The market for non-portable lights, outdoor poles, emergency systems, and building tech spans residential and commercial sectors. Demand depends on economic growth, construction costs, and energy prices, with commercial projects and consumer housing trends driving it. Tech advances and energy standards are fueling a shift toward LEDs and smart, sustainable design. The market is projected to reach $160 billion by 2026, growing at an 11.26% CAGR since 2020.
The company is organized into two distinct segments: Acuity Brands Lighting (ABL) and the Intelligent Spaces Group (ISG) :
The ABL segment delivers high-performance lighting solutions. Its LED luminaires and controls, featured in brands like Lithonia Lighting, Gotham, Peerless, SensorSwitch, Holophane, Juno, Cyclone, and Aculux, from healthcare to large-scale corporate projects. Serving electrical distributors, OEMs, corporate accounts, and energy service companies, ABL supports new construction, retrofits, and maintenance through a network of independent sales agencies and direct sales channels.
The segment experienced modest growth from Q4 2023 to Q4 2024, with net sales rising from $944 million to $955 million. However, adjusted operating profit showed a stronger performance, increasing by 8% from $159 million to $172 million.
The ISG segment delivers intelligent building management, optimizing HVAC, lighting, shades, refrigeration, and access control for smarter, safer, and greener spaces. Its software enhances occupant experience, automates tasks, and improves energy efficiency. Key customers include system integrators, retailers, airports, and enterprise campuses across North America and select global markets, with brands like Atrius and Distech Controls.
The ISG segment was the primary growth driver this quarter, with a 17% increase in sales and a notable 51% rise in adjusted operating profit. From Q4 2023 to Q4 2024, sales climbed from $72 million to $84 million, while adjusted operating profit jumped from $14 million to $22 million, underscoring ISG’s significant impact on overall group performance.
The company operates eighteen manufacturing facilities: seven in Mexico, six in the U.S., three in Canada, and two in Europe. Given former President Trump's stance on offshore manufacturing and US sales, this may impact the company's strategy. For the next quarterly presentation, it would be useful to examine whether the company plans to relocate more production or open additional facilities in the US in response to potential policy changes.
The lighting and building management market is highly competitive, shaped by innovation, pricing, brand, design, and energy efficiency. Established players and newcomers alike, including Signify, LSI Industries, and Fagerhult Group, drive the industry with frequent acquisitions and expanding offerings. Large manufacturers bundle extensive product lines, while startups, Asian importers, and tech giants introduce fresh alternatives.
Fiscal 2024 showed strong growth, with ABL’s net sales increasing by $11 million and adjusted operating profit rising by $13 million, reaching an 18% profit margin. Key achievements include the integration of lighting and supply chain under Sach Sankpal, driving alignment and productivity, and launching the Holobay high bay light by Holophane, a standout in industrial lighting.
The Intelligent Spaces Group also saw substantial growth, with net sales up 17%, driven by large data center projects and success in international markets, particularly France. Fourth-quarter highlights include total net sales of $1 billion, a 2% rise year-over-year, with a $16 million increase in adjusted operating profit, reaching a 17.3% margin. Strong cash flow allowed investments in acquisitions like Arize Horticulture Lighting, a 15% dividend increase, and a share repurchase program, ending the year with $846 million in cash. Looking to fiscal 2025, the company expects net sales between $3.9 billion and $4.1 billion, with steady growth across its business segments.
Acuity Brands appears well-positioned to continue its growth in the coming quarters and years. Its diversification and active acquisitions are attracting new clients while expanding its market reach. However, challenges remain with the integration of new brands and the potential impact of the new U.S. administration starting in January 2025.
