Comparative Results from Signify, Acuity, OSRAM, Hubbell, Cree and LSI

COVID-19 has affected many businesses in an unprecedented way, the lighting industry being no exception. Big players like Signify, Acuity, OSRAM, and Hubbell released their earnings report recently. In addition, Cree held their FY20 Q4 Earnings Call on August 18th, along with LSI Industries who held their FY20 Q4 report on August 20th to detail the financial position of their company during these times. Now that these six major companies have released their most recent quarterly reports, EdisonReport has compared and contrasted the information in order to provide a snapshot into the current state of the lighting industry.

Signify

Signify reported their FY20 Q2 Earnings on July 24th, 2020.
Here are the key points from their report (currency is in EUR):

  • Sales fell by -0.6% (1,469M FY20 Q2, from 1,477M FY19 Q2).
  • Comparable sales decreased by 22.5%.
  • Adjusted EBITDA margin remained the same at 9.0% as a result of cost measures taken by Signify.
  • Free cash flow of €158M in FY20 Q2, which is a €37M increase from FY19 Q2.
  • Net income increased by 61.5% (81M FY20 Q2, from 50M FY19 Q2).
  • Basic EPS increased from €0.41 (FY19) to €0.62 (FY20).
  • Sales would have fallen by 23% were it not for Signify’s acquisition of Cooper Lighting Solutions

Signify demonstrated their ability to adapt to market changes and challenging conditions by taking COVID-19 measures which maintained profitability, as indicated by their increase in free cash flow and net income.

Acuity Brands

Acuity Brands reported their FY20 Q3 earnings on June 30th, 2020. Third quarter ended May 31st, 2020.

Here are the key points from their report (currency is in USD):

  • Sales fell by -18.1% ($948M in FY19 Q3, to $776M in FY20 Q3) due to 20% decrease in volume as a result of less demand due to COVID-19.
  • Gross profit decreased from $384M (FY19 Q3) to $328M (FY20 Q3).
  • Net income decreased from $88M (FY19 Q3) to $60M (FY20 Q3).
  • Gross profit margin increased to 42.2% (39.7% in FY19 Q3).
  • Cash and cash equivalents increased to $521M (FY20 Q3) from $334M (FY19 Q3).
  • Basic EPS decreased from $2.23 (FY19 Q3) to $1.53 (FY20 Q3).

Despite decreases in revenue and net income, Acuity Brands was able to generate cash and increase gross profit margins to a level that surpassed expectations. Their ability to increase cash, total assets, stockholders’ equity, and gross profit margins led to their stock soaring at the time of their report.

OSRAM

OSRAM reported their FY20 Q3 earnings on July 29th, 2020.

Here are the key points from their report (currency is in EUR):

  • Revenue fell from €850M (FY19 Q3) to €606M (FY20 Q3).
  • Adjusted EBITDA margin decreased from 6.8% to -4.5%.
  • Free cash flow decreased from €91M to -€7M.
  • Profit after taxes decreased from -€35M to -€140M.

OSRAM reported that their businesses have been deeply affected by COVID-19, particularly their automotive segment. Despite numerous setbacks and decreases in financial items, OSRAM reports that the results are better than expected and that they have already achieved overall savings in Q3 that was forecasted for the whole year.

Hubbell Incorporated

Hubbell Incorporated reported their FY20 Q2 earnings on July 30th, 2020.

Here are the key points from their report (currency is in USD):

  • Net sales for Hubbell Incorporated decreased by -21% from FY19 to FY20.
  • The electrical segment’s net sales decreased by 26%
  • We estimate that 22% of Hubbell Incorporated’s business is lighting, making lighting sales $263.2M in Q2 2019 to $208.8M in Q2 2020.
  • Free cash flow increased to $178M from $107M.
  • Adjusted operating margin decreased from 13.6% to 12.4% for their Electrical segment
  • Adjusted operating margin increased from 18.0% to 19.7% for their Utility Solution segment.
  • Basic EPS decreased from $1.76 to $1.62.

Hubbell Incorporated saw a decrease in sales/volume due to an inability to meet demand resulting from supply chain disruptions caused by COVID-19. Revenues were affected by delays in projects and installations. Hubbell’s efforts in lowering operating expenses and other COVID-19 measures taken resulted in a significant increase in free cash flow.

Cree

Cree Inc. released their FY20 Q4 report on August 18th, 2020.
Here are the key points from their report (currency is in USD):

  • 47% of Cree’s revenue is from their LED products, the same as Q4 2019.
  • Cree’s LED revenue fell from $117.0M to $97.3M (-17%).
  • LED segment revenue fell less than their Wolfspeed segment (-17% and -19% respectively).
  • Overall revenue fell by 18% from FY19 Q4 to FY20 Q4.
  • Gross margin decreased from 35% to 25%.
  • EPS decreased from -$0.33 to -$0.36.
  • Operating loss increased from -$25.6m (FY19 Q4) to -$64.3m (FY20 Q4).

Cree’s quarterly report was full of falling numbers and decreases in profitability. Revenue fell which was expected due to COVID-19. Their LED segment was slightly less affected by current conditions and operations than their Wolfspeed segment. Cree’s stock fell after their quarterly report. Cree’s CEO Gregg Lowe believes the company performed sufficiently during these unexpected market conditions.

LSI Industries

LSI Industries release their FY20 Q4 report on August 20th, 2020.

Here are the key points from their report (currency is in USD):

  • Net sales decreased by -22% ($81.5M to $63.4M).
  • Net income increased by 76% ($0.9M to $1.5M).
  • EPS increased from $0.03 per share to $0.06.
  • Free cash flow increased from $4.8M to $11.5M.
  • Adjusted EBITDA increased by 37% ($3.2M to $4.5M)
  • Lighting segment adjusted operating income is $2.9M (5% increase).

LSI reported very strong numbers in their Q4 report. Sales decreased due to COVID-19, but LSI showed improvement in many other areas. They showed an increase in net income, EPS, free cash flow, and EBITDA. CEO James A. Clark praised his company’s ability to adapt to the pandemic and their success at going into 2021 as a stronger business. LSI stock increased after the release of their report.

Summary

All six companies were impacted by the COVID-19 pandemic. The common thread in all of them was a decrease in sales and volume. Decreases in sales has affected many other industries besides lighting as the pandemic has led to supply chain disruptions making manufacturers unable to meet demand, customers/buyers limiting their expenditures during this time, among other reasons. Signify, Acuity Brands, LSI, and Hubbell Incorporated all showed a strong ability to lower operating expenses and generate  significant positive growth in free cash flow despite lower volume. Their ability to adapt  has led to increased investor confidence as their stock has been on an overall steady increase since the release of their reports. OSRAM’s report surpassed expectations as well and has seen a stock market increase. Cree’s report has led to a steady decline in their stock as investors are not pleased with their results. Stock market data and history can be found on the right side of Edison Report’s homepage. We hope to see a continued rebound and positive adaptation to the ongoing pandemic from the lighting industry, and we will report on any further developments.

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