Acuity (AYI) Q3 2024 earnings summary

Executive summary

• Fiscal Q3 2024 net sales were $968.1M, down 3.2% year-over-year, with adjusted operating profit up 2.6% to $167.1M and adjusted diluted EPS up 10.7% to $4.15, despite lower ABL segment sales and strong ISG growth.

• Gross profit rose 1.1% to $452.2M, with margin up 200 bps to 46.7% due to favorable material costs.

• Strong free cash flow generation and disciplined capital allocation supported value creation.

• ISG segment delivered double-digit sales and profit growth, while ABL saw sales decline but improved margins.

• Diluted EPS rose 10.4% to $3.62; adjusted diluted EPS increased 10.7% to $4.15 year-over-year.

Financial highlights

• Q3 net sales were $968M, down 3% year-over-year, mainly due to lower lighting and controls sales.

• Adjusted operating profit reached $167M, up 3% year-over-year; margin up 100 bps to 17.3%.

• Adjusted diluted EPS was $4.15, an 11% increase from $3.75 in Q3 2023.

• Year-to-date operating cash flow was $445M; free cash flow YTD was $404M.

• Cash and equivalents at May 31, 2024 were $699.0M; debt was $496.0M.

Outlook and guidance

• Fiscal 2024 net sales expected between $3.7B and $4.0B; adjusted diluted EPS guidance set at $14.75 to $15.50.

• ABL segment net sales projected to decline low to mid-single digits; ISG segment net sales expected to grow mid-teens.

• Order rates grew year-over-year, building backlog as orders exceeded shipments; backlog expected to be fulfilled in coming quarters.

• Management expects to meet liquidity needs over the next 12 months with cash on hand, projected operating cash flows, and available credit.

• Infrastructure quoting activity is strong, indicating future opportunities.