LSI Industries delivered a robust second quarter of fiscal 2025 (Q2 2025), reporting total revenue of $147.7 million, up 36% year-over-year and 7% quarter-over-quarter, with organic growth contributing 14% YoY. The Display Solutions segment led the top-line acceleration, with revenue roughly doubling and organic growth of approximately 50%, driven by resurgence in grocery and continued activity in refueling/c-store sites. The EMI acquisition, completed prior to the period, contributed to margin expansion and a meaningful uplift in operating performance, while service revenue more than doubled, underscoring the value of end-to-end product integration.
Key financial metrics also reflect disciplined cash generation and a meaningful deleveraging trajectory: free cash flow for the quarter was $8.8 million and trailing twelve-month net debt declined to a leverage ratio of 0.6x since EMI integration, supported by solid operating cash flow of $9.9 million. Backlog excluding EMI rose 14% versus the prior year, signaling durable demand across verticals and a favorable mix shift toward higher-value project work. Management highlighted ongoing strength in Grocery, QSR, and petroleum/c-store channels, plus ongoing momentum in the Lighting and Display Solutions platforms, including next-generation product introductions like V-LOCITY.
Looking ahead, management stated that order activity is expected to remain robust in the near term, with elevated demand sustaining into Q3 and Q4, albeit with visibility on pace and mix still developing. While margin dynamics were temporarily pressured by ramp-up inefficiencies as the expanded production base absorbed surges in orders, the company expects margins to normalize as manufacturing runs at steadier throughput and EMI-related integration gains accrue. Investors should monitor (i) the pace of demand normalization versus surges, (ii) EMI cross-selling and integration benefits, (iii) the evolution of DoE refrigerant transitions and related supply-chain implications, and (iv) potential tariff or permitting developments that could affect near-term cost structure.