Acuity Brands (AYI) 1 Oct 242024 Q4 Earnings call transcript

Good morning, and welcome to Acuity Brands Fiscal 2024 Fourth 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.

operator. you, Thank welcome Quarter and Acuity Fiscal Brands Good Full to Year Fourth and Earnings XXXX morning, the Call.

at Holcom, opportunity Executive On and There the our and and Chief Ashe, strategic Officer. Today's on quarter call and are morning call. this for Vice will be the Karen Chief will Officer; include Financial call with Fourth end Chairman, in performance. me President our full this XXXX our Q&A year President Senior of an our updates Neil progress and fiscal

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

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

share. Our delivered per results. financial that Lighting Fiscal net performance satisfaction performance XXXX and year fiscal XXXX a improved and was user both operating earnings Fourth was grew sales and Spaces, expansion of Quarter strong. We increased delivered of end margin improved successful

to technology and we our elevate productivity. increase operate being how our and adjusted vitality, drive profit service to million, XX%. our our and margin operating expanded $XX differentiate net product levels by million $XX sales ABL, products profit are strategy and improve business use driven These the results grew to to both increased we In by operating adjusted

of our we to had align ABL Lighting connectivity announced combined one leader processes. and we better organizations the Chain In under end-to-end our August, that Supply

a transformation Sach about to He to and to has a drive growth business order is organization. the joined together in ability ago lead Sankpal who appointed combined growth Sach to role. productivity. and the us the bring leader I in X years accelerate dynamic

continue to vitality. quarter, product we our further ongoing This

innovative of leadership launches ] capable manufacturing to technology both environments, and Fame, deliver high by leveraging and was has configurable is One multiple spaces. product reinforces industrial in recent than Hall improvement in most can position Its management bay lighter bays. warehouse decade our output X industrial the environments. with controls. of Hollibay round to high it's for new technology by pounds ] is nLight alternatives, our the the space thermal in withstand [ of demanding [ configurable lumen biggest Fame's use XX and a This Hall Hollibay It mounting ] [ existing a in options options has performance. the game-changing industrial environments the over on broadest market, and

Lithonia earnings showcases calls of have science by IVO year. and Lino in A-Light, which significant year's which of including team our customers. recognized Recessed our the fourth XXXX Shallow highlighted Illuminating on Lighting for Progress the the bring most Engineering products been has to for and many continued the were Lighting, to innovation advancements the our that Downlight Gotham all quarter, art the this Our FRAME, for In of solutions Report selected be Society value

for landscape for sealing minimal vertical Lighting. illumination. long that integrity We innovative with allow And Its use, contrast capabilities a additionally architectural won Hydrel safety maximum light street compact to term maintenance. our designed in that Cyclone ingrade innovative fixture and outdoor is a Tierra, pedestrian maximize that Crosswalk, structural ensures used through was and

the in back step a this year business. Lighting Now take I'd like to recap and achievements our

need and our we performance end projects. growth, portfolios was get to the evolved prioritizing and Design it our users our competed differentiated financial Select on strategy product Select And they initiatives. for what Made-To-Order, for We for effective and where progress not Overall, way their future or our on Contractor made and specific we invested when are strong, create they we new have need we where underpenetrated. contractors to historically verticals most

to we Notably, line in and new product vertical, a the refueling the product a horticulture developed we through in product horticulture development. organic environment solutions and tailored portfolio market, of service built the where inorganic where

margin on moving and Now our delivered growth impressive performance. Intelligent to which Spaces Group,

to edge to business focused our greener spaces, and of compete mission and we can In we where cloud. through Our is we addressable Spaces on market a what in our by control. strategy increasing the make safer smarter, spaces expanding the Intelligence connecting are

market North was France of Distech's original outside America.

in this the We have water impressive capable as products used result and position adaptable most our Solutions an consumption. a many Eclipse facilities Paris of the our the summer. Aquatic of regulated the market energy Center, market. in were And having not surprisingly, on and In technology

in when de transforms the energy. in hosted now Maxwell Eclipse a events part Hall, gymnastics and our like manage as managing to acoustics It demonstrated Chapelle, quality at badminton. In la nighttime as window used the automation And controllers to of occupants served adapted athletes space the and temperature our temperature, was and is the needs offices. requirements it the Grand athletes enabled which of key of the we being facility role air easily Eclipse controllers the incoming Our played village, save modularity the Palais, Arena into solutions. the the of and Porte

market, had the our done. Lighting performance business increased our forward. we've very And continued and We growth Controls a and the Lighting margins. differentiated In we're that addressable from good rest business, let's now clearly year. look our of expanded impressive market, and is not Spaces Intelligent demonstrated Our

so. We confident do and this business ability our algorithm are in growth clear a to grow to have

North in industry, with market. the company largest the grow American will we as Lighting First, the

invest share. adding will verticals we take are historically we by new will competed we And for either where third, continue have or underpenetrated. where growth not Second, we to

of Lighting long digits. time, believe we grow business period a together, Taken our that will mid-single over

have also can XX%. XXXX, increased demonstrated In now fiscal was And it adjusted fiscal to We in XX%. margins. we has improve margin profit XXXX, that our

trend in that are and that can we operating continue we confident profit XX Lighting points We adjusted this believe of year business. basis add XXX margin around per to the

scalable. core is have ABL of more a high-quality strategic and repeatable predictable, asset We and It company. pillar our made a

disruptive our financial outcomes for are and that meaningful end powered that business, In results. strong Spaces we are Intelligent by technologies generate delivering users

growing increasing are We margins. are we expanding sales, our addressable market, are and we

buildings minimize and operational we can and currently And edge-to-cloud operate to in maximize open do more costs. Our experience future. occupant solutions the energy believe we

our for in built managing build space a future from new outcomes. and comes add to focused space in from data is who bring inorganic will efforts new continuing unique be space a vision disruptive organic Both see data more happens where drive of what that We technologies build generated ways. on together and interoperability in end-user and to a the together a a

pipeline satisfy acquisitions We of to development medium-sized small and and internal this vision. have a strong

better wealth for outcomes In compounding for shareholders. stakeholders and conclusion, our are our we delivering

company fiscal order to We impactful drive make beyond. more and Acuity larger XXXX improvements to in are in a and much continuing

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

improvements. full We strong in both increased good we in to quarter. our fourth We and the our Neil, you, morning mid-teen to margin everyone Lighting flow. on delivered performance continued year our delivered Spaces call. impressive significant deliver per growth in share businesses and generated business cash diluted Thank earnings our Sales grew, and adjusted operating sales business,

total year of billion was Lighting in we as fourth a result above sales For growth both of $XX the quarter prior net which or Spaces in million X% the AYI, and generated business. the $X

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

we $XX During the operating an points margin was expanded XX.X%, up profit last quarter, from our of operating to year. adjusted increase basis million profit from the and adjusted our prior XXX year,

the price profit vitality, by This productivity result gross margin of cost management our and improvements. largely in year-over-year increase improvement significant and of driven was product the a

earnings income net position result our $X.XX as or of again strong generated diluted year. increased X% we the sheet. the share $X.XX quarter, balance This adjusted per over a on And prior our interest cash of

center over $XX Net impressive the million, operating by result primarily we driven a million or basis growth the in an large around million, an prior quarter Distech fourth margin of and projects. and driven as XXX for were increase was net Intelligence sales improvement improvements were the but of $XXX higher year. $XX data Net profit channels, X%. by Spaces This XX% in delivered sales in part increase operating adjusted $XXX was increase delivered in profit XX%, channel. our of to In our Adjusted of the accounts ABL, million, sales majority of corporate increased

$XX margin was operating operating with Adjusted over Spaces profit million the Intelligent adjusted XX%. in profit

flow performance. Now turning to our cash

we cash XXXX, million $XXX generated fiscal of $XX operating activities, increase fiscal XXXX. In over a flow million from

average with We we flow. approximately repurchase in million acquired to of We $XXX shares million horticulture about our of price that Since of organic year capital and the on cash X.X which cash. ended shares XX% balance at per assets cash share. This about $XXX then earn invested the shares. returns dividend repurchased to share, quarter by Arize of at continued priorities, allocated the Lighting. We have on outstanding million approximately fourth per beginning of amounts the with and we increased million the $XX average our price $XXX was attractive an sheet to an and the over XX% XXX,XXX XXXX, of per allocated capital our share consistent $XX fiscal of expenditures have funded

we to provide our on diluted anchored are share. per around to for sales and adjusted spend a minutes prior practice, outlook XXXX. net Consistent now want our with earnings guidance going few annual I

conclusion you this the also in you which website can after certain presentation, assumptions, We find will our the provide on of call. available with supplemental

year by we half control. and mid-teens XXXX. fiscal more back based which to sales what sales deliver will low total addressable full on we compete to the anticipate we our that as can market growth, is net will fiscal for AYI. will XXXX, is And assumptions billion This generate of continue in $X.X within $X.X that ISG For range in where be expanding and weighted growth the the billion expectation low mid-single-digit will increase ABL to sales our we be

We expect We growth balance the earnings performance sheet. we increased range very in investing and capital adjusted businesses, XXXX. we to our effectively, share year and improved share a finished allocated from to strong future for impressive within existing generated diluted cash We've of $XX.XX. earnings flow To $XX per delivered conclude, operations. in fiscal deliver the margins, per strong with

to We fiscal in are deliver to XXXX. growth well positioned earnings and continue sales

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

Instructions]. [Operator

Our with first question Wojs from Baird. Tim comes

I Maybe question, could one just start if with Neil.

kind you kind as activity current around and of the there. Just a of of just you of I'm conditions, data if you're kind the business. quoting, release what of market obviously, us look update kind can an give curious points ABL there's just ordering in at out seeing choppy lot

Tim. Thanks, Yes.

first good for we're all, where about So we 'XX. going of feel fiscal

-- ABL quarter. fourth So strength. we're We the to building business the off returned of growth in

very was performance operating Our strong.

confident look we reasonably we're about fiscal As year 'XX. forward,

think I seen, expected the calendar view strong. is we've pretty that most which data is consistent our -- of to year we're be that 'XX with is

are, now ABL side. extraordinarily normal, good So relatively say, on nor the the conditions bad neither I would

albeit kind there loaded. So 'XX, said, on the of we we're good about algorithm. the as back-end full focused And feel more, growth Karen

Okay.

have cash situation repurchase which to of really you have. Okay. capital balance pile kind from quite sheet maybe this a much just That's quarter priority is on allocation? at then Any noticed how on I to guys you're didn't -- built And kind the point, a you stock thinking just the about this helpful. update good of standpoint. a add

of kind on thinking and there. update you're just changes of significant kind about if how capital any So allocation any

then do to you want and Karen, follow up. I'll start

Yes.

Sounds good.

that of we're $XXX satisfy We to So current was invested flow, million Tim, of free a our of we're really had We've flow businesses which year. growth. pipeline. higher generation cash M&A capable than outstanding. for year. priorities. million increased with the got cash dividend last this $XX $XX our healthy we in We cash and million demonstrated all did our We've shares We've pleased flow with repurchase our

million did the we share the expectations XX of year. provide we repurchases, about on XX So with that repurchase to year, you with would the this beginning million shares

about more midpoint, to, price at So we expected it than around at we $XXX the we and bought XX% an did a back share. of average

this executed year there. of feel the repurchases we and about So how good we all

Neil talk let I'll more about So the then M&A pipeline.

Yes. build I just that, do And point. Tim, Karen's I'll before on

we do I generation have it think is the balance to sheet that the all. our capacity and cash takeaway of

to have continued demonstrated through ISG. our in invest the and vertical we've horticulture which and the capacity the We current growth for businesses, at refueling expansion

We we have increased and a Karen strong pipeline as look medium-sized pointed out. believe opportunity we We've And to forward, businesses. dividend. then of of acquisitions shares, our grow repurchased both small of have we our as

Our both acquiring directed to efforts disruptive together be our believe have and priority that developing is will outcomes. end-user in ISG. that we and continue deliver and new around And bring technologies the opportunity to data inorganic towards interesting ways that organic

balance all but -- is takeaway so from and I think with can cash performance core that do that a perspective. And believe our it our the we sheet we

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

for on it, the agency how was results adoption of trends Congratulations variation on any going I reception adopters curious the or early laggards? And there is update an and Select, to across their all strong Design year. independent

Yes. Thanks, Chris.

pleased picture, segmentation portfolio the So big way going. we're really is with the

the So the portfolio. the as Design and And on the that is couple the and agents. Contractor Select, weeks, the were into of of over has now distributors in road bring Select met us And a we course well. more exceptionally last kind we families dig portfolio. portfolio Sach We more hope is Their of on we made-to-order with positive. universally of obviously performed product I have and our for reaction

for things lot more distributors the they're ensure -- and in makes them choose them and makes projects performance each that them our they a it's for to us. that that right picture, makes for big service profitable the specking effective ordering increased continued better allows are levels So more to is of more them, profitable, everything

to more we're there the turn product want as been And it And going reaction methodically it vitality faster. Distributors service and targets agent incredibly for continue we -- meet the so on positive. has side internal out performance. of to our

you sounds good. And Data DC certainly segment. mentioned ISG And that in projects, out calling just recall for don't you That the past. Center the I

curious in that -- how that and is pipeline around for win driver a of fiscal is process anything just So on ahead. how rolling vertical selection rates, much is 'XX, Distech that rolling

Yes.

So kind if pneumatic control. there's we exceptional back then obviously of data had -- that center control, take on front last control quarter. steps digital an on we quarter there's and The two

We are basically the leader in digital control.

use who control, scalers the we the for are So digital choice.

the behind driver that. so what's And that's

this it's been obviously, -- part outside both for of grow and markets in business continue the of several the We So will a to a our of the good that had the we last years. That -- really in quarter just U.S. U.S. some portion had really the year. business a

and up wrap that. the miscellaneous I'll with timing of just housekeeping $X context question, And million expense,

Yes.

And expense, Distech to consistent two that is is currency areas. miscellaneous the generates, movements. So things One pretty One foreign quarter that primarily that's the a was there's of really is is which fall big in cash which pension couple significant. quarter-over-quarter. there. mover this expense, The around our due

some in the had be our you And other foreign Canadian dollar on unfavorable lease and saw. some we around would then Mexico, we that's currency there. had so movements the And liabilities what movements and

our So doing, look and manage ahead, when on FX then to really you working the we're effectively. it are rates cash what depends

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

And Lighting in with confidence that, and kind there? prolonged calendar the behind it's algorithm to tied break that additional contributors terms talk that. you strong. what's about perspective shift, some to market more muted terms of year just mid-single Or how of if with period start looking starting then just color see of related to wanted pretty cycle, the of to -- I expected your kind rates? Any respect any be outgrowth, commentary in the you maybe of activity within when down for to and of interest around Neil, something the time a and but through to growth drivers at in of is been there any XXXX price growth, that digits

sure. Yes,

terrible economists. So first, the notably are CEOs economy, on

it. analysis worth continues analysis a is commentary is I of will but there consistent, be to that as releasing what the So projects amount a paying analysis generally. fair will. you're fair as say, that however, would our they be is I'd there mentioned would on horizon is busy, traveling of or -- and activity which we distributors. say this data consistently and I data amount, for very trend And I were they Sach what do agents are is and they -- -- aren't with say

up building So in words, there's stuff the in other pipeline.

through to the in one We're we Chicago, -- for example, slowdown the consumption I'll focusing on reach on a things obviously significant in been that's work and been decrease office there's low going on -- obviously capacity. back; -- in point were we hand, going were space market, because to one has put were in the like a a -- take second a warehouse they're to other section hand, turn a in for for warehouse. we But

things will themselves out. work these So

over the term, so feel about And longer that. we good really

transitioning of -- and algorithm, So I'll the each and growth your to questions. answer

in the America. is we're first North the the So largest --

So the performance some the industry. tied going in be obviously, manner, we're of to to,

kind of that's step X. So

we can performance our from is identify America any and other anywhere company is second The differentiated in clearly Lighting that else. frankly, North

is, continue American verticals share, will either been are take chosen And we compete despite underpenetrated. share. fact North have to not there the the are we where within the are are and to taking other we third industry, that we So largest, Lighting

We refueling literally are a independent as up We largest new stores had portfolio ago. restaurants. needs focus spend be we of gas no refueling, to signed product on the business, for prosecute chunky to that. the add minute meets Opportunities canopy and can I of network, opportunity. and a So and they QSR created agent months the agent that in stations that convenience that X XX and as are example, will We in we -- -- like portfolio. the going on

about of we those feel the mix good So three things.

we're confident So the whatever is, that outgrow will growth we Lighting industry it.

vitality valuable price. industry. that. finally our our paid through believe that strategy the get to delivering efforts we, then will on are through services the more we product and service, on products and and we And for We

to strategic the us that a pricing one, industry. Lighting value on to, which allows have we deliver So strategy, continuing to focus

the we continue margins. they to the reap continue At benefits of to So will that. earn same higher time, can

we So about feel of positioned we years. as look really X to next the good ABL is of X where kind kind forward now to

all I wanted the East to port approach the And Just there, just to I situation, color color. appreciate on exposure also on your then situation? of any the ask kind managing Coast your sure of could there's and not inventory any looking challenges how line if you to sort for operating your think time sort buffer at any you're before model? about of that it convert

ports, Coast Coast West of West our the the most ports. products into On come

we customers few good won't some Coast. but impacted just West the could pretty volumes impact the specific so lasts, to situation. we Coast, ship time from don't at be as and about are where this continuing believe be secondary that move impacted. products. long we There depending be to monitor materially products should we feel a specific from it East how do But So position an inventory on those the we on are

Instructions]. [Operator

next comes Goldman Sachs Brian Company. Lee Our from & question with

growth just the Back you growth true year a one about a sales there, time I different network, Are maybe in a plus. to and The over channels. one, inflection that seeing first first flat, And to you segments big guys. a for what think trends as look that outlook I guess for bracket obviously, if in independent you sense on in Just that low-single, business? part help business? can like think scenarios mid-single? kind for specifically to up Is of specifically the trying you of speak 'XX? the get that

joining. just answer I to build would Joe there. Yes, my Brian, on for thanks

Lighting will more outline generally of year, So year take the business from growth mid-single network. said, a to and be calendar low Karen is skewed expect to this trends towards in a which the perspective, the our power as sales to minute I 'XX. digits independent we emphasize

So step I haven't it's but talked reflecting taking a Lighting it's of and that. while, back about that on business. our XX% round a numbers, worth in

North FTEs. XX in have agents XX on average, America, about have We they about,

America So professionals selling X,XXX products. we have sales support our North throughout

really we #X We which strong. compete. market are They in generally market between generally are each each And symbiotic relationship they and them in in #X is the compete. us

So Mishegoss first kind when to going here the of went and all got of way that. the stuff we and global all back that of chain the pandemic the supply I immediately into followed

very -- sales performance agent consistent. independent has network Our the been the of performance

an to Projects a So time. been they're as the I But of out us for They growth. hard. important on as our right working over are perform and a continuing are them, of have we've to road they're little lot release. now. will part activity mentioned, very And they to talking slow

together, of are our of that kind of Lighting kind the continued business. time on long not expected they taken a growth period over a So contributor the sales only but mid-single-digit contributor to

helpful. margin look question And where good percentage are that the flat right, had fiscal very 'XX just our the you guidance if If with gross metric. kind a fiscal essentially 'XX, on on at performance I maybe Super here, of then margins. implies basis Okay. gross a on numbers obviously

seems assume it ongoing think it that contextualize 'XX. like annually, leverage be OpEx So is and going on at for the going it more like the kind coming between the operating to could be as OpEx leverage shifting toward is just in for And XXX is to line margin long-term to be gross Or maybe a of line? is basis 'XX at it leverage the split about level? margin the fiscal points that, fair additional we XX target more to then

the Thanks question. for Yes.

that. me couple of Let of a on highlight things kind

going several margin think First the to years. we say our gross performance And is to -- that it's has last over that's been that don't abate. fair strong incredibly

is changes. line geographic on we that second OpEx have So the some the

up in SG&A. example, the power So improvement, investment margin to in technology help gross shows technology as that we for invest

As think we the to foreseeable annual the on target continue be margin now two, operating can mix those for XX of those focus of we a point basis and future. combination profit two. It will XXX the

any perfectly but So that be in linear areas. believe period. it specific have in won't we opportunities we both

opportunity margin on varying different OpEx gross we continue years. degrees we -- to that margin. in continue leverage invest the the expansion continue while have to to to the still And we drive believe as have higher to We we opportunity

wanted use it taken I our Lighting performer its this So is, together, really to opportunity in to highlight business the how clearly industry. top powerful is

We industry outgrow we we have demonstrated continue can can that margin. both the and expand to

So it's term. industry-leading for a strategically valuable long for us asset the

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

joining in today. our pleased you fiscal all strong. for Great. very the was performance incredibly us XXXX. We're Thank It with

As we industry business the look forward leader. to FY 'XX, will our to Lighting be continue

business We will that will grow. --

that. do clear to a algorithm have We

to can generation strong finally, that stakeholders continue for to and all control our And can where cash shareholders. drive foreseeable capital our we're drive continue delivers will interesting disruptive us compete, ways as excited we're for and in we about we that data the to the and allocation in and . We together incredibly the excited value compound there wealth Group future. to to margins And what expand feel we possibility. Spaces deliver stitch use new for for expand We like we to of can technologies outcomes. opportunities end-user about continue

after ahead the forward and looking after the we're year the year that that. to So year and

in So we'll this and you another with for again being thank morning, quarter. you talk to us

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

disconnect. now may You