Acuity Brands (NYSE: AYI), a leading provider of lighting solutions, reported an increase in its fourth-quarter adjusted earnings, despite a decline in sales. The results, however, missed the market’s projection and the company’s stock dropped sharply early Wednesday immediately after the announcement.
At $2.75 per share, adjusted earnings were higher than $2.68 per share reported in the fourth quarter of 2018, which is a quarterly record for the company. But, the bottom-line came in below the consensus estimate. Reported profit dropped to $96.1 million or $2.42 per share from $108.2 million or $2.70 per share last year.
Sales Down 12%
Net sales declined 12% annually to $938.1 million during the three-month period and missed analysts’ forecast. The top-line was negatively impacted by a double-digit fall in volumes, which was partially offset by a favorable change in product prices and mix of products sold. More than 50% of the sales decline occurred in the retail sales channel.
Vernon Nagel, Chief Executive Officer of Acuity Brands, said, “We achieved solid results despite sluggish market conditions. We delivered record adjusted net income and adjusted diluted earnings per share notwithstanding the decline in fourth quarter net sales and operating profit compared with the year-ago period.”
Nagel, meanwhile, warned that market conditions would remain unfavorable in fiscal 2020, mainly due to the continued economic uncertainties caused by global trade issues, which will weigh down on the market demand for lighting products. The company intends to focus on boosting sales growth and enhancing margins in the current fiscal year.
Net sales are currently forecast to drop in the mid-to-high single-digit percentage range in fiscal 2020, when the annual tax rate is expected to be about 23%, before special items.
Recently, Acuity Brands acquired The Luminaires Group, a leading provider of specification-grade luminaires for commercial and institutional markets, which complements its current lighting portfolio. The transaction is expected to be immediately accretive to the company’s fiscal 2020 earnings.
Acuity Brands’ shares declined steadily since the beginning of the month and closed the last session down 4%. During Wednesday’s early trading hours, the stock was trading down 16%.
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