LSI Industries reported $64.8 million in lighting sales for its fiscal first quarter ended September 30, a 6% decline from $69.1 million a year earlier. Total net sales rose 44% to $225.9 million, but the increase was driven by the acquisition of Royston Group. Excluding Royston, organic sales fell 2% to $153.4 million, a decline LSI attributed to “demand softness within the North American non-residential lighting market.”
Royston, a retail fixture company LSI acquired in March, contributed $72.4 million in sales, more than the entire lighting segment. Royston sits within Display Solutions, which grew 83% to $161.0 million; legacy Display accounted for $88.6 million. Lighting now represents 28.7% of LSI revenue, down from 43.9% a year earlier. Most of that shift reflects the arithmetic of a full Royston quarter against a year-ago period with no Royston sales.
Orders steady, conversion slower
The lighting decline was the segment’s lowest total since the third quarter of fiscal 2026, when sales were $60.0 million, and $5.5 million below the $70.3 million posted in the fourth quarter. The longer trend is less dramatic: lighting sales have moved within a roughly $57 million to $73 million band since the second quarter of fiscal 2022.
Demand indicators were flat rather than collapsing. Project quote activity held steady both sequentially and year over year. Lighting orders rose 1%, and the company reported book-to-bill “steady at 1.0,” while a call-deck slide described it as above 1.0. But the deck also said quote-to-order conversion is taking longer on both large and small projects. Order growth has cooled from 5% in the fourth quarter to 1%.
That combination describes a pipeline that still contains work but is moving more slowly toward signed business. For distributors and agency principals, the relevant signal is not a shortage of quotes but the time required to turn them into orders.
Pricing supports margin, volume questions remain
LSI said lighting gross margin improved despite lower volumes, crediting focused price actions in response to cost inflation. The company reported adjusted gross margin of 33.7%, up 10 basis points. If prices rose while dollar sales fell 6%, unit volume likely fell by more. LSI has not confirmed that, so it remains an inference rather than a reported figure.
Below the gross-margin line, adjusted operating income slipped to $8.2 million from $9.3 million, and adjusted EBITDA fell to $8.9 million from $9.9 million. That put the adjusted EBITDA margin at 13.7%, compared with 14.4% a year earlier. Operating expenses were flat, with continued spending on new products and customer initiatives. Lighting still carries a richer margin than Display Solutions, which ran at 11.5%.
Mixed verticals and a QSR test
Lighting sales grew in refueling, sports and banking applications. They declined in parking, small retail, warehouse and automotive—verticals where CEO James Clark said LSI “maintains a strong position.” A strong position in a shrinking pool offers limited comfort, particularly when those are among the segment’s larger markets. Clark also said demand across LSI’s key vertical markets “remains resilient,” even as the release blamed non-residential lighting softness for the organic decline. Both statements can coexist if the “key verticals” reference leans heavily on Display.
Refueling is the vertical to watch. Display’s refueling and convenience-store sales rose 5%, and a 2,500-site refresh for a major oil company is expected to ramp through fiscal 2027 and into fiscal 2028. Whether LSI will route more lighting through its direct national-account relationships, outside the traditional rep channel, remains an open question. Lighting growth in that vertical is a hint, not yet evidence.
The company also has a large quick-service restaurant customer that approved a 3,000-store interior renovation program, with LSI selected as one of three providers. Work is scheduled to begin late in the third quarter of fiscal 2027 and run for about three years. The customer is unnamed, and LSI has not said whether lighting is included in the scope. QSR demand is down double digits, and comparable Display sales rose just 1% as customers missed renovation schedules ahead of the holiday pause.
Steady quoting shows customers remain interested; it does not guarantee that they will sign. LSI’s quarter reads less like a final verdict on lighting demand than a status report. The quote logs say the work exists. The next two quarters will show whether stretched conversion cycles are a pause before releases arrive or the early phase of a slowdown that has not yet been named.