Acuity Brands Inc. (AYI) reported better-than-expected sales and earnings for the first quarter of 2019, sending the stock up over 3.3% during morning trade on Wednesday.
Net sales rose 10.7% to $932.6 million versus the prior-year period, helped by a growth in sales volume and favorable impacts from acquisitions. Sales was negatively impacted by a change in accounting standards as well as foreign exchange rates fluctuations.
Net income grew 11.3% year-over-year to $79.6 million, mainly due to a lower provision for income taxes. GAAP EPS grew 16.5% to $1.98, reflecting an increase in net income and lower average shares outstanding due to repurchases. Adjusted EPS increased 19.6% to $2.32.
The quarterly sales growth was mainly driven by the company’s efforts to expand its customer base as well as the roll-out of new products and solutions. The majority of Acuity’s net sales is generated from its independent sales network, which recorded a 10% sales growth in the first quarter compared to last year. This growth was driven by improved demand for small and medium-sized lighting solutions as well as strong growth for building management solutions.
Acuity faced cost pressures in the quarter due to inflation as well as tariffs on certain Chinese-sourced products. The company adopted price increases and productivity improvements as part of its efforts to tackle these cost pressures.
Acuity remains cautiously optimistic for fiscal 2019 and does not see any meaningful change in the demand outlook since it provided its previous guidance last October. Based on third-party forecasts and leading indicators, the company believes the North American lighting market, its primary market, should grow in the low-single digit range in fiscal 2019.
Vernon J. Nagel, Chairman, President, and CEO, said, “Our focus in fiscal 2019 is to garner additional top-line growth driven primarily by outperforming the growth rates of the markets we serve through execution of our previously announced growth strategies, continue to improve the mix of products and solutions sold as we execute our tiered solutions strategy, and leverage our fixed cost infrastructure to achieve targeted incremental margins to improve our overall profitability.”
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