Acuity Brands(AYI) - 2021 Q3 - Quarterly Report

Acquisitions and Business Realignment - The company completed a realignment of operations and structure in Q3 fiscal 2021, now reporting financial results in two segments: Acuity Brands Lighting and Lighting Controls (ABL) and Intelligent Spaces Group (ISG)[118] - The company signed a definitive agreement to purchase ams OSRAM's North American Digital Systems (DS) business on June 4, 2021, expected to close by July 1, 2021[119] - The company acquired Rockpile Ventures on May 18, 2021, to enhance its Edge AI capabilities[120] - The company acquired The Luminaires Group (TLG) on September 17, 2019, adding niche lighting brands to its portfolio[120] - The company acquired LocusLabs, Inc. on November 25, 2019, expanding its navigation software platform[121] Financial Performance and Cash Flow - The company's cash position increased to $593.5 million as of May 31, 2021, up$ 32.8 million from August 31, 2020[131] - The company generated $316.2 million in net cash flows from operations during the nine months ended May 31, 2021[131] - The company repurchased 3.3 million shares of common stock during the first nine months of fiscal 2021, with 4.4 million shares remaining under the repurchase program[126] - The company issued$ 500.0 million in 2.150% senior unsecured notes on November 10, 2020, with net proceeds of $493.9 million[133] - The company's net sales for the nine months ended May 31, 2021, were$ 2,046.7 million, with a gross profit of $889.1 million and net income of$ 204.7 million[137] - Consolidated stockholders' equity decreased by $88.4 million to$ 2.0 billion at May 31, 2021, from $2.1 billion at August 31, 2020, primarily due to stock repurchases and dividend payments[140] - Debt to total capitalization ratio increased to 19.6% at May 31, 2021, from 15.9% at August 31, 2020[140] - Net sales for the three months ended May 31, 2021 increased by$ 123.5 million (15.9%) to $899.7 million compared to$ 776.2 million in the prior-year period[144] - Net income for the three months ended May 31, 2021 increased by $25.3 million (41.9%) to$ 85.7 million compared to $60.4 million in the prior-year period[144] - Diluted earnings per share increased by 55.9% to$ 2.37 for the three months ended May 31, 2021, compared to $1.52 in the prior-year period[144] - Gross profit for the third quarter of fiscal 2021 increased by$ 59.0 million (18.0%) to $386.6 million, with gross profit margin increasing by 80 basis points to 43.0%[149] - Operating profit for the third quarter of fiscal 2021 increased by$ 35.1 million (42.3%) to $118.1 million, with operating profit margin increasing by 240 basis points to 13.1%[152] - Adjusted operating profit for the third quarter of fiscal 2021 increased by$ 31.9 million (30.4%) to $136.8 million, with adjusted operating profit margin increasing to 15.2%[152] - Adjusted diluted earnings per share increased by 42.8% to$ 2.77 for the three months ended May 31, 2021, compared to $1.94 in the prior-year period[147] - Net income for the third quarter of fiscal 2021 increased by$ 25.3 million, or 41.9%, to $85.7 million compared to$ 60.4 million in the prior-year period[155] - Diluted earnings per share for the three months ended May 31, 2021 increased by $0.85, or 55.9%, to$ 2.37 compared to $1.52 in the prior-year period[155] - Net sales for the nine months ended May 31, 2021 increased by 1.4% to$ 2.47 billion compared to $2.44 billion in the prior-year period[162] - Net income for the nine months ended May 31, 2021 increased by$ 33.6 million, or 19.2%, to $208.2 million compared to$ 174.6 million in the prior-year period[162] - Diluted earnings per share for the nine months ended May 31, 2021 increased by 28.6% to $5.66 compared to$ 4.40 in the prior-year period[162] - The effective income tax rate for the three months ended May 31, 2021 decreased to 21.5% compared to 23.1% in the prior-year period[154] - Net sales for the nine months ended May 31, 2021 increased by $33.2 million (1.4%) to$ 2.47 billion compared to $2.44 billion in the prior-year period[167] - Gross profit for the nine months ended May 31, 2021 increased by$ 28.4 million (2.8%) to $1.06 billion, with a gross profit margin of 42.8% compared to 42.2% in the prior-year period[168] - Operating profit for the nine months ended May 31, 2021 increased by$ 46.8 million (18.9%) to $294.8 million, with an operating profit margin of 11.9% compared to 10.2% in the prior-year period[171] - Adjusted operating profit for the nine months ended May 31, 2021 increased by$ 24.3 million (7.5%) to $349.9 million, with an adjusted operating profit margin of 14.2% compared to 13.4% in the prior-year period[171] - Net income for the nine months ended May 31, 2021 increased by$ 33.6 million (19.2%) to $208.2 million, with diluted earnings per share increasing by$ 1.26 (28.6%) to $5.66[175] - Adjusted net income for the nine months ended May 31, 2021 increased by$ 19.5 million (8.3%) to $254.0 million, with adjusted diluted earnings per share increasing by$ 0.99 (16.8%) to $6.90[175] - SD&A expenses for the nine months ended May 31, 2021 decreased by$ 8.1 million (1.1%) to $759.4 million, with adjusted SD&A expenses of$ 705.8 million (28.6% of net sales) compared to $702.9 million (28.9% of net sales) in the prior-year period[169] - Pre-tax special charges for the nine months ended May 31, 2021 were$ 1.5 million compared to $11.8 million in the prior-year period[170] Segment Performance - ABL net sales for the three months ended May 31, 2021 increased by 14.6% to$ 850.0 million compared to $741.6 million in the prior-year period[158] - ABL operating profit for the three months ended May 31, 2021 increased by$ 27.9 million, or 28.3%, to $126.5 million compared to$ 98.6 million in the prior-year period[158] - ISG net sales for the three months ended May 31, 2021 increased by 46.9% to $55.4 million compared to$ 37.7 million in the prior-year period[159] - ISG operating profit for the three months ended May 31, 2021 increased by $7.4 million to$ 7.2 million compared to a $0.2 million loss in the prior-year period[159] - ABL segment net sales for the nine months ended May 31, 2021 increased by$ 12.6 million (0.5%) to $2,340.4 million, with operating profit increasing by$ 22.9 million (7.5%) to $326.9 million[177] - ABL segment adjusted operating profit for the nine months ended May 31, 2021 increased by$ 19.5 million (5.8%) to $356.0 million, with an adjusted operating profit margin of 15.2% compared to 14.5% in the prior-year period[177] - ABL net sales for the nine months ended May 31, 2021 increased by 0.5% compared to the prior-year period, driven by higher sales volumes through independent and direct sales networks[178] - ABL operating profit for the nine months ended May 31, 2021 was$ 326.9 million, a 14.0% margin, up from $304.0 million (13.1% margin) in the prior-year period[178] - ISG net sales for the nine months ended May 31, 2021 increased by 20.2% to$ 139.5 million compared to $116.1 million in the prior-year period[179] - ISG operating profit for the nine months ended May 31, 2021 was$ 7.9 million, compared to a $2.3 million loss in the prior-year period[179] - Adjusted operating profit for ISG increased by$ 6.8 million to $19.6 million, a 53.1% increase compared to the prior-year period[179] Sales Channels and Market Trends - Sales through the independent sales network and direct sales network increased by 14% and 39%, respectively, while retail sales declined by 26%[148] - The company expects continued improvements in end markets but anticipates volatility in raw material costs and labor availability[180] - The company plans to continue investing in its business to become a larger, more dynamic company[180] Debt and Capital Structure - The company's long-term debt as of May 31, 2021, included$ 500.0 million of senior unsecured notes, with a 10% increase in market interest rates potentially decreasing their fair value by approximately $9.9 million[185] - The company had no borrowings outstanding under the Revolving Credit Facility or the Term Loan Facility as of May 31, 2021[185]