Exchange: NASDAQ | Sector: Technology | Industry: Hardware Equipment Parts
Q1 2025
Published: Nov 8, 2024
Earnings Highlights
Revenue of $138.10M up 11.9% year-over-year
EPS of $0.22 decreased by 17.9% from previous year
Gross margin of 24.4%
Net income of 6.68M
"“Sales are up 12% year-over-year, thanks to very robust project activity in our refueling C-store space, increased activity in our grocery market, in our Display Solution segment, along with strong sales from EMI, which we acquired back in April of 2024.”" - Jim Clark
LSI Industries delivered a solid start to fiscal 2025, posting revenue of $138.1 million for Q1 and adjusted EBITDA above $13 million, supported by strong project activity across multiple verticals and the first full quarter of EMI contributions. The Display Solutions segment drove outsized growth (+43% total sales in the quarter, aided by EMI) and exited the quarter with a measurably higher backlog, while EMI integration progressed at an accelerated pace. Management highlighted a durable, vertically oriented business model with cross-selling opportunities and ongoing capacity expansion to meet demand, particularly in C-store displays and grocery-related programs. However, the company also signaled continued project-timing volatility in large lighting projects and ongoing regulatory and policy headwinds in the grocery sector, which could influence cadence into 2025. The balance sheet remains healthy, with net debt under ~1x EBITDA and robust operating cash flow, supporting potential bolt-on acquisitions and continued investments in growth initiatives.
Key Performance Indicators
Revenue
138.10M
QoQ: 7.05% | YoY:11.87%
Gross Profit
33.65M
24.37% margin
QoQ: -0.55% | YoY:-8.04%
Operating Income
9.13M
QoQ: -8.73% | YoY:-17.20%
Net Income
6.68M
QoQ: 17.89% | YoY:-16.77%
EPS
0.23
QoQ: 21.05% | YoY:-17.86%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $138.095 million, up 11.9% YoY (QoQ +7.1% in the four-quarter window; YoY 11.87% via incomeMetrics). Gross margin: 24.36% (down YoY -8.04%, QoQ -0.55%).- EBITDA: $12.132 million; EBITDA margin ~8.8% (ratio provided 0.0879).- Operating income: $9.131 million; operating margin ~6.61%.- Net income: $6.682 million; net margin ~4.84%; EPS: $0.23, diluted $0.22. - Backlog and orders: exit Q1 backlog up >10% YoY; book-to-bill 1.3x (per transcript).- Segment notes: Display Solutions sales +43% in Q1 (EMI contribution included); Lighting margin ~10.1%.- Cash flow: operating cash flow $11.846 million; free cash flow $11.087 million; capex $0.759 million; cash at period-end $6.969 million. - Balance sheet: total assets $349.5 million; total liabilities $138.3 million; total stockholders’ equity $211.2 million. Net debt $57.6 million; leverage ~0.8x TTM. Current ratio ~2.08, quick ratio ~1.19.
Financial Highlights
- Revenue: $138.095 million, up 11.9% YoY (QoQ +7.1% in the four-quarter window; YoY 11.87% via incomeMetrics). Gross margin: 24.36% (down YoY -8.04%, QoQ -0.55%).- EBITDA: $12.132 million; EBITDA margin ~8.8% (ratio provided 0.0879).- Operating income: $9.131 million; operating margin ~6.61%.- Net income: $6.682 million; net margin ~4.84%; EPS: $0.23, diluted $0.22. - Backlog and orders: exit Q1 backlog up >10% YoY; book-to-bill 1.3x (per transcript).- Segment notes: Display Solutions sales +43% in Q1 (EMI contribution included); Lighting margin ~10.1%.- Cash flow: operating cash flow $11.846 million; free cash flow $11.087 million; capex $0.759 million; cash at period-end $6.969 million. - Balance sheet: total assets $349.5 million; total liabilities $138.3 million; total stockholders’ equity $211.2 million. Net debt $57.6 million; leverage ~0.8x TTM. Current ratio ~2.08, quick ratio ~1.19.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
138.10M
11.87%
7.05%
Gross Profit
33.65M
-8.04%
-0.55%
Operating Income
9.13M
-17.20%
-8.73%
Net Income
6.68M
-16.77%
17.89%
EPS
0.23
-17.86%
21.05%
Key Financial Ratios
currentRatio
2.08
grossProfitMargin
24.4%
operatingProfitMargin
6.61%
netProfitMargin
4.84%
returnOnAssets
1.91%
returnOnEquity
3.16%
debtEquityRatio
0.31
operatingCashFlowPerShare
$0.4
freeCashFlowPerShare
$0.38
dividendPayoutRatio
22.2%
priceToBookRatio
2.26
priceEarningsRatio
17.88
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Themes from management commentary and Q&A:
“Sales are up 12% year-over-year, thanks to very robust project activity in our refueling C-store space, increased activity in our grocery market, in our Display Solution segment, along with strong sales from EMI, which we acquired back in April of 2024.”
— Jim Clark
“We exit Q1 with a significantly increased backlog in grocery and expect favorable order levels to continue.”
— Jim Clark
Forward Guidance
Management signaled constructive near-term momentum, with expectations for continued strength in Display Solutions and a potential multi-quarter ramp in grocery-related projects. Key points include: (i) Display Solutions backlogs and orders poised to support double-digit organic growth in Q2; (ii) EMI integration delivering commercial and operational synergies with a multi-year runway; (iii) ongoing capacity investments to support higher demand, particularly in refrigeration and millwork displays; (iv) regulatory tailwinds around DOE refrigerant standards supporting the transition to R290 refrigerants from early 2025; (v) potential bolt-on acquisitions considered opportunistically given a strong balance sheet and a funnel of opportunities. Investors should monitor: the pace of large project releases in Lighting, regulatory developments in grocery, EMI/J SI/EMI integration progress, and the cadence of R290 adoption across C-store and grocery formats.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
LYTS Focus
24.37%
6.61%
3.16%
17.88%
PLXS
10.30%
4.80%
2.83%
28.67%
OSIS
35.30%
8.82%
2.28%
35.43%
CTS
37.00%
12.90%
2.48%
23.32%
BHE
10.00%
1.86%
0.33%
94.06%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, LYTS presents a constructive investment thesis for the near to mid-term, anchored by EMI-driven synergies, a growing Display Solutions backlog, and a resilient cash flow profile. The company has demonstrated the ability to convert backlog into revenue and cash, with EBITDA conversion supported by a diversified mix of Refrigerated and Non-Refrigerated displays and lighting projects. The EMI integration is advancing well, creating opportunities for cross-selling, procurement optimization, and shared manufacturing efficiencies, which should support margin resilience as volumes scale. The regulatory tailwinds around R290 refrigerants and the rollout of V-Velocity add to the growth runway in outdoor lighting and grocery/retail displays. However, investors should monitor the cadence of large Lighting projects, regulatory developments affecting grocery remodels, and the pace of R290 conversion across chains, as these are meaningful near-term drivers of revenue and margin progression.
Key Investment Factors
Growth Potential
Growth drivers include the EMI integration delivering cross-selling opportunities across grocery, lighting, and refrigeration; expansion of Display Solutions backlog (notably in refueling C-store and QSR), dual-segment product ramps (refrigerated and non-refrigerated displays), and the V-Velocity outdoor lighting platform driving long-cycle demand. Management forecasts double-digit growth in Display Solutions for Q2 and beyond, supported by a deeper pipeline and synergies from EMI and JSI.
Profitability Risk
Key risks include: (1) timing volatility of large lighting projects and project delays (especially in Lighting and large QSR/warehouse programs); (2) regulatory/regulatory policy shifts affecting grocery remodels and refrigerant standards; (3) execution risk and integration drag from EMI/J SI/JSI acquisitions; (4) supply chain and component availability impacting ramp-up of R290 refrigerant displays; (5) macroeconomic and consumer spending dynamics affecting store-level capex cycles.
Financial Position
Solid liquidity profile with net debt of $57.6 million and TT M leverage of 0.8x; operating cash flow generation of $11.85 million in Q1 supports ongoing capex and potential bolt-on acquisitions; backlog growth and EMI integration support a constructive medium-term growth trajectory. The company maintains a diversified two-segment model (Lighting and Display Solutions) with margin resilience aided by favorable mix shifts and ongoing cost control, though gross margins lag the prior-year levels due to ramp-up costs and product mix changes.
SWOT Analysis
Strengths
Diversified, vertically oriented portfolio with two synergistic segments (Lighting and Display Solutions).
Strong near-term cash generation: operating cash flow $11.8M and free cash flow ~$11.1M in Q1; net debt ~0.8x.
EMI integration progressing with measurable top-line contribution in Q1 and substantial cross-selling opportunities across Grocery and Lighting.
Significant backlog growth, especially in Display Solutions (backlog up >10% YoY; book-to-bill 1.3x).
Robust C-store and QSR demand driving backlogs and order activity (C-store and grocery rebound).
New product initiatives (V-Velocity outdoor lighting) and refrigerant evolution (R290) supporting competitive differentiation.
Weaknesses
Short-cycle sensitivity to large project timing in Lighting.
Gross margin pressures due to product mix and ramp-up costs during transitions (refrigerated vs non-refrigerated displays).
Regulatory and policy risk in grocery related to refrigerant standards and potential headwinds from legislative outcomes.
High reliance on project-based revenue with potential timing variability across verticals.
Opportunities
EMI/J SI cross-sell to deepen wallet share in Grocery and Display Solutions.
Expansion into additional verticals (parking, QSR, C-store extensions) using EMI/J SI capabilities.
Adoption and scale-up of R290 refrigerant displays across more chains; potential for open/closed refrigeration platform expansion.
Potential bolt-on acquisitions leveraging strong balance sheet and integration capabilities.
Threats
Continued project timing volatility in large-scaled lighting and display installations.
Regulatory shifts impacting grocery remodel timelines or refrigerant mandates.
Competitive dynamics in C-store displays and refrigeration technologies.
Macro demand volatility affecting capital expenditure cycles in retail/specialty segments.