net income

Nine Months Ended

March 31

(In thousands, except per share data)

2020

2019

Diluted EPS

Diluted EPS

Net Income (Loss) as reported
$ 8,079 $ 0.31 $ (17,201 ) $ (0.66 )

Restructuring, plant closure (gain) costs and related inventory write-downs (5,995 )
(1)
(0.23 ) 1,386
(3)
0.05

Severance costs
61
(2)
- 372
(4)
0.01

Goodwill impairment
- - 15,361
(5)
0.59

Transition and re-alignment costs
- - 94
(6)
-

Tax impact due to the change in the estimated annual tax rate used for GAAP reporting purposes
(609 ) (0.02 ) 897 0.03

Net Income adjusted
$ 1,536 $ 0.06 $ 908 $ 0.03

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

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

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

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

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

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

Net Income adjusted	$	6,447			$	0.24		$	2,265			$	0.09

(1) $305

(2) $4

(3) $1

(4) $121

(5) $13

(6) ($1,579)

The reconciliation of reported net income ~~(loss)~~ and earnings ~~(loss)~~ 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.

~~The~~Reconciliation of operating income ~~tax effects of the adjustments in the tables above were calculated using the estimated U.S. effective income tax rates for the periods indicated. The income tax effects were as follows (in thousands):~~to EBITDA and Adjusted EBITDA

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

Operating Income as reported	$	2,096	$	2,631		$	6,984	$	11,230

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

EBITDA	$	4,016	$	4,711		$	12,927	$	17,861

Stock compensation expense		415		(103	)		1,317		494

Severance costs		-		19			21		73

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

Adjusted EBITDA	$	4,431	$	1,572		$	14,268	$	11,061

⁽¹⁾~~($1,372)~~Reconciliation of cash flow from operations to free cash flow

⁽²⁾~~$12~~

⁽³⁾~~$605~~

⁽⁴⁾ ~~$162~~

⁽⁵⁾ ~~$4,804~~

⁽⁶⁾~~$26~~

Reconciliation of operating income (loss) to EBITDA and Adjusted EBITDA

Three Months Ended

Nine Months Ended

March 31

March 31

(In thousands)

2020

2019

2020

2019

Operating Income (Loss) as reported
$ 2,631 $ (2,273 ) $ 11,230 $ (19,610 )

Depreciation and Amortization
2,080 2,552 6,631 7,787

EBITDA
$ 4,711 $ 279 $ 17,861 $ (11,823 )

Restructuring, plant closure (gain) costs and related inventory write-downs
(3,055 ) 368 (7,367 ) 1,991

Severance costs
19 42 73 534

Goodwill impairment
- - - 20,165

Transition and re-alignment costs
- - - 120

Adjusted EBITDA
$ 1,675 $ 689 $ 10,567 $ 10,987

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

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

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

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

Free Cash Flow	$	10,580		$	3,475		$	23,117		$	35,591

Page 24

Reconciliation of cash flow from operations to free cash flow

Three Months Ended

Nine Months Ended

March 31

March 31

(In thousands)

2020

2019

2020

2019

Cash Flow from Operations
$ (3,806 ) $ (1,243 ) $ 17,097 $ 6,385

Proceeds from sale of facilities
7,700 - 20,032 -

Capital expenditures
(419 ) (769 ) (1,538 ) (2,348 )

Free Cash Flow
$ 3,475 $ (2,012 ) $ 35,591 $ 4,037

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	)

Reconciliation of Net Debt

March 31,

June 30,

(In thousands)

2020

2019

Long-Term Debt as reported
$ 7,919 $ 39,541

Less:

Cash and cash equivalents as reported
820 966

Net Debt
$ 7,099 $ 38,575

~~Page 25~~

Results of Operations

THREE MONTHS ENDED MARCH 31, ~~2020~~2021 COMPARED TO THREE MONTHS ENDED MARCH 31, ~~2019~~2020

Lighting Segment
	Three Months Ended				Three Months Ended
	March 31				March 31
(In thousands)	2020		2019		2021		2020

Net Sales	$	49,013	$	52,785	$	45,740	$	49,013
Gross Profit	$	12,637	$	12,331	$	14,159	$	12,637
Operating Income (Loss)	$	1,102	$	691
Operating Income					$	3,797	$	1,102

Lighting Segment net sales of ~~$49.0~~$45.7 million in the three months ended March 31, ~~2020~~2021 decreased 7% from net sales of ~~$52.8~~$49.0 million in the same period in fiscal ~~2019.~~2020. The ~~7% drop in sales~~decrease is ~~attributed~~due to the ~~continued transition toward a less commoditized, higher-value~~impact of COVID-19 disruptions in construction markets, however; the sales ~~mix.~~gap versus the prior year continues to narrow, having improved each quarter of the current fiscal year.

Gross profit of ~~$12.6~~$14.2 million in the three months ended March 31, ~~2020~~2021 increased ~~$0.3~~$1.5 million or 3%12% from the same period of fiscal ~~2019 and increased from 23.2% to 25.4%~~2020. Gross profit as a percentage of ~~Lighting Segment~~ net sales ~~(customer plus inter-segment net sales).~~was 31.0% in the three months ended March 31, 2021 compared to 25.8% in the same period of fiscal 2020. The Lighting Segment incurred restructuring and plant closure costs that were recorded in cost of sales related to the closure of the New Windsor, New York facility $0.3 million in fiscal 2019. The increasegrowth in gross profit ~~is also due to product mix~~as a percentage of net sales reflects our continued focus on the entire lighting model, including higher value applications, price management, new and ~~moving away from low-margin commodity business to higher margin market applications. Also contributing to the period-over-period improvement in gross profit are the~~ cost ~~savings from the closure of the New Windsor facility~~reduced products and supply chain and operations productivity.

Selling and administrative expenses of ~~$11.5~~$10.4 million in the three months ended March 31, ~~2020 remained relatively flat~~2021 decreased $1.2 million from the same period of fiscal ~~2019.~~2020, primarily driven by programs to reduce spending as a result of the pandemic.

Lighting Segment operating income of ~~$1.1~~$3.8 million for the three months ended March 31, ~~2020~~2021 increased ~~$0.4~~$2.7 million from operating income of ~~$0.7~~$1.1 million in the same period of fiscal ~~2019~~2020 primarily due to ~~restructuring~~higher gross profit and ~~plant closure costs and severance related to the closure of its New Windsor facility in fiscal 2019.~~lower operating expenses, partially offset by lower sales.

Graphics Segment
	Three Months Ended					Three Months Ended
	March 31					March 31
(In thousands)	2020		2019			2021		2020

Net Sales	$	21,997	$	20,047		$	26,464	$	21,997
Gross Profit	$	3,293	$	3,018		$	3,933	$	3,293
Operating Income (Loss)	$	4,015	$	(898	)
Operating Income						$	1,230	$	4,015

Graphics Segment net sales of ~~$22.0~~$26.5 million in the three months ended March 31, ~~2020~~2021 increased ~~$1.9~~$4.5 million or ~~10%~~20% from net sales of ~~$20.0~~$22.0 million in the same period in fiscal ~~2019.~~2021. The increase in sales is ~~from~~primarily due to growth in ~~sales to the Petroleum market~~our Quick-Service Restaurants vertical.

Gross profit of ~~$3.3~~$3.9 million in the three months ended March 31, ~~2020~~2021 increased ~~$0.3~~$0.6 million or 9%19% from the same period of fiscal ~~2019.~~2020. Gross profit as a percentage of ~~segment~~ net sales ~~(customer plus inter-segment net sales) for~~in the three months ended March 31, ~~2020 remained relatively flat from~~2021 was consistent with gross profit as a percentage of net sales in the same period of fiscal ~~2019.~~2020.

Selling and administrative expenses ~~which showed a gain~~ of ~~($0.7)~~$2.7 million in the three months ended March 31, ~~2020, improved $4.6~~2021 increased $3.4 million from ~~$3.9~~($0.7) million in the same period of fiscal ~~2019.~~2020. Selling and administrative expenses in the 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.

Graphics Segment operating income of $1.2 million in the three months ended March 31, 2021 decreased $2.8 million from operating income of $4.0 million in the same period of fiscal 2020. The ~~$4.6~~decrease of $2.8 million ~~improvement~~ was primarily as a result of the $3.7 million pre-tax gain on the sale of the North Canton, Ohio facility in the third quarter of fiscal 2020. When the $3.7 million gain is removed from the third quarter of fiscal 2020 results, there was a $0.9 million or 23% decrease in selling and administrative expenses. The decrease in selling and administrative expenses was due to decreased wages and benefit expense due to lower headcount and a reduction in bad debt expense.

~~Page 26~~

Graphics Segment operating income of $4.0 million in the three months ended March 31, 2020 increased $4.9 million from operating loss of ($0.9) million in the same period of fiscal 2019. The increase of $4.9 million was primarily the net result of the $3.7 million pre-tax gain on the sale of the North Canton, Ohio facility in the three months ended March 31, 2020. When all Non-GAAP items are removed from both fiscal years, Non-GAAP adjusted operating income for the three months ended March 31, ~~2020~~2021 was ~~$1.0~~$1.2 million, or ~~$1.9~~$0.2 million higher than Non-GAAP adjusted operating ~~loss~~income of ~~($0.9)~~$1.0 million for the three months ended March 31, ~~2019~~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 ~~the increase in sales and a decrease in selling and administrative expenses.~~improved gross profit margin.

Reconciliation of Graphics Segment operating income (loss) to adjusted operating income (loss):

Three Months Ended

March 31

(In thousands)

2020

2019

Operating Income (Loss)
$ 4,015 $ (898 )
Restructuring, plant closure (gain) costs and related inventory write-downs
(3,044 ) -
Severance
27 (9 )
Adjusted operating income (loss)
$ 998 $ (907 )

Page 25

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
	March 31						March 31
(In thousands)	2020			2019			2021			2020

Gross Profit (Loss)	$	12		$	(12	)	$	-		$	12
Operating (Loss)	$	(2,486	)	$	(2,066	)	$	(2,931	)	$	(2,486	)

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

Administrative expenses of ~~$2.5~~$2.9 million in the three months ended March 31, ~~2020~~2021 increased $0.4 million or ~~22%~~18% from the same period of fiscal ~~2019.~~2020. The net increase iswas primarily due to an increase in stock compensation expense due to prior year forfeitures and an increase in the employer match related to the deferred compensation plan as result of ~~filling key vacancies in selling and administration.~~additional participants.

Consolidated Results

We reported ~~$0.1 million~~$52,000 and $128,000 of net interest expense in the three months ended March 31, 2021 and March 31, 2020, ~~compared to $0.6 million net interest~~respectively. We also recorded other expense of $43,000 and $642,000 in the three months ended March 31, ~~2019. The decrease in interest~~2021 and March 31, 2020, respectively, which is related to net foreign exchange currency transaction gains and losses through our Mexican subsidiary.

In the three months ended March 31, 2021, we recorded $0.5 million of income tax expense, ~~from fiscal 2019 to fiscal 2020 is the result~~which represents a consolidated effective tax rate of ~~lower levels of debt outstanding on our line of credit. We also recorded other expense of $0.6 million in~~26.4%. In the three months ended March 31, 2020, compared to $0.2 million in the three months ended March 31, 2019, both of which are related to net foreign exchange currency transaction losses through our Mexican subsidiary. The increase in other expense for the three months ended March 31, 2020 was due to the devaluation of the Mexican Peso as a result of market conditions surrounding the COVID-19 pandemic.

Wewe recorded less than $1,000 of ~~income~~ tax expense, ~~in the three months ended March 31, 2020~~ which was driven by a favorable deferred tax asset adjustment related to a ~~Net Operating Loss (NOL)~~NOL carryback from the CARES Act. ~~The $0.1~~

We reported net income of $1.5 million ~~income tax expense~~ in the three months ended March 31, ~~2019 was the result of a cumulative change~~2021 compared to ~~our estimated annual tax rate driven by the expected gain on the sale of the New Windsor, New York facility.~~

~~We reported~~ net income of $1.9 million in the three months ended March 31, ~~2020 compared to~~2020. Non-GAAP adjusted net ~~loss of ($3.2)~~income was $1.8 million ~~in the same period of fiscal 2019. The improvement in the net loss in~~for the three months ended March 31, ~~2019~~2021 compared to net income in the three months ended March 31, 2020 is mostly driven by the pre-tax gain of $3.7 million on the sale of the North Canton, Ohio facility. When the impact of all Non-GAAP items is removed from both fiscal years, Non-GAAP adjusted net loss ~~was~~of ($1.1) million for the three months ended March 31, 2020 ~~compared to adjusted net loss of ($2.2) million for the three months ended March 31, 2019~~ (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 in operating expenses and decreased interest expense, ~~and a lower effective tax rate,~~ partially offset by decreased net ~~sales and higher foreign exchange currency transaction losses.~~sales. Diluted earnings per share of ~~$0.07~~$0.05 was reported in the three months ended March 31, ~~2020~~2021 as compared to ~~($0.12)~~$0.07 diluted ~~loss~~earnings per share in the same period of fiscal ~~2019.~~2020. The weighted average common shares outstanding for purposes of computing diluted earnings ~~(loss)~~ per share in the three months ended March 31, ~~2020~~2021 were ~~26,301,000~~27,727,000 shares as compared to ~~26,132,000~~26,623,000 shares in the same period last year.

Page 2726

NINE MONTHS ENDED MARCH 31, 2021 COMPARED TO NINE MONTHS ENDED MARCH 31, 2020 ~~COMPARED TO~~ ~~NINE~~ ~~MONTHS ENDED~~ ~~MARCH 31, 2019~~

Lighting Segment
	Nine Months Ended					Nine Months Ended
	March 31					March 31
(In thousands)	2020		2019			2021		2020

Net Sales	$	165,640	$	177,871		$	136,271	$	165,640
Gross Profit	$	45,357	$	42,548		$	41,689	$	45,357
Operating Income (Loss)	$	13,411	$	(13,911	)
Operating Income						$	9,519	$	13,411

Lighting Segment net sales of ~~$165.6~~$136.3 million in the nine months ended March 31, ~~2020~~2021 decreased 7%18% from net sales of ~~$177.9~~$165.6 million in the same period in fiscal ~~2019.~~2020. The ~~reduction in sales~~decrease is ~~attributed~~due to the ~~continued transition toward a less commoditized, higher-value~~impact of COVID-19 disruptions in construction markets, however; the sales ~~mix and~~gap versus the ~~softness in select vertical markets.~~prior year continues to narrow, having improved each quarter of the current fiscal year.

Gross profit of ~~$45.4~~$41.7 million in the nine months ended March 31, ~~2020 increased $2.8~~2021 decreased $3.7 million or 7%8% from the same period of fiscal ~~2019 and increased from 23.7% to 27.0%~~2020. Gross profit as a percentage of ~~Lighting Segment~~ net sales ~~(customer plus inter-segment net sales).~~was 30.6% in the nine months ended March 31, 2021 compared to 27.4% in the same period of fiscal 2020. The growth in ~~gross profit and~~ gross profit as a percentage of net sales ~~is due to~~reflects our continued ~~favorable price/mix. Also contributing to~~focus on the ~~period-over-period improvement in gross profit are the~~entire lighting model, including higher value applications, price management, new and cost ~~savings from the closure of the New Windsor facility.~~reduced products and supply chain and operations productivity.

Selling and administrative expenses of ~~$31.9~~$32.2 million in the nine months ended March 31, ~~2020 decreased $24.5~~2021 increased $0.3 million from ~~selling and administrative expenses of $56.5~~$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 ~~2019,~~2021 decreased from the prior year, driven by programs to reduce spending as a result of the pandemic.

Lighting Segment operating income of $9.5 million for the nine months ended March 31, 2021 decreased $3.9 million from operating income of $13.4 million in the same period of fiscal 2020 primarily due to the $4.8 million pre-tax gain on the sale of the New Windsor ~~New York~~ facility in fiscal 2020 and the $20.2 million pre-tax goodwill impairment charge in fiscal 2019. When the $4.8 million gain is removed from fiscal 2020 results and the goodwill impairment charge is removed from fiscal 2019 results, there was a $0.5 million or 1% increase in selling and administrative expenses. The increase in selling and administrative expenses is mostly driven by a one-time adjustment to a Company benefit plan in fiscal 2019 with no comparable event in fiscal 2020 partially offset by lower commission expense in fiscal 2020 which is the result of lower sales volume.

~~Lighting Segment~~2020. Non-GAAP adjusted operating income ~~of $13.4~~was $9.7 million in the nine months ended March 31, ~~2020 increased $27.3 million from an operating loss of ($13.9) million in the same period of fiscal 2019 primarily due~~2021 compared to the $4.8 million pre-tax gain on the sale of the New Windsor, New York facility in fiscal 2020 and a $20.2 million pre-tax goodwill impairment charge in fiscal 2019. When all Non-GAAP items are removed from both fiscal years, fiscal 2020 Non-GAAP adjusted operating income of $8.8 million ~~was $0.3 million higher than fiscal 2019 Non-GAAP adjusted operating income of $8.5 million~~in the nine months ended March 31, 2020 (refer to the Non-GAAP table below for a reconciliation of Lighting Segment operating income ~~(loss)~~ to adjusted operating income). The increase in Non-GAAP adjusted operating income is due to higher gross profit and improved gross profit as a percentage of sales partially offset by a decrease in sales volume and higher selling and administrative expenses.

Reconciliation of Lighting Segment operating income (loss) to adjusted operating income:

Nine Months Ended

March 31

(In thousands)

2020

2019

Operating Income (Loss)
$ 13,411 $ (13,911 )
Restructuring and plant closure (gain) costs
(4,674 ) 1,991
Severance
18 237
Goodwill impairment
- 20,165
Adjusted operating income
$ 8,755 $ 8,482

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 2827

Graphics Segment

Nine Months Ended

March 31

(In thousands)

2020

2019

Net Sales
$ 76,448 $ 69,459
Gross Profit
$ 12,384 $ 13,727
Operating Income
$ 6,394 $ 2,350

Graphics Segment net sales of ~~$76.4~~$82.3 million in the nine months ended March 31, ~~2020~~2021 increased ~~$7.0~~$5.9 million or ~~10%~~8% from net sales of ~~$69.5~~$76.4 million in the same period ofin fiscal ~~2019. Growth was realized across the petroleum~~2020. The increase in sales is from growth in our Grocery and ~~digital signage product applications.~~Quick-Service Restaurants verticals partially offset by a reduction in our Petroleum vertical.

Gross profit of ~~$12.4~~$14.4 million in the nine months ended March 31, ~~2020 decreased $1.3~~2021 increased $2.0 million or ~~10%~~16% from the same period of fiscal ~~2019.~~2020. Gross profit as a percentage of ~~segment~~ net sales ~~(customer plus inter-segment net sales) decreased from 19.7%~~increased to 17.5% in the nine months ended March 31, ~~2019~~2021 compared to ~~16.1%~~16.2% in the nine months ended March 31, 2020. The decrease in amount of gross profit is due to the net effect of increased net sales (customer plus inter-segment net sales) offset by a change in customer program mix. Graphics gross margin was unfavorably impacted by several factors including: new and early stage petroleum products and start-up costs associated therewith, alignment of manufacturing resources required to support the transition from print to digital in certain market applications, and a one-time adjustment to a Company benefit plansame period in fiscal ~~2019 with no comparable event in fiscal 2020.~~2020, primarily within our Petroleum and Grocery verticals.

Selling and administrative expenses of $8.2 million increased $2.2 million from $6.0 million in the same period of fiscal 2020. Selling and administrative expenses in the nine months ended March 31, 2020 ~~decreased $5.4 million or 47% from the same period of fiscal 2019 primarily as a result of~~were reduced by the $3.7 million pre-tax gain on the sale of the North Canton, Ohio ~~facility in the third quarter of fiscal 2020.~~facility. When the $3.7 million gain is removed from the ~~third quarter of~~ fiscal 2020 results, ~~there was a $1.6 million or 14% decrease in selling and administrative expenses. The decrease in~~ selling and administrative expenses ~~was due~~in fiscal 2021 decreased from the prior year, driven by programs to ~~decreased wages and benefit expense due to lower headcount and~~reduce spending as a ~~reduction in bad debt expense.~~result of the pandemic.

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 ~~increased $4.0 million from~~(refer to the Non-GAAP table below for a reconciliation of Graphics Segment operating income ~~of $2.4 million in the same period of fiscal 2019.~~to adjusted operating income). The increase ~~of $4.0 million was~~is primarily ~~the result of the $3.7 million pre-tax gain on the sale of the North Canton, Ohio facility.~~due to improved gross profit margin.

Corporate and Eliminations

Nine Months Ended

March 31

(In thousands)

2020

2019

Gross Profit (Loss)
$ 20 $ (21 )
Operating (Loss)
$ (8,575 ) $ (8,049 )

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
	March 31
(In thousands)	2021			2020

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

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

Administrative expenses of ~~$8.6~~$8.7 million in the nine months ended March 31, ~~2020 increased $0.6 million from~~2021 remained relatively consistent with the ~~same period of fiscal 2019. The increase is primarily the result of filling key vacancies in selling and administration.~~prior year period.

Consolidated Results

We reported $0.2 million net interest expense in the nine months ended March 31, 2021 compared to $0.8 million net interest expense in the nine months ended March 31, ~~2020 compared to $1.7 million net~~2020. The decrease in interest expense from fiscal 2020 to fiscal 2021 is the result 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, ~~2019. The decrease in interest expense from fiscal 2019~~2021 compared to ~~fiscal 2020 is primarily the result of reduced borrowings against our line of credit. We also recorded~~ other expense of $0.6 million in the nine months ended March 31, 2020, ~~compared $0.2~~which is related to net foreign exchange currency transaction gains and losses through our Mexican subsidiary.

The $1.3 million income tax expense in the nine months ended March 31, ~~2019, both~~2021 represents a consolidated effective tax rate of ~~which are~~19.1% and was driven by a favorable deferred tax asset adjustment related to a net ~~foreign exchange currency transaction losses through our Mexican subsidiary. The increase in other expense for~~operating loss carryback from the ~~three months ended March 31, 2020 was due to the devaluation of the Mexican Peso as a result of market conditions surrounding the COVID-19 pandemic.~~

~~Page 29~~

CARES Act. The $1.7 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 to stock-based compensation expense; 2) a deferred tax asset adjustment related to a NOL carryback from the CARES ~~Act, and;~~Act; and 3) the utilization of a capital loss carryforward related to the capital gain on the sale of the North Canton, Ohio facility. ~~The $4.3~~

Page 28

We reported net income of $5.7 million ~~income tax benefit~~ in the nine months ended March 31, ~~2019 represents a consolidated effective tax rate of 20.0%, which is inclusive of a cumulative change~~2021 compared to the estimated annual tax rate mostly due to the tax treated related to the fourth quarter of fiscal 2019 sale of the New Windsor, New York facility. Also impacting the consolidated tax benefit in the first nine months of fiscal 2019 is the second quarter goodwill impairment charge.

~~We reported~~ net income of $8.1 million in the nine months ended March 31, ~~2020 compared to net loss of ($17.2) million in the same period of fiscal 2019. The change from the net loss in the nine months ended March 31, 2019 to the~~2020. Non-GAAP adjusted net income inwas $6.4 million for the nine months ended March 31, 2020 is driven by the $3.7 million pre-tax gain on the sale of the North Canton, Ohio facility and the $4.8 million pre-tax gain on the sale of the New Windsor, New York facility in fiscal 2020 and the $20.2 million pre-tax goodwill impairment charge in fiscal 2019. When the impact of all Non-GAAP items is removed from both fiscal years, the fiscal 2020 Non-GAAPcompared to adjusted net income of ~~$1.5~~$2.3 million ~~increased $0.6 million from fiscal 2019 adjusted net income of $0.9 million~~for the nine 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, decreased interest expense and ~~a lower effective tax rate,~~other expense, partially offset by decreased net ~~sales and higher foreign exchange currency transaction losses.~~sales. Diluted earnings per share of ~~$0.31~~$0.21 was reported in the ~~nine~~mine months ended March 31, ~~2020~~2021 as compared to ~~($0.66)~~$0.31 diluted ~~loss~~earnings per share in the same period of fiscal ~~2019.~~2020. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the nine months ended March 31, ~~2020~~2021 were ~~26,423,000~~27,352,000 shares as compared to ~~26,083,000~~26,423,000 shares in the same period ~~of fiscal 2019.~~last year.

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, ~~2020,~~2021, we had working capital of ~~$56.4~~$61.1 million compared to ~~$71.1~~$51.2 million at June 30, ~~2019.~~2020. The ratio of current assets to current liabilities was ~~2.45~~2.10 to 1 as compared to a ratio of ~~2.78~~2.48 to 1 at June 30, ~~2019.~~2020. The ~~balance sheet at June 30, 2019 included an asset held for sale of $7.5~~$9.9 million which was sold in the first quarter of fiscal 2020. When June 30, 2019 current assets are revised to exclude the asset held for sale, adjusted working capital, a Non-GAAP financial measure, and the ratio of current assets to current liability are $63.6 million and 2.59 to 1, respectively, as of June 30, 2019. The $7.2 million decreaseincrease in working capital from June 30, ~~2019~~2020 to March 31, ~~2020 (as adjusted and excludes held for sale assets)~~2021 is primarily driven by ~~an $8.8 million decrease in accounts receivable,~~ a ~~$1.1 million decrease in accrued expense and a $0.9~~$20.0 million increase in ~~refundable income taxes.~~

~~We generated $17.1 million of~~ cash, ~~from operating activities in the nine months ended March 31, 2020 as compared to $6.4 million in the same period of fiscal 2019. This $10.7~~$7.1 million increase in net ~~cash flows from operating activities is the result of our improved earnings as well as our ongoing strategy to aggressively manage our~~accounts receivable, $1.8 million increase in other current assets and $1.6 million increase in net inventory, partially offset by a $10.8 million increase in accounts payable and a $9.6 million increase in accrued expenses. While working capital ~~which includes~~has increased, non-cash working capital decreased as we continue to effectively manage it in the ~~reduction~~face of accounts receivable days sales outstanding (DSO), increasing inventory turns while simultaneously reducing inventory levels, and effectively managing our supply chain which includes partnering with our suppliersconstantly changing market conditions due to ~~find the appropriate service level while effectively managing payment terms.~~COVID-19.

Net accounts receivable ~~were $46.0~~was $45.0 million and ~~$54.7~~$37.8 million at March 31, ~~2020~~2021 and June 30, ~~2019,~~2020, respectively. DSO decreased to 5952 days at March 31, ~~2020~~2021 from 6356 days at June 30, ~~2019.~~2020. We believe that our receivables are ultimately collectible or recoverable, net of certain reserves, and that aggregate allowances for doubtful accounts are adequate.

Net inventories of ~~$43.6~~$40.4 million at March 31, ~~2020~~2021 increased ~~$0.1~~$1.6 million from ~~$43.5~~$38.8 million at June 30, ~~2019.~~2020. The ~~decrease~~increase of ~~$0.1~~$1.6 million is the result of ~~a decrease~~an increase in gross inventory of ~~$0.9~~$2.2 million and ~~a decrease~~an increase in obsolescence reserves of ~~$1.0~~$0.6 million. Based on a strategy of balancing inventory ~~reductions~~levels with customer service and the timing of shipments, net inventory increased ~~$1.7~~$1.8 million ~~in the first nine months of fiscal 2020~~ in the Lighting Segment ~~which was partially offset by a decrease in net inventory~~and $0.2 million in the Graphics ~~Segment of $1.6 million. We increased inventory~~segment in the ~~Lighting Segment in anticipation for higher demand during the coming summer months.~~nine months ended March 31, 2021.

Cash generated from operations and borrowing capacity under our line of credit is our primary source of liquidity. ~~We have a~~In March 2021, the Company amended its secured ~~$75 million revolving~~ line of credit to a $100 million facility from a $75 million facility, with ~~our bank, with $63.7~~$100 million of the credit line available as of April ~~17, 2020.~~23, 2021. This ~~line of credit is a $75~~$100 million five-year credit line ~~expiring~~expires in the third quarter of fiscal ~~2022.~~2026. We are in compliance with all of our loan covenants. We believe that our ~~$75~~$100 million line of credit plus cash flows from operating activities are adequate for ~~calendar year 2020~~fiscal 2021 operational and capital expenditure needs. However, as the impact of COVID-19 on the economy and our operations evolves, we will continue to assess our liquidity needs.

~~Page 30~~

We generated $24.6 million of cash from operating activities in the nine months ended March 31, 2021 as compared to $17.1 million in the same period of fiscal 2020. The $7.5 million increase in net cash flows from operating activities is the result of our improved earnings as well as a $9.4 million 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.

We ~~had a source~~used $1.5 million of cash ~~of $18.5 million~~ related to investing activities in the nine months ended March 31, ~~2020~~2021 as compared to ~~a use~~$18.5 million of ~~$2.3 million~~cash provided by investing activities in the same period of fiscal ~~2019,~~2020, resulting in a ~~favorable change~~decrease of ~~$20.8~~$20.0 million. Capital expenditures ~~decreased from $2.3~~were $1.5 million in both the nine months ended 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 million in the nine months ended March 31, 2019 to $1.5 million in the nine months ended March 31, 2020. We sold our New Windsor, New York manufacturing facility for $12.3 million in the first quarter of fiscal 2020 and our North Canton, Ohio facility for $7.7 million in the third quarter of fiscal 2020, which ~~were~~was the primary contributing ~~factors~~factor to the ~~increase~~decrease in cash flow from investing activities from fiscal ~~2019~~2020 to fiscal ~~2020.~~2021.

We used ~~$35.5~~$3.2 million of cash related to financing activities in the nine months ended March 31, ~~2020~~2021 compared to ~~$5.5~~$35.5 million in the nine months ended March 31, ~~2019.~~2020. The ~~$30.0~~$32.3 million change in cash flow was primarily the net result of payments of long-term debt in excess of borrowings which was primarily driven by cash flow from ~~operations.~~operations and cash flow from investments due to the sale of the New Windsor and North Canton facilities.

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 ~~2020,~~2021, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable May ~~12, 2020~~11, 2021 to shareholders of record as of May ~~4, 2020.~~3, 2021. The indicated annual cash dividend rate for fiscal ~~2020~~2021 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.

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 ~~2019~~2020 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 3130

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, ~~2019.~~2020. Additional information can be found in Item 7A, Quantitative and Qualitative Disclosures About Market Risk, which appears on page 1312 of the Annual Report on Form 10-K for the fiscal year ended June 30, ~~2019.~~2020.

ITEM 4.CONTROLS AND PROCEDURES

~~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 ~~Securities~~ Exchange ~~Act of 1934.~~Act. Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, ~~2020,~~2021, 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

~~During the nine months ended March 31, 2020, we enacted additional controls related to the adoption of ASU 2016-02, “Leases.”~~ 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, ~~2020,~~2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Page 3231

PART II.OTHER INFORMATION

ITEM ~~1A. RISK FACTORS~~5. OTHER INFORMATION

There have been no material changes from risk factors as previously disclosed in the Company’s fiscal 2019 Annual Report on Form 10-K in response to Item 1A to Part I of Form 10-K, except that we are adding the following risk factor discussion relating to the coronavirus (COVID-19) pandemic.None.

~~The COVID-19 pandemic could have a material adverse effect on our ability to operate, results of operations, financial condition, liquidity, and capital investments.~~

The World Health Organization has declared the COVID-19 outbreak a pandemic, and the virus continues to spread in areas where we operate and sell our products and services. The COVID-19 pandemic and similar issues in the future could have a material adverse effect on our ability to operate, results of operations, financial condition, liquidity, and capital investments. Several public health organizations have recommended, and many local governments have implemented, certain measures to slow and limit the transmission of the virus, including shelter in place and social distancing ordinances. Such preventive measures, or others we may voluntarily put in place, may have a material adverse effect on our business for an indefinite period of time, such as the potential shut down of certain locations, decreased employee availability, potential border closures, disruptions to the businesses of our channel partners, and others. Our suppliers and customers may also face these and other challenges, which could lead to a disruption in our supply chain as well as decreased construction and renovation spending and consumer demand for our products and services.

A continued worldwide disruption could materially affect our future access to our sources of liquidity, particularly our cash flows from operations, financial condition, capitalization, and capital investments. In the event of a sustained market deterioration, we may need additional liquidity, which would require us to evaluate available alternatives and take appropriate action. Although the disruptions related to COVID-19 may continue to occur, the long-term economic impact and near-term financial impacts of the COVID-19 pandemic, including but not limited to, possible impairment, restructuring, and other charges, cannot be reliably quantified or estimated at this time due to the uncertainty of future developments. Because the duration and resulting economic disruption of the COVID-19 pandemic are unknown and impossible to determine at this time, we are uncertain regarding the extent to which the COVID-19 pandemic could have a material adverse effect on our ability to operate, results of operations, financial condition, liquidity and capital investments.

~~ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~

Effective February 4, 2020, the Compensation Committee of the Board of Directors granted inducement awards of stock options in accordance with NASDAQ Listing Rule 5635(c)(4) to Jeffrey Davis, the head of LSI sales and Brian Vincent, Chief Support Officer. Mr. Davis was granted an inducement stock option to purchase up to 100,000 shares of the Company’s common stock. The award was approved in connection with the commencement of his employment with the Company and has a ten-year term. The option is exercisable at a price of $6.51 per share (the closing price on February 4, 2020) and will vest only if Mr. Davis remains an employee of the Company for three years. Mr. Vincent was granted an inducement stock option to purchase up to 50,000 shares of the Company’s common stock in connection with the commencement of his employment with the Company and has a ten-year term. The option is exercisable at a price of $6.51 per share (the closing price on February 4, 2020), and one-third of the option will vest on each anniversary of the grant date. The grants of such awards are exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended and/or Rule 701 promulgated pursuant to the Securities Act of 1933, as amended.

~~Page 33~~

ITEM 6.EXHIBITS

Exhibits:

~~31.1~~ 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~~
31.2	Certification of Principal Financial Officer required by Rule 13a-14(a)

~~32.1~~
32.1	Section 1350 Certification of Principal Executive Officer

~~32.2~~
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)

Page 3432

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)
~~May 5, 2020~~April 28, 2021

Page 3533

X☒		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, ~~2020~~2021 OR

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

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

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

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

	March 31,			June 30,			March 31,			June 30,
(In thousands, except shares)	2020			2019			2021			2020

ASSETS

Current assets
	$	820		$	966
Cash and cash equivalents							$	23,528		$	3,517

Accounts receivable, less allowance for doubtful accounts of $267 and $879, respectively		45,957			54,728
Accounts receivable, less allowance for doubtful accounts of $241 and $273, respectively								44,974			37,836

Inventories		43,597			43,512			40,390			38,752

Refundable income tax		1,807			882			3,233			2,776

Asset held for sale		-			7,512

Other current assets		3,106			3,380			4,277			2,977

Total current assets		95,287			110,980			116,402			85,858

Property, Plant and Equipment, at cost
Land		3,933			4,576			3,943			3,933
Buildings		20,215			27,015			20,667			20,638
Machinery and equipment		70,733			73,185			68,444			67,796
Buildings under finance leases								2,033			2,033
Construction in progress		803			455			778			440
		95,684			105,231			95,865			94,840
Less accumulated depreciation		(70,981	)		(73,255	)		(71,713	)		(68,305	)
Net property, plant and equipment		24,703			31,976			24,152			26,535

Goodwill		10,373			10,373			10,373			10,373

Other Intangible Assets, net		30,631			32,647			27,948			29,960

Operating Lease Right-of-Use Assets								7,673			8,663

Other Long-Term Assets, net		21,238			15,124			10,546			10,874

Total assets	$	182,232		$	201,100		$	197,094		$	172,263

				Begins on Page
PART I. Financial Information

	ITEM 1.	Financial Statements (Unaudited)

		Condensed Consolidated Statements of Operations		3
		Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~		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		21

	ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	32
			31

	ITEM 4.	Controls and Procedures	32

~~PART II. Other Information~~

	~~ITEM 1A.~~	~~Risk Factors~~	3331

PART II. Other Information


	ITEM 2.5.	~~Unregistered Sales of Equity Securities and Use of Proceeds~~Other Information	33
			32

	ITEM 6.	Exhibits		3432

Signatures				3533

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

Balance at June 30, 2018		25,884	$	124,104		(242	)	$	(2,110	)	$	2,133			-	$	15,124		$	139,251
Balance at June 30, 2019																							26,176	$	125,729		(209	)	$	(1,468	)	$	1,468			16		$	(5,808	)	$	119,937

Net Loss		-		-		-			-			-			-		(17,201	)		(17,201	)
Other comprehensive income		-		-		-			-			-			-		-			-
Net Income																							-		0		-			0			0			0			8,079			8,079
Other comprehensive loss																							-		0		-			0			0			(110	)		0			(110	)
Stock compensation awards		70		265		-			-			-			-		-			265			48		225		0			0			0			0			0			225
Restricted stock units issued		98		-		-			-			-			-		-			-			21		0		0			0			0			0			0			0
Shares issued for deferred compensation		65		257		-			-			-			-		-			257			54		296		0			0			0			0			0			296
Activity of treasury shares, net		-		-		19			481			-			-		-			481			0		0		42			411			0			0			0			411
Deferred stock compensation		-		-		-			-			(474	)		-		-			(474	)		-		0		-			0			(413	)		0			0			(413	)
Stock-based compensation expense		-		951		-			-			-			-		-			951
Stock compensation expense																							-		494		-			0			0			0			0			494
Stock options exercised, net																							29		174		0			0			0			0			0			174
Dividends — $0.20 per share		-		-		-			-			-			-		(3,882	)		(3,882	)		-		0		-			0			0			0			(3,958	)		(3,958	)
Cumulative effect of adoption of accounting guidance		-		-		-			-			-			-		591			591			-		0		-			0			0			0			(428	)		(428	)

Balance at March 31, 2019		26,117	$	125,577		(223	)	$	(1,629	)	$	1,659		$	-	$	(5,368	)	$	120,239
Balance at March 31, 2020																							26,328	$	126,918		(167	)	$	(1,057	)	$	1,055		$	(94	)	$	(2,115	)	$	124,707

ASC 606 Cumulative Impact

(in thousands)	Balance as of					Balance as of
	June 30, 2018		Adjustments			July 1, 2018
Assets:
Accounts receivable, net	$	50,609	$	4,935		$	55,544
Inventories, net	$	50,994	$	(4,167	)	$	46,827
Other long-term assets, net	$	9,786	$	(177	)	$	9,609
Shareholder's Equity:
Retained earnings	$	15,124	$	591		$	15,715

	March 31, 2020		June 30, 2019		March 31, 2021		June 30, 2020
Identifiable Assets:
Lighting Segment	$	130,370	$	142,105	$	121,245	$	118,819
Graphics Segment		35,213		40,914		36,738		35,021
Corporate and Eliminations		16,649		18,081		39,111		18,423
	$	182,232	$	201,100	$	197,094	$	172,263

Inter-segment sales
	Three Months Ended				Nine Months Ended
(In thousands)	March 31				March 31
	2020		2019		2020		2019
Lighting Segment inter-segment net sales	$	744	$	479	$	2,415	$	1,758

Graphics Segment inter-segment net sales	$	153	$	96	$	251	$	171

Goodwill
(In thousands)	Lighting			Graphics
	Segment			Segment			Total
Balance as of June 30, 2019
Goodwill	$	94,564		$	28,690		$	123,254
Accumulated impairment losses		(85,356	)		(27,525	)		(112,881	)
Goodwill, net as of June 30, 2019	$	9,208		$	1,165		$	10,373

Balance as of March 31, 2020
Goodwill	$	94,564		$	28,690		$	123,254
Accumulated impairment losses		(85,356	)		(27,525	)		(112,881	)
Goodwill, net as of March 31, 2020	$	9,208		$	1,165		$	10,373

Other Intangible Assets	March 31, 2020						March 31, 2021
(In thousands)	Gross						Gross
	Carrying		Accumulated		Net		Carrying		Accumulated		Net
	Amount		Amortization		Amount		Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	35,563	$	13,614	$	21,949	$	30,163	$	10,273	$	19,890
Patents		338		270		68		268		230		38
LED technology firmware, software		16,066		12,731		3,335		16,066		13,215		2,851
Trade name		2,658		801		1,857		2,658		911		1,747
Total Amortized Intangible Assets		54,625		27,416		27,209		49,155		24,629		24,526

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

Total Other Intangible Assets	$	58,047	$	27,416	$	30,631	$	52,577	$	24,629	$	27,948

Other Intangible Assets	June 30, 2019						June 30, 2020
(In thousands)	Gross						Gross
	Carrying		Accumulated		Net		Carrying		Accumulated		Net
	Amount		Amortization		Amount		Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	35,563	$	12,070	$	23,493	$	35,563	$	14,129	$	21,434
Patents		338		247		91		338		277		61
LED technology firmware, software		16,066		12,364		3,702		16,066		12,852		3,214
Trade name		2,658		719		1,939		2,658		829		1,829
Total Amortized Intangible Assets		54,625		25,400		29,225		54,625		28,087		26,538

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

Total Other Intangible Assets	$	58,047	$	25,400	$	32,647	$	58,047	$	28,087	$	29,960

(In thousands)

2020	$	2,687
2021	$	2,682	$	2,682
2022	$	2,459	$	2,461
2023	$	2,412	$	2,412
2024	$	2,412	$	2,412
After 2024	$	16,573
2025			$	2,412
After 2025			$	14,159