LSI Industries Inc (LYTS) Q3 2025 Earnings Report

- Revenue: $132.481 million, up 22.46% YoY; QoQ change not directly disclosed in quarterly core table but quarterly data shows a sequential decline from Q2 to Q3 in the press materials and 4-quarter metrics reflect seasonality. - Gross profit: $32.843 million; gross margin 24.79% (0.2479). - EBITDA: $9.319 million; adjusted EBITDA reported as $11.3 million in the call. - Operating income: $6.235 million; operating margin 4.71%. - Net income: $3.883 million; net margin 2.93%. - EPS: $0.13 (diluted $0.13); weighted average shares ~30.0 million. - Backlog: lighting backlog 18% above prior year; overall backlog 15% above last year. - Cash flow: operating cash flow $6.882 million; free cash flow $6.192 million; net debt to trailing-12-month adjusted EBITDA ~1.0x; cash balance $4.301 million. - Balance sheet: total assets $380.9 million; total liabilities $159.2 million; stockholders’ equity $221.7 million. - Liquidity and leverage: total debt $74.6 million; net debt $70.3 million; current ratio 2.08; quick ratio 1.245; interest coverage 9.43x.

- Management emphasized sustainable growth through a diversified Lighting and Display Solutions platform, noting 22% YoY sales growth and Display Solutions’ 70% sales increase (including 15% organic) driven by Refueling/C-store and Grocery segments. They observed that margin pressure stemmed from scheduling disruptions rather than lost demand, with an expectation of margin recovery as scheduling stabilizes. - They highlighted strategic acquisitions and integration momentum: Canada’s Best Store Fixtures acquisition completed; EMI integration progressing ahead of schedule; cross-selling opportunities across Lighting and Display Solutions cited as a key growth engine. - Tariff and onshoring dynamics were framed as a competitive advantage, with management stating a plan to minimize customer impact and potentially gain share as foreign-sourced components are replaced with domestic sourcing where feasible. They underscored that tariff volatility creates a balancing act between sourcing choices and timing, with careful price pass-through and inventory buffering. - The leadership stressed the need for stable quote-to-order conversion, particularly for larger projects, and anticipated improved efficiency and margin in Q4 and beyond as the team stabilizes operations and leverages a higher backlog. - Management conveyed confidence in maintaining both reported and comparable sales growth in fiscal Q4 and reiterated the Fast Forward plan’s objective to drive profitable growth through disciplined execution and strategic M&A initiatives.

Given LYTS' Display Solutions-led revenue growth and a strategic emphasis on cross-selling with Lighting, the company is positioned for modest revenue expansion as scheduling stabilizes and EMI mix normalizes. The near-term margin headwinds from scheduling inefficiencies are expected to abate in coming quarters, aided by a higher backlog and improved release rates. The onshoring of sourcing and tariff management—paired with buffers and price pass-through where needed—should mitigate tariff-driven cost fluctuations over time. The company’s Fast Forward plan, including accretive acquisitions and integration benefits, provides optionality to accelerate growth and diversify end-market exposure beyond Grocery/Automotive. investors should monitor: (1) the trajectory of gross margins as EMI integration and scheduling stabilize, (2) the durability of backlog strength and book-to-bill dynamics, (3) the run-rate cash flow and net debt trajectory, and (4) the progression of M&A activity and its impact on profitability and mix. Overall, LYTS presents a quality, diversified solution provider with a credible path to profitability improvement, though valuation remains a consideration given its enterprise value multiple and modest current profitability relative to some peers.