LSI Industries: Royston adds $72.4M to quarterly sales
Royston contributed most of Display Solutions’ growth, while total organic net sales declined 2%.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Filing Summary
LSI Industries Inc. reported $225.9 million in net sales for the quarter ended September 30, 2026, up 44% from $157.2 million a year earlier. Display Solutions sales rose 83% to $161.0 million, with Royston contributing most of the increase; excluding Royston, Display Solutions sales increased 1%, while total organic sales declined 2%. Lighting sales fell 6% to $64.8 million amid soft demand across commercial and industrial markets.
Operating income rose 29% to $14.2 million, while net income was $7.1 million versus $7.3 million and diluted EPS was $0.19 versus $0.23. Operating cash flow was $15.2 million, compared with $0.7 million. Royston contributed $72.4 million in sales and $4.9 million in operating income from July 1, 2026, through September 30, 2026. At September 30, total debt was $240.2 million, with $109.8 million available under the credit facility; the company reported compliance with all loan covenants. The board declared a $0.05-per-share quarterly dividend payable November 24, 2026, to shareholders of record November 16, 2026.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNet sales rose 44% to $225.9 million in the September 2026 quarter.
- Moderate pointOperating income increased 29% to $14.2 million year over year.
- Moderate pointOperating cash flow was $15.2 million, versus $0.7 million a year earlier.
- Minor pointRoyston contributed $72.4 million in sales and $4.9 million in operating income during the quarter.
Negative
- Moderate pointLighting segment sales declined 6% to $64.8 million amid soft commercial and industrial demand.
- Moderate pointDiluted EPS was $0.19, compared with $0.23 in the prior-year quarter.
Filing Explained
Operating cash flow lowered debt by fifteen point seven million dollars, while the completed acquisition included five million dollars in LSI shares.
This 10-Q reports that LSI Industries completed the Royston acquisition on
LSI says it funded the purchase with cash on hand, about
LSI says operating cash flow enabled it to reduce debt by
The credit agreement’s maximum net-leverage limit steps down to 3.75-to-1 for the quarter ending
Key Figures
Key Terms
performance obligation financial
bill-and-hold arrangements financial
Net debt to adjusted EBITDA financial
maximum net leverage ratio financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much revenue did LYTS report for the September 2026 quarter?
How much did Royston contribute to LYTS's quarterly results?
What quarterly dividend did LYTS declare?
What are LYTS's maximum net leverage covenant limits?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO ________________. |
Commission File No.
LSI Industries Inc. |
(Exact name of registrant as specified in its charter) |
| ||
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
| ||
(Address of principal executive offices) |
| (Zip Code) |
( | ||
Registrant’s telephone number, including area code) | ||
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by checkmark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Table of Contents
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Emerging growth company | |
Non-accelerated filer ☐ | Smaller reporting company |
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of October 30, 2026, there were
Table of Contents
LSI INDUSTRIES INC.
FORM 10-Q
FOR THE QUARTER ENDED September 30, 2026
INDEX
PART I. FINANCIAL INFORMATION |
4 |
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ITEM 1. |
FINANCIAL STATEMENTS |
4 |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
4 |
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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
5 |
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CONDENSED CONSOLIDATED BALANCE SHEETS (ASSETS) |
6 |
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CONDENSED CONSOLIDATED BALANCE SHEETS (LIABILITIES & SHAREHOLDERS' EQUITY) |
7 |
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CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY |
8 |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
10 |
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
11 |
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ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
26 |
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ITEM 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
33 |
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ITEM 4. |
CONTROLS AND PROCEDURES |
33 |
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PART II. OTHER INFORMATION |
34 |
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ITEM 5. |
OTHER INFORMATION |
34 |
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ITEM 6. |
EXHIBITS |
34 |
|
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|
SIGNATURES |
35 |
|
Page 3
Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LSI INDUSTRIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data) |
| Three Months Ended |
| |||||
|
| September 30, |
| |||||
|
| 2026 |
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| 2025 |
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Net sales |
| $ |
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| $ |
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Cost of products and services sold |
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Gross profit |
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Selling and administrative expenses |
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Operating income |
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Interest expense |
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Other expense |
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Income before income taxes |
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Income tax expense |
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Net income |
| $ |
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| $ |
| ||
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Earnings per common share (see Note 5) |
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Basic |
| $ |
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| $ |
| ||
Diluted |
| $ |
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| $ |
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Weighted average common shares outstanding |
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Basic |
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Diluted |
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The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.
Page 4
Table of Contents
LSI INDUSTRIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands) |
| Three Months Ended |
| |||||
|
| September 30, |
| |||||
|
| 2026 |
|
| 2025 |
| ||
|
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| |
|
|
| |
Net income |
| $ |
|
| $ |
| ||
|
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| |
|
|
| |
Foreign currency translation adjustment |
|
| ( | ) |
|
| ( | ) |
|
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| |
|
|
| |
Comprehensive income |
| $ |
|
| $ |
| ||
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.
Page 5
Table of Contents
LSI INDUSTRIES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except shares) |
| September 30, |
|
| June 30, |
| ||
|
| 2026 |
|
| 2026 |
| ||
|
|
|
| |
|
|
| |
ASSETS |
|
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| |
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| |
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| |
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| |
Current assets |
|
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| |
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| |
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| |
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| |
Cash and cash equivalents |
| $ |
|
| $ |
| ||
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| |
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| |
Accounts receivable, less allowance for credit losses of $ and $, respectively |
|
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Inventories |
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Refundable income tax |
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Other current assets |
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Total current assets |
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Property, plant and equipment, at cost |
|
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| |
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Land |
|
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Buildings |
|
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Machinery and equipment |
|
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Construction in progress |
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Less accumulated depreciation |
|
| ( | ) |
|
| ( | ) |
Net property, plant and equipment |
|
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| |
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Goodwill |
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Intangible assets, net |
|
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| |
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| |
Operating lease right-of-use assets |
|
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| |
|
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| |
Other long-term assets, net |
|
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| ||
|
|
|
| |
|
|
| |
Total assets |
| $ |
|
| $ |
| ||
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.
Page 6
Table of Contents
LSI INDUSTRIES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except shares) |
| September 30, |
|
| June 30, |
| ||
|
| 2026 |
|
| 2026 |
| ||
|
|
|
| |
|
|
| |
LIABILITIES & SHAREHOLDERS' EQUITY |
|
|
| |
|
|
| |
|
|
|
| |
|
|
| |
Current liabilities |
|
|
| |
|
|
| |
Current maturities of long-term debt |
| $ |
|
| $ |
| ||
Accounts payable |
|
|
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|
|
| ||
Accrued expenses |
|
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| ||
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| |
|
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| |
Total current liabilities |
|
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| ||
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| |
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| |
Long-term debt, less current maturities |
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| |
|
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| |
Operating lease liabilities |
|
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| |
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| |
Other long-term liabilities |
|
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| ||
|
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| |
|
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| |
Deferred tax liabilities |
|
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| ||
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| |
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| |
Commitments and contingencies (Note 13) |
|
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| |
|
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Shareholders' Equity |
|
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| |
|
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| |
Preferred shares, par value; Authorized shares, issued |
|
|
|
|
|
| ||
Common shares, par value; Authorized shares; Outstanding and shares, respectively |
|
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|
|
| ||
Treasury shares, without par value |
|
| ( | ) |
|
| ( | ) |
Key Executive Compensation |
|
|
|
|
|
| ||
Retained earnings |
|
|
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|
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| ||
Accumulated other comprehensive income |
|
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| ||
|
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| |
|
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| |
Total shareholders' equity |
|
|
|
|
|
| ||
|
|
|
| |
|
|
| |
Total liabilities & shareholders' equity |
| $ |
|
| $ |
| ||
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.
Page 7
Table of Contents
LSI INDUSTRIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
| Accumulated |
|
|
|
| | |
|
| Common Shares |
|
| Treasury Shares |
|
| Key Executive |
|
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| |
| Other |
|
| Total |
| |||||||||||||
(In thousands, except per share data) |
| Number Of |
|
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|
| |
| Number Of |
|
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| |
| Compensation |
|
| Retained |
|
| Comprehensive |
|
| Shareholders' |
| ||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Amount |
|
| Earnings |
|
| Income |
|
| Equity |
| ||||||||
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| |
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| |
|
|
| |
Balance at June 30, 2025 |
|
|
|
| $ |
|
|
| ( | ) |
| $ | ( | ) |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||||
|
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| |
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| |
|
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| |
|
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| |
|
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| |
|
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| |
|
|
| |
|
|
| |
Net Income |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Other comprehensive (loss) |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||
Board stock compensation |
|
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| ||||||||
ESPP stock awards |
|
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|
|
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|
|
|
|
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| ||||||||
Restricted stock units issued, net of shares withheld for tax withholdings |
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
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|
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| ||||||||
Shares issued for deferred compensation |
|
|
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|
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|
|
|
|
|
|
|
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|
|
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| ||||||||
Activity of treasury shares, net |
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
| ( | ) | |||||
Deferred stock compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Stock-based compensation expense |
|
|
| |
|
|
|
|
| - |
|
|
|
|
|
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|
|
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|
|
|
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| ||||||
Stock options exercised, net |
|
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| ||||||||
Dividends — $ per share |
|
| - |
|
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|
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| - |
|
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|
|
|
|
|
| ( | ) |
|
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| ( | ) | ||||
|
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| |
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| |
|
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| |
|
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| |
|
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| |
|
|
| |
|
|
| |
Balance at September 30, 2025 |
|
|
|
| $ |
|
|
| ( | ) |
| $ | ( | ) |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||||
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.
Page 8
Table of Contents
LSI INDUSTRIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
|
|
|
| |
|
|
| |
|
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| |
|
|
| |
|
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| |
|
|
| |
| Accumulated |
|
|
|
| | |
|
| Common Shares |
|
| Treasury Shares |
|
| Key Executive |
|
|
|
| |
| Other |
|
| Total |
| |||||||||||||
(In thousands, except per share data) |
| Number Of |
|
|
|
| |
| Number Of |
|
|
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| |
| Compensation |
|
| Retained |
|
| Comprehensive |
|
| Shareholders' |
| ||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Amount |
|
| Earnings |
|
| Income |
|
| Equity |
| ||||||||
|
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| |
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| |
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| |
|
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| |
|
|
| |
|
|
| |
Balance at June 30, 2026 |
|
|
|
| $ |
|
|
| ( | ) |
| $ | ( | ) |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||||
|
|
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| |
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| |
|
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| |
|
|
| |
|
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| |
|
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| |
|
|
| |
|
|
| |
Net Income |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Other comprehensive (loss) |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||
Board stock compensation |
|
|
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|
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|
|
|
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|
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|
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|
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| ||||||||
ESPP stock awards |
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Restricted stock units issued, net of shares withheld for tax withholdings |
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ) | |||||||
Shares issued for deferred compensation |
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| ||||||||
Activity of treasury shares, net |
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
| ( | ) | ||||||
Deferred stock compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Stock-based compensation expense |
|
| 283 |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Stock options exercised, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Dividends — $ per share |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | ||||
|
|
|
| |
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| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Balance at September 30, 2026 |
|
|
|
| $ |
|
|
| ( | ) |
| $ | ( | ) |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||||
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.
Page 9
Table of Contents
LSI INDUSTRIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| Three Months Ended |
| |||||
(In thousands) |
| September 30, |
| |||||
|
| 2026 |
|
| 2025 |
| ||
Cash Flows from Operating Activities |
|
|
| |
|
|
| |
Net income |
| $ |
|
| $ |
| ||
Non-cash items included in net income |
|
|
| |
|
|
| |
Depreciation and amortization |
|
|
|
|
|
| ||
Deferred income taxes |
|
|
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|
| ||
Deferred compensation plan |
|
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| ||
Stock compensation expense |
|
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| ||
ESPP discount |
|
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| ||
Board stock compensation |
|
|
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| ||
Loss on disposition of fixed assets |
|
| ( | ) |
|
|
| |
Allowance for credit losses |
|
|
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|
|
| ||
Inventory obsolescence reserve |
|
| ( | ) |
|
| ( | ) |
|
|
|
| |
|
|
| |
Changes in certain assets and liabilities: |
|
|
| |
|
|
| |
Accounts receivable |
|
|
|
|
| ( | ) | |
Inventories |
|
| ( | ) |
|
|
| |
Refundable income taxes |
|
|
|
|
| ( | ) | |
Accounts payable |
|
|
|
|
| ( | ) | |
Accrued expenses and other |
|
| ( | ) |
|
| ( | ) |
Customer prepayments |
|
| ( | ) |
|
|
| |
Net cash flows provided by operating activities |
|
|
|
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| ||
|
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| |
|
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| |
Cash Flows from Investing Activities |
|
|
| |
|
|
| |
Proceeds from the sale of fixed assets |
|
|
|
|
|
| ||
Acquisition of Royston (net of cash acquired and shares used in purchase) |
|
|
|
|
|
| ||
Acquisition of business |
|
|
|
|
|
| ||
Purchases of property, plant, and equipment |
|
| ( | ) |
|
| ( | ) |
Net cash flows provided by (used in) investing activities |
|
|
|
|
| ( | ) | |
|
|
|
| |
|
|
| |
Cash Flows from Financing Activities |
|
|
| |
|
|
| |
Payments on long-term debt |
|
| ( | ) |
|
| ( | ) |
Borrowings on long-term debt |
|
|
|
|
|
| ||
Cash dividends paid |
|
| ( | ) |
|
| ( | ) |
Shares withheld on employees' taxes |
|
| ( | ) |
|
|
| |
Proceeds from stock option exercises |
|
|
|
|
|
| ||
Net cash flows (used in) provided by financing activities |
|
| ( | ) |
|
|
| |
|
|
|
| |
|
|
| |
Change related to foreign currency |
|
| ( | ) |
|
| ( | ) |
(Decrease) / increase in cash and cash equivalents |
|
| ( | ) |
|
|
| |
Cash and cash equivalents at beginning of period |
|
|
|
|
|
| ||
|
|
|
| |
|
|
| |
Cash and cash equivalents at end of period |
| $ |
|
| $ |
| ||
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.
Page 10
Table of Contents
LSI INDUSTRIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The interim condensed consolidated financial statements are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, and rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the interim financial statements include all normal adjustments and disclosures necessary to present fairly the Company’s financial position as of September 30, 2026, the results of its operations for the three-month periods ended September 30, 2026, and 2025, and its cash flows for the three-month periods ended September 30, 2026, and 2025. These statements should be read in conjunction with the financial statements and footnotes included in the fiscal 2026 Annual Report on Form 10-K. Financial information as of June 30, 2026, has been derived from the Company’s audited consolidated financial statements.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation:
A summary of the Company’s significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company’s fiscal 2026 Annual Report on Form 10-K.
Revenue Recognition:
The Company recognizes revenue when it satisfies the performance obligation in its customer contracts or purchase orders. Most of the Company’s products have a single performance obligation which is satisfied at a point in time when control is transferred to the customer. Control is generally transferred at the time of shipment when title and risk of ownership passes to the customer. For customer contracts with multiple performance obligations, the Company allocates the transaction price and any discounts to each performance obligation based on relative standalone selling prices. Payment terms are typically within 30 to 90 days from the shipping date, depending on the terms with the customer. The Company offers standard warranties that do not represent separate performance obligations.
Installation is a separate performance obligation, except for the Company’s digital signage products. For digital signage products, installation is not a separate performance obligation as the product and installation is the combined item promised in digital signage contracts. The Company is not always responsible for installation of products it sells and has no post-installation responsibilities other than standard warranties.
A number of the Company's display solutions and select lighting products are customized for specific customers. As a result, these customized products do not have an alternative use. For these products, the Company has a legal right to payment for performance to date and generally does not accept returns on these items. The measurement of performance is based upon cost plus a reasonable profit margin for work completed. Because there is no alternative use and there is a legal right to payment, the Company transfers control of the item as the item is being produced and therefore recognizes revenue over time. The customized product types are as follows:
| ● | Customer Main Identification (MID) signage, print / digital graphics, and customer specific metal and millwork products |
| ● | Electrical components based on customer specifications |
The Company also offers installation services for its display solutions elements and select lighting products. Installation revenue is recognized over time as the customer simultaneously receives and consumes the benefits provided through the installation process.
For these customized products and installation services, revenue is recognized using a cost-based input method: recognizing revenue and gross profit as work is performed based on the relationship between the actual cost incurred and the total estimated cost for the performance obligation.
Page 11
Table of Contents
On occasion, the Company enters into bill-and-hold arrangements on a limited basis. Each bill-and-hold arrangement is reviewed and revenue is recognized only when certain criteria have been met: (i) the customer has requested delayed delivery and storage of the products by the Company because the customer wants to secure a supply of the products but lacks storage space; (ii) the risk of ownership has passed to the customer; (iii) the products are segregated from the Company’s other inventory items held for sale; (iv) the products are ready for shipment to the customer; and (v) the Company does not have the ability to use the products or direct them to another customer.
Disaggregation of Revenue
The Company disaggregates the revenue from contracts with customers by the timing of revenue recognition because the Company believes it best depicts the nature, amount, and timing of its revenue and cash flows. The table below presents a reconciliation of the disaggregation by reportable segments:
|
| Three Months Ended |
| |||||
(In thousands) |
| September 30, 2026 |
| |||||
|
|
|
| |
| Display |
| |
|
| Lighting |
|
| Solutions |
| ||
|
| Segment |
|
| Segment |
| ||
Timing of revenue recognition |
|
|
| |
|
|
| |
Products and services transferred at a point in time |
| $ |
|
| $ |
| ||
Products and services transferred over time |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
Type of Product and Services |
|
|
| |
|
|
| |
Lighting, poles, electronic components |
| $ |
|
| $ |
| ||
Signage and display Products |
|
|
|
|
|
| ||
Project management, installation services, shipping and handling |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
|
| Three Months Ended |
| |||||
(In thousands) |
| September 30, 2025 |
| |||||
|
|
|
| |
| Display |
| |
|
| Lighting |
|
| Solutions |
| ||
|
| Segment |
|
| Segment |
| ||
Timing of revenue recognition |
|
|
| |
|
|
| |
Products and services transferred at a point in time |
| $ |
|
| $ |
| ||
Products and services transferred over time |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
Type of Product and Services |
|
|
| |
|
|
| |
Lighting, poles, electronic components |
| $ |
|
| $ |
| ||
Signage and display Products |
|
|
|
|
|
| ||
Project management, installation services, shipping and handling |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
Practical Expedients and Exemptions
| ● | The Company’s contracts with customers have an expected duration of one year or less, as such, the Company applies the practical expedient to expense sales commissions as incurred and has omitted disclosures on the amount of remaining performance obligations. |
| ● | Shipping costs that are not material in context of the delivery of products are expensed as incurred. |
| ● | The Company’s accounts receivable balance represents the Company’s unconditional right to receive payment from its customers with contracts. Payments are generally due within 30 to 90 days of completion of the performance obligation and invoicing; therefore, payments do not contain significant financing components. |
| ● | The Company collects sales tax and other taxes concurrent with revenue-producing activities which are excluded from revenue. Shipping and handling costs are treated as fulfillment activities and included in cost of products and services sold on the Consolidated Statements of Operations. |
Page 12
Table of Contents
New Accounting Pronouncements:
In November 2024, the FASB issued Accounting Standards Update 2024-03, Income Statement – Reporting Comprehensive Income: Disaggregation of Income Statement Expenses (ASU 2024-03). This ASU requires disaggregated income statement expense disclosures on an annual and interim basis, including inventory purchases, employee compensation, depreciation, and intangible asset amortization for each income statement line item that contains these expenses. The standard also requires disclosure of total selling expenses on an annual and interim basis, and the definition of those expenses disclosed annually. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, and may be applied prospectively or retrospectively. The Company is evaluating the impact of ASU 2024-03 and expects the standard will only impact its disclosures with no material impact to the consolidated financial statements
NOTE 3 — ACQUISITION OF ROYSTON GROUP
On February 20, 2026 the Company entered into an agreement and a plan of merger to acquire SRR Holdings, Inc. (Royston) which was completed on March 24, 2026. Royston is a leading U.S.-based designer and manufacturer of cabinetry and store fixtures, refrigerated and heated cases, and signage for multiple end markets. Royston’s customer base spans across large, attractive end-markets of convenience, grocery and gas stations and other retail. Royston was acquired for $
The Company accounted for this transaction as a business combination. The Company has allocated the purchase price of $
|
| March 24, 2026 |
|
| Measurement |
|
| March 24, 2026 |
| |||
(In thousands) |
| as initially reported |
|
| period adjustments |
|
| as adjusted |
| |||
Cash and cash equivalents |
| $ |
|
| $ |
|
| $ |
| |||
Accounts receivable |
|
|
|
|
| ( | ) |
|
|
| ||
Inventory |
|
|
|
|
| ( | ) |
|
|
| ||
Property, plant and equipment |
|
|
|
|
|
|
|
|
| |||
Prepaids expenses and other current assets |
|
|
|
|
|
|
|
|
| |||
Income tax provision refund |
|
|
|
|
|
|
|
|
| |||
Operating lease right-of-use assets |
|
|
|
|
|
|
|
|
| |||
Other assets |
|
|
|
|
|
|
|
|
| |||
Intangible assets |
|
|
|
|
|
|
|
|
| |||
Accounts payable |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Accrued expenses |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Operating lease liabilities |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Other long-term liabilities |
|
|
|
|
|
|
|
|
| |||
Deferred tax liability |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Identifiable Assets |
|
|
|
|
|
|
|
|
| |||
Goodwill |
|
|
|
|
| ( | ) |
|
|
| ||
Net Purchase Consideration |
| $ |
|
| $ | ( | ) |
| $ |
| ||
The gross amount of accounts receivable is $
Page 13
Table of Contents
Goodwill recorded from the acquisition of Royston is attributable to the impact of the positive cash flow from Royston in addition to expected synergies from the business combination. As a result of the acquisition, goodwill of $
|
| Estimated Fair |
| Estimated Useful | ||
(in thousands) |
| Value |
| Life (Years) | ||
|
|
|
| |
|
|
Tradename |
| $ |
| Indefinite | ||
Technology assets |
|
|
|
| ||
Customer relationships |
|
|
|
| ||
|
| $ |
|
|
| |
Royston’s post-acquisition results of operations for the period from July 1, 2026, through September 30, 2026, are included in the Company’s Condensed Consolidated Statements of Operations. Since the acquisition date, net sales of Royston for the period from July 1, 2026, through September 30, 2026, were $
Pro Forma Impact of the Acquisition of Royston (Unaudited)
The following table represents unaudited pro forma results of operations and gives effect to the acquisition of Royston as if the transaction had occurred on July 1, 2024. The unaudited pro forma results of operations have been prepared for comparative purposes only and are not necessarily indicative of what would have occurred had the business combination been completed at the beginning of the period or the results that may occur in the future. Furthermore, the unaudited pro forma financial information does not reflect the impact of any synergies or operating efficiencies resulting from the acquisition of Royston.
The unaudited pro forma financial information for the three months ended September 30, 2025, is prepared using the acquisition method of accounting and has been adjusted to reflect the pro forma events that are: (1) directly attributable to the acquisition; (2) factually supportable; and (3) expected to have a continuing impact on the combined results. The unaudited pro forma operating income for the three months ended September 30, 2025 of $
| | Three Months Ended | | |
(in thousands; unaudited) | | September 30, | | |
| | 2025 | | |
Sales | | $ | | |
| | | | |
Gross Profit | | $ | | |
| | | | |
Operating Income | | $ | | |
Page 14
Table of Contents
NOTE 4 - SEGMENT REPORTING INFORMATION
The accounting guidance on Segment Reporting establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in financial statements. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (the Company’s Chief Executive Officer or “CODM”) in making decisions on how to allocate resources and assess performance. The Company’s operating segments are Lighting and Display Solutions, with one executive leadership team reporting directly to the CODM with responsibilities for managing the performance across the segments.
The Company’s methods for measuring profitability under GAAP on a reportable segment basis and used by the CODM to assess performance is adjusted net income. These measurements are used to monitor performance compared to prior periods and forecasted results. The CODM does not look at disaggregated expenses at the segment level. The CODM does review expenses on a consolidated basis which is consistent with the categories of expense reported on the consolidated statements of operations.
The Lighting Segment includes non-residential outdoor and indoor lighting fixtures utilizing LED light sources that have been fabricated and assembled for the Company’s markets, primarily the refueling and convenience store markets, parking lot and garage markets, quick-service restaurant market, retail and grocery store markets, the automotive market, the warehouse market, and the sports court and field market. The Company also services lighting product customers through the commercial and industrial project, stock and flow, and renovation channels. In addition to the manufacture and sale of lighting fixtures, the Company offers a variety of lighting controls to complement its lighting fixtures which include sensors, photocontrols, dimmers, motion detection and Bluetooth systems. The Lighting Segment also includes the design, engineering and manufacturing of electronic circuit boards, assemblies and sub-assemblies which are sold directly to customers.
The Display Solutions Segment manufactures, sells and installs exterior and interior visual image and display elements, including printed graphics, structural graphics, digital signage, non-digital signage, menu board systems, millwork and metal display fixtures, refrigerated displays, heated displays, food equipment, countertops, and other custom display elements. These products are used in visual image programs in several markets including the refueling and convenience store markets, quick-service and casual restaurant market, retail and grocery store, and other retail markets. The Company accesses its customers primarily through a direct sale model utilizing its own sales force. Sales through distribution represent a small portion of Display Solutions sales. The Display Solutions Segment also provides a variety of project management services to complement our display elements, such as installation management, site surveys, permitting, and content management which are offered to our customers to support our digital signage.
The Company’s corporate administration activities are reported in the Unallocated corporate expenses net of tax line item. These activities primarily include expense related to certain corporate officers and support staff, the Company’s internal audit staff, expense related to the Company’s Board of Directors, equity compensation expense for various equity awards granted to corporate administration employees, certain consulting expenses, investor relations activities, and a portion of the Company’s legal, auditing, and professional fee expenses. Corporate identifiable assets primarily consist of cash, invested cash (if any), refundable income taxes (if any), and deferred income taxes.
There were
Page 15
Table of Contents
Summarized financial information for the Company’s operating segments is provided for the indicated periods and as of September 30, 2026, and September 30, 2025:
(In thousands) |
| Three Months Ended |
| |||||||||
|
| September 30, 2026 |
| |||||||||
|
|
|
| |
|
|
| |
| Segment |
| |
|
| Lighting |
|
| Display |
|
| Total |
| |||
Total sales |
| $ |
|
| $ |
|
| $ |
| |||
Inter-segment sales |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Net sales |
|
|
|
|
|
|
|
|
| |||
|
|
|
| |
|
|
| |
|
|
| |
Other segment items * |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
| |
|
|
| |
|
|
| |
Adjusted net income |
|
|
|
|
|
|
|
|
| |||
|
|
|
| |
|
|
| |
|
|
| |
Unallocated corporate expenses |
|
|
| |
|
|
| |
|
| ( | ) |
Interest expense |
|
|
| |
|
|
| |
|
| ( | ) |
Long-term performance based compensation |
|
|
| |
|
|
| |
|
| ( | ) |
Amortization expense on acquired intangible assets |
|
|
| |
|
|
| |
|
| ( | ) |
Restructuring / severance costs |
|
|
| |
|
|
| |
|
| ( | ) |
Acquisition costs |
|
|
| |
|
|
| |
|
| ( | ) |
on the step-up basis of acquired leases |
|
|
| |
|
|
| |
|
| ( | ) |
Foreign currency transaction loss on intercompany loan |
|
|
| |
|
|
| |
|
| ( | ) |
Tax rate difference between reported and adjusted net income |
|
|
| |
|
|
| |
|
| ( | ) |
|
|
|
| |
|
|
| |
|
|
| |
Net income |
|
|
| |
|
|
| |
| $ |
| |
* Costs of products and services sold, selling and administrative expenses, other income and expense, and income tax expense |
(In thousands) |
| Three Months Ended |
| |||||||||
|
| September 30, 2025 |
| |||||||||
|
|
|
| |
|
|
| |
| Segment |
| |
|
| Lighting |
|
| Display |
|
| Total |
| |||
Total sales |
| $ |
|
| $ |
|
| $ |
| |||
Inter-segment sales |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Net sales |
|
|
|
|
|
|
|
|
| |||
|
|
|
| |
|
|
| |
|
|
| |
Other segment items * |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
| |
|
|
| |
|
|
| |
Adjusted net income |
|
|
|
|
|
|
|
|
| |||
|
|
|
| |
|
|
| |
|
|
| |
Unallocated corporate expenses |
|
|
| |
|
|
| |
|
| ( | ) |
Interest expense |
|
|
| |
|
|
| |
|
| ( | ) |
Long-term performance based compensation |
|
|
| |
|
|
| |
|
| ( | ) |
Amortization expense on acquired intangible assets |
|
|
| |
|
|
| |
|
| ( | ) |
Restructuring / severance costs |
|
|
| |
|
|
| |
|
|
| |
Acquisition costs |
|
|
| |
|
|
| |
|
| ( | ) |
Lease expense on the step-up basis of acquired leases |
|
|
| |
|
|
| |
|
| ( | ) |
Foreign currency transaction loss on intercompany loan |
|
|
| |
|
|
| |
|
| ( | ) |
Tax rate difference between reported and adjusted net income |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| |
|
|
| |
|
|
| |
Net income |
|
|
| |
|
|
| |
| $ |
| |
* Costs of products and services sold, selling and administrative expenses, other income and expense, and income tax expense |
Page 16
Table of Contents
(In thousands) |
| Three Months Ended |
| |||||
|
| September 30, |
| |||||
|
| 2026 |
|
| 2025 |
| ||
Capital Expenditures: |
|
|
| |
|
|
| |
Lighting Segment |
| $ |
|
| $ |
| ||
Display Solutions Segment |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
Total segment capital expenditures |
| $ |
|
| $ |
| ||
Other unallocated capital expenditures |
|
|
|
|
|
| ||
Consolidated capital expenditures |
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
Income Tax Expense: |
|
|
| |
|
|
| |
Lighting Segment |
| $ |
|
| $ |
| ||
Display Solutions Segment |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
Total segment income tax expense |
| $ |
|
| $ |
| ||
Other unallocated income tax (credit) |
|
| ( | ) |
|
| ( | ) |
Consolidated income tax expense |
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
Depreciation and Amortization: |
|
|
| |
|
|
| |
Lighting Segment |
| $ |
|
| $ |
| ||
Display Solutions Segment |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
Total segment depreciation and amortization |
| $ |
|
| $ |
| ||
Other unallocated depreciation and amortization |
|
|
|
|
|
| ||
Consolidated depreciation and amortization |
| $ |
|
| $ |
| ||
|
| September 30, 2026 |
|
| June 30, 2026 |
| ||
Identifiable Assets: |
|
|
| |
|
|
| |
Lighting Segment |
| $ |
|
| $ |
| ||
Display Solutions Segment |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
Total Segment assets |
| $ |
|
| $ |
| ||
Corporate and Eliminations |
|
|
|
|
|
| ||
Consolidated assets |
| $ |
|
| $ |
| ||
The segment net sales reported above represent sales to external customers. Identifiable assets are those assets used by each segment in its operations.
Page 17
Table of Contents
NOTE 5 - EARNINGS PER COMMON SHARE
The following table presents the amounts used to compute basic and diluted earnings per common share, as well as the effect of dilutive potential common shares on weighted average shares outstanding:
(in thousands, except per share data) |
| Three Months Ended |
| |||||
|
| September 30, |
| |||||
|
| 2026 |
|
| 2025 |
| ||
|
|
|
| |
|
|
| |
BASIC EARNINGS PER SHARE |
|
|
| |
|
|
| |
|
|
|
| |
|
|
| |
Net Income |
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
Weighted average shares outstanding during the period, net of treasury shares |
|
|
|
|
|
| ||
|
|
|
| |
|
|
| |
Weighted average vested restricted stock units outstanding |
|
|
|
|
|
| ||
|
|
|
| |
|
|
| |
Weighted average shares outstanding in the Deferred Compensation Plan during the period |
|
|
|
|
|
| ||
Weighted average shares outstanding |
|
|
|
|
|
| ||
|
|
|
| |
|
|
| |
Basic income per share |
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
DILUTED EARNINGS PER SHARE |
|
|
| |
|
|
| |
|
|
|
| |
|
|
| |
Net Income |
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
Weighted average shares outstanding |
|
|
| |
|
|
| |
|
|
|
| |
|
|
| |
Basic |
|
|
|
|
|
| ||
|
|
|
| |
|
|
| |
Effect of dilutive securities (a): |
|
|
| |
|
|
| |
Impact of common shares to be issued under stock option plans, and contingently issuable shares, if any |
|
|
|
|
|
| ||
Weighted average shares outstanding |
|
|
|
|
|
| ||
|
|
|
| |
|
|
| |
Diluted income per share |
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
Anti-dilutive securities (b) |
|
|
|
|
|
| ||
| (a) | Calculated using the “Treasury Stock” method as if dilutive securities were exercised and the funds were used to purchase common shares at the average market price during the period. |
| (b) | Anti-dilutive securities were excluded from the computation of diluted net income per share for the three months ended September 30, 2026, because the exercise price was greater than the average fair market price of the common shares or because the assumed proceeds from the award’s exercise or vesting was greater than the average fair market price of the common shares. |
Page 18
Table of Contents
NOTE 6 – INVENTORIES, NET
The following information is provided as of the dates indicated:
(In thousands) |
| September 30, 2026 |
|
| June 30, 2026 |
| ||
|
|
|
| |
|
|
| |
Inventories: |
|
|
| |
|
|
| |
Raw materials |
| $ |
|
| $ |
| ||
Work-in-progress |
|
|
|
|
|
| ||
Finished goods |
|
|
|
|
|
| ||
Total Inventories |
| $ |
|
| $ |
| ||
NOTE 7 - ACCRUED EXPENSES
The following information is provided as of the dates indicated:
(In thousands) |
| September 30, 2026 |
|
| June 30, 2026 |
| ||
Accrued Expenses: |
|
|
| |
|
|
| |
Customer prepayments |
| $ |
|
| $ |
| ||
Compensation and benefits |
|
|
|
|
|
| ||
Accrued warranty |
|
|
|
|
|
| ||
Accrued sales commissions |
|
|
|
|
|
| ||
Accrued freight |
|
|
|
|
|
| ||
Accrued FICA |
|
|
|
|
|
| ||
|
|
|
|
|
| |||
Accrued rebate |
|
|
|
|
|
| ||
Accrued sales and use tax |
|
|
|
|
|
| ||
Accrued commitments and contingency |
|
|
|
|
|
| ||
Accrued income taxes |
|
|
|
|
|
| ||
Other accrued expenses |
|
|
|
|
|
| ||
Total Accrued Expenses |
| $ |
|
| $ |
| ||
NOTE 8 - GOODWILL AND OTHER INTANGIBLE ASSETS
The carrying values of goodwill and other intangible assets with indefinite lives are reviewed at least annually for possible impairment. The Company may first assess qualitative factors in order to determine if goodwill and indefinite-lived intangible assets are impaired. If through the qualitative assessment it is determined that it is more likely than not that goodwill and indefinite-lived assets are not impaired, no further testing is required. If it is determined more likely than not that goodwill and indefinite-lived assets are impaired, or if the Company elects not to first assess qualitative factors, the Company’s impairment testing continues with the estimation of the fair value of the reporting unit using a combination of a market approach and an income (discounted cash flow) approach, at the reporting unit level. The estimation of the fair value of the reporting unit requires significant management judgment with respect to revenue and expense growth rates, changes in working capital and the selection and use of an appropriate discount rate. The estimates of the fair value of reporting units are based on the best information available as of the date of the assessment. The use of different assumptions would increase or decrease estimated discounted future operating cash flows and could increase or decrease an impairment charge. Company management uses its judgment in assessing whether assets may have become impaired between annual impairment tests. Indicators such as adverse business conditions, economic factors and technological change or competitive activities may signal that an asset has become impaired.
The Company identified its reporting units in conjunction with its annual goodwill impairment testing. The Company has a total of reporting units that contain goodwill. reporting unit is within the Lighting Segment and reporting units are within the Display Solutions Segment. The tradename intangible assets have an indefinite life and are also tested separately on an annual basis. The Company relies upon a number of factors, judgments and estimates when conducting its impairment testing including, but not limited to, the Company’s stock price, operating results, forecasts, anticipated future cash flows, and marketplace data. There are inherent uncertainties related to these factors and judgments in applying them to the analysis of goodwill impairment.
Page 19
Table of Contents
The following table presents information about the Company's goodwill on the dates or for the periods indicated:
|
|
|
| |
| Display |
|
|
|
| | |
|
| Lighting |
|
| Solutions |
|
|
|
| | ||
(In thousands) |
| Segment |
|
| Segment |
|
| Total |
| |||
Activity for three-month period ended September 30, 2026 |
|
|
| |
|
|
| |
|
|
| |
Goodwill, gross as of June 30, 2026 |
| $ |
|
| $ |
|
| $ |
| |||
Goodwill acquired, net of adjustments |
|
|
|
|
| ( | ) |
|
| ( | ) | |
Foreign currency translation |
|
|
|
|
| ( | ) |
|
| ( | ) | |
Goodwill, gross as of September 30, 2026 |
|
|
|
|
|
|
|
|
| |||
Accumulated impairment losses |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Goodwill, net as of September 30, 2026 |
| $ |
|
| $ |
|
| $ |
| |||
|
|
|
| |
|
|
| |
|
|
| |
Activity for three-month period ended September 30, 2025 |
|
|
| |
|
|
| |
|
|
| |
Goodwill, gross as of June 30, 2025 |
| $ |
|
| $ |
|
| $ |
| |||
Goodwill acquired, net of adjustments |
|
|
|
|
| ( | ) |
|
| ( | ) | |
Foreign currency translation |
|
|
|
|
| ( | ) |
|
| ( | ) | |
Goodwill, gross as of September 30, 2025 |
|
|
|
|
|
|
|
|
| |||
Accumulated impairment losses |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Goodwill, net as of September 30, 2025 |
| $ |
|
| $ |
|
| $ |
| |||
The gross carrying amount and accumulated amortization by each major intangible asset class is as follows:
(In thousands) |
| September 30, 2026 |
| |||||||||
|
| Gross |
|
|
|
| |
|
|
| | |
|
| Carrying |
|
| Accumulated |
|
| Net |
| |||
|
| Amount |
|
| Amortization |
|
| Amount |
| |||
|
|
|
| |
|
|
| |
|
|
| |
Amortized Intangible Assets |
|
|
| |
|
|
| |
|
|
| |
Customer relationships |
| $ |
|
| $ |
|
| $ |
| |||
Patents |
|
|
|
|
|
|
|
|
| |||
LED technology, software |
|
|
|
|
|
|
|
|
| |||
Trade name |
|
|
|
|
|
|
|
|
| |||
Non-compete |
|
|
|
|
|
|
|
|
| |||
Total Amortized Intangible Assets |
| $ |
|
| $ |
|
| $ |
| |||
|
|
|
| |
|
|
| |
|
|
| |
Indefinite-lived Intangible Assets |
|
|
| |
|
|
| |
|
|
| |
Trademarks and trade names |
|
|
|
|
| - |
|
|
|
| ||
Total indefinite-lived Intangible Assets |
|
|
|
|
| - |
|
|
|
| ||
|
|
|
| |
|
|
| |
|
|
| |
Total Other Intangible Assets |
| $ |
|
| $ |
|
| $ |
| |||
Page 20
Table of Contents
(In thousands) | | June 30, 2026 | | |||||||||
| | Gross | | | | | | | | | | |
| | Carrying | | | Accumulated | | | Net | | |||
| | Amount | | | Amortization | | | Amount | | |||
| | | | | | | | | | | | |
Amortized Intangible Assets | | | | | | | | | | | | |
Customer relationships | | $ | | | $ | | | $ | | |||
Patents | | | | | | | | | | |||
LED technology, software | | | | | | | | | | |||
Trade name | | | | | | | | | | |||
Non-compete | | | | | | | | | | |||
Total Amortized Intangible Assets | | $ | | | $ | | | $ | | |||
| | | | | | | | | | | | |
Indefinite-lived Intangible Assets | | | | | | | | | | | | |
Trademarks and trade names | | | | | | - | | | | | ||
Total indefinite-lived Intangible Assets | | | | | | - | | | | | ||
| | | | | | | | | | | | |
Total Other Intangible Assets | | $ | | | $ | | | $ | | |||
|
| Three Months Ended |
| |||||
|
| September 30, |
| |||||
(In thousands) |
| 2026 |
|
| 2025 |
| ||
|
|
|
| |
|
|
| |
Amortization expense of other intangible assets |
| $ |
|
| $ |
| ||
The Company expects to record annual amortization expense as follows:
(In thousands) |
|
|
| |
|
|
|
| |
2027 |
| $ |
| |
2028 |
| $ |
| |
2029 |
| $ |
| |
2030 |
| $ |
| |
2031 |
| $ |
| |
After 2031 |
| $ |
|
Page 21
Table of Contents
NOTE 9 - DEBT
The Company’s long-term debt as of September 30, 2026, and June 30, 2026, consisted of the following:
|
| September 30, |
|
| June 30, |
| ||
(In thousands) |
| 2026 |
|
| 2026 |
| ||
|
|
|
| |
|
|
| |
Secured line of credit |
| $ |
|
| $ |
| ||
Term loan, net of debt issuance costs of $ and $, respectively |
|
|
|
|
|
| ||
Total debt |
| $ |
|
| $ |
| ||
Less: amounts due within one year |
|
|
|
|
|
| ||
Total amounts due after one year, net |
| $ |
|
| $ |
| ||
In March of 2026, the Company entered into a $
The Company is in compliance with all of its loan covenants as of September 30, 2026.
NOTE 10 - CASH DIVIDENDS
The Company paid cash dividends of $
Page 22
Table of Contents
NOTE 11 – EQUITY COMPENSATION
In November 2022, the Company's shareholders approved the amendment and restatement of the 2019 Omnibus Award Plan ("2019 Omnibus Plan") which increased the number of shares authorized for issuance under the plan by
In the three months ended September 30, 2026, the Company granted
In November of 2021, our board of directors approved the LSI Employee Stock Purchase Plan (“ESPP”). A total of
NOTE 12 - SUPPLEMENTAL CASH FLOW INFORMATION
(in thousands) |
| Three Months Ended |
| |||||
|
| September 30, |
| |||||
|
| 2026 |
|
| 2025 |
| ||
Cash Payments: |
|
|
| |
|
|
| |
Interest |
| $ |
|
| $ |
| ||
Income taxes |
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
Non-cash investing and financing activities |
|
|
| |
|
|
| |
Issuance of common shares as compensation |
| $ |
|
| $ |
| ||
Issuance of common shares to fund deferred compensation plan |
| $ |
|
| $ |
| ||
Issuance of common shares to fund ESPP plan |
| $ |
|
| $ |
| ||
NOTE 13 - 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 recorded a $
Page 23
Table of Contents
NOTE 14 - LEASES
The Company leases certain manufacturing facilities along with a small office space, several forklifts, several small tooling items, and various items of office equipment. The Company’s leases are operating leases and have a remaining term of to 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.
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. The rent expense for these leases was immaterial for September 30, 2026, and 2025. As of September 30, 2026 and 2025, the Company has no finance leases.
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.
|
| Three Months Ended |
| |||||
|
| September 30, |
| |||||
(In thousands) |
| 2026 |
|
| 2025 |
| ||
Operating lease cost |
| $ |
|
| $ |
| ||
Variable lease cost |
|
|
|
|
|
| ||
Sublease income |
|
|
|
|
|
| ||
Total lease cost |
| $ |
|
| $ |
| ||
|
| Three Months Ended |
| |||||
Supplemental Cash Flow Information: |
| September 30, |
| |||||
(in thousands) |
| 2026 |
|
| 2025 |
| ||
Cash flows from operating leases |
|
|
| |
|
|
| |
Fixed payments - operating lease cash flows |
| $ |
|
| $ |
| ||
Liability reduction - operating cash flows |
| $ |
|
| $ |
| ||
Assets obtained in exchange for operating lease obligations |
| $ |
|
| $ |
| ||
Operating Leases: |
| September 30, 2026 |
|
| June 30, 2026 |
| ||
Total operating right-of-use assets |
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
Accrued Expenses |
|
|
|
|
|
| ||
Long-term operating lease liability |
|
|
|
|
|
| ||
Total operating lease liabilities |
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
Weighted Average remaining Lease Term (in years) |
|
|
|
|
|
| ||
|
|
|
| |
|
|
| |
Weighted Average Discount Rate |
|
| % |
|
| % | ||
Page 24
Table of Contents
| | Operating | | |
| | Lease | | |
Maturities of Lease Liability: | | Liabilities | | |
| | | | |
2027 | | $ | | |
2028 | | | | |
2029 | | | | |
2030 | | | | |
2031 | | | | |
Thereafter | | | | |
Total lease payments | | $ | | |
Less: Interest | | | ( | ) |
Present Value of Lease Liabilities | | $ | | |
NOTE 15 – 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 and in evaluating tax positions. For the three months ended September 30, 2026 the effective tax rate is higher than the statutory tax rate primarily because of the non-deductible tax treatment of executive compensation.
|
| Three Months Ended |
| |||||
|
| September 30, |
| |||||
|
| 2026 |
|
| 2025 |
| ||
Reconciliation of effective tax rate: |
|
|
| |
|
|
| |
|
|
|
| |
|
|
| |
Provision for income taxes at the anticipated annual tax rate |
|
| % |
|
| % | ||
Uncertain tax positions |
|
|
|
|
|
| ||
Share-based compensation |
|
|
|
|
| ( | ) | |
Effective tax rate |
|
| % |
|
| % | ||
Page 25
Table of Contents
NOTE 16 – SUBSEQUENT EVENTS
In October of 2026, the Company announced the consolidation of manufacturing operations of our leased facility in Collingwood, Ontario, into an existing Toronto-area facility that serves as the headquarters of our Canada’s Best Store Fixtures business. The transition is expected to be completed in the third quarter of fiscal 2027, after which the Company will vacate the Collingwood Ontario facility.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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,” “focus,” “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 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, 2026, 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.
Summary of Consolidated Results
Net Sales by Business Segment |
|
Three Months Ended |
|
|||||
|
|
September 30, |
|
|||||
(In thousands) |
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
|
|
Display Solutions Segment |
|
$ | 161,032 |
|
|
$ | 88,196 |
|
Lighting Segment |
|
|
64,823 |
|
|
|
69,053 |
|
Total Net Sales |
|
$ | 225,855 |
|
|
$ | 157,249 |
|
Operating Income (Loss) by Business Segment |
|
Three Months Ended |
|
|||||
|
|
September 30, |
|
|||||
(In thousands) |
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
|
|
Display Solutions Segment |
|
$ | 12,996 |
|
|
$ | 8,592 |
|
Lighting Segment |
|
|
7,548 |
|
|
|
8,549 |
|
Corporate and Eliminations |
|
|
(6,383 |
) |
|
|
(6,169 |
) |
Total Operating Income |
|
$ | 14,161 |
|
|
$ | 10,972 |
|
Net sales of $225.9 million for the three months ended September 30, 2026, increased 44% as compared to net sales of $157.2 million for the three months ended September 30, 2025. Lighting segment net sales of $64.8 million decreased 6% compared to prior year quarter net sales of $69.1 million. The 6% decline in net sales reflects soft demand across the broader commercial and industrial markets. Net sales in the Display Solutions segment of $161.0 million increased 83% compared to the same quarter last year sales of $88.2 million. The Company’s acquisition of Royston contributed most of the increase in Display Solutions segment sales. Excluding Royston sales, net sales increased 1%. Quarter-over-quarter sales to the refueling/c-store and grocery verticals increased and were partially offset by softness in the quick service restaurant ("QSR") vertical.
Page 26
Table of Contents
Operating income of $14.2 million for the three months ended September 30, 2026, represents a 29% increase in operating income from $11.0 million in the three months ended September 30, 2025. Adjusted operating income, a Non-GAAP measure, was $19.4 million in the three months ended September 30, 2026, represents a 38% increase compared to $14.0 million in the three months ended September 30, 2025. Refer to “Non-GAAP Financial Measures” below for a reconciliation of Non-GAAP financial measures to U.S. GAAP measures. The increase in operating income is primarily the result of an increase in net sales in the Display solutions segment driven mostly by the impact of the Royston acquisition.
Non-GAAP Financial Measures
This report includes adjustments to GAAP operating income, net income, and earnings per share for the three months ended September 30, 2026, and 2025. 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, restructuring and severance costs, and organic sales growth are non-GAAP financial measures. We further note that while the amortization expense of acquired intangible assets is excluded from the non-GAAP financial measures, the revenue of the acquired companies is included in the measures, and the acquired assets contribute to the generation of revenue. We believe these non-GAAP measures will provide increased transparency to our core operating performance of the business. Also included in this report are non-GAAP financial measures, including Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA and Adjusted EBITDA), Net Debt to Adjusted EBITDA, and Free Cash Flow. 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.
|
|
Three Months Ended |
|
|||||
Reconciliation of operating income to adjusted operating income: |
|
September 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
(In thousands) |
|
|
|
|
|
|
|
|
Operating income as reported |
|
$ | 14,161 |
|
|
$ | 10,972 |
|
|
|
|
|
|
|
|
|
|
Long-term performance based compensation |
|
|
1,049 |
|
|
|
1,282 |
|
|
|
|
|
|
|
|
|
|
Amortization expense of acquired intangible assets |
|
|
3,779 |
|
|
|
1,554 |
|
|
|
|
|
|
|
|
|
|
Restructuring/severance costs |
|
|
13 |
|
|
|
(71 |
) |
|
|
|
|
|
|
|
|
|
Acquisition costs |
|
|
252 |
|
|
|
220 |
|
|
|
|
|
|
|
|
|
|
Lease expense on the step-up basis of acquired leases |
|
|
152 |
|
|
|
68 |
|
|
|
|
|
|
|
|
|
|
Adjusted operating income |
|
$ | 19,406 |
|
|
$ | 14,025 |
|
Page 27
Table of Contents
Reconciliation of net income to adjusted net income |
|
Three Months Ended |
|
|||||||||||||||
|
|
September 30, |
|
|||||||||||||||
(In thousands, except per share data) |
|
2026 |
|
|
2025 |
|
||||||||||||
|
|
|
|
|
|
|
Diluted EPS |
|
|
|
|
|
|
|
Diluted EPS |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income as reported |
|
$ | 7,127 |
|
|
|
$ | 0.19 |
|
|
$ | 7,264 |
|
|
|
$ | 0.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term performance based compensation |
|
|
787 |
|
(1) |
|
|
0.03 |
|
|
|
954 |
|
(6) |
|
|
0.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense of acquired intangible assets |
|
|
2,853 |
|
(2) |
|
|
0.08 |
|
|
|
1,117 |
|
(7) |
|
|
0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring/severance costs |
|
|
10 |
|
(3) |
|
|
- |
|
|
|
(53 |
) |
(8) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs |
|
|
189 |
|
(4) |
|
|
- |
|
|
|
165 |
|
(9) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease expense on the step-up basis of acquired leases |
|
|
114 |
|
(5) |
|
|
- |
|
|
|
51 |
|
(10) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency transaction loss on intercompany loan |
|
|
14 |
|
|
|
|
- |
|
|
|
326 |
|
|
|
|
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax rate difference between reported and adjusted net income |
|
|
508 |
|
|
|
|
0.01 |
|
|
|
(93 |
) |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income adjusted |
|
$ | 11,602 |
|
|
|
$ | 0.31 |
|
|
$ | 9,731 |
|
|
|
$ | 0.31 |
|
The following represents the income tax effects of the adjustments in the tables above, which were calculated using the estimated combined U.S., Canada and Mexico effective income tax rates for the periods indicated (in thousands):
(1) $262
(2) $926
(3) $3
(4) $63
(5) $38
(6) $328
(7) $437
(8) ($18)
(9) $55
(10) $17
Page 28
Table of Contents
|
|
Three Months Ended |
|
|||||
Reconciliation of net income to EBITDA and adjusted EBITDA |
|
September 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
(In thousands) |
|
|
|
|
|
|
|
|
Net income - reported |
|
$ |
7,127 |
|
|
$ |
7,264 |
|
Income tax |
|
|
3,059 |
|
|
|
2,431 |
|
Interest expense, net |
|
|
3,860 |
|
|
|
747 |
|
Other expense |
|
|
115 |
|
|
|
530 |
|
Operating income as reported |
|
$ |
14,161 |
|
|
$ |
10,972 |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
6,540 |
|
|
|
3,200 |
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
$ |
20,701 |
|
|
$ |
14,172 |
|
|
|
|
|
|
|
|
|
|
Acquisition costs |
|
|
252 |
|
|
|
220 |
|
|
|
|
|
|
|
|
|
|
Long-term performance based compensation |
|
|
1,049 |
|
|
|
1,282 |
|
|
|
|
|
|
|
|
|
|
Restructuring/severance costs |
|
|
13 |
|
|
|
(71 |
) |
|
|
|
|
|
|
|
|
|
Lease expense on the step-up basis of acquired leases |
|
|
152 |
|
|
|
68 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
22,167 |
|
|
$ |
15,671 |
|
|
|
Three Months Ended |
|
|||||
Reconciliation of cash flow from operations to free cash flow |
|
September 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
(In thousands) |
|
|
|
|
|
|
|
|
Cash flow from operations |
|
$ |
15,231 |
|
|
$ |
676 |
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(1,444 |
) |
|
|
(967 |
) |
|
|
|
|
|
|
|
|
|
Free cash flow |
|
$ |
13,787 |
|
|
$ |
(291 |
) |
Page 29
Table of Contents
Net debt to adjusted EBITDA |
|
September 30, |
|
|||||
(In thousands) |
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
|
|
Current portion and long-term debt as reported |
|
$ | 10,000 |
|
|
$ | 3,571 |
|
Long-Term Debt |
|
|
230,195 |
|
|
|
47,105 |
|
Debt as reported |
|
$ | 240,195 |
|
|
$ | 50,676 |
|
Less: |
|
|
|
|
|
|
|
|
Cash and cash equivalents as reported |
|
|
(12,805 |
) |
|
|
(7,143 |
) |
|
|
|
|
|
|
|
|
|
Net debt |
|
$ | 227,390 |
|
|
$ | 43,533 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA - Trailing 12 Months |
|
$ | 87,640 |
|
|
$ | 57,308 |
|
|
|
|
|
|
|
|
|
|
Net debt to adjusted EBITDA |
|
|
2.6 |
|
|
|
0.8 |
|
Adjusted EBITDA for the trailing twelve months ended September 30, 2026, includes proforma results for the Royston acquisition.
Organic compared to inorganic sales |
|
September 30, |
|
|
|
|
|
|||||
(In thousands) |
|
2026 |
|
|
2025 |
|
|
% Variance |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
Lighting segment |
|
$ | 64,823 |
|
|
$ | 69,053 |
|
|
|
-6 |
% |
Display solutions segment |
|
|
|
|
|
|
|
|
|
|
|
|
- Comparable display solutions sales |
|
|
88,620 |
|
|
|
88,196 |
|
|
|
1 |
% |
- Royston |
|
|
72,412 |
|
|
|
- |
|
|
n/m |
|
|
Total display solutions sales |
|
$ | 161,032 |
|
|
$ | 88,196 |
|
|
|
83 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales |
|
$ | 225,855 |
|
|
$ | 157,249 |
|
|
|
44 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
- Royston |
|
|
72,412 |
|
|
|
- |
|
|
n/m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total organic net sales |
|
$ | 153,443 |
|
|
$ | 157,249 |
|
|
|
-2 |
% |
Results of Operations
THREE MONTHS ENDED September 30, 2026, COMPARED TO THREE MONTHS ENDED September 30, 2025
Display Solutions Segment |
|
Three Months Ended |
|
|||||
|
|
September 30, |
|
|||||
(In thousands) |
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
|
|
Net Sales |
|
$ | 161,032 |
|
|
$ | 88,196 |
|
Gross Profit |
|
$ | 30,374 |
|
|
$ | 17,095 |
|
Operating Income |
|
$ | 12,996 |
|
|
$ | 8,592 |
|
Display Solutions Segment net sales of $161.0 million in the three months ended September 30, 2026, increased 83% from net sales of $88.2 million in the same period in fiscal 2026. The Company’s acquisition of Royston contributed to most of the increase in Display Solutions segment sales. Excluding Royston sales, net sales increased 1%. Quarter-over-quarter sales to the refueling/c-store and grocery verticals increased and were partially offset by softness in the QSR vertical.
Gross profit of $30.4 million in the three months ended September 30, 2026, increased 78% from the same period of fiscal 2026. Gross profit as a percentage of net sales in the three months ended September 30, 2026, decreased to 18.9% from 19.4% in the same period of fiscal 2026. The decrease in gross profit as a percentage of sales was the result of increased material input costs in several product lines, and customer mix. The Company continues to maintain favorable program pricing and prudent cost management.
Operating expenses of $17.4 million in the three months ended September 30, 2026, increased from $8.5 million from the same period of fiscal 2026, primarily driven by the acquisition of Royston and by continued investment in commercial initiatives to drive growth.
Display Solutions Segment operating income of $13.0 million in the three months ended September 30, 2026, increased 51% from the same period of fiscal 2026. The increase in operating income was driven by the increase in net sales and favorable program pricing and prudent cost management.
Lighting Segment |
|
Three Months Ended |
|
|||||
|
|
September 30, |
|
|||||
(In thousands) |
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
|
|
Net Sales |
|
$ | 64,823 |
|
|
$ | 69,053 |
|
Gross Profit |
|
$ | 21,855 |
|
|
$ | 23,182 |
|
Operating Income |
|
$ | 7,548 |
|
|
$ | 8,549 |
|
Page 30
Table of Contents
Lighting Segment net sales of $64.8 million in the three months ended September 30, 2026, decreased 6% compared to net sales of $69.1 million in the same period in fiscal 2026. The 6% decline in net sales reflects soft demand across the broader commercial and industrial markets. Sales to the refueling/c-store, banking, and sports vertical increased from the same quarter last fiscal year and were offset by a decline in sales in other verticals. The Company maintains a favorable position in the parking, small retail, warehouse, and automotive verticals.
Gross profit of $21.9 million in the three months ended September 30, 2026, decreased 6% from the same period of fiscal 2026. While sales declined, gross profit margin was maintained as a result of aligning selling price with material input costs inflation.
Operating expenses of $14.3 million in the three months ended September 30, 2026, decreased 2% from the same period of fiscal 2026, driven mostly by a decrease in agent commission expense resulting from lower sales.
Lighting Segment operating income of $7.5 million for the three months ended September 30, 2026, decreased 12% from operating income of $8.5 million in the same period of fiscal 2026 primarily driven by decreased net sales.
Corporate and Eliminations |
|
Three Months Ended |
|
|||||
|
|
September 30, |
|
|||||
(In thousands) |
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
|
|
Gross Profit |
|
$ | 2 |
|
|
$ | - |
|
Operating (Loss) |
|
$ | (6,383 |
) |
|
$ | (6,169 |
) |
The gross profit relates to the change in the intercompany profit in inventory elimination.
Operating expenses of $6.4 million in the three months ended September 30, 2026, increased 3% from $6.2 million from the same period of fiscal 2026. The increase was primarily driven by an increase in wage and benefit costs.
Consolidated Results
The Company reported $3.9 million and $0.7 million of net interest expense in the three months ended September 30, 2026, and September 30, 2025, respectively. The increase in interest expense is the result of the acquisition of Royston in the third quarter of fiscal 2026. The Company also recorded other expense of $0.1 million and $0.5 million in the three months ended September 30, 2026, and September 30, 2025, respectively, both of which is related to net foreign exchange currency transaction gains and losses through the Company’s Mexican and Canadian subsidiaries.
The $3.1 million of income tax expense in the three months ended September 30, 2026, represents a consolidated effective tax rate of 30.0%. The $2.4 million of income tax expense in the three months ended September 30, 2025, represents a consolidated effective tax rate of 25.1%. Impacting the fiscal 2027 first quarter effective tax rate was the unfavorable tax treatment of executive compensation.
The Company reported net income of $7.1 million in the three months ended September 30, 2026, compared to net income of $7.3 million in the three months ended September 30, 2025. Non-GAAP adjusted net income was $11.6 million for the three months ended September 30, 2026, compared to adjusted net income of $9.7 million for the three months ended September 30, 2025 (Refer to the Non-GAAP tables above). The increase in Non-GAAP adjusted net income is primarily the result of an increase in net sales. Diluted adjusted earnings per share of $0.19 was reported in the three months ended September 30, 2026, compared to $0.23 diluted adjusted earnings per share in the same period of fiscal 2026. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the three months ended September 30, 2026, were 37,888,000 shares compared to 31,381,000 shares in the same period last year.
Page 31
Table of Contents
Liquidity and Capital Resources
The Company considers its level of cash on hand, borrowing capacity, current ratio and working capital levels to be its most important measures of short-term liquidity. For long-term liquidity indicators, the Company believes its 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 September 30, 2026, the Company had working capital of $144.0 million compared to $146.0 million at June 30, 2026. The ratio of current assets to current liabilities was 2.0 to 1 as of September 30, 2026, and as of June 30, 2026. The decrease in working capital from June 30, 2026, to September 30, 2026, is primarily driven by a $7.7 million decrease in net accounts receivable partially offset by a $5.6 million decrease in current liabilities.
Net accounts receivable was $143.5 million and $151.2 million at September 30, 2026, and June 30, 2026, respectively. DSO decreased to 61 days at September 30, 2026, from 65 days at June 30, 2026. The decrease in net accounts receivable is the result of lower sales in the first quarter of fiscal 2027 compared to the fourth quarter of fiscal 2026.
Net inventories of $114.4 million at September 30, 2026, increased $2.1 million from $112.3 million at June 30, 2026. Lighting Segment net inventory increased $1.7 million, and net inventory in the Display Solutions Segment increased $0.4 million. The Company manages inventory levels to meet customer demands.
Cash generated from operations and borrowing capacity under the Company’s line of credit is its primary source of liquidity. Our credit facility consists of a $200 million term loan and $150 million secured revolving line of credit. Both facilities expire in the third quarter of fiscal 2031. As of September 30, 2026, $109.8 million of the credit facility was available. The Company is in compliance with all of its loan covenants as of September 30, 2026. The $350 million credit facility plus cash flows from operating activities are adequate for operational and capital expenditure needs for the next 12 months.
The Company generated $15.2 million of cash from operating activities in the three months ended September 30, 2026, compared to $0.7 million of cash generated from operating activities in the same period in fiscal 2026. The Company continues to proactively manage its working capital while generating positive cash flow from earnings.
The Company generated $0.6 million and consumed $0.7 million of cash related to investing activities in the three months ended September 30, 2026, and September 30, 2025, respectively. The $0.6 million generation of cash was the result of a $2.0 million recovery of purchase price related to the Royston acquisition. The Company invested $1.4 million and $1.0 million in capital assets as of during the period ending September 30, 2026, and September 30, 2025, respectively, most of which related to investments in equipment and tooling to support sales growth.
The Company consumed cash of $17.2 million in the three months ended September 30, 2026, compared to a generation of cash of $3.9 million in the three months ended September 30, 2025, related to financing activities. The improvement in the generation of cash flow from operations in the first quarter of fiscal 2027 allowed the Company to reduce its debt by $15.7 million. Contributing favorably to cash flow from financing activities was the generation of cash related to the proceeds from the exercise of stock options of $0.5 million and $3.0 million in the first quarters of fiscal 2027, and 2026, respectively. Cash dividends paid to shareholders increased from $1.5 million in the first quarter of fiscal 2026 compared to $1.9 million in the first quarter of fiscal 2027.
The Company has on its balance sheet financial instruments consisting primarily of cash and cash equivalents, 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.
Page 32
Table of Contents
Off-Balance Sheet Arrangements
The Company has no financial instruments with off-balance sheet risk and have no off-balance sheet arrangements.
Cash Dividends
In November 2026, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable November 24, 2026, to shareholders of record as of November 16, 2026. The indicated annual cash dividend rate for fiscal 2027 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 2026 Annual Report on Form 10-K.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our exposure to market risk since June 30, 2026. Additional information can be found in Item 7A, Quantitative and Qualitative Disclosures About Market Risk, which appears on page 20 of the Annual Report on Form 10-K for the fiscal year ended June 30, 2026.
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 Exchange Act. Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2026, 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
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 September 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS
Exhibits:
10.1 |
Fiscal Year 2027 Long-Term Incentive Plan (LTIP)*++ |
10.2 |
Fiscal Year 2027 Short-Term Incentive Plan (STIP)*++ |
10.3 |
2027 Special Retention Restricted Stock Unit Award Agreement between the Company and James A. Clark* |
31.1 |
Certification of Principal Executive Officer required by Rule 13a-14(a) |
31.2 |
Certification of Principal Financial Officer required by Rule 13a-14(a) |
32.1 |
Section 1350 Certification of Principal Executive Officer |
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) |
* Management Compensatory Agreement
++ Schedules and exhibits have been omitted pursuant to Item 601(a)(5) and / or Item 601(b)(10)(iv) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules and exhibits to the SEC upon its request.
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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.
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LSI Industries Inc. |
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By: |
/s/ James A. Clark |
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James A. Clark |
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Chief Executive Officer and President |
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(Principal Executive Officer) |
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By: |
/s/ James E. Galeese |
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James E. Galeese |
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Executive Vice President and Chief Financial Officer |
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(Principal Financial and Accounting Officer) |
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November 6, 2026 |
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