Acuity Brands (AYI) Q4 Earnings Top Estimates, Revenues Lag
Acuity Brands, Inc. AYI reported mixed results for fourth-quarter fiscal 2023 (ended Aug 31, 2023), wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Earnings beat the consensus mark for the 14th consecutive quarter. Revenues missed the same for four quarters in a row following six straight quarters of beat.
Despite a decline in sales in the lighting business, AYI reported strong fiscal fourth-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, shares of the company rose 6.9% during the trading session on Oct 04, 2023.
Delving Deeper
AYI reported adjusted earnings of $3.97 per share, which topped the consensus estimate of $3.57 by 11.2%. The metric also increased 0.5% from the year-ago reported figure of $3.95 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 $1.01 billion lagged the consensus mark of $1.02 billion by 0.7%. The metric also declined 9% 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 10.5% year over year to $944.2 million. Our estimate for the metric was $967.8 million. Net sales in the Independent Sales Network were down 8.3% year over year to $676 million. Sales from the Direct Sales Network were down 4.8% from the prior-year period’s level to $109.4 million. Retail sales of $46.6 million increased 5.9% from the prior-year quarter’s levels. Sales in the Corporate Accounts channel declined 27.7% from the prior year’s levels to $52.8 million. The Original equipment manufacturer and other channels generated sales of $59.4 million, down 30.9% from the prior-year period’s levels.
Adjusted operating profit in the segment declined 1.9% from the prior year’s levels to $158.7 million. The adjusted operating margin was up 150 basis points (bps) year over year.
Intelligent Spaces Group or ISG generated net sales of $71.9 million, up 17.1% year over year. Our estimate for the metric was $64.6 million. Adjusted operating profit was $14.2 million, down 2.7% from a year ago. Adjusted operating margin was down 410 bps year over year to 19.7%.
Operating Highlights
Adjusted operating profit declined 4.4% year over year to $162.3 million. Adjusted operating margin of 16.1% was up 80 bps year over year. Adjusted EBITDA was down 4.3% year over year to $175.1 million.
Fiscal 2023 Highlights
For the year, net sales increased 1.3% year over year to $3.95 billion. Adjusted earnings of $14.05 per share increased 9.5% from the year-ago reported figure of $12.83 per share.
Adjusted operating margin of 15.1%, up 40 bps year over year. Adjusted EBITDA rose 1% to $648.5 million from a year ago.
Financials
At fiscal 2023-end, Acuity Brands had cash and cash equivalents of $397.3 million compared with $223.2 million at the fiscal 2022-end. Long-term debt was $495.6 million, which was in line with the fiscal 2022-end.
For fiscal 2023, cash provided by operating activities totaled $578.1 million, up from $316.3 million in the prior-year period. Free cash flow was up 96.8% to $511.4 million at fiscal 2023-end.
During fiscal 2023, the company repurchased approximately 1.6 million shares of its common stock for a total of $269 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 fiscal 2023.
For the year, the adjusted earnings per shares is expected within the range of $13-$14.50 compared with the value of $14.05 reported in fiscal 2023.
Zacks Rank & Recent Releases
Acuity Brands currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
KB Home KBH reported better-than-expected results in third-quarter fiscal 2023 (ended Aug 31, 2023). Both the earnings and revenues beat the Zacks Consensus Estimate. With this, the company’s earnings and revenues surpassed the consensus mark in three consecutive quarters.
Pertaining to the quarterly results, Jeffrey Mezger, chairman, president and chief executive officer, stated, “Demand was steady throughout the quarter, leading to a community absorption pace of 4.3 net orders per month, even though mortgage interest rates rose as the quarter progressed.
Lennar Corporation LEN reported better-than-expected results for third-quarter fiscal 2023. Its earnings and revenues surpassed the Zacks Consensus Estimate.
Both the top and bottom lines declined on a year-over-year basis. Improving the supply chain and labor market has positively impacted the company’s production times and reduced cycle time sequentially to 32 days.
Another Stock to Consider
Based in Atlanta, GA, PulteGroup Inc. PHM engages in homebuilding and financial services businesses, primarily in the United States. Pulte’s direct subsidiaries under the homebuilding segment include Pulte Diversified Companies Inc., Del Webb Corporation and Centex Corporation. Pulte’s Financial Services business includes mortgage banking and title operations through Pulte Mortgage and other subsidiaries.
PulteGroup’s expected earnings growth rate for 2024 is 0.8%. The Zacks Consensus Estimate for current-year earnings has improved 4.1% over the past 60 days. PHM currently sports a Zacks Rank #2 (Buy).
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