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Acuity Brands (AYI) Q2 Earnings Top Estimates, Margins Expand
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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%.
Acuity Brands Inc Price, Consensus and EPS Surprise
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 (AYI) Q2 Earnings Top Estimates, Margins Expand
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%.
Acuity Brands Inc Price, Consensus and EPS Surprise
Acuity Brands Inc price-consensus-eps-surprise-chart | Acuity Brands Inc Quote
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.