Back to top

Image: Bigstock

Acuity Brands (AYI) Q3 Earnings & Sales Top Estimates, Stock Down

Read MoreHide Full Article

Acuity Brands, Inc. (AYI - Free Report) reported solid third-quarter fiscal 2022 results. The top and the bottom line surpassed the Zacks Consensus Estimate and improved from the prior-year quarter’s levels. The upside was backed by higher sales from both of its segments along with price increases and product and productivity improvement.

However, the stock fell 1.09% on Jun 30. The company expects market conditions to remain consistent in the fiscal fourth quarter.

Pertaining to the quarterly release, Neil Ashe — chairman, president, and chief executive officer of Acuity Brands — said, "We are executing consistently as a result of significant and ongoing improvements in our business, and we continue to generate value for shareholders through share repurchases."

Delving Deeper

AYI reported adjusted earnings of $3.52 per share, which topped the consensus estimate of $2.98 by 18.1%. The metric also improved 27.1% from the year-ago reported figure of $2.77 per share.

Acuity Brands Inc Price, Consensus and EPS Surprise

 

Acuity Brands Inc Price, Consensus and EPS Surprise

Acuity Brands Inc price-consensus-eps-surprise-chart | Acuity Brands Inc Quote

 

Net sales of $1,061 million surpassed the consensus mark of $997 million by 6.4% and increased 17.9% from the prior-year quarter. The improvement was mainly driven by ABL and its focus on product vitality and service levels. Also, strong demand, benefits from recent price increases and the OSRAM DS business acquisition added to the positives.

Segment Details

Acuity Brands Lighting and Lighting Controls or ABL’s net sales grew 18.6% year over year to $1,008.4 million, backed by a 3% contribution from the acquisition of the Osram DS business.

Net sales in the Independent Sales Network were up 15.6% year over year to $725.9 million. Direct Sales Network sales were 0.6% down from the prior-year period’s levels to $96.1 million. Sales in the Corporate Accounts channel increased 34.3% from the prior year to $59.1 million. Yet, Retail sales of $44.7 million increased 23.8% from the prior-year quarter.

Adjusted operating profit in the segment increased 17.7% from the prior year. Yet, the adjusted operating margin was down 20 basis points (bps) year over year.

Intelligent Spaces Group or ISG generated net sales of $58.3 million, marking a 5.2% year-over-year increase. Adjusted operating profit was up 22.5% from third-quarter fiscal 2021. Adjusted operating margin was up a notable 330 bps year over year.

Operating Highlights

Gross margin declined 100 bps on a year-over-year basis to 42%, owing to the dilutive mix of the acquisition of the OSRAM DS business.

Adjusted operating margin came in at 15.3%, up 10 bps year over year. Adjusted EBITDA rose 16.2% to $176.1 million from a year ago.

Financials

At the fiscal third quarter-end, Acuity Brands had cash and cash equivalents of $318.2 million compared with $491.3 million at the fiscal 2021-end. For the first nine months of fiscal 2022, cash provided by operating activities totaled $165.7 million, reflecting a decrease from $316.2 million in the prior-year period.

During the first nine months of fiscal 2022, the company repurchased 2.3 million shares of its common stock for $405 million.

Zacks Rank & Key Pick

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.

Meritage Homes Corporation (MTH - Free Report) has a Zacks Rank #2 (Buy) at present and is one of the leading designers and builders of single-family homes.

Earnings are expected to grow 42.7% in 2022. Earnings estimates for the current year have moved north to $27.52 per share from $27.14 over the past 30 days.

Few Recent Construction Releases

Lennar Corporation (LEN - Free Report) reported second-quarter fiscal 2022 (ended May 31, 2022) results. Quarterly earnings and revenues topped the Zacks Consensus Estimate, despite unprecedented supply-chain challenges.

Lennar has declined 39.3% year to date. That said, earnings are expected to grow 18.2% in fiscal 2022. Earnings estimates for the year have moved 1.4% north in the past seven days.

KB Home (KBH - Free Report) reported stellar results for second-quarter fiscal 2022 (ended May 31, 2022). Its earnings and revenues beat their respective Zacks Consensus Estimate and increased on a year-over-year basis.

KB Home has declined 36.4% year to date. That said, earnings are expected to grow 69.6% in fiscal 2022. Earnings estimates for the year have moved 1.3% north in the past seven days.