Acuity Brands Inc reports 24.8% Net Income decline in 2020 and 1.3 pp EBITDA Margin decline from 15.0% to 13.7%
10/08/2020 • About Acuity Brands Inc (
$AYI) • By InTwits
Acuity Brands Inc reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Acuity Brands Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.7%. At the same time it's a lot of higher than industry average of 1.4%.
- CAPEX is quite volatile: $54m in FY2020, $28m in FY2019, $35m in FY2018, $28m in FY2017, $20m in FY2016
- The company has highly profitable business model: ROIC is 14.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Acuity Brands Inc's Revenue decreased on 9.4%. Annual revenue decline showed slowdown in FY20Q4 - revenue decreased on 5.0%. Revenue decline was accelerating on average at -6.9 pp per annum in the last 5 years. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 4.0 pp from 5.4% to 9.4% in FY2020.
Gross Margin increased slightly on 1.9 pp from 40.3% to 42.2% in FY2020. During FY2016-FY2020 Gross Margin bottomed in FY2019 at 40.3%. SG&A as a % of Revenue increased on 5.3 pp from 25.6% to 30.9% in FY2020.
Net Income margin decreased slightly on 1.5 pp from 9.0% to 7.5% in FY2020. During the last 5 years Net Income margin topped in FY2018 at 9.5% and was declining since that time.
Investments (CAPEX, working capital and M&A)
Acuity Brands Inc's CAPEX/Revenue was 1.7% in FY2020. CAPEX/Revenue showed almost no change from FY2017 to FY2020. Average CAPEX/Revenue for the last three years was 1.4%. During FY2016-FY2020 CAPEX as a % of Revenue bottomed in FY2018 at 1.2% and was growing since that time.
Return on investment
The company operates at good ROIC (14.5%) and ROE (12.3%). ROIC decreased on 6.0 pp from 20.4% to 14.5% in FY2020. ROE decreased on 5.9 pp from 18.2% to 12.3% in FY2020. ROIC stuck to a declining trend at -2.5 pp per annum in the last 5 years. During FY2016-FY2020 ROE topped in FY2018 at 20.7% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.4x and Debt / EBITDA is 0.9x. Debt surged on 12.5% while cash surged on 21.6%.
Acuity Brands Inc has no short term refinancing risk: cash is higher than short term debt (2,307.4%).
Valuation and dividends
The company's trades at EV/EBITDA 7.8x and P/E 15.0x.
Management team
The company's CEO Neil M Ashe has spent 1 year with the company. Acuity Brands Inc's CFO Karen J Holcom has spent 15 years with the company.
Financial and operational results
Acuity Brands Inc ($AYI) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 3,291 | 3,505 | 3,680 | 3,673 | 3,326 | -9.4% |
| Gross Profit | 1,436 | 1,481 | 1,485 | 1,480 | 1,402 | -5.2% |
| SG&A | 946 | 890 | 955 | 940 | 1,028 | 9.4% |
| EBITDA | 538 | 602 | 541 | 551 | 455 | -17.5% |
| Net Income | 291 | 322 | 350 | 330 | 248 | -24.8% |
Balance Sheet
|
|---|
| Cash | 413 | 311 | 129 | 461 | 561 | 21.6% |
| Short Term Debt | 0 | 0 | 0 | 9 | 24 | 167.0% |
| Long Term Debt | 355 | 357 | 356 | 348 | 377 | 8.4% |
Cash flow
|
|---|
| Capex | 84 | 67 | 44 | 53 | 55 | 3.6% |
Ratios
|
|---|
| Revenue growth | 21.6% | 6.5% | 5.0% | -0.2% | -9.4% | |
| EBITDA growth | 27.4% | 12.0% | -10.1% | 1.9% | -17.5% | |
|
|---|
| Gross Margin | 43.6% | 42.3% | 40.4% | 40.3% | 42.2% | 1.9% |
| EBITDA Margin | 16.3% | 17.2% | 14.7% | 15.0% | 13.7% | -1.3% |
| SG&A, % of revenue | 28.7% | 25.4% | 26.0% | 25.6% | 30.9% | 5.3% |
| Net Income Margin | 8.8% | 9.2% | 9.5% | 9.0% | 7.5% | -1.5% |
| CAPEX, % of revenue | 2.5% | 1.9% | 1.2% | 1.4% | 1.7% | 0.2% |
|
|---|
| ROIC | 24.8% | 25.0% | 21.5% | 20.4% | 14.5% | -6.0% |
| ROE | 19.3% | 19.3% | 20.7% | 18.2% | 12.3% | -5.9% |
| Net Debt/EBITDA | -0.1x | 0.1x | 0.4x | -0.2x | -0.4x | -0.2x |
Acuity Brands Inc ($AYI) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 835 | 824 | 776 | 891 | | -10.5% | -3.5% | -18.1% | -5.0% |
| EBITDA | 113 | 111 | 113 | 132 | | -18.2% | -5.5% | -20.9% | -13.9% |
| Net Income | 57 | 57 | 60 | 74 | | -28.4% | -13.7% | -31.7% | -23.3% |
Balance Sheet
|
|---|
| Cash | 267 | 381 | 521 | 561 | | 24.1% | 64.1% | 56.0% | 21.6% |
| Short Term Debt | 26 | 32 | 34 | 24 | | 6,375.0% | 357.1% | 273.6% | 167.0% |
| Long Term Debt | 397 | 439 | 432 | 377 | | 11.3% | 25.5% | 24.4% | 8.4% |
Ratios
|
|---|
| Gross Margin | 42.6% | 41.7% | 42.2% | 42.1% | | 3.2% | 2.6% | 1.7% | 0.0% |
| EBITDA Margin | 13.5% | 13.5% | 14.5% | 14.8% | | -1.3% | -0.3% | -0.5% | -1.5% |
| Net Income Margin | 6.8% | 6.9% | 7.8% | 8.3% | | -1.7% | -0.8% | -1.5% | -2.0% |
Peers in Electrical Components & Equipment
Below we provide Acuity Brands Inc benchmarking against other companies in Electrical Components & Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Flux Power Holdings Inc ($FLUX) | - | 61.6% | 356.5% | 126.3% | 80.8% |
| Espey Mfg. & Electronics Corp. ($ESP) | - | -18.0% | 44.4% | 12.2% | -13.6% |
| |
|---|
| Median (2 companies) | - | 21.8% | 200.5% | 69.2% | 33.6% |
|---|
| Acuity Brands Inc ($AYI) | - | 6.5% | 5.0% | -0.2% | -9.4% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Espey Mfg. & Electronics Corp. ($ESP) | 26.8% | 20.9% | 23.6% | 19.4% | 17.6% |
| Flux Power Holdings Inc ($FLUX) | -96.8% | -79.8% | -19.3% | 5.9% | 13.0% |
| |
|---|
| Median (2 companies) | -35.0% | -29.4% | 2.1% | 12.6% | 15.3% |
|---|
| Acuity Brands Inc ($AYI) | 43.6% | 42.3% | 40.4% | 40.3% | 42.2% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Espey Mfg. & Electronics Corp. ($ESP) | 17.4% | 8.7% | 13.2% | 8.8% | 5.5% |
| Flux Power Holdings Inc ($FLUX) | -732.1% | -458.5% | -149.5% | -119.9% | -73.7% |
| |
|---|
| Median (2 companies) | -357.3% | -224.9% | -68.2% | -55.6% | -34.1% |
|---|
| Acuity Brands Inc ($AYI) | 16.3% | 17.2% | 14.7% | 15.0% | 13.7% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Flux Power Holdings Inc ($FLUX) | 0.9% | 5.9% | 2.1% | 3.0% | 1.9% |
| Espey Mfg. & Electronics Corp. ($ESP) | 1.0% | 1.6% | 5.9% | 1.7% | 0.7% |
| |
|---|
| Median (2 companies) | 1.0% | 3.7% | 4.0% | 2.3% | 1.3% |
|---|
| Acuity Brands Inc ($AYI) | 2.5% | 1.9% | 1.2% | 1.4% | 1.7% |
Top companies by ROIC, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Espey Mfg. & Electronics Corp. ($ESP) | 13.7% | 4.7% | 11.8% | 8.1% | 3.7% |
| Flux Power Holdings Inc ($FLUX) | - | -1,762.0% | -283.6% | -333.9% | -553.1% |
| |
|---|
| Median (2 companies) | 13.7% | -878.6% | -135.9% | -162.9% | -274.7% |
|---|
| Acuity Brands Inc ($AYI) | 24.8% | 25.0% | 21.5% | 20.4% | 14.5% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Espey Mfg. & Electronics Corp. ($ESP) | -2.1x | -5.1x | -1.0x | -0.5x | -3.1x |
| |
|---|
| Median (1 company) | -2.1x | -5.1x | -1.0x | -0.5x | -3.1x |
|---|
| Acuity Brands Inc ($AYI) | -0.1x | 0.1x | 0.4x | -0.2x | -0.4x |
