LSI Organic Sales Fall After Royston Lifts the Quarter

The Tip Desk · November 11, 2026 · 4 min read

Reported net sales reached $225.9 million in the fiscal first quarter ended September 30, 2026, up 44% from a year earlier, while sales excluding Royston declined 2%.

LSI Industries Inc. (LYTS), a U.S. manufacturer of commercial lighting and display solutions, reported fiscal 2027 first-quarter net sales of $225.9 million, up 44% from a year earlier, including contributions from the March 2026 acquisition of Royston Group. Excluding Royston, sales declined 2% versus the prior-year period, which the company attributed to demand softness in the North American non-residential lighting market.

That organic turn reversed the fiscal fourth quarter, when reported sales rose 51% and organic sales rose 8%. Adjusted EBITDA was $22.2 million, up 41% from a year earlier, with an adjusted EBITDA margin of 9.8% of net sales. Sequentially, adjusted EBITDA fell from $25.7 million and a 10.9% margin in the fiscal fourth quarter.

Reported net income was $7.1 million, or $0.19 a share, compared with $7.3 million, or $0.23 a share, a year earlier. Adjusted net income was $11.6 million, or $0.31 a share, versus $9.7 million, or $0.31 a share. Adjusted diluted earnings were unchanged from a year earlier.

Display Solutions, the larger of the two reportable segments, generated $161.0 million of net sales, up 83% from $88.2 million a year earlier. Excluding Royston, Display Solutions sales increased 1%. President and CEO James A. Clark said refueling/c-store and grocery verticals continued to experience elevated demand and project activity, while demand from quick-service restaurant customers remained soft, consistent with recent quarters.

In the refueling/c-store vertical, sales increased 5% versus the prior year, which the company said was supported by demand across several of its largest customers, including renovation of pilot sites for an existing customer representing the early phase of a proposed large-scale renovation program. A 2,500-site refresh for a major oil company customer announced last quarter continued as planned, with activity expected to ramp throughout fiscal 2027 and into fiscal 2028. Grocery sales remained at a high level, led by check-stand and display-case product sales.

Standalone Royston sales increased 8%, and its adjusted EBITDA margin expanded 100 basis points sequentially from fiscal fourth-quarter 2026, which the company said reflected early gains from recently launched initiatives. In early October, LSI launched a Category of One marketing campaign at the NACS tradeshow.

Lighting net sales were $64.8 million, down 6% from $69.1 million a year earlier, reflecting soft demand across broader commercial and industrial markets. Clark said growth in refueling, sports, and banking applications was offset by declines in parking, small retail, warehouse, and automotive. Lighting gross margin improved despite lower volumes, which he attributed to price actions in response to cost inflation. Lighting orders increased 1% year over year, with a book-to-bill ratio of 1.0 and stable project quote activity.

Display Solutions order rates increased 4% year over year. Orders in refueling/c-store and grocery rose 5% and 12%, respectively, driven by project activity at large national chains. QSR order activity remained soft; one large QSR customer recently approved a 3,000-store interior renovation program and selected LSI as one of three providers, scheduled to begin late in the third quarter of fiscal 2027 and expected to continue over three years. Proforma backlog increased 4% year over year.

Free cash flow was $13.8 million, or 62% of adjusted EBITDA, up from $9.7 million in the fiscal fourth quarter. Net debt fell $14.3 million versus the fiscal fourth quarter, leaving a ratio of net debt to proforma trailing-twelve-month adjusted EBITDA of 2.6x as of September 30, 2026, and cash plus credit-facility availability of $122.6 million. The company declared a quarterly cash dividend of $0.05 a share, payable November 24, 2026.

LSI announced it will consolidate manufacturing from a leased Collingwood, Ontario facility into an existing Toronto-area plant, with the transfer in the fiscal second and third quarters and expected annual cost savings of more than $1.0 million. Clark said customers are incurring challenges meeting project renovation schedules as the company approaches the seasonal slowdown ahead of the holiday season, and that it is managing higher levels of delayed site releases and changes to product delivery and installation requirements.