LSI Industries Inc. reported fourth-quarter adjusted earnings per share of $0.38, beating analyst expectations of $0.35, while revenue reached $234.6 million against a $222.78 million forecast. The company’s shares fell 13.6% in premarket trading to $20.80 after management highlighted margin concerns tied to a lower-margin backlog in its SignResource unit.
For the full fiscal year 2026, LSI Industries posted record net sales of $689 million, up 20% from the prior year, and adjusted earnings per share of $1.25, a 20.2% increase. Adjusted EBITDA rose 28% to nearly $70 million, though the EBITDA margin narrowed to 10.1% from 10.9% in the same period last year. Free cash flow totaled $39 million, representing a conversion of more than 50% of adjusted EBITDA.
The Display Solutions segment, which now accounts for 70% of total sales, nearly doubled to $164 million in the quarter, driven by the Royston Group acquisition and 18% organic growth. Adjusted EBITDA margin in the segment improved to 12.4%, the highest in nearly three years. The Lighting segment, however, reported a 3% year-over-year sales decline due to weaker demand in automotive and quick-service restaurant markets, though orders were 5% higher than last year.
Management attributed the near-term margin pressure to a lower-margin backlog in SignResource, tied to crude-oil-sensitive polymers and plastics. The impact is expected to weigh on margins for one to two quarters, with a 30-basis-point headwind anticipated in the first quarter before easing by the end of the second quarter of fiscal 2027. Despite this, LSI Industries reaffirmed its 12.5% adjusted EBITDA margin target for fiscal 2027.
The company also secured a multi-year program with a large oil retailer to renovate approximately 2,500 sites, covering exterior branding and potential interior upgrades. Management noted the project, which could span about 18 months, was not yet factored into current guidance. Additionally, CFO Jim Galeese announced plans to retire at the end of October 2027 after nearly a decade with the company, with a formal search for a successor underway.
