Acuity Brands (AYI) Q2 Earnings Top Estimates, Margins Expand

Core Insights - Acuity Brands, Inc. (AYI) reported strong second-quarter fiscal 2024 results, with earnings and revenues exceeding the Zacks Consensus Estimate, marking the 16th consecutive quarter of earnings beats [1][2] Financial Performance - Adjusted earnings per share were $3.38, surpassing the consensus estimate of $3.11 by 8.7% and increasing 10.5% from the previous year's $3.06 [2] - Net sales reached $905.9 million, exceeding the consensus mark of $897 million by 1%, although this represented a 4% decline from the prior-year quarter due to lower volumes [2] Segment Performance - Acuity Brands Lighting and Lighting Controls (ABL) saw net sales decline 5.3% year over year to $843.5 million, slightly above the estimate of $837 million [3] - The Independent Sales Network's sales decreased 3.6% year over year to $612.3 million, while Direct Sales Network sales fell 1.8% to $93 million [3] - Retail sales dropped 7.9% to $46.4 million, and Corporate Accounts channel sales plummeted 38.1% to $29.4 million [3] - Despite the sales decline, adjusted operating profit in the segment increased 2.3% to $136.4 million, with an adjusted operating margin up 120 basis points to 16.2% [3] Intelligent Spaces Group - The Intelligent Spaces Group (ISG) generated net sales of $68.1 million, a 17% year-over-year increase, exceeding the estimate of $67.6 million [4] - Adjusted operating profit for ISG rose 32.4% to $14.3 million, with an adjusted operating margin up 240 basis points to 21% [4] Operating Highlights - Adjusted operating profit increased 6.1% to $140.1 million, with an adjusted operating margin of 15.5%, up 150 basis points year over year [5] - Adjusted EBITDA rose 5.7% to $153 million, with an adjusted EBITDA margin expanding 160 basis points to 16.9% [5] Financial Position - At the end of the fiscal second quarter, Acuity Brands had cash and cash equivalents of $578.9 million, up from $397.9 million at the end of fiscal 2023 [6] - Long-term debt remained stable at $495.9 million [6] - Cash provided by operating activities totaled $292.6 million in the first half of fiscal 2024, down from $306.4 million in the prior-year period [6] - Free cash flow decreased 2.7% to $263.6 million in the first half of fiscal 2024 [6] - The company repurchased nearly 370,000 shares for $68 million during the first half of fiscal 2024 [6]