Acuity Brands Reports Strong Q3 Results Despite Sales Decline

Acuity Graphic showing up green arrow and down red arrow

Acuity Brands, Inc. Reports Strong Q3 Results of fiscal 2024, ending May 31, 2024, by increasing its operating profit and earnings per share despite a decline in net sales.

Financial Performance Overview

Acuity Brands reported net sales of $968.1 million for the third quarter, a 3% decrease from the previous year. However, the company’s strategic focus on efficiency and value generation led to a notable increase in profitability metrics. Operating profit rose by $2 million to $145.3 million, a 1.4% improvement, while adjusted operating profit increased by $4.2 million to $167.1 million, reflecting a 2.6% rise.

The company’s ability to control costs and optimize operations was evident as the operating profit margin improved to 15%, up 70 basis points from the prior year. Adjusted operating profit margin saw an increase of 100 basis points, reaching 17.3%.

Earnings Per Share and Cash Flow

Acuity’s strong Q3 results reflect a significant 10.4% rise in diluted earnings per share (EPS), which stood at $3.62. Adjusted diluted EPS was even more impressive, growing by 11% to $4.15. This strong performance in earnings was underpinned by effective capital allocation and solid cash flow management.

Year-to-date, the company generated $445.1 million in cash flow from operations, a slight decrease from the $471.5 million reported in the previous year. This robust cash flow enabled the company to repurchase approximately 454,000 shares of common stock, amounting to around $89 million.

Segment Performance: ABL and ISG

Acuity Brands operates through two primary segments: Acuity Brands Lighting and Lighting Controls (ABL) and the Intelligent Spaces Group (ISG). Both segments displayed unique strengths in the third quarter.

Acuity Brands Lighting and Lighting Controls (ABL)

ABL, the larger segment, reported net sales of $898.5 million, a 4.5% decline compared to the previous year. Despite this, ABL’s operating profit increased by 1% to $151.5 million, with an operating profit margin improvement of 100 basis points to 16.9%. Adjusted operating profit for ABL was $162.1 million, up 1.5%.

Intelligent Spaces Group (ISG)

ISG showcased strong growth, with net sales increasing by 15% to $75.7 million. The segment’s operating profit surged by 45.3% to $12.5 million, significantly boosting its operating profit margin to 16.5%, up 340 basis points. Adjusted operating profit for ISG was $17.3 million, a 35.2% increase, highlighting the segment’s expanding contribution to the company’s overall profitability.

CEO Insights

Neil Ashe, Chairman, President, and CEO of Acuity Brands, reflected on the company’s performance, stating, “In our fiscal 2024 third quarter we delivered solid results as we continued to execute on our strategy. We increased our adjusted operating profit, adjusted operating profit margin, and adjusted diluted earnings per share. We generated strong free cash flow, and we allocated capital effectively to drive value.”

Strategic Capital Allocation

Acuity Brands’ strategic approach to capital allocation has been integral to its success. The company’s disciplined investment in high-return projects and share repurchases underscore its commitment to maximizing shareholder value. This approach is evident in the repurchase of 454,000 shares for approximately $89 million year-to-date.

Future Outlook

Looking ahead, Acuity Brands remains focused on leveraging technology to drive growth and efficiency. The company continues to innovate in lighting, lighting controls, and building management solutions, aiming to enhance market share and deliver superior returns. Acuity’s strategic initiatives are expected to propel it into attractive new verticals, further solidifying its position as a market leader.

Source: Acuity Brands, Inc. 2024 GlobeNewswire, Inc.