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LSI's profits are improving as it stabilizes its revenue base.
Robust cash flow is bolstering LSI's balance sheet and funding its expansion plans.
Shares of LSI Industries (NASDAQ: LYTS) popped on Thursday after the commercial lighting and display manufacturer announced its fiscal 2026 second-quarter results.
By the close of trading, LSI's stock price was up more than 14%.
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Image source: Getty Images.
LSI's net sales declined by less than 1% year over year to $147 million in the quarter ended Dec. 31, as the company lapped event-driven grocery sales that have since normalized.
"The strength of our diversified, solutions-based model was evident in the second quarter, enabling LSI to deliver solid performance despite a challenging prior-year comparison," CEO James Clark said in a press release.
LSI's lighting business was a notable growth driver, with sales up 15%.
A disciplined pricing strategy, expense controls, and productivity initiatives helped to more than offset the manufacturer's cost inflation. LSI's adjusted net income, in turn, rose slightly to $8.4 million, or $0.26 per share. That bested Wall Street's estimates, which had called for adjusted per-share profits of $0.22.
LSI also generated $23.3 million in free cash flow, which enabled it to pay down debt and strengthen its balance sheet. Management also plans to use LSI's strong cash generation to fund the company's organic growth investments as it hunts for value-creating acquisitions.
"Entering the second half of fiscal 2026, we anticipate continued year-over-year revenue growth in our lighting segment, together with resumption of growth within our display solutions segment," Clark said.
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