What changed in this filing

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Item 1. Financial Statements

2026-02-09 compared with 2025-11-07 · 583 added, 155 removed, 590 unchanged (56% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

Three Months Ended

Six Months Ended

(In thousands, except per share data)

$ 147,002 $ 147,734 $ 304,251 $ 285,829

Cost of products and services sold

109,568 112,873 226,540 217,321

37,434 34,861 77,711 68,508

Selling and administrative expenses

28,569 26,402 57,874 50,918

Operating income

8,865 8,459 19,837 17,590

Interest expense

Other (income)/expense

573 728 1,320 1,603

Other expense (income)

( 103 ) 382 427 322

Income before income taxes

8,395 7,349 18,090 15,665

Income tax expense

2,047 1,702 4,478 3,336

$ 6,348 $ 5,647 $ 13,612 $ 12,329

Earnings per common share (see Note 5)

$ 0.20 $ 0.19 $ 0.44 $ 0.41

$ 0.20 $ 0.18 $ 0.43 $ 0.40

Weighted average common shares outstanding

31,157 29,930 30,803 29,761

32,004 30,876 31,685 30,709

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended

Six Months Ended

(In thousands)

$ 6,348 $ 5,647 $ 13,612 $ 12,329

Foreign currency translation adjustment

243 ( 48 ) 46 ( 157 )

Comprehensive income

$ 6,591 $ 5,599 $ 13,658 $ 12,172

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

2 unchanged sentences

(In thousands, except shares)

September 30,

Current assets

Cash and cash equivalents

$ 6,407 $ 3,457

Accounts receivable, less allowance for credit losses of $ 975 and $ 1,152 , respectively

Refundable income tax

90,618 104,347

82,023 79,818

Refundable income taxes

Other current assets

Total current assets

187,259 194,166

Property, Plant and Equipment, at cost

24,928 24,575

Machinery and equipment

78,769 77,858

Construction in progress

109,639 107,451

Less accumulated depreciation

( 79,267 ) ( 76,297 )

Net property, plant and equipment

Intangible assets, net

30,372 31,154

64,089 64,548

Other intangible assets, net

75,106 78,258

Operating lease right-of-use assets

30,080 17,187

Deferred tax assets 5,561 7,302

Other long-term assets, net

$ 396,306 $ 396,362

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

2 unchanged sentences

(In thousands, except shares)

September 30,

LIABILITIES & SHAREHOLDERS' EQUITY

2 unchanged sentences

Accounts payable

43,334 48,526

Accrued expenses

43,841 45,252

Total current liabilities

87,175 97,349

Long-term debt

27,939 44,986

Operating lease liabilities

23,247 12,047

Other long-term liabilities

Deferred tax liabilities 3,197 3,209

Commitments and contingencies (Note 13)

5 unchanged sentences

Outstanding 31,113,681 and 30,054,532 shares, respectively

170,489 163,692

Treasury shares, without par value

Key Executive Compensation

( 10,845 ) ( 10,011 )

Deferred compensation plan

10,845 10,011

Retained earnings

76,733 66,201

Accumulated other comprehensive income

Total shareholders' equity

248,097 230,722

Total liabilities & shareholders' equity

$ 396,306 $ 396,362

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands, except per share data)

Common Shares

6 unchanged sentences

Balance at June 30, 2024

29,222 $ 156,365 ( 1,036 ) $ ( 8,895 ) $ 8,895 202 $ 47,788 $ 204,355

- - - - - - 6,682 6,682

Other comprehensive loss

Board stock compensation

- - - - - ( 109 ) - ( 109 )

Board stock compensation awards

8 113 - - - - - 113

ESPP stock Awards

3 45 - - - - - 45

Restricted stock units issued, net of shares withheld for tax withholdings

492 ( 204 ) - - - - - (204 )

Shares issued for deferred compensation

32 487 - - - - - 487

Activity of treasury shares, net

- - 42 140 - - - 140

Deferred stock compensation

- - - - ( 140 ) - - ( 140 )

Stock-based compensation expense

1,047 - - - - - 1,047

Stock options exercised, net

39 248 - - - - - 248

Dividends — $0.20 per share

- - - - - - ( 1,481 ) ( 1,481 )

Balance at September 30, 2024

29,796 $ 158,101 ( 994 ) $ ( 8,755 ) $ 8,755 $ 93 $ 52,989 $ 211,183

- - - - - - 5,647 5,647

Other comprehensive loss

- - - - - ( 48 ) - ( 48 )

Board stock compensation awards

7 112 - - - - - 112

ESPP stock Awards

5 65 - - - - - 65

Restricted stock units issued, net of shares withheld for tax withholdings

26 ( 374 ) ( 374 )

Shares issued for deferred compensation

27 507 - - - - - 507

Activity of treasury shares, net

- - ( 28 ) ( 506 ) - - - ( 506 )

Deferred stock compensation

- - - - 506 - - 506

Stock-based compensation expense

- 1,141 - - - - - 1,141

Stock options exercised, net

30 374 - - - - - 374

Dividends — $0.20 per share

- - - - - - ( 1,492 ) ( 1,492 )

Balance at December 31, 2024

29,891 $ 159,926 ( 1,022 ) $ ( 9,261 ) $ 9,261 $ 45 $ 57,144 $ 217,115

Common Shares

Treasury Shares

Key Executive

Accumulated Other

Comprehensive

Shareholders'

Income/(Loss)

Balance at June 30, 2025

30,054 $ 163,692 ( 1,052 ) $ ( 10,011 ) $ 10,011 $ 829 66,201 $ 230,722

- - - - - 7,264 7,264

Other comprehensive loss

Board stock compensation

- - - - - ( 197 ) ( 197 )

Board stock compensation awards

8 135 - - - - - 135

ESPP stock Awards

4 55 - - - - - 55

Restricted stock units issued, net of shares withheld for tax withholdings

377 297 - - - - - 297

Shares issued for deferred compensation

22 443 - - - - - 443

Activity of treasury shares, net

- - ( 13 ) ( 341 ) - - - ( 341 )

Deferred stock compensation

- - - - 341 - - 341

Stock-based compensation expense

1,109 - - - - - 1,109

Stock options exercised, net

613 3,023 - - - - - 3,023

Dividends — $0.20 per share

- - - - - ( 1,525 ) ( 1,525 )

Balance at September 30, 2025

31,078 $ 168,754 ( 1,065 ) $ ( 10,352 ) $ 10,352 $ 632 $ 71,940 $ 241,326

- - - - - - 6,348 6,348

Other comprehensive loss

- - - - - 243 - 243

Board stock compensation awards

6 135 - - - - - 135

ESPP stock Awards

6 94 - - - - - 94

Restricted stock units issued, net of shares withheld for tax withholdings

Shares issued for deferred compensation

24 492 - - - - - 492

Activity of treasury shares, net

- - ( 24 ) ( 493 ) - - - ( 493 )

Deferred stock compensation

- - - - 493 - - 493

Stock-based compensation expense

- 1,001 - - - - - 1,001

Stock options exercised, net

- - - - - - - -

Dividends — $0.20 per share

- - - - - - ( 1,555 ) ( 1,555 )

Balance at December 31, 2025

31,114 $ 170,489 ( 1,089 ) $ ( 10,845 ) $ 10,845 $ 875 $ 76,733 $ 248,097

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(In thousands)

Cash Flows from Operating Activities

$ 13,612 $ 12,329

Non-cash items included in net income

2 unchanged sentences

Deferred compensation plan

Stock compensation expense

ESPP discount

Stock compensation expense

Issuance of common shares as compensation

Loss on disposition of fixed assets

(Gain) loss on disposition of fixed assets

Allowance for credit losses

2 unchanged sentences

Accounts receivable

13,907 ( 2,661 )

( 1,518 ) 1,356

Refundable income taxes

Accounts payable

( 5,192 ) 130

Accrued expenses and other

( 4,868 ) ( 44 )

Customer prepayments

Net cash flows provided by operating activities

25,659 21,737

Cash Flows from Investing Activities

Acquisition of business

Proceeds from the sale of fixed assets

Purchases of property, plant and equipment

( 2,651 ) ( 1,825 )

Net cash flows used in investing activities

( 2,389 ) ( 1,838 )

Cash Flows from Financing Activities

Payments on long-term debt

Borrowings on long-term debt

Payments of long-term debt

( 107,927 ) ( 96,265 )

Borrowings of long-term debt

87,308 80,222

Cash dividends paid

Shares withheld on employees' taxes

( 3,080 ) ( 2,973 )

Shares withheld for employees' taxes

Payments on financing lease obligations

Proceeds from stock option exercises

Net cash flows provided by (used in) financing activities

Net cash flows used in financing activities

( 20,366 ) ( 19,140 )

Change related to foreign currency

2 unchanged sentences

Cash and cash equivalents at end of period

$ 6,407 $ 4,712

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

4 unchanged sentences

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations.

In the opinion of management, the interim financial statements include all normal adjustments and disclosures necessary to present fairly the Company’s financial position as of September 30, 2025, the results of its operations for the three-month periods ended September 30, 2025, and 2024, and its cash flows for the three-month periods ended September 30, 2025, and 2024.

In the opinion of management, the interim financial statements include all normal adjustments and disclosures necessary to present fairly the Company’s financial position as of December 31, 2025, the results of its operations for the three and six -month periods ended December 31, 2025, and 2024, and its cash flows for the six -month periods ended December 31, 2025, and 2024.

These statements should be read in conjunction with the financial statements and footnotes included in the fiscal 2025 Annual Report on Form 10 -K.

38 unchanged sentences

(In thousands)

September 30, 2025

Display Solutions

December 31, 2025

December 31, 2024

Lighting Segment

Display Solutions Segment

Lighting Segment

Display Solutions Segment

Timing of revenue recognition

Products and services transferred at a point in time

$ 55,724 $ 67,543 $ 48,366 $ 68,046

Products and services transferred over time

10,949 12,786 9,844 21,478

$ 66,673 $ 80,329 $ 58,210 $ 89,524

Three Months Ended

December 31, 2025

December 31, 2024

Lighting Segment

Display Solutions Segment

Lighting Segment

Display Solutions Segment

Type of Product and Services

LED lighting, digital signage solutions, electronic circuit boards

Poles and other display solutions elements

$ 54,554 $ 4,739 $ 47,580 $ 9,310

Poles, other display solution elements

11,510 61,719 9,945 60,726

Project management, installation services, shipping and handling

Three Months Ended

(In thousands)

September 30, 2024

Display Solutions

609 13,871 685 19,488

$ 66,673 $ 80,329 $ 58,210 $ 89,524

Six Months Ended

December 31, 2025

December 31, 2024

Lighting Segment

Display Solutions Segment

Lighting Segment

Display Solutions Segment

Timing of revenue recognition

Products and services transferred at a point in time

$ 113,034 $ 145,206 $ 96,577 $ 130,140

Products and services transferred over time

22,692 23,319 20,069 39,043

$ 135,726 $ 168,525 $ 116,646 $ 169,183

Six Months Ended

December 31, 2025

December 31, 2024

Lighting Segment

Display Solutions Segment

Lighting Segment

Display Solutions Segment

Type of Product and Services

LED lighting, digital signage solutions, electronic circuit boards

Poles and other display solutions elements

$ 110,301 $ 8,089 $ 95,009 $ 17,746

Poles, other display solution elements

24,244 132,079 20,338 116,429

Project management, installation services, shipping and handling

1,181 28,357 1,299 35,008

$ 135,726 $ 168,525 $ 116,646 $ 169,183

Practical Expedients and Exemptions

34 unchanged sentences

period adjustments

March 11, 2025

March 11, 2025 as

Cash and cash equivalents

$ 4,592 $ - $ 4,592

Accounts receivable

3,907 ( 55 ) 3,852

4,287 ( 104 ) 4,183

Property, plant and equipment

640 1,422 2,062

Operating lease right-of-use assets

5,211 ( 386 ) 4,825

204 1,790 1,994

Intangible assets

9,955 ( 353 ) 9,602

Accounts payable

( 29 ) 2 ( 27 )

Accrued expenses

( 472 ) ( 639 ) ( 1,111 )

Operating lease liabilities

( 2,954 ) - ( 2,954 )

Other long-term liabilities

- ( 1,515 ) ( 1,515 )

Deferred tax liability

( 3,700 ) 573 ( 3,127 )

Identifiable Assets

21,641 735 22,376

5,748 709 6,457

Net Purchase Consideration

$ 27,389 $ 1,444 $ 28,833

The gross amount of accounts receivable is $ 4.3 million.

6 unchanged sentences

Estimated Useful

Non-compete agreements

Technology assets

Customer relationships

CBH’s post-acquisition results of operations for the period from July 1, 2025, through September 30, 2025, are included in the Company’s Consolidated Statements of Operations.

Since the acquisition date, net sales of CBH for the period from July 1, 2025, through September 30, 2025, were $ 8.9 million and operating income was $ 1.3 million.

CBH’s post-acquisition results of operations for the period from July 1, 2025, through December 31, 2025, are included in the Company’s Condensed Consolidated Statements of Operations.

Since the acquisition date, net sales of CBH for the period from July 1, 2025, through December 31, 2025, were $ 15.2 million and operating income was $ 1.7 million, and net sales of CBH for the period from October 1, 2025, through December 31, 2025, were $ 6.3 million and operating income was $ 0.4 million.

The operating results of CBH are included in the Display Solutions Segment.

3 unchanged sentences

Furthermore, the unaudited pro forma financial information does not reflect the impact of any synergies or operating efficiencies resulting from the acquisition of CBH .

The unaudited pro forma financial information for the three months ended September 30, 2024, is prepared using the acquisition method of accounting and has been adjusted to reflect the pro forma events that are:

The unaudited pro forma financial information for the three and six months ended December 31, 2024, is prepared using the acquisition method of accounting and has been adjusted to reflect the pro forma events that are:

( 1 ) directly attributable to the acquisition;

1 unchanged sentence

and ( 3 ) expected to have a continuing impact on the combined results.

The unaudited pro-form operating income of $ 10.8 million excludes acquisition-related expenses of $ 0.1 million.

The unaudited pro-form operating income for the three months ended December 31, 2024 of $ 10.3 million excludes acquisition-related expenses of $ 0.1 million.

The unaudited pro-form operating income for the six months ended December 31, 2024 of $ 23.4 million excludes acquisition-related expenses of $ 0.2 million.

(in thousands;

Three Months Ended

September 30,

unaudited) Three Months

Ended December

$ 155,070 $ 313,156

$ 37,810 $ 78,324

Operating Income

$ 10,330 $ 23,410

NOTE 4 - SEGMENT REPORTING INFORMATION

17 unchanged sentences

Corporate identifiable assets primarily consist of cash, invested cash (if any), refundable income taxes (if any), and deferred income taxes.

There were no customers or customer programs representing a concentration of 10% or more of the Company’s consolidated net sales in the three months ended September 30, 2025, or 2024.

There was no concentration of accounts receivable at September 30, 2025, or 2024.

Summarized financial information for the Company’s operating segments is provided for the indicated periods and as of September 30, 2025, and September 30, 2024:

There were no customers or customer programs representing a concentration of 10% or more of the Company’s consolidated net sales in the three and six months ended December 31, 2025, or 2024.

There was no concentration of accounts receivable at December 31, 2025, or 2024.

Summarized financial information for the Company’s operating segments is provided for the indicated periods and as of December 31, 2025, and December 31, 2024:

(In thousands)

Three Months Ended

September 30, 2025

December 31, 2025

$ 66,673 $ 80,329 $ - $ 147,002

Operating income

7,547 6,076 ( 4,758 ) 8,865

Long-term performance based compensation

81 259 662 1,002

Severance costs and restructuring costs

( 1 ) 2 ( 1 ) -

Amortization expense of acquired intangible assets

603 955 - 1,558

Acquisition costs

1 unchanged sentence

Adjusted operating income

8,230 7,360 ( 3,897 ) 11,693

Depreciation Expense

658 896 115 1,669

Adjusted EBITDA

$ 8,888 $ 8,256 $ ( 3,782 ) $ 13,362

(In thousands)

Three Months Ended

September 30, 2024

Six Months Ended

December 31, 2025

135,726 168,525 - $ 304,251

Operating income

16,096 14,667 ( 10,926 ) 19,837

Long-term performance based compensation

190 474 1,620 2,284

Severance costs and restructuring costs

17 ( 88 ) - ( 71 )

Amortization expense of acquired intangible assets

1,206 1,906 - 3,112

Acquisition costs

1 unchanged sentence

Adjusted operating income

17,509 17,095 ( 8,886 ) 25,718

Depreciation Expense

1,331 1,784 200 3,315

Adjusted EBITDA

$ 18,840 $ 18,879 $ ( 8,686 ) $ 29,033

(In thousands)

Three Months Ended

December 31, 2024

$ 58,210 $ 89,524 $ - $ 147,734

Operating income

5,971 8,125 ( 5,637 ) 8,459

Long-term performance based compensation

141 358 1,170 1,669

Consulting expense:

commercial growth initiatives

Amortization expense of acquired intangible assets

603 805 - 1,408

Expense on step-up basis of acquired assets

Adjusted operating income

6,715 9,357 ( 4,386 ) 11,686

Depreciation Expense

642 835 133 1,610

Adjusted EBITDA

$ 7,357 $ 10,192 $ ( 4,253 ) $ 13,296

Six Months Ended

December 31, 2024

(In thousands)

116,646 169,183 - $ 285,829

Operating income

11,730 15,833 ( 9,973 ) 17,590

Long-term performance based compensation

210 643 2,000 2,853

Consulting expense:

commercial growth initiatives

Severance costs and restructuring costs

Amortization expense of acquired intangible assets

1,206 1,610 - 2,816

Acquisition costs

Expense on step-up basis of acquired assets

Adjusted operating income

13,206 18,222 ( 7,844 ) 23,584

Depreciation Expense

1,286 1,682 174 3,142

Adjusted EBITDA

$ 14,492 $ 19,904 $ ( 7,670 ) $ 26,726

Three Months Ended

Six Months Ended

(In thousands)

Capital Expenditures:

Lighting Segment

$ 449 $ 509 $ 738 $ 1,221

Display Solutions Segment

1,200 529 1,811 576

Corporate and Eliminations

$ 1,684 $ 1,066 $ 2,651 $ 1,825

Depreciation and Amortization:

Lighting Segment

$ 1,275 $ 1,281 $ 2,537 $ 2,493

Display Solutions Segment

1,849 1,656 3,690 3,291

Corporate and Eliminations

September 30, 2025

103 81 200 174

$ 3,227 $ 3,018 $ 6,427 $ 5,958

December 31, 2025

June 30, 2025

Identifiable Assets:

Total Assets:

Lighting Segment

$ 130,671 $ 132,960

Display Solutions Segment

255,739 253,299

Corporate and Eliminations

$ 396,306 $ 396,362

The segment net sales reported above represent sales to external customers.

5 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands)

Lighting Segment inter-segment net sales

$ 3,249 $ 6,053 $ 6,494 $ 12,037

Display Solutions Segment inter-segment net sales

$ 429 $ 133 $ 543 $ 304

NOTE 5 - EARNINGS PER COMMON SHARE

The following table presents the amounts used to compute basic and diluted earnings per common share, as well as the effect of dilutive potential common shares on weighted average shares outstanding:

(in thousands, except per share data)

Three Months Ended

Six Months Ended

BASIC EARNINGS PER SHARE

$ 6,348 $ 5,647 $ 13,612 $ 12,329

Weighted average shares outstanding during the period, net of treasury shares

30,019 28,848 29,682 28,681

Weighted average vested restricted stock units outstanding

Weighted average shares outstanding in the Deferred Compensation Plan during the period

1,077 1,010 1,069 999

Weighted average shares outstanding

Basic income per share

31,157 29,930 30,803 29,761

Basic earnings per common share

$ 0.20 $ 0.19 $ 0.44 $ 0.41

DILUTED EARNINGS PER SHARE

$ 6,348 $ 5,647 $ 13,612 $ 12,329

Weighted average shares outstanding:

31,157 29,930 30,803 29,761

Effect of dilutive securities (a):

Impact of common shares to be issued under stock option plans, and contingently issuable shares, if any

847 946 882 948

Weighted average shares outstanding

Diluted income per share

32,004 30,876 31,685 30,709

Diluted earnings per common share

$ 0.20 $ 0.18 $ 0.43 $ 0.40

Anti-dilutive securities (b)

Calculated using the “Treasury Stock” method as if dilutive securities were exercised and the funds were used to purchase common shares at the average market price during the period.

Anti-dilutive securities were excluded from the computation of diluted net income per share for the three months ended September 30, 2024, because the exercise price was greater than the average fair market price of the common shares or because the assumed proceeds from the award’s exercise or vesting was greater than the average fair market price of the common shares.

Anti-dilutive securities were excluded from the computation of diluted net income per share for the three and six months ended December 31, 2025, and December 31, 2024, because the exercise price was greater than the average fair market price of the common shares or because the assumed proceeds from the award’s exercise or vesting was greater than the average fair market price of the common shares.

NOTE 6 – INVENTORIES, NET

1 unchanged sentence

(In thousands)

September 30, 2025

June 30, 2025

Raw materials

$ 61,329 $ 60,726

Work-in-progress

Finished goods

14,891 11,150

Total Inventories

$ 82,023 $ 79,818

NOTE 7 - ACCRUED EXPENSES

1 unchanged sentence

(In thousands)

September 30, 2025

June 30, 2025

Accrued Expenses:

Customer prepayments

$ 3,976 $ 4,070

Compensation and benefits

10,212 12,471

Accrued warranty

Operating lease liabilities

Accrued sales commissions

Accrued freight

Operating lease liabilities

Other accrued expenses

Total Accrued Expenses

$ 43,841 $ 45,252

NOTE 8 - GOODWILL AND OTHER INTANGIBLE ASSETS

16 unchanged sentences

(In thousands)

Lighting Segment

Balance as of September 30, 2025

Measurement period adjustments

Balance as of December 31, 2025

$ 70,971 $ 82,865 $ 153,836

Goodwill acquired, net of adjustements

- ( 262 ) ( 262 )

Foreign currency translation

- ( 197 ) ( 197 )

Accumulated impairment losses

Goodwill, net as of September 30, 2025

( 61,763 ) ( 27,525 ) ( 89,288 )

Goodwill, net as of December 31, 2025

$ 9,208 $ 54,881 $ 64,089

Balance as of June 30, 2025

Goodwill acquired, net of adjustments

$ 70,971 $ 75,714 $ 146,685

Goodwill acquired, net of adjustements

- 6,769 6,769

Foreign currency translation

Accumulated impairment losses

( 61,763 ) ( 27,525 ) ( 89,288 )

Goodwill, net as of June 30, 2025

$ 9,208 $ 55,340 $ 64,548

The gross carrying amount and accumulated amortization by each major intangible asset class is as follows:

Other Intangible Assets

December 31, 2025

(In thousands)

September 30, 2025

Gross Carrying

Amortized Intangible Assets

Customer relationships

LED technology, software

$ 78,441 $ 27,360 $ 51,081

LED technology firmware, software

24,126 19,512 4,614

3,700 1,508 2,192

Total Amortized Intangible Assets

107,125 49,001 58,124

Indefinite-lived Intangible Assets

Trademarks and trade names

16,982 - 16,982

Total indefinite-lived Intangible Assets

16,982 - 16,982

Total Other Intangible Assets

(In thousands)

$ 124,107 $ 49,001 $ 75,106

Other Intangible Assets

June 30, 2025

Gross Carrying

(In thousands)

Amortized Intangible Assets

Customer relationships

LED technology, software

$ 78,485 $ 25,251 $ 53,234

LED technology firmware, software

24,126 18,694 5,432

3,704 1,404 2,300

Total Amortized Intangible Assets

107,173 45,897 61,276

Indefinite-lived Intangible Assets

Trademarks and trade names

16,982 - 16,982

Total indefinite-lived Intangible Assets

16,982 - 16,982

Total Other Intangible Assets

$ 124,155 $ 45,897 $ 78,258

Three Months Ended

Six Months Ended

(In thousands)

Amortization Expense of Other Intangible Assets

$ 1,558 $ 1,408 $ 3,112 $ 2,816

The Company expects to record annual amortization expense as follows:

1 unchanged sentence

NOTE 9 - DEBT

The Company’s long-term debt as of September 30, 2025, and June 30, 2025, consisted of the following:

September 30,

The Company’s long-term debt as of December 31, 2025, and June 30, 2025, consisted of the following:

(In thousands)

Secured line of credit

$ 27,939 $ 36,956

Term loan, net of debt issuance costs of $ 0 and $ 14 , respectively

Total debt $ 27,939 $ 48,557

amounts due within one year

Total amounts due after one year, net

$ 27,939 $ 44,986

In September 2025, the Company amended its existing $ 100 million credit facility which consisted of a $ 25 million term loan and a $ 75 million revolving credit line to a $ 125 million revolving credit line.

2 unchanged sentences

The increment over the SOFR borrowing rate fluctuates between 100 and 225 basis points of which depend upon the ratio of indebtedness to earnings before interest, taxes, depreciation, and amortization (“EBITDA”), as defined in the line of credit agreement.

As of September 30, 2025, the Company’s borrowing rate against its revolving line of credit was 5.5 %.

The increment over the SOFR borrowing rate will be 100 basis points for the second quarter of fiscal 2026.

As of December 31, 2025, the Company’s borrowing rate against its revolving line of credit was 5.5 %.

The increment over the SOFR borrowing rate will be 100 basis points for the third quarter of fiscal 2026.

The fee on the unused balance of the $ 125 million committed line of credit fluctuates between 15 and 25 basis points.

1 unchanged sentence

The Company is also required to maintain an interest coverage ratio equal to or above the minimum set forth in the agreement.

Under the amended credit facility, there was $ 73 million available for borrowing under the $ 125 million line of credit.

The Company is in compliance with all of its loan covenants as of September 30, 2025.

Under the amended credit facility, there was $ 104.6 available for borrowing under the $ 125 million line of credit.

The Company is in compliance with all of its loan covenants as of December 31, 2025.

NOTE 10 - CASH DIVIDENDS

The Company paid cash dividends of $ 1.5 million for the three months ended September 30, 2025, and September 30, 2024, respectively.

Dividends on restricted stock units in the amount of $ 0.2 million and $ 0.1 million were accrued as of both September 30, 2025, and 2024, respectively.

The Company paid cash dividends of $ 3.1 million and $ 3.0 million for the six months ended December 31, 2025, and December 31, 2024, respectively.

Dividends on restricted stock units in the amount of $ 0.2 million and $ 0.2 million were accrued as of both December 31, 2025, and 2024, respectively.

These dividends will be paid upon the vesting of the restricted stock units when shares are issued to the award recipients.

In November 2025, the Board of Directors declared a regular quarterly cash dividend of $ 0.05 per share payable November 25, 2025, to shareholders of record as of November 17, 2025.

In January 2026, the Board of Directors declared a regular quarterly cash dividend of $ 0.05 per share payable February 10, 2026 , to shareholders of record as February 2, 2026 .

The indicated annual cash dividend rate is $ 0.20 per share.

5 unchanged sentences

Except for Restricted Stock Unit ("RSU") grants which are time-based, participants in the Company's Long-Term Equity Compensation Plans are awarded the opportunity to acquire shares over a three -year performance measurement period tied to specific company performance metrics.

The number of shares that remain reserved for issuance under the 2019 Omnibus Plan is 1,047,885 as of September 30, 2025.

In the three months ended September 30, 2025, the Company granted 121,440 PSUs and 80,958 RSUs, both with a weighted average market value of $ 19.30 .

Stock compensation expense was $ 1.1 million for both the three months ended September 30, 2025, and 2024, respectively.

The number of shares that remain reserved for issuance under the 2019 Omnibus Plan is 1,012,769 as of December 31, 2025.

In the six months ended December 31, 2025, the Company granted 121,440 PSUs and 85,958 RSUs, both with a weighted average market value of $ 19.54 .

Stock compensation expense was $ 1.0 million and $ 1.1 million for the three months ended December 31, 2025, and 2024, respectively, and $ 2.1 million and $ 2.2 million in the six months ended December 31, 2025, and 2024, respectively.

In November of 2021, our board of directors approved the LSI Employee Stock Purchase Plan (“ESPP”).

3 unchanged sentences

During fiscal year 2026, employees purchased 9,000 shares.

At September 30, 2025, 221,000 shares remained available for purchase under the ESPP.

At December 31, 2025, 216,000 shares remained available for purchase under the ESPP.

NOTE 12 - SUPPLEMENTAL CASH FLOW INFORMATION

Six Months Ended

(In thousands)

Three Months Ended

Cash Payments:

$ 1,226 $ 1,460

$ 5,113 $ 2,321

Non-cash investing and financing activities

8 unchanged sentences

The Company recorded a $ 3.4 million contingent liability related to the future earnout payments as part of the acquisition of Canada’s Best Holding (CBH).

(Refer to Footnote 3.) The $3.3 million, and $ 3.4 million represents the value of the earnout converted from its functional currency to USD as of September 30, 2025, and June 30, 2025, respectively.

(Refer to Footnote 3.

) The $ 3.4 million represents the value of the earnout converted from its functional currency to USD as of December 31, 2025, and June 30, 2025.

NOTE 14 - LEASES

6 unchanged sentences

The Company elected not to record these leases on the balance sheet.

The rent expense for these leases was immaterial for September 30, 2025, and 2024.

The rent expense for these leases was immaterial for December 31, 2025, and 2024.

The Company has certain leases that contain lease and non-lease components and has elected to utilize the practical expedient to account for these components together as a single lease component.

2 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands)

Operating lease cost

$ 2,222 $ 1,610 $ 4,097 $ 3,231

Financing lease cost:

4 unchanged sentences

Total lease cost

Three Months Ended

$ 2,222 $ 1,693 $ 4,097 $ 3,366

Supplemental Cash Flow Information:

Six Months Ended

(In thousands)

Cash flows from operating leases

Fixed payments - operating lease cash flows

Fixed payments - operating cash flows

$ 3,900 $ 3,298

Liability reduction - operating cash flows

$ 3,405 $ 2,813

Assets obtained in exchange for operating lease obligations $ 18,568 $ 2,441

Cash flows from finance leases

2 unchanged sentences

Operating Leases:

September 30, 2025

June 30, 2025

Total operating right-of-use assets

Accrued Expenses

$ 30,080 $ 17,187

Accrued expenses (Current liabilities)

$ 7,650 $ 6,037

Long-term operating lease liability

23,247 12,047

Total operating lease liabilities

$ 30,897 $ 18,084

Weighted Average remaining Lease Term (in years)

Weighted Average Discount Rate

In fiscal 2025, the Company terminated its finance lease in Akron, Ohio as of June 30, 2025.

In conjunction with the termination of the finance lease, the Company entered into a new lease to expand its production capabilities in its Houston, Texas location.

The new lease is effective October 1, 2025, and expires September 30, 2035.

5.58 % 5.70 %

Maturities of Lease Liability:

Operating Lease

Operating Lease Liabilities

Operating Subleases

Net Lease Commitments

$ 7,650 $ - $ - $ 7,650

8,296 - - 8,296

4,479 - - 4,479

3,888 - - 3,888

2,751 - - 2,751

9,635 - - 9,635

Total lease payments

$ 36,699 $ - $ - $ 36,699

( 5,802 ) - ( 5,802 )

Present Value of Lease Liabilities

$ 30,897 $ - $ 30,897

NOTE 15 – INCOME TAXES

6 unchanged sentences

Three Months Ended

Six Months Ended

Reconciliation of effective tax rate:

Provision for income taxes at the anticipated annual tax rate

24.9 % 26.7 % 24.8 % 26.2 %

Uncertain tax positions

( 0.5 ) ( 1.5 ) 0.5 ( 0.2 )

Deferred income tax adjustment

Share-based compensation

- ( 2.0 ) ( 0.5 ) ( 5.8 )

Effective tax rate

24.4 % 23.2 % 24.8 % 21.3 %

NOTE 16 – SUBSEQUENT EVENTS

A limited liability company owned and controlled by LSI's Chief Executive Officer, James A.

Clark, owns an aircraft that is dry leased to an unrelated third party.

Pursuant to a separate arrangement, the third -party dry leases the aircraft to LSI for NEO business travel.

Payments made by LSI depends on actual usage.

For the period from July 2025 through January 2026, the LLC received aggregate payments of $ 102,000 in connection with this arrangement.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

13 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands)

1 unchanged sentence

Display Solutions Segment

Total Net Sales

Operating Income (Loss) by Business Segment

Three Months Ended

Six Months Ended

(In thousands)

2 unchanged sentences

Corporate and Eliminations

Total Operating Income

Net sales of $157.2 million for the three months ended September 30, 2025, increased 14% as compared to net sales of $138.1 million for the three months ended September 30, 2024.

Lighting segment net sales of $69.1 million increased 18% compared to prior year quarter net sales of $58.4 million.

Strong Lighting t net sales were driven by the introduction of several new products and the Company’s ability to convert multiple competitor accounts to LSI.

Net sales in the Display Solutions segment of $88.2 million increased 11% compared to the same quarter last year sales of $79.7 million.

The increase in net sales in the Display Solutions segment is the result of continued steady demand in the refueling/c-store and grocery markets and from the acquisition of Canada’s Best Holdings which contributed $8.9 million of the quarter-over-quarter sales growth.

Operating income of $11.0 million for the three months ended September 30, 2025, represents a 20% increase from operating income of $9.1 million in the three months ended September 30, 2024.

Adjusted operating income, a Non-GAAP measure, was $14.1 million in the three months ended September 30, 2025, represents an 18% increase compared to $11.9 million in the three months ended September 30, 2024.

Net sales of $147.0 million for the three months ended December 31, 2025, decreased less than 1% as compared to net sales of $147.7 million for the three months ended December 31, 2024.

Lighting Segment net sales of $66.7 million increased 15% and Display Solutions Segment net sales of $80.3 million decreased 10% from last year’s second quarter net sales.

The 15% second quarter sales growth of Lighting Segment sales follows 18% growth in the first quarter, with several factors contributing to the improving momentum, including the increased number of large project shipments, which doubled from the second quarter last year.

Within the Display Solutions segment, we continue to maintain a high level of project execution across large, multi-year customer programs in the refueling/c-store and QSR verticals.

In addition, our grocery vertical continues to stabilize, with demand patterns returning to seasonal levels after two years of significant disruption.

Net sales of $304.3 million for the six months ended December 31, 2025, increased 6% as compared to net sales of $285.8 million for the six months ended December 31, 2024.

Lighting Segment net sales of $135.7 million increased 16% and Display Solutions Segment net sales of $168.5 million decreased less than 1 percent from last year’s net sales As stated in the overview of second quarter sales, the momentum in the Lighting Segment from the first quarter carried over to the second quarter with strong lighting net sales driven by the increased number of large project shipments and by the introduction of several new products and the Company’s ability to convert multiple competitor accounts to LSI.

Within the Display Solutions segment we continue to experience a steady demand in the refueling/c-store and grocery markets as customers continue to recognize the value of our broad service capabilities.

Operating income of $8.9 million for the three months ended December 31, 2025, represents a 5% increase in operating income from $8.5 million in the three months ended December 31, 2024.

Adjusted operating income, a Non-GAAP measure, was $11.7 million in the three months ended December 31, 2025, compared to $11.7 million in the three months ended December 31, 2024.

Refer to “Non-GAAP Financial Measures” below for a reconciliation of Non-GAAP financial measures to U.S.

GAAP measures.

The increase in operating income is the result of an increase in net sales in both segments coupled with improved price realization and disciplined cost management.

While net sales were relatively flat compared to the same time in the prior year, operating income improved.

Margin management remains a priority for us, with a strong focus on project pricing, productivity, and cost discipline.

Operating income of $19.8 million for the six months ended December 31, 2025, represents a 13% increase from operating income of $17.6 million in the six months ended December 31, 2024.

Adjusted operating income, a Non-GAAP financial measure, was $25.7 million in the six months ended December 31, 2025, compared to adjusted operating income of $23.6 million in the six months ended December 31, 2024.

The increase in net sales coupled with focused margin management contributed to the period over period improvement in operating income.

Refer to “Non-GAAP Financial Measures” below for a reconciliation of Non-GAAP financial measures to U.S.

GAAP measures.

Non-GAAP Financial Measures

This report includes adjustments to GAAP operating income, net income, and earnings per share for the three months ended September 30, 2025, and 2024.

This report includes adjustments to GAAP operating income, net income, and earnings per share for the three months ended December 31, 2025, and 2024.

Operating income, net income, and earnings per share, which exclude the impact of long-term performance-based compensation expense, the amortization expense of acquired intangible assets, commercial growth opportunity expense, acquisition costs, the lease expense on the step-up basis of acquired leases, and restructuring and severance costs, are non-GAAP financial measures.

15 unchanged sentences

Amortization expense of acquired intangible assets

Restructuring/severance costs

Acquisition costs

Lease expense on the step-up basis of acquired leases

Acquisition costs

Consulting expense:

commercial growth opportunities

Adjusted operating income

5 unchanged sentences

Amortization expense of acquired intangible assets

Lease expense on the step-up basis of acquired leases

Acquisition costs

Consulting expense:

commercial growth opportunities

Foreign currency transaction loss on intercompany loan

Tax rate difference between reported and adjusted net income

Net income adjusted

The following represents the income tax effects of the adjustments in the tables above, which were calculated using the estimated combined U.S., Canada and Mexico effective income tax rates for the periods indicated (in thousands):

Six Months Ended

Reconciliation of operating income to adjusted operating income:

(In thousands)

Operating income as reported

Acquisition costs

Long-term performance based compensation

Amortization expense of acquired intangible assets

Lease expense on the step-up basis of acquired leases

Restructuring/severance costs

Consulting expense:

commercial growth opportunities

Adjusted operating income

Reconciliation of net income to adjusted net income

Six Months Ended

(In thousands, except per share data)

Net income as reported

Long-term performance based compensation

Amortization expense of acquired intangible assets

Restructuring/severance costs

Acquisition costs

Lease expense on the step-up basis of acquired leases

Consulting expense:

commercial growth opportunities

Foreign currency transaction loss on intercompany loan

2 unchanged sentences

Reconciliation of Net Income to Adjusted EBITDA

Three Months Ended

Reconciliation of net income to EBITDA and adjusted EBITDA

Six Months Ended

(In thousands)

1 unchanged sentence

Interest Expense, Net

Other expense (income)

Other (Income) Expense

Operating Income as reported

Depreciation and Amortization

Acquisition costs

Long-term performance based compensation

1 unchanged sentence

Lease expense on the step-up basis of acquired leases

Consulting expense:

commercial growth opportunities

Acquisition costs

Adjusted EBITDA

Three Months Ended

Reconciliation of cash flow from operations to free cash flow

Three Months Ended

Six Months Ended

(In thousands)

6 unchanged sentences

Long-Term Debt

Debt as reported

Cash and cash equivalents as reported

Cash and cash equivalents

Adjusted EBITDA - Trailing 12 Months

Net Debt to Adjusted EBITDA

Three Months Ended

Six Months Ended

Organic compared to Inorganic Sales

Lighting Segment

Display Solutions Segment

- Comparable Display Solutions Sales

- Canada's Best

Total Diplay Solutions Sales

Total net sales

Canada's Best

Total organic net sales

Results of Operations

THREE MONTHS ENDED SEPTEMBER 30, 2025, COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2024

THREE MONTHS ENDED DECEMBER 31, 2025, COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2024

Display Solutions Segment

Three Months Ended

(In thousands)

Operating Income

Display Solutions Segment net sales of $88.2 million in the three months ended September 30, 2025, increased 11% from net sales of $79.7 million in the same period in fiscal 2025.

The increase in net sales in the Display Solutions segment is the result of favorable demand in the refueling/c-store and grocery markets and from the acquisition of Canada’s Best Holdings which contributed $8.9 million of the quarter-over-quarter sales growth.

Gross profit of $17.1 million in the three months ended September 30, 2025, increased 14% from the same period of fiscal 2025.

Gross profit as a percentage of net sales in the three months ended September 30, 2025, increased to 19.4% from 18.9% in the same period of fiscal 2025 impacted by favorable product and vertical market mix.

The Company continues to maintain favorable program pricing and prudent cost management.

Operating expenses of $8.5 million in the three months ended September 30, 2025, increased 16% from the same period of fiscal 2025, primarily driven by the acquisition of CBH and by continued investment in commercial initiatives to drive growth.

Display Solutions Segment operating income of $8.6 million in the three months ended September 30, 2025, increased 12% from the same period of fiscal 2025.

The increase in operating income was driven by the increase in net sales and an improvement in gross profit margin.

Display Solutions net sales of $80.3 million decreased from same period in fiscal 2024.

Within the Display Solutions segment, we continue to maintain a high level of project execution across large, multi-year customer programs in the refueling/c-store and QSR verticals.

In addition, our grocery vertical continues to stabilize, with demand patterns returning to seasonal levels after two years of significant disruption.

Gross profit of $14.4 million in the three months ended December 31, 2025, decreased from the same period of fiscal 2025 driven by lower sales.

Gross profit as a percentage of net sales remained at 18% despite lower sales as we continue to maintain favorable program pricing and prudent cost management.

Operating expenses of $8.3 million in the three months ended December 31, 2025, increased 8% from the same period of fiscal 2025, primarily driven by the acquisition of Canada’s Best Holdings and by continued investment in commercial initiatives to drive growth.

Display Solutions Segment operating income of $6.1 million in the three months ended December 31, 2025, decreased from the same period of fiscal 2025.

The decrease in operating income driven by the net effect of a decrease in net sales partially offset by the gross margin impact of product mix and by favorable program pricing and prudent cost management.

Lighting Segment

Three Months Ended

(In thousands)

Operating Income

Lighting Segment net sales of $69.1 million in the three months ended September 30, 2025, increased 18% compared to net sales of $58.4 million in the same period in fiscal 2025.

Strong Lighting net sales were driven by the introduction of several new products and the Company’s ability to convert multiple competitor accounts to LSI.

Gross profit of $23.2 million in the three months ended September 30, 2025, increased 25% from the same period of fiscal 2025 while gross profit as a percentage of sales improved from 31.9% in the first quarter of fiscal 2025 to 33.6% in the first quarter of fiscal 2026.

The improved gross margin reflects increased volume, but also the ability to successfully align selling prices with changes in material input costs.

Operating expenses of $14.6 million in the three months ended September 30, 2025, increased 14% from the same period of fiscal 2025, driven mostly by agent commission expense resulting from higher sales.

Lighting Segment operating income of $8.5 million for the three months ended September 30, 2025, increased 48% from operating income of $5.8 million in the same period of fiscal 2025 primarily driven by increased net sales and an improvement in gross profit margin.

Lighting Segment net sales of $66.7 million in the three months ended December 31, 2025, increased 15% compared to net sales of $58.2 million in the same period in fiscal 2025.

The 15% second quarter sales growth follows 18% growth in the first quarter, with several factors contributing to our improving momentum, including the increased number of large project shipments, which doubled from the second quarter last year.

Gross profit of $23.0 million in the three months ended December 31, 2025, increased 21% from the same period of fiscal 2025.

Gross profit as a percentage of sales improved from 32.7% to 34.6%.

The increase in net sales coupled with focused margin management contributed to the period over period improvement in gross profit.

Operating expenses of $15.5 million in the three months ended December 31, 2025, increased from the same period of fiscal 2025, driven mostly by higher agent commission expense from higher net sales.

Lighting Segment operating income of $7.5 million for the three months ended December 31, 2025, increased 26% from operating income of $6.0 million in the same period of fiscal 2025 primarily driven by improved sales and focused margin management.

Corporate and Eliminations

Three Months Ended

(In thousands)

Operating (Loss)

The gross (loss) relates to the change in the intercompany profit in inventory elimination.

Operating expenses of $6.2 million in the three months ended September 30, 2025, increased from operating expenses of 4.3 in the three months ended September 30, 2024.

The increase was primarily the result of the investment in commercial initiatives to support the growth of the Company, including the cost associated with acquisitions, and performance related compensation programs.

The gross profit relates to the change in the intercompany profit in inventory elimination.

Operating expenses of $4.8 million in the three months ended December 31, 2025, decreased 16% from the same period of fiscal 2025.

The decrease in expense is primarily the result of effective cost management of the Company’s corporate operating expenses.

Consolidated Results

The Company reported $0.7 million and $0.8 million of net interest expense in the three months ended September 30, 2025, and September 30, 2024, respectively.

The decrease in interest expense is the result of positive cash flow to pay down the of funds borrowed to acquire EMI Industries, LLC in the fourth quarter of fiscal 2024 and Canada’s Best Holdings in the third quarter of fiscal 2025, and by lower borrowing costs.

The Company also recorded other expense/(income) of $0.5 million and ($0.1) million in the three months ended September 30, 2025, and September 30, 2024, respectively, both of which is related to net foreign exchange currency transaction gains and losses through the Company’s Mexican and Canadian subsidiaries.

The $2.4 million of income tax expense in the three months ended September 30, 2025, represents a consolidated effective tax rate of 25.1%.

The $1.6 million of income tax expense in the three months ended September 30, 2024, represents a consolidated effective tax rate of 19.7%.

The Company reported $0.6 million and $0.7 million of net interest expense in the three months ended December 31, 2025, and December 31, 2024, respectively.

The decrease in interest expense is driven by profitability and by sustained working capital management as the Company lowered its outstanding debt.

The Company also recorded other income of ($0.1) million compared to other expense of $0.4 in the three months ended December 31, 2025, and December 31, 2024, respectively, of which is related to net foreign exchange currency transaction gains and losses through the Company’s Mexican and Canadian subsidiaries.

The $2.0 million of income tax expense in the three months ended December 31, 2025, represents a consolidated effective tax rate of 24.4%.

The $1.7 million of income tax expense in the three months ended December 31, 2024, represents a consolidated effective tax rate of 23.2%.

Impacting the effective tax rate of both reported periods was the favorable tax treatment of the Company’s long-term performance-based compensation.

The Company reported net income of $7.3 million in the three months ended September 30, 2025, compared to net income of $6.7 million in the three months ended September 30, 2024.

Non-GAAP adjusted net income was $9.7 million for the three months ended September 30, 2025, compared to adjusted net income of $8.0 million for the three months ended September 30, 2024 (Refer to the Non-GAAP tables above).

The increase in Non-GAAP adjusted net income is primarily the result of an increase in net sales and by the favorable profit margin impact of product mix.

Diluted adjusted earnings per share of $0.23 was reported in the three months ended September 30, 2025, compared to $0.22 diluted adjusted earnings per share in the same period of fiscal 2025.

The weighted average common shares outstanding for purposes of computing diluted earnings per share in the three months ended September 30, 2025, were 31,381,000 shares compared to 30,530,000 shares in the same period last year.

The Company reported net income of $6.3 million in the three months ended December 31, 2025, compared to net income of $5.6 million in the three months ended December 31, 2024.

Non-GAAP adjusted net income was $8.4 million for the three months ended December 31, 2025, compared to adjusted net income of $8.0 million for the three months ended December 31, 2024 (Refer to the Non-GAAP tables above).

The increase in Non-GAAP adjusted net income is primarily the result of a strong focus on project pricing, productivity, and cost disciplines, on relatively flat sales.

Diluted adjusted earnings per share of $0.20 were reported in the three months ended December 31, 2025, compared to $0.18 diluted adjusted earnings per share in the same period of fiscal 2025.

The weighted average common shares outstanding for purposes of computing diluted earnings per share in the three months ended December 31, 2025, were 32,004,000 shares compared to 30,876,000 shares in the same period last year.

SIX MONTHS ENDED DECEMBER 31, 2025, COMPARED TO SIX MONTHS ENDED DECEMBER 31, 2024

Display Solutions Segment

Six Months Ended

(In thousands)

Operating Income

Display Solutions Segment net sales of $168.5 million decreased less than 1 percent from last year’s net sales.

We continue to experience a continued steady demand in the refueling/c-store and grocery markets as customers continue to recognize the value of our broad service capabilities.

In addition, our grocery vertical continues to stabilize, with demand patterns returning to seasonal levels after two years of significant disruption.

Gross profit of $31.5 million in the six months ended December 31, 2025, increased 2% from the same period of fiscal 2025 despite slightly lower sales.

Gross profit as a percentage of net sales in the six months ended December 31, 2025, increased slightly to 18.7% from 18.2% in the same period of fiscal 2025 impacted by favorable program pricing and prudent cost management.

Operating expenses of $16.8 million in the six months ended December 31, 2025, increased 12% from the same period of fiscal 2025, primarily driven by the acquisition of Canada’s Best Holdings and by continued investment in commercial initiatives to drive growth.

Operating income of $14.7 million in the six months ended December 31, 2025, decreased from the same period of fiscal 2025.

The decrease in operating income was driven by the net effect of an increase in gross offset by an increase in operating expenses.

Lighting Segment

Six Months Ended

(In thousands)

Operating Income

Lighting Segment net sales of $135.7 million in the six months ended December 31, 2025, increased 16% compared to net sales of $116.7 million in the same period in fiscal 2025.

Also contributing to the period over period growth of sales was the introduction of several new products and the Company’s ability to convert multiple competitor accounts to LSI.

Gross profit of $46.2 million in the three months ended December 31, 2025, increased 23% from the same period of fiscal 2025.

Gross profit as a percentage of sales improved from 32.3% to 34.1%.

The increase in net sales coupled with focused margin management contributed to the period over period improvement in gross profit.

Operating expenses of $30.1 million in the six months ended December 31, 2025, increased 16% from the same period of fiscal 2025, driven mostly by higher agent commission expense.

Lighting Segment operating income of $16.1 million for the six months ended December 31, 2025, increased 37% from operating income of $11.7 million in the same period of fiscal 2025.

primarily driven by improved sales and focused margin management.

Corporate and Eliminations

Six Months Ended

(In thousands)

Gross Profit (Loss)

Operating (Loss)

The gross profit (loss) relates to the change in the intercompany profit in inventory elimination.

Operating expenses of $10.9 million in the six months ended December 31, 2025, increased 10% from the same period of fiscal 2025.

The increase in expense is the result of an increase in investment in commercial initiatives to support the growth of the Company.

Consolidated Results

The Company reported $1.3 million and $1.6 million of net interest expense in the six months ended December 31, 2025, and December 31, 2024, respectively.

The decrease in interest expense is driven by profitability and by sustained working capital management as the Company lowered its outstanding debt.

The Company also recorded other expense of $0.4 million and $0.3 million in the six months ended December 31, 2025, and December 31, 2024, respectively, both of which is related to net foreign exchange currency transaction gains and losses through the Company’s Mexican and Canadian subsidiaries.

The $4.5 million of income tax expense in the six months ended December 31, 2025, represents a consolidated effective tax rate of 24.8%.

The $3.3 million of income tax expense in the six months ended December 31, 2024, represents a consolidated effective tax rate of 21.3%.

Impacting the effective tax rate of both reported periods was the favorable tax treatment of the Company’s long-term performance-based compensation.

The Company reported net income of $13.6 million in the six months ended December 31, 2025, compared to net income of $12.3 million in the six months ended December 31, 2024.

Non-GAAP adjusted net income was $18.2 million for the six months ended December 31, 2025, compared to adjusted net income of $16.0 million for the six months ended December 31, 2024 (Refer to the Non-GAAP tables above).

The increase in Non-GAAP adjusted net income is primarily the result of improved sales and a strong focus on project pricing, productivity, and cost disciplines.

Diluted adjusted earnings per share of $0.57 was reported in the six months ended December 31, 2025, compared to $0.52 diluted adjusted earnings per share in the same period of fiscal 2025.

The weighted average common shares outstanding for purposes of computing diluted earnings per share in the six months ended December 31, 2025, were 31,685,000 shares compared to 30,709,000 shares in the same period last year.

Liquidity and Capital Resources

1 unchanged sentence

For long-term liquidity indicators, the Company believes its ratio of long-term debt to equity and our historical levels of net cash flows from operating activities to be the most important measures.

At September 30, 2025, the Company had working capital of $112.4 million compared to $96.8 million at June 30, 2025.

The ratio of current assets to current liabilities was 2.2 to 1 as of September 30, 2025, and 2.0 to 1 as of June 30, 2025.

The increase in working capital from June 30, 2025, to September 30, 2025, is primarily driven by a $10.4 million increase in net accounts receivable and a $3.7 million increase in cash.

Net accounts receivable was $114.8 million and $104.3 million at September 30, 2025, and June 30, 2025, respectively.

DSO increased to 65 days at September 30, 2025, from 57 days at June 30, 2025.

The increase in net accounts receivable and the corresponding increase in DSO is directly related to strong sales in the last month of the quarter, and an inadvertent delay in project billing for a large customer.

Net inventories of $78.9 million at September 30, 2025, decreased $0.9 million from $79.8 million at June 30, 2025.

Lighting Segment net inventory increased $3.0 million to support the growth in backlog, whereas net inventory in the Display Solutions Segment decreased $3.9 million as a result of several shipments supporting several customer rollout programs.

At December 31, 2025, the Company had working capital of $100.1 million compared to $96.8 million at June 30, 2025.

The ratio of current assets to current liabilities was 2.2 to 1 for December 31, 2025, and 2.0 for June 30, 2025.

The increase in working capital from June 30, 2025, to December 31, 2025, was primarily driven a decrease in accounts payable and accrued expenses and an increase in net inventory, partially offset by a $13.7 million decrease in net accounts receivable.

Net accounts receivable was $90.6 million and $104.3 million at December 31, 2025, and June 30, 2025, respectively.

DSO decreased to 59 days at December 31, 2025, from 66 days at June 30, 2025.

Net inventories of $82.0 million at December 31, 2025, increased $2.2 million from $79.8 million at June 30, 2025.

Lighting Segment net inventory increased $3.6 million to support the growth in Lighting Segment sales whereas net inventory in the Display Solutions Segment decreased $1.4 million.

Cash generated from operations and borrowing capacity under the Company’s line of credit is its primary source of liquidity.

In September 2025, the Company amended its existing $100 million credit facility which consisted of a $25 million term loan and a $75 million revolving credit line to a $125 million revolving credit line.

The $125 million credit facility will expire in the first quarter of fiscal 2031.

As of September 30, 2025, $73 million of the credit line was available.

The Company has a $125 million a secured revolving line of credit.

The revolving line of credit expires in the first quarter of fiscal 2031.

As of December 31, 2025, $104.6 million of the credit line was available.

The Company is in compliance with all of its loan covenants.

The $125 million credit facility plus cash flows from operating activities are adequate for operational and capital expenditure needs for the remainder of fiscal 2026.

The Company generated $0.7 million of cash from operating activities in the three months ended September 30, 2025, compared to $11.8 million of cash generated from operating activities in the same period in fiscal 2025.

While cash flow from earnings was positive in the first quarter of fiscal 2026, the growth in net accounts receivable partially offset the cash flow generated from earnings.

The Company continues to proactively manage its working capital while generating positive cash flow from earnings.

The Company consumed $0.7 million and $0.8 million of cash related to investing activities in the three months ended September 30, 2025, and September 30, 2025, respectively, most of which related to investments in equipment and tooling to support sales growth.

The Company generated cash of $3.9 million in the three months ended September 30, 2025, compared to a consumption of cash of $8.1 million in the three months ended September 30, 2024, related to financing activities.

The decline in cash flow from operations from the first quarter of fiscal 2025 to the first quarter of fiscal 2026 contributed to the period-over-period comparison of cash flow from financing activities whereby the Company borrowed from its credit facility to fund the operating cashflow shortfall in the current quarter.

Contributing favorably to cash flow from financing activities was the generation of cash related to the proceeds from the exercise of stock options of $3.0 million in the first quarter of fiscal 2026 compared to $0.2 million of proceeds from the exercise of stock option in the prior period.

The Company generated $25.7 million of cash from operating activities in the six months ended December 31, 2025, compared to $21.7 million of cash generated from operating activities in the same period in fiscal 2025.

The Company continues to effectively manage its working capital while generating increasing cash flow from earnings in both fiscal years, resulting in strong cash flow from operations.

The Company invested $2.6 million and $1.8 million of cash related to investing activities in the six months ended December 31, 2025, and December 31, 2024, respectively.

The Company continues to invest in equipment and tooling to support sales growth.

The Company had a net use of cash of $20.4 million and $19.1 million related to financing activities in the six months ended December 31, 2025, and December 31, 2024, respectively.

The Company continues to generate positive cash flow from its operations in order to pay down its debt and fund its dividend payments to shareholders.

The Company has on its balance sheet financial instruments consisting primarily of cash and cash equivalents, revolving lines of credit, and long-term debt.

3 unchanged sentences

Cash Dividends

In November 2025, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable November 25, 2025, to shareholders of record as of November 17, 2025.

In January 2026, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable February 10, 2026, to shareholders of record as of February 2, 2026.

The indicated annual cash dividend rate for fiscal 2026 is $0.20 per share.

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements