The following table calculates basic earnings per common share and diluted earnings per common share for the three months ended November 30, 2017 and 2016periods presented (in millions, except per share data):
Comprehensive income represents a measure of all changes in equity that result from recognized transactions and other economic events other than transactions with owners in their capacity as owners. OtherComprehensive income includes our net income as well as other comprehensive income (loss) for the Company includesitems, which are comprised of foreign currency translation and pension adjustments.
The following table presents the changes in each component of accumulated other comprehensive income (loss) net of tax during the three months ended November 30, 2017periods presented (in millions):
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| November 30, 2017 | | November 30, 2016 |
| Before Tax Amount | | Tax (Expense) Benefit | | Net of Tax Amount | | Before Tax Amount | | Tax (Expense) Benefit | | Net of Tax Amount |
Foreign currency translation adjustments | $ | (10.5 | ) | | $ | — |
| | $ | (10.5 | ) | | $ | (11.9 | ) | | $ | — |
| | $ | (11.9 | ) |
Defined benefit pension plans: | | | | | | | | | | | |
Amortization of defined benefit pension items: | | | | | | | | | | | |
Prior service cost (1) | 0.8 |
| | (0.3 | ) | | 0.5 |
| | 0.8 |
| | (0.3 | ) | | 0.5 |
|
Actuarial losses (1) | 1.7 |
| | (0.6 | ) | | 1.1 |
| | 2.2 |
| | (0.7 | ) | | 1.5 |
|
Total defined benefit pension plans, net | 2.5 |
| | (0.9 | ) | | 1.6 |
| | 3.0 |
| | (1.0 | ) | | 2.0 |
|
Other comprehensive loss | $ | (8.0 | ) | | $ | (0.9 | ) | | $ | (8.9 | ) | | $ | (8.9 | ) | | $ | (1.0 | ) | | $ | (9.9 | ) |
| |
(1)
| The before tax amount of these other comprehensive income (loss) components is included in net periodic pension cost. See Pension Plans footnotewithin the Notes to Consolidated Financial Statements for additional details.
|
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
LinesThe accounting policies of Credit
On August 27, 2014,our reportable segments are the Company executed a $250.0 million revolving credit facility (the “Revolving Credit Facility”). The Revolving Credit Facility will mature, and all amounts outstanding will be due and payable, on August 27, 2019. Generally, amounts outstanding under the Revolving Credit Facility bear interest at a Eurocurrency Rate. Eurocurrency Rate advances can be denominated in a variety of currencies, including U.S. Dollars, and amounts outstanding bear interest at a periodic fixed rate equal to the London Inter Bank Offered Rate (“LIBOR”) for the applicable currency plus a marginsame as determined by the Company's leverage ratio (“Applicable Margin”). The Applicable Margin is based on the Company’s leverage ratio, as definedthose described in the Revolving Credit Facility, with such margin ranging from 1.000% to 1.575%. The Company had no borrowings outstanding under the Revolving Credit Facility as of November 30, 2017. Additionally, the Company is required to pay certain fees in connection with the Revolving Credit Facility, including administrative service fees and an annual facility fee. The annual facility fee is payable quarterly, in arrears, and is determined by the Company’s leverage ratio as defined in the Revolving Credit Facility. This facility fee ranges from 0.125% to 0.300% of the aggregate $250.0 million commitment of the lenders under the Revolving Credit Facility.
The Revolving Credit Facility contains financial covenants, including a minimum interest coverage ratio (“Minimum Interest Coverage Ratio”) and a leverage ratio (“Maximum Leverage Ratio”) of total indebtedness to earnings before interest, taxes, depreciation, and amortization expense (“EBITDA”), as such terms are defined in the Revolving Credit Facility agreement. These ratios are computed at the end of each fiscal quarter for the most recent 12-month period. The Revolving Credit Facility allows for a Minimum Interest Coverage Ratio of 2.50 and a Maximum Leverage Ratio of 3.50, subject to certain conditions defined in the financing agreement.
As of November 30, 2017, the Company was in compliance with all financial covenants under the Revolving Credit Facility. As of November 30, 2017, the Company had outstanding letters of credit totaling $10.2 million, primarily for securing collateral requirements under the Company's casualty insurance programs and for providing credit support for the Company’s industrial revenue bond (not an outstanding amount under the Revolving Credit Facility). At November 30, 2017, the Company had additional borrowing capacity under the Revolving Credit Facility of $244.7 million under the most restrictive covenant in effect at the time, which represents the full amount of the Revolving Credit Facility less outstanding letters of credit of $5.3 million issued under the Revolving Credit Facility.
Long-term Debt
At November 30, 2017, the Company had $350.0 million of publicly-traded, senior unsecured notes outstanding at a 6% interest rate that are scheduled to mature in December 2019 (the “Unsecured Notes”) and $4.0 million of tax-exempt industrial revenue bonds that are scheduled to mature in 2021. The Company also had $3.7 million outstanding under fixed-rate bank loans. Further discussion of the Company's long-term debt is included within the Debt and Lines of CreditSignificant Accounting Policies footnote of the Notes to Consolidated Financial Statements within the Company’s Form 10-K.
Interest Expense, net
Interest expense, net, is comprised primarily of interest expense on long-term debt, obligations in connection with non-qualified retirement benefits, and Revolving Credit Facility borrowings, partially offset by interest income earned on cash and cash equivalents.
The following table summarizes the components of interest expense, net for the three months ended November 30, 2017 and 2016 (in millions):
|
| | | | | | | |
| Three Months Ended |
| November 30, 2017 | | November 30, 2016 |
Interest expense | $ | 8.7 |
| | $ | 8.6 |
|
Interest income | (0.6 | ) | | (0.4 | ) |
Interest expense, net | $ | 8.1 |
| | $ | 8.2 |
|
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
| |
10. | Commitments and Contingencies |
In the normal course of business, the Company is subject to the effects of certain contractual stipulations, events, transactions, and laws and regulations that may, at times, require the recognition of liabilities, such as those related to self-insurance reserves and claims, legal and contractual issues, environmental laws and regulations, guarantees, and indemnities. The Company establishes reserves when the associated costs related to uncertainties or guarantees become probable and can be reasonably estimated. For the period ended November 30, 2017, no material changes have occurred in the Company's reserves for self-insurance, litigation, environmental matters, guarantees and indemnities, or relevant events and circumstances, from those disclosed in the Commitments and Contingencies footnote of the Notes to Consolidated Financial Statements within the Company'sour Form 10-K.
Trade Compliance Matters
In the course of routine reviews of import Corporate expenses that are primarily administrative in function and export activity,benefit the Company determined that it misclassified and/or inaccurately valued certain international shipments of products. The Company is conducting a detailed review of this activityon an entity-wide basis are not allocated to determine the extent of any liabilities and the appropriate remedial measures. At this time, the Company is unable to determine the likelihood or amount of any loss associated with these shipments.
Product Warranty and Recall Costs
The Company's products generally have a standard warranty term of five years. The Company records an allowance for the estimated amount of future warranty costs when the related revenue is recognized. Estimated costssegments. These include expenses related to product recalls based on a formal campaign soliciting repair or return of that product are accrued when they are deemed to be probablegovernance, policy setting, compliance, and can be reasonably estimated. Estimated future warrantycertain other shared services functions. Additionally, net interest expense, net miscellaneous expense, and recall costs are primarily based on historical experience of identified warranty and recall claims. In certain limited cases, the Company has warranty arrangements for terms that exceed the standard term. Given that these longer-term warrantiesincome tax expense are not included in the Company’s historical experience, the Company utilizes estimated failure rates from industry sourcesallocated to determine the potential future warranty cost. However, there can besegments.
We recorded no assurance that future warranty or recall costs will not exceed historical amounts or that new technology products, which may include extended warranties, may not generate unexpected costs. If actual future warranty or recall costs exceed historical amounts, additional allowances may be required, which could have a material adverse impact on the Company’s results of operations and cash flows.
Reserves for product warranty and recall costs are included in Other accrued liabilities and Other long-term liabilities on the Consolidated Balance Sheets. The changes in the reserves for product warranty and recall costsspecial charges during the three and six months ended November 30, 2017 and 2016 are summarized as follows (in millions):
|
| | | | | | | |
| Three Months Ended |
| November 30, 2017 | | November 30, 2016 |
Beginning balance | $ | 22.0 |
| | $ | 15.5 |
|
Warranty and recall costs | 8.6 |
| | 9.2 |
|
Payments and other deductions | (6.7 | ) | | (7.2 | ) |
Ending balance | $ | 23.9 |
| | $ | 17.5 |
|
Securities Class Action
On January 3, 2018, a shareholder filed a class action complaint inFebruary 29, 2024. Special charges during the United States District Court forsix months ended February 28, 2023 of $6.9 million pertained to the District of Delaware against the Company and certain of its officers on behalf of all persons who purchased or otherwise acquired the Company’s stock between June 29, 2016 and April 3, 2017. The complaint alleges that the defendants violated the federal securities laws by making false or misleading statements and/or omitting to disclose material adverse facts that (i) concealed known trends negatively impacting sales of the Company’s products and (ii) overstated the Company’s ability to achieve profitable sales growth. The plaintiff seeks class certification, unspecified monetary damages, costs, and attorneys’ fees. The Company disputes the allegations in the complaint and intends to vigorously defend against the claims. Estimating an amount or range of possible losses resulting from litigation proceedings is inherently difficult, particularly where the matters involve indeterminate claims for monetary damages and are in the stages of the proceedings where key factual and legal issues have not been resolved. For these reasons, the Company is currently unable to predict the ultimate timing or outcome of, or reasonably estimate the possible losses or a range of possible losses resulting from the matter described above.
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Other Litigation
The Company is subject to various other legal claims arising in the normal course of business, including patent infringement, employment matters, and product liability claims. Based on information currently available, it is the opinion of management that the ultimate resolution of any such pending and threatened legal proceedings will not have a material adverse effect on the financial condition, results of operations, or cash flows of the Company. However, in the event of unexpected future developments, it is possible that the ultimate resolution of any such matters, if unfavorable, could have a material adverse effect on the financial condition, results of operations, or cash flows of the Company in future periods. The Company establishes reserves for legal claims when associated costs become probable and can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher than the amounts reserved for such claims. However, the Company cannot make a meaningful estimate of actual costs to be incurred that could possibly be higher or lower than the amounts reserved.
The Company accounts for share-based payments through the measurement and recognition of compensation expense for share-based payment awards made to employees and directors of the Company, including stock options and restricted shares (all part of the Company's equity incentive plan), and share units representing certain deferrals into the Company's director deferred compensation plan or the Company's supplemental deferred savings plan.ABL segment.
The following table presents share-based payment expense and new shares issued upon exercise of stock optionsfinancial information by operating segment for the three months ended November 30, 2017 and 2016 (in millions, except shares):
|
| | | | | | | |
| Three Months Ended |
| November 30, 2017 | | November 30, 2016 |
Share-based payment expense | $ | 8.5 |
| | $ | 7.9 |
|
Shares issued from option exercises | 6,156 |
| | 12,030 |
|
Further details regarding each of these award programs and the Company's share-based payments are included within the Share-based Payments footnote of the Notes to Consolidated Financial Statements within the Company’s Form 10-K.
The Company has several pension plans, both qualified and non-qualified, covering certain hourly and salaried employees. Benefits paid under these plans are based generally on employees’ years of service and/or compensation during the final years of employment. Plan assets are invested primarily in equity and fixed income securities.
Net periodic pension cost for the Company’s defined benefit pension plans during the three months ended November 30, 2017 and 2016 included the following components before taxperiods presented (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| February 29, 2024 | | February 28, 2023 | | February 29, 2024 | | February 28, 2023 |
Net sales: | | | | | | | |
ABL | $ | 843.5 | | | $ | 890.8 | | | $ | 1,719.9 | | | $ | 1,837.9 | |
ISG | 68.1 | | | 58.2 | | | 132.3 | | | 115.0 | |
Eliminations(1) | (5.7) | | | (5.4) | | | (11.6) | | | (11.4) | |
Total | $ | 905.9 | | | $ | 943.6 | | | $ | 1,840.6 | | | $ | 1,941.5 | |
| | | | | | | |
Operating profit: | | | | | | | |
ABL | $ | 126.0 | | | $ | 123.6 | | | $ | 269.8 | | | $ | 241.7 | |
ISG | 9.1 | | | 6.3 | | | 14.4 | | | 14.0 | |
Unallocated corporate amounts | (17.0) | | | (18.4) | | | (33.2) | | | (35.3) | |
Total | $ | 118.1 | | | $ | 111.5 | | | $ | 251.0 | | | $ | 220.4 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
____________________________
(1) These amounts represent intersegment sales. Profit on these sales eliminates within gross profit on a consolidated basis.
The following table reconciles operating profit by segment to income before income taxes for the periods presented (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| February 29, 2024 | | February 28, 2023 | | February 29, 2024 | | February 28, 2023 |
Operating profit - ABL | $ | 126.0 | | | $ | 123.6 | | | $ | 269.8 | | | $ | 241.7 | |
Operating profit - ISG | 9.1 | | | 6.3 | | | 14.4 | | | 14.0 | |
Unallocated corporate amounts | (17.0) | | | (18.4) | | | (33.2) | | | (35.3) | |
Operating profit | 118.1 | | | 111.5 | | | 251.0 | | | 220.4 | |
Interest (income) expense, net | (0.1) | | | 5.7 | | | 0.8 | | | 12.3 | |
Miscellaneous expense (income), net | 0.6 | | | (3.7) | | | 1.7 | | | 5.4 | |
Income before income taxes | $ | 117.6 | | | $ | 109.5 | | | $ | 248.5 | | | $ | 202.7 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
|
| | | | | | | |
| Three Months Ended |
| November 30, 2017 | | November 30, 2016 |
Service cost | $ | 0.7 |
| | $ | 0.9 |
|
Interest cost | 2.2 |
| | 2.0 |
|
Expected return on plan assets | (3.1 | ) | | (2.8 | ) |
Amortization of prior service cost | 0.8 |
| | 0.8 |
|
Recognized actuarial loss | 1.7 |
| | 2.2 |
|
Net periodic pension cost | $ | 2.3 |
| | $ | 3.1 |
|
Further details regarding the Company's pension plans are included within the Pension and Defined Contribution Plans footnote of the Notes to Consolidated Financial Statements within the Company’s Form 10-K.
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
During fiscal 2017, the Company recognized pre-tax special charges consisting primarily of severance and employee-related benefit costs for the elimination of certain operations and positions following a realignment of the Company's operating structure, including positions within various selling, distribution, and administrative (“SD&A”) departments. During fiscal 2016, the Company recognized pre-tax special charges primarily related to the Company's continued efforts to integrate recent acquisitions and to streamline the organization by realigning certain responsibilities primarily within various SD&A departments, as well as the consolidation of certain production activities. The Company expects that actions to streamline its business activities taken in previous fiscal years will allow it to reduce spending in certain areas while permitting continued investment in future growth initiatives, such as new products, expanded market presence, and technology and innovation. The Company did not initiate any such actions during the first quarter of fiscal 2018.
The details of the special charge during the three months ended November 30, 2017 and 2016 are summarized as follows (in millions):
|
| | | | | | | |
| Three Months Ended |
| November 30, 2017 | | November 30, 2016 |
Severance and employee-related costs | $ | 0.2 |
| | $ | (0.2 | ) |
Lease termination and other costs | — |
| | 1.4 |
|
Total special charges | $ | 0.2 |
| | $ | 1.2 |
|
As of November 30, 2017, remaining restructuring reserves were $10.2 million and are included in Accrued compensation and Other long-term liabilities on the Consolidated Balance Sheets. The changes in the reserves related to these programs during the three months ended November 30, 2017 are summarized as follows (in millions):
|
| | | | | | | | | | | |
| Fiscal 2017 Actions | | Fiscal 2016 Actions | | Total |
Balance at August 31, 2017 | $ | 11.2 |
| | $ | 1.4 |
| | $ | 12.6 |
|
Severance costs | 0.2 |
| | — |
| | 0.2 |
|
Payments made during the period | (2.1 | ) | | (0.5 | ) | | (2.6 | ) |
Balance at November 30, 2017 | $ | 9.3 |
| | $ | 0.9 |
| | $ | 10.2 |
|
On December 22, 2017, the President of the U.S. signed into law the Tax Cuts and Jobs Act (H.R. 1) (the “Act”), which is expected to have a materially favorable impact to the Company's net income, cash flows, and diluted earnings per share in future periods. The Act reduces the federal corporate tax rate from 35% to 21% effective January 1, 2018. Additionally, the Company will be required to evaluate the Act's impact on certain discrete items, including the remeasurement of the Company's net deferred tax liabilities and the taxation of the Company's accumulated unremitted foreign earnings. The Company is currently reviewing the components of the Act and evaluating its impact on its financial position, operations, and future cash flows.
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
| |
15. | Supplemental Guarantor Condensed Consolidating Financial Statements |
In December 2009, ABL, the 100% owned and principal operating subsidiary of Acuity Brands, refinanced the then current outstanding debt through the issuance of the Notes. See Debt and Lines of Credit footnote for further information.
In accordance with the registration rights agreement by and between ABL and the guarantors to the Notes and the initial purchasers of the Notes, ABL and the guarantors to the Notes filed a registration statement with the SEC for an offer to exchange the Notes for an issue of SEC-registered notes with identical terms. Due to the filing of the registration statement and offer to exchange, the Company determined the need for compliance with Rule 3-10 of SEC Regulation S-X (“Rule 3-10”). In lieu of providing separate audited financial statements for ABL and ABL IP Holding, the Company has included the accompanying Condensed Consolidating Financial Statements in accordance with Rule 3-10(d) of SEC Regulation S-X since the Notes are fully and unconditionally guaranteed by Acuity Brands and ABL IP Holding. The column marked “Parent” represents the financial condition, results of operations, and cash flows of Acuity Brands. The column marked “Subsidiary Issuer” represents the financial condition, results of operations, and cash flows of ABL. The column entitled “Subsidiary Guarantor” represents the financial condition, results of operations, and cash flows of ABL IP Holding. Lastly, the column listed as “Non-Guarantors” includes the financial condition, results of operations, and cash flows of the non-guarantor direct and indirect subsidiaries of Acuity Brands, which consist primarily of foreign subsidiaries. Consolidating adjustments were necessary in order to arrive at consolidated amounts. In addition, the equity method of accounting was used to calculate investments in subsidiaries. Accordingly, this basis of presentation is not intended to present the Company's financial condition, results of operations, or cash flows for any purpose other than to comply with the specific requirements for parent-subsidiary guarantor reporting.
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
CONDENSED CONSOLIDATING BALANCE SHEETS
(In millions)
|
| | | | | | | | | | | | | | | | | | | | | | | |
| November 30, 2017 |
| Parent | | Subsidiary Issuer | | Subsidiary Guarantor | | Non- Guarantors | | Consolidating Adjustments | | Consolidated |
ASSETS |
Current assets: | |
| | |
| | |
| | |
| | |
| | |
|
Cash and cash equivalents | $ | 364.8 |
| | $ | — |
| | $ | — |
| | $ | 63.8 |
| | $ | — |
| | $ | 428.6 |
|
Accounts receivable, net | — |
| | 443.5 |
| | — |
| | 70.8 |
| | — |
| | 514.3 |
|
Inventories | — |
| | 314.5 |
| | — |
| | 25.1 |
| | — |
| | 339.6 |
|
Other current assets | 11.0 |
| | 14.8 |
| | — |
| | 15.5 |
| | — |
| | 41.3 |
|
Total current assets | 375.8 |
| | 772.8 |
| | — |
| | 175.2 |
| | — |
| | 1,323.8 |
|
Property, plant, and equipment, net | 0.3 |
| | 227.0 |
| | — |
| | 58.8 |
| | — |
| | 286.1 |
|
Goodwill | — |
| | 677.5 |
| | 2.7 |
| | 216.3 |
| | — |
| | 896.5 |
|
Intangible assets, net | — |
| | 232.5 |
| | 108.9 |
| | 98.5 |
| | — |
| | 439.9 |
|
Deferred income taxes | 51.5 |
| | — |
| | — |
| | 7.9 |
| | (56.1 | ) | | 3.3 |
|
Other long-term assets | 0.2 |
| | 9.3 |
| | — |
| | 2.3 |
| | — |
| | 11.8 |
|
Investments in and amounts due from affiliates | 1,469.7 |
| | 459.4 |
| | 244.0 |
| | — |
| | (2,173.1 | ) | | — |
|
Total assets | $ | 1,897.5 |
| | $ | 2,378.5 |
| | $ | 355.6 |
| | $ | 559.0 |
| | $ | (2,229.2 | ) | | $ | 2,961.4 |
|
| | | | | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY |
Current liabilities: | |
| | |
| | |
| | |
| | |
| | |
|
Accounts payable | $ | 0.3 |
| | $ | 340.5 |
| | $ | — |
| | $ | 23.8 |
| | $ | — |
| | $ | 364.6 |
|
Current maturities of long-term debt | — |
| | — |
| | — |
| | 0.4 |
| | — |
| | 0.4 |
|
Other accrued liabilities | 65.5 |
| | 126.1 |
| | — |
| | 38.3 |
| | — |
| | 229.9 |
|
Total current liabilities | 65.8 |
| | 466.6 |
| | — |
| | 62.5 |
| | — |
| | 594.9 |
|
Long-term debt | — |
| | 353.2 |
| | — |
| | 3.3 |
| | — |
| | 356.5 |
|
Deferred income taxes | — |
| | 134.6 |
| | — |
| | 29.8 |
| | (56.1 | ) | | 108.3 |
|
Other long-term liabilities | 105.6 |
| | 49.7 |
| | — |
| | 20.3 |
| | — |
| | 175.6 |
|
Amounts due to affiliates | — |
| | — |
| | — |
| | 117.4 |
| | (117.4 | ) | | — |
|
Total stockholders’ equity | 1,726.1 |
| | 1,374.4 |
| | 355.6 |
| | 325.7 |
| | (2,055.7 | ) | | 1,726.1 |
|
Total liabilities and stockholders’ equity | $ | 1,897.5 |
| | $ | 2,378.5 |
| | $ | 355.6 |
| | $ | 559.0 |
| | $ | (2,229.2 | ) | | $ | 2,961.4 |
|
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
CONDENSED CONSOLIDATING BALANCE SHEETS
(In millions)
|
| | | | | | | | | | | | | | | | | | | | | | | |
| August 31, 2017 |
| Parent | | Subsidiary Issuer | | Subsidiary Guarantor | | Non- Guarantors | | Consolidating Adjustments | | Consolidated |
ASSETS |
Current assets: | |
| | |
| | |
| | |
| | |
| | |
|
Cash and cash equivalents | $ | 237.7 |
| | $ | — |
| | $ | — |
| | $ | 73.4 |
| | $ | — |
| | $ | 311.1 |
|
Accounts receivable, net | — |
| | 494.6 |
| | — |
| | 78.7 |
| | — |
| | 573.3 |
|
Inventories | — |
| | 305.5 |
| | — |
| | 23.1 |
| | — |
| | 328.6 |
|
Other current assets | 1.6 |
| | 15.8 |
| | — |
| | 15.2 |
| | — |
| | 32.6 |
|
Total current assets | 239.3 |
| | 815.9 |
| | — |
| | 190.4 |
| | — |
| | 1,245.6 |
|
Property, plant, and equipment, net | 0.2 |
| | 228.3 |
| | — |
| | 59.2 |
| | — |
| | 287.7 |
|
Goodwill | — |
| | 677.7 |
| | 2.7 |
| | 220.5 |
| | — |
| | 900.9 |
|
Intangible assets, net | — |
| | 235.5 |
| | 109.8 |
| | 103.5 |
| | — |
| | 448.8 |
|
Deferred income taxes | 51.6 |
| | — |
| | — |
| | 8.0 |
| | (56.2 | ) | | 3.4 |
|
Other long-term assets | 1.5 |
| | 10.9 |
| | — |
| | 0.8 |
| | — |
| | 13.2 |
|
Investments in and amounts due from affiliates | 1,500.3 |
| | 330.4 |
| | 234.2 |
| | — |
| | (2,064.9 | ) | | — |
|
Total assets | $ | 1,792.9 |
| | $ | 2,298.7 |
| | $ | 346.7 |
| | $ | 582.4 |
| | $ | (2,121.1 | ) | | $ | 2,899.6 |
|
| | | | | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY |
Current liabilities: | |
| | |
| | |
| | |
| | |
| | |
|
Accounts payable | $ | 0.9 |
| | $ | 366.4 |
| | $ | — |
| | $ | 27.8 |
| | $ | — |
| | $ | 395.1 |
|
Current maturities of long-term debt | — |
| | — |
| | — |
| | 0.4 |
| | — |
| | 0.4 |
|
Other accrued liabilities | 27.6 |
| | 138.9 |
| | — |
| | 38.9 |
| | — |
| | 205.4 |
|
Total current liabilities | 28.5 |
| | 505.3 |
| | — |
| | 67.1 |
| | — |
| | 600.9 |
|
Long-term debt | — |
| | 353.1 |
| | — |
| | 3.4 |
| | — |
| | 356.5 |
|
Deferred income taxes | — |
| | 134.6 |
| | — |
| | 29.8 |
| | (56.2 | ) | | 108.2 |
|
Other long-term liabilities | 98.7 |
| | 49.3 |
| | — |
| | 20.4 |
| | — |
| | 168.4 |
|
Amounts due to affiliates | — |
| | — |
| | — |
| | 128.8 |
| | (128.8 | ) | | — |
|
Total stockholders’ equity | 1,665.7 |
| | 1,256.4 |
| | 346.7 |
| | 332.9 |
| | (1,936.1 | ) | | 1,665.6 |
|
Total liabilities and stockholders’ equity | $ | 1,792.9 |
| | $ | 2,298.7 |
| | $ | 346.7 |
| | $ | 582.4 |
| | $ | (2,121.1 | ) | | $ | 2,899.6 |
|
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended November 30, 2017 |
| Parent | | Subsidiary Issuer | | Subsidiary Guarantor | | Non- Guarantors | | Consolidating Adjustments | | Consolidated |
Net sales: | |
| | |
| | |
| | |
| | |
| | |
|
External sales | $ | — |
| | $ | 744.2 |
| | $ | — |
| | $ | 98.6 |
| | $ | — |
| | $ | 842.8 |
|
Intercompany sales | — |
| | — |
| | 12.0 |
| | 43.5 |
| | (55.5 | ) | | — |
|
Total sales | — |
| | 744.2 |
| | 12.0 |
| | 142.1 |
| | (55.5 | ) | | 842.8 |
|
Cost of products sold | — |
| | 429.8 |
| | — |
| | 104.9 |
| | (42.1 | ) | | 492.6 |
|
Gross profit | — |
| | 314.4 |
| | 12.0 |
| | 37.2 |
| | (13.4 | ) | | 350.2 |
|
Selling, distribution, and administrative expenses | 12.7 |
| | 194.7 |
| | 0.8 |
| | 36.6 |
| | (13.4 | ) | | 231.4 |
|
Intercompany charges | (1.0 | ) | | (0.5 | ) | | — |
| | 1.5 |
| | — |
| | — |
|
Special charge | — |
| | 0.2 |
| | — |
| | — |
| | — |
| | 0.2 |
|
Operating (loss) profit | (11.7 | ) | | 120.0 |
| | 11.2 |
| | (0.9 | ) | | — |
| | 118.6 |
|
Interest expense, net | 2.7 |
| | 4.0 |
| | — |
| | 1.4 |
| | — |
| | 8.1 |
|
Equity earnings in subsidiaries | (80.9 | ) | | (1.1 | ) | | — |
| | — |
| | 82.0 |
| | — |
|
Miscellaneous expense (income), net | — |
| | 0.8 |
| | — |
| | (1.2 | ) | | — |
| | (0.4 | ) |
Income (loss) before provision for income taxes | 66.5 |
| | 116.3 |
| | 11.2 |
| | (1.1 | ) | | (82.0 | ) | | 110.9 |
|
(Benefit) provision for income taxes | (5.0 | ) | | 42.2 |
| | 2.2 |
| | — |
| | — |
| | 39.4 |
|
Net income (loss) | 71.5 |
| | 74.1 |
| | 9.0 |
| | (1.1 | ) | | (82.0 | ) | | 71.5 |
|
| | | | | | | | | | | |
Other comprehensive income (loss) items: | | | | | | | | | | | |
Foreign currency translation adjustments | (10.5 | ) | | (10.5 | ) | | — |
| | — |
| | 10.5 |
| | (10.5 | ) |
Defined benefit pension plans, net | 1.6 |
| | 1.2 |
| | — |
| | 0.4 |
| | (1.6 | ) | | 1.6 |
|
Other comprehensive (loss) income items, net of tax | (8.9 | ) | | (9.3 | ) | | — |
| | 0.4 |
| | 8.9 |
| | (8.9 | ) |
Comprehensive income (loss) | $ | 62.6 |
| | $ | 64.8 |
| | $ | 9.0 |
| | $ | (0.7 | ) | | $ | (73.1 | ) | | $ | 62.6 |
|
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended November 30, 2016 |
| Parent | | Subsidiary Issuer | | Subsidiary Guarantor | | Non- Guarantors | | Consolidating Adjustments | | Consolidated |
Net sales: | |
| | |
| | |
| | |
| | |
| | |
|
External sales | $ | — |
| | $ | 746.3 |
| | $ | — |
| | $ | 104.9 |
| | $ | — |
| | $ | 851.2 |
|
Intercompany sales | — |
| | — |
| | 11.5 |
| | 51.6 |
| | (63.1 | ) | | — |
|
Total sales | — |
| | 746.3 |
| | 11.5 |
| | 156.5 |
| | (63.1 | ) | | 851.2 |
|
Cost of products sold | — |
| | 426.9 |
| | — |
| | 114.9 |
| | (50.2 | ) | | 491.6 |
|
Gross profit | — |
| | 319.4 |
| | 11.5 |
| | 41.6 |
| | (12.9 | ) | | 359.6 |
|
Selling, distribution, and administrative expenses | 11.8 |
| | 199.9 |
| | 0.9 |
| | 32.1 |
| | (12.9 | ) | | 231.8 |
|
Intercompany charges | (1.2 | ) | | 0.2 |
| | — |
| | 1.0 |
| | — |
| | — |
|
Special charge | — |
| | 1.2 |
| | — |
| | — |
| | — |
| | 1.2 |
|
Operating (loss) profit | (10.6 | ) | | 118.1 |
| | 10.6 |
| | 8.5 |
| | — |
| | 126.6 |
|
Interest expense, net | 2.8 |
| | 4.0 |
| | — |
| | 1.4 |
| | — |
| | 8.2 |
|
Equity earnings in subsidiaries | (90.4 | ) | | (9.1 | ) | | — |
| | 0.2 |
| | 99.3 |
| | — |
|
Miscellaneous income, net | — |
| | (7.3 | ) | | — |
| | (0.6 | ) | | — |
| | (7.9 | ) |
Income before provision for income taxes | 77.0 |
| | 130.5 |
| | 10.6 |
| | 7.5 |
| | (99.3 | ) | | 126.3 |
|
(Benefit) provision for income taxes | (4.7 | ) | | 47.8 |
| | 0.9 |
| | 0.6 |
| | — |
| | 44.6 |
|
Net income | 81.7 |
| | 82.7 |
| | 9.7 |
| | 6.9 |
| | (99.3 | ) | | 81.7 |
|
| | | | | | | | | | | |
Other comprehensive income (loss) items: | | | | | | | | | | | |
Foreign currency translation adjustments | (11.9 | ) | | (11.9 | ) | | — |
| | — |
| | 11.9 |
| | (11.9 | ) |
Defined benefit pension plans, net | 2.0 |
| | 0.7 |
| | — |
| | 0.7 |
| | (1.4 | ) | | 2.0 |
|
Other comprehensive (loss) income items, net of tax | (9.9 | ) | | (11.2 | ) | | — |
| | 0.7 |
| | 10.5 |
| | (9.9 | ) |
Comprehensive income | $ | 71.8 |
| | $ | 71.5 |
| | $ | 9.7 |
| | $ | 7.6 |
| | $ | (88.8 | ) | | $ | 71.8 |
|
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(In millions)
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended November 30, 2017 |
| Parent | | Subsidiary Issuer | | Subsidiary Guarantor | | Non- Guarantors | | Consolidating Adjustments | | Consolidated |
Net cash provided by operating activities | $ | 137.8 |
| | $ | 5.8 |
| | $ | — |
| | $ | (3.8 | ) | | $ | — |
| | $ | 139.8 |
|
Cash flows from investing activities: | | | | | | | | | | | |
|
Purchases of property, plant, and equipment | — |
| | (7.2 | ) | | — |
| | (3.1 | ) | | — |
| | (10.3 | ) |
Net cash used for investing activities | — |
| | (7.2 | ) | | — |
| | (3.1 | ) | | — |
| | (10.3 | ) |
Cash flows from financing activities: | |
| | |
| | |
| | |
| | |
| | |
|
Repayments of long-term debt | — |
| | — |
| | — |
| | (0.1 | ) | | — |
| | (0.1 | ) |
Proceeds from stock option exercises and other | 0.8 |
| | — |
| | — |
| | — |
| | — |
| | 0.8 |
|
Employee taxes on net settlement of equity awards | (6.0 | ) | | — |
| | — |
| | — |
| | — |
| | (6.0 | ) |
Dividends paid | (5.5 | ) | | — |
| | — |
| | — |
| | — |
| | (5.5 | ) |
Net cash used for financing activities | (10.7 | ) | | — |
| | — |
| | (0.1 | ) | | — |
| | (10.8 | ) |
Effect of exchange rates changes on cash | — |
| | 1.4 |
| | — |
| | (2.6 | ) | | — |
| | (1.2 | ) |
Net change in cash and cash equivalents | 127.1 |
| | — |
| | — |
| | (9.6 | ) | | — |
| | 117.5 |
|
Cash and cash equivalents at beginning of period | 237.7 |
| | — |
| | — |
| | 73.4 |
| | — |
| | 311.1 |
|
Cash and cash equivalents at end of period | $ | 364.8 |
| | $ | — |
| | $ | — |
| | $ | 63.8 |
| | $ | — |
| | $ | 428.6 |
|
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(In millions)
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended November 30, 2016 |
| Parent | | Subsidiary Issuer | | Subsidiary Guarantor | | Non- Guarantors | | Consolidating Adjustments | | Consolidated |
Net cash provided by operating activities | $ | 36.5 |
| | $ | 2.2 |
| | $ | — |
| | $ | 17.1 |
| | $ | — |
| | $ | 55.8 |
|
Cash flows from investing activities: | | | | | | | | | | | |
|
Purchases of property, plant, and equipment | — |
| | (16.5 | ) | | — |
| | (3.0 | ) | | — |
| | (19.5 | ) |
Proceeds from sale of property, plant, and equipment | — |
| | — |
| | — |
| | 5.4 |
| | — |
| | 5.4 |
|
Proceeds from sale of investment | — |
| | 13.0 |
| | — |
| | — |
| | — |
| | 13.0 |
|
Net cash (used for) provided by investing activities | — |
| | (3.5 | ) | | — |
| | 2.4 |
| | — |
| | (1.1 | ) |
Cash flows from financing activities: | |
| | |
| | |
| | |
| | |
| | |
|
Issuance of long-term debt | — |
| | — |
| | — |
| | 0.9 |
| | — |
| | 0.9 |
|
Proceeds from stock option exercises and other | 2.1 |
| | — |
| | — |
| | — |
| | — |
| | 2.1 |
|
Repurchases of common stock | (0.4 | ) | | — |
| | — |
| | — |
| | — |
| | (0.4 | ) |
Employee taxes on net settlement of equity awards | (11.3 | ) | | — |
| | — |
| | — |
| | — |
| | (11.3 | ) |
Dividends paid | (5.8 | ) | | — |
| | — |
| | — |
| | — |
| | (5.8 | ) |
Net cash (used for) provided by financing activities | (15.4 | ) | | — |
| | — |
| | 0.9 |
| | — |
| | (14.5 | ) |
Effect of exchange rate changes on cash | — |
| | 1.3 |
| | — |
| | (3.5 | ) | | — |
| | (2.2 | ) |
Net change in cash and cash equivalents | 21.1 |
| | — |
| | — |
| | 16.9 |
| | — |
| | 38.0 |
|
Cash and cash equivalents at beginning of period | 368.2 |
| | — |
| | — |
| | 45.0 |
| | — |
| | 413.2 |
|
Cash and cash equivalents at end of period | $ | 389.3 |
| | $ | — |
| | $ | — |
| | $ | 61.9 |
| | $ | — |
| | $ | 451.2 |
|
| |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
The purpose of this discussion and analysis is to enhance the understanding and evaluation of the results of operations, financial position, cash flows, indebtedness, and other key financial information of Acuity Brands, Inc. (“Acuity Brands”)(referred to herein as “we,” “our,” “us,” the “Company,” or similar references) and its subsidiaries as of November 30, 2017February 29, 2024 and for the three and six months ended November 30, 2017February 29, 2024 and 2016.February 28, 2023. The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements included within this report. Also, please refer to the Company’sAcuity Brands, Inc.'s Annual Report on Form 10-K for the fiscal year ended August 31, 2017,2023, filed with the Securities and Exchange Commission (the “SEC”) on October 26, 20172023 (“Form 10-K”).
Overview
Company
Acuity Brands is the parent company ofWe are a market-leading industrial technology company. We use technology to solve problems in spaces and light. Through our two business segments, Acuity Brands Lighting Inc.and Lighting Controls (“ABL”) and other subsidiaries (Acuity Brands, ABL,the Intelligent Spaces Group (“ISG”), we design, manufacture, and such other subsidiaries are collectively referredbring to herein asmarket products and services that make a valuable difference in people's lives. We achieve growth through the “Company”). The Company has its principal office in Atlanta, Georgia.
The Company is onedevelopment of the world’s leading providers ofinnovative new products and services, including lighting, andlighting controls, building management solutions, and services for commercial, institutional, industrial, infrastructure,location-aware applications.
Our business exhibits some seasonality, with net sales being affected by weather and residential applications throughout North Americaseasonal demand on construction and select international markets. The Company’s lighting and building management solutions include devices such as luminaires, lighting controls, controllers for various building systems, power supplies, prismatic skylights, and drivers,installation programs, particularly during the winter months, as well as integrated systems designedthe annual budget cycles of major customers. Historically, with certain exceptions, we have experienced our highest sales in the last two quarters of each fiscal year due to optimize energy efficiencythese factors.
Financial Condition, Capital Resources, and comfort for various indoor and outdoor applications. Additionally, the Company continues to expand its solutions portfolio to provide a host of other economic benefits, including software and services that enable the Internet of Things (“IoT”). The Company's IoT solutions provide customers with access to robust data analytics; support the advancement of smart buildings, smart cities, and the smart grid; and allow businesses to develop custom applications to scale their operations. As of November 30, 2017, the Company operates 19 manufacturing facilities and seven distribution facilities along with one warehouse to serve its extensive customer base.Liquidity
The Company does not consider acquisitions a critical element of its strategy but seeks opportunities to expand and enhance its portfolio of solutions. No acquisitions were completed during the first quarter of fiscal 2018 or fiscal 2017.
Liquidity and Capital Resources
The Company’s principalWe have numerous sources of liquidity are operating cash flows generated primarily from its business operations,capital, including cash on hand and cash flows generated from operations, as well as various sources of borrowings. Thefinancing. Our ability of the Company to generate sufficient cash flowflows from operations or to access certain capital markets, including banks, is necessary to meet our capital allocation priorities, which are to invest in our current business for growth, to invest in mergers and acquisitions, to pay a dividend, and to make share repurchases. Sufficient cash flow generation is also critical to fund itsour operations in the short and capital expenditures, pay dividends, meet its obligations as they become due,long terms and to maintain compliance with covenants contained in itsour financing agreements.
BasedOur significant contractual cash requirements primarily include principal and interest on its cashour unsecured notes, accounts payable, accrued employee compensation, operating lease liabilities, and certain purchase obligations incurred in the ordinary course of business that are enforceable and legally binding. Our obligations related to these items are described further within Management’s Discussion and Analysis of Financial Condition and Results of Operations within our Annual Report filed on hand, availability under existing financing arrangements, and current projections of cash flow from operations, the Company believesForm 10-K.
We believe that itwe will be able to meet itsour liquidity needs over the next 12 months. The Company's short-term needs are expected to include fundingmonths based on our cash on hand, current projections of cash flows from operations, as currently planned, making anticipated capital investments, paying quarterly stockholder dividends as currently anticipated, paying principal and interest on borrowings as currently scheduled, making required contributions to its employee benefit plans, funding potential acquisitions, and potentially repurchasing shares of its outstanding common stock as authorized by the Board of Directors (the “Board”).
In June 2017, the Board authorized the repurchase of two million shares of the Company's outstanding common stock in the future. The Company expects to repurchase shares on an opportunistic basis. No shares have been purchasedborrowing availability under this plan as of November 30, 2017. During fiscal 2018, the Company currently expects to invest approximately two percent of net sales, of which $10.3 million had been invested as of November 30, 2017, in capital expenditures primarily for equipment, tooling, facility enhancements, and new and enhanced information technology capabilities.financing arrangements. Additionally, management believeswe believe that the Company’sour cash flows from operations and sources of funding, including, but not limited to, future borrowings and borrowing capacity, will sufficiently support theour long-term liquidity needsneeds. In the event of the Company.a sustained market deterioration, we may need additional capital, which would require us to evaluate available alternatives and take appropriate actions.
Cash Flow
The Company uses available cash and cash flow from operations, as well as proceeds from the exercise of stock options, to fund operations, capital expenditures, and acquisitions, repurchase Company stock, and pay dividends.
The Company’sOur cash position at November 30, 2017February 29, 2024 was $428.6$578.9 million, an increase of $117.5$181.0 million from August 31, 2017. During the three months ended November 30, 2017, the Company generated net cash flows from operations of $139.8 million.2023. Cash generated from operating activities as well asand cash on-hand, wason hand were used during the current period primarilyyear to fund our capital expenditures of $10.3 million, to pay employee taxes on net settlement of equity awards of $6.0 million, and to pay dividends to stockholders of $5.5 million.allocation priorities as discussed below.
The CompanyWe generated $139.8$292.6 million of cash flowflows from operating activities during the threesix months ended November 30, 2017February 29, 2024, compared with $55.8to $306.4 million in the prior-year period, an increasea decrease of $84.0 million,$13.8 million. This decrease was due primarily to lowermore favorable operating working capital requirements,reductions in the timing of payments for income taxes, and lower variable incentive compensation payments for prior year performance. Operating working capital (calculatedas well as an increase in income tax payments associated with higher profit, partially offset by adding accounts receivable plus inventories, and subtracting accounts payable-nethigher pre-tax income.
Management believes that investing in assets and programs that will over time increase the overall return on its invested capital is a key factor in driving stockholder value. The Company invested $10.3 million and $19.5 million in the first three months of fiscal 2018 and 2017, respectively, primarily related to investments in new equipment, tooling, facility enhancements, and information technology. As noted above, the Company expects to invest approximately two percent of net sales primarily for new equipment, tooling, facility enhancements, and information technology capabilities during fiscal 2018.Financing Arrangements
Capitalization
The current capital structure of the Company is comprised principally of senior unsecured notes and equity of its stockholders. Total debt outstanding was $356.9 million at November 30, 2017 and August 31, 2017, and consisted primarily of fixed-rate obligations.
On December 8, 2009, ABL issued $350.0 million of senior unsecured notes due in fiscal 2020 (the “Unsecured Notes”) in a private placement transaction. The Unsecured Notes were subsequently exchanged for SEC-registered notes with substantially identical terms. The Unsecured Notes bear interest at a rate of 6% per annum and were issued at a price equal to 99.797% of their face value and for a term of 10 years. See the Debt and Lines of Credit footnote of the Notes to Consolidated Financial Statements for more information.
On August 27, 2014,discussion of the Company executed aterms of our various financing arrangements, including the $500.0 million aggregate principal amount of 2.150% senior unsecured notes due December 15, 2030 (the “Unsecured Notes”) as well as the terms of our $600.0 million five-year unsecured revolving credit facility (“Revolving Credit Facility”) with a borrowing capacity.
At February 29, 2024, our outstanding debt balance was $495.9 million, which consisted solely of $250.0our Unsecured Notes, compared to our cash position of $578.9 million. The Revolving Credit Facility will mature and all amounts outstanding thereunder will be due and payable on August 27, 2019. The Company had no borrowings outstanding under the Revolving Credit Facility as of November 30, 2017. The Company wasWe were in compliance with all financial covenants under the Revolving Credit Facilityour financing arrangements as of November 30, 2017. February 29, 2024.
At November 30, 2017, the CompanyFebruary 29, 2024, we had additional borrowing capacity under the Revolving Credit Facility of $244.7$596.2 million under the most restrictive covenant in effect at the time, which represents the full amount of the Revolving Credit Facility less outstanding letters of credit of $5.3$3.8 million issued under the Revolving Credit Facility.facility. As of November 30, 2017,February 29, 2024, our cash on hand combined with the Company had outstanding letters of credit totaling $10.2 million, primarily for securing collateral requirements under the Company's casualty insurance programs and for providing credit support for the Company’s industrial revenue bond, including $5.3 million issuedadditional borrowing capacity under the Revolving Credit Facility. SeeFacility totaled $1.2 billion.
The Unsecured Notes were issued by Acuity Brands Lighting, Inc., a wholly-owned subsidiary of Acuity Brands, Inc. The Unsecured Notes are fully and unconditionally guaranteed on a senior unsecured basis by Acuity Brands, Inc. and ABL IP Holding LLC, a wholly-owned subsidiary of Acuity Brands, Inc. The following tables present summarized financial information for Acuity Brands, Inc., Acuity Brands Lighting, Inc., and ABL IP Holding LLC on a combined basis after the Debtelimination of all intercompany balances and transactions between the combined group as well as any investments in non-guarantors as of the dates and during the period presented (in millions):
| | | | | | | | | | | | | | |
Summarized Balance Sheet Information | | February 29, 2024 | | August 31, 2023 |
Current assets | | $ | 1,180.1 | | | $ | 995.7 | |
Amounts due from non-guarantor affiliates | | 321.4 | | | 326.4 | |
Non-current assets | | 1,373.4 | | | 1,377.9 | |
Current liabilities | | 468.3 | | | 464.2 | |
Non-current liabilities | | 786.0 | | | 785.4 | |
| | | | | | | | |
Summarized Income Statement Information | | Six Months Ended February 29, 2024 |
Net sales | | $ | 1,521.8 | |
Gross profit | | 679.2 | |
Net income | | 189.2 | |
Capital Allocation Priorities
Our capital allocation priorities are to invest in our current business for growth, to invest in mergers and acquisitions, to pay a dividend, and to make share repurchases.
Investments in Current Business for Growth
We invested $29.0 million and $35.6 million in property, plant, and equipment during the six months ended February 29, 2024 and February 28, 2023, respectively. We invested primarily in new and enhanced information technology, equipment, and facility improvements in fiscal 2024 to date.
Strategic Acquisitions, Investments, and Divestitures
We seek opportunities to strategically expand and enhance our portfolio of solutions. Refer to the Acquisitions and Divestitures footnote of theNotes to Consolidated Financial Statementsfor more information.
DuringArize Assets
On January 19, 2024, we acquired certain assets related to Arize® horticulture lighting products from Current Lighting Solutions, LLC. The assets have been included in ABL's financial results since the date of acquisition and did not have a material impact to our consolidated financial condition, results of operations, or cash flows.
KE2 Therm
On May 15, 2023, using cash on hand, we acquired all of the equity interests of KE2 Therm Solutions, Inc. (“KE2 Therm”). KE2 Therm develops and provides intelligent refrigeration control solutions that deliver the precision of
digital controls to promote safety, efficiency, and reliability, while delivering cost savings to the customer. This acquisition is intended to expand ISG's technology and controls product portfolio and reach new customers.
Divestitures
There were no divestitures during the first threesix months of fiscal 2018, the Company’s consolidated stockholders’ equity increased $60.5 million to $1.73 billion at November 30, 2017, from $1.67 billion at August 31, 2017. The increase was due primarily to net income earned2024. We sold our Sunoptics prismatic skylights business in the period, stock issuances resulting primarily fromfirst fiscal quarter of 2023 and recognized a pre-tax loss of $11.2 million on the exercisesale of stock options, and amortization of pension plan prior service costs and actuarial losses, partially offset by the payment of dividends, and foreign currency translation adjustments. The Company’s debt to total capitalization ratio (calculated by dividing total debt by the sum of total debt and total stockholders’ equity) was 17.1% and 17.6% at November 30, 2017 and August 31, 2017, respectively. The ratio of debt, net of cash, to total capitalization, net of cash, was (4.3)% at November 30, 2017 and 2.7% at August 31, 2017.this business.
Dividends
Acuity BrandsWe paid dividends on itsour common stock of $5.5$8.8 million ($0.28 per share) and $5.8$8.5 million ($0.130.26 per share) during the threesix months ended November 30, 2017February 29, 2024 and 2016,February 28, 2023, respectively. All decisions regarding the declaration and payment of dividends by Acuity Brands are at the discretion of the Board of Directors (the “Board”) and are evaluated regularly in light of the Company’sour financial condition, earnings, growth prospects, funding requirements, applicable law, and any other factors the Board deems relevant.
Share Repurchases
During the first six months of fiscal 2024, we repurchased 0.4 million shares of our outstanding common stock for $67.6 million. Total cash outflows for share repurchases during the six months ended February 29, 2024 were $67.8 million. We expect to repurchase shares on an opportunistic basis subject to various factors including stock price, Company performance, market conditions, and other possible uses of cash. On January 25, 2024, the Board approved an increase of three million shares to the maximum number of shares that may yet be repurchased under the share repurchase program. As of February 29, 2024, 3.9 million shares remained available within the program to repurchase.
Results of Operations
FirstSecond Quarter of Fiscal 20182024 Compared with FirstSecond Quarter of Fiscal 20172023
The following table sets forth information comparing the components of net income for the three months ended November 30, 2017February 29, 2024 and 2016February 28, 2023 (in millions except per share data):
|
| | | | | | | | | | | | | | |
| Three Months Ended | | | | |
| November 30, 2017 | | November 30, 2016 | | Increase (Decrease) | | Percent Change |
Net sales | $ | 842.8 |
| | $ | 851.2 |
| | $ | (8.4 | ) | | (1.0 | )% |
Cost of products sold | 492.6 |
| | 491.6 |
| | 1.0 |
| | 0.2 | % |
Gross profit | 350.2 |
| | 359.6 |
| | (9.4 | ) | | (2.6 | )% |
Percent of net sales | 41.6 | % | | 42.2 | % | | (60 | ) | bps | |
|
Selling, distribution, and administrative expenses | 231.4 |
| | 231.8 |
| | (0.4 | ) | | (0.2 | )% |
Special charge | 0.2 |
| | 1.2 |
| | (1.0 | ) | | NM |
|
Operating profit | 118.6 |
| | 126.6 |
| | (8.0 | ) | | (6.3 | )% |
Percent of net sales | 14.1 | % | | 14.9 | % | | (80 | ) | bps | |
|
Other (income) expense: | |
| | |
| | |
| | |
|
Interest expense, net | 8.1 |
| | 8.2 |
| | (0.1 | ) | | (1.2 | )% |
Miscellaneous income, net | (0.4 | ) | | (7.9 | ) | | 7.5 |
| | NM |
|
Total other expense | 7.7 |
| | 0.3 |
| | 7.4 |
| | NM |
|
Income before provision for income taxes | 110.9 |
| | 126.3 |
| | (15.4 | ) | | (12.2 | )% |
Percent of net sales | 13.2 | % | | 14.8 | % | | (160 | ) | bps | |
|
Provision for income taxes | 39.4 |
| | 44.6 |
| | (5.2 | ) | | (11.7 | )% |
Effective tax rate | 35.5 | % | | 35.3 | % | | |
| | |
|
Net income | $ | 71.5 |
| | $ | 81.7 |
| | $ | (10.2 | ) | | (12.5 | )% |
Diluted earnings per share | $ | 1.70 |
| | $ | 1.86 |
| | $ | (0.16 | ) | | (8.6 | )% |
NM - not meaningful | | | | | | | |
Net sales were $842.8 million for the three months ended November 30, 2017 compared with $851.2 million reported for the three months ended November 30, 2016, a decrease of $8.4 million, or 1.0%. For the three months ended November 30, 2017, the Company reported net income of $71.5 million, a decrease of $10.2 million, or 12.5%, compared with $81.7 million for the three months ended November 30, 2016. For the first quarter of fiscal 2018, diluted earnings per share decreased 8.6% to $1.70 compared with $1.86 reported in the year-ago period.
The following table reconciles certain U.S. generally accepted accounting principles (“U.S. GAAP”) financial measures to the corresponding non-U.S. GAAP measures referred to in the discussion of the Company’s results of operations, which exclude the impact of certain manufacturing inefficiencies, amortization of acquired intangible assets, share-based payment expense, special charges associated primarily with continued efforts to streamline the organization, and a gain on the sale of an investment in an unconsolidated affiliate. Although the impacts of these items have been recognized in prior periods and could recur in future periods, management typically excludes these charges during internal reviews of performance and uses these non-U.S. GAAP measures for baseline comparative operational analysis, decision making, and other activities. Primarily due to the impact of the four acquisitions completed during fiscal 2016, the Company experienced noticeable increases in amortization of acquired intangibles, share-based payments used to improve retention and align the interest of key leaders of acquired businesses, and special charges due to activities to streamline and integrate those acquisitions. These non-U.S. GAAP financial measures, including adjusted gross profit and margin, adjusted selling, distribution, and administrative (“SD&A”) expenses, adjusted operating profit and margin, adjusted other expense, adjusted net income, and adjusted diluted earnings per share, are provided to enhance the user’s overall understanding of the Company’s current financial performance. Specifically, the Company believes these non-U.S. GAAP measures provide greater comparability and enhanced visibility into the Company's results of operations. The non-U.S. GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, results prepared in accordance with U.S. GAAP.
|
| | | | | | | | | | | | | |
(In millions, except per share data) | Three Months Ended | | | |
| November 30, 2017 | | November 30, 2016 | | Increase (Decrease) | Percent Change |
Gross profit | $ | 350.2 |
| | $ | 359.6 |
| | | |
Add-back: Manufacturing inefficiencies (1) | — |
| | 1.6 |
| | | |
Adjusted gross profit | $ | 350.2 |
|
| $ | 361.2 |
| | $ | (11.0 | ) | (3.0 | )% |
Percent of net sales | 41.6 | % | | 42.4 | % | | (80 | ) | bps |
| | | | | | |
Selling, distribution, and administrative expenses | $ | 231.4 |
| | $ | 231.8 |
| | | |
Less: Amortization of acquired intangible assets | (6.6 | ) | | (5.9 | ) | | | |
Less: Share-based payment expense | (8.5 | ) | | (7.9 | ) | | | |
Adjusted selling, distribution, and administrative expenses | $ | 216.3 |
|
| $ | 218.0 |
| | $ | (1.7 | ) | (0.8 | )% |
Percent of net sales | 25.7 | % | | 25.6 | % | | 10 |
| bps |
| | | | | | |
Operating profit | $ | 118.6 |
| | $ | 126.6 |
| | | |
Add-back: Amortization of acquired intangible assets | 6.6 |
| | 5.9 |
| | | |
Add-back: Share-based payment expense | 8.5 |
| | 7.9 |
| | | |
Add-back: Manufacturing inefficiencies (1) | — |
| | 1.6 |
| | | |
Add-back: Special charges | 0.2 |
| | 1.2 |
| | | |
Adjusted operating profit | $ | 133.9 |
|
| $ | 143.2 |
| | $ | (9.3 | ) | (6.5 | )% |
Percent of net sales | 15.9 | % | | 16.8 | % | | (90 | ) | bps |
| | | | | | |
Other expense | $ | 7.7 |
| | $ | 0.3 |
| | | |
Add-back: Gain on sale of investment in unconsolidated affiliate | — |
| | 7.2 |
| | | |
Adjusted other expense | $ | 7.7 |
|
| $ | 7.5 |
| | $ | 0.2 |
| 2.7 | % |
| | | | | | |
Net income | $ | 71.5 |
| | $ | 81.7 |
| | | |
Add-back: Amortization of acquired intangible assets | 6.6 |
| | 5.9 |
| | | |
Add-back: Share-based payment expense | 8.5 |
| | 7.9 |
| | | |
Add-back: Manufacturing inefficiencies (1) | — |
| | 1.6 |
| | | |
Add-back: Special charges | 0.2 |
| | 1.2 |
| | | |
Less: Gain on sale of investment in unconsolidated affiliate | — |
| | (7.2 | ) | | | |
Total pre-tax adjustments to net income | 15.3 |
|
| 9.4 |
| | | |
Income tax effects | (5.3 | ) | | (3.3 | ) | | | |
Adjusted net income | $ | 81.5 |
|
| $ | 87.8 |
| | $ | (6.3 | ) | (7.2 | )% |
| | | | | | |
Diluted earnings per share | $ | 1.70 |
| | $ | 1.86 |
| | | |
Adjusted diluted earnings per share | $ | 1.94 |
| | $ | 2.00 |
| | $ | (0.06 | ) | (3.0 | )% |
______________________________
(1) Incremental costs incurred due to manufacturing inefficiencies directly related to the closure of a facility.
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | | | | | |
| February 29, 2024 | | February 28, 2023 | | Increase (Decrease) | | Percent Change | | |
Net sales | $ | 905.9 | | | $ | 943.6 | | | $ | (37.7) | | | (4.0) | % | | |
Cost of products sold | 493.5 | | | 536.9 | | | (43.4) | | | (8.1) | % | | |
Gross profit | 412.4 | | | 406.7 | | | 5.7 | | | 1.4 | % | | |
Percent of net sales | 45.5 | % | | 43.1 | % | | 240 | | bps | | | |
Selling, distribution, and administrative expenses | 294.3 | | | 295.2 | | | (0.9) | | | (0.3) | % | | |
| | | | | | | | | |
Operating profit | 118.1 | | | 111.5 | | | 6.6 | | | 5.9 | % | | |
Percent of net sales | 13.0 | % | | 11.8 | % | | 120 | | bps | | | |
Other expense: | | | | | | | | | |
Interest (income) expense, net | (0.1) | | | 5.7 | | | (5.8) | | | (101.8) | % | | |
Miscellaneous expense (income), net | 0.6 | | | (3.7) | | | 4.3 | | | NM | | |
Total other expense | 0.5 | | | 2.0 | | | (1.5) | | | (75.0) | % | | |
Income before income taxes | 117.6 | | | 109.5 | | | 8.1 | | | 7.4 | % | | |
Percent of net sales | 13.0 | % | | 11.6 | % | | 140 | | bps | | | |
Income tax expense | 28.4 | | | 26.3 | | | 2.1 | | | 8.0 | % | | |
Effective tax rate | 24.1 | % | | 24.0 | % | | | | | | |
Net income | $ | 89.2 | | | $ | 83.2 | | | $ | 6.0 | | | 7.2 | % | | |
Diluted earnings per share | $ | 2.84 | | | $ | 2.57 | | | $ | 0.27 | | | 10.5 | % | | |
NM - not meaningful | | | | | | | | | |
Net Sales
Net sales for the three months ended November 30, 2017second quarter of fiscal 2024 decreased 1.0%$37.7 million, or 4.0%, to $905.9 million, compared with $943.6 million in the prior-year period due primarily to an approximately 1% decreasea decline in sales volume and the unfavorable impact of changes in product prices and the mix of products sold (“price/mix”) of approximately 1%,within our ABL segment, partially offset by higher sales within our ISG segment. Acquisitions did not have a meaningful impact on consolidated net sales for the favorable impact from foreign exchange rate changes of approximately 1%. Sales of LED-based products during the firstsecond quarter of fiscal 2018 and 2017 accounted for approximately two-thirds of total net sales. Overall sales decreased compared to the prior year due primarily to the expected tepid conditions within the North American non-residential lighting market, as well as declines in the home center/showroom channel and certain international channels. The change in price/mix was due primarily to lower pricing on luminaires, reflecting the decline in certain LED component costs as well as increased competition in more basic, lesser-featured products. Due to the changing dynamics of the Company's product portfolio, including the increase of integrated lighting and building management solutions, it is not possible to precisely quantify or differentiate the individual components of volume, price, and mix.2024.
Gross Profit
Gross profit for the firstsecond quarter of fiscal 2018 decreased $9.42024 increased $5.7 million, or 2.6%1.4%, to $350.2$412.4 million, compared with $359.6$406.7 million in the prior-year period. Grossperiod, and gross profit margin decreased 60increased 240 basis points to 41.6% for the three months ended November 30, 201745.5% from 43.1% compared with 42.2% in the prior-year period. GrossOur gross profit margin was lower thanincreased compared with the prior-yearprior period due primarily to lower net sales, unfavorable price/mix,favorable material and higher inputimport costs, for certain commodity-related items, such as steel. These declines were partially offset by lower costs for certain LED componentsthe fall through of the net sales decline as well as higher quality, labor, and productivity improvements. Adjusted gross profit for the three months ended November 30, 2017 was $350.2 million (41.6% of net sales) compared with $361.2 million (42.4% of net sales) in the prior-year period.overhead costs.
Operating Profit
Selling, distribution, and administrative expenses (“SD&A&A”) expenses for the three months ended November 30, 2017second quarter of fiscal 2024 were $231.4$294.3 million, compared with $231.8$295.2 million in the prior-year period, a decrease of $0.4$0.9 million, or 0.2%0.3%. The decrease in SD&A expenses was due primarily to lower sales commissions, largely offset by higher salaried employee costs including share-based payment expense and higher amortization of intangible assets. SD&A expenses for the first quarter of fiscal 2018 were 27.5% of net sales compared with 27.2% for the prior-year period. Adjusted SD&A expenses for the three months ended November 30, 2017 were $216.3 million (25.7% of net sales) compared with $218.0 million (25.6% of net sales) in the prior-year period.
The Company recognized pre-tax special charges related to prior fiscal year actions of $0.2 million during the first quarter of fiscal 2018, compared with pre-tax special charges of $1.2 million during the first quarter of fiscal 2017. Further details regarding the Company's special charges are included in the Special Charge footnote of the Notes to Consolidated Financial Statements.
Operating profit for the firstsecond quarter of fiscal 20182024 was $118.6$118.1 million (14.1%(13.0% of net sales), compared with $126.6$111.5 million (14.9%(11.8% of net sales) for the prior-year period, a decreasean increase of $8.0$6.6 million, or 6.3%5.9%. The decreaseincrease in operating profit was due primarily to a decreasethe increase in gross profit, partially offset by lower SD&A expensesprofit.
Interest (Income) Expense, net
We reported net interest income of $0.1 million and special charges.
Adjusted operating profit decreased by $9.3 million, or 6.5%, to $133.9net interest expense of $5.7 million for the firstsecond quarter of fiscal 20182024 and 2023, respectively. Our fiscal 2024 net interest income reflects higher interest bearing cash and cash equivalent balances, higher investing rates on those balances, and lower average short term borrowings outstanding compared with $143.2 million forto the first quarterprior year.
Miscellaneous Expense (Income), net
Miscellaneous expense (income), net consists of fiscal 2017. Adjusted operating profit margin decreased 90 basis points to 15.9% for the first quarter of fiscal 2018 compared with 16.8% for the year-ago period.
Other Expense (Income)
Other expense (income) consists principallynon-service components of net interest expense and net miscellaneous income/expense, which includesperiodic pension cost, gains and losses associated with foreign currency-related transactions, and non-operating gains and losses. Interest
We reported net miscellaneous expense net, was $8.1of $0.6 million and $8.2 million for the three months ended November 30, 2017 and 2016, respectively. The Company reported net miscellaneous income of $0.4 million and $7.9$3.7 million for the three months ended November 30, 2017second quarter of fiscal 2024 and 2016,2023, respectively. Net miscellaneous income forThis year-over-year change is due primarily to the three months ended November 30, 2016 included a gainimpact of $7.2 million associated withforeign currency-related items compared to the sale of an investment in an unconsolidated affiliate.prior year.
Provision for Income Taxes and Net Income
The Company’sOur effective income tax rate was 35.5%24.1% and 35.3%24.0% for the three months ended November 30, 2017second quarter of fiscal 2024 and 2016,2023, respectively.
Net income for the firstsecond quarter of fiscal 2018 decreased $10.22024 increased $6.0 million, or 7.2%, to $71.5$89.2 million, from $81.7$83.2 million reported for the prior-year period. The decrease in net income resulted primarily from lower operating profit and lower miscellaneous income, partially offset by a smaller provision for income taxes. Diluted earnings per share for the three months ended November 30, 2017 decreased $0.16second quarter of fiscal 2024 increased $0.27, or 10.5%, to $1.70$2.84 compared with diluted earnings per share of $1.86$2.57 for the prior-year period.
Adjusted This increase reflects higher net income foras well as lower outstanding diluted shares.
Segment Results
The following table sets forth information comparing the first quarteroperating results of fiscal 2018 was $81.5 million compared with $87.8 million in the prior-year period, which represented an decrease of $6.3 million, or 7.2%. Adjusted diluted earnings per shareour segments, ABL and ISG, for the three months ended November 30, 2017 decreased $0.06, or 3.0%, to $1.94 compared with $2.00 for the prior-year period.February 29, 2024 and February 28, 2023 (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | | | |
| | February 29, 2024 | | February 28, 2023 | | Increase (Decrease) | | Percent Change |
ABL: | | | | | | | | |
Net sales | | $ | 843.5 | | | $ | 890.8 | | | $ | (47.3) | | | (5.3) | % |
Operating profit | | 126.0 | | | 123.6 | | | 2.4 | | | 1.9 | % |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Operating profit margin | | 14.9 | % | | 13.9 | % | | 100 | | | bps |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
ISG: | | | | | | | | |
Net sales | | $ | 68.1 | | | $ | 58.2 | | | $ | 9.9 | | | 17.0 | % |
Operating profit | | 9.1 | | | 6.3 | | | 2.8 | | | 44.4 | % |
Operating profit margin | | 13.4 | % | | 10.8 | % | | 260 | | | bps |
| | | | | | | | |
Outlook
Management believes that the execution of the Company's strategy will provide opportunities for continued profitable growth. The Company's strategy is to capitalize on market growth opportunities by continuing to expand and leverage its industry-leading lighting and building management solutions portfolio combined with its extensive market presence and financial strength.
Management continues to expect the North American lighting market, the Company’s primary market, to experience low-single digit growth for the fiscal 2018 full year, reflecting an expected rebound in the second half of the year. Management does not foresee a meaningful rebound in demand in the near term in certain international markets that the Company serves. In addition, management expects 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 the Company brings new solutions to key customers and expands its access to market in this importantABL net sales channel. Third-party forecasts suggest that softness in demand in the North American lighting market that began in the third calendar quarter of 2016 will continue through the early part of calendar year 2018, followed by improvement in growth rates later in the year. While current quoting activity remains tepid, both short and long-term fundamental drivers of the markets that the Company serves remain positive. Management expects 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. Management continues to accelerate programs to reduce product costs to maintain the Company’s competitiveness and drive improved profitability. Management expects to continue to outperform the growth rates of the markets that the Company serves by executing its strategies focused on growth opportunities for new construction and renovation projects, expansion into underpenetrated geographies and channels, and growth from the continued introduction of new lighting and building management solutions as part of the Company’s integrated, tiered solutions strategy.
Management expects the Tax Cuts and Jobs Act (the “Act”) that was passed on December 22, 2017, 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% effective for periods beginning January 1, 2018. 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. Management currently estimates that the Company’s blended consolidated effective income tax rate (“tax rate”) for full-year fiscal 2018 will approximate 26 to 28% before discrete items, compared with nearly 35% for the prior year. Management also anticipates that the tax rate for the second quarter of fiscal 2018 will be significantly2024 decreased $47.3 million, or 5.3%, to $843.5 million, compared with $890.8 million in theprior-year period. Sales within the ABL segment decreased due to lower than the estimated full-year blended tax rate to cumulatively adjustnet sales across all channels. The second quarter of 2023 benefited from working through an elevated backlog.
Operating profit for ABL was $126.0 million (14.9% of ABL net sales) for the 35.5% tax ratesecond quarter of fiscal 2024, compared with $123.6 million (13.9% of ABL net sales) in the prior-year period, an increase of $2.4 million. The increase in operating profit was due primarily to improved profitability on lower sales as well as lower sales-related costs, such as commissions and freight to customers.
ISG net sales for the second quarter of fiscal 2024 increased $9.9 million, or 17.0%, to $68.1 million, compared with $58.2 million in the prior-year period. Sales within the ISG segment increased due primarily to higher volume and the acquisition of KE2 Therm. ISG operating profit was $9.1 million for the second quarter of fiscal 2024, compared with $6.3 million in the prior-year period, an increase of $2.8 million. This increase was due primarily to contributions from higher net sales, partially offset by higher employee-related costs.
First Six Months of Fiscal 2024 Compared with First Six Months of Fiscal 2023
The following table sets forth information comparing the components of net income for the six months ended February 29, 2024 and February 28, 2023 (in millions except per share data):
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended | | | | | | |
| February 29, 2024 | | February 28, 2023 | | Increase (Decrease) | | Percent Change | | |
Net sales | $ | 1,840.6 | | | $ | 1,941.5 | | | $ | (100.9) | | | (5.2) | % | | |
Cost of products sold | 999.8 | | | 1,118.3 | | | (118.5) | | | (10.6) | % | | |
Gross profit | 840.8 | | | 823.2 | | | 17.6 | | | 2.1 | % | | |
Percent of net sales | 45.7 | % | | 42.4 | % | | 330 | | bps | | | |
Selling, distribution, and administrative expenses | 589.8 | | | 595.9 | | | (6.1) | | | (1.0) | % | | |
Special charges | — | | | 6.9 | | | (6.9) | | | NM | | |
Operating profit | 251.0 | | | 220.4 | | | 30.6 | | | 13.9 | % | | |
Percent of net sales | 13.6 | % | | 11.4 | % | | 220 | | bps | | | |
Other expense: | | | | | | | | | |
Interest expense, net | 0.8 | | | 12.3 | | | (11.5) | | | (93.5) | % | | |
Miscellaneous expense, net | 1.7 | | | 5.4 | | | (3.7) | | | NM | | |
Total other expense | 2.5 | | | 17.7 | | | (15.2) | | | (85.9) | % | | |
Income before income taxes | 248.5 | | | 202.7 | | | 45.8 | | | 22.6 | % | | |
Percent of net sales | 13.5 | % | | 10.4 | % | | 310 | | bps | | | |
Income tax expense | 58.7 | | | 44.6 | | | 14.1 | | | 31.6 | % | | |
Effective tax rate | 23.6 | % | | 22.0 | % | | | | | | |
Net income | $ | 189.8 | | | $ | 158.1 | | | $ | 31.7 | | | 20.1 | % | | |
Diluted earnings per share | $ | 6.05 | | | $ | 4.86 | | | $ | 1.19 | | | 24.5 | % | | |
NM - not meaningful | | | | | | | | | |
Net Sales
Net sales for the six months ended February 29, 2024 decreased $100.9 million, or 5.2%, to $1.84 billion compared with $1.94 billion in the prior-year period due to a decline in sales within our ABL segment, partially offset by higher sales within our ISG segment. Acquisitions and divestitures did not have meaningful impacts on consolidated net sales for the first six months of fiscal 2024.
Gross Profit
Gross profit for the six months ended February 29, 2024 increased $17.6 million, or 2.1%, to $840.8 million compared with $823.2 million in the prior-year period. Gross profit margin increased 330 basis points to 45.7% for the six months ended February 29, 2024 compared with 42.4% in the prior-year period. Our gross profit increased compared with the prior period due primarily to favorable material and import costs, partially offset by the fall through of the net sales decline as well as higher labor, overhead, and quality costs.
Operating Profit
SD&A expenses for the six months ended February 29, 2024 were $589.8 million compared with $595.9 million in the prior-year period, a decrease of $6.1 million, or 1.0%. The decrease in SD&A expenses was due primarily to lower commissions and freight costs associated with the decline in net sales as well as decreased amortization, partially offset by increased employee-related costs.
Amortization expense of definite-lived intangibles decreased in fiscal 2024 as we recorded $4.0 million of accelerated amortization in fiscal 2023 for intangibles associated with certain brands that were discontinued.
We recognized special charges of $6.9 million during the first six months of fiscal 2023. Please refer to the Special
Charges footnote of the Notes to Consolidated Financial Statements for further details.
Operating profit for the first six months of fiscal 2024 was $251.0 million (13.6% of net sales) compared with $220.4 million (11.4% of net sales) for the prior-year period, an increase of $30.6 million, or 13.9%. The increase in operating profit was due primarily to higher gross profit, lower SD&A expenses, and nonrecurring special charges in the first quarter of fiscal 2018. Additionally, management currently estimates the second quarter tax2023.
Interest Expense, net
Interest expense, to be reduced by approximately $30net was $0.8 million and $12.3 million for discrete items, primarilythe six months ended February 29, 2024 and February 28, 2023, respectively. The decrease in net interest expense was due to a non-cash income tax benefit fromhigher interest bearing cash and cash equivalent balances, higher investing rates on those balances, and lower average short term borrowings outstanding compared to the remeasurementprior year.
Miscellaneous Expense, net
Miscellaneous expense, net consists of non-service components of net periodic pension cost, gains and losses associated with foreign currency-related transactions, and non-operating gains and losses.
We reported net miscellaneous expense of $1.7 million for the Company’s net U.S. deferred tax liabilities,six months ended February 29, 2024 and $5.4 million for the six months ended February 28, 2023. This year-over-year decrease was due primarily to the recognition of an $11.2 million loss on the sale of our Sunoptics prismatic skylights business in fiscal 2023, partially offset by an unfavorablethe impact relatedof foreign currency-related items compared to the taxation of the Company's accumulated unremitted foreign earnings. Management currently estimates that the fiscal 2019prior year.
Income Taxes and Net Income
Our effective income tax rate will approximate 23was 23.6% and 22.0% for the six months ended February 29, 2024 and February 28, 2023, respectively. This increase was due primarily to 25% beforethe recognition of higher favorable discrete items. The aforementioned tax-related estimates may differitems in the prior year.
Net income for the first six months of fiscal 2024 increased $31.7 million, or 20.1%, to $189.8 million from actual results, possibly materially, due$158.1 million reported for the prior-year period. Diluted earnings per share for the six months ended February 29, 2024 increased $1.19 to changes in interpretations$6.05 compared with diluted earnings per share of $4.86 for the Act and assumptions made by the Company,prior-year period. This increase reflects higher net income as well as guidance that may be issuedlower outstanding diluted shares.
Segment Results
The following table sets forth information comparing the operating results of our segments, ABL and actionsISG, for the Company may take as a resultsix months ended February 29, 2024 and February 28, 2023 (in millions):
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| | Six Months Ended | | | | |
| | February 29, 2024 | | February 28, 2023 | | Increase (Decrease) | | Percent Change |
ABL: | | | | | | | | |
Net sales | | $ | 1,719.9 | | | $ | 1,837.9 | | | $ | (118.0) | | | (6.4) | % |
Operating profit | | 269.8 | | | 241.7 | | | 28.1 | | | 11.6 | % |
Operating profit margin | | 15.7 | % | | 13.2 | % | | 250 | | | bps |
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ISG: | | | | | | | | |
Net sales | | $ | 132.3 | | | $ | 115.0 | | | $ | 17.3 | | | 15.0 | % |
Operating profit | | 14.4 | | | 14.0 | | | 0.4 | | | 2.9 | % |
Operating profit margin | | 10.9 | % | | 12.2 | % | | (130) | | | bps |
ABL net sales for the six months ended February 29, 2024 decreased 6.4% compared with theprior-year period due primarily to lower net sales across all channels except within the retail sales channel. The first six months of 2023 benefited from working through an elevated backlog.
Operating profit for ABL was $269.8 million (15.7% of ABL net sales) for the Act.
Notwithstanding the U.S. Tax Cuts and Jobs Act, a great amountsix months ended February 29, 2024 compared to $241.7 million (13.2% of rhetoric and debate remains regarding a wide range of policy options with respect to monetary, regulatory, and trade, amongst others, that may be pursued by the current U.S. Administration. Any additional policy changes that may be implemented could have a positive or negative consequence on the Company’s financial performance depending on how the changes would influence many factors, including business and consumer sentiment. While management is proactively identifying and evaluating potential
contingency options under various policy scenarios, it is too early to comment or speculate at this time on the potential ramification of these endless scenarios.
From a longer term perspective, management expects that the Company’s addressable markets have the potential to 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 roleABL net sales) in the IoT through the useprior-year period, an increase of intelligent networked lighting and building automation systems that can collect and exchange data$28.1 million. The increase in operating profit was due primarily to increase efficiencyimproved profitability on lower sales as well as provide a hostlower sales-related costs, such as commissions and freight to customers. During the first six months of other economic benefits resultingfiscal 2023, we recorded within ABL $6.9 million of special charges and $4.0 million of accelerated amortization expense for intangibles associated
with certain brands that were discontinued.
ISG net sales for the six months ended February 29, 2024 increased 15.0% compared with the prior-year period primarily driven by the acquisition of KE2 Therm as well as price increases and favorable product mix. ISG operating profit was $14.4 million for the six months ended February 29, 2024 compared with $14.0 million in the prior-year period, an increase of $0.4 million. This increase was due primarily to contributions from data analytics. Management remains positive about the future prospects of the Companyhigher sales, partially offset by increased employee-related costs and its ability to outperform the markets it serves.professional fees.
Critical Accounting Estimates
Management’s Discussion and Analysis of Financial Condition and Results of Operations addresses the financial condition and results of operations as reflected in the Company’s our Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP.generally accepted accounting principles (“U.S. GAAP”). As discussed in the Description of Business and Basis of Presentation footnote of the Notes to Consolidated Financial Statements, the preparation of financial statements in conformity with U.S. GAAP requires managementus to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expense during the reporting period. On an ongoing basis, management evaluates itswe evaluate our estimates and judgments, including those related to revenue recognition; inventory valuation; amortizationgoodwill and the recoverability of long-lived assets, including goodwill andindefinite-lived intangible assets; share-based payment expense; medical,and product warranty and recall and other reserves; retirement benefits; and litigation. Management bases itscosts. We base our estimates and judgments on itsour substantial historical experience and other relevant factors, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. Management discussesWe discuss the development of critical accounting estimates with the Company’s Audit Committee of the Board.Board of Directors on a recurring basis.
There have been no material changes in the Company’sour critical accounting estimates during the current period. For a detailed discussion of other significant accounting policies that may involve a higher degree of judgment, please refer to the Company’sour Form 10-K.
Cautionary Statement Regarding Forward-Looking Statements and Information
This filing contains forward-looking statements“forward-looking statements” within the meaning of the federal securities laws. Statements made herein that may be considered forward-looking include statements incorporating terms such as “expects,” “believes,” “intends,” “anticipates,” and similar terms that relate to future events, performance, or resultsSection 27A of the Company. In addition,Securities Act of 1933, as amended, and Section 21E of the Company, or the executive officers on the Company’s behalf, may from time to time make forward-looking statements in reports and other documents the Company files with the SEC or in connection with oral statements madeSecurities Exchange Act of 1934, as amended, pursuant to the press, current and potential investors, or others.safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the “Act”). Forward-looking statements include, without limitation: (a)among other things, statements that describe or relate to the Company’s plans, initiatives, projections, regardingvision, goals, targets, commitments, expectations, objectives, prospects, strategies, or financial performance, liquidity, capital structure, capital expenditures,outlook, and dividends; (b) expectations about the impactassumptions underlying or relating thereto. In some cases, we may use words such as “expect,” “believe,” “intend,” “anticipate,” “estimate,” “forecast,” “indicate,” “project,” “predict,” “plan,” “may,” “will,” “could,” “should,” “would,” “potential,” and words of softness in demandsimilar meaning, as well as volatility and uncertainty in general economicother words or expressions referencing future events, conditions, andor circumstances, to identify forward-looking statements. We intend these forward-looking statements to be covered by the pricing environment; (c) external forecasts projecting the North American lighting and building management solutions market growth rate and growthsafe harbor provisions for forward-looking statements contained in the Company's addressable markets; (d)Act. Forward-looking statements are not guarantees of future performance. Our forward-looking statements are based on our current beliefs, expectations, and assumptions, which may not prove to be accurate, and are subject to known and unknown risks and uncertainties, many of which are outside of our control. These risks and uncertainties could cause actual events or results to differ materially from our historical experience and management’s present expectations or projections. These risks and uncertainties are discussed in our filings with the Company's abilityU.S. Securities and Exchange Commission, including our most recent annual report on Form 10-K (including, but not limited to, executePart I, Item 1a. Risk Factors), quarterly reports on Form 10-Q, and realize benefits from initiatives related to streamlining its operations, capitalizecurrent reports on growth opportunities, expand in key marketsForm 8-K. Any forward-looking statement speaks only as well as underpenetrated geographies and channels, and introduce new lighting and building management solutions; (e) the Company’s estimate of its fiscal 2018 and 2019 tax rates, as well as the impact of the U.S. Tax Cuts and Jobs Actdate on the Company's financial position, results of operations, and cash flows; (f) the Company’s estimate of future amortization expense; (g) the Company’s ability to achieve its long-term financial goals and measures and outperform the markets its serves; (h) the impact to the Company of changes in the political landscape and related policy changes; (i) the Company's projected future capital expenditures and investments; and (j) the Company's expectations about the resolution of trade compliance matters.which it is made. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this annual report.statements. Except as required by law, the Company undertakeswe undertake no obligation to publicly update or release any revisions to these forward-looking statements to reflect any events or circumstances after the date of this annualquarterly report or to reflect the occurrence of unanticipated events. The Company’s forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the historical experienceevents, whether as a result of the Company and management’s present expectationsnew information, future events, or projections. These risks and uncertainties include, but are not limited to, customer and supplier relationships and prices; competition; ability to realize anticipated benefits from initiatives taken and timing of benefits; market demand; litigation and other contingent liabilities; and economic, political, governmental, and technological factors affecting the Company. Also, additional risks that could cause the Company’s actual results to differ materially from those expressed in the Company’s forward-looking statements are discussed in Part I, Item 1a. Risk Factors of this Annual Report on Form 10-K, and are specifically incorporated herein by reference.otherwise.
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Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
General. The Company isItem 3.Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risks that may impact its our Consolidated Balance Sheets, Consolidated Statements of Comprehensive Income, and Consolidated Statements of Cash Flows due primarily to fluctuations in interest rates, foreign exchange rates, and commodity prices. There have been no material changes to the Company’sour exposure from market risks from those disclosed in Part II, Item 7a. Quantitative and Qualitative Disclosures About Market Risk of the Company’sour Form 10-K.
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Item 4. | Controls and Procedures |
Item 4.Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to reasonably ensure that information required to be disclosed in the reports filed or submitted by the Companyus under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the time periods specified in the SECSecurities and Exchange Commission (the “SEC”) rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to reasonably ensure that information required to be disclosed by the Companyus in the reports filed under the Exchange Act is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
As required by SEC rules, the Company haswe have evaluated the effectiveness of the design and operation of itsour disclosure controls and procedures as of November 30, 2017.February 29, 2024. The scope of our efforts to comply with the SEC rules included all of our operations except for KE2 Therm Solutions, Inc. (“KE2 Therm”), which we acquired during the year ended August 31,2023. KE2 Therm constituted less than 2% of both total assets and equity as of February 29, 2024 and less than 1% of both the Company's net sales and pre-tax income for the six months ended February 29, 2024. SEC guidance permits management to omit an assessment of an acquired business' internal control over financial reporting from management's assessment of internal control over financial reporting for a period not to exceed one year from the date of the acquisition. Accordingly, management has not assessed KE2 Therm's internal control over financial reporting as of February 29, 2024. This evaluation was carried out under the supervision and with the participation of management, including the principal executive officer and principal financial officer. Based on this evaluation, which as discussed herein excluded the operations of KE2 Therm, these officers have concluded that the design and operation of the Company’sour disclosure controls and procedures are effective at a reasonable assurance level as of November 30, 2017. February 29, 2024.
However, because all disclosure procedures must rely to a significant degree on actions or decisions made by employees throughout the organization, such as reporting of material events, the Company and its reporting officers believe that they cannot provide absolute assurance that all control issues and instances of fraud or errors and omissions, if any, within the Company will be detected. Limitations within any control system, including the Company’sour control system, include faulty judgments in decision-making or simple errors or mistakes. In addition, controls can be circumvented by an individual, by collusion between two or more people, or by management override of the control. Because of these limitations, misstatements due to error or fraud may occur and may not be detected.
There have been no changes in the Company’sour internal control over financial reporting that occurred during the Company’sour most recent completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’sour internal control over financial reporting.
PART II. OTHER INFORMATION
On January 3, 2018, a shareholder filed a class action complaint in the United States District Court for the District of Delaware against the Company and certain of its officers on behalf of all persons who purchased or otherwise acquired the Company’s stock between June 29, 2016 and April 3, 2017. The complaint alleges that the defendants violated the federal securities laws by making false or misleading statements and/or omitting to disclose material adverse facts that (i) concealed known trends negatively impacting sales of the Company’s products and (ii) overstated the Company’s ability to achieve profitable sales growth. The plaintiff seeks class certification, unspecified monetary damages, costs, and attorneys’ fees. The Company disputes the allegations in the complaint and intends to vigorously defend against the claims. Estimating an amount or range of possible losses resulting from litigation proceedings is inherently difficult, particularly where the matters involve indeterminate claims for monetary damages and are in the stages of the proceedings where key factual and legal issues have not been resolved. For these reasons, the Company is currently unable to predict the ultimate timing or outcome of, or reasonably estimate the possible losses or a range of possible losses resulting from the matter described above.Item 1.Legal Proceedings
The Company is subject to various other legal claims arising in the normal course of business, including, but not limited to, patent infringement, product liability claims, and employment matters. The Company is self-insured up to specified limits for certain types of claims, including product liability, and is fully self-insured for certain other types of claims, including environmental, product recall, and patent infringement. Based on information currently available, it is the opinion of management that the ultimate resolution of any such pending and threatened legal proceedings will not have a material adverse effect on the financial condition, results of operations, or cash flows of the Company. However, in the event of unexpected future developments, it is possible that the ultimate resolution of any such matters, if unfavorable, could have a material adverse effect on the financial condition, results of operations, or cash flows of the Company in future periods. The Company establishes reserves for legal claims when the costs associated with the claims become probable and can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher than the amounts reserved for such claims. However, the Company cannot make a meaningful estimate of actual costs to be incurred that could possibly be higher or lower than the amounts reserved.
Information regarding reportable legal proceedings is contained in Part I, Item 3. Legal Proceedings in the Company’sour Form 10-K. Information set forth in this report’s Commitments and Contingencies footnote of the Notes to Consolidated Financial Statements describes any legal proceedings that became reportable during the quarterthree and six months ended November 30, 2017,February 29, 2024, and updates any descriptions of previously reported legal proceedings in which there have been material developments during such quarter.period. The discussion of legal proceedings included within the Commitments and Contingencies footnote of the Notes to Consolidated Financial Statements is incorporated into this Item 1 by reference.
Item 1a. Risk Factors
There have been no material changes in the Company’sour risk factors from those disclosed in Part I, Item 1a. Risk Factors of our Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On January 25, 2024, the Board of Directors (the “Board”) authorized the repurchase of up to an additional three million shares of our common stock. Under the current share repurchase authorization, we may repurchase shares of our common stock from time to time at prevailing market prices, depending on market conditions, through open market or privately negotiated transactions. No date has been established for the completion of the Company’s Form 10-K.share repurchase program, and we are not obligated to repurchase any shares. Subject to applicable corporate securities laws, repurchases may be made at such times and in such amounts as management deems appropriate. Repurchases under the program can be discontinued at any time management feels additional repurchases are not warranted. As of February 29, 2024, the maximum number of shares that may yet be repurchased under the share repurchase program authorized by the Board equaled 3.9 million shares. The following table reflects activity related to equity securities we repurchased during the quarter ended February 29, 2024:
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Purchases of Equity Securities |
Period | Total Number of Shares Purchased | | Average Price Paid per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans | | Maximum Number of Shares that May Yet Be Purchased Under the Plans |
12/1/2023 through 12/31/2023 | 53,277 | | | $ | 188.27 | | | 53,277 | | | 3,886,429 | |
1/1/2024 through 1/31/2024 | 10,539 | | | $ | 236.86 | | | 10,539 | | | 3,875,890 | |
2/1/2024 through 2/29/2024 | 20,730 | | | $ | 243.50 | | | 20,730 | | | 3,855,160 | |
Total | 84,546 | | | $ | 207.87 | | | 84,546 | | | 3,855,160 | |
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ResultsItem 5. Other Information
During the second quarter of Annual Stockholders Meetingfiscal 2024, none of our directors or Section 16 officers adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Item 408(a) of Regulation S-K).
At the Company's annual meeting of stockholders held on January 5, 2018, in Atlanta, Georgia, the stockholders considered and voted on the following proposals.
PROPOSAL 1 - Votes regarding the persons elected to serve as Directors of the Company were as follows:
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| Votes For | Votes Against | Votes Abstained | Broker Non-Votes |
Peter C. Browning | 35,596,102 | 1,004,180 | 13,951 | 2,193,025 |
G. Douglas Dillard, Jr. | 36,215,079 | 386,875 | 12,279 | 2,193,025 |
Ray M. Robinson | 35,832,630 | 769,306 | 12,297 | 2,193,025 |
Norman H. Wesley | 36,342,508 | 259,586 | 12,139 | 2,193,025 |
Mary A. Winston | 36,375,404 | 226,939 | 11,890 | 2,193,025 |
In addition to the above elected directors, the directors whose term of office continued after the meeting are as follows: W. Patrick Battle, James H. Hance, Jr. Robert F. McCullough, Julia B. North, Dominic J. Pileggi, and Vernon J. Nagel.
PROPOSAL 2 - Votes cast regarding the ratification of the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm were as follows:
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Votes For | Votes Against | Votes Abstained |
38,348,219 | 443,773 | 15,266 |
PROPOSAL 3 - The results of the advisory vote on the compensation of the named executive officers of the Company were as follows:
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Votes For | Votes Against | Votes Abstained | Broker Non-Votes |
34,382,495 | 2,050,995 | 180,743 | 2,193,025 |
PROPOSAL 4 - The results of the advisory vote on the frequency of future advisory votes on the compensation of the named executives of the Company were as follows:
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1 Year | 2 Years | 3 Years | Votes Abstained | Broker Non-Votes |
34,179,035 | 113,187 | 2,230,943 | 91,068 | 2,193,025 |
PROPOSAL 5 - The results of the vote regarding the approval of the Amended and Restated Acuity Brands, Inc. 2012 Omnibus Stock Incentive Compensation Plan were as follows:
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Votes For | Votes Against | Votes Abstained | Broker Non-Votes |
33,804,368 | 2,778,791 | 31,074 | 2,193,025 |
PROPOSAL 6 - The results of the vote regarding the approval of the Acuity Brands, Inc. 2017 Management Cash Incentive Plan were as follows:
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Votes For | Votes Against | Votes Abstained | Broker Non-Votes |
35,752,598 | 829,739 | 31,896 | 2,193,025 |
PROPOSAL 7 - The results of the shareholder proposal regarding the annual reporting of the Company's environmental, social, and governance policies (“ESG”), performance, and improvement targets were as follows:
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Votes For | Votes Against | Votes Abstained | Broker Non-Votes |
17,888,914 | 18,037,538 | 687,781 | 2,193,025 |
Pursuant to the foregoing votes, the Company's stockholders: (i) elected five directors nominated by the Board of Directors and listed above for a one-year term; (ii) approved the ratification of the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm; (iii) approved, on an advisory basis, the Company's named executive officer compensation; (iv) approved an annual frequency, on an advisory basis, for future advisory votes on named executive officer compensation; (v) approved the amended and restated stock incentive plan; (vi) approved the management cash incentive plan, and (vii) did not approve the shareholder proposal regarding annual reporting for ESG policies, performance, and improvement targets.
Additionally, the Board determined that the Company will hold future non-binding, advisory votes of stockholders to approve the compensation of the named executive officers every year, consistent with the results of the vote at the annual meeting of stockholders held on January 5, 2018. This advisory vote will occur annually until the Board otherwise elects a different frequency for such non-binding, advisory votes or until another non-binding, advisory stockholder vote on the frequency of stockholder votes on executive compensation occurs.
The Company expects to publish a policy on sustainability, which it anticipates will be available on the Company’s website in the near future. The policy will describe and formalize the Company's ESG policies, including key performance indicators related to ESG matters that are material to the business.
Declaration of Dividend
On January 5, 2018, the Board declared a quarterly dividend of $0.13 per share. The dividend is payable on February 1, 2018 to stockholders of record on January 22, 2018.
Other Board Matters
On January 5, 2018, the Board reduced the size of the Board from 12 members to 11 members following the retirement of Gordon D. Harnett from the Board effective January 5, 2018. Mr. Harnett advised the Company that his decision to retire did not involve any disagreement with the Company.
Item 6.Exhibits
INDEX TO EXHIBITS
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EXHIBIT 3 | (a) | | | Reference is made to Exhibit 3.1 of registrant's Form 8-K as filed with the Commission on September 26, 2007, which is incorporated herein by reference. |
| (b) | | | Reference is made to Exhibit 3.2 of registrant's Form 8-K as filed with the Commission on September 26, 2007, which is incorporated herein by reference. |
| (c) | | | Reference is made to Exhibit 3.C3.1 of registrant'sregistrant’s Form 10-Q8-K as filed with the Commission on January 9, 2017,26, 2024, which is incorporated herein by reference.
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| (d)(b) | | | Reference is made to Exhibit 3.2 of registrant’s Form 8-K as filed with the Commission on January 26, 2024, which is incorporated herein by reference. |
| (c) | | | Reference is made to Exhibit 3.D3.4 of registrant'sregistrant’s Form 10-Q8-K as filed with the Commission on January 9, 2017, which is incorporated herein by reference.
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EXHIBIT 10(iii)A | (1) | | | Reference is made to Annex A of the registrant’s Proxy Statement as filed with the Commission on November 21, 2017,26, 2024, which is incorporated herein by reference. |
EXHIBIT 22 | | (2) | | Reference is made to Annex BExhibit 22 of the registrant’s Proxy Statementregistrant's Form 10-K as filed with the Commission on November 21,2017,October 26, 2023, which is incorporated herein by reference. |
EXHIBIT 31 | (a) | | | Filed with the Commission as part of this Form 10-Q. |
| (b) | | | Filed with the Commission as part of this Form 10-Q. |
EXHIBIT 32 | (a) | | | Filed with the Commission as part of this Form 10-Q. |
| (b) | | | Filed with the Commission as part of this Form 10-Q. |
EXHIBIT 101 | .INS | XBRL Instance Document | | The following financial information frominstance document does not appear in the Company's Quarterly Report on Form 10-Q forInteractive Data File because its XBRL tags are embedded within the quarter ended November 30, 2017, filed on January 9, 2018, formatted inInline XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to Consolidated Financial Statements.document. |
| .SCH | XBRL Taxonomy Extension Schema Document. | | Filed with the Commission as part of this Form 10-Q. |
| .CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | | Filed with the Commission as part of this Form 10-Q. |
| .DEF | XBRL Taxonomy Extension Definition Linkbase Document. | | Filed with the Commission as part of this Form 10-Q. |
| .LAB | XBRL Taxonomy Extension Label Linkbase Document. | | Filed with the Commission as part of this Form 10-Q. |
| .PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | | Filed with the Commission as part of this Form 10-Q. |
EXHIBIT 104 | | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | | Filed with the Commission as part of this Form 10-Q |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ACUITY BRANDS, INC.
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Date: | April 3, 2024 | | By: | /S/ NEIL M. ASHE |
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Date: | January 9, 2018 | | By: | /S/ VERNON J. NAGEL |
| | | | VERNON J. NAGEL
NEIL M. ASHE CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER |
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Date: | April 3, 2024 | | By: | /S/ KAREN J. HOLCOM |
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Date: | January 9, 2018 | | By: | /S/ RICHARD K. REECE |
| | | | RICHARD K. REECE
EXECUTIVEKAREN J. HOLCOM SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER (Principal Financial and
Accounting Officer)
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