Acuity’s CEO Neil Ashe:  “…we would like the lighting market to be a little bit stronger…”

Acuity reported a solid first quarter, although the stock dropped nearly 13%.  That may seem like a lot, but recall that the stock rose 30% between April 2024 and early January this year and it had been teetering near all time highs. So a 13% drop looks to your humble editor as a great time to buy.

The prepared remarks were solid, but—as usual—the most revealing moments came in the Q&A. That’s when management has to think on their feet.   My take aways was something that most us already know:  we would lighting market to be a little bit stronger.

During the 1Q 2026 Acuity earnings call, an analyst asked about recent gross margin pressure and whether the company should expect the typical seasonal margin improvement in the back half of the year. The question referenced sharper step-downs in margins over recent quarters and asked whether those changes were largely tied to pricing pressure and external factors, or part of a longer-term trend.

Responding to the question, Neil Ashe, CEO of Acuity, said recent margin performance reflects a combination of short-term noise and proactive management actions rather than a structural shift in the business. “There is so much noise,” Neil explained, noting that a series of cost and tariff-related factors have moved through the system at different times rather than all at once. “That headline is that it’s all about April 2, but that’s not really what’s happened.”

Neil said the company has responded by accelerating productivity initiatives and taking targeted pricing actions across parts of the portfolio. Those efforts are now working their way through reported results. Importantly, he emphasized management’s confidence in the long-term margin trajectory. “On a long-term basis, we’re confident in our ability to continue to drive the margins at ABL,” Neil said. “We’re targeting roughly 50-100 basis points of operating profit margin improvement per year, and we’re right in that range now.” He also said in the recent quarter that Acuity benefited more from OPEX than from gross profit margin.  

When asked in a follow-up about operating leverage and the usual step-down in adjusted operating margin from the first quarter, CFO Karen Holcom, Senior Vice President and Chief Financial Officer, explained that much of the cost realignment had already occurred earlier. “When you look at the fourth quarter and the third quarter, that reflected a lot of the realigning of the work and taking some of the cost out of the business,” she said. As a result, first-quarter performance appeared more muted year over year. Even so, she pointed to continued progress, noting that operating profit margin improved by 60 basis points despite a decline in gross profit. “We feel really good about their performance this quarter,” she said.

Would Like a Little Bit Stronger Lighting Market

Neil added a bit about the lighting side that it’s been kind of a tepid lighting environment. He explained that they like the lighting market to be a little bit stronger.   All indications are that Acuity is at least holding if not accelerating their position in the market.  He reminded the analysts that you can’t build a space or touch a space without touching the lighting.   

Neil explained that there were higher backlog levels during COVID and post COVID. Tariff increases also affected backlogs as well as pricing actions.  He foresees more seasonality in the second quarter especially in the lighting business. 

Towards the end of the call he again stated.  “…we would like the lighting market to be a little bit stronger…”

Wouldn’t we all!

Go Deeper: Acuity Reports Strong Q1 Fiscal 2026 Performance with Double-Digit Sales and Earnings Growth