Acuity Brands(AYI)2023-01-09 15:44Financial Data and Key Metrics Changes - The company generated net sales of approximately 0.44 or 15% over the prior year to 0.17 or 7% year-over-year due to non-recurring charges [17] - Cash flow from operating activities was 103 million compared to the prior year's first quarter [19] Business Line Data and Key Metrics Changes - The Acuity Brands Lighting (ABL) segment reported net sales of 118 million, down 57 million, an increase of 22% year-over-year, with operating profit rising to $8 million [18] Market Data and Key Metrics Changes - The company is experiencing improved component availability, which is expected to reduce lead times and help clear backlog levels [21][22] - The company is focusing on expanding its geographic markets, particularly for the Distech product portfolio, with promising starts in the U.K. [11] Company Strategy and Development Direction - The company is committed to product vitality and service improvements, with a focus on sustainability through new product launches [7][14] - The decision to exit the Sunoptics Daylighting business and Winona custom architectural lighting solutions reflects a strategic review of the portfolio to focus on more relevant and profitable areas [10][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged uncertainty around the economy, inflation, and interest rates, but expressed confidence in adapting to changing market conditions [13] - The company is well-positioned in various end-markets and is focused on continuing to invest in product vitality and service [13] Other Important Information - The company repurchased approximately 0.5 million shares during the quarter, totaling over 20% of shares outstanding since May 2020 [12] - The company is committed to achieving net zero carbon emissions by 2040 and is working with the Science-Based Targets Initiative to establish interim targets [14] Q&A Session Summary Question: Backlog and Supply Chain Performance - Management expects backlog levels to normalize as component availability improves, with a timeline of approximately the second or third fiscal quarter for a more balanced relationship between order intake and lead times [21][22] Question: Commission Changes - The increase in commissions is part of a strategy to invest in future business, particularly in infrastructure projects, and is expected to continue throughout the year [23][24] Question: Capital Allocation and M&A - The company remains committed to its capital allocation priorities, including M&A opportunities, particularly in expanding the Intelligent Spaces Group [27][29] Question: Operating Leverage and Margin Outlook - Management is confident in generating operating leverage as the environment normalizes, with expectations for margin improvements as backlog levels decrease [31][32] Question: Demand Environment and Economic Conditions - Management is monitoring economic indicators and anticipates that improved component availability may temporarily impact demand as customers adjust their inventory levels [38][39] Question: International Expansion for Distech - The company plans to expand Distech's market presence beyond North America and France, with a focus on the U.K. and non-China Asia as part of a multi-year strategy [55]