EXHIBIT 99.1
ACUITY BRANDS NEWS RELEASE Acuity Brands, Inc.
1170 Peachtree Street, NE
Suite 2400
Atlanta, GA 30309
Tel: 404 853 1400
Fax: 404 853 1430
AcuityBrands.com
COMPANY CONTACT:
DAN SMITH
ACUITY BRANDS, INC.
(404) 853-1423
ACUITY BRANDS REPORTS 2005 FOURTH QUARTER AND FULL YEAR RESULTS
ATLANTA - October 5, 2005 - Acuity Brands, Inc. (NYSE: AYI) announced today that
it expects to report net income for the fourth quarter of fiscal 2005 of $27.8
million, or $0.61 per diluted share. Net income in the fourth quarter of 2005
included a pretax charge of $6.0 million, or $0.09 per diluted share, for
additional severance costs related to the previously announced reduction in
force as well as certain follow-on actions under the Company's ongoing
restructuring program. Also included in net income for the fourth quarter of
2005 was a pretax gain related to sales of property of $1.8 million, or $0.03
per diluted share, and a lower effective tax rate, which benefited the quarter
by approximately $0.06 per diluted share. Lastly, higher diluted shares
outstanding during the current quarter lowered earnings per share by $0.03
compared to the year-ago period. Net income in the fourth quarter of 2004 was
$26.8 million, or $0.62 per diluted share.
The Company generated $75.9 million in cash flow from operations in the fourth
quarter of 2005. Total debt at August 31, 2005 was $372.3 million compared to
$395.7 million one year earlier, while cash on hand grew to $98.5 million from
$14.1 million at the end of August 2004. Total debt outstanding as of August 31,
2005 was comprised primarily of fixed rate obligations with longer-term
maturities. Net debt (total debt less cash and cash equivalents) was $273.8
million at August 31, 2005 compared to $381.6 million at the end of the prior
year, a decrease of $107.8 million or 28%.
Net sales for the quarter ended August 31, 2005 increased $33.8 million, or 6%,
to $597.2 million from the year-ago period. The increase was due primarily to
the positive impact of price increases and, to a lesser degree, unit volume
growth. Consolidated
ACUITY BRANDS NEWS RELEASE 2
gross profit grew approximately 2% to $232.5 million, while gross profit margins
decreased to 38.9% of net sales in the fourth quarter of fiscal 2005 from 40.6%
reported in the year-ago period. The increase in gross profit was due primarily
to higher selling prices and a more favorable mix of products sold, partially
offset by higher costs for raw materials and components. Gross profit as a
percentage of net sales primarily declined because the increase in net sales
largely offset rising raw material costs. Overall, raw material and component
costs increased approximately $25.0 million in the fourth quarter of 2005
compared to the year-ago period. Operating expenses were $188.3 million, or
31.5% of net sales, in the fourth quarter of 2005 compared to $179.8 million, or
31.9% of net sales, reported in the year-ago period. The increase in operating
expenses in the current quarter was due primarily to the $6.0 million special
charge and higher freight and distribution expenses, partially offset by
benefits from the previously announced reduction in force. Consolidated
operating profit for the fourth quarter of 2005, which included the $6.0 million
charge, decreased $4.8 million to $44.2 million from $49.0 million reported in
the year-ago period.
Fourth Quarter Segment and Corporate Overview
Net sales at Acuity Brands Lighting (ABL) in the fourth quarter of fiscal 2005
were $452.5 million, a company record, compared to $422.5 million reported in
the year-ago period, an increase of $30.0 million, or 7%. Net sales at ABL
increased over the prior year due primarily to better pricing, a more favorable
mix of products sold, and greater shipments in certain channels, partially
offset by lower volume in the core commercial and industrial business. The
backlog at August 31, 2005 of $152.2 million approximated the backlog at the end
of the prior year. Operating profit at ABL was $37.3 million in the fourth
quarter of fiscal 2005, a decrease of $4.4 million from the year-ago period, and
included a pretax charge of $3.0 million, primarily for an increase in costs
associated with the previously announced reduction in force and additional
severance for ongoing programs to streamline certain operations. The decrease in
operating profit was due primarily to the special charge; higher raw material
and component costs; greater expenses for freight and distribution; and higher
commission expense. These items were partially offset by the positive impact of
price increases, favorable changes in the mix of products sold, and benefits
from the reduction in workforce announced in the
ACUITY BRANDS NEWS RELEASE 3
second quarter of fiscal 2005. Raw materials and component costs increased over
$20.0 million compared to the year-ago period, while distribution and freight
expenses increased approximately $5.0 million over the prior year.
Net sales at Acuity Specialty Products (ASP) in the fourth quarter of fiscal
2005 increased $3.9 million, or 3%, to $144.7 million from $140.8 million in the
year-ago period. The increase in net sales was due primarily to more favorable
pricing in the domestic industrial and institutional channel and the favorable
impact of foreign currency translation on international sales, partially offset
by lower unit volume. Operating profit at ASP for the fourth quarter of fiscal
2005 was $17.1 million compared to $14.8 million reported in the year-ago
period, an increase of 16%. The increase in operating profit in the fourth
quarter of fiscal 2005 was due primarily to the positive impact of price
increases and benefits from the second quarter reduction in force, partially
offset by the $0.6 million special charge related to additional actions to be
taken as part of the previously announced reduction in force and by higher costs
for certain raw materials.
Corporate expenses were $10.1 million in the fourth quarter of fiscal 2005
compared to $7.5 million in the year-ago period. The increase included an
additional special charge of $2.4 million primarily for non-cash costs
associated with long-term incentive programs for those employees included in the
restructuring. Net interest expense in the fourth quarter of fiscal 2005
increased to $8.7 million from $8.5 million reported in the year-ago period. The
consolidated income tax rate for the Company was 26.7% for the quarter ended
August 31, 2005 as compared to 33.9% for the quarter ended August 31, 2004. The
decrease in the effective rate was due primarily to certain tax credits
associated with the Mexican operations and state tax benefits. The Company
expects the tax rate to be approximately 35% in fiscal 2006.
Fiscal Year Results
Net sales for the year ended August 31, 2005 increased $68.7 million, or 3%, to
$2,172.9 million compared to $2,104.2 million reported in the same period a year
ago. Consolidated operating profit for fiscal 2005 was $106.7 million as
compared to operating profit of $137.9 million in the prior year. Fiscal 2005
net income was $52.2
ACUITY BRANDS NEWS RELEASE 4
million, or $1.17 per diluted share, compared to last year's net income of $67.2
million, or $1.56 per diluted share. Operating profit, net income, and earnings
per share for the year ended August 31, 2005 were negatively impacted primarily
by the aggregate $23.0 million pre-tax restructuring charge (or $0.34 per
diluted share) taken in the second and fourth quarters of fiscal 2005, lower
shipments in certain channels, escalating raw material and component costs, and
lower absorption of manufacturing expenses. These items were partially offset by
benefits from price increases, a more favorable mix of products sold, and
actions implemented to improve overall operating effectiveness, including
benefits of approximately $13 million from the reduction in force. Pursuant to
Sarbanes-Oxley requirements, the Company's certifying public accountants' audit
opinion with respect to the year-end financial statements will not be dated
until the Company completes the final 10-K report and evaluation of internal
controls over financial reporting. Accordingly, the financial results reported
in this earnings release are preliminary pending completion of the audit.
Commentary and Outlook
Vernon J. Nagel, Chairman, President, and Chief Executive Officer of Acuity
Brands, said, "We posted solid results in the fourth quarter in spite of higher
raw material, component, freight, and distribution costs and the continued
softness in the non-residential construction market, now forecasted to be down
in calendar year 2005 for the sixth year in a row. Our net sales grew by 6% over
the year-ago period reflecting both benefits from previously implemented pricing
initiatives and unit volume growth in certain lighting channels. In addition, I
am particularly pleased with our ability to continue to generate strong cash
flow and our efficient use of working capital, which reflects the success of
certain programs implemented in prior periods to enhance our operations. In
2005, we generated $137.1 million in cash flow from operations while paying
$26.3 million in dividends, significantly enhancing our financial position and
flexibility. Today, we have almost $100 million in cash and our existing debt is
comprised primarily of fixed rate obligations with longer-term maturities.
ACUITY BRANDS NEWS RELEASE 5
"Looking ahead to fiscal 2006, we expect that past actions and improvements we
continue to make will result in more efficient and effective operations
producing results expected by our key stakeholders. Our service to customers has
improved dramatically in key channels and we continue to make progress in
creating a leaner, more efficient company. We believe that we are on target to
achieve the previously announced annualized savings run-rate of approximately
$50 million by the end of our second quarter in fiscal 2006 from actions
associated with the Company's ongoing restructuring program. Additionally, we
are encouraged by external forecasts that are projecting unit volume growth in
calendar year 2006 in the non-residential construction industry, a core market
for us. To the extent this occurs, we believe it will have a positive impact on
our unit volume. We expect cash flow from operations to remain strong, while
investing between $40 million and $45 million in capital expenditures. Although
these influences bode well for us in 2006, we are not without formidable
challenges, including the impact of rising prices for crude oil, generating
profitable growth within our retail channels, and continued escalating costs.
However, in spite of these challenges, we expect to make positive progress in
growing our business and improving our operations in 2006 sufficient to allow us
to make meaningful progress towards the achievement of our long-term financial
goals."
Conference Call
As previously announced, the Company will host a conference call to discuss
fourth quarter results today, October 5, 2005, at 4:00 p.m. ET. Interested
parties may listen to this call live today or hear a replay at the Company's Web
site: www.acuitybrands.com.
Acuity Brands, Inc., with fiscal year 2005 net sales of approximately $2.2
billion, is comprised of Acuity Brands Lighting and Acuity Specialty Products.
Acuity Brands Lighting is one of the world's leading providers of 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), Zep Commercial(TM), Enforcer(R), and Selig(TM).
Headquartered in Atlanta, Georgia, Acuity Brands employs approximately 10,000
people and has operations throughout North America and in Europe and Asia.
ACUITY BRANDS NEWS RELEASE 6
Forward Looking Information
This release contains forward-looking statements, within the meaning of the
Private Securities Litigation Reform Act of 1995. Statements made herein that
may be considered forward-looking include statements incorporating terms such as
"expects," "believes," "intends," "anticipates" and similar terms that relate to
future events, performance, or results of the Company, including, without
limitation, statements made regarding the expected results; the tax rate for
fiscal 2006; impact of past actions and improvements; progress in creating a
leaner, more efficient company; an annualized savings run-rate of approximately
$50 million by the end of the second quarter in fiscal 2006 from actions
associated with the Company's ongoing restructuring program; external forecasts
that are projecting unit volume growth in calendar year 2006 in the
non-residential construction industry and its impact on unit volume;
expectations for cash flow from operations and investment of $40 to $45 million
in capital expenditures; anticipated challenges including the impact of rising
prices for crude oil, generating profitable growth opportunities within the
retail channels, and continued escalating costs; and expected progress in
growing the business and improving operations in 2006 sufficient to allow the
Company to make meaningful progress towards the achievement of management's
long-term financial goals. Forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from the historical experience of Acuity Brands and management's present
expectations or projections. These risks and uncertainties include, but are not
limited to, completion of the external audit; customer and supplier
relationships and prices; competition; ability to realize anticipated benefits
from initiatives taken and timing of benefits; market demand; litigation and
other contingent liabilities; and economic, political, governmental, and
technological factors affecting the Company's operations, tax rate, markets,
products, services, and prices, among others. Please see the other risk factors
more fully described in the Company's SEC filings including the Quarterly Report
on Form 10-Q filed with the Securities and Exchange Commission on July 8, 2005.
Acuity Brands, Inc.
ACUITY BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
THREE MONTHS ENDED
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NET SALES OPERATING PROFIT (LOSS)
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
(Amounts in thousands, except per-share data) 2005 2004 2005 2004
- ------------------------------------------------------------------------------------- -------------------------------------
ABL $ 452,528 $ 422,534 $ 37,295 (2) $ 41,715
ASP 144,676 140,830 17,084 (2) 14,802
--------- --------- -------- --------
$ 597,204 $ 563,364 54,379 56,517
========= =========
Corporate (10,132)(2) (7,466)
-------- --------
Operating profit 44,247 49,051
Other income (expense), net (1) 2,379 (92)
Interest expense, net (8,709) (8,484)
-------- --------
Income before taxes 37,917 40,475
Income taxes 10,108 13,709
-------- --------
Net income $ 27,809 $ 26,766
======== ========
Earnings per Share:
Basic earnings per share $ .63 $ .63
Basic weighted-average shares outstanding during period 43,805 42,180
Diluted earnings per share $ .61 $ .62
Diluted weighted-average shares outstanding during period 45,248 43,487
YEAR ENDED
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NET SALES OPERATING PROFIT (LOSS)
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
(Amounts in thousands, except per-share data) 2005 2004 2005 2004
- ------------------------------------------------------------------------------------------ --------------------------------
ABL $ 1,637,902 $ 1,580,498 $ 94,615 (3) $ 118,904
ASP 534,952 523,669 42,306 (3) 43,570
----------- ----------- -------- ---------
$ 2,172,854 $ 2,104,167 136,921 162,474
=========== ===========
Corporate (30,176)(3) (24,547)
-------- --------
Operating profit 106,745 137,927
Other income (expense), net (1) 3,818 (434)
Interest expense, net (35,731) (34,876)
-------- --------
Income before taxes 74,832 102,617
Income taxes 22,603 35,403
-------- --------
Net income $ 52,229 $ 67,214
======== ========
Earnings per Share:
Basic earnings per share $ 1.21 $ 1.60
Basic weighted-average shares outstanding during period 43,135 41,906
Diluted earnings per share $ 1.17 $ 1.56
Diluted weighted-average shares outstanding during period 44,752 43,201
(1) Other income (expense), net consists primarily of gains or losses related to
the sale of assets and foreign currency gains or losses.
(2) Operating profit (loss) amounts for each business unit include a special
charge in the following amounts: ABL - $3,000; ASP - $600; Corporate - $2,400.
See further discussion of special charge in text of press release.
(3) Operating profit (loss) amounts for each business unit include a special
charge in the following amounts: ABL - $15,652; ASP - $3,595; Corporate -
$3,753. See further discussion of special charge in text of press release.
ACUITY BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
AUGUST 31, AUGUST 31,
(Dollar amounts in thousands) 2005 2004
- ----------------------------------------------------------------------------------
ASSETS
Current Assets
Cash and cash equivalents $ 98,533 $ 14,135
Receivables, net 345,770 331,157
Inventories, net 215,590 222,260
Other current assets 57,881 54,686
----------- -----------
Total Current Assets 717,774 622,238
Property, Plant, and Equipment, net 219,194 226,299
Other Assets 505,247 507,915
----------- -----------
Total Assets $ 1,442,215 $ 1,356,452
=========== ===========
AUGUST 31, AUGUST 31,
2005 2004
- -------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term debt $ 567 $ 5,511
Accounts payable 221,844 206,064
Accrued compensation 59,122 45,335
Other accrued liabilities 117,939 109,973
----------- -----------
Total Current Liabilities 399,472
Long-Term Debt, less current maturities 371,736 390,210
Other Long-Term Liabilities 129,214 121,382
Stockholders' Equity 541,793 477,977
----------- -----------
Total Liabilities and Stockholders' Equity $ 1,442,215 $ 1,356,452
=========== ===========
Current Ratio (4) 1.8 1.7
Percent of Total Debt to Total Capitalization (5) 40.7% 45.3%
CONDENSED CONSOLIDATED CASH FLOWS (Unaudited)
YEAR ENDED
AUGUST 31, AUGUST 31,
(Amounts in thousands) 2005 2004
- ----------------------------------------------------------------------------------
CASH PROVIDED BY (USED FOR):
Operations-
Net income $ 52,229 $ 67,214
Depreciation and amortization 41,075 42,960
Other operating activities 43,783 3,080
--------- ---------
Cash Provided by Operations 137,087 113,254
========= =========
Investing-
Capital expenditures (32,636) (53,821)
Sale of assets 3,238 4,238
--------- ---------
Cash Used for Investing $ (29,398) $ (49,583)
========= =========
YEAR ENDED
AUGUST 31, AUGUST 31,
2005 2004
-------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED FOR):
Financing-
Debt $ (23,486) $ (50,153)
Dividends (26,342) (25,409)
Stock issuances 27,108 9,664
--------- --------
Cash Used for Financing (22,720) (65,898)
========= ========
Effect of Exchange Rate on Cash (571) 309
--------- --------
Net Change in Cash 84,398 (1,918)
Cash at Beginning of Period 14,135 16,053
--------- --------
Cash at End of Period $ 98,533 $ 14,135
========= =========
(4) Current Ratio is calculated as Total Current Assets divided by Total
Current Liabilities
(5) Total Debt is defined as Short-term debt plus Long-Term Debt, less
current maturities. Total capitalization is defined as Total Debt plus
Stockholders' Equity.