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LSI INDUSTRIES INC (LYTS)·Q3 2025 Earnings Summary

Executive Summary

  • Revenue grew 22% y/y to $132.5M on Display Solutions strength; adjusted EPS was $0.20 as scheduling volatility in grocery temporarily pressured margins . Versus S&P Global consensus, revenue modestly beat ($132.5M vs $129.7M*) and EPS beat ($0.20 vs $0.15*); EBITDA missed on a GAAP basis ($9.3M vs $11.8M*) while adjusted EBITDA was $11.3M .
  • Orders/backlog remained constructive: total book-to-bill 1.06 and comparable backlog up 15% y/y; Lighting book-to-bill was 1.13 with backlog +18% y/y; Display book-to-bill ~1.0 as schedules normalized exiting the quarter .
  • Management expects reported and comparable sales growth in FQ4, with 200–250 bps gross margin recapture as grocery schedules stabilize; a $5M+ refrigerated case order booked in early April supports Q4 visibility .
  • Strategic M&A continued: LSI closed Canada’s Best (CBH) for up to $31M total consideration, expanding Canadian presence and Display capabilities; dividend maintained at $0.05/share .

Note: Asterisked values are from S&P Global consensus/actuals via GetEstimates.*

What Went Well and What Went Wrong

What Went Well

  • Display Solutions surged: segment sales +70% y/y to $73.5M, with 15% organic growth, driven by refueling/c‑store programs and grocery demand resumption; EMI contributed $22.4M and CBH $1.4M in the quarter .
  • Orders/backlog quality: total book-to-bill 1.06; comparable backlog +15% y/y; Lighting book-to-bill 1.13 with backlog +18% y/y, indicating improving release trends for previously delayed large projects .
  • Lighting margin execution: Lighting operating margin expanded 110 bps to 13.3% on pricing discipline and mix, despite lower large-project shipments; management emphasized ongoing quote-to-order conversion improvement .
    “Schedules are improving as we enter the fiscal fourth quarter… we exit the quarter with a strong Display backlog” — CEO Jim Clark .

What Went Wrong

  • Margin pressure from schedule volatility: manufacturing/logistics inefficiencies from grocery schedule changes compressed margins; management quantified a recoverable 200–250 bps gross margin impact .
  • GAAP profitability down y/y: GAAP EPS fell to $0.13 from $0.18 and GAAP EBITDA to $9.3M from $10.1M despite higher sales; adjusted EPS/EBITDA also trended modestly lower y/y .
  • Lighting sales softness persisted: Lighting segment revenue declined 9% y/y to $59.0M due to fewer large project shipments (timing), though orders improved late in the quarter .

Financial Results

Quarterly performance (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($M)138.095 147.734 132.481
GAAP Diluted EPS ($)0.22 0.18 0.13
Adjusted Diluted EPS ($)0.26 0.26 0.20
EBITDA ($M)12.071 11.477 9.297
Adjusted EBITDA ($M)13.430 13.296 11.254
Adjusted EBITDA Margin (%)9.7% 9.0% 8.5%
Free Cash Flow ($M)11.087 8.825 4.716
Net Debt / TTM Adj. EBITDA (x)0.8x 0.6x 1.0x

Year-over-year (Q3)

MetricQ3 2024Q3 2025
Revenue ($M)108.186 132.481
GAAP Diluted EPS ($)0.18 0.13
Adjusted Diluted EPS ($)0.24 0.20
EBITDA ($M)10.075 9.297
Adjusted EBITDA ($M)11.237 11.254

Segment breakdown (Q3)

SegmentQ3 2024 Sales ($M)Q3 2025 Sales ($M)
Lighting64.881 58.967
Display Solutions (Total)43.305 73.514
└ Comparable Display Sales43.305 49.728
└ EMI contribution—22.417
└ Canada’s Best (CBH)—1.369

KPIs and balance sheet

KPIQ3 2025
Company Book-to-Bill1.06
Comparable Backlog y/y+15%
Display Book-to-Bill~1.0
Lighting Book-to-Bill1.13
Lighting Operating Margin13.3%
Free Cash Flow$4.716M
Dividend Declared$0.05/share
Net Debt / TTM Adj. EBITDA1.0x
New Refrigerated Case Order (Apr)$5M+ over next 5 months

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Sales outlookFQ4 2025Not providedExpect reported and comparable sales growth in FQ4 New directional commentary
Display gross margin trajectoryNext few quartersNot providedRecover ~200–250 bps gross margin as scheduling stabilizes New directional commentary
Tariffs/sourcingOngoingNot providedPricing and sourcing adjustments as needed; diversified/reshored supply chain Policy/approach reiterated
DividendOngoing$0.05/qtr (prior practice)$0.05 declared for Q3; policy unchanged Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1–Q2 2025)Current Period (Q3 2025)Trend
Tariffs & supply chain70% domestic/30% foreign sourcing; limited tariff exposure; contingency plans; moved ~20% remaining China content; advantage vs import-reliant peers Prepared to adjust pricing/sourcing; well-constructed supply chain; sees competitive advantage as tariffs evolve Advantage solidifying
Grocery verticalQ1: orders +90% y/y; backlog up; R290 transition underway ; Q2: surge drove strong growth but caused inefficiencies Scheduling volatility largely stabilizing; expect margin recovery; booked $5M+ refrigerated order in April Improving/stabilizing
Refueling/C‑storeElevated backlog and multi-year programs; strong activity across N. America and LATAM Continued strength; Display book-to-bill ~1.0; stable elevated orders Sustained strength
Lighting large projectsTiming delays; smaller projects healthy ; Q2 backlog +6% y/y; book-to-bill 1.1 Orders rebounded; Lighting book-to-bill 1.13; backlog +18% y/y; margin +110 bps Improving
R290 refrigerant transitionQ1–Q2: DOE-driven transition executed; new R290 line; positioned for demand Remains a growth driver via refrigerated displays; early April order supports run-rate Executed; monetizing
M&A & integrationEMI integration ahead of plan; cross-selling opportunities emerging Acquired CBH; expands Canada footprint and fixtures capabilities; expected accretive Platform expanding
Product innovationV‑LOCITY outdoor lighting launched; strong interest Velocity demand met/exceeded initial targets; >30 products launched annually Ongoing vitality

Management Commentary

  • “Our 22% sales growth was driven by continued strong performance in the Display Solutions segment… The rapid increase in demand combined with a high level of customer scheduling changes had a transitory impact to margins in the quarter.” — Jim Clark, CEO .
  • “Within the Lighting segment… operating margin expanded 110 basis points to 13.3%… book-to-bill of 1.13 for the third quarter.” — Jim Clark .
  • “We have a well-constructed supply chain… we will continue to adjust both pricing and sourcing decisions for those products impacted by current and future tariff activity.” — Jim Clark .
  • “The disruption was pretty large… interruptions were pretty significant. I assess that to be 200 to 250 basis points that we’re going to recover as we stabilize here.” — James Galeese, CFO (on gross margin) .

Q&A Highlights

  • Grocery scheduling/cost headwinds: Management quantified 200–250 bps gross margin impact from rapid ramps and stop-start schedules; expects stabilization and recovery ahead .
  • Tariff strategy: Company is not leveraging tariffs opportunistically; passing through real cost impacts while flexing sourcing; prior reshoring (70% domestic) confers advantage vs import competitors .
  • Order momentum: Early April >$5M grocery refrigerated case order (ship over 5 months) adds to elevated backlog; supports Q4 growth commentary .
  • Cross-sell & pipeline: Significant cross-selling between Lighting, Display, JSI/EMI; opportunity still “wide open,” with continued new product vitality (e.g., Velocity) .

Estimates Context

  • Q3 2025 vs S&P Global consensus: Revenue $132.5M actual vs $129.7M*; Primary EPS $0.20* actual vs $0.15*; EBITDA $9.3M actual vs $11.8M* (GAAP basis), while adjusted EBITDA was $11.3M .
  • Prior quarters: Q1 revenue $138.1M vs $130.9M*; EPS $0.26* actual vs $0.20*; Q2 revenue $147.7M vs $129.2M*; EPS $0.26* actual vs $0.17* .
MetricQ1 2025Q2 2025Q3 2025
Revenue Consensus Mean ($M)*130.864*129.195*129.718*
Revenue Actual ($M)138.095 147.734 132.481
Primary EPS Consensus Mean ($)*0.20*0.167*0.15*
Primary EPS Actual ($)*0.26*0.26*0.20*
EBITDA Consensus Mean ($M)*13.302*12.037*11.786*
EBITDA Actual ($M)12.071 11.477 9.297

Asterisked values are from S&P Global consensus/actuals via GetEstimates.*

Key Takeaways for Investors

  • Display-led growth intact; backlog/order quality suggests sustained revenue into FQ4 despite transient grocery scheduling headwinds .
  • Margin recapture should be a near-term lever: management guided to gross margin uplift of ~200–250 bps as schedules normalize; watch Q4 print for confirmation .
  • Lighting inflecting: improved order rates (book-to-bill 1.13) and backlog +18% y/y, with margin already +110 bps; large project timing risk abating .
  • Tariff positioning a relative advantage: reshored footprint and dual-sourcing underwrite delivery while enabling selective price pass-throughs if needed .
  • M&A adds scale and geography: CBH broadens Canadian presence and Display capabilities; expected accretive—monitor cross-sell and integration KPIs .
  • Capital returns and balance sheet: dividend maintained; net leverage at 1.0x TTM adj. EBITDA post-CBH leaves flexibility for organic and inorganic investments .
  • Estimate revisions: Expect upward adjustments to revenue and EPS trajectories on Q4 growth/margin recovery, offset by potential EBITDA normalization vs earlier consensus assumptions (GAAP vs adjusted) .

Appendix: Primary Sources

  • Q3 2025 8-K press release and exhibits (financials, KPIs, non-GAAP reconciliations) .
  • Q3 2025 earnings press release (Business Wire) .
  • Q3 2025 earnings call transcript (prepared remarks and Q&A) .
  • CBH acquisition press release .
  • Prior quarter results: Q2 2025 8-K/PR/Call ; Q1 2025 8-K/PR/Call .

Asterisked values are from S&P Global consensus/actuals via GetEstimates.*