Acuity Reports Surprisingly Strong Quarter–‘Better, Smarter, Faster’

October 8, 2020 [addtoany]

ATLANTA, Oct. 08, 2020 (GLOBE NEWSWIRE) — Acuity Brands, Inc. (NYSE: AYI) (“Company”) today announced results for the fourth quarter and fiscal year ended August 31, 2020. Fourth quarter net sales were $891 million, a decrease of 5.0% compared with the prior-year period. Gross profit margin of 42.1% remained flat compared with the prior-year period. Operating profit margin of 11.9% decreased 200 basis points and adjusted operating profit margin of 14.7% decreased 90 basis points compared with the prior-year period. Diluted earnings per share (EPS) of $1.87 decreased by 22.7% and adjusted diluted EPS of $2.35 decreased by 14.5% compared with the prior-year period. For fiscal year 2020, net cash provided by operating activities of $505 million increased $10 million, or 2.0%, compared with the prior-year period.

Neil Ashe, President and Chief Executive Officer of Acuity Brands, commented, “Our company achieved strong financial results in the fourth quarter despite the backdrop of a weak market environment associated with the COVID-19 pandemic which continues to negatively impact our end markets. We were able to manage to a 5% decline in sales while balancing a strategic investment in price and maintaining our gross profit margins. The fiscal year 2020 full-year net cash from operating activities was a record $505 million as we effectively managed our working capital in this challenging environment.”

Fiscal 2020 fourth quarter net sales of $891 million decreased 5.0% compared with the prior-year period due to an approximate 4% decrease in volume largely resulting from the negative impact on demand due to the COVID-19 pandemic as well as an estimated 4% net unfavorable change in product prices and mix of products sold (“price/mix”). These negative changes were partially offset by an approximate 3% benefit from acquisitions.

Gross profit for the fourth quarter of fiscal 2020 decreased $20 million to $375 million compared with $395 million in the prior-year period, due to unfavorable price/mix and the lower sales volume, partially offset by lower costs for certain inputs as well as the contributions from acquisitions. Fiscal 2020 fourth quarter gross profit margin of 42.1% remained unchanged compared with the prior-year period’s gross profit margin.

Selling, distribution, and administrative (“SD&A”) expenses for the fourth quarter of fiscal 2020 totaled $261 million, a decrease of $3 million compared with the prior-year period. The decrease in SD&A expense in the fourth quarter was due primarily to decreased freight associated with lower sales volume along with a reduction in costs across multiple expense categories as the Company adjusted spending in response to the lower net sales and realized benefits from recent streamlining activities. The decrease in SD&A expenses was partially offset by the additional costs from recent acquisitions, including commissions, additional amortization of acquired intangibles, and employee costs. SD&A expenses for the fourth quarter of fiscal 2020 were 29.3% of net sales compared with 28.1% of net sales for the prior-year period. Adjusted SD&A expenses for the fourth quarter of fiscal 2020 totaled $244 million (27.4% of net sales) compared with $249 million, or 26.5% of net sales, in the prior-year period.

The Company recognized a pre-tax special charge of $8 million during the fourth quarter of fiscal 2020, which consisted primarily of lease asset impairment costs associated with planned reductions in the Company’s real estate footprint as well as severance and employee-related charges related to initiatives to streamline the organization.

Operating profit for the fourth quarter of fiscal 2020 was $106 million, or 11.9% of net sales, compared with $130 million, or 13.9% of net sales, for the prior-year period. The decrease in operating profit was due to lower gross profit and increased special charges, partially offset by favorable SD&A expenses. Adjusted operating profit for the fourth quarter of fiscal 2020 was $131 million, or 14.7% of net sales, compared with $146 million, or 15.6% of net sales, for the prior-year period.

Fiscal 2020 Full-Year Results

Fiscal 2020 net sales of $3.3 billion decreased 9.4% compared with the prior-year period due to an estimated 12% decrease in volume partially offset by an approximate 3% benefit from acquisitions. The change in product prices and mix of products sold was approximately flat year over year. Operating profit for fiscal 2020 was $354 million compared with $463 million for the prior-year period, a decrease of $109 million, or 23.5%. Operating profit margin for fiscal 2020 decreased 200 basis points to 10.6% of net sales compared with 12.6% of net sales in the year-ago period. Net income for fiscal 2020 was $248 million, a decrease of $82 million, or 24.8%, compared with $330 million for the prior-year period. For fiscal 2020, diluted EPS decreased $2.02, or 24.4%, to $6.27 compared with $8.29 reported in the year-ago period.

Adjusted operating profit decreased by $72 million, or 13.6%, to $456 million for fiscal 2020 compared with $528 million for the prior-year period. Adjusted operating profit margin for fiscal 2020 decreased 70 basis points to 13.7% of net sales compared with 14.4% of net sales in the year-ago period. Adjusted net income for fiscal 2020 was $327 million compared with $381 million in the prior-year period, a decrease of $54 million, or 14.2%. Adjusted diluted EPS for fiscal 2020 decreased $1.30, or 13.6%, to $8.27 compared with $9.57 for the prior-year period.

Cash Flows

Net cash provided by operating activities totaled $505 million during fiscal 2020 compared with $495 million in the prior-year period, an increase of $10 million, or 2.0%. Free cash flow (net cash provided by operating activities less capital expenditures) increased $8 million to $450 million for fiscal 2020. Cash and cash equivalents on August 31, 2020 totaled $561 million, an increase of $100 million since the end of fiscal 2019. During the fourth quarter of fiscal 2020, the Company paid $69 million in cash to repurchase shares of its common stock under its previously authorized stock repurchase program.

Outlook

Mr. Ashe commented, “We continued to demonstrate the durability of our business and our ability to generate cash despite challenging market conditions. We believe the uncertainty around the economic recovery due to the COVID-19 pandemic remains and, as a result, we expect weakness in nonresidential building activity based on current construction indicators. As we look forward to fiscal 2021, we see an opportunity to leverage our expanded product portfolio in lighting, lighting controls, and intelligent buildings along with our investment in our digital transformation to expand market share.”