LYTS

As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the electrical systems industry, including LSI (NASDAQ:LYTS) and its peers. Like many equipment and component manufacturers, electrical systems companies are buoyed by secular trends such as connectivity and industrial automation. More specific pockets of strong demand include Internet of Things (IoT) connectivity and the 5G telecom upgrade cycle, which can benefit companies whose cables and conduits fit those needs. But like the broader industrials sector, these companies are also at the whim of economic cycles. Interest rates, for example, can greatly impact projects that drive demand for these products. The 13 electrical systems stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 1.7% while next quarter’s revenue guidance was 0.6% below. While some electrical systems stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3.9% since the latest earnings results. Enhancing commercial environments, LSI (NASDAQ:LYTS) provides lighting and display solutions for businesses and retailers. LSI reported revenues of $234.6 million, up 51.3% year on year. This print exceeded analysts’ expectations by 5.8%. Overall, it was a very strong quarter for the company with a beat of analysts’ EPS estimates and a narrow beat of analysts’ EBITDA estimates. LSI achieved the biggest analyst estimate beat among its peers. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 18.6% since reporting and currently trades at $19.60. Read why we think that LSI is one of the best electrical systems stocks, our full report is free. Protecting the things that power our world, Atkore (NYSE:ATKR) designs and manufactures electrical safety products. Atkore reported revenues of $794.8 million, up 8.1% year on year, outperforming analysts’ expectations by 4.7%. The business had an incredible quarter with a solid beat of analysts’ EBITDA estimates and a beat of analysts’ EPS estimates. The market seems happy with the results as the stock is up 28.2% since reporting. It currently trades at $93.57. Is now the time to buy Atkore? Access our full analysis of the earnings results here, it’s free. Originally a metal-working shop supporting local petrochemical facilities, Powell (NASDAQ:POWL) has grown from a small Houston manufacturer to a global provider of electrical systems. Powell reported revenues of $311.7 million, up 8.9% year on year, falling short of analysts’ expectations by 1.6%. It was a disappointing quarter as it posted a significant miss of analysts’ EPS estimates. As expected, the stock is down 18.1% since the results and currently trades at $180.02. Read our full analysis of Powell’s results here. Allegion plc (NYSE:ALLE) is a provider of security products and solutions that keep people and assets safe and secure in various environments. Allegion reported revenues of $1.15 billion, up 12.7% year on year. This print topped analysts’ expectations by 3.1%. Overall, it was an exceptional quarter as it also recorded an impressive beat of analysts’ organic revenue estimates and a solid beat of analysts’ EBITDA estimates. The stock is up 11% since reporting and currently trades at $155.28. Read our full, actionable report on Allegion here, it’s free. Founded in 1980, Sanmina (NASDAQ:SANM) is an electronics manufacturing services company offering end-to-end solutions for various industries. Sanmina reported revenues of $3.46 billion, up 69.7% year on year. This number beat analysts’ expectations by 1.8%. It was a very strong quarter as it also produced EPS guidance for next quarter exceeding analysts’ expectations and a solid beat of analysts’ adjusted operating income estimates. Sanmina scored the fastest revenue growth but had the weakest guidance update in the group. The stock is down 5.7% since reporting and currently trades at $196.95. Read our full, actionable report on Sanmina here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

LSI’s second quarter was marked by robust revenue growth, surpassing Wall Street’s expectations, yet the market reacted negatively as investors focused on margin pressures. Management attributed the strong sales to continued momentum in the Display Solutions segment, especially in grocery and convenience store verticals, and highlighted the contribution from the integration of Royston. However, CEO James Clark acknowledged, “fourth quarter adjusted EBITDA margin came in at 10.9%. That is below where we expected margin to land for the quarter,” citing inherited low-margin backlog from Royston as a key challenge. Is now the time to buy LYTS? Find out in our full research report (it’s free). Revenue: $234.6 million vs analyst estimates of $221.8 million (51.3% year-on-year growth, 5.8% beat) Adjusted EPS: $0.38 vs analyst estimates of $0.36 (5.6% beat) Adjusted EBITDA: $25.67 million vs analyst estimates of $25.37 million (10.9% margin, 1.2% beat) Operating Margin: 6.2%, down from 8.6% in the same quarter last year Market Capitalization: $735.2 million While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Aaron Spychalla (Craig-Hallum) asked about the timeline for resolving Royston’s low-margin backlog and whether operational initiatives are on track. CEO James Clark explained that full resolution should take one to two quarters, emphasizing ongoing pricing discipline and integration. Brent Thielman (Oppenheimer) asked for details on the size and impact of the margin headwind from legacy Royston projects. Clark estimated a 50 to 100 basis point margin impact over the next two quarters, with improvements expected as operational changes are implemented. Brent Thielman (Oppenheimer) also questioned whether margin tailwinds exist beneath current headwinds. Clark pointed to procurement efficiencies and cross-segment selling as medium-term opportunities for improved profitability. Alex Rygiel (Texas Capital Securities) inquired about the timing and revenue recognition for the 2,500-site oil retailer contract. Clark and CFO Galeese said the project should run approximately 18 months, with upside potential if interior work is awarded. Amit Dayal (H.C. Wainwright) asked if Royston’s margin recovery requires sacrificing revenue growth. Clark and Galeese responded that repricing and portfolio focus should not materially impact volume, citing continued strong order activity. In the coming quarters, our analysts will be watching (1) the pace at which LSI works through the low-margin Royston backlog and realizes targeted margin improvements, (2) progress on cross-selling and integration synergies across Display Solutions and Lighting, and (3) execution and revenue recognition on large-scale projects such as the 2,500-site oil retailer renovation. The trajectory of demand in key verticals like grocery and C-store will also be closely monitored. LSI currently trades at $20.24, down from $24.06 just before the earnings. Is there an opportunity in the stock? Find out in our full research report (it’s free for active Edge members). ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively. Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Thursday, Aug. 20, 2026, at 11:00 a.m. ET Chief Financial Officer - James E. Galeese President and Chief Executive Officer - James A. Clark Operator: Greetings, and welcome to LSI Industries Fiscal 26 Fourth Quarter and full year results conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, James Galeese, Chief Financial Officer. Thank you. You may begin. James E. Galeese: Welcome, everyone. And thank you for joining today's call. We issued a press release before the market opened this morning detailing our fiscal 26 fourth quarter and full year results. In addition to this release, we also posted a conference call presentation in the investor Relations section of our corporate website. Information contained in this presentation will be referenced on today's conference call. Included are certain non GAAP measures for improved transparency of our operating results. A complete reconciliation of GAAP and non GAAP results is contained in our press release and 10-K. Please note that management's commentary and responses to questions on today's conference call may include forward looking statements about our business outlook. Such statements involve risks and opportunities, and actual results could differ materially. I refer you to our safe harbor statement which appears in this morning's press release for more details. Today's call will begin with remarks summarizing our fiscal fourth quarter and full year results, At the conclusion of these prepared remarks, we will open the line for questions. With that, I will turn the call over to LSI President, and Chief Executive Officer, Jim Clark. James A. Clark: Thank you, and good morning, everyone. Thank you for joining us today. Fiscal 26 was a transformational year for LSI. We delivered record sales and profitability in our core business, but we also completed the largest acquisition in our company's history with the purchase of the Royston Group. I am proud of what our team accomplished this year, and I am well aware of the work ahead of us. Today, I will walk us through the results and give an update on where we are headed, and then turn the call back over to James Galeese for a detailed look at the financials. Full year net sales reached a record $689 million up 20% versus the prior year. Adjusted earnings per diluted share grew to 1.25 compared to $1.4 in fiscal 25. We generated almost $70 million of adjusted EBITDA for the year up 28% versus fiscal 25 at a margin rate of 10.1%. We produced $39 million of free cash flow for the year, representing a conversion of more than 50% of adjusted EBITDA. Turning to the segment results. In our Lighting segment, fourth quarter sales increased 17% sequentially versus the fiscal third quarter but declined 3% versus the fiscal fourth quarter of last year. That decline reflects a soft quarter in our automotive and QSR verticals where project timing can be uneven. For the full year, lighting sales grew 7% driven by increased penetration of national accounts and improved demand for outdoor area lighting. Our V-LOCITY family of outdoor area lighting continues to gain traction in the market. And customers are responding to its performance and specifications. We are in the final stages of developing our new V-LOCITY floodlight fixture line initial sizes launching next quarter. Lighting orders in the fourth quarter were 5% above last year with a book-to-bill above 1x. And we are focused on continuing to deliver above market growth as our national accounts and new product introductions build momentum. Our Lighting segment has consistently outperformed the broader market and we think we have a lot of runway in front of us. Within Display Solutions, fourth quarter sales nearly doubled versus the prior period year. Including organic growth of 18% Segment adjusted EBITDA margin rate increased to 12.4% for the highest level we have reached in nearly 3 years and an increase of 180 basis points versus the year-ago period. That growth was broad based. Organic growth in our grocery vertical, refrigerated and nonrefrigerated display case sales increased 21% year over year. As grocery customers continue to invest in store decor and the overall shopping experience. This vertical has steadily strengthened over the past 2 years following the industry wide pause in 2024 and we expect that demand to remain elevated as we enter into fiscal 27. We experienced strong organic growth in our refueling and convenience verticals, with fourth quarter sales increasing 16% versus the prior year quarter and double digit growth in both outdoor print graphics and EMI store interior products. Project activity across our multi brand customer base remains healthy. Spanning both new store construction and renovation programs. During the quarter, we were awarded a multiyear program with a large oil retailer to renovate approximately 2.5 thousand sites. This program covers all exterior branding elements with anticipated interior opportunities. I want to highlight that this is a new customer for LSI. We displaced a longstanding incumbent supplier because of the breadth of our integrated 1 LSI solution set. This is exactly the kind of win our platform strategy was built to generate It did not require us to add a single new customer relationship to see the benefit of what an integrated offering could. Right. Before I go further into the results, I wanna address something directly. Fourth quarter adjusted EBITDA margin came in at 10.9%. That is below where we expected margin to land for the quarter. The primary driver is lower margin backlog at SignResource within Royston. This backlog reflects pricing that did not keep pace with higher raw material input costs and those decisions were made prior to our ownership. As you may know, these signs have a great deal of petroleum based polymers and that have been significantly impacted by crude oil prices. We are working through this impact, and we expect it to take approximately 2 quarters to fully clear. It may run through the first half of fiscal 27. We expect this to create a bit of a margin headwind in this group for the first half of the year followed by a benefit as we move into the back half of fiscal 27. And this backlog is fully behind us. I want to be clear about how we think about this. This is a onetime isolated situation. it is the kind of issue we look for early on in an integration. And then we take corrective action. It does not change our conviction in the underlying margin thesis behind the Royston acquisition. And it does not change our commitment to the 12.5% adjusted EBITDA margin target we have communicated as part of our Fast Forward strategy. It does mean the path there will not be perfectly linear. And I would rather tell you that right up front than assume otherwise. The Royston integration within display solutions continues to move at a good pace as we align on a single customer facing value proposition and go to market model. Royston's fourth quarter sales declined modestly year over year consistent with our expectations as we intentionally narrow our focus towards higher value product and project mix. Several of Royston's largest customers are in the early stages of multiyear awards and new construction cycles. With project activity expected to ramp beginning in fiscal 27 and continue over the next several years. We are excited by that. I personally visited all but 1 warehouse at the Royston location since the close, and I visited most of these locations multiple times. I have led town halls, walked the floor, and spent time directly with the people doing the work every day. Our senior and mid tier leaders across LSI are actively engaged with the Royston organization. Learning the business and building relationships. I have met personally with a number of Royston's top customers and the reception has been universally and outstandingly positive. On the commercial side, we see substantial cross selling opportunities. At SignResource alone, we believe we could double or triple the size of that business without adding a single new customer simply by deepening our relationships within the customers we already have on our roster. This is the kind of organic upside that makes this acquisition so compelling. On the operational side, we are seeing many encouraging progress points. At Southern CaseArts, we have made measurable improvements in on time delivery performance. Moving from the 70 something percent range to on time delivery in excess of 90%. This is a direct result of applying the same operational discipline across Royston we have applied across the rest of LSI. We are also identifying cost saving opportunities that we expect to realize over the next 24 months. And we are approaching that work carefully. We do not want to do anything that could destabilize the business we will share more detail of these plans as they mature. Note we are applying the same integration playbook that has served us well across prior acquisitions. With dedicated teams focused on procurement, cross selling and cost synergies. Value creation from an acquisition of this size is never perfectly linear but I am excited by the progress, and I am confident in the direction we are headed. Order rates within display solutions remain strong. With a book to bill of approximately 1x on a strong sales basis. And that figure does not include the new program award I just described. I also want to share an important update on our organizational structure and our leadership team And I wanna spend a bit more time on it than a single headline, because I want you to understand just how purposeful this plan is. As part of this broader transformation, the leadership team and I spent the second week of July in a working session planning the go forward plans of our company and the tactical activities we will seek to execute over the next 12 to 24 months. I say tactical because this was not a strategic discussion. This was a get down to work discussion. We also introduced a shared values framework this year called DRIVE. DRIVE stands for Detail, Respect, intention, velocity, and execution. it is not a marketing campaign or a slogan. It does not change who we are as a company. But instead, it builds on our current values, and it gives every person across every facility, regardless of history or legacy, a shared language in a program of how we collaborate, how we make decisions, how we hold ourselves accountable as 1 LSI. it is the cultural foundation that underpins our Fast Forward strategy And I am already seeing it show up in how our teams are working together across the combined organization. Finally, I want to share an important update on our leadership team. As announced in a separate press release earlier today, our Chief Financial Officer, James Galeese, has announced that he will retire next year at the October 2027 after nearly a decade of service to LSI. I wanna be very clear about what this means. Jim Galeese is not going anywhere soon. it is not a change in strategy, guidance, or capital allocation priorities. Jim is with us today. He will be with us this time next year. And he will stay with us through an orderly transition that he and help will help lead. We are telling you about this move more than a year in advance for a reason. We believe that giving ourselves and the market this much runway is exactly what creates the best opportunity to get the right person in this seat. This is deliberate, well-governed succession plan, 1 we prepared for, it is funny but I would like to mention that when Jim and I first met in 2018, he said that he was only staying for 2 years. That was 8 years ago. So I am thrilled that we have had this time to work together. Ahead of Jim's retirement, we have initiated a formal search process for a successor. That search will be led by me, with our executive team along with the executive committee of our board of directors in consultation with a global executive search firm. The search will consider both internal and external candidates And once your successor is named, Jim is committed to supporting that transition for as long as it takes to get it right. Including remaining longer than August of 2027 if that is what it takes. We are planning for continuity. Not a gap. And I want you to leave this call confident that we have thought this through carefully and thoroughly. On behalf of our employees, customers, partners and shareholders, I want to thank Jim. he is led with integrity, strategic insight, and financial stewardship for 10 years, and his commercially-minded approach and partnership has been instrumental in building the company we are today. During fiscal 26, we built on a strong foundation for profitable growth, We meaningfully expanded our capabilities increased our share of key verticals and continued to deliver a value proposition that is unique to our market and 1 that we believe has redefined the retail branding solutions category. With the addition of Royston, we are focused on realizing the benefits of scale while applying a proven playbook to prioritize disciplined, on time, and on plan execution. Our long standing customer relationships and the trust our customers place in our combined LSI and Royston brands positions us to become an even more valuable strategic partner and to capture a greater share of wallet over time. We are confident in the outlook for our business and we look forward to continuing to create value for our customers our employees, and our shareholders in the years ahead. With that, I will turn the call over to James Galeese to walk through our financial results in more detail. James E. Galeese: Thank you, Jim. I will start by summarizing our Q4 performance. LSI delivered a solid Q4 with sales growth of 51%, including organic sales growth of 8%. Generated adjusted EBITDA of over $25 million an increase of 50% versus prior year, with an adjusted EBITDA margin of 10.9%. And adjusted EPS increased to $0.38 per diluted share. The business generated Q4 free cash flow of just under $10 million serving to reduce debt by $9 million in the quarter. Next, I will recap the Q4 performance of our 2 reportable segments. Our overall 8% organic sales growth in Q4 was driven by continued healthy activity in several of our key vertical markets. Most notably grocery, and refueling C-store. This resulted in a strong organic growth rate of 18% in our Display Solutions segment. This heightened demand challenged our supply chain and manufacturing teams, and they responded and met customer requirements. This demonstrates LSI's proven capability to domestically fulfill projects with diverse levels of customer specifications and customization. A key differentiator for our company. In total, fourth quarter sales for display solutions doubled compared to the prior year to $164 million representing 70% of LSI sales in the quarter. My following comments on market verticals will reference LSI organic performance followed by separate comments on Royston. I mentioned activity for display solutions in the refueling C-store vertical remains strong. With fourth quarter organic sales increasing 16% in the quarter. it is important to note that double digit growth was realized in both the exterior of the store as well as the interior of the store. Now many of the projects and sites remain either exterior only or interior only, but we are beginning to see more opportunities involving both. This is consistent with our solution selling strategy and confirms a significant synergy opportunity to improve customer and per site revenue as we move forward. The grocery vertical also experienced double digit organic growth as grocery chains continue to realize the return on investment in the consumer experience. Grocery sales continue to be more balanced across a broader customer base than in previous years. An encouraging sign for both the breadth of market activity and our sales penetration efforts for both national and regional chains. The overall QSR vertical remains soft, as inflation unfavorably impacts consumer sentiment and spending. QSR is a large vertical, and strategic adjustments by industry participants will result in increased opportunities for LSI. Project inquiry levels are steady we are beginning to realize improvement in quote activity. Next, a few comments on Royston. Royston sales on a pro form a basis were down slightly year over year driven by account mix. Royston's largest vertical is refueling C store. And while I mentioned the overall vertical remains strong, the top 2 chains, which are sizable Royston customers, currently lag the industry in renovation and new store construction. The substantial investment plans for both chains over the next 5+ years are well documented. And we maintain our strong relationship with both. Working on concept and pilot projects. Activity in the balance of the customer base remains healthy. The Display Solutions segment also delivered strong fourth quarter earnings, generating over $20 million of adjusted EBITDA compared to $8.7 million in the prior year quarter. Earnings were particularly favorable in the organic LSI business, as we continue to effectively manage project margins. As Jim outlined, Royston pro forma EBITDA margin was down due to lower margin projects in signage. Looking forward for display solution, we expect demand to remain at elevated levels for the refueling C store and grocery verticals. Bookings match billings in Q4 on strong sales and we enter fiscal 2027 with a backlog slightly above prior year. For organic LSI, we expect to sustain solid margin performance. For Royston, we expect demand to increase modestly year over year with the top 2 accounts projected to realize improved demand levels as the year progresses. First quarter display margins will be impacted somewhat as we flush through lower margin backlog on certain Royston signage projects. We have identified the flaw in their project quotation process and have implemented the disciplined approach other LSI businesses utilize to effectively manage this area. As you know, quality of earnings is a high priority for us. Shifting to the Lighting segment. Fourth quarter sales were down modestly as projected. While the market is active, performance fluctuates considerably by vertical. For example, our larger automotive project activity increased through the fiscal year but was down for the quarter. While sports application projects increased substantially. We continue our emphasis on national account growth with Q4 again generating year over year sales growth. Despite fluctuating marketing conditions throughout the year, Lighting generated sales growth of 7% in fiscal 26 outperforming the market. Lighting Q4 gross margin rate increased in the quarter and for the full year. Driven by project pricing, and product Lighting book to bill was moderately above 1x for the quarter And assessing scheduling of our project backlog, we expect first quarter sales to be several points below a strong prior year comp. While maintaining gross margin performance. In summary, Q4 and fiscal 2026 were a solid quarter and year, for LSI. Our top markets remain active, and we are well positioned to capitalize on market opportunities. Lastly, Jim, thank you for the kind words. I highly value your leadership and the productive partnership we have. LSI has built a very accomplished leadership team and have talented employees throughout the organization. People who are passionate about what they do all contributing to the value of LSI. I look forward to a successful fiscal 27. I will now turn the call back to the moderator for the question and answer session. Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. We ask that you please limit to 1 question and 1 follow-up. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Aaron Spychalla with Craig-Hallum. Your line is now live. Aaron Spychalla: Yes. Good morning, Jim and Jim. Thanks for taking the questions and congrats Jim, on the retirement, but good to hear you will be around for a little bit longer. James A. Clark: Well, appreciate that, Aaron. Thank you. Aaron Spychalla: Hey, you bet. First question for us, just thinking about EBITDA margins and operational initiatives, can you just talk about some of the goals operationally and integration of M&A And then it just it sounds like, you know, these lower margin projects at SignResource, you feel like you have a good handle on those, you know, a couple more quarters to kind of work through some of some of the issues there? James A. Clark: Yeah. Absolutely. Aaron, it is Jim Clark, and thanks for the question. Yes, just going backwards, yes, we do think we have a good handle on it. I mean, as I look at it, I think that you know, Royston was making sure working to make sure that their pipeline and their forecast was full, and, you know, maybe a little discipline around margin slipped a little bit. You know, that is what we execute and do a very good job on is managing that pricing, where we price and sell it. We look for that margin. We make sure that it is equitable for us and for the customer. And so we will bring that culture and that discipline in. But, you know, with the backlog we have right now and the commitments we have to the projects, it is just gonna take us, you know, a quarter or so to quarter, maybe 2 to work through that backlog we have there at a little bit lower margin than we want. In terms of overall EBITDA margin, our goals remain the same, 12.5%. I think that it is clear we can get there. We have demonstrated it in the past. That, you know, we can get up north of 5. And with the accretive nature of, you know, Royston, it certainly makes it even easier for us to get there. Now I will say easy as a qualified word. Because we have work to do. Right? We just acquired a $300-something-million company. We are working through you know, the integration, the cross selling, all of that type of thing. We are rationalizing the footprints we have. The resources we have, the people we have, and we are working to optimize that. But, you know, that process takes time, and it is you know, and it takes effort And, you know, you see a little disruption. During those times, but we know what the outcome is going to look like, and we are excited about it. Aaron Spychalla: Alright. Thanks for the color there. Aaron Spychalla: And then second on QSR. Sounds like some indications of you know, kind of shoots of a recovery there. Could you just give a little bit more detail? And is it similar to some of your other markets where there is you know, good cross selling potential? With Royston and the rest of your business? James A. Clark: Yeah. I mean, listen, just because QSR is facing a little bit of headwinds right now, we still love the market. We love the investment that customer base is making. If you look at some of the projects we have had over the last few years and the results of those investments by those companies, they are doing well. And it goes to show that investment in the store interior, the location interior, the drive through menu boards, the you know, the parking lot refreshes, all the things that LSI does, rather, has paid off for them. And, you know, I am specifically talking about 1 of our customers that is in the lead position right now, after, you know, struggling for a few years. So I think it is a it is a good indicator to the market overall and anybody that is sitting on the sidelines in that sector that those investments have direct ROI and it is customer flow and profitability. So we, you know, we still remain very excited about that. You know, primarily because of our offering. You know, it is so well organized for that market as it is for grocery, as it is for, you know, petroleum C-store. You know, automotive, so many other of these vertical markets that we are in. I just think it is, you know, a reflection of some of their decisions to invest and the project timing. But I do not think it is a statement about you know, the future potential or the momentum that we are going to continue to get off of that. Aaron Spychalla: Understood. Thanks for taking the questions. I will turn it over. James A. Clark: Yes. I am pleased by the way, the operator said limit it to 1 question. Please ask the questions that everybody has on their minds, and we will jump in if it gets to be too many. Operator: Our next question comes from Brent Thielman with Oppenheimer. Your line is now live. Brent Thielman: Hey, thanks. Good morning. Congrats as well. Jim, on the retirement. I guess just first question, in and around Royston and the lower margin SignResource projects you are working through. Is it possible to size that backlog and what the margin headwind that caused you or is causing you as you wind those down? And, Jim, I think you mentioned you have taken some actions to protect the margins going forward, if you do not mind just kind of walking through what you are doing differently there. James A. Clark: Yeah. Brent, thanks for the questions. I mean, we do not usually dive too deep into project activity because it is mix. Right? it is never just 1 customer or anything like that. And I think it is easy to understand you know, maybe some of the decisions that were made as we are coming to a close and things like that. You know, I think the most important thing, you know, I said it in my comments there is we identify it. We know where it is. They have they have certainly performed at a higher level before. And so we do not see, you know, a lot of headwind getting back to the discipline that they have demonstrated in the past. Nor the discipline that LSI has as a bigger company. But, you know, I mean, I think the impact is, you know, between 50 and 100 basis points, you know, over the next, you know, quarter or 2, and I think it diminishes as time goes by. Brent Thielman: Got it. And then maybe just on the other side of that, any, like, margin tailwinds under the hood that you could speak through? I know there is been a lot of focus on procurement execution. Do not know if mix of end markets could make a difference here in the near term. Just be curious what you see kind of behind this headwind that is an underlying tailwind to the business for margins. James A. Clark: Yes. I mean, I think that is a great question and 1 that we are deeply focused on. And it is part of our overall thesis here You know? And there is a number of levers, but, you know, it starts with just our cost of sales. Right? I mean, when we look at you know, coming in as a sign company, a lighting company, a refrigeration company, whatever it is, that is, you know, 1 arrow, 1 shot. You know? When we walk in as LSI, we have, you know, 10 arrows, 10 shots, and we do not necessarily have to go through every arrow to get a win. So the whole idea of making it easy for our customers being able to service them you know, multiple levers of their request and their needs. that is probably the biggest tailwind we have, and we see that continuing to build momentum. But we also have the opportunity in the background of all the things we have done in the past. LSI executes very well. Procurement, manufacturing efficiencies, all of those things are levers we are working on right now You know, they do not happen overnight, and they are not linear. But what we have is a very receptive team in the Royston group You know, the engagement level by the by the team over at Royston and by the team at LSI has been outstanding. I think it says a lot of the professionalism of Royston. it is it is a well run company. And LSI is a well run company. I think we, you know, we rise we raise each other, by the way. Know, our investments are meetings with them, and I talked about our tactical focus I think, are all tailwinds where creating, and I hope to benefit from them sooner rather than later. Yeah. James E. Galeese: Brent, Jim G here. Just to you know, support what Jim's saying. You know, we commented that the organic LSI margins, you know, were pretty solid. And that is a result of a very disciplined process to align this rather volatile environment of material input cost with our project pricing. We are a project based business. Right? And what we saw in signage there was they had a gap in referring to, you know, current material input costs. So there was some misalignment. You know, there. You know, we are fixing that. We know how to do that. So we are very, bullish and upbeat about, our margin improvement process and capabilities as we know, as we move forward. Right? And good, again, being a project based business, every day, we are quoting projects. So every day, we can be alert and respond to changes going on in the, you know, in the marketplace. I was very encouraged, though, with our the demand levels in our key verticals were very strong, very high, very healthy. Alright? So true. James A. Clark: And the excitement level I talked about it a little bit. I wish there was a way I could know, visualize it, but we have had the opportunity to meet with know, customers of Royston and customers of LSI about what our what this new company looks like, and it is it is genuine excitement. it is it is it is there. And by the way, if the subtle if there was any subtlety in my message, particularly around some of the pricing margin issues, Look, signs are primarily plastics and polymers you know, they are directly impacted by crude oil pricing and, yeah. And the swing on that was faster than any, you know, than I think that anybody could react to. You know? And so I am proud of the work that the team did you know, even without LSI's involvement, and I think that it will get even better as a collaborative team. Brent Thielman: Appreciate all that. I will I will take you up on the 1 extra 1, which is on, again, on Display Solutions. I think you were assuming something around mid single digits to high single digits organic it came out in the high teens I guess 2 part would be is there any reason to think there is a pull forward in this quarter And I guess if not, what verticals or areas would you call out for kind of outperformance relative to expectations this quarter? James A. Clark: Yes. there is no there I will just say there is no pull forward of anything. We keep a steady state all the time and that is part of our agreement with our customers, our relationship. We wanna be very predictable. We wanna high say-do ratio. James E. Galeese: Well, even if we wanted to, we cannot. it is project based because it is going to a site and being installed to a date they specify. So we really do not have a lot of latitude, you know, there. James A. Clark: Our problems are usually the other way. Right. James E. Galeese: Know, the concrete truck that show up. Right. James A. Clark: You know? So, no, there is no pull forward. You know what I mean? I am pretty excited about I am really excited about the reception in the petroleum C-store space. I mean, these guys see it right away. They are getting right away. They are like, oh, this is great combination. I am also very excited about grocery. I mean, you know, we said it. We said that, you know, there was a little distraction, a little industry wide pause back in 24. And we said that we said that we expect to continue to see that investment. And it is been maybe 1 of the closest linear activities we have had. And, you know, we do not have very many of them. So you know, the grocery market has been on a, you know, on a good, nice, steady trajectory. We like the angle it is on. And we are you know, we listen just like a lot of other investors do to what the you know, what the CEOs of those companies are saying. And we have seen you know, consistent reference to store and in-store environment investment, and the payback. And, you know, and that is what we provide. And so we are pretty excited about that. And I would also say that, you know, automotive underperformed where we wanted this quarter, but you know, we like automotive. I have if you go back and listen to any of my prior calls, I have been you know, I remember coming out of COVID, somebody was calling the death of the showroom and you know, a traditional auto dealer, and we have never seen that And we continue to really enjoy the momentum that, that market has and the investments that they make. So and I am not leaving anybody out here. there is still a lot of positives in a number of the other vertical markets we have, but those would be 3 that I would definitely highlight. James E. Galeese: Yeah. Just to, you know, add to Jim's comments specifically, you know, in refueling, you know, C store. Jim referenced in his comments the award received on the, you know, the 2.5 thousand site program, you know, for large oil retailer. You know? And that retailer recognized, you know, the solution-sell capabilities and allowed us then to, you know, win that, not on price, but on, you know, our breath of what we can do to make, you know, their life you know, easier and allowed us to displace the multiple suppliers it took for them to do the same thing for them, you know, historically. So as Jim said, that is that is a new customer, and I think that is a really solid proof point you know, relative to our strategy. James A. Clark: And by the way, as we are waiting for the next question, I did mention it. In my comments and in the press release. That award is not really factored into some of the numbers that we are presenting. Right? So you know, we will we will get more on project timing and that type of thing as it moves forward. You can imagine it is complex. it is it is got a lot of elements to it. So you know, we are excited about it. Operator: Our next question comes from Alex Rygiel with Texas Capital Securities. Your line is now live. Alex Rygiel: Thanks. And you kind of just maybe answered this question, but want to kind of ask it again. Regarding the 2.5 thousand sites for the large oil retailer, what does that time line look like? It sounds like you have not really included the guidance yet. But what does that timeline look like? And it sounds like there is some upside possibly from some interior work. When might that be awarded, and how should we think about quantifying that upside? James A. Clark: Alex, thanks for the question. Good to hear you are on the line. Remember, we have talked about this before. there is award and then there is project release. Right? So awarding the project is, hey. We are going forward. This is the site scope. This is everything we are doing. Project release is what we and the customer learn through the process. Wow. You know, we bid off. We were gonna do a you know, 180 stores in, you know, 180 stores a month-- that is too much. You know, we are, you know, we are not able to process all of that. Or Look. We are gonna do 180 stores. I think we can step it up to 250. Right now, our initial look is looking at around 18 months for that project, you know, the scope of that project. Some of it will be you know, we will learn as we go through here over the next, I think, couple weeks We will get more clarity on that But, you know, I think the number 1 person that comments on this is James Galeese on these calls all the time. there is a difference between award and project release. And that, you know, and that is always the thing that we learn together. So where we where we are right now is the project award phase The pick and shovel work that we will do right now is what is that release schedule look like. But right now, we are anticipating it over about an 18-month time period. James E. Galeese: You know, and Alex, you know, that award, that 18 months, it is you know, it from historical perspective, the customer's being pretty aggressive there. What that means is, and we spoke to this too, is our capabilities to be able to fulfill that. Alright? You know, this is a specific customer, specific customer specifications certain level of complexity associated with that. But our competencies in capabilities to, you know, to do that is what the customer recognizes as well and allows them to think about you know, this, 2.5 thousand site renovation being done in this, you know, condensed period of time. James E. Galeese: Yeah. We support it. Now whether they can keep up with it James A. Clark: Right. Yeah. I was gonna say that we are confident we have the you know, we have the capacity to do it without disrupting our normal course of business. James A. Clark: This is that the efficiencies. This is what, you know, better utilization, second shifts, all of this flex that we have built into our system to allow us to respond to this. James A. Clark: And we learn along with the customer. I mentioned in the beginning of the comments. We learn as we go through these Sometimes we press the gas, you know, the pedal a little harder. Sometimes we say, well, you know, let's step it back to 150 or let's step it back to 125. And that is done in collaboration with the customer, and it is it is almost wholly driven by the customer. We need them to feel comfortable. But we are excited about the project. And then as it relates to the opportunities interior, Well, you know, that is something we are working on right now. You know? And I think that where we get our greatest strength is you know? And this is just like every consumer of every project, of every product, I fundamentally believe people buy from people. They you know, we look at specifications. We look at you know, performance criteria materials. We look at overall we, you know, we look at acquisition cost versus total cost. But people end up buying from people based on know, their safety ratio, how they do, you know, how they deliver on their commitments. And I think that as we continue to deliver with a new customer on a great project, we will earn more of their business. James E. Galeese: You know, Alex, I think you heard in my comments that, you know, 1 of the real positive highlights about the Petroleum C-store in Q4 was both the outdoor you know, applications work as well as the indoor work our sales were up double digits in both. Now, you know, a good majority of those were still out only projects or indoor, but we are beginning to see more where we are going in with both. That is the big opportunity and this project is certainly 1 of those where we have the opportunity now to expand into the indoor solution set as well. James A. Clark: I, you know, I wanna say 1 other thing because I think it is a you opened up a window for me to make comment on it, is that I am not sure, you know, a lot of our people know it. I think that the coverage people that have come to our factories have walked through, have noted it. I think that investors that have come and visited us noted it. But I wanted to talk about accessibility and communication and know, where a customer can reach in the organization and where an employee can reach. In every 1 of our factories, in every 1 of our locations, my cell phone number is posted in the factory, in the cafeterias, by the time clocks, available in HR, it is right there. It says you have a question. You have a suggestion. You see something. Say something. And it just goes through kind of a 6 steps. You know? like, hey, talk to your manager. If you are not getting satisfaction, Talk to HR if you are still not getting satisfaction. Talk to the our head of operations, Don Kern. If you are still not getting satisfaction, call Jim Clark. Here's his cell phone number. And that is equal to our customer base. And when I was going through the phone calls with Royston, and this is going back, you know, 5 months now, You know, there were a number of comments from the customers about you know, wow. I am surprised the CEO of the company is on the line. You know, nice to meet you, all that type of stuff. And that cell phone number was made available to every 1 of those customers too. And I think it says a lot about the culture in our company. I am 1 person that 1 cell phone number. But it is that understanding whether you are a customer or whether you are an employee that there are no walls in communication. There are you know, you can get ahold of people pretty quick. And I think that gives a great deal of comfort, and I think it is it says a lot about our organization anywhere between me you know, and our manufacturing operation that people are available, accessible, and, you know, it is better to act fast than to, you know, live with something and have it get caught up in some type of procedural process. And I think we get a lot of equity from that from our customers. We get a lot of acknowledgment, and we are proud of that. Alex Rygiel: And 1 last question. First quarter display margin directional guidance obviously suggests a headwind. Is that headwind incremental to the fiscal fourth quarter? Such that margins sequentially could be down? Or is that more of a kind of a year over year kind of broader comment? James E. Galeese: Yes. Jim G here. Yeah. Alex, it is it is it is a combination of both. We did see some of that headwind in Q4 Alright? We will see a bit of an incremental piece of that in Q1, you know, as well. But I do not know. In the, you know, 30-basis-points or something like that incremental. Alright? So we did see it in Q4. We will see it A little larger in Q1. And then as Jim mentioned, you know, it will start, you know, dropping a bit. Better with some. And then it looks like we are going to flush out of it by the end of Q2. James A. Clark: And I would I would like to mention 1 other thing just in case it is too readily apparent, This--you know, we are--this is about the anticipated the targeted margin that increase, that, you know, that benefit that we were getting from Royston, that accretive effect combined with our discipline and our current margins, we are just not going to this headwind is going to hold us back a little from hitting that top that upper end goal, but we are the bottom is not dropping out of anything. You know? I mean, it is not like if this was LSI on a stand alone basis, it would be, you know, be pretty strong. And like I said, I mean, the most important thing is that this is identified fixable, and it will be digested and worked through. Alex Rygiel: Very helpful. Thank you. Operator: Our next question comes from Amit Dayal with H.C. Wainwright. Your line is now live. Amit Dayal: Hey, good morning, guys. With respect to Royston, you know, sorry to, you know, beat the horse on this 1. Are the margin improvements just as simple as repricing the portfolio to adjust for higher costs? Or does the portfolio require any tweaking? Maybe in other words, will Royston margins come at the expense of lower revenue growth James A. Clark: No. Hey, Amit. First of all, good to hear your voice. Thank you. No. I mean, listen, this is going back to our original thesis and our, you know, our presentations, Royston as a group is accretive to our margins, and it will remain accretive, and it will get there. I think that you know, we have 2 factors that were going on here, and it is not hard to understand. 1 was you know, Royston had the accelerator to the floor, through this sales process. Right? They are they are handling the sales process and the due diligence, and they are keeping the business going. And, you know, they took their eye off the ball a little bit. that is number 1. Number 2 was there is a huge input cost that swung very quickly. it is petroleum. It does not take much to understand that petroleum prices have been significantly impacted over the last 6 months. And that is exactly the time period that this these projects were exposed to. So the combination of those 2 make up the overwhelming majority of any headwind that we are facing. The other thing that I have talked about I think a lot of times in acquisitions, you know, from the outside, everybody looks at it as 1+1=2. And I have I have worked really hard through our prior calls to say, there is a couple things to consider about that. 1 is we do not like all the business that you know, might be in the portfolio right now. So we will look at that business and say, can we fix this? Can it perform to the level that we want it to perform to? Is it a distraction to our core vertical market thesis, which was work in the sectors that we know well and that respect us, And can we add to this? Is it something we can build on? So some of that is going on. that is number 1. Number 2, know, when you go through an acquisition process like this, the company you know, the acquired company, let alone the acquiring company, are running full speed. There is a little bit of an exhale that happens when the deal gets signed. Right? And, you know, I think that exhale has happened. Everybody's focused. Everybody's going, you know, about their business, and I think there is huge potential. But that exhale happens. So, you know, everybody comes off their pace a little bit. Relaxes a little bit, so we are paying a little bit of that impact. And then the last thing, and this is the most important thing as an investor, as an employee, or as a customer, We have got purposeful programs in play right now. We have got the meetings going on. We have got tact plans to execute against. And those things will get done and if-- and the returns will be there. So you know, we are very excited about this. I think it just the size and scale of it makes it a little bit more visible. And, you know, as we have always in the past, we wanna have a very high say-do ratio. We wanna be very transparent. And so you know, that is just this is just us being us. James E. Galeese: Yeah. And, Amit, Jim g here. I would just, you know, add to Jim's, you know, comments. I talked yesterday, you know, with the LSI leader of our print graphics and signage business combination now. And, we talked about that very topic. And he says, you know, no, Jim. We are we are very busy on the quote stage, very busy on the order entry stage. And, you know, this new pricing, we do not expect any type of, business volume interruption you know, associated with, with us, you know, making the appropriate price movements and price changes. So as we talked before, you know, the, you know, the market outlook for refueling C-store continues to be very, very positive. And size of that, could be a part of that. Amit Dayal: No. I appreciate that color, guys. that is helpful, I think, for everyone. You know, with respect to I was at your facilities, Jim, you know, not too long ago, and, you know, really got to appreciate the scale and depth at which you deliver your services. Because of the broader portfolio now that you have, you know, after these acquisitions over the last few years, are you able to pitch bigger deals to customers? And is that a trend we should potentially sort of, you know, keep in mind as we think about growth for you in the future? James A. Clark: I mean, I think this is more of a customer behavioral change than a capabilities change for LSI. Remember, we are creating what is effectively a new category that is serving this market. And, you know, we go through the awareness process to the customer. Hey. Did you know we can do all of this? And sometimes, you know, some of our customer base is just you know, not fully aware that we can do x, y, and z. Sometimes their own structure splits those roles and the people that are involved in those meetings. So I think we are going--you know, our customer base as well as our company are going through an evolutionary development process together. And as we were just talking about, you know, our capacity and everything, we have the capacity to absorb. We can grow within our footprint 2x. You know? And so now the decisions come you know, what do you do to optimize that capacity? Because unutilized capacity is--it can potentially be you know, a paper cutter drain on our margins. But taking that capacity out too soon or making adjustments that do not account for that could be a shortcoming for us in the future where we get these projects that are larger in scope and you know, have more elements. I cannot speak for the whole industry but I would say these 2 things. Remember, number 1, we are creating a new category of supplier. It did not exist before. The breadth of what we can bring, was not available before you know, before LSI started on this on this path. Number 2 is that--we are--I believe we are already getting some of the largest project awards there are. I, you know, I mean, we get, in some cases, you know, I can think of 1 right now where a customer gave us a third of the project and within 2 months came back and said, we are giving you the whole project. They literally pulled the other 2 awards and gave it to us. We want more of that to happen. But I think there is just a natural awareness curve and demonstration curve that is gonna go on. Amit Dayal: Understood. that is alright, guys. Thank you so much. Operator: We have reached the end of the question and answer session. I would now like to turn the call back over to Jim Clark. President and Chief Executive Officer, for closing comments. James A. Clark: We were looking at the comments that we made in the opening of this conversation and we had rehearsed it. And Jim and I, James Galeese and myself both thought this is the longest you know, intro, the longest call intro, prepared comments we have ever had. And I think it speaks to the you know, the growth of the business, the size of the business. And the opportunity that is in it. I think we had a great quarter. We are very excited about what is in the future. I wish that our growth was linear, and it just was you know, it was just from point A to point B to point C to point D. I do not expect it to look like an EKG. But I do expect you know, nice growth in front of us. I think we have a lot of potential. A lot of runway. I can speak for myself, and I can speak for a number of our senior leadership team. We are very excited about what is in front of us. We are very excited about the reception the market has given us. Our customers are giving us the opportunities. And I think there is just a lot of opportunity in front of us. And now it is our job to just continue to maintain that high say-do ratio demonstrate it, show it, and, you know, continue on the path we have been on. With that, I will say thank you very much for taking the time and I look forward to hearing from each of you or some of you here in the future. Take care. Operator: This concludes today's conference. You may disconnect your lines at this time. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. LSI Industries (LYTS) Q4 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in LSI Industries Inc.? Here are five stocks we like better. LSI Industries delivered record fiscal 2026 results, with sales up 20% to $689 million, adjusted EPS rising to $1.25, and adjusted EBITDA increasing 28% to nearly $70 million. Fourth-quarter sales grew 51% year over year, including 8% organic growth. Display Solutions was the primary growth driver, with quarterly sales doubling to $164 million and organic growth of 18%, supported by grocery and convenience-store demand. A multiyear award to renovate approximately 2,500 oil-retailer sites provides additional potential growth, though it was excluded from current forecasts. Near-term margins face pressure from Royston’s lower-margin signage backlog, expected to reduce adjusted EBITDA margins by roughly 50–100 basis points through the first half of fiscal 2027. Management expects pricing improvements and operational changes to resolve the issue while maintaining its long-term 12.5% adjusted EBITDA margin target. LSI Industries (NASDAQ:LYTS) reported record fiscal 2026 sales and profitability, supported by growth in its core operations and the acquisition of the Royston Group, while management said lower-margin signage backlog at Royston will weigh on margins through the first half of fiscal 2027. Full-year net sales rose 20% from the prior year to a record $689 million. Adjusted diluted earnings per share increased to $1.25 from $1.04 in fiscal 2025, while adjusted EBITDA climbed 28% to nearly $70 million, representing a 10.1% margin. The company generated $39 million in free cash flow, or more than 50% of adjusted EBITDA. → Datavault AI Locks Down CyberCatch in $94M Security Rollup For the fiscal fourth quarter, sales increased 51% year over year, including 8% organic growth. Adjusted EBITDA rose 50% to more than $25 million, with a 10.9% adjusted EBITDA margin, and adjusted EPS was $0.38 per diluted share. Fourth-quarter free cash flow totaled just under $10 million, which the company used to reduce debt by $9 million. Display Solutions sales doubled year over year to $164 million in the fourth quarter, accounting for 70% of LSI’s quarterly revenue. Organic sales in the segment rose 18%, aided by demand in grocery and petroleum convenience-store markets. → Michael Burry Is Betting Against Palantir Again—Should Investors Care? In grocery, organic sales of refrigerated and non-refrigerated display cases increased 21% from a year earlier. President and Chief Executive Officer Jim Clark said grocery customers continued to invest in store décor and the overall shopping experience, following an industry-wide pause in 2024. He said the company expects grocery demand to remain elevated entering fiscal 2027. Organic sales in the refueling and convenience-store vertical rose 16% during the quarter, with double-digit gains in outdoor print graphics and EMI store interior products. Clark said LSI received a multiyear award from a new large oil-retailer customer to renovate about 2,500 sites, covering exterior branding elements with potential future interior opportunities. → Home Depot Analysts See a Path to $375 and Beyond Management said the initial expectation is for the exterior project to unfold over roughly 18 months, though the release schedule will depend on the customer’s ability to execute the program. The award was not included in the figures management discussed during the call. Chief Financial Officer Jim Galeese said the company is beginning to see more convenience-store projects that include both exterior and interior work, consistent with LSI’s strategy of providing a broader set of solutions to customers. He added that fourth-quarter bookings matched billings in Display Solutions and the segment entered fiscal 2027 with backlog slightly above the prior-year level. LSI completed its acquisition of the Royston Group during fiscal 2026, describing it as the largest acquisition in company history. Clark said the integration is progressing, with the company aligning customer-facing and go-to-market efforts while pursuing procurement, cross-selling and cost-saving opportunities. However, management said fourth-quarter adjusted EBITDA margin of 10.9% came in below expectations because of lower-margin backlog at SignResource, a Royston business. According to Clark, prices on certain signage projects did not keep pace with higher raw-material costs, particularly petroleum-based polymers and plastics affected by crude-oil prices. Management expects the issue to take approximately two quarters to clear and to create a margin headwind through the first half of fiscal 2027. Clark estimated the effect at roughly 50 to 100 basis points over the next quarter or two. Galeese said the pressure was visible in the fourth quarter and is expected to be somewhat greater in the fiscal first quarter before declining and largely clearing by the end of the second quarter. LSI said it has identified shortcomings in the acquired business’s project-quotation process and has implemented a pricing discipline used elsewhere in the company. Management maintained that Royston remains accretive to LSI’s margin profile and reiterated its 12.5% adjusted EBITDA margin target under the company’s Fast Forward strategy. Royston’s sales declined modestly on a pro forma basis during the quarter, driven partly by account mix. Galeese said two large convenience-store customers are currently lagging the broader industry in renovation and new-store activity, though both have substantial investment plans over the next five years and are working with Royston on concept and pilot projects. Operationally, Clark said Southern CaseArts improved on-time delivery from the “70-something percent range” to above 90% after LSI applied its operating practices to the business. The company expects to identify and realize additional cost savings over the next 24 months. Lighting sales increased 17% sequentially in the fourth quarter but declined 3% from the prior-year quarter, reflecting softer automotive and quick-service restaurant, or QSR, activity. For the full year, Lighting sales rose 7%, driven by national-account penetration and outdoor area-lighting demand. Clark said LSI’s Velocity family of outdoor area lighting products continues to gain market traction. The company expects to launch initial sizes of a new Velocity floodlight fixture line in the next quarter. Fourth-quarter Lighting orders were 5% higher than a year earlier and book-to-bill exceeded one times. Galeese said Lighting’s gross-margin rate improved both in the quarter and for the full year because of project pricing and productivity. Still, based on project backlog scheduling, the company expects fiscal first-quarter Lighting sales to be several points below a strong prior-year comparison while maintaining gross-margin performance. Management characterized the QSR market as soft amid inflation’s effect on consumer sentiment and spending, but said project inquiries have remained steady and quote activity has begun to improve. Clark said the company continues to view the vertical as attractive because investments in store interiors, drive-through menu boards, parking lots and other upgrades can generate returns for operators. LSI also announced that Galeese plans to retire at the end of October 2027 after nearly a decade with the company. The company has begun a formal search for a successor, considering both internal and external candidates with the support of a global executive search firm. Clark said Galeese will remain in his role through an orderly transition and may stay beyond the planned retirement date if necessary to support the handoff. Management said the planned retirement does not represent a change in strategy, guidance or capital-allocation priorities. LSI Industries, Inc (NASDAQ: LYTS) is a diversified manufacturer and distributor of lighting, graphics and building technology products. Headquartered in Cincinnati, Ohio, the company develops energy-efficient LED lighting systems, branded and digital graphic displays, and integrated building technology solutions. Serving customers in the retail, quick-service and convenience store, industrial, hospitality and transportation markets, LSI combines design, engineering and manufacturing capabilities to address both aesthetic and functional needs. In its lighting segment, LSI offers interior and exterior LED fixtures, canopy lights, high-bay and low-bay systems, and specialized horticultural grow lights. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "LSI Industries Q4 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. Full Year Net Sales: Record $689 million, up 20% versus the prior year. Adjusted EPS (Full Year): $1.25 per diluted share, compared to $1.04 in fiscal 2025. Adjusted EBITDA (Full Year): Nearly $70 million, up 28% versus fiscal 2025, at a margin rate of 10.1%. Free Cash Flow (Full Year): $39 million, representing a conversion of more than 50% of adjusted EBITDA. Q4 Sales Growth: 51% total growth, including 8% organic sales growth. Q4 Adjusted EBITDA: Over $25 million, an increase of 50% versus prior year, with an adjusted EBITDA margin of 10.9%. Q4 Adjusted EPS: $0.38 per diluted share. Q4 Free Cash Flow: Just under $10 million, used to reduce debt by $9 million in the quarter. Display Solutions Q4 Sales: Doubled compared to the prior year to $164 million, representing 70% of LSI's sales in the quarter, with organic growth of 18%. Display Solutions Q4 Adjusted EBITDA: Over $20 million, compared to $8.7 million in the prior year quarter, with segment adjusted EBITDA margin rate of 12.4%. Lighting Segment Full Year Sales: Grew 7%, with Q4 sales declining 3% versus the prior year quarter. Lighting Q4 Orders: 5% above last year with a book-to-bill above one times. Grocery Vertical Organic Growth: Refrigerated and non-refrigerated display case sales increased 21% year-over-year in Q4. Petroleum C-store Vertical Organic Growth: Q4 sales increased 16% versus the prior year quarter. Warning! GuruFocus has detected 7 Warning Sign with LYTS. Is LYTS fairly valued? Test your thesis with our free DCF calculator. Release Date: August 20, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Record full-year net sales of $689 million, up 20% year-over-year, with adjusted EPS growth to $1.25 from $1.04. Display Solutions segment achieved 18% organic sales growth in Q4, with grocery vertical up 21% and Petroleum C-store up 16%. Secured a major multi-year program with a new large oil retailer to renovate approximately 2,500 sites, displacing an incumbent supplier. Lighting segment continues to outperform the market with 7% full-year sales growth, driven by national accounts and new Velocity product line traction. Strong free cash flow of $39 million for the year, representing over 50% conversion of adjusted EBITDA, and debt reduction of $9 million in Q4. Royston integration progressing well, with Southern CaseArts on-time delivery improving from ~70% to over 90%. Identified and addressing the SignResource margin issue, expecting it to clear within two quarters, with corrective actions already implemented. Q4 adjusted EBITDA margin of 10.9% fell below expectations due to lower-margin backlog at SignResource within Royston. SignResource backlog impacted by petroleum-based polymer costs that were not adequately priced, creating a margin headwind expected to persist through H1 fiscal 2027. Lighting segment Q4 sales declined 3% year-over-year due to softness in automotive and QSR verticals. QSR vertical remains soft due to inflation impacting consumer spending, though quote activity is improving. Royston's top two Petroleum C-store chains currently lag in renovation and new store construction, impacting near-term demand. First quarter Display Solutions margins will be further impacted by the lower-margin backlog, with an incremental headwind of ~30 basis points. CFO Jim Galeese announced retirement for October 2027, creating leadership transition uncertainty despite an orderly plan. Q: Can you provide more detail on the lower-margin SignResource projects at Royston, including the size of the backlog and the actions being taken to protect margins going forward?A: CEO Jim Clark explained that the issue stems from a combination of Royston's focus on filling the pipeline during the sales process and a rapid swing in petroleum-based input costs for signage materials. He noted the impact is between 50 and 100 basis points over the next quarter or two and will diminish as the backlog clears. CFO Jim Galeese added that LSI has identified the flaw in the project quotation process and has implemented a more disciplined approach to align project pricing with current material input costs, a process the company is confident in fixing. Q: Is the Q1 Display Solutions margin headwind incremental to Q4, and how should we think about the margin trajectory?A: CFO Jim Galeese confirmed the headwind is a combination of both sequential and year-over-year impacts. The company saw some of the headwind in Q4 and will see an incremental piece, estimated at around 30 basis points, in Q1. The expectation is that the impact will begin to drop off after Q1 and be fully flushed out by the end of Q2. Q: Regarding the new 2,500-site program with a large oil retailer, what is the timeline, and is there upside from potential interior work?A: CEO Jim Clark stated the initial expectation is for the project to span approximately 18 months, with more clarity expected in the coming weeks. He emphasized the difference between a project award and project release, noting the schedule will be learned collaboratively with the customer. CFO Jim Galeese highlighted that the company is beginning to see more opportunities involving both exterior and interior work, and this project presents a significant opportunity to expand into the indoor solution set. Q: Are the margin improvements at Royston as simple as repricing the portfolio, or will they come at the expense of lower revenue growth?A: CEO Jim Clark clarified that Royston remains accretive to margins and will get to the target level. He attributed the headwind to two factors: Royston's focus on the sales process and a rapid swing in petroleum-based input costs. He also noted the company is evaluating the portfolio to ensure it aligns with core vertical market theses. CFO Jim Galeese added that he has received direct assurance from the business leader that the new pricing is not expected to cause any business volume interruption, given the very positive market outlook for the Petroleum C-store vertical. Q: With the broader portfolio, are you able to pitch bigger deals to customers, and is this a trend to keep in mind for future growth?A: CEO Jim Clark explained that this is more of a customer behavioral change than a capabilities change for LSI. The company is creating a new category of supplier, and as customers become more aware of the full breadth of offerings, they are awarding larger projects. He cited an example where a customer initially gave LSI a third of a project and then returned within two months to award the entire project. He believes this trend will continue as the awareness and demonstration curve progresses. Q: Can you elaborate on the operational goals and integration of the Royston acquisition, and confirm the path to the 12.5% EBITDA margin target?A: CEO Jim Clark confirmed the company has a good handle on the margin issue and that the 12.5% adjusted EBITDA margin target remains unchanged. He noted the company has demonstrated the ability to achieve margins north of 11.5% in the past, and the accretive nature of Royston makes the target more achievable. He acknowledged the integration work takes time and effort, but the company is confident in the outcome and is working on rationalizing footprints, resources, and people to optimize the combined business. Q: Can you provide more detail on the QSR vertical and the indications of a potential recovery?A: CEO Jim Clark stated that despite current headwinds, LSI remains excited about the QSR market. He pointed to the success of a specific customer that has invested in store interiors and drive-through menu boards, demonstrating a direct ROI on such investments. He believes the current softness is a reflection of project timing and customer investment decisions, not a statement about the future potential of the market, and LSI's offering is well-organized for this vertical. Q: Are there any margin tailwinds under the hood that could offset the SignResource headwind?A: CEO Jim Clark identified the company's integrated "One LSI" solution set as the biggest tailwind, allowing it to service customers on multiple levers and win business without needing to win every component. He also mentioned ongoing work on procurement and manufacturing efficiencies. CFO Jim Galeese added that the organic LSI business has demonstrated solid margins through a disciplined process of aligning project pricing with volatile material input costs, and the company is very bullish on its margin improvement capabilities moving forward. Q: Was there any pull-forward of demand in the strong Q4 Display Solutions organic growth of 18%?A: CEO Jim Clark and CFO Jim Galeese both confirmed there was no pull-forward of demand. The business is project-based, with installations tied to customer-specified dates, leaving little latitude for timing changes. The strong growth was driven by continued healthy activity in key verticals like grocery and Petroleum C-store, with the grocery market showing a particularly steady and linear trajectory of investment. Q: Can you provide more color on the strength in the Petroleum C-store and grocery verticals, and the cross-selling potential with Royston?A: CFO Jim Galeese noted that Q4 organic sales in the Petroleum C-store vertical increased 16%, with double-digit growth in both exterior and interior products. He highlighted that while many projects are still exterior-only or interior-only, the company is beginning to see more opportunities involving both, which confirms the significant synergy opportunity to improve per-site revenue. CEO Jim Clark added that the grocery market has been on a steady trajectory, with chains continuing to invest in the consumer experience, and the company is excited about the reception from customers in both verticals. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Fiscal 2026 marked a transformational period defined by the record-setting acquisition of Royston Group, significantly expanding LSI's retail branding capabilities. Performance was driven by strong organic growth in grocery and refueling C-store verticals, offsetting softness in QSR and automotive sectors due to project timing. The company successfully displaced a long-standing incumbent for a 2,500-site renovation program by leveraging its integrated '1 LSI' solution set across exterior and interior branding. Management identified a temporary margin headwind at Royston's SignResource unit caused by legacy backlog pricing that failed to account for volatile petroleum-based polymer costs. Operational discipline at Southern CaseArts improved on-time delivery from the 70% range to over 90% by applying LSI's core manufacturing playbook. The 'DRIVE' values framework was introduced to unify the combined organization's culture and ensure tactical execution of the Fast Forward strategy. Management emphasized that the current margin pressure is an isolated, non-linear event that does not alter the long-term 12.5% adjusted EBITDA margin target. The lower-margin signage backlog is expected to take approximately two quarters to fully clear, creating a margin headwind in the first half of fiscal 2027 followed by a recovery in the second half. A multi-year renovation program for a large oil retailer covering 2,500 sites is anticipated to execute over an 18-month timeline, with potential for interior cross-selling upside. Lighting segment sales for Q1 fiscal 2027 are projected to be several points below the prior year due to a strong comparison period and specific project scheduling. Management expects demand in grocery and refueling C-store verticals to remain elevated, supported by multi-year investment cycles from top-tier national accounts. A deliberate, year-long CFO succession plan is underway to ensure continuity and stability through August 2027 and beyond if necessary. The SignResource backlog represents a specific risk where legacy pricing did not keep pace with crude oil-driven raw material input costs. CFO James Galeese announced his retirement effective October 2027, with a formal search process initiated to find a successor over the next year. Royston sales declined modestly year-over-year as management intentionally narrowed focus toward higher-value product and project mixes. LSI maintains significant unutilized capacity, allowing for potential 2x growth within the existing footprint to accommodate large-scale project awards. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management estimates the headwind to be between 50 and 100 basis points over the next one to two quarters. The impact is expected to diminish sequentially as the legacy projects are flushed out and LSI's disciplined pricing model is applied. Despite current consumer sentiment headwinds, management remains bullish on QSR due to the high ROI seen by early investors in store refreshes. LSI's integrated offering for drive-thrus and interiors is positioned to capture demand as industry participants adjust strategies to combat inflation. The project is currently in the award phase, with a projected 18-month release schedule that is largely driven by the customer's pace. LSI confirmed they have the flex capacity and second-shift capabilities to fulfill this aggressive timeline without disrupting other business. Management clarified there was no 'pull-forward' of revenue; growth is strictly tied to site-specific installation dates set by customers. Strength is attributed to a genuine market reception of the combined LSI-Royston value proposition, particularly in the petroleum C-store space.

LSI Industries Inc. (NASDAQ:LYTS) shares advanced 2.20% in premarket trading on Thursday after the company delivered fourth-quarter earnings and revenue above analyst expectations, supported by organic growth and its acquisition of Royston Group. Adjusted earnings per share reached $0.38, exceeding the consensus estimate of $0.35, while quarterly revenue of $234.6 million came in ahead of the $222.78 million forecast. Revenue jumped 51% from $155.1 million in the same period a year earlier, benefiting from continued expansion across key vertical markets and the first full-quarter contribution from Royston Group, which LSI acquired on March 24, 2026. Excluding acquisition-related sales, revenue still increased 8% year on year. LSI reported GAAP net income of $6.9 million, equivalent to $0.18 per diluted share, after absorbing $3.0 million of expenses associated with acquisitions. On an adjusted basis, net income reached $14.4 million, while adjusted EBITDA climbed 50% to $25.7 million from $17.1 million in the prior-year quarter. The adjusted EBITDA margin also improved by 90 basis points sequentially from the fiscal third quarter, indicating stronger profitability alongside the substantial increase in sales. For the full fiscal year ended June 30, 2026, LSI generated record net sales of $689.4 million, representing growth of 20% from the previous year. Adjusted earnings per share increased to $1.25 from $1.07 in fiscal 2025, while the company generated $39.0 million of free cash flow during the year. Net debt stood at 2.7 times pro forma trailing 12-month adjusted EBITDA, reflecting the impact of the company’s recent acquisition activity. “Fiscal 2026 was a transformational year for LSI, one in which we delivered record sales and profitability within our core business, while completing our largest acquisition to-date, with the purchase of Royston Group,” stated James A. Clark, President and CEO of LSI. Performance was particularly strong within LSI’s Display Solutions segment, where fourth-quarter net sales doubled from the corresponding period last year. Organic growth within the division reached 18%, while its adjusted EBITDA margin increased to 12.4%. The Lighting segment produced a more mixed performance. Sales increased 17% sequentially from the third quarter but declined 3% year on year, reflecting softer activity in the automotive and quick-service restaurant markets. Alongside its results, LSI declared a regular quarterly cash dividend of $0.05 per share. The dividend will be paid on September 8, 2026, to shareholders of record as of August 31. The combination of better-than-expected quarterly results, record annual sales, improving profitability and continued organic growth helped support the positive premarket reaction, while the Royston acquisition has significantly expanded the scale of LSI’s operations. LSI Industries stock price

CINCINNATI, August 20, 2026--(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 its fiscal 2026 fourth quarter and full year ended June 30, 2026. FISCAL 2026 FOURTH QUARTER RESULTS Net Sales +51% y/y to $234.6 million; organic growth +8% Net Income $6.9 million; Adjusted Net Income $14.4 million Diluted EPS of $0.18; Adjusted EPS $0.38 per diluted share EBITDA $21.2 million; Adjusted EBITDA $25.7 million or 10.9%/sales Free Cash Flow $9.7 million FISCAL 2026 FULL YEAR RESULTS Net Sales +20% y/y to record $689.4 million Net Income $22.6 million; Adjusted net income $42.2 million Diluted EPS of $0.67; Adjusted EPS of $1.25 per diluted share EBITDA of $55.0 million; Adjusted EBITDA $69.7 million or 10.1%/sales Free Cash Flow of $39.0 million Ratio of net debt to proforma TTM Adjusted EBITDA of 2.7x LSI reported net sales of $234.6 million in the fourth quarter, an increase of 51% versus the prior year period, led by sustained growth in key vertical markets and the first full-quarter contributions from the acquisition of Royston Group ("Royston") on March 24, 2026. Excluding acquisition-related contributions, net sales increased 8% in the fourth quarter when compared to the year-ago period. LSI reported fourth quarter net income of $6.9 million, or $0.18 per diluted share, including $3.0 million of acquisition-related expenses, while adjusted net income was $14.4 million, or $0.38 per diluted share. The Company generated adjusted EBITDA of $25.7 million in the fourth quarter, an increase of 50% when compared to $17.1 million in the prior year quarter. Fourth quarter adjusted EBITDA margin rate increased 90 basis points sequentially versus the fiscal third quarter, driven by sustained operational discipline and a favorable margin contribution from the Royston acquisition. For the twelve-month period ended June 30, 2026, LSI reported net sales of $689.4 million with adjusted earnings per diluted share of $1.25 compared to $1.07 in fiscal 2025. Fiscal 2026 sales include the partial year impact from the strategic acquisition of Royston. For full-year fiscal 2026, LSI delivered margin expansion across adjusted operating income, adjusted net income, and adjusted EBITDA, driven by volume growth, strategic price actions, and productivity initiatives. LSI generated Adjusted EBITDA of $69.7 million in fiscal year 2026, an increase of 27% versus the prior year, inclusive of an adjusted EBITDA margin rate of 10.1%, or 50 basis points above fiscal year 2025. A reconciliation of GAAP and non-GAAP financial results is included in this press release. LSI generated free cash flow of $9.7 and $39.0 million for the fourth quarter and full year fiscal 2026, respectively. As of June 30, 2026, the Company had a ratio of net debt to proforma trailing twelve month adjusted EBITDA of 2.7x, and approximately $95 million of availability under its $350 million senior secured credit facility. The Company declared a regular cash dividend of $0.05 per share payable on September 8, 2026, to shareholders of record on August 31, 2026. MANAGEMENT COMMENTARY "Fiscal 2026 was a transformational year for LSI, one in which we delivered record sales and profitability within our core business, while completing our largest acquisition to-date, with the purchase of Royston Group," stated James A. Clark, President and CEO of LSI. "Over the past year, we continued to expand our differentiated portfolio of integrated retail branding solutions across a growing roster of leading brands, while reinforcing our market-leading positions in key consumer environments, including refueling, grocery and quick-service restaurants, through a collaborative approach focused on elevating the consumer experience. "Fiscal fourth quarter net sales increased materially versus the prior-year period, supported by a combination of organic growth and contributions from the Royston acquisition," stated Clark. "The addition of Royston has taken our vertical market strategy to a new level, creating unprecedented opportunities for commercial synergies that, over time, are expected to further demonstrate the power and durability of our value-compounding business model. To that end, adjusted net income increased nearly 40% versus the prior-year period in the fourth quarter, driven by a combination of volume growth, price discipline, and improved operational efficiency, consistent with our strategic focus. "Our acquisition of Royston has further strengthened our differentiated value proposition across our vertical markets, creating a one-of-one platform that is generating strong enthusiasm among customers and partners for its ability to elevate the consumer experience and strengthen their brands in the marketplace," continued Clark. "We are well positioned to capitalize on incremental growth opportunities by expanding our share of business with existing customers while attracting new customers that recognize the many benefits of partnering with our integrated, one-of-one, solutions-based platform. "Within our Display Solutions segment, net sales doubled from the previous year period, including 18% organic growth, when compared to the fiscal fourth quarter 2025. Display segment adjusted EBITDA margin rate increased to 12.4%, the highest level reached in nearly three years, and an increase of 180 basis points versus the year-ago period," stated Clark. "Organic growth in Display Solutions for the fourth quarter was supported by strengthening demand across the grocery and refueling/c-store vertical markets. Within the grocery vertical, refrigerated and non-refrigerated display cases sales increased 21% year-over-year, as grocery customers continued to invest in store décor and an enhanced consumer shopping experience. Activity within this vertical has steadily improved over the past two years following the industry-wide pause related to the proposed merger of two large grocery chains, and we expect demand to remain elevated entering fiscal 2027. "Across the refueling/c-store vertical, fourth quarter sales increased 16% versus the prior year quarter. Both outdoor print graphics and EMI store interior products produced double-digit growth. Project activity remains healthy across our multi-brand customer base, including both new store and renovation activity. In the quarter, LSI was awarded a multi-year program with a large oil company to renovate approximately 2,500 sites. The program includes renovation of all exterior branding elements and includes both products and services. This represents a new customer win for our business, with the breadth of our integrated One LSI solution set serving as a key differentiator in displacing long-standing incumbent suppliers. "The integration of Royston continues to advance at an accelerated pace as we refine and deploy a unified customer-facing value proposition and go-to-market model. Royston fourth quarter sales declined modestly on a year-over-year basis, consistent with our expectations, as we narrow our strategic focus around a higher-value product/project mix. Importantly, several of Royston’s largest c-store customers are in the initial phase of a multi-year renovation and new construction cycle, with project activity that is expected to ramp beginning in fiscal 2027 and continue throughout the next several years," stated Clark. "Entering fiscal 2027, we anticipate a sustained, elevated pace of project activity within the Display Solutions segment. As has been the case in recent years, we also expect the timing of project activity will not be linear, as customers navigate site scheduling, permitting, and procurement requirements. Given a dynamic operating environment, we will continue to adapt and respond accordingly, while providing our customers with an integrated, on-stop solution that solves for the complexities of large-scale site construction and remodeling project management. "Within Display Solutions, project activity remains elevated and order rates remain strong, with a book-to-bill of approximately 1.0x on strong sales," continued Clark. "Importantly, order rates do not include the $30 million refueling/c-store program award we received during the fourth quarter 2026. "For our Lighting segment, fourth quarter sales increased 17% versus the fiscal third quarter but declined 3% when compared to the fiscal fourth quarter 2025, the result of a soft quarter for the automotive and QSR verticals, where project activity can be uneven throughout the fiscal year. "For fiscal year 2026, Lighting segment sales increased 7%, with growth driven by increased penetration of national accounts, together with improved demand for outdoor area lighting," continued Clark. "Our recently launched V-LOCITY family of outdoor area lighting continues to gain market acceptance, with customers recognizing the industry leading specifications and performance afforded by the new product line. In addition, we are in the final development phase of our new Velocity Flood light fixture line, with initial sizes to be launched in the calendar year fourth quarter. The new Flood range expands our high performing Velocity series of products, further strengthening our outdoor range of products. Lighting fourth quarter orders were 5% above last year with a book-to-bill above 1.0." Clark concluded, "During fiscal 2026, we built upon a strong foundation for profitable growth as we meaningfully expanded our capabilities, significantly increased our market share in key verticals, and continued to focus on driving a unique-to-market value proposition that has fundamentally redefined the retail branding solution category. With the addition of Royston, we’re focused on realizing the benefits of scale, while leveraging a proven playbook that prioritizes on-plan execution. Our long-standing customer relationships, together with the trust and confidence customers place in the combined LSI and Royston brands, position us to become an even more valuable strategic partner and capture a greater share of wallet, over time. We’re confident in the outlook for our business and look forward to continuing to create value with our customers, employees and shareholders in the years ahead." FISCAL 2026 FOURTH 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: To listen to a replay of the teleconference, which subsequently will be available through September 3, 2026: 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 3,000 people at 23 manufacturing plants in the U.S. and Canada. Additional information about LSI is available at www.lsicorp.com FORWARD-LOOKING STATEMENTS Cautionary Notice: In addition to statements of historical fact, this news release contains forward-looking statements within the meaning of the federal securities laws and is intended to receive the protections of such laws. All statements, other than historical facts, included or incorporated in this release could be deemed forward-looking statements, particularly statements that reflect our expectations or beliefs of LSI Industries Inc. (the "Company," "LSI," "we," or "us") concerning future events or our future financial performance. You are cautioned not to place undue reliance on forward-looking statements, which are often characterized by discussions of strategy, plans, or intentions or by the use of words such as "may," "would," "could," "should," "will," "expect," "estimate," "anticipate," "believe," "intend," "plan," "forecast," "project," "predict," "potential," "continue," or "intend," the negative or other variants of such terms, or other comparable terminology. The Company cautions that these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations as a result of various factors, including, but not limited to: the impact of competitive products and services; product and pricing demands and market acceptance risks; LSI’s reliance on third-party manufacturers and suppliers; substantial changes to the refueling and convenience store and grocery markets; LSI’s stock price volatility and market volatility in the debt and equity markets; potential costs associated with litigation, other proceedings and regulatory compliance; LSI’s ability to adequately protect intellectual property, information technology security threats and computer crime; financial difficulties experienced by customers; the cyclical and seasonal nature of our business; the failure of acquisitions or acquired companies to achieve their plans or objectives generally; our ability to consummate, successfully integrate, and achieve strategic and other objectives, including any expected synergies, relating to pending or recently completed acquisitions; the inability to effectively execute our business strategies; the ability to retain key employees, including key employees of acquired businesses; labor shortages or an increase in labor costs; changes in product mix; unfavorable economic, political, and market conditions, including interest rate fluctuations and inflation; changes in U.S. trade policy, including mitigating the impacts of increased costs related to tariffs; the results of asset impairment assessments; price increases of materials; significant shortages of materials; shortages in transportation and increases in fuel prices; sudden or unexpected changes in customer creditworthiness; write-offs or impairment of capitalized costs or intangible assets in the future; and the other risk factors LSI describes from time to time in the Company’s Annual Report on Form 10-K (the "Form 10-K") and in other reports filed with or furnished to the U.S. Securities and Exchange Commission (the "SEC") by the Company. You should carefully consider the trends, risks, and uncertainties described in this news release, the Form 10-K, and other reports filed with or furnished to the SEC by the Company before making any investment decision with respect to our securities. If any of these trends, risks, or uncertainties continues or occurs, our business, financial condition, or operating results could be materially and adversely affected, the trading prices of our securities could decline, and you could lose part or all of your investment. Forward-looking statements are made in the context of information available as of the date of this news release and are based on our current expectations, forecasts, estimates, and assumptions. The Company undertakes no obligation to update or revise such statements to reflect circumstances or events occurring after this news release except as may be required by applicable law. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement. Three Months Ended June 30, 2026, Results Net sales for the three months ended June 30, 2026, were $234.6 million, up 51% from the three months ended June 30, 2025, reported net sales of $155.1 million. Lighting Segment net sales of $70.5 million decreased 3% and Display Solutions Segment net sales of $164.2 million doubled from last year’s fourth quarter net sales. Net income for the three months ended June 30, 2026, was $6.9 million, or $0.18 per share, compared to $8.2 million or $0.26 per share for the three months ended June 30, 2025. Earnings per share represent diluted earnings per share. Twelve Months Ended June 30, 2026, Results Net sales for the twelve months ended June 30, 2026, were $689.4 million, up 20% from the twelve months ended June 30, 2025, reported net sales of $573.4 million. Lighting Segment net sales of $266.2 million increased 7% and Display Solutions Segment net sales of $423.2 million increased 30% from last year’s net sales. Net income for the twelve months ended June 30, 2026, was $22.6 million, or $0.67 per share, compared to $24.4 million or $0.79 per share for the twelve months ended June 30, 2025. Earnings per share represent diluted earnings per share. Balance Sheet The balance sheet on June 30, 2026, included current assets of $295.9 million, current liabilities of $149.9 million and working capital of $146.0 million, which includes cash of $14.3 million. The current ratio was 2.0 to 1. The balance sheet also included shareholders’ equity of $360.7 million and long-term debt of $245.9 million. It is the Company’s priority to continuously generate sufficient cash flow, coupled with our credit facility, to adequately fund operations. Cash Dividend Actions The Board of Directors declared a regular cash dividend of $0.05 per share for the fourth quarter of fiscal 2026, payable September 8, 2026, to shareholders of record as of the close of business on August 31, 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 twelve months ended June 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, 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. The foreign currency transaction gain (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. View source version on businesswire.com: https://www.businesswire.com/news/home/20260820439458/en/ Contacts INVESTOR & MEDIA CONTACT Noel [email protected]