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Acuity Brands (AYI) Stock Down Despite Q1 Earnings Beat
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Acuity Brands, Inc. (AYI - Free Report) reported first-quarter fiscal 2021 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Earnings beat the estimate for the third straight quarter, whereas revenues surpassed the same for the fourth consecutive quarter. However, the metrics declined year over year due to the coronavirus pandemic, which is affecting end-market demand.
Despite reporting better-than-expected results, the company’s shares declined 5.5% after the company stated the recovery in the economic environment remains uncertain. Moreover, weakness in large industrial projects and decline in price of certain products remain a concern.
Neil Ashe, president and chief executive officer of Acuity Brands, said, “Our Company delivered consistent financial performance in our first quarter amid the challenging market environment associated with the pandemic that continues to negatively impact our end markets.”
Delving Deeper
The company reported adjusted earnings of $2.03 per share that comfortably surpassed the acks Consensus Estimate of $1.82 by 11.5%. However, the said metric declined 4.7% from the year-ago quarter’s reported figure.
Net sales during the quarter totaled $792 million, which topped the consensus mark of $789 million. However, the reported figure declined 5.1% from $835 million in the prior-year quarter. The downside was caused by a nearly 3% decline in independent sales due to the pandemic. Sales in the direct sales network declined 10%, while the corporate accounts sales channel decreased 28% due to decline in renovation activity with large, big-box retailers. Moreover, decline in overall sales channels were partially offset by a 3% contribution from sales in the retail channel mainly owing to higher demand for residential products.
Acuity Brands Inc Price, Consensus and EPS Surprise
Gross margin came in at 42%, down 60 basis points on year-over-year basis. Decrease in volume as well as lower price on certain products negatively impacted the margin. The was partially offset by aggressive cost reduction efforts and productivity improvements.
Adjusted selling, distribution and administrative or SD&A expenses came in at $228 million (28.8% of net sales) compared with $238 million (28.5% of net sales) in the prior-year quarter, an increase of 30 basis point on year-over-year basis. Adjusted operating profit for the first quarter of fiscal 2021 was $104 million compared with $119 million in the first quarter of fiscal 2020. Adjusted operating profit margin came in at 13.2% compared with 14.3% in the prior-year quarter.
Financials
As of Nov 30, 2020, Acuity Brands had cash and cash equivalents of $507 million compared with $561 million at the end of fiscal 2019. In fiscal 2020, cash provided by operating activities totaled $124 million, reflecting an increase from $130 million in fiscal 2019.
Outlook
The company stated it will continue to invest in technology expansion as well as product portfolios in lighting, lighting controls, and intelligent buildings. Meanwhile, it continues to work on improving service capabilities. Although the company is uncertain about the economic environment due to the pandemic, it is cautiously optimistic about returning to stability in its end markets in fiscal 2021. Also, Acuity Brands continues to use its strong cash generation capabilities to prioritize growth investments and share repurchases.
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
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Acuity Brands (AYI) Stock Down Despite Q1 Earnings Beat
Acuity Brands, Inc. (AYI - Free Report) reported first-quarter fiscal 2021 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Earnings beat the estimate for the third straight quarter, whereas revenues surpassed the same for the fourth consecutive quarter. However, the metrics declined year over year due to the coronavirus pandemic, which is affecting end-market demand.
Despite reporting better-than-expected results, the company’s shares declined 5.5% after the company stated the recovery in the economic environment remains uncertain. Moreover, weakness in large industrial projects and decline in price of certain products remain a concern.
Neil Ashe, president and chief executive officer of Acuity Brands, said, “Our Company delivered consistent financial performance in our first quarter amid the challenging market environment associated with the pandemic that continues to negatively impact our end markets.”
Delving Deeper
The company reported adjusted earnings of $2.03 per share that comfortably surpassed the acks Consensus Estimate of $1.82 by 11.5%. However, the said metric declined 4.7% from the year-ago quarter’s reported figure.
Net sales during the quarter totaled $792 million, which topped the consensus mark of $789 million. However, the reported figure declined 5.1% from $835 million in the prior-year quarter. The downside was caused by a nearly 3% decline in independent sales due to the pandemic. Sales in the direct sales network declined 10%, while the corporate accounts sales channel decreased 28% due to decline in renovation activity with large, big-box retailers. Moreover, decline in overall sales channels were partially offset by a 3% contribution from sales in the retail channel mainly owing to higher demand for residential products.
Acuity Brands Inc Price, Consensus and EPS Surprise
Acuity Brands Inc price-consensus-eps-surprise-chart | Acuity Brands Inc Quote
Operating Highlights
Gross margin came in at 42%, down 60 basis points on year-over-year basis. Decrease in volume as well as lower price on certain products negatively impacted the margin. The was partially offset by aggressive cost reduction efforts and productivity improvements.
Adjusted selling, distribution and administrative or SD&A expenses came in at $228 million (28.8% of net sales) compared with $238 million (28.5% of net sales) in the prior-year quarter, an increase of 30 basis point on year-over-year basis. Adjusted operating profit for the first quarter of fiscal 2021 was $104 million compared with $119 million in the first quarter of fiscal 2020. Adjusted operating profit margin came in at 13.2% compared with 14.3% in the prior-year quarter.
Financials
As of Nov 30, 2020, Acuity Brands had cash and cash equivalents of $507 million compared with $561 million at the end of fiscal 2019. In fiscal 2020, cash provided by operating activities totaled $124 million, reflecting an increase from $130 million in fiscal 2019.
Outlook
The company stated it will continue to invest in technology expansion as well as product portfolios in lighting, lighting controls, and intelligent buildings. Meanwhile, it continues to work on improving service capabilities. Although the company is uncertain about the economic environment due to the pandemic, it is cautiously optimistic about returning to stability in its end markets in fiscal 2021. Also, Acuity Brands continues to use its strong cash generation capabilities to prioritize growth investments and share repurchases.
Zacks Rank
Acuity Brands — which shares space with Orion Energy Systems, Inc. (OESX - Free Report) , Energy Focus, Inc. (EFOI - Free Report) and Life Storage, Inc. in the same industry — currently carries a Zacks Rank #3 (Hold). You can the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>