LSI Industries (NasdaqGS:LYTS) Q2 2026 Earnings call January 22, 2026 11:00 AM ET Company ParticipantsJim Galeese - CFOJim Clark - President and CEOConference Call ParticipantsSameer Joshi - AnalystGeorge Gianarikas - AnalystAlex Riegel - AnalystAaron Spychala - AnalystChristopher Glynn - AnalystOperatorGreetings and welcome to the LSI Industries Fiscal 2026 Second Quarter Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal ...

Financial Data and Key Metrics Changes - Revenue for Q2 2026 was $147 million, essentially flat year over year, while profitability and free cash flow improved [5][15] - Adjusted EBITDA increased year over year to $13.4 million, with a strong free cash flow of $23 million, reducing the net leverage ratio to 0.4 [13][15] - Adjusted earnings per share were $0.26 for the quarter, with adjusted net income and adjusted EBITDA modestly above the prior year [15] Business Line Data and Key Metrics Changes - The Lighting segment achieved a sales growth of 15% year over year, marking the third consecutive quarter of double-digit growth [6][16] - Display Solutions experienced a slight revenue decline year over year due to prior year comparisons, but orders improved sequentially and were up year over year, resulting in a strong backlog [7][18] - In the grocery vertical, Q2 sales reflected a return to normal seasonal demand, with grocery orders increasing double digits year over year and a book-to-bill ratio of 1.2 [17] Market Data and Key Metrics Changes - International market activity, particularly in Mexico and the islands, showed improvement after several softer periods, with expectations for elevated activity into fiscal and calendar year 2027 [10] - The competitive environment in the convenience store sector is accelerating, with new entrants driving growth and investment in customer experience [26][64] Company Strategy and Development Direction - The company is focused on integrating JSI and EMI under the LSI umbrella, emphasizing talent management and operational consolidation to unlock cross-selling opportunities [11][32] - The strategy includes enhancing visibility into sales activities and strengthening alignment between sales, operations, and execution [12] - The company aims to grow above market through a differentiated solutions-based approach, leveraging its capabilities in custom fabrication and integrated design [14][64] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the secular growth outlook across key vertical markets, supported by improving order trends and backlog [14] - The company remains focused on building long-term value through disciplined growth and operational excellence, with expectations for continued progress in the second half of Fiscal 2026 [14][80] Other Important Information - The company utilized strong cash flow to reduce total debt by $22.7 million during the quarter, supporting its fast-forward strategy [13] - The integration of Canada's Best is progressing well, with ongoing discussions in the retail banking sector in the U.S. [51] Q&A Session Summary Question: Can you help frame the opportunity in refueling and C-store? - Management indicated steady growth with multiple mid-sized projects expected to contribute positively through 2026 and into 2027 [22][24] Question: What are the market drivers in Mexico? - Management noted that the market is normalizing, with expectations for growth as companies return to original plans [25][29] Question: Can you discuss the integration of EMI and its impact on margins? - Management reported over 200 basis points of margin improvement and expects continued progress towards achieving better margins [33] Question: What is the outlook for premium food services? - Management highlighted growth opportunities in casual dining and premium food services, with larger project sizes compared to QSR [38][72] Question: How does the competitive environment support above-market growth? - Management emphasized the dynamics in the convenience store and grocery markets, which align well with the company's offerings [64]