October 24, 2024
Acuity Brands to Acquire QSC for $1.215 Billion
The deal integrates cloud-based audio, video, and control into Acuity’s Intelligent Spaces Group
Acuity Brands, North America’s largest lighting manufacturer, has entered into a definitive agreement to acquire QSC, LLC, a provider of cloud-manageable audio, video, and control (AVC) platforms. This acquisition will enhance Acuity’s Intelligent Spaces Group (ISG), which accounted for 7.6% of the company’s total sales in the most recent fiscal year, as Acuity aims to scale this segment.
Acuity will acquire QSC for $1.215 billion, or $1.1 billion net of approximately $100 million in anticipated tax benefits. The net purchase price is calculated at approximately 14 times QSC’s estimated EBITDA for the twelve months ending August 31, 2024. Acuity plans to finance the acquisition with $600 million in term loans, with the remaining balance covered by cash reserves. The deal is expected to close in the second quarter of fiscal 2025, pending regulatory approvals, which corresponds to the 90-day period beginning December 1, 2024.
The acquisition is expected to be accretive to Acuity’s adjusted diluted earnings per share for the full fiscal year of 2025, marking another significant investment in the company’s ISG business, which has been growing in importance. ISG’s revenue share increased from 6% in 2021 to 7.6%, contributing $292 million in revenue for the last fiscal year.
Strategic Fit for Intelligent Spaces Group
ISG, which includes brands like Distech Controls and Atrius, focuses on building-centric technology platforms. In 2023, Acuity added KE2 Therm, a refrigeration technology provider, to its portfolio, further solidifying its foothold in the smart building solutions market. The acquisition of QSC fits into this strategy by adding cloud-based AVC capabilities, which Acuity aims to integrate into its existing ISG offerings.
Neil Ashe, Acuity’s Chairman and CEO, emphasized the strategic alignment, saying, "Our acquisition of QSC builds on our vision of data interoperability as we continue to make spaces smarter, safer, and greener." This is consistent with the company’s ongoing efforts to deliver innovative technologies that improve building efficiency and user outcomes through data-driven insights.
QSC, headquartered in Costa Mesa, California, is a well-established player in the AVC market, with annual sales of $535 million for the twelve months ending August 31, 2024. Its platform, Q-SYS, offers cloud-based audio, video, and control solutions that serve a variety of sectors, including education, hospitality, government, and healthcare. This acquisition expands ISG’s market reach by integrating QSC’s offerings into Acuity’s broader portfolio of intelligent building solutions.
Financial Considerations and Cash Reserves
Acuity has been bolstering its financial position, with cash and cash equivalents growing from $397.9 million at the end of fiscal 2023 to $845.8 million at the end of fiscal 2024, reflecting a significant increase of $447.9 million. These reserves will play a major role in funding the QSC acquisition and other potential future investments.
Earlier this month during Acuity’s recent quarterly earnings call, Ashe foreshadowed this acquisition stating, "We believe we have a strong pipeline of opportunity of small and medium-sized acquisitions to grow both of our businesses. Our priority is around ISG." He also highlighted the company's commitment to acquiring disruptive technologies, particularly those that enable data interoperability across building systems.
More about QSC
QSC overview excerpted from Acuity Brands investor deck
QSC is a company that designs and manufactures solutions for the audio-visual industry. In 2020, the company reported having 500 employees, and today it employs approximately 900 people. QSC's product offerings are divided into two main categories: Q-SYS, a platform for integrated audio, video, and control solutions, and QSC Audio Products, which focuses on audio systems for live sound, cinema, and installed sound environments.
The Q-SYS platform is designed with a cloud-first approach, targeting industries such as corporate, education, and healthcare, among others, to manage AV and control systems through a unified platform. Meanwhile, QSC Audio Products includes a range of audio solutions, such as loudspeakers, amplifiers, and mixers, aimed at both portable and permanent sound applications.
With the anticipated close of the QSC acquisition in early 2025, Acuity is positioning itself to further expand its presence in the growing AVC and smart building markets. The company’s Intelligent Spaces Group continues to be a focal point of its growth strategy, as it integrates technologies that enhance the management and efficiency of built environments.
