Acuity Brands, Inc. (NYSE:AYI) (“Company”) today announced that
fiscal 2018 second quarter net sales increased 3.4 percent to
$832.1 million from $804.7 million reported in the prior-year
period. Operating profit for the second quarter of fiscal
2018 was $88.0 million, a decrease of $20.0 million, or 18.5
percent, over the year-ago period. Net income for the second
quarter of fiscal 2018 was $96.9 million, an increase of $29.6
million, or 44 percent, compared with the prior-year period.
Fiscal 2018 second quarter diluted earnings per share (“EPS”) of
$2.33 increased $0.80, or 52 percent, compared with $1.53 for the
year-ago period.
Adjusted diluted EPS for the second quarter of
fiscal 2018 increased 7 percent to $1.89 compared with adjusted
diluted EPS of $1.77 for the year-ago period. Adjusted
operating profit for the second quarter of fiscal 2018 decreased
$20.1 million, or 16 percent, to $103.8 million, or 12.5 percent of
net sales, compared with the year-ago period adjusted operating
profit of $123.9 million, or 15.4 percent of net sales.
Adjusted results exclude the impact of amortization expense of
acquired intangible assets, share-based payment expense,
acquisition-related items, special charges for streamlining
activities, and an income tax net benefit for discrete items
associated with the Tax Cuts and Jobs Act of 2017 (“TCJA”).
Management believes these items impacted the comparability of the
Company's results and that adjusted financial measures enhance the
reader’s overall understanding of the Company's current financial
performance by making results comparable between periods. A
reconciliation of adjusted financial measures to the most directly
comparable U.S. 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 believe our net
sales growth of 3.4 percent in the second quarter once again
exceeded market level performance as initial industry data suggests
the lighting market in the U.S. was flat to down low-single
digits, reflecting continued weakness of non-residential
construction in certain markets. The increase in net sales
was primarily due to greater shipments of our Atrius-based
luminaires to customers in certain key vertical applications,
partially offset by lower shipments for larger commercial projects
and through the home center/showroom sales channel. We were
disappointed in our second quarter profitability measures, which
were impacted by unfavorable changes in product prices and mix of
products sold as well as higher selling, distribution, and
administrative expenses. We expect to accelerate programs to
reduce product and other overhead costs in order to maintain the
Company’s competitiveness and drive improved profitability.
We are pleased that past investments in our Atrius platform are now
generating robust growth in our Tier 3 and 4 solutions, which grew
well over 20 percent this quarter over the year-ago period.
Additionally, we are excited to welcome aboard the associates of
the recently acquired Lucid Design Group, whose comprehensive
building operations and analytics platform enables customers to
have unparalleled insights about their energy use and other
building operations.”
Second Quarter Results
The 3.4 percent year-over-year growth in fiscal
2018 second quarter net sales was due primarily to an increase in
sales volume of over 6 percent and an approximate 1 percent
favorable impact from foreign exchange rate changes, partially
offset by an approximate 3.5 percent unfavorable change in
product prices and mix of products sold (“price/mix”).
Unfavorable price/mix reflected changes in both product mix, which
included substitutions to certain products with lower price points,
and sales channel mix, which included declines in generally higher
priced solutions, primarily for larger commercial projects.
Price/mix was also impacted by lower pricing on certain
luminaires, reflecting the decline in certain LED component costs
as well as increased competition in more basic, lesser-featured
products. Sales of LED-based products represented over
two-thirds of fiscal 2018 second quarter total net sales.
Gross profit for the second quarter of fiscal 2018
decreased $0.9 million, or 0.3 percent, to $334.9 million compared
with $335.8 million in the prior-year period due primarily to
unfavorable price/mix, partially offset by higher sales volumes and
productivity improvements. Fiscal 2018 second quarter gross
profit margin of 40.2 percent declined 150 basis points compared
with prior year’s gross profit margin. Selling, distribution,
and administrative (“SD&A”) expenses for the second quarter of
fiscal 2018 increased $18.5 million, or 8.1 percent, to $246.3
million compared with the prior-year period, due primarily to
higher employee related costs, including compensation, increased
freight charges to support the greater sales volume, and to a
lesser degree, certain other operating expenses. Adjusted
SD&A expenses for the second quarter of fiscal 2018 of $231.1
million increased $19.2 million, or 9.1 percent, compared with
$211.9 million in the prior-year period. Adjusted SD&A
expenses for the three months ended February 28, 2018 represented
27.8% of net sales compared with 26.3% of net sales in the
prior-year period.
Excluded from adjusted diluted EPS for the second
quarter of fiscal 2018 was a $0.75 benefit from $31.2 million of
net discrete items associated with the TCJA, primarily due to a
non-cash income tax benefit from the remeasurement of the Company’s
net U.S. deferred tax liabilities reflecting a reduced corporate
federal rate, partially offset by an unfavorable impact related to
the taxation of the Company's accumulated unremitted foreign
earnings.
Year-to-Date Results
Net sales for the first six months of fiscal 2018
increased 1 percent to $1.67 billion compared with $1.66 billion
for the prior-year period. The Company reported $206.6
million of operating profit for the first half of fiscal 2018
compared with $234.6 million for the prior-year period. Net
income for the first half of fiscal 2018 was $168.4 million
compared with $149.0 million for the year-ago period. Diluted
EPS for the first six months of fiscal 2018 was $4.04 compared with
$3.39 for the prior-year period.
Adjusted operating profit for the first half of
fiscal 2018 decreased $29.4 million, or 11 percent, to $237.7
million, or 14.2 percent of net sales. Prior year’s adjusted
operating profit was $267.1 million, or 16.1 percent of net
sales. Adjusted net income for the first half of fiscal 2018
was $160.0 million compared with $165.5 million for the prior-year
period, a decrease of 3 percent. Adjusted diluted EPS for the
first half of fiscal 2018 increased $0.08, or 2 percent, to $3.84
compared with adjusted diluted EPS of $3.76 for the year-ago
period. Adjusted results exclude amortization expense of
acquired intangible assets, share-based payment expense,
acquisition-related items, special charges for streamlining
activities, manufacturing inefficiencies related to the closing of
a facility, gain on the sale of an investment in an unconsolidated
affiliate, and an income tax net benefit for discrete items
associated with the TCJA. These items reduced adjusted
diluted EPS for the first half of fiscal 2018 by $0.20 and
increased prior year’s results $0.37. A reconciliation of
adjusted financial measures to the most directly comparable U.S.
GAAP measure is provided in the tables at the end of this
release.
Net miscellaneous income for the six months of the
prior fiscal year included a $7.2 million pre-tax gain associated
with the sale of an investment in an unconsolidated affiliate,
which occurred in the first quarter of fiscal 2017.
Net cash provided by operating activities totaled
$178.3 million for the first half of fiscal 2018 compared with $90
million for the year-ago period. Cash and cash equivalents at
the end of the second quarter of fiscal 2018 totaled $229.8
million, a decrease of $81.3 million since the beginning of the
fiscal year. During the second quarter of fiscal 2018, the
Company repurchased 1.2 million shares of Acuity Brands common
stock under its previously authorized stock repurchase program at a
total cost of $194.3 million.
Stock Repurchase Authorization
The Board of Directors of Acuity Brands has
authorized the repurchase of up to 6 million shares, or
approximately 15 percent, of the Company’s outstanding common
stock. Mr. Nagel said, “In light of the current weakness in
the lighting industry, balanced against our long-term optimism in
the Company’s prospects, the Board believes share repurchases
represent an effective use of the Company’s cash flow to generate
shareholder value, especially during periods of high stock price
volatility. Additionally, the Board believes that repurchases
of the Company’s stock supports the objective to maximize long-term
stockholder value, while continuing to fund investments to better
serve our customers, grow our businesses, and improve our operating
and financial performance.”
The extent and timing of actual stock repurchases
will be subject to various factors, including stock price, company
performance, expected future market conditions, and other possible
uses of cash such as acquisitions. Management believes that
repurchasing the full authorization under the program within a
twelve-month period would require additional resources beyond the
Company’s current available cash and borrowing capacity.
Therefore, the Company may increase its leverage to accommodate
repurchases at attractive price levels. Under the current
authorization, the Company may acquire shares through open market
transactions, subject to market conditions and other factors.
The Company may also enter into Rule 10b5-1 plans to facilitate
open market repurchases. A Rule 10b5-1 plan would generally
permit the Company to repurchase shares at times when it might
otherwise be prevented from doing so under certain securities laws
provided the plan is adopted when the Company is not in possession
of material non-public information. Shares repurchased under
the authorization may be retired or used for general corporate
purposes, which may include transactions related to the Company’s
share-based compensation and employee benefit plans.
Outlook
Mr. Nagel commented, “The current weakness in the
lighting industry has created a challenging environment for
management to drive financial performance in the short term while
continuing to invest in attractive longer-term opportunities.
Third-party forecasts and leading indicators suggest that demand in
the North American lighting market, the Company’s primary market,
will improve later in calendar 2018. However, we continue to
be cautious and believe overall market conditions could continue to
be challenging for the near future based on soft order activity in
certain sales channels, which suggests growth in the lighting
fixture market may remain sluggish for the balance of 2018. In
addition, we expect headwinds in the home center/showroom sales
channel to continue in the near term, giving way to growth in the
second half of calendar 2018 as the Company brings new solutions to
key customers and expands its access to market in this important
sales channel. We believe the pricing environment will
continue to be challenging in portions of the market, particularly
for more basic, lesser-featured products sold through certain sales
channels as well as shifts in product mix, both of which are
expected to continue to negatively impact net sales and margins. We
expect to introduce products and solutions to more effectively
compete in these portions of the market. Additionally, we
believe the price of certain LED components will continue to
decline though at a decelerating pace, while certain other costs
will continue to increase, including certain components and
commodity costs, especially steel prices, as well as certain
employee related costs.”
Mr. Nagel concluded, “While current quoting
activity for lighting equipment in portions of the non-residential
market remains tepid, certain short and long-term fundamental
drivers of the markets that the Company serves remain positive,
including growing demand for our Atrius-based lighting
solutions. We expect to continue to outperform the growth
rates of the markets that we serve by executing our strategies
focused on growth opportunities for new construction and renovation
projects, expansion into underpenetrated geographies and channels,
and growth from the continued introduction of new lighting and
building management solutions as part of our integrated, tiered
solutions strategy. We continue to believe the lighting and
lighting-related industry as well as building management systems
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 to play a key role in
the Internet of Things. We believe we are uniquely positioned
to fully participate in this exciting industry.”
Conference Call
As previously announced, the Company will host a
conference call to discuss second quarter results today, April 4,
2018, at 10:00 a.m. ET. Interested parties may listen to this
call live today or hear a replay at the Company's Web site:
www.acuitybrands.com.
About Acuity Brands
Acuity Brands, Inc. (NYSE:AYI) is the North
American market leader and one of the world’s leading providers of
lighting and building management solutions. With fiscal year 2017
net sales of $3.5 billion, Acuity Brands currently employs over
12,000 associates and is headquartered in Atlanta, Georgia with
operations throughout North America, and in Europe and Asia. The
Company’s products and solutions are sold under various brands,
including Lithonia Lighting®, Holophane®, Peerless®, Gotham®, Mark
Architectural Lighting™, Winona® Lighting, Juno®, Indy™, Aculux®,
Healthcare Lighting®, Hydrel®, American Electric Lighting®,
Carandini®, Antique Street Lamps™, Sunoptics®, Distech Controls®,
nLight®, ROAM®, Sensor Switch®, Atrius™, and Lucid®. Visit us
at www.acuitybrands.com.
Non-GAAP Financial Measures
This news release includes the following non-GAAP
financial measures: "adjusted gross profit," “adjusted gross profit
margin,” “adjusted SD&A expenses,” “adjusted operating profit,”
“adjusted operating profit margin,” “adjusted other expense,”
“adjusted net income,” and “adjusted diluted EPS.” These non-GAAP
financial measures are provided to enhance the reader's overall
understanding of the Company's current financial performance and
prospects for the future. Previously, during fiscal 2016, the
Company acquired four businesses, which impacted the comparability
of many of its GAAP financial measures. Specifically,
management believes that these non-GAAP measures provide useful
information to investors by excluding or adjusting items for
amortization of acquired intangible assets, share-based payment
expense, which is used as a method to improve retention and align
the interests of key leaders of acquired businesses with those of
the Company’s shareholders, special charges associated with efforts
to streamline the organization that we execute on an ongoing basis
and to integrate acquisitions, manufacturing inefficiencies
directly related to the closure of a facility, a gain associated
with the sale of an investment in an unconsolidated affiliate, and
an income tax net benefit for discrete items associated with the
TCJA. Management typically adjusts for these items for
internal reviews of performance and uses the above non-GAAP
measures for baseline comparative operational analysis, decision
making, and other activities. Management believes these
non-GAAP measures provide greater comparability and enhanced
visibility into the Company’s results of operations as well as
comparability with many of its peers, especially those companies
focused more on technology and software.
Non-GAAP financial measures included in this news
release should be considered in addition to, and not as a
substitute for or superior to, results prepared in accordance with
GAAP. The most directly comparable GAAP measures for adjusted gross
profit and adjusted gross profit margin are “gross profit” and
“gross profit margin,” respectively, which include the impact of
manufacturing inefficiencies directly related to the closure of a
facility. The most directly comparable GAAP measure for adjusted
SD&A expenses is “SD&A expenses,” which includes
amortization of acquired intangible assets and share-based payment
expense. The most directly comparable GAAP measures for adjusted
operating profit and adjusted operating profit margin are
“operating profit” and “operating profit margin,” respectively,
which include the impact of acquisition-related items,
manufacturing inefficiencies directly related to the closure of a
facility, amortization of acquired intangible assets, share-based
payment expense, and special charges. The most directly
comparable GAAP measures for adjusted other expense is “other
expense,” which includes the impact of a gain on sale of investment
in an unconsolidated affiliate. The most directly comparable
GAAP measures for adjusted net income and adjusted diluted EPS are
“net income” and “diluted EPS,” respectively, which include the
impact of manufacturing inefficiencies directly related to the
closure of a facility, amortization of acquired intangible assets,
share-based payment expense, special charges, gain on sale of
investment in an unconsolidated affiliate, and income tax net
benefit for discrete items associated with the TCJA. A
reconciliation of each measure to the most directly comparable GAAP
measure is available in this news release. 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.
Forward Looking Information
This release contains forward-looking statements,
within the meaning of the Private Securities Litigation Reform Act
of 1995. Statements that may be considered forward-looking include
statements incorporating terms such as "expects," "believes,"
"intends," “estimates”, “forecasts,” "anticipates," “could,” “may,”
“should”, “suggests,” “remain,” and similar terms that relate to
future events, performance, or results of the Company and
specifically include statements made in this press release
regarding: third-party forecasts and leading indicators suggests
that demand in the North American lighting market will improve
later in calendar 2018; growth in the lighting fixture market may
remain sluggish for the balance of 2018 based on soft order
activity in certain sales channels; certain headwinds to continue
in the home center/showroom sales channel in the near term, giving
way to growth in the second half of calendar 2018 as the Company
brings new solutions to key customers and expands access to market
in this channel; pricing environment will continue to be
challenging in certain portions of the market, particularly for
more basic, lesser-featured products sold through certain sales
channels as well as shifts in product mix, and the Company’s
introduction of products and solutions to more effectively compete
in these portions of the market; price of certain LED components
will continue to decline though at a decelerating pace, while
certain other costs will continue to increase, including certain
components and commodity costs, especially steel prices, as well as
certain employee related costs; acceleration of programs to reduce
product and other overhead costs in order to maintain the Company’s
competitiveness and drive improved profitability; belief
that share repurchases represent an effective use of the Company’s
cash flow to generate shareholder value and supports the objective
to maximize long-term stockholder value; belief that repurchasing 6
million shares of the Company’s stock within a twelve-month period
would require additional resources beyond the Company’s current
available cash and borrowing capacity, and therefore, the Company
may increase its leverage to accommodate repurchases at attractive
price levels; certain short and long-term fundamental drivers
of the markets that the Company serves remain positive, including
growing demand for the Company’s Atrius-based lighting solutions;
expectations for the Company to continue to outperform the growth
rates of the markets it serves by executing strategies focused on
growth opportunities for new construction and renovation projects,
expansion into underpenetrated geographies and channels, and growth
from the continued introduction of new lighting and building
management solutions as part of the Company’s integrated, tiered
solutions strategy; and belief that the lighting and
lighting-related industry as well as building management systems
will experience solid growth over the next decade and the Company’s
unique position to fully participate. Forward-looking
statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from the historical
experience of Acuity Brands and management's present expectations
or projections. These risks and uncertainties include, but
are not limited to, customer and supplier relationships and prices;
competition; ability to realize anticipated benefits from
initiatives taken and timing of benefits; market demand; litigation
and other contingent liabilities; and economic, political,
governmental, and technological factors affecting the
Company. Please see the other risk factors more fully
described in the Company’s SEC filings including risks discussed in
Part I, “Item 1a. Risk Factors” in the Company’s Annual Report on
Form 10-K for the year ended August 31, 2017. The discussion
of those risks is specifically incorporated herein by
reference. Management believes these forward-looking
statements are reasonable; however, undue reliance should not be
placed on any forward-looking statements, which are based on
current expectations. Further, forward-looking statements
speak only as of the date they are made, and management undertakes
no obligation to update publicly any of them in light of new
information or future events.
|
ACUITY BRANDS, INC. |
CONSOLIDATED BALANCE SHEETS |
(In millions, except share data) |
|
February 28, 2018 |
|
August 31, 2017 |
(Unaudited) |
|
|
ASSETS |
|
|
|
Current
assets: |
|
|
|
Cash and
cash equivalents |
$ |
229.8 |
|
|
$ |
311.1 |
|
Accounts
receivable, less reserve for doubtful accounts of $2.1 and $1.9,
respectively |
|
500.2 |
|
|
|
573.3 |
|
Inventories |
|
322.1 |
|
|
|
328.6 |
|
Prepayments and other current assets |
|
41.3 |
|
|
|
32.6 |
|
Total current assets |
|
1,093.4 |
|
|
|
1,245.6 |
|
Property,
plant, and equipment, at cost: |
|
|
|
Land |
|
22.3 |
|
|
|
22.5 |
|
Buildings
and leasehold improvements |
|
183.1 |
|
|
|
180.7 |
|
Machinery
and equipment |
|
500.4 |
|
|
|
484.6 |
|
Total property, plant, and equipment |
|
705.8 |
|
|
|
687.8 |
|
Less -
Accumulated depreciation and amortization |
|
(423.0 |
) |
|
|
(400.1 |
) |
Property, plant, and equipment, net |
|
282.8 |
|
|
|
287.7 |
|
Goodwill |
|
911.9 |
|
|
|
900.9 |
|
Intangible assets, net |
|
447.5 |
|
|
|
448.8 |
|
Deferred
income taxes |
|
3.2 |
|
|
|
3.4 |
|
Other
long-term assets |
|
11.7 |
|
|
|
13.2 |
|
Total assets |
$ |
2,750.5 |
|
|
$ |
2,899.6 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
341.9 |
|
|
$ |
395.1 |
|
Current
maturities of long-term debt |
|
0.4 |
|
|
|
0.4 |
|
Accrued
compensation |
|
38.2 |
|
|
|
41.8 |
|
Other
accrued liabilities |
|
129.1 |
|
|
|
163.6 |
|
Total current liabilities |
|
509.6 |
|
|
|
600.9 |
|
Long-term
debt |
|
356.5 |
|
|
|
356.5 |
|
Accrued
pension liabilities |
|
94.3 |
|
|
|
96.9 |
|
Deferred
income taxes |
|
76.1 |
|
|
|
108.2 |
|
Self-insurance reserves |
|
9.0 |
|
|
|
7.9 |
|
Other
long-term liabilities |
|
69.2 |
|
|
|
63.6 |
|
Total liabilities |
|
1,114.7 |
|
|
|
1,234.0 |
|
Stockholders’ equity: |
|
|
|
Preferred
stock, $0.01 par value; 50,000,000 shares authorized; none
issued |
|
- |
|
|
|
- |
|
Common
stock, $0.01 par value; 500,000,000 shares authorized; 53,634,418
and53,549,840 issued, respectively |
|
0.5 |
|
|
|
0.5 |
|
Paid-in
capital |
|
892.5 |
|
|
|
881.0 |
|
Retained
earnings |
|
1,828.5 |
|
|
|
1,659.9 |
|
Accumulated other comprehensive loss |
|
(115.4 |
) |
|
|
(99.7 |
) |
Treasury
stock, at cost - 12,876,689 and 11,678,002 shares,
respectively |
|
(970.3 |
) |
|
|
(776.1 |
) |
Total stockholders’ equity |
|
1,635.8 |
|
|
|
1,665.6 |
|
Total liabilities and stockholders’
equity |
$ |
2,750.5 |
|
|
$ |
2,899.6 |
|
|
|
ACUITY BRANDS, INC. |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME (Unaudited) |
(In millions, except per-share
data) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
February 28,2018 |
|
February 28,2017 |
|
February 28,2018 |
|
February 28,2017 |
Net
sales |
$ |
832.1 |
|
|
$ |
804.7 |
|
$ |
1,674.9 |
|
|
$ |
1,655.9 |
|
Cost of
products sold |
|
497.2 |
|
|
|
468.9 |
|
|
989.8 |
|
|
|
960.5 |
|
Gross
profit |
|
334.9 |
|
|
|
335.8 |
|
|
685.1 |
|
|
|
695.4 |
|
Selling,
distribution, and administrative expenses |
|
246.3 |
|
|
|
227.8 |
|
|
477.7 |
|
|
|
459.6 |
|
Special
charge |
|
0.6 |
|
|
|
- |
|
|
0.8 |
|
|
|
1.2 |
|
Operating profit |
|
88.0 |
|
|
|
108.0 |
|
|
206.6 |
|
|
|
234.6 |
|
Other
expense (income): |
|
|
|
|
|
|
|
Interest
expense, net |
|
8.0 |
|
|
|
8.0 |
|
|
16.1 |
|
|
|
16.2 |
|
Miscellaneous expense (income), net |
|
1.3 |
|
|
|
0.6 |
|
|
0.9 |
|
|
|
(7.3 |
) |
Total
other expense |
|
9.3 |
|
|
|
8.6 |
|
|
17.0 |
|
|
|
8.9 |
|
Income
before provision for income taxes |
|
78.7 |
|
|
|
99.4 |
|
|
189.6 |
|
|
|
225.7 |
|
Provision for income taxes |
|
(18.2 |
) |
|
|
32.1 |
|
|
21.2 |
|
|
|
76.7 |
|
Net
income |
$ |
96.9 |
|
|
$ |
67.3 |
|
$ |
168.4 |
|
|
$ |
149.0 |
|
|
|
|
|
|
|
|
|
Earnings
per share: |
|
|
|
|
|
|
|
Basic
earnings per share |
$ |
2.34 |
|
|
$ |
1.54 |
|
$ |
4.05 |
|
|
$ |
3.40 |
|
Basic
weighted average number of shares outstanding |
|
41.4 |
|
|
|
43.8 |
|
|
41.6 |
|
|
|
43.8 |
|
Diluted
earnings per sShare |
$ |
2.33 |
|
|
$ |
1.53 |
|
$ |
4.04 |
|
|
$ |
3.39 |
|
Diluted
weighted average number of shares outstanding |
|
41.5 |
|
|
|
44.0 |
|
|
41.7 |
|
|
|
44.0 |
|
Dividends declared per share |
$ |
0.13 |
|
|
$ |
0.13 |
|
$ |
0.26 |
|
|
$ |
0.26 |
|
|
Comprehensive income: |
|
|
|
|
|
|
|
Net
income |
$ |
96.9 |
|
|
$ |
67.3 |
|
$ |
168.4 |
|
|
$ |
149.0 |
|
Other comprehensive
income (loss) items: |
|
|
|
|
|
|
|
Foreign
currency translation adjustments |
|
2.5 |
|
|
|
3.3 |
|
|
(8.0 |
) |
|
|
(8.6 |
) |
Defined
benefit pension plans, net of tax |
|
1.8 |
|
|
|
2.1 |
|
|
3.4 |
|
|
|
4.1 |
|
Other comprehensive
income (loss), net of tax |
|
4.3 |
|
|
|
5.4 |
|
|
(4.6 |
) |
|
|
(4.5 |
) |
Comprehensive
income |
$ |
101.2 |
|
|
$ |
72.7 |
|
$ |
163.8 |
|
|
$ |
144.5 |
|
|
|
|
|
|
|
|
|
|
|
ACUITY BRANDS, INC. |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) |
|
(In millions) |
|
|
Six Months Ended |
|
|
|
February 28,2018 |
|
February 28,2017 |
|
Cash
Flows from operating activities: |
|
|
|
|
Net
income |
$ |
168.4 |
|
|
$ |
149.0 |
|
|
Adjustments to reconcile net income to net cash provided by (used
for)operating activities: |
|
|
|
|
Depreciation and amortization |
|
38.3 |
|
|
|
36.5 |
|
|
Share-based payment expense |
|
16.8 |
|
|
|
16.0 |
|
|
Loss on sale or disposal of property, plant, and
equipment |
|
0.1 |
|
|
|
0.1 |
|
|
Gain on sale of investment in unconsolidated
affiliate |
|
- |
|
|
|
(7.2 |
) |
|
Deferred income taxes |
|
(32.0 |
) |
|
|
(2.7 |
) |
|
Change in assets and liabilities, net of effect of
acquisitions, divestitures and effect of
exchange rate changes: |
|
|
|
|
Accounts receivable |
|
73.2 |
|
|
|
69.7 |
|
|
Inventories |
|
6.8 |
|
|
|
(59.5 |
) |
|
Prepayments and other current
assets |
|
(9.2 |
) |
|
|
(8.9 |
) |
|
Accounts payable |
|
(54.0 |
) |
|
|
(32.2 |
) |
|
Other current liabilities |
|
(39.8 |
) |
|
|
(83.6 |
) |
|
Other |
|
9.7 |
|
|
|
12.8 |
|
|
Net cash provided by operating activities |
|
178.3 |
|
|
|
90.0 |
|
|
Cash
flows from investing activities: |
|
|
|
|
Purchases
of property, plant, and equipment |
|
(20.9 |
) |
|
|
(35.8 |
) |
|
Proceeds
from sale of property, plant, and equipment |
|
- |
|
|
|
5.4 |
|
|
Acquisition of businesses, net of cash acquired |
|
(26.4 |
) |
|
|
- |
|
|
Proceeds
from sale of investment in unconsolidated affiliate |
|
- |
|
|
|
13.2 |
|
|
Other
investing activities |
|
- |
|
|
|
(0.2 |
) |
|
Net cash used for investing activities |
|
(47.3 |
) |
|
|
(17.4 |
) |
|
Cash
flows from financing activities: |
|
|
|
|
Issuance
of long-term debt |
|
- |
|
|
|
0.9 |
|
|
Repayments of long-term debt |
|
(0.2 |
) |
|
|
- |
|
|
Repurchases of common stock |
|
(194.3 |
) |
|
|
(0.4 |
) |
|
Proceeds
from stock option exercises and other |
|
1.4 |
|
|
|
2.3 |
|
|
Payments
for employee taxes on net settlement of equity awards |
|
(6.7 |
) |
|
|
(12.2 |
) |
|
Dividends
paid |
|
(10.9 |
) |
|
|
(11.5 |
) |
|
Net cash used for financing activities |
|
(210.7 |
) |
|
|
(20.9 |
) |
|
Effect of
exchange rate changes on cash and cash equivalents |
|
(1.6 |
) |
|
|
(1.7 |
) |
|
Net
change in cash and cash equivalents |
|
(81.3 |
) |
|
|
50.0 |
|
|
Cash and
cash equivalents at beginning of period |
|
311.1 |
|
|
|
413.2 |
|
|
Cash and
cash equivalents at end of period |
$ |
229.8 |
|
|
$ |
463.2 |
|
|
|
Certain prior-period amounts have been reclassified to conform
to the current year presentation. |
|
|
|
ACUITY BRANDS,
INC.Reconciliation of Non-U.S. GAAP
Measures
The tables below reconcile certain GAAP financial measures to
the corresponding non-GAAP measures:
|
(In millions, except
per share data) |
|
|
|
|
|
|
|
Three Months Ended |
|
Increase(Decrease) |
|
PercentChange |
|
|
February 28,2018 |
|
February 28,2017 |
|
|
|
Net sales |
$ |
832.1 |
|
|
$ |
804.7 |
|
|
$ |
27.4 |
|
|
3.4 |
% |
|
|
|
|
|
|
|
|
|
|
Selling, distribution,
and administrative (SD&A) expenses (GAAP) |
$ |
246.3 |
|
|
$ |
227.8 |
|
|
|
|
|
|
Less:
Amortization of acquired intangible assets |
|
(6.7 |
) |
|
|
(7.8 |
) |
|
|
|
|
|
Less:
Share-based payment expense |
|
(8.3 |
) |
|
|
(8.1 |
) |
|
|
|
|
|
Less:
Acquisition-related items (1) |
|
(0.2 |
) |
|
|
- |
|
|
|
|
|
|
Adjusted SD&A
expenses (Non-GAAP) |
$ |
231.1 |
|
|
$ |
211.9 |
|
|
$ |
19.2 |
|
|
9.1 |
% |
|
Percent
of net sales |
|
27.8 |
% |
|
|
26.3 |
% |
|
|
150 |
|
bps |
|
|
|
|
|
|
|
|
|
|
Operating profit
(GAAP) |
$ |
88.0 |
|
|
$ |
108.0 |
|
|
|
|
|
|
Add-back:
Amortization of acquired intangible assets |
|
6.7 |
|
|
|
7.8 |
|
|
|
|
|
|
Add-back:
Share-based payment expense |
|
8.3 |
|
|
|
8.1 |
|
|
|
|
|
|
Add-back:
Acquisiton-related items (1) |
|
0.2 |
|
|
|
- |
|
|
|
|
|
|
Add-back:
Special charge |
|
0.6 |
|
|
|
- |
|
|
|
|
|
|
Adjusted operating
profit (Non-GAAP) |
$ |
103.8 |
|
|
$ |
123.9 |
|
|
$ |
(20.1 |
) |
|
(16.2 |
)% |
|
Percent
of net sales |
|
12.5 |
% |
|
|
15.4 |
% |
|
|
(290 |
) |
bps |
|
|
|
|
|
|
|
|
|
|
Net income (GAAP) |
$ |
96.9 |
|
|
$ |
67.3 |
|
|
|
|
|
|
Add-back:
Amortization of acquired intangible assets |
|
6.7 |
|
|
|
7.8 |
|
|
|
|
|
|
Add-back:
Share-based payment expense |
|
8.3 |
|
|
|
8.1 |
|
|
|
|
|
|
Add-back:
Acquisiton-related items (1) |
|
0.2 |
|
|
|
- |
|
|
|
|
|
|
Add-back:
Special charge |
|
0.6 |
|
|
|
- |
|
|
|
|
|
|
Total
pre-tax adjustments to net income |
|
15.8 |
|
|
|
15.9 |
|
|
|
|
|
|
Income
tax effect |
|
(3.0 |
) |
|
|
(5.5 |
) |
|
|
|
|
|
Less: Discrete income tax net benefit of the TCJA (2) |
|
(31.2 |
) |
|
|
- |
|
|
|
|
|
|
Adjusted
net income (Non-GAAP) |
$ |
78.5 |
|
|
$ |
77.7 |
|
|
$ |
0.8 |
|
|
1.0 |
% |
|
|
|
|
|
|
|
|
|
|
Diluted Earnings per
Share (GAAP) |
$ |
2.33 |
|
|
$ |
1.53 |
|
|
|
|
|
|
Adjusted Diluted
Earnings per Share (Non-GAAP) |
$ |
1.89 |
|
|
$ |
1.77 |
|
|
$ |
0.12 |
|
|
6.8 |
% |
|
|
(1) Acquisiton-related items include professional fees. |
|
(2) Discrete income tax net benefit of the Tax Cuts and
Jobs Act of 2017 includes provisional estimates recognized within
Income tax (benefit) expense on the Consolidated Statements of
Comprehensive Income. |
|
|
(In millions, except
per share data) |
|
|
|
|
|
|
|
Six Months Ended |
|
Increase(Decrease) |
|
PercentChange |
|
|
February 28,2018 |
|
February 28,2017 |
|
|
|
Net sales |
$ |
1,674.9 |
|
|
$ |
1,655.9 |
|
|
$ |
19.0 |
|
|
1.1 |
% |
|
|
|
|
|
|
|
|
|
|
Gross profit
(GAAP) |
$ |
685.1 |
|
|
$ |
695.4 |
|
|
|
|
|
|
Add-back:
Manufacturing inefficiencies(2) |
|
- |
|
|
|
1.6 |
|
|
|
|
|
|
Adjusted Gross profit
(Non-GAAP) |
$ |
685.1 |
|
|
$ |
697.0 |
|
|
$ |
(11.9 |
) |
|
(1.7 |
)% |
|
Percent
of net sales |
|
40.9 |
% |
|
|
42.1 |
% |
|
|
(120 |
) |
bps |
|
|
|
|
|
|
|
|
|
|
Selling, distribution,
and administrative (SD&A) expenses (GAAP) |
$ |
477.7 |
|
|
$ |
459.6 |
|
|
|
|
|
|
Less:
Amortization of acquired intangible assets |
|
(13.3 |
) |
|
|
(13.7 |
) |
|
|
|
|
|
Less:
Share-based payment expense |
|
(16.8 |
) |
|
|
(16.0 |
) |
|
|
|
|
|
Less:
Acquisition-related items (1) |
|
(0.2 |
) |
|
|
- |
|
|
|
|
|
|
Adjusted SD&A
expenses (Non-GAAP) |
$ |
447.4 |
|
|
$ |
429.9 |
|
|
$ |
17.5 |
|
|
4.1 |
% |
|
Percent
of net sales |
|
26.7 |
% |
|
|
26.0 |
% |
|
|
70 |
|
bps |
|
|
|
|
|
|
|
|
|
|
Operating profit
(GAAP) |
$ |
206.6 |
|
|
$ |
234.6 |
|
|
|
|
|
|
Add-back:
Amortization of acquired intangible assets |
|
13.3 |
|
|
|
13.7 |
|
|
|
|
|
|
Add-back:
Share-based payment expense |
|
16.8 |
|
|
|
16.0 |
|
|
|
|
|
|
Add-back:
Acquisition-related items (1) |
|
0.2 |
|
|
|
- |
|
|
|
|
|
|
Add-back:
Manufacturing inefficiencies(2) |
|
- |
|
|
|
1.6 |
|
|
|
|
|
|
Add-back:
Special charge |
|
0.8 |
|
|
|
1.2 |
|
|
|
|
|
|
Adjusted operating
profit (Non-GAAP) |
$ |
237.7 |
|
|
$ |
267.1 |
|
|
$ |
(29.4 |
) |
|
(11.0 |
)% |
|
Percent
of net sales |
|
14.2 |
% |
|
|
16.1 |
% |
|
|
(190 |
) |
bps |
|
|
|
|
|
|
|
|
|
|
Other expense (income)
(GAAP) |
$ |
17.0 |
|
|
$ |
8.9 |
|
|
|
|
|
|
Add-back: Gain on sale
of investment in unconsolidated affiliate |
|
- |
|
|
|
7.2 |
|
|
|
|
|
|
Adjusted other
expense(Non-GAAP) |
$ |
17.0 |
|
|
$ |
16.1 |
|
|
$ |
0.9 |
|
|
5.6 |
% |
|
|
|
|
|
|
|
|
|
|
Net income (GAAP) |
$ |
168.4 |
|
|
$ |
149.0 |
|
|
|
|
|
|
Add-back:
Amortization of acquired intangible assets |
|
13.3 |
|
|
|
13.7 |
|
|
|
|
|
|
Add-back:
Share-based payment expense |
|
16.8 |
|
|
|
16.0 |
|
|
|
|
|
|
Add-back:
Acquisition-related items (1) |
|
0.2 |
|
|
|
- |
|
|
|
|
|
|
Add-back:
Manufacturing inefficiencies(2) |
|
- |
|
|
|
1.6 |
|
|
|
|
|
|
Add-back:
Special charge |
|
0.8 |
|
|
|
1.2 |
|
|
|
|
|
|
Less:
Gain on sale of investment in unconsolidated affiliate |
|
- |
|
|
|
(7.2 |
) |
|
|
|
|
|
Total
pre-tax adjustments to net income |
|
31.1 |
|
|
|
25.3 |
|
|
|
|
|
|
Income
tax effect |
|
(8.3 |
) |
|
|
(8.8 |
) |
|
|
|
|
|
Less: Discrete income tax net benefit of the TCJA (3) |
|
(31.2 |
) |
|
|
- |
|
|
|
|
|
|
Adjusted
net income (Non-GAAP) |
$ |
160.0 |
|
|
$ |
165.5 |
|
|
$ |
(5.5 |
) |
|
(3.3 |
)% |
|
|
|
|
|
|
|
|
|
|
Diluted Earnings per
Share (GAAP) |
$ |
4.04 |
|
|
$ |
3.39 |
|
|
|
|
|
|
Adjusted Diluted
Earnings per Share (Non-GAAP) |
$ |
3.84 |
|
|
$ |
3.76 |
|
|
$ |
0.08 |
|
|
2.1 |
% |
|
|
(1) Acquisiton-related items include professional fees. |
|
(2) Incremental costs incurred due to manufacturing
inefficiencies directly related to the closure of a facility. |
|
(3) Discrete income tax net benefit of the Tax Cuts and Jobs
Act of 2017 includes provisional estimates recognized within Income
tax (benefit) expense on the Consolidated Statements of
Comprehensive Income. |
|
|
|
Contact:Dan Smith,
404-853-1423dan.smith@acuitybrands.com
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