Electricalmarketing 2212 Acuitybrands 770 1
Electricalmarketing 2212 Acuitybrands 770 1
Electricalmarketing 2212 Acuitybrands 770 1
Electricalmarketing 2212 Acuitybrands 770 1
Electricalmarketing 2212 Acuitybrands 770 1

Acuity Expects Improvement Later in 2018 but Investors Knocked 15% Off Shares After Earnings

Jan. 12, 2018
“The year-over-year decline in our net sales of one percent was due primarily to lower sales in the home center/showroom channel and certain international sales channels, including the U.K and Mexico," Nagel said.

Investors have hammered stocks of Acuity Brands, Inc., Atlanta, since Tuesday, when the lighting giant announced declines in quarterly sales and income and expectations of soft lighting sales into the first part of 2018, but company execs expressed cautious optimism about the view ahead.

Acuity’s fiscal 2018 first quarter net sales were $842.8 million, a decrease of $8.4 million, or 1%, compared with the year-ago period. Operating profit for the period fell $8.0 million or 6.3% to $118.6 million from the year-ago period and net income slipped 12.5% to $71.5 million.

After the announcement, Acuity’s stock price went from around $186 to $159.43, a drop of 15%.

Vernon Nagel, chairman, president, and CEO, said in the release, “The year-over-year decline in our net sales of one percent was due primarily to lower sales in the home center/showroom channel and certain international sales channels, including the U.K and Mexico.” He added that the home center/showroom channel slowdown was primarily due to changes in the in-house branding strategies being deployed by certain customers for select products in certain categories, while the decline in sales in certain international markets was due to weaker demand resulting from economic and or political headwinds.  Excluding these specific sales channels, net sales increased 2 percent.”

“At this time, we continue to expect the growth rate for lighting and building management solutions in the North American market, which includes renovation and retrofit activity and comprises approximately 97 percent of the company’s revenues, will be up low single-digits for fiscal 2018, reflecting an expected rebound in the second half of the year. We expect the pricing environment to continue to be challenging in certain portions of the market, particularly for more basic, lesser-featured products sold through certain sales channels. We do not foresee a meaningful rebound in demand in the near term in certain international markets that we serve. In addition, we expect certain headwinds in the home center/showroom channel to continue in the near term, giving way to growth in the second half of calendar 2018 as we bring new solutions to key customers and expand our access to market in this important sales channel,” Nagel said in the release.

According to the earnings release, Acuity management expects the Tax Cuts and Jobs Act to favorably impact the company’s net income, diluted earnings per share and cash flows in future periods, due primarily to the reduction in the federal corporate tax rate from 35% to 21% this year. “Additionally, positive business sentiment and other favorable aspects of the new tax law could incentivize additional investments in facilities and infrastructure in the U.S. that may increase future demand in the end-markets that the company serves.”