Acuity Brands Reports Fiscal Year 2004 First Quarter Results
ATLANTA, Dec. 18 /PRNewswire-FirstCall/ -- Acuity Brands, Inc. announced today
that net income for the first quarter of fiscal 2004 was $12.9 million, or $0.30
per diluted share, compared to $10.5 million, or $0.25 per diluted share,
reported in the year-ago period. This represents an increase in net income and
diluted earnings per share of approximately 22.9 percent and 20.0 percent,
respectively. In addition, total debt outstanding increased modestly to $449.8
million at November 30, 2003 from $445.8 million at August 31, 2003.
Net sales for the quarter ended November 30, 2003 were $517.5 million compared
to $505.2 million reported in the year-ago period, an increase of $12.3 million,
or 2.4 percent. The growth in net sales, which occurred in both of the
Company's segments, was due primarily to greater shipments to the home
improvement and retail channels. Overall, consolidated gross profit margins
advanced to 41.5 percent of net sales in the first quarter of fiscal 2004 from
41.0 percent reported in the year-ago period due primarily to improvements in
pricing, the mix of products sold, and the impact of initiatives to reduce
product cost, partially offset by higher raw material costs and expenses
associated with the consolidation of certain manufacturing facilities at Acuity
Brands Lighting (ABL). Consolidated operating expenses increased slightly to
36.0 percent of net sales in the first quarter of fiscal 2004 compared to 35.8
percent of net sales in the similar period one year earlier. The increase was
due primarily to higher corporate expenses more fully described below, partially
offset by the impact of programs to reduce operating expenses and improve
efficiencies. Consolidated operating profit of $28.6 million was $2.3 million
higher in the first quarter of fiscal 2004 compared to the year-ago period due
primarily to higher sales and greater gross profit margin, partially offset by
the increased operating expenses. Consolidated operating profit margins were 5.5
percent of net sales in the first quarter of fiscal 2004 compared to 5.2 percent
reported in the year-ago period. The 22.9 percent growth in net income in the
first quarter of fiscal 2004 compared to the similar period in 2003 was due
primarily to the increase in operating profit as noted above, a gain recognized
on the sale of a small product line at Acuity Specialty Products (ASP), and
lower interest expense due to less debt outstanding during the current period.
First Quarter Segment and Corporate Overview Net sales at Acuity Brands Lighting in the first quarter of fiscal 2004 were
$391.0 million compared to $382.7 million reported in the year-ago period, an
increase of $8.3 million, or 2.2 percent. The increase in net sales at ABL was
due primarily to greater shipments of products to the home improvement channel.
While net sales increased in the current quarter, incoming orders remained soft
reflecting continued weak economic conditions, particularly in the commercial
and industrial construction channel. This, along with process improvement
initiatives to reduce order cycle times and shorten lead times to customers,
resulted in a modestly lower backlog at November 30, 2003. The backlog at ABL
decreased $12.8 million, or 9.4 percent, to $123.3 million at November 30, 2003
from August 31, 2003. Operating profit at Acuity Brands Lighting improved $1.8
million to $27.9 million in the first quarter of fiscal 2004 from $26.1 million
reported in the same period in the prior year. Operating profit margins
improved to 7.1 percent from 6.8 percent due primarily to a favorable product
mix, better pricing, and benefits from initiatives to reduce product costs and
contain expenses.
Net sales at Acuity Specialty Products in the first quarter of fiscal 2004 were
$126.5 million compared to $122.6 million reported in the year-ago period, an
increase of $3.9 million, or 3.2 percent. The increase in net sales was due
primarily to greater shipments through the retail channel and to institutional
and industrial customers in key domestic and international markets. Operating
profit at ASP for the first quarter of fiscal 2004 doubled to $7.4 million from
$3.7 million reported in the year-ago period. Operating profit margins advanced
to 5.9 percent from 3.0 percent. The improvement in operating profit and margin
was due primarily to the higher sales noted above, the impact of previously
announced price increases, lower product costs, and the reduction of costs
associated with product introductions and logistics programs in the prior year.
Corporate expenses were $6.7 million in the first quarter of fiscal 2004
compared to $3.5 million in the year-ago period. The increase was due primarily
to greater expense for company-wide restricted stock incentives and other
share-price based programs, reflecting the 33 percent appreciation in the
Company's share price in the current quarter. Corporate expenses also included
investments to facilitate compliance with the rules promulgated under the
Sarbanes-Oxley Act. Net interest expense decreased $1.1 million to $8.7 million
in the first quarter of fiscal 2004 compared to $9.8 million reported in the
year-ago period due to a reduction in outstanding debt, partially offset by a
higher weighted-average interest rate.
The Company anticipated adopting certain provisions of Statement of Financial
Accounting Standards No. 148 in the first quarter of fiscal 2004, which would
have required stock options to be expensed. In light of recent public
communications from the Financial Accounting Standards Board, the Company has
elected to delay the recognition of expense related to stock options until the
final standard is promulgated. The recognition of stock option expense was
projected to reduce earnings in fiscal 2004 by approximately $0.02 per share for
each quarter beginning with the second quarter.
Outlook James S. Balloun, Chairman, President, and Chief Executive Officer of Acuity
Brands, said, "Our first quarter results, which modestly exceeded our
expectations, reflected the positive impact of initiatives to improve the
performance of our business units in the face of continued softness in key
markets, especially non-residential construction. Numerous programs to reduce
costs, enhance productivity, and further expand our product offerings and brands
through a variety of channels contributed to improved results. Overall, these
efforts allowed us to improve our gross profit margins while experiencing cost
increases for certain raw materials and employee related programs, as well as to
fund key initiatives to improve our selling effectiveness and supply chain.
Also, during the quarter, we were able to generate more cash flow than
anticipated to essentially maintain our debt level while paying our quarterly
dividend and expanding our investment in each segment.
"I am pleased with our progress to make each segment a stronger and more
competitive organization in spite of continued weak demand and overcapacity in
key markets. We continue to find innovative ways to more effectively serve
customers, introduce new products, and expand our access to new markets. These
efforts and other initiatives designed to improve pricing, reduce product costs,
and improve productivity are all having a positive impact on our profit margins. Our goal continues to be to generate higher margins to fund product innovations
and to build greater customer service capabilities while providing enhanced
returns for our shareholders. While these efforts, including programs to
rationalize our manufacturing network at ABL and improve our information
technology capabilities, are not without short-term costs, we anticipate that
they will allow us to continue to create greater value for our customers and our
shareholders.
"We are optimistic about the long-term potential of our Company. However, we
remain cautious about our near-term results due to the continued softness in
demand and uncertainties that exist in our key markets, particularly non-
residential construction. While it appears that certain sectors of the economy
are showing signs of renewed growth and some economists are again calling for a
rebound in portions of the non-residential construction market in calendar 2004,
we have yet to see or benefit from such a rebound. Therefore, we anticipate that
the second quarter of our fiscal year, which is historically the weakest for the
Company, will be very challenging. Further, as indicated in our most recent
Form 10-K, we still expect earnings for the first half of 2004 to approximate
those reported in the same period in 2003. Adjusting for the previously
mentioned delay in accounting for stock option expense, we expect full year
earnings for fiscal 2004 to be in the range of $1.31 to $1.51 per share.
Lastly, as we have previously indicated, the Company's debt balance at the end
of the second quarter may increase up to ten percent from August 31, 2003 due
primarily to the timing of certain expenses and capital spending associated with
the consolidation of the manufacturing network at ABL. Outstanding debt is then
expected to decline by the end of fiscal 2004 to approximately $400 million." Conference Call and Board News As previously announced, the Company will host a conference call to discuss
first quarter results on December 18, 2003 at 4:00 p.m. EST. Interested parties
may listen to this call live today or hear a replay until January 8, 2004 at the
Company's Web site: http://www.acuitybrands.com/ .
The Board of Directors will hold its regular quarterly meeting on December 18,
2003.
Acuity Brands, Inc., with fiscal year 2003 net sales of over $2.0 billion, is
comprised of Acuity Brands Lighting and Acuity Specialty Products. Acuity
Brands Lighting is a world leader in lighting fixtures and includes brands such
as Lithonia Lighting(R), Holophane(R), Peerless(R), Hydrel(R), American Electric
Lighting(R), and Gotham(R). Acuity Specialty Products is a leading provider of
specialty chemicals and includes brands such as Zep(R), Enforcer(R), and Selig
Industries(TM). Headquartered in Atlanta, Georgia, Acuity Brands employs
approximately 11,400 people and has operations throughout North America and in
Europe and Asia.
Forward-Looking Statements This press release contains forward-looking statements, within the meaning of
the Private Securities Litigation Reform Act of 1995, that involve risks and
uncertainties. Consequently, actual results may differ materially from those
indicated by the forward-looking statements. Statements made herein that may be
considered forward-looking include statements concerning: (a) future net sales
and earnings (including the timing of future net sales and earnings within
fiscal 2004); (b) expected changes in total indebtedness (including the timing
of the changes in total indebtedness); (c) the impact of continued softness in
demand and uncertainty in the Company's key markets, particularly
non-residential construction, on near-term results; and (d) the impact of the
Company's efforts, including programs to rationalize the manufacturing network
at ABL and improve its information technology capabilities, on value for its
customers and shareholders.
A variety of risks and uncertainties could cause the Company's actual results to
differ materially from the anticipated results or other expectations expressed
in the Company's forward-looking statements. The risks and uncertainties
include without limitation the following: (a) the uncertainty of general
business and economic conditions, including the potential for a more severe
slowdown in non-residential construction and other industrial markets, changes
in interest rates, and fluctuations in commodity and raw material prices or
foreign currency rates; (b) the Company's ability to realize the anticipated
benefits of initiatives expected to reduce costs, improve profits, enhance
customer service, increase manufacturing efficiency, reduce debt, and expand
product offerings and brands in the market through a variety of channels; (c)
the risk that the Company will be unable to execute its various initiatives
within expected time frames; (d) unexpected developments in the Company's legal
and environmental matters; and (e) the other risk factors more fully described
in the Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission on October 31, 2003.
ACUITY BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) THREE MONTHS ENDED NOVEMBER 30
OPERATING PROFIT
NET SALES (LOSS)
(Amounts in thousands, except per-
share data) 2003 2002 2003 2002
ABL $391,027 $382,658 $27,911 $26,067
ASP 126,511 122,568 7,409 3,671
$517,538 $505,226 35,320 29,738
Corporate (6,722) (3,456)
Other income (expense), net (1) 302 (118)
Interest expense, net (8,717) (9,774)
Income before taxes 20,183 16,390
Income taxes 7,266 5,900
Net income $12,917 $10,490 Earnings per Share:
Basic earnings per share $.31 $.25
Basic weighted-average shares
outstanding during period 41,581 41,391 Diluted earnings per share $.30 $.25
Diluted weighted-average shares
outstanding during period 42,594 41,432 (1) Other income (expense), net consists primarily of gains or losses
related to the sale of assets and foreign currency gains or losses. ACUITY BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollar amounts in thousands) NOVEMBER 30 AUGUST 31
2003 2003
Assets
Current Assets
Cash and short-term investments $13,056 $16,053
Receivables, net 308,926 302,276
Inventories, net 202,377 188,799
Other current assets 54,166 51,424
Total Current Assets 578,525 558,552 Property, Plant, and Equipment, net 220,302 222,558
Other Assets 506,355 507,109
Total Assets $1,305,182 $1,288,219
NOVEMBER 30 AUGUST 31
2003 2003
Liabilities and Stockholders' Equity
Current Liabilities
Short-term debt $58,398 $54,339
Accounts payable 153,562 165,656
Accrued salaries, commissions, and
bonuses 49,896 49,217
Other accrued liabilities 97,962 90,239
Total Current Liabilities 359,818 359,451 Long-Term Debt, less current
maturities 391,356 391,469
Other Long-Term Liabilities 132,188 129,005
Stockholders' Equity 421,820 408,294
Total Liabilities and Stockholders'
Equity $1,305,182 $1,288,219
Current Ratio 1.6 1.6
Percent of Debt to Total
Capitalization 51.6% 52.2%
ACUITY BRANDS, INC.
CONDENSED CONSOLIDATED CASH FLOWS (Unaudited) THREE MONTHS ENDED
NOVEMBER 30
(Amounts in thousands) 2003 2002
Cash Provided by (Used for):
Operations-
Net income $12,917 $10,490
Depreciation and amortization 11,373 11,766
Other operating activities (20,473) (8,141)
Cash Provided by Operations 3,817 14,115 Investing-
Capital expenditures (9,881) (7,257)
Sale of assets 4,017 375
Cash Used for Investing $(5,864) $(6,882)
THREE MONTHS ENDED
NOVEMBER 30
2003 2002
Cash Provided by (Used for):
Financing-
Debt $3,930 $736
Dividends (6,265) (6,216)
Other financing activities 964 439
Cash Used for Financing (1,371) (5,041) Effect of Exchange Rate on Cash 421 (212) Net Change in Cash (2,997) 1,980
Cash at Beginning of Period 16,053 2,694
Cash at End of Period $13,056 $4,674
DATASOURCE: Acuity Brands, Inc.
CONTACT: Karen Holcom of Acuity Brands, Inc., +1-404-853-1437 Web site: http://www.acuitybrands.com/
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