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ACUITY INC. (DE) (AYI)·Q3 2025 Earnings Summary

Executive Summary

  • AYI delivered net sales of $1.18B (+21.7% YoY) with adjusted diluted EPS of $5.12 (+23.4% YoY); GAAP diluted EPS fell to $3.12 (-13.8% YoY) due to $29.7M ABL special charges tied to productivity actions, while adjusted operating margin expanded to 18.8% (+150 bps YoY) .
  • Results beat Wall Street consensus: revenue $1.179B vs $1.148B estimate and adjusted EPS $5.12 vs $4.44 estimate; EBITDA tracked near consensus ($205.6M vs $208.1M). This beat, plus strong AIS margin expansion, is a positive stock reaction catalyst.
  • Management affirmed no change to second-half expectations; they highlighted tariff-driven order acceleration in Q3, expected margin dilution in Q4 as tariffs flow through with dollar-for-dollar price coverage .
  • AIS grew to $264M (+249% YoY) with adjusted operating margin 23.6%, underscoring emerging “data and controls” leverage from QSC integration; ABL adjusted margin rose to 18.8% on product vitality and pricing discipline .

What Went Well and What Went Wrong

What Went Well

  • AIS strength and faster-than-expected QSC margin improvement: AIS adjusted operating profit rose to $62.3M (+260% YoY); management noted QSC’s adoption of Better, Smarter, Faster tools and strong top line drove margin improvement (“really pleased with the integration of QSC”) .
  • ABL adjusted margin expansion despite tariff uncertainty: ABL adjusted operating margin increased to 18.8% (+80 bps YoY) on product vitality, service, technology and productivity (“we grew net sales, expanded our adjusted operating profit... increased our adjusted diluted earnings per share”) .
  • Gross margin expanded: adjusted gross margin reached 50.0% (+330 bps YoY) as AIS becomes a larger share and ABL mix/product initiatives take hold (“gross margin... really strong at 50%; underlying businesses are performing really well”) .

What Went Wrong

  • GAAP profitability compressed: GAAP operating margin fell to 11.9% (-310 bps YoY) and GAAP diluted EPS declined 13.8% YoY, reflecting $29.7M special charges for ABL brand consolidation, severance and facility reorganization .
  • Tariff headwind timing: Q3 had minimal tariff cost realization, but management expects margin dilution in Q4 as tariffs and price actions flow through (“dilutive impact... starting in the fourth quarter”) .
  • Corporate accounts weakness and mixed channel: Corporate accounts down 41.3% YoY; retail down 9.4% YoY, partially offset by independent network growth (+7.6% YoY) and direct sales (+4.6% YoY) .

Financial Results

Key Metrics (GAAP and Non-GAAP)

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$0.968 $0.952 $1.006 $1.179
Gross Margin % (GAAP)46.7% 47.2% 46.5% 48.4%
Adjusted Gross Margin %46.7% —47.5% 50.0%
Operating Margin % (GAAP)15.0% 14.0% 11.0% 11.9%
Adjusted Operating Margin %17.3% 16.7% 16.2% 18.8%
Diluted EPS (GAAP)$3.62 $3.35 $2.45 $3.12
Adjusted Diluted EPS$4.15 $3.97 $3.73 $5.12

Segment Breakdown

| Segment | Q1 2025 Net Sales ($MM) | Q1 2025 Adj. OP Margin