Acuity Brands, Inc. is comprised of the Acuity Lighting Group and Acuity Specialty Products. The Acuity Lighting Group is the world's largest lighting fixture manufacturer and includes brands such as LithoniaLighting, Holophane, Peerless, and Hydrel. Acuity Specialty Products is a leading provider of specialty chemicals and includes brands such as Zep, Enforcer, and Selig. Acuity Brands Inc. has a market cap of $1.57 billion; its shares were traded at around $36.33 with a P/E ratio of 14.7 and P/S ratio of 0.9. The dividend yield of Acuity Brands Inc. stocks is 1.4%. Acuity Brands Inc. had an annual average earning growth of 26.4% over the past 5 years.
Highlight of Business Operations:Acuity Brands uses available cash and cash flow from operations, as well as proceeds from the exercise of stock options to fund operations, and capital expenditures, to repurchase stock, to fund acquisitions, and to pay dividends. During the three months ended November 30, 2009, the Company received $0.8 in cash primarily from stock issuances in connection with stock option exercises. These receipts were more than offset by returns to stockholders during the first three months through the payment of $5.6 in dividends. Acuity Brands available cash position at November 30, 2009 was $48.3, an increase of $29.6 from August 31, 2009.
The Company generated $41.0 of net cash from operating activities during the first three months of fiscal year 2010 compared with $8.2 of cash used in the prior-year period, an increase of $49.2. This increase was due primarily to the cash flow impact of decreased operating working capital (calculated by adding accounts receivable, net, plus inventories, and subtracting accounts payable) in the first three months of fiscal year 2010 compared with an increase in operating working capital in the prior year period and the rise in other current liabilities in the first three months of fiscal year 2010 compared with a decline in the prior year period. Operating working capital decreased by approximately $4.5 to $201.4 at November 30, 2009 from $205.9 at August 31, 2009, due primarily to operating working capital associated with lower levels of accounts receivable driven by lower sales volumes and a relatively steady accounts payable level in the current period as compared to a large decline in the prior-year period. The decrease in accounts payable during the first quarter of fiscal 2009 was due mostly to a significant reduction in purchases in relation to lower anticipated sales volumes. This reduction in accounts payable was not repeated in the first quarter of fiscal 2010. Additionally, finished goods inventory increased during the first quarter of fiscal 2010 due to the replenishment of finished goods inventory from year-end levels as consistent with the prior-year period and higher in-transit goods attributable to orders placed ahead of upcoming holidays in certain international locations. The period over period improved cash flow due to other current liabilities was primarily attributable to higher incentive compensation payments during the first quarter of fiscal 2009 as compared to fiscal 2010. Management believes that investing in assets and programs that, over time, will increase the overall return on its invested capital is a key factor in driving stockholder value. The Company invested $4.3 and $4.5 in the first three months of fiscal year 2010 and 2009, respectively, primarily for new tooling, machinery, equipment, and information technology. As noted above, the Company expects to invest during fiscal year 2010 approximately $30.0 for new plant, equipment, tooling, and new and enhanced information technology capabilities.
As noted above, the Company retired $175.7, or 87.9%, of the $200.0 publicly traded notes due in August 2010 through the execution of a tender offer paying a purchase price of $1,050.91 per $1,000.00 (whole dollars). The loss, including expenses, on the transaction was approximately $9.5 and will be recorded by the Company in the second quarter of fiscal 2010.
During the first three months of fiscal 2010, the Companys consolidated stockholders equity increased $22.0 to $694.2 at November 30, 2009 from $672.2 at August 31, 2009. The increase was due primarily to net income earned in the period, as well as amortization of stock-based compensation, foreign currency translation adjustments, stock issuances resulting from the exercise of stock options, and purchases under the Employee Stock Purchase Plan, partially offset by the payment of dividends. The Companys debt to total capitalization ratio (calculated by dividing total debt by the sum of total debt and total stockholders equity) was 24.8% and 25.6% at November 30, 2009 and August 31, 2009, respectively. The ratio of debt, net of cash, to total capitalization, net of cash, was 20.7% at November 30, 2009 and 24.1% at August 31, 2009. The December financing activities, which includes the issuance of the $350.0 Notes and the repurchase of approximately 88% of the $200.0 notes due in August 2010, effectively increases the debt to total capitalization ratio.
The Company paid cash dividends on common stock of $5.6 ($0.13 per share) during the first three months of fiscal 2010 compared with $5.3 ($0.13 per share) during the first three months of fiscal year 2009. The Company currently plans 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.
Other expense for Acuity Brands consists primarily of interest expense and foreign exchange related gains and losses. Interest expense, net, was $6.7 and $8.0 for the three months ended November 30, 2009 and 2008, respectively. Interest expense, net, decreased 16.3% in the first quarter of fiscal 2010 compared with the first quarter of fiscal 2009 due primarily to lower average outstanding debt balances in conjunction with a decrease in interest income earned on lower invested cash balances and lower interest rates. The unfavorable fluctuation in miscellaneous expense (income) of $4.7 to $0.5 of expense in the first quarter of fiscal 2010 compared with $4.2 of income in the first quarter of fiscal 2009 was due primarily to the impact of exchange rates on foreign currency items.
Read the The complete ReportAYI is in the portfolios of John Keeley of Keeley Fund Management, Chuck Royce of ROYCE & ASSOCIATES, Kenneth Fisher of Fisher Asset Management, LLC.