Acuity Brands Reports Fiscal 2021 First Quarter Results
Jan 12, 2021
Acuity Brands, Inc. has announced results for thier first quarter, ending November 30, 2020.
First quarter net sales were $792 million, a decrease of 5.1% compared with the prior-year period. Operating profit margin of 10.8% increased 80 basis points and adjusted operating profit margin of 13.2% decreased 110 basis points compared with the prior-year period. Net income was $60 million, an increase of 4.6% compared with the prior-year period. Diluted earnings per share (EPS) of $1.57 increased by 9.0% and adjusted diluted EPS of $2.03 decreased by 4.7% compared with the prior-year period. Net cash provided by operating activities totaled $124 million for the first quarter of fiscal 2021 compared with $130 million in the prior year.
Neil Ashe, Chief Executive Officer of Acuity Brands, commented, “Our Company delivered consistent financial performance in our first quarter amid the challenging market environment associated with the pandemic that continues to negatively impact our end markets. We achieved gross profit margins of 42%, in line with our gross profit margins in the fourth quarter, resulting from our ongoing actions to drive productivity and reduce product input costs. We generated free cash flow of $113 million and deployed $255 million of cash to repurchase shares under our share repurchase program.”
Mr. Ashe further commented, “The health and well-being of our associates remain our first priority. I am extremely pleased with how our talented associates have worked together during the pandemic to support each other and our customers. As part of our ongoing commitment to making a difference in our communities, we released our EarthLIGHT report during the first quarter to highlight our progress to deliver on our governance and sustainability objectives.”
Fiscal 2021 First Quarter Results
Fiscal 2021 first quarter net sales of $792 million decreased 5.1% compared with the prior-year period. From a sales channel perspective, sales in the retail channel increased 3% reflecting strength in home center opportunities. Sales in the independent sales network decreased 3% as compared with the prior year due to lower volume, decreasing prices on certain products and a changing mix of products sold due primarily to the impact of the COVID-19 pandemic. Sales in the direct sales network decreased 10% reflecting weakness in large industrial projects while sales in the corporate accounts sales channel declined 28% due primarily to lower renovation activity with large, big-box retailers. Changes in foreign currency rates did not have a meaningful impact on first quarter net sales.
Gross profit for the first quarter of fiscal 2021 was $332 million, a decrease of $23 million, or 6.6%, compared with the prior-year period. The decrease in gross profit was due primarily to the impact of lower volume and lower price on certain products, as well as a change in product mix partially offset by productivity improvements and lower product input costs from cost reduction efforts. Fiscal 2021 first quarter gross profit margin of 42.0% decreased 60 basis points compared with the prior-year period’s gross profit margin of 42.6%. Adjusted gross profit margin for the first quarter of fiscal 2021 decreased 80 basis points to 42.0% compared to 42.8% in the prior-year period.
Selling, distribution, and administrative (“SD&A”) expenses for the first quarter of fiscal 2021 totaled $246 million, a decrease of $19 million compared with the prior-year period. The decrease in SD&A expenses was due primarily to decreased employee costs, lower freight and commissions associated with decreased sales volumes, and the reduction of fixed operating expenses in response to the lower net sales. SD&A expenses for the first quarter of fiscal 2021 were 31.1% of net sales compared with 31.8% of net sales for the prior-year period. Adjusted SD&A expenses for the first quarter of fiscal 2021 totaled $228 million (28.8% of net sales) compared with $238 million (28.5% of net sales) in the prior-year period.
Operating profit for the first quarter of fiscal 2021 was $86 million, or 10.8% of net sales, compared with $84 million, or 10.0% of net sales, for the prior-year period, an increase of $2 million, or 2.5%. The increase in operating profit was due to lower SD&A expenses and lower special charges partially offset by lower gross profit. Adjusted operating profit for the first quarter of fiscal 2021 was $104 million, or 13.2% of net sales, compared with $119 million, or 14.3% of net sales, for the prior-year period, a decrease of $15 million, or 12.4%.
Cash Flows
Net cash provided by operating activities totaled $124 million during fiscal 2021 first quarter compared with $130 million in the prior-year period, a decrease of $6 million due primarily to the timing of certain payments and lower net income partially offset by lower operating working capital requirements. Free cash flow (net cash provided by operating activities less capital expenditures) decreased $5 million to $113 million for fiscal 2021 first quarter. Cash and cash equivalents on November 30, 2020 totaled $507 million, a decrease of $54 million since the end of fiscal 2020. During the first quarter of fiscal 2021, the Company paid $255 million in cash to repurchase approximately 2.6 million shares of its common stock under its previously authorized stock repurchase program.
Financing
On November 10, 2020, Acuity Brands Lighting, Inc. (“ABL”), a wholly owned operating subsidiary of the Company, issued senior unsecured notes in an aggregate principal amount of $500 million. The notes bear interest at a rate of 2.150% per annum and will mature on December 15, 2030. The majority of the proceeds were used to refinance outstanding borrowings of $395 million under ABL’s senior unsecured term loan.
Outlook
Mr. Ashe commented, “We continue to invest in our business to expand our technology and product portfolios in lighting, lighting controls, and intelligent buildings while we drive our transformation to improve our service capabilities. While the recovery in the economic environment remains uncertain due to the impacts of the pandemic, we are cautiously optimistic about returning to stability in our end markets in calendar year 2021, and are excited about the opportunity that lies before us to transform our business and gain share. We will continue to use our strong cash generation to prioritize growth investments and share repurchases.”
