Acuity Brands (AYI) will report fiscal third quarter results (ending May) tomorrow morning; management will host a conference call at 10:00.
Acuity Brands is the North American market leader and one of the world's leading providers of lighting and building management solutions.
Third quarter earnings are expected to be flat year-over-year with revenue up 1%.
Acuity has been struggling recently. The company has missed earnings estimates two quarters in a row as gross margins have fallen five quarters in a row. Sales have also missed expectations five of the last seven quarters.
Acuity missed first quarter estimates on the top and bottom line in January. Volume fell 1% while price/mix also represented a 1% headwind. The company said the pricing environment would continue to be challenging, particularly for more basic, lesser-featured products. They expected certain headwinds in the home center/showroom channel to continue in the near term.
Last quarter, sales grew 3% as volume rose 6% but price/mix represented a 3.5% headwind. Expenses were up 8% due to higher employee costs and freight charges. The company also removed language about the North American lighting market growing low single digits with an improvement in the back half of the year. Acuity said overall market conditions could continue to be challenging for the near future based on soft order activity in certain sales channels, which suggests growth in the lighting fixture market may remain sluggish for the balance of 2018. Management expected headwinds in the home center/showroom sales channel to continue in the near term, giving way to growth in the second half of calendar 2018. The company also warned about continued price/mix headwinds and higher commodity and employee costs.
Meanwhile, the company continues to consolidate the lighting industry with tuck-in acquisitions.
The company's recent poor performance has weighed on the stock, which is down more than 50% since peaking in the Summer of 2016.
With a market capitalization of $4.7 billion, Acuity trades at ~12x EPS estimates. Some 13% of the 40 million share float is sold short.