Acuity Brands, Inc. : Acuity Brands Reports Fiscal 2012 Third Quarter Results
07/02/2012| 08:35am US/Eastern
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Adjusted Diluted EPS Increases 32 Percent
Acuity Brands, Inc. (NYSE: AYI) ("Company") today announced that fiscal
2012 third quarter net sales increased $29.2 million, or 6.4 percent, to
$487.5 million compared with the prior-year period. Net income for the
third quarter of fiscal 2012 was $33.6 million compared with $27.1
million for the year-ago period. Diluted earnings per share ("EPS") for
the third quarter of fiscal 2012 were $0.79 compared with $0.62 reported
for the prior-year period. Included in the results for the third quarter
of fiscal 2012 was a pre-tax special charge of $1.9 million, or $0.03
per diluted share, associated with streamlining actions as explained
below. Excluding the special charge, fiscal 2012 third quarter adjusted
diluted EPS were $0.82, an increase of 32 percent compared with the
year-ago period.
Unit volume increased more than 5 percent compared with the prior-year
period reflecting the modest recovery in the North American lighting
market, partially offset by weakness in Spain. The balance of the
year-over-year increase in net sales was due primarily to the net
favorable change in product prices and the mix of products sold
("price/mix"). While it is not possible to precisely quantify the
separate impact between price and mix, the Company estimates that the
net favorable change in price/mix was due primarily to price. The impact
on net sales from acquisitions and foreign currency was not significant.
Fiscal 2012 third quarter operating profit was $57.3 million, or 11.8
percent of net sales, compared with $50.2 million, or 11.0 percent of
net sales, for the prior-year period. Excluding the special charge,
adjusted operating profit for the third quarter of fiscal 2012 was $59.2
million, or 12.1 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 third
quarter results as we continue to execute our strategies to extend our
leadership position in North America, including our record pace for the
introduction of more energy-efficient lighting solutions. The
improvement in adjusted operating profit was due primarily to the
benefits from higher sales volumes, price increases implemented during
calendar year 2011, and productivity improvements. These benefits were
partially offset by higher material and component costs and additional
operating expense to support the greater sales volume, including
increased sales and marketing expenses. Our third quarter results also
reflected a continuation of an elevated level of spending on future
growth initiatives, including new products, expanded market presence,
and technology and innovation."
Fiscal 2012 third quarter results included $2.7 million of net
miscellaneous income compared with $0.9 million of net miscellaneous
expense in the prior-year period. Net miscellaneous income/expense
consists primarily of gains and losses resulting from the impact of
exchange rates changes on foreign currency exposures, particularly those
associated with the Mexican Peso.
The effective tax rate for the third quarter of fiscal 2012 was 35.8
percent compared with 35.2 percent for the prior-year period. The
increase in the effective tax rate was due primarily to higher taxable
income, nondeductible losses in Spain, and the expiration of the
research and development tax credit which occurred at the end of
calendar year 2011. The Company's effective tax rate for fiscal 2012 is
forecasted to be approximately 35 percent.
Special Charge
In the third quarter of fiscal 2012, the Company recorded a pre-tax
special charge related to streamlining activities of $1.9 million, or
$0.03 per diluted share. The special charge was associated with the
previously announced planned closing of the Company's Cochran, Georgia
production facility. The closure of the facility, which began in the
third quarter of fiscal 2012, is expected to be principally completed by
the end of the first quarter of fiscal 2013. The Company expects to
incur additional costs of approximately $7 million associated with the
closure of the facility, which are forecasted to be recognized primarily
during the fourth quarter of fiscal 2012. The total estimated pre-tax
costs of $14 million associated with the facility closing consist
primarily of severance and employee-related costs of $9 million,
production transfer expenses of $2 million, and non-cash asset
impairments of $3 million. 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 nine months of fiscal 2012 were $1,419.5 million
compared with $1,299.5 million for the prior-year period, an increase of
approximately 9 percent. Results for the first nine months of fiscal
2012 include operating profit of $146.9 million, net income of $83.1
million, and diluted EPS of $1.95. Adjusted results, which exclude $11.2
million of pre-tax special charges for streamlining activities, include
adjusted operating profit of $158.1 million, or 11.1 percent of net
sales, compared with $132.9 million, or 10.2 percent of net sales, for
the prior-year period. Adjusted net income for the first nine months of
fiscal 2012 was $90.6 million, an increase of 27 percent compared with
$71.3 million for the prior-year period. For the first nine months of
fiscal 2012, adjusted diluted EPS were $2.13, an increase of 31 percent
compared with the year-ago period.
Outlook
Mr. Nagel commented, "We remain very positive about the future prospects
for our company and our ability to outperform the markets we serve. We
continue to position the Company to optimize short-term performance
while investing in and deploying resources to further our long-term
profitable growth opportunities. While we are optimistic about our
future prospects and ability to outperform the markets we serve, we do
see the potential for continuing volatility in demand due to the weak
pace of economic recovery in the United States and globally.
"Our performance expectations have not changed materially during the
past quarter. Key indicators continue to suggest that the U.S.
non-residential construction market, a key market for the Company, is
expected to grow modestly through fiscal 2013. Also, third-party
forecasts suggest that the North American lighting market, which
includes renovation and relight activity, will continue to outpace the
growth rate of new construction. We believe opportunities exist that
will allow us to continue to outperform the markets we serve, including
benefits from growing renovation and tenant improvement projects,
further expansion in underpenetrated geographies and channels, and
growth from the introduction of innovative products and lighting
solutions."
Mr. Nagel concluded, "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-U.S.
Generally Accepted Accounting Principles ("GAAP"), or 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
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 third quarter results today, July 2, 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) forecasted effective tax rate for fiscal 2012; (b) estimated
additional costs and the total pre-tax special charge associated with
the facility closure; (c) projected annualized pre-tax savings
associated with the facility closure, including the timing of the
realization of such savings; (d) expectation of solid growth for the
lighting and lighting-related industry and the Company's position to
fully participate; (e) existence of opportunities that will allow the
Company to outperform the markets it serves; (f) expectation of modest
growth in the U.S. non-residential construction market through fiscal
2013; and (g) expectation that the North American lighting market will
continue to outpace the growth rate of new construction and the
potential for continuing volatility in customer demand. 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 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)
August 31,
May 31, 2012
2011
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents
$
228.3
$
170.2
Accounts receivable, less reserve for doubtful accounts of $1.7 at
May 31, 2012 and $1.8 at August 31, 2011
269.6
262.6
Inventories
168.7
165.9
Deferred income taxes
15.3
16.0
Prepayments and other current assets
22.2
15.8
Total Current Assets
704.1
630.5
Property, Plant, and Equipment, at cost:
Land
6.9
8.4
Buildings and leasehold improvements
113.4
121.2
Machinery and equipment
360.4
355.3
Total Property, Plant, and Equipment
480.7
484.9
Less - Accumulated depreciation and amortization
348.3
341.7
Property, Plant, and Equipment, net
132.4
143.2
Other Assets:
Goodwill
554.0
559.2
Intangible assets
233.5
234.2
Deferred income taxes
1.8
2.0
Other long-term assets
30.7
28.3
Total Other Assets
820.0
823.7
Total Assets
$
1,656.5
$
1,597.4
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable
$
202.7
$
203.8
Accrued compensation
40.4
45.0
Accrued pension liabilities, current
1.2
1.2
Other accrued liabilities
86.8
81.4
Total Current Liabilities
331.1
331.4
Long-Term Debt
353.5
353.4
Accrued Pension Liabilities, less current portion
52.6
60.5
Deferred Income Taxes
38.5
36.4
Self-Insurance Reserves, less current portion
7.2
7.3
Other Long-Term Liabilities
54.6
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;
51,454,820 issued and 41,735,565 outstanding at May 31, 2012; and
50,956,137 issued and 41,488,882 outstanding at August 31, 2011
0.5
0.5
Paid-in capital
697.8
680.3
Retained earnings
607.6
541.0
Accumulated other comprehensive loss items
(66.8
)
(53.8
)
Treasury stock, at cost, 9,719,255 shares at May 31, 2012 and
9,467,255 shares at August 31, 2011
(420.1
)
(411.0
)
Total Stockholders' Equity
819.0
757.0
Total Liabilities and Stockholders' Equity
$
1,656.5
$
1,597.4
ACUITY BRANDS, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In millions, except per-share data)
Three Months Ended
Nine Months Ended
May 31, 2012
May 31, 2011
May 31, 2012
May 31, 2011
Net Sales
$
487.5
$
458.3
$
1,419.5
$
1,299.5
Cost of Products Sold
285.5
268.6
841.9
769.9
Gross Profit
202.0
189.7
577.6
529.6
Selling, Distribution, and Administrative Expenses
142.8
139.5
419.5
396.7
Special Charge
1.9
-
11.2
-
Operating Profit
57.3
50.2
146.9
132.9
Other Expense (Income):
Interest Expense, net
7.7
7.5
23.1
22.5
Miscellaneous (Income) Expense, net
(2.7
)
0.9
(4.5
)
2.9
Total Other Expense
5.0
8.4
18.6
25.4
Income before Provision for Income Taxes
52.3
41.8
128.3
107.5
Provision for Income Taxes
18.7
14.7
45.2
36.2
Net Income
$
33.6
$
27.1
$
83.1
$
71.3
Earnings Per Share:
Basic Earnings per Share
$
0.80
$
0.63
$
1.97
$
1.66
Basic Weighted Average Number of Shares Outstanding
41.6
42.5
41.4
42.3
Diluted Earnings per Share
$
0.79
$
0.62
$
1.95
$
1.63
Diluted Weighted Average Number of Shares Outstanding
42.0
43.1
41.9
42.9
Dividends Declared per Share
$
0.13
$
0.13
$
0.39
$
0.39
ACUITY BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In Millions)
Nine Months Ended
May 31, 2012
May 31, 2011
Cash Provided by (Used for) Operating Activities:
Net income
$
83.1
$
71.3
Adjustments to reconcile net income to net cash provided by (used
for) operating activities:
Depreciation and amortization
29.7
29.7
Share-based compensation expense, net
6.8
5.2
Excess tax benefits from share-based payments
(4.3
)
(5.1
)
Loss on the sale or disposal of property, plant, and equipment
0.2
0.1
Asset impairments
0.1
0.1
Deferred income taxes
(0.8
)
(1.4
)
Other non-cash items
0.1
-
Change in assets and liabilities, net of effect of acquisitions, and
effect of exchange rate changes:
Accounts receivable
(9.8
)
10.2
Inventories
(3.7
)
(17.6
)
Prepayments and other current assets
(2.1
)
0.6
Accounts payable
0.2
(10.1
)
Other current liabilities
6.0
(2.9
)
Other
(2.7
)
1.5
Net Cash Provided by Operating Activities
102.8
81.6
Cash Provided by (Used for) Investing Activities:
Purchases of property, plant, and equipment
(18.8
)
(17.4
)
Proceeds from sale of property, plant, and equipment
-
1.3
Acquisitions of business and intangible assets, net of cash acquired
(3.8
)
(90.4
)
Net Cash Used for Investing Activities
(22.6
)
(106.5
)
Cash Provided by (Used for) Financing Activities:
Repurchases of common stock
(9.2
)
(2.9
)
Proceeds from stock option exercises and other
6.5
5.8
Excess tax benefits from share-based payments
4.3
5.1
Dividends paid
(16.5
)
(16.9
)
Net Cash Used for Financing Activities
(14.9
)
(8.9
)
Effect of Exchange Rate Changes on Cash
(7.2
)
3.6
Net Change in Cash and Cash Equivalents
58.1
(30.2
)
Cash and Cash Equivalents at Beginning of Period
170.2
191.0
Cash and Cash Equivalents at End of Period
$
228.3
$
160.8
ACUITY BRANDS, INC.
Reconciliation of Non-U.S. GAAP Measures
The tables below reconciles certain GAAP financial measures to the
corresponding non-GAAP measures, which exclude special charges
associated with actions to accelerate the streamlining of the
organization, including the consolidation of certain manufacturing
facilities. 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 by 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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