Acuity Brands (AYI) Q3 Earnings Top Estimates, Revenues Lag

Core Insights - Acuity Brands, Inc. (AYI) reported mixed results for Q3 fiscal 2024, with earnings exceeding estimates while revenues fell short [1][2] - The company achieved a 17th consecutive quarter of earnings surpassing the Zacks Consensus Estimate, driven by a focus on margins and cash generation [1][2] Financial Performance - Adjusted earnings per share (EPS) were $4.15, beating the consensus estimate of $4.10 by 1.2% and increasing 10.7% from $3.75 a year ago [2] - Net sales totaled $968.1 million, missing the consensus mark of $995.4 million by 2.7% and declining 3% year-over-year due to lower volumes [2] Segment Performance - Acuity Brands Lighting and Lighting Controls (ABL) saw net sales decline 4.5% year-over-year to $898.5 million, below the estimate of $925.3 million [3] - The Independent Sales Network's sales decreased 7.1% to $637.1 million, while Direct Sales Network sales fell 6.6% to $97 million [3] - Retail sales dropped 4.8% to $45.7 million, but Corporate Accounts channel sales increased 36.3% to $60.5 million [3] - Adjusted operating profit for ABL rose 1.5% to $162.1 million, with an adjusted operating margin up 100 basis points to 18% [3] Intelligent Spaces Group - Intelligent Spaces Group (ISG) generated net sales of $75.7 million, a 15% increase year-over-year, with adjusted operating profit rising 35.2% to $17.3 million [4] - Adjusted operating margin for ISG improved by 340 basis points to 22.9% [4] Operating Highlights - Overall adjusted operating profit increased 2.6% to $167.1 million, with an adjusted operating margin of 17.3%, up 100 basis points [5] - Adjusted EBITDA rose 2.5% to $180 million, with an adjusted EBITDA margin expanding 100 basis points to 18.6% [5] Financial Position - As of the end of Q3, cash and cash equivalents stood at $699 million, up from $397.9 million at the end of fiscal 2023 [6] - Long-term debt slightly increased to $496 million from $495.6 million [6] - Cash provided by operating activities for the first nine months of fiscal 2024 totaled $445.1 million, down from $471.5 million in the prior-year period [6] - Free cash flow decreased 4.6% year-over-year to $404.1 million [6] - The company repurchased nearly 454,000 shares for $89 million during the first nine months of fiscal 2024 [6] Outlook - For fiscal 2024, AYI expects net sales in the range of $3.7 billion to $4 billion, compared to $3.95 billion reported in fiscal 2023 [7] - Adjusted EPS guidance was raised to a range of $14.75 to $15.50, up from a prior projection of $13 to $14.50 [7]