LSI Industries (LYTS) Q2 2026 earnings summary

Executive summary

• Q2 FY2026 net sales were $147 million, flat year-over-year, with 15% growth in Lighting offsetting a 10% decline in Display Solutions; profitability, free cash flow, and margins improved, supported by strong execution and cost discipline.

• Adjusted EBITDA was $13.4 million (9.1% margin), and free cash flow reached $23.3 million, enabling a $22.7 million debt reduction and net leverage ratio of 0.4.

• Net income for the quarter was $6.3 million ($0.20 diluted EPS); adjusted net income was $8.4 million ($0.26 adjusted EPS).

• Integration of recent acquisitions (EMI, JSI, Canada's Best) is progressing, with a focus on operational efficiency, cross-selling, and margin improvement.

• A quarterly cash dividend of $0.05 per share was declared, with an annualized rate of $0.20.

Financial highlights

• Adjusted net income, adjusted EBITDA, and adjusted EPS ($0.26) were all above prior year; adjusted EBITDA margin was 9.1%.

• Gross margin in Lighting improved by 190 basis points to 34.6%; Display Solutions gross margin held at 18%.

• Free cash flow for Q2 was $23.3 million, and cash and available liquidity exceeded $100 million.

• Net debt to adjusted EBITDA was 0.4x at quarter end.

• Operating margin for Q2 was 7.9%, and current ratio improved to 2.2.

Outlook and guidance

• Management expects continued above-market growth, with strong order trends, healthy backlog, and secular growth in key verticals.

• Lighting segment momentum is expected to continue, with book-to-bill above one and orders 10% above prior year.

• Display Solutions demand is stabilizing, especially in grocery and refueling/c-store markets, with a 20% increase in grocery orders.

• Q3 is historically the toughest quarter, but management expects to outperform the prior year.