Acuity's Stock Rises on Q3 Earnings & Sales Beat, Margins Up Y/Y

Acuity Inc. AYI reported impressive results for the third quarter of fiscal 2025 (ended May 31, 2025), with adjusted earnings and net sales topping the Zacks Consensus Estimate and increasing year over year.

The quarter’s performance was driven by the benefits realized from the acquisition of QSC, closed in January 2025. Moreover, increased contributions from its Acuity Intelligent Spaces and Acuity Brands Lighting segments added to the uptrend, alongside higher sales of Atrius and Distech products.

Acuity stock grew 5.8% during yesterday’s trading session and inched up 0.3% in the after-hours.

Acuity’s Q3 Earnings & Sales Performance

The company reported adjusted earnings per share (EPS) of $5.12, which topped the Zacks Consensus Estimate of $4.42 by 15.8%. The metric also increased 23% from the year-ago reported EPS of $4.15.

Acuity, Inc. Price, Consensus and EPS Surprise

Acuity, Inc. price-consensus-eps-surprise-chart | Acuity, Inc. Quote

Net sales of $1.18 billion surpassed the consensus mark of $1.14 billion by 3% and improved 21.7% from the prior-year quarter’s level. (Find the latest earnings estimates and surprises on Zacks Earnings Calendar.)

Acuity’s Segment Details

The Acuity Brands Lighting segment, responsible for the majority of sales, experienced an increase in quarterly sales by 2.7% to $923.2 million. Our estimate for the metric was $912.6 million.

Net sales in the Independent Sales Network were up 7.6% year over year to $685.3 million. Sales from the Direct Sales Network were up 4.6% from the prior-year period’s level to $101.5 million.

Retail sales of $41.4 million tumbled 19.4% from the prior-year quarter’s level. Sales in the Corporate Accounts channel also decreased 41.3% from the prior-year quarter to $35.5 million. The original equipment manufacturer and other channel sales of $59.5 million were up 2.2% from the prior-year period’s level.

The adjusted operating profit in the segment increased 7.3% from the prior year’s level to $173.9 million. The adjusted operating margin was up 80 basis points (bps) year over year to 18.8%.

Acuity Intelligent Spaces generated net sales of $264.1 million, which were significantly up 248.9% year over year. The reported figure came above our estimate of $233.5 million.

The adjusted operating profit was $62.3 million, up by a whopping 260.1% from the year-ago period. The adjusted operating margin expanded 70 bps year over year to 23.6%.

AYI’s Operating Highlights

The adjusted operating profit increased 32.7% year over year to $221.7 million. The adjusted operating margin of 18.8% was up 150 bps year over year.

Adjusted EBITDA rose 31.3% to $236.3 million from the year-ago period. The adjusted EBITDA margin expanded 140 bps from the year-ago period to 20%.

Acuity’s Financials

As of the fiscal third quarter, Acuity had cash and cash equivalents of $371.8 million compared with $845.8 million at the fiscal 2024-end. Long-term debt was $996.7 million, up from $496.2 million at the fiscal 2024-end.

During the first nine months of fiscal 2025, cash provided by operating activities totaled $398.9 million, down from $445.1 million in the prior-year period. Adjusted free cash flow was down 12.1% year over year to $355.3 million in the first nine months of fiscal 2025.

During the first nine months of fiscal 2025, the company repurchased nearly 0.3 million shares of its common stock for $90 million. As of May 31, 2025, 3.4 million shares remained available within AYI’s repurchase program. Moreover, it hiked its quarterly dividend by 13% to 17 cents per share or 68 cents annually.

Acuity Retains Fiscal 2025 View

For fiscal 2025, Acuity still expects net sales between $4.3 billion and $4.5 billion (indicating growth from $3.84 billion reported in fiscal 2024), with adjusted EPS in the range of $16.50-$18.00 (depicting growth from $15.56 reported in fiscal 2024). The focus remains on maintaining a balance between growth and margin expansion.

AYI’s Zacks Rank & Stocks to Consider

Acuity currently carries a Zacks Rank #3 (Hold).

Here are some better-ranked stocks from the Business Services sector.

AppLovin Corporation APP currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The company delivered a trailing four-quarter earnings surprise of 22.9%, on average. The stock has inched up 7.3% year to date. The Zacks Consensus Estimate for AppLovin’s 2025 sales and EPS indicates growth of 16.6% and 84.6%, respectively, from the year-ago period’s levels.

Duolingo, Inc. DUOL presently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 22.8%, on average. The stock has gained 22.9% year to date.

The Zacks Consensus Estimate for Duolingo’s 2025 sales and EPS indicates growth of 33.5% and 54.3%, respectively, from the year-ago period’s levels.

Gen Digital Inc. GEN presently carries a Zacks Rank of 2. The company has a trailing four-quarter earnings surprise of 0.9%, on average. The stock has moved up 7.5% year to date.

The Zacks Consensus Estimate for Gen Digital’s fiscal 2026 sales and EPS indicates growth of 20.4% and 9.5%, respectively, from the year-ago period’s levels.

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This article originally published on Zacks Investment Research (zacks.com).

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