LSI Industries Inc. Q4 FY2025 earnings call

Product Innovation

• Lighting segment launched over 25 new products, with V-LOCITY Lighting being a success.

Segment Recoveries

• Grocery segment saw meaningful recovery, with growth in bakery and checkout areas.

Integrations

• EMI delivered record sales and profits in 2025 despite project delays, and is a key driver of cross-selling. Canada's Best store fixtures, integrated less than 6 months ago, has shown impressive results.

Culture

• Focus on maintaining a high say/do ratio, driving growth and execution excellence.

For the fourth quarter, Lighting segment sales increased 12% organically, and Display Solutions segment saw 28% sales increase including acquisitions. Organic growth for Display Solutions excluding acquisitions was 10%. For the full year, total sales were a record $574 million, a 22% year-over-year increase. Lighting and Display Solutions both contributed to the growth. Lighting had over 25 new product launches, including the successful V-LOCITY Lighting product. Display Solutions had a robust pipeline with growth in segments like c-store (comparable refueling c-store sales up 23% in Q4) and grocery (Q4 sales up 31% as grocers resumed in-store renovations).

Fiscal 2026 Outlook

• Focus on Fast Forward strategic plan, including deep focus on people, processes, and cross-selling initiatives. Aim to deepen customer relationships and drive sustainable incremental growth through cross-selling. Expect favorable cash generation to support organic and inorganic growth. Target to improve EBITDA margins, with plans to move EMI towards LSI's margin levels and continue margin expansion efforts.

Tariff Impact

• Lighting segment may face incremental costs from tariffs on certain components, but expects to offset most with price adjustments and cost reductions. Display Solutions minimally impacted by tariffs. ### Market Fluctuations
• Potential impact of consumer slowdown or reduced spending on retail-related initiatives, though LSI's verticals are seen as having long-term growth potential.

Q: On c-store and refueling, talk about the large program opportunity and growth in the vertical?

A: The large program has thousands of site locations, halfway through, expected to continue into 2026 with other projects in the hopper.

Q: In grocery, is the market fully recovered?

A: Still some turmoil, but stable order process and demand, with potential upside still available.

Q: EMI cross-selling initiatives and margin confidence?

A: EMI has made over 200 basis points improvement, expecting another 200+ basis points improvement in 2026, with good integration and cross-selling progress.

Q: EBITDA margin comfort level?

A: Comfortable with margins in 11%+ range, with plans to move higher, though some variations due to activities like EMI integration.

Q: Cross-selling benefits timing?

A: Already in double-digit millions, on early stage, takes time to create awareness and engage customers in multiple solutions.

Q: Risks with consumer slowdown and retail exposure?

A: Verticals in focus have long-term growth potential, diversified, and no disruption seen in current verticals.

Q: Automotive market update?

A: Strong in automotive with design-specific lighting for showrooms, service areas, etc., and momentum in parking lighting.

Q: Tariff impact on fiscal 2026?

A: Lighting has some exposure, Display Solutions minimally impacted, net-net an opportunity.

Q: Market share and competitive environment?

A: Strong in c-store, expanding in grocery, with opportunity in many markets, often having a seat at the table though not always winning every project.