What changed in this filing

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Item 1. Financial Statements

2022-04-05 compared with 2022-01-07 · 141 added, 97 removed, 500 unchanged (32% of the section changed)

3 unchanged sentences

(In millions, except share data)

November 30, 2021 August 31, 2021

February 28, 2022 August 31, 2021

Current assets:

42 unchanged sentences

(In millions, except per-share data)

Three Months Ended

November 30, 2021 November 30, 2020

Three Months Ended Six Months Ended

February 28, 2022 February 28, 2021 February 28, 2022 February 28, 2021

Net sales $ 909.1 $ 776.6 $ 1,835.2 $ 1,568.6

6 unchanged sentences

Interest expense, net 6.0 6.6 11.9 11.5

Miscellaneous expense, net 0.3 1.6

Miscellaneous (income) expense, net ( 1.9 ) 2.2 ( 1.6 ) 3.8

Total other expense 4.1 8.8 10.3 15.3

13 unchanged sentences

Defined benefit plans, net of tax 1.2 1.7 2.4 3.3

Other comprehensive (loss) income items, net of tax ( 10.7 ) 6.2

Other comprehensive income (loss) items, net of tax 6.0 8.4 ( 4.7 ) 14.6

Comprehensive income $ 81.3 $ 71.3 $ 158.2 $ 137.1

3 unchanged sentences

(In millions)

Three Months Ended

November 30, 2021 November 30, 2020

Six Months Ended

February 28, 2022 February 28, 2021

Cash flows from operating activities:

3 unchanged sentences

Share-based payment expense 17.6 15.2

Gain on sale of property, plant, and equipment ( 2.3 ) —

Asset impairment 1.7 4.0

9 unchanged sentences

Proceeds from sale of property, plant, and equipment 8.9 0.4

Acquisition of businesses, net of cash acquired ( 10.2 ) —

Other investing activities ( 1.7 ) ( 3.1 )

31 unchanged sentences

Products are delivered directly from our manufacturing facilities or through a network of distribution centers, regional warehouses, and commercial warehouses using both common carriers and a company-managed truck fleet.

To serve international customers, the sales forces utilize a variety of distribution methods to meet specific individual customer or country requirements.

ABL comprised approximately 95 % of consolidated revenues during the three months ended November 30, 2021 and 2020.

To serve international customers, our sales forces utilize a variety of distribution methods to meet specific individual customer or country requirements.

ABL comprised approximately 95 % of consolidated revenues during the three and six months ended February 28, 2022 and 2021.

ISG delivers products and services that make spaces smarter, safer, and greener.

5 unchanged sentences

ISG products and solutions are marketed under numerous brand names, including but not limited to Distech Controls®, Atrius TM , and Rockpile Ventures.

ISG comprised approximately 5 % of consolidated revenues during the three months ended November 30, 2021 and 2020.

ISG comprised approximately 5 % of consolidated revenues during the three and six months ended February 28, 2022 and 2021.

We have prepared the Consolidated Financial Statements in accordance with U.S.

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and its wholly-owned subsidiaries.

These unaudited interim consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present fairly our consolidated financial position as of November 30, 2021, our consolidated comprehensive income for the three months ended November 30, 2021 and 2020, and our consolidated cash flows for the three months ended November 30, 2021 and 2020.

These unaudited interim consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present fairly our consolidated financial position as of February 28, 2022, our consolidated comprehensive income for the three and six months ended February 28, 2022 and 2021, and our consolidated cash flows for the six months ended February 28, 2022 and 2021.

Certain information and footnote disclosures normally included in our annual financial statements prepared in accordance with U.S.

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001-16583) (“Form 10-K”).

The results of operations for the three months ended November 30, 2021 are not necessarily indicative of the results to be expected for the full fiscal 2022 year due primarily to continued uncertainty of general economic conditions that may impact our key end markets for the remainder of fiscal 2022, seasonality, and the impact of any acquisitions, among other reasons.

Additionally, we are uncertain of the future impact of the ongoing COVID-19 pandemic or recovery of prior deterioration in economic conditions to our sales channels, supply chain, manufacturing, and distribution as well as overall construction, renovation, and consumer spending.

The results of operations for the three and six months ended February 28, 2022 are not necessarily indicative of the results to be expected for the full fiscal 2022 year due primarily to continued uncertainty of general economic conditions that may impact our key end markets for the remainder of fiscal 2022, seasonality, and the impact of any acquisitions, among other reasons.

We are uncertain of the future impact of the ongoing COVID-19 pandemic or recovery of prior deterioration in economic conditions to our sales channels, supply chain, manufacturing, and distribution as well as overall construction, renovation, and consumer spending.

Additionally, the current conflict between Russia and Ukraine and the related sanctions and other penalties imposed by countries across the globe against Russia are creating substantial uncertainty in the global economy.

While we do not have operations in Russia or Ukraine and do not have significant direct exposure to customers and vendors in those countries, we are unable to predict the impact that these actions will have on the global economy or on our financial condition, results of operations, and cash flows as of the date of these financial statements.

Note 2 — Significant Accounting Policies

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We have recast prior period segment and disaggregated revenue information to conform to the current year presentation.

See Segment Information footnote of the Notes to Consolidated Financial Statements for further details.

See the Segment Information footnote of the Notes to Consolidated Financial Statements for further details.

No other material reclassifications occurred during the current period.

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There were no acquisitions during fiscal 2022;

Fiscal 2021 Acquisition

the $ 10.2 million of cash outflows reflected in the fiscal 2022 Consolidated Statements of Cash Flows relate to working capital settlements for fiscal 2021 acquisitions.

Fiscal 2021 Acquisitions

ams OSRAM's North American Digital Systems Business

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Rockpile Ventures helps early-stage artificial intelligence companies drive co-engineering and co-selling partnerships with major cloud ecosystems, enabling faster adoption from proof-of-concept trials to market scale.

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Accounting for Acquisitions

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Goodwill recognized from these acquisitions is comprised primarily of expected synergies from obtaining more control over our supply chain and technology, combining the operations of the acquired business with our operations, and acquiring the associated trained workforce.

As of November 30, 2021, goodwill from these

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

acquisitions totaling $ 6.9 million is expected to be tax deductible.

As of February 28, 2022, goodwill from these acquisitions totaling $ 7.5 million is expected to be tax deductible.

Amounts recognized for these acquisitions are deemed to be provisional until disclosed otherwise, as we continue to gather information related to the identification and valuation of acquired assets and liabilities, including but not limited to, acquired interests in technology startups, tax-related items, final net working capital purchase adjustments, if any, and the residual impacts on the valuation of intangible assets.

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All valuation methods and assumptions are validated at least quarterly to ensure the accuracy and relevance of the fair values.

There were no material changes to the valuation methods or assumptions used to determine fair values during the current period.

No transfers between the levels of the fair value hierarchy occurred during the current fiscal period.

In the event of a transfer in or out of a level within the fair value hierarchy, the transfers would be recognized on the date of occurrence.

There were no

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

material changes to the valuation methods or assumptions used to determine fair values during the current period.

No transfers between the levels of the fair value hierarchy occurred during the current fiscal period.

In the event of a transfer in or out of a level within the fair value hierarchy, the transfers would be recognized on the date of occurrence.

Financial Instruments Recorded at Fair Value

We used quoted market prices to determine the fair value of Level 1 assets and liabilities.

Our cash and cash equivalents (Level 1), which are required to be carried at fair value and measured on a recurring basis, were $ 504.0 million and $ 491.3 million as of November 30, 2021 and August 31, 2021, respectively.

We hold a small number of investments in equity and debt financial instruments totaling $ 8.8 million and $ 5.3 million as of November 30, 2021 and August 31, 2021, respectively.

Our cash and cash equivalents (Level 1), which are required to be carried at fair value and measured on a recurring basis, were $ 475.5 million and $ 491.3 million as of February 28, 2022 and August 31, 2021, respectively.

We hold a small number of investments in equity and debt financial instruments totaling $ 9.9 million and $ 5.3 million as of February 28, 2022 and August 31, 2021, respectively.

We generally account for these investments at fair value on a recurring basis.

Changes in the fair values of these financial instruments during the three months ended November 30, 2021 and November 30, 2020 were de minimis.

Changes in the fair values of these financial instruments during the three and six months ended February 28, 2022 and 2021 were not material to our financial condition, results of operations, or cash flows.

Our strategic equity investments represent less than a 20% ownership interest in each of the privately-held entities, and we do not exercise significant influence or control any of the entities.

2 unchanged sentences

During the first quarter of fiscal 2021, we recorded an impairment charge of $ 4.0 million for one of these investments as a recapitalization of the underlying company diluted our holding value.

This impairment is reflected in Miscellaneous expense, net for the three months ended November 30, 2020 within our Consolidated Statements of Comprehensive Income.

The impairment charge is reflected in Miscellaneous (income) expense, net for the six months ended February 28, 2021 within our Consolidated Statements of Comprehensive Income.

Disclosures of Fair Value of Financial Instruments

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Fair value is estimated based on discounted future cash flows using rates currently available for debt of similar terms and maturity (Level 2).

The estimated fair value of our senior unsecured public notes was $ 488.9 million and $ 496.5 million as of November 30, 2021 and August 31, 2021, respectively.

The estimated fair value of our senior unsecured public notes was $ 461.3 million and $ 496.5 million as of February 28, 2022 and August 31, 2021, respectively.

The decrease in fair value is due to increases in market bond yields since the end of fiscal 2021.

See Debt and Lines of Credit footnote for further details on our long-term borrowings.

3 unchanged sentences

In evaluating our management of liquidity and other risks, the fair values of all assets and liabilities should be taken into consideration, not only those presented above.

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 6 — Inventories

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and consist of the following as of the dates presented (in millions):

November 30, 2021 August 31, 2021

February 28, 2022 August 31, 2021

Raw materials, supplies, and work in process (1)

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(1) Due to the immaterial amount of estimated work in process and the short lead times for the conversion of raw materials to finished goods, we do not believe the segregation of raw materials and work in process is meaningful information.

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

We review inventory quantities on hand and record a provision for excess or obsolete inventory primarily based on estimated future demand and current market conditions.

2 unchanged sentences

Property, plant, and equipment consist of the following as of the dates presented (in millions):

November 30, 2021 August 31, 2021

February 28, 2022 August 31, 2021

Land $ 22.2 $ 22.4

4 unchanged sentences

Property, plant, and equipment, net $ 264.1 $ 269.1

As of November 30, 2021 and August 31, 2021, we classified as held for sale one building with a total carrying value of $ 6.6 million within Prepayments and other current assets on the Consolidated Balance Sheets .

At each balance sheet date, we concluded the fair value less costs to sell exceeded the carrying value of each of these assets.

During the three months ended February 28, 2022, we sold one building previously classified as held for sale with a carrying value of $ 6.6 million for a gain of approximately $ 2.3 million reflected in Selling, distribution, and administrative expenses within our Consolidated Statements of Comprehensive Income.

Note 8 — Goodwill and Intangible Assets

1 unchanged sentence

Indefinite-lived intangible assets consist of trade names that are expected to generate cash flows indefinitely.

We recorded amortization expense for definite-lived intangible assets of $ 10.3 million and $ 10.1 million during the three months ended November 30, 2021 and 2020, respectively.

We recorded amortization expense for definite-lived intangible assets of $ 10.3 million and $ 10.1 million during the three months ended February 28, 2022 and 2021, respectively, and $ 20.6 million and $ 20.2 million during the six months ended February 28, 2022 and 2021, respectively.

Amortization expense is generally recorded on a straight-line basis and is expected to be approximately $ 41.2 million in fiscal 2022, $ 40.5 million in fiscal 2023, $ 40.0 million in fiscal 2024, $ 31.9 million in fiscal 2025, and $ 29.1 million in fiscal 2026.

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following table summarizes the changes in the carrying amount of goodwill by segment during the periods presented (in millions):

1 unchanged sentence

Balance as of August 31, 2021 $ 1,022.2 $ 72.5 $ 1,094.7

Adjustments to provisional amounts from acquired businesses 0.6 — 0.6

Foreign currency translation adjustments ( 2.6 ) ( 0.3 ) ( 2.9 )

Balance as of November 30, 2021 $ 1,019.2 $ 71.8 $ 1,091.0

Balance as of February 28, 2022 $ 1,020.2 $ 72.2 $ 1,092.4

ABL ISG Total

1 unchanged sentence

Foreign currency translation adjustments 2.8 1.4 4.2

Balance as of November 30, 2020 $ 1,013.0 $ 67.6 $ 1,080.6

Balance as of February 28, 2021 $ 1,015.4 $ 68.8 $ 1,084.2

Further discussion of goodwill and other intangible assets is included within the Significant Accounting Policies footnote of the Notes to Consolidated Financial Statements within our Form 10-K.

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 9 — Other Current Liabilities

Other current liabilities consist of the following as of the dates presented (in millions):

November 30, 2021 August 31, 2021

February 28, 2022 August 31, 2021

Customer incentive programs (1)

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(4) Refer to the Debt and Lines of Credit footnote of the Notes to Consolidated Financial Statements for additional information.

(5) Includes an accrual of $ 15.8 million as of November 30, 2021, related to the securities class action matter.

(5) Includes an accrual of $ 15.8 million as of February 28, 2022, related to the securities class action matter.

Refer to the Commitments and Contingencies footnote of the Notes to Consolidated Financial Statements for additional information.

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These issuance costs are amortized over the 10-year term of the Unsecured Notes.

As of November 30, 2021, the balance of the Unsecured Notes net of unamortized discount and deferred issuance costs was $ 494.5 million.

As of February 28, 2022, the balance of the Unsecured Notes net of unamortized discount and deferred issuance costs was $ 494.7 million.

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Lines of Credit

On June 29, 2018, we entered into a credit agreement (the “Credit Agreement”) with a syndicate of banks that provides us with a $ 400.0 million five-year unsecured revolving credit facility (the “Revolving Credit Facility”).

We had no borrowings outstanding under the Revolving Credit Facility as of November 30, 2021 or August 31, 2021.

We had no borrowings outstanding under the Revolving Credit Facility as of February 28, 2022 or August 31, 2021.

The Credit Agreement expires in June 2023, and we plan to enter into a new agreement prior to this expiration.

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The base rate applicable margin is based on our leverage ratio with such margin ranging from 0.000 % to 0.375 %.

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

On July 27, 2017, the U.K.

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The Credit Agreement generally allows for a Minimum Interest Expense Coverage Ratio of 2.50 and a Maximum Leverage Ratio of 3.50 , subject to certain conditions.

We were in compliance with all financial covenants under the Credit Agreement as of November 30, 2021.

As of November 30, 2021, we had outstanding letters of credit totaling $ 4.1 million, primarily for securing collateral requirements under our casualty insurance programs.

At November 30, 2021, we had additional borrowing capacity under the Credit Agreement of $ 395.9 million under the most restrictive covenant in effect at the time, which represents the full amount of the Revolving Credit Facility less the outstanding letters of credit of $ 4.1 million issued under the Revolving Credit Facility.

We were in compliance with all financial covenants under the Credit Agreement as of February 28, 2022.

As of February 28, 2022, we had outstanding letters of credit totaling $ 4.1 million, primarily for securing collateral requirements under our casualty insurance programs.

At February 28, 2022, we had additional borrowing capacity under the Credit Agreement of $ 395.9 million under the most restrictive covenant in effect at the time, which represents the full amount of the Revolving Credit Facility less the outstanding letters of credit of $ 4.1 million issued under the Revolving Credit Facility.

Borrowings and repayments on our Revolving Credit Facility with terms of three months or less are reported on a net basis on our Consolidated Statements of Cash Flows .

3 unchanged sentences

The following table summarizes the components of interest expense, net for the periods presented (in millions):

Three Months Ended

November 30, 2021 November 30, 2020

Three Months Ended Six Months Ended

February 28, 2022 February 28, 2021 February 28, 2022 February 28, 2021

Interest expense $ 6.4 $ 6.9 $ 12.6 $ 12.0

1 unchanged sentence

Interest expense, net $ 6.0 $ 6.6 $ 11.9 $ 11.5

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 11 — Commitments and Contingencies

1 unchanged sentence

We establish estimated liabilities when the associated costs related to uncertainties or guarantees become probable and can be reasonably estimated.

For the period ended November 30, 2021, no material changes have occurred in our estimated liabilities for self-insurance, litigation, environmental matters, guarantees and indemnities, or relevant events and circumstances, from those disclosed in the Commitments and Contingencies footnote of the Notes to Consolidated Financial Statements within our Form 10-K other than the items discussed below.

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

For the period ended February 28, 2022, no material changes have occurred in our estimated liabilities for self-insurance, litigation, environmental matters, guarantees and indemnities, or relevant events and circumstances, from those disclosed in the Commitments and Contingencies footnote of the Notes to Consolidated Financial Statements within our Form 10-K other than the items discussed below.

Product Warranty and Recall Costs

Our products generally have a standard warranty term of five years that assure our products comply with agreed upon specifications.

Our products generally have a standard warranty term of five years that assures our products comply with agreed upon specifications.

We record an accrual for the estimated amount of future warranty costs when the related revenue is recognized.

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However, there can be no assurance that future warranty or recall costs will not exceed historical amounts or that new technology products may not generate unexpected costs.

If actual future warranty or recall costs exceed historical amounts, additional increases in the accrual may be required, which could have a material adverse impact on our results of operations and cash flows.

Estimated liabilities for product warranty and recall costs are included in Other accrued liabilities and Other long-term liabilities on the Consolidated Balance Sheets based upon when we expect to settle the incurred warranty.

The following table summarizes changes in the estimated liabilities for product warranty and recall costs during the periods presented (in millions):

Three Months Ended

November 30, 2021 November 30, 2020

Six Months Ended

February 28, 2022 February 28, 2021

Beginning balance $ 20.3 $ 16.1

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As such, we do not anticipate a significant net loss or cash outflow as a result of the settlement of this matter.

As of November 30, 2021, we reflected a liability for the settlement amount within Other current liabilities and a corresponding receivable for the offsetting insurance proceeds within Prepayments and other current assets on the Consolidated Balance Sheets .

As of February 28, 2022, we reflected a liability for the settlement amount within Other current liabilities and a corresponding receivable for the offsetting insurance proceeds within Prepayments and other current assets on the Consolidated Balance Sheets .

The case was originally filed on January 3, 2018, in the United States District Court for the District of Delaware against the Company and certain of our officers on behalf of all persons who purchased or otherwise acquired our stock between June 29, 2016 and April 3, 2017.

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1:18-cv-02140-MHC (N.D.

On October 5, 2018, the court-appointed lead plaintiff filed a consolidated amended class action complaint (the “Consolidated Complaint”), which supersedes the initial complaints.

On October 5, 2018, the court-appointed lead plaintiff filed a consolidated amended class action complaint (the “Consolidated Complaint”),

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

which supersedes the initial complaints.

The Consolidated Complaint is brought on behalf of all persons who purchased our common stock between October 7, 2015 and April 3, 2017 and alleges that we and certain of our former officers/executives violated the federal securities laws by making false or misleading statements and/or omitting to disclose material adverse facts that (i) concealed known trends negatively impacting sales of our products and (ii) overstated our ability to achieve profitable sales growth.

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The Eleventh Circuit Court of Appeals granted the Company permission to file an interlocutory appeal of the District Court’s class certification order, and the briefing of that appeal has been completed.

On October 7, 2021, the Eleventh Circuit Court of Appeals entered an order holding the appeal from the class certification order in abeyance pending a

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

decision from the District Court concerning approval of the proposed settlement.

On October 7, 2021, the Eleventh Circuit Court of Appeals entered an order holding the appeal from the class certification order in abeyance pending a decision from the District Court concerning approval of the proposed settlement.

Shareholder Derivative Complaint

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Balance, November 30, 2021 35.1 0.5 1,004.6 2,893.2 ( 108.9 ) ( 1,716.5 ) 2,072.9

Net income — — — 75.3 — — 75.3

Other comprehensive income — — — — 6.0 — 6.0

Share-based payment amortization, issuances, and cancellations — — 9.4 — — — 9.4

Employee stock purchase plan issuances — — 0.4 — — — 0.4

Cash dividends of $ 0.13 per share paid on common stock

— — — ( 4.6 ) — — ( 4.6 )

Stock options exercised — — 1.2 — — — 1.2

Repurchases of common stock ( 0.3 ) — — — — ( 56.3 ) ( 56.3 )

Balance, February 28, 2022 34.8 $ 0.5 $ 1,015.6 $ 2,963.9 $ ( 102.9 ) $ ( 1,772.8 ) $ 2,104.3

Common Stock Outstanding

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Balance, November 30, 2020 36.4 0.5 968.6 2,577.7 ( 126.5 ) ( 1,483.3 ) 1,937.0

Net income — — — 62.9 — — 62.9

Other comprehensive income — — — — 8.4 — 8.4

Share-based payment amortization, issuances, and cancellations — — 8.6 — — — 8.6

Employee stock purchase plan issuances — — 0.2 — — — 0.2

Cash dividends of $ 0.13 per share paid on common stock

— — — ( 4.7 ) — — ( 4.7 )

Stock options exercised — — 0.4 — — — 0.4

Repurchases of common stock ( 0.7 ) — — — — ( 80.3 ) ( 80.3 )

Balance, February 28, 2021 35.7 $ 0.5 $ 977.8 $ 2,635.9 $ ( 118.1 ) $ ( 1,563.6 ) $ 1,932.5

Note 13 — Revenue Recognition

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Further details regarding revenue recognition are included within the Revenue Recognition footnote of the Notes to Consolidated Financial Statements within our Form 10-K.

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Contract Balances

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The amount of transaction price from contracts with customers allocated to our contract liabilities consists of the following as of the periods presented (in millions):

November 30, 2021 August 31, 2021

February 28, 2022 August 31, 2021

Current deferred revenues $ 10.2 $ 7.7

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Current deferred revenues are included within Other current liabilities on the Consolidated Balance Sheets .

These services are expected to be performed within one year

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

from the dates presented.

These services are expected to be performed within one year from the dates presented.

Non-current deferred revenues primarily consist of long-term service-type warranties, which are typically recognized ratably as revenue between five and ten years from the date of sale, and are included within Other long-term liabilities on the Consolidated Balance Sheets.

Revenue recognized from beginning balances of contract liabilities during the three months ended November 30, 2021 totaled $ 3.1 million.

Unsatisfied performance obligations that do not represent contract liabilities are expected to be satisfied within one year from November 30, 2021 and consist primarily of orders for physical goods that have not yet been shipped.

Revenue recognized from beginning balances of contract liabilities during the six months ended February 28, 2022 totaled $ 5.2 million.

Unsatisfied performance obligations that do not represent contract liabilities are expected to be satisfied within one year from February 28, 2022 and consist primarily of orders for physical goods that have not yet been shipped.

Disaggregated Revenues

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The following table shows revenue from contracts with customers by sales channel and reconciles to our segment information for the periods presented (in millions):

Three Months Ended

November 30, 2021 November 30, 2020

Three Months Ended Six Months Ended

February 28, 2022 February 28, 2021 February 28, 2022 February 28, 2021

Independent sales network $ 614.3 $ 549.9 $ 1,251.1 $ 1,109.4

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We account for share-based payments through the measurement and recognition of compensation expense for share-based payment awards made to employees and directors over the related requisite service period, including stock options, performance stock units, and restricted stock (all part of our equity incentive plan), as well as stock units representing certain deferrals into our director deferred compensation plan or our supplemental deferred savings plan.

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following table presents share-based payment expense for the periods presented (in millions):

Three Months Ended

November 30, 2021 November 30, 2020

Three Months Ended Six Months Ended

February 28, 2022 February 28, 2021 February 28, 2022 February 28, 2021

Share-based payment expense $ 10.0 $ 7.5 $ 17.6 $ 15.2

We recognized excess tax benefits of $ 4.2 million related to share-based payment awards during the three months ended November 30, 2021.

We recognized excess tax benefits of $ 4.4 million related to share-based payment awards during the six months ended February 28, 2022.

Further details regarding our share-based payments are included within the Share-based Payments footnote of the Notes to Consolidated Financial Statements within our Form 10-K.

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 15 — Pension Plans

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Service cost of net periodic pension cost is allocated between Cost of products sold and Selling, distribution, and administrative expenses in the Consolidated Statements of Comprehensive Income based on the nature of the employee's services.

All other components of net periodic pension cost are included within Miscellaneous expense, net in the Consolidated Statements of Comprehensive Income .

All other components of net periodic pension cost are included within Miscellaneous (income) expense, net in the Consolidated Statements of Comprehensive Income .

Net periodic pension cost included the following components before tax for the periods presented (in millions):

Three Months Ended

November 30, 2021 November 30, 2020

Three Months Ended Six Months Ended

February 28, 2022 February 28, 2021 February 28, 2022 February 28, 2021

Service cost $ 1.2 $ 1.3 $ 2.4 $ 2.5

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The dilutive effects of share-based payment awards subject to market and/or performance conditions that were not met during the period are excluded from the computation of diluted earnings per share.

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following table calculates basic earnings per common share and diluted earnings per common share for the periods presented (in millions, except per share data):

Three Months Ended

November 30, 2021 November 30, 2020

Three Months Ended Six Months Ended

February 28, 2022 February 28, 2021 February 28, 2022 February 28, 2021

Net income $ 75.3 $ 62.9 $ 162.9 $ 122.5

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Diluted earnings per share $ 2.13 $ 1.74 $ 4.60 $ 3.30

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following table presents stock options, performance stock awards, and restricted stock awards that were excluded from the diluted earnings per share calculation for the periods presented as the effect of inclusion would have been antidilutive (in millions):

Three Months Ended

November 30, 2021 November 30, 2020

Three Months Ended Six Months Ended

February 28, 2022 February 28, 2021 February 28, 2022 February 28, 2021

Stock options 0.1 1.0 0.1 1.1

Performance stock awards — * —

Restricted stock awards 0.1 0.1 0.1 0.1

_______________________________________

* Represents shares of less than 0.1 million.

Further discussion of our share-based payment awards is included within the Common Stock and Related Matters and Share-based Payments footnotes of the Notes to Consolidated Financial Statements within our Form 10-K.

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Net current period other comprehensive (loss) income ( 7.1 ) 2.4 ( 4.7 )

Balance at November 30, 2021 $ ( 52.1 ) $ ( 56.8 ) $ ( 108.9 )

Balance at February 28, 2022 $ ( 47.3 ) $ ( 55.6 ) $ ( 102.9 )

Foreign Currency Items Defined Benefit Pension Plans Accumulated Other Comprehensive Loss Items

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Net current period other comprehensive income 11.3 3.3 14.6

Balance at November 30, 2020 $ ( 48.9 ) $ ( 77.6 ) $ ( 126.5 )

Balance at February 28, 2021 $ ( 42.2 ) $ ( 75.9 ) $ ( 118.1 )

_______________________________________

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Three Months Ended

November 30, 2021 November 30, 2020

February 28, 2022 February 28, 2021

Before Tax Amount Tax (Expense) Benefit Net of Tax Amount Before Tax Amount Tax (Expense) Benefit Net of Tax Amount

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Total defined benefit pension plans, net 1.6 ( 0.4 ) 1.2 2.0 ( 0.3 ) 1.7

Other comprehensive income $ 6.4 $ ( 0.4 ) $ 6.0 $ 8.7 $ ( 0.3 ) $ 8.4

Six Months Ended

February 28, 2022 February 28, 2021

Before Tax Amount Tax (Expense) Benefit Net of Tax Amount Before Tax Amount Tax (Expense) Benefit Net of Tax Amount

Foreign currency translation adjustments $ ( 7.1 ) $ — $ ( 7.1 ) $ 11.3 $ — $ 11.3

Defined benefit pension plans:

Amortization of defined benefit pension items:

Prior service cost 1.4 ( 0.4 ) 1.0 1.4 ( 0.3 ) 1.1

Actuarial losses 1.8 ( 0.4 ) 1.4 2.7 ( 0.5 ) 2.2

Total defined benefit pension plans, net 3.2 ( 0.8 ) 2.4 4.1 ( 0.8 ) 3.3

Other comprehensive (loss) income $ ( 3.9 ) $ ( 0.8 ) $ ( 4.7 ) $ 15.4 $ ( 0.8 ) $ 14.6

8 unchanged sentences

Accordingly, this information is not used by the chief operating decision maker to make operating decisions and assess performance and is therefore excluded from our disclosures.

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following table presents financial information by operating segment for the periods presented (in millions):

ABL ISG Corporate Eliminations (1)

Three Months Ended November 30, 2021:

Three Months Ended February 28, 2022

Net sales $ 863.1 $ 50.0 $ — $ ( 4.0 ) $ 909.1

1 unchanged sentence

Depreciation and amortization 19.8 3.6 0.2 — 23.6

Three Months Ended November 30, 2020:

Three Months Ended February 28, 2021

Net sales $ 736.8 $ 43.3 $ — $ ( 3.5 ) $ 776.6

1 unchanged sentence

Depreciation and amortization 21.1 3.7 0.2 — 25.0

Six Months Ended February 28, 2022

Net sales $ 1,746.7 $ 96.4 $ — $ ( 7.9 ) $ 1,835.2

Operating profit (loss) 244.6 3.2 ( 30.4 ) — 217.4

Depreciation and amortization 40.2 7.2 0.5 — 47.9

Six Months Ended February 28, 2021

Net sales $ 1,490.4 $ 84.1 $ — $ ( 5.9 ) $ 1,568.6

Operating profit (loss) 200.4 0.7 ( 24.4 ) — 176.7

Depreciation and amortization 42.2 7.3 0.5 — 50.0

____________________________

2 unchanged sentences

The following table reconciles operating profit by segment to income before income taxes (in millions):

Three Months Ended

November 30, 2021 November 30, 2020

Three Months Ended Six Months Ended

February 28, 2022 February 28, 2021 February 28, 2022 February 28, 2021

Operating profit - ABL $ 116.5 $ 102.0 $ 244.6 $ 200.4

Operating profit (loss) - ISG 2.0 ( 0.1 )

Operating profit - ISG 1.2 0.8 3.2 0.7

Unallocated corporate amounts ( 15.4 ) ( 11.8 ) ( 30.4 ) ( 24.4 )

1 unchanged sentence

Interest expense, net 6.0 6.6 11.9 11.5

Miscellaneous expense, net 0.3 1.6

Miscellaneous (income) expense, net ( 1.9 ) 2.2 ( 1.6 ) 3.8

Income before income taxes $ 98.2 $ 82.2 $ 207.1 $ 161.4

Note 19 — Subsequent Event

On March 31, 2022 , the Board of Directors authorized the repurchase of additional shares of our common stock, bringing our total authorization to five million shares.

Refer to Part II, Item 5.

Other Information for further details .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements