Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________________________________________ Form 10-K __________________________________________________________ (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended August 31, 2020. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . _______________________ ...

Table of Contents Title of each class Trading symbol Name of each exchange on which registered Common stock, $0.01 par value per share AYI New York Stock Exchange UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________________ Form 10-Q _____________________________________________ (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 2020. OR ☐ TRANSITION REPORT PURSUA ...

Financial Data and Key Metrics Changes - Net sales for Q2 2020 were $824 million, a decrease of 3.5% compared to the same period last year [11] - Overall net sales volume declined approximately 7%, while the price mix of products sold was favorable by approximately 1% [11] - Gross profit was $344 million, up approximately $10 million from the year-ago period, with a gross profit margin of 41.7%, an increase of 260 basis points year-over-year [16] - Reported operating profit was $81 million compared to $96 million in the prior year, with an adjusted operating profit of $102 million compared to $112 million [17] - Diluted EPS for the second quarter was $1.44, down $0.23 from the prior year, while adjusted diluted EPS was $1.84 compared to $1.99 [18] - Generated $250 million of net cash flow from operating activities during the first half of fiscal 2020, up $26 million or 14% compared to the prior year [18] Business Line Data and Key Metrics Changes - Net sales through the independent sales network, which represents approximately 72% of total net sales, increased 4% year-over-year [13] - Sales in the Contractor Select products grew by 30% this quarter [9] - Direct sales network net sales were down 16% year-over-year, primarily due to the completion of larger infrastructure projects in the previous year [13] - Retail channel net sales declined by 23% compared to the prior year, attributed to the company's exit from certain products and the impact of tariffs [14] - Corporate accounts channel sales decreased by almost $20 million compared to the previous year due to the completion of certain projects [15] Market Data and Key Metrics Changes - Demand for private nonresidential construction, particularly lighting, was down in the low single-digit percentage range year-over-year [12] - The company faced year-over-year revenue declines in retail and corporate accounts due to strategic changes and project timing [9][12] Company Strategy and Development Direction - The company is focusing on digital transformation and adapting to a pull-based market environment [27][29] - Plans to leverage its market leadership in lighting and technology to enhance competitiveness and explore new business opportunities [26][29] - The management emphasizes the importance of maintaining a strong balance sheet and liquidity during the COVID-19 pandemic [19][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience and ability to navigate the challenges posed by the COVID-19 pandemic [20][21] - The company is preparing for various scenarios and is focused on ensuring liquidity while positioning itself for future growth [23][30] - Management acknowledged the potential for a rebound in demand post-pandemic, particularly in renovation projects [50] Other Important Information - The company has a total debt outstanding of $406 million and additional borrowing availability of approximately $396 million under its bank credit facility [19] - The management highlighted the adaptability and durability of the business model, which allows for efficient cash generation [26][30] Q&A Session Summary Question: Where in your business do you see revenue opportunity and where do you see the biggest challenges? - Management identified opportunities in product portfolio development and supply chain strength, while challenges include scaling the business appropriately [32][33] Question: Are you seeing push outs and cancellations in the retail segment? - Management noted consistent results in retail but expects demand shocks to impact the segment [34][35] Question: To what extent might this entail a fundamental margin reset over time? - Management is evaluating the adaptability of the business model and aims for efficient competition across market segments [37][39] Question: How are you managing your inventory levels in the coming months? - Management is maintaining supply for Asian finished goods and ensuring access to necessary components while building to demand [77][78]

Table of Contents Title of each class Trading symbol Name of each exchange on which registered Common stock, $0.01 par value per share AYI New York Stock Exchange UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________________ Form 10-Q _____________________________________________ (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 29, 2020. OR ☐ TRANSITION REPORT P ...

Financial Data and Key Metrics Changes - Net sales for Q1 2020 were $835 million, a decrease of 10.5% compared to the same period last year [7] - Reported operating profit was $83.6 million, down from $116.4 million year-over-year [7] - Reported diluted earnings per share (EPS) was $1.44, compared to $1.98 in the prior year [7] - Adjusted operating profit for Q1 2020 was $119 million, down from $134.1 million in the year-ago period [8] - Adjusted diluted EPS was $2.13, a decline of 8% from $2.32 in the previous year [8] - Net cash provided by operating activities was $130 million, with a cash position of $267 million at the end of the quarter [8][29] Business Line Data and Key Metrics Changes - Net sales volume declined approximately 16%, while price/mix of products sold was favorable by approximately 3% [9] - Acquisitions contributed about 2.5% to growth, while foreign currency changes had an immaterial impact [10] - Net sales through independent and direct sales networks, which account for 84% of total net sales, increased by approximately 6% [11] - Retail channel shipments accounted for about one-third of the total decline in net sales, primarily due to load-ins in the previous year [13] - Corporate accounts channel net sales decreased by nearly $18 million, attributed to the completion of certain projects in the prior year [14] Market Data and Key Metrics Changes - The lighting market was down year-over-year in the low to mid-single-digit percentage range, with private nonresidential construction demand weaker than expected [10] - The Dodge Momentum Index has recently turned positive, suggesting potential improvement in market conditions for the latter half of 2020 [33] - Labor shortages and cost increases for imported components and finished goods continue to impact the market [34] Company Strategy and Development Direction - The company is focused on improving market reach, enhancing customer solutions, and driving productivity to optimize financial performance [32] - Strategic initiatives include the introduction of innovative solutions, expansion of the Contractor Select portfolio, and streamlining operations to reduce costs [35][22] - The company aims to leverage its market leadership position with technology-enabled solutions to gain further market share [36] Management's Comments on Operating Environment and Future Outlook - Current market conditions in the lighting industry are challenging, with expectations of sluggish demand continuing due to global trade concerns [32] - Management is optimistic about long-term growth potential, citing early indicators of market improvement [33] - The company is focused on executing plans to grow market share and improve margin profiles while managing costs [34] Other Important Information - The company recognized a pretax special charge of $6.9 million for streamlining operations [26] - The adoption of new lease accounting standards impacted the balance sheet, recognizing total operating lease liabilities of $64.7 million [28] - The company has significant financial strength and flexibility, with additional borrowing capacity of approximately $396 million [31] Q&A Session All Questions and Answers Question: Variability around gross profit margin - Management indicated that they expect to maintain a consistent gross profit margin moving forward, with improvements anticipated as market conditions stabilize [45][46] Question: Dollar value opportunity from streamlining actions - Management expects to recover costs from streamlining actions and see benefits primarily in the second half of the year [48] Question: Succession planning and Neil's skill set - Management highlighted Neil's transformational leadership experience and the mutual excitement about the growth opportunities at Acuity [54] Question: Market performance and share dynamics - Management acknowledged that the market was soft, particularly for larger projects, but emphasized that their core business was not overly penalized by market changes [58] Question: Future plans for cash allocation - Management deferred detailed discussions on capital allocation to Neil, who will articulate his vision in future calls [67][68]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Acuity Brands, Inc., including the Balance Sheets, Statements of Comprehensive Income, and Statements of Cash Flows, along with detailed notes explaining the company's business, accounting policies, acquisitions, debt, equity, and other financial details for the period ended November 30, 2019 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheets show an increase in total assets and stockholders' equity, primarily driven by goodwill and intangible assets from acquisitions, while current assets decreased due to a significant reduction in cash and cash equivalents | Metric | Nov 30, 2019 (millions) | Aug 31, 2019 (millions) | Change (millions) | | :----------------------------------- | :---------------------- | :---------------------- | :---------------- | | Total Assets | **$3,305.2** | $3,172.4 | **+$132.8** | | Total Liabilities | $1,317.9 | $1,253.5 | **+$64.4** | | Total Stockholders' Equity | **$1,987.3** | $1,918.9 | **+$68.4** | | Cash and Cash Equivalents | **$266.6** | $461.0 | **-$194.4** | | Goodwill | **$1,115.5** | $967.3 | **+$148.2** | | Intangible Assets, net | **$621.5** | $466.0 | **+$155.5** | [Consolidated Statements of Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)) For the three months ended November 30, 2019, Acuity Brands experienced a decline in net sales, net income, and diluted EPS compared to the prior-year period, despite an improvement in gross profit margin | Metric | Nov 30, 2019 (millions) | Nov 30, 2018 (millions) | Change (millions) | Change (%) | | :----------------------------------- | :---------------------- | :---------------------- | :---------------- | :--------- | | Net Sales | **$834.7** | $932.6 | **-$97.9** | **-10.5%** | | Gross Profit | $355.8 | $367.5 | **-$11.7** | **-3.2%** | | Operating Profit | $83.6 | $116.4 | **-$32.8** | **-28.2%** | | Net Income | **$57.0** | $79.6 | **-$22.6** | **-28.4%** | | Diluted Earnings Per Share | **$1.44** | $1.98 | **-$0.54** | **-27.3%** | | Gross Profit Margin | **42.6%** | 39.4% | **+3.2%** | | [Consolidated Statements of Cash Flows](index=5&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Cash flows from operating activities remained stable, but significant cash was used for investing activities, primarily due to acquisitions, leading to a substantial net decrease in cash and cash equivalents for the three months ended November 30, 2019 | Metric | Nov 30, 2019 (millions) | Nov 30, 2018 (millions) | Change (millions) | | :----------------------------------- | :---------------------- | :---------------------- | :---------------- | | Net Cash Provided by Operating Activities | $129.6 | $131.8 | **-$2.2** | | Net Cash Used for Investing Activities | **($315.1)** | ($11.3) | **-$303.8** | | Net Cash Used for Financing Activities | ($9.5) | ($34.1) | **+$24.6** | | Net Change in Cash and Cash Equivalents | **($194.4)** | $85.7 | **-$280.1** | | Acquisition of Businesses, net of cash acquired | **($302.0)** | — | **-$302.0** | [Notes to Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) The notes provide detailed explanations of the company's financial reporting, including its business description, accounting policies, acquisitions, debt, equity, and other financial details [Note 1 — Description of Business and Basis of Presentation](index=6&type=section&id=Note%201%20%E2%80%94%20Description%20of%20Business%20and%20Basis%20of%20Presentation) Acuity Brands is a leading provider of lighting and building management solutions, expanding into IoT and smart building software. Interim results are not necessarily indicative of the full fiscal year - Acuity Brands is a leading provider of lighting and building management solutions and services for commercial, institutional, industrial, infrastructure, and residential applications, primarily in North America. The company is expanding its portfolio to include software and services for IoT, smart buildings, smart cities, and the smart grid[12](index=12&type=chunk) - The unaudited interim consolidated financial statements reflect normal and recurring adjustments necessary for fair presentation, but certain information and footnote disclosures have been condensed or omitted compared to annual statements[14](index=14&type=chunk) - Results for the three months ended November 30, 2019, are not necessarily indicative of the full fiscal year due to seasonality (net sales and income generally higher in the second half), impact of acquisitions, and continued economic uncertainties[15](index=15&type=chunk) [Note 2 — Significant Accounting Policies](index=6&type=section&id=Note%202%20%E2%80%94%20Significant%20Accounting%20Policies) Financial statement preparation requires management estimates and assumptions, which may differ from actual results. No material reclassifications occurred - The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts of assets, liabilities, revenue, and expense. Actual results could differ from these estimates[16](index=16&type=chunk) [Note 3 — Acquisitions](index=7&type=section&id=Note%203%20%E2%80%94%20Acquisitions) In fiscal 2020, Acuity Brands acquired TLG and LocusLabs, adding goodwill and intangible assets. Operating results are included since acquisition dates - On September 17, 2019, Acuity Brands acquired The Luminaires Group (TLG), a provider of specification-grade luminaires, complementing its lighting portfolio[20](index=20&type=chunk) - On November 25, 2019, Acuity Brands acquired LocusLabs, Inc., a software platform supporting indoor navigation applications[21](index=21&type=chunk) - The aggregate purchase price for TLG and LocusLabs included preliminary total goodwill of **approximately $147.8 million** and identified intangible assets of **approximately $165.0 million** as of November 30, 2019[22](index=22&type=chunk) [Note 4 — New Accounting Pronouncements](index=7&type=section&id=Note%204%20%E2%80%94%20New%20Accounting%20Pronouncements) Acuity Brands adopted ASC 842 (Leases) in fiscal 2020, recognizing lease liabilities and ROU assets. Other ASUs are being evaluated or planned for adoption - Acuity Brands adopted ASC 842 (Leases) using the modified retrospective method, applying it to all leases existing as of September 1, 2019[25](index=25&type=chunk) Impact of ASC 842 Adoption (as of September 1, 2019) | Metric | Amount (millions) | | :----------------------------------- | :---------------- | | Total Operating Lease Liabilities Recognized | **$64.7** | | Long-term Operating Lease Liabilities | $49.3 | | Current Operating Lease Liabilities | $15.4 | | Previously Recorded Net Deferred Rent Derecognized | $5.1 | | ROU Assets Recorded | **$59.6** | - The company is currently evaluating the impacts of ASU No. 2019-12, Simplifying the Accounting for Income Taxes, effective for fiscal years beginning after December 15, 2021[27](index=27&type=chunk) [Note 5 — Fair Value Measurements](index=8&type=section&id=Note%205%20%E2%80%94%20Fair%20Value%20Measurements) Fair value measurements use a three-level hierarchy. Cash and cash equivalents are Level 1 assets, while certain debt instruments are Level 2 - Fair value measurements are based on a three-level hierarchy: Level 1 (unadjusted quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable and significant inputs)[31](index=31&type=chunk) Cash and Cash Equivalents (Level 1) | Date | Amount (millions) | | :------------------- | :---------------- | | November 30, 2019 | **$266.6** | | August 31, 2019 | $461.0 | Carrying Values and Estimated Fair Values of Financial Instruments (Level 2) | Instrument | Nov 30, 2019 Carrying Value (millions) | Nov 30, 2019 Fair Value (millions) | Aug 31, 2019 Carrying Value (millions) | Aug 31, 2019 Fair Value (millions) | | :---------------------------------------------------- | :----------------------------------- | :--------------------------------- | :----------------------------------- | :--------------------------------- | | Senior unsecured public notes, net | $350.0 | $350.1 | $349.9 | $352.7 | | Industrial revenue bond | $4.0 | $4.0 | $4.0 | $4.0 | | Bank loans | $2.3 | $2.4 | $2.7 | $2.9 | [Note 6 — Inventories](index=9&type=section&id=Note%206%20%E2%80%94%20Inventories) Inventories, valued at the lower of cost and net realizable value, increased slightly due to raw materials, supplies, and work in process Inventories (in millions) | Category | Nov 30, 2019 | Aug 31, 2019 | | :----------------------------------- | :----------- | :----------- | | Raw materials, supplies, and work in process | $190.6 | $179.4 | | Finished goods | $186.8 | $183.7 | | Inventories excluding reserves | $377.4 | $363.1 | | Less: Reserves | ($24.8) | ($22.3) | | Total inventories | **$352.6** | $340.8 | [Note 7 — Property, Plant, and Equipment](index=10&type=section&id=Note%207%20%E2%80%94%20Property%2C%20Plant%2C%20and%20Equipment) Net property, plant, and equipment remained relatively stable, with minor increases in buildings and machinery Property, Plant, and Equipment, Net (in millions) | Category | Nov 30, 2019 | Aug 31, 2019 | | :----------------------------------- | :----------- | :----------- | | Land | $22.7 | $22.6 | | Buildings and leasehold improvements | $193.6 | $190.7 | | Machinery and equipment | $557.7 | $544.4 | | Total property, plant, and equipment, at cost | $774.0 | $757.7 | | Less: Accumulated depreciation and amortization | ($495.6) | ($480.4) | | Property, plant, and equipment, net | $278.4 | $277.3 | [Note 8 — Leases](index=10&type=section&id=Note%208%20%E2%80%94%20Leases) Following ASC 842 adoption, the company recognized operating lease liabilities and ROU assets. Total lease cost was $6.0 million for the quarter - The company leases property and equipment under operating lease arrangements, primarily for distribution centers and manufacturing facilities in the U.S. and Mexico[41](index=41&type=chunk) Operating Lease Liabilities and Payments (in millions) | Metric | Nov 30, 2019 | | :----------------------------------- | :----------- | | Present value of lease liabilities | **$66.1** | | Total undiscounted lease payments | $70.0 | | Weighted average discount rate | 2.2% | | Weighted average remaining lease term | **6 years** | | Total lease cost (3 months ended Nov 30, 2019) | **$6.0** | | Cash paid for operating lease liabilities (3 months ended Nov 30, 2019) | $4.5 | | ROU assets obtained from lease liabilities (3 months ended Nov 30, 2019) | **$5.1** | [Note 9 — Goodwill and Intangible Assets](index=11&type=section&id=Note%209%20%E2%80%94%20Goodwill%20and%20Intangible%20Assets) Goodwill increased due to acquisitions. Amortization expense for definite-lived intangible assets was $9.6 million for the quarter Goodwill (in millions) | Metric | Nov 30, 2019 | Nov 30, 2018 | | :----------------------------------- | :----------- | :----------- | | Beginning balance | $967.3 | $970.6 | | Additions from acquired businesses | $147.8 | — | | Foreign currency translation adjustments | $0.4 | ($3.7) | | Ending balance | **$1,115.5** | $966.9 | Amortization Expense (in millions) | Period | Amount | | :----------------------------------- | :----- | | Three months ended Nov 30, 2019 | **$9.6** | | Three months ended Nov 30, 2018 | $7.7 | | Expected fiscal 2020 | $41.3 | | Expected fiscal 2021 | $39.0 | | Expected fiscal 2022 | $38.1 | | Expected fiscal 2023 | $36.9 | | Expected fiscal 2024 | $36.0 | [Note 10 — Debt and Lines of Credit](index=12&type=section&id=Note%2010%20%E2%80%94%20Debt%20and%20Lines%20of%20Credit) Acuity Brands has a $400.0 million revolving credit facility and a $400.0 million term loan facility, with no outstanding borrowings as of November 30, 2019. Post-period, senior unsecured notes were repaid - Acuity Brands has a **$400.0 million** five-year unsecured revolving credit facility and a **$400.0 million** unsecured delayed draw term loan facility[51](index=51&type=chunk) - As of November 30, 2019, there were no borrowings outstanding under either the Revolving Credit Facility or the Term Loan Facility[51](index=51&type=chunk) - The company was in compliance with all financial covenants and had an additional borrowing capacity of **$796.2 million** as of November 30, 2019[54](index=54&type=chunk) - In December 2019, the **$350.0 million** senior unsecured notes that matured were repaid in full using borrowings from the Term Loan Facility[56](index=56&type=chunk)[92](index=92&type=chunk) Interest Expense, Net (in millions) | Metric | Nov 30, 2019 | Nov 30, 2018 | | :------------------- | :----------- | :----------- | | Interest expense | $9.0 | $9.2 | | Interest income | ($0.7) | ($0.5) | | Interest expense, net | $8.3 | $8.7 | [Note 11 — Commitments and Contingencies](index=13&type=section&id=Note%2011%20%E2%80%94%20Commitments%20and%20Contingencies) The company is subject to legal claims, including patent infringement and a securities class action, which are being vigorously defended. Reserves for product warranty increased slightly - Acuity Brands is subject to legal claims, including patent infringement allegations by Lighting Science Group Corp. related to LED luminaires and systems, and a securities class action alleging false or misleading statements regarding sales trends and growth[64](index=64&type=chunk)[65](index=65&type=chunk) - The company disputes the allegations and intends to vigorously defend against these claims, but the ultimate timing, outcome, or range of possible losses cannot be reasonably estimated at this stage[64](index=64&type=chunk)[65](index=65&type=chunk) Reserves for Product Warranty and Recall Costs (in millions) | Metric | Nov 30, 2019 | Nov 30, 2018 | | :----------------------------------- | :----------- | :----------- | | Beginning balance | $11.5 | $27.3 | | Warranty and recall costs | $7.9 | $5.4 | | Payments and other deductions | ($7.8) | ($5.6) | | Acquired warranty and recall liabilities | $0.1 | — | | ASC 606 adjustments | — | ($14.8) | | Ending balance | **$11.7** | $12.3 | [Note 12 — Changes in Stockholders' Equity](index=15&type=section&id=Note%2012%20%E2%80%94%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity increased by $68.4 million, primarily due to net income and other comprehensive income, partially offset by cash dividends Changes in Stockholders' Equity (in millions) | Metric | Nov 30, 2019 | Aug 31, 2019 | | :----------------------------------- | :----------- | :----------- | | Balance, August 31 | $1,918.9 | $1,716.8 | | Net income | $57.0 | $79.6 | | Other comprehensive income (loss) | $3.8 | ($6.2) | | Share-based payment amortization, issuances, and cancellations | $12.6 | $3.8 | | Employee stock purchase plan issuances | $0.2 | $0.1 | | Cash dividends paid | ($5.2) | ($5.2) | | Repurchases of common stock | — | ($25.0) | | Balance, November 30 | **$1,987.3** | $1,750.9 | [Note 13 — Revenue Recognition](index=16&type=section&id=Note%2013%20%E2%80%94%20Revenue%20Recognition) Revenue is recognized when control of goods and services is transferred to customers, net of allowances. Total net sales were $834.7 million for the quarter - Revenue is recognized when control of goods and services is transferred to customers, measured as the expected consideration, net of rebates, sales incentives, returns, and discounts[70](index=70&type=chunk) Contract Liabilities (in millions) | Category | Nov 30, 2019 | Aug 31, 2019 | | :----------------------------------- | :----------- | :----------- | | Current deferred revenues | $7.4 | $4.7 | | Non-current deferred revenues | $47.7 | $46.4 | Revenue by Sales Channel (in millions) | Sales Channel | Nov 30, 2019 | Nov 30, 2018 | | :----------------------------------- | :----------- | :----------- | | Independent sales network | $618.0 | $651.0 | | Direct sales network | $84.3 | $99.0 | | Retail sales | $53.4 | $85.2 | | Corporate accounts | $33.5 | $51.2 | | Other | $45.5 | $46.2 | | Total | **$834.7** | $932.6 | [Note 14 — Share-based Payments](index=16&type=section&id=Note%2014%20%E2%80%94%20Share-based%20Payments) Share-based payment expense increased significantly due to changes in the equity incentive program, including new performance share unit grants Share-based Payment Expense (in millions) | Period | Amount | | :----------------------------------- | :----- | | Three months ended Nov 30, 2019 | **$16.7** | | Three months ended Nov 30, 2018 | $7.8 | - The Board approved grants of performance share units to executives and key employees, vesting over three years based on performance thresholds. Approximately 37,000 performance share units were outstanding as of November 30, 2019[78](index=78&type=chunk) - A policy was reinstated for restricted stock and performance share grants awarded in October 2019 and thereafter, providing for continued vesting after retirement for eligible participants (age 60 with 10+ years of service)[79](index=79&type=chunk) [Note 15 — Pension Plans](index=17&type=section&id=Note%2015%20%E2%80%94%20Pension%20Plans) Net periodic pension cost for the quarter was $2.3 million, slightly higher than the prior year, with service cost allocated across expenses Net Periodic Pension Cost (in millions) | Component | Nov 30, 2019 | Nov 30, 2018 | | :----------------------------------- | :----------- | :----------- | | Service cost | $1.2 | $0.8 | | Interest cost | $1.8 | $2.2 | | Expected return on plan assets | ($3.1) | ($3.1) | | Amortization of prior service cost | $1.0 | $0.8 | | Settlement loss | — | $0.4 | | Recognized actuarial loss | $1.4 | $1.1 | | Net periodic pension cost | **$2.3** | $2.2 | [Note 16 — Special Charges](index=17&type=section&id=Note%2016%20%E2%80%94%20Special%20Charges) Special charges increased significantly to $6.9 million, primarily due to severance costs and ROU asset lease impairments related to facility closures and acquisitions - During fiscal 2020, Acuity Brands recognized pre-tax special charges of **$6.9 million**, primarily for severance costs and ROU asset lease impairments related to planned facility closures[83](index=83&type=chunk) - These actions are expected to streamline business activities, integrate recent acquisitions, reduce spending, and allow continued investment in growth initiatives[83](index=83&type=chunk) Special Charges (in millions) | Category | Nov 30, 2019 | Nov 30, 2018 | | :----------------------------------- | :----------- | :----------- | | Severance and employee-related costs | $5.1 | ($0.5) | | Other restructuring costs | $1.8 | $1.5 | | Total special charges | **$6.9** | $1.0 | [Note 17 — Earnings Per Share](index=19&type=section&id=Note%2017%20%E2%80%94%20Earnings%20Per%20Share) Basic and diluted earnings per share decreased to $1.44 for the quarter, reflecting lower net income Earnings Per Share (in millions, except per share data) | Metric | Nov 30, 2019 | Nov 30, 2018 | | :----------------------------------- | :----------- | :----------- | | Net income | $57.0 | $79.6 | | Basic weighted average shares outstanding | 39.5 | 40.0 | | Diluted weighted average shares outstanding | 39.6 | 40.1 | | Basic earnings per share | **$1.44** | $1.99 | | Diluted earnings per share | **$1.44** | $1.98 | Antidilutive Stock Options and Restricted Stock Awards Excluded from Diluted EPS | Category | Nov 30, 2019 | Nov 30, 2018 | | :----------------------------------- | :----------- | :----------- | | Stock options | 278,972 | 212,048 | | Restricted stock awards | 118,036 | 197,014 | [Note 18 — Comprehensive Income](index=20&type=section&id=Note%2018%20%E2%80%94%20Comprehensive%20Income) Comprehensive income for the quarter was $60.8 million, including net income and positive other comprehensive income items Comprehensive Income (in millions) | Metric | Nov 30, 2019 | Nov 30, 2018 | | :----------------------------------- | :----------- | :----------- | | Net income | $57.0 | $79.6 | | Other comprehensive income (loss) items, net of tax | $3.8 | ($6.2) | | Comprehensive income | **$60.8** | $73.4 | Changes in Accumulated Other Comprehensive Loss (in millions) | Component | Nov 30, 2019 | Aug 31, 2019 | | :----------------------------------- | :----------- | :----------- | | Balance at August 31 | ($151.4) | ($114.8) | | Net current period other comprehensive income (loss) | $3.8 | ($6.2) | | Balance at November 30 | ($147.6) | ($121.0) | [Note 19 — Subsequent Event](index=21&type=section&id=Note%2019%20%E2%80%94%20Subsequent%20Event) In December 2019, Acuity Brands borrowed $400.0 million from its Term Loan Facility to repay maturing Unsecured Notes, leaving $396.2 million in additional borrowing capacity - In December 2019, Acuity Brands borrowed the full **$400.0 million** available under its Term Loan Facility[92](index=92&type=chunk) - The proceeds were primarily used to repay the **$350.0 million** Unsecured Notes, which matured on December 15, 2019, and related accrued interest[92](index=92&type=chunk) - As of the filing date, the company had an additional borrowing capacity of **$396.2 million** under the Credit Agreement[92](index=92&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Acuity Brands' financial performance, liquidity, and capital resources, detailing business, acquisitions, cash flow, debt, and outlook [Overview](index=23&type=section&id=Overview) Acuity Brands is a leading provider of lighting and building management solutions, expanding into IoT. Recent acquisitions enhance its portfolio, but quarterly results are not indicative of full-year performance - Acuity Brands is a leading provider of lighting and building management solutions and services, expanding its portfolio to include software and services for IoT, smart buildings, smart cities, and the smart grid[95](index=95&type=chunk) - In fiscal 2020, the company acquired The Luminaires Group (TLG) to enhance its lighting portfolio and LocusLabs, Inc. for indoor navigation software[96](index=96&type=chunk)[97](index=97&type=chunk) - The results for the three months ended November 30, 2019, are not necessarily indicative of the full fiscal year due to seasonality, the impact of acquisitions, and continued economic uncertainties[98](index=98&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) Acuity Brands relies on operating cash flows, cash on hand, and borrowings to fund operations, capital expenditures, dividends, and acquisitions, expecting to meet all liquidity needs - Principal sources of liquidity include operating cash flows, cash on hand, and various borrowings[99](index=99&type=chunk) - Expected short-term cash needs include funding operations, capital investments, quarterly dividends, debt payments, employee benefit contributions, possible acquisitions, and potential share repurchases[103](index=103&type=chunk) - The company believes it will meet liquidity needs over the next 12 months and long-term through cash on hand, projected operating cash flow, and borrowing availability[103](index=103&type=chunk) [Cash Flow](index=24&type=section&id=Cash%20Flow) Cash and cash equivalents decreased by $194.4 million. Operating cash flow was $129.6 million, while investing activities used $315.1 million, primarily for acquisitions Cash Position and Operating Cash Flow (in millions) | Metric | Nov 30, 2019 | Aug 31, 2019 | | :----------------------------------- | :----------- | :----------- | | Cash position | **$266.6** | $461.0 | | Net cash flows from operations (3 months) | **$129.6** | $131.8 | | Net cash used for investing activities (3 months) | **$315.1** | $11.3 | | Acquisitions (3 months) | **$302.0** | — | | Capital expenditures (3 months) | $11.6 | $14.0 | [Capitalization](index=24&type=section&id=Capitalization) Total debt outstanding was $356.3 million. The company maintained compliance with covenants and had significant borrowing capacity. Stockholders' equity increased to $1.99 billion Debt and Capitalization Ratios (in millions) | Metric | Nov 30, 2019 | Aug 31, 2019 | | :----------------------------------- | :----------- | :----------- | | Total debt outstanding | **$356.3** | $356.6 | | Consolidated stockholders' equity | **$1,990** | $1,920 | | Debt to total capitalization ratio | **15.2%** | 15.7% | | Debt, net of cash, to total capitalization, net of cash | 4.3% | (5.8)% | - The company had a $400.0 million revolving credit facility and a $400.0 million term loan facility, with no borrowings outstanding as of November 30, 2019, and was in compliance with all financial covenants[110](index=110&type=chunk) - Additional borrowing capacity under the Credit Agreement was **$796.2 million** as of November 30, 2019[110](index=110&type=chunk) [Dividends](index=25&type=section&id=Dividends) Acuity Brands paid $5.2 million ($0.13 per share) in common stock dividends, consistent with the prior year, with future decisions at the Board's discretion Dividends Paid on Common Stock (in millions) | Period | Amount | Per Share | | :----------------------------------- | :----- | :-------- | | Three months ended Nov 30, 2019 | **$5.2** | **$0.13** | | Three months ended Nov 30, 2018 | $5.2 | $0.13 | [Contractual Obligations](index=25&type=section&id=Contractual%20Obligations) In December 2019, the company fully utilized its Term Loan Facility to refinance Unsecured Notes. The Term Loan amortizes quarterly, with no other material changes to obligations - In December 2019, Acuity Brands borrowed the full **$400.0 million** available under its Term Loan Facility to repay the Unsecured Notes that matured on December 15, 2019[115](index=115&type=chunk) - Borrowings under the Term Loan Facility amortize in equal quarterly installments, with any remaining balance due on June 29, 2023[115](index=115&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Net sales decreased by 10.5% due to lower volumes, despite improved gross profit margin. Operating profit and net income declined significantly due to lower sales and higher expenses Key Financial Performance (in millions, except per share data) | Metric | Nov 30, 2019 | Nov 30, 2018 | Change (millions) | Percent Change | | :----------------------------------- | :----------- | :----------- | :---------------- | :------------- | | Net sales | **$834.7** | $932.6 | **($97.9)** | **(10.5)%** | | Gross profit | $355.8 | $367.5 | ($11.7) | (3.2)% | | Gross profit percent of net sales | **42.6%** | 39.4% | +320 bps | | | Selling, distribution, and administrative expenses | $265.3 | $250.1 | $15.2 | 6.1% | | Special charges | $6.9 | $1.0 | $5.9 | NM | | Operating profit | **$83.6** | $116.4 | **($32.8)** | **(28.2)%** | | Operating profit percent of net sales | 10.0% | 12.5% | (250) bps | | | Net income | **$57.0** | $79.6 | **($22.6)** | **(28.4)%** | | Diluted earnings per share | **$1.44** | $1.98 | ($0.54) | (27.3)% | Adjusted Key Financial Performance (in millions, except per share data) | Metric | Nov 30, 2019 | Nov 30, 2018 | Change (millions) | Percent Change | | :----------------------------------- | :----------- | :----------- | :---------------- | :------------- | | Adjusted gross profit | $356.9 | $368.7 | ($11.8) | (3.2)% | | Adjusted gross profit percent of net sales | 42.8% | 39.5% | +330 bps | | | Adjusted selling, distribution, and administrative expenses | $237.9 | $234.6 | $3.3 | 1.4% | | Adjusted operating profit | $119.0 | $134.1 | ($15.1) | (11.3)% | | Adjusted operating profit percent of net sales | 14.3% | 14.4% | (10) bps | | | Adjusted net income | $84.2 | $92.8 | ($8.6) | (9.3)% | | Adjusted diluted earnings per share | $2.13 | $2.32 | ($0.19) | (8.2)% | - Net sales decreased **10.5%** due to a **16%** decrease in sales volumes, partially offset by a **3%** net favorable change in product prices and mix, and a **2.5%** contribution from acquired businesses[121](index=121&type=chunk) [Outlook](index=28&type=section&id=Outlook) Acuity Brands is cautious about lighting market conditions due to construction declines and trade issues. The strategy focuses on market share, margin, cost containment, and technology-driven solutions for long-term growth - The company expects to drive market share gains and enhance margins in fiscal 2020, while implementing cost containment measures[132](index=132&type=chunk) - Market demand for lighting products is expected to remain sluggish due to continued declines in private non-residential construction spending, global trade uncertainties (tariffs), and potential U.S. election impacts[132](index=132&type=chunk) - Long-term prospects are positive, with expectations for solid growth in addressable markets, especially with digital lighting's role in IoT and smart building automation systems[137](index=137&type=chunk) - Refinancing the Unsecured Notes with the Term Loan Facility is estimated to save **$7 million to $8 million** in interest for the remainder of fiscal 2020[136](index=136&type=chunk) [Critical Accounting Estimates](index=30&type=section&id=Critical%20Accounting%20Estimates) Management relies on estimates and assumptions for revenue, inventory, asset recoverability, and various reserves. No material changes occurred in critical accounting estimates - The preparation of financial statements requires management to make estimates and assumptions related to revenue recognition, inventory valuation, amortization and recoverability of long-lived assets (including goodwill and intangible assets), share-based payment expense, and various reserves (medical, product warranty, recall, retirement benefits, litigation)[139](index=139&type=chunk) - No material changes in critical accounting estimates occurred during the current period[140](index=140&type=chunk) [Cautionary Statement Regarding Forward-Looking Information](index=30&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Information) This section warns that forward-looking statements are subject to risks and uncertainties, including customer relations, competition, market demand, litigation, and economic factors - The filing contains forward-looking statements regarding financial performance, liquidity, capital structure, market conditions, growth strategies, tax rates, amortization, and legal matters[141](index=141&type=chunk) - Readers are cautioned not to place undue reliance on forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially[141](index=141&type=chunk) - Key risks include customer and supplier relationships, competition, market demand, litigation, and economic, political, governmental, and technological factors[141](index=141&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Acuity Brands is exposed to market risks from fluctuations in interest rates, foreign exchange rates, and commodity prices, with no material changes since the prior Form 10-K - The company is exposed to market risks primarily from fluctuations in interest rates, foreign exchange rates, and commodity prices[143](index=143&type=chunk) - There have been no material changes to the company's exposure from market risks compared to those disclosed in its Form 10-K[143](index=143&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective. The assessment of internal control for newly acquired businesses was omitted, but integration has begun - Management, including the principal executive officer and principal financial officer, concluded that the design and operation of disclosure controls and procedures are effective at a reasonable assurance level as of November 30, 2019[145](index=145&type=chunk) - The assessment of internal control over financial reporting for the recently acquired businesses, The Luminaires Group (TLG) and LocusLabs, Inc., was omitted as permitted by SEC guidance for a period not exceeding one year from acquisition date[146](index=146&type=chunk) - Excluding the acquisitions, there have been no material changes in internal control over financial reporting during the most recent fiscal quarter[146](index=146&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) Acuity Brands is involved in ongoing legal proceedings, including patent infringement and a securities class action, which are being vigorously defended. Management believes the resolution will not have a material adverse effect - Acuity Brands is facing patent infringement complaints from Lighting Science Group Corp. (LSG) regarding certain LED luminaires and systems, with LSG seeking import/sale preclusion orders and unspecified monetary damages[148](index=148&type=chunk) - A securities class action lawsuit alleges the company made false or misleading statements regarding sales trends and profitable growth. The court dismissed most claims but allowed some to proceed to discovery[149](index=149&type=chunk) - The company is also reviewing trade compliance matters related to misclassified/inaccurately valued international shipments and is subject to other legal claims in the normal course of business. Management believes the ultimate resolution of pending and threatened legal proceedings will not have a material adverse effect[150](index=150&type=chunk)[151](index=151&type=chunk) [Item 1a. Risk Factors](index=33&type=section&id=Item%201a.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Form 10-K - No material changes in risk factors have occurred from those disclosed in Part I, Item 1a. Risk Factors of the company's Form 10-K[154](index=154&type=chunk) [Item 5. Other Information](index=34&type=section&id=Item%205.%20Other%20Information) This section reports the declaration of a quarterly dividend and the results of the annual stockholders' meeting, where directors were elected, auditors ratified, but executive compensation was not approved [Declaration of Dividend](index=34&type=section&id=Declaration%20of%20Dividend) On January 8, 2020, the Board of Directors declared a quarterly dividend of $0.13 per share, payable on February 3, 2020 - On January 8, 2020, the Board of Directors declared a quarterly dividend of **$0.13 per share**[156](index=156&type=chunk) - The dividend is payable on February 3, 2020, to stockholders of record on January 20, 2020[156](index=156&type=chunk) [Results of Annual Stockholders Meeting](index=34&type=section&id=Results%20of%20Annual%20Stockholders%20Meeting) Stockholders elected nine directors and ratified Ernst & Young LLP. However, the advisory vote on executive compensation was not approved - Stockholders elected nine directors nominated by the Board of Directors for a one-year term[157](index=157&type=chunk) - The appointment of Ernst & Young LLP as the company's independent registered public accounting firm was ratified[157](index=157&type=chunk) - The advisory vote on the compensation of the named executive officers of the company was **not approved** by stockholders[157](index=157&type=chunk) [Item 6. Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including corporate governance documents, CEO/CFO certifications, and XBRL data files - The exhibits include the Restated Certificate of Incorporation, Certificate of Amendment, Amended and Restated Bylaws, Certifications of the Chief Executive Officer and Chief Financial Officer (pursuant to Sections 302 and 906 of Sarbanes-Oxley Act), and XBRL Instance Document and Taxonomy Extension Documents[161](index=161&type=chunk) [SIGNATURES](index=36&type=section&id=SIGNATURES) The report is duly signed on behalf of Acuity Brands, Inc. by Vernon J. Nagel, Chairman and Chief Executive Officer, and Karen J. Holcom, Senior Vice President and Chief Financial Officer, on January 9, 2020 - The report was signed by Vernon J. Nagel, Chairman and Chief Executive Officer, and Karen J. Holcom, Senior Vice President and Chief Financial Officer, on January 9, 2020[163](index=163&type=chunk)

Part I [Business](index=3&type=section&id=Item%201.%20Business) Acuity Brands is a leading provider of lighting and building management solutions and services in North America and select international markets, operating as a single reportable segment - Acuity Brands is a **leading provider** of lighting and building management solutions and services, operating as **one reportable segment** primarily serving the North American market[5](index=5&type=chunk) - The company estimates the North American lighting and building management solutions market it serves was **over $20 billion** in fiscal 2019, with renovation and retrofit activity representing a growing proportion of the total market[9](index=9&type=chunk)[10](index=10&type=chunk) - In fiscal 2019, approximately **98% of net sales originated in North America**, with **89% from the United States** Key customers include electrical distributors, retail home improvement centers, and national accounts[8](index=8&type=chunk) Fiscal 2019 Manufacturing & Sourcing by Region | Region | Manufactured | Purchased | Total | | :--- | :--- | :--- | :--- | | United States | 19% | 7% | 26% | | Mexico | 60% | —% | 60% | | China | —% | 11% | 11% | | Others | 3% | —% | 3% | | **Total** | **82%** | **18%** | **100%** | Research and Development Expenses (2017-2019) | Fiscal Year | R&D Expense (in millions) | | :--- | :--- | | 2019 | $74.7 | | 2018 | $63.9 | | 2017 | $52.0 | [Risk Factors](index=8&type=section&id=Item%201a.%20Risk%20Factors) The company faces significant risks related to its strategy, operations, legal/regulatory environment, and financial matters - Sales are **highly dependent** on the cyclical construction market and are subject to **aggressive pricing** from competitors, including Asian importers[37](index=37&type=chunk)[39](index=39&type=chunk) - Approximately **60% of finished products** are manufactured in Mexico, exposing the company to **potential disruptions** from civil unrest or trade disputes[51](index=51&type=chunk) - The company sources components and about **11% of finished goods** from China, which are subject to **import tariffs** Mitigation efforts include finding alternative suppliers, insourcing, and raising prices[66](index=66&type=chunk)[68](index=68&type=chunk) - **Significant operational risk** exists from **potential failures** or **security compromises** of IT systems, especially for customer-facing IoT and building management solutions, which could lead to **data loss**, **reputational damage**, and **fines** under evolving data privacy laws like GDPR and CCPA[52](index=52&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) - The company faces **financial risk** from the **planned transition** away from LIBOR after 2021, as its credit agreement is indexed to LIBOR, which could **increase interest expenses**[81](index=81&type=chunk) [Unresolved Staff Comments](index=15&type=section&id=Item%201b.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the Securities and Exchange Commission - **None**[84](index=84&type=chunk) [Properties](index=15&type=section&id=Item%202.%20Properties) As of August 31, 2019, the company operates from numerous facilities, primarily in North America, including 18 manufacturing facilities Facility Summary by Type (as of Aug 31, 2019) | Facility Type | Owned | Leased | | :--- | :--- | :--- | | Manufacturing facilities | 13 | 5 | | Warehouses | 1 | 3 | | Distribution centers | 2 | 7 | | Offices | 5 | 17 | Manufacturing Facilities by Location (as of Aug 31, 2019) | Location | Owned | Leased | Total | | :--- | :--- | :--- | :--- | | United States | 6 | 2 | 8 | | Mexico | 4 | 2 | 6 | | Europe | 2 | — | 2 | | Canada | 1 | 1 | 2 | | **Total** | **13** | **5** | **18** | [Legal Proceedings](index=15&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal claims, including patent infringement and a securities class action lawsuit - Lighting Science Group Corp (LSG) filed complaints alleging infringement of seven patents related to certain LED luminaires and is seeking to preclude importation and sale of accused products, along with unspecified monetary damages[89](index=89&type=chunk) - A consolidated securities class action lawsuit alleges false or misleading statements between October 2015 and April 2017 While a motion to dismiss was granted for 42 of 47 challenged statements, claims based on 5 statements are proceeding to discovery[90](index=90&type=chunk) [Mine Safety Disclosures](index=17&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Not applicable**[93](index=93&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=18&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Acuity Brands' common stock trades on the NYSE under "AYI", with a share repurchase program authorized in March 2018 - The Board authorized a repurchase of up to **six million shares** in March 2018 As of August 31, 2019, **4.55 million shares** may yet be purchased under this program[95](index=95&type=chunk) Share Repurchase Activity (Quarter Ended Aug 31, 2019) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | June 2019 | — | $— | | July 2019 | 250,000 | $131.58 | | August 2019 | — | $— | | **Total** | **250,000** | **$131.58** | - Over the five years ending August 31, 2019, a **$100 investment** in Acuity Brands stock would be worth **$103**, compared to **$142** for the S&P Midcap 400 Index and **$177** for the Dow Jones US Building Materials & Fixtures Index[99](index=99&type=chunk) [Selected Financial Data](index=20&type=section&id=Item%206.%20Selected%20Financial%20Data) The five-year financial data shows net sales peaking at $3.68 billion in 2018, with consistent growth in total assets and stockholders' equity Selected Consolidated Financial Data (2015-2019) | (In millions, except per-share data) | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net sales | $3,672.7 | $3,680.1 | $3,505.1 | $3,291.3 | $2,706.7 | | Net income | $330.4 | $349.6 | $321.7 | $290.8 | $222.1 | | Diluted earnings per share | $8.29 | $8.52 | $7.43 | $6.63 | $5.09 | | Total assets | $3,172.4 | $2,988.8 | $2,899.6 | $2,948.0 | $2,407.0 | | Total debt | $356.6 | $356.8 | $356.9 | $355.2 | $352.4 | | Stockholders' equity | $1,918.9 | $1,716.8 | $1,665.6 | $1,659.8 | $1,360.0 | | Cash dividends declared per common share | $0.52 | $0.52 | $0.52 | $0.52 | $0.52 | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=21&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, liquidity, and strategic outlook, noting flat sales in fiscal 2019 and a cautious outlook for fiscal 2020 [Overview](index=21&type=section&id=MD%26A_Overview) This section outlines Acuity Brands' business as a leading provider of lighting and building management solutions, including IoT-enabled systems - The company's strategy focuses on extending its leadership in North America by delivering superior lighting and building management solutions, including expanding its software and IoT offerings[111](index=111&type=chunk) - Recent acquisitions include The Luminaires Group (TLG) and WhiteOptics in fiscal 2019, and IOTA Engineering and Lucid Design Group in fiscal 2018, to enhance the company's portfolio of luminaires, optical components, emergency lighting, and data analytics platforms[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=MD%26A_Liquidity_and_Capital_Resources) The company's primary liquidity sources are operating cash flow, cash on hand, and borrowings, with significant increase in operating cash flow in fiscal 2019 - Net cash from operating activities **increased by $143.2 million to $494.7 million** in fiscal 2019, primarily due to a **$57.0 million decrease in operating working capital**[120](index=120&type=chunk) - The company intends to refinance its **$350.0 million senior unsecured notes**, due December 2019, using its Term Loan Facility, which is expected to have a **lower interest rate**[125](index=125&type=chunk)[126](index=126&type=chunk)[167](index=167&type=chunk) Contractual Obligations as of August 31, 2019 (in millions) | Obligation | Total | Less than 1 Year | 1 to 3 Years | 4 to 5 Years | After 5 Years | | :--- | :--- | :--- | :--- | :--- | :--- | | Debt | $356.7 | $350.3 | $4.8 | $0.7 | $0.9 | | Interest obligations | $95.2 | $23.6 | $25.2 | $20.9 | $25.5 | | Operating leases | $68.7 | $16.7 | $23.4 | $11.8 | $16.8 | | Purchase obligations | $357.2 | $347.2 | $10.0 | $— | $— | | Other liabilities | $44.9 | $1.8 | $3.2 | $1.5 | $38.4 | | **Total** | **$922.7** | **$739.6** | **$66.6** | **$34.9** | **$81.6** | [Results of Operations](index=25&type=section&id=MD%26A_Results_of_Operations) This section provides a detailed comparison of financial results for fiscal years 2019 vs 2018 and 2018 vs 2017, highlighting sales, margins, and tax rates Fiscal 2019 vs. 2018 Performance | (In millions, except per share) | 2019 | 2018 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $3,672.7 | $3,680.1 | (0.2)% | | Gross profit | $1,479.7 | $1,485.4 | (0.4)% | | Operating profit | $462.9 | $460.8 | 0.5% | | Net income | $330.4 | $349.6 | (5.5)% | | Diluted EPS | $8.29 | $8.52 | (2.7)% | | Adjusted Diluted EPS | $9.57 | $8.84 | 8.3% | - The fiscal 2019 sales decline was driven by a **1% drop in volume**, attributed to non-repeating initial stocking at a retail customer, product portfolio pruning, and softer market conditions This was offset by **favorable price/mix** from price increases and channel mix changes[136](index=136&type=chunk) Fiscal 2018 vs. 2017 Performance | (In millions, except per share) | 2018 | 2017 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $3,680.1 | $3,505.1 | 5.0% | | Gross profit | $1,485.4 | $1,481.1 | 0.3% | | Operating profit | $460.8 | $527.5 | (12.6)% | | Net income | $349.6 | $321.7 | 8.7% | | Diluted EPS | $8.52 | $7.43 | 14.7% | - The fiscal 2018 sales increase was due to a **~7% rise in sales volume**, partially offset by an unfavorable price/mix of **~3%** The volume growth was driven by Atrius-based luminaires and higher shipments in the home center channel[149](index=149&type=chunk) - The effective tax rate for fiscal 2018 was **17.9%**, significantly lower than **34.7%** in 2017, primarily due to the enactment of the Tax Cuts and Jobs Act (TCJA)[157](index=157&type=chunk) [Outlook](index=33&type=section&id=MD%26A_Outlook) Management expresses caution for fiscal 2020, anticipating sluggish market demand due to global trade issues and tariffs - Management is **cautious** about fiscal 2020 market conditions due to **global trade issues** and **tariffs**, expecting **sluggish demand** for lighting products[160](index=160&type=chunk) - Fiscal 2020 first quarter net sales are projected to be down in the **mid-to-high single-digit percentage range** compared to Q1 2019, primarily due to a **prior-year pull-forward of orders** ahead of price increases[162](index=162&type=chunk) - The estimated annual tax rate for fiscal 2020 is approximately **23%** before discrete items, and capital expenditures are expected to be around **1.7% of net sales**[161](index=161&type=chunk) [Critical Accounting Estimates](index=34&type=section&id=MD%26A_Critical_Accounting_Estimates) The company identifies several critical accounting estimates that require significant management judgment, including revenue recognition and impairment testing - Key **critical accounting estimates** include revenue recognition, inventory valuation, goodwill and intangible asset impairment, self-insurance reserves, retirement benefits, share-based payments, and product warranty/recall costs[170](index=170&type=chunk)[171](index=171&type=chunk) - Goodwill and indefinite-lived intangible assets are tested for impairment annually in Q4 The fiscal 2019 qualitative assessment for goodwill (**$967.3M**) and quantitative test for indefinite-lived trade names (**$141.3M**) resulted in **no impairment charges**[175](index=175&type=chunk)[177](index=177&type=chunk)[178](index=178&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%207a.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from interest rates, foreign exchange rates, and commodity prices - A hypothetical **10% decline** in the Canadian dollar versus the U.S. dollar would negatively impact operating profit by **~$12 million**, while a **10% appreciation** would favorably impact it by **~$15 million**[197](index=197&type=chunk) - A hypothetical **10% decrease** in the Mexican peso versus the U.S. dollar would favorably impact operating profit by **~$13 million**, while a **10% increase** would negatively impact it by **~$16 million**[197](index=197&type=chunk) - In fiscal 2019, the company purchased approximately **90,000 tons of steel and aluminum**, exposing it to **commodity price volatility**[199](index=199&type=chunk) [Financial Statements and Supplementary Data](index=39&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's consolidated financial statements for the fiscal year ended August 31, 2019, and the independent auditor's reports [Management's Report on Internal Control over Financial Reporting](index=40&type=section&id=Management%27s%20Report%20on%20Internal%20Control%20over%20Financial%20Reporting) Management asserts its responsibility for establishing and maintaining adequate internal control over financial reporting, concluding it was effective as of August 31, 2019 - Management concluded that the Company's internal control over financial reporting was **effective** as of August 31, 2019, based on the criteria set forth by COSO in the Internal Control-Integrated Framework (2013)[203](index=203&type=chunk) [Report of Independent Registered Public Accounting Firm](index=41&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Ernst & Young LLP issued an unqualified opinion on the financial statements and internal controls, identifying indefinite-lived trade names valuation as a critical audit matter - The auditor, Ernst & Young LLP, issued an **unqualified opinion** on the consolidated financial statements and the company's internal control over financial reporting as of August 31, 2019[207](index=207&type=chunk)[217](index=217&type=chunk) - The audit identified the valuation of the company's **$141.3 million** in indefinite-lived trade names as a **critical audit matter** due to the **complex and subjective judgments** required for assumptions like future net sales, discount rates, and royalty rates[211](index=211&type=chunk)[213](index=213&type=chunk) [Consolidated Financial Statements](index=44&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements present the company's financial position and performance, including the Balance Sheet, Statements of Comprehensive Income, and Cash Flows Consolidated Balance Sheet Highlights (as of Aug 31, in millions) | | 2019 | 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | $461.0 | $129.1 | | Total current assets | $1,441.8 | $1,211.1 | | Goodwill | $967.3 | $970.6 | | Total assets | $3,172.4 | $2,988.8 | | Total current liabilities | $596.1 | $682.7 | | Long-term debt | $347.5 | $356.4 | | Total liabilities | $1,253.5 | $1,272.0 | | Total stockholders' equity | $1,918.9 | $1,716.8 | Consolidated Statement of Comprehensive Income (Year Ended Aug 31, in millions) | | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | | Net sales | $3,672.7 | $3,680.1 | $3,505.1 | | Gross profit | $1,479.7 | $1,485.4 | $1,481.1 | | Operating profit | $462.9 | $460.8 | $527.5 | | Net income | $330.4 | $349.6 | $321.7 | | Diluted EPS | $8.29 | $8.52 | $7.43 | [Notes to Consolidated Financial Statements](index=48&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures supporting the main financial statements, covering accounting policies, acquisitions, debt, and income taxes - The company adopted ASC 606 (Revenue from Contracts with Customers) on September 1, 2018, using the modified retrospective method, resulting in a **$13.0 million cumulative reduction to retained earnings**[281](index=281&type=chunk) - Total debt outstanding was **$356.6 million** at August 31, 2019, primarily consisting of **$350.0 million in senior unsecured notes** due December 2019, which the company intends to **refinance**[345](index=345&type=chunk)[346](index=346&type=chunk) - The company recorded **pre-tax special charges of $1.8 million** in fiscal 2019 for **streamlining initiatives**, compared to **$5.6 million** in 2018 and **$11.3 million** in 2017[393](index=393&type=chunk)[395](index=395&type=chunk) - The **total tax benefit** related to the enactment of the TCJA was **$36.8 million**, including a **$32.5 million benefit** from **re-measuring deferred taxes** and a **$4.3 million benefit** for the **one-time transition tax**[403](index=403&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=96&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on any matter of accounting principles or practices, or financial statement disclosure - **None**[430](index=430&type=chunk) [Controls and Procedures](index=96&type=section&id=Item%209a.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of August 31, 2019 - Based on an evaluation as of August 31, 2019, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures are **effective at a reasonable assurance level**[432](index=432&type=chunk) [Other Information](index=97&type=section&id=Item%209b.%20Other%20Information) There is no other information to report for this item - **None**[435](index=435&type=chunk) Part III [Directors, Executive Officers, and Corporate Governance](index=98&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) Information regarding the company's directors, executive officers, and corporate governance policies is incorporated by reference from the 2020 proxy statement - Information required by this item is incorporated by reference from the company's proxy statement for the 2020 Annual Meeting of Stockholders[437](index=437&type=chunk)[438](index=438&type=chunk)[439](index=439&type=chunk) [Executive Compensation](index=98&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the company's proxy statement for its 2020 Annual Meeting of Stockholders - Information required by this item is incorporated by reference from the company's proxy statement for the 2020 Annual Meeting of Stockholders[440](index=440&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=98&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership by certain beneficial owners and management, and equity compensation plans, is incorporated by reference from the 2020 proxy statement - Information required by this item is incorporated by reference from the company's proxy statement for the 2020 Annual Meeting of Stockholders[441](index=441&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=98&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related party transactions, and director independence is incorporated by reference from the company's proxy statement for its 2020 Annual Meeting of Stockholders - Information required by this item is incorporated by reference from the company's proxy statement for the 2020 Annual Meeting of Stockholders[442](index=442&type=chunk) [Principal Accountant Fees and Services](index=98&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services, including audit committee pre-approval policies, is incorporated by reference from the 2020 proxy statement - Information required by this item is incorporated by reference from the company's proxy statement for the 2020 Annual Meeting of Stockholders[443](index=443&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=99&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the documents filed as part of the Form 10-K report, including financial statements, schedules, and a comprehensive index of exhibits - This section lists all financial statements, schedules, and exhibits filed with the report, including certifications by the CEO and CFO pursuant to the Sarbanes-Oxley Act[445](index=445&type=chunk)[484](index=484&type=chunk) [Form 10-K Summary](index=108&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company did not provide a summary for this item - **None**[485](index=485&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________________ Form 10-Q _____________________________________________ (Mark One) þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 2019. OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number 001-16583. __________ ...

Financial Data and Key Metrics Changes - Net sales for the second quarter reached a record $854 million, an increase of almost 3% compared to the year-ago period [8] - Adjusted operating profit for the second quarter was $112.4 million, up 7% from $105.3 million in the prior year [8][14] - Adjusted diluted earnings per share (EPS) was a record $1.99, reflecting a 5% increase from the previous year [8][16] - Adjusted gross profit margin decreased by 100 basis points to 39.2% compared to the year-ago period [14] Business Line Data and Key Metrics Changes - Net sales through the independent sales network benefited from price increases and growth from the building management team at Distech, while C&I sales volume declined due to order pull-forward [11] - Corporate accounts channel net sales increased by 10% year-over-year, driven by the expansion of Atrius-enabled luminaires [11] - C&I market net sales were up almost 5% for the first half of 2019 compared to the previous year, indicating a recovery from the pull-forward effect [12] Market Data and Key Metrics Changes - The overall growth rate of the lighting industry in North America was reported to be low-single digits, with the company outpacing this growth [10] - The company noted that prolonged weak demand for larger non-residential lighting projects and product substitution to lower-priced alternatives continued to impact sales [12][32] Company Strategy and Development Direction - The company is focused on diversifying its product offerings and enhancing customer solutions, particularly through its Atrius IoT platform and building management solutions [17][36] - The company aims to maintain its investment-grade rating while exploring M&A opportunities and share buybacks as part of its capital allocation strategy [39][42] - The company is reviewing its product portfolio to eliminate underperforming items, which is expected to improve margins and return on invested capital [35][72] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term growth despite current market challenges, citing strong cash flow and sales growth [28] - The company anticipates that labor shortages and global trade issues may continue to impact growth rates in the construction and lighting markets [30][31] - Management expects to continue outperforming the overall market growth rate, particularly in North America, while facing challenges from product substitutions and pricing dynamics [33][34] Other Important Information - The company generated $188 million in net cash flow from operating activities in the first half of fiscal 2019, an increase from $178 million in the prior year [24] - The company repurchased 400,000 shares for $49 million during the first six months of fiscal 2019, with 4.8 million shares remaining under the current repurchase authorization [26][27] Q&A Session Summary Question: Thoughts on deploying net buybacks and leveraging the balance sheet - Management indicated that cash will be used for capital expenditures, shareholder returns, and acquisitions, with a preference for M&A opportunities [39][40] Question: Impact of retail channel mix on growth - Management sees opportunities for diversification and growth in the retail channel, despite the complexities of different customer service requirements [46][48] Question: Price capture and realization timeline - Management believes there may be another quarter of noise around price capture, but is optimistic about future price realization [54][55] Question: Recent lighting industry M&A activity - Management remains bullish on the lighting industry, stating that it continues to grow and that Acuity is well-positioned compared to smaller competitors [68][69]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________________ Form 10-Q _____________________________________________ (Mark One) þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 28, 2019. OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number 001-16583. _____ ...