LSI INDUSTRIES INC
For the period ended Sep 30, 2026. Filed Nov 6, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 6, 2026
LYTS$17.20-3.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-08.
0001437749-26-015958
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-06.
0001437749-26-035562
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 61 previous paragraphs and 44 current paragraphs.
19 unchanged; 12 reworded; 13 added; 27 removed; 3 previous and 0 current paragraphs rearranged.
Tables are not compared: 15 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
Net sales of $225.9 million for the three months ended September 30, 2026, increased 44% as compared to net sales of $157.2 million for the three months ended September 30, 2025. Lighting segment net sales of $64.8 million decreased 6% compared to prior year quarter net sales of $69.1 million. The 6% decline in net sales reflects soft demand across the broader commercial and industrial markets. Net sales in the Display Solutions segment of $161.0 million increased 83% compared to the same quarter last year sales of $88.2 million. The Company’s acquisition of Royston contributed most of the increase in Display Solutions segment sales. Excluding Royston sales, net sales increased 1%. Quarter-over-quarter sales to the refueling/c-store and grocery verticals increased and were partially offset by softness in the quick service restaurant ("QSR") vertical.
Current report
Adjusted EBITDA for the trailing twelve months ended September 30, 2026, includes proforma results for the Royston acquisition.
Current report
Display Solutions Segment net sales of $161.0 million in the three months ended September 30, 2026, increased 83% from net sales of $88.2 million in the same period in fiscal 2026. The Company’s acquisition of Royston contributed to most of the increase in Display Solutions segment sales. Excluding Royston sales, net sales increased 1%. Quarter-over-quarter sales to the refueling/c-store and grocery verticals increased and were partially offset by softness in the QSR vertical.
Current report
Gross profit of $30.4 million in the three months ended September 30, 2026, increased 78% from the same period of fiscal 2026. Gross profit as a percentage of net sales in the three months ended September 30, 2026, decreased to 18.9% from 19.4% in the same period of fiscal 2026. The decrease in gross profit as a percentage of sales was the result of increased material input costs in several product lines, and customer mix. The Company continues to maintain favorable program pricing and prudent cost management.
Current report
Display Solutions Segment operating income of $13.0 million in the three months ended September 30, 2026, increased 51% from the same period of fiscal 2026. The increase in operating income was driven by the increase in net sales and favorable program pricing and prudent cost management.
Current report
Lighting Segment net sales of $64.8 million in the three months ended September 30, 2026, decreased 6% compared to net sales of $69.1 million in the same period in fiscal 2026. The 6% decline in net sales reflects soft demand across the broader commercial and industrial markets. Sales to the refueling/c-store, banking, and sports vertical increased from the same quarter last fiscal year and were offset by a decline in sales in other verticals. The Company maintains a favorable position in the parking, small retail, warehouse, and automotive verticals.
Current report
Gross profit of $21.9 million in the three months ended September 30, 2026, decreased 6% from the same period of fiscal 2026. While sales declined, gross profit margin was maintained as a result of aligning selling price with material input costs inflation.
Current report
Lighting Segment operating income of $7.5 million for the three months ended September 30, 2026, decreased 12% from operating income of $8.5 million in the same period of fiscal 2026 primarily driven by decreased net sales.
Current report
Operating expenses of $6.4 million in the three months ended September 30, 2026, increased 3% from $6.2 million from the same period of fiscal 2026. The increase was primarily driven by an increase in wage and benefit costs.
Current report
Net accounts receivable was $143.5 million and $151.2 million at September 30, 2026, and June 30, 2026, respectively. DSO decreased to 61 days at September 30, 2026, from 65 days at June 30, 2026. The decrease in net accounts receivable is the result of lower sales in the first quarter of fiscal 2027 compared to the fourth quarter of fiscal 2026.
Current report
Net inventories of $114.4 million at September 30, 2026, increased $2.1 million from $112.3 million at June 30, 2026. Lighting Segment net inventory increased $1.7 million, and net inventory in the Display Solutions Segment increased $0.4 million. The Company manages inventory levels to meet customer demands.
Current report
The Company generated $0.6 million and consumed $0.7 million of cash related to investing activities in the three months ended September 30, 2026, and September 30, 2025, respectively. The $0.6 million generation of cash was the result of a $2.0 million recovery of purchase price related to the Royston acquisition. The Company invested $1.4 million and $1.0 million in capital assets as of during the period ending September 30, 2026, and September 30, 2025, respectively, most of which related to investments in equipment and tooling to support sales growth.
Current report
The Company consumed cash of $17.2 million in the three months ended September 30, 2026, compared to a generation of cash of $3.9 million in the three months ended September 30, 2025, related to financing activities. The improvement in the generation of cash flow from operations in the first quarter of fiscal 2027 allowed the Company to reduce its debt by $15.7 million. Contributing favorably to cash flow from financing activities was the generation of cash related to the proceeds from the exercise of stock options of $0.5 million and $3.0 million in the first quarters of fiscal 2027, and 2026, respectively. Cash dividends paid to shareholders increased from $1.5 million in the first quarter of fiscal 2026 compared to $1.9 million in the first quarter of fiscal 2027.
Removed paragraphs (27)
Previous report
Net sales of $150.5 million for the three months ended March 31, 2026, increased 14% as compared to net sales of $132.5 million for the three months ended March 31, 2025. The increase in net sales reflects growth in both of the Company’s segments with a 23% sales growth in the Display Solutions segment and a 2% sales growth in the Lighting segment. The 23% growth in the Display Solutions Segment was primarily driven by strong demand levels across a broad base of customers in both the grocery and refueling/c-store verticals. Third quarter net sales in the Display Solutions segment also reflects Royston net sales of $6.6 million for the 6-day stub period. Royston was acquired on March 24, 2026. Lighting Segment sales improved 2% compared to the same period last year despite a lengthening project quote to order conversion period.
Previous report
Net sales of $454.8 million for the nine months ended March 31, 2026, increased 9% as compared to net sales of $418.3 million for the nine months ended March 31, 2025. The increase in net sales reflects growth in both of the Company’s segments with a 7% sales growth in the Display Solutions segment and a 12% sales growth in the Lighting segment. As stated in the overview of the third quarter, the demand levels across a broad base of customers in both the grocery and refueling/c-store verticals contributed to the year-over-year growth in the Display Solutions segment. Net sales in the period for the Display Solutions segment also reflects Royston net sales of $6.6 million for the 6-day stub period. Royston was acquired on March 24, 2026. Growth in the Lighting Segment continued for the third straight quarter with period-over-period sales growth contributing to the year-to-date growth in net sales of 12%.
Previous report
Operating income of $23.9 million for the nine months ended March 31, 2026, represents a slight increase from operating income of $23.8 million in the nine months ended March 31, 2025. Operating income for the three months ended March 31, 2026, was impacted by $6.9 million of acquisition-related costs. Adjusted operating income, a Non-GAAP financial measure, was $39.1 million in the nine months ended March 31, 2026, compared to adjusted operating income of $33.2 million in the nine months ended March 31, 2025. Refer to “Non-GAAP Financial Measures” below for a reconciliation of Non-GAAP financial measures to U.S. GAAP measures.** **The year-over-year sales growth of 9% coupled with improved margins resulting from improved productivity and price optimization resulted in the growth in operating income.
Previous report
Display Solutions net sales of $90.5 million increased 23% from same period in fiscal 2025. The 23% growth in the Display Solutions Segment was primarily driven by strong demand levels across a broad base of customers in both the grocery and refueling/c-store verticals. Third quarter net sales in the Display Solutions segment also reflects Royston net sales of $6.6 million for the 6-day stub period. Royston was acquired on March 24, 2026.
Previous report
Gross profit of $17.3 million in the three months ended March 31, 2026, increased 39% from the same period of fiscal 2025. Gross profit as a percentage of net sales improved 220 basis points from the same period as last year. The strong demand in grocery and refueling/c-store verticals coupled with increased productivity and price optimization contributed to the quarter-over-quarter leveraged growth in gross margin.
Previous report
Display Solutions Segment operating income of $7.9 million in the three months ended March 31, 2026, increased 75% from the same period of fiscal 2025. The increase in operating income, driven by the net effect of an increase in net sales, improved gross margin as a percentage of sales, partially offset by an increase in operating expenses.
Previous report
Lighting Segment net sales of $60.0 million in the three months ended March 31, 2026, increased 2% compared to net sales of $59.0 million in the same period in fiscal 2025. Lighting Segment sales improved 2% compared to the same period last year despite less favorable weather conditions in the early part of the quarter.
Previous report
Gross profit of $20.9 million in the three months ended March 31, 2026, increased 3% from the same period of fiscal 2025. Gross profit as a percentage of sales improved 30 basis points as a result of pricing actions taken in response to shifts in material input costs.
Previous report
Lighting Segment operating income of $7.0 million for the three months ended March 31, 2026, decreased 3% from operating income of $7.2 million in the same period of fiscal 2025 primarily driven by the net effect of an increase in net sales, a 30-basis point improvement in gross margin, offset by an increase in operating expenses.
Previous report
Operating expenses of $10.8 million in the three months ended March 31, 2026, increased from $5.4 million from the same period of fiscal 2025. The increase in expense is primarily the result of acquisition-related costs for Royston and CBH of $5.3 million.
Previous report
NINE MONTHS ENDED MARCH 31, 2026, COMPARED TO NINE MONTHS ENDED MARCH 31, 2025
Previous report
Display Solutions net sales of $259.0 million increased 7% from same period in fiscal 2025. Net sales within the Display Solution segment have returned to its normal seasonal sales levels, driven in part by the third quarter growth resulting from strong demand levels across a broad base of customers in both the grocery and refueling/c-store verticals. Year-to-date net sales in the Display Solutions segment also reflects Royston net sales of $6.6 million for the 6-day stub period. Royston was acquired on March 24, 2026.
Previous report
Gross profit of $48.8 million in the nine months ended March 31, 2026, increased 13% from the same period of fiscal 2025. Gross profit as a percentage of net sales in the nine months ended March 31, 2026, increased 100 basis points. The strong demand in grocery and refueling/c-store verticals coupled with increased productivity and price optimization contributed to the year-over-year leveraged growth in gross margin.
Previous report
Operating expenses of $26.2 million in the nine months ended March 31, 2026, increased 14% from the same period of fiscal 2025, primarily driven by the acquisition costs and related operating costs related to the Royston acquisition, and by continued investment in commercial initiatives to drive growth.
Previous report
Operating income of $22.6 million in the nine months ended March 31, 2026, increased 11% from the same period of fiscal 2025. The increase in operating income driven by the net effect of an increase in net sales, improved gross margin as a percentage of sales, partially offset by an increase in operating expenses.
Previous report
Lighting Segment net sales of $195.8 million in the nine months ended March 31, 2026, increased 12% compared to net sales of $175.6 million in the same period in fiscal 2025. The increase in net sales is the result of the Company’s investment in commercial initiatives to drive growth which continues to deliver above market net sales growth despite overall market headwinds.
Previous report
Gross profit of $67.1 million in the nine months ended March 31, 2026, increased 16% from the same period of fiscal 2025. Gross profit as a percentage of sales improved 120 basis points as a result of pricing actions taken in response to shifts in material input costs.
Previous report
Operating expenses of $44.1 million** **in the nine months ended March 31, 2026, increased 16% from the same period of fiscal 2025, driven mostly by higher commission expense from higher sales along with a continued investment in sales initiatives to generate sales growth.
Previous report
Lighting Segment operating income of $23.0 million for the nine months ended March 31, 2026, increased 22% from operating income of $18.9 million in the same period of fiscal 2025. The increase in operating income is primarily driven by the net effect of an increase in net sales, a 120-basis point improvement in gross margin, partially offset by an increase in operating expenses.
Previous report
Operating expenses of $21.7 million in the nine months ended March 31, 2026, increased from $15.4 from the same period of fiscal 2025. The increase in expense is primarily the result of acquisition-related costs of $5.9 million and also by a small increase in an investment in commercial initiatives to support the growth of the Company.
Previous report
Consolidated Results
Previous report
The Company reported $1.8 million and $2.3 million of net interest expense in the nine months ended March 31, 2026, and March 31, 2025, respectively. The decrease in interest expense is the result of a reduction of year-over-year average outstanding debt driven by profitability and by sustained working capital management. The overall reduction in interest expense was partially offset by the company incurred additional debt on March 24, 2026 to acquire Royston. The Company also recorded other expense of $0.7 million and $0.3 million in the nine months ended March 31, 2026, and March 31, 2025, respectively, both of which are related to net foreign exchange currency transaction gains and losses through the Company’s Mexican and Canadian subsidiaries.
Previous report
The $5.7 million of income tax expense in the nine months ended March 31, 2026, represents a consolidated effective tax rate of 26.8%. The $5.0 million of income tax expense in the nine months ended March 31, 2025, represents a consolidated effective tax rate of 23.7%. The effective tax rate for the three months ended March 31, 2026, was impacted by the unfavorable tax treatment related to acquisition-related costs. Impacting the effective tax rate of both reported periods was the favorable tax treatment of the Company’s long-term performance-based compensation.
Previous report
Net accounts receivable was $135.8 million and $104.3 million at March 31, 2026, and June 30, 2025, respectively. The acquisition of Royston accounted for $37.6 million of the year-over-year change. DSO increased to 63 days at March 31, 2026, excluding the impact of Royston, from 57 days at June 30, 2025.
Previous report
Net inventories of $116.6 million at March 31, 2026, increased $36.8 million from $79.8 million at June 30, 2025. The acquisition of Royston accounted for $32.5 million of the increase in net inventory. When the impact of the Royston acquisition is removed from the period-over-period change in net inventory, net inventory increased $4.3 million. The increase in the Lighting Segment net inventory accounted for all of the increase in total net inventory.
Previous report
The Company invested $3.2 million and $2.5 million of cash related to purchases of property, plant and equipment in the nine months ended March 31, 2026, and March 31, 2025, respectively. The Company continues to invest in equipment and tooling to support sales growth. In the third quarter of FY 2026 the Company acquired Royston for $336.8 million net of cash received.
Previous report
The Company had a net source of cash of $309.3 million and a net use of cash of $3.2 million related to financing activities in the nine months ended March 31, 2026, and March 31, 2025, respectively. The acquisition of Royston accounted for $238.7 million of the source of cash through the debt refinancing from the Company’s credit facility. In addition, the Company raised $98.1 million of net proceeds from the sale of common stock in a public equity offering in February of 2026. Both the debt financing along with the public equity offering served as the source of funds to acquire Royston. Not including the cost to acquire Royston, 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.
Reworded paragraphs (12)
Previous wording
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.
Current wording
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 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.
Previous wording
Operating income of $4.1 million for the three months ended March 31, 2026, represents a 35% decrease in operating income from $6.2 million in the three months ended March 31, 2025. Operating income for the three months ended March 31, 2026, was impacted by $6.5 million of acquisition-related costs. Adjusted operating income, a Non-GAAP measure, was $13.4 million in the three months ended March 31, 2026, representing a 39% increase compared to adjusted operating income of $9.7 million in the three months ended March 31, 2025. Refer to “Non-GAAP Financial Measures” below for a reconciliation of Non-GAAP financial measures to U.S. GAAP measures. The quarter-over-quarter sales growth of 14% coupled with improved margins resulting from improved productivity and price optimization resulted in leveraged adjusted operating income growth.
Current wording
Operating income of $14.2 million for the three months ended September 30, 2026, represents a 29% increase in operating income from $11.0 million in the three months ended September 30, 2025. Adjusted operating income, a Non-GAAP measure, was $19.4 million in the three months ended September 30, 2026, represents a 38% increase compared to $14.0 million in the three months ended September 30, 2025. Refer to “Non-GAAP Financial Measures” below for a reconciliation of Non-GAAP financial measures to U.S. GAAP measures. The increase in operating income is primarily the result of an increase in net sales in the Display solutions segment driven mostly by the impact of the Royston acquisition.
Previous wording
This report includes adjustments to GAAP operating income, net income, and earnings per share for the three months and nine months ended March 31, 2026, and 2025. 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, and Free Cash Flow. 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.
Current wording
This report includes adjustments to GAAP operating income, net income, and earnings per share for the three months ended September 30, 2026, and 2025. 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, restructuring and severance costs, and organic sales growth 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, and Free Cash Flow. 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.
Previous wording
THREE MONTHS ENDED MARCH 31, 2026, COMPARED TO THREE MONTHS ENDED MARCH 31, 2025
Current wording
THREE MONTHS ENDEDSeptember 30, 2026, COMPARED TO THREE MONTHS ENDED****September 30, 2025
Previous wording
Operating expenses of $9.4 million in the three months ended March 31, 2026, increased 19% from the same period of fiscal 2025, primarily driven by the acquisition costs and related operating costs related to the Royston acquisition, and by continued investment in commercial initiatives to drive growth.
Current wording
Operating expenses of $17.4 million in the three months ended September 30, 2026, increased from $8.5 million from the same period of fiscal 2026, primarily driven by the acquisition of Royston and by continued investment in commercial initiatives to drive growth.
Previous wording
Operating expenses of $14.0 million** **in the three months ended March 31, 2026, increased 6% from the same period of fiscal 2025, driven mostly by higher commission expense from improved sales along with a continued investment in sales initiatives to generate sales growth.
Current wording
Operating expenses of $14.3 million** **in the three months ended September 30, 2026, decreased 2% from the same period of fiscal 2026, driven mostly by a decrease in agent commission expense resulting from lower sales.
Previous wording
The Company reported $0.5 million and $0.7 million of net interest expense in the three months ended March 31, 2026, and March 31, 2025, respectively. The decrease in interest expense is the result of a reduction of quarter-over-quarter average outstanding debt driven by profitability and by sustained working capital management. The overall reduction in interest expense was partially offset by the company incurred additional debt on March 24, 2026 to acquire Royston. The Company also recorded other expense of $0.2 million compared to other income of ($0.1) million in the three months ended March 31, 2026, and March 31, 2025, respectively, which is related to net foreign exchange currency transaction gains and losses through the Company’s Mexican and Canadian subsidiaries.
Current wording
The Company reported $3.9 million and $0.7 million of net interest expense in the three months ended September 30, 2026, and September 30, 2025, respectively. The increase in interest expense is the result of the acquisition of Royston in the third quarter of fiscal 2026. The Company also recorded other expense of $0.1 million and $0.5 million in the three months ended September 30, 2026, and September 30, 2025, respectively, both of which is related to net foreign exchange currency transaction gains and losses through the Company’s Mexican and Canadian subsidiaries.
Previous wording
The $1.3 million of income tax expense in the three months ended March 31, 2026, represents a consolidated effective tax rate of 37.7%. 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 effective tax rate for the three months ended March 31, 2026, was impacted by the unfavorable tax treatment related to acquisition-related costs. Impacting the effective tax rate of both reported periods was the favorable tax treatment of the Company’s long-term performance-based compensation.
Current wording
The $3.1 million of income tax expense in the three months ended September 30, 2026, represents a consolidated effective tax rate of 30.0%. The $2.4 million of income tax expense in the three months ended September 30, 2025, represents a consolidated effective tax rate of 25.1%. Impacting the fiscal 2027 first quarter effective tax rate was the unfavorable tax treatment of executive compensation.
Previous wording
The Company reported net income of $2.1 million in the three months ended March 31, 2026, compared to net income of $3.9 million in the three months ended March 31, 2025. Non-GAAP adjusted net income was $9.6 million for the three months ended March 31, 2026, compared to adjusted net income of $6.3 million for the three months ended March 31, 2025 (Refer to the Non-GAAP tables above). The increase in Non-GAAP adjusted net income is primarily the net result of an increase in net sales, improved gross margin rate resulting from improved productivity and price optimization, partially offset by an increase in operating expense mostly resulting from an increase in sales. Diluted adjusted earnings per share of $0.28 was reported in the three months ended March 31, 2026, compared to $0.20 diluted adjusted earnings per share in the same period of fiscal 2025. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the three months ended March 31, 2026, were 33,855,000 shares compared to 30,966,000 shares in the same period last year.
Current wording
The Company reported net income of $7.1 million in the three months ended September 30, 2026, compared to net income of $7.3 million in the three months ended September 30, 2025. Non-GAAP adjusted net income was $11.6 million for the three months ended September 30, 2026, compared to adjusted net income of $9.7 million for the three months ended September 30, 2025 (Refer to the Non-GAAP tables above). The increase in Non-GAAP adjusted net income is primarily the result of an increase in net sales. Diluted adjusted earnings per share of $0.19 was reported in the three months ended September 30, 2026, compared to $0.23 diluted adjusted earnings per share in the same period of fiscal 2026. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the three months ended September 30, 2026, were 37,888,000 shares compared to 31,381,000 shares in the same period last year.
Previous wording
At March 31, 2026, the Company had working capital of $90.9 million compared to $96.8 million at June 30, 2025. The ratio of current assets to current liabilities was 1.5 to 1 as of March 31, 2026, and 2.0 as of June 30, 2025. The acquisition of Royston in the third quarter of fiscal 2026 accounted for an additional $47.7 million of net working capital and also added $58 million in short-term debt. When the impact of the acquisition of Royston is removed from the year-over-year comparison, net working capital increased $4.4 million to $101.2 million. The net increase in working capital excluding Royston is the result of a $6.2 million decrease in net accounts receivable more than offset by a $4.3 million increase in inventory, a $2.3 million increase in other current assets and a $2.9 million decrease in current liabilities.
Current wording
At September 30, 2026, the Company had working capital of $144.0 million compared to $146.0 million at June 30, 2026. The ratio of current assets to current liabilities was 2.0 to 1 as of September 30, 2026, and as of June 30, 2026. The decrease in working capital from June 30, 2026, to September 30, 2026, is primarily driven by a $7.7 million decrease in net accounts receivable partially offset by a $5.6 million decrease in current liabilities.
Previous wording
Cash generated from operations and borrowing capacity under the Company’s line of credit is its primary source of liquidity. The Company has a $200 million term loan and a $150 million revolving line of credit. Both credit facilities commenced in the third quarter of fiscal 2026 to accommodate the acquisition of Royston. Both credit facilities expire in the third quarter of fiscal 2031. As of March 31, 2026, $89 million of the credit line was available. The Company is in compliance with all of its loan covenants as of March 31, 2026. The $350 million credit facility plus cash flows from operating activities are adequate for operational and capital expenditure needs for the remainder of fiscal 2026.
Current wording
Cash generated from operations and borrowing capacity under the Company’s line of credit is its primary source of liquidity. Our credit facility consists of a $200 million term loan and $150 million secured revolving line of credit. Both facilities expire in the third quarter of fiscal 2031. As of September 30, 2026, $109.8 million of the credit facility was available. The Company is in compliance with all of its loan covenants as of September 30, 2026. The $350 million credit facility plus cash flows from operating activities are adequate for operational and capital expenditure needs for the next 12 months.
Previous wording
The Company generated $32.6 million of cash from operating activities in the nine months ended March 31, 2026, compared to $28.6 million of cash generated from operating activities in the same period in fiscal 2025. 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.
Current wording
The Company generated $15.2 million of cash from operating activities in the three months ended September 30, 2026, compared to $0.7 million of cash generated from operating activities in the same period in fiscal 2026. The Company continues to proactively manage its working capital while generating positive cash flow from earnings.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
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):
Previous report — wording carried elsewhere
The gross profit relates to the change in the intercompany profit in inventory elimination.
Previous report — wording carried elsewhere
The Company reported net income of $15.7 million in the nine months ended March 31, 2026, compared to net income of $16.2 million in the nine months ended March 31, 2025. Non-GAAP adjusted net income was $27.8 million for the nine months ended March 31, 2026, compared to adjusted net income of $22.3 million for the nine months ended March 31, 2025 (Refer to the Non-GAAP tables above). The increase in Non-GAAP adjusted net income is primarily the net result of an increase in net sales, improved gross margin rate resulting from improved productivity and price optimization, partially offset by an increase in operating expense mainly resulting from an increase in sales. Diluted adjusted earnings per share of $0.86 was reported in the nine months ended March 31, 2026, compared to $0.72 diluted adjusted earnings per share in the same period of fiscal 2025. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the nine months ended March 31, 2026, were 32,387,000 shares compared to 30,790,000 shares in the same period last year.