Acuity Brands, Inc. (NYSE: AYI) stock lost over 7.1% on 2nd July, 2019 (as of 12:12 pm GMT-4; Source: Google finance) as the company posted mixed results as for earnings the company beat the expectations but sales that missed and provided a downbeat outlook. The company has reported the net income for the third quarter of May 31 rose to $88.4 million from $73.0 million in the year-ago period.
AYI in the third quarter of FY 19 has reported the adjusted earnings per share of $2.53, beating the analysts’ estimates for the adjusted earnings per share of $2.42, according to FactSet consensus. The company had reported the adjusted revenue growth of 0.4 percent to $947.6 million in the third quarter of FY 19, beating the analysts’ estimates for revenue of $971.4 million. The sales grew mainly due to a greater than 1 percent increase in sales volumes, partially offset by unfavorable foreign exchange rate changes and the adoption of Accounting Standards Codification 606, Revenue from Contracts with Customers. Changes in product prices and mix of products sold were flat compared with the prior year as higher pricing was offset by changes in the mix of products sold and customer mix within certain channels. The management had projected that the realization from recent price increases contributed low single-digit growth to overall net sales for the third quarter. The acquired revenues from acquisitions net of lost revenues from divestitures were flat during the quarter compared to the prior year period.
Moreover, the gross profit for the third quarter of FY 19 declined 1.4 percent, to $383.6 million compared with $389.1 million in the prior-year period. Gross profit margin decreased 70 basis points to 40.5 percent for the three months ended May 31, 2019 compared with 41.2 percent in the prior-year period. The decline in gross profit margin was mainly on the back of the shift in sales among key customers within the retail sales channel as well as under-absorption of manufacturing costs as a result of inventory reduction efforts.
For the fiscal fourth quarter, AYI expects the sales to be down modestly from a year ago, while the current FactSet consensus of $1.08 billion implies growth of 1.6%. The North American lighting market, which is primary market, is projected to grow in the low-single digit range in calendar 2019, although some leading indicators of future market demand, such as the Architectural Billings Index and the Dodge Momentum Index, have recently softened.