LSI agreed to acquire Royston for $325 million (approximately $320 million in cash and $5 million in stock) in a deal expected to close in the third quarter of fiscal 2026; The purchase price is approx. 8.1x Adjusted EBITDA post-September 2025 and is backed by a committed bridge credit facility with permanent equity/debt below.
Management called the acquisition “transformational”, producing September 2025 pro forma TTM combined revenue of approximately $864 million and Adjusted EBITDA of ~$95 millionand position LSI to potentially achieve its fiscal 2028 goals two years earlier than planned.
Royston adds five U.S. manufacturing plants (almost +40% manufacturing capacity and ~900 employees), strengthens exposure to refueling, grocery and C-store markets (~60% of pro forma sales), creates cross-selling opportunities and is expected to drive ~130bps of pre-synergy EBITDA margin expansion with a pro forma margin of ~11% and pro forma net leverage close to “3x or less,” falling to “2x or less” by fiscal 2028.
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LSI Industries (NASDAQ:LYTS) announced that it has signed a definitive agreement to acquire privately held Royston Group, a provider of identity and equipment solutions for retail environments. The deal was revealed after the market closed and was discussed in a conference call led by Chief Financial Officer Jame Galeese and President and CEO Jim Clark.
Clark described Atlanta-based Royston as a vertically integrated provider of custom store fixtures, internal and external signage, and refrigerated and heated case displays. Royston operates through five facilities in four U.S. states and offers what management called a build-to-order solution that includes design, engineering, manufacturing, assembly, distribution and turnkey installation throughout the entire project lifecycle.
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LSI management said Royston’s end markets align with LSI’s existing footprint, including refueling, convenience stores, grocery and quick-service restaurants. Clark said Royston is an established partner of three of the top five C-store and grocery chains and four of the top five gas station chains in the U.S. by number of locations.
Clark said the acquisition “will be transformative” and could position LSI as an expanded platform in branded retail solutions. He said Royston expands LSI’s integrated offering to a “comprehensive solutions-based approach” that supports new construction and remodeling programs for retail businesses across North America.
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LSI also tied the acquisition to its “Fast Forward” value creation plan and previously communicated targets for fiscal 2028. Clark said the Royston acquisition positions the company to potentially meet those targets “two years ahead of schedule,” citing September 2025 pro forma trailing twelve month (TTM) combined revenue of approximately $864 million and adjusted EBITDA of approximately $95 million.
Clark outlined several reasons why management expects the combination to strengthen LSI’s platform, including broader capabilities in lighting, fixtures, branded signage and display cases, and the benefits of vertical integration. He also emphasized the company’s core exposure to the vertical market and the expansion of manufacturing capacity and workforce.
Main vertical markets: On a pro forma basis, Clark said about 60% of combined sales would come from the refueling, grocery and C-store markets.
Expanded manufacturing footprint: Royston adds five domestic manufacturing facilities, bringing LSI’s total to 23 locations, which management says increases square footage manufacturing capacity by nearly 40% and adds nearly 900 employees.
Recurring Revenue Features: Management said Royston has long-term customer relationships and a revenue profile driven by redevelopment. In fiscal 2025, approximately 70% of Royston’s revenue came from remodeling projects and 30% from new store construction. Clark also said the average tenure of Royston’s top 10 clients is over 20 years.
Cross-selling opportunity: Clark said about 47% of Royston customers currently purchase a single product, which management sees as an opportunity to expand customer spending across the combined portfolio, including LSI’s branded lighting solutions.
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Clark said Royston generated an adjusted EBITDA margin of 14% in calendar year 2025. On a pro forma basis for fiscal year 2025, he said the combined businesses produced an adjusted EBITDA margin of 11%, which management characterized as close to LSI’s fiscal 2028 target of 12.5% under its Fast Forward plan. It also said the acquisition is expected to create 130 basis points of EBITDA margin expansion on a pre-synergy basis.
On leverage, Clark said that at closing the company anticipates pro forma net debt to adjusted EBITDA of “three times or less” and expects to reduce net leverage to “two times or less” by the end of fiscal 2028.
Galeese said LSI entered into the definitive agreement on Feb. 20, 2026 to acquire Royston from Industrial Opportunity Partners for a total purchase price of $325 million, subject to a final working capital adjustment. It said $320 million in cash will be paid at closing and $5 million in LSI common stock valued at the Feb. 19, 2026 closing price.
The transaction is expected to close during the third quarter of LSI’s fiscal 2026, subject to customary closing conditions, including regulatory review. Upon closing, Royston will become part of LSI’s Display Solutions segment.
Galeese provided Royston’s financial results for the 12 months ended September 2025: approximately $272 million in revenue and approximately $38 million in adjusted EBITDA, representing 14% of revenue. It said the transaction price represents 8.1 times adjusted EBITDA for the trailing 12 months of September 2025.
Management said the acquisition is expected to be accretive for LSI in both margin rate and diluted earnings per share at closing. Galeese added that the deal is supported by a fully committed bridge credit facility, while permanent financing is expected to include a mix of equity and debt.
In his closing remarks, Clark said Royston represents LSI’s largest platform acquisition to date after several years of smaller transactions. He said LSI intends to update long-term financial targets following the closing of the transaction as it unveils the next phase of its Fast Forward plan.
LSI Industries, Inc (NASDAQ: LYTS) is a diversified manufacturer and distributor of lighting, graphics and building technology products. Headquartered in Cincinnati, Ohio, the company develops energy-efficient LED lighting systems, branded and digital graphic displays, and integrated building technology solutions. Serving customers in the retail, quick service and convenience store, industrial, hospitality and transportation markets, LSI combines design, engineering and manufacturing capabilities to address both aesthetic and functional needs.
In its lighting segment, LSI offers indoor and outdoor LED fixtures, canopy lights, high and low bay systems, and specialty horticultural grow lights.
The article “LSI Industries to buy Royston Group for $325 million, calls deal ‘transformational’ for retail solutions platform” was originally published by MarketBeat.
