Earnings stock to watch: Acuity Brands, Inc. (NYSE: AYI)

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Acuity Brands, Inc. (NYSE: AYI) stock fell 2.80% on January 9th, 2019 (Source: Google finance). The company said the demand outlook for fiscal 2019 has not meaningfully changed since early October, and affirmed the North America lighting market growth outlook in the low single-digit percentage range

Net income for the quarter to Nov. 30 increased to $79.6 million from $71.5 million in the same period a year ago.

AYI in the first quarter of FY 19 has reported the adjusted earnings per share of $2.32, beating the analysts’ estimates for the adjusted earnings per share of $2.11. The company had reported the adjusted revenue growth of 10.7 percent to $932.6 million in the first quarter of FY 19, beating the analysts’ estimates for revenue of $922.6 million. Overall net sales volume grew approximately 11%, while price mix of products sold was essentially flat this quarter. Reported operating profit was $116.4 million compared with $120.2 million in the year ago period.

In adding back these items, one can see adjusted operating profit for the first quarter of 2019 was $134.1 million compared with adjusted operating profit of $135.5 million in the year ago period, a slight decrease of 1%. Adjusted operating profit margin was 14.4%, a decrease of 170 basis points compared with the margin reported in the prior year. Net cash provided by operating activities was a solid $132 million this quarter while our cash position at the end of the quarter grew to $215 million, even after repurchasing $25 million of the company stock during the quarter, leaving us with plenty of liquidity to execute the growth strategies.

Adjusted gross profit increased $19 million this quarter over the year ago period, driven primarily by higher sales volumes and productivity improvement, partially offset by higher input costs. The adjusted gross profit and margin were negatively impacted by higher input costs for certain items including electronic and oil based components, freight and certain other commodity related items, such as steel. Further, adjusted SDA expenses were up approximately $20 million compared with the year ago period. Adjusted SDA expense as a percentage of net sales was 25.2% in the first quarter, a decrease of 20 basis points from the year ago period, demonstrating the leverage of our SDA investment as our net sales volume grows.

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