Executive Summary

Q1 FY2026 delivered double-digit top-line growth: revenue $157.249m (+14% y/y), adjusted EPS $0.31 (+19% y/y), and adjusted EBITDA $15.671m with a 10.0% margin; GAAP diluted EPS was $0.23 .
Versus S&P Global consensus, revenue beat ($157.249m vs $149.482m*) and normalized EPS beat ($0.31 vs $0.28*); adjusted EBITDA also exceeded consensus ($15.671m vs $14.918m*), while GAAP EBITDA was slightly below ($14.172m vs $14.918m*) .
Lighting drove outperformance: segment sales +18% y/y with >170 bps gross margin expansion and 43% growth in adjusted operating income; pricing discipline and consuming tariff-impacted inventory supported margins .
Near-term watch items: Q1 free cash flow was negative on working capital and receivables timing but management expects positive FCF in Q2; grocery vertical Q2 volumes will be below last year’s record (still up y/y in FY26) .

What Went Well and What Went Wrong

What Went Well

Lighting segment strength: “Gross margin rate increased by more than 170 basis points… driven by improved sales volume and strategic pricing actions,” with 18% y/y sales growth and 43% adjusted operating income growth .
Share gains and product differentiation: “We continue to convert lighting accounts to LSI… features and functionality… designed for specific vertical market applications and outperform the competition” .
Display Solutions wins: “Awarded a multi-million-dollar program for a large national grocer… quality and performance standards outweighed LSI not being the low-cost bidder” .

What Went Wrong

Cash generation: Q1 free cash flow was -$0.292m as accounts receivable rose due to timing and two large customers’ invoicing address changes; management expects these receivables current in Q2 and FCF positive .
Tariff headwinds: Highest-cost, tariff-impacted inventory was consumed in Q1; while forward tariffs are expected lower, volatility remains a risk for components and inputs .
Near-term grocery softness: Q2 grocery project volumes expected below prior year’s record due to last year’s post-merger surge and EPA refrigerant phase-out timing; FY26 grocery still expected to grow y/y .

Financial Results

Consolidated Performance vs prior year and prior quarter

Metric	Q1 2025 (FY)	Q4 2025 (FY)	Q1 2026 (FY)
Revenue ($USD Millions)	$138.095	$155.000	$157.249
Adjusted EPS ($)	$0.26	$0.34	$0.31
EBITDA ($USD Millions)	$12.071	—	$14.172
Adjusted EBITDA ($USD Millions)	$13.430	$17.000	$15.671
Adjusted EBITDA Margin %	9.7%	11.0%	10.0%
GAAP Diluted EPS ($)	$0.22	—	$0.23

Notes:

Q1 2026 revenue up 1.5% q/q and 14% y/y; adjusted EBITDA margin declined q/q from 11.0% to 10.0% on working capital build and component/tariff dynamics .

Segment Sales Breakdown

Segment	Q1 2025 (FY)	Q1 2026 (FY)	y/y Change
Lighting ($USD Millions)	$58.437	$69.053	+18%
Display Solutions ($USD Millions)	$79.658	$88.196 (incl. Canada’s Best $8.919m)	+11%
Total Net Sales ($USD Millions)	$138.095	$157.249	+14%
Organic Net Sales ($USD Millions)	$138.095	$148.330	+7%

KPIs and Cash Flow

KPI	Q1 2025 (FY)	Q1 2026 (FY)
Free Cash Flow ($USD Millions)	$11.087	-$0.292
Cash from Operations ($USD Millions)	$11.846	$0.675
Net Debt / TTM Adjusted EBITDA (x)	0.8x	0.8x
Dividend per share ($)	$0.05	$0.05
Available Liquidity ($USD Millions)	—	>$80
Credit Facility Availability ($USD Millions)	$75	$125

GAAP Income Statement (select items)

Metric ($USD Millions)	Q1 2025 (FY)	Q1 2026 (FY)
Gross Profit	$33.647	$40.277
Operating Income (reported)	$9.131	$10.972
Net Income (reported)	$6.682	$7.264

Non-GAAP Reconciliations (Q1)

Metric	Q1 2025 (FY)	Q1 2026 (FY)
Operating Income (adjusted, $USD Millions)	$11.898	$14.025
Net Income (adjusted, $USD Millions)	$7.981	$9.731
Diluted EPS (adjusted, $)	$0.26	$0.31

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Lighting Revenue	Q2 FY2026	Not provided	Year-over-year growth expected; recent orders strong	New directional color
Grocery Display Revenue	Q2 FY2026	Not provided	Q2 below record prior year; FY26 y/y growth expected	Clarified trajectory
Free Cash Flow	Q2 FY2026	Not provided	Return to positive cash flow expected	Positive vs Q1
Credit Facility	Current	$75m availability	$125m availability; extended to Sept 2030	Raised/extended
Dividend	Current	$0.05 declared prior	$0.05 declared for Q1 FY2026	Maintained

No formal revenue/EPS margin guidance ranges provided; management emphasized directional outlook by segment and cash flow .

Earnings Call Themes & Trends

Topic	Q3 FY2025 (Apr 2025)	Q4 FY2025 (Aug 2025)	Q1 FY2026 (Nov 2025)	Trend
Supply chain/tariffs	Onshoring progress; planning alt sources; pricing aligned to input costs	Minimal tariff impact in Q4 lighting; impact to rise in Q1; offsets via pricing/cost reductions	Highest-cost tariff inventory consumed; expect lower tariffs and cost reductions ahead	Improving cost visibility; mitigation ongoing
Grocery vertical	Demand choppiness, scheduling inefficiency; backlog building	Recovery; production/scheduling stabilized; backlog healthy	Q2 volumes below record prior year; FY26 y/y growth expected	Normalizing after prior-year surge
Refueling/C-store	Strong programs; graphics-led growth	Record year; site releases continue through CY2026	Continued program releases; largest chain expanding store count	Sustained strength
Lighting share gains	Backlog up; large projects rebounding	+12% organic growth in Q4; margin >10%	18% y/y sales; >170 bps gross margin expansion; account conversions	Accelerating
Cash flow/working capital	TTM FCF ~$35m; net debt ~1x	FCF robust; net leverage 0.8x	Q1 FCF negative on AR timing; FCF positive expected in Q2	Temporary dip; expected rebound
M&A/integration	Canada’s Best acquired; EMI integration ahead of schedule	EMI record year; Canada’s Best exceeding expectations	Canada’s Best had one of strongest quarters; active M&A pipeline	Positive integration; pipeline active
Pricing discipline	Project pricing aligned with inputs	Stable pricing; offsets tariffs	Pricing largely stable; volume-driven growth	Steady

Management Commentary

“Gross margin rate increased by more than 170 basis points… our highest-cost, tariff-impacted inventory was fully consumed… tariff levels will be lower moving forward, and recently implemented cost reduction measures are expected to significantly offset this impact” — Jim Clark, CEO .
“We continue to convert lighting accounts to LSI, displacing our competitors… features and functionality… designed for specific vertical market applications” — Jim Clark, CEO .
“In the first quarter, we were awarded a multi-million dollar display case project for a large national grocer… we were not the low-cost bid” — Management commentary .
“Free cash flow for Q1 was slightly negative… due to timing of sales and an inadvertent delay in project billing for two large accounts… these receivables will be current in Q2” — Jim Galeese, CFO .
“The amended facility increases our availability from $75 million to $125 million… extends the term… to September 2030… exiting the quarter, we have more than $80 million in available liquidity” — Management .

Q&A Highlights

Volume vs price in lighting: growth “almost exclusively volume”; pricing “fairly stable” with margin uplift from disciplined quotations and supply chain management .
Grocery cadence: Q2 to be below prior-year record due to seasonality and last year’s anomaly; demand higher than prior year overall with FY26 y/y growth expected .
Capacity and program stacking: ability to stack large C‑store programs; ~20% spare capacity with potential to add another 20% via second shift .
Pricing outlook: stable near-term; adaptive to input costs; customers unlikely to pressure for lower prices given product value .
M&A: active pipeline; recent acquisitions exceeding expectations; vertical market-based strategy guides targets .

Estimates Context

Q1 FY2026 vs consensus: revenue $157.249m vs $149.482m*; normalized EPS $0.31 vs $0.28*; adjusted EBITDA $15.671m vs EBITDA consensus $14.918m* (GAAP EBITDA actual $14.172m) .
Q2 FY2026 consensus snapshot: revenue $140.340m*, normalized EPS $0.215* — management commentary suggests lighting growth y/y and grocery softness vs prior-year record, which could skew mix and margins (watch for estimate revisions toward segment dynamics) .

Estimates marked with an asterisk are values retrieved from S&P Global.

Consensus vs Actual Detail

Metric	Q1 2026 Consensus*	Q1 2026 Actual
Revenue ($USD Millions)	$149.482*	$157.249
EPS Normalized ($)	$0.28*	$0.31*
EBITDA ($USD Millions)	$14.918*	$14.172 (GAAP) / $15.671 (Adjusted)

Key Takeaways for Investors

Revenue and adjusted EPS beats underscore momentum in Lighting and Display; focus near-term on mix and margin as grocery normalizes and tariffs ebb .
Lighting is the key upside driver: share gains, vertical differentiation, and margin expansion (>170 bps) position the segment for continued y/y growth in Q2 .
Expect FCF recovery in Q2 as receivables normalize; watch working capital discipline amid sequential growth .
Display Solutions pipeline remains robust (C‑store programs into CY2026; new grocery awards) though Q2 comps are tough; monitor execution to sustain adj. EBITDA ~10% .
Balance sheet and liquidity strengthened: facility raised to $125m, >$80m available; dividend maintained at $0.05 — optionality for organic growth and M&A .
Estimates likely to adjust: upward bias to FY EPS/Revenue given beats, but Q2 consensus may need mix/margin refinements given grocery commentary; traders should watch estimate revisions and segment order cadence* .

Appendix: Additional Data

GAAP/Non-GAAP reconciliation drivers include long-term performance-based compensation, amortization of intangibles, acquisition costs, lease step-up, severance/restructuring, FX loss on intercompany loan (Canada’s Best), and tax rate differences .
Dividend policy remains discretionary, assessing GAAP/non-GAAP earnings, cash flow, debt levels, repurchases, and opportunities .

Values marked with an asterisk are retrieved from S&P Global.

LSI INDUSTRIES INC (LYTS)·Q1 2026 Earnings Summary