On the top line, revenues rose 5.9% year/year to $944.0 mln, which also easily topped expectations.
The 5.9% year/year growth in fiscal 2018 third quarter net sales was due primarily to an increase in sales volume of approximately 10% and a combined 1% favorable impact from acquisitions and foreign exchange rate changes, partially offset by an approximate 5% unfavorable change in product prices and mix of products sold ("price/mix".)
Unfavorable price/mix reflected changes in both product mix, which included substitutions to certain products with less costly form factors resulting in lower price points, and sales channel mix, which included declines in shipments of generally higher priced solutions, primarily for larger commercial projects.
Price/mix was also impacted by lower pricing on certain luminaires as well as increased competition in portions of the market for more basic, lesser-featured products. Sales of LED-based products represented over two-thirds of fiscal 2018 third quarter total net sales.
Moving a little down the income statement, gross profit rose year/year.
Gross profit for the third quarter of fiscal 2018 increased $10.5 mln, or 2.8%, to $389.4 mln compared with $378.9 mln in the prior-year period due to higher sales volumes, productivity improvements, and lower quality costs, partially offset by unfavorable price/mix, increased wages, and additional reserves for excess inventory related to the closure of a facility.
However, gross profit as a percentage of sales declined some year/year to 41.3% from 42.5%.
Looking ahead: The company said, "Third-party forecasts and leading indicators suggest that demand in the North American lighting market, the company's primary market, will improve modestly in the second half of calendar 2018 following several quarters of weak demand. We expect to continue to outperform the growth rates of the markets that the company serves by executing our strategies focused on growth opportunities for new construction and renovation projects, expansion into underpenetrated geographies and channels, and growth from the continued introduction of new lighting and building management solutions as part of the company's integrated, tiered solutions strategy. We believe the pricing environment will continue to be challenging in portions of the market, particularly for more basic, lesser-featured products sold through certain sales channels as well as shifts in product mix, both of which are expected to continue to negatively impact net sales and margins. We expect to continue to introduce products and solutions to more effectively compete in these portions of the market and to accelerate programs to reduce product costs in order to maintain the company's competitiveness and drive improved profitability."
Overall, the market clearly likes the lighting manufacturing company's results and outlook, as shares are trading near 16% higher in current action.