LSI Industries reported a 6% decline in lighting sales for the fiscal first quarter ended Sept. 30, as customers continued to request quotes but took longer to turn them into orders. Lighting revenue fell to $64.8 million from $69.1 million a year earlier, the segment's lowest total since the third quarter of fiscal 2026.
The quarter's headline numbers were reshaped by Royston Group, the retail fixture company LSI acquired in March. Royston contributed $72.4 million in sales, more than the entire lighting segment. Total net sales rose 44% to $225.9 million, but excluding Royston, organic sales declined 2% to $153.4 million.
Lighting's share narrows
LSI attributed the organic decline to demand softness in the North American non-residential lighting market. Lighting now represents 28.7% of company revenue, down from 43.9% a year earlier. Most of that shift reflects the addition of a full Royston quarter rather than an equivalent decline in lighting revenue, but the comparison still underscores how much the company's revenue base has changed.
Royston sits within Display Solutions, which grew 83% to $161.0 million. Legacy Display sales were $88.6 million, also ahead of lighting. Within the broader trend, lighting sales have moved in a band of roughly $57 million to $73 million since the second quarter of fiscal 2022. The latest result was $5.5 million below the $70.3 million posted in the fourth quarter.
Pricing supports margin; volume likely weaker
Lighting gross margin improved despite lower sales. LSI credited focused price actions in response to cost inflation, and adjusted gross margin edged up 10 basis points to 33.7%. Because dollar sales fell 6% while prices rose, unit volume likely declined by more than the revenue figure. LSI has not disclosed that unit outcome, making it an inference from the available numbers.
Below the gross margin line, adjusted operating income slipped to $8.2 million from $9.3 million, and adjusted EBITDA fell to $8.9 million from $9.9 million. The EBITDA margin was 13.7%, down from 14.4%. LSI said operating expenses held flat because of continued spending on new products and customer initiatives. Lighting still earned a richer margin than Display Solutions, which ran at 11.5%.
Orders steady, conversion slower
The leading indicators were flat rather than falling. Project quote activity held steady sequentially and year over year, lighting orders rose 1%, and the book-to-bill ratio was described as steady at 1.0, with a call deck slide putting it above 1.0. Momentum did cool from the fourth quarter, when lighting orders were up 5%.
The more important detail for lighting suppliers is that quote-to-order conversion is lengthening on large and small projects alike. That describes a familiar quarterly pattern for distributors and agency principals: projects remain in the pipeline, but approvals are taking longer. Steady quoting shows customer interest, not a guarantee that projects will be signed.
Vertical mix and project pipeline
Lighting sales grew in refueling, sports and banking applications. They declined in parking, small retail, warehouse and automotive, which CEO James Clark described as verticals where LSI maintains a strong position. A strong position in a shrinking pool offers limited comfort, especially when several of those are sizable markets for the segment.
Refueling is worth watching. Display's refueling and convenience-store sales rose 5%, and a 2,500-site refresh for a major oil company is expected to ramp through fiscal 2027 and into fiscal 2028. It is not yet clear whether LSI will route more lighting through direct national-account relationships rather than the traditional rep channel; lighting growth in that vertical is a hint, not evidence.
LSI also has approval from one large quick-service restaurant customer for a 3,000-store interior renovation program, with LSI selected as one of three providers. Work is scheduled to start late in the third quarter of fiscal 2027 and run about three years. The customer is unnamed, and LSI has not said whether lighting is included in the scope. QSR demand is down double digits, and comparable Display sales rose just 1% as customers missed renovation schedules ahead of the holiday pause.
For lighting readers, the quarter reads less like a verdict and more like a status report. Quote logs show that projects exist. The next two quarters will show whether stretched conversion cycles are a pause before releases come through or the early phase of a slowdown that has not yet been named.