Acuity Brands (AYI) 3 Apr 242024 Q2 Earnings call transcript

Good morning, and welcome to the Acuity Brands Fiscal 2024 Second Quarter Earnings Call. [Operator Instructions] 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. Charlotte, please go ahead.

Good morning, and welcome to the Acuity Brands Fiscal 2024 Second Quarter Earnings Call.

Financial me Chief is Holcom, Executive Vice and with Chairman, Ashe, our call President and President Officer; Chief the this Neil morning our Senior On Officer. and Karen

on Today's call fiscal Xnd end for performance. quarter of strategic opportunity and will an at on XXXX be our There Q&A will our progress this updates include the call.

of available non-GAAP our Reconciliations statements the forward-looking our at website statements. safe these forward-looking Thank to As Act quarter covered as certain be are harbor Securities release Investor of available you a their accompanying We our www.investors.acuitybrands.com. interest in detailed X for Private financial of are corresponding may earnings provisions reminder, Litigation GAAP Reform on both measures comments Acuity on metrics today some of the be of with presentation. by XXXX, presentation, brands. and Relations second intend the XXXX supplemental your in which of Slide

the Neil now will Ashe. over turn I call to

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

the profit the adjusted performance million on have result X fiscal $X This strong to we business to sales the cumulative another value. earnings solid strong the adjusted $XX share. by our Both generated Lighting We to increased margin operating increased Intelligence last adjusted flow, cash adjusted profit quarter operating that effectively margin per financial of operating was performance. XXXX profit, second execution. XXX adjusted increased diluted operating our and over Spaces we the We of allocated profit Our capital years. ABL, In and less and free basis made quarter and delivered our drive businesses is we changes XX.X%. million points

both to productivity. business the differentiate elevate product vitality, to products strategy operate the by levels, increase more scalable driving and made and our business improve we have use predictable, and technology our how executing service and on by repeatable We

we our to our our strategy. quarter, elevating focusing needs portfolios. continue second on through make on service differentiated By During the are of the our we progress customers,

the our is stock Contractor product designed distributors. applications. Select products able retailers most resold in while levels Through to are that portfolio and their same These a customers prices, been time, used that in popular projects. everyday are high allow about products to want for electrical vitality, we our comprised XXX that products select and less that competitive at lighting is products and distributor are allowing offers needed customers inventory. Design at configurable quality at of to common be products our carry Select are partners have of easily create of to the

reception less We the are first we where recent far The positive. a families controls. than indoor A are and to product so into configurations and of a available. the been is Design customer expand fixtures lighting has in and project continuing example, California launching great fixtures, wave outdoor year Select, a needed

needed community. of meet The to the it, portfolio Using accounts product it options of easy were combination Select products specialty and the applications, specific Design such These that install. remainder solutions made of or as of is needs satisfy our Made-to-Order. Lyon the for are national all customer wants when Design ensure the the it to unique there and portfolio, for able from the we project, contractor the was product then was

our are commercial At air with controls line cultivation growing existing acquired advantage that wireless efforts solutions. take OPTOTRONIC of driver we vertical. quarter, to the order greenhouses, and future evidenced portfolio luminaires, our to in product used and Arize luminaires, in growth. this is LED one, our This the make compatible horticulture Verjure in greater vertical We OEM our collection Arize a market. of a realized the is to horticulture in grade professional in by expand in-line farming. investment and are expanded family approach of second as investments being indoor electronic products In more time, attractive channel for in of to This in component we technology ABL right to added value our accelerates product the small to same We our of the take business. the XXXX our supply control control OPTOTRONIC and order chain. in our to investment continue

the ourselves offers one our the design product vitality us core to to for Today, as top flexibility manufacture process offers control development we not but lighting products. financial benefit us industry are only our engineering a drivers we that greater also to driver the of the and majority efforts. our own suppliers of and This during is

This new that family a shallow of downlights use recess in be less lighting drives efficiency renovation. The high is for of and quarter, both settings IVO from Compact compact deliver the Gotham plastic fixtures. IVO value we the Design canned and confined spaces in replace that recessed the of vendor real customers, options platform design for new while downlights us. can introduced in which steel, our nonresidential and aluminum used less construction margin traditional have use most for less

brands quarter, recognized this Finally, of by several the industry. our were

were Use brands Our Atemi Aculux, Luminis the architecture Eureka, X Hydrel, design. from of and good awarded Chicago awards and Peerless design

Magazine Design our functionality for awarded outstanding form, the innovation. XXXX creativity LIT of Award product XX, exemplifying in selected And and categories by sustainability. were impressive product awards luminaires multiple Architectural and across terms XX innovation were Products for We by innovation of

moving Spaces to Intelligence our Now Group.

and strategy devices on cloud applications. Distech cloud. greener mission in the the will the be best connecting in is best our to to edge the edge Our Spaces control our has smarter, the business Atrius market, while Intelligence of spaces make through safer

market At Distech, focused we are our ways. addressable expanding on in X

what first space. built and we The second increasing can in geographic control is is the a

Energy quarter As we part systems additional France. our and and Atrius we in in expansion, integrator geographic Sustainability of Australia, added capacity this released Atrius

in sell our Distech the expansion organic of partner the suite to of key specific our best We to are business. and Atrius SIs independent geographies Spaces full product portfolios. Our SIs with

that an reporting are of categorizes carbon allowing by Our usage Atrius and and captures, to for reports while energy making carbon reduction obligations. tool facilities and sustainability our usage Energy for prepare customers. benchmark applications a upcoming the on Atrius teams Atrius difference facilitates automation their emissions, is

Atrius awards influence solutions energy in technology as and estate technology finalist sustainability selected Commercial Our vendors innovative Atrius Atrius, applications recognition. And Executive magazine that on are named annual are gaining CREtech real our buildings. for a in its tech that commercial an its advancing Property winner awards.

for year. Now the remainder turning the of the outlook to

We are well. performing

rates our strong to we returning build and costs to and our our in cash Controls the we and our and what business customers, business our to Lighting flow. our last order flow. cash environment, satisfying Spaces our growth. expanding Lighting lead and focused are excess strategy in in sales margins are can strong while business both execution, we business, business, the strong and leveraging growth to We drives geographically generating a of In year-over-year. from year, times business, In by are absent control would impact adding sales grow Spaces Lighting we space. continue backlog back fixed growing In we generating be typical on and are free The experiencing Lighting a normalized will

update what Karen? second Karen our that on quarter our for outlook you second will outline an means performance. giving half after

to morning Neil, on and everyone you, good the Thank call.

execute increased second generating our well. we we operating operating Neil and per flow. profit continue In As said, improved fiscal while profit, increased diluted cash adjusted adjusted our strong to earnings quarter, adjusted our margin our share

progress while our effectively We on continue making allocate capital to priorities. strategic

was For million offset total ABL net was the continued than $XX we which ISG second partially the or in million, of of X% in lower AYI, by the prior growth as net result year the of lower business. business the generated XX% $XXX quarter. a in in our This sales sales quarter

We continue margin deliver improvement. to year-over-year

margins driven $X profit million year. management adjusted quarter, we significant largely increase through improvement execute the sales, to lower improvements. prior of was year-over-year basis profit on the gross price XXX our and our operating as margin the drive vitality, product points adjusted expanded we the and from continue During an This net operating of XX.X%, productivity cost by in margin by approximately increased strategy to our and increase and profit

of share of per net In compared with of channels. to sales During all million quarter. prior A lower income driven increased ABL, the our shares due year, repurchases. across the in diluted around net result of earnings lesser quarter, over $XXX $X.XX year, higher by the primarily declines XX% a were outstanding $X.XX the X% or share decrease prior our and extent, adjusted to a

million on of from ABL's delivered have profit prior order to XXX last the As net ABL in adjusted while experienced operating sales Neil over excess sales absent a profit improvement mentioned rate basis growth. meaning margin to the grow the increased XX.X%, X% year. $XXX year-over-year, our operating adjusted year ABL would backlog, previously, sales we lower continues point

for ISG's at basis QX million, the with a million grow performed continued adjusted quarter to term as expected. and $XX Distech net sales was XX%, ISG's prior $XX increase profit we an operating of point as year. the were second the profit adjusted operating margin XX% improvement XXX over

flow We from performance. from of first the down million to year. in year, half cash cash of same the year-to-date turning our operating $XXX period generated activities last Now flow slightly the

dividend acquired shares. of in capital allocate Arize lighting, $XX over XXX,XXX consistent assets to capital increased million our and repurchase our horticulture Year-to-date, $XX per approximately share XX% allocated million with continue priorities. we We we We invested expenditures. the to

to to authorized million of the price adjusted up the flow. average earnings of half outstanding. common about delivered We X.X stock, We of repurchased fourth authorization outstanding million Board funded shares. a beginning strong first shares share, diluted $XXX we approximately per January, an approximately fiscal This bringing share. the improved amounts XXXX, was additional of the increased Directors margins by of Since the X million and had In organic of have at of which repurchase X cash our shares performance. to quarter shares XX% per then about

allocate cash We from operations strong effectively. continued and generated to flow capital

practice was our the raising year expectations XXXX $XX.XX $XX.XX. our our EPS. our performance diluted now the adjusted are not in full very and strong range We earnings expect be and half outlook address per during to for between we year, our to is it share While first

I us you you to pass joining questions. will your take operator now Thank to for over today. the

with line Wells first the Our [Operator from O'Dea Joe Instructions] comes Fargo. of question

in in about seeing little is, first pipeline X at you that the infrastructure can kind the you I'll changes ask evidence this wins bit. of the are a really, So infrastructure question, X, last to about wanted of that And talk year but commissions and better some You I translating SG&A. point? the group are angle to implemented

As well leverage you of or either sales, opportunities SG&A is down? percent as just a volume as where there, when you cost that see see

Okay. thank Great. Joe, you.

feeling we're the larger pipe. down our about infrastructure, on the good So positioning all, are first coming of projects that for

think than everyone coming recognizing X. orders that but will today, them spread longer-term to shipments basis a like be year next sales but anyone the I would here are out is and strong, We'd are they down over on or be like.

a there get we'll impact confident share. we're a share, continued to our least So we're from will infrastructure get working and be disproportionate fair and at

So forward. we feel that's opportunity us like for going good a

execution We an from feel, question, your also to we ourselves well positioned perspective.

that sales around first, our approach network -- network for And those. between independent our those the are necessary projects. So and combination we to direct then win sales interrelationship the as products and

about good feel we So those.

and different As than where excess we from last obviously, our -- SG&A in in reason we're backlog position a this year appears normally is is it performance to are specific for it year. that would the sales spending, -- the relates

demonstrated confident #X, the gross combination of the margin to business do lighting we're our SG&A going costs level, when we well margin the to continue the that we've And at to that margins as business. in we'll increased performance forward that, will return that, So expand ability leverage #X, as growth.

sales, expand to lower obviously. achievement insignificant not it's So on margins

so looking growth. to that -- being to we're business forward And normalized returning

deployment. about And I of appreciate revisions thinking cash sort to it. touch The point million. how then any is balance to $XXX wanted activity, repurchase And cash this just on also you're approaching and with the of the strength what as out more interpret that and cash perhaps we guidance if pipeline balance, just framework seeing kind that within of opportunities within you're higher the well M&A as there? should at

Overall, of cash $XXX we've we with that. Yes, flow cash this million period, for Joe, quarter or year-to-date pleased our really performance this free generated are flow. thanks

-- despite lot really performance, is the net sales. So a which contributing driven by It's cash higher our flow versus lower strong to margin income performance. the

pleased overall, So really with that.

which capital at first allocation When we've we to really in look priorities, business done. clear that in for we've M&A, over to been our invest it's growth, invest second the time

but small horticulture KEX years, the the Arize now assets. relatively few with we've and some Over acquisitions with past -- OPTOTRONIC small made with but strategic Therm

dividend noticed did progress this the increase pleased there. made quarter. So really XX% with our we Maybe we've you by

demonstrated we And So the increase. and the price finally, we excited when see a buy price to that We've when less is share more. repurchases. then buy share share low, is high, lot

cumulative period, year-to-date of So XX% shares it's share. a about $XXX been And our at we've repurchased quarter, this this outstanding.

priorities. capital So feel really we where are good allocation from about our

Karen, build a second. just I'll on that for

about through feel capital to our So really value the we -- good allocation. ability generate

So first, group. on focus M&A our the expanding Intelligence be pipeline, -- to the continues Spaces we on

medium a have large-sized and We small, pipeline good of acquisitions. both

we've well we've that with Karen really As patient. done Made-to-Order, acquisitions mentioned, we're the and

going until the to an the to So we the that valuation. is at obligation have feel move impact we opportunity don't right find right right

We continue dividend. we that the achieve of at dividend the company very -- X/X We increased we a to because perceive. attractive higher pay can. can strategic that to finally, on afford we mentioned, And we've Karen rate prices. our demonstrated Second, the as opportunities almost and repurchase did can we the at

As price less, is Karen price we'll lower, buy buy the is that we'll stock the more mentioned, when and stock higher. when

we together, put progress strategic a capital and that So as we allocation feel all far. lever for so generate to our when it you about us on really back good view value,

the Ryan William Merkel Our next from of comes Blair. line question with

expect bit for in does for and return to half. you first grow second I little about Can ask a wanted year? the talk business that orders the the mentioned ETS Lighting to the more? it on full just guide. new What are you Neil, growing assume you sales to

define it's I first year. It's the guidance our to we're really then our year. Sure. with not beginning and pleased year in address against of -- it. all, so to the the performance at beginning know, practice to far outlook It's than other as so of this preference our you -- execute of an the

was margin Our first largely driven strong, quarter the really by that performance, obviously performance.

on remainder As -- we we of the going given for conservatively, the we world. in look all obviously, the year, of forward uncertainties planned the

expect period. extend as we So The to as plan, our we be in we're of business line over than the were return perform just the perform of to and we a year, appropriately going will we back Lighting the performance more adjusting for that forward, growth rest would conservative that our but year. half as the I normalized

beyond. this of rest the So and year, next year,

you of as So to we we're well. will period when in about look performance the for to stack feel a are But on how feel going business, over year. a really the last really about It inflated minute do lighting to take that where good we or we us time at that. good of the from continue longer work multiyear a through kind sales

not change did revenue guidance. we So the

performance we're confident So profitability we feel pleased from with and we're that perspective. within range, our really a

wanted I right. really Got to ISG, then ask And growth. nice it. All on

are there in a be Just controls? And new? are any interest that, that lot may seeing drivers level, more you high of

Yes.

as use opportunity explain going to of for allow thanks question, to I'm that Ryan. an you'll if it X and kind things, me, So

Lighting that is Controls we a very First business the have strong business. in

Lighting of for Brands the largest, Acuity for not specifically. Distech Acuity is those control one if OEM Controls, the So largest Lighting player provider And Lighting Brands to controls. is

at disproportionate expanding in growth. We're on sensors it's Distech as there say perceived there highest reasons. our One performance the our really the demand we're I about to it to in are be relates good and our X fair the now of strategy Specifically, Distech for quality market ISG, is, we controls to feel marketplace. for addressable think seeing

other owners more flexibility attractive managers solutions. and it very facilities because them to gives building many than they're So

they're SI because have to -- because open have distribution, have protocol, investment they confident be way. they open an that, that and attractive in opportunity forward we will the them So carry

the which stores, needs. our within We high open ecosystem cetera, also fit up example convenience work broader that like Distech products refrigeration Distech ability feel control, we effectively retail, about that into additional good so Therm things a KEX and add where portfolio, to acquired verticals more have can we is really the great et

about that good feel going strategy we So forward.

taking #X, a the when we and expand build finally, those is we of in in us the which in things difference been has make opportunity Atrius to present Distech the a data cloud data that in So in the layer the that have i competes building, it allows have competes take controls and applications and it the expand it controls. And cloud, to the to spaces. each the generate be edge can been which all to now sensors which in, those manner of that the it you number built, and of markets market share then which connect

business So we we're we're about really the feel technology building We think that really business. a good building valuable there.

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

Design into management product wanted of backbone the consider you implications your some for I to that dive productivity and of internally, Select. the manner Contractor momentum? or Select of would categorization That

it, it's a big think part of I Chris.

just and Select. another -- to minute on Contractor spend So

to it for with So for our Select largely stocked distributors. I service distribution vitality at levels, retail strategy and resold. built with make product brand of electrical it's appropriate to prices Contractor And be is with mentioned, choice and high the as high

So SKUs. very a we constrained of -- resold. to it's be stocked number designed And and

price, of they're their in a to higher we've customers investment allows the a on the of able very that inventory for with returns what execution them us them is noting needs And The us what significantly And consistent worth that satisfy business. the easy distribution do and to choose. hand there's it's at retail to to to drive -- appropriate foundation them, too, provided that allowed a done that's has created in relationship is a build portfolio it have on and less for community. their and lot with an because

the making margins, at money as significantly So result. a same more they're

So yes, that important portfolio. part it's of been product really a

margin that of raised The much we more the that margin portfolio second thing we've portfolio, -- the consistent is we've raised me, are levels with to now. of excuse where

started. margin of Design driven that's we're getting Select, So performance. With some really just our

a Select to is can that products designed be to that the the such and contract opportunity they So from Contractor or is chosen resold, choose has where designed options -- options -- the can you so be configure need. Select to Design that projects specifier

days of at in mentioned early the the we As script, this. we're

multiyear process, both So a the our changing though think of portfolio majority this be it our of how portfolio. business we about and execution think will about but specifiers how is remains that Made-to-Order. The

And so Made-to-Order specifiers satisfy to large they order can can make -- pieces need national -- a its made a Made-to-Order projects, that of we can are the that so reason, accounts, that they choices lot of so different there that for the we can satisfy puzzle.

of -- portfolio we Joe changes those some made relight of good We won We specific That's asked Philadelphia. project. can infrastructure roll We city our of needs, to to their earlier. and of a some about asked satisfy the example out. a the made-to-order product

So everything -- we're of is in margin very higher operating profile user doing better set job a then end satisfying a at marketplace. when and those much you the specific altogether, take needs it's it's and

of the you the ability consistent question, elaborated want to overall to lot you've what's generating to to Do market? of select you in moving within talked you that widening terms on. extension you of the just The about see you're aperture considering attractive lighting productivity that all projects and be on the ahead choose a select

feel we we're competitively. good about Well, positioned very how

-- like from select. indicated, pay competitors close obviously, perspective to projects our think this we you want -- windshield to we the which about we to So a and attention generally we as

Select So on well project been we're doing the competitive side. We're there. really side. competitive obviously the Contractor on We've

where and handful their profile, than given So of because at especially like for competitors already profiles passed we we're the don't those happy margin lower margin lower are a that our we've execute ours. on are profile, on there projects examples and a margin to

than we else means projects, someone So and lower projects, we a selected when at have and margin lower than them do not we would accept. that executing margin select at they're those has a those

forward, that new build when well So on see going as we as we we opportunity to and both add then still we already we look verticals. have add the to as grow, that the on business

So horticulture a is example. great

think that of there know, was rush -- or and As that to multiple that it pursue vertical. there that for investment then an try level time. significant as at people invest was the you companies amount asking was market attractive And vertical vertical. identified invested the vertical. worth did -- years ago, that X X a to didn't We money, too in a that would We of was just

product the add add we scratch, And organically. with what started portfolio We to the of built gives was with level measured term, So ground portfolio scratch, organically started designed be a attractive from from of to from long that, we over up. Arize did opportunity vertical distribution and the investment. that to now instead and to built we've a which to that, in us grow the a will greenlight a think we

you well we when where in to innovation we're are do the product of we as management that all service the margin. price and demonstrating put choosing compete through through to ability as So that our and marketplace, want together,

Vertical Research. from the of Sprague with Our Jeffrey question line next comes

of expansion a from see point bandwidth the address to choosing geographic to that? the kind activity of you're of just more of you're this is kind something little a Maybe which this how company forward? higher And target execute bit level we on geographies the could -- where

Yes. Thanks, Jeff.

geographic Spaces on Group. the expansion our So is focused Intelligence

the the it's standards Distech global global. to that edge opportunity, So and cloud worth mostly are portfolio for application the pointing Atrius for product are the out

portfolios new to which not example. Germany, for create So product with like exceptions, small the to without us having available are expand that us some gives to opportunity

roll out. we there strength result, that the a As on are to building

home we America, obviously, So strength North our in that's have market.

we half we think can We the where probably are be penetrated in U.S.

for growth in markets And there. invest We're so the successful obviously, France. bigger will also

markets. market share that. into markets in and expanding quarter, then -- last through high of really we're I And on Europe, look identified more and U.K. France. We're we that have focused the we think other like well now so in the

of added So over for for accelerate to kind capacity. Australia, to out ISG geographically. figure to the X course ways expansion of next SI we that the XX We'll months looking be how

that through of that that safer and it smarter, for that edge combination and greener something cloud cloud, aspiration global and that sensors a Our or to edge is is with and unit those spaces generate. data do controls business a unit sensors devices the applications makes the controls

can So in on us expect that America yes, be North point. expanding to focused you business and globally. basically And we're this at France

a opportunity there. there's So big

take then And for Great. can too, Karen. perhaps course. you Neil, it of

far gotten the market, on? I you're shipping, the of going we've Just not that's any and tone specifically, us about seeing the update a big of changes global topic discussion maybe price chaos there were of but just to quarter. doing price. kind kind costs this there? of a bit in little without talk good and Q&A you're real give with everything the last what of to going any transportation the And Are you significant know

Chaos is good Why pricing? address you word, don't Karen. a

the I'll pricing. some of address

our we with be get talked performance. is to call products for value resulting the marketplace. price pleased that gross to they really the So on the and deserve able that in already being we've strategic about Jeff, from And the management of overall, profit really what continue is our

some seen the steel this in at our benefits time, same electronics. with and on we input quarter While working suppliers. We've are costs

freight to helping that's continuing us. benefit year-over-year. then So is And

and Select, our focus that about Made-to-Order portfolio Design we segmentation feel on we that products on helps overall, in So the marketplace. with Select get us the the the strategically price and value talked they deserve Contractor

Baird. comes Schultz line question Bobby next of Our the with from

should posted looking think, margins. the How year XX% into where margins been about of second I've we gross think the and X I you've into quarters XXXX? now those plus sustainability half then

Thanks, Bobby. Yes.

changing that about our to about which Karen's margin, and as to cost, is And on I'll price talking managing each when we for that value that those ship guidance, performance. the our the about products Jeff's efforts are the adjustment things. on in is build content pricing And mentioned EPS our are we're providing X are realizing -- and our input how such in feel vitality is products. really One answer that So I of our products amount we our question doing we product our we of were we're good marketplace. the

on more pallet. can be So products shipped same the

a we delivers third, the in the is America. product also my North really the there's mentioned a size IVO of as a is less obviously opening half which that's content. It what it's comments, around the replacing, less roughly a innovative means in means because marketplace So #X, that or significant of at lot site. I ship fit we pallet those lot value innovation more and the then can on it job it And how the significant patented to constructed installers because -- it

use put different in to to lighting. ability the basically one So housing

of the And combination a are of levels to now. delivers real entire the value to product example things has those gotten chain. right all margin a that's value the great that where we So us

will the And performance. down quarter, improvement feel that but our quarter good margin about or about up feel or good of conditions. yes, -- demonstrated has ability we significant little to really kinds dexterity in kind structural our of a It So go performance. all on our market deliver little a and from margin different we team of to the up

on a not we're here, like we're at feel pleased performance. destination, with we journey our and so we're And a

you in today? that it. market there of ask And exposure I are Got right seeing to data what your kind is on what then wanted centers, now? And

So exposures we to X centers. have data

a good on news So front, data centers lighting. have

the don't. but So dark, operate could one they that they might in think

very a business. attractive and Lighting continues for the that's opportunity So be to

are we data scalers, of into Controls data of so -- There their X choice. the in side, spec controls some kinds is largest of On centers. are Distech as the different control flat

digital the but build so that us entire market not is scalers. on global -- controls addressable is those the for on that as focus for means us, that we and we So growing doesn't market is addressable

we where us front another win the we on and a course quarter control that multiyear of -- be are the our a data converted opportunity so center for that We forward. to operator will over where had large Asian way of going

to segment we're well So the opportunity as Lighting data as both in our center segments, exposed both the of Spaces the segment.

question next UBS. with of from Snyder Chris Our comes line the

to half the to maybe it be just back for wanted XX.X%. that to gross QX, in seems kind we similar, calls It margin than lower fiscal I slightly saw about guidance. of ask that what me

volume the guess, back here from it that some takes And because and second the then, I does quarter So interpretation? puts to the is what half? that are on leverage is seem there some right of like

Yes. you I'll of how your Thanks, and of about model, talk thinking call earlier. help my building Chris. Karen the half build about can year comments on on after back some we're the qualitatively but

lighting strong. Our is business

competing effectively the marketplace. in are We

whether or are more or valuable that the freight profitable demonstrating the can valuing input are environment, for any what demonstrating to changing a and the perspective. costs, demonstrated electronics market costs we're a -- the in that what rapidly that from we products we deliver what marketplace selling of marketplace portfolio We or is it's and things. We're a managing material steel innovate And product are that is to more our us. we've innovative on product different

of feel we -- performance margin if continued really continued the excuse So performance, me. good our about

portfolio. of half we're a after So business the year Intelligence and back to after as year Spaces the business on much more mission Lighting side the to and the more capital the importantly make the to that on a use to you repeatable, and and side after continue predictable, that, look that expand then year the growth to on year to and this scalable a

and -- after So even we feel the after remainder good and the we year we for feel feel guidance about year the better of the that. about the the about fine year

And that. less just done then Select kind thoughts market standpoint following and margin the raising is any And Just floor? Contractor it competition up years you is you shying the gross being of have most the away competitive more on that. aspects kind what selective of market? of from with is Do the guys price is on the appreciate feel X ago? I lighting like it Or that was from maybe points. industry Acuity a than competitive

Yes.

which the so I that, address how largest would So kind the of industry. years I last X address obviously, will here we've in we're X wasn't over say performed I I can't that, ago, but the is, years,

margins highest the industry. the have We in

the have industry. highest product We the vitality in

Select. on Contractor We the floor with have raised margins

We portfolio. Select and are innovating new Design our with

our the So more we very is competitor who matter ago. small we're just North a That competitor, whether than much whether competitor, a are, you're years makes a stronger objectively else, strong. to formidable somewhere you're a significantly us performance competitor housed America large or in X you're no were marketplace, you

in have more to in performance. us destiny. control And we're puts position our a so demonstrating over our significantly And control that that

And is so -- and on. we think good to build a this point

side. will we on lighting continue advantage So the our press to

the impact answer your cumulative strategy that the choppy, really the that we of we more that question So we a result execution was by controlling as performance something and our are is saying which the happening I said control in and strategy and what market of would that. we marketplace of the when control, of what's can

And could the you interested, any negative, you pressure of side. on Neil, are, -- I but that I'd wouldn't on indicators say is in that the a thoughts the already maybe I it, but that A lot in just if or construction cycle, more one I like it's cycle? with the horizon leading of I lot felt nonresidential appreciate on are pretty call in. terribly squeeze appreciate negative feel a Activity destock? hard healthy. cycle Just be it. Do where still you And one know we think to last that. I this

Chris. sure, Yes,

think been we et so cetera, has because last over many been curveballs of X one cycle question industry, mean a I -- and the years. really the the by I course the thrown collectively that, economy, hard has

feel I in lived we've years year So like or kind multiple of a single period. single a

So it's cycle. normal a as call it hard to historical

happened we year, So year. we our bit and the growth on activity satisfy that impact bullwhip and shutdown. you waiting see had executed, projects this obviously, sales hangover led which we was of be the last the which increased had backlogs, accelerated Then of which to to little a to

on at market basis, We've though. been multiyear looking the a

of It normally amount the there's executed executed So of and it have doesn't cycle. multiyear normalize. to been just look that kind this fair bust like boom was maybe when year. you like any looks year got market start really would on look does business a a there It at basis, that first last

would this we amount And do. look a analysis are it. we're And I've forward, I regression before, call the so as mentioned and fair do of we think to outperforming analysis, and we good expect -- on what the of data at we we're pretty

contributor we a our -- to where are is are. we performance So

-- we've cycle we think we feel super-hot normalcy. don't As We about we strive forward, a cool execute a can really need or environment we and relatively the demonstrated like for in going environment.

parts out that and where with feel from of where people's data the our that between perspective. We've Spaces that the lighting say we other moves There a kind relationship than on we we about other has indicates performance. other earlier of in reasons for So ABL rate to are are of Group that order have and I been And Distech. thousand happened, industry. good would cycle seen the lighting are an front? the borne kind between that industries but

we're Distech, the expectations in are. market's also So outperforming what

So there we're taking to means SIs share which where we're outperforming be, our also. expect

think now had environment. So were what that forward, more studies is X a normal then a normalized not back. I it look cycles that steps strive cycle look I'm past. Taking we doesn't we the don't in is calling for cycle because this we've or confident a sleep as like

our a is Our and Lighting grows on there. group pretty Spaces taking Controls building special consistently and share, over something annual and business growth time compounded rate we're Lighting

we've really about want really from feel a grow in about perspective lot good we Controls control Spaces platform. good we and the to kind play We our feel execute Lighting can We control. say, feel are we we're what we like Fed we cycle to to of where than don't environment. other a any governor net-net, to figure and going I try So out can capital where from are Lighting and got from where business, are we business. of and the

from Our TD next Osborne the with Jeff line comes question Cowen. of

the follow-up prior just a maybe Neil, on question.

of just more the the system And more last shift the then the CRM profitable In I a profitability projects terms in curious projects. I were through, touched -- mix than that think potential what you that XXXX. larger considerably projects projects larger historically, projects call, I'm there's greatly as the earnings on showing disproportionate the you in Contractor visible commoditized in of. for rebound and the of rebound improved you've think Would larger expect flows a profitability? some Select of larger those

Yes, thanks.

so the focus projects is large of on kind if said, I As we -- bucket. big

about we'll the other. let's kind So talk of talk kind about hand the infrastructure on one of then projects and large on traditional

the still what infrastructure a And the share. significant that's others piece fair there. share calling we'll through to on fairly we're disproportionate and a And going side, projects. there's business, of run mix capital obviously attractive a from perspective, an price we of hopefully, confident get our amount of mega So is are that those

basically citizens funding So we're those. delivering value to the are who

larger that of sector within of So projects, that we of can we of At portfolio good also. private margin there operate kind expect. the other about that. Then a time, number the are kind we impacts same feel in

centers, business of industrial us. ability light and to lot fabs, attractive So obviously, for as of pieces are scaling consistently deliver impact to a light to the CHIPS happening our is data reshoring margin all in in those control, Act of We're the U.S.

margin mix tighter from perspective. of however, And so is, a portfolio our the

Contractor floor that are continue As -- the for that has portfolio to funding will deliver we and fairly we're price indicated Select demonstrating. we'll been we infrastructure, the and performance to the citizens earlier, on effectively, the raised the

Select it. the might for past? then years you portfolios. Select investment And on than sort and inventory have that, in require one Design by few definition, of just the Got Contractor more in Does Karen had

Select on everyday the it XXX for We first So levels, the Contractor carry But the inventory those of given stock look less our portfolio, us inventory high when distributors the also lighting distributors. with less of that carry Design but at to most for here, products. Select, also then allows we turnover Select, and kind inventory. and common Contractor our to

manage turns. requirement. Select, are On So that levels we effectively a have those Design our doesn't and improve really higher to inventory able

capital look at impact negative the should inventory those a have And our forward. are of neither on inventory over our we working -- fact, we've going if of time, days So you certainly it improve. kind then turns point and course in improved room from last continue year last and when our and inventory reduced over over of year versus our to high -- versus we have to

improve we going a should that materials good And forward. where our really ability believe are our around negative some and our on of if should impact. raw have about that anything, that, feel inventory we So don't

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

all joining you. Thank morning. you us Thank for this

performance. comments We are really questions, -- we're the and said as we our our pleased in in with

demonstrated we like Our team Spaces well. that And is this feel on capital where clear, confident opportunity beyond, the with in value executing Lighting growth real allocation. is Controls side and it. business is against our we've year executing and really we're We feel the and we Lighting for create can

quarter. that, so you. you and to forward we'll seeing keep next doing And Thank look we'll

This for participation. concludes your today's conference you call. Thank

disconnect. now may You