Core Insights - LSI Industries, Inc. will release its fiscal 2026 first quarter results on November 6, 2025, before market opening, followed by a conference call at 11:00 a.m. ET to discuss the results and recent events [1][2] Company Overview - LSI Industries is a publicly traded company on NASDAQ under the symbol LYTS, headquartered in Cincinnati, specializing in commercial lighting and display solutions [3] - The company manufactures a range of products including non-residential indoor and outdoor lighting, print graphics, digital graphics, and custom displays, aimed at enhancing customer brands and consumer experiences [3] - LSI employs approximately 2,000 people across 19 manufacturing plants in the U.S. and Canada [3] Recent Developments - LSI Industries has renewed its partnership as the Official Lighting Sponsor of USA Pickleball, emphasizing its commitment to innovative lighting technologies that improve visibility and safety in sports [8]

PART I [ITEM 1. BUSINESS](index=7&type=section&id=ITEM%201.%20BUSINESS) LSI Industries Inc. provides non-residential lighting and retail display solutions, with segments in Lighting (43% of FY2025 net sales) and Display Solutions (57%) - LSI Industries Inc. is a leading producer of non-residential lighting and retail display solutions, providing American-made fixtures and custom products/services[17](index=17&type=chunk) [Overview](index=7&type=section&id=Overview) LSI Industries Inc. specializes in non-residential lighting and retail display solutions, aiming to provide comprehensive package solutions to customers in target vertical markets - LSI Industries Inc. specializes in non-residential lighting and retail display solutions, aiming to provide comprehensive package solutions to customers in target vertical markets[17](index=17&type=chunk) Segment Net Sales | Segment | FY2025 Net Sales % | | :---------------------- | :----------------- | | Lighting Segment | 43% | | Display Solutions Segment | 57% | [Lighting Segment](index=7&type=section&id=Lighting%20Segment) The Lighting Segment manufactures and sells outdoor and indoor LED lighting fixtures and controls for various vertical markets - The Lighting Segment manufactures and sells outdoor and indoor LED lighting fixtures and controls for various vertical markets, including refueling/convenience stores, parking lots, quick-service restaurants, and warehouses[19](index=19&type=chunk) - Products are designed for energy efficiency, reliability, performance, and ease of installation, adhering to safety and performance standards like UL Solutions and Design Lights Consortium[20](index=20&type=chunk) [Display Solutions Segment](index=7&type=section&id=Display%20Solutions%20Segment) The Display Solutions Segment expanded significantly through recent acquisitions, offering custom retail fixtures, store design, and visual image elements - The Display Solutions Segment expanded significantly through the acquisitions of Canada's Best Holdings (CBH) in Q3 FY2025 and EMI Industries, LLC (EMI) in Q4 FY2024[21](index=21&type=chunk) - This segment provides custom retail fixtures, store design solutions, visual image elements (signage, graphics, digital displays), and project management services for grocery, QSR, c-store, and other retail industries[21](index=21&type=chunk)[22](index=22&type=chunk) [Sales, Customers and Marketing](index=9&type=section&id=Sales%2C%20Customers%20and%20Marketing) Sales are primarily in the U.S., with lighting products sold through project-based business and display solutions through a direct sales force - Sales are primarily in the U.S., with approximately **3% of consolidated net sales** from Canada, Mexico, Latin America, and the Caribbean[23](index=23&type=chunk) - Lighting products are sold through project-based business and stocking distributors, primarily via manufacturer's sales representatives. Display solutions are program-driven and sold through a direct sales force[23](index=23&type=chunk) - The company leverages cross-selling opportunities between segments to act as a single-source provider and uses various marketing methods including trade shows, digital platforms, and direct customer contact[25](index=25&type=chunk)[26](index=26&type=chunk) [Manufacturing and Distribution](index=9&type=section&id=Manufacturing%20and%20Distribution) LSI operates 18 manufacturing facilities across the U.S., Mexico, and Canada, sourcing key raw materials from multiple suppliers - LSI operates 18 manufacturing facilities across 11 U.S. states, one leased facility in Mexico, and two provinces in Canada, utilizing lean manufacturing principles[27](index=27&type=chunk)[28](index=28&type=chunk) - Key raw materials include steel, aluminum, LEDs, power supplies, and various graphics substrates, sourced from multiple suppliers to mitigate supply chain risks[29](index=29&type=chunk) [Research and Development](index=10&type=section&id=Research%20and%20Development) R&D investments focus on new product development and existing product enhancements, including new technology for LED products and software R&D Costs | Fiscal Year | R&D Costs (Millions) | | :---------- | :------------------- | | 2025 | $3.3 | | 2024 | $3.5 | - R&D investments focus on new product development and existing product enhancements, including new technology for LED products and software, expensed as incurred[30](index=30&type=chunk) [Competition](index=10&type=section&id=Competition) The company faces intense competition in both segments across all markets, based on factors such as price, quality, and service - The company faces intense competition in both segments across all markets, based on factors such as price, quality, brand recognition, delivery, and service capabilities[31](index=31&type=chunk) [Working Capital](index=10&type=section&id=Working%20Capital) Discussion of working capital is referenced to 'Liquidity and Capital Resources' in Item 7 - Discussion of working capital is referenced to 'Liquidity and Capital Resources' in Item 7[32](index=32&type=chunk) [Environmental Regulations](index=10&type=section&id=Environmental%20Regulations) The company is subject to federal, state, and local environmental regulations, with non-compliance potentially leading to fines and liabilities - The company is subject to federal, state, and local environmental regulations concerning hazardous materials and waste, with non-compliance potentially leading to fines and liabilities[32](index=32&type=chunk) [Seasonality](index=10&type=section&id=Seasonality) Both segments experience seasonality due to weather, construction/installation programs, and major customers' annual budget cycles - Both lighting and display solutions segments experience seasonality due to weather, construction/installation programs, and major customers' annual budget cycles, particularly affecting sales during winter and holiday seasons[33](index=33&type=chunk) [Intellectual Property](index=10&type=section&id=Intellectual%20Property) The company relies on patents, trademarks, copyrights, and trade secret laws to protect its intellectual property and competitive position - The company relies on patents, trademarks, copyrights, and trade secret laws to protect its intellectual property, which is important to its competitive position[34](index=34&type=chunk) [Human Capital](index=10&type=section&id=Human%20Capital) As of June 30, 2025, the company has approximately 2,000 full-time/part-time employees and 175 agency employees - As of June 30, 2025, the company has approximately **2,000 full-time/part-time employees** and **175 agency employees**[36](index=36&type=chunk) - The company focuses on attracting, retaining, and motivating talent through internal development, external hires, a diverse workforce, and a comprehensive compensation and benefits program[35](index=35&type=chunk)[36](index=36&type=chunk) [Information Concerning the Company](index=11&type=section&id=Information%20Concerning%20the%20Company) The company files reports with the SEC and uses its website and social media channels for information distribution - The company files reports with the SEC (Forms 10-K, 10-Q, 8-K) and uses its website (www.lsicorp.com) and social media channels for company information distribution[37](index=37&type=chunk)[38](index=38&type=chunk) [ITEM 1A. RISK FACTORS](index=11&type=section&id=ITEM%201A.%20RISK%20FACTORS) Strategic, operational, legal, and financial risks that could materially impact the company's business and financial performance are detailed - The company's success is subject to risks related to strategy execution, including new product development, market penetration, and potential obsolescence[40](index=40&type=chunk)[45](index=45&type=chunk) - Operational risks include price increases and shortages of raw materials, transportation issues, cybersecurity threats, labor shortages, and product liability claims[47](index=47&type=chunk)[49](index=49&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk) - Financial risks encompass stock price volatility, inflation, interest rate increases, and the inability to raise additional capital[65](index=65&type=chunk)[66](index=66&type=chunk) [RISKS RELATED TO OUR STRATEGY](index=11&type=section&id=RISKS%20RELATED%20TO%20OUR%20STRATEGY) Inability to effectively execute business strategies, manage competitive pressures, or integrate acquisitions could adversely affect financial results - Inability to effectively execute business strategies, including new product development and market penetration, could adversely affect financial condition and results of operations[40](index=40&type=chunk) - Highly competitive markets may lead to pricing pressures, impacting operating results, especially with foreign competitors having different cost structures[41](index=41&type=chunk) - Concentration of sales in refueling/convenience store and grocery markets makes the business vulnerable to changes in these industries[42](index=42&type=chunk)[43](index=43&type=chunk) - Future growth through strategic acquisitions may not yield anticipated benefits due to integration difficulties, resource diversion, and potential impairment of goodwill[44](index=44&type=chunk) - Failure to develop appropriate new products or customer non-acceptance could lead to loss of competitive position and impact future revenues[45](index=45&type=chunk) - Inadequate protection of intellectual property (patents, trademarks, trade secrets) could result in loss of competitive advantage[46](index=46&type=chunk) [RISKS RELATED TO OUR OPERATIONS](index=13&type=section&id=RISKS%20RELATED%20TO%20OUR%20OPERATIONS) Operational risks include raw material price increases, supply chain disruptions, cybersecurity threats, labor issues, and product liability claims - Price increases and significant shortages of raw materials and components, along with increased transportation and fuel prices, could adversely affect operating margins[47](index=47&type=chunk)[48](index=48&type=chunk) - Information technology systems are subject to cyber risks, interruptions, and malicious activity, which could lead to service disruptions, data loss, and reputational damage[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) - Labor shortages or increases in labor costs could negatively impact business operations and profitability[52](index=52&type=chunk) - Improperly designed, manufactured, packaged, or labeled products could necessitate recalls, increase warranty costs, and lead to product liability claims[53](index=53&type=chunk) - Changes in customer demands or failure to honor commitments for proprietary inventory could result in significant inventory write-offs[54](index=54&type=chunk) - Turnover of independent commissioned sales representatives, particularly in the Lighting Segment, could disrupt sales volume[55](index=55&type=chunk) - Inability to sustain significant customer and/or channel partner relationships could harm the company[56](index=56&type=chunk) - Loss of key personnel or inability to attract qualified personnel could adversely affect operating results[57](index=57&type=chunk) - Changes in product mix can significantly impact gross margins, as certain products have higher profitability[58](index=58&type=chunk) - The company may not recognize all revenues from its backlog or receive all anticipated payments under awarded projects if customers terminate contracts or defer shipments[59](index=59&type=chunk) [RISKS RELATED TO LEGAL AND REGULATORY MATTERS](index=17&type=section&id=RISKS%20RELATED%20TO%20LEGAL%20AND%20REGULATORY%20MATTERS) Potential changes in U.S. trade policies, tax rates, and increased emphasis on ESG matters could negatively affect the business - Potential changes in U.S. trade policies, including tariffs, could increase product costs, reduce demand, or lower margins[60](index=60&type=chunk)[61](index=61&type=chunk) - Changes in tax rates and exposures to additional income tax liabilities could unfavorably affect reported results[62](index=62&type=chunk) - Increased emphasis on environmental, social, and governance (ESG) matters by stakeholders could negatively affect the business through non-compliance, reputational damage, or increased investment costs[63](index=63&type=chunk) - Climate changes and extreme weather conditions create financial risks, potentially leading to reduced demand, product obsolescence, or pressure on manufacturing costs[64](index=64&type=chunk) [RISKS RELATED TO FINANCIAL MATTERS](index=17&type=section&id=RISKS%20RELATED%20TO%20FINANCIAL%20MATTERS) Financial risks include stock price decline, inflation, interest rate increases, and limitations in internal controls - A significant decline in stock price could adversely affect the company's ability to raise additional capital[65](index=65&type=chunk) - Increases in inflation and interest rates could negatively affect the business by increasing expenses and interest costs[66](index=66&type=chunk)[67](index=67&type=chunk) - Anti-takeover provisions in organizational documents and Ohio law could make it difficult or delay a change in management or negatively impact share price[68](index=68&type=chunk)[69](index=69&type=chunk) - Inherent limitations in disclosure and internal controls and procedures mean there is no absolute assurance against errors, theft, or fraud[70](index=70&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=19&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) No unresolved SEC staff comments were received regarding periodic or current reports issued 180 days or more before fiscal year 2025 end - No unresolved written comments from SEC staff regarding periodic or current reports issued 180 days or more preceding the end of fiscal year 2025[71](index=71&type=chunk) [ITEM 1C. CYBERSECURITY](index=19&type=section&id=ITEM%201C.%20CYBERSECURITY) The company's NIST-guided cybersecurity program manages threats, with Board oversight through the Audit Committee and IT leadership - The company's cybersecurity program follows the National Institute of Standards and Technology (NIST) Cybersecurity Framework for risk assessment, prevention, and incident response[72](index=72&type=chunk)[75](index=75&type=chunk) - An incident response team, comprising senior leaders from IT, finance, and compliance, is responsible for diagnosing cyber events and determining materiality for SEC reporting[74](index=74&type=chunk) - The Board of Directors, with delegated oversight to the Audit Committee, is responsible for cybersecurity risk oversight, policy, and compliance, receiving periodic updates from IT leadership[77](index=77&type=chunk)[78](index=78&type=chunk) [Risk Management and Strategy](index=19&type=section&id=Risk%20Management%20and%20Strategy) The company employs a cybersecurity program to assess, identify, and manage information security and data privacy threats - The company employs a cybersecurity program to assess, identify, and manage information security and data privacy threats, including risk assessment, prevention, training, and incident response[72](index=72&type=chunk)[73](index=73&type=chunk) - A Security Action Committee, composed of senior IT, finance, and compliance leaders, guides the cybersecurity program's evolution and reviews potential incidents[75](index=75&type=chunk) - Despite security measures, the company acknowledges susceptibility to cybersecurity incidents, which could materially affect business, operating margins, revenues, and competitive position[76](index=76&type=chunk) [Governance](index=21&type=section&id=Governance) The Board of Directors oversees cybersecurity risks, with specific oversight delegated to the Audit Committee, and the CIO leads strategic direction - The Board of Directors oversees cybersecurity risks, with specific information security and data privacy oversight delegated to the Audit Committee[77](index=77&type=chunk) - The Chief Information Officer, supported by the CEO and CFO, is responsible for strategic direction, compliance, and day-to-day information security management[80](index=80&type=chunk) [ITEM 2. PROPERTIES](index=22&type=section&id=ITEM%202.%20PROPERTIES) The company operates 18 manufacturing and office facilities across the U.S., Canada, and Mexico, including owned and leased properties - The company operates 18 manufacturing and office facilities across 11 U.S. states, one leased facility in Mexico, and two provinces in Canada[82](index=82&type=chunk) Company Facilities | Description | Size (sq. ft.) | Location | Status | | :---------------------------------------------- | :------------- | :---------------- | :----- | | Corporate HQ & Lighting/Display Mfg. | 243,000 | Cincinnati, OH | Owned | | Lighting Mfg. | 122,000 | Cincinnati, OH | Owned | | Lighting Office & Mfg. | 96,000 | Independence, KY | Owned | | Display Solutions Office & Mfg. | 183,000 | Houston, TX | Leased | | Display Solutions Mfg. | 77,000 | Milo, ME | Owned | [ITEM 3. LEGAL PROCEEDINGS](index=24&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) Legal proceedings information is incorporated by reference from Note 15 – Contingencies of the Consolidated Financial Statements - Legal proceedings information is detailed in Note 15 – Contingencies of the Notes to the Consolidated Financial Statements[83](index=83&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=24&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Mine Safety Disclosures are not applicable to LSI Industries Inc.[84](index=84&type=chunk) PART II [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=24&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) LSI common stock trades on NASDAQ (LYTS), with 497 holders, a $0.20 annual dividend, and no share repurchases in fiscal 2025 - LSI's common stock is traded on the NASDAQ Global Select Market under the symbol 'LYTS'[86](index=86&type=chunk) - The company has paid quarterly cash dividends since fiscal 1995, with an indicated annual rate of **$0.20 per share** for fiscal 2025[87](index=87&type=chunk) - A share repurchase program of up to **$15 million** was authorized in April 2022, but no shares were repurchased during the fiscal year ended June 30, 2025[88](index=88&type=chunk) [ITEM 6. [RESERVED]](index=24&type=section&id=ITEM%206.%20%5BRESERVED%5D) This item is reserved and contains no information [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=33&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Analysis of LSI's FY2025 and FY2024 financial performance, covering sales, operating income, non-GAAP measures, liquidity, and critical accounting policies Consolidated Net Sales and Operating Income (in thousands) | Metric | 2025 | 2024 | | :----------------- | :-------- | :-------- | | Total Net Sales | $573,377 | $469,638 | | Total Operating Income | $35,769 | $35,517 | | Adjusted Operating Income | $48,361 | $46,395 | - Fiscal 2025 net sales increased **22% year-over-year**, primarily due to a **57% increase** in the Display Solutions Segment's net sales, which included **$85.3 million** from EMI and CBH acquisitions and **17% organic growth**[131](index=131&type=chunk) - Operating income increased by **1%**, while adjusted operating income rose **4%**, with the increase in sales partially offset by the dilutive impact of acquisitions and customer mix[132](index=132&type=chunk) [Overview](index=33&type=section&id=Overview) LSI Industries Inc. is a leading producer of non-residential lighting and retail display solutions, offering integrated solutions to customers in target vertical markets - LSI Industries Inc. is a leading producer of non-residential lighting and retail display solutions, offering integrated solutions to customers in target vertical markets[129](index=129&type=chunk) [Summary of Consolidated Results](index=33&type=section&id=Summary%20of%20Consolidated%20Results) Consolidated net sales increased by 22% in fiscal 2025, driven by the Display Solutions Segment's growth, while operating income saw a slight increase Net Sales by Business Segment (in thousands) | Segment | 2025 | 2024 | | :---------------------- | :-------- | :-------- | | Lighting Segment | $248,357 | $262,413 | | Display Solutions Segment | $325,020 | $207,225 | | **Total Net Sales** | **$573,377** | **$469,638** | Operating Income (Loss) by Business Segment (in thousands) | Segment | 2025 | 2024 | | :---------------------- | :-------- | :-------- | | Lighting Segment | $30,253 | $33,327 | | Display Solutions Segment | $26,353 | $19,969 | | Corporate and Eliminations | ($20,837) | ($17,779) | | **Total Operating Income** | **$35,769** | **$35,517** | - Display Solutions Segment's net sales increased by **$117.8 million (57%)**, driven by **17% organic growth** and **$85.3 million** from EMI and CBH acquisitions. Lighting Segment sales declined by **$14.1 million (5%)** due to fewer large projects[131](index=131&type=chunk) [Non-GAAP Financial Measures](index=34&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like adjusted operating income, adjusted net income, and Adjusted EBITDA to provide transparency into core operating performance - The company uses non-GAAP measures like adjusted operating income, adjusted net income, adjusted EPS, EBITDA, Adjusted EBITDA, Net Debt to Adjusted EBITDA, and organic sales growth to provide increased transparency into core operating performance[133](index=133&type=chunk) Reconciliation of Net Income to Adjusted Net Income (in thousands, except per share data) | Metric | 2025 Net Income | 2025 Diluted EPS | 2024 Net Income | 2024 Diluted EPS | | :------------------------------------------- | :-------------- | :--------------- | :-------------- | :--------------- | | Net income as reported | $24,383 | $0.79 | $24,977 | $0.83 | | Long-term performance based compensation | 3,951 | 0.13 | 3,272 | 0.11 | | Acquisition costs | 838 | 0.03 | 735 | 0.02 | | Amortization expense of acquired intangible assets | 4,745 | 0.16 | 3,671 | 0.13 | | **Net income adjusted** | **$32,883** | **$1.07** | **$32,294** | **$1.07** | Reconciliation of Operating Income to Adjusted Operating Income (in thousands) | Metric | 2025 | 2024 | | :------------------------------------------- | :-------- | :-------- | | Operating income as reported | $35,769 | $35,517 | | Long-term performance based compensation | 4,939 | 4,380 | | Acquisition costs | 1,047 | 1,001 | | Amortization expense of acquired intangible assets | 5,869 | 4,958 | | **Adjusted operating income** | **$48,361** | **$46,395** | Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | 2025 | 2024 | | :------------------------------------------- | :-------- | :-------- | | Net income - reported | $24,383 | $24,977 | | Depreciation and amortization | 12,575 | 9,999 | | **EBITDA** | **$48,344** | **$45,516** | | Acquisition costs | 1,047 | 1,001 | | Long-term performance based compensation | 4,939 | 4,380 | | **Adjusted EBITDA** | **$55,067** | **$51,436** | Net Debt to Adjusted EBITDA | Metric | June 30, 2025 | June 30, 2024 | | :---------------------- | :------------ | :------------ | | Net debt | $45,100 | $50,119 | | Adjusted EBITDA | $55,067 | $51,436 | | **Net debt to adjusted EBITDA** | **0.82** | **0.97** | Organic vs. Inorganic Sales (in thousands) | Segment/Source | FY 2025 | FY 2024 | % Variance | | :------------------------ | :-------- | :-------- | :--------- | | Lighting Segment | $248,357 | $262,413 | -5% | | Comparable Display Solutions Sales | $221,641 | $189,152 | 17% | | EMI (Acquisition) | $94,830 | $18,073 | | | Canada's Best (Acquisition) | $8,549 | - | | | **Total organic net sales** | **$469,998** | **$451,565** | **4%** | [Results of Operations (2025 Compared to 2024)](index=37&type=section&id=Results%20of%20Operations) This section details the financial performance of the Display Solutions and Lighting segments, as well as corporate consolidated results [Display Solutions Segment](index=37&type=section&id=Display%20Solutions%20Segment) Display Solutions net sales increased 57% year-over-year, driven by organic growth and acquisitions, though gross profit percentage declined Display Solutions Segment Performance (in thousands) | Metric | 2025 | 2024 | | :--------------- | :-------- | :-------- | | Net Sales | $325,020 | $207,225 | | Gross Profit | $57,476 | $44,195 | | Operating Income | $26,353 | $19,969 | - Display Solutions net sales increased **57% (YoY)**, driven by **17% organic growth** across product categories and vertical markets (grocery, refueling/C-Store), and **$85.3 million** from EMI and CBH acquisitions[142](index=142&type=chunk) - Gross profit increased **30%**, but gross profit as a percentage of net sales decreased from **21% to 18%** due to the dilutive impact of acquisitions and customer mix[143](index=143&type=chunk) [Lighting Segment](index=38&type=section&id=Lighting%20Segment) Lighting Segment net sales decreased 5% year-over-year due to fewer large projects, but gross profit percentage marginally improved Lighting Segment Performance (in thousands) | Metric | 2025 | 2024 | | :--------------- | :-------- | :-------- | | Net Sales | $248,357 | $262,413 | | Gross Profit | $84,390 | $89,026 | | Operating Income | $30,253 | $33,327 | - Lighting Segment net sales decreased **5% (YoY)** due to the non-recurrence of several large lighting projects from fiscal 2024, though small project activity and large project order activity increased in Q4 FY2025[145](index=145&type=chunk) - Gross profit declined **5%** in line with sales, but gross profit as a percentage of sales marginally improved due to a higher mix of value applications and effective cost management[146](index=146&type=chunk) [Corporate and Eliminations](index=38&type=section&id=Corporate%20and%20Eliminations) Corporate operating expenses increased 17% year-over-year due to investments in commercial initiatives, acquisition costs, and compensation programs Corporate and Eliminations Operating (Loss) (in thousands) | Metric | 2025 | 2024 | | :--------------- | :---------- | :---------- | | Operating (Loss) | ($20,837) | ($17,779) | - Operating expenses increased **17% (YoY)** due to increased investment in commercial initiatives, acquisition costs, and performance-related compensation programs[148](index=148&type=chunk) [Consolidated Results](index=38&type=section&id=Consolidated%20Results) Consolidated net income slightly decreased, while adjusted net income increased, with higher interest expense and effective tax rate Consolidated Net Income and EPS | Metric | 2025 | 2024 | | :---------------------- | :---------- | :---------- | | Net income | $24.4 million | $25.0 million | | Non-GAAP adjusted net income | $32.9 million | $32.3 million | | Diluted adjusted EPS | $1.07 | $1.07 | - Net interest expense increased to **$3.1 million** in fiscal 2025 from **$2.2 million** in fiscal 2024, primarily due to funds borrowed for EMI and CBH acquisitions[149](index=149&type=chunk) - The consolidated effective tax rate increased to **26.2%** in fiscal 2025 from **24.5%** in fiscal 2024, driven by higher state, local, and foreign income taxes[150](index=150&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) Working capital increased to $96.8 million at June 30, 2025, with $35.7 million available under the credit facility - Working capital increased to **$96.8 million** at June 30, 2025, from **$83.3 million** at June 30, 2024, with **$9.7 million** of the increase attributed to the CBH acquisition[154](index=154&type=chunk) Key Liquidity Metrics (in thousands) | Metric | June 30, 2025 | June 30, 2024 | | :----------------------------------- | :------------ | :------------ | | Working Capital | $96,800 | $83,300 | | Current Ratio | 2.0 to 1 | 2.1 to 1 | | Net Accounts Receivable | $104,300 | $78,600 | | Net Inventories | $79,800 | $70,900 | | Cash from Operating Activities | $38,100 | $43,400 | | Cash used in Investing Activities | $28,000 | $55,300 | | Cash (used in)/provided by Financing Activities | ($11,400) | $14,300 | - The company has a **$100 million credit facility** (**$25 million term loan**, **$75 million revolving line of credit**) expiring in Q1 fiscal 2027, with **$35.7 million** available as of June 30, 2025[157](index=157&type=chunk) [Off-Balance Sheet Arrangements](index=39&type=section&id=Off-Balance%20Sheet%20Arrangements) The company has no financial instruments with off-balance sheet risk - The company has no financial instruments with off-balance sheet risk[162](index=162&type=chunk) [Cash Dividends](index=39&type=section&id=Cash%20Dividends) In August 2025, the Board declared a regular quarterly cash dividend of $0.05 per share, maintaining an annual rate of $0.20 per share - In August 2025, the Board declared a regular quarterly cash dividend of **$0.05 per share**, maintaining an indicated annual rate of **$0.20 per share** for fiscal 2025[163](index=163&type=chunk) [Critical Accounting Policies and Use of Estimates](index=40&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Estimates) The company's critical accounting policies involve significant judgments and estimates, particularly for warranty reserves and business combinations - The company's critical accounting policies involve significant judgments and estimates, particularly for warranty reserves and business combinations, which can materially impact financial results[164](index=164&type=chunk) [Warranty Reserves](index=40&type=section&id=Warranty%20Reserves) Warranty liabilities are recorded based on historical claims and estimates for known issues, with terms generally ranging from one to five years - The company records warranty liabilities based on historical claims and estimates for known issues, with terms generally ranging from one to five years, and up to 10 years for some products[165](index=165&type=chunk) - Warranty reserves are subject to adjustments if actual costs differ significantly from estimates, potentially affecting gross profit and operating results[165](index=165&type=chunk) [Business Combination](index=40&type=section&id=Business%20Combination) Business acquisitions are accounted for using the acquisition method, requiring significant estimates for fair value allocation of acquired assets and liabilities - Business acquisitions are accounted for using the acquisition method, requiring significant estimates for fair value allocation of acquired assets and liabilities, including intangible assets and goodwill[166](index=166&type=chunk) - Adjustments to preliminary estimates during the measurement period (up to one year) or subsequent adjustments outside this period could materially impact financial condition and results[166](index=166&type=chunk)[167](index=167&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=24&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company faces market risks from variable interest rates, raw material prices, and foreign currency, managing them through sourcing and price adjustments - The company is exposed to market risks from changes in variable interest rates, raw material prices, and foreign currency translation rates[90](index=90&type=chunk) [Interest Rate Risk](index=24&type=section&id=Interest%20Rate%20Risk) The company is exposed to interest rate fluctuations on its cash, investments, and debt, particularly its revolving line of credit and term loan - The company is exposed to interest rate fluctuations on its cash, cash equivalents, short-term investments, and debt, particularly its **$75 million revolving line of credit** and **$25 million term loan**[91](index=91&type=chunk)[92](index=92&type=chunk) [Raw Material Price Risk](index=24&type=section&id=Raw%20Material%20Price%20Risk) The company is susceptible to raw material price fluctuations, mitigating risk through multiple suppliers and attempting to pass increased costs to customers - The company purchases large quantities of raw materials (e.g., steel, aluminum, LEDs) and components, making it susceptible to price fluctuations[93](index=93&type=chunk) - Strategic sourcing plans include using multiple suppliers and negotiating annual contracts to mitigate supply chain risk and price volatility[93](index=93&type=chunk) - The company attempts to pass increased costs to customers through price increases, but timing lags and competitive reasons may limit success[94](index=94&type=chunk) [Foreign Currency Translation Risk](index=26&type=section&id=Foreign%20Currency%20Translation%20Risk) The company has foreign currency risk from its Mexican and Canadian subsidiaries, whose sales represent approximately 3% of consolidated net sales - The company has foreign currency risk from its Mexican and Canadian subsidiaries, whose sales in pesos and Canadian dollars represent approximately **3% of fiscal 2025 consolidated net sales**[95](index=95&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=26&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) Audited consolidated financial statements for FY2025 and FY2024, including core statements, internal control report, auditor reports, and detailed accounting notes - The consolidated financial statements for the years ended June 30, 2025, and 2024, are presented in accordance with U.S. GAAP[96](index=96&type=chunk)[177](index=177&type=chunk) - Management concluded that internal control over financial reporting was effective as of June 30, 2025, with the exclusion of Canada's Best Holdings (CBH) due to its recent acquisition[173](index=173&type=chunk)[174](index=174&type=chunk) - Grant Thornton LLP issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of June 30, 2025[177](index=177&type=chunk)[178](index=178&type=chunk)[187](index=187&type=chunk)[188](index=188&type=chunk) [Index to Financial Statements](index=26&type=section&id=Index%20to%20Financial%20Statements) The index lists the various financial statements and supplementary data included in this item - The index lists the various financial statements and supplementary data included in this item, such as Consolidated Statements of Operations, Balance Sheets, Cash Flows, and Notes to Consolidated Financial Statements[96](index=96&type=chunk) [Management's Report On Internal Control Over Financial Reporting](index=41&type=section&id=Management%27s%20Report%20On%20Internal%20Control%20Over%20Financial%20Reporting) Management is responsible for internal control over financial reporting and concluded its effectiveness as of June 30, 2025, excluding Canada's Best Holdings - Management is responsible for establishing and maintaining adequate internal control over financial reporting and evaluated its effectiveness as of June 30, 2025, based on the COSO framework[169](index=169&type=chunk) - Management excluded Canada's Best Holdings (CBH) from its evaluation of internal control effectiveness as of June 30, 2025, as CBH represented **10% of total consolidated assets** and **1% of total consolidated sales**[173](index=173&type=chunk) - The principal executive officer and principal financial officer concluded that internal control over financial reporting was effective as of June 30, 2025[174](index=174&type=chunk)[175](index=175&type=chunk) [Report of Independent Registered Public Accounting Firm (Opinion on Financial Statements)](index=42&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20%28Opinion%20on%20Financial%20Statements%29) Grant Thornton LLP issued an unqualified opinion on the consolidated financial statements, identifying the valuation of acquired customer relationships as a critical audit matter - Grant Thornton LLP issued an unqualified opinion, stating that the consolidated financial statements present fairly, in all material respects, the financial position and results of operations for the periods ended June 30, 2025, and 2024[177](index=177&type=chunk) - The valuation of acquired customer relationships from Canada's Best Holdings (CBH) was identified as a critical audit matter due to significant auditor judgment required for fair value measurements[182](index=182&type=chunk)[183](index=183&type=chunk) [Report of Independent Registered Public Accounting Firm (Opinion on Internal Control)](index=45&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20%28Opinion%20on%20Internal%20Control%29) Grant Thornton LLP issued an unqualified opinion on the effectiveness of internal control over financial reporting, excluding Canada's Best Holdings - Grant Thornton LLP issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of June 30, 2025, based on COSO criteria[187](index=187&type=chunk) - The audit of internal control over financial reporting excluded Canada's Best Holdings (CBH), which was acquired during fiscal year 2025 and represented **10% of total assets** and **1% of revenues**[191](index=191&type=chunk) [Consolidated Statements of Operations](index=46&type=section&id=Consolidated%20Statements%20of%20Operations) This section presents the company's consolidated statements of operations, detailing net sales, gross profit, operating income, and net income for fiscal years 2025 and 2024 Consolidated Statements of Operations (in thousands, except per share data) | Metric | 2025 | 2024 | | :------------------------- | :-------- | :-------- | | Net Sales | $573,377 | $469,638 | | Gross profit | $141,780 | $133,168 | | Operating income | $35,769 | $35,517 | | Income before income taxes | $33,038 | $33,099 | | Net income | $24,383 | $24,977 | | Basic EPS | $0.82 | $0.86 | | Diluted EPS | $0.79 | $0.83 | [Consolidated Statements of Comprehensive Income](index=47&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the company's consolidated statements of comprehensive income, including net income and foreign currency translation adjustments Consolidated Statements of Comprehensive Income (in thousands) | Metric | 2025 | 2024 | | :---------------------------- | :-------- | :-------- | | Net Income | $24,383 | $24,977 | | Foreign currency translation adjustment | 627 | (137) | | **Comprehensive Income** | **$25,010** | **$24,840** | [Consolidated Balance Sheets](index=48&type=section&id=Consolidated%20Balance%20Sheets) This section presents the company's consolidated balance sheets, detailing assets, liabilities, and shareholders' equity as of June 30, 2025, and 2024 Consolidated Balance Sheets (in thousands) | Asset/Liability/Equity | June 30, 2025 | June 30, 2024 | | :------------------------------- | :------------ | :------------ | | **ASSETS** | | | | Total current assets | $194,166 | $162,499 | | Net property, plant and equipment | $31,154 | $32,960 | | Goodwill | $64,548 | $57,397 | | Intangible assets, net | $78,258 | $73,916 | | Total assets | **$396,362** | **$348,800** | | **LIABILITIES & SHAREHOLDERS' EQUITY** | | | | Total current liabilities | $97,349 | $79,207 | | Long-term debt | $44,986 | $50,658 | | Total shareholders' equity | $230,722 | $204,355 | | Total liabilities & shareholders' equity | **$396,362** | **$348,800** | [Consolidated Statements of Shareholders' Equity](index=50&type=section&id=Consolidated%20Statements%20of%20Shareholders%27%20Equity) This section presents the company's consolidated statements of shareholders' equity, detailing changes in common shares, treasury shares, retained earnings, and comprehensive income Consolidated Statements of Shareholders' Equity (in thousands) | Metric | June 30, 2025 | June 30, 2024 | | :--------------------------- | :------------ | :------------ | | Common Shares Amount | $163,692 | $156,365 | | Treasury Shares Amount | ($10,011) | ($8,895) | | Retained Earnings | $66,201 | $47,788 | | Accumulated other comprehensive income | $829 | $202 | | **Total Shareholders' Equity** | **$230,722** | **$204,355** | - Total shareholders' equity increased from **$204.4 million** in 2024 to **$230.7 million** in 2025, driven by net income, stock-based compensation, and other comprehensive gain, partially offset by dividends[201](index=201&type=chunk) [Consolidated Statements of Cash Flows](index=51&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's consolidated statements of cash flows, detailing cash flows from operating, investing, and financing activities Consolidated Statements of Cash Flows (in thousands) | Activity | 2025 | 2024 | | :------------------------------------- | :---------- | :---------- | | Net cash flows provided by operating activities | $38,118 | $43,392 | | Net cash flows used in investing activities | ($27,967) | ($55,253) | | Net cash flows provided by (used in) financing activities | ($11,431) | $14,308 | | Increase (decrease) in cash and cash equivalents | ($653) | $2,282 | | Cash and cash equivalents at end of period | $3,457 | $4,110 | - Cash from operating activities decreased from **$43.4 million** in 2024 to **$38.1 million** in 2025. Cash used in investing activities decreased from **$55.3 million** to **$28.0 million**, primarily due to the timing of EMI and CBH acquisitions[203](index=203&type=chunk) [Notes to Consolidated Financial Statements](index=52&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The consolidated financial statements are prepared in accordance with U.S. GAAP, with critical accounting policies involving significant judgments and estimates - The consolidated financial statements are prepared in accordance with U.S. GAAP, including wholly-owned subsidiaries, with all intercompany transactions eliminated[204](index=204&type=chunk) - Revenue is recognized when performance obligations are satisfied, typically at shipment for products, or over time for customized products and installation services using a cost-based input method[205](index=205&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk) - Critical accounting policies include warranty reserves and business combinations, which involve significant management judgment and estimates[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk) [NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=52&type=section&id=NOTE%201%20%E2%80%94%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the company's significant accounting policies, including consolidation, revenue recognition, inventory valuation, and employee benefit plans [Consolidation](index=52&type=section&id=Consolidation) Consolidated financial statements include LSI Industries Inc. and its wholly-owned subsidiaries, prepared in accordance with U.S. GAAP - Consolidated financial statements include LSI Industries Inc. and its wholly-owned subsidiaries, prepared in accordance with U.S. GAAP, with all intercompany transactions eliminated[204](index=204&type=chunk) [Revenue Recognition](index=52&type=section&id=Revenue%20Recognition) Revenue is recognized when performance obligations are satisfied, typically at shipment for most products, or over time for customized products and installation services - Revenue is recognized when performance obligations are satisfied, typically at a point in time upon shipment for most products when control transfers to the customer[205](index=205&type=chunk) - For customized products (metal/millwork, print graphics, digital signage) and installation services, revenue is recognized over time using a cost-based input method[207](index=207&type=chunk)[208](index=208&type=chunk)[210](index=210&type=chunk) [Disaggregation of Revenue](index=53&type=section&id=Disaggregation%20of%20Revenue) This section provides a breakdown of revenue by timing of transfer and product/service type for fiscal year 2025 Disaggregated Revenue by Timing and Type (FY2025, in thousands) | Category | Lighting Segment | Display Solutions Segment | | :---------------------------------------- | :--------------- | :------------------------ | | Products and services transferred at a point in time | $208,193 | $259,432 | | Products and services transferred over time | $40,164 | $65,588 | | LED lighting, digital signage solutions, electronic circuit boards | $202,552 | $26,144 | | Poles and other display solutions elements | $43,211 | $233,792 | | Project management, installation services, shipping and handling | $2,594 | $65,084 | [Practical Expedients and Exemptions](index=53&type=section&id=Practical%20Expedients%20and%20Exemptions) The company expenses sales commissions for short-term contracts and omits disclosures on remaining performance obligations - The company expenses sales commissions as incurred for contracts with expected durations of one year or less and omits disclosures on remaining performance obligations[214](index=214&type=chunk) - Shipping costs are expensed as incurred if not material, and sales tax is excluded from revenue[214](index=214&type=chunk) [Credit and Collections](index=53&type=section&id=Credit%20and%20Collections) Allowances for credit losses are maintained for estimated losses from customer disputes or inability to pay - Allowances for credit losses are maintained for estimated losses from customer disputes or inability to pay, determined by known problems and historical percentages against aging receivables[213](index=213&type=chunk) Net Accounts Receivable (in thousands) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Accounts receivable | $105,499 | $79,474 | | Less: Allowance for credit losses | ($1,152) | ($848) | | **Accounts receivable, net** | **$104,347** | **$78,626** | [Cash and Cash Equivalents](index=55&type=section&id=Cash%20and%20Cash%20Equivalents) Cash and cash equivalents include bank deposits and money market accounts with original maturities of less than three months - Cash and cash equivalents include bank deposits and money market accounts with original maturities of less than three months, stated at cost approximating fair value[218](index=218&type=chunk) [Inventories, Net](index=55&type=section&id=Inventories%2C%20Net) Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis - Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis, including raw materials, direct labor, and manufacturing overhead[219](index=219&type=chunk) - An inventory reserve is maintained for obsolete and excess inventory, based on specific known items and percentages applied to inventory categories[220](index=220&type=chunk) [Property, Plant and Equipment and Related Depreciation](index=55&type=section&id=Property%2C%20Plant%20and%20Equipment%20and%20Related%20Depreciation) Property, plant, and equipment are stated at cost, with depreciation computed on the straight-line method over estimated useful lives - Property, plant, and equipment are stated at cost, with depreciation computed on the straight-line method over estimated useful lives (e.g., buildings 28-40 years, machinery 3-10 years)[221](index=221&type=chunk) Depreciation Expense (in thousands) | Fiscal Year | Depreciation Expense | | :---------- | :------------------- | | 2025 | $6,700 | | 2024 | $5,000 | [Goodwill and Intangible Assets](index=55&type=section&id=Goodwill%20and%20Intangible%20Assets) Definite-lived intangible assets are amortized over 5 to 20 years, while goodwill and indefinite-lived intangible assets are subject to annual impairment review - Definite-lived intangible assets (customer relationships, technology, trade names, non-compete) are amortized over 5 to 20 years, while goodwill and indefinite-lived intangible assets (trademarks/trade names) are not amortized but are subject to annual impairment review[223](index=223&type=chunk) [Fair Value](index=55&type=section&id=Fair%20Value) The fair value of financial instruments approximates their carrying value, with fair value measurements for nonfinancial assets primarily used in impairment analyses - The fair value of financial instruments like cash, receivables, debt, and payables approximates their carrying value due to short-term maturity or variable interest rates[224](index=224&type=chunk) - Fair value measurements for nonfinancial assets and liabilities are primarily used in impairment analyses and valuation of acquired assets/liabilities[225](index=225&type=chunk) [Product Warranties](index=56&type=section&id=Product%20Warranties) The company offers limited warranties against defects and records warranty liabilities based on historical claims and estimates for future costs - The company offers limited warranties (1-10 years) against defects and records warranty liabilities based on historical claims and estimates for future repair/replacement costs[226](index=226&type=chunk) Changes in Warranty Liabilities (in thousands) | Metric | June 30, 2025 | June 30, 2024 | | :------------------------------ | :------------ | :------------ | | Balance at beginning of the period | $6,623 | $6,501 | | Additions charged to expense | $5,304 | $3,781 | | Deductions for repairs and replacements | ($4,495) | ($4,004) | | **Balance at end of the period** | **$7,505** | **$6,623** | [Employee Benefit Plans](index=56&type=section&id=Employee%20Benefit%20Plans) The company offers a 401(k) retirement plan with matching contributions and a non-qualified deferred compensation plan - The company offers a 401(k) retirement plan with matching contributions and a non-qualified deferred compensation plan for certain employees[228](index=228&type=chunk) Total Employee Benefit Plan Costs (in millions) | Fiscal Year | Total Costs | | :---------- | :---------- | | 2025 | $2.4 | | 2024 | $2.3 | [Research and Development Costs](index=56&type=section&id=Research%20and%20Development%20Costs) R&D costs, primarily for new product and technology development, are expensed as incurred and totaled $3.3 million in FY2025 - R&D costs, primarily for new product and technology development (including LED software), are expensed as incurred and totaled **$3.3 million** in FY2025 and **$3.5 million** in FY2024[229](index=229&type=chunk) [Cost of Products and Services Sold](index=56&type=section&id=Cost%20of%20Products%20and%20Services%20Sold) Cost of products sold includes direct materials, labor, manufacturing overhead, distribution, freight, and warehousing - Cost of products sold includes direct materials, labor, manufacturing overhead, distribution, freight, and warehousing. Cost of services sold includes internal/external labor for project management and installation[230](index=230&type=chunk) [Stock-Based Compensation](index=56&type=section&id=Stock-Based%20Compensation) Stock-based compensation for equity instruments is measured at grant date fair value and recognized as expense over the vesting period - Stock-based compensation for equity instruments (stock options, RSUs, PSUs) is measured at grant date fair value and recognized as expense over the vesting period[231](index=231&type=chunk) [Earnings Per Common Share](index=56&type=section&id=Earnings%20Per%20Common%20Share) Basic EPS is based on weighted average common shares outstanding, while diluted EPS includes common share equivalents from stock options, RSUs, and contingently issuable shares - Basic EPS is based on weighted average common shares outstanding, net of treasury shares. Diluted EPS includes common share equivalents from stock options, RSUs, and contingently issuable shares[232](index=232&type=chunk)[233](index=233&type=chunk) [Income Taxes](index=58&type=section&id=Income%20Taxes) Deferred income taxes are provided for temporary differences, requiring significant management judgment in estimating taxable income and effective tax rates - Deferred income taxes are provided for temporary differences between financial reporting and tax purposes, requiring significant management judgment in estimating taxable income and effective tax rates[234](index=234&type=chunk) [Foreign Exchange](index=58&type=section&id=Foreign%20Exchange) Assets and liabilities of foreign subsidiaries are translated using period-end exchange rates, with translation gains/losses reported in accumulated other comprehensive income - Assets and liabilities of Mexican and Canadian subsidiaries are translated using period-end exchange rates, while revenue and expenses use average rates. Translation gains/losses are reported in accumulated other comprehensive income[235](index=235&type=chunk) [New Accounting Pronouncements](index=58&type=section&id=New%20Accounting%20Pronouncements) The company adopted ASU 2023-07 (Segment Reporting) in FY2025 and is evaluating ASU 2023-06 and ASU 2023-09 - The company adopted ASU 2023-07 (Segment Reporting) in FY2025, providing greater visibility into segment performance metrics, with no significant impact on financial statements[237](index=237&type=chunk) - The company is evaluating ASU 2023-06 (Disclosure Improvements) and ASU 2023-09 (Income Tax Disclosures), with no material impact anticipated from ASU 2023-06 and early adoption permitted for ASU 2023-09[236](index=236&type=chunk)[237](index=237&type=chunk) [Use of Estimates](index=58&type=section&id=Use%20of%20Estimates) Financial statement preparation requires management to make estimates and assumptions, and actual results may differ from these estimates - Financial statement preparation requires management to make estimates and assumptions, and actual results may differ from these estimates[238](index=238&type=chunk) [Subsequent Events](index=59&type=section&id=Subsequent%20Events) The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, is expected to monetize the capitalized R&D deferred tax asset in the next fiscal year - The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, is expected to monetize the capitalized R&D deferred tax asset in the next fiscal year[239](index=239&type=chunk)[309](index=309&type=chunk) [NOTE 2 — ACQUISITION OF EMI INDUSTRIES, LLC](index=59&type=section&id=NOTE%202%20%E2%80%94%20ACQUISITION%20OF%20EMI%20INDUSTRIES%2C%20LLC) On April 18, 2024, the company acquired EMI Industries, LLC for $50.0 million, expanding its vertical market presence and adding goodwill and intangible assets - On April 18, 2024, the company acquired EMI Industries, LLC for **$50.0 million**, funded by cash and a revolving line of credit[240](index=240&type=chunk) - The acquisition expanded LSI's vertical market presence in Grocery, C-Store, and QSR/Restaurant, adding **$12.4 million in goodwill** and **$15.7 million in intangible assets**[240](index=240&type=chunk)[241](index=241&type=chunk)[242](index=242&type=chunk) EMI Intangible Assets Acquired (in thousands) | Intangible Asset | Estimated Fair Value | Estimated Useful Life (Years) | | :------------------ | :------------------- | :---------------------------- | | Tradename | $4,880 | Indefinite life | | Technology assets | $3,160 | 7 | | Non-compete | $140 | 5 | | Customer relationships | $7,490 | 20 | [Pro Forma Impact of the Acquisition of EMI (Unaudited)](index=61&type=section&id=Pro%20Forma%20Impact%20of%20the%20Acquisition%20of%20EMI%20%28Unaudited%29) Unaudited pro forma results for FY2024, assuming EMI acquisition on July 1, 2022, show sales of $535.8 million and operating income of $36.3 million - Unaudited pro forma results for FY2024, assuming EMI acquisition on July 1, 2022, show sales of **$535.8 million** and operating income of **$36.3 million**[244](index=244&type=chunk)[246](index=246&type=chunk) [NOTE 3— ACQUISITION OF CANADA'S BEST HOLDINGS](index=61&type=section&id=NOTE%203%E2%80%94%20ACQUISITION%20OF%20CANADA%27S%20BEST%20HOLDINGS) On March 11, 2025, the company acquired Canada's Best Holdings (CBH) for $25.9 million, resulting in $6.7 million in goodwill and $9.6 million in intangible assets - On March 11, 2025, the company acquired Canada's Best Holdings (CBH) for **$25.9 million**, with total purchase consideration of **$29.1 million** including a **$3.3 million contingent earnout liability**[247](index=247&type=chunk) - The acquisition resulted in **$6.7 million in goodwill** and **$9.6 million in intangible assets**, primarily customer relationships[248](index=248&type=chunk)[249](index=249&type=chunk) CBH Intangible Assets Acquired (in thousands) | Intangible Asset | Estimated Fair Value | Estimated Useful Life (Years) | | :------------------ | :------------------- | :---------------------------- | | Tradename | $991 | 10 | | Non-compete agreements | $180 | 3 - 5 | | Customer relationships | $8,431 | 20 | [Pro Forma Impact of the Acquisition of CBH (Unaudited)](index=62&type=section&id=Pro%20Forma%20Impact%20of%20the%20Acquisition%20of%20CBH%20%28Unaudited%29) Unaudited pro forma results, assuming CBH acquisition on July 1, 2023, show higher sales and gross profit for both fiscal years Pro Forma Impact of CBH Acquisition (Unaudited, in thousands) | Metric | FY 2025 | FY 2024 | | :--------------- | :-------- | :-------- | | Sales | $587,874 | $496,965 | | Gross Profit | $146,962 | $142,984 | | Operating Income | $37,848 | $41,337 | - Unaudited pro forma results, assuming CBH acquisition on July 1, 2023, show higher sales and gross profit for both fiscal years, with pro-forma operating income of **$37.8 million** for FY2025[250](index=250&type=chunk)[251](index=251&type=chunk)[253](index=253&type=chunk) [NOTE 4 — BUSINESS SEGMENT INFORMATION](index=64&type=section&id=NOTE%204%20%E2%80%94%20BUSINESS%20SEGMENT%20INFORMATION) The company operates two reportable segments, Lighting and Display Solutions, with profitability assessed by the CEO using adjusted operating income and adjusted EBITDA - The company operates two reportable segments: Lighting and Display Solutions, with profitability assessed by the CEO (CODM) using adjusted operating income and adjusted EBITDA[254](index=254&type=chunk)[255](index=255&type=chunk) - The Lighting Segment focuses on non-residential LED lighting fixtures and controls, while the Display Solutions Segment provides visual image and display elements, including digital signage and custom fixtures[256](index=256&type=chunk)[257](index=257&type=chunk) Segment Performance (FY2025, in thousands) | Metric | Lighting Segment | Display Solutions Segment | Corporate & Elims | Total | | :---------------------- | :--------------- | :------------------------ | :---------------- | :-------- | | Net sales | $248,357 | $325,020 | $0 | $573,377 | | Operating income | $30,253 | $26,353 | ($20,837) | $35,769 | | Adjusted operating income | $33,086 | $31,429 | ($16,154) | $48,361 | | Adjusted EBITDA | $35,725 | $35,144 | ($15,802) | $55,067 | [NOTE 5 — EARNINGS PER SHARE](index=67&type=section&id=NOTE%205%20%E2%80%94%20EARNINGS%20PER%20SHARE) This note details the calculation of basic and diluted earnings per common share for fiscal years 2025 and 2024 Earnings Per Common Share (in thousands, except per share data) | Metric | 2025 | 2024 | | :------------------------------------------- | :-------- | :-------- | | Net Income | $24,383 | $24,977 | | Weighted average shares outstanding (Basic) | 29,903 | 29,049 | | Basic income per share | $0.82 | $0.86 | | Weighted average shares outstanding (Diluted) | 30,832 | 30,068 | | Diluted income per share | $0.79 | $0.83 | - Diluted EPS calculation includes the dilutive effect of stock options, restricted stock units, and contingently issuable shares, totaling **2,024,000 shares** in FY2025 and **2,087,000 shares** in FY2024[233](index=233&type=chunk)[263](index=263&type=chunk) [NOTE 6 — INVENTORIES, NET](index=68&type=section&id=NOTE%206%20%E2%80%94%20INVENTORIES%2C%20NET) This note provides a breakdown of inventories by category and details open purchase orders as of June 30, 2025 Inventories, Net (in thousands) | Inventory Category | June 30, 2025 | June 30, 2024 | | :----------------- | :------------ | :------------ | | Raw materials | $60,726 | $52,644 | | Work-in-progress | $7,942 | $6,244 | | Finished goods | $11,150 | $12,025 | | **Total Inventories** | **$79,818** | **$70,913** | - The company had open purchase orders primarily related to inventory totaling **$48.1 million** as of June 30, 2025[264](index=264&type=chunk) [NOTE 7 — ACCRUED EXPENSES](index=68&type=section&id=NOTE%207%20%E2%80%94%20ACCRUED%20EXPENSES) This note details the components of accrued expenses, including customer prepayments, compensation, warranty, and operating lease liabilities Accrued Expenses (in thousands) | Accrued Expense Category | June 30, 2025 | June 30, 2024 | | :----------------------- | :------------ | :------------ | | Customer prepayments | $4,070 | $8,475 | | Compensation and benefits | $12,471 | $10,217 | | Accrued warranty | $7,505 | $6,623 | | Accrued sales commissions | $3,956 | $3,937 | | Operating lease liabilities | $6,037 | $5,560 | | **Total Accrued Expenses** | **$45,252** | **$43,444** | [NOTE 8 — GOODWILL AND OTHER INTANGIBLE ASSETS](index=68&type=section&id=NOTE%208%20%E2%80%94%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS) Goodwill and indefinite-lived intangible assets are reviewed annually for impairment, with all reporting units passing their impairment tests in fiscal 2025 - Goodwill and indefinite-lived intangible assets are reviewed annually for impairment, using qualitative factors or a combination of market and income approaches for fair value estimation[266](index=266&type=chunk) - In fiscal 2025, all five reporting units (one in Lighting, four in Display Solutions) passed their annual goodwill impairment tests[268](index=268&type=chunk) Goodwill, Net (in thousands) | Segment | June 30, 2025 | June 30, 2024 | | :---------------- | :------------ | :------------ | | Lighting Segment | $9,208 | $9,208 | | Display Solutions Segment | $55,340 | $48,189 | | **Goodwill, net** | **$64,548** | **$57,397** | Other Intangible Assets, Net (in thousands) | Asset Class | June 30, 2025 Net Amount | June 30, 2024 Net Amount | | :-------------------------- | :----------------------- | :----------------------- | | Customer relationships | $53,234 | $48,241 | | LED technology, software | $5,432 | $7,068 | | Trademarks and trade names (indefinite-lived) | $16,982 | $16,982 | | **Total Other Intangible Assets** | **$78,258** | **$73,916** | Expected Annual Amortization Expense (in thousands) | Year | Amount | | :-------- | :-------- | | 2026 | $6,220 | | 2027 | $6,037 | | 2028 | $5,560 | | 2029 | $4,916 | | 2030 | $4,911 | | After 2030 | $33,632 | [NOTE 9 — REVOLVING LINE OF CREDIT AND LONG-TERM DEBT](index=71&type=section&id=NOTE%209%20%E2%80%94%20REVOLVING%20LINE%20OF%20CREDIT%20AND%20LONG-TERM%20DEBT) The company has a $100 million credit facility expiring in Q1 fiscal 2027, with $35.7 million available for borrowing as of June 30, 2025 Long-Term Debt (in thousands) | Debt Type | June 30, 2025 | June 30, 2024 | | :---------------------- | :------------ | :------------ | | Secured line of credit | $36,956 | $38,766 | | Term loan, net | $11,601 | $15,463 | | **Total debt** | **$48,557** | **$54,229** | | Less: amounts due within one year | ($3,571) | ($3,571) | | **Total amounts due after one year, net** | **$44,986** | **$50,658** | - The company has a **$100 million credit facility** (a **$25 million term loan** and a **$75 million revolving line of credit**) expiring in Q1 fiscal 2027[276](index=276&type=chunk) - As of June 30, 2025, **$35.7 million** was available for borrowing under the revolving line of credit, and the company was in compliance with all loan covenants[276](index=276&type=chunk)[277](index=277&type=chunk) [NOTE 10 — CASH DIVIDENDS](index=71&type=section&id=NOTE%2010%20%E2%80%94%20CASH%20DIVI

Core Insights - LSI Industries Inc. (NASDAQ: LYTS) has demonstrated strong growth driven by both organic and acquisition activities, particularly in integrated lighting and display solutions [1] Group 1: Company Performance - The company is positioned as a leader in its sector, benefiting from a combination of internal growth and strategic acquisitions [1] - The investment group "Value In Corporate Events" highlights LSI Industries as a notable opportunity for investors, focusing on major corporate events such as earnings reports and M&A activities [1] Group 2: Investment Opportunities - The investment group provides coverage of approximately 10 major events monthly, aiming to identify the best investment opportunities in the market [1]

Financial Data and Key Metrics Changes - The company reported total sales of just over $573 million for the fiscal year, representing a 22% increase over the prior year [5][22] - Adjusted EBITDA for the full year was $55 million, nearly 10% of sales, with a net debt leverage ratio of 0.8 times [6][22] - Fourth quarter sales increased 20% to $155 million, with adjusted EBITDA rising to $17 million or 11% of sales [15][22] - Organic growth for the fourth quarter, excluding acquisitions, was 11% [15] Business Line Data and Key Metrics Changes - The Lighting segment saw a 12% increase in sales during the fourth quarter, while the Display Solutions segment experienced a 28% increase, with organic growth of 10% [16][20] - The Grocery segment reported a 31% increase in sales for the fourth quarter, driven by resumed investments in store renovations [21] - The company launched over 25 new products in the lighting segment, with the velocity lighting product being particularly successful [7] Market Data and Key Metrics Changes - Total orders increased by 11% year-over-year, with a backlog 13% above the prior year [17] - The Lighting backlog was approximately 20% higher than last year [19] - The company noted marked improvements in demand levels across various markets, including warehousing, automotive, and outdoor applications [17] Company Strategy and Development Direction - The company is focused on advancing its Fast Forward strategic plan, emphasizing internal talent development and optimizing business processes [12] - Cross-selling initiatives are a core element of the strategy, aiming to deepen customer relationships and drive sustainable growth [13] - The company aims to offer a broader set of integrated solutions to meet evolving customer needs [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to build on the momentum from 2025 as it heads into 2026 [14] - The operating environment is described as stable, with expectations for continued growth in the grocery segment despite some remaining market turmoil [30] - Management highlighted the importance of maintaining a high say-do ratio and accountability within the company culture as key drivers of growth [11] Other Important Information - The company declared a regular cash dividend of $0.05 per share payable on September 10 for shareholders of record on September 2 [23] - The integration of acquired companies, EMI and Canada's Best Store Fixtures, has exceeded expectations, contributing positively to cross-selling activities [10] Q&A Session Summary Question: Can you discuss the opportunity in the C store and refueling market? - The company mentioned thousands of site locations involved in a large program, with ongoing projects expected to continue into 2026 [26][28] Question: Is the grocery market fully recovered after the merger fallout? - Management indicated that while the market is stable, it has not fully recovered, but there is potential for further growth [30] Question: What is the status of cross-selling initiatives and margin expansion at EMI? - The company has seen over 200 basis points improvement in EMI's performance and expects further improvements in the coming year [31] Question: How do you view your market share relative to competitors? - The company believes it has significant growth opportunities in various segments, maintaining a single-digit market share in many areas [68]

Financial Performance - LSI Industries' Q4FY25 sales increased by 20% year-over-year, reaching $155.1 million compared to $129.0 million in Q4FY24 [14, 22] - Organic sales grew by 11%, driven by improved demand across key vertical markets [12, 14, 21] - Adjusted EBITDA increased by 21% compared to the prior year, leading to a margin improvement of 250 basis points from Q3FY25 [15, 21] - Net income adjusted reached $10.6 million in Q4FY25, compared to $8.3 million in Q4FY24 [23] - For the full year FY25, total net sales reached $573.4 million, compared to $469.6 million in FY24 [22] Segment Performance - Display Solutions sales increased by 29%, with 10% organic sales growth, driven by Refueling / C-Store (+23%) and Grocery (+31%) [29] - Lighting revenues increased by 12% due to improved project order rates, with a 20% growth in backlog exiting the year [17] Balance Sheet and Cash Flow - The company generated free cash flow of $8.5 million in Q4FY25, with a trailing twelve-month (TTM) free cash flow of $34.7 million [50, 52] - Net debt stood at $45.1 million through Q4FY25, with a net leverage ratio of 0.8x [50, 55, 56]

[Executive Summary](index=1&type=section&id=Executive%20Summary) [Fiscal 2025 Fourth Quarter Highlights](index=1&type=section&id=Fiscal%202025%20Fourth%20Quarter%20Highlights) LSI Industries demonstrated strong performance in Q4 FY2025, achieving significant growth in sales and profitability, primarily driven by improved demand in the lighting and display solutions markets, alongside a substantial increase in adjusted EBITDA margin Fiscal 2025 Fourth Quarter Key Financial Data | Metric | Amount ($ million) | Change (YoY) | | :------------------- | :-------------- | :---------- | | Net Sales | 155.1 | +20% | | Net Income | 8.2 | - | | Adjusted Net Income | 10.6 | - | | Diluted EPS | 0.26 | - | | Adjusted Diluted EPS | 0.34 | - | | EBITDA | 15.5 | - | | Adjusted EBITDA | 17.0 | - | - Adjusted EBITDA margin improved by **250 basis points** from the prior fiscal quarter, reaching **11.0%**[4](index=4&type=chunk)[6](index=6&type=chunk) [Fiscal 2025 Full Year Highlights](index=1&type=section&id=Fiscal%202025%20Full%20Year%20Highlights) LSI achieved record sales in fiscal year 2025, driven by organic growth and strategic acquisitions, while also generating strong adjusted EBITDA and free cash flow, maintaining a healthy balance sheet Fiscal 2025 Full Year Key Financial Data | Metric | Amount ($ million) | Change (YoY) | | :------------------- | :-------------- | :---------- | | Net Sales | 573.4 | +22% | | Net Income | 24.4 | - | | Adjusted Net Income | 32.9 | - | | Diluted EPS | 0.79 | - | | Adjusted Diluted EPS | 1.07 | - | | EBITDA | 48.3 | - | | Adjusted EBITDA | 55.0 | - | | Free Cash Flow | 34.7 | - | - Net sales reached a record **$573.4 million**, representing a **22% year-over-year increase**[5](index=5&type=chunk)[6](index=6&type=chunk) - Net debt to trailing twelve-month adjusted EBITDA ratio was **0.8x**, indicating a healthy balance sheet[6](index=6&type=chunk)[8](index=8&type=chunk) [Management Commentary & Business Review](index=2&type=section&id=Management%20Commentary%20%26%20Business%20Review) [Overall Performance and Strategic Focus](index=2&type=section&id=Overall%20Performance%20and%20Strategic%20Focus) Management highlighted balanced performance across both lighting and display solutions segments in Q4, with improved sales and profitability, achieving record full-year sales through acquisitions and focusing on long-term value creation and operational discipline - Fourth-quarter order activity increased **11% year-over-year**, with a book-to-bill ratio of **1.0**[12](index=12&type=chunk) - Backlog at fiscal year-end grew **13% year-over-year**[12](index=12&type=chunk) - The company is in the early stages of a cross-selling initiative aimed at expanding its addressable market and deepening customer relationships[13](index=13&type=chunk) [Segment Performance](index=3&type=section&id=Segment%20Performance) LSI's Display Solutions and Lighting segments both achieved significant growth in Q4, with Display Solutions benefiting from acquisitions and vertical market demand, and Lighting from improved project order rates [Display Solutions Segment](index=3&type=section&id=Display%20Solutions%20Segment) The Display Solutions segment achieved strong growth in Q4, driven by organic sales and the contribution from the Canada's Best acquisition, with notable performance in the gas/convenience store and grocery vertical markets, and EMI Industries also succeeding Display Solutions Segment Fiscal 2025 Fourth Quarter Sales Growth | Metric | Q4 FY2025 Sales ($ million) | Year-over-Year Growth | | :------------------- | :--------------------------------- | :------- | | Total Sales | 82.3 | +29% | | Organic Sales | - | +10% | | Gas/Convenience Store Vertical Sales | - | +23% | | Grocery Vertical Sales | - | +31% | - EMI Industries, as part of LSI, achieved record sales in its first year and improved its adjusted EBITDA margin by over **200 basis points**[15](index=15&type=chunk) - The grocery display business saw its Q4 operating margin improve by over **200 basis points sequentially** from Q3[16](index=16&type=chunk) [Lighting Segment](index=3&type=section&id=Lighting%20Segment) The Lighting segment achieved sales growth and improved profitability in Q4, primarily due to better project order rates, and despite anticipated increased tariff impacts in Q1 FY2026, the company plans to offset these through price increases and cost reduction measures Lighting Segment Fiscal 2025 Fourth Quarter Performance | Metric | Q4 FY2025 Sales Growth | Adjusted Operating Income Growth | Operating Margin Improvement (YoY) | | :------------------- | :----------------------- | :----------------- | :------------- | | Sales | +12% | - | - | | Adjusted Operating Income | - | +32% | - | | Operating Margin | - | - | +250 basis points | - Backlog at the end of fiscal 2025 increased **20% year-over-year**[18](index=18&type=chunk) - Increased tariff impacts are anticipated in Q1 FY2026, but the company plans to partially offset higher costs through implemented price increases and other cost reduction measures[19](index=19&type=chunk) [Acquisitions and Market Expansion](index=1&type=section&id=Acquisitions%20and%20Market%20Expansion) LSI continues to advance its vertical market strategy through the successful integration of EMI Industries (acquired April 2024) and the recent acquisition of Canada's Best Holdings (acquired March 2025), expanding its geographic reach and entering new market verticals including banking - Integrated EMI Industries (acquired April 2024) and Canada's Best Holdings (acquired March 2025) during fiscal 2025[5](index=5&type=chunk)[17](index=17&type=chunk) - The Canada's Best acquisition provided geographic expansion capabilities and established a presence in additional market verticals, including banking[17](index=17&type=chunk) [Outlook and Strategic Plan](index=2&type=section&id=Outlook%20and%20Strategic%20Plan) LSI is well-positioned for fiscal 2026, committed to achieving the goals outlined in its 2028 "Fast Forward Plan," focusing on advancing its vertical market strategy, expanding addressable markets, entering new verticals, enhancing operational excellence, and maintaining a disciplined capital allocation approach - LSI is well-positioned for fiscal 2026 to achieve the goals outlined in its 2028 "Fast Forward Plan"[19](index=19&type=chunk) - The company is committed to advancing its vertical market strategy, with a focus on expanding addressable markets, pursuing new vertical entries, and enhancing operational excellence[19](index=19&type=chunk) [Financial Results](index=5&type=section&id=Financial%20Results) [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) LSI achieved growth in net sales and gross profit for both Q4 and the full fiscal year 2025, with an increase in Q4 operating income, though full-year net income slightly decreased due to various expenses Consolidated Statements of Operations (Q4 & Full Year FY2025 vs. Q4 & Full Year FY2024) | Metric | Three Months Ended June 30, 2025 ($ thousand) | Three Months Ended June 30, 2024 ($ thousand) | Twelve Months Ended June 30, 2025 ($ thousand) | Twelve Months Ended June 30, 2024 ($ thousand) | | :--------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Net Sales | 155,066 | 129,007 | 573,377 | 469,638 | | Cost of Sales | 114,298 | 95,173 | 431,016 | 335,962 | | Gross Profit | 40,433 | 33,834 | 141,785 | 133,168 | | Selling and Administrative Expenses | 25,648 | 21,257 | 94,000 | 87,281 | | Operating Income | 11,944 | 9,011 | 35,769 | 35,517 | | Income Before Income Taxes | 11,777 | 7,887 | 33,038 | 33,099 | | Net Income | 8,172 | 5,668 | 24,383 | 24,977 | | Diluted Earnings Per Share | 0.26 | 0.19 | 0.79 | 0.83 | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, LSI maintained a healthy balance sheet with increased total assets and stockholders' equity, a strong current ratio, and manageable long-term debt Consolidated Balance Sheets (As of June 30, 2025 vs. June 30, 2024) | Metric | June 30, 2025 ($ thousand) | June 30, 2024 ($ thousand) | | :------------------- | :--------------------- | :--------------------- | | Current Assets | 194,166 | 162,499 | | Property, Plant and Equipment, Net | 31,154 | 32,959 | | Other Assets | 171,042 | 153,342 | | Total Assets | 396,362 | 348,800 | | Current Liabilities | 97,349 | 79,207 | | Long-Term Debt | 44,986 | 50,658 | | Other Long-Term Liabilities | 23,305 | 14,580 | | Stockholders' Equity | 230,722 | 204,355 | | Total Liabilities and Stockholders' Equity | 396,362 | 348,800 | - As of June 30, 2025, the current ratio was **2.0 to 1**[29](index=29&type=chunk) [Cash Flow and Capital Allocation](index=2&type=section&id=Cash%20Flow%20and%20Capital%20Allocation) LSI generated robust free cash flow in both Q4 and the full fiscal year 2025, prioritizing capital allocation for organic expansion, acquisition-related investments, and debt reduction, resulting in a healthy net debt to adjusted EBITDA ratio Free Cash Flow (Q4 & Full Year FY2025 vs. Q4 & Full Year FY2024) | Metric | Three Months Ended June 30, 2025 ($ thousand) | Three Months Ended June 30, 2024 ($ thousand) | Twelve Months Ended June 30, 2025 ($ thousand) | Twelve Months Ended June 30, 2024 ($ thousand) | | :------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Cash Flow from Operating Activities | 9,499 | 11,096 | 38,118 | 43,393 | | Capital Expenditures | (950) | (762) | (3,465) | (5,388) | | Free Cash Flow | 8,549 | 10,334 | 34,653 | 38,005 | Net Debt to Adjusted EBITDA Ratio (As of June 30, 2025 vs. June 30, 2024) | Metric | June 30, 2025 ($ thousand) | June 30, 2024 ($ thousand) | | :--------------------------- | :--------------------- | :--------------------- | | Total Debt | 48,557 | 54,229 | | Less: Cash | (3,457) | (4,110) | | Net Debt | 45,100 | 50,119 | | Adjusted EBITDA - Trailing Twelve Months | 55,067 | 51,436 | | Net Debt to Adjusted EBITDA Ratio | 0.82 | 0.97 | - In fiscal 2025, LSI prioritized capital allocation towards organic expansion, acquisition-related investments, and debt reduction[8](index=8&type=chunk) [Cash Dividend Declaration](index=2&type=section&id=Cash%20Dividend%20Declaration) The Board declared a regular quarterly cash dividend of $0.05 per share for Q4 FY2025, representing an indicative annual dividend rate of $0.20 per share, with future dividends subject to Board discretion based on earnings, cash flow needs, financial condition, and strategic opportunities - The Board of Directors declared a regular quarterly cash dividend of **$0.05 per share** for Q4 FY2025[9](index=9&type=chunk)[31](index=31&type=chunk) - The indicative annual cash dividend rate is **$0.20 per share**[31](index=31&type=chunk) [Non-GAAP Financial Measures & Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Measures%26%20Reconciliations) [Explanation of Non-GAAP Measures](index=7&type=section&id=Explanation%20of%20Non-GAAP%20Measures) LSI utilizes non-GAAP financial measures such as adjusted operating income, net income, EPS, EBITDA, adjusted EBITDA, net debt to adjusted EBITDA ratio, free cash flow, and organic sales growth to provide a clearer view of ongoing operational performance by excluding certain non-recurring or non-operating items - Non-GAAP measures exclude items such as long-term performance-based compensation expense, acquisition intangible asset amortization expense, business growth opportunity expenses, acquisition costs, lease expense for acquired leases, and restructuring and severance costs[32](index=32&type=chunk) - These metrics are used by management and parties interested in the company to evaluate business operating performance[32](index=32&type=chunk) [Reconciliation of Operating Income, Net Income, and EPS](index=8&type=section&id=Reconciliation%20of%20Operating%20Income%2C%20Net%20Income%2C%20and%20EPS) This section details the reconciliation of GAAP operating income, net income, and diluted EPS to their adjusted non-GAAP counterparts for Q4 and the full fiscal years 2025 and 2024, highlighting the impact of various adjustments Reconciliation of Operating Income, Net Income, and EPS (Q4 & Full Year FY2025 vs. Q4 & Full Year FY2024) | Metric | Three Months Ended June 30, 2025 ($ thousand) | Three Months Ended June 30, 2024 ($ thousand) | Twelve Months Ended June 30, 2025 ($ thousand) | Twelve Months Ended June 30, 2024 ($ thousand) | | :----------------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Reported Operating Income | 11,944 | 9,011 | 35,769 | 35,517 | | Adjusted Operating Income | 15,120 | 12,576 | 48,361 | 46,395 | | Reported Net Income | 8,172 | 5,668 | 24,383 | 24,977 | | Adjusted Net Income | 10,577 | 8,304 | 32,883 | 32,294 | | Reported Diluted EPS | 0.26 | 0.19 | 0.79 | 0.83 | | Adjusted Diluted EPS | 0.34 | 0.28 | 1.07 | 1.07 | - Beginning in Q1 FY2025, LSI includes acquisition intangible asset amortization expense as an add-back for non-GAAP reconciliation[34](index=34&type=chunk) [Reconciliation of Net Income to Adjusted EBITDA, Free Cash Flow, and Net Debt](index=10&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA%2C%20Free%20Cash%20Flow%2C%20and%20Net%20Debt) This section provides detailed reconciliations of net income to EBITDA and adjusted EBITDA for Q4 and the full fiscal years 2025 and 2024, along with calculations for free cash flow and the net debt to adjusted EBITDA ratio Reconciliation of Net Income to Adjusted EBITDA (Q4 & Full Year FY2025 vs. Q4 & Full Year FY2024) | Metric | Three Months Ended June 30, 2025 ($ thousand) | Three Months Ended June 30, 2024 ($ thousand) | Twelve Months Ended June 30, 2025 ($ thousand) | Twelve Months Ended June 30, 2024 ($ thousand) | | :--------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Reported Net Income | 8,172 | 5,668 | 24,383 | 24,977 | | Reported Operating Income | 11,944 | 9,011 | 35,769 | 35,517 | | EBITDA | 15,499 | 11,867 | 48,344 | 45,516 | | Adjusted EBITDA | 17,087 | 14,044 | 55,067 | 51,436 | | Adjusted EBITDA as a Percentage of Sales | 11.0% | 10.9% | 9.6% | 11.0% | [Organic vs. Inorganic Sales Growth](index=11&type=section&id=Organic%20vs.%20Inorganic%20Sales%20Growth) This section disaggregates net sales for Q4 and the full fiscal year 2025 into organic and inorganic components, illustrating comparable sales and the contribution of recent acquisitions (EMI and Canada's Best Holdings) to overall growth Organic vs. Inorganic Sales (Q4 FY2025 vs. Q4 FY2024) | Metric | Q4 FY2025 ($ thousand) | Q4 FY2024 ($ thousand) | Percentage Change | | :------------------- | :------------------------ | :------------------------ | :--------- | | Lighting Segment | 72,743 | 65,095 | 12% | | Display Solutions Segment | 82,323 | 63,912 | 29% | | Total Net Sales | 155,066 | 129,007 | 20% | | Less: EMI | 22,819 | 18,074 | - | | Less: Canada's Best Holdings | 7,180 | - | - | | Total Organic Net Sales | 125,067 | 110,933 | 11% | Organic vs. Inorganic Sales (YTD FY2025 vs. YTD FY2024) | Metric | YTD FY2025 ($ thousand) | YTD FY2024 ($ thousand) | Percentage Change | | :------------------- | :-------------------- | :-------------------- | :--------- | | Lighting Segment | 248,356 | 262,413 | -5% | | Display Solutions Segment | 325,021 | 207,225 | 57% | | Total Net Sales | 573,377 | 469,638 | 22% | | Less: EMI | 94,830 | 18,073 | - | | Less: Canada's Best Holdings | 8,549 | - | - | | Total Organic Net Sales | 469,998 | 451,565 | 4% | - Organic net sales for Q4 FY2025 increased **11% year-over-year** to **$125.1 million**[37](index=37&type=chunk) [Eight-Quarter Adjusted Net Income Reconciliation](index=12&type=section&id=Eight-Quarter%20Adjusted%20Net%20Income%20Reconciliation) This section provides a comprehensive reconciliation of net income to adjusted net income for eight consecutive quarters from Q1 FY2024 to Q4 FY2025, detailing non-GAAP adjustments and their impact on quarterly EPS Eight-Quarter Adjusted Net Income Reconciliation (Q1 FY2024 to Q4 FY2025) | Quarter | Reported Net Income ($ thousand) | Reported Diluted EPS | Adjusted Net Income ($ thousand) | Adjusted Diluted EPS | | :------- | :------------------ | :--------------- | :-------------------- | :--------------- | | Q1 FY2024 | 8,028 | 0.27 | 9,610 | 0.32 | | Q2 FY2024 | 5,906 | 0.20 | 7,249 | 0.24 | | Q3 FY2024 | 5,375 | 0.18 | 7,131 | 0.24 | | Q4 FY2024 | 5,668 | 0.19 | 8,304 | 0.28 | | Q1 FY2025 | 6,682 | 0.22 | 7,981 | 0.26 | | Q2 FY2025 | 5,647 | 0.18 | 7,996 | 0.26 | | Q3 FY2025 | 3,883 | 0.13 | 6,331 | 0.20 | | Q4 FY2025 | 8,172 | 0.26 | 10,577 | 0.34 | [Company Information](index=4&type=section&id=Company%20Information) [About LSI Industries](index=4&type=section&id=About%20LSI%20Industries) LSI Industries is a US-based manufacturer of commercial lighting, graphics, and display solutions, providing American-made products and comprehensive project management services for strategic vertical markets - LSI is headquartered in Cincinnati and listed on the Nasdaq Stock Market under the ticker symbol **LYTS**[22](index=22&type=chunk) - The company manufactures advanced lighting, graphics, and display solutions, including non-residential indoor and outdoor lighting, printed graphics, digital graphics, refrigerated, and custom displays[22](index=22&type=chunk) - The company employs approximately **2,000 people** across **19 manufacturing facilities** in the United States and Canada[22](index=22&type=chunk) [Conference Call Details](index=4&type=section&id=Conference%20Call%20Details) Details for the Q4 FY2025 conference call are provided, including webcast and dial-in access, along with replay information - The conference call was held on **August 21, 2025, at 11:00 AM ET**, to review the company's financial results and conduct a Q&A session[20](index=20&type=chunk) - A webcast and presentation materials for the conference call are available in the Investor Relations section of the LSI Industries website[21](index=21&type=chunk) [Forward-Looking Statements & Contacts](index=4&type=section&id=Forward-Looking%20Statements%20%26%20Contacts) A disclaimer regarding forward-looking statements and contact information for investor and media inquiries are provided - For uncertainties that could cause actual results to differ materially from forward-looking statements, refer to the risk factors included in the company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q[23](index=23&type=chunk) - Contact information for investor and media contacts, **Bill Seymour** and **Noel Ryan**, is provided[24](index=24&type=chunk)

Financial Performance - LSI Industries Inc's Q4 FY15 net sales increased by 3% to $76073 thousand from $73858 thousand in Q4 FY14 [5] - The company's Q4 FY15 operating income as reported was $2193 thousand, compared to a loss of $946 thousand in Q4 FY14 [5] - LSI Industries Inc's full year FY15 net sales increased by 3% to $307857 thousand from $299463 thousand in FY14 [8] - The company's full year FY15 operating income as reported increased by 225% to $7533 thousand from $2318 thousand in FY14 [8] - Full year FY15 net income as reported increased by 454% to $5151 thousand from $930 thousand in FY14 [8] Segment Performance - Lighting segment net sales for Q4 FY15 were $55538 thousand, compared to $55011 thousand in Q4 FY14 [10] - Graphics segment net sales for Q4 FY15 were $15239 thousand, compared to $10603 thousand in Q4 FY14 [10] - Technology segment net sales for Q4 FY15 were $5296 thousand, compared to $8031 thousand in Q4 FY14 [10] - Lighting segment operating income for Q4 FY15 was $3545 thousand, compared to $1846 thousand in Q4 FY14 [13] - Graphics segment operating income for Q4 FY15 was $358 thousand, compared to a loss of $936 thousand in Q4 FY14 [13] Balance Sheet and Dividends - Cash dividend of $003 per share is payable on September 8th [17]

Financial Performance - The company's sales performance has stabilized, showing evidence of progress[6] - Free cash flow provides flexibility for debt reduction and business reinvestment[12] - Working capital saw a 15% reduction from its peak in the second quarter of fiscal year 2019[14] - The company's free cash flow growth supports a reduction in the net debt ratio to 2.7x[16] - Adjusted diluted earnings per share for Q4 2019 was $(0.08) compared to $0.00 in Q4 2018[19] - Adjusted EBITDA for Q4 2019 was $3.262 million, compared to $3.627 million in Q4 2018[21] Segment Performance - Lighting segment customer orders increased by a high single-digit percentage year-over-year in F4Q19[8] - The Graphics segment experienced strong sales and order levels, particularly in the petroleum vertical[10] - Lighting segment adjusted EBITDA margin was 7.9% in Q4 2019, compared to 6.1% in Q4 2018[22] - Graphics segment adjusted EBITDA margin was 4.8% in Q4 2019, compared to 8.5% in Q4 2018[22]

Fourth Quarter & Fiscal year 2021 Results Conference Call August 19, 2021 (发 DISCLAIMER This presentation contains "forward-looking statements"—that is, statements related to future events within the meaning of the Private Securities Litigation Reform Act of 1995. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In this context, forward-looking statements often address our expected future business, financial performance, financial condition and resu ...

PART I. FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) The company's Q3 FY2025 financial statements show a 22.5% sales increase driven by Display Solutions, though net and operating income declined [Condensed Consolidated Statements of Operations](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Q3 FY2025 net sales rose to $132.5 million, but operating income decreased to $6.2 million and net income fell to $3.9 million Consolidated Statements of Operations Highlights (In thousands, except per share data) | Metric | Q3 2025 | Q3 2024 | YoY Change | Nine Months 2025 | Nine Months 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $132,481 | $108,186 | +22.5% | $418,310 | $340,632 | +22.8% | | **Gross Profit** | $32,843 | $31,210 | +5.2% | $101,351 | $99,335 | +2.0% | | **Operating Income** | $6,235 | $7,660 | -18.6% | $23,825 | $26,507 | -10.1% | | **Net Income** | $3,883 | $5,375 | -27.8% | $16,212 | $19,309 | -16.0% | | **Diluted EPS** | $0.13 | $0.18 | -27.8% | $0.53 | $0.64 | -17.2% | [Condensed Consolidated Balance Sheets](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of March 31, 2025, total assets increased to $384.6 million, driven by acquisitions, with liabilities and equity also rising Balance Sheet Summary (In thousands) | Account | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $185,511 | $162,499 | | **Goodwill** | $63,204 | $57,397 | | **Other intangible assets, net** | $79,607 | $73,916 | | **Total Assets** | **$384,565** | **$348,800** | | **Total Current Liabilities** | $89,192 | $79,207 | | **Long-term debt** | $51,789 | $50,658 | | **Total Liabilities** | **$162,852** | **$144,445** | | **Total Shareholders' Equity** | **$221,713** | **$204,355** | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Nine-month operating cash flow was $28.6 million, with investing activities using $25.3 million primarily for the CBH acquisition Cash Flow Summary (Nine Months Ended March 31, In thousands) | Category | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash flows provided by operating activities** | $28,619 | $32,297 | | **Net cash flows used in investing activities** | ($25,321) | ($4,594) | | **Net cash flows used in financing activities** | ($3,212) | ($22,401) | | **Increase in cash and cash equivalents** | $191 | $5,347 | | **Cash and cash equivalents at end of period** | $4,301 | $7,175 | - The acquisition of Canada's Best Holdings (CBH) for **$22.8 million** (net of cash acquired) was the primary driver of cash used in investing activities[28](index=28&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Notes detail accounting policies, recent acquisitions like EMI and CBH, segment performance, and the $0.05 quarterly dividend - On April 18, 2024, the company acquired EMI Industries, LLC for **$50.0 million** to expand its presence in the Grocery, C-Store, and QSR/Restaurant markets[43](index=43&type=chunk) - On March 11, 2025, the company acquired Canada's Best Holdings (CBH) for a total consideration of **$27.4 million**, including a potential earnout, to expand its retail fixture and store design solutions[50](index=50&type=chunk) - The company paid a quarterly cash dividend of **$0.05 per share**, with an indicated annual rate of **$0.20 per share**[77](index=77&type=chunk) [Management's Discussion and Analysis (MD&A)](index=30&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management attributes Q3 sales growth to Display Solutions' 70% increase, offsetting Lighting's decline, despite a 19% drop in operating income - Q3 net sales increased **22% YoY**, driven by a **70% increase** in the Display Solutions Segment, which included **$23.8 million** from the EMI and CBH acquisitions and **15% organic growth**[94](index=94&type=chunk) - The Lighting Segment's sales declined **9%** in Q3 due to the comparison against several large lighting projects in the prior year that did not repeat[94](index=94&type=chunk) - Q3 operating income decreased **19%** to **$6.2 million**, and adjusted operating income was **$9.7 million**[96](index=96&type=chunk) - The company generated **$27.1 million** in cash from operations in the first nine months of fiscal 2025 and had **$32.2 million** available for borrowing under its credit facility as of March 31, 2025[132](index=132&type=chunk)[133](index=133&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Q3 FY2025 Display Solutions sales surged 70% with 15% organic growth, while Lighting sales fell 9%, impacting consolidated net income Display Solutions Segment Performance (Q3 YoY) | Metric | Q3 2025 | Q3 2024 | Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $73,514K | $43,304K | +70% | | **Gross Profit** | $12,457K | $9,645K | +29% | | **Operating Income** | $4,510K | $4,064K | +11% | - Display Solutions' Q3 organic growth was **15%**, with acquisitions of EMI and CBH contributing an additional **$23.8 million** in sales[103](index=103&type=chunk) Lighting Segment Performance (Q3 YoY) | Metric | Q3 2025 | Q3 2024 | Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $58,967K | $64,882K | -9% | | **Gross Profit** | $20,384K | $21,564K | -6% | | **Operating Income** | $7,154K | $7,268K | -2% | - Lighting Segment's gross margin improved from **33% to 35%** in Q3, driven by a higher mix of value applications, stable pricing, and cost management, despite lower sales[108](index=108&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) Working capital increased to $96.3 million, with $27.1 million in operating cash flow and $32.2 million available on the credit line - Working capital was **$96.3 million** at March 31, 2025, up from **$83.3 million** at June 30, 2024, with the current ratio remaining stable at **2.1 to 1**[129](index=129&type=chunk) - The company has a **$75 million** secured revolving line of credit expiring in Q1 of fiscal 2027, with **$32.2 million** available as of March 31, 2025[132](index=132&type=chunk) - Cash from operating activities for the nine months ended March 31, 2025, was **$27.1 million**, compared to **$32.3 million** in the prior year period[133](index=133&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) No material changes in the company's exposure to market risk have occurred since June 30, 2024 - There have been no material changes in the company's exposure to market risk since June 30, 2024[140](index=140&type=chunk) [Controls and Procedures](index=41&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective[142](index=142&type=chunk) - No changes in internal control over financial reporting occurred during the fiscal quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[143](index=143&type=chunk) PART II. OTHER INFORMATION [Other Information](index=42&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section references prior risk factors and adds a new one concerning potential adverse impacts from changes in trade policies - A new risk factor has been added regarding potential adverse impacts from changes in United States and international trade policies, including tariffs, which could disrupt supply chains and increase costs[146](index=146&type=chunk)[147](index=147&type=chunk) [Exhibits](index=42&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with Form 10-Q, including officer certifications and Inline XBRL data files - The report includes required certifications from the Principal Executive Officer and Principal Financial Officer, as well as Inline XBRL filings[148](index=148&type=chunk)