Acuity Brands (AYI) Q1 Earnings Beat, Adjusted EBITDA Up Y/Y
Acuity Brands, Inc. AYI reported impressive results in first-quarter fiscal 2024 (ending Nov 30, 2023), with earnings and revenues surpassing the Zacks Consensus Estimate. Earnings beat the consensus mark for the 15th consecutive quarter.
Despite a year-over-year decline in sales in the lighting business, AYI reported strong fiscal first-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.
Following the results, the company’s shares rose 11.5% during the trading session on Jan 09, 2024.
Delving Deeper
AYI reported adjusted earnings of $3.72 per share, which topped the consensus estimate of $3.09 by 20.4%. The metric also increased 13.1% from the year-ago reported figure of $3.29 per share.
Acuity Brands Inc Price, Consensus and EPS Surprise
Acuity Brands Inc price-consensus-eps-surprise-chart | Acuity Brands Inc Quote
Net sales of $934.7 million surpassed the consensus mark of $924.5 million by 1.1%. The metric declined 6.3% 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 7.5% year over year to $876.4 million. Our estimate for the metric was $865.6 million. Net sales in the Independent Sales Network were down 7.2% year over year to $625.2 million. Sales from the Direct Sales Network were down 8.5% from the prior-year period’s level to $97.4 million. Retail sales of $55.6 million increased 11.4% from the prior-year quarter’s levels. Sales in the Corporate Accounts channel declined 15.5% from the prior year’s levels to $41.5 million. The Original equipment manufacturer and other channels generated sales of $56.7 million, down 16.6% from the prior-year period’s levels.
Adjusted operating profit in the segment increased 10.8% from the prior year’s levels to $153.8 million. The adjusted operating margin was up 280 basis points (bps) year over year to 17.5%.
Intelligent Spaces Group or ISG generated net sales of $64.2 million, up 13% year over year. Our estimate for the metric was $65.9 million. Adjusted operating profit was $10.3 million, down 2.7% from a year ago. Adjusted operating margin was down 530 bps year over year to 16%.
Operating Highlights
Adjusted operating profit increased 9.9% to $153.9 million. Adjusted operating margin of 16.5% was up 250 bps year over year. Adjusted EBITDA rose 9% to $166.7 million from a year ago.
Financials
At the fiscal first quarter-end, Acuity Brands had cash and cash equivalents of $513.3 million compared with $397.9 million at the fiscal 2023-end. Long-term debt was $495.7 million, in line with the fiscal 2023-end.
During the fiscal first quarter, cash provided by operating activities totaled $190 million, up from $186.6 million in the prior-year period. Free cash flow was up 4.2% to $175.4 million in the first quarter of fiscal 2024.
During the first quarter of fiscal 2024, the company repurchased nearly 0.3 million shares of its common stock for $50 million.
Fiscal 2024 Outlook
For fiscal 2024, AYI expects net sales in the range of $3.7-$4 billion compared with the reported figure of $3.95 billion in the fiscal 2023.
For the year, adjusted earnings per share are expected in the range of $13-$14.50 compared with the value of $14.05 reported in fiscal 2023.
Zacks Rank
Acuity Brands currently carries a Zacks Rank #4 (Sell).
Key Picks
Here are some better-ranked stocks from the Zacks Construction sector:
Martin Marietta Materials, Inc. MLM sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 37.3%, on average. Shares of MLM have increased 40.1% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MLM’s 2024 sales and earnings per share (EPS) suggests growth of 9.2% and 14%, respectively, from the year-ago period’s levels.
AECOM ACM carries a Zacks Rank of #2 (Buy). It has a trailing four-quarter earnings surprise of 2.1%, on average. Shares of ACM have increased 5.2% in the past year.
The Zacks Consensus Estimate for ACM’s 2024 sales and EPS indicates an increase of 4.5% and 17.5%, respectively, from the year-ago period’s levels.
Armstrong World Industries, Inc. AWI currently sports a Zacks Rank of 2. AWI delivered a trailing four-quarter earnings surprise of 7.9%, on average. The stock has surged 31.5% in the past year.
The Zacks Consensus Estimate for AWI’s 2024 sales and EPS indicates growth of 1.3% and 6.8%, respectively, from the previous year’s levels.
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