ATLANTA — Acuity Brands, Inc. announced record second quarter results for net sales, net income, and diluted earnings per share (“EPS”). Fiscal 2016 second quarter net sales of $777.8 million increased $161.7 million, or 26 percent, compared with the year-ago period. Operating profit for the second quarter of fiscal 2016 was $106.7 million, an increase of $28.1 million, or 36 percent, over the year-ago period. Net income for the second quarter of fiscal 2016 was $65.5 million, an increase of 41 percent compared with the prior-year period. Fiscal 2016 second quarter diluted EPS of $1.49 increased 39 percent compared with $1.07 for the year-ago period.
Adjusted diluted EPS for the second quarter of fiscal 2016 increased 53 percent to $1.80 compared with adjusted diluted EPS of$1.18 for the year-ago period. Adjusted operating profit for the second quarter of fiscal 2016 increased $41.6 million, or 49 percent, to $127.4 million, or 16.4 percent of net sales, compared with the year-ago period adjusted operating profit of $85.8 million, or 13.9 percent of net sales. Adjusted results for both periods exclude the impact of amortization expense for acquired intangible assets, share-based compensation expense, acquisition-related items (including profit in inventory, professional fees, and certain contract termination costs), and special charges for streamlining activities. Management believes these items impacted the comparability of the Company’s results and that adjusted financial measures enhance the reader’s overall understanding of the Company’s current financial performance by making results comparable between periods. A reconciliation of adjusted financial measures to the most directly comparable U.S. GAAP measure is provided in the tables at the end of this release.
Vernon J. Nagel, Chairman, President, and Chief Executive Officer of Acuity Brands, commented, “We were extremely pleased with our achievement of record second quarter results. These results are even more impressive when one considers that we continued to invest in our strong sales growth and areas with significant future growth potential, including the expansion of our solid state luminaire and controls portfolio as well as our building management, software, and Internet of Things solutions. Adjusted gross profit margin was 43.5 percent, a quarterly record, and represented an increase of 200 basis points over prior year’s second quarter, while adjusted operating profit margin of 16.4 percent increased 250 basis points over last year’s second quarter. The integration of recent acquisitions, which include Distech Controls, Juno Lighting and Geometri, continues to go well. We believe our record second quarter results reflect our ability to provide customers with truly differentiated value from our industry-leading portfolio of innovative lighting and building automation solutions along with superior service.”
Second Quarter Results
The year-over-year growth in fiscal 2016 second quarter net sales was primarily due to a 17 percent increase in volume as well as an 11 percent increase from acquisitions, partially offset by 1 percent net unfavorable change in product prices and mix of products sold (“price/mix”) and 1 percent unfavorable impact from changes in foreign currency exchange rates. The increase in volume was broad-based across most product categories and key sales channels. Sales of LED-based products increased over 40 percent from the year-ago period and represented approximately 55 percent of fiscal 2016 second quarter total net sales.
Net cash provided by operating activities totaled $119.5 million for the first six months of fiscal 2016 compared with $75.5 million for the year-ago period. Cash and cash equivalents at the end of the second quarter of fiscal 2016 totaled $224.3 million, a decrease of $532.5 million since the beginning of the fiscal year. The Company used cash of $613.7 million for acquisitions.
Year-to-Date Results
Net sales for the first six months of fiscal 2016 increased 20 percent to $1,514.4 million compared with $1,263.5 million for the prior-year period. Fiscal 2016 first-half reported results include operating profit of $219.1 million, net income of $133.9 million, and diluted EPS of $3.06.
Adjusted operating profit for the first half of fiscal 2016 increased $63.8 million, or 34 percent, to $253.3 million, or 16.7 percent of net sales, compared with prior year’s adjusted operating profit of $189.5 million, or 15.0 percent of net sales. Adjusted net income for the first half of fiscal 2016 was $156.6 million compared with $113.2 million for the prior-year period, an increase of 38 percent. Adjusted diluted EPS for the first half of fiscal 2016 increased $0.98, or 38 percent, to $3.58 compared with adjusted diluted EPS of $2.60 for the year-ago period. Adjusted results for the first six months of fiscal 2016 and 2015 exclude amortization expense for acquired intangible assets, share-based compensation expense, acquisition-related items (including profit in inventory, professional fees, and certain contract termination costs), and special charges for streamlining activities. The total impact of these items on diluted EPS for the first six months of fiscal 2016 and 2015 was $0.52 and $0.36 respectively. A reconciliation of adjusted financial measures to the most directly comparable U.S. GAAP measure is provided in the tables at the end of this release.
Outlook
Mr. Nagel commented, “We remain bullish about our prospects for continued future profitable growth. Third-party forecasts as well as key leading indicators suggest that the growth rate for the North American lighting market, which includes renovation and retrofit activity, will be in the mid-to-upper single digit range for fiscal 2016 with expectations that overall demand in our end markets will continue to experience solid growth over the next several years. Our order rates through the month of March reflect this favorable trend. We expect to continue to outperform the growth rates of the markets we serve by executing our strategies focused on growth opportunities for new construction and renovation projects, expansion into under-penetrated geographies and channels, and growth from the continued introduction of new products and lighting solutions as part of our integrated, tiered solutions strategy.”
Mr. Nagel concluded, “We believe the lighting and lighting-related industry as well as building automation systems will experience solid growth over the next decade, particularly as energy and environmental concerns come to the forefront along with emerging opportunities for digital lighting to play a key role in the Internet of Things. We believe we are uniquely positioned to fully participate in this exciting industry.”
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