lyts20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

☒		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025, OR

☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO ________________.

Commission File No. 0-13375

LSI Industries Inc.

(Exact name of registrant as specified in its charter)

Ohio

31-0888951

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer Identification No.)

10000 Alliance Road, Cincinnati, Ohio		45242
(Address of principal executive offices)		(Zip Code)
(513) 793-3200
Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which

registered

Common Stock, no par value

LYTS

NASDAQ Global Select Market

Indicate by checkmark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ NO ☐

Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ NO ☐

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer ☐	Accelerated filer ☒	Emerging growth company ☐
	Non-accelerated filer ☐	Smaller reporting company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ NO ☒

As of April 30, 2025, there were 30,004,460 shares of the registrant's common stock, no par value per share, outstanding.

LSI INDUSTRIES INC.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2025

INDEX

PART I. FINANCIAL INFORMATION		3

ITEM 1.	FINANCIAL STATEMENTS	3

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS		3

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME		4

CONDENSED CONSOLIDATED BALANCE SHEETS		5

CONDENSED CONSOLIDATED BALANCE SHEETS		6

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY		7

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS		9

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS		10

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	24

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	33

ITEM 4.	CONTROLS AND PROCEDURES	33

PART II. OTHER INFORMATION		34

ITEM 5.	OTHER INFORMATION	34

ITEM 6.	EXHIBITS	34

SIGNATURES		35

Page 2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended					Nine Months Ended
	March 31					March 31
(In thousands, except per share data)	2025			2024		2025		2024

Net Sales	$	132,481		$	108,186	$	418,310	$	340,632

Cost of products and services sold		99,638			76,976		316,959		241,297

Gross profit		32,843			31,210		101,351		99,335

Selling and administrative expenses		26,608			23,550		77,526		72,828

Operating income		6,235			7,660		23,825		26,507

Interest expense		661			134		2,264		1,153

Other (income) expense		(22	)		75		300		142

Income before income taxes		5,596			7,451		21,261		25,212

Income tax expense		1,713			2,076		5,049		5,903

Net income	$	3,883		$	5,375	$	16,212	$	19,309


Earnings per common share (see Note 4)
Basic	$	0.13		$	0.18	$	0.54	$	0.67
Diluted	$	0.13		$	0.18	$	0.53	$	0.64


Weighted average common shares outstanding
Basic		30,003			29,163		29,841		28,981
Diluted		30,966			30,122		30,790		30,005

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 3

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended				Nine Months Ended
	March 31				March 31
(In thousands)	2025		2024		2025		2024

Net Income	$	3,883	$	5,375	$	16,212	$	19,309

Foreign currency translation adjustment		262		31		105		46

Comprehensive Income	$	4,145	$	5,406	$	16,317	$	19,355

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 4

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31,			June 30,
(In thousands, except shares)	2025			2024

ASSETS

Current assets

Cash and cash equivalents	$	4,301		$	4,110

Accounts receivable, less allowance for credit losses of $1,291 and $848, respectively		98,046			78,626

Inventories		74,462			70,913

Refundable income taxes		2,893			3,197

Other current assets		5,809			5,653

Total current assets		185,511			162,499

Property, Plant and Equipment, at cost
Land		4,029			4,010
Buildings		24,778			24,757
Machinery and equipment		77,637			74,204
Buildings under finance leases		2,033			2,033
Construction in progress		1,026			1,611
		109,503			106,615
Less accumulated depreciation		(78,249	)		(73,655	)
Net property, plant and equipment		31,254			32,960

Goodwill		63,204			57,397

Other intangible assets, net		79,607			73,916

Operating lease right-of-use assets		17,682			15,912

Other long-term assets, net		7,307			6,116

Total assets	$	384,565		$	348,800

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 5

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31,			June 30,
(In thousands, except shares)	2025			2024

LIABILITIES & SHAREHOLDERS' EQUITY

Current liabilities
Current maturities of long-term debt	$	3,571		$	3,571
Accounts payable		43,751			32,192
Accrued expenses		41,870			43,444

Total current liabilities		89,192			79,207

Long-term debt		51,789			50,658

Finance lease liabilities		383			636

Operating lease liabilities		13,162			11,267

Other long-term liabilities		8,326			2,677

Commitments and contingencies (Note 14)		-			-

Shareholders' Equity
Preferred shares, without par value; Authorized 1,000,000 shares, none issued		-			-
Common shares, without par value; Authorized 50,000,000 shares; Outstanding 29,987,826 and 29,222,414 shares, respectively		161,875			156,365
Treasury shares, without par value		(9,665	)		(8,895	)
Deferred compensation plan		9,665			8,895
Retained earnings		59,531			47,788
Accumulated other comprehensive income		307			202

Total shareholders' equity		221,713			204,355

Total liabilities & shareholders' equity	$	384,565		$	348,800

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 6

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

	Common Shares				Treasury Shares						Key Executive		Accumulated Other						Total
	Number Of				Number Of						Compensation		Comprehensive			Retained			Shareholders'
(In thousands, except per share data)	Shares		Amount		Shares			Amount			Amount		Income			Earnings			Equity

Balance at June 30, 2023		28,488	$	148,691		(922	)	$	(7,166	)	$	7,166	$	339		$	28,548		$	177,578

Net Income		-		-		-			-			-		-			8,028			8,028
Other comprehensive gain		-		-		-			-			-		(56	)		-			(56	)
Board stock compensation		9		113		-			-			-		-			-			113
ESPP stock Awards		3		57		-			-			-		-			-			57
Restricted stock units issued, net of shares withheld for tax withholdings
Shares issued for deferred compensation		32		437		-			-			-		-			-			437
Activity of treasury shares, net		-		-		(30	)		(417	)		-		-			-			(417	)
Deferred stock compensation		-		-		-			-			417		-			-			417
Stock-based compensation expense		-		1,220		-			-			-		-			-			1,220
Stock options exercised, net		70		549		-			-			-		-			-			549
Dividends — $0.05 per share		-		-		-			-			-		-			(1,380	)		(1,380	)

Balance at September 30, 2023		28,602	$	151,067		(952	)	$	(7,583	)	$	7,583	$	283		$	35,196		$	186,546

Net Income		-		-		-			-			-		-			5,906			5,906
Other comprehensive gain		-		-		-			-			-		71			-			71
Board stock compensation		7		112		-			-			-		-			-			112
ESPP stock Awards		4		41		-			-			-		-			-			41
Restricted stock units issued, net of shares withheld for tax withholdings
Shares issued for deferred compensation		36		506		-			-			-		-			-			506
Activity of treasury shares, net		-		-		(36	)		(505	)		-		-			-			(505	)
Deferred stock compensation		-		-		-			-			505		-			-			505
Stock-based compensation expense		-		814		-			-			-		-			-			814
Stock options exercised, net		107		628		-			-			-		-			-			628
Dividends — $0.05 per share		-		-		-			-			-		-			(1,446	)		(1,446	)

Balance at December 31, 2023		28,784	$	152,924		(988	)	$	(8,088	)	$	8,088		354		$	39,656		$	192,934

Net Income		-		-		-			-			-		-			5,375			5,375
Other comprehensive gain		-		-		-			-			-		31			-			31
Board stock compensation awards		8		113		-			-			-		-			-			113
ESPP stock Awards		4		47		-			-			-		-			-			47
Restricted stock units issued, net of shares withheld for tax withholdings
Shares issued for deferred compensation		29		431		-			-			-		-			-			431
Activity of treasury shares, net		-		-		(31	)		(432	)		-		-			-			(432	)
Deferred stock compensation		-		-		-			-			432		-			-			432
Stock-based compensation expense		-		927		-			-			-		-			-			927
Stock options exercised, net		12		93		-			-			-		-			-			93
Dividends — $0.05 per share		-		-		-			-			-		-			(1,454	)		(1,454	)

Balance at March 31, 2024		28,837	$	154,475		(1,019	)	$	(8,520	)	$	8,520		385		$	43,577		$	198,437

Page 7

	Common Shares				Treasury Shares						Key Executive			Accumulated Other						Total
	Number Of				Number Of						Compensation			Comprehensive			Retained			Shareholders'
	Shares		Amount		Shares			Amount			Amount			Income			Earnings			Equity

Balance at June 30, 2024		29,222	$	156,365		(1,036	)	$	(8,895	)	$	8,895		$	202		$	47,788		$	204,355

Net Income		-		-		-			-			-			-			6,682			6,682
Other comprehensive loss		-		-		-			-			-			(109	)		-			(109	)
Board stock compensation		8		113		-			-			-			-			-			113
ESPP stock awards		3		45		-			-			-			-			-			45
Restricted stock units issued, net of shares withheld for tax withholdings
Shares issued for deferred compensation		32		487		-			-			-			-			-			487
Activity of treasury shares, net		-		-		42			140			-			-			-			140
Deferred stock compensation		-		-		-			-			(140	)		-			-			(140	)
Stock-based compensation expense		-		1,047		-			-			-			-			-			1,047
Stock options exercised, net		39		248		-			-			-			-			-			248
Dividends — $0.05 per share		-		-		-			-			-			-			(1,481	)		(1,481	)

Balance at September 30, 2024		29,796	$	158,101		(994	)	$	(8,755	)	$	8,755		$	93		$	52,989		$	211,183

Net Income		-		-		-			-			-			-			5,647			5,647
Other comprehensive gain		-		-		-			-			-			(48	)		-			(48	)
Board stock compensation		7		112		-			-			-			-			-			112
ESPP stock awards		5		65		-			-			-			-			-			65
Restricted stock units issued, net of shares withheld for tax withholdings
Shares issued for deferred compensation		27		507		-			-			-			-			-			507
Activity of treasury shares, net		-		-		(28	)		(506	)		-			-			-			(506	)
Deferred stock compensation		-		-		-			-			506			-			-			506
Stock-based compensation expense		-		1,141		-			-			-			-			-			1,141
Stock options exercised, net		30		374		-			-			-			-			-			374
Dividends — $0.05 per share		-		-		-			-			-			-			(1,492	)		(1,492	)

Balance at December 31, 2024		29,891	$	159,926		(1,022	)	$	(9,261	)	$	9,261		$	45		$	57,144		$	217,115

Net Income		-		-		-			-			-			-			3,883			3,883
Other comprehensive gain		-		-		-			-			-			262			-			262
Board stock compensation		6		112		-			-			-			-			-			112
ESPP stock awards		4		49		-			-			-			-			-			49
Restricted stock units issued, net of shares withheld for tax withholdings
Shares issued for deferred compensation		24		447		-			-			-			-			-			447
Activity of treasury shares, net		-		-		(15	)		(404	)		-			-			-			(404	)
Deferred stock compensation		-		-		-			-			404			-			-			404
Stock-based compensation expense		-		1,007		-			-			-			-			-			1,007
Stock options exercised, net		47		220		-			-			-			-			-			220
Dividends — $0.05 per share		-		-		-			-			-			-			(1,496	)		(1,496	)

Balance at March 31, 2025		29,988	$	161,875		(1,037	)	$	(9,665	)	$	9,665		$	307		$	59,531		$	221,713

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 8

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended
	March 31
(In thousands)	2025			2024

Cash Flows from Operating Activities
Net income	$	16,212		$	19,309
Non-cash items included in net income
Depreciation and amortization		9,020			7,143
Deferred income taxes		270			(1,143	)
Deferred compensation plan		1,441			1,374
ESPP discount		159			145
Stock compensation expense		3,195			2,961
Issuance of common shares as compensation		337			338
Loss on disposition of fixed assets		(21	)		173
Allowance for credit losses		93			57
Inventory obsolescence reserve		607			(1,259	)

Changes in certain assets and liabilities
Accounts receivable		(15,606	)		8,894
Inventories		131			4,646
Refundable income taxes		304			466
Accounts payable		11,532			(3,092	)
Accrued expenses and other		2,781			(6,865	)
Customer prepayments		(1,836	)		(850	)
Net cash flows provided by operating activities		28,619			32,297

Cash Flows from Investing Activities
Proceeds from the sale of fixed assets		50			32
Acquisition of CBH (net of cash acquired)		(22,797	)		-
Acquisition of EMI		(59	)		-
Purchases of property, plant and equipment		(2,515	)		(4,626	)
Net cash flows used in investing activities		(25,321	)		(4,594	)

Cash Flows from Financing Activities
Payments of long-term debt		(145,537	)		(102,366	)
Borrowings of long-term debt		146,668			83,520
Cash dividends paid		(4,469	)		(4,280	)
Shares withheld for employees' taxes		(463	)		(304	)
Payments on financing lease obligations		(253	)		(241	)
Proceeds from stock option exercises		842			1,270
Net cash flows used in financing activities		(3,212	)		(22,401	)

Change related to foreign currency		105			45

Increase in cash and cash equivalents		191			5,347

Cash and cash equivalents at beginning of period		4,110			1,828

Cash and cash equivalents at end of period	$	4,301		$	7,175

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

Page 9

LSI INDUSTRIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The interim condensed consolidated financial statements are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, and rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the interim financial statements include all normal adjustments and disclosures necessary to present fairly the Company’s financial position as of March 31, 2025, the results of its operations for the three and nine-month periods ended March 31, 2025, and 2024, and its cash flows for the nine-month periods ended March 31, 2025, and 2024. These statements should be read in conjunction with the financial statements and footnotes included in the fiscal 2024 Annual Report on Form 10-K. Financial information as of June 30, 2024, has been derived from the Company’s audited consolidated financial statements.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation:

A summary of the Company’s significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company’s fiscal 2024 Annual Report on Form 10-K.

Revenue Recognition:

The Company recognizes revenue when it satisfies the performance obligation in its customer contracts or purchase orders. Most of the Company’s products have a single performance obligation which is satisfied at a point in time when control is transferred to the customer. Control is generally transferred at the time of shipment when title and risk of ownership passes to the customer. For customer contracts with multiple performance obligations, the Company allocates the transaction price and any discounts to each performance obligation based on relative standalone selling prices. Payment terms are typically within 30 to 90 days from the shipping date, depending on the terms with the customer. The Company offers standard warranties that do not represent separate performance obligations.

Installation is a separate performance obligation, except for the Company’s digital signage products. For digital signage products, installation is not a separate performance obligation as the product and installation is the combined item promised in digital signage contracts. The Company is not always responsible for installation of products it sells and has no post-installation responsibilities other than standard warranties.

A number of the Company's display solutions and select lighting products are customized for specific customers. As a result, these customized products do not have an alternative use. For these products, the Company has a legal right to payment for performance to date and generally does not accept returns on these items. The measurement of performance is based upon cost plus a reasonable profit margin for work completed. Because there is no alternative use and there is a legal right to payment, the Company transfers control of the item as the item is being produced and therefore recognizes revenue over time. The customized product types are as follows:

●

Customer specific metal and millwork branded products and branded print graphics

●

Electrical components based on customer specifications

●

Digital signage and related media content

The Company also offers installation services for its display solutions elements and select lighting products. Installation revenue is recognized over time as the customer simultaneously receives and consumes the benefits provided through the installation process.

For these customized products and installation services, revenue is recognized using a cost-based input method: recognizing revenue and gross profit as work is performed based on the relationship between the actual cost incurred and the total estimated cost for the performance obligation.

Page 10

On occasion, the Company enters into bill-and-hold arrangements on a limited basis. Each bill-and-hold arrangement is reviewed and revenue is recognized only when certain criteria have been met: (1) the customer has requested delayed delivery and storage of the products by the Company because the customer wants to secure a supply of the products but lacks storage space; (ii) the risk of ownership has passed to the customer; (iii) the products are segregated from the Company’s other inventory items held for sale; (iv) the products are ready for shipment to the customer; and (v) the Company does not have the ability to use the products or direct them to another customer.

Disaggregation of Revenue

The Company disaggregates the revenue from contracts with customers by the timing of revenue recognition because the Company believes it best depicts the nature, amount, and timing of its revenue and cash flows. The table below presents a reconciliation of the disaggregation by reportable segments:

	Three Months Ended
(In thousands)	March 31, 2025				March 31, 2024
	Lighting Segment		Display Solutions Segment		Lighting Segment		Display Solutions Segment
Timing of revenue recognition
Products and services transferred at a point in time	$	49,258	$	60,215	$	53,619	$	30,304
Products and services transferred over time		9,709		13,299		11,263		13,000
	$	58,967	$	73,514	$	64,882	$	43,304

	Three Months Ended
	March 31, 2025				March 31, 2024
	Lighting Segment		Display Solutions Segment		Lighting Segment		Display Solutions Segment
Type of Product and Services
LED lighting, digital signage solutions, electronic circuit boards	$	48,403	$	3,867	$	53,917	$	8,321
Poles, other display solution elements		9,960		54,592		10,181		26,628
Project management, installation services, shipping and handling		604		15,055		784		8,355
	$	58,967	$	73,514	$	64,882	$	43,304

	Nine Months Ended
	March 31, 2025				March 31, 2024
	Lighting Segment		Display Solutions Segment		Lighting Segment		Display Solutions Segment
Timing of revenue recognition
Products and services transferred at a point in time	$	145,835	$	190,355	$	165,890	$	99,560
Products and services transferred over time		29,779		52,341		31,428		43,754
	$	175,614	$	242,696	$	197,318	$	143,314

	Nine Months Ended
	March 31, 2025				March 31, 2024
	Lighting Segment		Display Solutions Segment		Lighting Segment		Display Solutions Segment
Type of Product and Services
LED lighting, digital signage solutions, electronic circuit boards	$	143,412	$	21,613	$	162,524	$	26,045
Poles, other display solution elements		30,298		171,021		32,532		86,326
Project management, installation services, shipping and handling		1,904		50,062		2,262		30,943
	$	175,614	$	242,696	$	197,318	$	143,314

Page 11

Practical Expedients and Exemptions

●

The Company’s contracts with customers have an expected duration of one year or less, as such, the Company applies the practical expedient to expense sales commissions as incurred and has omitted disclosures on the amount of remaining performance obligations.

●

Shipping costs that are not material in context of the delivery of products are expensed as incurred.

●

The Company’s accounts receivable balance represents the Company’s unconditional right to receive payment from its customers with contracts. Payments are generally due within 30 to 90 days of completion of the performance obligation and invoicing; therefore, payments do not contain significant financing components.

●

The Company collects sales tax and other taxes concurrent with revenue-producing activities which are excluded from revenue. Shipping and handling costs are treated as fulfillment activities and included in cost of products and services sold on the Consolidated Statements of Operations.

New Accounting Pronouncements:

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to SEC's Disclosure Update and Simplification Initiative. This ASU amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company will monitor the removal of various requirements from the current regulations in order to determine when to adopt the related amendments, but it does not anticipate that the adoption of the new guidance will have a material impact on the Company’s consolidated financial statements and related disclosures. The Company will continue to evaluate the impact of this guidance on its consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU expands reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The standard requires interim and annual disclosure of significant segment expenses that are regularly provided to the chief operating decision-maker ("CODM") and included within the reported measure of a segment’s profit or loss, requires interim disclosures about a reportable segment’s profit or loss and assets that are currently required annually, requires disclosure of the position and title of the CODM, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, and contains other disclosure requirements. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the effect of this new guidance on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires additional disclosures of various income tax components that affect the rate reconciliation based on the applicable taxing jurisdictions, as well as the qualitative and quantitative aspects of those components. The standard also requires information pertaining to taxes paid to be disaggregated for federal, state and foreign taxes, and contains other disclosure requirements. This ASU is effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025, with early adoption permitted. The Company is currently evaluating the effect of this new guidance on its consolidated financial statements and related disclosures.

NOTE 3 — ACQUISITION OF EMI INDUSTRIES, LLC

On April 18, 2024, the Company entered into and consummated the transactions contemplated by an asset purchase agreement with EMI Industries, LLC (EMI), a Florida-based metal and millwork manufacturer of standard and customized fixtures, displays and equipment for the convenience store, supermarket and restaurant industries, for $50.0 million, of which $0.1 million of the purchase price was retained pending a review of the acquired working capital. In the first quarter of fiscal 2025, the company funded an additional $59,000 related to the final settlement of the acquired working capital. The Company incurred acquisition-related costs totaling $1.0 million which are included in the selling and administrative expense line of the consolidated statements of operations. The acquisition of EMI will further expand LSI’s vertical market presence within Grocery, C-Store, and QSR/Restaurant, while providing a compelling entry point into other diverse markets. The Company funded the acquisition totaling $49.9 million with a combination of cash on hand and from the $75 million revolving line of credit.

Page 12

The Company accounted for this transaction as a business combination. The Company has allocated the purchase price of approximately $49.9 million which includes an estimate of customary post-closing purchase price adjustments to the assets acquired and liabilities assumed at estimated fair values, and the excess of the purchase price over the aggregate fair values is recorded as goodwill. This allocation of the final determination of the purchase price was finalized in fiscal 2025, as well as the potential revision resulting from the finalization of pre-acquisition tax filings. The preliminary allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed as of April 18, 2024, is as follows:

(In thousands)	April 18, 2024 as initially reported			Adjustments		April 18, 2024 as adjusted

Accounts Receivable	$	11,386		$	-	$	11,386
Inventory		12,246			-		12,246
Property, Plant and Equipment		7,719			-		7,719
Operating Lease Right-Of-Use Assets		8,734			-		8,734
Other Assets		1,176			-		1,176
Intangible Assets		15,670			-		15,670
Accounts Payable		(7,103	)		-		(7,103	)
Accrued Expenses		(6,308	)		-		(6,308	)
Operating Lease Liabilities		(5,987	)		-		(5,987	)
Identifiable Assets		37,533			-		37,533
Goodwill		12,367			59		12,426
Net Purchase Consideration	$	49,900		$	59	$	49,959

The gross amount of accounts receivable acquired was $11.9 million.

Goodwill recorded from the acquisition of EMI is attributable to the impact of the positive cash flow from EMI in addition to expected synergies from the business combination. The goodwill resulting from the acquisition is deductible for tax purposes. The trade name and technology used an income (relief from royalty) approach, the non-compete used an income (with or without) approach, and the customer relationships used an income (excess earnings) approach. The following table presents the details of the intangible assets acquired at the date of acquisition:

(in thousands)	Estimated Fair Value		Estimated Useful Life (Years)


Tradename	$	4,880	Indefinite life
Technology assets		3,160		7
Non-compete		140		5
Customer relationships		7,490		20
	$	15,670

EMI’s post-acquisition results of operations for the period from April 18, 2024, through June 30, 2024, are included in the Company’s Consolidated Statements of Operations. Since the acquisition date, net sales of EMI for the period from April 18, 2024, through June 30, 2024, were $18.1 million and operating income was $0.7 million. The operating results of EMI are included in the Display Solutions Segment.

Pro Forma Impact of the Acquisition of EMI (Unaudited)

The following table represents unaudited pro forma results of operations and gives effect to the acquisition of EMI as if the transaction had occurred on July 1, 2022. The unaudited pro forma results of operations have been prepared for comparative purposes only and are not necessarily indicative of what would have occurred had the business combination been completed at the beginning of the period or the results that may occur in the future. Furthermore, the unaudited pro forma financial information does not reflect the impact of any synergies or operating efficiencies resulting from the acquisition of EMI.

The unaudited pro forma financial information for the twelve months ended June 30, 2024, and June 30, 2023, is prepared using the acquisition method of accounting and has been adjusted to reflect the pro forma events that are: (1) directly attributable to the acquisition; (2) factually supportable; and (3) expected to have a continuing impact on the combined results. The fiscal 2024 unaudited pro forma operating income of $36.3 million excludes acquisition-related expenses of $1.0 million.

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	Twelve Months Ended June 30
(in thousands; unaudited)
	2024		2023
Sales	$	535,849	$	578,169

Gross Profit	$	141,788	$	147,967

Operating Income	$	36,303	$	38,798

NOTE 4— ACQUISITION OF CANADA’S BEST HOLDINGS

On March 11, 2025, the Company executed and closed on an asset purchase agreement with Canada’s Best Holdings (CBH), an Ontario Canada-based leading provider of retail fixtures and custom store design solutions for grocery, quick service restaurant, c-store, banking, and specialty retail environments, for $25.9 million, subject to a working capital adjustment and future potential earnout payment up to $7.0M as of the acquisition date for a total purchase consideration of $27.4M. The future earnout payments include revenue and EBITDA goals for the fiscal years ending June 30,2026 and June 30, 2027. The Company incurred acquisition-related costs totaling $0.8 million which are included in the selling and administrative expense line of the consolidated statements of operations. The Company funded the acquisition totaling $27.4 million with a combination of cash on hand and from the $75 million revolving line of credit.

The Company accounted for this transaction as a business combination. The Company has preliminarily allocated the purchase price of approximately $27.4 million which includes an estimate of customary post-closing purchase price adjustments to the assets acquired and liabilities assumed at estimated fair values, and the excess of the purchase price over the aggregate fair values is recorded as goodwill. This preliminary allocation is subject to the final determination of the purchase price which will be finalized in fiscal 2026, as well as potential revision resulting from the finalization of pre-acquisition tax filings and earnout payment calculations. The Company is in the process of finalizing third party valuations of certain assets including fixed assets and intangible assets. The preliminary allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed as of March 11, 2025, is as follows:

	March 11, 2025 as initially reported
(In thousands)
Cash and cash equivalents	$	4,592
Accounts receivable		3,907
Inventory		4,287
Property, plant and equipment		640
Operating lease right-of-use assets		5,211
Other assets		204
Intangible assets		9,955
Accounts payable		(29	)
Accrued expenses		(472	)
Operating lease liabilities		(2,954	)
Deferred tax liability		(3,700	)
Identifiable assets		21,641
Goodwill		5,748
Net purchase consideration	$	27,389

The gross amount of accounts receivable is $4.3 million.

Page 14

Goodwill recorded from the acquisition of CBH is attributable to the impact of the positive cash flow from CBH in addition to expected synergies from the business combination. The intangible assets include amounts recognized for the fair value of the trade name, non-compete agreements and customer relationships. The fair value of the intangible assets was determined based upon the income (discounted cash flow) approach. The following table presents the details of the intangible assets acquired at the date of acquisition:

	Estimated Fair Value		Estimated Useful Life (Years)

(in thousands)
Tradename	$	1,009		10
Non-compete agreements		220		3	-	5
Customer relationships		8,726		15
	$	9,955

The preliminary fair market value write-up of the property, plant, and equipment totaled $0.6 million. The Company expects more transaction costs to follow in the fourth quarter.

CBH’s post-acquisition results of operations for the period from March 11, 2025, through March 31, 2025, are included in the Company’s Consolidated Statements of Operations. Since the acquisition date, net sales of CBH for the period from March 11, 2025, through March 31, 2025, were $1.4 million and operating income was $0.3 million. The operating results of CBH are included in the Display Solutions Segment.

Pro Forma Impact of the Acquisition of CBH (Unaudited)

The following table represents unaudited pro forma results of operations and gives effect to the acquisition of CBH as if the transaction had occurred on July 1, 2023. The unaudited pro forma results of operations have been prepared for comparative purposes only and are not necessarily indicative of what would have occurred had the business combination been completed at the beginning of the period or the results that may occur in the future. Furthermore, the unaudited pro forma financial information does not reflect the impact of any synergies or operating efficiencies resulting from the acquisition of CBH.

The unaudited pro forma financial information for the twelve months ended June 30, 2024 is prepared using the acquisition method of accounting and has been adjusted to effect to the pro forma events that are: (1) directly attributable to the acquisition; (2) factually supportable; and (3) expected to have a continuing impact on the combined results. The unaudited pro forma operating income of $41.3 million excludes acquisition-related expenses of $0.8 million.

	Twelve Month Ended
	June 30
(in thousands; unaudited)	2024
Sales	$	496,965

Gross Profit	$	142,984

Operating Income	$	41,337

NOTE 5 - SEGMENT REPORTING INFORMATION

The accounting guidance on Segment Reporting establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in financial statements. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (the Company’s Chief Executive Officer or “CODM”) in making decisions on how to allocate resources and assess performance. The Company’s two operating segments are Lighting and Display Solutions, with one executive team under the organizational structure reporting directly to the CODM with responsibilities for managing each segment. Corporate and Eliminations, which captures the Company’s corporate administrative activities, is also reported in the segment information.

The Lighting Segment includes non-residential outdoor and indoor lighting fixtures utilizing LED light sources that have been fabricated and assembled for the Company’s markets, primarily the refueling and convenience store markets, parking lot and garage markets, quick-service restaurant market, retail and grocery store markets, the automotive market, the warehouse market, and the sports court and field market. The Company also services lighting product customers through the commercial and industrial project, stock and flow, and renovation channels. In addition to the manufacture and sale of lighting fixtures, the Company offers a variety of lighting controls to complement its lighting fixtures which include sensors, photocontrols, dimmers, motion detection and Bluetooth systems. The Lighting Segment also includes the design, engineering and manufacturing of electronic circuit boards, assemblies and sub-assemblies which are sold directly to customers.

Page 15

The Display Solutions Segment manufactures, sells and installs exterior and interior visual image and display elements, including printed graphics, structural graphics, digital signage, menu board systems, millwork display fixtures, refrigerated displays, food equipment, countertops, and other custom display elements. These products are used in visual image programs in several markets including the refueling and convenience store markets, parking lot and garage markets, quick-service and casual restaurant market, retail and grocery store, and other retail markets. The Company accesses its customers primarily through a direct sale model utilizing its own sales force. Sales through distribution represents a small portion of Display Solutions sales. The Display Solutions Segment also provides a variety of project management services to complement our display elements, such as installation management, site surveys, permitting, and content management which are offered to our customers to support our digital signage.

The Company’s corporate administration activities are reported in the Corporate and Eliminations line item. These activities primarily include intercompany profit in inventory eliminations, expense related to certain corporate officers and support staff, the Company’s internal audit staff, expense related to the Company’s Board of Directors, equity compensation expense for various equity awards granted to corporate administration employees, certain consulting expenses, investor relations activities, and a portion of the Company’s legal, auditing, and professional fee expenses. Corporate identifiable assets primarily consist of cash, invested cash (if any), refundable income taxes (if any), and deferred income taxes.

There were no customers or customer programs representing a concentration of 10% or more of the Company’s consolidated net sales in the three and nine months ended March 31, 2025, or 2024. There was no concentration of accounts receivable at March 31, 2025, or 2024.

Summarized financial information for the Company’s operating segments is provided for the indicated periods and as of March 31, 2025, and March 31, 2024:

	Three Months Ended						Nine Months Ended
(In thousands)	March 31						March 31
	2025			2024			2025			2024
Net Sales:
Lighting Segment	$	58,967		$	64,882		$	175,614		$	197,318
Display Solutions Segment		73,514			43,304			242,696			143,314
	$	132,481		$	108,186		$	418,310		$	340,632

Operating Income (Loss):
Lighting Segment	$	7,154		$	7,268		$	18,885		$	24,877
Display Solutions Segment		4,510			4,064			20,344			14,585
Corporate and Eliminations		(5,429	)		(3,672	)		(15,404	)		(12,955	)
	$	6,235		$	7,660		$	23,825		$	26,507

Capital Expenditures:
Lighting Segment	$	246		$	999		$	1,467		$	3,012
Display Solutions Segment		358			167			934			1,215
Corporate and Eliminations		86			111			114			399
	$	690		$	1,277		$	2,515		$	4,626

Depreciation and Amortization:
Lighting Segment	$	1,284		$	1,342		$	3,778		$	3,944
Display Solutions Segment		1,693			982			4,984			2,946
Corporate and Eliminations		84			90			258			253
	$	3,061		$	2,414		$	9,020		$	7,143

Page 16

	March 31, 2025		June 30, 2024
Total Assets:
Lighting Segment	$	122,109	$	130,695
Display Solutions Segment		252,436		208,248
Corporate and Eliminations		10,020		9,857
	$	384,565	$	348,800

The segment net sales reported above represent sales to external customers. Segment operating income, which is used in management’s evaluation of segment performance, represents net sales less all operating expenses. Identifiable assets are those assets used by each segment in its operations.

The Company records a 10% mark-up on intersegment revenues. Any inter-segment profit in inventory is eliminated in consolidation. Intersegment revenues were eliminated in consolidation as follows:

Inter-segment sales
	Three Months Ended				Nine Months Ended
(In thousands)	March 31				March 31
	2025		2024		2025		2024
Lighting Segment inter-segment net sales	$	3,334	$	6,318	$	15,371	$	18,468

Display Solutions Segment inter-segment net sales	$	283	$	96	$	587	$	536

Page 17

NOTE 6 - EARNINGS PER COMMON SHARE

The following table presents the amounts used to compute basic and diluted earnings per common share, as well as the effect of dilutive potential common shares on weighted average shares outstanding:

	Three Months Ended				Nine Months Ended
	March 31				March 31
	2025		2024		2025		2024

BASIC EARNINGS PER SHARE

Net income	$	3,883	$	5,375	$	16,212	$	19,309

Weighted average shares outstanding during the period, net of treasury shares		28,904		28,084		28,754		27,933
Weighted average vested restricted stock units outstanding		71		75		78		78
Weighted average shares outstanding in the Deferred Compensation Plan during the period		1,028		1,004		1,009		970
Weighted average shares outstanding		30,003		29,163		29,841		28,981

Basic earnings per common share	$	0.13	$	0.18	$	0.54	$	0.67


DILUTED EARNINGS PER SHARE

Net income	$	3,883	$	5,375	$	16,212	$	19,309

Weighted average shares outstanding:

Basic		30,003		29,163		29,841		28,981

Effect of dilutive securities (a):
Impact of common shares to be issued under stock option plans, and contingently issuable shares, if any		963		959		949		1,024
Weighted average shares outstanding		30,966		30,122		30,790		30,005

Diluted earnings per common share	$	0.13	$	0.18	$	0.53	$	0.64


Anti-dilutive securities (b)		35		3		265		10

(a)

Calculated using the “Treasury Stock” method as if dilutive securities were exercised and the funds were used to purchase common shares at the average market price during the period.

(b)

Anti-dilutive securities were excluded from the computation of diluted net income per share for the three and nine months ended March 31, 2025, and March 31, 2024, because the exercise price was greater than the average fair market price of the common shares or because the assumed proceeds from the award’s exercise or vesting was greater than the average fair market price of the common shares.

NOTE 7 – INVENTORIES, NET

The following information is provided as of the dates indicated:

	March 31,		June 30,
(In thousands)	2025		2024

Inventories:
Raw materials	$	55,311	$	52,644
Work-in-progress		7,009		6,244
Finished goods		12,142		12,025
Total Inventories	$	74,462	$	70,913

Page 18

NOTE 8 - ACCRUED EXPENSES

The following information is provided as of the dates indicated:

	March 31,		June 30,
(In thousands)	2025		2024

Accrued Expenses:
Customer prepayments	$	6,639	$	8,475
Compensation and benefits		11,865		9,704
Accrued warranty		7,079		6,623
Operating lease liabilities		5,339		5,560
Accrued sales commissions		2,596		3,937
Accrued Freight		1,759		2,270
Accrued FICA		588		513
Finance lease liabilities		327		324
Other accrued expenses		5,678		6,038
Total Accrued Expenses	$	41,870	$	43,444

NOTE 9 - GOODWILL AND OTHER INTANGIBLE ASSETS

The carrying values of goodwill and other intangible assets with indefinite lives are reviewed at least annually for possible impairment. The Company may first assess qualitative factors in order to determine if goodwill and indefinite-lived intangible assets are impaired. If through the qualitative assessment it is determined that it is more likely than not that goodwill and indefinite-lived assets are not impaired, no further testing is required. If it is determined more likely than not that goodwill and indefinite-lived assets are impaired, or if the Company elects not to first assess qualitative factors, the Company’s impairment testing continues with the estimation of the fair value of the reporting unit using a combination of a market approach and an income (discounted cash flow) approach, at the reporting unit level. The estimation of the fair value of the reporting unit requires significant management judgment with respect to revenue and expense growth rates, changes in working capital and the selection and use of an appropriate discount rate. The estimates of the fair value of reporting units are based on the best information available as of the date of the assessment. The use of different assumptions would increase or decrease estimated discounted future operating cash flows and could increase or decrease an impairment charge. Company management uses its judgment in assessing whether assets may have become impaired between annual impairment tests. Indicators such as adverse business conditions, economic factors and technological change or competitive activities may signal that an asset has become impaired.

The Company identified its reporting units in conjunction with its annual goodwill impairment testing. The Company has a total of five reporting units that contain goodwill. One reporting unit is within the Lighting Segment and four reporting units are within the Display Solutions Segment. The tradename intangible assets have an indefinite life and are also tested separately on an annual basis. The Company relies upon a number of factors, judgments and estimates when conducting its impairment testing including, but not limited to, the Company’s stock price, operating results, forecasts, anticipated future cash flows, and marketplace data. There are inherent uncertainties related to these factors and judgments in applying them to the analysis of goodwill impairment.

The following table presents information about the Company's goodwill on the dates or for the periods indicated:

Goodwill				Display
(In thousands)	Lighting			Solutions
	Segment			Segment			Total
Balance as of March 31, 2025
Goodwill	$	70,971		$	81,521		$	152,492
Accumulated impairment losses		(61,763	)		(27,525	)		(89,288	)
Goodwill, net as of March 31, 2025	$	9,208		$	53,996		$	63,204

Balance as of June 30, 2024
Goodwill	$	70,971		$	75,714		$	146,685
Accumulated impairment losses		(61,763	)		(27,525	)		(89,288	)
Goodwill, net as of June 30, 2024	$	9,208		$	48,189		$	57,397

Page 19

The gross carrying amount and accumulated amortization by each major intangible asset class is as follows:

Other Intangible Assets	March 31, 2025
(In thousands)	Gross
	Carrying		Accumulated		Net
	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	78,299	$	24,206	$	54,093
Patents		268		268		-
LED technology firmware, software		24,126		18,285		5,841
Trade name		3,667		1,351		2,316
Non-compete		620		245		375
Total Amortized Intangible Assets		106,980		44,355		62,625

Indefinite-lived Intangible Assets
Trademarks and trade names		16,982		-		16,982
Total indefinite-lived Intangible Assets		16,982		-		16,982

Total Other Intangible Assets	$	123,962	$	44,355	$	79,607

Other Intangible Assets	June 30, 2024
(In thousands)	Gross
	Carrying		Accumulated		Net
	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	69,573	$	21,332	$	48,241
Patents		268		268		-
LED technology firmware, software		24,126		17,058		7,068
Trade name		2,658		1,265		1,393
Non-compete		400		168		232
Total Amortized Intangible Assets		97,025		40,091		56,934

Indefinite-lived Intangible Assets
Trademarks and trade names		16,982		-		16,982
Total indefinite-lived Intangible Assets		16,982		-		16,982

Total Other Intangible Assets	$	114,007	$	40,091	$	73,916

	Three Months Ended				Nine Months Ended
	March 31				March 31
(In thousands)	2025		2024		2025		2024

Amortization Expense of Other Intangible Assets	$	1,448	$	1,190	$	4,264	$	3,570

The Company expects to record annual amortization expense as follows:

(In thousands)

2025	$	5,864
2026	$	6,366
2027	$	6,136
2028	$	5,704
2029	$	5,058
After 2029	$	37,762

Page 20

NOTE 10 - DEBT

The Company’s long-term debt as of March 31, 2025, and June 30, 2024, consisted of the following:

	March 31,		June 30,
(In thousands)	2025		2024

Secured line of credit	$	42,868	$	38,766
Term loan, net of debt issuance costs of $10 and $14, respectively		12,492		15,463
Total debt	$	55,360	$	54,229
Less: amounts due within one year		3,571		3,571
Total amounts due after one year, net	$	51,789	$	50,658

In September 2021, the Company amended its existing $100 million secured line of credit, to a $25 million term loan and $75 million remaining as a secured revolving line of credit. Both facilities expire in the first quarter of fiscal 2027. The principal of the term loan is repaid annually in the amount of $3.6 million over a five-year period with a balloon payment of the remaining balance due last month. Interest on both the revolving line of credit and the term loan is charged based upon an increment over the Secured Overnight Financing Rate (SOFR) or a base rate, at the Company’s option. The base rate is calculated as the highest of (a) the Prime rate, (b) the sum of the Overnight Funding Rate plus 50 basis points and (c) the sum of the Daily SOFR Rate plus 100 basis points. The increment over the SOFR borrowing rate fluctuates between 100 and 225 basis points, and the increment over the Base Rate fluctuates between 0 and 125 basis points, both of which depend upon the ratio of indebtedness to earnings before interest, taxes, depreciation, and amortization (“EBITDA”), as defined in the line of credit agreement. As of March 31, 2025, the Company’s borrowing rate against its revolving line of credit was 5.4%. The increment over the SOFR borrowing rate will be 100 basis points for the fourth quarter of fiscal 2025. The fee on the unused balance of the $75 million committed line of credit fluctuates between 15 and 25 basis points. Under the terms of this line of credit, the Company is required to comply with financial covenants that limit the ratio of indebtedness to EBITDA and require a minimum fixed charge ratio. As of March 31, 2025, there was $32.1 million available for borrowing under the $75 million line of credit.

The Company is in compliance with all of its loan covenants as of March 31, 2025.

NOTE 11 - CASH DIVIDENDS

The Company paid cash dividends of $4.5 million and $4.3 million for the nine months ended March 31, 2025, and March 31, 2024, respectively. Dividends on restricted stock units in the amount of $0.2 million were accrued as of both March 31, 2025, and 2024, respectively. These dividends will be paid upon the vesting of the restricted stock units when shares are issued to the award recipients. In April 2025, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable May 13, 2025, to shareholders of record as May 5, 2025. The indicated annual cash dividend rate is $0.20 per share.

NOTE 12 – EQUITY COMPENSATION

In November 2022, the Company's shareholders approved the amendment and restatement of the 2019 Omnibus Award Plan ("2019 Omnibus Plan") which increased the number of shares authorized for issuance under the plan by 2,350,000 and removed the Plan's fungible share counting feature. The purpose of the 2019 Omnibus Plan is to provide a means to attract and retain key personnel and to align the interests of the directors, officers, and employees with the Company's shareholders. The plan also provides a vehicle whereby directors and officers may acquire shares in order to meet the ownership requirements under the Company's Stock Ownership Policy. The 2019 Omnibus Plan allows for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units (‘RSUs”), performance stock units ("PSUs") and other awards. Except for RSU grants which are time-based, participants in the Company's Long-Term Equity Compensation Plans are awarded the opportunity to acquire shares over a three-year performance measurement period tied to specific company performance metrics. The number of shares that remain reserved for issuance under the 2019 Omnibus Plan is 1,374,537 as of March 31, 2025.

In the first nine months of fiscal 2025, the Company granted 160,826 PSUs and 107,217 RSUs, both with a weighted average market value of $14.92. Stock compensation expense was $1.0 million and $0.9 million for the three months ended March 31, 2025, and 2024, respectively, and $3.2 million and $2.9 million in the nine months ended March 31, 2025, and 2024, respectively.

Page 21

In November of 2021, our board of directors approved the LSI Employee Stock Purchase Plan (“ESPP”). A total of 270,000 shares of common stock were provided for issuance under the ESPP. Employees may participate at their discretion and are able to purchase, through payroll deduction, common stock at a 10% discount on a quarterly basis. Employees may end their participation at any time during the offering period, and participation ends automatically upon termination of employment with the company. During fiscal year 2025, employees purchased 12,000 shares. At March 31, 2025, 230,000 shares remained available for purchase under the ESPP.

NOTE 13 - SUPPLEMENTAL CASH FLOW INFORMATION

	Nine Months Ended
(In thousands)	March 31
	2025		2024
Cash Payments:
Interest	$	2,036	$	1,122
Income taxes	$	4,201	$	6,317

Non-cash investing and financing activities
Issuance of common shares as compensation	$	337	$	338
Issuance of common shares to fund deferred compensation plan	$	1,441	$	1,374
Issuance of common shares to fund ESPP plan	$	159	$	145

NOTE 14 - COMMITMENTS AND CONTINGENCIES

The Company is party to various negotiations, customer bankruptcies, and legal proceedings arising in the normal course of business. The Company provides reserves for these matters when a loss is probable and reasonably estimable. The Company does not disclose a range of potential loss because the likelihood of such a loss is remote. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, cash flows or liquidity.

The Company may occasionally issue a standby letter of credit in favor of third parties. As of March 31, 2025, there were no standby letters of credit issued.

NOTE 15 - LEASES

The Company leases certain manufacturing facilities along with a small office space, several forklifts, several small tooling items, and various items of office equipment. All but two of the Company’s leases are operating leases. Leases have a remaining term of one to seven years some of which have an option to renew. The Company does not assume renewals in determining the lease term unless the renewals are deemed reasonably certain. The lease agreements do not contain any material residual guarantees or material variable lease payments. The number of operating leases increased in fiscal 2024 as a result of the acquisition of EMI; most of EMI’s operating leases are building leases. The number of operating leases increased in fiscal 2025 as a result of the acquisition of CBH; most of CBH’s operating leases are building leases.

The Company has periodically entered into short-term operating leases with an initial term of twelve months or less. The Company elected not to record these leases on the balance sheet. The rent expense for these leases was immaterial for March 31, 2025, and 2024.

The Company has certain leases that contain lease and non-lease components and has elected to utilize the practical expedient to account for these components together as a single lease component.

Lease expense is recognized on a straight-line basis over the lease term. The Company used its incremental borrowing rate when determining the present value of lease payments.

Page 22

	Three Months Ended					Nine Months Ended
	March 31					March 31
(In thousands)	2025		2024			2025			2024

Operating lease cost	$	1,679	$	993		$	4,910		$	2,893
Financing lease cost:
Amortization of right of use assets		73		73			218			219
Interest on lease liabilities		9		13			30			41
Variable lease cost		-		22			7			65
Sublease income		-		(116	)		(39	)		(348	)
Total lease cost	$	1,761	$	985		$	5,126		$	2,870

Supplemental Cash Flow Information:	Nine Months Ended
	March 31
(In thousands)	2025		2024

Cash flows from operating leases
Fixed payments - operating cash flows	$	5,055	$	2,806
Liability reduction - operating cash flows	$	4,328	$	2,421

Cash flows from finance leases
Interest - operating cash flows	$	30	$	41
Repayments of principal portion - financing cash flows	$	253	$	241

Operating Leases:	March 31,			June 30,
	2025			2024

Total operating right-of-use assets	$	17,682		$	15,912

Accrued expenses (Current liabilities)	$	5,339		$	5,560
Long-term operating lease liability		13,162			11,267
Total operating lease liabilities	$	18,501		$	16,827

Weighted Average remaining Lease Term (in years)		3.49			3.49

Weighted Average Discount Rate		5.74	%		5.90	%

Finance Leases:	March 31,			June 30,
	2025			2024

Buildings under finance leases	$	2,033		$	2,033
Equipment under finance leases		-			41
Accumulated depreciation		(1,428	)		(1,232	)
Total finance lease assets, net	$	605		$	842

Accrued expenses (Current liabilities)	$	327		$	324
Long-term finance lease liability		383			636
Total finance lease liabilities	$	710		$	960

Weighted Average remaining Lease Term (in years)		2.08			2.83

Weighted Average Discount Rate		4.86	%		4.86	%

Page 23

Maturities of Lease Liability:	Operating Lease Liabilities			Finance Lease Liabilities			Operating Subleases			Net Lease Commitments
2025	$	5,339		$	327		$	(38	)	$	5,628
2026		5,957			362			-			6,319
2027		5,226			57			-			5,283
2028		2,311			-			-			2,311
2029		1,463			-			-			1,463
Thereafter		302			-			-			302
Total lease payments	$	20,598		$	746		$	(38	)	$	21,306
Less: Interest		(2,097	)		(36	)					(2,133	)
Present Value of Lease Liabilities	$	18,501		$	710					$	19,173

NOTE 16 – INCOME TAXES

The Company's effective income tax rate is based on expected income, statutory rates, and tax planning opportunities available in the various jurisdictions in which it operates. For interim financial reporting, the Company estimates the annual income tax rate based on projected taxable income for the full year and records a quarterly income tax provision or benefit in accordance with the anticipated annual rate. The Company refines the estimates of the year's taxable income as new information becomes available, including actual year-to-date financial results. This continual estimation process often results in a change to the expected effective income tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected income tax rate. Significant judgment is required in determining the effective tax rate and in evaluating tax positions.

	Three Months Ended						Nine Months Ended
	March 31						March 31
	2025			2024			2025			2024
Reconciliation of effective tax rate:

Provision for income taxes at the anticipated annual tax rate		32.7	%		25.3	%		27.9	%		26.0	%
Uncertain tax positions		1.3			2.6			0.2			0.3
Other		-			-			0.8			-
Share-based compensation		(3.4	)		-			(5.1	)		(2.9	)
Effective tax rate		30.6	%		27.9	%		23.8	%		23.4	%

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Note About Forward-Looking Statements

This report includes estimates, projections, statements relating to our business plans, objectives, and expected operating results that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this report, including this section. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “focus,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. We describe risks and uncertainties that could cause actual results and events to differ materially in in our Annual Report on Form 10-K in the following sections: “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures about Market Risk,” and “Risk Factors.” All of those risks and uncertainties are incorporated herein by reference. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of operations and financial condition of LSI Industries Inc. MD&A is provided as a supplement to, and should be read in conjunction with, our Annual Report on Form 10-K for the year ended June 30, 2024, and our financial statements and the accompanying Notes to Financial Statements (Part I, Item 1 of this Form 10-Q).

Page 24

Our condensed consolidated financial statements, accompanying notes and the “Safe Harbor” Statement, each as appearing earlier in this report, should be referred to in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Summary of Consolidated Results

Net Sales by Business Segment	Three Months Ended				Nine Months Ended
	March 31				March 31
(In thousands)	2025		2024		2025		2024

Lighting Segment	$	58,967	$	64,882	$	175,614	$	197,318
Display Solutions Segment		73,514		43,304		242,696		143,314
	$	132,481	$	108,186	$	418,310	$	340,632

Operating Income by Business Segment	Three Months Ended						Nine Months Ended
	March 31						March 31
(In thousands)	2025			2024			2025			2024

Lighting Segment	$	7,154		$	7,268		$	18,885		$	24,877
Display Solutions Segment		4,510			4,064			20,344			14,585
Corporate and Eliminations		(5,429	)		(3,672	)		(15,404	)		(12,955	)
	$	6,235		$	7,660		$	23,825		$	26,507

Net sales of $132.5 million for the three months ended March 31, 2025, increased 22% as compared to net sales of $108.2 million for the three months ended March 31, 2024. The increase in net sales was attributed to a $30.2 million or 70% increase in net sales of the Display Solutions Segment, partially offset by a $5.9 million or 9% decline in net sales of the Lighting Segment. The Display Solutions Segment generated organic growth of 15% driven by increased sales across all product categories and vertical markets supported mostly by the grocery and refueling/ C-Store verticals. The Company’s acquisitions of EMI and CBH (acquired March 11, 2025) contributed an additional $23.8 million of the quarter-over-quarter sales growth of the Display Solutions Segment. The decline in sales in the Lighting Segment is attributed to the comparison of quarter-over-quarter sales of large lighting projects. In fiscal 2024, the Company had several large lighting projects that did not repeat in fiscal 2025. While there was a decline in large lighting projects, small project activity continued to increase over the prior year period.

Net sales of $418.3 million for the nine months ended March 31, 2024, increased 23% as compared to net sales of $340.6 million for the nine months ended March 31, 2024. The increase in net sales was attributed to a $99.4 million or 69% increase in net sales of the Display Solutions Segment, partially offset by a $21.7 or 11% decline in net sales of the Lighting Segment. The Display Solutions Segment generated organic growth of 18% driven by increased sales across all product categories and vertical markets supported mostly by the grocery and refueling/ C-Store verticals. The Company’s acquisition of EMI and CBH contributed an additional $73.4 million of the year-over-year sales growth of the Display Solutions Segment. The decline in sales in the Lighting Segment is attributed to the comparison of year-over-year sales of large lighting projects. In fiscal 2024, the Company had several large lighting projects that did not repeat in fiscal 2025. While there was a decline in large lighting projects, small project activity continued to increase over the prior year period.

Operating income of $6.2 million for the three months ended March 31, 2025, represents a 19% decrease in operating income of $7.7 million in the three months ended March 31, 2024. Adjusted operating income, a Non-GAAP measure, was $9.7 million in the three months ended March 31, 2025, compared to $10.0 million in the three months ended March 31, 2024. The increase in net sales was offset by a change in product mix. Refer to “Non-GAAP Financial Measures” below for a reconciliation of Non-GAAP financial measures to U.S. GAAP measures.

Operating income of $23.8 million for the nine months ended March 31, 2025, represents a 10% decrease from operating income of $26.5 million in the nine months ended March 31, 2024. Adjusted operating income, a Non-GAAP financial measure, was $33.2 million in the nine months ended March 31, 2025, compared to adjusted operating income of $33.8 million in the nine months ended March 31, 2024. The increase in net sales was offset by a change in product mix. Refer to “Non-GAAP Financial Measures” below for a reconciliation of Non-GAAP financial measures to U.S. GAAP measures.

Page 25

Non-GAAP Financial Measures

This report includes adjustments to GAAP operating income, net income, and earnings per share for the three months and nine ended March 31, 2025, and 2024. Operating income, net income, and earnings per share, which exclude the impact of long-term performance based compensation expense, the amortization expense of acquired intangible assets, commercial growth opportunity expense, acquisition costs, the lease expense on the step-up basis of acquired leases, and restructuring and severance costs, are non-GAAP financial measures. We further note that while the amortization expense of acquired intangible assets is excluded from the non-GAAP financial measures, the revenue of the acquired companies is included in the measures and the acquired assets contribute to the generation of revenue. We believe these non-GAAP measures will provide increased transparency to our core operating performance of the business. Also included in this report are non-GAAP financial measures, including Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA and Adjusted EBITDA), Net Debt to Adjusted EBITDA, Free Cash Flow, and organic sales growth. We believe that these are useful as supplemental measures in assessing the operating performance of our business. These measures are used by our management, including our chief operating decision maker, to evaluate business results, and are frequently referenced by those who follow the Company. These non-GAAP measures may be different from non-GAAP measures used by other companies. In addition, the non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations, in that they do not reflect all amounts associated with our results as determined in accordance with U.S. GAAP. Therefore, these measures should be used only to evaluate our results in conjunction with corresponding GAAP measures. Below is a reconciliation of these non-GAAP measures to net income and earnings per share reported for the periods indicated along with the calculation of EBITDA, Adjusted EBITDA, Free Cash Flow, Net Debt to Adjusted EBITDA, and organic sales growth.

	Three Months Ended
Reconciliation of operating income to adjusted operating income:	March 31
	2025		2024
(In thousands)
Operating income as reported	$	6,235	$	7,660

Long-term performance based compensation		1,116		1,021

Amortization expense of acquired intangible assets		1,465		1,190

Lease expense on the step-up basis of acquired leases		67		-

Restructuring/severance costs		-		141

Acquisition costs		774		-

Adjusted operating income	$	9,657	$	10,012

Reconciliation of net income to adjusted net income	Three Months Ended
	March 31
(In thousands, except per share data)	2025						2024
				Diluted EPS						Diluted EPS

Net income as reported	$	3,883		$	0.13		$	5,375		$	0.18

Long-term performance based compensation		879	(1)		0.02			767	(5)		0.03

Amortization expense of acquired intangible assets		1,128	(2)		0.04			888	(6)		0.03

Lease expense on the step-up basis of acquired leases		52	(3)		-			-			-

Restructuring/severance costs		-			-			101	(7)		-

Acquisition Costs		577	(4)		0.02			-			-

Tax rate difference between reported and adjusted net income		(188	)		(0.01	)		-			-

Net income adjusted	$	6,331		$	0.20		$	7,131		$	0.24

Page 26

Effective in the first quarter of fiscal 2025, LSI includes the amortization expense related to acquired intangible assets as an add-back to its non-GAAP reconciliation. Prior quarter non-GAAP reconciliations have been adjusted accordingly.

The following represents the income tax effects of the adjustments in the tables above, which were calculated using the estimated combined U.S., Canada and Mexico effective income tax rates for the periods indicated (in thousands):

⁽¹⁾ $237

⁽²⁾$337

⁽³⁾$15

⁽⁴⁾$197

⁽⁵⁾$254

⁽⁶⁾$302

⁽⁷⁾$40

	Nine Months Ended
Reconciliation of operating income to adjusted operating income:	March 31
	2025		2024
(In thousands)
Operating income as reported	$	23,825	$	26,507

Acquisition costs		822		-

Long-term performance based compensation		3,969		3,195

Amortization expense of acquired intangible assets		4,281		3,570

Lease expense on the step-up basis of acquired leases		203		-

Restructuring/severance costs		60		529

Consulting expense: commercial growth opportunities		81		19

Adjusted operating income	$	33,241	$	33,820

Reconciliation of net income to adjusted net income	Nine Months Ended
	March 31
(In thousands, except per share data)	2025						2024
				Diluted EPS						Diluted EPS

Net income as reported	$	16,212		$	0.53		$	19,309		$	0.65

Long-term performance based compensation		3,039	(1)		0.09			2,366	(7)		0.08

Amortization expense of acquired intangible assets		3,260	(2)		0.11			2,643	(8)		0.09

Restructuring/severance costs		45	(3)		-			391	(9)		0.01

Acquisition costs		627	(4)		0.02			-			-

Lease expense on the step-up basis of acquired leases		155	(5)		-			-			-

Consulting expense: commercial growth opportunities		62	(6)		-			13	(10)		-

Tax rate difference between reported and adjusted net income		(1,093	)		(0.03	)		(732	)		(0.03	)

Net income adjusted	$	22,307		$	0.72		$	23,990		$	0.80

(1) $930

Page 27

(2) $1,021

(3) $15

(4) $195

(5) $48

(6) $19

(7) $829

(8) $927

(9) $138

(10) $6

Reconciliation of Net Income to Adjusted EBITDA	Three Months Ended					Nine Months Ended
	March 31					March 31
(In thousands)	2025			2024		2025		2024
Net Income - Reported	$	3,883		$	5,375	$	16,212	$	19,309

Income Tax		1,713			2,076		5,049		5,903
Interest Expense, Net		661			134		2,264		1,153
Other (Income) Expense		(22	)		75		300		142
Operating Income as reported	$	6,235		$	7,660	$	23,825	$	26,507

Depreciation and Amortization		3,062			2,415		9,020		7,143

EBITDA	$	9,297		$	10,075	$	32,845	$	33,650

Long-term performance based compensation		1,116			1,021		3,969		3,195
Restructuring/severance costs		-			141		60		529
Lease expense on the step-up basis of acquired leases		67			-		203		-
Consulting expense: commercial growth opportunities		-			-		81		19
Acquisition costs		774			-		822		-

Adjusted EBITDA	$	11,254		$	11,237	$	37,980	$	37,393

Net Debt to Adjusted EBITDA	March 31			March 31
(In thousands)	2025			2024

Current portion and long-term debt as reported	$	3,571		$	3,571
Long-Term Debt		51,789			12,782
Total Debt		55,360			16,353
Less: Cash and cash equivalents		(4,301	)		(7,175	)

Net Debt	$	51,059		$	9,178

Adjusted EBITDA - Trailing 12 Months	$	52,024		$	51,496

Net Debt to Adjusted EBITDA		1.0			0.2

	Three Months Ended							Nine Months Ended
Organic compared to Inorganic Sales	March 2025		March 2024		% Variance			March 2025		March 2024		% Variance

Lighting Segment	$	58,967	$	64,881		-9	%	$	175,614	$	197,318		-11	%
Display Solutions Segment
- Comparable Display Solutions Sales		49,728		43,305		15	%		169,316		143,314		18	%
- EMI		22,417		-					72,011		-
- Canada's Best		1,369							1,369		-
Total Diplay Solutions Sales		73,514		43,305		70	%		242,696		143,314		69	%
Total net sales		132,481		108,186		22	%		418,310		340,632		23	%
Less:
EMI		22,417		-					72,011		-
Canada's Best		1,369		-					1,369		-
Total organic net sales	$	108,695	$	108,186		0	%	$	344,930	$	340,632		1	%

Page 28

Results of Operations

THREE MONTHS ENDED MARCH 31, 2025, COMPARED TO THREE MONTHS ENDED MARCH 31, 2024

Display Solutions Segment	Three Months Ended
	March 31
(In thousands)	2025		2024

Net Sales	$	73,514	$	43,304
Gross Profit	$	12,457	$	9,645
Operating Income	$	4,510	$	4,064

Display Solutions net sales of $73.5 million increased 70% from the same period in fiscal 2024. This segment generated organic growth of 15% driven by increased sales across all major product categories and vertical markets supported mostly by the grocery and refueling/ C-Store verticals. The Company’s acquisition of EMI and CBH (acquired March 11, 2025) also contributed $23.8 million of the quarter-over-quarter sales growth of the Display Solutions Segment.

Gross profit of $12.5 million in the three months ended March 31, 2025, increased 29% from the same period of fiscal 2024. Gross profit as a percentage of net sales in the three months ended March 31, 2025, decreased to 17% from 22% in the same period of fiscal 2024 impacted by product and vertical market mix. The rapid increase in demand combined with a high level of scheduling changes also had what is expected to be a transitory impact on margins. The Company continues to maintain favorable program pricing and prudent cost management.

Operating expenses of $7.9 million in the three months ended March 31, 2025, increased 43% from the same period of fiscal 2024, primarily driven by the acquisitions of EMI and CBH and also by continued investment in commercial initiatives to drive growth.

Display Solutions Segment operating income of $4.5 million in the three months ended March 31, 2025, increased 11% from the same period of fiscal 2024. The increase in operating income of $0.4 million was driven by the net effect of an increase in net sales partially offset by the gross margin impact of product and vertical mix.

Lighting Segment	Three Months Ended
	March 31
(In thousands)	2025		2024

Net Sales	$	58,967	$	64,882
Gross Profit	$	20,384	$	21,564
Operating Income	$	7,154	$	7,268

Lighting Segment net sales of $59.0 million in the three months ended March 31, 2025, decreased 9% compared to net sales of $64.9 million in the same period in fiscal 2024. The decline in sales is attributed to the comparison of quarter-over-quarter sales of large lighting projects. In fiscal 2024, the Company had several large lighting projects that did not repeat in fiscal 2025. While there was a decline in large lighting projects, small project activity continued to increase over the prior year period.

Gross profit of $20.4 million in the three months ended March 31, 2025, decreased 6% from the same period of fiscal 2024. The decline in gross profit is attributed to the decline in sales. While overall demand levels were lower in the fiscal third quarter, gross profit as a percentage of sales improved from 33% to 35%. The improvement in gross margin was driven by an increase in a higher mix of value applications, stable pricing, and affective cost management.

Operating expenses of $13.2 million in the three months ended March 31, 2025, decreased 7% from the same period of fiscal 2024, driven mostly by lower commission expense from lower sales, and effective cost management.

Lighting Segment operating income of $7.2 million for the three months ended March 31, 2025, decreased 2% from operating income of $7.3 million in the same period of fiscal 2024 primarily driven by decreased net sales partially offset by an improvement in operating margins.

Page 29

Corporate and Eliminations	Three Months Ended
	March 31
(In thousands)	2025			2024

Gross Profit (Loss)	$	2		$	1
Operating (Loss)	$	(5,429	)	$	(3,672	)

The gross profit relates to the change in the intercompany profit in inventory elimination.

Operating expenses of $5.4 million in the three months ended March 31, 2025, increased 48% from the same period of fiscal 2024. The increase in expense is primarily the result of continued investment in commercial initiatives to support the growth of the Company. Also contributing to the quarter-over-quarter change was an increase in employee benefit costs.

Consolidated Results

The Company reported $0.6 million and $0.1 million of net interest expense in the three months ended March 31, 2025, and March 31, 2024, respectively. The increase in interest expense is the result of the funds borrowed to acquire EMI in the fourth quarter of fiscal 2024 along with the funds borrowed in the third quarter of fiscal 2025 to acquire CBH partially offset by decreased borrowing costs.

The $1.7 million of income tax expense in the three months ended March 31, 2025, represents a consolidated effective tax rate of 30.6%. The $2.1 million of income tax expense in the three months ended March 31, 2024, represents a consolidated effective tax rate of 27.8%. Impacting the effective tax rate of both reported periods is the increase in pre-tax profits in foreign countries where the tax rates of these countries is higher than the US statutory tax rates.

The Company reported net income of $3.9 million in the three months ended March 31, 2025, compared to net income of $5.4 million in the three months ended March 31, 2024. Non-GAAP adjusted net income was $6.3 million for the three months ended March 31, 2025, compared to adjusted net income of $7.1 million for the three months ended March 31, 2024 (Refer to the Non-GAAP tables above). The decrease in Non-GAAP adjusted net income is primarily the net result of an increase in net sales offset by unfavorable product mix and operating efficiencies. Diluted adjusted earnings per share of $0.13 was reported in the three months ended March 31, 2025, compared to $0.18 diluted adjusted earnings per share in the same period of fiscal 2024. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the three months ended March 31, 2025 were 30,966,000 shares compared to 30,122,000 shares in the same period last year.

NINE MONTHS ENDED MARCH 31, 2025, COMPARED TO NINE MONTHS ENDED MARCH 31, 2024

Display Solutions Segment	Nine Months Ended
	March 31
(In thousands)	2025		2024

Net Sales	$	242,696	$	143,314
Gross Profit	$	43,308	$	31,793
Operating Income	$	20,344	$	14,585

Display Solutions net sales of $242.7 million increased 69% from same period in fiscal 2024. This segment generated organic growth of 18% driven by increased sales across all major product categories and vertical markets supported mostly by the grocery and refueling/ C-Store verticals. The Company’s acquisitions of EMI and CBH also contributed $73.4 million of the year-over-year sales growth of the Display Solutions Segment.

Gross profit of $43.3 million in the nine months ended March 31, 2025, increased 36% from the same period of fiscal 2024. Gross profit as a percentage of net sales in the nine months ended March 31, 2025, decreased to 18% from 22% in the same period of fiscal 2024 impacted by product and vertical market mix. The rapid increase in demand over the past two quarters combined with a high level of scheduling changes also had a transitory impact on margins. The Company continues to maintain favorable program pricing and prudent cost management.

Operating expenses of $23.0 million in the nine months ended March 31, 2025 increased 33% from the same period of fiscal 2024, primarily driven by the acquisitions of EMI and CBH and by continued investment in commercial initiatives to drive growth.

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Operating income of $20.3 million in the nine months ended March 31, 20254 increased 40% from the same period of fiscal 2024. The increase in operating income of 5.8 million was driven by the net effect of an increase in net sales partially offset by the gross margin impact of product mix.

Lighting Segment	Nine Months Ended
	March 31
(In thousands)	2025		2024

Net Sales	$	175,614	$	197,318
Gross Profit	$	58,042	$	67,542
Operating Income	$	18,885	$	24,877

Lighting Segment net sales of $175.6 million in the nine months ended March 31, 2025, decreased 11% compared to net sales of $197.3 million in the same period in fiscal 2024. The decline in sales is attributed to the comparison of year-over-year sales of large lighting projects. In fiscal 2024, the Company had several large lighting projects that did not repeat in fiscal 2025. While there was a decline in large lighting projects, small project activity continues to increase over the prior year period.

Gross profit of $58.0 million in the nine months ended March 31, 2025, decreased 14% from the same period of fiscal 2024. The decline in gross profit is attributed to the decline in sales. While overall demand levels were lower in the first nine months, gross profit as a percentage of sales only decreased by 1% compared to the 34% from the margin rate reported in first nine months of fiscal 2024. Maintaining a comparable gross margin rate on lower sales was the result of an increase in a higher mix of value applications, stable pricing, and affective cost management.

Operating expenses of $39.2 million in the nine months ended March 31, 2025, decreased 8% from the same period of fiscal 2024, driven mostly by lower commission expense from lower sales, and effective cost management.

Lighting Segment operating income of $18.9 million for the nine months ended March 31, 2025, decreased 24% from operating income of $24.9 million in the same period of fiscal 2024 primarily driven by decreased net sales partially offset by an increase in a higher mix of value applications, stable pricing, and effective cost management.

Corporate and Eliminations	Nine Months Ended
	March 31
(In thousands)	2025			2024

Gross Profit	$	1		$	-
Operating (Loss)	$	(15,404	)	$	(12,955	)

The gross profit (loss) relates to the change in the intercompany profit in inventory elimination.

Operating expenses of $15.4 million in the nine months ended March 31, 2025, increased 19% from the same period of fiscal 2024. The increase in expense is the result of an increase in investment in commercial initiatives to support the growth of the Company. Also contributing to the year-over-year change was an increase in employee benefit costs.

Consolidated Results

The Company reported $2.3 million and $1.2 million of net interest expense in the nine months ended March 31, 2025, and March 31, 2024, respectively. The increase in interest expense is the result of the funds borrowed to acquire EMI in the fourth quarter of fiscal 2024 along with the funds borrowed to acquire CBH in the third quarter of fiscal 2025, partially offset by decreased borrowing costs. The Company also recorded other expense of $0.3 million and $0.1 million in the nine months ended March 31, 2025, and March 31, 2024, respectively, both of which is related to net foreign exchange currency transaction gains and losses through the Company’s Mexican and Canadian subsidiaries.

The $5.1 million of income tax expense in the nine months ended March 31, 2025 represents a consolidated effective tax rate of 23.7%. The $5.9 million of income tax expense in the nine months ended March 31, 2024 represents a consolidated effective tax rate of 23.4%. Impacting the effective tax rate of both reported periods was the favorable tax treatment of the Company’s long-term performance based compensation.

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The Company reported net income of $16.2 million in the nine months ended March 31, 2025, compared to net income of $19.3 million in the nine months ended March 31, 2024. Non-GAAP adjusted net income was $22.3 million for the nine months ended March 31, 2025, compared to adjusted net income of $24.0 million for the nine months ended March 31, 2024 (Refer to the Non-GAAP tables above). The decrease in Non-GAAP adjusted net income is primarily the net result of an increase in net sales offset by unfavorable product mix and operating efficiencies. Diluted adjusted earnings per share of $0.53 was reported in the nine months ended March 31, 2025, compared to $0.64 diluted adjusted earnings per share in the same period of fiscal 2024. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the nine months ended March 31, 2025, were 30,790,000 shares compared to 30,005,000 shares in the same period last year.

Liquidity and Capital Resources

The Company considers its level of cash on hand, borrowing capacity, current ratio and working capital levels to be its most important measures of short-term liquidity. For long-term liquidity indicators, the Company believes its ratio of long-term debt to equity and our historical levels of net cash flows from operating activities to be the most important measures.

At March 31, 2025, the Company had working capital of $96.3 million compared to $83.3 million at June 30, 2024. The ratio of current assets to current liabilities was 2.1 to 1 for both March 31, 2025, and June 30, 2024. The acquisition of CBH in the third quarter of fiscal 2025 accounted for $8.3 million of the increase in net working capital. When the impact of the acquisition of CBH is removed from the year-over-year comparison, net working capital increased $4.8 million. Most of the increase is attributed to a $14.9 million increase in accounts receivable partially offset by a $9.0 increase in accounts payable and accrued expenses.

Net accounts receivable was $98.0 million and $78.6 million at March 31, 202, and June 30, 2024, respectively. The acquisition of CBH accounted for $4.5 million of the increase. DSO increased to 59 days at March 31, 2025, from 58 days at June 30, 2024.

Net inventories of $74.5 million at March 31, 2025, increased $3.5 million from $70.9 million at June 30, 2024. Lighting Segment net inventory decreased $1.9 million whereas net inventory in the Display Solutions Segment increased $5.4 million. The acquisition of CBH accounted for $4.3 million of the increase in net inventory. The growth in Display Solutions inventory excluding the impact of CBH inventory was to support the growth in backlog resulting from an increase in program activity.

Cash generated from operations and borrowing capacity under the Company’s line of credit is its primary source of liquidity. The Company has a $25 million term loan and $75 million remaining in a secured revolving line of credit. Both facilities expire in the first quarter of fiscal 2027. As of March 31, 2025, $32.2 million of the credit line was available. The Company is in compliance with all of its loan covenants. The $100 million credit facility plus cash flows from operating activities are adequate for operational and capital expenditure needs for the remainder of fiscal 2025.

The Company generated $27.1 million of cash from operating activities in the nine months ended March 31, 2025, compared to $32.3 million of cash generated from operating activities in the same period in fiscal 2024. The Company continues to effectively manage its working capital while generating increasing cash flow from earnings in both fiscal years, resulting in strong cash flow from operations.

The Company invested $2.5 million and $4.6 million of cash related to purchases of property, plant and equipment in the nine months ended March 31, 2025, and March 31, 2024, respectively. In the third quarter of FY 2025 the Company acquired CBH for $22.8 million net of cash received. The Company continues to invest in equipment and tooling to support sales growth.

The Company had a net use of cash of $3.2 million and $22.4 million related to financing activities in the nine months ended March 31, 2025, and March 31, 2024, respectively. The decrease in net cash used year-over-year was the result of the debt funding required to acquire CBH in the third quarter of fiscal 2025. The Company continues to generate positive cash flow from its operations in order to pay down its debt and fund its dividend payments to shareholders.

The Company has on its balance sheet financial instruments consisting primarily of cash and cash equivalents, revolving lines of credit, and long-term debt. The fair value of these financial instruments approximates carrying value because of their short-term maturity and/or variable, market-driven interest rates.

Off-Balance Sheet Arrangements

The Company has no financial instruments with off-balance sheet risk and have no off-balance sheet arrangements.

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Cash Dividends

In April 2025, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable May 13, 2025, to shareholders of record as of May 5, 2025. The indicated annual cash dividend rate for fiscal 2025 is $0.20 per share. The Board of Directors has adopted a policy regarding dividends which indicates that dividends will be determined by the Board of Directors in its discretion based upon its evaluation of earnings, cash flow requirements, financial condition, debt levels, stock repurchases, future business developments and opportunities, and other factors deemed relevant.

Critical Accounting Policies and Estimates

A summary of our significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company’s fiscal 2024 Annual Report on Form 10-K.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our exposure to market risk since June 30, 2024. Additional information can be found in Item 7A, Quantitative and Qualitative Disclosures About Market Risk, which appears on page 16 of the Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as such term is defined Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized, and reported within required time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

We conducted, under the supervision of our management, including the Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2025, our disclosure controls and procedures were effective. Management believes that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q are fairly presented in all material respects in accordance with GAAP for interim financial statements, and the Company’s Chief Executive Officer and Chief Financial Officer have certified that, based on their knowledge, the condensed consolidated financial statements included in this report fairly present in all material respects the Company’s financial condition, results of operations and cash flows for each of the periods presented in this report.

Changes in Internal Control

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 5. OTHER INFORMATION

In addition to the other information set forth in this report, careful consideration should be given to the factors discussed in Item 1A, “Risk Factors” in our Form 10-K for the year ended June 30, 2024, which could materially affect our business, financial condition or future results. The risks described therein are not the only risks facing us. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, also may adversely affect our business, financial condition and/or operating results. There have been no material changes with respect to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended June 30, 2024, which are incorporated herein by reference, except for the addition of the following:

Changes in United States and international trade policies may adversely impact our business and operating results.

The United States government has made statements and taken certain actions that may lead to potential changes to United States and international trade policies, including imposing tariffs or taxes. Our products are manufactured in the United States, and a significant portion of our revenues are domestic. Because some of our direct and downstream suppliers of components for our products are located in foreign countries, we are exposed to potential supply chain disruptions or delays and increasing costs in the event of changes in policies, laws, rules and regulations of the United States or foreign governments. Due to the global nature of our business, international results could be impacted. Implementation of tariffs or other trade measures by the United States government and reciprocal measures potentially enacted by other countries subject to such tariffs or other measures remains uncertain and may cause material short-term or long-term fluctuations in our results. These actions are unpredictable and could have a material adverse impact on our business, financial condition and results of operations.

ITEM 6. EXHIBITS

Exhibits:

31.1	Certification of Principal Executive Officer required by Rule 13a-14(a)

31.2	Certification of Principal Financial Officer required by Rule 13a-14(a)

32.1	Section 1350 Certification of Principal Executive Officer

32.2	Section 1350 Certification of Principal Financial OfficerEmerging growth company

101.INS Inline XBRL Instance Document

101.SCH Inline XBRL Taxonomy Extension Schema Document

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	LSI Industries Inc.


	By:	/s/ James A. Clark
		James A. Clark
		Chief Executive Officer and President
		(Principal Executive Officer)


	By:	/s/ James E. Galeese
		James E. Galeese
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)
May 8, 2025

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