Acuity Inc.

Good morning, and welcome to the Acuity Brands Fiscal 2024 Second Quarter Earnings Call. At this time, all participants are in 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.

Good morning, and welcome to the Acuity Brands Fiscal 2024 Second Quarter Earnings Call. On the call with me this morning is Neil Ashe, our Chairman, President, and Chief Executive Officer, and Karen Holcomb, our Senior Vice President and Chief Financial Officer. Today's call will include updates on our strategic progress and on our Fiscal 2024 Second Quarter performance. There will be an opportunity for Q&A at the end of this call. As a reminder, some of our comments today may be forward-looking statements. We intend these forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as detailed on slide two of the accompanying presentation. Reconciliations of certain non-gap financial metrics with their corresponding gap measures are available in our 2024 second quarter earnings release and supplemental presentation, both of which are available on our Investor Relations website at www.investors.acuitybrands.com. Thank you for your interest in Acuity Brands. I will now turn the call over to Neil Ash.

Thank you, Charlotte, and thank you all for joining us this morning. Our fiscal 2024 second quarter was another quarter of solid execution. We increased our adjusted operating profit, adjusted operating profit margin, and adjusted diluted earnings per share. We generated strong free cash flow, and we allocated capital effectively to drive value. Both our lighting and our intelligent spaces businesses delivered strong financial performance. In ABL, we increased adjusted operating profit by $3 million on $47 million less sales and increased the adjusted operating profit margin 120 basis points to 16.2%. This performance is the cumulative result of the changes that we have made to the business over the last four years. We have made the business more predictable, repeatable, and scalable by executing on our strategy to increase product vitality, elevate service levels, use technology to improve and differentiate both our products and how we operate the business, and by driving productivity. During the second quarter, we continue to make progress on our strategy. By focusing on the needs of our customers, we are elevating our service through our differentiated portfolios. Contractors Select is about 300 of our most popular products that are used in common, everyday lighting applications. These products are designed to be resold and are in stock at retailers and electrical distributors. Through high levels of product vitality, we have been able to create a portfolio that offers quality products that our customers want at competitive prices, while at the same time allowing our distributor partners to carry less inventory. Design Select is comprised of products that are configurable and allow customers to easily select the products needed for their projects. We are less than a year into launching the first wave of Design Select, and we are continuing to expand the product families and configurations available. The reception so far has been positive. A recent project in California is a great example, where a customer needed indoor fixtures, outdoor fixtures, and lighting controls. Using options from the Design Select portfolio, we were able to meet the unique product combination of the project, ensure it was there when the customer needed it, and that it was easy for the contractor to install. The remainder of our product portfolio is made to order. These are specialty products or solutions made for specific applications, such as national accounts, that satisfy all of the wants and needs of the lighting design community. At the same time, we continue to make investments for future growth. In the second quarter, we expanded our horticulture product solutions. We added the Arise family of products to our existing Berger line in order to take advantage of a growing market. Arise is a collection of professional-grade LED horticulture luminaires that are compatible with our in-light air wireless controls and are used in commercial greenhouses, indoor cultivation, and vertical farming. This small investment accelerates our product portfolio efforts in this attractive vertical. This approach to investment in ABL is the right one, as evidenced by the value being realized in our Optitronic driver and component business. We acquired Optitronic in 2021 in order to control more of the technology in our luminaires, to expand our OEM channel, and to take greater control of our electronics supply chain. Today, we are one of the top driver suppliers to the lighting industry and to ourselves as we manufacture the majority of our drivers for our own products. This control not only offers us a financial benefit, but also offers us greater engineering flexibility during the design and development process that is core to our product vitality efforts. This quarter, we introduced the Ivo family of shallow recess downlights from Gotham, which is a new platform of indoor downlights that have a compact design for use in confined spaces that replace the traditional canned recess lighting fixtures. Ivo can be used in most non-residential settings, in both new construction and renovation. The compact design and high efficiency options deliver real value for our customers, while the use of less steel, less aluminum, and less plastic drives margin for us. Finally, this quarter several of our brands were recognized by the industry. Our AccuLux, Eureka, Hydrel, Luminous, and Peerless brands were awarded nine Good Design Awards from the Chicago-Athenium Museum of Architecture and Design. We were awarded 11 2023 Product Innovation Awards by Architectural Products Magazine for impressive innovation in terms of form, functionality, and sustainability. And 14 of our luminaires were selected across multiple product categories by the Lit Design Awards for exemplifying outstanding creativity and innovation. Now, moving to our Intelligence Basis Group. Our mission in our intelligent spaces business is to make spaces smarter, safer, and greener through our strategy of connecting the edge to the cloud. Distech has the best edge control devices on the market, while Atrius will be the best in cloud applications. At Distech, we are focused on expanding our addressable market in two ways. The first is geographic, and the second is increasing what we can control in a built space. As part of our geographic expansion, this quarter we added additional systems integrator capacity in Australia, and we released Atrius Sustainability and Atrius Energy in France. Our independent SIs are key to the organic expansion of our Spaces business. We partner with the best SIs in specific geographies to sell our full suite of DISTEC and Atrius product portfolios. Our Atrius applications are making a difference for our customers. Atrius Sustainability is an automation tool that captures, categorizes, and reports on carbon emissions, while Atrius Energy facilitates the reduction of energy and carbon usage by allowing facilities teams to benchmark their usage and prepare for upcoming reporting obligations. Our Atrius Energy and Sustainability applications are gaining recognition. Commercial Property Executive Magazine named Atrius an Innovative Technology winner in its annual Influence Awards. And CRE Tech selected Atrius as a finalist in its Real Estate Tech Awards that honor technology vendors that are advancing solutions for commercial buildings. Now, turning to the outlook for the remainder of the year. We are performing well. We are satisfying customers, expanding margins, and generating strong free cash flow. The order rates in both our lighting business and our spaces business are growing year over year. In our lighting business, we are back to typical lead times and absent the impact of sales from excess backlog last year, we would be experiencing sales growth. In our lighting and lighting controls business, our strategy drives strong execution and we are focused on returning the business to growth in a normalized environment while leveraging our fixed costs and generating strong cashflow. In our spaces business, we will continue to grow geographically and by adding to what we can control in a built space. Karen will outline what that means for our second half outlook after giving you an update on our second quarter performance. Karen?