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Acuity Brands (AYI) Stock Down Despite Earnings Beat in Q4
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Acuity Brands, Inc. (AYI - Free Report) reported fourth-quarter fiscal 2020 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Earnings beat the estimate for second straight quarter, whereas revenues bear the same for third consecutive quarter. However, the metrics declined year over year due to the coronavirus pandemic.
Despite reporting better-than-expected results, the company’s shares declined 10.4% after the company stated that it expects weakness in non-residential building activity stemming from the pandemic.
Neil Ashe, president and chief executive officer of Acuity Brands, said, “Our company achieved strong financial results in the fourth quarter despite the backdrop of a weak market environment associated with the COVID-19 pandemic which continues to negatively impact our end markets.”
Delving Deeper
The company reported adjusted earnings of $2.35 per share that comfortably surpassed the Zacks Consensus Estimate of $1.96 by 19.9%. However, the said metric declined 14.5% from the year-ago quarter’s reported figure.
Net sales during the quarter totaled $891.2 million, which topped the consensus mark of $815 million. However, the reported figure declined 5% from $938.1 million in the prior-year quarter. The downside was caused by a nearly 4% decline in volume, mainly due to lower demand owing to the COVID-19 pandemic, partially offset by 3% contribution from acquisitions. Sales were also impacted by 4% net unfavorable change in product prices and mix of products sold.
Acuity Brands Inc Price, Consensus and EPS Surprise
Gross margin came in at 42.1%, flat year over year. Lower costs for certain inputs as well as contributions from acquisitions were overshadowed by unfavorable price mix and the decline in volume.
Adjusted selling, distribution and administrative or SD&A expenses came in at $244 million (27.4% of net sales) compared with $249 million (26.5% of net sales), in the prior-year quarter. The increase was due to higher acquisition-related costs. Adjusted operating profit margin came in at 14.7%, down 90 bps year over year.
Financials
As of Aug 31, 2020, Acuity Brands had cash and cash equivalents of $560.7 million compared with $461 million at the end of fiscal 2019. In fiscal 2020, cash provided by operating activities totaled $504.8 million, reflecting an increase from $494.7 million in fiscal 2019.
Outlook
The company stated that it expects weakness in non-residential building activity as the uncertainties related to the economic recovery persist. The company further stated that it plans to strengthen its product portfolio in lighting, lighting controls and intelligent buildings. It will also invest in digital transformation to increase market share.
Fiscal 2020 Review
In fiscal 2020, the company generated adjusted earnings of $8.27 per share, down 13.6% from $9.57 in the year-ago period. Revenues of $3.3 billion declined 9.4% from the year-ago period due to 12% decline in volumes.
Adjusted operating margin declined 70 bps to 13.7%.
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Acuity Brands (AYI) Stock Down Despite Earnings Beat in Q4
Acuity Brands, Inc. (AYI - Free Report) reported fourth-quarter fiscal 2020 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Earnings beat the estimate for second straight quarter, whereas revenues bear the same for third consecutive quarter. However, the metrics declined year over year due to the coronavirus pandemic.
Despite reporting better-than-expected results, the company’s shares declined 10.4% after the company stated that it expects weakness in non-residential building activity stemming from the pandemic.
Neil Ashe, president and chief executive officer of Acuity Brands, said, “Our company achieved strong financial results in the fourth quarter despite the backdrop of a weak market environment associated with the COVID-19 pandemic which continues to negatively impact our end markets.”
Delving Deeper
The company reported adjusted earnings of $2.35 per share that comfortably surpassed the Zacks Consensus Estimate of $1.96 by 19.9%. However, the said metric declined 14.5% from the year-ago quarter’s reported figure.
Net sales during the quarter totaled $891.2 million, which topped the consensus mark of $815 million. However, the reported figure declined 5% from $938.1 million in the prior-year quarter. The downside was caused by a nearly 4% decline in volume, mainly due to lower demand owing to the COVID-19 pandemic, partially offset by 3% contribution from acquisitions. Sales were also impacted by 4% net unfavorable change in product prices and mix of products sold.
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 42.1%, flat year over year. Lower costs for certain inputs as well as contributions from acquisitions were overshadowed by unfavorable price mix and the decline in volume.
Adjusted selling, distribution and administrative or SD&A expenses came in at $244 million (27.4% of net sales) compared with $249 million (26.5% of net sales), in the prior-year quarter. The increase was due to higher acquisition-related costs. Adjusted operating profit margin came in at 14.7%, down 90 bps year over year.
Financials
As of Aug 31, 2020, Acuity Brands had cash and cash equivalents of $560.7 million compared with $461 million at the end of fiscal 2019. In fiscal 2020, cash provided by operating activities totaled $504.8 million, reflecting an increase from $494.7 million in fiscal 2019.
Outlook
The company stated that it expects weakness in non-residential building activity as the uncertainties related to the economic recovery persist. The company further stated that it plans to strengthen its product portfolio in lighting, lighting controls and intelligent buildings. It will also invest in digital transformation to increase market share.
Fiscal 2020 Review
In fiscal 2020, the company generated adjusted earnings of $8.27 per share, down 13.6% from $9.57 in the year-ago period. Revenues of $3.3 billion declined 9.4% from the year-ago period due to 12% decline in volumes.
Adjusted operating margin declined 70 bps to 13.7%.
Zacks Rank
Acuity Brands — which shares space with Orion Energy Systems, Inc. (OESX - Free Report) , Energy Focus, Inc. (EFOI - Free Report) and LSI Industries Inc. (LYTS - Free Report) in the same industry — currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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