Acuity Q3 2025 slides: revenue surges 22%, Intelligent Spaces segment soars 249%

Acuity Brands Inc (NYSE:AYI) shares jumped over 6.5% in premarket trading after the company presented strong fiscal third-quarter 2025 results on June 26, showing significant growth across all major financial metrics, with particularly impressive performance in its Intelligent Spaces segment.

Quarterly Performance Highlights

Acuity reported substantial growth in its third quarter, with net sales increasing 22% year-over-year to $1.179 billion, compared to $968 million in the same period last year. The company’s adjusted diluted earnings per share rose 23% to $5.12, while adjusted operating profit surged 33% to $222 million, representing an expansion of 150 basis points in adjusted operating profit margin.

These results mark a significant improvement from the company’s second-quarter performance, when Acuity reported revenue of $1 billion and earnings per share of $3.73.

As shown in the following chart of Acuity’s third-quarter performance:

"We delivered strong performance in the third quarter, with substantial increases in both our top and bottom lines," the company noted in its presentation. The only negative metric was year-to-date cash flow from operations, which decreased 10% to $399 million compared to $445 million in the prior year period.

Segment Performance Analysis

Acuity’s business is divided into two main segments: Acuity Brands Lighting (ABL) and Acuity Intelligent Spaces (AIS), with dramatically different growth profiles in the quarter.

The Lighting segment, which remains the company’s largest division, showed modest but steady growth with net sales increasing 3% to $923 million. Adjusted operating profit in this segment rose 7% to $174 million, with adjusted operating profit margin expanding by 80 basis points to 18.8%.

As illustrated in the ABL segment performance chart:

The real star of the quarter was the Intelligent Spaces segment, which experienced explosive growth with net sales soaring 249% to $264 million from $76 million in the prior year period. This segment’s adjusted operating profit increased by an even more impressive 260% to $62 million, with adjusted operating profit margin improving by 70 basis points to 23.6%.

The company positions this segment around the concept of being "SMARTER, SAFER, GREENER" and notes that "WE CONTROL HOW A BUILDING OPERATES AND THE EXPERIENCES THAT HAPPEN IN A BUILDING."

The following chart demonstrates the dramatic growth in the AIS segment:

Capital Allocation and Strategic Initiatives

Acuity’s capital allocation strategy for fiscal 2025 has focused on balancing growth investments, acquisitions, shareholder returns, and maintaining financial flexibility. The company generated $399 million in operating cash flow year-to-date.

A significant development was the acquisition of QSC for $1.2 billion, which closed at the beginning of January 2025. This acquisition appears to be a major contributor to the growth in the Intelligent Spaces segment. Additionally, Acuity increased its dividend by 13% and repurchased $91 million worth of shares.

The company’s capital allocation approach is illustrated in this breakdown:

"We continue to invest for growth in our current businesses, pursue strategic M&A opportunities, increase our dividend, and repurchase shares to create permanent shareholder value," the company stated in its presentation.

Forward-Looking Statements

Despite the challenges noted in the previous quarter, Acuity maintained a positive outlook for the full fiscal year 2025. The company projects net sales in the range of $4.3 billion to $4.5 billion and adjusted diluted EPS between $16.50 and $18.00.

The outlook takes into account the QSC acquisition that closed at the beginning of January 2025:

The company’s quarterly trends show consistent improvement throughout fiscal 2025, with the third quarter representing the strongest performance of the year so far:

This outlook suggests confidence in continued strong performance for the remainder of the fiscal year, despite the previous quarter’s revenue challenges that led to a stock decline of 4.58% after the Q2 earnings release.

The current market reaction appears to validate this confidence, with Acuity’s stock trading up 6.53% in premarket at $306.25, according to market data. This represents a significant recovery from the previous day’s close of $287.49 and brings the stock closer to its 52-week high of $345.30.

Full presentation:

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.