Acuity Brands(AYI) - 2024 Q3 - Quarterly Results

Acuity Brands Fiscal 2024 Third-Quarter Results The company reported a slight revenue decline in Q3 fiscal 2024 but demonstrated strong profitability and earnings growth Financial Highlights The company reported a slight revenue decline but achieved higher operating profit and significant growth in diluted earnings per share Q3 Fiscal 2024 Key Financial Metrics (YoY) | Metric | Q3 FY2024 | Q3 FY2023 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $968.1M | $1,000.3M | -3.2% | | Operating Profit | $145.3M | $143.3M | +1.4% | | Adjusted Operating Profit | $167.1M | $162.9M | +2.6% | | Diluted EPS | $3.62 | $3.28 | +10.4% | | Adjusted Diluted EPS | $4.15 | $3.75 | +10.7% | - The company successfully expanded its operating profit margin by 70 basis points to 15.0% and its adjusted operating profit margin by 100 basis points to 17.3% compared to the prior year[2] Segment Performance Performance was mixed, with the ABL segment's sales decline offset by margin improvement and strong growth from the ISG segment Acuity Brands Lighting and Lighting Controls (ABL) The ABL segment saw a modest sales decrease but improved its operating profit margin through effective cost management ABL Segment Q3 FY2024 Performance (YoY) | Metric | Q3 FY2024 | Q3 FY2023 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $898.5M | $940.7M | -4.5% | | Operating Profit | $151.5M | $150.0M | +1.0% | | Operating Profit Margin | 16.9% | 15.9% | +100 bps | | Adjusted Operating Profit | $162.1M | $159.7M | +1.5% | Intelligent Spaces Group (ISG) The ISG segment delivered robust double-digit sales growth and a significant expansion in operating profit margin ISG Segment Q3 FY2024 Performance (YoY) | Metric | Q3 FY2024 | Q3 FY2023 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $75.7M | $65.8M | +15.0% | | Operating Profit | $12.5M | $8.6M | +45.3% | | Operating Profit Margin | 16.5% | 13.1% | +340 bps | | Adjusted Operating Profit | $17.3M | $12.8M | +35.2% | Cash Flow and Capital Allocation The company generated strong operating cash flow and continued to return capital to shareholders through share repurchases - Net cash from operating activities for the first nine months of fiscal 2024 was $445.1 million, compared to $471.5 million in the same period of the prior year[6][23] - Year-to-date, the company has repurchased approximately 454,000 shares of common stock for about $89 million[6] Disaggregated Net Sales Sales performance varied by channel, with a decline in the Independent sales network partially offset by strong growth in Corporate accounts Q3 2024 Net Sales by Channel (YoY % Change) | Segment / Channel | Q3 2024 Sales | % Change | | :--- | :--- | :--- | | ABL Total | $898.5M | -4.5% | | Independent sales network | $637.1M | -7.1% | | Direct sales network | $97.0M | -6.6% | | Retail sales | $45.7M | -4.8% | | Corporate accounts | $60.5M | +36.3% | | ISG Total | $75.7M | +15.0% | | Total Company | $968.1M | -3.2% | Financial Statements The unaudited condensed consolidated financial statements reflect a stronger balance sheet and year-over-year net income growth Condensed Consolidated Statements of Income The income statement shows stable gross profit despite lower net sales, leading to higher net income and diluted EPS for the quarter Q3 Fiscal 2024 Income Statement Highlights (in millions) | Line Item | Q3 FY2024 | Q3 FY2023 | | :--- | :--- | :--- | | Net Sales | $968.1 | $1,000.3 | | Gross Profit | $447.3 | $447.3 | | Operating Profit | $145.3 | $143.3 | | Net Income | $113.9 | $105.0 | - Diluted earnings per share for Q3 2024 increased to $3.62 from $3.28 in Q3 2023[20] Condensed Consolidated Balance Sheets The balance sheet highlights a significant increase in cash and cash equivalents, strengthening the company's overall liquidity Balance Sheet Highlights (in millions) | Account | May 31, 2024 | August 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $699.0 | $397.9 | | Total current assets | $1,674.0 | $1,395.2 | | Total assets | $3,642.9 | $3,408.5 | | Total current liabilities | $605.3 | $595.4 | | Total liabilities | $1,388.2 | $1,393.1 | | Total stockholders' equity | $2,254.7 | $2,015.4 | Condensed Consolidated Statements of Cash Flows The company generated substantial cash from operations, funding investments and shareholder returns while increasing its cash balance Nine Months Ended May 31 Cash Flow Summary (in millions) | Cash Flow Activity | FY2024 | FY2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $445.1 | $471.5 | | Net cash used for investing activities | ($44.6) | ($76.4) | | Net cash used for financing activities | ($100.5) | ($258.7) | | Net change in cash | $301.1 | $136.1 | Reconciliation of Non-GAAP Measures This section details the adjustments made to bridge GAAP results to non-GAAP measures like adjusted operating profit - Management uses non-GAAP measures like adjusted operating profit and adjusted diluted EPS to provide a clearer view of core operational performance by excluding certain items[10][11] Q3 2024 Reconciliation of Operating Profit (in millions) | Description | Amount | | :--- | :--- | | Operating profit (GAAP) | $145.3 | | Add-back: Amortization of acquired intangible assets | $10.0 | | Add-back: Share-based payment expense | $11.8 | | Adjusted operating profit (Non-GAAP) | $167.1 | Company Information and Disclosures This section outlines the company's business structure, defines non-GAAP measures, and includes forward-looking statement disclaimers - Acuity Brands is an industrial technology company operating through two business segments: Acuity Brands Lighting and Lighting Controls (ABL) and the Intelligent Spaces Group (ISG)[8][9] - The report includes non-GAAP financial measures to enhance understanding of the company's financial performance, excluding items like amortization and share-based payment expense[10] - The press release contains forward-looking statements that are subject to risks and uncertainties, and the company undertakes no obligation to update them[15]