April 24, 2025
LSI's Lighting Margins Rise, But Sales Stay Soft
Lighting revenue declines as acquisitions fuel significant Display segment growth
LSI Industries posted a 22% year-over-year increase in total sales for the third quarter of fiscal 2025, buoyed by surging demand and recent acquisitions in the Display Solutions segment. However, organic sales were nearly flat — $108.2 million compared to $108.7 million in the prior year — highlighting the outsized impact of acquisitions in the Display Solutions segment. Within the Lighting division, softness persists, continuing the subdued sales pattern that has characterized the fiscal year.
Notably, Display Solutions now account for 58% of total revenue — a reversal from 2021, when Lighting made up nearly 60% and Display the remaining 40%.
Lighting sales declined 9% from the prior year to $59.0 million in Q3, following two consecutive quarters of $58 million. This fiscal year’s Lighting results stand in contrast to fiscal 2024, when the segment posted consistent revenues of $65 - 68 million per quarter.
Still, there are some green shoots: operating margin in the Lighting segment expanded by 110 basis points to 13.3%. Management attributes the margin improvement to a stronger product mix and tighter cost controls, factors that cushioned the impact of weaker large-project shipments.
Encouragingly, the company booked a Lighting segment book-to-bill ratio of 1.13 for the quarter, and the backlog grew 18% compared to the same period last year. The pipeline may be building, but the question remains: when will it convert?
Delays and Duties
LSI cited “customer indecision early in the calendar year” as a major factor delaying project release timing. While quoting activity has remained healthy, actual conversions have been inconsistent — a trend the company expects to persist quarter to quarter.
Adding to the uncertainty are newly announced tariffs, slated to take effect 90 days from their April 2 introduction. While most LSI lighting products are manufactured domestically, the company acknowledged that certain commodity products and components still rely on international sourcing. Leadership stated that pricing and sourcing strategies are being re-evaluated in response.
Display Strength Masks Lighting Softness
The broader company performance tells a different story. Total quarterly sales reached $132.5 million, with the Display Solutions segment soaring 70% year-over-year to $73.5 million. Acquisitions of EMI and Canada’s Best contributed to that growth, alongside a 15% organic gain.
Year-to-date, the Display business accounts for 58% of total revenue, while Lighting represents the remaining 42%. It’s a dynamic that highlights the company's evolving revenue mix — and the increasingly pivotal role of Display in driving overall growth.
Strategic Stillness and What’s Next
Management reaffirmed its dual-track strategy of organic growth and bolt-on acquisitions but offered no new financial guidance. The company continues to position its Lighting business as margin-resilient and backlog-rich — a steady hand amid uncertain market rhythms.
For now, LSI is betting that stable pricing, selective sourcing, and a maturing backlog will give the Lighting division room to rebound. Until then, Display Solutions will carry the torch for topline momentum.
