Executive Summary

Q4 2025 delivered 17% net sales growth to $1.21B, with adjusted operating margin expanding 130 bps to 18.6% and adjusted EPS up 21% to $5.20; GAAP EPS declined 4% to $3.61 due to a $30.9M non-cash pension settlement partially offset by an $8.2M one-time tax benefit .
Versus S&P Global consensus, AYI posted a clear EPS beat (Adj. EPS $5.20 vs $4.84 estimate*) and a slight revenue miss ($1.209B vs $1.229B estimate*); EBITDA under-shot consensus (company EBITDA $191.1M vs $210.8M estimate*) as mix and tariff-related effects weighed on GAAP profitability .
AIS was the growth engine (Q4 sales +204% y/y to $255.2M) with QSC integration progressing, while ABL posted modest sales growth (+0.8% y/y) and strong adjusted margin expansion (+210 bps to 20.1%); management emphasized pricing actions (low-to-mid single-digit) and supply-chain re-routing to mitigate tariff costs .
FY26 guidance introduced: total net sales $4.7–$4.9B and adjusted diluted EPS $19.00–$20.50; assumptions include ABL low single-digit growth and AIS organic low-to-mid teens growth—management indicated tariffs are a 50–100 bps margin headwind while they prioritize share gains and growth investments .
Capital allocation remained active: $601M operating cash flow for FY25, $200M term-loan repayment, ~436K shares repurchased for ~$118.5M, and $0.17 quarterly dividend declared (payable Nov 3, 2025) .

What Went Well and What Went Wrong

What Went Well
- AIS momentum and QSC integration: AIS sales grew to $255.2M (+204% y/y), with adjusted operating margin of 21.4%; management cited QSC margin uplift and broader collaboration across Atrius/Distech/QSC .
- ABL adjusted margin expansion: ABL adjusted operating margin rose 210 bps to 20.1% on cost reductions and productivity actions taken in Q3, despite tariff impacts .
- Clear FY26 outlook and focus: Introduced FY26 sales ($4.7–$4.9B) and adjusted EPS ($19–$20.50) ranges; reiterated strategy to take share, expand into underpenetrated verticals (e.g., healthcare) and invest for AIS growth .
What Went Wrong
- GAAP profitability dilution: GAAP EPS fell 4% y/y in Q4 to $3.61, reflecting a $30.9M non-cash pension settlement; EBITDA margin (non-GAAP) dipped to 15.8% from 16.6% y/y .
- Revenue vs consensus: Q4 revenue of $1.209B modestly missed S&P Global consensus ($1.229B estimate*), reflecting mixed channel trends (corporate accounts down 19.6% y/y) .
- AIS GAAP margin compression: AIS GAAP operating margin decreased y/y (11.0% vs 19.9%) due largely to higher amortization and acquisition accounting; adjusted margin remained healthy at 21.4% .

Financial Results

Headline metrics – last three quarters (oldest → newest)

Metric	Q2 2025	Q3 2025	Q4 2025
Net Sales ($USD Billions)	$1.006	$1.179	$1.209
Operating Profit (GAAP, $M)	$110.2	$139.8	$180.6
Operating Margin (GAAP, %)	11.0%	11.9%	14.9%
Adjusted Operating Profit (Non-GAAP, $M)	$162.9	$221.7	$225.3
Adjusted Operating Margin (Non-GAAP, %)	16.2%	18.8%	18.6%
Diluted EPS (GAAP, $)	$2.45	$3.12	$3.61
Adjusted Diluted EPS (Non-GAAP, $)	$3.73	$5.12	$5.20
EBITDA (Non-GAAP, $M)	$139.7	$172.1	$191.1
Adjusted EBITDA (Non-GAAP, $M)	$176.6	$236.3	$240.7

Q4 2025 vs prior year and vs S&P Global consensus

Metric	Q4 2024	Q4 2025 Actual	S&P Global Consensus*	Result vs Consensus
Net Sales ($USD Billions)	$1.032	$1.209	$1.229*	Miss (slight)
Primary/Adj. EPS ($)	$3.77 (GAAP) / $4.30 (Adj)	$3.61 (GAAP) / $5.20 (Adj)	$4.84*	Beat (Adj. EPS)
EBITDA ($M)	$171.6	$191.1	$210.8*	Miss

Notes: S&P Global consensus for Q4 2025: EPS 4.83778*, revenue $1,229,429,570*, EBITDA $210,750,000*. Values retrieved from S&P Global.

Segment performance – Q4 2025

Segment	Net Sales ($M)	Gross Margin (GAAP)	Operating Profit (GAAP, $M)	Op Margin (GAAP)	Adjusted Op Profit ($M)	Adjusted Op Margin
Acuity Brands Lighting (ABL)	962.4	45.7%	183.0	19.0%	193.6	20.1%
Acuity Intelligent Spaces (AIS)	255.2	59.2%	28.0	11.0%	54.6	21.4%

KPIs – Q4 2025 Disaggregated Net Sales by Channel

Channel (ABL)	Q4 2024 ($M)	Q4 2025 ($M)	Y/Y %
Independent sales network	677.1	702.4	3.7%
Direct sales network	109.6	105.3	(3.9%)
Retail sales	42.6	43.4	1.9%
Corporate accounts	65.8	52.9	(19.6%)
OEM & other	59.9	58.4	(2.5%)
AIS	83.9	255.2	204.2%

Non-GAAP/one-time items – Q4 2025

Pension settlement charge: $30.9M (non-cash); one-time tax benefit: $8.2M .
Adjusted EPS excludes amortization of intangibles, share-based comp, acquisition-related costs, pension settlement, and the one-time tax item .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales (Total AYI)	FY2026	N/A	$4.7B–$4.9B	Introduced
Adjusted Diluted EPS	FY2026	N/A	$19.00–$20.50	Introduced
ABL Sales Growth	FY2026	N/A	Low single-digit growth (assumption)	Introduced
AIS Organic Sales Growth	FY2026	N/A	Low to mid-teens (assumption)	Introduced
Margin context (tariffs)	FY2026	N/A	Tariffs a negative 50–100 bps margin impact; pricing offsets dollar costs	Qualitative update
One-time pension (UK)	Q1 FY2026	N/A	~$10M non-cash GAAP charge expected	Introduced
Dividend	Nov 3, 2025 pay date	Prior quarterly $0.17 (Jan/Jun)	Declared $0.17 quarterly dividend	Maintained

Note: No explicit FY26 guidance for tax rate, OpEx, OI&E beyond narrative; assumptions provided in call .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2025, Q3 2025)	Current Period (Q4 2025)	Trend
Tariffs & supply chain	Q2: Closed QSC; modest margin compression; no explicit tariff framework; Q3: accelerated productivity actions, $29.7M special charges .	Re-routed supply chain away from higher-tariff sources; pricing low-to-mid single digits to offset dollar costs; margin % impact −50–100 bps .	Proactive mitigation; lingering % margin headwind.
AIS & QSC integration	Q2: QSC included for 2 months; AIS adj. op margin 18.7% . Q3: AIS adj. op margin 23.6%; QSC 3 months included .	Q4: AIS adj. op margin 21.4%; QSC margin uplift; mid-teens organic growth targeted .	Strong growth focus; steady adj. margins.
ABL margins & pricing	Q2: ABL adj. margin 16.8% . Q3: Adjusted margin 18.8%; special charges to optimize cost base .	Q4: Adjusted margin 20.1%; pricing actions targeted (not broad-based) .	Upward adjusted margin trajectory.
Market demand	Q2/Q3: Solid topline; AIS drove growth .	End markets “tepid”/flat-to-down; ABL growth plan assumes share gains and new verticals .	Share gains over macro tailwinds.
Data/software monetization	Not highlighted in Q2 PR; Q3 PR focused on special charges .	Data interoperability via Atrius Data Lab; software opportunities in next 12–24 months .	Increasing emphasis on software/data.
Inventory & tariffs	Q3: Elevated inventories tied to actions and tariffs implicit .	Higher inventory dollars due to tariffs and pre-buys; expected to normalize through FY26 .	Temporary elevation; planned normalization.

Management Commentary

“We grew net sales, expanded our adjusted operating profit and adjusted operating profit margin, and increased our adjusted diluted earnings per share.” – Neil Ashe, CEO .
“We have the most dynamic and resilient supply chain in the industry… [we] move away from higher tariff environments… [and] strategically manage price.” – Neil Ashe .
“Pricing actions… have been in the low to mid-single digits, intending to offset the dollar impact of those tariffs.” – Karen Holcom, CFO .
“For full-year fiscal 2026, our expectation is that net sales will be… $4.7–$4.9 billion… We expect to deliver adjusted diluted EPS within the range of $19 to $20.50.” – Karen Holcom .
“Tariff cost and price increase is neutral [in dollars]. The margin % impact is negative… in the 50 to 100 bps range.” – Neil Ashe .

Q&A Highlights

AIS/QSC trajectory: Management has lifted QSC margins toward legacy AIS levels and will prioritize growth investments to sustain mid-teens organic growth; further product commingling and data-driven outcomes expected .
ABL seasonality and demand: Sequential dynamics reflect earlier pull-forward amidst tariff changes; ABL performance was in line on a combined Q3+Q4 view; channel mix shows corporate accounts softness .
Tariffs and sourcing: Material sourcing rebalanced away from China/“higher tariff environments”; total China exposure now ~20% of former levels; pricing targeted by portfolio segment .
Margin outlook: ABL adjusted margins continue to expand via productivity; tariff headwind is 50–100 bps on margin %, while AIS margins will grow over time but with near-term bias toward growth .
Inventory: Elevated dollars reflect higher input costs and opportunistic pre-buys to mitigate tariffs; expected to work down over FY26 .

Estimates Context

Q4 2025 EPS: Adj. EPS $5.20 beat S&P Global consensus $4.84*; GAAP EPS was $3.61 as reported .
Q4 2025 Revenue: $1.209B slightly missed S&P Global consensus $1.229B* .
Q4 2025 EBITDA: $191.1M came in below S&P Global consensus $210.8M* (company adjusted EBITDA was $240.7M) .
Implications: Street models likely lift FY26 EPS on AIS growth and ABL margin execution but may trim revenue/EBITDA trajectory for near-term tariff drag and AIS growth-investment mix .

Note: Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

Quality of beat: Strong Adj. EPS beat on margin execution and AIS scale; revenue was essentially in-line/slightly light, suggesting mix/price and cost actions are key earnings drivers near term .
AIS as growth vector: Integration of QSC and collaboration with Distech/Atrius underpin mid-teens organic growth ambitions and software/data optionality over 12–24 months .
ABL discipline: Adjusted margin improvement to 20.1% demonstrates cost productivity and pricing agility; tariff headwinds likely transient in % terms as productivity offsets accumulate .
FY26 setup: New guidance ($4.7–$4.9B sales; $19–$20.50 Adj. EPS) provides visibility; bias toward growth investments could cap near-term AIS margin upside but support multi-year compounding .
Tariff/Inventory watch: Expect some margin % drag (50–100 bps) and inventory normalization through FY26 as pre-buys unwind; monitoring gross/operating margin trajectory is critical .
Capital allocation: Robust cash generation ($601M FY25) supports dividends, buybacks, and de-leveraging amid acquisition integration; debt down $200M in FY25 .
Trading lens: Narrative likely rewards durable Adj. margin expansion and AIS growth milestones; any signs of end-market improvement would be incremental upside to ABL volume and operating leverage .

Appendix: Source Documents

Q4 2025 8-K and Press Release (Ex. 99.1): results, segment detail, reconciliations, cash flow, balance sheet .
Q4 2025 Earnings Call Transcript: strategy, guidance, tariff/supply chain, pricing, inventory, Q&A .
Other Q4 PRs: Dividend declaration ($0.17, payable Nov 3, 2025) .
Prior quarters (trend): Q3 2025 PR (sales $1.179B; Adj. EPS $5.12; special charges $29.7M) ; Q2 2025 PR (sales $1.006B; Adj. EPS $3.73; QSC closed) .

S&P Global Disclaimer: Consensus estimates (values marked with *) are retrieved from S&P Global.

ACUITY INC. (DE) (AYI)·Q4 2025 Earnings Summary