Despite continued supply chain and cost challenges, Acuity Brands reported an 11.8% increase in net sales to $1.1 billion for its fiscal fourth quarter ending Aug. 31, compared to the same quarter a year ago. Net income also jumped by 17.6% to $115.4 million.
The leap in profits came despite a decline in profit margin in the company’s Acuity Brands Lighting (ABL) segment, from 15.8% a year ago to 14.4%. ABL, which sells luminaires, drivers, and other hardware, represents most of the Atlanta company’s sales. It accounted for about $1.05 billion of overall sales. The Intelligent Spaces Group (ISG) made up the rest with $61.4 million in net sales, an increase of 21.6%. Its operating margins increased substantially, from 4% to 16.8%. ISG markets building and lighting controls under the Distech brand and IoT connections under the Atrius flag.
For the year, Acuity sales rose 15.7%, or $545.1 million, to $4.01 billion, marking the first time the company cracked the $4 billion mark. Net income for the year surged 25% to $384 million, from $306.3 million in 2021.
A steady rise in prices passed on to customers helped buoy the top line.
“We’ve made seven price increases in our last fiscal year,” Acuity CEO Neil Ashe said when asked about inflation during a web call with analysts. “That’s more than anyone in our company can remember.”
It’s not clear exactly how profits rose for the quarter as margins declined, but presumably the company was able to lower operating costs in areas not directly related to sales.
Ashe and chief financial officer Karen Holcom described a quarter in which costs and the operating environment remained challenging in many of the logistical and supply areas that have become familiar across all industries in the recent era of war, pandemic, and inflation.
“We are continuing to deal with the global supply chain challenges, particularly around component shortages,” Holcom said. She noted that the company is “continuing to work through some of the higher cost inventory,” which, she said in regard to fiscal 2023, “could result in margins that are a little lower in the first part of the year as compared to later in the year.”
CEO Ashe told one analyst that the component shortages related mainly to “pacemaker” parts that go into LED drivers, and that Acuity is working hard to smooth things.
“We are establishing long-term multiyear relationships with some of the key component suppliers on the electronics side,” he said. “We expect that to over time provide more consistency. We should expect some benefit from that toward the middle or later part of next year.”
Holcom also singled out higher transportation costs — both receiving and shipping goods — as well as increased commissions that Acuity pays its sales agents as factors in the margin decline.
The company provided a sales outlook for 2023 of between $4.1 billion and $4.3 billion.
Ashe also outlined a future in which Acuity might acquire another company, and hinted that could happen in the IoT space, where Acuity wants to increase the activity of its Atrius software and services program, especially collecting data for cloud analysis.
“I don’t think we’ve turned to an inflection point yet on Atrius, but we’re excited about the possibility,” Ashe told one analyst.
LEDs Magazine hopes to bring you more on this in a separate article.
MARK HALPER is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).
For up-to-the-minute LED and SSL updates, follow us on Twitter. You’ll find curated content and commentary, as well as information on industry events, webcasts, and surveys on our LinkedIn page and our Facebook page.
