ATLANTA, July 01, 2015 (GLOBE NEWSWIRE) — Acuity Brands, Inc. (AYI) (“Company”) today announced record quarterly results. Fiscal 2015 third quarter net sales of $683.7 million increased $79.8 million, or 13 percent, compared with the year-ago period. Net income for the third quarter of fiscal 2015 was $64.5 million, an increase of 47 percent compared with the prior-year period, while diluted earnings per share (“EPS”) of $1.48 increased 47 percent compared with $1.01 for the year-ago period.
Fiscal 2015 third quarter adjusted net income of $59.5 million increased $16.2 million, or 37 percent, compared with adjusted net income of $43.3 million for the prior-year period. Adjusted diluted EPS for the third quarter of fiscal 2015 increased 37 percent to $1.37 compared with adjusted diluted EPS of $1.00 for the year-ago period. Adjusted results for the third quarter of fiscal 2015 exclude a $0.4 million, or $0.01 diluted EPS, special charge related to previously announced streamlining activities, $1.3 million, or $0.03 diluted EPS, of acquisition-related professional fees (non-tax deductible expense), and a $10.5 million, or $0.15 diluted EPS, net gain associated with financial instruments to hedge the foreign currency exposure related to the previously announced acquisition of Canadian-based Distech Controls, Inc. Adjusted results for the prior-year fiscal third quarter exclude the benefit of a $0.8 million, or $0.01 diluted EPS, recovery related to a fiscal 2013 loss resulting from fraud perpetrated by a former freight service provider. Management believes these items impacted the comparability of the Company’s results and that the adjusted financial measures enhance the reader’s overall understanding of the Company’s current financial performance. A reconciliation of adjusted financial measures to the most directly comparable GAAP measure is provided in the tables at the end of this release.
Vernon J. Nagel, Chairman, President, and Chief Executive Officer of Acuity Brands, commented, “We were extremely pleased with our record fiscal 2015 third quarter results. Gross profit margin of 43.2 percent increased 290 basis points over prior year’s third quarter, while adjusted operating profit margin also increased 290 basis points year-over-year to 14.8 percent. Our variable contribution margin, that is the incremental adjusted operating profit as a percentage of the increase in net sales, was over 36 percent. We believe our record third quarter results reflect the on-going recovery in new construction, continuing conversion to solid-state lighting, and our ability to provide customers truly differentiated value from our industry-leading portfolio of innovative lighting and control solutions along with superior service.”
Third Quarter Results
The 13 percent year-over-year growth in fiscal 2015 third quarter net sales was due primarily to a 14 percent increase in volume, partially offset by an estimated one percent unfavorable impact from changes in foreign currency exchange rates. The impact of changes in product prices and the mix of products sold (“price/mix”) was insignificant compared with the prior-year period. The increase in volume was broad-based across most product categories and key sales channels. Sales of LED-based products increased approximately 55 percent from the year-ago period and represented more than 45 percent of fiscal 2015 third quarter net sales.
Operating profit for the third quarter of fiscal 2015 was $99.2 million, an increase of $26.6 million, or 37 percent, over the year-ago period. Adjusted operating profit (excluding the impact of acquisition-related professional fees and the special charge) for the third quarter of fiscal 2015 increased $29.1 million, or 41 percent, to $100.9 million compared with the year-ago period adjusted operating profit (excluding the favorable impact of the fraud loss recovery) of $71.8 million. Adjusted operating profit margin for the third quarter of fiscal 2015 increased 290 basis points to 14.8 percent compared with 11.9 percent adjusted operating profit margin for the prior-year period.
Cash and cash equivalents at the end of the third quarter of fiscal 2015 totaled $652.1 million, an increase of $99.6 million since the beginning of the fiscal year. Net cash provided by operating activities totaled $158.2 million for the first nine months of fiscal 2015 compared with $128.8 million for the year-ago period.
Year-to-Date Results
Net sales for the first nine months of fiscal 2015 increased 13 percent to $1,947.2 million compared with $1,724.8 million for the prior-year period. Reported results for the first nine months of fiscal 2015 include operating profit of $264.5 million, net income of $162.0 million, and diluted EPS of $3.72.
Adjusted operating profit for the first nine months of fiscal 2015 increased $73.9 million, or 37 percent, to $276.3 million, or 14.2 percent of net sales, compared with adjusted operating profit for the prior-year period of $202.4 million, or 11.7 percent of net sales. Adjusted net income for the first nine months of fiscal 2015 was $163.6 million compared with $117.3 million for the prior-year period, an increase of over 39 percent. Adjusted diluted EPS for the first nine months of fiscal 2015 increased $1.05, or 39 percent, to $3.76 compared with adjusted diluted EPS of $2.71 for the year-ago period. Adjusted results for the first nine months of fiscal 2015 exclude a net special charge of $9.8 million, or $0.14 diluted EPS, as well as acquisition-related professional fees of $2.0 million, or $0.05 diluted EPS, and a net gain of $10.5 million, or $0.15 diluted EPS, associated with financial instruments to hedge the foreign currency exposure related to the previously announced acquisition of Canadian-based Distech Controls, Inc. Adjusted results for the prior-year period exclude the benefit of $5.8 million, or $0.08 diluted EPS, in recoveries related to fraud perpetrated by a former freight service provider, and $0.2 million favorable adjustment to a previously recorded special charge.
Outlook
Mr. Nagel commented, “We remain very bullish about our prospects for continued future profitable growth. Third-party forecasts as well as key leading indicators suggest that the growth rate for the North American lighting market, which includes renovation and retrofit activity, will be in the mid-to-upper single digit range for our fiscal 2015 with expectations that overall demand in our end markets will continue to experience solid growth over the next several years. Our order rates through the month of June reflect this favorable trend. Further, we expect to continue to outperform the growth rates of the markets we serve due to benefits from growing renovation and tenant improvement projects, further expansion in underpenetrated geographies and channels, and growth from the introduction of new products and lighting solutions. Additionally, we expect to continue to pursue growth opportunities enabled by newer technologies which require additional resources, including talent with specific skill sets, to drive innovation and accelerate commercialization of these evolving digital lighting solutions.”
During the first nine months of fiscal 2015, the Company continued efforts to streamline the organization by realigning certain responsibilities primarily within various selling, distribution, and administrative departments and the consolidation of certain production activities. The Company recorded a pre-tax net special charge of $9.8 million during the nine months ended May 31, 2015 for streamlining actions. The special charge consisted primarily of severance and employee-related costs. Management expects to incur production transfer expenses and additional costs associated with these streamlining actions totaling approximately $1.3 million during the fourth quarter of fiscal 2015. While management expects to achieve annual savings in fiscal 2015 in excess of these costs, management plans to reinvest a portion of these savings over the next twelve months in additional growth initiatives which require resources for further innovation. Through the nine months ended May 31, 2015, the Company realized savings, net of investments, approximately equal to the amount of the special charge.
On March 9, 2015, the Company announced that it entered into an agreement to acquire all of the outstanding capital stock of Distech Controls Inc. (“Distech”), a provider of building automation and energy management solutions. The acquisition is expected to be completed in September 2015 following formal approval of certain shareholders of Distech and other customary closing conditions.
Mr. Nagel concluded, “We believe the broad industry we serve will experience solid growth over the next decade, particularly as energy and environmental concerns come to the forefront along with emerging opportunities for digital lighting and building management systems to play a key role in the Internet of Things. We believe we are well positioned to fully participate in this exciting industry.”
Non-GAAP Financial Measures
This news release contains non-GAAP financial measures such as “adjusted selling, distribution, and administrative expenses” (“adjusted SD&A expenses”), “adjusted operating profit”, “adjusted operating profit margin”, “adjusted other expense (income)”, “adjusted net income”, and “adjusted diluted EPS”. These measures are provided to enhance the reader’s overall understanding of the Company’s current financial performance and prospects for the future. However, the Company’s non-GAAP financial measures may not be comparable to similarly titled non-GAAP financial measures used by other companies, have limitations as an analytical tool and should not be considered in isolation or as a substitute for GAAP financial measures.
A reconciliation of each measure to the most directly comparable GAAP measure is available in this news release. In addition, the Current Report on Form 8-K furnished to the SEC concurrent with the issuance of this press release includes a more detailed description of each of these non-GAAP financial measures, together with a discussion of the usefulness and purpose of such measures.