Acuity Brands Reports 2005 Third Quarter Results.ATLANTA Atlanta (ətlăn`tə, ăt–), city (1990 pop. 394,017), state capital and seat of Fulton co., NW Ga., on the Chattahoochee R. and Peachtree Creek, near the Appalachian foothills; inc. 1847. -- Acuity Brands Acuity Brands, Inc., through its subsidiaries, engages in the design, production, and distribution of lighting equipment and specialty products worldwide. The company was founded in 2001 and is based in Atlanta, Georgia. , Inc. (NYSE NYSE See: New York Stock Exchange : AYI AYI Academy of Young Investors ) announced today that net income for the third quarter of fiscal 2005 was $19.7 million, or $0.44 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to $18.0 million, or $0.42 per diluted share, reported in the third quarter of fiscal 2004. These represent increases in net income and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of 9% and 5%, respectively. Also during the quarter, the Company generated significant cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses , bringing year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. cash flow from operations to $61.2 million compared to $49.3 million reported in the first nine months of 2004, an increase of $11.9 million. Total debt outstanding at May 31, 2005 was $390.7 million, down $5.0 million from August 31, 2004, while the Company's cash position was $44.3 million, an increase of $30.1 million from August 31, 2004. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the quarter ended May 31, 2005 increased $13.1 million, or 2%, to $545.3 million from the year-ago period. Acuity Brands Lighting (ABL) and Acuity acuity /acu·i·ty/ (ah-ku´i-te) clarity or clearness, especially of vision. a·cu·i·ty n. Sharpness, clearness, and distinctness of perception or vision. Specialty Products (ASP asp, popular name for several species of viper, one of which, the European asp (Vipera aspis), is native to S Europe. It is also a name for the Egyptian cobra (Naja haja). ) posted higher net sales in the period due primarily to the positive impact of price increases, partially offset by lower shipments in certain commercial and retail channels. Consolidated gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. decreased to 39.6% of net sales in the third quarter of fiscal 2005 from 41.8% reported in the year-ago period. The decline was due primarily to higher costs for raw materials and components, less profit contribution resulting from lower shipments in certain channels, and the negative impact of reduced production at ABL. These items were partially offset by higher pricing and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. product mix changes and benefits from the efforts taken to streamline and improve the operations. Overall, raw material and component costs increased approximately $20.0 million in the third quarter of 2005 compared to the year-ago period. Consolidated operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. declined as a percentage of net sales to 32.5% in the third quarter of fiscal 2005, compared to 34.9% reported in the year-ago period, due primarily to benefits from the Company's restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and cost reduction programs. Consolidated operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. increased $2.3 million, or 6%, to $38.8 million in the third quarter of 2005 compared to the year-ago period due primarily to lower operating expenses, partially offset by the lower gross profit noted above. Operating profit margin Operating profit margin The ratio of operating profit to net sales. increased 20 basis points to 7.1% of net sales for the third quarter of fiscal 2005 from 6.9% reported in the prior-year period. Third Quarter Segment and Corporate Overview Net sales at Acuity Brands Lighting in the third quarter of fiscal 2005 were $406.2 million compared to $397.5 million reported in the year-ago period, an increase of $8.7 million, or 2%. Net sales at ABL increased over the prior year due primarily to better pricing and a more favorable mix of products sold, partially offset by lower shipments into the commercial and industrial channel, which experienced general softness in demand particularly in the early portion of the quarter. The backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. at ABL increased $14.6 million, or 9%, to $174.4 million at May 31, 2005 from February February: see month. 28, 2005, reflecting a strong order rate, principally in the month of May, and the normal seasonal pattern for the non-residential construction market. Operating profit at ABL increased $1.3 million, or 5%, to $29.9 million in the third quarter of fiscal 2005 from $28.6 million reported in the prior year. Operating profit margins at ABL improved to 7.4% of net sales from 7.2% reported in the year-ago period. The increases in operating profit and margin were due primarily to the positive impact of price increases, favorable changes in the mix of products sold, and benefits from the reduction in workforce announced in the second quarter of fiscal 2005 and continued cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. programs. These improvements were partially offset by higher raw material and component costs, increased transportation costs, less profit contribution resulting from reduced shipments into certain channels, and lower absorption of manufacturing costs due to decreased production volume. Net sales at Acuity Specialty Products in the third quarter of fiscal 2005 increased $4.4 million, or 3%, to $139.1 million from $134.7 million in the year-ago period. The increase in net sales was due primarily to improved pricing in the domestic industrial and institutional channel and greater volume in international markets, particularly Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , partially offset by lower net sales in certain retail channels. Operating profit at ASP for the third quarter of fiscal 2005 increased to $13.9 million, or 10.0% of net sales, from $12.4 million, or 9.2% of net sales, reported in the year-ago period. The improvements in operating profit and margin were due primarily to the positive impact of price increases and benefits from the second quarter reduction in workforce, partially offset by higher costs for certain raw material and logistics costs and lower profit contribution from the retail channel. Corporate expenses were $5.0 million in the third quarter of fiscal 2005 compared to $4.5 million in the year-ago period. The increase was due primarily to higher miscellaneous gains in the prior year and increased costs for Sarbanes-Oxley compliance. Net interest expense in the third quarter of fiscal 2005 increased to $9.0 million from $8.7 million reported in the year-ago period due to an increase in the weighted average interest rate, partially offset by a lower debt balance. The consolidated income tax rate for the Company was 33.7% for the quarter ended May 31, 2005 as compared to 33.5% for the quarter ended May 31, 2004. Overall, the Company expects its effective income tax rate to be approximately 34.5% for fiscal 2005. Year-To-Date Results Net sales for the nine months ended May 31, 2005 increased $34.9 million, or 2%, to $1,575.7 million compared to $1,540.8 million reported in the same period a year ago. Consolidated operating profit for the first nine months of fiscal 2005 decreased $26.4 million, or 30%, to $62.5 million compared to operating profit of $88.9 million in the prior year. Consolidated operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: declined to 4.0% of net sales for the nine months ended May 31, 2005 from 5.8% of net sales reported in the prior year. Year-to-date net income was $24.4 million, or $0.55 per diluted share, compared to last year's net income of $40.4 million, or $0.94 per diluted share. Net income and diluted earnings per share decreased 40% and 41%, respectively, in the first nine months of fiscal 2005 compared to the year-ago period. Operating profit, margin, net income, and earnings per share for the nine months ended May 31, 2005 were impacted significantly by the $17.0 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. (or $0.25 per diluted share after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. ) taken in the second quarter of fiscal 2005 and by escalating raw material and component costs, partially offset by price increases, a more favorable mix of products sold, and actions implemented to improve overall operating effectiveness. Outlook Vernon Vernon, city, Canada Vernon, city (1991 pop. 23,514), S British Columbia, Canada, near the north end of Okanagan Lake. The center of a fruit-growing and dairying area, it has packing and dehydrating plants. J. Nagel Nagel can refer to: People
adj. 1. Filled with a specified element or elements; charged: an incident fraught with danger; an evening fraught with high drama. 2. with intense competition, dramatically rising material and benefit costs, and sluggish end markets. On balance, we posted solid results and made positive strides to improve our overall effectiveness. While we generated an improvement in earnings, results are still not where we would like them to be. During the quarter, we were able to raise prices to help offset approximately $20.0 million in material and component cost increases while experiencing higher costs for transportation and the negative impact of lower production volume. We took strong actions that improved our customer service, reduced operating costs operating costs npl → gastos mpl operacionales , and improved the effectiveness of our manufacturing facilities at both businesses. These actions contributed to ASP's achievement of a 10.0% operating profit margin in the quarter. We were particularly pleased with our ability to generate strong cash flow as evidenced by our declining debt level and our growing cash position. These were all positive indicators of managing well while our primary end markets were soft, particularly in the first half of the quarter. "As we look forward, we see both opportunities and conditions that continue to cause us concern. On the positive side, order rates at ABL were strong in May and continued so in June June: see month. , reflecting unit growth as well as our ability to hold recent price increases. This is a reflection of what we believe to be improving market conditions in the non-residential construction market, our largest market. The backlog at ABL continues to build while our customer service metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. improve. Actions to enhance the efficiencies of our facilities should begin to benefit our financial results. Assuming all these conditions continue to prevail, they should have a positive impact on our results going forward. We continue to be concerned by rising raw material and component costs, particularly those impacted by the price of oil, as well as end market demand, which seems to ebb and flow the alternate ebb and flood of the tide; often used figuratively. See also: Ebb giving mixed signals of growth sustainability. Nonetheless, we expect that the numerous actions implemented will enhance our fourth quarter performance as compared to the year-ago period and positively impact fiscal 2006." Conference Call As previously announced, the Company will host a conference call to discuss third quarter results today, July July: see month. 6, 2005, at 4:00 p.m. ET. Interested parties may listen to this call live today or hear a replay at the Company's Web site: www.acuitybrands.com. Acuity Brands, Inc., with fiscal year 2004 net sales of over $2.1 billion, is comprised of Acuity Brands Lighting and Acuity Specialty Products. Acuity Brands Lighting is one of the world's leading providers of lighting fixtures and includes brands such as Lithonia Lighting(R), Holophane Holophane is a part of Acuity Brands. Holophane is one of the oldest manufacturers of lighting-related products in the world; founded in 1898. They are a US manufacturer (based in Newark, OH) of lighting fixtures for commercial, industrial, outdoor, and emergency (R), Peerless(R), Hydrel(R), American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Electric Lighting(R), and Gotham Gotham (gŏth`əm), name for New York City first used by Washington Irving and others in the Salmagundi Papers, with satirical reference to Gotham, England, where the wise men acted as fools in order to avoid paying for the king's upkeep. (R). Acuity Specialty Products is a leading provider of specialty chemicals A Specialty chemical is a chemical produced for a specialized use. They are produced in lower volume than bulk chemicals, of which petrochemicals, made from oil feedstocks, are the most common. However, both are produced in a chemical plant. and includes brands such as Zep(R), Zep Commercial(TM), Enforcer(R), and Selig(TM). Headquartered in Atlanta, Georgia Georgia, country, Asia Georgia (jôr`jə), Georgian Sakartvelo, Rus. Gruziya, officially Republic of Georgia, republic (2005 est. pop. 4,677,000), c.26,900 sq mi (69,700 sq km), in W Transcaucasia. , Acuity Brands employs approximately 10,000 people and has operations throughout North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and Asia.Forward Looking Information This filing contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Statements made herein that may be considered forward-looking include statements incorporating terms such as "expects," "believes," "intends," "anticipates" and similar terms that relate to future events, performance, or results of the Company, including, without limitation, statements made regarding the estimated income tax rate for the fiscal year; areas of opportunity and concern; improving market conditions in the non-residential construction market; benefits of actions to enhance the efficiencies of facilities; and the impact of these items on results going forward, specifically the fourth quarter as compared to the year-ago period and fiscal 2006. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the historical experience of Acuity Brands and management's present expectations or projections. These risks and uncertainties include, but are not limited to, customer and supplier relationships and prices; competition; ability to realize anticipated benefits from initiatives taken and timing of benefits; market demand; litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and other contingent liabilities Contingent Liability 1. The possibility of an obligation to pay certain sums dependent on future events. 2. Defined obligations by a company that must be met, but the probability of payment is minimal. Notes: 1. ; and economic, political, governmental, and technological factors affecting the Company's operations, markets, products, services, and prices, among others. Please see the other risk factors more fully described in the Company's SEC filings including the Quarterly Report on Form 10-Q Form 10-Q See 10-Q. filed with the Securities and Exchange Commission on April 4, 2005. Acuity Brands, Inc.
ACUITY BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
THREE MONTHS ENDED
--------------------------------------------------
NET SALES OPERATING PROFIT (LOSS)
(Amounts in thousands, MAY 31, MAY 31, MAY 31, MAY 31,
except per-share data) 2005 2004 2005 2004
-------------------------------------------- -----------------------
ABL $ 406,238 $ 397,549 $ 29,879 $ 28,634
ASP 139,089 134,677 13,894 12,379
---------- ---------- ---------- ---------
$ 545,327 $ 532,226 43,773 41,013
---------- ----------
Corporate (4,993) (4,537)
---------- ---------
Operating profit 38,780 36,476
Other income
(expense), net (1) (100) (643)
Interest expense,
net (8,994) (8,748)
---------- ---------
Income before taxes 29,686 27,085
Income taxes 9,994 9,073
---------- ---------
Net income $ 19,692 $ 18,012
---------- ---------
Earnings per Share:
Basic earnings per
share $ .45 $ .43
Basic weighted-
average shares
outstanding during
period 43,367 42,018
Diluted earnings per
share $ .44 $ .42
Diluted weighted-
average shares
outstanding during
period 44,634 43,343
NINE MONTHS ENDED
--------------------------------------------------
NET SALES OPERATING PROFIT (LOSS)
(Amounts in thousands, MAY 31, MAY 31, MAY 31, MAY 31,
except per-share data) 2005 2004 2005 2004
-------------------------------------------- -----------------------
ABL $1,185,374 $1,157,964 $ 57,320 (2)$ 77,188
ASP 390,276 382,839 25,222 (2) 28,768
---------- ---------- ---------- ---------
$1,575,650 $1,540,803 82,542 105,956
---------- ----------
Corporate (20,044)(2) (17,081)
---------- ---------
Operating profit 62,498 88,875
Other income
(expense), net (1) 1,439 (341)
Interest expense,
net (27,022) (26,392)
---------- ---------
Income before taxes 36,915 62,142
Income taxes 12,495 21,694
---------- ---------
Net income $ 24,420 $ 40,448
---------- ---------
Earnings per Share:
Basic earnings per
share $ .57 $ .97
Basic weighted-
average shares
outstanding during
period 42,918 41,816
Diluted earnings per
share $ .55 $ .94
Diluted weighted-
average shares
outstanding during
period 44,401 43,092
(1) Other income (expense), net consists primarily of gains or losses
related to the sale of assets and foreign currency gains or losses.
(2) Operating profit (loss) amounts for each business unit include a
special charge in the following amounts: ABL - $12,652; ASP -
$2,995; Corporate - $1,353. See further discussion of special charge
in text of press release.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
MAY 31, AUGUST 31,
(Dollar amounts in thousands) 2005 2004
----------------------------------------------------------------------
Assets
Current Assets
Cash and short-term investments $ 44,250 $ 14,135
Receivables, net 325,236 331,157
Inventories, net 220,763 222,260
Other current assets 79,304 66,034
---------- ----------
Total Current Assets 669,553 633,586
Property, Plant, and Equipment, net 221,546 226,299
Other Assets 497,879 504,644
---------- ----------
Total Assets $1,388,978 $1,364,529
---------- ----------
Liabilities and Stockholders' Equity
Current Liabilities
Short-term debt $ 18,733 $ 5,511
Accounts payable 200,926 206,064
Accrued salaries, commissions, and bonuses 37,089 45,335
Accrued severance and related charges 13,254 -
Other accrued liabilities 99,827 105,325
---------- ----------
Total Current Liabilities 369,829 362,235
Long-Term Debt, less current maturities 372,012 390,210
Other Long-Term Liabilities 132,552 134,107
Stockholders' Equity 514,585 477,977
---------- ----------
Total Liabilities and Stockholders' Equity $1,388,978 $1,364,529
---------- ----------
Current Ratio 1.8 1.7
Percent of Debt to Total Capitalization 43.2% 45.3%
CONDENSED CONSOLIDATED CASH FLOWS (Unaudited)
NINE MONTHS ENDED
MAY 31, MAY 31,
(Amounts in thousands) 2005 2004
----------------------------------------------------------------------
Cash Provided by (Used for):
Operations-
Net income $ 24,420 $ 40,448
Depreciation and amortization 30,275 33,472
Other operating activities 6,478 (24,572)
--------- --------
Cash Provided by Operations 61,173 49,348
--------- --------
Investing-
Capital expenditures (25,961) (32,383)
Sale of assets 699 3,971
--------- --------
Cash Used for Investing (25,262) (28,412)
--------- --------
Financing-
Debt (5,026) (16,259)
Dividends (19,646) (19,006)
Other financing activities 19,681 7,600
--------- --------
Cash Used for Financing (4,991) (27,665)
--------- --------
Effect of Exchange Rate on Cash (805) 262
--------- --------
Net Change in Cash 30,115 (6,467)
Cash at Beginning of Period 14,135 16,053
--------- --------
Cash at End of Period $ 44,250 $ 9,586
--------- --------
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