Acuity Brands (AYI) Misses Q4 Earnings, Issues FY17 View

Acuity Brands, Inc. (NYSE:AYI) reported fourth-quarter fiscal 2016 adjusted earnings of $2.09 per share, missing the Zacks Consensus Estimate of $2.27 by 7.9%. The reported figure however increased 28.2% from $1.63 a year ago, led by higher volume and operating margin.

Sales

Net sales during the quarter were $925.5 million, falling short of the Zacks Consensus Estimate of $948.3 million by 2.4%. The reported figure, however, increased 21.9% year over year.

The upside was mainly attributable to a 13% increase in volume and a 12% rise from acquisitions. These were partly offset by a net unfavorable change in product prices and mix of products sold (“price/mix”) of 2% and a 1% unfavorable impact from changes in foreign currency exchange rates.

Volumes increased across most product categories and key sales channels during the quarter. LED-based product sales grew nearly 40% and represented approximately two-thirds of fiscal fourth quarter net sales.

Operating Highlights

Adjusted gross profit margin was 43.5% in the fourth quarter, an increase of 120 basis points (bps) year over year. Adjusted operating margin was 16.9%, up 60 bps year over year.

Adjusted Selling, Distribution, and Administrative or SG&A expenses were $245.8 million or 26.6% of quarterly net sales, compared with $197.7 million, or 26% of quarterly net sales.

Financials

Cash and cash equivalents in fiscal 2016, as of Aug 31, 2016, were $413.2 million, down from $756.8 million in fiscal 2015. Long-term debt, less current portion, was $355 million, up slightly from $352.4 million in fiscal 2015.

Net cash provided by operating activities was $345.7 million in fiscal 2016 compared with $288.9 million in fiscal 2015, an increase of 20%. The company used cash of $623.2 million for acquisitions during fiscal 2016.

Guidance

The company will likely spend approximately 2.5% of its revenues in capital expenditures in fiscal 2017, which will support growth including tooling for new products, expansion and electronic capacity.

Acuity Brands expects the growth rate for the North American lighting market (comprising over 97% of the company’s revenues) to be in the mid-to-upper single digit range for fiscal 2017. Overall, the company expects demand in its end-markets to continue to be strong over the next several years.

Zacks Rank

Acuity Brands currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Peer Releases in the Construction Sector

PulteGroup, Inc. (NYSE:PHM) will release its third-quarter 2016 earnings on Oct 20. The Zacks Consensus Estimate for the quarter is pegged at 43 cents per share.

Masco Corporation (NYSE:MAS) will report its third-quarter 2016 earnings on Oct 25. The Zacks Consensus Estimate for the quarter stands at 44 cents per share

DR Horton Inc. (NYSE:DHI) will release its fourth-quarter fiscal 2016 results on Nov 8. The Zacks Consensus Estimate for the quarter’s earnings is pegged at 77 cents per share.

ACUITY BRANDS Price, Consensus and EPS Surprise

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