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Acuity Brands is trading lower after reporting Q2 (Feb) results, as weakness in its core lighting segment overshadowed another strong EPS beat. The company delivered its fourth consecutive double-digit EPS beat, while revenue rose 4.9% yr/yr to $1.06 bln, roughly in-line with expectations.

• Acuity operates through two segments: Acuity Brands Lighting (ABL) and Acuity Intelligent Spaces (AIS).
• ABL revenue declined 2.8% yr/yr to $817.4 mln, driven by weakness in the direct sales channel and tough comps from large prior-year projects. Despite lower sales, ABL gross margin improved 70 bps to 45.7%, supported by strategic pricing and productivity initiatives.
• The company noted slower project release timing on the ABL side, with demand impacted by uncertainty around interest rates, inflation, and tariffs, along with labor crowding from data center projects.
• Acuity is taking cost actions in ABL, including targeted labor reductions, and now expects FY26 ABL sales to be flat to down low-single digits.
• AIS revenue surged 44.7% yr/yr to $248.1 mln, primarily driven by the QSC acquisition, which expands its AV and control platform capabilities. Both Distech and QSC delivered strong performance, supporting continued momentum in the AIS segment.

Briefing.com Analyst Insight:

Acuity delivered another strong bottom-line performance, but that strength is being overshadowed by ongoing softness in its core ABL segment. The soft full-year ABL guidance is likely the main source of investor disappointment, as it suggests that a meaningful recovery in lighting demand is not yet taking hold. While margin execution remains solid and AIS is providing a welcome growth offset, investors were looking for clearer signs of stabilization in ABL. With sentiment already weak coming into the report, this update does little to shift the narrative, and shares may remain under pressure until demand trends in the core lighting business show more definitive improvement.