Acuity Brands, Inc. : Acuity Brands Reports Fiscal 2012 Second Quarter Results
04/04/2012| 08:40am US/Eastern
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Net Sales Rise 10%; Adjusted Diluted EPS Increases 27%
Acuity Brands, Inc. (NYSE: AYI) ("Company") today announced that fiscal
2012 second quarter net sales increased $41.6 million, or 10 percent, to
$457.7 million compared with the prior-year period. Net income for the
second quarter of fiscal 2012 was $19.5 million compared with $19.9
million for the year-ago period. Diluted earnings per share ("EPS") for
the second quarter of fiscal 2012 were $0.46 compared with $0.45
reported for the prior-year period. Included in the results for the
second quarter of fiscal 2012 was a $6.6 million pre-tax special charge,
or $0.11 per diluted share, associated with streamlining actions as
explained below. Excluding the special charge, fiscal 2012 second
quarter adjusted diluted EPS were $0.57, an increase of 27 percent
compared with the year-ago period.
The year-over-year growth in fiscal 2012 second quarter net sales was
due to an approximate 5 percent increase in unit volume, 3 percent from
the net favorable impact of changes in product pricing and the mix of
products sold (i.e., "price/mix"), and 2 percent from acquisitions. The
increase in unit volume was broad-based across most product categories
and key sales channels in North America, partially offset by a decline
in Spain. Although it is not possible to precisely quantify the separate
impact of price/mix changes, the Company believes that essentially all
of the benefit from price/mix was due to price increases implemented in
calendar year 2011 which offset a less favorable mix of products sold.
Fiscal 2012 second quarter operating profit was $39.0 million compared
with $37.2 million for the prior-year period. Excluding the special
charge, adjusted operating profit for the second quarter of fiscal 2012
was $45.6 million, or 10.0 percent of net sales, which represents a 110
basis point improvement in adjusted operating profit margin compared
with the prior-year period.
Vernon J. Nagel, Chairman, President, and Chief Executive Officer of
Acuity Brands, commented, "We are pleased with our fiscal 2012 second
quarter results as we continue to execute our strategies, including the
introduction of new and more energy-efficient lighting solutions, to
extend our leadership position in North America. The improvement in
adjusted operating profit was due primarily to the benefits from higher
sales volumes, price increases implemented during the prior twelve
months, and productivity improvements. These benefits were partially
offset by higher material costs, additional operating expense related to
acquired businesses, increased compensation expense, and an adjusted
operating loss in Spain. Our second quarter results also reflect the
continuing higher level of spending on future growth initiatives,
including new products, expanded market presence, and technology and
innovation."
Mr. Nagel continued, "Our gross profit margin increased 30 basis points
year-over-year to 39.7 percent. Through previously implemented pricing
initiatives we were able to recapture approximately $11 million of
higher material costs, although the impact of these items negatively
impacted our gross profit margin by 90 basis points. Our operations in
Spain reported for the quarter an adjusted operating loss, excluding any
special charges, of $1.3 million, or $0.03 per diluted share, on a 50
percent, or $2.6 million, year-over-year decline in net sales,
reflecting the difficult economic conditions in Spain. While we are
taking significant steps to properly size our Spanish operations given
the challenging prospects of the local economy, we expect to report a
modest operating loss for Spain in our third quarter."
The effective tax rate for the second quarter of fiscal 2012 was 35.4
percent compared with 31.4 percent for the prior-year period. The
increase in the effective tax rate was due primarily to the research and
development tax credit which was extended during the second quarter of
fiscal 2011 but was not extended in the current year. The change in the
tax rate negatively impacted adjusted net income and adjusted diluted
EPS by $1.3 million and $0.03, respectively, compared with the year-ago
period. The effective tax rate for fiscal 2012 is forecasted to
approximate 34 percent.
Special Charge
In the second quarter of fiscal 2012, the Company recorded a pre-tax
special charge related to streamlining activities of $6.6 million, or
$0.11 per diluted share. The special charge was comprised of
approximately $1.2 million associated with a reduction in workforce,
primarily at its operations in Spain, and $5.4 million related to the
planned closing of the Company's Cochran, Georgia production facility.
The closure of the facility is expected to be principally completed by
the end of the current fiscal year. The Company expects to incur
additional costs of approximately $10 million associated with the
closure of the facility, which are forecasted to be recognized primarily
during the second half of fiscal 2012. The total estimated pre-tax
special charge of $15 million associated with the facility closing
consists primarily of severance and employee-related costs of $9
million, production transfer expenses of $3 million, and non-cash asset
impairments of $3 million. Annualized pre-tax savings related to the
reduction in workforce in Spain are estimated to be $1.2 million and are
expected to begin to be realized by the end of the third quarter of the
current fiscal year. Annualized pre-tax savings associated with the
closure of the Cochran production facility are forecasted to be
approximately $8 million and are expected to be realized beginning in
the first quarter of fiscal 2013 following the completion of the
transfer of production and closure of the facility.
Year-to-Date Results
Net sales for the first six months of fiscal 2012 were $932.0 million
compared with $841.2 million for the prior-year period, an increase of
approximately 11 percent. Fiscal 2012 first half reported results
include operating profit of $89.5 million, net income of $49.5 million,
and diluted EPS of $1.16. Adjusted results, which exclude the special
charge for streamlining activities, include adjusted operating profit of
$98.8 million, or 10.6 percent of net sales, compared with $82.7
million, or 9.8 percent of net sales, for the prior-year period.
Adjusted net income for the first half of fiscal 2012 was $55.8 million,
an increase of 26 percent compared with $44.3 million for the prior-year
period. For the first half of fiscal 2012, adjusted diluted EPS were
$1.31, an increase of 30 percent compared with the year-ago period.
Outlook
Mr. Nagel commented, "Our performance expectations for fiscal 2012 have
not changed materially during the past quarter. Third-party forecasts
suggest that the North American lighting market, which includes
renovation and relight activity, will increase in the low-to-mid single
digits during the remainder of our fiscal 2012. We believe opportunities
continue to exist that will allow us to continue to outperform the
markets we serve. These opportunities include benefits from growing
renovation and tenant improvement projects, further expansion in
underpenetrated geographies and channels, and growth from the
introduction of new products and lighting solutions. This
notwithstanding, we continue to anticipate on-going volatility in both
customer demand and commodity costs."
Mr. Nagel concluded, "We continue to position the Company to deliver
short-term performance while investing in and deploying resources to
further our longer-term profitable growth opportunities. We believe the
lighting and lighting-related industry will experience solid growth over
the next decade, particularly as energy and environmental concerns come
to the forefront, and we believe we are well positioned to fully
participate in this exciting industry."
Non-GAAP Financial Measures
Acuity Brands' management included in the above news release the terms
"adjusted operating profit", "adjusted operating profit margin",
"adjusted net income", and "adjusted diluted EPS" which are non-GAAP
financial measures provided to enhance the user's overall understanding
of the Company's current financial performance and prospects for the
future. Specifically, management believes that adjusted operating
profit, adjusted operating profit margin, adjusted net income, and
adjusted diluted EPS provide useful information to investors by
excluding or adjusting items related to special charges associated with
efforts to streamline the organization, which affected fiscal 2012
second quarter operating profit, net income and diluted EPS. Management
believes the special charges impacted the comparability of the Company's
results and that these items are not reflective of fixed costs that the
Company will incur over the long term. However, we have incurred similar
charges in prior fiscal years and continually evaluate streamlining
measures which could result in additional charges in future periods.
These non-GAAP financial measures should be considered in addition to,
and not as a substitute for or superior to, results prepared in
accordance with GAAP. The most directly comparable GAAP measure for
adjusted operating profit and adjusted operating profit margin are
"operating profit" and "operating profit margin", respectively, which
include the impact of the special charges. The most directly comparable
GAAP measures for adjusted net income and adjusted diluted EPS are "net
income" and "diluted EPS," respectively; both GAAP measures include the
impact of the special charges. The non-GAAP financial measures included
in this news release have been reconciled to the nearest GAAP measure.
Conference Call
As previously announced, the Company will host a conference call to
discuss second quarter results today, April 4, 2012, at 10:00 a.m. ET.
Interested parties may listen to this call live today or hear a replay
at the Company's Web site: www.acuitybrands.com.
About Acuity Brands
Acuity Brands, Inc. is a North American market leader and one of the
world's leading providers of lighting solutions for both indoor and
outdoor applications. With fiscal year 2011 net sales of $1.8 billion,
Acuity Brands employs approximately 6,000 associates and is
headquartered in Atlanta, Georgia with operations throughout North
America, and in Europe and Asia. The company's lighting solutions are
sold under various brands, including Lithonia Lighting®, Holophane®,
Peerless®, Gotham®, Mark Architectural Lighting™, Winona® Lighting,
Healthcare Lighting®, Hydrel®, American Electric Lighting®, Carandini®,
Antique Street Lamps™, Tersen®, Sunoptics®, Sensor Switch®, Lighting
Control & Design™, Synergy® Lighting Controls, Pathway Connectivity™,
Dark to Light®, ROAM®, RELOC® Wiring Solutions, and acculamp®.
Forward Looking Information
This release contains forward-looking statements, within the meaning of
the Private Securities Litigation Reform Act of 1995. Statements that
may be considered forward-looking include statements incorporating terms
such as "expects," "believes," "intends," "estimates", "forecasts,"
"anticipates," "may," "should", "remain", and similar terms that relate
to future events, performance, or results of the Company and
specifically include statements made in this press release regarding:
(a) projected annualized pre-tax savings associated with the facility
closure and workforce reductions; (b) expectation of solid growth for
the lighting and lighting-related industry and the Company's position to
fully participate; (c) existence of opportunities that will allow the
Company to outperform the markets it serves; and (d) low-to-mid single
digit growth for the North American lighting market for the remainder
fiscal 2012 and the potential for continuing volatility in customer
demand and commodity costs. Forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to
differ materially from the historical experience of Acuity Brands and
management's present expectations or projections. These risks and
uncertainties include, but are not limited to, customer and supplier
relationships and prices; competition; ability to realize anticipated
benefits from initiatives taken and timing of benefits; market demand;
litigation and other contingent liabilities; and economic, political,
governmental, and technological factors affecting the Company. Please
see the other risk factors more fully described in the Company's SEC
filings including the Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission on April 4, 2012 and risks discussed
in Part I, "Item 1a. Risk Factors" in the Company's Annual Report on
Form 10-K for the year ended August 31, 2011. The discussion of those
risks is specifically incorporated herein by reference. Management
believes these forward-looking statements are reasonable; however, undue
reliance should not be placed on any forward-looking statements, which
are based on current expectations. Further, forward-looking statements
speak only as of the date they are made, and management undertakes no
obligation to update publicly any of them in light of new information or
future events.
ACUITY BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except share and per-share data)
February 29, 2012
August 31, 2011
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents
$
180.6
$
170.2
Accounts receivable, less reserve for doubtful accounts of $2.0 at
February 29, 2012 and $1.8 at August 31, 2011
257.6
262.6
Inventories
159.0
165.9
Deferred income taxes
15.4
16.0
Prepayments and other current assets
30.1
15.8
Total Current Assets
642.7
630.5
Property, Plant, and Equipment, at cost:
Land
7.3
8.4
Buildings and leasehold improvements
113.5
121.2
Machinery and equipment
357.8
355.3
Total Property, Plant, and Equipment
478.6
484.9
Less - Accumulated depreciation and amortization
345.2
341.7
Property, Plant, and Equipment, net
133.4
143.2
Other Assets:
Goodwill
557.3
559.2
Intangible assets
234.5
234.2
Deferred income taxes
2.1
2.0
Other long-term assets
27.9
28.3
Total Other Assets
821.8
823.7
Total Assets
$
1,597.9
$
1,597.4
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable
$
189.4
$
203.8
Accrued compensation
32.6
45.0
Accrued pension liabilities, current
1.2
1.2
Other accrued liabilities
69.0
81.4
Total Current Liabilities
292.2
331.4
Long-Term Debt
353.4
353.4
Accrued Pension Liabilities, less current portion
57.1
60.5
Deferred Income Taxes
37.7
36.4
Self-Insurance Reserves, less current portion
7.6
7.3
Other Long-Term Liabilities
54.7
51.4
Stockholders' Equity:
Preferred stock, $0.01 par value; 50,000,000 shares authorized; none
issued
-
-
Common stock, $0.01 par value; 500,000,000 shares authorized;
51,434,881 issued and 41,715,626 outstanding at February 29, 2012;
and 50,956,137 issued and 41,488,882 outstanding at August 31, 2011
0.5
0.5
Paid-in capital
694.3
680.3
Retained earnings
579.5
541.0
Accumulated other comprehensive loss items
(59.0
)
(53.8
)
Treasury stock, at cost, 9,719,255 shares at February 29, 2012 and
9,467,255 shares at August 31, 2011
(420.1
)
(411.0
)
Total Stockholders' Equity
795.2
757.0
Total Liabilities and Stockholders' Equity
$
1,597.9
$
1,597.4
ACUITY BRANDS, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In millions, except per-share data)
Three Months Ended
Six Months Ended
February 29, 2012
February 28, 2011
February 29, 2012
February 28, 2011
Net Sales
$
457.7
$
416.1
$
932.0
$
841.2
Cost of Products Sold
275.8
252.3
556.4
501.2
Gross Profit
181.9
163.8
375.6
340.0
Selling, Distribution, and Administrative Expenses
136.3
126.6
276.8
257.3
Special Charge
6.6
-
9.3
-
Operating Profit
39.0
37.2
89.5
82.7
Other Expense (Income):
Interest Expense, net
7.7
7.5
15.4
15.0
Miscellaneous Expense (Income), net
1.1
0.7
(1.8
)
2.0
Total Other Expense
8.8
8.2
13.6
17.0
Income before Provision for Income Taxes
30.2
29.0
75.9
65.7
Provision for Income Taxes
10.7
9.1
26.4
21.4
Net Income
$
19.5
$
19.9
$
49.5
$
44.3
Earnings Per Share:
Basic Earnings per Share
$
0.46
$
0.46
$
1.17
$
1.03
Basic Weighted Average Number of Shares Outstanding
41.4
42.3
41.3
42.2
Diluted Earnings per Share
$
0.46
$
0.45
$
1.16
$
1.01
Diluted Weighted Average Number of Shares Outstanding
41.9
43.0
41.8
42.9
Dividends Declared per Share
$
0.13
$
0.13
$
0.26
$
0.26
ACUITY BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In Millions)
Six Months Ended
February 29, 2012
February 28, 2011
Cash Provided by (Used for) Operating Activities:
Net income
$
49.5
$
44.3
Adjustments to reconcile net income to net cash provided by (used
for) operating activities:
Depreciation and amortization
19.5
19.2
Share-based compensation expense, net
3.6
3.0
Excess tax benefits from share-based payments
(4.1
)
(3.5
)
Loss on the sale or disposal of property, plant, and equipment
0.1
0.1
Asset impairments
0.1
-
Deferred income taxes
(1.9
)
(0.9
)
Other non-cash items
0.1
(1.0
)
Change in assets and liabilities, net of effect of acquisitions,
divestitures and effect of exchange rate changes:
Accounts receivable
4.1
21.9
Inventories
6.6
(14.4
)
Prepayments and other current assets
(8.2
)
(5.7
)
Accounts payable
(13.9
)
(22.6
)
Other current liabilities
(20.5
)
(16.7
)
Other
2.6
5.0
Net Cash Provided by Operating Activities
37.6
28.7
Cash Provided by (Used for) Investing Activities:
Purchases of property, plant, and equipment
(9.4
)
(11.8
)
Acquisitions of business and intangible assets, net of cash acquired
(3.8
)
(80.5
)
Net Cash Used for Investing Activities
(13.2
)
(92.3
)
Cash Provided by (Used for) Financing Activities:
Repurchases of common stock
(9.2
)
(2.9
)
Proceeds from stock option exercises and other
6.4
5.3
Excess tax benefits from share-based payments
4.1
3.5
Dividends paid
(11.0
)
(11.2
)
Net Cash Used for Financing Activities
(9.7
)
(5.3
)
Effect of Exchange Rate Changes on Cash
(4.3
)
3.4
Net Change in Cash and Cash Equivalents
10.4
(65.5
)
Cash and Cash Equivalents at Beginning of Period
170.2
191.0
Cash and Cash Equivalents at End of Period
$
180.6
$
125.5
ACUITY BRANDS, INC.
Reconciliation of Non-U.S. GAAP Measures
The table below reconciles certain U.S. Generally Accepted Accounting
Principles ("GAAP") financial measures to the corresponding non-GAAP
measures, which exclude special charges associated with actions to
accelerate the streamlining of the organization, including reductions in
the workforce and the closure of a production facility. These non-GAAP
financial measures, including adjusted operating profit, adjusted
operating profit margin, adjusted net income, and adjusted diluted
earnings per share, are provided to enhance the user's overall
understanding of the Company's current financial performance.
Specifically, the Company believes these non-U.S. GAAP measures provide
greater comparability and enhanced visibility into results excluding the
impact of the special charges. These non-GAAP financial measures should
be considered in addition to, and not as a substitute for or superior
to, results prepared in accordance with GAAP.
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