At the end of the year, Neil Ashe, CEO of Acuity, described the 4^th quarter (their first quarter) lighting business as “tepid”, and our 2025 Q4 Pulse of Lighting report affirmed, and shared a 2026 Outlook If the definition of tepid is “only slightly warm; lukewarm,” or “showing little enthusiasm”,  then we can apply the same term to Q1 and add “treading water.”

2026 Q1 Pulse of Lighting Findings

• Our Q1 Pulse of Lighting report where we received input from over 200 distributor, manufacturer rep / lighting agents, and manufacturer contacts shared:
• Distributors, reps / lighting agents, and manufacturers were slightly below zero (0%).
• The segments of the market experiencing “decent” activity are small to mid-sized projects. And this is primarily retrofit projects rather than new construction. The large commercial projects that drive much of the architectural business are lacking.
• Market segments where there are opportunities include traditional “favorites” of healthcare, education, warehousing, some multi-family, and other institutional initiatives. While data centers is also mentioned, the lighting spend for a data center is significantly lower, as a percentage of a project, than a commercial office building … so the dollar replacement is not the same.
• Some distributors are realizing opportunities in pursuing renovations from gen 1 LED projects as users experience warranty issues, degradation of quality of light, driver replacement issues and more. This requires more of a dedicated sales activity and/or educating contractors to pursue these opportunities.
• Of importance, backlog is flat to slightly declining, which is an indication of the market. With a percentage of future sales driven by backlog shipping, this is a concern.
• And distributors appear to be stocking less, at least versus last year. This could be due to the need to stock less due to selectable product functionality, manufacturer quick-ship initiatives that reduce the distributor need to fulfill small and medium projects from their warehouse, price concerns due to tariffs and commodity increases. Additionally, some distributors shared that with copper increases, their overall inventory costs need to be managed and they have pulled back in other product categories.
• Looking forward, all are projecting low single digit growth for Q2, however, the sense is that they don’t know if this is “hope” or success based upon intentional strategies. There are macroeconomic concerns due to the war, higher fuel costs, expected inflation, questions on tariffs and the potential for price increases due to supplier raw materials (steel, aluminum, transportation costs.)
• This quarter we also asked respondents about their AI usage – what application areas and if they had a corporate governance policy. Surprisingly, less than a third have governance policies.

The detailed report was shared with survey respondents in appreciation of their support and they could request a copy of Channel Marketing Group’s AI eBook, “The AI-Enabled Distributor.”  If you would like a copy Q1 Pulse of Lighting report, it is available for only $35.

“The AI-Enabled Distributor” eBook, a 120 page report that shares an overview of AI, different applications, insights from AI leaders such as Nick Pericle, Jim Lillig, Murthy Vanapalli and Tracy Sponenberg, as well as 30+ AI providers, is available for only $39.

The cost of the eBook was reduced through the generous support of Band, Blue Ridge Global, Canals, Distributor Data Solutions, Distro, IDEA, Infor, Motivate, Mydatamatcher, Parspec, Patchworks, Prokeep, and Pull Logic (and if you are unfamiliar with any of these companies, I encourage you to check them out.)

AD IESD members also received a complimentary copy, courtesy of AD.

How did Acuity do in Q1 (their Q2)?

Acuity held their quarterly call last week. The company is diversified nowadays with the lighting business (ABL) essentially being a cash cow to support the diversification efforts which relate to Distech, QSC, and overseas expansion.

From a business strategy viewpoint, this is smart because the traditional fixture business is dependent upon the commercial construction market. While the residential market is down, it was never a core area for Acuity and the amount of fixed lighting that builders place into SF homes is down. Acuity can play in the multi-family. Further, the long-life of LEDs reduces the retrofit frequency. This leaves new construction and retrofit of older illumination technologies, opportunities to upgrade from the prior generation of LEDs, companies seeking to upgrade their space (expansion, “look/feel”) or in some cases utility-driven upgrades.

It’s a tough market, especially when you are the market share leader … and a publicly held company.

Reviewing Q1 Earnings for ABL (Acuity Lighting)

Rather than consider the company in whole, let’s focus on Acuity’s lighting business.

• Acuity’s Neil Ashe described the lighting market as “soft lighting environment.” (It has been “soft” for awhile as the quarterly Pulse of Lighting reports have highlighted. Typically, Acuity slightly outperforms. Which it slightly did this quarter also.)
• ABL sales were $817M, down $23 million or 3%. Acuity attributed the decline to “the direct sales channel” and “several large projects in the same period last year that did not repeat.” (large projects don’t repeat. New large projects need to be won or a large project needs to be implemented over an extended time. As the Pulse of Lighting report showed, large new construction projects serviced by the independent channel are the weakest part of the market. The lack of continuation of large projects on the direct sales side of ABL’s business is either a sales pipeline issue (sales management), customers this group pursues not investing, or the group not able to create demand by selling the value of “new experiences” … but it’s a small part of ABL’s business.)
• Sales by ABL Channel
  

  Courtesy of Acuity FY Q2 10-Q

• ABL sales analysis by channel

Acuity FY Q2 26 Performance by Channel – ElectricalTrends

• Margins improved due to “strategic pricing and product and productivity improvements” (so, if they are using strategic pricing, which can mean SPAs to pursue significant stock opportunities, targeting specific projects, or bundled / lot pricing, which infers that there could be negotiating opportunities for distributors.) They also said they are “aligning our cost structure to current market dynamics while continuing to serve customers effectively.” And they said that this included “targeted labor cost reductions.”
• He also said they have ‘greater flexibility to evaluate their production costs” which could infer seeking cost savings (usually labor related) or passing on costs due to higher input costs (material, fuel)
• “Expect full year ABL sales to be flat to down low single digits year-over-year” per Karen Holcom, SVP & CEO
• Highlighted some successes due to their M3 Innovation acquisition which has helped with wins in the education, municipality, and infrastructure markets. And also mentioned some awards / recognition they have received (that hopefully will result in revenue for those SKUs.)
• From reading between the lines, ABL is the cash cow for the business as they also paid down $100M on their QSC acquisition debt and now only have $200M remaining. Given that ABLs continues to hum along and perform close to the market, and has strong gross margins, and probably only needs nominal re-investment (and, after all, what reinvestment can be made to drive new construction or capture significant incremental share that meets profit goals.) This is a good corporate reinvestment strategy, even though it doesn’t benefit ABL or the electrical distribution channel (distributors or agents).

Relevant analyst questions, and the answers they derived, include:

• One asked about demand and Acuity responded, “projects are releasing at a slower pace” with “conversion rates about the same.” (Our research is yes, they are slower to release due to the submittal / approval processes and distributors are quoting, requoting, and re-requoting as contractors and developers “hope” for lower prices but projects are not being slowed any more than usual.)
• A large portion of Acuity’s lighting business is “unaffected to tariffs as most of their steel and aluminum, 232, goes thought USMCA.”
• Due to a question about full-year guidance, Acuity shared ABL is down about 1% in the first half of its FY. They feel that contractors are prioritizing data center work with their labor and delaying / declining non-data center projects. (While this may be so with some contractors who are focused on the data center market, which is more of a niche and doesn’t affect most contractors.)

Input comes from this synopsis of the earnings call on Seeking Alpha and from this version of the earnings call transcript. Here’s a link to their presentation and a link to their 10-Q,

What Does it Say About the Lighting Market

• Everyone’s gut feeling is affirmed. The market is challenged. It is flat. There is nothing from a macro-economic viewpoint that is driving it.
• The lighting market, however, is very important to distributors, especially contractor-oriented distributors, and it is the lifeblood to 100’s of lighting agents.
• Success is not defined as cutting costs to survive. Rather it is being intentional and determining where to focus. As the Pulse of Lighting respondents shared, there are market segments to pursue, value-engineering now needs to be an “art,” promoting lighting controls and having a strategy to do such is important, controlling your outreach rather than waiting to be the recipient of a quotation opportunity is important, and lighting knowledge is more important now, and in the future, to capture business.
• The lighting market is about winning, and taking, share. Two different strategies.
• Acuity continues to perform; however, their performance may be sufficient for them given their alternative growth opportunities.
• Selling value (and I don’t mean low price), “experiences” (to create demand), generating brand awareness, preference and lighting benefits (not product) can help you outperform. And, as distributors know, every market is its own market and in every market there are some opportunities.

The Pulse of Lighting report can help inform. It is available for only $35 by clicking here.

And if you are a manufacturer, perhaps US Lighting Trends can be a resource to support your messaging (reach out to me and we can discuss) and if you are a distributor, there could be some editorial opportunities.