LSI Industries Sees 12.5% EBITDA Margin by 2028, Driven by Cross-Selling Strategy and Q4 2025 Sales Growth.

LSI Industries reported a 20% increase in sales in Q4 2025, driven by strong performance in both Lighting and Display Solutions segments. CEO James A. Clark outlined a cross-selling strategy and targets a 12.5% EBITDA margin by 2028. The company's project momentum is building, with Clark stating that LSI Industries is well-positioned for future growth.

LSI Industries (LYTS) reported a 20% increase in sales in the fourth quarter of 2025, driven by robust performance in both the Lighting and Display Solutions segments. CEO James A. Clark highlighted the company's strong financial performance, with total sales for the full year reaching $573 million, a 22% increase over the prior year. Adjusted EBITDA came in at $55 million, representing nearly 10% of sales [1].

Clark emphasized the company's strategic flexibility, noting a net debt leverage ratio of 0.8x and robust free cash flow. He also mentioned the successful launch of over 25 new products in the Lighting segment, with the V-LOCITY Lighting product being a notable success. In the Display Solutions segment, Clark reported a "robust pipeline of projects" that will continue into 2026, with a meaningful recovery in the grocery segment and expanded presence in new store areas, including bakery and checkout. The integration of EMI and Canada’s Best Store Fixtures was also described as highly successful [1].

Looking ahead, Clark stated that LSI Industries will continue to advance its Fast Forward strategic plan, focusing on talent development, operational optimization, and expanding cross-selling initiatives as key priorities for fiscal 2026. He described cross-selling as a "core element of our strategy" and discussed the intention to "deepen our customer relationships, increase our share of wallet, and drive sustainable incremental growth." The company expects favorable cash generation to continue in fiscal 2026, positioning the business for further investments in both sales growth initiatives and strengthening operational capabilities [1].

The company reported fourth quarter sales of $155 million, adjusted EBITDA of $17 million, and adjusted EPS of $0.34. Organic growth excluding acquisitions was 11% for the quarter. Full year sales reached $574 million, with adjusted EBITDA of $55 million and adjusted EPS of $1.07. Free cash flow for the year totaled $34.6 million, marking the third consecutive year above $30 million. Both Lighting and Display Solutions segments generated double-digit organic growth in the quarter. Lighting sales increased 12%, and Display Solutions increased 10% on a comparable basis. The company exited the fiscal year with a backlog 13% above the prior year, with Lighting backlog approximately 20% higher [1].

Management identified potential impacts from tariffs, particularly for certain Lighting components, but stated that "the impact will increase in fiscal Q1 and as we consume components which were procured during the highest tariff period." Clark outlined mitigation strategies, including price adjustments and cost reduction efforts, and noted that Display Solutions would be "minimally impacted" by tariffs [1].

LSI Industries closed fiscal 2025 with record sales, robust free cash flow, and strong momentum across its Lighting and Display Solutions segments. Management highlighted the successful integration of recent acquisitions and the growing impact of cross-selling initiatives as key drivers for future growth. The company reaffirmed its commitment to its Fast Forward strategic plan, targeting further margin expansion, operational excellence, and strong cash generation into fiscal 2026 and beyond [1].

References:
[1] https://seekingalpha.com/news/4488031-lsi-industries-outlines-cross-selling-strategy-and-targets-12_5-percent-ebitda-margin-by-2028