LYTS 10-Q
Lsi Industries Inc (LYTS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED |
|
| |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO ________________. |
Commission File No.
| LSI Industries Inc. |
| (Exact name of registrant as specified in its charter) |
| | | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| | | |
| (Address of principal executive offices) | (Zip Code) | |
| ( | ||
| Registrant’s telephone number, including area code) | ||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| | | |
Indicate by checkmark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | | Emerging growth company | |
| Non-accelerated filer ☐ | Smaller reporting company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES
As of January 30, 2026, there were
FORM 10-Q
FOR THE QUARTER ENDED DECEMBER 31, 2025
INDEX
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| (In thousands, except per share data) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||
| Cost of products and services sold | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Selling and administrative expenses | ||||||||||||||||
| Operating income | ||||||||||||||||
| Interest expense | ||||||||||||||||
| Other expense (income) | ( | ) | ||||||||||||||
| Income before income taxes | ||||||||||||||||
| Income tax expense | ||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Earnings per common share (see Note 5) | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| (In thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||||||||||
| Comprehensive income | $ | $ | $ | $ | ||||||||||||
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| December 31, | June 30, | |||||||
| (In thousands, except shares) | 2025 | 2025 | ||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, less allowance for credit losses of $ and $, respectively | ||||||||
| Inventories | ||||||||
| Refundable income taxes | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property, Plant and Equipment, at cost | ||||||||
| Land | ||||||||
| Buildings | ||||||||
| Machinery and equipment | ||||||||
| Construction in progress | ||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Net property, plant and equipment | ||||||||
| Goodwill | ||||||||
| Other intangible assets, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Deferred tax assets | ||||||||
| Other long-term assets, net | ||||||||
| Total assets | $ | $ | ||||||
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| December 31, | June 30, | |||||||
| (In thousands, except shares) | 2025 | 2025 | ||||||
| LIABILITIES & SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Current maturities of long-term debt | $ | $ | ||||||
| Accounts payable | ||||||||
| Accrued expenses | ||||||||
| Total current liabilities | ||||||||
| Long-term debt | ||||||||
| Operating lease liabilities | ||||||||
| Other long-term liabilities | ||||||||
| Deferred tax liabilities | ||||||||
| Commitments and contingencies (Note 13) | ||||||||
| Shareholders' Equity | ||||||||
| Preferred shares, par value; Authorized shares, issued | ||||||||
| Common shares, par value; Authorized shares; Outstanding and shares, respectively | ||||||||
| Treasury shares, without par value | ( | ) | ( | ) | ||||
| Deferred compensation plan | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive income | ||||||||
| Total shareholders' equity | ||||||||
| Total liabilities & shareholders' equity | $ | $ | ||||||
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
| Common Shares | Treasury Shares | Key Executive | Accumulated Other | Total | ||||||||||||||||||||||||||||
| Number Of | Number Of | Compensation | Comprehensive | Retained | Shareholders' | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Amount | Income/(Loss) | Earnings | Equity | |||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
| Net Income | - | - | ||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Board stock compensation awards | ||||||||||||||||||||||||||||||||
| ESPP stock Awards | ||||||||||||||||||||||||||||||||
| Restricted stock units issued, net of shares withheld for tax withholdings | ( | ) | ) | |||||||||||||||||||||||||||||
| Shares issued for deferred compensation | ||||||||||||||||||||||||||||||||
| Activity of treasury shares, net | ||||||||||||||||||||||||||||||||
| Deferred stock compensation | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||||||||||
| Stock options exercised, net | ||||||||||||||||||||||||||||||||
| Dividends — $0.20 per share | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | ( | ) | $ | ( | ) | $ | $ | $ | $ | ||||||||||||||||||||||
| Net Income | - | - | ||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Board stock compensation awards | ||||||||||||||||||||||||||||||||
| ESPP stock Awards | ||||||||||||||||||||||||||||||||
| Restricted stock units issued, net of shares withheld for tax withholdings | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Shares issued for deferred compensation | ||||||||||||||||||||||||||||||||
| Activity of treasury shares, net | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Deferred stock compensation | - | - | ||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | ||||||||||||||||||||||||||||||
| Stock options exercised, net | ||||||||||||||||||||||||||||||||
| Dividends — $0.20 per share | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | ( | ) | $ | ( | ) | $ | $ | $ | $ | ||||||||||||||||||||||
| Common Shares | Treasury Shares | Key Executive | Accumulated Other | Total | ||||||||||||||||||||||||||||
| Number Of | Number Of | Compensation | Comprehensive | Retained | Shareholders' | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Amount | Income/(Loss) | Earnings | Equity | |||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
| Net Income | - | - | ||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Board stock compensation awards | ||||||||||||||||||||||||||||||||
| ESPP stock Awards | ||||||||||||||||||||||||||||||||
| Restricted stock units issued, net of shares withheld for tax withholdings | ||||||||||||||||||||||||||||||||
| Shares issued for deferred compensation | ||||||||||||||||||||||||||||||||
| Activity of treasury shares, net | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Deferred stock compensation | - | - | ||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||||||||||
| Stock options exercised, net | ||||||||||||||||||||||||||||||||
| Dividends — $0.20 per share | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | ( | ) | $ | ( | ) | $ | $ | $ | $ | ||||||||||||||||||||||
| Net Income | - | - | ||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | ||||||||||||||||||||||||||||||
| Board stock compensation awards | ||||||||||||||||||||||||||||||||
| ESPP stock Awards | ||||||||||||||||||||||||||||||||
| Restricted stock units issued, net of shares withheld for tax withholdings | ||||||||||||||||||||||||||||||||
| Shares issued for deferred compensation | ||||||||||||||||||||||||||||||||
| Activity of treasury shares, net | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Deferred stock compensation | - | - | ||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | ||||||||||||||||||||||||||||||
| Stock options exercised, net | ||||||||||||||||||||||||||||||||
| Dividends — $0.20 per share | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | ( | ) | $ | ( | ) | $ | $ | $ | $ | ||||||||||||||||||||||
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended | ||||||||
| December 31 | ||||||||
| (In thousands) | 2025 | 2024 | ||||||
| Cash Flows from Operating Activities | ||||||||
| Net income | $ | $ | ||||||
| Non-cash items included in net income | ||||||||
| Depreciation and amortization | ||||||||
| Deferred income taxes | ||||||||
| Deferred compensation plan | ||||||||
| ESPP discount | ||||||||
| Stock compensation expense | ||||||||
| Issuance of common shares as compensation | ||||||||
| (Gain) loss on disposition of fixed assets | ( | ) | ||||||
| Allowance for credit losses | ( | ) | ||||||
| Inventory obsolescence reserve | ( | ) | ||||||
| Changes in certain assets and liabilities | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventories | ( | ) | ||||||
| Refundable income taxes | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses and other | ( | ) | ( | ) | ||||
| Customer prepayments | ( | ) | ||||||
| Net cash flows provided by operating activities | ||||||||
| Cash Flows from Investing Activities | ||||||||
| Acquisition of business | ( | ) | ||||||
| Proceeds from the sale of fixed assets | ||||||||
| Purchases of property, plant and equipment | ( | ) | ( | ) | ||||
| Net cash flows used in investing activities | ( | ) | ( | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Payments of long-term debt | ( | ) | ( | ) | ||||
| Borrowings of long-term debt | ||||||||
| Cash dividends paid | ( | ) | ( | ) | ||||
| Shares withheld for employees' taxes | ( | ) | ||||||
| Payments on financing lease obligations | ( | ) | ||||||
| Proceeds from stock option exercises | ||||||||
| Net cash flows used in financing activities | ( | ) | ( | ) | ||||
| Change related to foreign currency | ( | ) | ||||||
| Increase in cash and cash equivalents | ||||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The interim condensed consolidated financial statements are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, and rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the interim financial statements include all normal adjustments and disclosures necessary to present fairly the Company’s financial position as of December 31, 2025, the results of its operations for the three and six-month periods ended December 31, 2025, and 2024, and its cash flows for the six-month periods ended December 31, 2025, and 2024. These statements should be read in conjunction with the financial statements and footnotes included in the fiscal 2025 Annual Report on Form 10-K. Financial information as of June 30, 2025, has been derived from the Company’s audited consolidated financial statements.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation:
A summary of the Company’s significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company’s fiscal 2025 Annual Report on Form 10-K.
Revenue Recognition:
The Company recognizes revenue when it satisfies the performance obligation in its customer contracts or purchase orders. Most of the Company’s products have a single performance obligation which is satisfied at a point in time when control is transferred to the customer. Control is generally transferred at the time of shipment when title and risk of ownership passes to the customer. For customer contracts with multiple performance obligations, the Company allocates the transaction price and any discounts to each performance obligation based on relative standalone selling prices. Payment terms are typically within 30 to 90 days from the shipping date, depending on the terms with the customer. The Company offers standard warranties that do not represent separate performance obligations.
Installation is a separate performance obligation, except for the Company’s digital signage products. For digital signage products, installation is not a separate performance obligation as the product and installation is the combined item promised in digital signage contracts. The Company is not always responsible for installation of products it sells and has no post-installation responsibilities other than standard warranties.
A number of the Company's display solutions and select lighting products are customized for specific customers. As a result, these customized products do not have an alternative use. For these products, the Company has a legal right to payment for performance to date and generally does not accept returns on these items. The measurement of performance is based upon cost plus a reasonable profit margin for work completed. Because there is no alternative use and there is a legal right to payment, the Company transfers control of the item as the item is being produced and therefore recognizes revenue over time. The customized product types are as follows:
| ● | Customer specific metal and millwork branded products and branded print graphics |
| ● | Electrical components based on customer specifications |
| ● | Digital signage and related media content |
The Company also offers installation services for its display solutions elements and select lighting products. Installation revenue is recognized over time as the customer simultaneously receives and consumes the benefits provided through the installation process.
For these customized products and installation services, revenue is recognized using a cost-based input method: recognizing revenue and gross profit as work is performed based on the relationship between the actual cost incurred and the total estimated cost for the performance obligation.
On occasion, the Company enters into bill-and-hold arrangements on a limited basis. Each bill-and-hold arrangement is reviewed and revenue is recognized only when certain criteria have been met: (1) the customer has requested delayed delivery and storage of the products by the Company because the customer wants to secure a supply of the products but lacks storage space; (ii) the risk of ownership has passed to the customer; (iii) the products are segregated from the Company’s other inventory items held for sale; (iv) the products are ready for shipment to the customer; and (v) the Company does not have the ability to use the products or direct them to another customer.
Disaggregation of Revenue
The Company disaggregates the revenue from contracts with customers by the timing of revenue recognition because the Company believes it best depicts the nature, amount, and timing of its revenue and cash flows. The table below presents a reconciliation of the disaggregation by reportable segments:
| Three Months Ended | ||||||||||||||||
| (In thousands) | December 31, 2025 | December 31, 2024 | ||||||||||||||
| Lighting Segment | Display Solutions Segment | Lighting Segment | Display Solutions Segment | |||||||||||||
| Timing of revenue recognition | ||||||||||||||||
| Products and services transferred at a point in time | $ | $ | $ | $ | ||||||||||||
| Products and services transferred over time | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Three Months Ended | ||||||||||||||||
| December 31, 2025 | December 31, 2024 | |||||||||||||||
| Lighting Segment | Display Solutions Segment | Lighting Segment | Display Solutions Segment | |||||||||||||
| Type of Product and Services | ||||||||||||||||
| LED lighting, digital signage solutions, electronic circuit boards | $ | $ | $ | $ | ||||||||||||
| Poles, other display solution elements | ||||||||||||||||
| Project management, installation services, shipping and handling | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Six Months Ended | ||||||||||||||||
| December 31, 2025 | December 31, 2024 | |||||||||||||||
| Lighting Segment | Display Solutions Segment | Lighting Segment | Display Solutions Segment | |||||||||||||
| Timing of revenue recognition | ||||||||||||||||
| Products and services transferred at a point in time | $ | $ | $ | $ | ||||||||||||
| Products and services transferred over time | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Six Months Ended | ||||||||||||||||
| December 31, 2025 | December 31, 2024 | |||||||||||||||
| Lighting Segment | Display Solutions Segment | Lighting Segment | Display Solutions Segment | |||||||||||||
| Type of Product and Services | ||||||||||||||||
| LED lighting, digital signage solutions, electronic circuit boards | $ | $ | $ | $ | ||||||||||||
| Poles, other display solution elements | ||||||||||||||||
| Project management, installation services, shipping and handling | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
Practical Expedients and Exemptions
| ● | The Company’s contracts with customers have an expected duration of one year or less, as such, the Company applies the practical expedient to expense sales commissions as incurred and has omitted disclosures on the amount of remaining performance obligations. |
| ● | Shipping costs that are not material in context of the delivery of products are expensed as incurred. |
| ● | The Company’s accounts receivable balance represents the Company’s unconditional right to receive payment from its customers with contracts. Payments are generally due within 30 to 90 days of completion of the performance obligation and invoicing; therefore, payments do not contain significant financing components. |
| ● | The Company collects sales tax and other taxes concurrent with revenue-producing activities which are excluded from revenue. Shipping and handling costs are treated as fulfillment activities and included in cost of products and services sold on the Consolidated Statements of Operations. |
New Accounting Pronouncements:
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to SEC's Disclosure Update and Simplification Initiative. This ASU amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company will monitor the removal of various requirements from the current regulations in order to determine when to adopt the related amendments, but it does not anticipate that the adoption of the new guidance will have a material impact on the Company’s consolidated financial statements and related disclosures. The Company will continue to evaluate the impact of this guidance on its consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires additional disclosures of various income tax components that affect the rate reconciliation based on the applicable taxing jurisdictions, as well as the qualitative and quantitative aspects of those components. The standard also requires information pertaining to taxes paid to be disaggregated for federal, state and foreign taxes, and contains other disclosure requirements. This ASU is effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025, with early adoption permitted. The Company is currently evaluating the effect of this new guidance on its consolidated financial statements and related disclosures.
NOTE 3 — ACQUISITION OF CANADA’S BEST HOLDINGS
On March 11, 2025, the Company acquired Canada’s Best Holdings (CBH), an Ontario Canada-based leading provider of retail fixtures and custom store design solutions for grocery, quick service restaurant, c-store, banking, and specialty retail environments, for $
The Company accounted for this transaction as a business combination. The Company has preliminarily allocated the purchase price of $
| (In thousands) | March 11, 2025 as initially reported | Measurement period adjustments | March 11, 2025 as adjusted | |||||||||
| Cash and cash equivalents | $ | $ | $ | |||||||||
| Accounts receivable | ( | ) | ||||||||||
| Inventory | ( | ) | ||||||||||
| Property, plant and equipment | ||||||||||||
| Operating lease right-of-use assets | ( | ) | ||||||||||
| Other assets | ||||||||||||
| Intangible assets | ( | ) | ||||||||||
| Accounts payable | ( | ) | ( | ) | ||||||||
| Accrued expenses | ( | ) | ( | ) | ( | ) | ||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||||||
| Other long-term liabilities | ( | ) | ( | ) | ||||||||
| Deferred tax liability | ( | ) | ( | ) | ||||||||
| Identifiable Assets | ||||||||||||
| Goodwill | ||||||||||||
| Net Purchase Consideration | $ | $ | $ | |||||||||
The gross amount of accounts receivable is $
Goodwill recorded from the acquisition of CBH is attributable to the impact of the positive cash flow from CBH in addition to expected synergies from the business combination. The intangible assets include amounts recognized for the fair value of the trade name, non-compete agreements and customer relationships. The fair value of the intangible assets was determined based upon the income (discounted cash flow) approach. The following table presents the details of the intangible assets acquired at the date of acquisition:
| (in thousands) | Estimated Fair Value | Estimated Useful Life (Years) | |||||||
| Tradename | $ | ||||||||
| Technology assets | - | ||||||||
| Customer relationships | |||||||||
| $ | |||||||||
CBH’s post-acquisition results of operations for the period from July 1, 2025, through December 31, 2025, are included in the Company’s Condensed Consolidated Statements of Operations. Since the acquisition date, net sales of CBH for the period from July 1, 2025, through December 31, 2025, were $
Pro Forma Impact of the Acquisition of CBH (Unaudited)
The following table represents unaudited pro forma results of operations and gives effect to the acquisition of CBH as if the transaction had occurred on July 1, 2023. The unaudited pro forma results of operations have been prepared for comparative purposes only and are not necessarily indicative of what would have occurred had the business combination been completed at the beginning of the period or the results that may occur in the future. Furthermore, the unaudited pro forma financial information does not reflect the impact of any synergies or operating efficiencies resulting from the acquisition of CBH.
The unaudited pro forma financial information for the three and six months ended December 31, 2024, is prepared using the acquisition method of accounting and has been adjusted to reflect the pro forma events that are: (1) directly attributable to the acquisition; (2) factually supportable; and (3) expected to have a continuing impact on the combined results. The unaudited pro-form operating income for the three months ended December 31, 2024 of $
| (in thousands; unaudited) | Three Months Ended December 31, 2024 | Six Months Ended December 31, 2024 | ||||||
| Sales | $ | $ | ||||||
| Gross Profit | $ | $ | ||||||
| Operating Income | $ | $ | ||||||
NOTE 4 - SEGMENT REPORTING INFORMATION
The accounting guidance on Segment Reporting establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in financial statements. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (the Company’s Chief Executive Officer or “CODM”) in making decisions on how to allocate resources and assess performance. The Company’s operating segments are Lighting and Display Solutions, with one executive team under the organizational structure reporting directly to the CODM with responsibilities for managing each segment. Corporate and Eliminations, which captures the Company’s corporate administrative activities, is also reported in the segment information.
The Company’s method for measuring profitability on a reportable segment basis and used by the CODM to assess performance is adjusted operating income and adjusted earnings before interest, tax, depreciation, amortization, along with other non-GAAP adjustments (adjusted EBITDA). These measurements are used to monitor performance compared to prior periods and forecasted results.
The Lighting Segment includes non-residential outdoor and indoor lighting fixtures utilizing LED light sources that have been fabricated and assembled for the Company’s markets, primarily the refueling and convenience store markets, parking lot and garage markets, quick-service restaurant market, retail and grocery store markets, the automotive market, the warehouse market, and the sports court and field market. The Company also services lighting product customers through the commercial and industrial project, stock and flow, and renovation channels. In addition to the manufacture and sale of lighting fixtures, the Company offers a variety of lighting controls to complement its lighting fixtures which include sensors, photocontrols, dimmers, motion detection and Bluetooth systems. The Lighting Segment also includes the design, engineering and manufacturing of electronic circuit boards, assemblies and sub-assemblies which are sold directly to customers.
The Display Solutions Segment manufactures, sells and installs exterior and interior visual image and display elements, including printed graphics, structural graphics, digital signage, menu board systems, millwork display fixtures, refrigerated displays, food equipment, countertops, and other custom display elements. These products are used in visual image programs in several markets including the refueling and convenience store markets, quick-service and casual restaurant market, retail and grocery store, and other retail markets. The Company accesses its customers primarily through a direct sale model utilizing its own sales force. Sales through distribution represent a small portion of Display Solutions sales. The Display Solutions Segment also provides a variety of project management services to complement our display elements, such as installation management, site surveys, permitting, and content management which are offered to our customers to support our digital signage.
The Company’s corporate administration activities are reported in the Corporate and Eliminations line item. These activities primarily include intercompany profit in inventory eliminations, expense related to certain corporate officers and support staff, the Company’s internal audit staff, expense related to the Company’s Board of Directors, equity compensation expense for various equity awards granted to corporate administration employees, certain consulting expenses, investor relations activities, and a portion of the Company’s legal, auditing, and professional fee expenses. Corporate identifiable assets primarily consist of cash, invested cash (if any), refundable income taxes (if any), and deferred income taxes.
There were
Summarized financial information for the Company’s operating segments is provided for the indicated periods and as of December 31, 2025, and December 31, 2024:
| (In thousands) | Three Months Ended | |||||||||||||||
| December 31, 2025 | ||||||||||||||||
| Corporate | ||||||||||||||||
| Lighting | Display | & Elims | Total | |||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||
| Operating income | ( | ) | ||||||||||||||
| Long-term performance based compensation | ||||||||||||||||
| Severance costs and restructuring costs | ( | ) | ( | ) | ||||||||||||
| Amortization expense of acquired intangible assets | ||||||||||||||||
| Acquisition costs | ||||||||||||||||
| Expense on step-up basis of acquired assets | ||||||||||||||||
| Adjusted operating income | ( | ) | ||||||||||||||
| Depreciation Expense | ||||||||||||||||
| Adjusted EBITDA | $ | $ | $ | ( | ) | $ | ||||||||||
| (In thousands) | Six Months Ended | |||||||||||||||
| December 31, 2025 | ||||||||||||||||
| Corporate | ||||||||||||||||
| Lighting | Display | & Elims | Total | |||||||||||||
| Net sales | $ | |||||||||||||||
| Operating income | ( | ) | ||||||||||||||
| Long-term performance based compensation | ||||||||||||||||
| Severance costs and restructuring costs | ( | ) | ( | ) | ||||||||||||
| Amortization expense of acquired intangible assets | ||||||||||||||||
| Acquisition costs | ||||||||||||||||
| Expense on step-up basis of acquired assets | ||||||||||||||||
| Adjusted operating income | ( | ) | ||||||||||||||
| Depreciation Expense | ||||||||||||||||
| Adjusted EBITDA | $ | $ | $ | ( | ) | $ | ||||||||||
| (In thousands) | Three Months Ended | |||||||||||||||
| December 31, 2024 | ||||||||||||||||
| Corporate | ||||||||||||||||
| Lighting | Display | & Elims | Total | |||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||
| Operating income | ( | ) | ||||||||||||||
| Long-term performance based compensation | ||||||||||||||||
| Consulting expense: commercial growth initiatives | ||||||||||||||||
| Amortization expense of acquired intangible assets | ||||||||||||||||
| Expense on step-up basis of acquired assets | ||||||||||||||||
| Adjusted operating income | ( | ) | ||||||||||||||
| Depreciation Expense | ||||||||||||||||
| Adjusted EBITDA | $ | $ | $ | ( | ) | $ | ||||||||||
| Six Months Ended | ||||||||||||||||
| December 31, 2024 | ||||||||||||||||
| (In thousands) | Corporate | |||||||||||||||
| Lighting | Display | & Elims | Total | |||||||||||||
| Net sales | $ | |||||||||||||||
| Operating income | ( | ) | ||||||||||||||
| Long-term performance based compensation | ||||||||||||||||
| Consulting expense: commercial growth initiatives | ||||||||||||||||
| Severance costs and restructuring costs | ||||||||||||||||
| Amortization expense of acquired intangible assets | ||||||||||||||||
| Acquisition costs | ||||||||||||||||
| Expense on step-up basis of acquired assets | ||||||||||||||||
| Adjusted operating income | ( | ) | ||||||||||||||
| Depreciation Expense | ||||||||||||||||
| Adjusted EBITDA | $ | $ | $ | ( | ) | $ | ||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| (In thousands) | December 31 | December 31 | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Capital Expenditures: | ||||||||||||||||
| Lighting Segment | $ | $ | $ | $ | ||||||||||||
| Display Solutions Segment | ||||||||||||||||
| Corporate and Eliminations | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Depreciation and Amortization: | ||||||||||||||||
| Lighting Segment | $ | $ | $ | $ | ||||||||||||
| Display Solutions Segment | ||||||||||||||||
| Corporate and Eliminations | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| December 31, 2025 | June 30, 2025 | |||||||
| Total Assets: | ||||||||
| Lighting Segment | $ | $ | ||||||
| Display Solutions Segment | ||||||||
| Corporate and Eliminations | ||||||||
| $ | $ | |||||||
The segment net sales reported above represent sales to external customers. Identifiable assets are those assets used by each segment in its operations.
The Company records a
| Inter-segment sales | Three Months Ended | Six Months Ended | ||||||||||||||
| (In thousands) | December 31 | December 31 | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Lighting Segment inter-segment net sales | $ | $ | $ | $ | ||||||||||||
| Display Solutions Segment inter-segment net sales | $ | $ | $ | $ | ||||||||||||
NOTE 5 - EARNINGS PER COMMON SHARE
The following table presents the amounts used to compute basic and diluted earnings per common share, as well as the effect of dilutive potential common shares on weighted average shares outstanding:
| Three Months Ended | Six Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| BASIC EARNINGS PER SHARE | ||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Weighted average shares outstanding during the period, net of treasury shares | ||||||||||||||||
| Weighted average vested restricted stock units outstanding | ||||||||||||||||
| Weighted average shares outstanding in the Deferred Compensation Plan during the period | ||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||
| Basic earnings per common share | $ | $ | $ | $ | ||||||||||||
| DILUTED EARNINGS PER SHARE | ||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Effect of dilutive securities (a): | ||||||||||||||||
| Impact of common shares to be issued under stock option plans, and contingently issuable shares, if any | ||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||
| Diluted earnings per common share | $ | $ | $ | $ | ||||||||||||
| Anti-dilutive securities (b) | ||||||||||||||||
| (a) | Calculated using the “Treasury Stock” method as if dilutive securities were exercised and the funds were used to purchase common shares at the average market price during the period. |
| (b) | Anti-dilutive securities were excluded from the computation of diluted net income per share for the three and six months ended December 31, 2025, and December 31, 2024, because the exercise price was greater than the average fair market price of the common shares or because the assumed proceeds from the award’s exercise or vesting was greater than the average fair market price of the common shares. |
NOTE 6 – INVENTORIES, NET
The following information is provided as of the dates indicated:
| December 31, | June 30, | |||||||
| (In thousands) | 2025 | 2025 | ||||||
| Inventories: | ||||||||
| Raw materials | $ | $ | ||||||
| Work-in-progress | ||||||||
| Finished goods | ||||||||
| Total Inventories | $ | $ | ||||||
NOTE 7 - ACCRUED EXPENSES
The following information is provided as of the dates indicated:
| December 31, | June 30, | |||||||
| (In thousands) | 2025 | 2025 | ||||||
| Accrued Expenses: | ||||||||
| Customer prepayments | $ | $ | ||||||
| Compensation and benefits | ||||||||
| Accrued warranty | ||||||||
| Operating lease liabilities | ||||||||
| Accrued sales commissions | ||||||||
| Accrued freight | ||||||||
| Income taxes | ||||||||
| Other accrued expenses | ||||||||
| Total Accrued Expenses | $ | $ | ||||||
NOTE 8 - GOODWILL AND OTHER INTANGIBLE ASSETS
The carrying values of goodwill and other intangible assets with indefinite lives are reviewed at least annually for possible impairment. The Company may first assess qualitative factors in order to determine if goodwill and indefinite-lived intangible assets are impaired. If through the qualitative assessment it is determined that it is more likely than not that goodwill and indefinite-lived assets are not impaired, no further testing is required. If it is determined more likely than not that goodwill and indefinite-lived assets are impaired, or if the Company elects not to first assess qualitative factors, the Company’s impairment testing continues with the estimation of the fair value of the reporting unit using a combination of a market approach and an income (discounted cash flow) approach, at the reporting unit level. The estimation of the fair value of the reporting unit requires significant management judgment with respect to revenue and expense growth rates, changes in working capital and the selection and use of an appropriate discount rate. The estimates of the fair value of reporting units are based on the best information available as of the date of the assessment. The use of different assumptions would increase or decrease estimated discounted future operating cash flows and could increase or decrease an impairment charge. Company management uses its judgment in assessing whether assets may have become impaired between annual impairment tests. Indicators such as adverse business conditions, economic factors and technological change or competitive activities may signal that an asset has become impaired.
The Company identified its reporting units in conjunction with its annual goodwill impairment testing. The Company has a total of reporting units that contain goodwill. reporting unit is within the Lighting Segment and reporting units are within the Display Solutions Segment. The tradename intangible assets have an indefinite life and are also tested separately on an annual basis. The Company relies upon a number of factors, judgments and estimates when conducting its impairment testing including, but not limited to, the Company’s stock price, operating results, forecasts, anticipated future cash flows, and marketplace data. There are inherent uncertainties related to these factors and judgments in applying them to the analysis of goodwill impairment.
The following table presents information about the Company's goodwill on the dates or for the periods indicated:
| Goodwill | Display | |||||||||||
| (In thousands) | Lighting | Solutions | ||||||||||
| Segment | Segment | Total | ||||||||||
| Balance as of December 31, 2025 | ||||||||||||
| Goodwill | $ | $ | $ | |||||||||
| Goodwill acquired, net of adjustements | ( | ) | ( | ) | ||||||||
| Foreign currency translation | ( | ) | ( | ) | ||||||||
| Accumulated impairment losses | ( | ) | ( | ) | ( | ) | ||||||
| Goodwill, net as of December 31, 2025 | $ | $ | $ | |||||||||
| Balance as of June 30, 2025 | ||||||||||||
| Goodwill | $ | $ | $ | |||||||||
| Goodwill acquired, net of adjustements | ||||||||||||
| Foreign currency translation | ||||||||||||
| Accumulated impairment losses | ( | ) | ( | ) | ( | ) | ||||||
| Goodwill, net as of June 30, 2025 | $ | $ | $ | |||||||||
The gross carrying amount and accumulated amortization by each major intangible asset class is as follows:
| Other Intangible Assets | December 31, 2025 | |||||||||||
| (In thousands) | Gross | |||||||||||
| Carrying | Accumulated | Net | ||||||||||
| Amount | Amortization | Amount | ||||||||||
| Amortized Intangible Assets | ||||||||||||
| Customer relationships | $ | $ | $ | |||||||||
| Patents | ||||||||||||
| LED technology firmware, software | ||||||||||||
| Trade name | ||||||||||||
| Non-compete | ||||||||||||
| Total Amortized Intangible Assets | ||||||||||||
| Indefinite-lived Intangible Assets | ||||||||||||
| Trademarks and trade names | - | |||||||||||
| Total indefinite-lived Intangible Assets | - | |||||||||||
| Total Other Intangible Assets | $ | $ | $ | |||||||||
| Other Intangible Assets | June 30, 2025 | |||||||||||
| (In thousands) | Gross | |||||||||||
| Carrying | Accumulated | Net | ||||||||||
| Amount | Amortization | Amount | ||||||||||
| Amortized Intangible Assets | ||||||||||||
| Customer relationships | $ | $ | $ | |||||||||
| Patents | ||||||||||||
| LED technology firmware, software | ||||||||||||
| Trade name | ||||||||||||
| Non-compete | ||||||||||||
| Total Amortized Intangible Assets | ||||||||||||
| Indefinite-lived Intangible Assets | ||||||||||||
| Trademarks and trade names | - | |||||||||||
| Total indefinite-lived Intangible Assets | - | |||||||||||
| Total Other Intangible Assets | $ | $ | $ | |||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| (In thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Amortization Expense of Other Intangible Assets | $ | $ | $ | $ | ||||||||||||
The Company expects to record annual amortization expense as follows:
| (In thousands) | ||||
| 2026 | $ | |||
| 2027 | $ | |||
| 2028 | $ | |||
| 2029 | $ | |||
| 2030 | $ | |||
| After 2030 | $ |
NOTE 9 - DEBT
The Company’s long-term debt as of December 31, 2025, and June 30, 2025, consisted of the following:
| December 31, | June 30, | |||||||
| (In thousands) | 2025 | 2025 | ||||||
| Secured line of credit | $ | $ | ||||||
| Term loan, net of debt issuance costs of $ and $, respectively | ||||||||
| Total debt | $ | $ | ||||||
| Less: amounts due within one year | ||||||||
| Total amounts due after one year, net | $ | $ | ||||||
In September 2025, the Company amended its existing $
The Company is in compliance with all of its loan covenants as of December 31, 2025.
NOTE 10 - CASH DIVIDENDS
The Company paid cash dividends of $
NOTE 11 – EQUITY COMPENSATION
In November 2022, the Company's shareholders approved the amendment and restatement of the 2019 Omnibus Award Plan ("2019 Omnibus Plan") which increased the number of shares authorized for issuance under the plan by
In the six months ended December 31, 2025, the Company granted
In November of 2021, our board of directors approved the LSI Employee Stock Purchase Plan (“ESPP”). A total of
NOTE 12 - SUPPLEMENTAL CASH FLOW INFORMATION
| Six Months Ended | ||||||||
| (In thousands) | December 31 | |||||||
| 2025 | 2024 | |||||||
| Cash Payments: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Non-cash investing and financing activities | ||||||||
| Issuance of common shares as compensation | $ | $ | ||||||
| Issuance of common shares to fund deferred compensation plan | $ | $ | ||||||
| Issuance of common shares to fund ESPP plan | $ | $ | ||||||
NOTE 13 - COMMITMENTS AND CONTINGENCIES
The Company is party to various negotiations, customer bankruptcies, and legal proceedings arising in the normal course of business. The Company provides reserves for these matters when a loss is probable and reasonably estimable. The Company does not disclose a range of potential loss because the likelihood of such a loss is remote. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, cash flows or liquidity.
The Company recorded a $
NOTE 14 - LEASES
The Company leases certain manufacturing facilities along with a small office space, several forklifts, several small tooling items, and various items of office equipment. All but two of the Company’s leases are operating leases. Leases have a remaining term of to years some of which have an option to renew. The Company does not assume renewals in determining the lease term unless the renewals are deemed reasonably certain. The lease agreements do not contain any material residual guarantees or material variable lease payments.
The Company has periodically entered into short-term operating leases with an initial term of twelve months or less. The Company elected not to record these leases on the balance sheet. The rent expense for these leases was immaterial for December 31, 2025, and 2024.
The Company has certain leases that contain lease and non-lease components and has elected to utilize the practical expedient to account for these components together as a single lease component.
Lease expense is recognized on a straight-line basis over the lease term. The Company used its incremental borrowing rate when determining the present value of lease payments.
| Three Months Ended | Six Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| (In thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Operating lease cost | $ | $ | $ | $ | ||||||||||||
| Financing lease cost: | ||||||||||||||||
| Amortization of right of use assets | ||||||||||||||||
| Interest on lease liabilities | ||||||||||||||||
| Variable lease cost | ||||||||||||||||
| Sublease income | ( | ) | ||||||||||||||
| Total lease cost | $ | $ | $ | $ | ||||||||||||
| Supplemental Cash Flow Information: | Six Months Ended | |||||||
| December 31 | ||||||||
| (In thousands) | 2025 | 2024 | ||||||
| Cash flows from operating leases | ||||||||
| Fixed payments - operating cash flows | $ | $ | ||||||
| Liability reduction - operating cash flows | $ | $ | ||||||
| Assets obtained in exchange for operating lease obligations | $ | $ | ||||||
| Cash flows from finance leases | ||||||||
| Interest - operating cash flows | $ | $ | ||||||
| Repayments of principal portion - financing cash flows | $ | $ | ||||||
| Operating Leases: | December 31, | June 30, | ||||||
| 2025 | 2025 | |||||||
| Total operating right-of-use assets | $ | $ | ||||||
| Accrued expenses (Current liabilities) | $ | $ | ||||||
| Long-term operating lease liability | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
| Weighted Average remaining Lease Term (in years) | ||||||||
| Weighted Average Discount Rate | % | % | ||||||
| Maturities of Lease Liability: | Operating Lease Liabilities | Finance Lease Liabilities | Operating Subleases | Net Lease Commitments | ||||||||||||
| 2026 | $ | $ | $ | $ | 7,650 | |||||||||||
| 2027 | ||||||||||||||||
| 2028 | ||||||||||||||||
| 2029 | ||||||||||||||||
| 2030 | ||||||||||||||||
| Thereafter | ||||||||||||||||
| Total lease payments | $ | $ | $ | $ | ||||||||||||
| Less: Interest | ( | ) | ( | ) | ||||||||||||
| Present Value of Lease Liabilities | $ | $ | $ | |||||||||||||
NOTE 15 – INCOME TAXES
The Company's effective income tax rate is based on expected income, statutory rates, and tax planning opportunities available in the various jurisdictions in which it operates. For interim financial reporting, the Company estimates the annual income tax rate based on projected taxable income for the full year and records a quarterly income tax provision or benefit in accordance with the anticipated annual rate. The Company refines the estimates of the year's taxable income as new information becomes available, including actual year-to-date financial results. This continual estimation process often results in a change to the expected effective income tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected income tax rate. Significant judgment is required in determining the effective tax rate and in evaluating tax positions.
| Three Months Ended | Six Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Reconciliation of effective tax rate: | ||||||||||||||||
| Provision for income taxes at the anticipated annual tax rate | % | % | % | % | ||||||||||||
| Uncertain tax positions | ( | ) | ( | ) | ( | ) | ||||||||||
| Deferred income tax adjustment | ||||||||||||||||
| Share-based compensation | ( | ) | ( | ) | ( | ) | ||||||||||
| Effective tax rate | % | % | % | % | ||||||||||||
NOTE 16 – SUBSEQUENT EVENTS
A limited liability company owned and controlled by LSI's Chief Executive Officer, James A. Clark, owns an aircraft that is dry leased to an unrelated third party. Pursuant to a separate arrangement, the third-party dry leases the aircraft to LSI for NEO business travel. Payments made by LSI depends on actual usage. For the period from July 2025 through January 2026, the LLC received aggregate payments of $
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Note About Forward-Looking Statements
This report includes estimates, projections, statements relating to our business plans, objectives, and expected operating results that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this report, including this section. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “focus,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. We describe risks and uncertainties that could cause actual results and events to differ materially in in our Annual Report on Form 10-K in the following sections: “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures about Market Risk,” and “Risk Factors.” All of those risks and uncertainties are incorporated herein by reference. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of operations and financial condition of LSI Industries Inc. MD&A is provided as a supplement to, and should be read in conjunction with, our Annual Report on Form 10-K for the year ended June 30, 2025, and our financial statements and the accompanying Notes to Financial Statements (Part I, Item 1 of this Form 10-Q).
Our condensed consolidated financial statements, accompanying notes and the “Safe Harbor” Statement, each as appearing earlier in this report, should be referred to in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Summary of Consolidated Results
| Net Sales by Business Segment |
Three Months Ended |
Six Months Ended |
||||||||||||||
| December 31 |
December 31 |
|||||||||||||||
| (In thousands) |
2025 |
2024 |
2025 |
2024 |
||||||||||||
| Lighting Segment |
$ | 66,673 | $ | 58,210 | $ | 135,726 | $ | 116,646 | ||||||||
| Display Solutions Segment |
80,329 | 89,524 | 168,525 | 169,183 | ||||||||||||
| $ | 147,002 | $ | 147,734 | $ | 304,251 | $ | 285,829 | |||||||||
| Operating Income (Loss) by Business Segment |
Three Months Ended |
Six Months Ended |
||||||||||||||
| December 31 |
December 31 |
|||||||||||||||
| (In thousands) |
2025 |
2024 |
2025 |
2024 |
||||||||||||
| Lighting Segment |
$ | 7,547 | $ | 5,972 | $ | 16,096 | $ | 11,731 | ||||||||
| Display Solutions Segment |
6,076 | 8,127 | 14,667 | 15,834 | ||||||||||||
| Corporate and Eliminations |
(4,758 | ) | (5,640 | ) | (10,926 | ) | (9,975 | ) | ||||||||
| $ | 8,865 | $ | 8,459 | $ | 19,837 | $ | 17,590 | |||||||||
Net sales of $147.0 million for the three months ended December 31, 2025, decreased less than 1% as compared to net sales of $147.7 million for the three months ended December 31, 2024. Lighting Segment net sales of $66.7 million increased 15% and Display Solutions Segment net sales of $80.3 million decreased 10% from last year’s second quarter net sales. The 15% second quarter sales growth of Lighting Segment sales follows 18% growth in the first quarter, with several factors contributing to the improving momentum, including the increased number of large project shipments, which doubled from the second quarter last year. Within the Display Solutions segment, we continue to maintain a high level of project execution across large, multi-year customer programs in the refueling/c-store and QSR verticals. In addition, our grocery vertical continues to stabilize, with demand patterns returning to seasonal levels after two years of significant disruption.
Net sales of $304.3 million for the six months ended December 31, 2025, increased 6% as compared to net sales of $285.8 million for the six months ended December 31, 2024. Lighting Segment net sales of $135.7 million increased 16% and Display Solutions Segment net sales of $168.5 million decreased less than 1 percent from last year’s net sales As stated in the overview of second quarter sales, the momentum in the Lighting Segment from the first quarter carried over to the second quarter with strong lighting net sales driven by the increased number of large project shipments and by the introduction of several new products and the Company’s ability to convert multiple competitor accounts to LSI. Within the Display Solutions segment we continue to experience a steady demand in the refueling/c-store and grocery markets as customers continue to recognize the value of our broad service capabilities.
Operating income of $8.9 million for the three months ended December 31, 2025, represents a 5% increase in operating income from $8.5 million in the three months ended December 31, 2024. Adjusted operating income, a Non-GAAP measure, was $11.7 million in the three months ended December 31, 2025, compared to $11.7 million in the three months ended December 31, 2024. Refer to “Non-GAAP Financial Measures” below for a reconciliation of Non-GAAP financial measures to U.S. GAAP measures. While net sales were relatively flat compared to the same time in the prior year, operating income improved. Margin management remains a priority for us, with a strong focus on project pricing, productivity, and cost discipline.
Operating income of $19.8 million for the six months ended December 31, 2025, represents a 13% increase from operating income of $17.6 million in the six months ended December 31, 2024. Adjusted operating income, a Non-GAAP financial measure, was $25.7 million in the six months ended December 31, 2025, compared to adjusted operating income of $23.6 million in the six months ended December 31, 2024. The increase in net sales coupled with focused margin management contributed to the period over period improvement in operating income. Refer to “Non-GAAP Financial Measures” below for a reconciliation of Non-GAAP financial measures to U.S. GAAP measures.
Non-GAAP Financial Measures
This report includes adjustments to GAAP operating income, net income, and earnings per share for the three months ended December 31, 2025, and 2024. Operating income, net income, and earnings per share, which exclude the impact of long-term performance-based compensation expense, the amortization expense of acquired intangible assets, commercial growth opportunity expense, acquisition costs, the lease expense on the step-up basis of acquired leases, and restructuring and severance costs, are non-GAAP financial measures. We further note that while the amortization expense of acquired intangible assets is excluded from the non-GAAP financial measures, the revenue of the acquired companies is included in the measures, and the acquired assets contribute to the generation of revenue. We believe these non-GAAP measures will provide increased transparency to our core operating performance of the business. Also included in this report are non-GAAP financial measures, including Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA and Adjusted EBITDA), Net Debt to Adjusted EBITDA, and Free Cash Flow. We believe that these are useful as supplemental measures in assessing the operating performance of our business. These measures are used by our management, including our chief operating decision maker, to evaluate business results, and are frequently referenced by those who follow the Company. These non-GAAP measures may be different from non-GAAP measures used by other companies. In addition, the non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations, in that they do not reflect all amounts associated with our results as determined in accordance with U.S. GAAP. Therefore, these measures should be used only to evaluate our results in conjunction with corresponding GAAP measures. Below is a reconciliation of these non-GAAP measures to net income and earnings per share reported for the periods indicated along with the calculation of EBITDA, Adjusted EBITDA, Free Cash Flow, Net Debt to Adjusted EBITDA, and organic sales growth.
| Three Months Ended |
||||||||
| Reconciliation of operating income to adjusted operating income: |
December 31 |
|||||||
| 2025 |
2024 |
|||||||
| (In thousands) |
||||||||
| Operating income as reported |
$ | 8,865 | $ | 8,459 | ||||
| Long-term performance based compensation |
1,002 | 1,669 | ||||||
| Amortization expense of acquired intangible assets |
1,558 | 1,408 | ||||||
| Lease expense on the step-up basis of acquired leases |
68 | 69 | ||||||
| Acquisition costs |
200 | - | ||||||
| Consulting expense: commercial growth opportunities |
- | 81 | ||||||
| Adjusted operating income |
$ | 11,693 | $ | 11,686 | ||||
| Reconciliation of net income to adjusted net income |
Three Months Ended |
|||||||||||||||||
| December 31 |
||||||||||||||||||
| (In thousands, except per share data) |
2025 |
2024 |
||||||||||||||||
| Diluted EPS |
Diluted EPS |
|||||||||||||||||
| Net income as reported |
$ | 6,348 | $ | 0.20 | $ | 5,647 | $ | 0.18 | ||||||||||
| Long-term performance based compensation |
713 | (1) | 0.02 | 1,294 | (6) | 0.04 | ||||||||||||
| Amortization expense of acquired intangible assets |
1,159 | (2) | 0.04 | 1,090 | (7) | 0.04 | ||||||||||||
| Lease expense on the step-up basis of acquired leases |
48 | (3) | - | 53 | (8) | - | ||||||||||||
| Acquisition costs |
142 | (4) | - | - | - | |||||||||||||
| Consulting expense: commercial growth opportunities |
- | - | 62 | (9) | - | |||||||||||||
| Foreign currency transaction loss on intercompany loan |
28 | (5) | - | - | - | |||||||||||||
| Tax rate difference between reported and adjusted net income |
- | - | (150 | ) | - | |||||||||||||
| Net income adjusted |
$ | 8,438 | $ | 0.26 | $ | 7,996 | $ | 0.26 | ||||||||||
The following represents the income tax effects of the adjustments in the tables above, which were calculated using the estimated combined U.S., Canada and Mexico effective income tax rates for the periods indicated (in thousands):
(1) $289
(2) $399
(3) $20
(4) $58
(5) ($28)
(6) $375
(7) $318
(8) $16
(9) $19
| Six Months Ended |
||||||||
| Reconciliation of operating income to adjusted operating income: |
December 31 |
|||||||
| 2025 |
2024 |
|||||||
| (In thousands) |
||||||||
| Operating income as reported |
$ | 19,837 | $ | 17,590 | ||||
| Acquisition costs |
420 | 48 | ||||||
| Long-term performance based compensation |
2,284 | 2,853 | ||||||
| Amortization expense of acquired intangible assets |
3,112 | 2,816 | ||||||
| Lease expense on the step-up basis of acquired leases |
136 | 136 | ||||||
| Restructuring/severance costs |
(71 | ) | 60 | |||||
| Consulting expense: commercial growth opportunities |
- | 81 | ||||||
| Adjusted operating income |
$ | 25,718 | $ | 23,584 | ||||
| Reconciliation of net income to adjusted net income |
Six Months Ended |
|||||||||||||||||
| December 31 |
||||||||||||||||||
| (In thousands, except per share data) |
2025 |
2024 |
||||||||||||||||
| Diluted EPS |
Diluted EPS |
|||||||||||||||||
| Net income as reported |
$ | 13,612 | $ | 0.43 | $ | 12,329 | $ | 0.40 | ||||||||||
| Long-term performance based compensation |
1,667 | (1) | 0.05 | 2,161 | (6) | 0.07 | ||||||||||||
| Amortization expense of acquired intangible assets |
2,276 | (2) | 0.07 | 2,132 | (7) | 0.07 | ||||||||||||
| Restructuring/severance costs |
(53 | ) | (3) | - | 45 | (8) | - | |||||||||||
| Acquisition costs |
307 | (4) | 0.01 | 50 | (9) | - | ||||||||||||
| Lease expense on the step-up basis of acquired leases |
99 | (5) | - | 103 | (10) | 0.01 | ||||||||||||
| Consulting expense: commercial growth opportunities |
- | - | 62 | (11) | - | |||||||||||||
| Foreign currency transaction loss on intercompany loan |
354 | 0.01 | ||||||||||||||||
| Tax rate difference between reported and adjusted net income |
(93 | ) | - | (905 | ) | (0.03 | ) | |||||||||||
| Net income adjusted |
$ | 18,169 | $ | 0.57 | $ | 15,977 | $ | 0.52 | ||||||||||
The following represents the income tax effects of the adjustments in the tables above, which were calculated using the estimated combined U.S., Canada and Mexico effective income tax rates for the periods indicated (in thousands):
(1) $617
(2) $836
(3) ($18)
(4) $113
(5) $37
(6) $692
(7) $684
(8) $15
(9) ($2)
(10) $33
(11) $19
| Reconciliation of Net Income to Adjusted EBITDA |
Three Months Ended |
Six Months Ended |
||||||||||||||
| December 31 |
December 31 |
|||||||||||||||
| (In thousands) |
2025 |
2024 |
2025 |
2024 |
||||||||||||
| Net Income - Reported |
$ | 6,348 | $ | 5,647 | $ | 13,612 | $ | 12,329 | ||||||||
| Income Tax |
2,047 | 1,702 | 4,478 | 3,336 | ||||||||||||
| Interest Expense, Net |
573 | 728 | 1,320 | 1,603 | ||||||||||||
| Other (Income) Expense |
(103 | ) | 382 | 427 | 322 | |||||||||||
| Operating Income as reported |
$ | 8,865 | $ | 8,459 | $ | 19,837 | $ | 17,590 | ||||||||
| Depreciation and Amortization |
3,227 | 3,018 | 6,427 | 5,958 | ||||||||||||
| EBITDA |
$ | 12,092 | $ | 11,477 | $ | 26,264 | $ | 23,548 | ||||||||
| Long-term performance based compensation |
1,002 | 1,669 | 2,284 | 2,853 | ||||||||||||
| Restructuring/severance costs |
- | - | (71 | ) | 60 | |||||||||||
| Lease expense on the step-up basis of acquired leases |
68 | 69 | 136 | 136 | ||||||||||||
| Consulting expense: commercial growth opportunities |
- | 81 | - | 81 | ||||||||||||
| Acquisition costs |
200 | - | 420 | 48 | ||||||||||||
| Adjusted EBITDA |
$ | 13,362 | $ | 13,296 | $ | 29,033 | $ | 26,726 | ||||||||
| Reconciliation of cash flow from operations to free cash flow |
Three Months Ended |
Six Months Ended |
||||||||||||||
| December 31 |
December 31 |
|||||||||||||||
| (In thousands) |
2025 |
2024 |
2025 |
2024 |
||||||||||||
| Cash Flow from Operations |
$ | 24,984 | $ | 9,891 | $ | 25,659 | $ | 21,737 | ||||||||
| Capital expenditures |
(1,684 | ) | (1,066 | ) | (2,651 | ) | (1,825 | ) | ||||||||
| ` |
||||||||||||||||
| Free Cash Flow |
$ | 23,300 | $ | 8,825 | $ | 23,008 | $ | 19,912 | ||||||||
| Net Debt to Adjusted EBITDA |
December 31 |
December 31 |
||||||
| (In thousands) |
2025 |
2024 |
||||||
| Current portion and long-term debt as reported |
$ | - | $ | 3,571 | ||||
| Long-Term Debt |
27,939 | 34,615 | ||||||
| Total Debt |
27,939 | 38,186 | ||||||
| Less: Cash and cash equivalents |
(6,407 | ) | (4,712 | ) | ||||
| Net Debt |
$ | 21,532 | $ | 33,474 | ||||
| Adjusted EBITDA - Trailing 12 Months |
$ | 57,286 | $ | 52,006 | ||||
| Net Debt to Adjusted EBITDA |
0.4 | 0.6 | ||||||
| Three Months Ended |
Six Months Ended |
||||||||||||||||||||||||||
| Organic compared to Inorganic Sales |
Dec 2025 |
Dec 2024 |
% Variance |
Dec 2025 |
Dec 2024 |
% Variance |
|||||||||||||||||||||
| Lighting Segment |
$ | 66,673 | # |
$ | 58,210 | 15 | % | $ | 135,726 | # |
$ | 116,646 | 16 | % | |||||||||||||
| Display Solutions Segment |
|||||||||||||||||||||||||||
| - Comparable Display Solutions Sales |
74,001 | 89,524 | -17 | % | 153,278 | 169,183 | -9 | % | |||||||||||||||||||
| - Canada's Best |
6,328 | - | 15,247 | - | |||||||||||||||||||||||
| Total Diplay Solutions Sales |
80,329 | 89,524 | -10 | % | 168,525 | 169,183 | 0 | % | |||||||||||||||||||
| Total net sales |
147,002 | 147,734 | 0 | % | 304,251 | 285,829 | 6 | % | |||||||||||||||||||
| Less: |
|||||||||||||||||||||||||||
| Canada's Best |
6,328 | - | ` |
15,247 | - | ||||||||||||||||||||||
| Total organic net sales |
$ | 140,674 | $ | 147,734 | -5 | % | $ | 289,004 | $ | 285,829 | 1 | % | |||||||||||||||
Results of Operations
THREE MONTHS ENDED DECEMBER 31, 2025, COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2024
| Display Solutions Segment |
Three Months Ended |
|||||||
| December 31 |
||||||||
| (In thousands) |
2025 |
2024 |
||||||
| Net Sales |
$ | 80,329 | $ | 89,524 | ||||
| Gross Profit |
$ | 14,402 | $ | 15,820 | ||||
| Operating Income |
$ | 6,076 | $ | 8,125 | ||||
Display Solutions net sales of $80.3 million decreased from same period in fiscal 2024. Within the Display Solutions segment, we continue to maintain a high level of project execution across large, multi-year customer programs in the refueling/c-store and QSR verticals. In addition, our grocery vertical continues to stabilize, with demand patterns returning to seasonal levels after two years of significant disruption.
Gross profit of $14.4 million in the three months ended December 31, 2025, decreased from the same period of fiscal 2025 driven by lower sales. Gross profit as a percentage of net sales remained at 18% despite lower sales as we continue to maintain favorable program pricing and prudent cost management.
Operating expenses of $8.3 million in the three months ended December 31, 2025, increased 8% from the same period of fiscal 2025, primarily driven by the acquisition of Canada’s Best Holdings and by continued investment in commercial initiatives to drive growth.
Display Solutions Segment operating income of $6.1 million in the three months ended December 31, 2025, decreased from the same period of fiscal 2025. The decrease in operating income driven by the net effect of a decrease in net sales partially offset by the gross margin impact of product mix and by favorable program pricing and prudent cost management.
| Lighting Segment |
Three Months Ended |
|||||||
| December 31 |
||||||||
| (In thousands) |
2025 |
2024 |
||||||
| Net Sales |
$ | 66,673 | $ | 58,210 | ||||
| Gross Profit |
$ | 23,037 | $ | 19,034 | ||||
| Operating Income |
$ | 7,547 | $ | 5,971 | ||||
Lighting Segment net sales of $66.7 million in the three months ended December 31, 2025, increased 15% compared to net sales of $58.2 million in the same period in fiscal 2025. The 15% second quarter sales growth follows 18% growth in the first quarter, with several factors contributing to our improving momentum, including the increased number of large project shipments, which doubled from the second quarter last year.
Gross profit of $23.0 million in the three months ended December 31, 2025, increased 21% from the same period of fiscal 2025. Gross profit as a percentage of sales improved from 32.7% to 34.6%. The increase in net sales coupled with focused margin management contributed to the period over period improvement in gross profit.
Operating expenses of $15.5 million in the three months ended December 31, 2025, increased from the same period of fiscal 2025, driven mostly by higher agent commission expense from higher net sales.
Lighting Segment operating income of $7.5 million for the three months ended December 31, 2025, increased 26% from operating income of $6.0 million in the same period of fiscal 2025 primarily driven by improved sales and focused margin management.
| Corporate and Eliminations |
Three Months Ended |
|||||||
| December 31 |
||||||||
| (In thousands) |
2025 |
2024 |
||||||
| Gross Profit |
$ | (5 | ) | $ | 7 | |||
| Operating (Loss) |
$ | (4,758 | ) | $ | (5,637 | ) | ||
The gross profit relates to the change in the intercompany profit in inventory elimination.
Operating expenses of $4.8 million in the three months ended December 31, 2025, decreased 16% from the same period of fiscal 2025. The decrease in expense is primarily the result of effective cost management of the Company’s corporate operating expenses.
Consolidated Results
The Company reported $0.6 million and $0.7 million of net interest expense in the three months ended December 31, 2025, and December 31, 2024, respectively. The decrease in interest expense is driven by profitability and by sustained working capital management as the Company lowered its outstanding debt. The Company also recorded other income of ($0.1) million compared to other expense of $0.4 in the three months ended December 31, 2025, and December 31, 2024, respectively, of which is related to net foreign exchange currency transaction gains and losses through the Company’s Mexican and Canadian subsidiaries.
The $2.0 million of income tax expense in the three months ended December 31, 2025, represents a consolidated effective tax rate of 24.4%. The $1.7 million of income tax expense in the three months ended December 31, 2024, represents a consolidated effective tax rate of 23.2%. Impacting the effective tax rate of both reported periods was the favorable tax treatment of the Company’s long-term performance-based compensation.
The Company reported net income of $6.3 million in the three months ended December 31, 2025, compared to net income of $5.6 million in the three months ended December 31, 2024. Non-GAAP adjusted net income was $8.4 million for the three months ended December 31, 2025, compared to adjusted net income of $8.0 million for the three months ended December 31, 2024 (Refer to the Non-GAAP tables above). The increase in Non-GAAP adjusted net income is primarily the result of a strong focus on project pricing, productivity, and cost disciplines, on relatively flat sales. Diluted adjusted earnings per share of $0.20 were reported in the three months ended December 31, 2025, compared to $0.18 diluted adjusted earnings per share in the same period of fiscal 2025. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the three months ended December 31, 2025, were 32,004,000 shares compared to 30,876,000 shares in the same period last year.
SIX MONTHS ENDED DECEMBER 31, 2025, COMPARED TO SIX MONTHS ENDED DECEMBER 31, 2024
| Display Solutions Segment |
Six Months Ended |
|||||||
| December 31 |
||||||||
| (In thousands) |
2025 |
2024 |
||||||
| Net Sales |
$ | 168,525 | $ | 169,182 | ||||
| Gross Profit |
$ | 31,497 | $ | 30,851 | ||||
| Operating Income |
$ | 14,667 | $ | 15,833 | ||||
Display Solutions Segment net sales of $168.5 million decreased less than 1 percent from last year’s net sales. We continue to experience a continued steady demand in the refueling/c-store and grocery markets as customers continue to recognize the value of our broad service capabilities. In addition, our grocery vertical continues to stabilize, with demand patterns returning to seasonal levels after two years of significant disruption.
Gross profit of $31.5 million in the six months ended December 31, 2025, increased 2% from the same period of fiscal 2025 despite slightly lower sales. Gross profit as a percentage of net sales in the six months ended December 31, 2025, increased slightly to 18.7% from 18.2% in the same period of fiscal 2025 impacted by favorable program pricing and prudent cost management.
Operating expenses of $16.8 million in the six months ended December 31, 2025, increased 12% from the same period of fiscal 2025, primarily driven by the acquisition of Canada’s Best Holdings and by continued investment in commercial initiatives to drive growth.
Operating income of $14.7 million in the six months ended December 31, 2025, decreased from the same period of fiscal 2025. The decrease in operating income was driven by the net effect of an increase in gross offset by an increase in operating expenses.
| Lighting Segment |
Six Months Ended |
|||||||
| December 31 |
||||||||
| (In thousands) |
2025 |
2024 |
||||||
| Net Sales |
$ | 135,726 | $ | 116,646 | ||||
| Gross Profit |
$ | 46,219 | $ | 37,658 | ||||
| Operating Income |
$ | 16,096 | $ | 11,730 | ||||
Lighting Segment net sales of $135.7 million in the six months ended December 31, 2025, increased 16% compared to net sales of $116.7 million in the same period in fiscal 2025. The 15% second quarter sales growth follows 18% growth in the first quarter, with several factors contributing to our improving momentum, including the increased number of large project shipments, which doubled from the second quarter last year. Also contributing to the period over period growth of sales was the introduction of several new products and the Company’s ability to convert multiple competitor accounts to LSI.
Gross profit of $46.2 million in the three months ended December 31, 2025, increased 23% from the same period of fiscal 2025. Gross profit as a percentage of sales improved from 32.3% to 34.1%. The increase in net sales coupled with focused margin management contributed to the period over period improvement in gross profit.
Operating expenses of $30.1 million in the six months ended December 31, 2025, increased 16% from the same period of fiscal 2025, driven mostly by higher agent commission expense.
Lighting Segment operating income of $16.1 million for the six months ended December 31, 2025, increased 37% from operating income of $11.7 million in the same period of fiscal 2025. primarily driven by improved sales and focused margin management.
| Corporate and Eliminations |
Six Months Ended |
|||||||
| December 31 |
||||||||
| (In thousands) |
2025 |
2024 |
||||||
| Gross Profit (Loss) |
$ | (5 | ) | $ | (1 | ) | ||
| Operating (Loss) |
$ | (10,926 | ) | $ | (9,973 | ) | ||
The gross profit (loss) relates to the change in the intercompany profit in inventory elimination.
Operating expenses of $10.9 million in the six months ended December 31, 2025, increased 10% from the same period of fiscal 2025. The increase in expense is the result of an increase in investment in commercial initiatives to support the growth of the Company.
Consolidated Results
The Company reported $1.3 million and $1.6 million of net interest expense in the six months ended December 31, 2025, and December 31, 2024, respectively. The decrease in interest expense is driven by profitability and by sustained working capital management as the Company lowered its outstanding debt. The Company also recorded other expense of $0.4 million and $0.3 million in the six months ended December 31, 2025, and December 31, 2024, respectively, both of which is related to net foreign exchange currency transaction gains and losses through the Company’s Mexican and Canadian subsidiaries.
The $4.5 million of income tax expense in the six months ended December 31, 2025, represents a consolidated effective tax rate of 24.8%. The $3.3 million of income tax expense in the six months ended December 31, 2024, represents a consolidated effective tax rate of 21.3%. Impacting the effective tax rate of both reported periods was the favorable tax treatment of the Company’s long-term performance-based compensation.
The Company reported net income of $13.6 million in the six months ended December 31, 2025, compared to net income of $12.3 million in the six months ended December 31, 2024. Non-GAAP adjusted net income was $18.2 million for the six months ended December 31, 2025, compared to adjusted net income of $16.0 million for the six months ended December 31, 2024 (Refer to the Non-GAAP tables above). The increase in Non-GAAP adjusted net income is primarily the result of improved sales and a strong focus on project pricing, productivity, and cost disciplines. Diluted adjusted earnings per share of $0.57 was reported in the six months ended December 31, 2025, compared to $0.52 diluted adjusted earnings per share in the same period of fiscal 2025. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the six months ended December 31, 2025, were 31,685,000 shares compared to 30,709,000 shares in the same period last year.
Liquidity and Capital Resources
The Company considers its level of cash on hand, borrowing capacity, current ratio and working capital levels to be its most important measures of short-term liquidity. For long-term liquidity indicators, the Company believes its ratio of long-term debt to equity and our historical levels of net cash flows from operating activities to be the most important measures.
At December 31, 2025, the Company had working capital of $100.1 million compared to $96.8 million at June 30, 2025. The ratio of current assets to current liabilities was 2.2 to 1 for December 31, 2025, and 2.0 for June 30, 2025. The increase in working capital from June 30, 2025, to December 31, 2025, was primarily driven a decrease in accounts payable and accrued expenses and an increase in net inventory, partially offset by a $13.7 million decrease in net accounts receivable.
Net accounts receivable was $90.6 million and $104.3 million at December 31, 2025, and June 30, 2025, respectively. DSO decreased to 59 days at December 31, 2025, from 66 days at June 30, 2025.
Net inventories of $82.0 million at December 31, 2025, increased $2.2 million from $79.8 million at June 30, 2025. Lighting Segment net inventory increased $3.6 million to support the growth in Lighting Segment sales whereas net inventory in the Display Solutions Segment decreased $1.4 million.
Cash generated from operations and borrowing capacity under the Company’s line of credit is its primary source of liquidity. The Company has a $125 million a secured revolving line of credit. The revolving line of credit expires in the first quarter of fiscal 2031. As of December 31, 2025, $104.6 million of the credit line was available. The Company is in compliance with all of its loan covenants. The $125 million credit facility plus cash flows from operating activities are adequate for operational and capital expenditure needs for the remainder of fiscal 2026.
The Company generated $25.7 million of cash from operating activities in the six months ended December 31, 2025, compared to $21.7 million of cash generated from operating activities in the same period in fiscal 2025. The Company continues to effectively manage its working capital while generating increasing cash flow from earnings in both fiscal years, resulting in strong cash flow from operations.
The Company invested $2.6 million and $1.8 million of cash related to investing activities in the six months ended December 31, 2025, and December 31, 2024, respectively. The Company continues to invest in equipment and tooling to support sales growth.
The Company had a net use of cash of $20.4 million and $19.1 million related to financing activities in the six months ended December 31, 2025, and December 31, 2024, respectively. The Company continues to generate positive cash flow from its operations in order to pay down its debt and fund its dividend payments to shareholders.
The Company has on its balance sheet financial instruments consisting primarily of cash and cash equivalents, revolving lines of credit, and long-term debt. The fair value of these financial instruments approximates carrying value because of their short-term maturity and/or variable, market-driven interest rates.
Off-Balance Sheet Arrangements
The Company has no financial instruments with off-balance sheet risk and have no off-balance sheet arrangements.
Cash Dividends
In January 2026, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable February 10, 2026, to shareholders of record as of February 2, 2026. The indicated annual cash dividend rate for fiscal 2026 is $0.20 per share. The Board of Directors has adopted a policy regarding dividends which indicates that dividends will be determined by the Board of Directors in its discretion based upon its evaluation of earnings, cash flow requirements, financial condition, debt levels, stock repurchases, future business developments and opportunities, and other factors deemed relevant.
Critical Accounting Policies and Estimates
A summary of our significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company’s fiscal 2025 Annual Report on Form 10-K.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our exposure to market risk since June 30, 2025. Additional information can be found in Item 7A, Quantitative and Qualitative Disclosures About Market Risk, which appears on page 16 of the Annual Report on Form 10-K for the fiscal year ended June 30, 2025.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as such term is defined Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized, and reported within required time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
We conducted, under the supervision of our management, including the Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2025, our disclosure controls and procedures were effective. Management believes that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q are fairly presented in all material respects in accordance with GAAP for interim financial statements, and the Company’s Chief Executive Officer and Chief Financial Officer have certified that, based on their knowledge, the condensed consolidated financial statements included in this report fairly present in all material respects the Company’s financial condition, results of operations and cash flows for each of the periods presented in this report.
Changes in Internal Control
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Exhibits:
| 10.1 |
| 31.1 |
Certification of Principal Executive Officer required by Rule 13a-14(a) |
| 31.2 |
Certification of Principal Financial Officer required by Rule 13a-14(a) |
| 32.1 |
| 32.2 |
101.INS Inline XBRL Instance Document
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
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Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101) |
* Management compensatory agreement.
++ Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K. The omitted information is not material and would likely cause competitive harm to the Registrant if publicly disclosed. The Registrant hereby agrees to furnish a copy of any omitted portion to the SEC upon request.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| LSI Industries Inc. |
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| By: |
/s/ James A. Clark |
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| James A. Clark |
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| Chief Executive Officer and President |
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| (Principal Executive Officer) |
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| By: |
/s/ James E. Galeese |
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| James E. Galeese |
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| Executive Vice President and Chief Financial Officer |
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| (Principal Financial and Accounting Officer) |
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| February 9, 2026 | |||
Exhibit 10.1
LSI INDUSTRIES INC.
NON-EMPLOYEE DIRECTOR
DEFERRED COMPENSATION PROGRAM
This LSI Industries Inc. Non-Employee Director Deferred Compensation Program (this “Program”) has been adopted by the Board to govern the deferral of unrestricted Common Stock otherwise issued to Non-Employee Directors, on a quarterly basis, as part of their retainer for services on the Board. The program is adopted as a Sub Plan under the LSI Industries Inc. Amended and Restated 2019 Omnibus Award Plan, as the same may be amended, or further amended and restated, from time to time (the “Omnibus Plan”). Capitalized terms used but not defined herein will have the meaning given such terms in the Omnibus Plan.
1. Election to Defer Common Stock. A Non-Employee Director may elect to defer the quarterly issuance of shares of Common Stock that would otherwise be delivered to the Non- Employee Director as part of his or her retainer for services on the Board (each, an “Equity Retainer”) until the applicable payment date set forth in Section 4 of this Program. Any deferral election under this Program will be made on a form provided by the Company from time to time, the initial form of which is attached as Exhibit A (a “Deferral Election”), and in accordance with the following rules:
a. Initial Deferral Election. Each individual who first becomes a Non- Employee Director may make a Deferral Election with respect to his or her Equity Retainers to be granted in the same calendar year as such individual first becomes a Non-Employee Director (the “Initial Deferral Election”). The Initial Deferral Election must be submitted to the Company before the date that the individual first becomes a Non-Employee Director and will become irrevocable as of the date immediately prior to the date that the individual first becomes a Non- Employee Director.
b. Annual Deferral Election. No later than December 31 of each calendar year, or such earlier deadline as may be established by the Company, in its discretion (the “Annual Election Deadline”), each individual who is serving as a Non-Employee Director as of immediately before the Annual Election Deadline may make a Deferral Election with respect to Equity Retainers to be granted in the following calendar year (the “Annual Deferral Election”). The Annual Deferral Election must be submitted to the Company on or before the applicable Annual Election Deadline and will become irrevocable for the subsequent calendar year as of the applicable Annual Election Deadline. Directors may defer up to 100% of their Equity retainer. A deferral that results in a fractional share will be rounded up to the next whole share.
c. Evergreen Elections. A Deferral Election (whether an Initial Deferral Election or an Annual Deferral Election) will remain in effect from calendar year to calendar year and will become effective for each subsequent calendar year as of the applicable Annual Election Deadline, unless and until revoked prospectively by a Non-Employee Director on a form provided by the Company (see Exhibit B for the initial form). Any revocation of a Deferral Election will become effective only with respect to Equity Retainers that are granted in calendar years that begin after receipt and acceptance by the Company of the written revocation.
2. Deferred Account. If an Equity Retainer is subject to a valid Deferral Election, then on the date that shares of Common Stock underlying the Equity Retainer would otherwise have been issued to the Non-Employee Director, such shares instead will be converted to a number of Deferred Stock Units on a one-to-one basis, and the Deferred Stock Units will be credited to the Non-Employee Director’s deferred account (“Account”) until payment as provided in Section 4 below. The Account will be a bookkeeping entry only and will be used solely as a device to measure and determine the amounts, if any, to be paid to a Non-Employee Director or his or her beneficiary under the Program. The Deferred Stock Units credited to a Non-Employee Director’s Account will be subject to adjustment as provided in Section 4 below and in Section 13 of the Omnibus Plan.
3. Dividend Equivalents. As of each date that the Company pays a cash dividend to holders of Common Stock, the Company will credit each Non-Employee Director’s Account with a number of whole and fractional Deferred Stock Units equal to (a) the number of Deferred Stock Units credited to the Non-Employee Director’s Account as of the record date for the dividend, multiplied by (b) a fraction, the numerator of which is the amount of the cash dividend paid per share of Common Stock and the denominator of which is the Fair Market Value of a share of Common Stock on the dividend payment date.
4. Payment Date. Each whole Deferred Stock Unit credited to a Non-Employee Director’s Account will be paid to the Non-Employee Director or his or her beneficiary or estate, as applicable, in the form of shares of Common Stock (with one Deferred Stock Unit equaling one share of Common Stock), in a single lump sum within 30 calendar days after the earlier of (a) the date on which the Non-Employee Director ceases to serve as a member of the Board and incurs a Separation from Service, subject to Section 14(u) of the Omnibus Plan (or, such other date as permitted by the Company on the Deferral Election and properly designated by the Non-Employee Director), or (b) the date on which the Company experiences a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets”, as each of those terms is defined in Section 409A. Any fractional Deferred Stock Unit as of the payment date will be rounded up to the nearest whole Deferred Stock Unit and paid in accordance with this Section 4.
5. Incorporation of Omnibus Plan. This Program will be subject to the terms and conditions of the Omnibus Plan, which are fully incorporated herein. Any shares of Common Stock issued to a Non-Employee Director as a result of this Program will be issued under, and reduce the available Effective Date Share Limit of, the Omnibus Plan.
6. Effective Date. This Program was adopted by the Board as of December 19, 2025 and will be effective with respect to Equity Retainers otherwise granted on or after January 1, 2026.
EXHIBIT A
DEFERRAL ELECTION
1. Pursuant to the LSI Industries Inc. Non-Employee Director Deferred Compensation Program (the “Program”) and the LSI Industries Inc. Amended and Restated 2019 Omnibus Award Plan, as the same may be amended, or further amended and restated, from time to time (the “Omnibus Plan”), I, the undersigned Non-Employee Director, hereby elect and instruct LSI Industries Inc. (the “Company”) to defer issuance of my Equity Retainers in accordance with the Program and this Deferral Election.1 Capitalized terms in this election form will have the meaning specified in the Program and the Omnibus Plan unless a different meaning is specified herein.
2. I hereby elect to defer ___% of each of my quarterly Equity Retainer. An election that results in a fractional share will be rounded up to the next whole share.
3. I understand that I will receive the deferred amounts credited to my Account in a single lump sum in the form of shares of Common Stock within 30 days after the following, except as otherwise provided in Section 4(b) of the Program or Section 14(u) of the Omnibus Plan (please select one):
________ The date of my Separation from Service with the Company, including due to my death (this is the default payment option, which will apply if no payment option, or more than one payment option, is selected).
________ The earlier of (i) the first anniversary of my Separation from Service with the Company, or (ii) the date of my death.
________ The earlier of (i) the third anniversary of my Separation from Service with the Company, or (ii) the date of my death.
4. I understand that the election to defer under paragraph 2 will remain in effect for all subsequent calendar years unless the Company accepts, pursuant to the Program, a revocation of this election. I acknowledge that any revocation of my Deferral Election will become effective with respect to Equity Retainers granted in calendar years beginning after the date of revocation.
5. I acknowledge that I have been advised to consult with my own financial, tax, estate planning and legal advisors before making this election to defer in order to determine the tax effects and other implications of my participation in the Program.
(Signatures are on the following page)
1 In general, Deferral Elections must be filed with the Company on or before December 31 of a calendar year and will be effective only for Equity Retainers granted in subsequent calendar years. However, Deferral Elections for a new Non-Employee Director must be filed with the Company prior to the date of the Non-Employee Director’s election or appointment and will be effective for all Equity Retainers granted to the Non-Employee Director (i.e., in the year of election or appointment and thereafter).
Executed this _____ day of December, 2025.
Signature
__________________________________________
Print Name:
__________________________________________
Received and accepted by the Company on this _____ day of December, 2025.
__________________________________________
Name:
Title:
EXHIBIT B
REVOCATION NOTICE
Pursuant to the LSI Industries Inc. Non-Employee Director Deferred Compensation Program (the “Program”) and the LSI Industries Inc. Amended and Restated 2019 Omnibus Award Plan, as the same may be amended, or further amended and restated, from time to time (the “Omnibus Plan”), I, the undersigned Non-Employee Director, hereby revoke my election to defer my Equity Retainers pursuant to the Program. I understand that my revocation will apply to Equity Retainers to be granted in the calendar year beginning after the Company’s receipt of this notice, and that Equity Retainers granted prior to then will be controlled by the terms of the Program and my prior Deferral Election. Furthermore, my revocation will continue thereafter, until and unless I deliver a subsequent Deferral Election pursuant to the Program. Capitalized terms in this revocation notice will have the meaning specified in the Program and the Omnibus Plan unless a different meaning is specified herein.
Executed this ______day of ___________, 20____.
Signature
__________________________________________
Print Name:
__________________________________________
Received and accepted by the Company on this ______day of ___________, 20____.
__________________________________________
Name:
Title:
EXHIBIT 31.1
Certification of Principal Executive Officer
Pursuant to Rule 13a-14(a)
I, James A. Clark, certify that:
1. I have reviewed this quarterly report on Form 10-Q of LSI Industries Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: February 9, 2026 |
/s/ James A. Clark |
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|
Principal Executive Officer |
EXHIBIT 31.2
Certification of Principal Financial Officer
Pursuant to Rule 13a-14(a)
I, James E. Galeese, certify that:
1. I have reviewed this quarterly report on Form 10-Q of LSI Industries Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: February 9, 2026 |
/s/ James E. Galeese |
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Principal Financial and Accounting Officer |
EXHIBIT 32.1
CERTIFICATION OF JAMES A. CLARK
Pursuant to Section 1350 of Chapter 63 of the
United States Code and Rule 13a-14b
In connection with the filing with the Securities and Exchange Commission of the Quarterly Report of LSI Industries Inc. (the “Company”) on Form 10-Q for the quarter ended December 31, 2025 (the “Report”), I, James A. Clark, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
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(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
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/s/ James A. Clark |
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James A. Clark |
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Chief Executive Officer and President |
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Date: February 9, 2026 |
A signed original of this written statement required by Section 906 has been provided to LSI Industries Inc. and will be retained by LSI Industries Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION OF JAMES E. GALEESE
Pursuant to Section 1350 of Chapter 63 of the
United States Code and Rule 13a-14b
In connection with the filing with the Securities and Exchange Commission of the Quarterly Report of LSI Industries Inc. (the “Company”) on Form 10-Q for the quarter ended December 31, 2025 (the “Report”), I, James E. Galeese, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
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(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
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/s/ James E. Galeese |
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James E. Galeese |
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Executive Vice President and Chief Financial and Accounting Officer |
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Date: February 9, 2026 |
A signed original of this written statement required by Section 906 has been provided to LSI Industries Inc. and will be retained by LSI Industries Inc. and furnished to the Securities and Exchange Commission or its staff upon request.