AYI - Earnings call transcript Q1 2022

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Operator

Good morning, and welcome to the Acuity Brands First Quarter Earnings Call of Fiscal 2022. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be -- the company will conduct a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Charlotte McLaughlin, Vice President of Investor Relations. ahead. go please Charlotte,

Charlotte McLaughlin

Good first welcome quarter Liz. Brands the fiscal XXXX earnings morning, you, to and Acuity Thank call.

are and quarter; management's release, who As in materially comments SEC an a quarter control, actual Reconciliations These this Investor available our on filings. detail metrics earnings performance. President will risks and opportunity our our morning beliefs the those from first XXXX Chairman, on and update to this through which our may and and call. those today differ Please results our available end that our highlights strategy detailed Officer, assumptions, which CEO, will our to beliefs us including the will website walk and Ashe, their the beyond unknown be may with at we be are available management reminder, periodic President forward-looking be statements time. some of and Chief at information currently of Karen uncertainties, Financial metrics known at of With earnings Relations to company's our subject note based for and an and There is Senior provide of who corresponding Vice the www.investors.acuitybrands.com. may obligation me financial on undertake from anticipated our Holcom, in Q&A certain last is no GAAP update non-GAAP statements. many Neil these

if remarks So those question necessary. please to and one follow-up your limit participating, one

Ashe. I will your for Thank over Brands. webcasting now to Acuity today's call are We live. in you conference turn the Neil interest

Neil Ashe

discuss this I'm Year joining us Acuity of XXXX. performance fiscal first quarter Happy to Thank our you, morning A the New in Brands. Charlotte. of proud everyone to

growth market EPS sales our operating delivered expanded and conditions. supply XX% of and unpredictable diluted despite by margin increased by chain basis challenges XXX XX%, points team global profit Our

we transformation growth deep I customers, to the that while current the on and conditions. that are long-term turning driving income, sales by a to into start by Our and prioritizing company. operating of taking dive the performance demonstrates continuing in call growth today's market want invest

fair Demand short, dynamic our As you market of end it's the a best markets aware, across is of At the the time, of paradoxes. this remains times. a the with remain availability inputs of most challenging cost share In challenging. strong. are times and same key and

consistency time, while and and which same ABL, calendar business we projects expect can price environment, much market the demand, this it is their same to prudent and passing to we in that can is spaces. increases and time Within been our strong remain channels execute on except in we at First as so plan customers retail, strong Obviously, costs dealing ABL to have demand dynamic this. input expect they and on with as improve successful everyone our is all of the At we effectively. both availability to providing pricing continue. this In across year. unpredictable,

satisfying Prioritize consistent. demand associates. health wellbeing our been and customer of has this through ensuring managing for and strategy Our the

So demand. now minute on let me what by we spend satisfying our mean a customer

of to chosen orders. all have we on our placed pricing First, honor

we as specific the fulfill we these long-term with that can. with is between There when we before, in we orders we position customers are us From the doing even is important also when normal we’re As say. them this I've to everything me receive serve to that it greater fulfill said as for gap and well what we a quickly that and now. is we that Therefore, there, the in industry times, industry. orders known believe time in in and doing will can

meaningfully is disclose supply chain normal than we result prioritized Again, Acuity. general component don't we the during activities. that unique these, three of and higher To and to are higher say key is challenges. changing coupled periods. have I availability demand, While backlog, with is transportation what a combat This these will not

First, and with much procure in available industry. We relationships invested manufacturers possible. strategic most supply and benefit being as focused our and we have to for largest in the as components the suppliers the of consistent

levels to have Second, speed cost. we access the teams to over and we maintain spot at market, allows in expense costs. have the of empowered some our higher source prioritized us of components production This higher and

are idea based dedicated engineering Third, redesign. our products of To half product, the teams and engineers the an what Distech give to this of manufacturing components available. you in quarter and effort, spent magnitude been their on of have reengineering last type existing our time continuously redesigning that

Our our made production. same addition team and manufacturing in changes broader consistent efforts the into extend beyond company improvements to commitment processes also ensure ecosystem. our ABL in These to our

The have to ability have and make and implemented see products levels. our across We our in to and flexible ever-changing the us. overall working find the stakeholders, has them remain suppliers last we our to an help supply they teams environment. engineering have changes enhanced work business, and effort been to service been herculean with that that our years our necessary The to changes components continue over improve adapt across two to

stress what In is on transformation? our transformation revert are we case, that to you that our efforts. points One In sometimes not redouble we is team to process, times, the reaction these challenging first times I using a to our the is a our are know. to where of So destination. transformation

focused continuing and elevate continuing to levels his us. service and the with ABL industry to use differentiate high on to technology maintaining Let vitality, product me Trevor are team start business.

be need output quarter, to drive part The indoor During our lay-in important In PACK CLAIRITY remote and products. offering quick lights remote STACK of the This adjustable our can STACK for that that next-generation job launched reconfigured reduction lower packaging to portfolio troubleshooting platform in no offers there time we the service an need if visits, connectivity center-element time of product saves interesting is to a in-person projects the STACK for maintenance resolutions that the configuration. wasted controls The at has more we commercial reduce be also is products the capabilities changes customers. the an lumen STACK products that on This the This capability. nLight introduced our and a we Link. It lighting are way the changes means there the costs. Switch. site for and fundamentally These is step forward several cost. controls, like any transportation expansion, first has spaces. Switch profile and LED efficient on through

and action Now controller; The to We of analyze in take problems in to Group. solve the and Spaces them We ISG Intelligent in make spaces software moving ways. two is collect through this applications smarter, the and to through data then safer mission Atrius. use to Distech hardware, on data example do greener. order by the for technology powered

had eventful an Our ISG quarter. group

customers introduced our products controller Distech The introduced first effectively. at edge mentioned, time on increases is the quarter energy capacity As important APEX usage enhancements. continued artificial spend and in version for the I team several HVAC intelligence manage redesigning we ECLYPSE roll their more advanced half the Distech though focused and the building over Distech to compute and APEX which to most out in of product the even engineering was helps for The and available products components, automation. buildings,

in by also UK, is Atrius We Norway. Ireland the Insights expanded for service and Building our local the of Building requirements. Atrius available additional now further availability Insights Germany, enabling languages and France, Spain it privacy

to take As I turn want the a I Karen, step call back. over to

We and with operating times. a which expect we sometimes are game dealing and in Omicron, are materialized to and to only whack-a-mole, continue can currently months be availability Input of a like few feel ago. unpredictable prices

of new associates. face ensuring effectively we will we satisfying these the and on and customer in As I optimistic focus environment. our challenges this in health ability well-being XXXX and maintain our remain to challenges, our manage about demand

long-term the great to for I'll will call on today and and who then deeper executing a I'll And remarks. for who transformation over performance. have remaining some the of be Q&A Karen, while are into team focused also company. our We turn now dive closing a the the take growth back

Karen Holcom

year. XXXX prior revenue period to year. through million, improved sales, net rate price the our I operating first of basis increase excess continue favorable This benefits the an environment. the cost was improvements. a majority growth by a year, benefits of recovery the of start dedication increase over This investments. this XXX profit primarily margin performance. fiscal sales costs first recognized XX% quarter of by and first work improved our to the by million, from prior transformational margin the to XX% payments. of prior same effective in by continue Adjusted operating service Reported Neil. while day-to-day quarter was performance I over both net segments the compared of of The of strong last navigate profit XXXX and performance share-based achievement the the increases to result effective was of to Gross product tax increase environment. cost thanking year. fiscal was our on was points levels, increase to business. this delivered $XXX first quarter management over XX.X%, price percentage due and the a In profit XXX end million continued rate want in improvement the business the XX over driven quarter given operating be productivity $XX to $XXX continued XX.X%. team in profit XXXX, priorities We our recent prior quarter increases. decrease was as in and sales XX.X%. our Net year. the of items of team's for tax prior an of points the XX.X% the their of discrete growth was was the the related an of offsetting XX.X% we in to of you, basis XX% The freight income material and Gross points significant driven fiscal Thank was were or XXXX, we a leverage as basis for of an the in The and was markets for of significant increase rate the a by decrease impressed sales of balance tax

around our of to XXXX items. We full for discrete year to rate tax expect normalize XX% absent these the

$X.XX Finally, earnings we And per or fiscal of saw -- $X.XX prior XXXX. over share EPS earnings share $X.XX the first a year. Diluted XX% significant diluted improvement fiscal XX% increased adjusted for of for increased per the of the year. the quarter over in or quarter diluted of prior $X.XX

the and $X.XX. $X.XX impact by EPS diluted was adjusted impacted approximately tax favorably program repurchase share Our

Moving on to our segments.

the network, grew our million This grew which Control go-to-market network, impact During our favorable increase Lighting sales improvements saw as result Lighting about to independent XX%. segment of well direct sales was efforts and demand increases. which prior XX%; driven sales were and These year. XX% quarter, strong the within the the $XXX improved versus and an price our a increases as environment of by direct

accounts channel cycles an Our Sales customers' declined prior and maintenance XXX is to retail sales quarter the quarter to renovations. year, the in uneven XX% of of the large performance be the renovation to with XX.X%. quarter. Adjusted in versus to XX% margin channel previously the year, prior million increase operating approximately in our and improving to XX% deferred began upon fiscal improved saw year versus $XXX basis this compared adjusted channel XXXX XX.X%. The corporate accounts in the points current of basis as quarter. first can XX% operating dependent XXX $XXX increased ABL improving profit operating operating million prior points for margin with approximately profit

our to Intelligent moving for Now on results the Group. Spaces

of the quarter sales in of our XX% approximately versus continued first increased approximately building Spaces' demand profit sales approximately profit first result $X the reflecting the million spaces year, versus the million primarily in to million operating the increased $X and $XX XXXX, For versus controls. quarter across operating million prior year prior strong increased Adjusted as a prior of XXXX $X of the $X growth. million to year. HVAC

Now to flow. cash turning

to net The X flows. activities cash decrease $XX This compared drive the was and year $XX for was of million. increased a to XXXX fiscal investment first of million solid generate reflects to inventory operating or XX% continue an prior from cash the growth. months in We

expenditures X% was million the income fiscal or CARES prior result Additionally, payments cash in impacted tax months withholding taxes flow the of $X invested deferral and year the sales by of Act. We capital of during net as of of timing X a the first XXXX.

our XXX,XXX repurchased we $XX around strategy allocation of on and the $XXX at price million stock per approximately continued average During for of shares an share. common quarter, execute capital to

under We authorization. have current remaining Board our approximately X.X million shares

priorities allocation capital Our remain the same.

continue to now to growth an capital current invest share to like maintain opportunity prioritize addressing in dividend when and We businesses, will create our shareholders. our to current note. to repurchases for few to for minutes in would permanent investments value topics is a I there allocate to of spend our acquisitions,

on First, environment. the pricing

As Neil customers. increase said, We at are for in while relationships orders the with time managing aggressively this effective same we week February. the our price placed announced price another balancing

pricing. strategic deliberate our We will be approach continue to to in

I update Next, would to integration. like on the OSRAM you

our expand business to our to our it chain. of brings into OSRAM of channel significant over addition control XXX contributed progress bought in through and The benefit American the the our in the very overall dilutive supply to made for integration delivering OEM over OSRAM expectations OSRAM. to We points profit. are the relatively technology, We ensure on positive basis DS we team is the that have integration North now was impact contribution There excited Acuity. growth operating OSRAM also part quarter. sales a gross this our acquisition was OSRAM is an margin, small but of The and profit to

quarter, have an have we that you this earnings to Finally, release. additional noticed metric may our added

around our and EBITDA We enable adjustments. and adjusted have the improve to of included reconciliation comparisons to easier EBITDA in tables consistency reported

drive to and income. growth operating to to continue we prioritize customers XXXX, will our sales As continue we navigate

We will to operator way our take over that Thank to to growth creates you also permanent questions. that long-term your and value today. I joining for shareholders. capital allocate a now in drives pass the for continue you us will

Operator

Thank you.

Credit Our first question John Walsh comes from Suisse. with

is now open. line Your

John Walsh

morning. Hi, good

Neil Ashe

Good morning, John.

John Walsh

little it comments your like profit bit Maybe and a the the performance. the I portion of cost Wondering some a Is bit little of were structure. in that the that? operating margin leverage if script. fixed kind you kind just fixed bucket, Or could through could also you non-freight your the talk of there. the are flowing Thank driving of first, sales just productivity SD&A really to part if give we color on appreciate on more stronger Looks you about able commissions. SD&A you.

Neil Ashe

I'll jump want first. in me you that? Karen, take

to said growth plan, that question. step sales turn along, Taking and margin. into all back, then So thanks John, the yes, for sales a growth to the as operating we've been has drive

And The that fixed vitality of the first step -- now of step that was cost. we're product second leveraging the efforts that we is did. the

and growth answer So sales dollars because parts both. the expenses. there's that continue And of a leverage. that say improvement smaller there to -- is I'd There's obviously question operating larger transformation of within the the in the number, will and fixed absolute are there to of additional provide your be

John Walsh

in in of to the not surprised guess, question early guide. maybe and very bit see going of and it then you're then bill perspective? and Thank retrofit if terms what color you're demand you. from decarb on seeing efficiency any from maybe growth change feel Obviously just a you about the so the I can year, Holophane no But And pass you little talk And And to renovation I'll then Great. benefit maybe a along. sales strong forward. about the on kind any passed yet? infrastructure seeing energy

Neil Ashe

out. Karen, Yes. I in I'll start. leave fill if anything

that financial provide of not on regular basis, fiscal framework. on this beginning the but to it at year, to the first our So rather intention framework fiscal that we is a of provided last year, the end that update

framework. that you're obviously, so, familiar And with

we combination As from a quarter. rest That had year look really this perspective, a sales by obviously, performance factors. of the driven was to of strong a the forward we

mentioned, obviously, market the First, as I strong end demand.

indicated, So demand leading building amount to our larger and I of continues a is strong, time is lead which be strong in up to, as orders.

demand normally year, at well as our -- processing to seasonal as pandemic we're a first which So generally lower due last quarter, as quarter, to quarter, you as the is normally level know, fiscal lower compares time. can. That effectively the the as those of orders is the first we

it's So combination of those factors. a

of demand. see to process look As the the we continuing continue rest we for -- sales that year, forward we're

So will not some our that satisfy of is we the normal, that demand. normal, of as said, is all so forward. customer to That priority, the of seasonality look but mute we impacts as

to the early So the this to and kind won't of be And other later second like expect quarter things, then first or obviously levels we a has some next year Christmas at it couple so normal year. of return quarter. point

Karen Holcom

you call accounts really Yes. corporate out, when a quarter year-over-year. would growth is had at John, strong The only I at thing that XX% it look channel, other

quarter-to-quarter And so that as well. can be inconsistent

Neil Ashe

And a your of to specced, about projects the started. then for to question to get and quarter. We lots designed finally, a start see take Candidly, on get not those Holophane funded and happen. in them to had quarter good yet. and a get But minute going get great industrial. it's Holophane the as to opportunity to future

John Walsh

Great. Appreciate along. it it. Pass

Neil Ashe

John. Thanks,

Operator

question next William Blair. with Ryan from comes Our Merkel

Your line open. now is

Ryan Merkel

everyone. Year. Hey, morning. Good Happy New

Karen Holcom

Good morning. Same to you.

Neil Ashe

Ryan. Hey,

Ryan Merkel

Neil, you're just Do is guess, with managing well So feel say chain, do market you're worst early wanted you a to it too is things? question. secondly, And I based I on you over? to supply Or then like share think that? how the taking start two-part

Neil Ashe

could information your it's are. I in so first we clear say we it's isn't about I've market, terms there question, here, frustrating on absolute since said that this got So that more where

time of of, basis I supply products; two competitors' and then have see right at believe, are the this chain, investments time. our As in we the be vitality, on products it's on gets that about we report, We, is second know. you'll have I is, The price see really indications I we've indicated making all are in the really right share. to The performed don't we and taking having that which think the surprised, identified, comments the the key then which question, is earlier. which my product the and sure our front, performance I is right place all at is than we've worst you it's answer short the as to which kind And the is we most over your which made -- factors, -- right right think and over? better continue of

Omicron saw coming. one no So

will our next and production labor if is our don't supply for of through from believe So we is I impact we perform that multiple what the our also the over know we're months. And therefore that source -- working of allowed chain to capacity, one what that. highlight hand, the have by I want to course example, but But well. mean several us I And on the we our has team. dexterity dexterity, so places,

Our reinventing incredibly adaptable. production. distribution through source systems. team they They're how our flow-through reinventing has reinventing been and factory schedule products. They're they the how They're

dynamically us we things to these change make continue better. So to

we're a supply the in my chain, be continue is for can so to going or better. it And little it uncertainty it's while expectation we that longer. way positioning gets Ryan, gets So this that for ourselves, to worse whether perform

Ryan Merkel

you And realization cover your sense. then when put through? price impact enough full Makes higher of then the see be the do will price the it. that costs? think you've Got to increases we'll And capture, on

Neil Ashe

Karen?

Karen Holcom

Yes.

Let with Ryan. that, me start

the lag in is have price also comments, of between timing when there we lot then costs a come that our we faster the a the see results. we when And increase than the mentioned in and costs, does. the price the As in

increases. we've now, you had know, as this as of price week, So five

course the commensurately of expect that you'll start so of year. to see we increase the of to the benefits year, the course throughout the accumulate while cost throughout also And

our some So are price just then bit and that see still if costs being to be said, offset I and the going monitoring but think benefit uncertain cost, of able and add, offset do, take also continue some and we'll still not And we're on we have from Anything what to focused Neil? a future else to on product productivity We're to margins. actions to improvements focused the to just price. in those. improve to again,

Neil Ashe

asked -- that the in Karen we trying I'd just orders get And end who is price made going it. and you up what when input an and Ryan, costs time the a we've whenever to end pricing placed. it a is comments turning I to we're earlier, decision, markets it's But top said honor orders we've see that what on on I into No, to driving as the Yes. able say, the -- lag my are a which being. to mentioned, important component provides margin. we've consistency in And from we're think prices for strategically, And as execute profit projects. strategic line the can lock between those as there's results, operating been

Operator

Research. Our next Jeff Vertical comes question from Sprague at

Jeffrey Sprague

Two just is One kind for maybe me. of housekeeping.

some On it, the comment expect what do guide should regularly don't that of of if the of framework to, through here, of that that, band on remains same? plan year you guess, Or kind this regardless the plan we you're you to materiality? printing you're update though, exactly the outside reevaluate I

Neil Ashe

is view be, we're use for that's so that for which Well, how -- the what me this we framework about we thinking Jeff. for the is term which to framework the you let my let give And philosophically, the reason the it be of is me because year. thanks mean question,

thinking that we provide think about are can we're you I evaluate so forward. it more important it's going collectively how doing we how then we that

the time, the that be year expected to to So year this what our to that's higher a for term framework. back it that's keep place. use want expectation in as which normal at growth framework guidance, we will we we also I is to opposed tie said why why you than and we

it. outlook an best about conversation to philosophically the to deliver and have intelligent back and So our qualitative general try And you that's to go of we can. We segments. results with the when and Day we you then kind that we the if how gave about want perspective of think Investor X you want our

Jeffrey Sprague

approach given us helpful, whole new with given prior framework/guidance Helpful, for but That's practices. you. Great. the all of

in Can come insight. per see business understand of that of kind there? given What of out the se of terms of nature kind street, do do type of back as and your how be of feet of But in people the you might we that retrofit/reno activity And be work on backlog activity not you season in for interesting. back kind broadly working thanks to at time? point that your any And sort the color projects, this on coming see of work? I to peak So backlog relates product orders. the book how it would the you it

Karen Holcom

Karen. is this Jeff, Yes,

We several are to and related seeing improvements renovation. retrofit in areas

As before, We're be industrial -- is the excuse strong me, year. slight continues we've for of and -- seeing market improvements office improvements strong said space. on us. Education the to a in time depending

renovations So strong. to be markets continue with all those

to It's and of bit lot back large are renovation lagging back reinvigorating That program, come in a like a see. that's a slower markets to said, good seems hospitality. to be retailers their we still As so coming the than others. bit

that seeing and And get our markets. their seeing orders in that agents channels activity are our similar the other we're we anecdotally, today. So in

Operator

Christopher comes at Glynn Our next question from Oppenheimer.

Christopher Glynn

from of strategic. happenstance, expansions ABL to I a necessarily think been the they question about ABL? America. North international I of into several you had range not different product talk hear arenas. Because about Are curious sort you mentioned a prospects I'm IGS. has Neil, outside

to in but qualifiers, international have outlook But is some the You difference that. -- there IGS? for materially, may a

Neil Ashe

opportunity Chris. Yes. Thanks, I some Great. question and about to talk more. the the appreciate this

for second group, So different between of a different lighting American European electricity, that -- standards, Asian ABL, is different or reasons, me different industry a structure. before number spaces North I get spend number into which lighting, let the is on a and

it makes lighting to to share and try America of business sense to done. as continue continue and focus for in us -- take to on North a lot we've So our

controller Distech and When there, broader technology spaces and both has think about the to of outside switching it Now America. the just the you North applicability group.

Europe. in the France, example, already strong So We're in is technology there Distech. present with for very

broader well. the earlier. So spaces spend about talked I And as let Distech a see of we portion Insights Atrius me the opportunity for U.S. international a outside Building second.

Insights and consolidating the Building ability that means which data. costs Atrius making what drove understand software energy this to their action what take energy to we're on case, way. exactly were, it allows them analyze that a over provides to any facility then in provide As see costs the applications ability and the consistent time those What Atrius in and

And so that the gives which pathway envision future. European we've introduced, is that in with that Distech continue Atrius markets now I European of for localize a and to for what combined Distech done that solutions the us expansion both we the

Christopher Glynn

the high about curious was top framework I And line ABL Great. for single digits.

a I Is of guidance But that correct? of explanation quarter strength. fourth end couple rather the might to seasonality into of backs Just exit first implication. ratification kind of if the think heavier the that be of given I we indicated second to next on your quarters, and think the we'll year, you kind tease out flattish attribute in a quarter quarter normal seasonality normal than that

Neil Ashe

correct. That's

Operator

question Goldman Lee from next at Sachs. Our comes Brian

Miguel De Jesus

to Miguel wanted This I for Brian. is start on quick. real the just line

along On the price the price is curious, increases, this fifth all impact were on those of announcements, increase you guess, And just mentioned the the I the X all of -- quarter's fifth those those one announced realized announced? those be quarters, X prior future will Or on in that with increases? is there realized through Or results? week. still flow of are we price then just left this you to fully

Karen Holcom

you, Thank Yes. Miguel.

higher typically we would than meaningfully is backlog what see. our mentioned, we As

a we bit more announced, of price they So and the were of just come the might terms that come I they would normal in were timing through. impacted backlog think increases increases are that in of But still how price when today, the flow times, see then you through there's where when faster. will

As we also adjusting our backlog pointed not repricing it. and out, we're

it that was prices time the were the order the implemented at So reflects placed. only

through. in will see some of coming So a pricing you lag the

Miguel De Jesus

up a You that there's And than maybe material been just see announced as a a had sound I increases. But are price built go mentioned like increases? anticipate customer that prices if in have further follow-up, possibility to there in for quick guess, demand orders I prices. then you of And It a in higher but pull-forward customers, the think responding it, given then things any price prior you some if certain I a maybe possibility you maybe level, up Great. go a expected? do and when costs you mentioned how Okay. doesn't too. lag call, decline customers to

Neil Ashe

one. I'll take that

So first of are like prices. this don't therefore, prices changing, all, -- But that where and expectation prices all to a likes We customers one are are a up. like going go is there's time general that higher don't our them. recognizes everyone them, costs no

as components increases me of price couple is let our are, on a I earlier, are putting taking but -- to mentioned strategy which and that So the end important that. markets of spend the -- forward. we second price, of Part are of all the a

it which is have we will right and which The pricing is that, end day, at the the vitality; that levels; first about back right to our we're trying product, in need to believe come service place, is the the be right strategic product prudent of to the at price. because effective we

the can and our customers accordingly. And they so can the that investment our so making plan the honoring relationship that orders investment with our they in the expect that, we're see of and markets projects -- is end prices of in -- their part we're

demonstrating right growth, driving is they excess over input change are And the go strategy going So at And are have to that that could our we the on place price. potentially have is of strategy the an cost is the in is our at same prices direction. product either and in we market, right that, right course, time? they time. margins the in But impact will which we're expand think and price will. to Of to leveraging

Miguel De Jesus

more, I I quick. And a appreciate that. could X I had real on It's in OSRAM. just if squeeze

results. quarter's point of a XXX now just sales basis to mentioned this a point You XXX basis contribution kind --

over the course basis contribution that, 'XX, the of line. top mentioned I to it points think be fiscal in the would past, at you XXX

of to signs that's that to point accelerate? So are are maybe framework? still starting XXX seeing you basis Or tracking you sort that

Karen Holcom

let Yes, take that one. me

this it's just end really track, said, well, remember, we to year. our going of portfolio XXX is capability. as the of our towards product and the have the is we points. the as that we're buy it OSRAM, basis say For really part quarter on that, acquisition is pleased And I did would What and

own is a towards amount it say will to the have assume the we our But a see, So the in quarters. we basis off of of I fourth it would back did so months few X reasonable since points in it results, then will first for bit kind XXX you end, tail quarter.

Operator

question at next UBS. Chris Our comes Snyder from

Christopher Snyder

elevated teens of low which organically ABL high follow single-digit we if given up company to first improving that quarter, up kind watching with this of I seems unlikely, guidance. Are adding the single-digit And and out here a be math and non-res on year the growth embeds XXX rest for? But the the correct. backlogs want the organic And growth of activity. the my maybe to I bps low there in growth M&A hard commentary. of is highly more headwinds is framework guidance understand that XXX should than

Karen Holcom

framework, as the as of And you growth that the kind reflective this seen or the Chris, that gave see This sales framework year. not year. and past. that Neil in of what have was Yes. we abnormally high we XX% growth seen is said, XX% the in we year, it's started we've that a

So math, the you the the of the paint numbers kind at by year. framework the and we math give want to for and understand to just your look you of I part equation, think

the of a year. The would first half prior low I year, say, was to comparison

So would and framework, you it's I to a to a that. intend of Neil, don't you then are and update -- say that. And seeing anything bit so add? wanted we

Neil Ashe

No, nothing to add.

Christopher Snyder

before should and cadence Or full achieving half this we as year back the a above latest half? we XX% is about the gross a back to as in for of down it XX% follow-up, the guidance price And then steps And view think needed fair maybe margin recovery? assume to plus, that cushion? increase more the QX is get back the

Neil Ashe

far times so this on So Chris, said let multiple I've me what reiterate call.

a we of don't framework our year, First, to is the intend basis. on provided framework that the and regular beginning update at a we

doing highest can consistent and with investment deliver of the our are transformation and the to we're Second, that everything we results possible long-term growth company.

Third, we've into profit operating grown margin. sales growth, and that we've turned

we're that managing growth. profit to supply So we the effectively sales deliver and are both share, on price chain we we've operating taking are that demonstrated and getting

Operator

comes Wells at Fargo. Joe Our next question from O'Dea

Joseph O'Dea

call that which you've operating And about last relate the whether ago is price required you degree just changing environment. whether you either to anything of months what you And most unfold First that could indications or question recently going what things reported seen can you've to saw price if seen action? the X seen worse. and the maybe again, out to you that be gave taking or announced that's better increase, on up since you talk you've stabilization. you're that more And pricing kind

Neil Ashe

the for Thanks picking Joe, Yes. question, up I you coverage. appreciate and

view As see availability inputs to supply to in we're we demand, the been of based products. we've to that and the tree access as dynamic chain and top really strong continue the the on of said, manufacture -- necessary is we really each management

well. kind We've and last, prices And That be regular been when so going a to change the to basis, environment. and was changing a and are this it expectation that you our we dynamic as about laid was continuing are probably that. out framework therefore, talked our talk to on prices to we of going

increased. we're kind maybe the that anecdotes provide of indication have by, not prices what an we're to of So we some surprised about. talking And fact give obviously, can

about the normally point. in is talking of about source goods the steel, water. like when our Asia, about finished we're talking -- of you chips, So one think that obviously, interesting we're we that of the talking at That's about transportation this on about days about And transportation. the of XX for almost talking inputs, we're approaching and kind we're time from aluminum, kind the things components resin. is examples normal And time talking around, say, we're days XX

on on an that's That things. That an a of So that timing impact anecdote impact And this. inventory. example timing one cost, on one obviously. on timing just has has number an has impact that has impact an and -- of combating how we're

we So continue year. yes, expect your of -- to the the question prices the is change the of we year, course change prices over to over we to expect the course to expect costs and answer to

Joseph O'Dea

this think your I point. some buybacks and a appreciate cash But how And ongoing second inventory and current think to income a when cash inventory the about color. you whether cushion for and about appetite we free on just of the thinking question adjusted this is cash then kind flow that we related the build, comfortable net patient to point year, this given generation, deployment of preference on be at should then levels is at deals. versus the cash be what conversion

Karen Holcom

is This Karen. Yes.

I wanted First, to allocation priorities. our capital reiterate

our in first our to current of invest businesses. before, said is the priority growth we've As

The second to invest is in M&A.

permanent dividend. create our repurchases our we shareholders. value And believe for maintain then will to to share is third do fourth, there's we an when opportunity The

kind and to increased support about priorities environment at reasons. points So just talked the a Really, on lot that inventory, we're those with let me first One, and a up start that inventory. we've is on X about if for comment today. few the you reasons, your the look X of key in inventory make demand seeing X

secure to there when is is Second availability. supply

then So the products the on to inventory. buy and shortages, times that goes lead see that's Neil just secure to we are future the what already third And that. our referenced certainly water supply some with orders, opportunity on for components given we when the doing longer of are

business. for So growth in the inventory of the we are investing

continue -- So our those value to we do create to to And we create will about share see repurchases, as then those. direct focus to priorities. question answer opportunity are We'll your so. value for on that shareholders,

Operator

& Osborne question comes Jeff next Our at Cowen from Company.

Jeffrey Osborne

to that, it just what I remind Two Karen, One, that is put is questions what can if just revenue And could us it is But order lag recognition. you is what on on the in you stretching today? out. typical end. and perspective was from in times you my that normalized mentioned wondering

Karen Holcom

Yes. we're but would have Typically, on we the seeing it would seen not elevated you projects, backlog depends have seen, today. like

discussed with the a it be few availability of stretching So of kind that. the components, supply challenges we've the But times, it months. could lead the few could it just chain weeks, on beyond be a based is that

we months orders. It's of so. upwards be timing orders. can when But X the not or are can these the just orders. all They're it placed of speculative really ship So

Jeffrey Osborne

Got recent product XX, sense just now, product us give That's any be it availability months Neil. a helpful. UVC You for update it. in Or would line? successful? maybe helpful. has calls, haven't And of the XX you on then but can that and earnings in the been mentioned momentum

Neil Ashe

Yes, that. thanks for

to traction with kind robust we expectation line seen larger now people We've consistently. see. as a that as to several I a -- it's some adaptation for a environment. GUV it view of But not built don't for buy ago, of market kind built We'll of we rather us. the have on individual investment. this said, we product but an value as that I game-changer -- will the quarters a said, a would the say, we But recognize As accounts

becomes we're additional I think investments spaces And to the it every -- do to we've of the clear have keeping that more longer-term variant, best products collectively portfolio got going in safer. GUV make with that. to

it be. our But think large isn't as positioned. So think I the as extent to hoped had some market the would market way, we're I comes well the

Operator

comes question from at next Baird. Tim Our Wojs

Timothy Wojs

basis normally, XX back down levels. kind basis to kind just from I points gross QX just to just from want XXX Maybe think just run one, of margin of quarter seasonality. of is perspective I the weakest to And typically it's your QX first structurally. points a kind

kind And that last but just to so you the of how seasonal don't expect calibrated QX of comp give just guidance, this year, to play to trend we have make tough correctly. want you sure is out given know a year, QX? I kind I of necessarily want kind would similar quarterly to

Neil Ashe

a sequential or basis year-on-year a basis? on about talking you are Tim,

Timothy Wojs

Sequential.

Neil Ashe

kind me now what's blowout gross had between talked of extensively margin address the And and -- we've and -- let then margin So we and a last obviously, year. about quarter changed why.

first we from sequentially look -- and first to seasonality. address quarter second, quarter as the the So at fiscal

the quarter, in Years. second Christmas, have obviously, we So we have New

line cost in impacts a depress the because the supply our makes leveraging chain. have second quarter, quarter top fixed than which in will naturally of the sequential of first of a basis which lower We the on lot margin gross

I've ultimately to -- that's So -- work a that, doing And we've framework general demand. to said, will as outline. for how we're we're kind as we're is. And the now lead gave prioritizing of and which what gross through said we're the of customer trying I this reiterated, kind really Karen margin

Timothy Wojs

Okay.

like So more last year to the it say. sounds seasonal framework maybe than would be

terms is kind basis? sense, a cyclical change end I go-forward I'm or kind X and trying just is than X that's if lot to a in in of just people of kind then pricing and thinking lighting now. if do about think think I there's don't thinking you know do like, of the lighting deflation in last of there's you And think mean, market people customers mindset picture, on environment customer Or I that of understand, are mean, of now? kind maybe the inflation about projects years, how that thinking speccing a the benefit years the potential phenomenon lighting today over hopefully, there of and guess, the I of conceptual general. X those about flipped like how right to but Okay. has are terms kind around lighting and this clearly think in of been maybe makes terms about in ago. big a how quoting in there's you that when difference a about how

Neil Ashe

as philosophical, the changed this at think, I Yes. I kind market emphasized going product a impact Pro to think perspective. The Bay the I general and think be our opposed anecdotal I the of that how fast for referenced Tim, think mean, it Compact because has I so product point, -- the less people market which it the to product, us, I that the because end of value to to and changing this on with longer-term a interact the to a the quality of value STACK that breadth in the can install, changes marketplace today the it impact be relates costs is as the responding it for now. of the past, opportunity phenomenon from game-changer. which High I flexibility. is the product of has vitality, to product, I where kind game-changer are say specifically, chain a in the will market more is we're right is

So those things value are permanent changes. increases which are permanent

we value And so of accessing that. other can areas and participating that deliver, we're in we're

less control for example, if, or So labor use the lot the there's you to a install, luminaire value then lot of a solution. the on pressure less

I will the We've can as levels. the price we place that on said, the products, high of those I and kind consistent the on that also continue. the so pushed right right at strategically, pushed also around product think we be deliver -- that's quality. it service why right in that's So product

said as -- I've terrible in general up think So I think are broadly? the will past, CEOs I And inflationary environment the continue economists. that's for debate. the generally

follow. the believe to for periods this that But to both what and wouldn't say I anyway. I that So specific well I think we're us do had are making the about changes that period positioning us that

Operator

Neil I'd showing to like you. And call time. closing questions in Thank turn queue no for this back at Ashe any remarks. I'm the to further

Neil Ashe

you. Thank

again reiterate our Before our I'm New recognized. ESG pleased these we are in being strategy And to Happy I to attention a bear Report. all and of publication of EarthLIGHT made us where substantial we time driving break, our pleased We've both improved really capital for want XXXX. to where XXXX rating Year. the Carbon and I say testament thank We're joining the efforts with to It's really you and over progress on your really We're In in Acuity we December, wanted appreciate your you Disclosure pleased ESG a and initiatives. Project going, for are. the vastly team periods. with our we're prioritizing investing prior to Brands.

again about X your look talking to for thanks in we to you forward months. So interest, and

Operator

today's for participating. concludes conference This call. you Thank

You disconnect. may now

Acuity Brands (AYI) 7 Jan 222022 Q1 Earnings call transcript