Acuity Investor Call: Expect Price Increase to Stick

July 3 [addtoany]

Your humble editor listened in on the Acuity Brands investor call. Below are my notes:

  • C&I sales normally about 60% of volume, this quarter dropped by 3% or 4%.
  • Closing a few small plants and will leave inventory in place—not cost effective to move
    • Excess capacity will be absorbed into other locations. Consolidate to improve cost and productivity. These are smaller manufacturing facilities from recent acquisitions.
  • Home Center business was up slightly
  • Atrius is doing well.
  • Plan to grow at a higher rate than the overall market.
  • Last two acquisitions very interesting. Solidify position with emergency and power back up. Deploying capital to bring value to shareholders.
    • Spent $298 YTD with stock buy-back. $600M over last 5 quarters on stock buy-back
    • Expanded credit facility to give more flexibility. Have 5.2M shares that they have authority from board to repurchase
  • M&A pipeline continues to be busy
  • Contractor Select offers attractive price points, with better margins. Does not see competitors backing away from contractor programs.

Price Increase:

  • Announced at LIGHTFAIR and the increase not only covers fluorescent, but certain LED product
  • Starting to roll through
  • Seeing benefit
  • Everyone in this space is experience increase cost, so optimistic that it will stick.
  • Too early to impact Q3, but expect it to impact Q4
  • 75% of lighting is project based; impact of price increases will have some impact, but impact on stock and flow business