LYTS 10-K & 10-Q changes, risk factors and insider trading

In addition to the other information set forth in this report, you should carefully consider the following factors which could materially affect our business, financial condition, cash flows or future results. AnyoneAny one of these factors could cause the Company’s actual results to vary materially from recent results or from anticipated future results. The risks described below are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

The Company has a concentration of sales in the refueling and convenience store and grocery markets. Sales to the refueling and convenience store market are dependent upon the general conditions prevailing in and the profitability of the Petroleum industry and general market conditions. The refueling and convenience store market can be subject to reactions by the petroleum industry due to world political events, to the price and supply of oil, and to a decline in demand resulting from an economic recession, or other factors. Major disruptions in the petroleum industry generally result in a curtailment of retail marketing efforts, including expansion and refurbishing of retail outlets by the petroleum industry, which could adversely affect our business. The operating environment for the grocery market continues to be characterized by the fragmentation of local, regional, and national retailers, including both retail and digital formats, market consolidation, intense competition, and entry of non-traditional competitors. The changing operating environment along with changes in customerconsumer behaviors within the grocery market could have an adverse impact on the purchasing decisions by one or more of our larger customers in this market. In addition, actions by our competitors, our customers’ financial constraints, and industry factors or otherwise, could have an adverse effect on our business in either of these markets.

The Company has grown and strengthened its business through strategic acquisitionsacquisitions, most recently with the closing of our acquisition of Royston in March of 2026, and will continue to do so as opportunities arise in the future in order to meet the Company’s growth objectives. The Company will benefit from such activity only to the extent that it can effectively leverage and integrate the assets or capabilities of the acquired businesses including, but not limited to, personnel, technology, and operating processes. Moreover, unanticipated events, negative revisions to valuation assumptions and estimates, diversions of resources and management’s attention from other business concerns, and difficulties in attaining synergies, among other factors, could adversely affect the Company’s ability to recover initial and subsequent investments, particularly those related to acquired goodwill and intangible assets, which in turn could result in the impairment of the acquired company’s goodwill and related assets. In addition, such investment transactions may limit the Company’s ability to invest in other activities, which could be more profitable or advantageous.

The Company is committed to product innovation on a timely basis to meet customer demands. Development of new products for targeted markets requires the Company to develop or otherwise leverage leading technologies in a cost-effective and timely manner. Failure to meet these changing demands could result in a loss of competitive position and seriously impact future revenues. Products or technologies developed by others may render the Company’s products or technologies obsolete or non-competitive. A fundamental shift in technologies in key product markets could have a material adverse effect on the Company’s operating results and competitive position within the industry. More specifically, the development of new or enhanced products is a complex and uncertain process requiring the anticipation of technological and market trends. Rapidly changing product technologies could adversely impact operating results due to potential technological obsolescence of certain inventories or increased warranty expense related to newly developed LED lighting products or any of the Company’s other products and services.refrigeration technologies. We may experience design, manufacturing, marketing, or other difficulties, such as inability to attract a sufficient number of experienced engineers which could delay or prevent our development, introduction or marketing of new products or enhancements and result in unexpected expenses. Such difficulties could cause us to lose business from our customers and could adversely affect our competitive position. In addition, added expenses could decrease the profitability associated with those products that do not gain market acceptance.

The Company purchases large quantities of raw materials and components such as steel, aluminum, aluminum castings, fabrications, LEDs, power supplies, powder paint, steel tubing, wire harnesses, acrylic, silicon and glass lenses, inks, various graphics substrates such as Aluminum Composite Material (ACM), Expanded PVC sheet (EPVC), vinyl film, styrene, foamboards, wood and wood laminates, petroleum based resins, condensing units, and digital screens. The Company’s operating results could be affected by the availability and price fluctuations of these materials. The Company’s strategic sourcing plans include mitigating supply chain risk by utilizing multiple suppliers for a commodity to avoid significant dependence on any single supplier. Although an interruption of these supplies and components could disrupt our operations, we believe generally that alternative sources of supply exist and could be readily arranged. With regard to price fluctuations of our raw material and component purchases, the price risk for materials the Company purchases is related to price increases in commodity items that affect all users of the materials, including the Company’s competitors. Significant tariffs or increases in the price of these raw materials and components could further increase the Company’s operating costs and materially adversely affect margins. The Company does, however, seek and qualify new suppliers, negotiate with existing suppliers, and arrange stocking agreements to mitigate risk of supply and price increases. The Company can also be impacted by shortages and the availability of transportation of our products to our customers, in addition to rising fuel prices. The Company’s Lighting Segment has implemented price increases with customers to offset raw material price increases along,increases, rising transportation costs, and to mitigate the impact of trade tariffs. The Company’s Display Solutions Segment generally establishes new sales prices, reflective of the then current raw material prices and transportation costs, for each program as it begins with further price increases throughout the life of the program when warranted. Although the Company attempts to pass along increased costs in the form of price increases to its customers, the Company may be unsuccessful in doing so for competitive reasons. Even when price increases are successful, the timing of such price increases may lag behind the incurrence of higher costs.

We could be targeted by malicious cyber activity. Any failure to identify address or prevent malicious cyber activity could result in service interruptions, operational difficulties, loss of revenues or market share, liability to our customers or others, the diversion of corporate resources, injury to our reputation and increased service and maintenance costs. We have significantly enhanced and will continue to improve our cybersecurity controls in order to minimize the likelihood or impact of a malicious cyber activity.cyberactivity.

Tariffs implemented on our component parts and certain finished good inventory will increase the cost of our products manufactured at our plants in the U.S. and in Canada. Some of our purchased components are sourced from or manufactured in foreign countries. Import tariffs will result in increased prices for imported goods and materials and, in some cases, may result or have resulted in price increases for domestically sourced goods and materials. Changes in U.S. trade policy have resulted and could result in additional reactions from U.S. trading partners, including adopting responsive trade policies making it more difficult or costly for us to export our products or import goods and materials from those countries. These measures could also result in increased costs for goods imported into the U.S. or may cause us to adjust our foreign supply chain. Either of these could require us to increase prices to our customers, which may reduce demand, or, if we are unable to increase prices, result in lowering our margin on products sold which in turn could adversely impact our business, financial condition, and results of operations.

Customer, investor and employee expectations relating to ESG have been rapidly evolving and increasing.evolving. In addition, government organizations are enhancing or advancing legal and regulatory requirements specific to ESG matters. The heightened stakeholder focus on ESG issues related to our business requires the continuous monitoring of various and evolving laws, regulations, standards and expectations and the associated reporting requirements. A failure to adequately meet stakeholder expectations may result in noncompliance, the loss of business, reputational impacts, diluted market valuation, an inability to attract customers and an inability to attract and retain top talent. In addition, our adoption of certain standards or mandated compliance to certain requirements could necessitate additional investments that could impact our profitability.

Management does not expect that our disclosure controls and procedures and internal controls over financial reporting will prevent all errors or fraud. A control system is designed to give reasonable, but not absolute, assurance that the objectives of the control system are met. In addition, any control system reflects resource constraints, and the benefits of controls must be considered relative to their costs. Inherent limitations of a control system may include judgments in decision making that may be faulty, breakdowns can occur simply because of error or mistake and controls can be circumvented by collusion or management override. Due to the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of the Company’s operations and financial condition. MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying Notes to Financial Statements (Part II, Item 8 of this Form 10-K). This section generally discusses the results of our operations for the year ended June 30, 2025,2026, compared to the year ended June 30, 2024. For a discussion of the year ended June 30, 2024, compared to the year ended June 30, 2023, please refer to Part II, Item 7, “Management’s Discussion2025, and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended June 30, 2025, compared to June 30, 2024.

LSI Industries Inc. (LSI) is a leading producer of non-residential lighting and retail display solutions. Non-residential lighting consists of American-made fixtures and services for both indoor and outdoor applications satisfying the specific performance requirements of our customers. Retail display solutions consist of multiple custom products and services which enhance our customer’s brand image and improve the customerconsumer shopping experience. We offer customers in target vertical markets a package solution set of both lighting and display solutions, providing value for the customer by working with one partner to manage their regional and national location programs, versus multiple suppliers.

Fiscal 2025 operating income of $35.8 million represents a 1% increase from fiscal 2024 operating income of $35.5 million. Fiscal 2025 adjusted operating income, a Non-GAAP financial measure, was $48.4 million compared to adjusted fiscal 2024 operating income of $46.4 million. While sales increased 22% compared to the same period last year, Non-GAAP operating income rose 4%. The increase in sales was partially offset by the dilutive impact of acquisitions and by customer mix. Refer to “Non-GAAP Financial Measures” below for a reconciliation of Non-GAAP financial measures to U.S. GAAP measures This report includes adjustments to GAAP operating income, net income, and earnings per share for the fiscal years 20252026, 2025, and 2024. 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. This report includes additional non-GAAP financial measures, including Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA and Adjusted EBITDA), Net Debt to Adjusted EBITDA, Free Cash Flow, and organic sales growth. 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. Below is a reconciliation of these non-GAAP measures to net income and earnings per share reported for the periods indicated along with the calculation of EBITDA, Adjusted EBITDA, Free Cash Flow, Net Debt to Adjusted EBITDA, and organic sales growth.

(1) $659 (2) $1,639 (3) $97 (4) $12 (5) $1,425 (6) $988 (27) $19 (38) $209 (49) $71 (510) $60 (611) $1,124 (712) $1,108 (813) $266 (914) $143 (1015) $1,287 The reconciliation of reported earnings per share to adjusted earnings per share may not produce identical amounts due to rounding differences.

2026 Compared to 2025 and 2025 Compared to 2024

Display Solutions net sales of $325.0$423.2 million increased 57%30% from same period in fiscal 2024.2025. This segment generated organicSales growth of 17%was driven by increased sales across allseveral major product categories and vertical markets supported mostly by the grocery and refueling/ C-Store verticals. The Company’s acquisitionsacquisition of EMI and CBHRoyston also contributed $85.3$73.5 million of the year-over-year sales growth of the Display Solutions Segment.

Fiscal 20252026 operating income of $26.4$31.8 million in fiscal 20252026 increased 32%21% from the same period of fiscal 2024.2025. Fiscal 2026 operating income was negatively impacted by acquisition-related charges of $6.1 million. When these acquisition-related charges are excluded from the fiscal 2026 results, operating income grew 44%. The increase in operating income of 6.4 million was driven by the net effect of an increase in netincreased sales partiallyand offseta byfavorable the dilutive impact of acquisitionscustomer and by customerproduct mix.

Liquidity and Capital Resources 2026 Compared to 2025

Working capital was $146.0 million at June 30, 2026, compared to $96.8 million at June 30, 2025, compared to $83.3 million at June 30, 2024.2025. The ratio of current assets to current liabilities was 2.0 to 1 as of June 30, 2025,2026, compared to athe same ratio of 2.1current assets to 1liabilities as of June 30, 2024.2025. The acquisition of Canada’s Best Holding (CBH)Royston in the third quarter of fiscal 20252026 accounted for $9.7$41.1 million of the increase in net working capital. When the impact of the acquisition of CBHRoyston is removed from the year-over-year comparison, net working capital increased $5.4$8.1 million. The net increase in net working capital excluding CBHRoyston was mostlythe dueresult toof a $18.8$9.3 million increase in net accounts receivable, an increase of $4.0 million in net inventory, a $5.4 million increase in cash, and a $5.8 million increase in refundable income taxes, partially offset by a $13.6$10.8 million increase in accounts payable and accrued expenses and a 3.2 million reduction in refundable income taxes.expenses.

In August 2025,2026, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable September 10,8, 2025,2026, to shareholders of record as of SeptemberAugust 2,31, 2025.2026. The indicated annual cash dividend rate for fiscal 20252026 was $0.20 per share. The Board of Directors has adopted a policy regarding dividends which indicates that dividends will be determined by the Board of Directors at its discretion based upon its evaluation of earnings, cash flow requirements, financial conditions, debt levels, stock repurchases, future business developments and opportunities, and other factors deemed relevant.

Operating income of $19.8$4.1 million for the sixthree months ended DecemberMarch 31, 2025,2026, represents a 13%35% increasedecrease fromin operating income offrom $17.6$6.2 million in the sixthree months ended DecemberMarch 31, 2024.2025. 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 financial measure, was $25.7$13.4 million in the sixthree months ended DecemberMarch 31, 2025,2026, representing a 39% increase compared to adjusted operating income of $23.6$9.7 million in the sixthree months ended DecemberMarch 31, 2024. The increase in net sales coupled with focused margin management contributed to the period over period improvement in operating income.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.

This report includes adjustments to GAAP operating income, net income, and earnings per share for the three months and nine months ended DecemberMarch 31, 2025,2026, and 2024.2025. 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. Below is a reconciliation of these non-GAAP measures to net income and earnings per share reported for the periods indicated along with the calculation of EBITDA, Adjusted EBITDA, Free Cash Flow, Net Debt to Adjusted EBITDA, and organic sales growth.

(1) $289$118 (2) $399$355 (3) $20$6 (4) $58$1,621 (5) ($28)$76 (6) $375($49) (7) $318$237 (8) $16$337 (9) $19$197 (10) $15

(1) $617$735 (2) $836$1,191 (3) ($18)$113 (4) $113($11) (5) $37$1,734 (6) $692$52 (7) $684$930 (8) $15$1,021 (9) ($2)$15 (10) $33$195 (11) $48 (12) $19

THREE MONTHS ENDED DECEMBERMARCH 31, 2025,2026, COMPARED TO THREE MONTHS ENDED DECEMBERMARCH 31, 20242025

Display Solutions net sales of $80.3$90.5 million decreasedincreased 23% from same period in fiscal 2024.2025. WithinThe 23% growth in the Display Solutions segment,Segment wewas continueprimarily todriven maintainby strong demand levels across a highbroad levelbase of projectcustomers executionin acrossboth large,the multi-yeargrocery customerand programsrefueling/c-store verticals. Third quarter net sales in the refueling/c-storeDisplay andSolutions QSRsegment verticals.also Inreflects addition,Royston ournet grocery vertical continues to stabilize, with demand patterns returning to seasonal levels after two yearssales of significant$6.6 disruption.million for the 6-day stub period. Royston was acquired on March 24, 2026.

Gross profit of $23.0$17.3 million in the three months ended DecemberMarch 31, 2025,2026, increased 21%39% from the same period of fiscal 2025. Gross profit as a percentage of net sales improved 220 basis points from 32.7%the tosame 34.6%.period as last year. The increasestrong demand in netgrocery salesand refueling/c-store verticals coupled with focusedincreased marginproductivity managementand price optimization contributed to the periodquarter-over-quarter overleveraged period improvementgrowth in gross profit.margin.

Operating expenses of $15.5$9.4 million in the three months ended DecemberMarch 31, 2025,2026, increased 19% from the same period of fiscal 2025, primarily driven mostly by higherthe agentacquisition commissioncosts expenseand fromrelated higheroperating netcosts sales.related to the Royston acquisition, and by continued investment in commercial initiatives to drive growth.

LightingDisplay Solutions Segment operating income of $7.5$7.9 million forin the three months ended DecemberMarch 31, 2025,2026, increased 26%75% from operating income of $6.0 million in the same period of fiscal 20252025. primarilyThe increase in operating income, driven by the net effect of an increase in net sales, improved sales and focusedgross margin management.as a percentage of sales, partially offset by an increase in operating expenses.

Operating expenses of $4.8$10.8 million in the three months ended DecemberMarch 31, 2025,2026, decreasedincreased 16%from $5.4 million from the same period of fiscal 2025. The decreaseincrease in expense is primarily the result of effectiveacquisition-related costcosts managementfor Royston and CBH of the$5.3 Company’s corporate operating expenses.million.

The Company reported $0.6$0.5 million and $0.7 million of net interest expense in the three months ended DecemberMarch 31, 2026, and March 31, 2025, and December 31, 2024, 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 managementmanagement. asThe overall reduction in interest expense was partially offset by the Companycompany loweredincurred itsadditional outstandingdebt 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 compared to other expense of $0.4 in the three months ended DecemberMarch 31, 2026, and March 31, 2025, and December 31, 2024, respectively, of which is related to net foreign exchange currency transaction gains and losses through the Company’s Mexican and Canadian subsidiaries.

The $2.0$1.3 million of income tax expense in the three months ended DecemberMarch 31, 2025,2026, represents a consolidated effective tax rate of 24.4%.37.7%. The $1.7 million of income tax expense in the three months ended DecemberMarch 31, 2024,2025, represents a consolidated effective tax rate of 23.2%.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.

The Company reported net income of $6.3$2.1 million in the three months ended DecemberMarch 31, 2025,2026, compared to net income of $5.6$3.9 million in the three months ended DecemberMarch 31, 2024.2025. Non-GAAP adjusted net income was $8.4$9.6 million for the three months ended DecemberMarch 31, 2025,2026, compared to adjusted net income of $8.0$6.3 million for the three months ended DecemberMarch 31, 20242025 (Refer to the Non-GAAP tables above). The increase in Non-GAAP adjusted net income is primarily the net result of aan strongincrease focusin onnet projectsales, pricing,improved productivity,gross margin rate resulting from improved productivity and costprice disciplines,optimization, onpartially relativelyoffset flatby an increase in operating expense mostly resulting from an increase in sales. Diluted adjusted earnings per share of $0.20$0.28 werewas reported in the three months ended DecemberMarch 31, 2025,2026, compared to $0.18$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 DecemberMarch 31, 2025,2026, were 32,004,00033,855,000 shares compared to 30,876,00030,966,000 shares in the same period last year.

SIXNINE MONTHS ENDED DECEMBERMARCH 31, 2025,2026, COMPARED TO SIXNINE MONTHS ENDED DECEMBERMARCH 31, 20242025

Gross profit of $46.2$48.8 million in the threenine months ended DecemberMarch 31, 2025,2026, increased 23%13% from the same period of fiscal 2025. Gross profit as a percentage of net sales improvedin fromthe 32.3%nine tomonths 34.1%.ended March 31, 2026, increased 100 basis points. The increasestrong demand in netgrocery salesand refueling/c-store verticals coupled with focusedincreased marginproductivity managementand price optimization contributed to the periodyear-over-year overleveraged period improvementgrowth in gross profit.margin.

Operating expenses of $10.9$26.2 million in the sixnine months ended DecemberMarch 31, 2025,2026, increased 10%14% from the same period of fiscal 2025.2025, Theprimarily increasedriven in expense isby the resultacquisition ofcosts anand increaserelated inoperating costs related to the Royston acquisition, and by continued investment in commercial initiatives to supportdrive the growth of the Company.growth.

The Company reported $1.3$1.8 million and $1.6$2.3 million of net interest expense in the sixnine months ended DecemberMarch 31, 2026, and March 31, 2025, and December 31, 2024, 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 managementmanagement. asThe overall reduction in interest expense was partially offset by the Companycompany loweredincurred itsadditional outstandingdebt debt.on March 24, 2026 to acquire Royston. The Company also recorded other expense of $0.4$0.7 million and $0.3 million in the sixnine months ended DecemberMarch 31, 2026, and March 31, 2025, and December 31, 2024, respectively, both of which isare related to net foreign exchange currency transaction gains and losses through the Company’s Mexican and Canadian subsidiaries.

The $4.5$5.7 million of income tax expense in the sixnine months ended DecemberMarch 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 24.8%.23.7%. The $3.3 million of income tax expense in the six months ended December 31, 2024, represents a consolidated effective tax rate offor 21.3%.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.

The Company reported net income of $13.6$15.7 million in the sixnine months ended DecemberMarch 31, 2025,2026, compared to net income of $12.3$16.2 million in the sixnine months ended DecemberMarch 31, 2024.2025. Non-GAAP adjusted net income was $18.2$27.8 million for the sixnine months ended DecemberMarch 31, 2025,2026, compared to adjusted net income of $16.0$22.3 million for the sixnine months ended DecemberMarch 31, 20242025 (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 salesgross margin rate resulting from improved productivity and aprice strongoptimization, focuspartially onoffset projectby pricing,an productivity,increase andin costoperating disciplines.expense mainly resulting from an increase in sales. Diluted adjusted earnings per share of $0.57$0.86 was reported in the sixnine months ended DecemberMarch 31, 2025,2026, compared to $0.52$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 sixnine months ended DecemberMarch 31, 2025,2026, were 31,685,00032,387,000 shares compared to 30,709,00030,790,000 shares in the same period last year.

Net accounts receivable was $90.6$135.8 million and $104.3 million at DecemberMarch 31, 2025,2026, and June 30, 2025, respectively. The acquisition of Royston accounted for $37.6 million of the year-over-year change. DSO decreasedincreased to 5963 days at DecemberMarch 31, 2025,2026, excluding the impact of Royston, from 6657 days at June 30, 2025.

Cash generated from operations and borrowing capacity under the Company’s line of credit is its primary source of liquidity. The Company has a $125$200 million term loan and a secured$150 million revolving line of credit. The revolving line ofBoth credit expiresfacilities commenced in the firstthird quarter of fiscal 2026 to accommodate the acquisition of Royston. Both credit facilities expire in the third quarter of fiscal 2031. As of DecemberMarch 31, 2025,2026, $104.6$89 million of the credit line was available. The Company is in compliance with all of its loan covenants.covenants as of March 31, 2026. The $125$350 million credit facility plus cash flows from operating activities are adequate for operational and capital expenditure needs for the remainder of fiscal 2026.

The Company generated $25.7$32.6 million of cash from operating activities in the sixnine months ended DecemberMarch 31, 2025,2026, compared to $21.7$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.

The Company invested $2.6$3.2 million and $1.8$2.5 million of cash related to investingpurchases activitiesof property, plant and equipment in the sixnine months ended DecemberMarch 31, 2026, and March 31, 2025, and December 31, 2024, 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.

In JanuaryApril 2026, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable FebruaryMay 10,12, 2026, to shareholders of record as of FebruaryMay 2,4, 2026. The indicated annual cash dividend rate for fiscal 2026 is $0.20 per share. The Board of Directors has adopted a policy regarding dividends which indicates that dividends will be determined by the Board of Directors in its discretion based upon its evaluation of earnings, cash flow requirements, financial condition, debt levels, stock repurchases, future business developments and opportunities, and other factors deemed relevant.