July 2, 2021

3 Big Takeaways from the Acuity Brands Investor Day

Above: CFO Karen Holcom presents during Investor Day. Image published with permission from AYI.

We digested all 3 hours and 2 minutes of the Investor Day presentation and summarize our 3 biggest takeaways:

On Thursday July 1, Acuity Brands held its Investor Day presentation to discuss the company’s 2021 Q3 results and to provide detailed strategic insights into the priorities of the business. The company reviewed the favorable third quarter results, echoing the "return to growth" mantra several times during the Investor Day presentations.

Many Investor Day messages were noteworthy.

George McIlwraith speculated that the CPHB high bay fixture might be the most successful product launch in the history of the company.
Supply chain messaging was threaded throughout many discussions. The company acknowleged the industry-wide challenges while providing assurances that the company's 18 manufacturing locations and seven distribution points were optimally planning around the challenges.
The recent OSRAM Digital Systems acquisition will further enable Acuity to leverage vertical integration.
The company has relaunched the acuitybrands.com website, but did not explain the use of the all-black Acuity Brands logo now showing on the website and various social media platforms.

Below are our biggest three takeaways from the Acuity Brands Investor Day:

1. WATCH OUT FOR THE 6-PERCENTERS

In January, Acuity announced that it would be creating a separate intelligent buildings business segment that includes Distech Controls and Atrius. Peter Han, President, Intelligent Spaces Group, and his team elaborated in great detail about their vision for the business segment.

Large enterprises know that tech can enhance customer experience while creating higher customer value and loyalty. Furthermore, Acuity can benefit from all of the data collection points and possibly leverage highly profitable recurring revenue cloud models to grow future revenues and profits.

Our biggest takeaway about the Intelligent Spaces Business Unit:

It’s unusual to see a multi-billion dollar company create a second business unit that represents a mere 6% of current sales. We believe this is an indication that Acuity Brands is going all-in on Intelligent Spaces and that a disproportionate portion of the company’s resources and M&A activity will be focused on this business. We believe that Ashe is expecting to see that 6% slice of the pie chart grow significantly year-over-year.

2. REVAMPED LEADERSHIP TEAM

Nine members of Neil Ashe's Executive Team presented during the Investor Day. Five of them were hired from outside the company during the last 18 months.

Neil Ashe was appointed Chairman, President and CEO of Acuity Brands in early 2020. Since then, the Executive Team has undergone a remodel. During the presentations, the Executive Team was communicating their respective strategies and visions that sometimes resembled the ambition and tech-speak of a growth-stage startup and not of a $3+ billion company that helped pioneer the 2' x 4' parabolic troffer decades ago.

2020-21 Executive Hires

Neil Ashe, Chairman, President and CEO
Candace Steele Flippin, SVP and Chief Communications Officer
Peter Han, President, Intelligent Spaces Group
Dianne Mills, SVP and Chief Human Resources Officer
Vijay Raghavendra, Chief Technology Officer

Executive Promotions

Trevor Palmer who joined Acuity through the Distech Controls acquisition in 2015 was appointed President, Acuity Brands Lighting and Controls Business in March 2021.
14-year Acuity veteran Tyler Moon was promoted to Chief Operating Officer in late 2020.

Karen Holcom, CFO, and Barry Goldman, General Counsel, were appointed to their roles under previous CEO, Vern Nagel.

Notable Absence:

Ricky Reece, who is currently listed on the Acuity website as Executive Vice President; Vice Chairman, had previously played a significant role in assisting Neil Ashe in his first few Investor Earnings Calls during FY 2020. Reece was not among the Acuity Brands 2021 Investor Day Presenters.

3. CHALLENGING INDUSTRY SERVICE LEVELS THROUGH TECHNOLOGY

It’s not unusual for large companies to make earnest statements about providing great service to customers and partners. The 40+ mentions of "service" throughout this Investor Day, however, made service seem more like a pivotal initiative rather than just a robotic customer-focused talking point.

“We're going to increase the service levels in the industry. We're going to increase the amount of technology that's both in our products and in how we provide those services.”

“To continue leading the industry our strategy is simple, challenge the service levels of the industry.”

“We will aggressively reinvent the service experience using technology.”

“Enable the independent sales network through our tools that will help us better service their customers.”

The heightened messaging and tie-in to technology-enabled service leads us to believe that something significant is in the works. Like many construction-related industries that produce configurable, made-to-order products, the lighting industry has forever been challenged with creating widespread transparency with various business processes from quoting to shipping.

We look forward to learning what Acuity has in store for us in the service arena. Anyone born before 1982 remembers the days when we had to physically call a company to make hotel reservations, track a package or order a pizza. We are hoping to see some game-changing service tech evolve in the coming years from Acuity and others to help ease business processes for the entire lighting industry.