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Acuity Brands (AYI) Lags Q2 Earnings Estimates, Margins Down

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Acuity Brands, Inc. (AYI - Free Report) reported second-quarter fiscal 2017 adjusted earnings of $1.65 per share, missing the Zacks Consensus Estimate of $1.70 by 2.9%. Earnings were adjusted by excluding 12 cents of non-recurring items.

Without the above adjustment, the company reported adjusted diluted earnings of $1.77 per share, down 1.7% from $1.80 a year ago.
 

Sales

Net sales during the quarter were $804.7 million, falling short of the Zacks Consensus Estimate of $825.01 million by 2.5%. The reported figure, however, increased 3.5% year over year.

The upside was mainly attributable to a 4% increase in volume and a 1% rise from acquisitions. These were partly offset by a net unfavorable change in product prices and mix of products sold (“price/mix”) of approximately 1%.

Sales volume improved across most key product categories and sales channels in the U.S. and Canada, while sales declined in both Europe and Mexico.

Sales of LED-based products increased approximately 20% on a year-over-year basis and represented approximately two-thirds of total net sales in the second quarter.  

Operating Highlights

Adjusted gross profit margin was 41.7% in the second quarter, reflecting a decrease of 180 basis points (bps) year over year owing to higher manufacturing expenses, resulting from increased wages and benefits, inbound freight costs and quality costs.

Adjusted operating margin was 15.4%, down 100 bps year over year.

Adjusted Selling, Distribution and Administrative expenses were $227.8 million or 26.3% of quarterly net sales, compared with $230.1 million or 27.1% a year ago.

Acuity Brands Inc Price, Consensus and EPS Surprise

Financials

Cash and cash equivalents, as of Feb 28, 2016, were $463.2 million, up from $413.2 million in fiscal 2016.

Net cash provided by operating activities was $71.6 million in the first half of fiscal 2017, down 40.1% from $119.5 million a year ago.

The company expects the North American lighting market to return to growth in fiscal 2018. It also expects to continue to outperform growth rates of markets it serves by executing strategies focused on opportunities for new construction and renovation projects, expansion into underpenetrated geographies and channels, and growth from continued introduction of lighting and building management.

Zacks Rank

Acuity Brands currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases in the Construction Sector

Masco Corporation (MAS - Free Report) will release its first-quarter 2017 earnings on Apr 25. The Zacks Consensus Estimate for the quarter’s earnings is pegged at 36 cents per share.

PulteGroup, Inc. (PHM - Free Report) is slated to release its first-quarter 2017 earnings on Apr 25. The Zacks Consensus Estimate for the quarter’s earnings is 28 cents per share.

DR Horton Inc. (DHI - Free Report) is slated to report its second-quarter fiscal 2017 results on Apr 20. The Zacks Consensus Estimate for the quarter’s earnings stands at 59 cents per share.

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