LSI Industries Delivers Flat Sales, Strong Lighting Performance in Q2

LSI Industries reported essentially flat consolidated sales for its fiscal 2026 second quarter, but beneath the headline number was a clear bright spot: Lighting drove growth, delivering another strong quarter and continuing to outperform the broader non-residential construction market.

Revenue for the quarter came in at $147 million, in line with the prior year. While Display Solutions cycled unusually strong comparisons from fiscal 2025, LSI’s Lighting segment posted double-digit growth for the third consecutive quarter—reinforcing what management described as a durable, multi-quarter trend rather than a one-off result. The company reported its results before the market opened, followed by an earnings call led by President and CEO Jim Clark.

Flat Top Line, Improving Quality of Earnings

Clark framed the quarter as one of solid execution against a difficult comparison, particularly in Display Solutions, which benefited last year from event-driven demand in the grocery sector.

“Revenue was essentially flat year over year at $147 million, while profitability and free cash flow improved,” Clark told investors. “Given the strength of the prior year comparisons, particularly within display solutions, I’m pleased with how this quarter performed.”

Adjusted EBITDA increased to $13.4 million, and free cash flow reached $23 million. LSI used that cash generation to reduce total debt by $22.7 million, ending the quarter with a net leverage ratio of just 0.4—giving the company significant balance-sheet flexibility.

But the most notable story in the quarter came from lighting.

Lighting Drives Growth Momentum

Lighting delivered 15% year-over-year sales growth in the second quarter, following 18% growth in the first quarter. According to management, that momentum is being fueled by a mix of product expansion, national account traction, and large project execution.

“Lighting delivered another strong quarter with sales growth of 15% year over year and meaningful margin expansion,” Clark said. “We’re encouraged by the consistency of performance across multiple end markets.”

Several factors contributed to the strong lighting performance, including the addition of aluminum poles to LSI’s existing steel pole lineup, increased shipments tied to large projects, and continued success with national accounts. Recent product introductions also played a role as the company emphasized product vitality across the portfolio.

Lighting orders were up approximately 10% year over year exiting the quarter, resulting in a book-to-bill ratio above one and an improved backlog—an important signal as LSI heads into the second half of fiscal 2026.

Margin Expansion Reinforces Strategy

CFO Jim Galeese highlighted that Lighting not only grew faster than the market, but also expanded profitability.

“Lighting had an outstanding quarter,” Galeese said. “Adjusted operating income increased 29%, with the adjusted gross margin rate improving 190 basis points versus last year.”

Galeese added that LSI’s national account strategy is paying dividends, noting that investments in operating model capabilities are translating into new customers and higher sales volume. Against industry reports showing more muted non-residential construction growth, LSI’s strong lighting performance continues to stand out.

Display Solutions Normalize After Prior-Year Surge

While Lighting surged, Display Solutions reflected a return to more typical demand patterns following last year’s grocery-sector pull-forward. Sales declined modestly year over year, but orders improved sequentially and increased compared to the prior year quarter.

Clark noted that customer engagement remains healthy across refueling, convenience store, quick-serve retail, and casual dining verticals, with backlog improving as the company moves into fiscal Q3.

“Against that backdrop, flat consolidated sales and improved margin represent solid execution,” Clark said.

Looking Ahead

LSI enters the second half of fiscal 2026 with improving order trends, expanding margins, and a balance sheet that provides room for continued investment. Management reiterated confidence in above-market growth over the longer term, with Lighting expected to remain a key driver.

“We’re executing well. We’re financially strong,” Clark said. “Lighting continues to perform at a very high level, and that gives us confidence as we look ahead.”

For LSI, the quarter underscored a simple takeaway: while overall sales held steady, strong lighting performance continues to reshape the company’s growth profile.

In 2025, we also wrote about their strong 2Q. At that time the stock surged 25%.  The stock was up 14% at the end of trading today.