Acuity Q4 Adjusted EPS Rises 11% as Intelligent Spaces Sales Grow 17%

Acuity (NYSE: AYI) reported higher fiscal fourth-quarter sales and earnings as continued growth at Acuity Intelligent Spaces offset a slight revenue decline and lower adjusted profitability in its lighting business. The company also set a fiscal 2027 outlook calling for net sales of $4.7 billion to $4.9 billion and adjusted diluted earnings of $20.50 to $22.00 per share.

Net sales for the quarter ended in fiscal 2026 rose 2.9% to $1.244 billion from $1.209 billion a year earlier. Adjusted operating profit increased 3% to $233 million, while adjusted operating margin edged up 10 basis points to 18.7%. Adjusted diluted earnings per share rose 11% to $5.77 from $5.20.

On a GAAP basis, operating profit increased to $227 million from $181 million, and operating margin expanded to 18.2% from 14.9%. Net income rose to $173 million from $114 million, while diluted EPS increased to $5.63 from $3.61.

The GAAP results included a $45 million tariff refund. Acuity excluded that benefit, along with other specified items, from its adjusted calculations. Adjusted gross margin was 50.2%, compared with 48.9% a year earlier, while GAAP gross margin was 53.8%.

Intelligent Spaces drives growth

Acuity Intelligent Spaces, or AIS, remained the company’s primary growth contributor. Segment sales increased 17% to $298 million from $255 million. Adjusted operating profit rose 36% to $74 million, and adjusted operating margin expanded 350 basis points to 24.9%.

GAAP operating profit at AIS was $65 million, representing a 21.7% margin, compared with $28 million and 11.0% a year earlier. The segment’s adjusted results exclude items including amortization of acquired intangible assets, share-based compensation, special charges and a $13 million tariff refund.

Acuity Brands Lighting, or ABL, recorded sales of $959 million, down 0.4% from $962 million. Adjusted operating profit declined 7% to $180 million, and adjusted operating margin contracted 130 basis points to 18.8%. On a GAAP basis, ABL generated operating profit of $189 million and a 19.7% margin, with the reported results including a $32 million tariff refund.

Cash generation supports capital allocation

For fiscal 2026, cash provided by operating activities increased to $826 million from $601 million. Free cash flow, defined as operating cash flow less capital expenditures, rose to $748 million from $533 million after $78 million of capital spending.

The company allocated $287 million to share repurchases during the year and repaid $200 million of debt. Its stated capital-allocation priorities remain investing in existing operations, pursuing mergers and acquisitions, increasing the dividend and repurchasing shares.

Fiscal 2027 outlook

For fiscal 2027, management expects ABL sales to range from flat to low-single-digit growth, while AIS sales are projected to grow at a low- to mid-teens rate. The resulting companywide net-sales outlook is $4.7 billion to $4.9 billion, with adjusted diluted EPS expected to be between $20.50 and $22.00.

The outlook assumes net interest expense of $3 million to $5 million, an effective GAAP tax rate of about 23%, acquired-intangible amortization of approximately $95 million and share-based payment expense of $60 million to $65 million. Acuity also expects depreciation of about $70 million, capital expenditures of $85 million to $100 million and share repurchases of $40 million to $60 million.

Management said it does not expect to update guidance quarterly. The projections are based on quantitative and qualitative assumptions and remain subject to risks and uncertainties that could cause actual performance to differ materially. Acuity also noted that a GAAP reconciliation for its forward-looking adjusted EPS range is unavailable without unreasonable effort because of the variability and limited visibility of certain assumptions.