Wednesday, June 30, 2010

Acuity Brands posts Q3 results; expects a continued challenging 2010

Manufacturer to accelerate its investments in creating energy-efficient products and expand business with renovation and relight markets

Acuity Brands reported its fiscal third-quarter results today, pointing to an ongoing challenging business climate marked by declines in non-residential construction activity and increases in material and component costs.

The manufacturer of lighting fixtures and related products posted third-quarter sales of $407.6 million, a 3% increase compared with the same period a year ago. Third-quarter income was $21.3 million, down slightly compared with $22.3 million reported in the third quarter of 2009. Earnings per share fell too, at 48 cents compared with 52 cents in the prior-year period.

Sales for the first nine months of fiscal 2010 fell 4.2 percent compared to 2009 while operating profit rose slightly—to $109.7 million compared with $103.8 million last year.

Vernon J. Nagel, Acuity Brands’ chairman, president, and CEO, said he is pleased by the company’s performance in a continued challenging environment, pointing to a 140 basis-point improvement in gross margin during the quarter—to 40.1.

“We improved our gross profit margin while experiencing price competition in certain channels and geographies, which we anticipated, and unfavorable changes in the mix of products sold,” he said in a statement announcing the results.

Nagel said the company expects the balance of fiscal 2010 to remain challenging, pointing to expected declines in non-residential construction for the remainder of the year and into 2011. The company will focus on creating innovative and energy-efficient lighting products as well as expanding its service to key sectors such as home centers and the renovation and relight markets as avenues for growth.

“We believe these strategic initiatives provide growth opportunities in 2011 which should enable us to outperform the overall markets we serve,” he said.

Nagel also pointed to potential material and component cost increases as a key area of concern. In May, the company increased the price of most products to combat these issues, and Nagel said they will continue to be “as vigilant as possible in our pricing strategies to protect our margins.”

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