LSI Industries Reports Fiscal 2026 Second Quarter Results and Declares Quarterly Cash Dividend

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01/22/2026 - 07:00 AM

CINCINNATI--(BUSINESS WIRE)-- LSI Industries Inc. (Nasdaq: LYTS, “LSI” or the “Company”) a leading U.S. based manufacturer of commercial lighting and display solutions, today reported financial results for the fiscal 2026 second quarter ended December 31, 2025.

FISCAL 2026 SECOND QUARTER RESULTS

Net Sales of $147.0 million
Net Income $6.3 million; Adjusted Net Income $8.4 million
Diluted EPS of $0.20; Adjusted Diluted EPS of $0.26
EBITDA of $12.1 million; Adjusted EBITDA of $13.4 million
Free Cash Flow of $23.3 million
Ratio of net debt to TTM Adjusted EBITDA of 0.4x

LSI reported sales of $147.0 million, even with the prior year period, successfully offsetting the impact of fiscal 2025 results which included elevated, event driven sales related to disruption in the grocery vertical. Demand in the grocery vertical returned to seasonal levels in the second quarter of fiscal 2026, which supports higher seasonal activity quarters moving forward.

The Company reported net income of $6.3 million, or $0.20 per diluted share in the second quarter, while adjusted net income was $8.4 million or $0.26 per adjusted diluted share. Fiscal second quarter adjusted EBITDA was $13.4 million or 9.1% of net sales, an increase versus the prior-year period, as improved productivity, price optimization, and disciplined expense management combined to offset raw materials cost inflation.

The Company generated strong free cash flow of $23.3 million in the fiscal second quarter, driven by profitability and sustained working capital discipline. LSI reduced its total debt outstanding by $22.7 million in the fiscal second quarter, resulting in a ratio of net debt to trailing twelve-month adjusted EBITDA of 0.4x as of December 31, 2025. LSI exits the second quarter with cash and availability on its credit facility totaling $103.4 million.

The Company declared a regular cash dividend of $0.05 per share payable on February 10, 2026, to shareholders of record on February 2, 2026.

MANAGEMENT COMMENTARY

“The strength of our diversified, solutions-based model was evident in the second quarter, enabling LSI to deliver solid performance despite a challenging prior-year comparison,” stated James A. Clark, President and Chief Executive Officer of LSI. “Double-digit sales growth within our Lighting segment, continued execution of large project activity in Display Solutions, sustained profitability, and strong free cash generation, underscore the durability and resiliency of our operating model,” continued Clark.

“We exit the fiscal second quarter with an extremely healthy balance sheet. Free cash flow for the quarter was $23.3 million, reducing our leverage ratio to 0.4x. Our strong balance sheet provides the financial support required to achieve our 2028 Fast Forward strategic plan, supporting critical planned investments in organic growth, while also providing the ability to evaluate future acquisition opportunities.

“Margin management remains a priority for us, with a strong focus on project pricing, productivity, and cost discipline. These actions combined to offset cost inflation in the quarter, resulting in modest improvement in net income and diluted earnings per share, while positioning us to maintain EBITDA margin in what is seasonally one of slowest quarters of the year.

“Within our Lighting segment, our team delivered a strong quarter, with sales growth of 15%, together with seventy basis points of adjusted EBITDA margin expansion, when compared to the prior-year period. The 15% second quarter sales growth follows 18% growth in the first quarter, with several factors contributing to our improving momentum, including the increased number of large project shipments, which doubled from the second quarter last year. Furthermore, our increased emphasis on national account opportunities continues to generate new customers and sustainable business. One specific account conversion resulted in a multi-million-dollar initial order to be fulfilled in the fiscal third quarter.

“Within the Display Solutions segment, we continue to maintain a high level of project execution across large, multi-year customer programs in the refueling/c-store and QSR verticals. Market activity in Mexico, which has been soft for several quarters, improved considerably in the second quarter, and is expected to remain at elevated levels into fiscal 2027.

“In the refueling/c-store vertical we recently onboarded multiple mid-sized projects with new customers, as we expand our service radius beyond larger programs, an approach we expect will contribute to more stable growth over time. Progress around new customer acquisitions is the result of recent investments we’ve made within targeted sales and marketing initiatives, actions that we anticipate will result in further market penetration.

“Importantly, our grocery vertical continues to stabilize, with demand patterns returning to seasonal levels after two years of significant disruption,“ continued Clark. “We continue to collaborate with customers on programs in the planning phase, to be released throughout the next eighteen months, the scope including both refrigerated and non-refrigerated product requirements.

“Customers continue to recognize the value of our broad service capabilities. For example, at one of our refueling/c-store customers, we are currently active at a record 140 sites, effectively positioning us as an extension of their organization. By bringing an integrated solutions offering to our customers, LSI is embedding its products – and technical service capabilities – which strengthens long-term customer relationships and accelerates the potential for cross-selling synergies.

“Entering the second half of fiscal 2026, we anticipate continued year-over-year revenue growth in our Lighting segment, together with resumption of growth within our Display Solutions segment. Exiting the fiscal second quarter, Lighting segment orders were 10% above prior year, resulting in a book-to-bill ratio above 1.0x. For Display Solutions, total orders increased 8%, supporting an improved backlog entering the fiscal third quarter. Specifically, grocery orders increased double-digits in the second quarter versus the prior year quarter reflecting a more normalized release of planned programs.”

Clark concluded, “We remain confident in the secular growth outlook for our key vertical markets, while continuing to position LSI for above-market growth through a differentiated, solutions-based value proposition. During periods of fluctuating industry demand, we’ve demonstrated an ability to drive improved margin realization and remain committed to that focus. Moreover, we continue to retain significant balance sheet flexibility in support of our profitable growth objectives outlined within our Fast Forward plan, utilizing a return-centric approach to capital deployment.”

FISCAL 2026 SECOND QUARTER CONFERENCE CALL

A conference call will be held today at 11:00 A.M. ET to review the Company’s financial results and conduct a question-and-answer session.

A webcast of the conference call and accompanying presentation materials will be available in the Investor Relations section of LSI Industries’ website at www.lsicorp.com. Individuals can also participate by teleconference dial-in. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time to register, download and install any necessary audio software.

Details of the conference call are as follows:

Domestic Live:			877-407-4018
International Live:			201-689-8471

To listen to a replay of the teleconference, which subsequently will be available through February 5, 2026:

Domestic Replay:			844-512-2921
International Replay:			412-317-6671
Conference ID:			13758040

ABOUT LSI INDUSTRIES

Headquartered in Cincinnati, LSI is a publicly held company traded over the NASDAQ Stock Exchange under the symbol LYTS. The company manufactures advanced lighting, graphics, and display solutions across strategic vertical markets. The company’s American-made products, which include non-residential indoor and outdoor lighting, print graphics, digital graphics, refrigerated and custom displays, help create value for customer brands and enhance the consumer experience. LSI also provides comprehensive project management services in support of large-scale product rollouts. The company employs approximately 2,000 people at 19 manufacturing plants in the U.S. and Canada. Additional information about LSI is available at www.lsicorp.com.

FORWARD-LOOKING STATEMENTS

For details on the uncertainties that may cause our actual results to be materially different than those expressed in our forward-looking statements, visit https://investors.lsicorp.com as well as our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q which contain risk factors.

Three Months Ended
December 31

Six Months Ended
December 31

(Unaudited)

2025

2024

(In thousands, except per share data)

2025

2024

147,002

147,734

Net sales

304,251

285,829

109,495

112,804

Cost of products sold

226,534

217,147

Expense on step-up basis of acquired lease

136

Severance costs and restructuring costs

(130

)

37,434

34,861

Gross profit

77,711

68,508

1,002

1,669

Long-term performance based compensation

2,284

2,853

)

Severance costs and restructuring costs

1,558

1,408

Amortization expense of acquired intangible assets

3,112

2,816

200

Acquisition costs

420

Consulting expense: commercial growth initiatives

25,814

23,244

Selling and administrative costs

51,999

45,098

8,865

8,459

Operating Income

19,837

17,590

(103

)

382

Other (income) expense

427

322

573

728

Interest expense, net

1,320

1,603

8,395

7,349

Income before taxes

18,090

15,665

2,047

1,702

Income tax

4,478

3,336

6,348

5,647

Net income

13,612

12,329

Weighted Average Common Shares Outstanding

31,157

29,930

Basic

30,803

29,761

32,004

30,876

Diluted

31,685

30,709

Earnings Per Share

0.20

0.19

Basic

0.44

0.41

0.20

0.18

Diluted

0.43

0.40

	(amounts in thousands)
	Decmber 31		June 30,
		2025		2025
Current assets	$	187,259	$	194,166
Property, plant and equipment, net		30,372		31,154
Other assets		178,675		171,042
Total assets	$	396,306	$	396,362

Current maturities of long-term debt	$	-	$	3,571
Other current liabilities		87,175		93,778
Long-term debt		27,939		44,986
Other long-term liabilities		33,095		23,305
Shareholders' equity		248,097		230,722
	$	396,306	$	396,362

Three Months Ended December 31, 2025 Results

Net sales for the three months ended December 31, 2025, were $147.0 million compared to $147.7 million the three months ended December 31, 2024. Lighting Segment net sales of $66.7 million increased 15% and Display Solutions Segment net sales of $80.3 million decreased 10% from last year’s second quarter net sales. Net income for the three months ended December 31, 2025, was $6.3 million, or $0.20 per share, compared to $5.6 million or $0.18 per share for the three months ended December 31, 2024. Earnings per share represents diluted earnings per share.

Six Months Ended December 31, 2025 Results

Net sales for the six months ended December 31, 2025, were $304.3 million representing a 6% increase from the six months ended December 31, 2024, net sales of $285.8 million. Lighting Segment net sales of $135.7 million increased 16% and Display Solutions Segment net sales of $168.5 million decreased less than 1 percent from last year’s net sales. Net income for the six months ended December 31, 2025, was $13.6 million, or $0.43 per share, compared to $12.3 million or $0.40 per share for the six months ended December 31, 2024. Earnings per share represents diluted earnings per share.

Balance Sheet

The balance sheet at December 31, 2025, included current assets of $187.3 million, current liabilities of $87.2 million and working capital of $100.1 million, which includes cash of $6.4 million. The current ratio was 2.2 to 1. The balance sheet also included shareholders’ equity of $248.1 million and long-term debt of $27.9 million. It is the Company’s priority to continuously generate sufficient cash flow, coupled with an approved credit facility, to adequately fund operations.

Cash Dividend Actions

The Board of Directors declared a regular quarterly cash dividend of $0.05 per share in connection with the second quarter of fiscal 2026, payable February 10, 2026, to shareholders of record as of the close of business on February 2, 2026. The indicated annual cash dividend rate is $0.20 per share. The Board of Directors has adopted a policy regarding dividends which provides that dividends will be determined by the Board of Directors in its discretion based upon its evaluation of earnings both on a GAAP and non-GAAP basis, cash flow requirements, financial condition, debt levels, stock repurchases, future business developments and opportunities, and other factors deemed relevant by the Board.

Non-GAAP Financial Measures

This press release includes adjustments to GAAP operating income, net income, and earnings per share for the three and six months ended December 31, 2025, and 2024. Operating income, net income, and earnings per share, which exclude the impact of long-term performance-based compensation expense, the amortization expense of acquired intangible assets, commercial growth opportunity expense, acquisition costs, the lease expense on the step-up basis of acquired leases, and restructuring and severance costs, are non-GAAP financial measures. We further note that while the amortization expense of acquired intangible assets is excluded from the measures, the revenue of the acquired companies is reflected in the measures and the acquired assets contribute to revenue generation. We exclude these items because we believe they are not representative of the ongoing results of the operations of the business. Also included in this press release are non-GAAP financial measures, including Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA and Adjusted EBITDA), Net Debt to Adjusted EBITDA, Free Cash Flow, and organic sales growth. We believe that these are useful as supplemental measures in assessing the operating performance of our business. These measures are used by our management, including our chief operating decision maker, to evaluate business results, and are frequently referenced by those who follow the Company. These non-GAAP measures may be different from non-GAAP measures used by other companies. In addition, the non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations, in that they do not reflect all amounts associated with our results as determined in accordance with U.S. GAAP. Therefore, these measures should be used only to evaluate our results in conjunction with corresponding GAAP measures. Below is a reconciliation of these non-GAAP measures to net income and earnings per share reported for the periods indicated along with the calculation of EBITDA, Adjusted EBITDA, Free Cash Flow, Net Debt to Adjusted EBITDA, and organic sales growth.

Three Months Ended December 31							Six Months Ended December 31
Three Months Ended December 31						(Unaudited)	Six Months Ended December 31
	2025		2024	% Change		(In thousands, except per share data)		2025			2024	% Change
$	147,002	$	147,734			Net sales	$	304,251		$	285,829	6	%

	8,865		8,459	5	%	Operating income as reported		19,837			17,590	13	%

	1,002		1,669			Long-term performance based compensation		2,284			2,853
	-		81			Consulting expense: commercial growth initiatives		-			81
	200		-			Acquisition costs		420			48
	1,558		1,408			Amortization expense of acquired intangible assets		3,112			2,816
	68		69			Expense on step-up basis of acquired lease		136			136
	-		-			Severance costs and Restructuring costs		(71	)		60

$	11,693	$	11,686	-		Operating income as adjusted	$	25,718		$	23,584	9	%

$	6,348	$	5,647	12	%	Net income as reported	$	13,612		$	12,329	10	%

$	8,438	$	7,996	6	%	Net income as adjusted	$	18,169		$	15,977	14	%

$	0.20	$	0.18	8	%	Earnings per share (diluted) as reported	$	0.43		$	0.40	7	%

$	0.26	$	0.26	2	%	Earnings per share (diluted) as adjusted	$	0.57		$	0.52	10	%

Three Months Ended										Six Months Ended
December 31										December 31
	2025				2024				(In thousands, except per share data)		2025					2024
		Diluted EPS					Diluted EPS						Diluted EPS					Diluted EPS
		Diluted EPS					Diluted EPS		Reconciliation of net income to adjusted net income				Diluted EPS					Diluted EPS
$	6,348	$	0.20	$	5,647		$	0.18	Net income as reported	$	13,612		$	0.43	$	12,329		$	0.40

	713		0.02		1,294			0.04	Long-term performance based compensation		1,667		$	0.05		2,161			0.07

	1,159		0.04		1,090			0.04	Amortization expense of acquired intangible assets		2,276		$	0.07		2,132			0.07

	-		-		62			-	Consulting expense: commercial growth initiatives		-		$	-		62			-

	-		-		-			-	Severance costs and Restructuring costs		(53	)	$	-		45			-

	142	$	-		-			-	Acquisition costs		307		$	0.01		50			-

	48		-		53			-	Expense on step-up basis of acquired lease		99		$	-		103			0.01

	28		-		-			-	Foreign currency transaction loss on intercompany loan		354		$	0.01		-			-

	-	$	-		(150	)		-	Tax rate difference between reported and adjusted net income		(93	)	$	-		(905	)		(0.03	)

$	8,438	$	0.26	$	7,996		$	0.26	Net income adjusted	$	18,169		$	0.57	$	15,977		$	0.52

The foreign currency transaction loss on intercompany loan relates to an intercompany loan established as a result of the acquisition Canada’s Best Holdings as a method to repatriate cash generated in Canada to the Unites States without being subject to a withholding penalty.

Three Months Ended
December 31

(Unaudited; In thousands)

Six Months Ended
December 31

Net Income to Adjusted EBITDA

2025

2024

% Change

2025

2024

% Change

6,348

5,647

Net income as reported

13,612

12,329

2,047

1,702

Income tax

4,478

3,336

573

728

Interest expense, net

1,320

1,603

(103

)

382

Other (income) expense

427

322

8,865

8,459

Operating Income as reported

19,837

17,590

3,227

3,018

Depreciation and amortization

6,427

5,958

12,092

11,477

EBITDA

26,264

23,548

1,002

1,669

Long-term performance based compensation

2,284

2,853

Consulting expense: commercial growth initiatives

200

Acquisition costs

420

Expense on step-up basis of acquired lease

136

Severance costs and Restructuring costs

(71

)

13,362

13,296

Adjusted EBITDA

29,033

26,726

9.1

9.0

Adjusted EBITDA as a percentage of sales

9.5

9.4

Three Months Ended
December 31

(Unaudited; In thousands)

Six Months Ended
December 31

Free Cash Flow

2025

2024

% Change

2025

2024

% Change

24,984

9,891

153

Cash flow from operations

25,659

21,737

(1,684

)

(1,066

)

Capital expenditures

(2,651

)

(1,825

)

23,300

8,825

164

Free cash flow

23,008

19,912

Net Debt to Adjusted EBITDA Ratio	December 31,
(amounts in thousands)		2025			2024
Current maturity of debt	$	-		$	3,571
Long-term debt		27,939			34,615
Total debt	$	27,939		$	38,186
Less: cash		(6,407	)		(4,712	)
Net debt	$	21,532		$	33,474
Adjusted EBITDA - trailing twelve months	$	57,286		$	52,006
Net debt to adjusted EBITDA ratio		0.4			0.6

	Second Quarter
Organic compared to Inorganic Sales	Q2 2026		Q2 2025		% Variance

Lighting Segment	$	66,673	$	58,210	15	%
Display Solutions Segment
- Comparable Display Solutions Sales		74,001		89,524	-17	%
- Canada's Best		6,328		-
Total Display Solutions Sales	$	80,329	$	89,524	-10	%
Total net sales	$	147,002	$	147,734	-
Less:
Canada's Best Holdings		6,328		-
Total organic net sales	$	140,674	$	147,734	-5	%


	Year-to-Date
Organic compared to Inorganic Sales	Q2 2026		Q2 2025		% Variance

Lighting Segment	$	135,726	$	116,646	16	%
Display Solutions Segment
- Comparable Display Solutions Sales		153,278		169,183	-9	%
- Canada's Best		15,247		-
Total Display Solutions Sales	$	168,525	$	169,183	-
Total net sales	$	304,251	$	285,829	6	%
Less:
Canada's Best Holdings		15,247		-
Total organic net sales	$	289,004	$	285,829	1	%