LSI Industries (NASDAQ:LYTS) reported fiscal second-quarter results that surpassed Wall Street estimates, underpinned by a surge in demand for its lighting solutions and a significant strengthening of its balance sheet.
For the quarter ended Dec. 31, 2025, the Cincinnati-based manufacturer posted net sales of $147 million.
While revenue remained essentially flat compared to the previous year, the company successfully navigated a "challenging prior-year comparison" by offsetting a 10% decline in its Display Solutions segment with a 15% jump in Lighting sales.
The decline in display revenue was attributed to the grocery vertical returning to seasonal demand levels following a period of elevated, event-driven spending.
Profitability also remained resilient, with net income reaching $6.3 million, or $0.20 per diluted share.
On an adjusted basis, net income was $8.4 million, or $0.26 per share, ahead of the $0.22 consensus estimate.
The company’s Lighting segment was a primary engine of this performance, reporting improved adjusted EBITDA margins alongside its 15% revenue growth.
LSI also demonstrated high capital efficiency during the period, generating $23.3 million in free cash flow.
This influx of capital allowed the company to slash its debt by more than $22 million, bringing its net debt-to-TTM adjusted EBITDA ratio down to a lean 0.4x.
CEO James A. Clark highlighted the "durability and resiliency" of the company's diversified model, noting that order backlogs remain healthy.
During the period under review, Lighting segment orders were up 10% year-over-year at the end of the quarter, while Display Solutions orders rose 8%, suggesting continued momentum into the second half of the fiscal year.
The company also maintained its quarterly dividend of $0.05 per share.