Acuity Inc.

Good morning, and welcome to the Acuity Brands' first quarter earnings call of fiscal 2022. At this time, all participants are in a listen-only mode. After the speaker's presentation, the company will conduct a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Charlotte McLaughlin, Vice President of Investor Relations. Charlotte, please go ahead.

Thank you, Liz. Good morning and welcome to the Acuity Brands Fiscal 2022 First Quarter Earnings Call. As a reminder, some of our comments today may be forward-looking statements based on management's beliefs and assumptions and information currently available to management at this time. These beliefs are subject to known and unknown risks and uncertainties, many of which may be beyond our control. Including those detailed in our periodic SEC filings. Please note that the company's actual results may differ materially from those anticipated, and we undertake no obligation to update these statements. Reconciliations of certain non-GAAP financial metrics with their corresponding GAAP measures are available in our 2022 first quarter earnings release, which is available on our Investor Relations website at www.investors.acuitybrands.com. With me this morning is Neil Ash, our Chairman, President, and CEO, who will provide an update on our strategy and detail highlights from the last quarter, and Karen Holcomb, our Senior Vice President and Chief Financial Officer, who will walk us through our earnings performance. There will be an opportunity for Q&A at the end of the call. For those participating, please limit your remarks to one question and one follow-up if necessary. We are webcasting today's conference live. Thank you for your interest in Acuity Brands. I will now turn the call over to Neil Ash.

Thank you, Charlotte, and Happy New Year to everyone joining us this morning to discuss Acuity Brands. I'm proud of our performance in the first quarter of fiscal 2022. Our team delivered sales growth of 17%, expanded our operating profit margin by 160 basis points, and increased diluted EPS by 57%, despite global supply chain challenges and unpredictable market conditions. Our performance demonstrates that by prioritizing customers, we are driving sales growth and turning that into operating income, while continuing to invest in the long-term growth and transformation of the company. I want to start today's call by taking a deep dive on the current market conditions. As you are aware, this is a dynamic market with a fair share of paradoxes. Demand across our end markets remains strong. At the same time, the availability and cost of key inputs remain challenging. In short, it's the best of times and the most challenging of times. First on demand, business is strong both in ABL and its basis. Within ABL, demand is strong across all of our channels to market except retail, which we expect to improve this calendar year. In this dynamic pricing environment, we have been prudent and successful passing on price increases while at the same time providing as much consistency as we can to our customers so that they can plan and execute their projects effectively. At the same time, input costs and availability remain unpredictable, and we expect this to continue. Obviously, everyone is dealing with this. Our strategy for managing through this has been consistent. Prioritize satisfying customer demand and ensuring the health and well-being of our associates. So now, let me spend a minute on what we mean by satisfying our customer demand. First, we have chosen to honor pricing on all of our placed orders. As I've said before, it is important to me that we are known in the industry for doing what we say. There is a gap in time between when we receive orders and when we fulfill them in normal times, and that is even greater now. Therefore, we believe that this position will serve us well in the long term with specific customers and with the industry. From there, we are also doing everything that we can to fulfill these orders as quickly as we can. While we don't disclose backlog, what I will say is that it is meaningfully higher than during normal periods. This is the result of higher demand coupled with changing component availability and the general supply chain and transportation challenges. Again, these are not unique to Acuity. To combat these, we have prioritized three key activities. First, we have focused and invested in our strategic relationships with manufacturers and suppliers to procure as much of the available component supply as possible. We benefit from being the largest and most consistent in the industry. We have empowered our teams to source components in the spot market, and we have prioritized speed and access over cost. This allows us to maintain higher levels of production at the expense of some higher cost. Third, our product engineering and manufacturing teams have been continuously redesigning and reengineering existing products based on what components are available. To give you an idea of the magnitude of that effort, our distech engineers spent over half their time in the last quarter dedicated to this type of redesign. Our ABL team made the same commitment in addition to changes and improvements in our manufacturing processes to ensure consistent production. These efforts also extend beyond our company into our broader ecosystem. We have been working with suppliers to help them find necessary components and make engineering changes in the products that they supply to us. The overall effort has been Herculean, and our teams continue to remain flexible and to adapt to an ever-changing environment. The changes that we have implemented over the last two years have enhanced our ability to see across our business, work across our stakeholders, and improve our service levels. So where are we on our transformation? One of the points that I stress to our team is that transformation is a process, not a destination. In challenging times, sometimes the first reaction is to revert to what you know. In our case, we are using these times to redouble our transformation efforts. Let me start with the ABL business. Trevor and his team are focused on maintaining high product vitality, continuing to elevate industry service levels, and continuing to use technology to differentiate us. During the first quarter, we launched several interesting products to drive our portfolio expansion. Products like the Stack Pack and Stack Switch products. These are the next generation of center element LED lay-in lights for commercial indoor spaces. The stack has a lower profile and more efficient packaging that saves on transportation costs. It also has an adjustable lumen output that can be reconfigured at any time through the stack switch. This means that there is no time wasted on the job site if there need to be changes to the configuration. In controls, we introduced the clarity link. This is part of our in-light lighting controls platform that offers remote connectivity capability. The remote capabilities reduce the need for in-person visits, offering quick troubleshooting resolutions and a reduction in maintenance costs. This product fundamentally changes the way we service projects and is an important step forward for our customers. Now moving to the intelligent spaces group. The mission of ISG is to use technology to solve problems in spaces in order to make them smarter, safer, and greener. We do this in two ways. We collect data through hardware, for example, the Distech Controller, and then analyze and take action on the data through software applications powered by Atrius. Our ISG group had an eventful quarter. As I mentioned, even though the engineering team at Distech spent over half their time focused on redesigning Distech products for the available components, we continued to roll out several important products and product enhancements. The Distech Eclipse Apex was introduced in the first quarter, and is the most advanced version of our controller for HVAC and building automation. The APEX introduced artificial intelligence to the edge and increases compute capacity in buildings, which helps customers manage energy usage more effectively. We also further expanded the availability of our Atrius Building Insight service by enabling it for additional languages and local privacy requirements. Atrius Building Insights is now available in the UK, Ireland, France, Germany, Spain, and Norway. As I turn the call over to Karen, I want to take a step back. We are currently and expect to continue to be operating in unpredictable times. Input prices and availability can sometimes feel like a game of whack-a-mole, and we are dealing with Omicron, which materialized only a few months ago. As we face these challenges and new challenges, we will maintain our focus on satisfying customer demand and ensuring the health and well-being of our associates. I remain optimistic about 2022 and our ability to effectively manage in this environment. We have a great team who are executing today while also remaining focused on the long-term growth and transformation of the company. I'll now turn the call over to Karen, who will take a deeper dive into our performance, and then I'll be back for the Q&A and for some closing remarks.