Highlights

• Dialight lifted half-year Revenue 9.3% to $94.4m, with growth of 19.8% excluding the disposed Traffic business.

• Gross Margin climbed to 48.7% from 35.3%, helped by pricing discipline, better product mix and lower costs.

• Operating profit rose to $14.9m from $5.9m, while Diluted Earnings per Share reached 24.4 cents.

• The group swung to net cash of $4.5m and flagged potential to significantly beat full-year Net Income expectations.

Turnarounds tend to be judged on two things, margins and cash, and Dialight has just moved the needle on both. The industrial LED lighting specialist, Dialight (LSE:DIA), posted unaudited results for the six months to 30 September 2026 showing a gross margin of 48.7%, up from 35.3% a year earlier, alongside a shift from net bank Debt into net cash. For a Business that owed $10.2m net to its banks twelve months ago, that change has pulled this Main Market name back into the spotlight among LSE stocks.

Dialight half-year results: the headline numbers

Revenue reached $94.4m, compared with $86.4m in the prior-year period, a rise of 9.3%. Stripping out the Traffic business, which was sold in the previous year, growth came in at 19.8%.

Profits rose faster than sales. Operating profit reached $14.9m against $5.9m, profit before tax was $14.2m versus $4.5m, and profit for the period climbed to $10.1m from $2.7m. Diluted earnings per share stood at 24.4 cents, up from 6.8 cents.

Underlying EBITDA reached $19.0m, compared with $9.6m, giving a margin of 20.1%. No non-underlying items were booked in the half.

Lighting and Components both pull their weight

Lighting revenue grew 14.4% to $69.1m, with a gross margin of 48.3%. Components revenue was $25.3m, slightly below the prior $26.0m because of the Traffic exit; on a like-for-like basis excluding Traffic, it rose 37.5%. The company (LSE:DIA) linked that growth to its OE product line, which is tied to data-centre demand. Components gross margin was 49.8%.

Transformation Plan and a cleaner balance sheet

Group Chief Executive Steve Blair said: "The Group continues to realise the financial benefits of all five pillars of the Transformation Plan." Management pointed to pricing controls, a sales-commission overhaul, fewer SKUs and factory consolidation, with the Manufacturing moves expected to save about $4m, mainly from the second half of next year.

Net cash stood at $4.5m, while net debt including IFRS 16 Lease liabilities was $2.4m. Underlying Operating Cash Flow was $14.8m, against $13.9m. A new £15.0m revolving Credit Facility with HSBC runs to April 2029. "Reaching a positive net cash position is an important milestone for the Group," Blair added.

The group spent $3.2m buying 425,000 shares for its Employee Benefit Trust. No Interim Dividend was declared.

Risks and pressure points to watch

Inventory rose to $36.1m from $30.0m at 31 March 2026. The tax charge of $4.1m represented an effective rate of 28.9%. On tariffs, products made in Mexico are currently tariff-free under USMCA, and management described the overall impact of tariffs on some imported components as negligible. Growth in OE components depends on global data-centre investment, and the medium-term view remains subject to macroeconomic conditions.

Second-half outlook sharpens the focus

Dialight (LSE:DIA) expects continued sales growth and second-half gross margins in line with its upgraded guidance. It said the group has the potential to significantly exceed current market expectations for full-year net income. Blair said the group enters the second half of the year with a positive outlook.