Acuity Brands
Annual Report 2021

Plain-text annual report

N N U A L 21A R E P O R T TRANSFORMING WHAT MATTERS Table of Contents 2 Introduction 6 CEO Letter 9 Financials 13 Light 17 Spaces 20 Culture 24 Sustainability 27 For Stockholders “In Fiscal Year 2021, the Acuity team delivered a series of strategic changes to improve our Company and its performance. The year presented ongoing challenges due to the global pandemic. Our teams focused on product vitality, customer service, and efficient, thoughtful execution.” Neil M. Ashe Chairman, President and Chief Executive Officer R EAD FULL LE T TER C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 2 We use technology to solve problems in spaces, light, and more things to come. Acuity Brands, Inc. is a market-leading industrial technology company. We use technology to solve problems in spaces and light. Through our two business segments, Acuity Brands Lighting and Lighting Controls (“ABL”) and the Intelligent Spaces Group (“ISG”), we design, manufacture, and bring to market products and services that make the world more brilliant, productive, and connected. We achieve growth through the development of innovative new products and services, including lighting, lighting controls, building management systems, and location-aware applications. We are based in Atlanta, Georgia, with operations across North America, Europe, and Asia and are powered by approximately 13,000 dedicated and talented associates. Fiscal Year 2021 was a pivotal year for us as we advanced our corporate transformation. We returned the Company to growth amid a challenging global environment. We expanded our gross profit and operating profit margins. We generated strong cash flow and allocated capital in a way that creates permanent value for shareholders. We realigned our businesses into Acuity Brands Lighting and Lighting Controls and the Intelligent Spaces Group. We built a strong and diverse leadership team. Our Company continued to drive improvements across our Environmental, Social, and Governance (“ESG”) goals through our EarthLIGHT strategy, and we made progress on Diversity, Equity, Inclusion (“DEI”). As a result, we have positioned ourselves well for Fiscal Year 2022. C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 3 TRANS FORMING OUR BUSINESS We use technology to solve problems in spaces, light, and more things to come. TRANS FORMING O U R P R O D U C T P O RT F O L I O We are focused on innovation through product vitality. T R A N S F O R M I N G H O W W E R U N O U R B U S I N E S S The Better. Smarter. Faster. process focuses on the art of the possible and understanding that the most important metric is end-user satisfaction. T R A N S F O R M I N G O U R C U LT U R E We are defining ourselves as a values-based organization where the best people come to do their best work. T R A N S F O R M I N G O U R F U T U R E We are creating a better future – one where our planet, communities, and businesses can thrive. C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 4 C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 5 $3.5B NET SALES $365M* FREE CASH FLOW 4.0% NET SALES GROWTH 12.4% OPERATING PROFIT MARGIN 42.6% GROSS PROFIT MARGIN $8.38 DILUTED EPS F I N A N CI AL H I GHL IGHTS *Free Cash Flow is defined as cash provided by operating activities minus purchases of property, plant, and equipment. CEO Letter TO OUR STOCKHOLDERS In Fiscal Year 2021, Acuity Brands made significant progress in its transformation and delivered a solid performance. “In Fiscal Year 2021, we made significant progress on the transformation of Acuity Brands. Our Company improved operations and delivered solid performance in a challenging environment. We increased our service levels, delivered productivity improvements, and introduced new products featuring some of the most advanced technology in the industry.” Neil M. Ashe Chairman, President and Chief Executive Officer C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 6 TO OUR STOCKHOLDERS In January of 2020, Acuity announced our plan to undergo a company-wide transformation. In Fiscal Year 2021 (FY21), the Acuity team delivered a series of strategic changes to improve our Company and its performance. The year presented ongoing challenges due to the global pandemic. Yet, our teams persevered by focusing on product vitality, customer service, and efficient, thoughtful execution, even in these difficult circumstances. Fiscal Year 2021 was a pivotal year for us as we advanced our corporate transformation. I’m proud of what our associates have accomplished. Our key achievements include: • Returning the Company to growth through increased sales. This Fiscal Year, sales increased year-over-year in the third quarter, fourth quarter, and full year. We also expanded margins for the full year. • Realigning our Company into two segments, ABL, our Acuity Brands Lighting and Lighting Controls business, and ISG, our Intelligent Spaces Group. This alignment creates the necessary strategic focus on each segment and allows us to develop the leadership teams to deliver on the potential of each business. • Maintaining our continued strong cash flow and creating value through effective capital allocation. Acuity acquired OSRAM’s North American digital systems business to broaden our portfolio, deliver smarter technology faster, and create the opportunity to become a key strategic supplier to the industry. We also took advantage of favorable market conditions to repurchase over 10% of our outstanding shares. • Building a strong and diverse leadership team capable of maximizing the performance of our businesses, and continuing to attract, develop, and retain key talent for our organization. • Creating the environment for the best people to come and do their best work. Our Company launched Acuity Anywhere — a hybrid work model. We also formed an Executive-level council to drive our diversity, equity, and inclusion initiatives. • Forming an Executive-level EarthLIGHT council. We have made meaningful progress in our environmental, social, and governance initiatives, lessening our environmental footprint and improving our corporate governance structure. Our Fiscal 2021 performance was strong, and as we look forward, we expect to continue this performance. Encouraging Financial Performance, Strong Business Units I am pleased with our solid financial performance throughout FY21. We reported full-year net sales of $3.5 billion, an increase of 4 percent compared with Fiscal Year 2020, driven by improved sales in the second half of FY21. In addition, we reported a full-year gross profit margin of 42.6 percent, up 40 basis points over the prior year, and an operating profit margin of 12.4 percent, an increase of 180 basis points over the prior year. Full-year diluted earnings per share of $8.38 represented a 34 percent increase over the prior year. Our focus on innovation through product vitality and increasing our service levels for the benefit of our customers has delivered strong results. And we are continuing our efforts to drive our product expansion. Acuity Brands Lighting and Lighting Controls: New products, industry-leading service We were pleased with the results of our core ABL segment. Much of our success is attributed to a revitalized product portfolio, productivity improvements, higher service levels, diligent cost control, prudent price increases, and careful supply chain management. Here are just a few of our ABL product revenue drivers: In FY21, Acuity capitalized on the rapid growth in industrial spaces. At the center of that effort was our rapidly growing portfolio of Contractor Select products. For example, The Lithonia Lighting® Compact Pro High Bay (CPHB), a breakthrough high bay luminaire, was designed to deliver improved performance in a smaller size to ensure ease of installation. Our CPHB has been in high demand due to the increase in warehouse renovations, driven by the shift to online retail and the expansion of logistics networks across North America. The product is more efficient to transport and can be manufactured in our facilities or sourced externally to ensure supply chain flexibility. Another example from the Lithonia Lighting® brand is the HomeGuard LED security floodlight introduced in the fourth quarter. The floodlight offers a technology upgrade, higher efficacy, greater safety options, and ease of installation. Sales have been strong. We’re off to a great start in a category where we currently have low share and strong growth opportunities. C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 7 Our new product innovations also included the introduction of the Gotham EVO® LED Luminaires with UV technology. This product uses nanometer technology and circulation above the fixture to disinfect air locally in occupied and unoccupied spaces. We have installed this product in multiple Acuity locations and are developing specifications for its use in education, office, and healthcare applications. Intelligent Spaces Group: Smarter, Safer, and Greener The Intelligent Spaces Group is comprised of Distech Controls® and our Atrius® technology. It’s a collection of valuable technology assets and very talented people. We’re meeting customers where they are on their digital transformation journey and using our technology to solve problems in spaces and make them smarter, safer, and greener. As part of our Intelligent Spaces Group, Distech Controls and our Atrius technology work together to reshape how people operate, use, and experience spaces. Distech Controls is an open protocol building management technology that optimizes energy efficiency and comfort in buildings while reducing operating costs. Our Atrius technology gathers, unlocks, and transforms raw data to enable a broad range of software solutions that solve critical business challenges. Between Distech Controls and Atrius, we have two essential pieces of the puzzle in delivering edge-to-cloud solutions to transform spaces. Protecting the Environment, Improving our Corporate Governance Protecting our planet is the right thing to do, and it is good business. Our team has made significant progress and a meaningful difference. We have committed that our put-in-place products and services will prevent 100 million metric tons of carbon emissions by 2030. In addition, we have reached carbon neutrality in our operations. We’ve also enhanced our corporate governance structure, including instituting an ongoing investor outreach program, evolving our Board of Directors, and changing our total rewards framework to align all of our interests. Building an Environment for the Best People to do their best work Acuity is transforming human resources and the associate experience to support the growth of our Company. We are working to provide our associates with what they need to do their jobs with passion and purpose through our listening strategies, professional development opportunities, and modernizing our internal tools. In addition, we strive to enable a more productive remote work environment and create an inclusive workplace culture that recognizes and embraces our differences. Preparing for the year ahead Acuity is positioned at the intersection of sustainability and technology. We are building a company that can anticipate the changing needs of the industry by enhancing our service levels, thoughtfully applying technology into our products, and focusing on product vitality. We’re excited about the opportunities for growth in the future. Our strategy to continue leading and reinventing the industry is sound. Our Company has improved our profit margins through product and productivity improvements and by leveraging our costs as we’ve transformed. In addition, we have allocated capital effectively to grow our current businesses, add new companies, and take advantage of market conditions to repurchase our shares — all predicated on our strong organic cash flow. Our transformation is ongoing and will continue to evolve. The Acuity team is making tremendous progress, and I’m optimistic about what’s to come. Finally, I want to express my sincere gratitude to our global team of dedicated associates for their hard work and our stockholders for their continued support. Best, Neil M. Ashe Chairman, President and Chief Executive Officer C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 8 Financials FY21 FINANCIAL PERFORMANCE Fiscal Year 2021 was a year of improvement. Through our business segments, ABL and ISG, we made progress on our transformational priorities, improved the financial performance of the business, and continued to allocate capital thoughtfully. We are transforming our business and focusing on our customers, our investors, and our associates. As a result, we are excited to enter Fiscal Year 2022 as a much stronger company with clear opportunities. “We have evolved our service levels, improved our margins, and allocated capital effectively. I’m excited by everything this team has achieved together and the progress we continue to make.” Karen J. Holcom Senior Vice President and Chief Financial Officer C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 9 (in millions, except earnings per share) for the year ended August 31 Operations Net Sales Gross Profit % Operating Profit Operating Profit % Net Income Diluted earnings per share Diluted weighted average number of shares outstanding Return on stockholders’ equity(1) Cash provided by operating activities Depreciation and amortization Capital expenditures Financial Position Total assets Total cash Total debt Total stockholders equity Operating working capital(2) as a percentage of net sales $ $ $ $ $ $ $ $ $ $ $ 2021 2020 % Change 4% 21% 23% 34% (19%) (1%) (20%) $ $ $ $ 3,461.0 42.6 % 427.6 12.4 % 306.3 8.38 36.6 3,326.3 42.2 % 353.9 10.6 % 248.3 6.27 39.6 15.2 % $ 12.2 % 504.8 101.1 54.9 408.7 100.1 43.8 2021 3,575.1 491.3 494.3 2,044.5 $ $ $ $ $ $ $ 2020 % Change 3,491.7 560.7 401.1 2,127.5 2% (12%) 23% (4%) 16.7 % 14.8 % (1) Return on Stockholders’ Equity is calculated by dividing Net Income by Average Total Stockholders’ Equity (average of five quarters). (2) Operating working capital is defined as net receivables plus inventories minus accounts payable. C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 10 REVENUES ($ in millions) $3,680.1 $3,672.7 $3,505.1 $3,326.3 $3,461.0 OPERATING PROFIT ($ in millions) $527.5 $460.8 $462.9 $427.6 $353.9 ‘17 ‘18 ‘19 ‘20 ‘21 ‘17 ‘18 ‘19 ‘20 ‘21 DILUTED EPS FREE CASH FLOW* ($ in millions) $8.52 $8.29 $8.38 $7.43 $6.27 $441.7 $449.9 $364.9 $307.9 $269.3 ‘17 ‘18 ‘19 ‘20 ‘21 ‘17 ‘18 ‘19 ‘20 ‘21 *Free Cash Flow is defined as cash provided by operating activities minus purchases of property, plant, and equipment. C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 11 Total Shareholder Return (FY21)** Among Acuity Brands, Inc., the S&P 400, and the S&P 1500 Capital Goods 80% 70% 60% 50% 40% 30% 20% 10% 0 -10% -20% **9/1/20-8/31/21 Acuity Brands, Inc. S&P 400 S&P 1500 Capital Goods C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 12 Lighting and Lighting Controls TRANSFORMING LIGHT Providing sustainable, inspiring, and intelligent lighting solutions that enrich the communities where people live, learn, work, and play. “To continue leading the industry, we will aggressively reinvent the service experience using technology. We will also maintain a high product vitality and continuously reinvent our portfolios. Trevor Palmer President, Acuity Brands Lighting and Lighting Controls C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 13 BETTER. SMARTER. FASTER. As the market leader, we provide a broad product offering of the best brands and categories, with a high level of service and consistency. We have the number one market access in the industry, comprised of the leading independent sales agents, electrical distributors, and retailers. We’ve returned our lighting and lighting controls business to growth by focusing on our customers’ needs and increasing our margins through product vitality and productivity improvements. Despite challenging market conditions in FY21, we remained focused on our strategy, challenging the industry’s service levels, leading the technology curve, and accelerating product vitality. Our Lighting and Lighting Controls business leads the industry with a broad portfolio of products. We continue to adapt our portfolio to meet the changing needs of our customers. This Fiscal Year, Acuity capitalized on the growth trend in the industrial market by rapidly expanding our portfolio of Contractor Select products. For example, The Lithonia Lighting® Compact Pro High Bay (CPHB), a breakthrough high bay luminaire, was designed to deliver improved performance in a smaller size. Our CPHB has been in high demand due to the increase in warehouse renovations, driven by the shift to online retail and the expansion of logistics networks across North America. To ensure supply chain flexibility, the product is more efficient to transport and can be manufactured in our facilities or sourced externally. Pictured here: Acuity Brands associates working in our Monterrey Production Facility in Mexico. C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 14 C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 15 Better. Smarter. Faster. is the process by which we are transforming our Company. Through Better. Smarter. Faster. we are making progress on two essential factors — delivering value to our customers and focusing on time, our only constrained resource. To solve our customers’ problems, we are taking the important step of learning more about their needs. As we better understand their needs, we map them to the art of the possible to identify the best solution and include time as a key performance indicator. Lights are essential to all spaces, which gives us an opportunity for innovation and growth. In a new or existing construction project, lighting and lighting controls are key to the design and functionality of a space. Two of the most exciting new developments in our industry are the increased focus on reducing energy consumption and enhancing wellness. Pictured here: Custom lighting installed in an office building in Orlando, FL. Agent: Landreth Lighting, Inc. Specifier: HLB Lighting Design, Inc. Photographer: Chad Baumer Photography Leader Insights: An interview with Sarah Golish Senior Vice President, Digital Lighting Networks Sarah Golish leads the Digital Lighting Networks team within the Lighting and Lighting Controls segment responsible for developing and delivering lighting controls systems and in- luminaire technology for indoor and outdoor spaces that allow our customers to reduce energy cost, aid in-building code compliance, and improve occupant comfort. She joined Acuity in 2016 and, in the last 12 months, has seen a significant transformation at the Company. This Fiscal Year we improved our service levels and processes in several ways. We realigned our sales team, bringing in more product specialists with a deeper level of technical expertise to support our agency partners and other channel partners. Our teams saw improvements across our service levels by shifting our focus to real-time visibility for our customers and associates. We are now able to track our product from inventory to customer delivery with a higher degree of precision. Our distributors, contractors, and agents can now see the status of an order at any time to enable planning and proactive communication. Our improvements allow us to better anticipate constraints in our supply chain and allow us to engineer alternatives that can help manage lead times. The acquisition of OSRAM North American Digital Systems Business was an exciting advancement of our driver portfolio. The OSRAM North American Digital Systems Business acquisition was strategically significant. We are now able to better control our technology and product lifecycle, expand our access to the North American component market, and reduce our dependency on others for LED driver product supply and supporting technology. We are excited about what we can achieve in the future. We have learned a lot about ourselves during the pandemic, and one of the biggest realizations was that our team can innovate and operate effectively from anywhere in the world. There has always been an assumption that teams need to interact in person in the same office or location. However, our teams have thrived in this new collaborative digital ecosystem. We have a growing network of engineers spread across the globe, including a new layer of engineering talent with the acquisition of OSRAM North American Digital Systems Business. We have found new ways to support our engineering teams when they couldn’t physically be together to maintain our productivity. C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 16 Intelligent Spaces Group TRANSFORMING SPACES Using technology to make spaces smarter, safer, and greener. “We’ve only started our journey, but we are already building a bridge into the critical infrastructure of our customers and helping them solve real-world business problems.” Peter Han President, Intelligent Spaces Group C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 17 SMARTER SAFER GREENER C C E E O O L L E E T T T T E E R R | | F F I I N N A A N N C C I I A A L L S S | | L L I I G G H H T T | | S S P P A A C C E E S S | | C C U U L L T T U U R R E E | | I I S S U U S S T T A A N N A A B B I I L L I I T T Y Y | | F F O O R R S S T T O O C C K K H H O O L L D D E E R R S S 18 Our Intelligent Spaces Group works together to reshape how people operate, use, and experience spaces. The Intelligent Spaces Group is comprised of our Distech Controls® and our Atrius® technology solutions. It combines valuable technology assets with very talented people. We’re meeting customers where they are on their digital transformation journey. As part of our Intelligent Spaces Group, Distech Controls and Atrius technology work together to reshape how people operate, use, and experience spaces. Distech Controls open-source building management technology optimizes energy efficiency and comfort in buildings while reducing operating costs. Our Atrius technology gathers, unlocks, and transforms raw data to enable a broad range of software solutions that solve critical business challenges. With Distech Controls and Atrius, we have two essential pieces of the puzzle in delivering edge-to-cloud solutions to customers for energy management, location services, and asset tracking. From sensors to smart thermostats and gateways to the services that animate those devices, our solutions help our customers in their digital transformation. Leader Insights: An interview with Lauren Scott Vice President, Marketing & Sustainability, Intelligent Spaces Group Lauren Scott joined Acuity in 2017, and has played a central role in defining the Intelligent Spaces Group growth strategy. Over the last 12 months, Lauren has seen the benefit of our corporate transformation. It’s been incredibly exciting to watch Acuity’s digital transformation, especially how our team within the Intelligent Spaces Group has evolved. With the combination of the existing talent and the new talent coming in, we have a diverse set of people with an incredible breadth of knowledge. Our team includes individuals with backgrounds in operational technology, information technology, building intelligence, and people from large enterprises who are very disciplined in terms of processes. As a result, we are set up for scalability and are in a strong position to execute well. When we talk about a building’s performance, we think of it through the lens of it being Smarter, Safer, Greener. Companies are not only responsible for what’s inside of their four walls; they also have to ensure that they are good corporate stewards, community members, and global citizens. Operating a smarter, safer, greener space such as a physical building is one of the ways a company can advance its ESG goals. Understanding the needs of a space and its consumption patterns in real-time is the digital backbone of an intelligent space. Through the collection and interpretation of data, you can transform a space’s consumption and emission patterns while ensuring that the comfort of the occupants is not overlooked. Analyzing data and extracting meaningful insights is an ongoing process that delivers continuous improvement for buildings and the people who use them. Whether it’s the systems within the building or the occupants within a space, one of the big problems we’re helping our customers solve is how to get as much data about a space as possible. We want to analyze that data and extract meaningful insights to help our customers identify opportunities for improving building performance, improving enterprise operations, and providing better personal experiences for occupants or visitors of that space. Then, we want to work alongside our customers to “act” on those insights, solving a problem to improve the building’s performance. C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 19 Culture TRANSFORMING OUR CULTURE We are creating an environment where the best people come to do their best work. “We believe our new way of working is transformative. Acuity offers flexibility for associates; facilitates greater access to the best talent; allows us to keep pace with customer needs; and supports our EarthLIGHT sustainability and social initiatives.” Dianne S. Mills Senior Vice President and Chief Human Resources Officer C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 20 We’ve accelerated our Company’s internal transformation. We started with a listening strategy to create a more inclusive, empowering culture. We are transforming human resources and the associate experience for the future of the company, in order to support our changing, growing business. We’re providing our associates with what they need to do their jobs with passion and purpose, whether it’s the tools that enable a more productive remote work environment or an inclusive workplace culture that recognizes and embraces our differences. All of Acuity’s associates operate under a shared set of values that unite us in our mission to solve the big problems facing our customers and our communities. In FY21, we launched Acuity Anywhere, a holistic hybrid work model that creates greater flexibility on where and how our associates work, train, and grow professionally with our Company. Acuity Anywhere challenges us to look at where we work and how we work. By changing the way we think about our spaces, meetings, technology, and remote work offerings, we have a powerful advantage in recruiting and retaining the diversity of talent that Acuity needs. It gives our associates more flexibility. As Acuity continues to evolve, we can attract and retain the best people regardless of where they live. Additionally, the new work model provides for more time away from work for associates. The updated time away from work policies include expanded bereavement leave, increased vacation time, paid holidays, parental leave for mothers and fathers, time off to receive COVID-19 vaccinations, and time off to vote. Acuity also increased certain leave and health-related benefits for its manufacturing and distribution associates who are primarily on-site and looks forward to continuing this forward progress in partnership with its labor unions. To better understand the experience of our associates, we conducted two surveys, which unlocked critical insights into our workplace culture. Approximately 85% of our associates participated in our overall comprehensive engagement survey. We learned where our Company stands relative to the engagement benchmarks of companies with outstanding financial performance as well as companies in technology and manufacturing. Acuity is focused on driving real change around professional development, further enhancing our culture, and increasing our efforts around DEI. We also completed a diversity, equity, and inclusion survey that gave us an in-depth look into different viewpoints on inclusion here at Acuity. Our ongoing listening strategy will play a fundamental role in understanding how to support our associates and, together, build the culture that supports our people in doing their best work. Our associates are the key to our success. The future of our Company is an exciting one, and to drive innovation across Spaces and Light we are prioritizing the experience of our associates by creating a values-based workplace where they can thrive as part of a team. Ultimately, our Company’s success will depend on our ability to offer a workplace that supports wellness, development, belonging, and productivity. This Fiscal Year we made great progress on our internal transformation, and looking ahead, Acuity will continue to nurture a company culture that supports our growth and change. C C E E O O L L E E T T T T E E R R | | F F I I N N A A N N C C I I A A L L S S | | L L I I G G H H T T | | S S P P A A C C E E S S | | C C U U L L T T U U R R E E | | S S U U S S T T A A I I N N A A B B I I L L I I T T Y Y | | F F O O R R S S T T O O C C K K H H O O L L D D E E R R S S 21 OUR VALUES We are preparing our associates to deliver on our transformation. Based on the results of our engagement survey, we are performing well relative to others in the manufacturing and technology sectors. Acuity is on a journey, and understanding what matters most to our associates is the key to creating a high- performing organization. Our values are how we win and grow together and will result in higher levels of engagement from people who are inspired to bring their passion and creativity to Acuity. “Our values guide who we are and the impact we are making.” Candace Steele Flippin Senior Vice President and Chief Communications Officer INTEGRITY We do the right thing, the first time, every time. TIME Time is the only constrained resource. We focus on what is most important. CURIOSITY We are always searching for a better way. We are willing and able to change. CUSTOMER OBSESSED We see the world through the eyes of customers and end-users. We deliver on their needs. PEOPLE We create an environment where the best people come to do their best work. We all succeed together. COMMUNITY We care about the environment and our neighbors. We make communities better. OWNERS MINDSET We think and act like owners. We focus on long-term, sustainable value creation. C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 22 “We have been quick to adapt to changes in our workplace and our world and have found ways to make things better.” “Our new work model gives me the flexibility to get my work done while also balancing whatever life may have going on.” “The one thing that we have in common is that we are all uniquely different, and we now celebrate those differences.” Tawana Jones Quality Engineering Manager Bethany Cruz Senior Sales Operations Manager Patrick Atchison Compliance Manager C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S “There is now more focus on developing talent and being better partners to our customers, which is a big shift in our culture.” “Acuity leadership has taken an active role in listening, hearing, and understanding the challenges faced by its associates.” Samar Soliman Vice President, Digital Lighting Networks Engineering Brian Bond Senior Manager, Marketing “During these challenging times, Acuity has done a great job of keeping us connected with our coworkers while not physically being in the office together.” Fardin Faruque Indoor RFD Engineering Manager 23 Sustainability TRANSFORMING OUR FUTURE Sustainability is a central tenet of our corporate strategy. “We’ve made significant progress on EarthLIGHT since we began communicating our strategy and impact three years ago. I am proud of our associates and their positive impact on the world, and I am grateful to be a part of these efforts.” Barry Goldman Senior Vice President and General Counsel Founder of the EarthLIGHT Program C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 24 Our Approach to ESG EarthLIGHT is a central tenet of our strategy and reflects our comprehensive approach around ESG topics. Through EarthLIGHT, we improve our performance, increase transparency, and better highlight our results on numerous ESG priorities. R EAD EARTHLIGHT REPORT Set our target to enable 100 million tons of carbon avoidance by 2030 Achieved carbon neutrality in our operations Created an Executive- level DEI Council Built a strong and diverse leadership team Introduced Acuity Anywhere, our new holistic hybrid work model Established an Executive- level EarthLIGHT Council C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 25 Operating with Integrity Operating with integrity means doing things right the first time and every time. It means we earn the trust of our customers, shareholders, business partners, and each other by our actions each day. Honesty. Transparency. Meeting our commitments. Taking care of our people. Demonstrating our shared values. These are all essential elements of operating with integrity and strong governance. Protecting, preserving, and transforming our world Acuity continues to seek ways to lessen our carbon footprint. Our operations are now 100% carbon neutral. The determination to reduce carbon emissions for our customers extends to our own operations. And we are decreasing our energy consumption in our offices, production facilities, and distribution centers. Making offset investments — We have begun to offset our emissions by investing in forestry and landfill gas-to-energy projects that reduce atmospheric carbon. We’re tackling our Scope 1 and 2 emissions head-on with investments that improve the environment. Creating an environment where the best people come to do their best work The core of any company is people. Through our inclusive culture, our associates can bring their fresh ideas, perspectives, and experiences to deliver the best solutions for our customers. C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 26 STOCKHOLDER INFORMATION Board of Directors Neil M. Ashe W. Patrick Battle G. Douglas Dillard, Jr. James H. Hance, Jr.(3)(4) Chairman, President and Chief Executive Officer Acuity Brands, Inc. Managing Partner Stillwater Family Holdings Managing Partner Slewgrass Capital, LLC and Slewgrass Partners, LLC Director and Operating Executive The Carlyle Group LP Maya Leibman Laura O’Shaughnessy Dominic J. Pileggi(2) Ray M. Robinson Executive Vice President and Chief Information Officer American Airlines Group, Inc. Board Director and Independent Consultant Former Chairman, Chief Executive Officer and President Thomas and Betts Corporation Non-Executive Chairman Citizens Trust Bank; President Emeritus East Lake Golf Club Mark J. Sachleben Mary A. Winston(1) Chief Financial Officer and Corporate Secretary New Relic, Inc. President WinsCo Enterprises, Inc.; Former Executive Vice President and Chief Financial Officer Family Dollar Stores, Inc. (1) Chair of Audit Committee (2) Chair of Compensation and Management Development Committee (3) Chair of Governance Committee (4) Lead Director Executive Officers Neil M. Ashe Karen J. Holcom Barry R. Goldman Dianne S. Mills Chairman, President and Chief Executive Officer Senior Vice President and Chief Financial Officer Senior Vice President and General Counsel Senior Vice President and Chief Human Resources Officer C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 27 Stockholder Information Corporate Headquarters Acuity Brands, Inc. 1170 Peachtree Street, NE Suite 2300 Atlanta, Georgia 30309-7676 404-853-1400 www.acuitybrands.com Stock Listing New York Stock Exchange Ticker Symbol: AYI Annual Meeting 1:00 p.m. Eastern Time January 5, 2022 virtualshareholdermeeting.com/AYI2022 Independent Registered Public Accounting Firm Ernst & Young LLP 55 Ivan Allen Jr. Boulevard Suite 1000 Atlanta, Georgia 30308-3051 404-874-8300 Reports Available to Stockholders Transfer Agent & Registrar Computershare Investor Services is the transfer agent, registrar, dividend disbursing agent, and dividend reinvestment agent for the Company. Stockholders of record with questions about lost certificates, lost or missing dividend checks, direct deposit of dividends, or notification of change of address should contact: Copies of the following Company reports may be obtained, without charge: Acuity Brands, Inc. c/o Computershare • 2021 Annual Report to the Securities and Exchange Commission, filed on Form 10-K • Quarterly Reports to the Securities and Exchange Commission, filed on Form 10-Q Requests should be directed to: By Regular Mail PO Box 505000 Louisville, Kentucky 40233-5000 By Overnight Delivery 462 South 4th Street Suite 1600 Louisville, Kentucky 40202 Acuity Brands, Inc. Attention: Investor Relations 1170 Peachtree Street, NE Suite 2300 Atlanta, Georgia 30309-7676 404-853-1400 www.acuitybrands.com computershare.com/investor Toll Free: 866-234-1921 Inside the United States and Canada 201-680-6578 Outside the United States and Canada Direct Stock Purchase Plan Computershare Investor 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 Investor Services Forward-Looking Statements This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on management’s beliefs and assumptions and information currently available to management. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that the forward-looking information presented in this report is not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release. In addition, forward-looking statements are statements other than those of historical fact and may include statements relating to goals, plans, market conditions and projections regarding Acuity Brands’ strategy, and specifically include statements made in this report regarding: strategy, corporate transformation, innovation, product vitality, creating a better future, service levels, “we expect to continue this performance,” strong growth opportunities, “smarter, safer, and greener,” add new companies, plans to repurchase shares, reinventing the service experience using technology, maintaining high product vitality, continuously reinventing our portfolios, leading the technology curve, better anticipate constraints around the supply chain, impact of the OSRAM North American Digital Systems acquisition, “we are set up for scalability and are in a strong position to execute well,” attracting and retaining the best people, the benefits of Acuity Anywhere, 100 million metric tons of carbon emissions avoidance, the benefits of Acuity Anywhere hybrid work model, and enhanced governance policies. Generally, forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “plan,” “seek,” “comfortable with,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology. A number of important factors could cause actual events to differ materially from those contained in or implied by the forward-looking statements, including those factors discussed in our annual report on Form 10-K for the fiscal year ended August 31, 2021, filed on October 27, 2021 and those described from time to time in our other filings with the U.S. Securities and Exchange Commission (the “SEC”), which can be found at the SEC’s website www.sec.gov. Any forward-looking information presented herein is made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of events, or otherwise. C E O L E T T E R | F I N A N C I A L S | L I G H T | S P A C E S | C U L T U R E | S U S T A I N A B I L I T Y | F O R S T O C K H O L D E R S 28 Acuity Brands, Inc. 1170 Peachtree Street, NE Suite 2300 Atlanta, Georgia 30309-7676 404-853-1400 www.acuitybrands.com © Acuity Brands, Inc. All trademarks referenced are property of their respective owners. 

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