LSI Industries' fiscal first quarter, ended September 30, showed a lighting business that is now smaller than the retail fixture company it acquired in March. Royston Group contributed $72.4 million in sales, while LSI's entire Lighting segment generated $64.8 million. The comparison is striking, but the more relevant signal for lighting suppliers is LSI's description of non-residential demand: customers are still requesting quotes, but they are taking longer to convert them into orders.
A shifting revenue mix
Royston sits inside Display Solutions, which grew 83% to $161.0 million. Within that segment, legacy Display sales were $88.6 million, still ahead of Lighting. Lighting accounted for 28.7% of LSI's revenue, down from 43.9% a year earlier. Most of that decline is arithmetic: this was Royston's first full quarter against a year-earlier period with no Royston sales. Total net sales rose 44% to $225.9 million, but excluding Royston, organic sales fell 2% to $153.4 million. LSI attributed that decline to demand softness in the North American non-residential lighting market.
Lighting sales fell 6% from $69.1 million a year earlier. The segment's $64.8 million total was its lowest since the third quarter of fiscal 2026, when sales were $60.0 million, and was $5.5 million below the $70.3 million posted in the fourth quarter. Over a longer view, Lighting has moved within a band of roughly $57 million to $73 million since the second quarter of fiscal 2022.
Margins and leading indicators
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%. Below that line, adjusted operating income slipped from $9.3 million to $8.2 million, and adjusted EBITDA fell from $9.9 million to $8.9 million, a 13.7% margin versus 14.4% a year earlier. Lighting still carries a richer margin than Display Solutions, which ran at 11.5%. If prices rose while dollar sales fell 6%, unit volume likely fell by more, though LSI has not said so and that remains an inference.
The leading indicators were flat rather than falling. Project quote activity held steady sequentially and year over year, Lighting orders rose 1%, and the release put book-to-bill at a steady 1.0, while a call-deck slide described it as above 1.0. The deck added that quote-to-order conversion is lengthening on large and small projects alike. Order growth has cooled from 5% in the fourth quarter. CEO James Clark said demand across LSI's key vertical markets remains resilient, while the same release blamed non-residential lighting softness for the organic decline. Both statements can hold if the key verticals lean mostly on Display.
Verticals and pending projects
Lighting sales grew in refueling, sports and banking applications. They declined in parking, small retail, warehouse and automotive, which Clark described as verticals where LSI maintains a strong position. Refueling is worth watching: 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 might route more lighting through its direct national-account relationships, outside the traditional representative channel, remains a question; lighting growth in that vertical is a hint rather than evidence.
One large quick-service restaurant customer has approved a 3,000-store interior renovation program, and LSI is one of three selected providers. Work is scheduled to begin late in the third quarter of fiscal 2027 and run about three years. The customer is unnamed, and LSI has not said whether lighting is part of the scope. That answer matters because 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, but it does not guarantee signed orders. For lighting suppliers, LSI's quarter reads as a status report: the quote logs show work exists, and the next two quarters will reveal whether stretched conversion cycles are a pause before releases arrive or the early phase of a slowdown that has not yet been named.