Acuity Brands Second-Quarter Results Cheer Analysts

April 10, 2008
Wall Street analysts took note of the positive second-quarter financial report released last week by lighting fixture titan Acuity Brands Inc., Atlanta, which owns Lithonia Lighting and Holophane, as well as a large stable of other lighting brands.

Amidst the steady drumbeat of negative financial reports, good news stands out.

Wall Street analysts took note of the positive second-quarter financial report released last week by lighting fixture titan Acuity Brands Inc., Atlanta, which owns Lithonia Lighting and Holophane, as well as a large stable of other lighting brands. In online reports, several analysts cheered the company’s spin-off of its Zip Inc. specialty chemicals business last October so it could focus on the lighting business.

In its second-quarter fiscal 2008 report, the company also announced a 64 percent increase in its diluted earnings per share (EPS) from continuing operations of $0.82, compared with $0.50 for the prior year period. Income from continuing operations increased 55 percent, to $34.1 million compared with $22 million for the prior year second quarter. Acuity Brands also generated record second quarter net sales of $482.6 million, an 8.6 percent increase over the $444.3 million reported in the year-ago period.

Vernon Nagel, the company’s chairman, president and CEO said in the press release that he expects Acuity to meet or exceed its long-term financial goals, including operating margin expansion, earnings growth and cash-flow generation.

“Incoming orders in March continued at a positive pace compared with the year ago period,” he said. “To help offset a recent spike in various commodity prices, we recently announced a price increase ranging between 3 percent and 10 percent, effective early May. In addition, we continue to position the company by expanding our extensive product offerings and enhancing our service capabilities to benefit from opportunities in the growing renovation and the lighting retrofit markets as businesses seek to reduce energy costs and improve aesthetics.

“Looking ahead to the second half of 2008 and beyond, we continue to see challenges as well as opportunities. While the United States economy is experiencing a slowdown resulting from the disruption in the housing and credit markets, it’s impossible to predict the precise timing or impact on the growth rate of non-residential construction, the company’s primary market.

“Several factors influence the future rate of growth of new construction in the non-residential market including: economic vitality, employment, commercial property values and rental rates, occupancy rates, the cost and availability of financing for new construction, the costs of building materials, and to a lesser degree the relative strength of the housing market. Concerns by building owners and developers regarding several of these factors, particularly current economic vitality and the availability of capital to fund projects, contributed to the decline in reported non-residential contract awards for February 2008. This is potentially a harbinger for decline in future commercial construction activity in certain sectors of the market.

“Although these concerns are worrisome, the Federal Reserve and the U.S. Treasury implemented a number of actions designed to boost investor and public confidence about the overall direction of the U.S. economy, including lowering interest rates and increasing liquidity in the financial markets. We expect these actions will have a positive influence on the longer-term trends for overall construction in North America.

“We believe both past and future actions will provide customers with superior value propositions, create new and innovative products and services, expand into new markets, and simplify and streamline the organization will enhance the company’s opportunity to prosper over the long-term.”

The company’s stable of lighting brands include American Electric Lighting, Antique Street Lamps, Carandini, Gotham, Holophane, Hydrel, Lithonia Lighting, Mark Architectural Lighting, MetalOptics, Peerless and SpecLight and Synergy Lighting Controls.