Acuity Brands (AYI) 4 Oct 222022 Q4 Earnings call transcript

Good morning, and welcome to the Acuity Brands Fiscal 2022 Fourth and Full-Year Earnings Call. (Operator Instructions) At this time, all participants are in a listen-only mode. After the speakers' presentation, the company will conduct a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Charlotte McLaughlin, Vice President of Investor Relations. ahead. go please Charlotte,

Good fourth welcome call. quarter Liz. Brands the fiscal XXXX and morning, you, to and Acuity Thank full-year earnings

detailed call to our as call. the call this [Operator will for well Thank for as now Brands. Neil turn provide filings. a control, www.investor.acuitybrands.com. morning known beliefs uncertainties, may and our from statements XXXX. of our undertake SEC for our the statements. actual is performance, management risks at provide President the and an webcasting which Relations in currently our to who Vice highlights and an reminder, periodic are financial and Ashe. I that may These our including you our and in to Please those end With of As forward-looking Acuity beliefs will be us CFO, our in Investor and known on our time. Instructions] walk be conference measures full unknown are There Karen company's available available Q&A GAAP comments today's year non-GAAP these to available results quarter which strategy note full-year fiscal from live. metrics through based outlook full-year subject assumptions me will our update materially who earnings and beyond Ashe, anticipated, over your at many is our and last today update management's those of be quarter this President corresponding will fourth are at an with our and Reconciliations -- CEO, this Senior certain website release, information may no on on and Chairman, fourth differ some Holcom, of and and their interest we obligation opportunity XXXX Neil quarter full-year We

joining you us on Good to the and Charlotte. everyone morning you, Thank thank call.

XXXX. and deliver strong been to across quarter, to product demonstrated end the and solid through and fiscal and what shareholder throughout throughout this value have our continue We Lighting operating again ability volume our drive share our had results strong in Spaces Spaces we with profit fourth concluding and in created delivered fiscal demand service we delivered the EPS and Lighting results We businesses year. price both capture has We good very ABL. a vitality through strong growth, markets, repurchases. Both XXXX. Starting and businesses permanent

vitality on progress team initiatives. service good Our made and product

architectural including innovation, Bright category EC&M winner our several and from controls the of our magazine Awards efforts are magazine. a Design Award and introductions combination valuable design received for for as recognized to new a Select of improvements to that These are We us. efforts portfolio vitality awards recognized. customers being product across products vitality and Contractor for our product LED for lighting. the won more award to Dot more ensure And product Red software we and Our our our STACK profitable year. for existing are Star product Pack portfolio

global To by groups buying are XXXX, key supply to two the and been AD. continued in of we've demand. activities. the were prioritize named IMARK the also conditions, that Throughout the by do on recognized through each of chain three Our focused service initiatives Supplier being largest customer satisfying industry. industry, Year We we've the

components. products to our First, and available third, components relationships; investing open teams the empowering second, in in reengineering to secure market; supplier

two other I'd able our with finish now components, to relationships a our highlight strong quarter these remained have the ABL aspects we a electronic strong encountered While In business fourth with our important business. to the of same. were challenges focus leverage quarter August. the interruptions has continued, when sourcing like our few to supplier

contractor important most control everyday The lighting products. and Contractor is first lighting the is select of collection a select.

do we significant product our value and Contractor growing results be have is continue in relationship portfolio, perspective vitality done to consistent broader have from distributors. work and We been provides work this on the competitive impressive. a to a foundational allows faster with select electrical portfolio. us than and This

Second, we our want Osram of anniversary passed as you business, one year on acquisition the of I update DS progress. the our to

We our supply with go-to-market and chain integrated product the have business efforts. successfully

family. part of rebranded have to portfolio product We product our the as OPTOTRONIC eldoLED

to We OPTOTRONIC portfolio. more drivers have in our integrate begun luminaire

our grow on we have delivering operations. successfully and of sales The our greater over expectations, control into facility technology We our electronic Mexico luminaires, supply acquisition OEM take the OEM chain. grown expand to more our production is channel our have integrated in the and

vision by Atrius assets to The launched controller, Now ECLYPSE safer technology and Group. space. quarter, brain Spaces The is their in open improved and locator, systems buildings, fourth to sales protocol to heating, high also applications. to notably strong solid track monitor moving the which then and Spaces roll had the a control quarter, improve traffic as can the functions, Intelligent a to which within greener. out fourth sales managing value had Spaces including ventilation, in smarter, lighting optimize and building. data our like expanding team sales growth the to net used product in enables other we occupancy delivering building customer in space. improvements we that and our Atrius of spaces and and energy acting generated to or make the Atrius very customers uses experiences In new Distech profit a our essentially comfort consumption continue of quarter, continues and

want on to spend allocation. minute a Now capital I

priorities the same. allocation Our remain capital

our strategic and to reports be for value this announced Vice building current and President Brzusczak businesses, will opportunity and me share relationships. to evaluating shareholders. there Strategy. responsible growth create Development of to dividend perceive invest we is priorities month, in and capital are mergers we permanent invest Earlier Philippe acquisitions, our when Senior as Our acquisitions repurchases and Corporate in Philippe maintain for for for allocate an

As I a reflect on we've year. ‘XX, our fiscal had good

intersection at sustainability the have and technology. repositioned the of company We successfully

that technology their reduces the saves developed businesses customers' energy our and carbon emissions. Our

are growth of advantage the Acuity positioned in company important America. for long-term and impacts largest taking change the of maximizing most by the lighting of minimizing Lighting is impacts megatrends, control of Brands We technology. and two climate lighting the North

product others have improved vitality, when we we that could business our We not. dramatically have demonstrated and could serve

operating processes, rhythms, building At problem-solving. company Our combination our to working same our operating Atrius, changed of We've of time, to effectively and smarter, of It people, deliver and Intelligent transitioned faster values-driven the to change management to better, the introduction connecting we and controls the be with tools, the organization systems faster strategy the benefits and unique are with the cloud. allows from the Better, with Distech, smarter, differentiated edge beginning to manage has to have company we of system. results. Spaces and and Group spans technology works to purposely ways us how drive is the alignment, that is organization. strategic to a demonstrate

have shared We values. seven

the time and of distinctive and owner’s to like common. Acuity. they decision-making empowers shared Some faster combination service community values framework like better, The Others of quickly fairly allows our associates. curiosity accountability environments more continue that will our and smarter, are our mindset are integrity, and businesses is effectively Collectively, respond It us throughout how to the distribution we our company. to future. in successfully in operate operate more responsibility businesses, changing efficiently improve additional the and with and of greater economic values

as net by create how is We clear organization not growing and fast. into cash value balance on value. sales, sheet we the create those sales Our turning growing

have overhauled rewards that We effective so framework total this. organization that allocators. are capital with also demonstrated is everyone in our the aligned We've we

have made have our repurchased shareholder and integrated made businesses, XX% current investments We almost our we acquisitions, company, successfully value. creating we have in of permanent and

about beyond, how for our our fiscal come we future. looking far and and the Now prospects XXXX have to excited we're

While we our dynamic continue be a to confident execute. ability to we expect environment, in XXXX are to

of in well a variety end positioned markets. are We

to to invest improving. that product and We in service, culture change have we vitality is are and supports committed developed continuing a and

call the on XXXX for Karen, I'll outlook Now, update to will and performance who more turn specific XXXX. over provide a our you

Acuity. Thank year you, Neil. for XXXX was a strong

in we billion For crossed sales. net $X time, the first over annual

XX.X%. profit Our margin was gross

Our we fiscal EPS diluted grew to $XX.XX $XX XX% by increased XXXX. for and profit million year-over-year, operating

outstanding allocate continue the to the In strong have capital the the our ISG We to quarter, prior and contributing were ABL to continue with effectively $X.X sales shares. both higher fourth year, through we growth. of business of XX% $X Net approximately than the repurchase growth. billion sales segments million of net

levels production profit the now of fourth operating the gross fourth was was mentioned, a we've OPTOTRONIC sales quarter. was XX.X%, fourth quarter. only had incremental of quarter million. acquisition million profit delivered As the impact in full-year, margin and of beginning profit adjusted for and the $XXX Operating X% $XXX despite in lower the that We the Neil at

Finally, we grow share. earnings continued to per

diluted XX% to quarter. or the favorably throughout which XX% Our now the by want increased prior made which compared grew segment our ABL's $X.XX over prior $X.XX XX%. share at just the fiscal year-over-year, direct $XXX impacted per independent largely year. by operating versus of $X.XX diluted diluted billion, adjusted increase per prior while the year, was was during Share or ABL increased the sales on over increase an performance. driven adjusted the earnings XX% expand Net and of increase network, to million, year. million network, within an I with share repurchases $X.XX fourth $X.XX $X performance of of XX%, grew EPS earnings XXXX of sales $X profit our strong an sales

profit by cost higher cost inventory; to and to This increased project business. deliver rates customer; of certain transportation for factors: finally, the quarter products was our key operating higher first, commission second, for three impacted

performance XXXX million the the increased $X ISG. and ISG's versus Sales of improved, the net $XX profit. year. operating fourth XX% in very operating fourth were million. onto also while of million million, profit quarter increase segment of an invest in strong Operating Spaces moving we Now sales year had in to or to also improved XXXX $XX a and business. continue the prior quarter $XX The both

million in inventory sales quarter, expenditures the our Moving primarily in capital for to flow. inventory cash because This fiscal am generated we invested decreased activities X.X% during of year, particularly the cash prior invested $XX support by XXXX. XXXX. fiscal we from fourth We pleased down million I the capital, from which progress operating flow million. the was during $XX to working or our full-year million $XX of We of by full-year in growth. net $XXX

$XXX which in the million After $XXX the this outlook. spend repurchasing shares would now during quarter, to fiscal our invested we million to means to of supplemental will X invested approximately the approximately available that talk a the in fourth full-year that shares. through around XXXX have you deck like will for XXXX, be minutes Finally, repurchase call, find XXX,XXX I we few our on website. outlook million

anchored We to net are and provide EPS. guidance going around adjusted annual sales diluted

provide models. We with assumptions you the will also to help construction of your other

within expectation to be the and low will AYI. ABL For generate based $X.X billion will sales in that full-year to mid assumptions mid-teens. sales is the the sales fiscal our generate single-digits will range This the of and in that is total XXXX, net low for billion on growth ISG $X.X growth

As be a will fiscal to Neil that mentioned, environment. expect continue we XXXX dynamic

our from levels. returning more to XXXX, level we normal growth move to XXXX of sales is As

future. react as the to on outlook are necessary changes focused economic in any are and We the prepared in we

expectation Our AYI. the $XX.XX that share for annual range earnings total within will adjusted $XX is of and diluted per be

ability recall also focused the focused on we price framework margin our will cost on gross and manage on product and our sales to year, vitality demonstrating as we that You last relationship. net

and The will described. are as XXXX, will on of to these EPS supplementary key I We outlook use adjusted adjusted with the our pleased performance should EBITDA. you sales our mentioned traditional deck help more and net adjusted metrics detail and other metrics profit for diluted get fiscal that assumptions I've operating

be to provide providing context quarterly some We guidance. want with numbers. qualitative also these will for you I not

subject to XXXX. that been be As during and fiscal we our we expect quarters consistent largely you seasonality, know, historically have will

higher-cost deal in later first to in continuing could are the global of a the year. that to of particularly challenges, compared This little supply year, to margins shortages, inventory. through and we are We lower are in the as around part with the chain the result continuing component work some

strategy capital XXXX allocation Our unchanged. is in

investments share acquisitions, prioritizing cash continue in will capital in maintaining current businesses, generate We dividends our to and effectively, allocate for repurchases. allocating and our capital investing growth for

this. you want Just turn the before for to leave operator with I questions, call the I to

billion $X pleased XXXX. We in very our are with we fiscal increased net profitability. sales. business improvements exceeded our in made the We to performance We've and

questions. for will pass value allocate you us for We and effectively the I your over Thank operator you permanent deliver today. joining to our shareholders. to continue capital to now take

line Thank you. with is your Our comes Wojs first now question Instructions] line Tim, Baird. of open. [Operator from the Tim

Hey, good morning.

me. think I Nice it's guys. job,

Thanks, Tim.

the Maybe vitality had less you bigger that environment? of -- goes just, to in I are inflation. question of, into I if things to types we maybe business I question. going where guess, these guess where different react picture have we change Acuity Does of a service how environment other demand all? market around an change But words, how product Acuity and at on another guess one, in kind you kind environment then an get I inflationary

such. front, room are the on an we be have where normalized foundational and so product a try really of for The performance, progress driven all -- how we've increasing in us the there. they're to levels The think is pushed those vitality come -- we Those on -- going of profits that as to short essential, to times served they've Tim, rest component and remain have made to differentiated continue and think higher and obviously is our value more important environment, I equally I they've ability normalized improvement we've our to us lot We deliver that's a front, more work like we well a I are the good environment. and it. these as get inflationary for service asking to product and vitality of way from products, the lead to service feel Lighting through customers And lot we think and challenges answer foundational as the long-term industry. still and and to which to no. question thanks in a

don't of, Okay, to you going generally know around how percentage new good. Is like there sales replacing? I vitality? put it's the what any versus it's numbers or is maybe, that, to, kind of way product look if frame a on what margin

Yes.

the we emphasize So of in on to our vitality, that and we I vitality, existing mentioned want couple prepared things just that improvements when the which product combination new product a we portfolio. to say remarks, introductions as of mean is product

our would that's touch per generally which both materially of portfolio the to efforts, where doing the year XX% and with been years we're we ago. those So of those combination -- are up what's going which to of four, three, we XX% product five have driving are benefit. And from

Okay, good. channel. agent just on the maybe question bigger And picture then

consolidation the But, seen. by positive towards for last, over in the higher industry a we've do months, we've it's you some that is So, in as the of and at [Technical trend I'd OEM that trend, I see the Difficulty] you look more guess the And just agent that if consolidation? of is the channel, Acuity? I driven changes. probably seen say, six agent some kind guess industry consolidation

Yes.

really of independent network So, feel collection agents. sales about our our we and good

long largest We local as some have -- and need result, of, best really with we're forward, other, in to good wanting process but dependent that, our to a with working need through with good we of our first with are the which player. these them, as the And about. good the those us their agents choice changing agent gravitation of we What improving I to as aligned kind and feel representatives each is strategically and us, of, and the and markets on each say different going they of be our them markets, us. business agents And take we're is in we're a them. in world natural best is we is and

agents other -- The going our independent down frankly, is forward. think the And change so, I we of creates, that's and sales opportunity that and a fair us, agents mentioned, local see for kind amount continuing. there market each market you going some of that on in an on, as of,

good luck good. Nice job and next. on year this on Okay,

Tim. Thanks,

with comes next John Credit Our from question Suisse. Walsh

line now Your open. is

Hi, good morning, everyone.

John. Hey,

can happening, questions on Hey maybe very we lot into interesting dive just of things but guidance. some the

looking the $X.X there if visibility XXXX. into have kind is about and that the $X.X really the at carryover, could of wondering price thinking to fiscal I'm billion, stimulus talk if billion So just been backlog is carryover just through obviously, if you any infrastructure number? from or even JOBS And but business, maybe some then you Acts not IRA? backlog a you're carrying there

those the around anything things, you. just revenue So Thank touching on number? confidence that on that

John. Thanks, Yes.

remarks, be prepared to as we environment. dynamic indicated in the expect XXXX we So, fiscal a

of our else ability predicated on I've that can. told plan And than our better everyone predict should to the things that one is environment the our so team economic be

so, are And our try we we possible organization to have going and respond of lot as that the forward. a what work done doing to is dynamic to see and as make

to you guidance So ISG. we breakdown gave -- gave look we specifically, net kind Karen the sales of the that ABL and as between you

So to than the the said I same now. you and quarter, indicated, they as carry as to things higher continue we right first see last different are on are ABL than continue more side, normal at -- the we backlog

and continue are to mid-teens the I baked ABL. continue that's those grow accelerate that, software see Atrius. at into we for assumptions what's the to the So assumptions as we in controls -- -- and that's take share begin And to there to the we low in

the year. confident we and our where a ability be execute going think have estimate for of don't perfect we net-net, to best our So we is but ball, this in crystal to are we're

then And you, maybe Great. for another Neil. one

development your business very sheet Obviously, your is balance highlighted higher. You strong.

as at XXXX. very I the during you balance XX to are the you but don't fiscal usage expectations would the look over? market next set world, months? bought around right deployment choppy, Obviously, the shares for us what You've now, sheet and is back six know,

Yes.

expand very little let consistent six about to XX aperture next years. months think very, we're and to our the a John, been We've itself. couple in of maintain invest share going use over the me beyond the we're same. dividend, the kind priorities. remains So, presents in our and framework to to going of bit, please, our We're for repurchase going going when That current to opportunity M&A, we're capital invest businesses, purposely

believe that the On I done integrate smarter, based forward valuation all you positioned choppy, -- execute, years, the additional the so around front, we've we perspective. the two businesses mentioned, the better, are and on company. better bit from and to the a we -- year world coming acquisition or back as next of over that look the integrate work a And little market faster is rest little us is to the as manage

more would expect M&A allocation. our years of component we important next So a will couple of the over become capital that

Great. good Well, year a and ‘XX. luck the Thank good on you. end to

Thanks, John.

with Our next question comes from Chris UBS. Snyder

Your open. line is now

Thank you.

the I are year some So If math. I seems back-of-the-envelope mid-point sales. guide, ask mid-point, at and to take next margins down the also the year-on-year it and like about wanted EPS of

I about color cost Thank are there the on Is Is Spaces it's just be price in next helpful. me it you side? more right, maybe guess, but investment what Group? Any would talk correct margin the wrong, So SG&A if the headwinds is thinking the it that on you. if can year?

the and sales after Karen the model growing call. and follow-up these, the -- talked morning. net obviously, you help -- we the guidance. with will we've Resident about Charlotte EPS good Chris, is in build through year-on-year talked Yes, and you

degradation. imply So, that it down, as no doesn't we cascade margin

to part higher now impacts and As going first related year. next some that's some the next for we're year to to higher solid inventory ability container inventory Karen of about where cost availability, feel we one two, load indicated, in continued expect through level the related our cost factories, with pretty but we component historically, which in to inconsistency work right

incremental done And does Thank the we M&A also you. next be buybacks Thank couple of past guess, guide into I then, the as you. Does company thinking the a that. should obviously, or about has year side -- that anything on kind assume of the build Appreciate guide we buybacks of that quarter’s. lot the framework?

$XXX post deck to year the call, Yes, of the in share you Chris. When giving website million. will we'll estimate that repurchases after million you we're next our range to see $XXX for an see the of

for So have M&A. we for assumptions XXXX, anything not in that's our but built in assumed

Thank that. you. Appreciate

Thank you.

Our Oppenheimer. next line the question comes of Christopher Glynn from with

line Your is now open.

Charlotte. Neil, Thanks. Good morning, Karen,

kind mentioned last active of, but largely on a little a IGS Atrius, more think this Distech, Atrius a piloting few So, couple been you I I quarter. functionality with been think defined And has of spent improvements. the years. you by emphasis interesting story it's

there? and scale wondering sort software of transition anticipating what So, to the inflections for you're ability piece the

emphasis the Atrius, question. improving you're impact on Yes. adding and been it, functionality with on really Thanks the We've the to additional largely exactly product on for On focused an accurate. buildings.

we're you'll and why an So to you'll edge-to-cloud doing. those that's talk opportunity. talking but we've about Locator don't that, really Building feel product the are about an with taking Atrius all and ENVYSION we new that worth introduction about work about, we've that we're We and yet talked of it's the with don't talked some improvement And about see a Insights, we that second it, the at see that we work assume in been point inflection the been confident spaces. like

then spaces, everything creates additional options that we're of some the some And building currently for exist and and when talk those to data which generate have towards with So data obviously used happens in we the that's the spaces about in as that computing of the we control functionality to future. Distech, which spaces control we edge, mentioned increase space. be that that powerful those inside can edge

edge-to-cloud. compete excited edge-to-cloud, don't the our turned inflection point we and to to of about yet excited possibility So, are market we're Atrius. But around an developing no, think ability we've I on in effectively about the

quarter, little Great, the more year-over-year sequentially, margins a one the ABL than thanks. earlier the bit pressure other the in in a quarters. on And down was

the quarter mention relationships kind but out supplier You make some of the those call connected? on discrete are and in good in some August, two did

Karen?

that there couple the on we've a is margins in highlighted. Chris, Yes. ABL of going things

first That Definitely, mentioned, from the cost some shortages was factor working we cost that the higher inventory So, one as earlier Neil impact experienced to quarter. customers. had in ability particularly our our of our some freight we've load the level of the costs component in on that to that increased then see And related facilities, earlier it. we the container couple are of through impacted months for year. to first did

So increased to is commissions the the to the mentioned. freight outbound customer I also that in higher addition

that this the at kind So, margins really of impacted ABL quarter.

commission The is the right? stable, rate adjust? did Okay. Or rate

that The business. because higher and commission project work of rate on went -- up some the the rates slightly, project

Great. Thank you, guys.

Thank you. Yes.

next comes O'Dea question from Wells with Our Fargo. Joe

Your line is open. now

good Hi, morning.

P&L? ABL on you what you you impact then question kind of give how was of to of that size the the expand looking from a cost could. of to for flush and quarter, through What when revenue about you needs still wanted Just sourcing if margin the any talk interruptions? kind sense the there? Can out we're some much of And inventory, out can higher headwind margin

at looking impact. a break size we're out was. impact of talked of that so X% to about different much pieces going how ABL, the had and OPTOTRONIC we the Yes, Joe, Yes. the not impact

just a were year, we've of earlier on some talked year, component as rest the seen because the the of shortages. to sudden of margins, of little this the size And idea at at some higher-cost in the the than some the bit well that give can we price what So quarter, question more in for historically priced ABL the the you the through had, then about look quarter of as and working the beginning we increases that that know we've impact. you of inventory

year. So part a the the in probably in balance bit second lighter see of you first than little the the the part would for you'd year, of

So, trying kind looks I Not mid-points, similar of Okay. versus to kind SG&A, be in come contributes? And when sure margins with after really couple that's moving through of segment segment margins or pieces it or and quarters the of, of, be think a of [Technical XXXX whether think it how I we'll sort seeing whether in you'd ask of about guess, segments? ‘XX seen should Difficulty] we've between ISG and to the the But on, but on strong ’XX. what kind me of in then level like is good margin up margins? implying we the that wanted segment to the pretty of kind of about, seen slides out, of ‘XX gross indication last over see we've kind mix in at what what respective not types based to

Yes, I'll qualitative strategic take at that and and answer a it Joe, level.

place product -- service mentioned we So our big and a earlier, efforts as picture have the like industry. with ABL, we better feel vitality in I our level efforts positioned in us

margins and over allow maintain hopefully would increase that time. these them us So to

quarter ISG, at obviously, what's demonstrates that look they there. that really say and a we As -- had good performance possible

is longer that that to continue and growth for that invest period as we'll to growth necessary of expectation time. a Our for for continue

so a in for example, for additional we that manufacturing Distech point So this but capacity controllers. isn't increase their for capacity we're investing can margin

yes, are is we positioning similar answer for short-term ourselves we're to the next year expecting So and over for expand the margins time. those opportunity margins

That's helpful. environment. that vitality. how the curious product sneak more in through And in, goes then If power that flows about I'm one I could with pricing hyperinflationary

there's pricing if you like, for is deflation, you're because we Or So think value are delivering? getting sort of this see that continued you sounds properly opportunity, the in vitality environment? it what compensated

a good And Yes. spent we that. obviously, That's really time question. a lot of debating

industry can obviously, company our the use That's more I anyone price increases more us seven to entire -- and -- [probably] in perspective in (ph) remember. I'll haven't we've -- been that industry as long, our fiscal the but that's made On an year. representative, in last than than

of it's So pricing changed dramatically, the the of, environment. dynamic kind

been ability that little consistent of And as combination that more our moved so, in positions is for new can of and this more input not to costs of though I really channel the in Obviously, more had dynamic linear we've we price. able that is a more observe, than our charge marketplace, the therefore, more to between our introduce year It imply, serve the vitality, been as and that. the realize has bit would product than it. product, would we anticipated. it's What question that we volume

And think ourselves true found everybody. much that we so bit, chasing I we little a pretty got but for -- that's

look be I So, and we forward actually vitality a that's that where normalized product our then environment, will as to much service important. more think more

we choppy take of look this volume distributors, we that have margin more and allowed share as service building we think believe and doing specifiers So or in highest well position the I to will value for what them forward, a quality products them while forward. basis, from XXXX contractors, which us in on highest marketplace bode the can XXXX, a market know consistent a is lighting perspective for it where us and consistent we're I going

All appreciate helpful I details and it.

Thanks, Joe.

Our with Research next from Partners. Sprague question comes Vertical Jeffrey

now Sprague, is now your is line open. open. Your line Jeffrey

thanks. great, Oh,

tie that stuff inventory, higher-cost thought price some your of bit my coming equation unclear Neil, calling. broke really FIFO a I mind. it a to the the answer what cost was we that would with Hey, with of plays morning, who the light business Thanks, was Select -- in But that? you Obviously, just good in wonder like is mix-down on in had. And kind you it were of wonder of address up, worse, got, have I And quarter, all lag. I least if sounds was given are inflationary question the I in quite kind little price just this You through right? to a the everyone. question you second getting expect you've the you're would better pressures. it guess, I clear pleased with if could Contractor seeing kind so It at and how got But, performing. maybe

price mix So you where pleased, offering, forcing pain offer the are to it you in some can see sounds actually is but down into like do products? that market you other people

Jeff. There’s there. of good in couple questions a Yes,

math. lag, it's the on first, So just

for just $X,XXX the in to spikes. context few So costs ago now, $XX,XXX, container what? those were and they're $XX,XXX and months $X,XXX more range

blended we we're are on So to on the work volume, those and all would going picture, through. pleased on about say, of deliver on that big themselves price, based what factors can is I mix. margin the

in with and are where really it that mentioned strategically we the Contractor think good I because these we're we're distributors provide and the does earlier become a feel we've a that we demonstrated very and about at where be And very, can marketplace and both time. going it with does piece where it's portfolio, the value of going deliver obviously levels, same that industry, electrical core with our solid we Select the important, and distribution relationship So perspective we margin competitive from margin foundational forward.

something I've since certainly things inflationary any in would I been in trade-downs anecdotally which as this are relates it generally of -- top so of performance more the but would architectural is is consider than you at kind tell our that company. to environment, I that the happening, been the year time As our the portfolio, always portfolio all think obviously product that the has at stronger we of

we're across healthy the really portfolio. really it's healthy So a --

across feel portfolio what forward. we've going about more which are the we more of, components, to middle mix is good the our margin, volume, the it, -- end kind you delivered, and high the healthy portfolio how as the and significantly value We see the and the at that's

XXXX on diversification color you would pipeline. It kind just provide July a you're meeting, to we I in sounds the if like bigger consider this wonder thinking right? data higher could I would And from this starting portfolio a the but adjacencies, we're to and like and the talking of more bit about maybe of are -- little capital make the you thanks. and nature I than portfolio? on be back actually now, we'll you kind Great, it strategy, of as bolt-ons to could things if was things think you pursue on we're seem of deployment like focused go XX-months of does the strategy? sort just schedule, you're, of sort see like the outright call talking it follow-up Or on adding of, you that? the

definition definition adjacency of far consider of in different adjacency. different than I we person's Yes, want Jeff, of always out to one -- will may ourselves. too get good and person's so front Obviously, questions bolt-ons, be don't and a

at continue close to that look of we or -- be things very are in spot obviously sweet thereto. we'll things, are which doing the the currently So,

And -- climate I adjacencies the process -- on are which megatrends for then the -- that. things good We pipeline currently side megatrends obviously, minimizing to those the and are specifically outright and maximizing a has it go we of performed technology. Distech two call interesting we've consistently like but Spaces was the that OSRAM we need diversification, had OPTOTRONIC everything. to around organization very through which we're front wouldn't of acquisition, and change the Obviously, the positioned impact Atrius We see in impact Group, for our of on in said meaningful those really well earn our side. integration both us our affect

opportunities So, can that there that on. we be focused be long-term are think to growth but definition, a we're going inside realm liberal of that relatively

Great, you. thank

Merkel next line your comes Blair. open. Ryan William from Our now Ryan, question with is

Hey, good on everyone, the a My margin first question question cadence. just was gross clarifying morning.

of like the half help So And components? tell is but which one costs? to important? access lower they and it also the of have and equally due second wrong, then improve better like important margins line to will if it will me those factory components, better I'm do And are I'm you which or gross sight sounds more then productivity wondering, access to sounds

sight, that Yes. in that on all, -- emphasize it, I'll is we things Karen. our of of we've one line of the The supplier invested first significantly relationships. take

the with component relationships of multi-year some long-term establishing side. the are electronic suppliers key We on

So, the consistency. overtime that provide be more to -- -- expect we to

working we're else we half in the around so of the of come is Specifically everything through schedule what components the will -- first when knowing year those exactly can quarter that them. first the fourth half the and

need a pacemaker luminaire can't uncertain so adjust. a we short you build if build a driver, items, you without can't obviously, end So, then driver and up without to with we chips, certain

and expect some or that that for year. it. So, we later planners smooth benefits we demand middle that of we're so towards better next on be and majority -- working the on That's should the part that supply the side of can to the should side

we work through death, will as beat year. will the won't but Secondarily, this of in kind one to first work working through that container this -- half the through of prices -- that we're inventory

Yes.

get you We've deflation it's because had rates come keep are seen prices keep down, coming the is to question And the there? investors. material will obviously just It follow-up What you I a the view a your freight question, a I is so the question extra to helpful. or like extra profits. to that's quite Okay, going have lighting raw then profits? have expect from bit, industry on down prices reduce the sounds

those Well, down I high, even prices were they're they would that they're note -- off larger than have though come than higher their before.

our to of that as relative So a our different maybe basis, said before, they than we I've general is our they're channels. the have before of place product and had collection earn the table -- inflationary on combination -- service an with vitality believe, a the are still allows market is us We at market. levels still

will then our able the share. process therefore customers, cost we like that so, vitality product do to than value business can ourselves any be and more the drive more And that more And to we and delivering ability deliver, so be to success deliver to so service value. with make be longer-term key customers the feel element the value business our we for can in more lower another the of to we consistently of to of and can continue to margin

Got it. Great.

the could the assuming you for a you for assumptions I even if other? than but maybe and Okay. with guidance you know what lighting a contributing help more industry Last then non-res volume one for maybe me, you appreciate and ball. But are crystal number, I give it's have and sales don't is growth to for just the don't back price, or want one to

Yes.

that to So to a want I that level of don't don't didn't we want we -- precision imply imply.

to continue -- taking on is ABL ability the So fair taken we through to so that unit we -- continue amount right is, two and it. dependent has volume number now indicated we our expect big have too price the Karen to do we largely are one. share, have picture, Number manufacture working a of volume share, side, we as on

ABL sales assumptions. these we I resident that in So those that's and two are consistent. outperform highly the expectations things are but will But our would -- market

Very good. Thank you.

comes Our question with Cowen. Jeff next from Osborne

now Your line is open.

you, Thank morning. good

walk on on wondering power chip of could in us the ones quarter? the the Is early Neil, the nature I you the quick the two were supplies? challenges something challenges? Just my was or side. you on elaborate side if just analog chain that Can part what through supply of

the was Yes, pacemaker that we specific -- related manufacture I it's said, as drivers use our to to it luminaires. items in then

they I earlier come line as of we June answer, were just do July. time. have to -- those they didn't components indicated the the and when So sight It's over supposed in to in

hold-up. the was that So

follow-up have luminaires would trying OSRAM a driver it? acuity to of OSRAM, in -- broadly what speaking you're the a eldoLED then. on percentage that your internal that perspective. an get What quick Maybe just post manufacturing Just or

quite not half. Yes. No it's yet

both -- large provider external a a a consumer of still and we're drivers So obviously now. external of drivers large OEM

I on pipeline Got business, moving your If being curious what's expectation are had project you just still it. I mentioned for released, is And what projects then XXXX? quickly just heightened the are business, the those hanging project commissions, out of on the and one kind last there. in the was forward the is

answer the currently is we are So, more I different. as are -- -- they unfortunately, things said, guess simplest same I than the the

higher still a we lot So and doing maintain our -- are successful project that currently work bidding than is There they backlog. agents the have normal maintain of still in businesses. are -- that is work

But, don't six, said don't ball for months, whatever -- crystal of XX, they earlier than I we more things the are right now, have we six -- are a So, months different. same nine, as as three, XX XX, call, out. the in

all you. I had. Got it. That's Thank

Thanks.

with Brian from comes Sachs. question next Our Goldman Lee

is now Your open. line

to lot ’XX? you've to your try definitely on in comments. set like questions. price more those and the squeezing as get here fluid level in past us like I'll have pricing for Would It you in on quickly. the what you tailwinds than this is two Or there’s done kind year-on-year? of XXXX. maybe strategy characterize Thanks what sounds similar everyone. into maybe I It seems based saw just a the in Hey,

your So any I impact price think what embedded wondering views if just for way being to in ‘XX? about is there's

is bit Yes, Brian, seven has over With year, a dynamic been right. the it more you're the it of course historically. increases price than

be but the mentioned, to bit the regain with heavier footing do pricing volume price, we well, of expect little we an see supply, we to impact as component but will expect So there as a Neil also mix as have year-over-year.

supply in Any is fair chain through a utilization. second And then the different but lower Okay, is guidance, half, you enough. half been the first number in around around us there then margin in the of of big gross know sort on delta we that of how of questions the way margin the and this, picking I this margin walked and past, kind pieces up of expected you this but half range your the can is you've as the first kind quarters? the quantify move I be cadence of through half, is second XX% next outlined to the context target assume in still dynamic? several

is so, -- from go perspective kind annual what provide to a Big that line we're -- big we're will we about picture, strategically of ultimate productivity do perspective. think then what where a trying a outlook mean an going to both Brian, top and Yes. and

kind here create were is halls. value, and and you'd here, cash don't as into fast to you balance As I walk is in if the the on turn so what everyone we said, net focused see focused our on that's sheet grow of how grow sales, organization which

of highlight we go said year kind wanted our maintain to through margins. long-term, we additional color So to increase that. think But to working I and as within -- that we're is through provide as the what the just goal to we

additional model transparency. in we we help to also there'll that be will you sure, want on which help the Charlotte -- why I'm that's can with and well. the so provide construct information the as And Karen and presentation,

Okay. I appreciate offline, take it. I'll thanks. it

to questions for further time. closing no showing I'm back I'd at call queue this remarks. to like turn any Ashe Neil in the And you. Thank

Thank thank all you and for Liz, this us morning. you, joining

and the and with We and fourth prospects in strong excited far our XXXX, about results for quarter come future. our the how throughout we're we've are pleased

variety and and of change we well environment, our and ability questions we confident is the While We're XXXX product to be a supports in expect positioned committed construct our as we've of the a dynamic invest vitality execute. and culture to markets. expectation through said, really to we're service, in We're that developed about most in improving. to end a continuing importantly

you we thank talking and for in soon. So company, look your our you interest real forward to to again

concludes you conference call. for Thank participating. This today's

disconnect. now may You