Acuity Brands, Inc. (AYI) recently reported that fiscal 2k19 third quarter net sales raised $3.6M, or 0.4 percent, to $947.6M from $944.0M stated in the prior-year period. Operating profit for the third quarter of fiscal 2k19 was $120.3M, an raise of $12.9M, or 12.0 percent, over the year-before period. Net income for the third quarter of fiscal 2k19 was $88.4M, an raise of $15.4M, or 21.1 percent, contrast with the prior-year period. Fiscal 2k19 third quarter diluted earnings per share (“EPS”) of $2.22 raised $0.42, or 23.3 percent, contrast with $1.80 for the year-before period. Fiscal 2k19 third quarter results reflect record third quarter net sales, net income, and diluted EPS.
Third Quarter Results
Net sales for the three months ended May 31, 2k19 raised 0.4 percent contrast with the prior-year period due primarily to a greater than 1 percent raise in sales volumes, partially offset by unfavorable foreign exchange rate changes and the adoption of Accounting Standards Codification 606, Revenue from Contracts with Consumers (“ASC 606”). Changes in product prices and mix of products sold (“price/mix”) were flat contrast with the previous year as higher pricing was offset by changes in the mix of products sold and consumer mix within certain channels. Management estimated that the realization from recent price raises contributed low single-digit growth to overall net sales for the quarter. Purchased revenues from acquisitions net of lost revenues from divestitures were flat contrast to the previous year period.
Fiscal 2k19 third quarter results were influenced by the adoption of ASC 606, which resulted in a decrease to revenues, gross profit, and operating profit of $3.8M, $1.6M, and $1.6M, respectively. Additionally, fiscal 2k18 results were restated to reflect the impact of adopting Accounting Standards Update No. 2017-07, Compensation — Retirement Benefits (Topic 715): Improving the Presentation of Net Table of Contents 29 Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”). Upon adoption of ASU 2017-07, previous year’s third quarter stated operating profit and other expense both raised $1.5M. The provisions of ASU 2017-07 had no impact to before stated net income or earnings per share.
Gross profit for the third quarter of fiscal 2k19 reduced $5.5M, or 1.4 percent, to $383.6M contrast with $389.1M in the prior-year period. Gross profit margin reduced 70 basis points to 40.5 percent for the three months ended May 31, 2k19 contrast with 41.2 percent in the prior-year period. The decline in gross profit margin was due primarily to a shift in sales among key consumers within the retail sales channel as well as under-absorption of manufacturing costs as a result of inventory reduction efforts. Although current quarter gross profit reflected a mix shift towards certain consumers in the retail sales channel that generate lower gross profit margins as contrast with the Company’s historical consolidated gross profit margin profile, the decline was generally offset by proportionally lower selling, distribution, and administrative (“SD&A”) expenses as freight and commissions associated with such sales were lower. Adjusted gross profit margin for the quarter ended May 31, 2k19 declined 110 basis points to 40.5 percent contrast with 41.6 percent for the year-before period.
AYI has PEG ratio of 1.70 and price to cash ratio of 21.78. The stock as of last trading session moved 23.65% up from its 52 week low and was -26.04% behind its 52 week high.
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