LSI Forecast Dims

The graphics and lighting company pulls back estimates.
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LSI Industries (LYTS) - Get Report sank 14% late Friday after the graphics company said second-quarter numbers would miss Wall Street estimates.

The Cincinnati-based company expects to make 18 or 19 cents a share for the quarter ended Dec. 31 on sales of $73 million. Analysts surveyed by Thomson First Call had been looking for a 28-cent profit on $81 million in sales.

LSI also forecast a 67-cent profit for the year ending in June on sales of $270 million, well short of the Thomson First Call forecast of a 94-cent profit on sales of $306 million.

"Our highly profitable graphics business, which achieved record profits in fiscal year 2005, is experiencing lower sales volume as a result of certain new customers with major re-imaging needs delaying their programs from what had been previously expected," said CEO Robert J. Ready. "We believe this is a temporary timing issue as our graphics unit recently completed several major programs and has not yet replaced this lost volume with new business. Based on new and existing customer graphic programs we have underway, including several in relatively early prototype shipment stages, such as SBC/AT&T, we anticipate sales volume and profits will begin to increase during the fourth quarter of this fiscal year.

"We feel very positive about the intermediate and long-term outlook for our graphics business. However, the nature of the graphics business, and that of our petroleum/convenience store lighting business, will continue to have elements of timing uncertainty as customers make on-going decisions as they refine and fine-tune their re-imaging plans and programs. Understandably, we cannot change the inherent nature of our customers' program development/shipment cycles. Our job is to see that each cycle results in increased business and carries our operating results to ever higher levels.

"Our lighting business is achieving stronger sales with profits well above prior year levels, and the outlook is positive for the balance of fiscal 2006 and beyond. Our strong position and expertise in the petroleum lighting market has resulted in our Encore lighting fixtures being exclusively specified for Chevron's announced re-imaging program.

"The new organizational structure is working effectively, and our operating and growth strategies are being executed with success. While we now expect to see fiscal 2006 sales and earnings below those of fiscal 2005, the stage appears to be set for significant growth in operating results during fiscal 2007."

Late Friday, LSI slid $2.27 to $13.87.