Acuity Scores a 10

Acuity achieved a 10% organic sales growth last quarter while the Juno acquisition generated another 9%.  Both become key metrics for distributors to benchmark themselves.  Additionally, 66% of Acuity’s fixture business is now LEDs, another benchmark metric for distributors.

Acuity’s also shared the following highlights during its quarterly report:

• Net sales were up 16% (10% Acuity organic + 9% Juno – currency and price mix), but had planned for greater growth
• Q1 net sales of $851M
• Gross profit margin of 42.4%, down 100 basis points from last year (wonder how this mix is affected by its channel strategy? If much of Tier 3 and Tier 4 sales are sophisticated and served direct …??? May not be bad for the company, not good for distributors to have manufacturers get more comfortable selling direct, and customers buying direct.)
• Have $451M of cash on hand (wonder what they will look to buy next. Guessing is that it will be something that integrates with their lighting platform, not a lighting company.  Acuity distributors may want to consider Acuity’s acquisition trail as an indicator of where there are growth strategies.)
• Saw reduced sales growth due to slowdown in small projects as well as some larger projects delayed due to contractor labor issues.
• Have excess manufacturing capacity
• Expect continued rapid pace of new products and solutions for luminaires, lighting controls, and building management platform (perhaps this is the next acquisition area? wonder what Acuity sales are by channel?)
• Acuity’s Tier 3 category solutions now represents 12% of sales. This is significant as it relates to integrated solutions … hardware and software … fixtures and controls.  This Tier can be enabled to collect data and to support connectivity to IoT and offering Acuity recurring revenue streams. (Distributors should ask themselves “how do I participate in recurring revenue streams; if their teams are trained, qualified and are selling these systems and are they generating revenue.  Answers to these will help distributors position themselves for continued growth in the lighting market, otherwise they are fixture sellers.)
• Increased stocking of faster moving items to improve delivery
• Investing 2.5% of revenues to capital improvements, so reinvesting into the business
• See positive 2017
• View themselves in the lighting and building management systems markets (should distributors consider expanding (acquisitions) into the building management systems market? Where are gear companies focused / integrating with?)
• According to Acuity, NEMA data showed a decline during Q3 in the shipment of light fixtures. (it should be noted that NEMA data is self-reported by NEMA members and sometimes not all members report. Given the number of LED fixture manufacturers, it stands to reason that the NEMA data is under-reported.)
• Part of the smaller project decline may also be attributed to utility rebate programs running out of money towards the end of the year.
• Recently introduced more products for the stock and flow segment and targeted at renovation market. Receiving positive response but “need to translate into orders”. (This segment historically is not a strong segment for the major lighting companies so may be trying to leverage distributors to displace other lines … Rab, Halco, Atlas, Topaz, etc.)

Overall, good performance and Acuity feels the outlook is bright for continued growth due to its large project pipeline, overall quotation activity and Tier 3 product offering acceptance.

From a distributor perspective, if you are an Acuity distributor, how are you measuring up to their overall performance levels? Are you asking your area / region manager about Acuity’s regional performance to evaluate your performance? And then, where are you investing your lighting generated profit dollars?  Into the resources needed to sell and execute upon Tier 3 solutions? Are you positioning to take advantage of the connectivity elements and service generated revenue or are you destined to focus on being a quotation engine?

What are you seeing / experiencing from Acuity?