Acuity Brands, Inc. (AYI) Q1 2008 Earnings Report, Transcript and Summary

Yes, I was wondering if you could elaborate just little bit more on the share repurchasing you’ve, helped us out by mentioning what you had done so far this quarter but clue me in shares bought in the first quarter seems like a high level. I what kind of a pace would you generally expect going forward and be another way of asking is how soon. Or, is there a point in time when you want to get the million and a half shares remaining completed. R: Looking at the first quarter therate of repurchase was ata higher level as we took advantage of the dividend we received on the distribution of Zep the $62½ million and felt that the best use for that cash flowin terms of enhancing shareholder value was to repurchase shares with that. So, we were pretty aggressive, in our first quarter while we’ve, been aggressive over the last couple of years. We were at a higher rate there in our first quarter taking advantage of the opportunity of reinvesting or using that dividend from the distribution of Zep on what we thought was the highest use for shareholder value creation we are looking to continue to repurchase. and it will a million and a half shares that we have we’ve got a 10b5 program in place now that we’re purchasing under and just based on various market factors. As well as other opportunities we may see to reinvest that, capital would cause us to continue to examine what’s, the highest and best use of that capital atthe moment. Though I think, you're, likely to continue to see us in the market repurchasing shares but probably not as aggressive, arate as you saw in our first quarter because we had the added boost of the dividend from Zep. ichard K. Reece: Looking at the first quarter therate of repurchase was ata higher level as we took advantage of the dividend we received on the distribution of Zep the $62½ million and felt that the best use for that cash flowin terms of enhancing shareholder value was to repurchase shares with that. So, we were pretty aggressive, in our first quarter while we’ve, been aggressive over the last couple of years. We were at a higher rate there in our first quarter taking advantage of the opportunity of reinvesting or using that dividend from the distribution of Zep on what we thought was the highest use for shareholder value creation we are looking to continue to repurchase. and it will a million and a half shares that we have we’ve got a 10b5 program in place now that we’re purchasing under and just based on various market factors. As well as other opportunities we may see to reinvest that, capital would cause us to continue to examine what’s, the highest and best use of that capital atthe moment. Though I think, you're, likely to continue to see us in the market repurchasing shares but probably not as aggressive, arate as you saw in our first quarter because we had the added boost of the dividend from Zep. V: And Ricky just to add more color to that since the beginning of 2006 through this first quarter we have repurchased or invested $330 million in terms of share repurchase or share repurchases over that time period our expectation is, is that our cash flow will continue to be very strong. we have a goal out there of having our free cash flow exceed our net income our expectation is, is that we’ll do that again in 2008 so we continue to generate very favorable cash flow as we continue to improve our asset management capabilities because of better processes. So, as Ricky said we would expect to continue to look for ways to deploy that capital in the most advantageous way for our shareholders that would include share buyback and investments in terms of back into our business in terms of market expansion new all at New York City as well as potential acquisitions that help our portfolio. ernon: And Ricky just to add more color to that since the beginning of 2006 through this first quarter we have repurchased or invested $330 million in terms of share repurchase or share repurchases over that time period our expectation is, is that our cash flow will continue to be very strong. we have a goal out there of having our free cash flow exceed our net income our expectation is, is that we’ll do that again in 2008 so we continue to generate very favorable cash flow as we continue to improve our asset management capabilities because of better processes. So, as Ricky said we would expect to continue to look for ways to deploy that capital in the most advantageous way for our shareholders that would include share buyback and investments in terms of back into our business in terms of market expansion new all at New York City as well as potential acquisitions that help our portfolio. J. Nagel : And Ricky just to add more color to that since the beginning of 2006 through this first quarter we have repurchased or invested $330 million in terms of share repurchase or share repurchases over that time period our expectation is, is that our cash flow will continue to be very strong. we have a goal out there of having our free cash flow exceed our net income our expectation is, is that we’ll do that again in 2008 so we continue to generate very favorable cash flow as we continue to improve our asset management capabilities because of better processes. So, as Ricky said we would expect to continue to look for ways to deploy that capital in the most advantageous way for our shareholders that would include share buyback and investments in terms of back into our business in terms of market expansion new all at New York City as well as potential acquisitions that help our portfolio.

Also, could you just comment briefly on those stock options have you issued any yet since the spinoff of and do you have any immediate plans in that area? V: I can’t, comment on that, I don't, know the precise number but our long-term incentive plans are annual plans they are pay for performance plans. what that means is, is that we have to hit certain financial targets in order to fund a pool of long term incentive for the last four years we have generally used restricted shares as the only vehicle in terms of how we have funded those long term incentive plans through the first quarter post spin. We funded our long-term incentive plans and it was primarily again restricted shares but we did issue some options. And, Ricky the number was pretty small, right. ernon: I can’t, comment on that, I don't, know the precise number but our long-term incentive plans are annual plans they are pay for performance plans. what that means is, is that we have to hit certain financial targets in order to fund a pool of long term incentive for the last four years we have generally used restricted shares as the only vehicle in terms of how we have funded those long term incentive plans through the first quarter post spin. We funded our long-term incentive plans and it was primarily again restricted shares but we did issue some options. And, Ricky the number was pretty small, right. J. Nagel : I can’t, comment on that, I don't, know the precise number but our long-term incentive plans are annual plans they are pay for performance plans. what that means is, is that we have to hit certain financial targets in order to fund a pool of long term incentive for the last four years we have generally used restricted shares as the only vehicle in terms of how we have funded those long term incentive plans through the first quarter post spin. We funded our long-term incentive plans and it was primarily again restricted shares but we did issue some options. And, Ricky the number was pretty small, right. R: I don’t, recall the exact number either but it wasn’t a significant amount. And to put it in broadly in perspective we look atthe total number of shares including options that have been issued and as I recall that number is about was about 1 ½ % of our total shares outstanding. So it was well below about 600,000 shares but that included both restricted shares and options and I’m, giving this to you off the top of my head sobe a little careful there. But, I think I’m, pretty close in terms of the number. ichard K. Reece : I don’t, recall the exact number either but it wasn’t a significant amount. And to put it in broadly in perspective we look atthe total number of shares including options that have been issued and as I recall that number is about was about 1 ½ % of our total shares outstanding. So it was well below about 600,000 shares but that included both restricted shares and options and I’m, giving this to you off the top of my head sobe a little careful there. But, I think I’m, pretty close in terms of the number.

Okay just one last question given the fact that you're, say a new entity but changed entity do you have any near term plans for getting on the road to meet with investors. V: We yes we do that on a quarterly basis we present at different conferences that are sponsored by the folks that provide coverage on us and so it’d be our opportunity or it’d be our expectation to continue to do that. So and Dan I look to you I believe we have various road shows or trips that are planned we try and, do something once a quarter and. ernon: We yes we do that on a quarterly basis we present at different conferences that are sponsored by the folks that provide coverage on us and so it’d be our opportunity or it’d be our expectation to continue to do that. So and Dan I look to you I believe we have various road shows or trips that are planned we try and, do something once a quarter and. J. Nagel : We yes we do that on a quarterly basis we present at different conferences that are sponsored by the folks that provide coverage on us and so it’d be our opportunity or it’d be our expectation to continue to do that. So and Dan I look to you I believe we have various road shows or trips that are planned we try and, do something once a quarter and. D: Yeah we’ll, probably have a northeast in the next month or so and then probably Midwest later on. an Smith: Yeah we’ll, probably have a northeast in the next month or so and then probably Midwest later on. V: Just one last comment on the stock options our overhang has dropped dramatically over the last three years I believe that total options outstanding in our most recent 10-K were about 2.1 million Ricky. So, we were down pretty dramatically, if you go back even just three years ago sothe overhang issue we have really addressed pretty aggressively favorably for shareholders I might add. ernon: Just one last comment on the stock options our overhang has dropped dramatically over the last three years I believe that total options outstanding in our most recent 10-K were about 2.1 million Ricky. So, we were down pretty dramatically, if you go back even just three years ago sothe overhang issue we have really addressed pretty aggressively favorably for shareholders I might add. J. Nagel : Just one last comment on the stock options our overhang has dropped dramatically over the last three years I believe that total options outstanding in our most recent 10-K were about 2.1 million Ricky. So, we were down pretty dramatically, if you go back even just three years ago sothe overhang issue we have really addressed pretty aggressively favorably for shareholders I might add. O: Your next question comes from Dennis Scofield with Delafield Asset Management. perator: Your next question comes from Dennis Scofield with Delafield Asset Management. D: You had talked a lot about the energy policy act did that include anything about the retrofit for federal buildings. ennis Scofield – Delafield Asset Management: You had talked a lot about the energy policy act did that include anything about the retrofit for federal buildings. R: Yes, there is opportunity there if you're, a taxpayer there are accelerated tax deductions that you get if you own the building but there are also opportunities when it goes into a non-taxable entity for the contractor. And, the designer to participate in some of those incentives so there would still be an incentive through the epact, as I understand it for even entities that are not otherwise paying taxes. ichard K. Reece: Yes, there is opportunity there if you're, a taxpayer there are accelerated tax deductions that you get if you own the building but there are also opportunities when it goes into a non-taxable entity for the contractor. And, the designer to participate in some of those incentives so there would still be an incentive through the epact, as I understand it for even entities that are not otherwise paying taxes. D: But, there was no requirement that the government retrofit their own buildings with energy efficient lighting. ennis Scofield – Delafield Asset Management: But, there was no requirement that the government retrofit their own buildings with energy efficient lighting. R: No to my certainly not as part of epact 2005 and at the federal level I'm not aware of any requirement you're beginning to see more activity at a local level but I'm not aware of a requirement at the federal level at this time. ichard K. Reece : No to my certainly not as part of epact 2005 and at the federal level I'm not aware of any requirement you're beginning to see more activity at a local level but I'm not aware of a requirement at the federal level at this time. V: And, Dennis the local level is very exciting for us we continue to make inroads into those markets and feel that from a strategy perspective and from an organizational structure perspective. We are going to realign or better align some of our resources to target some of those types of markets in a more effective way because of the growth potential that’s, there. ernon: And, Dennis the local level is very exciting for us we continue to make inroads into those markets and feel that from a strategy perspective and from an organizational structure perspective. We are going to realign or better align some of our resources to target some of those types of markets in a more effective way because of the growth potential that’s, there. J. Nagel : And, Dennis the local level is very exciting for us we continue to make inroads into those markets and feel that from a strategy perspective and from an organizational structure perspective. We are going to realign or better align some of our resources to target some of those types of markets in a more effective way because of the growth potential that’s, there. O: Our next question comes from Robert McCarthy with Banc of America. perator: Our next question comes from Robert McCarthy with Banc of America. R: Just a couple of follow-ups and I notice we’re getting late in the day here with respect to the New York market Vern obviously you’ve made abig splash there with your new design center things like that. Could you talk about and the fact is those commercial markets particularly inthe northeast and some of the major metropolitan remain fairly firm are you seeing any signs anecdotally. Or, incrementally of market share gains or growth there above kind of market expectations. obert McCarthy – Banc of America: Just a couple of follow-ups and I notice we’re getting late in the day here with respect to the New York market Vern obviously you’ve made abig splash there with your new design center things like that. Could you talk about and the fact is those commercial markets particularly inthe northeast and some of the major metropolitan remain fairly firm are you seeing any signs anecdotally. Or, incrementally of market share gains or growth there above kind of market expectations. V: Well in the city itself, we had very little presence so any real opportunity there is market share gain for us and we believe the way we have positioned the product portfolio it fits very well with the opportunities and the demands of the New York City market. the acquisition of Mark Architectural Lighting some of the structuring that we've done with our specialty products businesses under one of our better leaders really is just a very exciting growth opportunity for us. so we’re after that supply chain is focused on making sure that we have New York type product but we see this in other markets as well other large markets where there continues to be. And, we expect there to continue to be strength in demand so for us those aren’t, shared gains they're, geographical share gains if you will. ernon: Well in the city itself, we had very little presence so any real opportunity there is market share gain for us and we believe the way we have positioned the product portfolio it fits very well with the opportunities and the demands of the New York City market. the acquisition of Mark Architectural Lighting some of the structuring that we've done with our specialty products businesses under one of our better leaders really is just a very exciting growth opportunity for us. so we’re after that supply chain is focused on making sure that we have New York type product but we see this in other markets as well other large markets where there continues to be. And, we expect there to continue to be strength in demand so for us those aren’t, shared gains they're, geographical share gains if you will. J. Nagel : Well in the city itself, we had very little presence so any real opportunity there is market share gain for us and we believe the way we have positioned the product portfolio it fits very well with the opportunities and the demands of the New York City market. the acquisition of Mark Architectural Lighting some of the structuring that we've done with our specialty products businesses under one of our better leaders really is just a very exciting growth opportunity for us. so we’re after that supply chain is focused on making sure that we have New York type product but we see this in other markets as well other large markets where there continues to be. And, we expect there to continue to be strength in demand so for us those aren’t, shared gains they're, geographical share gains if you will. R: So, there’s definitely an opportunity there. Finally on the acquisition front just following up on a previous commentary and questions with the fact that Genlyte is effectively focused on other things now being acquired is it is there any potential for any residential properties. and have you started to see multiples for some of those smaller residential properties kind of come down now as people kind of go through the Kübler-Ross stages of dying and realize that they're not going to get quite the multiples they thought. obert McCarthy – Banc of America: So, there’s definitely an opportunity there. Finally on the acquisition front just following up on a previous commentary and questions with the fact that Genlyte is effectively focused on other things now being acquired is it is there any potential for any residential properties. and have you started to see multiples for some of those smaller residential properties kind of come down now as people kind of go through the Kübler-Ross stages of dying and realize that they're not going to get quite the multiples they thought. V: Yeah and we see opportunities in that market it may be a little too soon to put our toe into the acquisition side there having said that we continue to develop and enhance our own product portfolio through our internal engineering and design capabilities targeting at that market. Because again we believe that, there is an energy story there as well so, we see the resi market again as a very large market. and an opportunity for us in the future to participate in more aggressively where we do that through again continued development of products internally or through acquisition those are choices and opportunities that we’ll have to consider I think later not right at this point in time. ernon: Yeah and we see opportunities in that market it may be a little too soon to put our toe into the acquisition side there having said that we continue to develop and enhance our own product portfolio through our internal engineering and design capabilities targeting at that market. Because again we believe that, there is an energy story there as well so, we see the resi market again as a very large market. and an opportunity for us in the future to participate in more aggressively where we do that through again continued development of products internally or through acquisition those are choices and opportunities that we’ll have to consider I think later not right at this point in time. J. Nagel : Yeah and we see opportunities in that market it may be a little too soon to put our toe into the acquisition side there having said that we continue to develop and enhance our own product portfolio through our internal engineering and design capabilities targeting at that market. Because again we believe that, there is an energy story there as well so, we see the resi market again as a very large market. and an opportunity for us in the future to participate in more aggressively where we do that through again continued development of products internally or through acquisition those are choices and opportunities that we’ll have to consider I think later not right at this point in time. O: There are no further questions so I’ll now turn the call back over to Vernon Nagel. perator: There are no further questions so I’ll now turn the call back over to Vernon Nagel. V: Thank you for your time this morning we believe we are focusing on the right objectives deploying the proper strategies and driving the organization to succeed in critical areas that deliver on the expectations of our key stakeholders I’d like to thank all the associates again of Acuity Brands terrific quarter and more to come our future is bright. Thank you for your support. ernon: Thank you for your time this morning we believe we are focusing on the right objectives deploying the proper strategies and driving the organization to succeed in critical areas that deliver on the expectations of our key stakeholders I’d like to thank all the associates again of Acuity Brands terrific quarter and more to come our future is bright. Thank you for your support. J. Nagel : Thank you for your time this morning we believe we are focusing on the right objectives deploying the proper strategies and driving the organization to succeed in critical areas that deliver on the expectations of our key stakeholders I’d like to thank all the associates again of Acuity Brands terrific quarter and more to come our future is bright. Thank you for your support.

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THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES INTHE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!