Acuity Brands, Inc. (AYI - Free Report) reported impressive results in second-quarter fiscal 2024 (ended Feb 29, 2024), with earnings and revenues surpassing the Zacks Consensus Estimate. Earnings beat the consensus mark for the 16th consecutive quarter.
Despite a year-over-year decline in sales in the lighting business, AYI reported strong fiscal second-quarter performance driven by increased focus on margins and cash generation. This approach resulted in a higher adjusted operating profit margin and increased adjusted diluted earnings per share.
Delving Deeper
AYI reported adjusted earnings of $3.38 per share, which topped the consensus estimate of $3.11 by 8.7%. The metric also increased 10.5% from the year-ago reported figure of $3.06 per share.
Net sales of $905.9 million surpassed the consensus mark of $897 million by 1%. The metric declined 4% from the prior-year quarter’s level. The downside was due to lower volumes.
Segment Details
Acuity Brands Lighting and Lighting Controls or ABL’s net sales declined 5.3% year over year to $843.5 million. Our estimate for the metric was $837 million. Net sales in the Independent Sales Network were down 3.6% year over year to $612.3 million. Sales from the Direct Sales Network were down 1.8% from the prior-year period’s level to $93 million. Retail sales of $46.4 million dropped 7.9% from the prior-year quarter’s levels. Sales in the Corporate Accounts channel declined 38.1% from the prior year’s levels to $29.4 million. The Original equipment manufacturer and other channels generated sales of $53.7 million, down 4.8% from the prior-year period’s levels.
Nevertheless, adjusted operating profit in the segment increased 2.3% from the prior year’s levels to $136.4 million. The adjusted operating margin was up 120 basis points (bps) year over year to 16.2%.
Intelligent Spaces Group or ISG generated net sales of $68.1 million, up 17% year over year. Our estimate for the metric was $67.6 million. Adjusted operating profit was $14.3 million, up 32.4% from a year ago. Adjusted operating margin was up 240 bps year over year to 21%.
Operating Highlights
Adjusted operating profit increased 6.1% to $140.1 million. Adjusted operating margin of 15.5% was up 150 bps year over year. Adjusted EBITDA rose 5.7% to $153 million from a year ago. Adjusted EBITDA margin expanded 160 bps to 16.9% from a year ago.
Financials
At the fiscal second-quarter end, Acuity Brands had cash and cash equivalents of $578.9 million compared with $397.9 million at the fiscal 2023-end. Long-term debt was $495.9 million, in line with the fiscal 2023-end.
During the first six months of fiscal 2024, cash provided by operating activities totaled $292.6 million, down from $306.4 million in the prior-year period. Free cash flow was down 2.7% to $263.6 million in the first six months of fiscal 2024.
During the first half of fiscal 2024, the company repurchased nearly 370,000 shares of its common stock for $68 million.
Zacks Rank and Key Picks
Acuity Brands currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks from the Zacks Construction sector:
Advanced Drainage Systems, Inc. (WMS - Free Report) currently sports a Zacks Rank of 1 (Strong Buy). WMS delivered a trailing four-quarter earnings surprise of a whopping 37.1%, on average. The stock has risen 45.7% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Advanced Drainage Systems’ 2024 earnings per share (EPS) has increased to $6.19 from $5.88 over the past 30 days.
Armstrong World Industries, Inc. (AWI - Free Report) currently flaunts a Zacks Rank of 1. AWI delivered a trailing four-quarter earnings surprise of 13.1%, on average. Shares of the company have surged 69.7% in the past six months.
The Zacks Consensus Estimate for Armstrong World Industries’ EPS for 2024 has increased to $5.74 from $5.65 over the past 30 days.
Vulcan Materials Company (VMC - Free Report) currently sports a Zacks Rank #1. This aggregate producer has a trailing four-quarter earnings surprise of 19.5%, on average.
Shares of VMC have rallied 29.9% in the past six months. Estimates for VMC’s EPS for 2024 have increased to $8.37 from $8.33 over the past 30 days.
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Acuity Brands, Inc. (AYI - Free Report) reported impressive results in second-quarter fiscal 2024 (ended Feb 29, 2024), with earnings and revenues surpassing the Zacks Consensus Estimate. Earnings beat the consensus mark for the 16th consecutive quarter.
Despite a year-over-year decline in sales in the lighting business, AYI reported strong fiscal second-quarter performance driven by increased focus on margins and cash generation. This approach resulted in a higher adjusted operating profit margin and increased adjusted diluted earnings per share.
Delving Deeper
AYI reported adjusted earnings of $3.38 per share, which topped the consensus estimate of $3.11 by 8.7%. The metric also increased 10.5% from the year-ago reported figure of $3.06 per share.
Net sales of $905.9 million surpassed the consensus mark of $897 million by 1%. The metric declined 4% from the prior-year quarter’s level. The downside was due to lower volumes.
Segment Details
Acuity Brands Lighting and Lighting Controls or ABL’s net sales declined 5.3% year over year to $843.5 million. Our estimate for the metric was $837 million. Net sales in the Independent Sales Network were down 3.6% year over year to $612.3 million. Sales from the Direct Sales Network were down 1.8% from the prior-year period’s level to $93 million. Retail sales of $46.4 million dropped 7.9% from the prior-year quarter’s levels. Sales in the Corporate Accounts channel declined 38.1% from the prior year’s levels to $29.4 million. The Original equipment manufacturer and other channels generated sales of $53.7 million, down 4.8% from the prior-year period’s levels.
Nevertheless, adjusted operating profit in the segment increased 2.3% from the prior year’s levels to $136.4 million. The adjusted operating margin was up 120 basis points (bps) year over year to 16.2%.
Intelligent Spaces Group or ISG generated net sales of $68.1 million, up 17% year over year. Our estimate for the metric was $67.6 million. Adjusted operating profit was $14.3 million, up 32.4% from a year ago. Adjusted operating margin was up 240 bps year over year to 21%.
Operating Highlights
Adjusted operating profit increased 6.1% to $140.1 million. Adjusted operating margin of 15.5% was up 150 bps year over year. Adjusted EBITDA rose 5.7% to $153 million from a year ago. Adjusted EBITDA margin expanded 160 bps to 16.9% from a year ago.
Financials
At the fiscal second-quarter end, Acuity Brands had cash and cash equivalents of $578.9 million compared with $397.9 million at the fiscal 2023-end. Long-term debt was $495.9 million, in line with the fiscal 2023-end.
During the first six months of fiscal 2024, cash provided by operating activities totaled $292.6 million, down from $306.4 million in the prior-year period. Free cash flow was down 2.7% to $263.6 million in the first six months of fiscal 2024.
During the first half of fiscal 2024, the company repurchased nearly 370,000 shares of its common stock for $68 million.
Zacks Rank and Key Picks
Acuity Brands currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks from the Zacks Construction sector:
Advanced Drainage Systems, Inc. (WMS - Free Report) currently sports a Zacks Rank of 1 (Strong Buy). WMS delivered a trailing four-quarter earnings surprise of a whopping 37.1%, on average. The stock has risen 45.7% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Advanced Drainage Systems’ 2024 earnings per share (EPS) has increased to $6.19 from $5.88 over the past 30 days.
Armstrong World Industries, Inc. (AWI - Free Report) currently flaunts a Zacks Rank of 1. AWI delivered a trailing four-quarter earnings surprise of 13.1%, on average. Shares of the company have surged 69.7% in the past six months.
The Zacks Consensus Estimate for Armstrong World Industries’ EPS for 2024 has increased to $5.74 from $5.65 over the past 30 days.
Vulcan Materials Company (VMC - Free Report) currently sports a Zacks Rank #1. This aggregate producer has a trailing four-quarter earnings surprise of 19.5%, on average.
Shares of VMC have rallied 29.9% in the past six months. Estimates for VMC’s EPS for 2024 have increased to $8.37 from $8.33 over the past 30 days.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>
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