LSI Industries Reports Fiscal 2026 Second Quarter Results and Declares Quarterly Cash Dividend

LSI Industries Reports Fiscal 2026 Second Quarter Results and Declares Quarterly Cash Dividend January 22, 2026 LSI Industries Inc. (Nasdaq: LYTS, “LSI” or the “Company”) a leading U.S. based manufacturer of commercial lighting and display solutions, today reported financial results for the fiscal 2026 second quarter ended December 31, 2025. FISCAL 2026 SECOND QUARTER RESULTS Net Sales of $147.0 millionNet Income $6.3 million; Adjusted Net Income $8.4 millionDiluted EPS of $0.20; Adjusted Diluted EPS of $0.26EBITDA of $12.1 million; Adjusted EBITDA of $13.4 millionFree Cash Flow of $23.3 millionRatio of net debt to TTM Adjusted EBITDA of 0.4x LSI reported sales of $147.0 million, even with the prior year period, successfully offsetting the impact of fiscal 2025 results which included elevated, event driven sales related to disruption in the grocery vertical. Demand in the grocery vertical returned to seasonal levels in the second quarter of fiscal 2026, which supports higher seasonal activity quarters moving forward. The Company reported net income of $6.3 million, or $0.20 per diluted share in the second quarter, while adjusted net income was $8.4 million or $0.26 per adjusted diluted share. Fiscal second quarter adjusted EBITDA was $13.4 million or 9.1% of net sales, an increase versus the prior-year period, as improved productivity, price optimization, and disciplined expense management combined to offset raw materials cost inflation. The Company generated strong free cash flow of $23.3 million in the fiscal second quarter, driven by profitability and sustained working capital discipline. LSI reduced its total debt outstanding by $22.7 million in the fiscal second quarter, resulting in a ratio of net debt to trailing twelve-month adjusted EBITDA of 0.4x as of December 31, 2025. LSI exits the second quarter with cash and availability on its credit facility totaling $103.4 million. The Company declared a regular cash dividend of $0.05 per share payable on February 10, 2026, to shareholders of record on February 2, 2026. MANAGEMENT COMMENTARY “The strength of our diversified, solutions-based model was evident in the second quarter, enabling LSI to deliver solid performance despite a challenging prior-year comparison,” stated James A. Clark, President and Chief Executive Officer of LSI. “Double-digit sales growth within our Lighting segment, continued execution of large project activity in Display Solutions, sustained profitability, and strong free cash generation, underscore the durability and resiliency of our operating model,” continued Clark. “We exit the fiscal second quarter with an extremely healthy balance sheet. Free cash flow for the quarter was $23.3 million, reducing our leverage ratio to 0.4x. Our strong balance sheet provides the financial support required to achieve our 2028 Fast Forward strategic plan, supporting critical planned investments in organic growth, while also providing the ability to evaluate future acquisition opportunities. “Margin management remains a priority for us, with a strong focus on project pricing, productivity, and cost discipline. These actions combined to offset cost inflation in the quarter, resulting in modest improvement in net income and diluted earnings per share, while positioning us to maintain EBITDA margin in what is seasonally one of slowest quarters of the year. “Within our Lighting segment, our team delivered a strong quarter, with sales growth of 15%, together with seventy basis points of adjusted EBITDA margin expansion, when compared to the prior-year period. 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. Furthermore, our increased emphasis on national account opportunities continues to generate new customers and sustainable business. One specific account conversion resulted in a multi-million-dollar initial order to be fulfilled in the fiscal third quarter. “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. Market activity in Mexico, which has been soft for several quarters, improved considerably in the second quarter, and is expected to remain at elevated levels into fiscal 2027. “In the refueling/c-store vertical we recently onboarded multiple mid-sized projects with new customers, as we expand our service radius beyond larger programs, an approach we expect will contribute to more stable growth over time. Progress around new customer acquisitions is the result of recent investments we’ve made within targeted sales and marketing initiatives, actions that we anticipate will result in further market penetration. “Importantly, our grocery vertical continues to stabilize, with demand patterns returning to seasonal levels after two years of significant disruption,“ continued Clark. “We continue to collaborate with customers on programs in the planning phase, to be released throughout the next eighteen months, the scope including both refrigerated and non-refrigerated product requirements. “Customers continue to recognize the value of our broad service capabilities. For example, at one of our refueling/c-store customers, we are currently active at a record 140 sites, effectively positioning us as an extension of their organization. By bringing an integrated solutions offering to our customers, LSI is embedding its products – and technical service capabilities – which strengthens long-term customer relationships and accelerates the potential for cross-selling synergies. “Entering the second half of fiscal 2026, we anticipate continued year-over-year revenue growth in our Lighting segment, together with resumption of growth within our Display Solutions segment. Exiting the fiscal second quarter, Lighting segment orders were 10% above prior year, resulting in a book-to-bill ratio above 1.0x. For Display Solutions, total orders increased 8%, supporting an improved backlog entering the fiscal third quarter. Specifically, grocery orders increased double-digits in the second quarter versus the prior year quarter reflecting a more normalized release of planned programs.” Clark concluded, “We remain confident in the secular growth outlook for our key vertical markets, while continuing to position LSI for above-market growth through a differentiated, solutions-based value proposition. During periods of fluctuating industry demand, we’ve demonstrated an ability to drive improved margin realization and remain committed to that focus. Moreover, we continue to retain significant balance sheet flexibility in support of our profitable growth objectives outlined within our Fast Forward plan, utilizing a return-centric approach to capital deployment.” FISCAL 2026 SECOND QUARTER CONFERENCE CALL A conference call will be held today at 11:00 A.M. ET to review the Company’s financial results and conduct a question-and-answer session. A webcast of the conference call and accompanying presentation materials will be available in the Investor Relations section of LSI Industries’ website at www.lsicorp.com. Individuals can also participate by teleconference dial-in. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time to register, download and install any necessary audio software. Details of the conference call are as follows: Domestic Live: 877-407-4018 International Live: 201-689-8471 To listen to a replay of the teleconference, which subsequently will be available through February 5, 2026: Domestic Replay: 844-512-2921 International Replay: 412-317-6671 Conference ID: 13758040 ABOUT LSI INDUSTRIES Headquartered in Cincinnati, LSI is a publicly held company traded over the NASDAQ Stock Exchange under the symbol LYTS. The company manufactures advanced lighting, graphics, and display solutions across strategic vertical markets. The company’s American-made products, which include non-residential indoor and outdoor lighting, print graphics, digital graphics, refrigerated and custom displays, help create value for customer brands and enhance the consumer experience. LSI also provides comprehensive project management services in support of large-scale product rollouts. The company employs approximately 2,000 people at 19 manufacturing plants in the U.S. and Canada. Additional information about LSI is available at www.lsicorp.com. FORWARD-LOOKING STATEMENTS For details on the uncertainties that may cause our actual results to be materially different than those expressed in our forward-looking statements, visit https://investors.lsicorp.com as well as our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q which contain risk factors. Three Months Ended December 31Six Months Ended December 31(Unaudited) 2025 2024 (In thousands, except per share data) 2025 2024 $ 147,002 $ 147,734 Net sales $ 304,251 $ 285,829 109,495 112,804 Cost of products sold 226,534 217,147 68 69 Expense on step-up basis of acquired lease 136 136 5 - Severance costs and restructuring costs (130 ) 38 37,434 34,861 Gross profit 77,711 68,508 1,002 1,669 Long-term performance based compensation 2,284 2,853 (5 ) - Severance costs and restructuring costs 59 22 1,558 1,408 Amortization expense of acquired intangible assets 3,112 2,816 200 - Acquisition costs 420 48 - 81 Consulting expense: commercial growth initiatives - 81 25,814 23,244 Selling and administrative costs 51,999 45,098 8,865 8,459 Operating Income 19,837 17,590 (103 ) 382 Other (income) expense 427 322 573 728 Interest expense, net 1,320 1,603 8,395 7,349 Income before taxes 18,090 15,665 2,047 1,702 Income tax 4,478 3,336 $ 6,348 $ 5,647 Net income $ 13,612 $ 12,329 Weighted Average Common Shares Outstanding 31,157 29,930 Basic 30,803 29,761 32,004 30,876 Diluted 31,685 30,709 Earnings Per Share $ 0.20 $ 0.19 Basic $ 0.44 $ 0.41 $ 0.20 $ 0.18 Diluted $ 0.43 $ 0.40 (amounts in thousands)Decmber 31June 30, 2025 2025 Current assets $ 187,259 $ 194,166 Property, plant and equipment, net 30,372 31,154 Other assets 178,675 171,042 Total assets $ 396,306 $ 396,362 Current maturities of long-term debt $ - $ 3,571 Other current liabilities 87,175 93,778 Long-term debt 27,939 44,986 Other long-term liabilities 33,095 23,305 Shareholders' equity 248,097 230,722 $ 396,306 $ 396,362 Three Months Ended December 31, 2025 Results Net sales for the three months ended December 31, 2025, were $147.0 million compared to $147.7 million 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. Net income for the three months ended December 31, 2025, was $6.3 million, or $0.20 per share, compared to $5.6 million or $0.18 per share for the three months ended December 31, 2024. Earnings per share represents diluted earnings per share. Six Months Ended December 31, 2025 Results Net sales for the six months ended December 31, 2025, were $304.3 million representing a 6% increase from the six months ended December 31, 2024, net sales of $285.8 million. 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. Net income for the six months ended December 31, 2025, was $13.6 million, or $0.43 per share, compared to $12.3 million or $0.40 per share for the six months ended December 31, 2024. Earnings per share represents diluted earnings per share. Balance Sheet The balance sheet at December 31, 2025, included current assets of $187.3 million, current liabilities of $87.2 million and working capital of $100.1 million, which includes cash of $6.4 million. The current ratio was 2.2 to 1. The balance sheet also included shareholders’ equity of $248.1 million and long-term debt of $27.9 million. It is the Company’s priority to continuously generate sufficient cash flow, coupled with an approved credit facility, to adequately fund operations. Cash Dividend Actions The Board of Directors declared a regular quarterly cash dividend of $0.05 per share in connection with the second quarter of fiscal 2026, payable February 10, 2026, to shareholders of record as of the close of business on February 2, 2026. The indicated annual cash dividend rate is $0.20 per share. The Board of Directors has adopted a policy regarding dividends which provides that dividends will be determined by the Board of Directors in its discretion based upon its evaluation of earnings both on a GAAP and non-GAAP basis, cash flow requirements, financial condition, debt levels, stock repurchases, future business developments and opportunities, and other factors deemed relevant by the Board. Non-GAAP Financial Measures This press release includes adjustments to GAAP operating income, net income, and earnings per share for the three and six 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 measures, the revenue of the acquired companies is reflected in the measures and the acquired assets contribute to revenue generation. We exclude these items because we believe they are not representative of the ongoing results of the operations of the business. Also included in this press release are non-GAAP financial measures, including Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA and Adjusted EBITDA), Net Debt to Adjusted EBITDA, Free Cash Flow, and organic sales growth. We believe that these are useful as supplemental measures in assessing the operating performance of our business. These measures are used by our management, including our chief operating decision maker, to evaluate business results, and are frequently referenced by those who follow the Company. These non-GAAP measures may be different from non-GAAP measures used by other companies. In addition, the non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations, in that they do not reflect all amounts associated with our results as determined in accordance with U.S. GAAP. Therefore, these measures should be used only to evaluate our results in conjunction with corresponding GAAP measures. Below is a reconciliation of these non-GAAP measures to net income and earnings per share reported for the periods indicated along with the calculation of EBITDA, Adjusted EBITDA, Free Cash Flow, Net Debt to Adjusted EBITDA, and organic sales growth. Three Months Ended December 31Six Months Ended December 31(Unaudited) 2025 2024 % Change (In thousands, except per share data) 2025 2024 % Change $ 147,002 $ 147,734 Net sales $ 304,251 $ 285,829 6 % 8,865 8,459 5 % Operating income as reported 19,837 17,590 13 % 1,002 1,669 Long-term performance based compensation 2,284 2,853 - 81 Consulting expense: commercial growth initiatives - 81 200 - Acquisition costs 420 48 1,558 1,408 Amortization expense of acquired intangible assets 3,112 2,816 68 69 Expense on step-up basis of acquired lease 136 136 - - Severance costs and Restructuring costs (71 ) 60 $ 11,693 $ 11,686 - Operating income as adjusted $ 25,718 $ 23,584 9 % $ 6,348 $ 5,647 12 % Net income as reported $ 13,612 $ 12,329 10 % $ 8,438 $ 7,996 6 % Net income as adjusted $ 18,169 $ 15,977 14 % $ 0.20 $ 0.18 8 % Earnings per share (diluted) as reported $ 0.43 $ 0.40 7 % $ 0.26 $ 0.26 2 % Earnings per share (diluted) as adjusted $ 0.57 $ 0.52 10 % Three Months EndedSix Months EndedDecember 31December 31 2025 2024 (In thousands, except per share data) 2025 2024 Diluted EPSDiluted EPSDiluted EPSDiluted EPSReconciliation of net income to adjusted net income $ 6,348 $ 0.20 $ 5,647 $ 0.18 Net income as reported $ 13,612 $ 0.43 $ 12,329 $ 0.40 713 0.02 1,294 0.04 Long-term performance based compensation 1,667 $ 0.05 2,161 0.07 1,159 0.04 1,090 0.04 Amortization expense of acquired intangible assets 2,276 $ 0.07 2,132 0.07 - - 62 - Consulting expense: commercial growth initiatives - $ - 62 - - - - - Severance costs and Restructuring costs (53 ) $ - 45 - 142 $ - - - Acquisition costs 307 $ 0.01 50 - 48 - 53 - Expense on step-up basis of acquired lease 99 $ - 103 0.01 28 - - - Foreign currency transaction loss on intercompany loan 354 $ 0.01 - - - $ - (150 ) - Tax rate difference between reported and adjusted net income (93 ) $ - (905 ) (0.03 ) $ 8,438 $ 0.26 $ 7,996 $ 0.26 Net income adjusted $ 18,169 $ 0.57 $ 15,977 $ 0.52 The foreign currency transaction loss on intercompany loan relates to an intercompany loan established as a result of the acquisition Canada’s Best Holdings as a method to repatriate cash generated in Canada to the Unites States without being subject to a withholding penalty. Three Months Ended December 31(Unaudited; In thousands)Six Months Ended December 31Net Income to Adjusted EBITDA 2025 2024 % Change 2025 2024 % Change $ 6,348 $ 5,647 Net income as reported $ 13,612 $ 12,329 2,047 1,702 Income tax 4,478 3,336 573 728 Interest expense, net 1,320 1,603 (103 ) 382 Other (income) expense 427 322 $ 8,865 $ 8,459 5 % Operating Income as reported $ 19,837 $ 17,590 13 % 3,227 3,018 Depreciation and amortization 6,427 5,958 $ 12,092 $ 11,477 5 % EBITDA $ 26,264 $ 23,548 12 % 1,002 1,669 Long-term performance based compensation 2,284 2,853 - 81 Consulting expense: commercial growth initiatives - 81 200 - Acquisition costs 420 48 68 69 Expense on step-up basis of acquired lease 136 136 - - Severance costs and Restructuring costs (71 ) 60 $ 13,362 $ 13,296 0 % Adjusted EBITDA $ 29,033 $ 26,726 9 % 9.1 % 9.0 % Adjusted EBITDA as a percentage of sales 9.5 % 9.4 % Three Months Ended December 31(Unaudited; In thousands)Six Months Ended December 31Free Cash Flow 2025 2024 % Change 2025 2024 % Change $ 24,984 $ 9,891 153 % Cash flow from operations $ 25,659 $ 21,737 18 % (1,684 ) (1,066 ) Capital expenditures (2,651 ) (1,825 ) $ 23,300 $ 8,825 164 % Free cash flow $ 23,008 $ 19,912 16 % Net Debt to Adjusted EBITDA RatioDecember 31,(amounts in thousands) 2025 2024 Current maturity of debt $ - $ 3,571 Long-term debt 27,939 34,615 Total debt $ 27,939 $ 38,186 Less: cash (6,407 ) (4,712 ) Net debt $ 21,532 $ 33,474 Adjusted EBITDA - trailing twelve months $ 57,286 $ 52,006 Net debt to adjusted EBITDA ratio 0.4 0.6 Second QuarterOrganic compared to Inorganic SalesQ2 2026Q2 2025% VarianceLighting Segment $ 66,673 $ 58,210 15 % Display Solutions Segment- Comparable Display Solutions Sales 74,001 89,524 -17 % - Canada's Best 6,328 - Total Display Solutions Sales $ 80,329 $ 89,524 -10 % Total net sales $ 147,002 $ 147,734 - Less:Canada's Best Holdings 6,328 - Total organic net sales $ 140,674 $ 147,734 -5 % Year-to-DateOrganic compared to Inorganic SalesQ2 2026Q2 2025% VarianceLighting Segment $ 135,726 $ 116,646 16 % Display Solutions Segment- Comparable Display Solutions Sales 153,278 169,183 -9 % - Canada's Best 15,247 - Total Display Solutions Sales $ 168,525 $ 169,183 - Total net sales $ 304,251 $ 285,829 6 % Less:Canada's Best Holdings 15,247 - Total organic net sales $ 289,004 $ 285,829 1 % Source: LSI Industries Inc.