Acuity Brands, Inc. (NYSE: AYI) stock plunged 13.17% on October 3rd, 2018 (Source: Google finance) after the company posted better than expected results for the fourth quarter of FY 18, but the margins fell amid a sharp rise in input costs. Net income for the quarter to Aug. 31 rose to $108.2 million from $90.5 million, in the same period a year ago. The company has ended the year with $129 million in cash on hand even after repurchasing $298 million of the company shares, investing $163 million to acquire two great businesses, spending $44 million for capital expenditures and funding $21 million in dividends this year. Further, the company has entered a new five year $800 million credit facility and has generated over $168 million in positive EVA.
AYI in the fourth quarter of FY 18 has reported the adjusted earnings per share of $2.68, beating the analysts’ estimates for the adjusted earnings per share of $2.56, as per FactSet consensus. The company had reported the adjusted revenue growth of 10.8 percent to $1.06 billion in the fourth quarter of FY 18, beating the analysts’ estimates for revenue of $1.01 billion. Adjusted operating margin declined 3.9 percentage points. The company’s costs were “well higher” for items items such as electronic components, freight, wages, and certain commodity-related items, such as steel. As per Chief Executive Vernon Nagel, many of these input costs the company experienced has risen dramatically in price in the fourth quarter driven by several economic factors, including previously announced and enacted tariffs and wage inflation due to the tight labor market.
Moreover, in the fourth quarter, AYI has experienced strong growth in net sales in most channels and geographies. The largest contributors to the increase in net sales volume were greater shipments of certain high volume, more basic, lesser-featured LED fixtures, primarily for applications on smaller commercial and residential projects, greater demand for our Atrius-based luminaires and growth in our infrastructure and utility channel primarily through our Holophane team. The increase in sales of more basic, lesser-featured products was driven in large part by the success of re-launch of the Contractor Select portfolio as well as gains in certain other brands sold through numerous channels including home centers and electrical distributors where the company posted strong sales growth.
For FY 19, AYI expects the North American lighting market, the company’s primary market, to be up low-single digits