Acuity Brands (AYI) Q2 Earnings Beat, Adjusted EBITDA Up Y/Y
Acuity Brands, Inc. AYI reported mixed results for second-quarter fiscal 2023 (ended Feb 28, 2023), wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Earnings beat the consensus mark for the 11th consecutive quarter. Revenues missed the same for two quarters in a row following six straight quarters of beat.
On a year-over-year basis, both metrics rose as both the lighting and spaces businesses’ sales grew, adjusted operating profit expanded and adjusted earnings per share increased.
Shares of the company plunged 11.02% on Apr 4, 2023.
Delving Deeper
AYI reported adjusted earnings of $3.06 per share, which topped the consensus estimate of $2.54 by 20.5%. The metric also increased 19.1% from the year-ago reported figure of $2.57 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 $943.6 million lagged the consensus mark of $960 million by 1.7% but increased 3.8% from the prior-year quarter’s levels.
Segment Details
Acuity Brands Lighting and Lighting Controls or ABL’s net sales rose 3.2% year over year to $890.8 million. Net sales in the Independent Sales Network were up 3.4% year over year to $635.3 million. Direct Sales Network sales were 13.8%, up from the prior-year period’s levels to $94.7 million. Retail sales of $50.4 million also increased 18% from the prior-year quarter’s levels. Sales in the Corporate Accounts channel grew 0.7% from the prior year’s levels to $54 million. The Original equipment manufacturer and other channels generated sales of $56.4 million, down 18.6% from the prior-year period’s levels.
Adjusted operating profit in the segment increased 5% from the prior year’s levels. The adjusted operating margin was up 30 basis points (bps) year over year.
Intelligent Spaces Group or ISG generated net sales of $58.2 million, up 16.4% year over year. Adjusted operating profit was $10.8 million, up 92.9% from a year ago. Adjusted operating margin was up 740 bps year over year to 18.6% from the previous year.
Operating Highlights
Adjusted operating profit increased 7.7% to $132.1 million. Adjusted operating margin of 14% was up 50 bps year over year. Adjusted EBITDA rose 6.5% to $144.8 million from a year ago.
Financials
At fiscal second quarter-end, Acuity Brands had cash and cash equivalents of $339 million compared with $223.2 million at the fiscal 2022-end. Long-term debt was $495.3 million, in line with the fiscal 2022-end.
For the first six months of fiscal 2023, cash provided by operating activities totaled $306.4 million, up from $127.3 million in the prior-year period. Free cash flow was up 162.4% to $270.8 million in the first six months of fiscal 2023.
During the first half of fiscal 2023, the company repurchased nearly 0.7 million shares of its common stock for $124.1 million.
Zacks Rank & Recent Releases
Acuity Brands currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
KB Home KBH reported better-than-expected first-quarter fiscal 2023 (ended Feb 28, 2023) results, defying the challenging housing market conditions. Its earnings and revenues beat the Zacks Consensus Estimate.
Pertaining to the quarterly results, Jeffrey Mezger, chairman, president and chief executive officer, stated, “Our revenues were at the high end of our guidance range and we outperformed both our operating and gross margin expectations. In addition, we further expanded our book value per share, which grew to $44.80, up 27% from a year ago.”
Lennar Corporation LEN reported impressive results for first-quarter fiscal 2023, where earnings and revenues beat the Zacks Consensus Estimate.
Pertaining to the prospect, Stuart Miller, executive chairman of Lennar, said, "As we have seen over the past quarters, interest rates are fluctuating and are likely to continue to move and the housing market will continue to rebalance pricing and interest rates. While we have a clear-cut strategy of execution, we will only give broad boundaries for deliveries and gross margin.”
Another Stock to Consider
Taylor Morrison Home Corporation TMHC is a homebuilder and land developer building single-family detached and attached homes for first-time buyers and move-up families to luxury and active adult customers. TMHC operates under the brands Taylor Morrison, Monarch and Darling Homes. Taylor Morrison Home operates in Arizona, California, Colorado, Florida and Texas.
Taylor Morrison Home’s expected earnings growth rate for next year is 8.8%. The Zacks Consensus Estimate for current-year earnings has improved 31.3% over the past 60 days. THMC currently sports a Zacks Rank #1.
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