In a deal valued at $97.5 million all-in, LSI Industries Inc., Cincinnati, has acquired Atlas Lighting Products Inc., Burlington, NC, a move that LSI executives say creates a much more complete and balanced company to compete in the LED lighting market.
The attraction of the deal is strategic and it lies in the companies’ complementary product lines and routes to market, Dennis Wells, CEO and president of LSI, told analysts in an phone conference this week. There’s little overlap in the products manufactured by the two companies and their channel strategies are likewise different. Atlas Lighting sells shelf-good lighting products through electrical distributors. LSI, in contrast, is most active in the project-based market, making custom lighting products sold through lighting specification agents. Combined, the companies can cover both sides of the channel, Wells said.
Atlas will continue as a brand distinct from LSI and Atlas president James Bennett and his management team will continue to lead the business. Both companies will continue to go to market through their existing agency networks.
“By putting the two together we can address both channels and become a more viable competitor,” Wells said. “I believe it’s an exciting time to be in the lighting industry. I also believe that bigger is better, going forward. This is a very large market, and it’s very fragmented. We can see more change on horizon, and we believe large competitors will thrive while smaller companies will struggle.”
Wells said LSI also sees a lot of value in Atlas Lighting’s Burlington production facility, a 330,000 square foot plant in what he sees as a strategically important North Carolina location. The Atlas plant will join LSI’s five facilities in Ohio, Kentucky and New York, which total 850,000 sq ft.
“This highly strategic acquisition, the largest in LSI’s history, will immediately broaden our lighting product offering, expand our sourcing capabilities, improve our profit margins, and provide significant revenue and cost synergies,” Wells said in a press release.
Atlas primarily makes quick-ship standard products, including floods, wall-packs, linear, pole-mount and high-bay fixtures, which Wells said will complement LSI’s custom product lines with minimal overlap, “providing our customers with a very complete LED lighting product portfolio.”
The deal is LSI’s largest acquisition to date. Atlas Lighting Products will add lighting sales of $58 million to LSI’s $250 million annually and 150 people to LSI’s payroll of 750.
Wells was also enthusiastic about Atlas’ profitability and advantages it can bring in terms of sourcing materials. “Atlas’ gross margin is much larger than LSI’s. Their margins are where we aspire to be,” Wells said.
“The strategy rationale, the basic access to both channels, is the core foundation of this acquisition. It rounds out our lighting offering, expands our reach, and puts us on path to greater growth in the industry,” Wells said.
