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Acuity Brands (AYI) Q4 Earnings & Sales Top, Margins Up Y/Y

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Acuity Brands, Inc. AYI reported impressive fourth-quarter fiscal 2021 results, wherein both the top and bottom lines handily surpassed the Zacks Consensus Estimate as well as improved from the prior year. Strength in go-to-market channels, product portfolio and robust economy allowed the company to effectively serve customers.

Impressively, its shares gained more than 9% in the pre-market trading session on Oct 6.

Neil Ashe, the chief executive officer of Acuity Brands, said, “We are entering fiscal 2022 from a position of strength with a diverse and capable team, who are driven by our values to deliver results for our customers, our investors and our environment.”

Delving Deeper

The company reported adjusted earnings of $3.27 per share, which topped the consensus estimate of $2.89 by 13.2%. The said metric also improved 39.1% from the year-ago reported figure of $2.35 per share.

Acuity Brands Inc Price, Consensus and EPS Surprise

Acuity Brands Inc Price, Consensus and EPS Surprise
Acuity Brands Inc Price, Consensus and EPS Surprise

Acuity Brands Inc price-consensus-eps-surprise-chart | Acuity Brands Inc Quote

Net sales of $992.7 million surpassed the consensus mark of $975.5 million by 1.8% and increased 11.4% from the prior-year quarter.

Segment Details

Acuity Brands Lighting and Lighting Controls or ABL’s net sales grew 11% year over year to $946.9 million. Net sales in the Independent Sales Network and Direct Sales Network were up 9.6% and 14.8% year over year, respectively. Sales in the Corporate Accounts channel increased 16% from the prior year as some large accounts began the previously deferred maintenance and renovations. Yet, Retail sales declined 20.1% from the prior-year quarter, primarily due to an ongoing customer inventory rebalancing. Adjusted operating profit in the segment increased 21.2% from the prior year. Adjusted operating margin was up 140 basis points (bps) year over year.

Intelligent Spaces Group or ISG generated net sales of $50.5 million, marking an increase of 23.5% year over year. The uptrend was due to strong demand for building and HVAC controls, energy management, and location services. Adjusted operating profit was up a notable 185.7% from fourth-quarter fiscal 2020. Adjusted operating margin was up 680 bps year over year.

Operating Highlights

Gross margin improved 10 bps on a year-over-year basis to 42.2% despite higher material, labor and freight costs. The improvement can be attributed to an increase in sales volumes, product and productivity improvements as well as benefits from recent price increases.

Adjusted selling, distribution and administrative expenses — at a percentage of net sales — were 26.5% compared with 27.4% in the prior-year quarter, improving 90 bps on a year-over-year basis. Adjusted operating margin came in at 15.8%, up 110 bps year over year. The improvement was driven by higher gross margin and its ability to successfully leverage fixed costs.

Financials

At fiscal 2021-end, Acuity Brands had cash and cash equivalents of $491.3 million compared with $560.7 million at fiscal 2020-end. In fiscal 2021, cash provided by operating activities totaled $408.7 million, reflecting a decrease from $504.8 million in the prior-year period.

In fiscal 2021, the company repurchased 3.8 million shares of its common stock for $434.9 million at an average price of $114 per share. At fiscal 2021-end, it had approximately 3.8 million shares remaining under its most recent authorization.

Fiscal 2021 Highlights

The company generated adjusted earnings of $10.17 per share, up 23% from $8.27 in the year-ago period. Revenues of $3.5 billion improved 4% from the year-ago period. Adjusted operating margin rose 90 bps to 14.6%.

Zacks Rank & Key Picks

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.

Some better-ranked stocks in the Zacks Construction sector include KBR, Inc. KBR, Jacobs Engineering Group Inc. J and ChampionX Corporation CHX, each carrying a Zacks Rank #2 (Buy). KBR, Jacobs, and ChampionX’s earnings topped analysts’ expectations in the trailing four quarters, with an average of 8.5%, 17.5%, and 72%, respectively.


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