Acuity Brands, Inc. (NYSE:AYI) Q3 2019 Earnings Conference Call Transcript

Jul 02, 2019 • 10:00 am ET

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Acuity Brands, Inc. (NYSE:AYI) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning, and welcome to the Acuity Brands Fiscal 2019 Third Quarter Financial Conference Call. After today's presentation, there will be a formal question-and-answer session. (Operator Instructions) Today's conference is being recorded. If you have any objections, you may disconnect at this time.

Now, I will like to introduce Mr. Dan Smith, Senior Vice President, Treasurer and Secretary. Sir, you may begin.

Executive
Dan Smith

Thank you, and good morning. With me today to discuss our fiscal 2019 third quarter results are Vern Nagel, our Chairman, President and Chief Executive Officer; and Ricky Reece, our Executive Vice President and Chief Financial Officer. We are webcasting today's conference call on our website at acuitybrands.com.

I would like to remind everyone that, during this call, we may make projections or forward-looking statements regarding future events or future financial performance of the company. Such statements involve risks and uncertainties such that actual results may differ materially. Please refer to our most recent 10-K and 10-Q SEC filings and today's press release, which identify important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements.

Now, let me turn this call over to Vern Nagel.

Executive
Vernon J. Nagel

Thank you, Dan. Good morning, everyone. Ricky and I would like to make a few comments, and then we will answer your questions. Our results for the third quarter were very solid, despite continuing inflationary cost pressures, the impact of tariffs and further uncertainties caused by US trade policies. We implemented several programs to address these cost issues including additional price increases, product and freight cost reductions and further actions to improve productivity.

We believe our top line growth this past quarter was negatively impacted by the pull forward of orders from customers into the first half of the year as they acted to avoid announced price increases as well as reduced shipments in the retail channel due to efforts initiated this year to eliminate products within our portfolio that do not meet our profitability hurdles primarily in the retail channel. I will provide greater detail on our sales mix later in the call.

Additionally, we are pleased that our adjusted gross profit margin exceeded 40% for the first time in a year and improved sequentially for the third quarter in a row. Our adjusted diluted earnings per share of $2.53 was a third quarter record. I know many of you have already seen our results and Ricky will provide more detail later in the call, but I would like to make a few comments on the key highlights for the third quarter of 2019.

Net sales were $948 million, a slight increase over the year ago period. Reported operating profit was $120.3 million compared with $107.4 million in the year ago period. Reported diluted earnings per share was $2.22 compared with $1.80 in the year ago period. There were adjustments in both quarters for certain special items as well as certain other add backs necessary for our results to be comparable between periods, as