Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark One)
☑
(Mark One)
þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 29, 2024.
OR
☐For the quarterly period ended November 30, 2017.
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number 001-16583.

ACUITY BRANDS, INC.
(Exact name of registrant as specified in its charter)

Delaware58-2632672
Delaware58-2632672
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification Number)
No.)
1170 Peachtree Street, N.E., Suite 2300,

1170 Peachtree Street, N.E., Suite 1200, Atlanta, Georgia 30309
(Address of principal executive offices)
30309-7676
(Zip Code)
(404) 853-1400
(Registrant’s telephone number, including area code)

code)
None
(Former Name, Former Addressname, former address and Former Fiscal Year,former fiscal year, if Changed Since Last Report)changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading SymbolName of each exchange on which registered
Common stock, $0.01 par value per shareAYINew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ☑     No o☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ☑     No o☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definitionthe definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☑Accelerated filer☐Non-accelerated filer☐
Large Accelerated Filer þ
Smaller reporting company
     Accelerated Filer o
☐
Smaller Reporting Company o
Non-accelerated Filer o
(Do not check if a smaller reporting company)     
Emerging growth Company o
company		☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o☐     No þ☑
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common stock — $0.01 par value — 42,158,28830,797,872 shares as of January 4, 2018.
March 28, 2024.




ACUITY BRANDS, INC.
Table of Contents


Page No.
ITEMItem 1.
1
2
3
4
Note 1 — Description of Business and Basis of Presentation
4
Note 2 — Significant Accounting Policies
5
Note 3 — Acquisitions and Divestitures
5
Note 4 — New Accounting Pronouncements
6
Note 5 — Fair Value Measurements
7
Note 6 — Inventories
8
Note 7 — Property, Plant, and Equipment
8
Note 8 — Goodwill and Intangible Assets
8
Note 9 — Other Current Liabilities
9
Note 10 — Debt and Lines of Credit
10
Note 11 — Commitments and Contingencies
10
Note 12 — Changes in Stockholders' Equity
12
Note 13 — Revenue Recognition
13
Note 14 — Share-based Payments
14
Note 15 — Pension Plans
14
Note 16 — Special Charges
15
Note 17 — Other Expense
15
Note 18 — Earnings Per Share
16
Note 19 — Comprehensive Income
16
Note 20 — Segment Information
17
Item 2.
19
ITEM 2.Item 3.
2126
ITEM 3.Item 4.
2827
ITEM 4.
CONTROLS AND PROCEDURES
28
ITEMItem 1.
2928
ITEM 1a.Item 1A.
2928
ITEM 5.Item 2.
3028
ITEM 6.Item 5.
3128
EXHIBITS INDEXItem 6.

28
29

3330



Table of Contents
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements
Item 1.Financial Statements
ACUITY BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except shareper-share data)
 February 29, 2024August 31, 2023
 (unaudited)
ASSETS
Current assets: 
Cash and cash equivalents$578.9 $397.9 
Accounts receivable, less reserve for doubtful accounts of $1.2 and $1.3, respectively494.9 555.3 
Inventories375.8 368.5 
Prepayments and other current assets97.2 73.5 
Total current assets1,546.8 1,395.2 
Property, plant, and equipment, net296.0 297.6 
Operating lease right-of-use assets76.2 84.1 
Goodwill1,097.1 1,097.9 
Intangible assets, net462.9 481.2 
Deferred income taxes0.8 3.0 
Other long-term assets46.0 49.5 
Total assets$3,525.8 $3,408.5 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities: 
Accounts payable$322.4 $285.7 
Current operating lease liabilities19.6 19.7 
Accrued compensation83.9 103.3 
Other current liabilities172.0 186.7 
Total current liabilities597.9 595.4 
Long-term debt495.9 495.6 
Long-term operating lease liabilities67.5 75.5 
Accrued pension liabilities38.7 38.4 
Deferred income taxes42.3 59.0 
Other long-term liabilities133.9 129.2 
Total liabilities1,376.2 1,393.1 
Commitments and contingencies (see Commitments and Contingencies footnote)
Stockholders’ equity: 
Preferred stock, $0.01 par value per share; 50.0 shares authorized; none issued— — 
Common stock, $0.01 par value per share; 500.0 shares authorized; 54.6 and 54.4 shares issued, respectively0.5 0.5 
Paid-in capital1,087.7 1,066.8 
Retained earnings3,686.4 3,505.4 
Accumulated other comprehensive loss(112.7)(112.6)
Treasury stock, at cost, of 23.7 and 23.4 shares, respectively(2,512.3)(2,444.7)
Total stockholders’ equity2,149.6 2,015.4 
Total liabilities and stockholders’ equity$3,525.8 $3,408.5 
 November 30, 2017
August 31, 2017
 (unaudited)

ASSETS


Current assets: 



Cash and cash equivalents$428.6

$311.1
Accounts receivable, less reserve for doubtful accounts of $2.0 and $1.9, respectively514.3

573.3
Inventories339.6

328.6
Prepayments and other current assets41.3

32.6
Total current assets1,323.8

1,245.6
Property, plant, and equipment, at cost: 



Land22.3

22.5
Buildings and leasehold improvements181.4

180.7
Machinery and equipment492.9

484.6
Total property, plant, and equipment696.6

687.8
Less — Accumulated depreciation and amortization
(410.5)
(400.1)
Property, plant, and equipment, net286.1

287.7
Goodwill896.5

900.9
Intangible assets, net439.9

448.8
Deferred income taxes3.3

3.4
Other long-term assets11.8

13.2
Total assets$2,961.4

$2,899.6
LIABILITIES AND STOCKHOLDERS’ EQUITY


Current liabilities: 



Accounts payable$364.6

$395.1
Current maturities of long-term debt0.4

0.4
Accrued compensation31.2

41.8
Other accrued liabilities198.7

163.6
Total current liabilities594.9

600.9
Long-term debt356.5

356.5
Accrued pension liabilities95.9

96.9
Deferred income taxes108.3

108.2
Self-insurance reserves8.6

7.9
Other long-term liabilities71.1

63.6
Total liabilities1,235.3

1,234.0
Commitments and contingencies (see Commitments and Contingencies footnote)





Stockholders’ equity: 



Preferred stock, $0.01 par value; 50,000,000 shares authorized; none issued—

—
Common stock, $0.01 par value; 500,000,000 shares authorized; 53,621,355 and 53,549,840 issued, respectively0.5

0.5
Paid-in capital884.3

881.0
Retained earnings1,725.9

1,659.9
Accumulated other comprehensive loss(108.6)
(99.7)
Treasury stock, at cost — 11,676,689 and 11,678,002 shares, respectively(776.0)
(776.1)
Total stockholders’ equity1,726.1

1,665.6
Total liabilities and stockholders’ equity$2,961.4

$2,899.6
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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ACUITY BRANDS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In millions, except per-share data)
 Three Months EndedSix Months Ended
 February 29, 2024February 28, 2023February 29, 2024February 28, 2023
Net sales$905.9 $943.6 $1,840.6 $1,941.5 
Cost of products sold493.5 536.9 999.8 1,118.3 
Gross profit412.4 406.7 840.8 823.2 
Selling, distribution, and administrative expenses294.3 295.2 589.8 595.9 
Special charges— — — 6.9 
Operating profit118.1 111.5 251.0 220.4 
Other expense: 
Interest (income) expense, net(0.1)5.7 0.8 12.3 
Miscellaneous expense (income), net0.6 (3.7)1.7 5.4 
Total other expense0.5 2.0 2.5 17.7 
Income before income taxes117.6 109.5 248.5 202.7 
Income tax expense28.4 26.3 58.7 44.6 
Net income$89.2 $83.2 $189.8 $158.1 
Earnings per share(1):
 
Basic earnings per share$2.89 $2.60 $6.13 $4.91 
Basic weighted average number of shares outstanding30.864 32.048 30.940 32.178 
Diluted earnings per share$2.84 $2.57 $6.05 $4.86 
Diluted weighted average number of shares outstanding31.399 32.386 31.388 32.545 
Dividends declared per share$0.15 $0.13 $0.28 $0.26 
Comprehensive income:
Net income$89.2 $83.2 $189.8 $158.1 
Other comprehensive income (loss) items:
Foreign currency translation adjustments0.7 (1.1)(1.4)(2.6)
Defined benefit plans, net of tax0.7 1.0 1.3 2.1 
Other comprehensive income (loss) items, net of tax1.4 (0.1)(0.1)(0.5)
Comprehensive income$90.6 $83.1 $189.7 $157.6 

(1) Earnings per share is calculated using unrounded numbers. Amounts in the table may not recalculate exactly due to rounding.
 Three Months Ended
 November 30, 2017
November 30, 2016
Net sales$842.8

$851.2
Cost of products sold492.6

491.6
Gross profit350.2

359.6
Selling, distribution, and administrative expenses231.4

231.8
Special charge0.2

1.2
Operating profit118.6

126.6
Other expense (income): 



Interest expense, net8.1

8.2
Miscellaneous income, net(0.4)
(7.9)
Total other expense7.7

0.3
Income before provision for income taxes110.9

126.3
Provision for income taxes39.4

44.6
Net income$71.5

$81.7






Earnings per share: 



Basic earnings per share$1.71

$1.87
Basic weighted average number of shares outstanding41.9

43.8
Diluted earnings per share$1.70

$1.86
Diluted weighted average number of shares outstanding42.1

44.0
Dividends declared per share$0.13

$0.13






Comprehensive income:




Net income$71.5

$81.7
Other comprehensive income (loss) items:




Foreign currency translation adjustments(10.5)
(11.9)
Defined benefit pension plans, net of tax1.6

2.0
Other comprehensive loss, net of tax(8.9)
(9.9)
Comprehensive income$62.6

$71.8
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.





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ACUITY BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
 Six Months Ended
 February 29, 2024February 28, 2023
Cash flows from operating activities:
Net income$189.8 $158.1 
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization45.6 48.5 
Share-based payment expense23.1 22.0 
Loss on disposal of property, plant, and equipment0.3 — 
Asset impairment— 4.3 
Loss on sale of a business— 11.2 
Changes in operating assets and liabilities, net of acquisitions and divestitures:
Accounts receivable60.1 142.6 
Inventories(4.7)44.5 
Prepayments and other current assets(23.0)(1.7)
Accounts payable39.2 (69.1)
Other operating activities(37.8)(54.0)
Net cash provided by operating activities292.6 306.4 
Cash flows from investing activities:  
Purchases of property, plant, and equipment(29.0)(35.6)
Other investing activities(3.7)6.4 
Net cash used for investing activities(32.7)(29.2)
Cash flows from financing activities:  
Repayments on credit facility, net of borrowings— (18.0)
Repurchases of common stock(67.8)(121.7)
Proceeds from stock option exercises and other7.0 1.7 
Payments of taxes withheld on net settlement of equity awards(9.4)(12.9)
Dividends paid(8.8)(8.5)
Net cash used for financing activities(79.0)(159.4)
Effect of exchange rate changes on cash and cash equivalents0.1 (2.0)
Net change in cash and cash equivalents181.0 115.8 
Cash and cash equivalents at beginning of period397.9 223.2 
Cash and cash equivalents at end of period$578.9 $339.0 
Supplemental cash flow information:  
Income taxes paid during the period$75.9 $52.1 
Interest paid during the period$18.4 $21.9 
 Three Months Ended
 November 30, 2017 November 30, 2016
Cash flows from operating activities:   
Net income$71.5
 $81.7
Adjustments to reconcile net income to net cash flows from operating activities:   
Depreciation and amortization19.0
 17.2
Share-based payment expense8.5
 7.9
Loss on sale or disposal of property, plant, and equipment0.1
 0.1
Gain on sale of investment in unconsolidated affiliate—
 (7.2)
Deferred income taxes(0.1) —
Change in assets and liabilities, net of effect of acquisitions, divestitures, and exchange rate changes:   
Accounts receivable57.6
 47.6
Inventories(11.1) (40.3)
Prepayments and other current assets(9.3) (10.7)
Accounts payable(32.5) (7.2)
Other current liabilities25.5
 (45.7)
Other10.6
 12.4
Net cash provided by operating activities139.8
 55.8
Cash flows from investing activities: 
  
Purchases of property, plant, and equipment(10.3) (19.5)
Proceeds from sale of property, plant, and equipment—
 5.4
Proceeds from sale of investment in unconsolidated affiliate—
 13.0
Net cash used for investing activities(10.3) (1.1)
Cash flows from financing activities: 
  
Issuances of long-term debt—
 0.9
Repayments of long-term debt(0.1) —
Repurchases of common stock—
 (0.4)
Proceeds from stock option exercises and other0.8
 2.1
Payments for employee taxes on net settlement of equity awards(6.0) (11.3)
Dividends paid(5.5) (5.8)
Net cash used for financing activities(10.8) (14.5)
Effect of exchange rate changes on cash and cash equivalents(1.2) (2.2)
Net change in cash and cash equivalents117.5
 38.0
Cash and cash equivalents at beginning of period311.1
 413.2
Cash and cash equivalents at end of period$428.6
 $451.2
Supplemental cash flow information: 
  
Income taxes paid during the period$2.7
 $29.0
Interest paid during the period$12.7
 $12.1
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)



Note 1 — Description of Business and Basis of Presentation
1.Description of Business and Basis of Presentation
Acuity Brands, Inc. (“Acuity Brands”)(referred to herein as “we,” “our,” “us,” the “Company,” or similar references) is the parent company ofa 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, the Intelligent Spaces Group (“ISG”), we design, manufacture, and bring to market products and services that make a valuable difference in people's lives. We achieve growth through the development of innovative new products and services, including lighting, lighting controls, building management systems, and location-aware applications.
ABL Segment
Our ABL strategy is to increase product vitality, improve service levels, use technology to improve and such other subsidiaries are collectively referred to herein as the “Company”)differentiate both our products and was incorporated in 2001 under the laws of the State of Delaware. The Company is one of the world’s leading providersour services, and drive productivity. ABL's portfolio of lighting solutions includes commercial, architectural, and building management solutionsspecialty lighting in addition to lighting controls and services for commercial, institutional, industrial, infrastructure, and residential applications throughout North America and select international markets. The Company’scomponents that can be combined to create integrated lighting and building management solutions includecontrols systems. We offer devices such as luminaires lighting controls, controllers for various building systems, power supplies, prismatic skylights, and drivers, as well as integrated systemsthat predominantly utilize light emitting diode (“LED”) technology designed to optimize energy efficiency and comfort for various indoor and outdoor applications. Additionally,ABL's portfolio of products includes but is not limited to the Company continuesfollowing brands: A-LightTM, AculuxTM, American Electric Lighting®, CycloneTM, Dark to expand its solutions portfolio to provide a hostLight®, eldoLED®, Eureka®, Gotham®, Healthcare Lighting®,Holophane®, Hydrel®, IndyTM, IOTA®, Juno®, Lithonia Lighting®, Luminaire LEDTM, Luminis®, Mark Architectural LightingTM, nLight®, OPTOTRONIC®, Peerless®, RELOC® Wiring Solutions, and Sensor Switch®.
Principal customers of other economic benefits, including softwareABL include electrical distributors, retail home improvement centers, electric utilities, national accounts, original equipment manufacturer (“OEM”) customers, digital retailers, lighting showrooms, and services that enable the Internet of Things (“IoT”). The Company's IoT solutions provideenergy service companies. ABL's 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. The Company has one reportable segment serving theare located in North American lighting marketAmerica and select international markets.markets that serve new construction, renovation and retrofit, and maintenance and repair applications. ABL's lighting and lighting controls solutions are sold primarily through a network of independent sales agencies that cover specific geographic areas and market channels, by internal sales representatives, through consumer retail channels, directly to large corporate accounts, and directly to OEM customers. Products are delivered directly from our manufacturing facilities or through a network of distribution centers, regional warehouses, and commercial warehouses using both common carriers and an internally-managed truck fleet.
The We market ABL's product portfolio and service capabilities to customers and/or end users in multiple channels through a broad spectrum of marketing and promotional methods, including direct customer contact, trade shows, on-site training, print and digital advertising in industry publications, product brochures, and other literature, as well as through digital marketing and social media. ABL operates training and education facilities in several locations throughout North America and Europe designed to enhance the lighting knowledge of customers and industry professionals.
ISG Segment
Our ISG strategy is to make spaces smarter, safer, and greener by connecting the edge to the cloud. ISG offers building management solutions and building management software. ISG's building management solutions include products for controlling heating, ventilation, air conditioning (“HVAC”), lighting, shades, refrigeration, and building access that deliver end-to-end optimization of those building systems. ISG's intelligent building software enhances the occupant experience, improves building system management, and automates labor intensive tasks while delivering operational energy efficiency and cost reductions. Through a connected and converged building system architecture, ISG's software delivers different applications, allows clients to upgrade over time with natural refresh cycles, and deploys new capabilities. Customers of ISG primarily include system integrators as well as retail stores, airports, and enterprise campuses throughout North America and select international locations. ISG products and solutions are marketed under multiple brand names, including but not limited, to Atrius®, Distech Controls®, and KE2 Therm Solutions®.
Basis of Presentation
We have prepared the Consolidated Financial Statements have been prepared by the Company in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) andto present the financial position, results of operations, and cash flows of Acuity Brands, Inc. and its wholly-owned subsidiaries.
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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
These unaudited interim consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present fairly the Company’sour consolidated financial position as of November 30, 2017, theFebruary 29, 2024, our consolidated comprehensive income for the three and six months ended November 30, 2017February 29, 2024 and 2016,February 28, 2023, and theour consolidated cash flows for the threesix months ended November 30, 2017February 29, 2024 and 2016.February 28, 2023. Certain information and footnote disclosures normally included in the Company’sour annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. However, the Company believeswe believe that the disclosures included herein are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the audited consolidated financial statements of the Company as of and for the three years in the period ended August 31, 20172023 and notes thereto included in the Company’sour Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on October 26, 20172023 (File No. 001-16583) (“Form 10-K”).
The resultsOur business exhibits some seasonality, with net sales being affected by weather and seasonal demand on construction and installation programs, particularly during the winter months, as well as the annual budget cycles of operations formajor customers. Historically, with certain exceptions, we have experienced our highest sales in the three months ended November 30, 2017 and 2016 are not necessarily indicativelast two quarters of the results to be expected for the fulleach fiscal year due primarily to seasonality, which results in the net sales and net income of the Company generally being higher in the second half of its fiscal year, the impact of any acquisitions, and, among other reasons, the continued uncertainty of general economic conditions that may impact the key end markets of the Company for the remainder of fiscal 2018.these factors.

Note 2 — Significant Accounting Policies
2.Significant Accounting Policies
Use of Estimates
The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.
Reclassifications
Certain prior-periodWe may reclassify certain prior period amounts have been reclassified to conform to the current year presentation. No material reclassifications occurred during the current period. Refer
Note 3 — Acquisitions and Divestitures
Acquisitions
Arize 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 Newcustomer. This acquisition is intended to expand ISG's technology and controls product portfolio and reach new customers.
We accounted for the acquisition of KE2 Therm in accordance with Accounting Pronouncements footnoteStandards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”). Acquired assets and liabilities were recorded at their estimated acquisition-date fair values. Acquisition-related costs were expensed as incurred and were not material to our financial statements. The aggregate purchase price of this acquisition reflects preliminary goodwill within the ISG segment of $15.0 million at February 29, 2024, which is not expected to be deductible for additional information regarding retrospective reclassificationstax purposes. The goodwill is primarily comprised of expected benefits related to accounting standards adopted inexpanding ISG's technology and controls product portfolio as well as the current year.trained workforce acquired with these businesses and expected synergies from combining the operations of KE2 Therm with our operations.


We additionally recorded preliminary gross intangible assets of $18.0 million as of February 29, 2024, which reflect estimates for definite-lived intangibles with a preliminary estimated weighted average useful life of approximately 15 years.
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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Amounts recorded for acquired assets and liabilities are deemed to be provisional until disclosed otherwise as we continue to gather information related to the identification and valuation of acquired assets and liabilities including, but not limited to, intangible assets and tax-related items. There were no measurement period adjustments during the first six months of fiscal 2024.
3.New Accounting Pronouncements
The operating results of KE2 Therm have been included in our financial statements since the date of acquisition and are not material to our consolidated financial condition, results of operations, or cash flows.
Divestitures
There were no divestitures during the first six months of fiscal 2024. The following discussion relates to fiscal year 2023 activities.
We sold our Sunoptics prismatic skylights business in November 2022. We transferred assets with a total carrying value of $15.1 million, which primarily consisted of intangibles with definite lives, inventories, and allocated goodwill from the ABL segment. During the first quarter of fiscal 2023, we recognized a pre-tax loss on this sale of $11.2 million within Miscellaneous expense (income), net on the Consolidated Statements of Comprehensive Income. Additionally, we recorded impairment charges for certain retained assets as well as associate severance and other costs related to this sale. These items are included within Special charges on the Consolidated Statements of Comprehensive Income. See the Special Charges footnote of the Notes to Consolidated Financial Statements for further details.
Note 4 — New Accounting Pronouncements
Accounting Standards Yet to Be Adopted in Fiscal 2018
Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”)
In March 2016,December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, ImprovementsASU 2023-09, which expands income tax disclosure requirements to Employee Share-Based Payment Accounting, (“include additional information related to the rate reconciliation of our effective tax rates to statutory rates as well as additional disaggregation of taxes paid. The amendments in the ASU 2016-09”), which changesalso remove disclosures related to certain aspects of accounting for share-based payments to employees. The standard requires that all excessunrecognized tax benefits and deficiencies previously recorded as additional paid-in capital be prospectively recorded in income tax expense, which could create volatility in the Company's effective income tax rate on a quarter by quarter basis due primarily to fluctuations in the Company's stock price and the timing of stock option exercises and vesting of restricted share grants. The standard also requires excess tax benefits to be presented as an operating activity on the statement of cash flows rather than as a financing activity and taxes paid for employee withholdings to be presented as a financing activity. The Company adopteddeferred taxes. ASU 2016-09 effective as of September 1, 2017. Excess tax benefits and deficiencies are recorded within Provision for income taxes within the Consolidated Statements of Comprehensive Income on a prospective basis as required by the standard; however, the Company elected to present changes to the statement of cash flows on a retrospective basis as allowed by the standard in order to maintain comparability between fiscal years. As such, cash flows from operations for three months ended November 30, 2016 increased $17.1 million, with a corresponding decrease to cash flows from financing activities, compared to amounts previously reported.
Accounting Standards Yet to Be Adopted
In March 2017, the FASB issued ASU No. 2017-07, Compensation — Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”), which will change the presentation of net periodic benefit cost related to employer sponsored defined benefit plans and other postretirement benefits. Service cost will be included within the same income statement line item as other compensation costs arising from services rendered during the period, while other components of net periodic benefit pension cost will be presented separately outside of operating income. Additionally, only service costs may be capitalized in assets. ASU 2017-072023-09 is effective for fiscal years (and interim reporting periods within those years) beginning after December 15, 2017.2024, or our fiscal 2026. The provisionsamendments may be applied prospectively or retrospectively, and early adoption is permitted. We are currently assessing the impact of the requirements on our consolidated financial statements and disclosures.
ASU 2017-07 are not expected2023-07, Segment Reporting (Topic 280): Improvements to have a material effect on the Company's financial condition, results of operations, or cash flows.Reportable Segment Disclosures (“ASU 2023-07”)
In January 2017,November 2023, the FASB issued ASU No. 2017-01, Clarifying2023-07, which expands reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in the DefinitionASU require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to an entity's chief operating decision maker (“CODM”), a description of other segment items by reportable segment, and any additional measures of a Business (“ASU 2017-01”), which requires an evaluation of whether substantially all ofsegment's profit or loss used by the fair value of assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If so, the transaction does not qualify as a business. The guidance also requires an acquired businessCODM when deciding how to include at least one substantive process and narrows the definition of outputs. The Company isallocate resources. Annual disclosures are required to apply this guidance to annual periodsfor fiscal years beginning after December 15, 2017, including interim2023 or our fiscal 2025. Interim disclosures are required for periods within those periods. The Companyfiscal years beginning after December 15, 2024, or our fiscal 2026. Retrospective application is required for all prior periods presented, and early adoption is permitted. We are currently evaluatingassessing the impact of the provisions of ASU 2017-01 and intends to implement the standard as required in fiscal 2019.
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (“ASU 2016-15”), which is intended to reduce the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows including debt prepayment and extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, and proceeds from the settlement of corporate-owned life insurance. ASU 2016-15 is effective for fiscal years (and interim reporting periods within those years) beginning after December 15, 2017. The Company intends to implement the standard as required in fiscal 2019, and the provisions of ASU 2016-15 are not expected to have a material impactrequirements on the Company's financial statement disclosures.
In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”), which requires lessees to include most leases on the balance sheet. ASU 2016-02 is effective for fiscal years (and interim reporting periods within those years) beginning after December 15, 2018. The Company is currently evaluating the impact of the provisions of ASU 2016-02 and intends to implement the standard as required in fiscal 2020.

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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which will replace most existing revenue recognition guidance in U.S. GAAP. ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The standard also requires additional disclosures about the nature, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU 2014-09 permits two transition methods: the full retrospective method and the modified retrospective method. Under the full retrospective method, the standard would be applied to each prior reporting period presented with the cumulative effect of applying the standard recognized at the earliest period shown. Under the modified retrospective method, the cumulative effect of applying the standard would be recognized at the date of initial application. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies the guidance in ASU 2014-09 and has the same effective date as the original standard. During the three months ended July 1, 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing; ASU 2016-11, Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting; and ASU 2016-12, Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients. These amendments are intended to improve and clarify the implementation guidance of ASU 2014-09 and have the same effective date as the original standard.
The Company has an implementation team tasked with identifying potential differences that will result from applying the new revenue recognition standard to the Company's contracts with its customers. The implementation team reports the findings and progress of the project to management on a frequent basis and to the Audit Committee of the Board of Directors on a quarterly basis. The implementation team has completed its initial phase of contract reviews and continues to evaluate the results of those reviews with respect to potential changes from adopting the new standard on the Company'sour consolidated financial statements. Management anticipates the most significant changes will relate to additional deferral of revenue recognition for certain services providedstatements and the gross presentation of right of return assets and refund liabilities for sales with a right of return. Based on the current portfolio of the Company's revenue generating activities, these changes are not expected to have a material impact on the Company's consolidated financial condition, results of operations, or cash flows. Additionally, the implementation team is in the process of identifying appropriate changes to the Company's business processes, systems, and controls to support recognition and disclosure under the new standard. Based on the implementation team's current findings and the overall expected immaterial impact of adoption, the implementation team is currently evaluating which adoption method would provide the most meaningful information to the Company's stakeholders. The Company will adopt the requirements of the new standard no later than the effective date of September 1, 2018.disclosures.
All other newly issued accounting pronouncements not yet effective have been deemed either immaterial or not applicable.

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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
4.Fair Value Measurements
The Company determinesNote 5 — Fair Value Measurements
We determine fair value measurements based on the assumptions a market participant would use in pricing an asset or liability. Accounting Standards Codification (“ASC”)ASC Topic 820, Fair Value Measurements and DisclosuresMeasurement (“ASC 820”), establishes a three levelthree-level hierarchy making a distinctionthat distinguishes between market participant assumptions based on (i) unadjusted quoted prices for identical assets or liabilities in an active market (Level 1), (ii) quoted prices in markets that are not active or inputs that are observable either directly or indirectly for substantially the full term of the asset or liability (Level 2), and (iii) prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement (Level 3).
The Company's cash and cash equivalents (Level 1), which are required to be carried at fair value and measured on a recurring basis, were $428.6 million and $311.1 million as of November 30, 2017 and August 31, 2017, respectively.
The Company utilizesWe utilize valuation methodologies to determine the fair values of itsour financial assets and liabilities in conformity with the concepts of “exit price” and the fair value hierarchy as prescribed in ASC 820. All valuation methods and assumptions are validated at least quarterly to ensure the accuracy and relevance of the fair values. There were no material changes to the valuation methods or assumptions used to determine fair values during the current period.

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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The Company used quoted market prices to determine the fair value of Level 1 assets and liabilities. No transfers between the levels of the fair value hierarchy occurred during the current fiscal period. In the event of a transfer in or out of a level within the fair value hierarchy, the transfers would be recognized on the date of occurrence. We may from time to time be required to remeasure the carrying value of certain assets and liabilities to fair value on a nonrecurring basis. Such adjustments typically arise if we determine that certain of our assets are impaired.
Financial Instruments Recorded at Fair Value
The following table summarizes balances and the fair value hierarchy level of our financial instruments recorded at fair value on a recurring basis as of the dates presented (in millions):
February 29, 2024August 31, 2023
Assets recorded at fair value:
Cash and cash equivalentsLevel 1$578.9 $397.9 
Other financial instrumentsLevel 20.6 0.4 
Assets in fair value hierarchy579.5 398.3 
Other investments(1)
7.2 7.2 
Total assets at fair value$586.7 $405.5 

(1) Includes strategic investments in privately-held entities over which we do not exercise significant influence or control and without readily determinable fair values. Amounts are recorded at cost less any impairment adjusted for observable price changes, if any.
Disclosures of Fair Value of Financial Instruments
Disclosures of fair value information about financial instruments, (whether or not recognized in the balance sheet), for which it is practicable to estimate that value, are required each reporting period in addition to any financial instruments carried at fair value on a recurring basis as prescribed by ASC Topic 825, Financial Instruments (“(“ASC 825”). In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows.
The carrying valuesFair value for our outstanding debt obligations is estimated based on discounted future cash flows using rates currently available for debt of similar terms and estimated fair values of certain of the Company’s financial instruments were as follows at November 30, 2017 and August 31, 2017 (in millions):
 November 30, 2017 August 31, 2017
 Carrying Value Fair Value Carrying Value Fair Value
Senior unsecured public notes, net of unamortized discount and deferred costs$349.2
 $374.1
 $349.1
 $379.7
Industrial revenue bond4.0
 4.0
 4.0
 4.0
Bank loans3.7
 3.7
 3.8
 3.8
Thematurity (Level 2). Our senior unsecured public notes are carried at the outstanding balance, net of unamortized bond discount and deferred costs, as of the end of the reporting period. Fair value is estimated based on discounted future cash flows using rates currently available for debt of similar terms and maturity (Level 2).
The industrial revenue bond is carried at the outstanding balanceestimated fair value of our senior unsecured public notes was $410.7 million and $401.4 million as of the endFebruary 29, 2024 and August 31, 2023, respectively.
We had no short-term borrowings outstanding under our revolving credit facility as of February 29, 2024 and August 31, 2023. Such borrowings, if any, are variable-rate instruments that reset on a frequent short-term basis; therefore, we estimate that any outstanding carrying values of these instruments, which are equal to their face amounts, approximate their fair values. See Debt and Lines of Credit footnote of the reporting period. The industrial revenue bond is a tax-exempt, variable-rate instrument that resetsNotes to Consolidated Financial Statements for further details on a weekly basis; therefore, the Company estimates that the face amountour outstanding borrowings.
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Table of the bond approximates fair value as of November 30, 2017 based on bonds of similar terms and maturity (Level 2).Contents
The bank loans are carried at the outstanding balance as of the end of the reporting period. Fair value is estimated based on discounted future cash flows using rates currently available for debt of similar terms and maturity (Level 2).ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
ASC 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value to the Company.us. In many cases, the fair value estimates cannot be substantiated by comparison to independent markets, nor can the disclosed value be realized in immediate settlement of the instruments. In evaluating the Company’sour management of liquidity and other risks, the fair values of all assets and liabilities should be taken into consideration, not only those presented above.

Note 6 — Inventories
5.Goodwill and Intangible Assets
Inventories include materials, direct labor, inbound freight, customs, duties, tariffs, and related manufacturing overhead. Inventories are stated on a first-in, first-out basis at the lower of cost and net realizable value and consist of the following as of the dates presented (in millions):
 February 29, 2024August 31, 2023
Raw materials, supplies, and work in process (1)
$228.1 $214.0 
Finished goods179.6 180.3 
Inventories excluding reserves407.7 394.3 
Less: Reserves(31.9)(25.8)
Total inventories$375.8 $368.5 

(1) Due to the immaterial amount of estimated work in process and the short lead times for the conversion of raw materials to finished goods, we do not believe the segregation of raw materials and work in process is meaningful information.
We review inventory quantities on hand and record a provision for excess and obsolete inventory primarily based on estimated future demand and current market conditions. A significant change in customer demand and/or market conditions could render certain inventory obsolete and could have a material adverse impact on our operating results in the period the change occurs.
Note 7 — Property, Plant, and Equipment
Property, plant, and equipment consist of the following as of the dates presented (in millions):
 February 29, 2024August 31, 2023
Land$23.0 $23.0 
Buildings and leasehold improvements214.7 210.9 
Machinery and equipment743.5 727.9 
Total property, plant, and equipment, at cost981.2 961.8 
Less: Accumulated depreciation and amortization(685.2)(664.2)
Property, plant, and equipment, net$296.0 $297.6 
Note 8 — Goodwill and Intangible Assets
Through multiple acquisitions, the Companywe acquired definite-lived intangible assets consisting primarily of customer relationships, patented technology, distribution networks, and trademarks and trade names associated with specific products, with finite lives, definite-lived distribution networks, patented technology, non-compete agreements, and customer relationships, which are amortized over their estimated useful lives. Indefinite-lived intangible assets consist of trade names that are expected to generate cash flows indefinitely.
The CompanyWe recorded amortization expense for definite-lived intangible assets of $6.6$10.0 million and $5.9$9.3 million during the three months ended November 30, 2017February 29, 2024 and 2016,February 28, 2023, respectively, and $19.9 million and $22.9 million during the six months ended February 29, 2024 and February 28, 2023, respectively. Amortization expense is generally recorded on a straight-line basis and is expected to be approximately $26.2 million in fiscal 2018, $26.1 million in fiscal 2019, $25.8 million in fiscal 2020, $23.0 million in fiscal 2021, and $21.2 million in fiscal 2022.

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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The changefollowing table summarizes the changes in the carrying amount of goodwill by segment during the three months ended November 30, 2017 is summarized belowperiods presented (in millions):
ABLISGTotal
Balance at August 31, 2023$1,014.4 $83.5 $1,097.9 
Foreign currency translation adjustments(0.6)(0.2)(0.8)
Balance at February 29, 2024$1,013.8 $83.3 $1,097.1 
Balance at August 31, 2017$900.9
Foreign currency translation adjustments(4.4)
Balance at November 30, 2017$896.5
ABLISGTotal
Balance at August 31, 2022$1,014.2 $70.1 $1,084.3 
Derecognitions for divestitures(0.7)— (0.7)
Foreign currency translation adjustments(1.2)(2.1)(3.3)
Balance at February 28, 2023$1,012.3 $68.0 $1,080.3 
Further discussion of the Company’s goodwill and other intangible assets is included within the Significant Accounting Policies footnote of the Notes to Consolidated Financial Statements within the Company’sour Form 10-K.

Note 9 — Other Current Liabilities
6.Inventories
Inventories include materials, labor, in-bound freight, and related manufacturing overhead, are stated at the lower of cost (on a first-in, first-out or average cost basis) or market, andOther current liabilities consist of the following as of the dates presented (in millions):
 February 29, 2024August 31, 2023
Customer incentive programs(1)
$19.8 $31.6 
Refunds to customers(1)
24.8 25.6 
Deferred revenues(1)
16.2 14.1 
Sales commissions28.0 35.7 
Freight costs11.2 15.0 
Warranty and recall costs(2)
31.4 22.8 
Tax-related items(3)
5.7 9.2 
Interest on long-term debt(4)
2.3 2.3 
Other32.6 30.4 
Total other current liabilities$172.0 $186.7 

(1) Refer to the Revenue Recognition footnote of the Notes to Consolidated Financial Statements within our Form 10-K for additional information.
(2) Refer to the Commitments and Contingencies footnote of the Notes to Consolidated Financial Statements for additional information.
(3) Includes accruals for income, property, sales and use, and value-added taxes.
(4) Refer to the Debt and Lines of Credit footnote of the Notes to Consolidated Financial Statements for additional information.
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 November 30, 2017 August 31, 2017
Raw materials, supplies, and work in process (1)
$176.4
 $176.5
Finished goods193.1
 180.8
Inventories excluding reserves369.5
 357.3
Less: Reserves(29.9) (28.7)
Total inventories$339.6
 $328.6

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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(1)
Due to the immaterial amount of estimated work in process and the short lead times for the conversion of raw materials to finished goods, the Company does not believe the segregation of raw materials and work in process is meaningful information.

Note 10 — Debt and Lines of Credit
Long-term Debt
On November 10, 2020, Acuity Brands Lighting, Inc., a wholly-owned operating subsidiary of Acuity Brands, Inc., issued $500.0 million aggregate principal amount of 2.150% senior unsecured notes due December 15, 2030 (the “Unsecured Notes”) at a price equal to 99.737% of their face value. Interest on the Unsecured Notes is paid semi-annually in arrears on June 15 and December 15 of each year. At issuance we recorded $4.8 million of deferred issuance costs related to the Unsecured Notes as a direct deduction from the face amount of the Unsecured Notes. These issuance costs are amortized over the 10-year term of the Unsecured Notes.
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.
Lines of Credit
On June 30, 2022, we entered into a credit agreement (the “Credit Agreement”) with a syndicate of banks that provides us with a $600.0 million five-year unsecured revolving credit facility (the “Revolving Credit Facility”) with the ability to request an additional $400.0 million of borrowing capacity. We had no short-term borrowings outstanding under the Revolving Credit Facility at February 29, 2024 and August 31, 2023.
We were in compliance with all financial covenants under the Credit Agreement as of the periods presented. At February 29, 2024, we had additional borrowing capacity under the Credit Agreement of $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 $3.8 million issued under the Revolving Credit Facility, primarily for securing collateral requirements under our casualty insurance premiums.
None of our existing debt instruments include provisions that would require an acceleration of repayments based solely on changes in our credit ratings. Borrowings and repayments on our Revolving Credit Facility with terms of three months or less are reported on a net basis on our Consolidated Statements of Cash Flows.
Note 11 — Commitments and Contingencies
In the normal course of business, we are 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 estimated liabilities and claims, legal and contractual issues, environmental laws and regulations, guarantees, and indemnities. We establish estimated liabilities when the associated costs related to uncertainties or guarantees become probable and can be reasonably estimated. For the period ended February 29, 2024, no material changes have occurred in our estimated liabilities 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 our Form 10-K other than the items discussed below.
Product Warranty and Recall Costs
Our products generally have a standard warranty term of five years that assure our products comply with agreed upon specifications. We record an accrual for the estimated amount of future warranty costs in accordance with ASC Topic 450, Contingencies (“ASC 450”) when the related revenue is recognized. Estimated future warranty and recall costs are primarily based on historical experience of identified warranty and recall claims. Estimated costs related to product warranty and recall costs outside of our historical experience, which could include significant product recalls or formal campaigns soliciting repair or return of a product, are accrued when they are deemed to be probable and can be reasonably estimated. Any estimated or actual loss recoveries that offset our costs and payments are reflected as assets and included within Other current assets or Other long-term assets based on the timing of receipt of recovery. Recoveries are recorded net of allowances for credit losses.
There can be no assurance that future warranty or recall costs will not exceed historical amounts, new technology products may not generate unexpected costs, and/or loss recoveries will not be fully collectible. If actual future warranty or recall costs exceed historical amounts or recoveries are no longer collectible, adjustments to our
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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
7.Earnings Per Share
accruals and/or receivables may be warranted, which could have a material adverse impact on our results of operations and cash flows.
Estimated liabilities for product warranty and recall costs are included in Other current liabilities or Other long-term liabilities on the Consolidated Balance Sheets based upon when we expect to settle the incurred warranty. The following table summarizes changes in the estimated liabilities for product warranty and recall costs during the periods presented (in millions):
Six Months Ended
February 29, 2024February 28, 2023
Beginning balance$31.6 $27.3 
Warranty and recall costs28.7 19.1 
Payments and other deductions(20.2)(18.4)
Ending balance$40.1 $28.0 
Data Security Incidents
On December 14, 2022, a former associate filed a putative class action complaint against the Company in the United States District Court for the Northern District of Georgia on behalf of all persons whose personal information was compromised as a result of data security incidents we experienced in October 2020 and/or December 2021. On January 25, 2023, a second putative class action complaint was filed in the same venue by two other former associates.
Both complaints contained similar allegations and claimed that the Company failed to exercise reasonable caution in securing and safeguarding associate information. On that basis, the complaints asserted claims for negligence, breach of contract, breach of implied contract, unjust enrichment, breach of fiduciary duty, invasion of privacy, and breach of confidence. The plaintiffs sought class certification, monetary damages, certain injunctive relief regarding our data-security measures, additional credit-monitoring services, other equitable relief (including disgorgement), attorneys’ fees, costs, and pre- and post-judgment interest.
On December 1, 2023, the parties reached a proposed settlement and release of all claims in the class action and executed a Settlement Agreement and Release, which is pending approval from the State Court of Fulton County, Georgia. The impact of the settlement is not material.
We have received inquiries from, and it is also possible that investigations or other actions may be taken by, state and/or federal agencies regarding the data security incidents and related data privacy matters. For these reasons, we are currently unable to reasonably estimate the possible losses or a range of possible losses resulting from the matters described above. We have insurance, subject to certain terms and conditions, for these types of matters.
Litigation
We are 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 pending and threatened legal proceedings will not have a material adverse effect on our financial condition, results of operations, or cash flows. 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 our financial condition, results of operations, or cash flows in future periods. We establish estimated liabilities 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 accrued for such claims. However, we cannot make a meaningful estimate of actual costs to be incurred that could possibly be higher or lower than the accrued amounts.
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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 12 — Changes in Stockholders' Equity
The following tables summarize changes in the components of stockholders' equity for the periods presented (in millions):

Common Stock Outstanding
Shares(1)
AmountPaid-in
Capital		Retained
Earnings		Accumulated Other
Comprehensive
Loss		Treasury
Stock, at cost		Total
Balance, August 31, 202331.1 $0.5 $1,066.8 $3,505.4 $(112.6)$(2,444.7)$2,015.4 
Net income— — — 100.6 — — 100.6 
Other comprehensive loss— — — — (1.5)— (1.5)
Share-based payment amortization, issuances, and cancellations0.1 — 2.1 — — — 2.1 
Employee stock purchase plan issuances— — 0.5 — — — 0.5 
Cash dividends of $0.13 per share paid on common stock— — — (4.1)— — (4.1)
Stock options exercised— — 1.1 — — — 1.1 
Repurchases of common stock(0.3)— — — — (50.0)(50.0)
Balance, November 30, 202330.9 0.5 1,070.5 3,601.9 (114.1)(2,494.7)2,064.1 
Net income— — — 89.2 — — 89.2 
Other comprehensive income— — — — 1.4 — 1.4 
Share-based payment amortization, issuances, and cancellations— — 11.8 — — — 11.8 
Employee stock purchase plan issuances— — 0.3 — — — 0.3 
Cash dividends of $0.15 per share paid on common stock— — — (4.7)— — (4.7)
Stock options exercised— — 5.1 — — — 5.1 
Repurchases of common stock(0.1)— — — — (17.6)(17.6)
Balance, February 29, 202430.8 $0.5 $1,087.7 $3,686.4 $(112.7)$(2,512.3)$2,149.6 
_______________________________________
(1) Share activity and balances above are calculated using rounded numbers.
Common Stock Outstanding
Shares(1)
AmountPaid-in
Capital		Retained
Earnings		Accumulated Other
Comprehensive
Loss		Treasury
Stock, at cost		Total
Balance, August 31, 202232.5 $0.5 $1,036.3 $3,176.2 $(125.8)$(2,175.4)$1,911.8 
Net income— — — 74.9 — — 74.9 
Other comprehensive loss— — — — (0.4)— (0.4)
Share-based payment amortization, issuances, and cancellations0.2 — (1.8)— — — (1.8)
Employee stock purchase plan issuances— — 0.5 — — — 0.5 
Cash dividends of $0.13 per share paid on common stock— — — (4.3)— — (4.3)
Stock options exercised— — 0.4 — — — 0.4 
Repurchases of common stock(0.5)— — — — (77.6)(77.6)
Balance, November 30, 202232.2 0.5 1,035.4 3,246.8 (126.2)(2,253.0)1,903.5 
Net income— — — 83.2 — — 83.2 
Other comprehensive loss— — — — (0.1)— (0.1)
Share-based payment amortization, issuances, and cancellations— — 10.9 — — — 10.9 
Employee stock purchase plan issuances— — 0.3 — — — 0.3 
Cash dividends of $0.13 per share paid on common stock— — — (4.2)— — (4.2)
Stock options exercised— — 0.5 — — — 0.5 
Repurchases of common stock(0.2)— — — — (46.5)(46.5)
Balance, February 28, 202332.0 $0.5 $1,047.1 $3,325.8 $(126.3)$(2,299.5)$1,947.6 
_______________________________________
(1) Share activity and balances above are calculated using rounded numbers.
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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 13 — Revenue Recognition
We recognize revenue when we transfer control of goods and services to our customers. Revenue is measured as the amount of consideration we expect to receive in exchange for goods and services and is recognized net of allowances for rebates, sales incentives, product returns, and discounts to customers. We allocate the expected consideration to be collected to each distinct performance obligation identified in a sale based on its standalone selling price. Sales and use taxes collected on behalf of governmental authorities are excluded from revenues.
Further details regarding revenue recognition are included within the Revenue Recognition footnote of the Notes to Consolidated Financial Statements within our Form 10-K.
Contract Balances
Our rights related to collections from customers are unconditional and are reflected within Accounts receivable on the Consolidated Balance Sheets at net realizable value. Further details regarding our method for developing our estimate of expected credit losses over the contractual term of our receivables are included within the Significant Accounting Policies footnote of the Notes to Consolidated Financial Statements within our Form 10-K.
We do not have any other significant contract assets. Contract liabilities arise when we receive cash or an unconditional right to collect cash prior to the transfer of control of goods or services.
The amount of transaction price from contracts with customers allocated to our contract liabilities consists of the following as of the dates presented (in millions):
February 29, 2024August 31, 2023
Current deferred revenues$16.2 $14.1 
Non-current deferred revenues44.1 47.6 
Current deferred revenues primarily consist of professional service and service-type warranty fees collected prior to performing the related service as well as software licenses and are included within Other current liabilities on the Consolidated Balance Sheets. These services are expected to be performed within one year. Revenue recognized from beginning balances of contract liabilities during the six months ended February 29, 2024 totaled $6.9 million.
Non-current deferred revenues primarily consist of long-term service-type warranties, which are typically recognized ratably as revenue between five and ten years from the date of sale, and are included within Other long-term liabilities on the Consolidated Balance Sheets.
Unsatisfied performance obligations that do not represent contract liabilities are expected to be satisfied within one year from February 29, 2024 and consist primarily of orders for physical goods that have not yet been shipped.
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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Disaggregated Revenues
Our ABL segment's lighting and lighting controls are sold primarily through independent sales agents who cover specific geographic areas and market channels, by internal sales representatives, through consumer retail channels, directly to large corporate accounts, and through other distribution methods, including directly to OEM customers. ISG sells predominantly to system integrators. The following table shows revenue from contracts with customers by sales channel and reconciles to our segment information for the periods presented (in millions):
Three Months EndedSix Months Ended
February 29, 2024February 28, 2023February 29, 2024February 28, 2023
ABL:
Independent sales network$612.3 $635.3 $1,237.5 $1,309.0 
Direct sales network93.0 94.7 190.4 201.1 
Retail sales46.4 50.4 102.0 100.3 
Corporate accounts38.1 54.0 79.6 103.1 
OEM and other53.7 56.4 110.4 124.4 
Total ABL843.5 890.8 1,719.9 1,837.9 
ISG68.1 58.2 132.3 115.0 
Eliminations(5.7)(5.4)(11.6)(11.4)
Total$905.9 $943.6 $1,840.6 $1,941.5 
Note 14 — Share-based Payments
We account for share-based payments through the measurement and recognition of compensation expense for share-based payment awards made to employees and directors over the related requisite service period, including restricted stock, performance stock units, and stock options (all part of our equity incentive plan), as well as stock units representing certain deferrals into our director deferred compensation plan or our supplemental deferred savings plan.
The following table presents share-based payment expense for the periods presented (in millions):
Three Months EndedSix Months Ended
February 29, 2024February 28, 2023February 29, 2024February 28, 2023
Share-based payment expense$12.0 $11.3 $23.1 $22.0 
We recognized excess tax benefits of $1.5 million and $1.7 million related to share-based payment awards during the six months ended February 29, 2024 and February 28, 2023, respectively.
Further details regarding our share-based payments are included within the Share-based Payments footnote of the Notes to Consolidated Financial Statements within our Form 10-K.
Note 15 — Pension Plans
We have 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. We make at least the minimum annual contributions to the plans to the extent indicated by actuarial valuations and statutory requirements. Plan assets are invested primarily in fixed income and equity securities.
Service cost of net periodic pension cost is allocated between Cost of products sold and Selling, distribution, and administrative expenses in the Consolidated Statements of Comprehensive Income based on the nature of the employee's services. All other components of net periodic pension cost are included within Miscellaneous expense, net in the Consolidated Statements of Comprehensive Income. Net periodic pension cost included the following components before tax for the periods presented (in millions):
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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 Three Months EndedSix Months Ended
 February 29, 2024February 28, 2023February 29, 2024February 28, 2023
Service cost$1.2 $1.2 $2.3 $2.3 
Interest cost2.4 2.3 4.9 4.5 
Expected return on plan assets(2.2)(2.4)(4.4)(4.8)
Amortization of prior service cost— 0.6 — 1.3 
Recognized actuarial loss0.8 0.7 1.6 1.5 
Net periodic pension cost$2.2 $2.4 $4.4 $4.8 
Further details regarding our pension plans are included within the Pension and Defined Contribution Plans footnote of the Notes to Consolidated Financial Statements within our Form 10-K.
Note 16 — Special Charges
We recognized no special charges during the first six months of fiscal 2024.
During the first quarter of fiscal 2023, we recognized $6.9 million within Special charges on the Consolidated Statements of Comprehensive Income primarily for impairments of operating lease right-of-use assets for $4.3 million associated with our previously owned Sunoptics prismatic skylights business that were not transferred in connection with the sale. We additionally recognized associate severance and other costs totaling $2.6 million primarily in connection with the Sunoptics divestiture.
Note 17 — Other Expense
The following table summarizes the components of other expense (income), net for the periods presented (in millions):
 Three Months EndedSix Months Ended
 February 29, 2024February 28, 2023February 29, 2024February 28, 2023
Interest (income) expense, net:
Interest expense$6.5 $7.6 $12.9 $15.5 
Interest income(6.6)(1.9)(12.1)(3.2)
Interest (income) expense, net(0.1)5.7 0.8 12.3 
Miscellaneous expense (income), net:
Non-service components of net periodic pension cost1.0 1.2 2.1 2.5 
Foreign currency transaction losses (gains)0.2 (3.8)0.8 (6.5)
Loss on sale of business— — — 11.2 
Other items(0.6)(1.1)(1.2)(1.8)
Miscellaneous expense (income), net0.6 (3.7)1.7 5.4 
Other expense, net$0.5 $2.0 $2.5 $17.7 
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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 18 — Earnings Per Share
Basic earnings per share for the periods presented is computed by dividing net earnings available to common stockholders by the weighted average number of common shares outstanding. Diluted earnings per share is computed similarly but reflects the potential dilution that would occur if dilutive options were exercised, all unvested share-based payment awards were vested, and other distributions related to deferred stock agreements were incurred. Common stock equivalents are calculated using the treasury stock method. The dilutive effects of share-based payment awards subject to market and/or performance conditions that were not met during the period are excluded from the computation of diluted earnings per share.
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):
Three Months EndedSix Months Ended
February 29, 2024February 28, 2023February 29, 2024February 28, 2023
Net income$89.2 $83.2 $189.8 $158.1 
Basic weighted average shares outstanding30.864 32.048 30.940 32.178 
Common stock equivalents0.535 0.338 0.448 0.367 
Diluted weighted average shares outstanding31.399 32.386 31.388 32.545 
Basic earnings per share(1)
$2.89 $2.60 $6.13 $4.91 
Diluted earnings per share(1)
$2.84 $2.57 $6.05 $4.86 
_______________________________________
 Three Months Ended
 November 30, 2017 November 30, 2016
Net income$71.5
 $81.7
Basic weighted average shares outstanding41.9
 43.8
Common stock equivalents0.2
 0.2
Diluted weighted average shares outstanding42.1

44.0
Basic earnings per share$1.71
 $1.87
Diluted earnings per share$1.70

$1.86
(1) Earnings per share is calculated using unrounded numbers. Amounts in the table may not recalculate exactly due to rounding.
The following table presentsStock options, performance stock optionsawards, and restricted stock awards that were excluded from the diluted earnings per share calculation for the three months ended November 30, 2017 and 2016 as the effect of inclusion would have been antidilutive:antidilutive for three and six months ended February 29, 2024 and February 28, 2023 were immaterial.
 Three Months Ended
 November 30, 2017 November 30, 2016
Stock options163,812
 81,487
Restricted stock awards211,576
 25,994

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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Further discussion of the Company’s stock options and restricted stockour share-based payment awards is included within the Common Stock and Related Matters and Share-based Payments footnotes of the Notes to Consolidated Financial Statements within the Company’sour Form 10-K.

Note 19 — Comprehensive Income
8.Comprehensive Income
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.
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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
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):
 Foreign Currency Items Defined Benefit Pension Plans Accumulated Other Comprehensive Loss Items
Balance at August 31, 2023$(65.0)$(47.6)$(112.6)
Other comprehensive loss before reclassifications(1.4)— (1.4)
Amounts reclassified from accumulated other comprehensive loss (1)
— 1.3 1.3 
Net current period other comprehensive (loss) income(1.4)1.3 (0.1)
Balance at February 29, 2024$(66.4)$(46.3)$(112.7)
  Foreign Currency Items  Defined Benefit Pension Plans  Accumulated Other Comprehensive Loss Items
Balance at August 31, 2017$(28.7) $(71.0) $(99.7)
Other comprehensive loss before reclassifications(10.5) —
 (10.5)
Amounts reclassified from accumulated other comprehensive income—
 1.6
 1.6
Net current period other comprehensive (loss) income(10.5) 1.6
 (8.9)
Balance at November 30, 2017$(39.2) $(69.4) $(108.6)
 Foreign Currency Items Defined Benefit Pension Plans Accumulated Other Comprehensive Loss Items
Balance at August 31, 2022$(73.5)$(52.3)$(125.8)
Other comprehensive loss before reclassifications(2.6)— (2.6)
Amounts reclassified from accumulated other comprehensive loss (1)
— 2.1 2.1 
Net current period other comprehensive (loss) income(2.6)2.1 (0.5)
Balance at February 28, 2023$(76.1)$(50.2)$(126.3)
_______________________________________
(1) The before tax amounts of the defined benefit pension plan items are included in net periodic pension cost. See the Pension and Defined Contribution Plans footnote of the Notes to Consolidated Financial Statements for additional details.
The following table presentssummarizes the tax expense or benefit allocated to each component of other comprehensive income (loss)loss for the three months ended November 30, 2017 and 2016periods presented (in millions):
Three Months Ended
February 29, 2024February 28, 2023
 Before Tax Amount Tax (Expense) Benefit Net of Tax Amount Before Tax Amount Tax (Expense) Benefit Net of Tax Amount
Foreign currency translation adjustments$0.7 $— $0.7 $(1.1)$— $(1.1)
Defined benefit pension plans:
Amortization of defined benefit pension items:
Prior service cost
— — — 0.6 (0.1)0.5 
Actuarial losses0.8 (0.1)0.7 0.7 (0.2)0.5 
Total defined benefit pension plans, net0.8 (0.1)0.7 1.3 (0.3)1.0 
Other comprehensive income (loss)$1.5 $(0.1)$1.4 $0.2 $(0.3)$(0.1)
Six Months Ended
February 29, 2024February 28, 2023
 Before Tax Amount Tax (Expense) Benefit Net of Tax Amount Before Tax Amount Tax (Expense) Benefit Net of Tax Amount
Foreign currency translation adjustments$(1.4)$— $(1.4)$(2.6)$— $(2.6)
Defined benefit pension plans:
Amortization of defined benefit pension items:
Prior service cost— — — 1.3 (0.3)1.0 
Actuarial losses1.6 (0.3)1.3 1.5 (0.4)1.1 
Total defined benefit pension plans, net1.6 (0.3)1.3 2.8 (0.7)2.1 
Other comprehensive income (loss)$0.2 $(0.3)$(0.1)$0.2 $(0.7)$(0.5)
Note 20 — Segment Information
We report our financial results of operations in two reportable segments, ABL and ISG, consistent with how our chief operating decision maker currently evaluates operating results, assesses performance, and allocates resources within the Company.
17
 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) $—
 $(11.9)
Defined benefit pension plans:           
Amortization of defined benefit pension items:           
Prior service cost (1)
0.8
 (0.3) 0.5
 0.8
 (0.3) 0.5
Actuarial losses (1)
1.7
 (0.6) 1.1
 2.2
 (0.7) 1.5
Total defined benefit pension plans, net2.5
 (0.9) 1.6
 3.0
 (1.0) 2.0
Other comprehensive loss$(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.


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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

9.Debt
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


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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 costs8.6
 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.

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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.

11.Share-based Payments
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 exercises6,156
 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.

12.Pension Plans
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 EndedSix Months Ended
February 29, 2024February 28, 2023February 29, 2024February 28, 2023
Net sales:
ABL$843.5 $890.8 $1,719.9 $1,837.9 
ISG68.1 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 
ISG9.1 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 EndedSix Months Ended
February 29, 2024February 28, 2023February 29, 2024February 28, 2023
Operating profit - ABL$126.0 $123.6 $269.8 $241.7 
Operating profit - ISG9.1 6.3 14.4 14.0 
Unallocated corporate amounts(17.0)(18.4)(33.2)(35.3)
Operating profit118.1 111.5 251.0 220.4 
Interest (income) expense, net(0.1)5.7 0.8 12.3 
Miscellaneous expense (income), net0.6 (3.7)1.7 5.4 
Income before income taxes$117.6 $109.5 $248.5 $202.7 
18
 Three Months Ended
 November 30, 2017 November 30, 2016
Service cost$0.7
 $0.9
Interest cost2.2
 2.0
Expected return on plan assets(3.1) (2.8)
Amortization of prior service cost0.8
 0.8
Recognized actuarial loss1.7
 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.


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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

13.Special Charge
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 costs0.2
 —
 0.2
Payments made during the period(2.1) (0.5) (2.6)
Balance at November 30, 2017$9.3
 $0.9
 $10.2

14.Subsequent Events
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.



13
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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.


14
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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 assets11.0
 14.8
 —
 15.5
 —
 41.3
Total current assets375.8
 772.8
 —
 175.2
 —
 1,323.8
Property, plant, and equipment, net0.3
 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 taxes51.5
 —
 —
 7.9
 (56.1) 3.3
Other long-term assets0.2
 9.3
 —
 2.3
 —
 11.8
Investments in and amounts due from affiliates1,469.7
 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 liabilities65.5
 126.1
 —
 38.3
 —
 229.9
Total current liabilities65.8
 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 liabilities105.6
 49.7
 —
 20.3
 —
 175.6
Amounts due to affiliates—
 —
 —
 117.4
 (117.4) —
Total stockholders’ equity1,726.1
 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

15
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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 assets1.6
 15.8
 —
 15.2
 —
 32.6
Total current assets239.3
 815.9
 —
 190.4
 —
 1,245.6
Property, plant, and equipment, net0.2
 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 taxes51.6
 —
 —
 8.0
 (56.2) 3.4
Other long-term assets1.5
 10.9
 —
 0.8
 —
 13.2
Investments in and amounts due from affiliates1,500.3
 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 liabilities27.6
 138.9
 —
 38.9
 —
 205.4
Total current liabilities28.5
 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 liabilities98.7
 49.3
 —
 20.4
 —
 168.4
Amounts due to affiliates—
 —
 —
 128.8
 (128.8) —
Total stockholders’ equity1,665.7
 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

16
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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 expenses12.7
 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, net2.7
 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 taxes66.5
 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, net1.6
 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

17
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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 expenses11.8
 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, net2.8
 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 taxes77.0
 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 income81.7
 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, net2.0
 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

18
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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 other0.8
 —
 —
 —
 —
 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 equivalents127.1
 —
 —
 (9.6) —
 117.5
Cash and cash equivalents at beginning of period237.7
 —
 —
 73.4
 —
 311.1
Cash and cash equivalents at end of period$364.8
 $—
 $—
 $63.8
 $—
 $428.6

19
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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 other2.1
 —
 —
 —
 —
 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 equivalents21.1
 —
 —
 16.9
 —
 38.0
Cash and cash equivalents at beginning of period368.2
 —
 —
 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.
19
Table of acquisitions and the impact of foreign exchange rate changes) decreased approximately $14.0 million during the first three months of fiscal 2018 compared to a $0.1 million increase during the first three months of fiscal 2017.Contents
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 InformationFebruary 29, 2024August 31, 2023
Current assets$1,180.1 $995.7 
Amounts due from non-guarantor affiliates321.4 326.4 
Non-current assets1,373.4 1,377.9 
Current liabilities468.3 464.2 
Non-current liabilities786.0 785.4 
Summarized Income Statement InformationSix Months Ended February 29, 2024
Net sales$1,521.8 
Gross profit679.2 
Net income189.2 
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
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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.

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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 sold492.6
 491.6
 1.0
 0.2 %
Gross profit350.2
 359.6
 (9.4) (2.6)%
Percent of net sales41.6% 42.2% (60)bps 
Selling, distribution, and administrative expenses231.4
 231.8
 (0.4) (0.2)%
Special charge0.2
 1.2
 (1.0) NM
Operating profit118.6
 126.6
 (8.0) (6.3)%
Percent of net sales14.1% 14.9% (80)bps 
Other (income) expense: 
  
  
  
Interest expense, net8.1
 8.2
 (0.1) (1.2)%
Miscellaneous income, net(0.4) (7.9) 7.5
 NM
Total other expense7.7
 0.3
 7.4
 NM
Income before provision for income taxes110.9
 126.3
 (15.4) (12.2)%
Percent of net sales13.2% 14.8% (160)bps 
Provision for income taxes39.4
 44.6
 (5.2) (11.7)%
Effective tax rate35.5% 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 sales41.6% 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 sales25.7% 25.6% 10
bps
       
Operating profit$118.6
 $126.6
   
Add-back: Amortization of acquired intangible assets6.6
 5.9
   
Add-back: Share-based payment expense8.5
 7.9
   
Add-back: Manufacturing inefficiencies (1)
—
 1.6
   
Add-back: Special charges0.2
 1.2
   
Adjusted operating profit$133.9

$143.2
 $(9.3)(6.5)%
Percent of net sales15.9% 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 assets6.6
 5.9
   
Add-back: Share-based payment expense8.5
 7.9
   
Add-back: Manufacturing inefficiencies (1)
—
 1.6
   
Add-back: Special charges0.2
 1.2
   
Less: Gain on sale of investment in unconsolidated affiliate—
 (7.2)   
Total pre-tax adjustments to net income15.3

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, 2024February 28, 2023Increase (Decrease) Percent Change
Net sales$905.9 $943.6 $(37.7)(4.0)%
Cost of products sold493.5 536.9 (43.4)(8.1)%
Gross profit412.4 406.7 5.7 1.4 %
Percent of net sales45.5 %43.1 %240 bps 
Selling, distribution, and administrative expenses294.3 295.2 (0.9) (0.3)%
Operating profit118.1 111.5 6.6  5.9  %
Percent of net sales13.0 %11.8 %120 bps 
Other expense:     
Interest (income) expense, net(0.1)5.7 (5.8) (101.8)%
Miscellaneous expense (income), net0.6 (3.7)4.3  NM
Total other expense0.5 2.0 (1.5) (75.0)%
Income before income taxes117.6 109.5 8.1 7.4  %
Percent of net sales13.0 %11.6 %140 bps
Income tax expense28.4 26.3 2.1 8.0  %
Effective tax rate24.1 %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.

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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, 2024February 28, 2023Increase (Decrease)Percent Change
ABL:
Net sales$843.5 $890.8 $(47.3)(5.3)%
Operating profit126.0 123.6 2.4 1.9  %
Operating profit margin14.9 %13.9 %100 bps
ISG:
Net sales$68.1 $58.2 $9.9 17.0 %
Operating profit9.1 6.3 2.8 44.4 %
Operating profit margin13.4 %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.
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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, 2024February 28, 2023Increase (Decrease) Percent Change
Net sales$1,840.6 $1,941.5 $(100.9)(5.2)%
Cost of products sold999.8 1,118.3 (118.5)(10.6)%
Gross profit840.8 823.2 17.6 2.1 %
Percent of net sales45.7 %42.4 %330 bps 
Selling, distribution, and administrative expenses589.8 595.9 (6.1) (1.0)%
Special charges— 6.9 (6.9)NM
Operating profit251.0 220.4 30.6  13.9 %
Percent of net sales13.6 %11.4 %220 bps 
Other expense:     
Interest expense, net0.8 12.3 (11.5) (93.5)%
Miscellaneous expense, net1.7 5.4 (3.7) NM
Total other expense2.5 17.7 (15.2) (85.9)%
Income before income taxes248.5 202.7 45.8 22.6 %
Percent of net sales13.5 %10.4 %310 bps
Income tax expense58.7 44.6 14.1 31.6 %
Effective tax rate23.6 %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
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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):
Six Months Ended
February 29, 2024February 28, 2023Increase (Decrease)Percent Change
ABL:
Net sales$1,719.9 $1,837.9 $(118.0)(6.4)%
Operating profit269.8 241.7 28.1 11.6 %
Operating profit margin15.7 %13.2 %250 bps
ISG:
Net sales$132.3 $115.0 $17.3 15.0 %
Operating profit14.4 14.0 0.4 2.9 %
Operating profit margin10.9 %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
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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.

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.

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PART II. OTHER INFORMATION

Item 1.Legal Proceedings
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
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:

Purchases of Equity Securities
PeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced PlansMaximum Number of Shares that May Yet Be Purchased Under the Plans
12/1/2023 through 12/31/202353,277 $188.27 53,277 3,886,429 
1/1/2024 through 1/31/202410,539 $236.86 10,539 3,875,890 
2/1/2024 through 2/29/202420,730 $243.50 20,730 3,855,160 
Total84,546 $207.87 84,546 3,855,160 

Item 5.Other Information
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:
 Votes ForVotes AgainstVotes AbstainedBroker Non-Votes
Peter C. Browning35,596,1021,004,18013,9512,193,025
G. Douglas Dillard, Jr.36,215,079386,87512,2792,193,025
Ray M. Robinson35,832,630769,30612,2972,193,025
Norman H. Wesley36,342,508259,58612,1392,193,025
Mary A. Winston36,375,404226,93911,8902,193,025
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:
Votes ForVotes AgainstVotes Abstained
38,348,219443,77315,266
PROPOSAL 3 - The results of the advisory vote on the compensation of the named executive officers of the Company were as follows:
Votes ForVotes AgainstVotes AbstainedBroker Non-Votes
34,382,4952,050,995180,7432,193,025
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:
1 Year2 Years3 YearsVotes AbstainedBroker Non-Votes
34,179,035113,1872,230,94391,0682,193,025
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:
Votes ForVotes AgainstVotes AbstainedBroker Non-Votes
33,804,3682,778,79131,0742,193,025

PROPOSAL 6 - The results of the vote regarding the approval of the Acuity Brands, Inc. 2017 Management Cash Incentive Plan were as follows:
Votes ForVotes AgainstVotes AbstainedBroker Non-Votes
35,752,598829,73931,8962,193,025
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:
Votes ForVotes AgainstVotes AbstainedBroker Non-Votes
17,888,91418,037,538687,7812,193,025
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
Item 6.Exhibits
Exhibits are listed on the Index to Exhibits.

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INDEX TO EXHIBITS
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)
Certificate of Amendment of Acuity Brands, Inc. (formerly Acuity Brands Holdings, Inc.), dated as of September 26, 2007.
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)
Certificate of Amendment to the Restated Certificate of Incorporation of Acuity Brands, Inc., dated as of January 6, 2017.25, 2024.
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.

(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.
EXHIBIT 10(iii)A(1)
Amended and Restated Acuity Brands, Inc. 2012 Omnibus Stock Incentive Compensation Plan.
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.INSXBRL Instance DocumentThe 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.
.SCHXBRL Taxonomy Extension Schema Document.Filed with the Commission as part of this Form 10-Q.
.CALXBRL Taxonomy Extension Calculation Linkbase Document.Filed with the Commission as part of this Form 10-Q.
.DEFXBRL Taxonomy Extension Definition Linkbase Document.Filed with the Commission as part of this Form 10-Q.
.LABXBRL Taxonomy Extension Label Linkbase Document.Filed with the Commission as part of this Form 10-Q.
.PREXBRL Taxonomy Extension Presentation Linkbase Document.Filed with the Commission as part of this Form 10-Q.
EXHIBIT 104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)Filed with the Commission as part of this Form 10-Q





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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.
Date:April 3, 2024By:/S/  NEIL M. ASHE
Date:January 9, 2018By:/S/  VERNON J. NAGEL
VERNON J. NAGEL
NEIL M. ASHE
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER


Date:April 3, 2024By:/S/  KAREN J. HOLCOM
Date:January 9, 2018By:/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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