Acuity Brands
Annual Report 2012

Plain-text annual report

2012 AnnuAl RepoRt Expanding the Boundaries of Lighting™ HARnessing tecHnology, innovAtion, cReAtivity And industRy-leAding expeRtise to deliveR supeRioR ligHting solutions. OUR BRANDS Delivering superior lighting solutions that improve the quality of our schools, workplaces and public places—indoors and outdoors. Luminaries, controls, and daylighting: intelligent solutions for better living. TO OUR STAkehOLDeRS: 2012 was another successful year for Acuity Brands, both strategically and financially. We again grew market share by providing customers with superior lighting solutions from our broad and dynamic product portfolio, and we enhanced service, which included delivering new capabilities from our regional service facilities. We were again recognized by key customers, such as the iMARK group, as supplier of the year for the third straight year for our outstanding products, service and support. We continued to expand our addressable market and further penetrated key geographies, reducing our reliance on new construction activity. 2012 was the fourth consecutive year in which we expanded our industry-leading portfolio with the introduction of approximately 100 new products for indoor and outdoor applications. Additionally, we won multiple awards for innovation and ingenuity, further demonstrating our leadership in solid state as well as conventional lighting solutions. these are among the strategic accomplishments that allowed us to once again extend our market leadership position in 2012 while strengthening our platform for future growth. Acuity Brands also delivered solid results, despite the continuing challenges of a weak economy: • Net sales grew almost 8 percent, to more than $1.9 billion; • Adjusted operating profit margin expanded 120 basis points to 11.7 percent; • Adjusted diluted earnings per share from continuing operations increased 24 percent to $3.00 per share; • Cash flow provided by operating activities rose to over $172 million; • Return on stockholders’ equity climbed to nearly 15 percent; and • Total shareholder return exceeded 40 percent. this is an extraordinary time to be in the lighting industry, particularly for a company of the caliber of Acuity Brands. Rapid advancements in technology, along with the need for greater energy efficiency, changes in public policy, and demand for environmental sustainability, continue to drive profound changes in our industry creating an exciting opportunity. Acuity Brands is capitalizing on these profound changes to provide lighting solutions that are elegant, sophisticated, and efficient, while at the same time simple to install, maintain, and use. We are at the forefront of transforming the lighting industry. our skill, knowl- edge and experience as lighting experts allow us to deliver superior lighting solutions for virtually any application, a promise best captured in our tag line: “expanding the Boundaries of lighting™.” Our Future: Growth, Innovation, Excellence As we enter 2013, our mission is to continue to build on our rich legacy of growth, innovation and excel- lence. our passion and intense focus continue to be centered on creating lighting solutions that deliver superior quality, energy efficiency and performance. We know that superior quality of light enhances how we live and interact, whether it is increasing students’ learning ability in schools, improving worker productivity and comfort in offices and industrial facilities, enhancing the shopping experience in retail establishments, or accelerating patient healing in hospitals. the possibilities of what can be achieved by the use of intelligent lighting solutions are still being explored. technology, coupled with our deep knowledge of lighting, is allowing us to create ever more effective and energy-efficient solutions that are “smart and simple,” a slogan we use in our sales and marketing campaigns to convey our value proposition for the many vertical markets we serve. our associates are rapidly exploiting these new technologies and aggressively expanding our industry-leading portfolio by developing intelligent lighting solutions that represent significant advancements over traditional technologies and that easily network with other building systems, improving energy efficiency, performance and safety. We believe the emphasis on energy efficiency and environmental concerns will continue to drive signifi- cant growth in our industry. As the market leader in north America, we believe that our deep expertise in technology, optics and thermal management, our understanding of the art and science of lighting, and our ability to provide tailored lighting solutions for numerous applications have positioned the company to excel. our key strategies and tactical focus have remained consistent over the last few years. We expect to continue to execute our profitable growth strategy by focusing on the three mission-critical areas of operational excellence that we refer to as the 3 Cs: • Providing unparalleled customer service; • Pursuing world-class cost efficiency by eliminating non-value added activities and transaction costs; and • Creating a culture that demands excellence in everything we do through continuous improvement. On behalf of Acuity’s management team and its Board of Directors, I want to thank our 6,000 associates for making possible the success we experienced in 2012 and for their continued contributions and dedication to our vision. i also want to thank our customers for their business, our suppliers for their support, and our stockholders for the partnership we share in our enterprise. sincerely, vernon J. nagel Chairman, President, and Chief Executive Officer November 18, 2012 vernon J. nagel 2012 PeRFORMANCe Financial success in increased sales, margins, earnings and shareholder returns. FiNANCiAL highLighTS REVENUES 9 (% in billions) FREE CASH FLOW $72 (% in Millions) OPERATING PROFIT (% in Millions) margins REVENUES ($ in Billions) 12.9% DILUTED EPS 9.3% 9.7% 10.5% 10.8% $2.01 $1.79 REVENUES (% in billions) DILUTED EPS FREE CASH FLOW (% in Millions) OPERATING PROFIT (% in Millions) margins REVENUES ($ in Billions) 2.5 2.0 1.5 1.0 0.5 0.0 2.5 2.0 1.5 1.0 0.5 0.0 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 200 150 100 50 0 200 150 100 50 0 300 250 200 150 100 50 0 300 250 200 150 100 50 0 2.5 2.0 1.5 1.0 0.5 0.0 15 12 6 3 0 15 12 9 6 3 0 REVENUES (% in billions) DILUTED EPS FREE CASH FLOW (% in Millions) OPERATING PROFIT (% in Millions) margins DILUTED EPS $3.51 FREE CASH FLOW ($ in Millions) $195 $2.72 $2.42 $139 $138 $141 200 150 ’08 ’09 ’10 ’11 ’12 ’08 ’09 ’10 ’11 ’12 Free Cash Flow is defined as cash provided by operating activities minus purchases of property, plant, and equipment. OPERATING PROFIT ($ in Millions) MARGINS $261 DILUTED EPS 100 $3.51 FREE CASH FLOW ($ in Millions) $195 $208 $189 12.9% $158 $154 10.5% 10.8% 9.3% 9.7% $2.72 $2.42 $139 $138 $141 $2.01 $1.79 50 $72 $2.03 $1.93 $1.80 $1.66 $1.63 4.0 ’08 ’09 ’10 3.5 ’11 ’12 3.0 2.5 REVENUES ($ in Billions) 2.0 $2.03 $1.93 $1.80 1.5 $1.66 $1.63 1.0 0.5 ’08 ’09 ’10 ’11 ’12 ’08 ’09 ’10 ’11 ’12 0.0 ’08 0 ’09 ’10 ’11 ’12 ’08 ’09 ’10 ’11 ’12 300 250 200 150 100 50 0 15 12 9 6 3 0 COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN* Among Acuity Brands, Inc., the S&P MidCap 400 Index, the Dow Jones US Electrical Components & Equipment Index, and the Dow Jones US Building Materials & Fixtures Index Operating Profit MARGINS $160 120 80 40 0 Aug. ’07 Aug. ’08 Aug. ’09 Aug. ’10 Aug. ’11 Aug. ’12 Acuity Brands, Inc. Dow Jones US Electrical Components & Equipment Index S&P MidCap 400 Index Dow Jones US Building Materials & Fixtures Index Acuity Brands, Inc. S&P MidCap 400 Index Dow Jones US Electrical Components & Equipment Index Dow Jones US Building Materials & Fixtures Index Aug. ’07 Aug. ’08 Aug. ’09 Aug. ’10 Aug. ’11 Aug. ’12 $100 $100 $100 $100 $101 $ 96 $ 95 $ 91 $76 $78 $74 $68 $93 $88 $78 $69 $111 $108 $ 97 $ 77 $156 $121 $120 $115 *Assumes $100 invested on August 31, 2007 in stock or index, including reinvestment of dividends. 160 120 80 40 0 $2.03 $1.93 $1.80 $1.66 $1.63 OPERATING PROFIT ($ in Millions) MARGINS $261 $208 $189 12.9% $158 $154 10.5% 10.8% 9.7% 9.3% DILUTED EPS $3.51 FREE CASH FLOW ($ in Millions) $195 $2.72 $2.42 $2.01 $1.79 $139 $138 $141 $72 ’08 ’09 ’10 ’11 ’12 ’08 ’09 ’10 ’11 ’12 ’08 ’09 ’10 ’11 ’12 ’08 ’09 ’10 ’11 ’12 Free Cash Flow is defined as cash provided by operating activities minus purchases of property, plant, and equipment. REVENUES ($ in Billions) REVENUES ($ in Billions) REVENUES ($ in Billions) REVENUES ($ in Billions) $2.03 $2.03 $2.03 $2.03 $1.93 $1.80 $1.66 $1.63 $1.93 $1.80 $1.93 $1.80 $1.93 $1.80 $1.66 $1.63 $1.66 $1.63 $1.66 $1.63 ’08 ’09 ’10 ’11 ’12 ’08 ’09 ’10 ’11 ’12 ’08 ’09 ’10 ’11 ’12 ’08 ’09 ’10 ’11 ’12 BOARD OF DiReCTORS AND exeCUTive OFFiCeRS executive officers vernon J. nagel Chairman, President, and Chief Executive Officer Acuity Brands, Inc. Richard K. Reece Executive Vice President and Chief Financial Officer Acuity Brands, Inc. Mark A. Black Executive Vice President Acuity Brands Lighting, Inc. Julia B. north Former President and Chief Executive Officer VSI Enterprises, Inc.; Former President of Consumer Services BellSouth Corporation dominic J. pileggi Chairman and Former Chief Executive Officer Thomas & Betts Corporation Ray M. Robinson4 Non-Executive Chairman Citizens Trust Bank; President Emeritus East Lake Golf Club norman H. Wesley Former Chairman and Chief Executive Officer Fortune Brands, Inc. Board of directors vernon J. nagel1 Chairman, President, and Chief Executive Officer Acuity Brands, Inc. peter c. Browning2 Non-Executive Chairman Nucor Corporation; Former Dean McColl Graduate School of Business at Queens University of Charlotte george c. (Jack) guynn Former President and Chief Executive Officer Federal Reserve Bank of Atlanta gordon d. Harnett Former Chairman, President and Chief Executive Officer Brush Engineered Materials, Inc. (now known as Materion Corp.) Robert F. Mccullough3 Former Chief Financial Officer AMVESCAP PLC (now known as Invesco Ltd.) 1) Chairman of Executive Committee 2) Chairman of Governance Committee, Lead Director 3) Chairman of Audit Committee 4) Chairman of Compensation Committee STOCkhOLDeR iNFORMATiON Corporate headquarters Stock Listing Direct Stock Purchase Plan computershare shareowner services offers a direct stock purchase and sale plan for investors wishing to purchase Acuity Brands stock. dividends can be automatically reinvested. the plan is not sponsored or administered by Acuity Brands. Inquiries should be directed to: computershare shareowner services. new york stock exchange ticker symbol: Ayi Transfer Agent and Registrar computershare shareowner services is the transfer agent, registrar, dividend disbursing agent and dividend reinvest- ment agent for the company. stockholders of record with questions about lost certifcates, lost or missing dividend checks, direct deposit of dividends, or notification of change of address should contact: Acuity Brands, inc. c/o computershare shareowner services P.O. Box 358015 pittsburgh, pennsylvania 15252-8015 Web site: www.cpushareownerservices.com Toll Free: 866-234-1921 (inside the united states and canada) 201-680-6685 (outside the united states and canada) Acuity Brands, inc. 1170 Peachtree Street, NE Suite 2400 Atlanta, Georgia 30309-7676 404-853-1400 www.acuitybrands.com Acuity Brands lighting one lithonia Way Conyers, Georgia 30012-3957 770-922-9000 independent Registered Public Accounting Firm ernst & young llp 55 Ivan Allen Jr. Boulevard suite 1000 Atlanta, Georgia 30308-3051 404-874-8300 Annual Meeting 11:00 a.m. eastern time January 4, 2013 Four seasons Hotel Ballroom, 75 Fourteenth Street, NE Atlanta, georgia Reports Available to Stockholders copies of the following com- pany reports may be obtained, without charge: 2012 Annual Report to the securities and exchange com mission, filed on Form 10-K, and Quarterly Reports to the securities and exchange com mission, filed on Form 10-Q. Requests should be directed to: Acuity Brands, inc. Attention: investor Relations 1170 Peachtree Street, NE Suite 2400 Atlanta, Georgia 30309-7676 404-853-1400 www.acuitybrands.com m o c . s r o n n o c - n a r r u c . w w w / . c n i , s r o n n o c & n a r r u c y b n g i s e d t r o p e R l a u n n A 1170 Peachtree Street, NE Suite 2400 Atlanta, Georgia 30309-7676 404-853-1400 www.acuitybrands.com 

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