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Acuity Brands Inc. Reports Operating Results (10-Q)

January 10, 2011 | About:
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10qk

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Acuity Brands Inc. (AYI) filed Quarterly Report for the period ended 2010-11-30.

Acuity Brands Inc. has a market cap of $2.57 billion; its shares were traded at around $59.77 with a P/E ratio of 28.74 and P/S ratio of 1.58. The dividend yield of Acuity Brands Inc. stocks is 0.87%. Acuity Brands Inc. had an annual average earning growth of 6.8% over the past 10 years.AYI is in the portfolios of John Keeley of Keeley Fund Management, Columbia Wanger of Columbia Wanger Asset Management, Steven Cohen of SAC Capital Advisors, Kenneth Fisher of Fisher Asset Management, LLC, Chuck Royce of Royce& Associates, Mario Gabelli of GAMCO Investors, Jeremy Grantham of GMO LLC.

Highlight of Business Operations:

The Company uses available cash and cash flow from operations, as well as proceeds from the exercise of stock options, to fund operations and capital expenditures, repurchase stock, fund acquisitions, and pay dividends. The Companys cash position at November 30, 2010 was $152.2, a decrease of $38.8 from August 31, 2010. During the three months ended November 30, 2010, the Companys change in cash consisted primarily of cash paid for acquisitions (net of cash assumed) of $36.2, capital expenditures of $6.7, dividends to stockholders of $5.6, and $2.9 in repurchases of common stock, which were partially offset by $5.3 of net cash generated from operating activities and cash received from stock issuances in connection with stock option exercises of $3.3.

The Company generated $5.3 of net cash from operating activities during the first three months of fiscal 2011 compared with $41.0 of cash generated in the prior-year period, a decrease of $35.7. This decrease was due primarily to the cash flow impact of higher operating working capital (calculated by adding accounts receivable, net, plus inventories, and subtracting accounts payable) and a decrease in other current liabilities in the first three months of fiscal 2011 compared with the prior-year period. Operating working capital increased by approximately $29.4 to $238.5 at November 30, 2010 from $209.1 at August 31, 2010, due primarily to increased raw materials and finished goods inventory, and lower accounts payable. The increase in raw materials was due primarily to strategic purchases of certain commodities and components to better support customer service and relocation of production. The Company expects to begin drawing down the raw material inventory in the second half of fiscal 2011 once the production moves are completed. Additionally, the reduction of accounts payable was attributable to the timing of payments in the current period. Net cash from operating activities was also negatively impacted by a decrease in other current liabilities due primarily to the payment of employee annual incentive compensation, which was attributable to fiscal 2010 performance.

The Company paid cash dividends on common stock of $5.6 ($0.13 per share) during the first three months of fiscal 2011 compared with $5.6 ($0.13 per share) during the first three months of fiscal 2010. The Company currently plans to continue to pay quarterly dividends at a rate of $0.13 per share; however, each quarterly dividend must be approved by the Board of Directors, and the actual amount to be paid, if any, is subject to change.

Net sales were $425.0 for the first quarter of fiscal 2011 compared with $391.7 for the same period in fiscal 2010, an increase of $33.3, or 8.5%. For the three months ended November 30, 2010, the Company reported net income of $24.4 compared with $23.3 earned in the prior-year period. Diluted earnings per share for the current fiscal quarter increased 5.7% to $0.56 from $0.53 for the prior-year period.

Gross profit for the current period increased $14.8, or 9.2%, to $176.1 compared with $161.3 for the prior-year period. Gross profit margin increased by 20 basis points to 41.4% for the three months ended November 30, 2010, from 41.2% in the year-ago period. The increase was due primarily to the rise in overall sales volumes, savings from streamlining actions, and favorable contributions from acquired businesses. These benefits were partially offset by the impact of higher materials and components costs, which the Company estimates added approximately $2.0 in incremental expense in the first quarter of fiscal 2011 compared with the prior-year period.

Other expense (income) for the Company consists primarily of net interest expense and foreign exchange related gains and losses. Interest expense, net, was $7.5 and $6.7 for the three months ended November 30, 2010 and 2009, respectively. The increase in interest expense, net, was due primarily to higher average outstanding debt balances. The increase in miscellaneous expense to $1.2 in the first quarter of fiscal 2011 compared with $0.5 in the first quarter of fiscal 2010 was due primarily to the unfavorable impact of exchange rates on foreign currency items.

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