Acuity Brands (AYI) to Acquire KE2 Therm, Expand Portfolio
Acuity Brands, Inc. AYI has signed an agreement to acquire KE2 Therm Solutions, Inc., an intelligent refrigeration control solutions provider. The value of the transaction has been kept under wraps. The deal is expected to be closed during spring 2023.
Pertaining to the announcement, president of the Intelligent Spaces Group of Acuity Brands, Peter Han said, “We are focused on increasing our addressable market for Distech Controls. With the acquisition of KE2 Therm, we will expand into the commercial refrigeration controls market as it transitions from analog to digital controls. KE2 Therm’s controls and software will help us lead this transition, and we are excited to welcome the talented team to Acuity.”
The share price of AYI declined 0.7% during the trading session on Apr 14 but increased 0.6% in the after-hours.
Expansion to Drive Growth
Acuity Brands is committed to expanding its geographic borders and product portfolio through acquisitions and joint ventures. Although there were no acquisitions during the first three months of fiscal 2023 or fiscal 2022, AYI acquired a developer and manufacturer of lighting components — OSRAM’s North American Digital Systems business on Jul 1, 2021. On May 18, 2021, it acquired Rockpile Ventures — an accelerator of Edge artificial intelligence startups.
Notably, KE2 Therm develops and provides intelligent refrigeration control solutions that enhance profits by expanding system efficiency and decreasing operational and service costs. The latest addition will boost AYI’s presence in the commercial refrigeration controls market as it shifts from analog to digital controls.
After the completion of the deal, KE2 Therm will be integrated into Distech Controls within the Intelligent Spaces Group (ISG) business segment of AYI. Until then, the companies will continue to operate separately.
The ISG segment of Acuity Brands offers building management systems as well as location-aware applications, including Distech Controls and Atrius. The company has a valuable and growing business in Distech Controls and Atrius. It has the potential to build a valuable technology business as the company mainly focuses on technology to solve problems in spaces by making them smarter, safer and greener.
In the second quarter of fiscal 2023, ISG’s net sales and adjusted operating profit margin increased 16.4% and 740 basis points (bps) year over year.
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Shares of AYI declined 8.8% in the past three months compared with the Zacks Building Products - Lighting industry’s decline of 14.2%.
Zacks Rank & Key Picks
AYI currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Here are some better-ranked stocks that investors may consider from the Zacks Construction sector.
Altair Engineering Inc. ALTR currently sports a Zacks Rank #1. ALTR has a trailing four-quarter earnings surprise of 135.8%, on average. Shares of the company have gained 54.6% in the past six months.
The Zacks Consensus Estimate for ALTR’s 2023 sales and EPS indicates growth of 7.8% and 11.2%, respectively, from the previous year’s reported levels.
CRH plc CRH currently carries a Zacks Rank #2 (Buy). Shares of CRH have gained 44.9% in the past six months. The long-term earnings growth rate is anticipated to be 10.2%.
The Zacks Consensus Estimate for CRH’s 2023 sales and EPS indicates growth of 4.5% and 9.2%, respectively, from the previous year’s reported levels.
AECOM ACM currently carries a Zacks Rank #2. ACM has a trailing four-quarter earnings surprise of 5.2%, on average. Shares of the company have gained 14.6% in the past six months.
The Zacks Consensus Estimate for ACM’s fiscal 2023 sales and EPS indicates growth of 3.9% and 5.8%, respectively, from the previous year’s reported levels.
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