LSI Industries reported a 51% year-over-year increase in fourth-quarter revenue to $234.6 million, beating Wall Street expectations by $11.82 million, though shares fell 13.55% to $20.62 after executives flagged margin pressure from the Royston Group acquisition.
The Cincinnati-based company posted adjusted earnings per share of $0.38, topping the $0.35 consensus. Full-year FY26 revenue rose 20% to $689.4 million, with adjusted EBITDA up 50% to $25.7 million in Q4 and 10.9% margins. Full-year adjusted EBITDA reached $69.7 million at a 10.1% margin, up from 9.6% in FY25.
Net debt stood at $241.7 million as of June 30, 2026, pushing net leverage to 2.7x from 0.8x in Q4 FY25. Management aims to reduce leverage below 2.0x within 12 to 18 months. Debt fell by $9 million in Q4, while free cash flow totaled $39 million for the year, including $9.7 million in the quarter.
Revenue growth was driven by the Display Solutions segment, which nearly doubled to $164.2 million, accounting for 70% of total sales. Organic growth of 18% was supplemented by the March 24 acquisition of Royston Group’s SignResource division. Adjusted EBITDA in the segment surged 139% to $20.3 million at a 12.4% margin, a three-year high. The Lighting segment declined 3% year-over-year to $70.5 million, though full-year sales rose 7% to $266.2 million.
Executives highlighted margin headwinds from SignResource’s lower-margin backlog, where pricing lagged raw material costs. The impact is expected to shave roughly 30 basis points from Q1 FY27 margins before easing by Q2 FY27. LSI maintained its 12.5% adjusted EBITDA margin target for fiscal 2027 despite the near-term pressure.
Credit facility availability increased to $108.3 million, while working capital rose to $146.0 million. Inventory days outstanding fell to 63 days, and net accounts receivable totaled $151.2 million. The company also announced plans to launch its V-Locity flood light fixture line in Q4 and set fiscal 2030 targets for December 2026.
