LSI Reports Strong 2Q; Stock Surges 25%

LSI Stock Surges 25%

LSI Industries Reports Strong Fiscal 2025 Second Quarter Performance with 36% Sales Growth; Stock Surges 25%

LSI Industries has reported impressive financial results for the fiscal second quarter ended 31 December 2024 and their stock surged 25%. The company achieved significant growth across its key vertical markets, fueled by organic expansion and the successful integration of its recent acquisition, EMI. Unfortunately, Lighting did not fare so well.

Fiscal 2025 Q2 Financial Highlights

LSI posted net sales of $147.7 million, reflecting a robust 36% year-over-year (y/y) increase, with organic net sales growth of 14% y/y, excluding contributions from EMI. The company reported a net income of $5.6 million, or $0.18 per diluted share, and an adjusted net income of $8.0 million, or $0.26 per diluted share.

Additional key financial highlights include:

  • Adjusted EBITDA: $13.3 million, representing 9.0% of net sales, a more than 20% increase over the prior year.
  • Free Cash Flow: $8.8 million for the quarter and nearly $41.4 million on a trailing twelve-month basis.
  • Net Debt Reduction: LSI’s net debt-to-adjusted EBITDA ratio decreased to 0.6x, down from 1.3x during the EMI acquisition in April 2024.

LSI declared a regular cash dividend of $0.05 per share, payable on 11 February 2025 to shareholders of record as of 3 February 2025.

Management Commentary

James A. Clark, President and CEO of LSI, expressed confidence in the company’s momentum, stating:

“LSI delivered 14% organic sales growth in the fiscal second quarter, supported by strong demand across our core refueling, c-store, and grocery verticals. Including contributions from EMI, which continues to exceed our expectations, total sales grew 36% year-over-year. Adjusted net income, adjusted EBITDA, and free cash flow generation all saw significant improvements.”

Clark also noted that second-quarter order rates increased by 12% compared to the previous year, leading to a promising start for the fiscal third quarter. Orders within the Display Solutions segment surged 25% y/y, reflecting balanced growth across all major verticals.

Growth in Key Verticals

LSI’s Display Solutions segment achieved 50% organic sales growth, bolstered by strong demand across multiple verticals. Notably, sales to refueling/c-store customers increased by more than 60%, driven by multi-year contracts with large national and international clients.

The grocery vertical experienced an over 50% increase in sales due to renewed demand for refrigerated and non-refrigerated display cases. The termination of a proposed merger between two major grocery chains in December 2024, which had previously stalled investments, contributed to the resurgence.

Clark highlighted the company’s proactive approach in transitioning its product line to comply with Department of Energy regulations, with the launch of new R290 display cases set to meet revised standards.

Meanwhile, the EMI acquisition contributed $23.4 million in sales for the quarter, exceeding expectations, especially during a slower period for store renovations.

Challenges in the Lighting Segment

Despite strong overall performance, LSI’s Lighting segment faced a 10% decline in sales compared to the prior year. This was attributed to the absence of large projects, such as a major EV battery plant installation that drove strong results in the previous year.

However, Clark emphasized that project quoting activity remains strong, with the segment maintaining a book-to-bill ratio of 1.1, indicating healthy future demand. The company expects order rates to accelerate in the second half of fiscal 2025.

Product Innovation and Future Outlook

LSI remains committed to innovation, launching over 30 new products annually for the past four years. In fiscal 2025, the company plans to introduce over 40 new products, including the V-LOCITY series outdoor area lights, new continuous indoor Linear fixtures, and the Zone High Bay for sports applications.

As of this writing, the stock jumped 25%.

Go Deeper:  Review LSI’s 1Q 2025 results here