Good morning, and welcome to the Acuity Brands' 2012 Third Quarter Financial Conference Call. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. Now I would like to introduce Mr. Dan Smith, Senior Vice President, Treasurer and Secretary. Sir, you may begin.

Thank you. Good morning. With me today to discuss our third quarter results are Vern Nagel, our Chairman, President and Chief Executive Officer; and Ricky Reece, our Executive Vice President and Chief Financial Officer. We are webcasting today's conference call at www.acuitybrands.com. I would like to remind everyone that during this call, we may make projections or forward-looking statements regarding future events or future financial performance of the company. Such statements involve risk and uncertainties such that actual results may differ materially. Please refer to our most recent 10-K and 10-Q SEC filings and today's press release, which identify important factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements. Now let me turn this call over to Vern Nagel.

Thank you, Dan. Good morning, everyone. Rick and I would like to make a few comments, and then we'll be happy to answer questions. First, let me say we are very pleased with our results for the third quarter of 2012. We reported strong top and bottom line growth in spite of continued soft economic conditions. This is the ninth quarter in a row where we achieved unit volume growth in an environment, where spending for new nonresidential construction remained weak. I believe this is, yet again, strong evidence our strategy to diversify the end markets we serve and extend our leadership position in North America is succeeding. These strategies include the continued and aggressive introduction of innovative energy-efficient lighting solutions, expansion in key channels and geographies and improvements in customer service. Our profitability and cash flow for the quarter were again strong, even while we continue to find areas with significant future growth potential, including the expansion of our solid-state luminaire Lighting Controls portfolio. As you well know, the economy in North America continues to be fragile, as consumer confidence lags and job growth remains anemic. Having said this, we believe the many channels and markets we serve are, for the most part, on the road to recovery. Also in the quarter, we continue to encounter rising costs, particularly for lamps. Overall, we estimate our pricing initiatives have allowed us to recover most of these higher input costs. I mentioned these macro factors because it provides a backdrop against what you can see the outstanding performance of our company again. I know many of you have already seen our results for the quarter, and Ricky will provide more detail later in the call, but I would like to make a few comments on the key highlights. Net sales for…

Thank you, Vern, and good morning, everyone. I will highlight a few items regarding our income statement, and then we'll discuss our cash flow and financial conditions, as well as a summary of the special charge before turning the call back to Vern. Vern covered the primary drivers for our sales growth in the third quarter and our profitability, so I will not repeat these items. But I would like to provide a bit more color on certain aspects of our third quarter results. Miscellaneous expense is due primarily to the impact of exchange rates on foreign currency items. In the third quarter of fiscal 2012, we had miscellaneous income of $2.7 million compared with $900,000 of miscellaneous expense in the prior year period. This incremental benefit of $3.6 million is primarily associated with the favorable impact of exchange rates on certain foreign currency items, primarily Mexico peso-denominated exposures. The effective tax rate this quarter was 35.8%. This is 60 basis points higher than the prior year quarter. The increased rate is due to higher year-to-date pretax earnings, which causes a lower rate impact on favorable permanent tax items, nondeductible losses in Spain and the expiration of the research and development tax credit, which occurred at the end of calendar year 2011. We now estimate the effective tax rate for fiscal year 2012 to be 35%, which is a full percentage point higher than our previous estimate and is due largely to those same factors. Now let's look at the cash flow for the 9 months ended May 31, 2012. Cash flow provided by operations for the 9-month period was a strong $102.8 million, an increase of $21.2 million or an impressive 26% compared with the prior year period. The higher level of cash provided by operations in the first…

Thank you, Ricky. As we look forward, we see huge long-term growth opportunities, while short-term economic challenges have become the norm. While we don't give earnings guidance, I would like to offer a few observations about what we see for the balance of 2012. First, we expect the macroeconomic environment for the balance of 2012 to continue to be influenced by external concerns, including fiscal and monetary policy in U.S. and the European debt crisis, which was business eroding business and consumer confidence, causing continued volatility in demand. Forecasts by independent organizations have not really changed much over the last few quarters and continue to suggest unit volume for key segments of the construction put in place in the U.S. will grow slightly during the remainder of 2012. Further, sales for lighting fixtures in North America are still expected to modestly outperform overall nonresidential construction in 2012. This is consistent with the outlook in our previous filings. All this seems to suggest that while the significant headwinds that have prevailed in our markets over the last few years or so have begun to abate, the recovery continues to be slow and inconsistent in North America. Additionally, we expect the European economies to remain weak, particularly Spain. On the good news front, we sense a level of cautious optimism about future business prospects in North America from our broad and diverse customer base, which is encouraging. While many believe, as do we, that continued fluctuations in demand will be the norm for the foreseeable future, our order rates for the fourth quarter reflect these modestly improving conditions. Again, we still see wide variability in demand amongst channels, reflecting the tepid economic recovery in the U.S. Second, the industry continues to experience volatility with respect to input costs, particularly for rare earth…

[Operator Instructions] Our first question comes from Matt McCall from BB&T.

So Vern, I guess, a lot of puts and takes on the margin front. I guess, I'm trying to get an outlook or some kind of view into next year. So if you can maybe talk qualitatively about the net impact that you expect from price and mix as you introduce more LED products, as controls become a bigger part and contrast that with pressure from any ongoing growth spending in the next year.

Matt, we do not provide guidance, so I'll just comment on the quarter. I think that the results speak for themselves. The mix of our business was pretty consistent with what we have enjoyed. We were able through our pricing initiatives over the last 12 months to help offset the almost $8 million of additional cost increases that we incurred this quarter. I think that these gross profit margins are consistent or in the range of what we would expect from our business. Again, it's an ebbing and flowing. As we look at the investments that we've made at the gross profit level into our business we continue to really drive the proliferation of new products. So the investment is -- you find that a lot in the SD&A area. But what it's allowing us to do is to continue to sell higher, more value-added lighting solutions. As we think about LED, we said that the margins are generally in the range of our other traditional products. So I think when you look at the overall profitability of the quarter, what I find particularly fascinating is when I look at this level of volume, I go back to our second quarter of 2008. And if you'll remember, in 2008, it was a record year both for the industry and for Acuity Brands. And the second quarter volume was about the same, roughly $400 million, $480 million kind of range. Our operating profit margin in that quarter was 12.6%. If one were to back out, if you will, the impact of Spain this quarter, our overall margins would have been about 12.4%. So to me, it's pretty fascinating. In 2008, we didn't have $0.05 of sales of LED-based products. Today, those numbers are nearing 10%. And yet, the overall profitability of the business is roughly in line with the same level of revenues. The other thing I would point out to everybody is our cash flow return on investment is near 24%. So we continue to provide very strong returns to our shareholder base, while we drive real value and changing value, if you will, in our portfolio for our customers. But I hope that gives you some insight as to what we see about the margin dynamics of our business.

It does, Vern. And I'll use my second question as a follow-up to that. So the -- you talked in the past and I think you gave some detail by the fixed SD&A. So is the expectation that, that growth spending -- and I think, Ricky, you talked about $30 million in CapEx, which was a little elevated relative to previous years. Are we going to see continued spending at those levels out into '13 or '14? Or is there a period where you could see some better leverage? That was kind of the point of question.

Sure. I would expect -- we spent approximately $89 million in fixed SD&A this quarter, and that was in line with a point that we had made last quarter. I would expect, again, this SD&A, it's not completely fixed. It's a little bit of a misnomer to call that. We have marketing expenses that go through there for new product introductions. We have incentive compensation that flows through there. So I would expect that always to have some fluctuation. But I think that this level of spend again is consistent with what we would expect on a go-forward basis. And we'll look to leverage that level of spend as we continue to expand our revenues with these new products. As I said in my prepared remarks, we have yet to even come close to peak sales on a lot of the investments, and then therefore, the new products that we have introduced. So I think you're going to see good leverage going forward, assuming that the markets continue to expand. I think they will. I think by 2015, we'll get past some of these issues that are influencing the overall economy and we'll once again see growth in the industry that is favorable. And I think Acuity is well positioned to really leverage into that growth cycle.

Our next question is from Jed Dorsheimer, Canaccord.

My 2 questions. Vern, I was wondering if you could elaborate on, first, I guess, the agent side of the business and in terms of what the costs are to add an agent and how you compare to some of your peers, Cooper, Hubbell. Because it looks as if the agenting side is sort of a key differentiator, particularly for some of the newcomers coming into the industry, too. So if you could elaborate on that, and then I have a follow-up.

Sure. First of all, the agency model for us is fully developed, if you will. In other words, the footprint and the agents that we have in place throughout North America are very strong. We are blessed in having partners with our agents. They're obviously independent businesses. They're usually the #1 agent in their marketplace. And so we leverage our relationship by providing them with great products and great service and support to help them win in their marketplaces. I think they and we continue to work together to differentiate our value propositions against others. I won't really comment on my competitors and their positions in the market. I'll just simply say that we value the agency relationship very robustly and we invest heavily to support them and us in the local markets that we have. And yes, we consider that to be a point of many, if you will, for differentiation in the marketplace.

And then on the LED side of the business, could you -- you said it was nearing 10%. Could you just note what it was in the quarter? And then from a controls perspective, what percentage is controls being spread across all of the products? Is it really concentrated in sort of daylighting and LEDs? Or how should we look at the controls aspect on a go-forward basis?

So with regard to LED, what we've provided is that we are nearing 10%. We don't provide specific revenue numbers behind that. And then similarly, with controls, we are very focused as a single-line business on the broad lighting industry. We see a real convergence occurring on how lighting control and luminaires are coming together to make them really a lighting solution. It's becoming very, very difficult to distinguish between the 2. Yes, we know we sell a sensing device as a single one-off item. But really, it's more and more about how we are able to provide fulsome lightings solutions into a space to provide superior quality of lighting while optimizing energy. So to me, how lighting control comes into the fulsomeness of the market, it -- when you look out 3 years, I think that again it will be indistinguishable between whether it's a luminaire or a lighting control because so much control will be into the entire space and how it's being controlled again to optimize the visual environment while providing superior energy solutions. So we see software as being a big part of how all this plays out. We think that lighting control is really an additive value to the end customer. And so therefore, as we think about what a lighting solution is, we're able to really provide an uptick in value, and then depending on their energy consumption, really get a very strong payback story. So this is why it's very difficult to, if you will, break out individually one item versus -- one component versus another, frankly.

And Jed, I would add that on your comment, is the controls more for LED or daylighting, we sell controls for all of the different light sources, embedded controls in the industrial bay, fluorescent fixtures in light systems. Certainly, it works with all types of sources of light and so forth. So our control offering for both energy efficiency, as well as for architectural purposes, spans all the different light sources and different types of luminaires that we sell, as well as the daylight fixtures that we offer.

Our next question is from Christopher Glynn, Oppenheimer.

What a color on the market so far. I was just wondering about the cash that's starting to build pretty nicely. Barring some significant near-term acquisition activity, would you expect to continue to build cash?

Yes. Certainly, we expect to continue to generate significant amount of cash and build that cash, as you know, $228 million at the end of this year. We do intend, and Vern commented, would expect to make some more acquisitions. That's a primary use of our cash historically, and we'll continue to do that. We also, of course, have 2 million shares authorized by the board to repurchase in the open market as appropriate and would see opportunities to use the excess cash for share repurchase. And of course, we do pay a dividend and periodically look at the level of dividend that we pay as well as another potential use of cash. Right now, we don't really have any maturity of debt coming up. So deleveraging this is not an alternative to us. So acquisitions, potential share repurchases, and then we continue to examine the dividend.

Chris, this is Vern. If you look at our net debt-to-total capitalization, we're now roughly 13%. So it's clear that we are well below what would be considered normal leverage. We do see opportunities in the marketplace, as Ricky pointed out. So we will continue to, on our terms and at our pace look to acquire to fill out our portfolio, whether it's technology, whether it's access to market design capability, potentially even geographical expansion. The other thing that, as we pointed out to our board, I think this is very true, now with the pending tax cuts still very uncertain as to what next steps are, it is difficult for companies who are in a fortunate position, like Acuity, where we're regenerating strong cash and we expect to continue to do that, to fully understand what is the best opportunities for our shareholders, vis-à-vis stock buyback versus dividend increases. So we will be looking at that as we get closer and have a better understanding as to what folks in Washington will do in terms of providing clarity on that kind of issue.

I'm sure they'll do the right thing. And just on the types of deals, you mentioned the technology access-type things. I'm wondering if there's much you see out there in terms of really high-end spec-type product that still remain kind of attractive additives to the portfolio. If we go back before the controls acquisitions, I think that was more characteristic of what you would typically do.

Yes. I would also point out the acquisitions that we have made, Pathway and Horizon, Winona, Renaissance, these -- Mark Architectural Lighting. These are very important acquisitions for us. And they all bring something unique to our portfolio. And as we think about where we're driving our business on a go-forward basis, take Winona, for example, they have tremendous manufacturing capability in terms of providing unique products. As we delve more and more into the world of color changing, there's a great example of an investment that we made, not directly into how we would increase that portion of our portfolio, but yet with their great design and quick turnaround capability, it's a perfect place for us to nestle and create product that is being developed in other parts of our business. We have technology and innovation centers in a couple of parts of the country. These are just fantastic folks who are creating design and solutions, but then are being manufactured much closer to the market. So all of those types of investments, we will look to enhance our capability. So it may not be that we're looking for that one big home run hit, it's probably not out there frankly, but it will be to continue to piece together broad capability based on our strategic direction going forward.

Our next question is from Peter Lisnic, Robert Baird.

Vern, I guess, you mentioned productivity a bit earlier. And if I look at the SD&A number on the fixed side and I calculate the implied variable piece, it looks like it's a little bit lower than kind of what you've been telling us it would be. So I was just wondering what you're doing on the productivity front and what sorts of benefits we might expect to see as we go forward on that variable cost side of the equation as well.

It's a good point, Pete. It is slightly lower. We've gotten some benefit because of lower fuel costs, so some of our freight was down a little bit compared to prior periods. We also continue to push our regional manufacturing capability to be much closer to the market. We have a great capability there. So a lot of freight back and forth in terms of from one facility to another is down. And we'll continue to leverage that. We'll continue to leverage that capability. My own feeling is that, as we continue to introduce more and more holistic lighting solutions, you will see our commission rate probably trend up a little bit. So all that, the puts and the takes around that, probably we're still in that 11.2%, 11.3%, 11.4% for freight and commissions. It's probably a fairly consistent number. We will look to leverage, if you will, that fixed SD&A side. And there is some variability in that number on a go-forward basis. In the manufacturing facilities, our teams continue to do a great job driving productivity throughout the facilities, if you will. Obviously, the streamlining action in the shuttering of Cochran will continue to add to that. I think on the SD&A side, within our organization, we continue to invest in new product development, and that's expensive. But we're looking at other things to help offset, if you will, that. And so we deem that productivity -- Ricky and Mark Black are doing great job driving productivity on the fixed SD&A side of their business. So I think you will continue to see us do that. As you know, Pete, we have said that we strive to add 70 basis points of productivity or 70 basis points of margin from productivity-type initiatives. Again, the streamlining of our manufacturing footprint is a good example of us continuing to do that. My hope is that soon here, we will start to see a lift from the marketplace, so our productivity will be coming more from leveraging the fixed investments that we have to really support a much higher level of sales growth.

All right. That is perfect. And then if I could just flip back to the controls comments you made a bit earlier. Can you give us a feel for the competitive landscape and how well you fit in there? There obviously have been some strategic actions by competitors over the past few months in specifically on the control side. Just wondering how well you're positioned there, any holes and how you kind of think about that business right now.

Yes. I believe that some of those moves by our competitors are really a complete validation of our strategy and our view of the market going forward. We believe that holistic integrated lighting systems will become a bigger and growing part of the market, particularly as buildings or campuses, whether it's a school system or a health care facility or an industrial space or a commercial office building, people are going to want to have capability that allows them for that entire campus to make sure that they're delivering quality of light in space. I mean, we need light to see and to optimize the use of the space, but they also want the energy savings in terms of what lighting control can mean. And so we think that we are uniquely positioned to fully leverage the fulsomeness of what we have in our portfolio today and to continue to expand, not only on the device side but on the software side. Our nLight System is second to none in the industry. And we think that is a very robust platform for us to continue to grow as, if you will, the brains within that overall integrated lighting system.

Our next question is from Glenn Wortman, Sidoti & Company.

Actually, my question, I think, was basically just answered. But just to follow up on that point with the convergence of the lighting fixtures and the controls over the next several years. So it does sound like if you're offering the full holistic solutions, you would expect to increase your market share in that environment. Can you just maybe kind of expand on that a little bit, please?

Yes. We believe that we have been expanding our market share in this environment. The industry -- and we believe industry will pay up for good quality technology that allows them again to optimize the visual environment while really taking advantage of energy savings. That energy savings comes into play and can be further enhanced by really taking advantage of daylighting so that you're deriving more energy savings even while you're using the space. And our belief is that as the market continues to migrate and is more accepting, more knowledgeable of what these types of systems can do, particularly the way Acuity will bring ease-of-use. And we've demonstrated a lot of that at LIGHTFAIR, met with great fanfare, hence, awards, and really a key focus by the industry on Acuity's capabilities in this area. We think it's a leverage point for us to gain share as the market continues to grow. These things will be higher value add, but they'll be paid for again by energy savings. So we think it's a key driver over the next handful of years in terms of what the market will see and want.

Okay. And then just second on that fixed SG&A of $89 million. On the last conference call, you sounded like you were in a ramp-up for a couple of quarters, and then that would abate somewhat. Do you no longer think that's the case? I mean, I think you mentioned earlier that you think this $89 million is a good run rate to you going forward.

Yes. In truth, given the -- we are introducing product, both conventional but mostly LED-based solutions, controls, daylighting, all sorts of different capabilities into the marketplace. We see our product portfolio growth and proliferation continue at this pace. We continue to get more and more excited about the opportunities that we see in the market over the next handful of years. And so I would expect us to continue to invest at this pace. Again, there is some variability in that fixed number, marketing expenses. So when we're developing and procuring new materials, when we're introducing new products where we have samples and all of that, it's period expense for us. And so I would expect us to continue to invest in those kinds of areas. And this pace, this range of where we are in terms of the fixed SD&A feels right to me. I think it could go up. I also think it could ebb down depending on just the timing of how things are done. But at the end of the day, we will continue with this level of investment in technology and innovation and sales and marketing support to drive our future growth.

Our next question is from Jesse Pichel with Jefferies.

Ricky, you talked about higher rare earth inputs. But when will lower-priced LED components and lower-priced steel start to act as a tailwind to input costs?

Yes, Jeff, we were seeing that. We are seeing some come down. As you mentioned, we have seen sequentially some reduction in steel. Vern commented on fuel. That's been the benefit on the reverse side. We have seen increases in the example given of lamps on the rare earths side. As regards to LED, we are seeing significant declines in the cost of the chip or the package. Much of that is being passed on in the end price, although we have been able, as Vern commented, to now have our LED margins in the range generally of our traditional fixtures. So as we look at the puts and takes of commodity costs and input costs, we see some up and some down, don't see a significant benefit or a challenge in the near-term horizon. But regardless, we're very vigilant if we do see increases to pass that through in price.

So can you help us understand Acuity's exposure to new construction versus new tenants versus renovation this quarter?

I think that, that is very difficult. We do not have precise data around the actual sale. I mean, we are at near $500 million of revenues and average order size -- I mean, it's probably 25,000 or 30,000 orders that have come through. And it's impossible for us to precisely know was it new construction or was it tenant improvement? Truthfully for us, it's really -- we're almost indifferent to it. I'm sitting here looking out at an empty building, where they're renovating the inside of it. The tenant has moved out. And so when someone else moves in there, it will probably -- they will probably hire some type of specifier or lighting designer architect engineer. And to us, that will look exactly like new construction, even though the shell of the building is probably 30 years old. We will not code it as tenant fit-up. We will code it as a job. So it's been very difficult for us to precisely quantify whether it's new construction. My own personal belief and the belief of our folks is that in this environment right now, it is mostly about tenant fit-up and different types of renovation. Many of the buildings that have been built again -- we're in midtown Atlanta here, there's a number of see-through buildings. So as employment comes back and as people move into these spaces that have not been built out at all, for us, that's new construction. So I would tell you, it's been difficult to precisely quantify that. I feel very strongly that our skill set to be able to support both renovation and tenant improvement is very robust, as well as our ability to support and serve new construction. 75% or more of our capability in that channel, it's shipping to a different address that we're billing it to. So as new construction comes back, as employment improves, as people find their way into these either commercial, industrial, health care facilities, office buildings, we feel that we are uniquely positioned to leverage our skill and our strength that we've always had in those spaces.

Our next question is from Brent Thielman with Davidson.

Just had a couple of housekeeping questions. Was the top line headwind from Spain less than a point or more than that?

It was less than a point.

Okay, great. And then could you provide a backlog figure for the end of the quarter?

We have been mentioning, Brent, for a while now that, that's less of a meaningful indicator for us, just given the shortness of our shipping cycle. As we do a lot more ship quick shipping and so forth, it's now down to 4 or 5 weeks of sales. But it was generally consistent with where we were a year ago, if you look at it on a comparable basis. But we're, as we've been saying, and this is probably less of an indicator, a forward indicator than many other things.

And one of the things that we have done with how we use our backlog to manage our business, it's what we see very clearly. In the past, we have potentially added some items into the backlog. And Ricky, help me here a little bit, a ship to that -- it's a whole type of thing, where in fact, the number, the apple-to-apple number, again as Ricky pointed out, is roughly flat. But it's much more because we are shipping -- it's what is actionable to us close-in versus taking orders that are further out because they're not actionable to us immediately. And in a very lean environment, the way we operate, we want to use our backlog as a tool to help us really drive and provide superior customer service. So what you're seeing at Acuity is our input, our order rates are more important and our ability to deliver on-time complete every time without error or defect in the product is a much higher priority. And so we're selling that differentiation in that capability. This is why backlog for us, the way you might look at or one might look at, is very different today than it was just even a few short years ago.

Our next question is from Ahmar Zaman, Piper Jaffray.

This is Shawn on for Ahmar. I wondered if we could talk a little bit more about sort of your confidence you guys have in terms of being able to outperform the market. In the face of sort of tough economic conditions, the company has performed very well. But when we look at things like -- I am just going to pull this one off the Architectural Billings Index, which shows that -- which has been pulling back the last couple of months. Can you guys talk a little bit more about what's giving you sort of confidence that you're going to be able to kind of fly against any sort of headwinds and continue to grow at a steady rate with the company?

Shawn, this is Vern. Unfortunately, that variability in demand has been in the marketplace now for at least 3 years. And so we expect it to be that way for a while longer. Our ability to really understand our end markets, we have 14 different channels that we serve in North America. They all ebb and flow. And so they're all going through their own little mini cycles, if you will. And we continue to stay very close to customers in each of those channels. We're very focused on the types of products and lighting solutions that we're bringing to them. And so we believe that we have the right strategies in these various channels to support growth, where it either is from share gain or it's because the market is growing in that particular segment. And we have the right capability to both participate and take share. The commercial markets, which have been really down for the last 3 years, are actually showing signs of life. I think that McGraw-Hill and others are showing an uptick there. If you take other channels or other market segments, whether it's the government support programs, I think for folks who relied heavily on with government spending, they're going to find it a bit of a challenge over the next period of time, as the government wrestles with its almost uncontrollable debt. Fortunately, for Acuity, we're not -- we didn't really participate in the stimulus side of it. So I don't think we're going to be directly impacted by it. So I feel that the products that we're coming out with, that we have come out with, our intense focus on understanding the customers in these various channels and the strength of our sales forces, combined with that portfolio, should allow us to continue to outperform the markets, as we have for the last several quarters.

Great. And if we could talk a little bit -- I mean, you had a very good quarter in terms of just your gross margin, up around 41% -- over 41%. Is this the kind of level that we should sort of expect going forward? Or is it reasonable to think that with the variability in business, it could kind of tick back, maybe not dramatically? But I know that last quarter, you were talking about maybe 40% to 41% gross margins for the year. Is it reasonable now to think that you guys could be trending toward the higher end of that? Or is it reasonable to think about that sort of with the variability of the business, there could be a tick back in the margins?

Well, so last quarter, I was being pushed on the gross margin because it was our second quarter, typically, our lightest in terms of volume, mostly due to the just seasonal nature of construction. And so the question was around gross margins for the full year. I believe that based on the current mix and what we produced and shipped this quarter, it is reflective of what our capabilities are. That doesn't mean that it's always going to be precisely this number. We do have ebbing and flowing, depending on the mix that shift that particular number, a little bit of the construction cycle influencing it, the leverage of volume. Typically, our third and fourth quarters are higher volumes, so we're able to leverage our fixed costs base. I think it gives investors a good sense of the leverage capability of what volume can do for Acuity. We are very vigilant and diligent around how we manage our cost structure and drive productivity. So this is a good indicator, I think, of what we're capable of doing. The other thing that was interesting to me this quarter. Again, if you look at the growth in revenues on a year-over-year basis and compare that to the pull-through on our operating profit, it was a robust variable contribution of 30%. So that meant productivity improvements, that meant opportunities for favorable mix. And I think the company just performed very, very well. And we pushed ourselves and we'll continue to do that to have that level of performance while investing in the business.

Our next question is from Kathryn Thompson, Thompson Research Group.

Twofold question for you. First, you achieved about 5% unit growth. Could you clarify how much of that is core market growth versus market share gains or new product categories for you, which also gained some market share gains? And then second, if you look back -- if you can really quantify or at least put some parameters around the content per square foot and how that has changed today versus 3 to 5 years ago. And it certainly has been improving. But could you put some quantifiable metrics around that shift?

I don't know if I can answer you either of these questions, to be honest with you. To quantify the content per square foot, we do believe it's improving. But it's such macro gross numbers that it's very difficult to precisely say that this is happening. When we look at jobs, individual jobs, and we see what we're selling into those, we try to understand in that particular job, what was happening, what would it have done a few years ago. And it's still, while directionally we believe that we're selling more value per square foot, again paid for through energy savings. People are now mandated that they have occupancy sensors in certain places. People are acquiring more sophisticated luminaires that have much more capability, whether it's high-end fluorescent or LED. So people are paying up to get quality of light, but then typically, they're justifying it by the payback of energy savings.

But just at least on a dollar per unit, at least you'd be able to see that internally that the dollar per unit is higher today versus 3 to 5 years ago. I mean, have you done that analysis before?

Again, the problem is that as we have converged more and more of technology into the luminaire, so if there's now embedded controls, there's embedded capability. You can look at a space and say, "Yes, it's improving." But it's very difficult to say, "Is it because of the luminaire or is it because of the control device because they're now a system?" So I have the ability to take raw numbers and divide it into my revenues and come up with something. But that is not precisely meaningful for us. And then your question around the differentiation between just normal market and market share gain, unfortunately, a lot of the information that we use to determine market share gain is on a lag basis. We are a fiscal quarter company versus most everyone else being a calendar company. A lot of the data that we get, whether it's from Dodge or NEMA or other places to compare our share, it's on a lag. And so we're typically looking at that at almost a quarter lag, frankly. And so we see share gains -- to say exactly what is the absolute percentage of that, I wouldn't want to guess right now. I know what it is for the last quarter, but that's not for this quarter. And we don't provide that information.

Thank you, all. Due to the time constraints, we will now turn the call back over to Mr. Nagel for closing remarks.

Thank you for your time this morning. We strongly believe we are focusing on the right objectives, deploying the proper strategies and driving the organization to succeed in critical areas that will, over the longer term, deliver on the expectations of our key stakeholders. Our future is bright. Thank you for your support.

Thank you for participating in today's conference. You may disconnect at this time.