Executive Summary
Acuity Brands delivered a solid start to fiscal 2025 with improved profitability and prudent capital allocation, supported by ongoing product vitality and a growing Intelligent Spaces ecosystem. Total net sales for QQ1 2025 were $951.6 million, up 2% year over year, driven by sustained growth in the Lighting segment and a 15% year-over-year expansion in Intelligent Spaces (ISG) revenue to $74 million. The company posted adjusted operating profit of $159 million and an adjusted operating margin of 16.7%, reflecting gross margin strength (47.2%) driven by product vitality, pricing discipline, and productivity improvements. GAAP net income was $106.7 million with diluted earnings per share (EPS) of $3.36; management highlighted the EBITDA framework and internally generated cash flow, with free cash flow of $113.3 million and cash balance of $936 million at quarter end. Notably, Acuity closed the acquisition of QSC, expanding the Intelligent Spaces platform; the company anticipates full-year 2025 net sales of $4.3–$4.5 billion and adjusted diluted EPS of $16.50–$18, with interest expense of $20–$25 million and ongoing integration costs. Management stresses a growth-first agenda: grow with the market, take share, and penetrate architectural and design verticals via Design Select and Contractor Select, while leveraging Distech, Atrius, and QSC to create data-enabled, energy-efficient spaces. The near-term focus remains on integrating QSC, expanding margins across both Lighting and ISG, and maintaining disciplined capital allocation (dividends, buybacks, and selective debt financing).
Key Performance Indicators
Key Insights
Revenue: Net sales of $951.6 million, up 2% YoY; gross profit $449.3 million, gross margin 47.2% (YoY gross profit up 4.88%, QoQ down 8.06%). Operating income $133.3 million, operating margin 14.0% (YoY +0.3%, QoQ -15.1%). Net income $106.7 million, net margin 11.2% (YoY +6.06%, QoQ -10.26%). Earnings per share: GAAP diluted EPS $3.36; adjusted diluted EPS $3.97 (YoY: EPS up ~7%, QoQ: down modestly). Cash flow: net cash provided by operating activities $132.2 million; free cash flow $113.3 milli...
Financial Highlights
Revenue: Net sales of $951.6 million, up 2% YoY; gross profit $449.3 million, gross margin 47.2% (YoY gross profit up 4.88%, QoQ down 8.06%). Operating income $133.3 million, operating margin 14.0% (YoY +0.3%, QoQ -15.1%). Net income $106.7 million, net margin 11.2% (YoY +6.06%, QoQ -10.26%). Earnings per share: GAAP diluted EPS $3.36; adjusted diluted EPS $3.97 (YoY: EPS up ~7%, QoQ: down modestly). Cash flow: net cash provided by operating activities $132.2 million; free cash flow $113.3 million; cash balance $935.6 million at period end. Balance sheet: total assets $3.864 billion; total liabilities $1.4009 billion; total stockholders’ equity $2.4634 billion; total debt $569.6 million; net debt negative $366 million (net cash). Liquidity and efficiency: current ratio 2.98; quick ratio 2.38; cash ratio 1.44; EBITDA $162.5 million; EBITDA margin 17.1%; return on equity 4.33%; debt-to-capitalization 18.8%.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
951.60M |
1.81% |
-7.82% |
| Gross Profit |
449.30M |
4.88% |
-8.06% |
| Operating Income |
133.30M |
0.30% |
-15.10% |
| Net Income |
106.70M |
6.06% |
-10.26% |
| EPS |
3.45 |
6.48% |
-10.62% |
Key Financial Ratios
operatingProfitMargin
14%
operatingCashFlowPerShare
$4.27
freeCashFlowPerShare
$3.66
dividendPayoutRatio
4.22%
Management Commentary
Key strategic and operational takeaways from the earnings call: 1) Strategy and growth algorithms: Management reiterated a growth framework to grow with the market, take share, and enter underpenetrated verticals, emphasizing product vitality, service levels, and technology-enabled productivity across both Lighting and Intelligent Spaces. 2) QSC acquisition and ISG expansion: Neil Ashe highlighted the QSC acquisition as a differentiator in data interoperability and space management: "we can now control both how a space is managed and what happens in that space with our disruptive technologies that promote end-user satisfaction through data interoperability." Karen Holcom noted the formal incorporation of QSC into full-year guidance. 3) Design Select and Contractor Select momentum: Management cited early traction in Design Select (design community focus) and the introduction of new products in Contractor Select (TruWrap and REBL Round High Bay) to reduce SKUs for distributors and increase project configurability. 4) Outlook and guidance: The 2025 full-year outlook was updated to incorporate QSC for net sales of $4.3–$4.5 billion and adjusted diluted EPS of $16.50–$18, with 20–25 million in annual interest expense and ongoing integration costs. 5) Channel dynamics and macro considerations: The leadership emphasized improving market conditions into 2025, with C&I channels showing stronger performance than retail, and indicated potential tariff-related actions as events unfold, noting preparedness but limited near-term action in response to tariffs.
We closed the acquisition of QSC last week. Through Distech, Atrius and QSC, we can now control both how a space is managed and what happens in that space with our disruptive technologies that promote end-user satisfaction through data interoperability.
— Neil Ashe
Our updated expectations for full year fiscal 2025 is that net sales will be within the range of $4.3 billion and $4.5 billion for total AYI, and we expect adjusted diluted earnings per share within the range of $16.50 to $18.
— Karen Holcom
Forward Guidance
Management’s 2025 guidance reflects the inclusion of QSC and a continued emphasis on high-value Lighting products and ISG solutions. Net sales are guided to $4.3–$4.5 billion for the full year, with adjusted diluted EPS of $16.50–$18. The company expects annual interest expense of $20–$25 million and will incur integration costs and purchase accounting adjustments related to the QSC acquisition. The QSC platform is expected to contribute to ISG growth through data interoperability and space management enhancements over the next 12–24 months, with potential revenue synergies and modest cost synergies realized over time. Risks to the outlook include potential tariffs, inflationary pressure, and project delays in large C&I installations. Investors should monitor: (1) progress of QSC integration and margin accretion, (2) design and contractor Select adoption rates, (3) ongoing gross margin management at ABL amid technology investments, and (4) the pace of Distech/Atrius/QSC cross-selling and customer engagement with end-to-end space solutions.