Acuity, Inc. Q1 FY2025 earnings call

• QSC acquisition successfully closed last week.
• Acuity Brands Lighting delivered sales growth in Q1, with strategies like increasing product vitality, elevating service levels, using technology, and driving productivity. Launched TruWrap and REBL Round High Bay in Contractor Select. Products recognized in GRANDS PRIX DU DESIGN Awards and Architect's Newspapers Best of Product Awards.
• Intelligent Spaces had strong sales growth and margin performance. Distech continued geographic expansion, added systems integrator capacity in U.K., Asia, Australia. Closed acquisition of QSC, which allows control of both space management and activities using disruptive technologies for end-user satisfaction through data interoperability.

Acuity Brands Lighting: Net sales were $886 million, 1% above prior year. Adjusted operating profit was $154 million, with an adjusted operating profit margin of 17.3% (slightly down from prior year). Intelligent Spaces: Sales were $74 million, an increase of 15% year-over-year. Adjusted operating profit was $15 million with an adjusted operating profit margin of 21%, an improvement of 5 percentage points year-over-year.

• Full year fiscal 2025 net sales expected to be within the range of $4.3 billion and $4.5 billion for total AYI.
• Adjusted diluted earnings per share expected within the range of $16.50 to $18.
• Full year interest expense expected to be between $20 million and $25 million for fiscal 2025, including impact of QSC acquisition.

• Mention of tariffs with comment that there's been a lot of talk but not much action, and customers expect reaction if tariffs happen but nothing has occurred yet.

Q: Could you give the full 12-month accretion expected from QSC?

A: It's not really relevant on a full year basis, but pleased with the acquisition and excited about QSC joining Intelligent Spaces.

Q: Comment on order trends and visibility on backlog and pipeline for Lighting business?

A: Lighting business performing well, growth algorithm working, calendar '25 expected better than '24 based on market data and field interaction, C&I channel performed well, retail channel not great but point in time.

Q: Comment on QSC margin opportunity over time?

A: QSC is a strong business with similar financial profile to existing Intelligent Spaces assets, priority is growth, no immediate plans to take costs out, expect mid-teens growth rate and margins to improve over time like with Distech.

Q: On ABL operating margins ticking down, what's going on with SG&A and investment?

A: Continuing to make investments in ABL, expenses consistent with back half of last year, will manage expenses, invest in technology, and expect operating margin to improve as sales grow in back half of year.

Q: Traction of Design Select product portfolio in ABL?

A: Design Select portfolio part of segmentation strategy to drive growth and productivity, traction good, ahead of expectations but still early in process, reaction from external community strong.