LSI Industries to Buy Royston Group for $325M, Calls Deal “Transformational” for Retail Solutions Platform

LSI agreed to acquire Royston for $325 million (approximately $320M cash and $5M stock) in a deal expected to close in Q3 fiscal 2026; the purchase price is roughly 8.1x trailing Sep‑2025 Adjusted EBITDA and is backed by a committed bridge facility with permanent equity/debt to follow.

Management called the acquisition “transformational,” producing pro forma TTM Sep‑2025 combined revenue of about $864 million and Adjusted EBITDA of ~$95 million, and positioning LSI to potentially reach its fiscal 2028 targets two years ahead of plan.

Royston adds five U.S. manufacturing sites (nearly +40% manufacturing capacity and ~900 employees), strengthens exposure to refueling/grocery/C‑store markets (~60% of pro forma sales), creates cross‑sell opportunities, and is expected to drive ~130 bps of pre‑synergy EBITDA margin expansion with pro forma margin ~11% and pro forma net leverage at close “at or below 3x,” falling to “at or below 2x” by fiscal 2028.

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LSI Industries (NASDAQ:LYTS) announced it has entered into a definitive agreement to acquire privately held Royston Group, a provider of identity and equipment solutions for retail environments. The deal was disclosed after the market closed and discussed on 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 across four U.S. states and provides what management called a build-to-order solution that includes design, engineering, fabrication, assembly, distribution, and turnkey installation across the full 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 store chains and four of the top five U.S. refueling station chains by location count.

Clark said the acquisition “will be transformational” and could position LSI as a scaled platform in branded retail solutions. He said adding Royston expands LSI’s integrated offering into a “one-stop solution-based approach” supporting new-build and remodel programs for retail companies across North America.

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LSI also tied the acquisition to its “Fast Forward” value creation plan and previously communicated fiscal 2028 targets. Clark said the Royston acquisition positions the company to potentially deliver on those targets “two years ahead of plan,” citing pro forma trailing twelve-month (TTM) September 2025 combined revenue of approximately $864 million and Adjusted EBITDA of approximately $95 million.

Clark outlined several reasons management expects the combination to strengthen LSI’s platform, including broader capabilities across lighting, fixtures, branded signage, and display cases, and the benefits of vertical integration. He also emphasized the company’s core vertical market exposure and expansion of manufacturing capacity and workforce.

Core vertical markets: On a pro forma basis, Clark said about 60% of combined sales would come from refueling, grocery, and C-store markets.

Expanded manufacturing footprint: Royston adds five domestic manufacturing facilities, bringing LSI’s total to 23 locations, which management said increases manufacturing square footage capacity by nearly 40% and adds nearly 900 employees.

Recurring revenue characteristics: Management said Royston has long-term customer relationships and a remodel-driven revenue profile. In fiscal 2025, approximately 70% of Royston revenue came from remodel projects, with 30% from new store construction. Clark also said the average tenure of Royston’s top 10 customers exceeds 20 years.

Cross-selling opportunity: Clark said roughly 47% of Royston customers currently purchase a single product, which management views as an opportunity to broaden customer spend 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 fiscal 2025 basis, he said the combined businesses produced an Adjusted EBITDA margin of 11%, which management characterized as approaching LSI’s fiscal 2028 target of 12.5% under its Fast Forward plan. He 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 “at or below three times” and expects to reduce net leverage to “at or below two times” by the end of fiscal 2028.

Galeese said LSI entered into the definitive agreement on February 20, 2026, to acquire Royston from Industrial Opportunity Partners for an aggregate purchase price of $325 million, subject to a final working capital adjustment. He said $320 million is payable in cash at closing and $5 million will be paid in LSI common stock valued based on the February 19, 2026 closing price.

The transaction is expected to close during LSI’s third quarter of fiscal 2026, subject to customary closing conditions, including regulatory review. Upon closing, Royston will be reported within 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. He said the transaction price represents 8.1x trailing 12-month September 2025 Adjusted EBITDA.

Management said the acquisition is expected to be accretive to LSI on both margin rate and diluted earnings per share upon closing. Galeese added that the deal is supported by a fully committed bridge facility, while permanent financing is expected to include a mix of equity and debt.

In concluding remarks, Clark said Royston represents LSI’s largest platform acquisition to date after several years of smaller bolt-on transactions. He said LSI intends to update long-term financial targets after the transaction closes as it introduces 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 interior and exterior LED fixtures, canopy lights, high-bay and low-bay systems, and specialized horticultural grow lights.

The article “LSI Industries to Buy Royston Group for $325M, Calls Deal “Transformational” for Retail Solutions Platform” was originally published by MarketBeat.