Lost in Translation? Dutch News Makes Claim about Acuity Brands

EdisonReport posted a link to a Dutch News article about a Philips Lighting layoff on 11 JAN.  The title of the Dutch article is “Philips Lighting trims R&D unit as competition issues profit warning.”  The last sentence of their article states, “Acuity Brands, Philips Lighting’s main American competitor, issued a heavy profit warning on Tuesday blaming declining market conditions.”  We think that is incorrect and that the opposite is true.  Make no mistake, Acuity had a terrible quarter and their stock dived 15%, but we don’t see any “heavy profit warning.”   We read the transcript of  the comments of Acuity’s CEO, Vernon Nagel during Tuesday’s call with investors.  Regarding the future, we found one semi-negative statement:  “Our current belief is growth in the lighting fixture market could remain sluggish for the next quarter or so and then rebound in the second half of 2018.”   But we found many more positive statements:

  1. “We see employment rate improving. We see unemployment coming down. We see the architectural building index improving. In front of me I have the Dodge Momentum Index, which clearly showed a drop in the 2017 period with a sharp rebound.”
  2. “Our view is that there is pent-up demand out there. We’re just not able as a company to say precisely when is that going to turn. I am optimistic, it’s just my personal optimism, that the change in the tax law is going to allow small business owners to look at their businesses in a different way. One of the greatest opportunities for quick return is to go to more energy-efficient lighting solutions.”
  3. “At Acuity, we are optimistic regarding our long-term future despite recent market softness, which has impacted our short-term financial performance. We continue to see significant long-term growth opportunities that are ever-changing and evolving in a positive direction for our company.”
  4. “…we continue to pull (poll) our vast customer base and from the majority we continue to hear guarded optimism regarding the prospects for future growth. Generally speaking, the trades are busy and backlogs are favorable.”
  5. “We further believe the benefit of the immediate expensing provision for certain investments contained in the new law could have a favorable and significant impact on end-customer demand for energy-efficient lighting fixtures, particularly for renovation projects.”
  6. “As for market expectations for the balance of 2018, while we have not seen nor heard of any new information from the market or forecasting organizations that would cause us to change the views expressed in our last earnings call, we believe many of these forecasters have not yet adjusted their models to incorporate the potential favorable impact of the just-passed U.S. federal tax law on both the growth rate of the overall economy and then specifically on the construction industry, which we believe can and will be meaningful.”
  7. “We’re in front of our customers. We are asking them how their business is and what they’re doing. Again, we’re starting to see positive comments coming from what I’ll call the trades, whether it’s architects, engineers, lighting designers, and now, again, the electrical contractors.”

Specifically Nagel states, “…we have not seen nor heard of any new information from the market or forecasting organizations that would cause us to change the views expressed in our last earnings call.”

How can one conclude that Acuity is issuing a “Heavy Profit Warning”?  Don’t get me wrong, there has been plenty of negative news in 2017–and EdisonReport has painfully covered it. But we are hearing strong things about 2018 and it appears that Acuity agrees.

Pass on the good news!

You can read the the Acuity Brands transcript here.