Acuity Brands Inc. (NYSE: AYI) reported its third quarter financial results on Tuesday, surpassing estimates in both revenue and earnings. Shares rose by 15.6% late Tuesday morning.
For the third quarter, Acuity reported revenue of USD 944 Million, increasing 5.9% year over year and beating analyst’s estimates of USD 900.1 Million. The Company reported an adjusted EPS of USD 2.37, increasing 10.2% year over year and topping estimates by USD 21 cents.
“Our third quarter performance was solid, particularly against the backdrop of a challenging lighting market. Our net sales grew almost 6% in the third quarter, which was primarily due to greater shipments of our Atrius-based luminaires as well as increased shipments of products for infrastructure and utility projects, partially offset by lower net sales for larger commercial projects.” said Vernon Nagel, Chairman, President, and Chief Executive Officer of Acuity Brands.
Sales of LED-based products represented over two-thirds of Acuity’s third-quarter total net sales. The Company said the increase in sales were favorable by the volume increase combined with a 1% favorable impact from acquisitions and foreign exchange rates.
Also, within the third quarter, Acuity recognized a pre-tax special charge of USD 9.9 Million, primarily due to planned consolidation of facilities and associated reduction in employee headcount. The Company also recorded a USD 3.1 Million charge during the quarter to reserve for raw material inventory.
The management expects to incur additional costs in the future associated with closing its facilities. Annual savings are expected to exceed the amount of the special charge once they are fully completed and will be reinvested back into Company activities for future growth and profitability.
“We took a number of actions this quarter to improve our profitability, including relaunching our Contractor Select portfolio of basic, lesser featured products at competitive price points to more effectively and profitably compete in that certain portion of the market.” added Mr. Nagel.
He cites third-party researchers that the demand for North American lighting market will improve “modestly” in the second half of 2018. Mr. Nagel projects the Company to outperform the growth rates due to its strategic growth plan.
The Company also expects to introduce new products and solutions to more effectively compete within the industry as well as accelerating programs to reduce expenses.
Mr. Nagel concluded, “We continue to believe the lighting and lighting-related industry as well as building management systems will experience solid growth over the next decade, particularly as owners and users of lighting equipment and buildings see the potential to transform these investments into strategic assets. We believe we are uniquely positioned to fully participate in this exciting industry.”