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, with the company attributing the drop to "demand softness within the North American non-residential lighting market."
The lighting figure now trails a business LSI did not own a year ago. Royston Group, the retail fixture maker acquired in March, contributed $72.4 million in sales during the quarter — more than the entire lighting segment. Royston sits inside Display Solutions, which grew 83% to $161.0 million; legacy Display accounted for $88.6 million of that total.
A mix shift driven mostly by arithmetic
Lighting now represents 28.7% of LSI revenue, down from 43.9% a year earlier. Most of that change is arithmetic rather than a collapse in lighting: this was the first full quarter with Royston included, measured against a period with no Royston at all. Total net sales rose 44% to $225.9 million. Excluding Royston, organic sales slipped 2% to $153.4 million.
At $64.8 million, lighting recorded its lowest quarterly total since the third quarter of fiscal 2026, when sales fell to $60.0 million, and a $5.5 million step down from the $70.3 million posted in the fourth quarter. Over a longer view the segment has moved within a band of roughly $57 million to $73 million since the second quarter of fiscal 2022.
Margins hold on price, but operating income slips
LSI said lighting gross margin improved despite lower volumes, crediting "focused price actions in response to cost inflation." Adjusted gross margin edged up 10 basis points to 33.7%. Because dollar sales fell 6% while prices rose, unit volume likely declined by more than 6%; LSI has not confirmed that, and it remains an inference from the reported figures.
Below the gross margin line the picture is less favorable. Adjusted operating income slipped to $8.2 million from $9.3 million, and adjusted EBITDA fell to $8.9 million from $9.9 million, a margin of 13.7% against 14.4% a year earlier. The company said operating expenses held flat as it continued spending on new products and customer initiatives. Lighting still carries a richer margin than Display Solutions, which ran at 11.5%.
Quotes steady, conversion slowing
Leading indicators were flat rather than falling. Project quote activity held steady both sequentially and year over year, lighting orders rose 1%, and the release described book-to-bill as "steady at 1.0," though a call deck slide put it above 1.0. The deck also noted that quote-to-order conversion is lengthening on large and small projects alike.
That marks a cooling from the fourth quarter, when lighting orders were up 5%. The release also pulls in two directions: CEO James Clark said demand across LSI's key vertical markets "remains resilient," while the same document attributes the organic decline to non-residential lighting softness.
Verticals split, with refueling in focus
Lighting sales grew in refueling, sports and banking applications and declined in parking, small retail, warehouse and automotive — verticals where Clark said LSI "maintains a strong position." 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.
LSI is also one of three providers selected by a large, unnamed quick-service restaurant customer for a 3,000-store interior renovation program, scheduled to begin late in the third quarter of fiscal 2027 and run about three years. The company has not said whether lighting is within scope. QSR demand is down double digits, and comparable Display sales rose just 1% as customers missed renovation schedules ahead of the holiday pause.
For lighting suppliers, steady quoting shows customers are still engaged, but it does not guarantee signatures. The next two quarters will indicate whether the stretched conversion cycle is a pause before orders release or the early stage of a slowdown.