Acuity NYSE: AYI reported fiscal 2026 second-quarter results that executives said reflected “strong execution” despite a soft lighting market. Chairman, President and CEO Neil Ashe said the company grew net sales, expanded adjusted operating profit and margin, increased adjusted diluted earnings per share, and generated strong cash flow while continuing to invest in technology and manage costs aggressively.
Second-quarter results
Senior Vice President and CFO Karen Holcomb said total company net sales were $1.1 billion, up $49 million, or 5% from the prior year. Holcomb attributed the increase primarily to growth in Acuity Intelligent Spaces (AIS), including “an additional month of QSC sales,” partially offset by revenue declines in Acuity Brands Lighting (ABL).
Adjusted operating profit was $176 million, up $13 million, or 8% year over year, while adjusted operating profit margin improved 50 basis points to 16.7%. Adjusted diluted EPS was $4.14, up $0.41, or 11%, which Holcomb said was driven mainly by higher profitability and, to a lesser extent, lower diluted shares outstanding.
Acuity Brands Lighting: softer sales, higher margins
ABL sales were $817 million, down $23 million, or 3% from the prior year, which Holcomb said was driven by declines in the direct sales channel. She cited “several large projects in the same period last year that did not repeat.”
Despite lower volume, ABL gross profit margin increased 70 basis points to 45.7%. Holcomb said the improvement was “driven largely by strategic pricing and product and productivity improvements.” ABL adjusted operating profit rose slightly to $142 million, and adjusted operating profit margin improved 50 basis points to 17.3%, reflecting the gross margin gains.
Ashe said Acuity is “aligning our cost structure to current market dynamics while continuing to serve customers effectively,” pointing to progress over the last five years in product vitality, service levels, technology, and productivity. Holcomb said the company took “certain actions, including the reduction of labor,” resulting in a $6 million special charge during the quarter.
Acuity Intelligent Spaces: growth and margin expansion
AIS sales were $248 million, up $77 million, driven by “strong growth in Distech and QSC,” Holcomb said, along with the extra month of QSC in the comparison. AIS adjusted gross profit margin increased 60 basis points to 59.1%. Adjusted operating profit was $48 million, and adjusted operating profit margin improved 60 basis points to 19.3%.
Ashe emphasized the company’s view of AIS as a differentiated portfolio: “Atrius and Distech Controls control the management of the space, and QSC manages the experiences in the space.” He said the company plans to use data interoperability across those platforms over time as part of its effort to make spaces “autonomous.”
During the quarter, Ashe highlighted product releases and awards within AIS, including Distech’s Eclipse Retrofit Solution and QSC’s expansion into smaller collaboration spaces with the RoomSuite Modular System. He also cited industry recognition for Q-SYS, Distech Controls, and related products.
Demand trends, pricing, and supply chain topics
On demand in lighting, Ashe told analysts that project activity remains in the pipeline, but “the time to release is increasing,” even as conversion rates have stayed roughly consistent. He tied the slower releases to market uncertainty around policy, tariffs, and rates, and to “the impact of data centers and their flow-through on everything else,” which he said can create “a bit of a crowding out” for labor.
Ashe said the company expected the year-over-year project comparison in the direct sales channel because of large prior-year projects that did not recur. He also said some future large infrastructure projects were “mildly impacted by the government shutdown,” describing stalled permitting and funding decisions that created a ripple effect.
Asked about market share and whether pricing has affected demand, Ashe said, “We have no indication that we are down in market share.” He described Acuity’s “strategic pricing” as value-based and not uniform across the market, saying the company balances competitiveness in some areas with taking price in others “while maintaining our market leadership position.”
On tariffs, Ashe said Acuity’s supply chain has allowed it to adapt through steps such as “qualifying new suppliers, identifying appropriate location, re-engineering products,” adding that the company can adjust quickly as conditions change. He said “most of our steel and aluminum 232 does go through USMCA,” and that a “large portion” of products are unaffected due to thresholds referenced in the question, while noting he had not yet seen the specific order being discussed.
Holcomb also addressed component pressures tied to data centers, focusing on “memory availability.” She called it a supply shock and said management’s playbook is to ensure component availability first, then cover the dollar impact of increases, and finally address any margin impact over time “just like we’ve done” with tariffs. Ashe later added that the company has extended some purchasing and funding in advance to support availability and expects conditions to remain “bumpy” over the next 6 to 12 months. He also clarified that memory constraints were not driving the change in ABL’s sales outlook and said most memory exposure would be in AIS, not ABL.
Outlook and capital allocation
For the full year, Ashe said Acuity now expects ABL sales to be flat to down low single digits year over year, reflecting performance to date and expectations for the remainder of the year. He described ABL as “the best performing lighting company in the world” and said management will continue focusing on product vitality, service, technology, and productivity, as well as “managing gross profit margin through the combination of strategic pricing and product and productivity improvements.”
Holcomb said there was no change to AIS expectations, and reiterated that the company still expects low- to mid-teens percentage growth for AIS for the year. She also said there was no change in EPS guidance.
On cash flow and capital allocation, Holcomb said Acuity generated $230 million of cash flow from operations in the first half of fiscal 2026, up $38 million from the same period last year, “primarily due to higher profitability.” During the quarter, the company repaid $100 million of its term loan, bringing total repayment to $200 million for the year, with $200 million remaining from the financing of the QSC acquisition.
Holcomb said the company increased its quarterly dividend by 18% to $0.20 per share and allocated $106 million to repurchase 318,000 shares.
Asked about balancing debt paydown versus buybacks and acquisitions, Ashe said repurchases are pursued when the company sees an attractive opportunity, while debt repayment reflects avoiding “negative carry” given cash levels. He said Acuity remains “completely comfortable operating with leverage” if it identifies an appropriate use and added that the acquisition pipeline remains active, with a focus on expanding AIS.
In closing remarks, Ashe said he was “pleased and proud” of the company’s execution in “dynamic market environments,” emphasizing margin management in ABL amid lower sales and continued growth and differentiation in AIS.
About Acuity NYSE: AYI
Acuity Brands, Inc NYSE: AYI is a leading provider of lighting fixtures, controls and building management solutions designed for commercial, institutional, industrial and residential markets. The company's core offerings include a broad range of LED luminaires, lighting controls, sensors and networked building systems that enhance energy efficiency, occupant comfort and operational productivity. Acuity Brands' portfolio spans indoor and outdoor lighting fixtures, emergency lighting, task lighting and architectural products, as well as advanced controls such as daylight harvesting, occupancy sensing and wireless sensor networks.
Beyond traditional lighting, Acuity Brands delivers integrated digital solutions through its Connected Building platform, which combines smart sensors, cloud-based analytics and mobile applications to enable real-time monitoring and remote management of lighting and environmental systems.
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