What is happening with Acuity Brands, Inc. (NYSE: AYI) stock

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Acuity Brands, Inc. (NYSE: AYI) stock fell 4.93% on April 2nd, 2020 (Source: Google finance) but slightly recovered over 0.5% on April 3rd, 2020 (As of 10:49 am GMT-4; Source: Google finance). The company missed the earnings estimate for the second quarter of FY 20. After a very weak December, the company’s business picked up in January and February and the company began to see real traction, specifically in the independent sales network channel, which represents over two-thirds of our sales and was up more than 4% for the quarter, inclusive of TLG. The demand in the second quarter for private non-residential construction in general and more specifically lighting was down in the low-single digit year-over-year percentage range. Further, the company has generated $250 million of net cash flow from operating activities during the first half of fiscal 2020, which was up 14% compared to the prior year. At the end of February, 2020, the company had cash and cash equivalents balance of $381 million, which represents a decrease of $80 million since August 31, 2019. The company’s total debt outstanding was $406 million at the end of February, 2020, and the company currently has an additional borrowing availability of approximately $396 million under the bank credit facility. The bank credit facility and term loan mature in June 2023.

AYI in the second quarter of FY 20 has reported the adjusted earnings per share of $1.84, missing the analysts’ estimates for the adjusted earnings per share of $1.88, according to Zacks Investment Research. The company had reported the adjusted revenue decline of 3.5 percent to $824.2 million in the second quarter of FY 20, beating the analysts’ estimates for revenue of $796.9 million. Overall, net sales volume fell by approximately 7%, while the price mix of products sold was favorable this quarter by about 1%.

The company delivered the gross profit of $344 million, which is up approximately $10 million from the year ago period. The gross profit margin expanded 260 basis points for the second quarter to 41.7% compared with the year ago period. The increases in gross profit and margin were mainly due to the benefit of acquisitions, favorable channel mix, and lower cost for certain inputs, partially offset by the impact of lower net sales as well as the higher costs due to the enacted tariffs. The adjusted operating profit for the second quarter of fiscal 2020 was $102 million, or 12.3% of net sales, compared to $112 million, or 13.2% of net sales, for the prior-year period.

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