Acuity’s Q4 Investor Call: Only 20% of Goods from Asia

Today, Acuity Brands held an investor call to report on their performance and earnings for Q4 2021. Acuity demonstrated a strong performance with improvements seen across many branches of their business and by their ability to meet target goals. Below are some financial highlights:

  • Net sales of $192 million, 11% increase compared to the prior year.
  • Gross profit margin of 42.2%, up 10 basis points over the prior year.
  • Diluted EPS of $2.72, a 46% increase over the prior year.
  • Operating profit margin 13.4% of net sales, up 150 basis points over the prior year

Acuity attributes their strong earnings to providing and retaining value in their products, price increases, the ability to coordinate efficiently on big projects, and notably to their ability to meet demand through a flexible supply chain. As many may already know, the global supply chain has caused problems for virtually all industries in being able to meet demand and acquire product for local distribution. In addition, issues have surfaced regarding the power shortages in China, forcing factories to temporarily shut down and lead to longer lead times for product manufacturing. All of these elements have created a tough situation for all industries that rely on overseas manufacturing.

So how is Acuity faring so well? According to Neil Ashe, Chairman, President, and CEO of Acuity Brands, Acuity’s sources for manufacturing can approximately be broken down by the following: 20% from Asia, 60% from Mexico, and 20% from the US, Canada, and the rest of North America. Going by this, Acuity’s lack of major reliance on transpacific importation puts them in a position to have much more flexibility in the supply chain. In addition, they have increased product dexterity, which allows the same products to be manufactured in either factory locations.

However, this isn’t to say that Acuity is immune to all of the logistical problems the world is facing. Ashe states that they are experiencing difficulty in acquiring containers and that they are still faced with having to adapt to multiple challenges regarding shipping. Availability of commodities for manufacturing remains a moving target, and Ashe predicts it will remain so for 12 months to 18 months at least. Many companies have begun looking at sourcing manufacturing outside of China, but will Acuity’s example encourage even more to reconsider their supply chain? Time will tell.

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