Commercial lighting and retail display solutions provider LSI (NASDAQ:LYTS) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 13.9% year on year to $157.2 million. Its non-GAAP profit of $0.31 per share was 10.7% above analysts’ consensus estimates.
Is now the time to buy LYTS? Find out in our full research report (it’s free for active Edge members).
LSI (LYTS) Q3 CY2025 Highlights:
- Revenue: $157.2 million vs analyst estimates of $149.5 million (13.9% year-on-year growth, 5.2% beat)
- Adjusted EPS: $0.31 vs analyst estimates of $0.28 (10.7% beat)
- Adjusted EBITDA: $15.67 million vs analyst estimates of $14.92 million (10% margin, 5% beat)
- Operating Margin: 7.1%, in line with the same quarter last year
- Market Capitalization: $609.5 million
StockStory’s Take
LSI’s third quarter results outpaced Wall Street’s revenue and profit expectations, but the market responded negatively following the report. Management attributed the solid quarter to double-digit growth in both Display Solutions and Lighting segments, with volume gains driving much of the top-line strength. CEO James Clark noted that recent account conversions and a strong presence in priority verticals—such as grocery, convenience stores, and quick-serve restaurants—helped LSI outperform broader nonresidential construction trends. The company’s ability to manage supply chain disruptions and maintain competitive lead times was highlighted as a differentiator, while integration of recent acquisitions contributed to expanded capabilities and customer reach.
Looking ahead, management expects continued growth by leveraging a comprehensive offering across targeted vertical markets and pursuing further operational efficiency. CEO James Clark emphasized the company’s focus on developing internal talent and optimizing processes to support its strategic plan, stating, “We are looking for that operational efficiency. We are turning the dial in collection with our people to look for ways that we can be more operationally efficient.” Management also cited a healthy pipeline of customer proposals and concept work, particularly in grocery and convenience store segments, as key drivers for future demand.
Key Insights from Management’s Remarks
Management pointed to volume-driven growth in both Lighting and Display Solutions, successful integration of acquisitions, and a healthy project pipeline as main contributors to quarterly performance.
-
Lighting segment volume gains: The Lighting business benefited almost exclusively from higher volumes rather than price increases, with several large project wins and recent key account conversions supporting growth. Management believes purpose-built products and domestic manufacturing have provided a competitive advantage and enabled share gains.
-
Display Solutions pipeline strength: The Display Solutions segment saw sustained demand from grocery and convenience store customers, aided by the continued recovery in the grocery vertical and ongoing multi-site programs in the refueling convenience channel. Proposal and concept work with multiple customers remains active, offering good visibility into future activity.
-
Integration of recent acquisitions: The integration of EMI and Canada’s Best Holdings is progressing well, with the latter delivering one of its strongest quarters. Management expects alignment of sales and manufacturing operations to drive further efficiency and unlock new opportunities.
-
Operational efficiency focus: Management is prioritizing operational efficiency through internal talent development and process optimization, aiming to support margin expansion and long-term strategic goals. This focus is seen as critical to achieving targeted EBITDA margins.
-
Resilience amid input cost and tariff volatility: The company managed fluctuations in input costs and tariffs through disciplined project pricing and supply chain management, maintaining stable pricing for customers while adapting quickly to changes in material costs.
Drivers of Future Performance
Management’s outlook is shaped by a combination of continued vertical market focus, operational efficiency initiatives, and a strong project pipeline, tempered by normalization after last year’s exceptional growth.
-
Vertical market strategy: The company expects ongoing growth in targeted sectors such as grocery, convenience stores, refueling, and quick-serve restaurants, as these verticals are experiencing both expansion and renovation cycles. Management’s approach of offering integrated product and service solutions is seen as a differentiator supporting future revenue.
-
Operational efficiency and margin focus: LSI aims to drive margin gains through internal process improvements and talent development. Management has set operational efficiency as a key pillar to support its path toward higher EBITDA margins, emphasizing disciplined cost control and productivity enhancements.
-
Project pipeline and industry normalization: While management remains optimistic about sustained demand, particularly for large multi-site projects, they cautioned that year-over-year comparisons will reflect normalization after last year’s unusual surge in grocery-related business. The company continues to monitor broader macroeconomic trends and customer investment cycles for potential impacts.
Catalysts in Upcoming Quarters
In the upcoming quarters, the StockStory team will monitor (1) the pace of new project awards and customer conversions in targeted verticals, (2) improvements in operational efficiency and progress toward margin expansion goals, and (3) successful integration and alignment of recent acquisitions. Additionally, we will track normalization in grocery and convenience store activity as the industry adjusts following last year’s exceptional demand surge.
LSI currently trades at $21, down from $22.98 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
Our Favorite Stocks Right Now
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.