Executive Summary
Acuity Brands reported a resilient second quarter of fiscal 2025 (QQ2 2025) with consolidated net sales of $1.006 billion, up 11% year over year (YoY) and roughly 5.8% quarter over quarter (QoQ), aided by the inclusion of two months of QSC results and continued strength in Acuity Intelligent Spaces (AIS). The company delivered adjusted operating profit of $163 million and an adjusted operating margin of 16.2%, up about 70 basis points YoY, driven by gross margin expansion and the contribution from QSC, despite a modest decline in the Lighting segment (ABL) on softer channel demand. Consolidated GAAP net income was $77.5 million (net income margin 7.7%), while GAAP diluted EPS was $2.44 and GAAP basic EPS was $2.50; on an adjusted basis, management framed earnings power as higher at $3.73 per share for the quarter (two months of QSC included). The quarter showcased strategic progress across both segments: AIS delivered robust topline growth (172 million in Q2, up 12% ex-QSC contributions) with an 18.7% adjusted operating margin, while ABL remained a high-margin, high-velocity lighting and controls business, aided by product vitality initiatives and productivity gains. The acquisition of QSC closed in the period, financed with about $600 million of incremental debt and further supported by cash on hand; post-quarter, debt was trimmed by $100 million. Management signaled a tough but navigable tariff backdrop, emphasizing a “tariff as a supply shock” and a disciplined, price-led response to offset COGS impact, alongside continued productivity initiatives. Guidance for the year remains unchanged, with management highlighting the potential for continued margin expansion through AIS/QSC synergies and ongoing pricing actions. Investors should monitor tariff developments, pace of demand normalization in Lighting (ABL) versus AIS growth, the integration trajectory of QSC, and the durability of pricing power as the company progresses through the tariff environment.
Key Performance Indicators
QoQ: -17.33% | YoY:-6.69%
QoQ: -27.37% | YoY:-13.12%
QoQ: -27.54% | YoY:-13.49%
Key Insights
Consolidated revenue: $1,006.3 million; YoY +11.0%, QoQ +5.8%. Gross profit: $468.0 million; gross margin 46.5% (vs. 46.5% reported). Operating income: $110.2 million; operating margin 11.0%. EBITDA: $110.2 million; EBITDA margin ~10.95%. Net income: $77.5 million; net income margin 7.7%. EPS (GAAP): $2.50; diluted EPS $2.44. Adjusted operating profit: $163.0 million; adjusted margin 16.2% (up 70 bps YoY). AIS (Intelligent Spaces) sales: $172.0 million; growth driven by Atrius/Distech and two mo...
Financial Highlights
Consolidated revenue: $1,006.3 million; YoY +11.0%, QoQ +5.8%. Gross profit: $468.0 million; gross margin 46.5% (vs. 46.5% reported). Operating income: $110.2 million; operating margin 11.0%. EBITDA: $110.2 million; EBITDA margin ~10.95%. Net income: $77.5 million; net income margin 7.7%. EPS (GAAP): $2.50; diluted EPS $2.44. Adjusted operating profit: $163.0 million; adjusted margin 16.2% (up 70 bps YoY). AIS (Intelligent Spaces) sales: $172.0 million; growth driven by Atrius/Distech and two months of QSC; adjusted AIS operating profit: $32.0 million; AIS margin 18.7%. ABL (Lighting) sales: $841.0 million; margins aided by product vitality initiatives; adjusted ABL operating profit: $141.0 million; adjusted ABL margin 16.8%. Cash flow: year-to-date CFO $59.4 million; free cash flow $49.7 million; net change in cash $(537.7) million; cash at end of period $397.9 million. Capital allocation: QSC acquisition financed with ~$600 million of new debt; $100 million debt repayment post-quarter; dividend raised 13% to $0.17 per share; repurchased ~68,000 shares for ~$23 million. Balance sheet: total assets $4.58B; total liabilities $2.06B; total stockholders’ equity $2.52B; goodwill $1.450B; intangible assets $1.126B; total debt $1.192B; net debt $0.794B. Segment contribution notes: AIS margin outpaced ABL; geographic expansion of Distech (UK/Asia) and ongoing QSC integration are key drivers of profitability. Key ratios: current ratio 1.95; debt-to-capitalization 0.32; gross margin 46.5%; operating margin 11.0%; ROA 1.69%; ROE 3.07%.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.01B |
11.08% |
5.75% |
| Gross Profit |
468.00M |
16.30% |
4.16% |
| Operating Income |
110.20M |
-6.69% |
-17.33% |
| Net Income |
77.50M |
-13.12% |
-27.37% |
| EPS |
2.50 |
-13.49% |
-27.54% |
Key Financial Ratios
operatingProfitMargin
11%
operatingCashFlowPerShare
$1.92
freeCashFlowPerShare
$1.6
Management Commentary
Themes and quotes from the QQ2 2025 earnings call:
- Strategy and growth framework: Neil Ashe emphasized the company’s growth algorithm — grow the market, take share, and enter new verticals — with AIS and ABL aligned to create a data-and-controls-led competitive differentiator. “Our growth algorithm is clear. We will grow the market, take share and enter new verticals.”
- Tariffs and pricing discipline: Management framed tariffs as a supply shock and outlined a plan to offset through pricing actions and productivity gains. Neil: “tariffs as the equivalent of a supply shock... we will continue to take pricing actions and accelerate our productivity efforts.” Karen noted that price actions have already been implemented and further actions would occur as tariff policy evolves.
- QSC integration: The QSC acquisition was described as additive and well-aligned with AIS, with integration progress “exceeding our expectations.” Neil highlighted enablement integration largely complete and margin opportunities from an expanded platform. Karen noted two months of QSC results included in the quarter and ongoing synergies.
- AIS and Distech momentum: AIS delivered strong growth and margin, with Atrius and Distech together up 12.2% in the quarter; Distech won the 2025 AHR Expo Innovation Award. Quote: Ashe on the broader AIS strategy and ecosystem (Atrius, Distech, QSC) delivering distinct end-user outcomes.
- Market conditions and demand: Neil acknowledged market uncertainty and its impact on lighting demand in QQ2, with pricing actions mitigating some impact. He cautioned that the demand shape for the back half remains uncertain but that the company expects to navigate with pricing and productivity levers.
- Capital allocation and shareholder value: The company funded QSC with debt, then repaid debt post-quarter, increased the dividend by 13% to $0.17, and repurchased ~68k shares (~$23M). The tone was one of prudent leverage and balanced capital deployment across growth, M&A, and shareholder reward.
We grew net sales, expanded our adjusted operating profit and adjusted operating profit margin and we increased our adjusted diluted earnings per share.
— Neil Ashe
Our growth algorithm is clear. We will grow the market, take share and enter new verticals.
— Neil Ashe
Forward Guidance
Investment outlook is anchored by a path to continued margin expansion and earnings resilience despite near-term tariff-induced headwinds. Key drivers include: (1) AIS’s expanding top line and higher-margin data-and-controls capabilities, (2) QSC integration delivering cross-sell opportunities and margin enrichment through the Atrius/Distech/QSC platform, (3) pricing power via strategic pricing programs (Contractor Select, Design Select, made-to-order) to offset tariff costs, and (4) an opportunistic M&A channel supported by strong cash flow and substantial capacity for debt financing if attractive targets arise. Management maintained the previous full-year guidance, acknowledging uncertainty around tariff policy and demand. They stressed that “all options are available” for capital allocation, including further acquisitions, debt management, and potential buybacks. Near-term risks include tariff continuation, potential demand weakness in Lighting channels, and any protracted macro uncertainty. Investors should monitor: tariff trajectory and pass-through timing; realized benefits from QSC integration and AIS margin progression; the pace of pricing actions relative to tariff costs; and the evolution of Lighting market demand in the back half of FY2025.