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Oct. 27, 2021, 9:14 a.m. EDT

10-K: ACUITY BRANDS INC

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(EDGAR Online via COMTEX) -- Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations The purpose of this discussion and analysis is to enhance the understanding and evaluation of the results of operations, financial position, cash flows, indebtedness, and other key financial information of Acuity Brands, Inc. (referred to herein as "we," "our," "us," the "Company," or similar references) and its subsidiaries for the years ended August 31, 2021, 2020, and 2019 ("fiscal 2021," "fiscal 2020," and "fiscal 2019," respectively). The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements included within this report.

Overview







        Summarized Balance Sheet Information                                  August 31, 2021           August 31, 2020
        Current assets                                                      $        1,172.0          $        1,152.6
        Current assets due from non-guarantor affiliates                               213.4                     183.3
        Non-current assets                                                           1,391.7                   1,416.0
        Current liabilities                                                            595.1                     530.2
        Non-current liabilities                                                        815.7                     723.8
               Summarized Income Statement Information         Year Ended August 31, 2021
               Net sales                                    $                   2,900.0
               Gross profit                                                     1,244.8
               Net income                                                         301.7
        


Capital Allocation Priorities







                                                                   Year Ended August 31,                Increase                 Percent
                                                                  2021                2020             (Decrease)                Change
        Net sales                                             $  3,461.0          $ 3,326.3          $     134.7                      4.0  %
        Cost of products sold                                    1,986.0            1,923.9                 62.1                      3.2  %
        Gross profit                                             1,475.0            1,402.4                 72.6                      5.2  %
        Percent of net sales                                        42.6  %            42.2  %                40    bps
        Selling, distribution, and administrative expenses       1,044.1            1,028.5                 15.6                      1.5  %
        Special charges                                              3.3               20.0                (16.7)                         NM
        Operating profit                                           427.6              353.9                 73.7                     20.8  %
        Percent of net sales                                        12.4  %            10.6  %               180    bps
        Other expense:
        Interest expense, net                                       23.2               23.3                 (0.1)                    (0.4) %
        Miscellaneous expense, net                                   8.2                5.9                  2.3                          NM
        Total other expense                                         31.4               29.2                  2.2                      7.5  %
        Income before income taxes                                 396.2              324.7                 71.5                     22.0  %
        Percent of net sales                                        11.4  %             9.8  %               160    bps
        Income tax expense                                          89.9               76.4                 13.5                     17.7  %
        Effective tax rate                                          22.7  %            23.5  %
        Net income                                            $    306.3          $   248.3          $      58.0                     23.4  %
        Diluted earnings per share                            $     8.38          $    6.27          $      2.11                     33.7  %
        NM - not meaningful
        


Net sales increased $134.7 million, or 4.0%, to $3.46 billion for the year ended August 31, 2021 compared with $3.33 billion reported for the year ended August 31, 2020. For the year ended August 31, 2021, we reported net income of $306.3 million compared with $248.3 million for the year ended August 31, 2020, an increase of $58.0 million, or 23.4%. For fiscal 2021, diluted earnings per share increased 33.7% to $8.38 from $6.27 for the prior-year period. The following table reconciles certain U.S. generally accepted accounting principles ("U.S. GAAP") financial measures to the corresponding non-U.S. GAAP measures referred to in the discussion of our results of operations, which exclude the impact of acquisition-related items, amortization of acquired intangible assets, share-based payment expense, special charges associated primarily with continued efforts to streamline the organization, and impairments of investments in unconsolidated affiliates. Although the impacts of these items have been recognized in prior periods and could recur in future periods, management typically excludes these items during internal reviews of performance and uses these non-U.S. GAAP measures for baseline comparative operational analysis, decision making, and other activities. These non-U.S. GAAP financial measures, including adjusted gross profit and margin, adjusted selling, distribution, and administrative ("SD&A") expenses and adjusted SD&A expenses as a percent of net sales, adjusted operating profit and margin, adjusted other expense, adjusted net income, and adjusted diluted earnings per share, are provided to enhance the user's overall understanding of our current financial performance. Specifically, we believe these non-U.S. GAAP measures provide greater comparability and







        (In millions, except per share data)                     Year Ended August 31,
                                                                                                                               Increase
                                                           2021                           2020                                (Decrease)    Percent Change
        Gross profit                                  $   1,475.0                     $ 1,402.4                            $        72.6            5.2  %
        Percent of net sales                                                  42.6  %                        42.2  %                  40    bps
        Add-back: Acquisition-related items (1)                 -                           1.2
        Adjusted gross profit                         $   1,475.0                     $ 1,403.6                            $        71.4            5.1  %
        Percent of net sales                                                  42.6  %                        42.2  %                  40    bps
        Selling, distribution, and administrative
        expenses                                      $   1,044.1                     $ 1,028.5                            $        15.6            1.5  %
        Percent of net sales                                                  30.2  %                        30.9  %                 (70)   bps
        Less: Amortization of acquired intangible
        assets                                              (40.7)                        (41.7)
        Less: Share-based payment expense                   (32.5)                        (38.2)
        Less: Acquisition-related items (1)                  (2.2)                         (1.3)
        Adjusted selling, distribution, and
        administrative expenses                       $     968.7                     $   947.3                            $        21.4            2.3  %
        Percent of net sales                                                  28.0  %                        28.5  %                 (50)   bps
        Operating profit                              $     427.6                     $   353.9                            $        73.7           20.8  %
        Percent of net sales                                                  12.4  %                        10.6  %                 180    bps
        Add-back: Amortization of acquired intangible
        assets                                               40.7                          41.7
        Add-back: Share-based payment expense                32.5                          38.2
        Add-back: Acquisition-related items (1)               2.2                           2.5
        Add-back: Special charges                             3.3                          20.0
        Adjusted operating profit                     $     506.3                     $   456.3                            $        50.0           11.0  %
        Percent of net sales                                                  14.6  %                        13.7  %                  90    bps
        Other expense                                 $      31.4                     $    29.2                            $         2.2            7.5  %
        Less: Impairments of investments                     (6.0)                            -
        Adjusted other expense                        $      25.4                     $    29.2                            $        (3.8)         (13.0) %
        Net income                                    $     306.3                     $   248.3                            $        58.0           23.4  %
        Add-back: Amortization of acquired intangible
        assets                                               40.7                          41.7
        Add-back: Share-based payment expense                32.5                          38.2
        Add-back: Acquisition-related items (1)               2.2                           2.5
        Add-back: Special charges                             3.3                          20.0
        Add-back: Impairments of investments                  6.0                             -
        Total pre-tax adjustments to net income              84.7                         102.4
        Income tax effect                                   (19.3)                        (23.4)
        Adjusted net income                           $     371.7                     $   327.3                            $        44.4           13.6  %
        Diluted earnings per share                    $      8.38                     $    6.27                            $        2.11           33.7  %
        Adjusted diluted earnings per share           $     10.17                     $    8.27                            $        1.90           23.0  %
        ______________________________
        


Table of Contents

Oct 27, 2021

COMTEX_395891324/2041/2021-10-27T09:14:14

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