Acuity lifts profit margins as sales growth slows
The lighting and building-controls supplier reported a 420-basis-point expansion in operating profit margin to 16.1%.
Acuity Inc. (AYI) posted a sharp rise in profitability in its fiscal third quarter even as revenue growth continued to decelerate. The lighting and building-controls supplier said operating profit surged 38.3% from a year earlier to $193.3 million.
The quarter marked a clear inflection: while net sales grew just 1.6% year-over-year to $1.2 billion—slowing from 4.9% in the prior quarter and 20.2% in the first quarter of the fiscal year—profitability metrics accelerated. Diluted earnings rose 46.2% to $4.56 a share, outpacing the 26.1% growth in the second quarter and 14.0% in the first.
The divergence was driven by margin expansion. Operating profit margin widened 420 basis points to 16.1%, a sharp improvement from the 160-basis-point expansion in the prior quarter and flat performance at the start of the fiscal year. Gross profit margin also strengthened, rising 220 basis points to 50.6%. The company attributed the gains to productivity initiatives and lower material costs, though it also received $6.4 million in tariff refunds during the quarter.
Performance varied by segment. Acuity Brands Lighting (ABL), the company’s largest unit, saw net sales decline 1.9% to $905.2 million, extending a downturn that began in the first quarter. Operating profit margin in the segment, however, expanded 320 basis points to 17.7%, reversing a 20-basis-point contraction in the prior quarter. Acuity Intelligent Spaces (AIS), which includes building-automation solutions, posted a 14.9% sales increase to $303.5 million, though growth decelerated from 44.7% in the second quarter and 250.2% in the first, when the QSC acquisition was included. AIS’s operating profit margin jumped 820 basis points to 18.6%.
Cash flow strengthened, with net cash from operating activities rising 30.4% year-to-date to $520.2 million. The company also accelerated share repurchases, buying back $230 million in stock through the first nine months of the fiscal year, up from $91.3 million in the same period a year earlier.
Acuity did not provide updated guidance for the full fiscal year. The results underscore the company’s ability to drive profitability even as top-line growth moderates, though the lighting segment’s persistent weakness remains a headwind.