Acuity Brands, Inc. (NYSE:AYI) Q1 2023 Earnings Call Transcript

Neil Ashe: Yes. So let me be a little bit more granular, Jeff, which I think will give you some more insight and color. So on the infrastructure side, we’re evolving how we take holiday to market with our direct sales and some agency relationships. So in some cases, we’re paying double – we’re paying double commissions on existing business. We will work through that over time so that, that will return to a more normal level. And second, as we indicated earlier, as we make sometimes some changes in markets like New York, which we’ve talked about or Atlanta or others around the country, we incur some period costs as we make those transitions that show up in the commissions line.

Jeffrey Sprague: Understood. Thanks. And then just on Distech, the international opportunities that appear to be unfolding, can you just give me a sense of kind of the total footprint? Is it now just U.K. and France and Europe? Are you looking at other markets? Maybe just give us a sense of kind of the plan there? Maybe it’s kind of a two or three year plan, it sounds like, but to roll that out more broadly?

Neil Ashe: Yes. Thanks for the question. So Distech is a very attractive business. So they have the best technology in the market. They compete effectively on the building management control sensor market. And it’s largely been focused on North America and France. So we have good penetration in France. We have developing penetration in the U.S. And, yes, the technology is applicable in multiple markets. And so it is a multiyear strategy. So first is the U.K. The second will be to start to grow. We have a very small business, but we have – we’ll have a developing business in non-China Asia, which we think provides a large opportunity. So net-net, we think we can continue to push this geographic expansion. And the theme around Distech will be, we do have a better mousetrap so now we want to increase the addressable market.

Jeffrey Sprague: Great. Thank you.

Operator: Thank you. One moment for our next question, please. And our next question will come from Brian Lee from Goldman Sachs. Your line is open.

Brian Lee: Hi, everyone. Good morning. Happy New Year. Maybe just zooming out a little bit at a couple of bigger picture questions. I know you don’t like to talk about price too granularly, but you’ve mentioned over the course of the past several quarters, including earlier today that price increases have been a tailwind, and you’ve had multiple price increases, obviously, in the past year. Any sense just kind of, again, big picture, what the outlook is for pricing given input costs, freight? They seem to be coming back in now. Any feedback from customers and/or peers around whether you’d expect some level of price to give back here through 2023?

Neil Ashe: Yes. So, Brian, big picture on price. Over the course of the last couple of years, we’ve done several things, which will ultimately impact price. The first is to dramatically increase our product vitality. So we’re delivering better value through our products to our end users through productivity in those products and the relationship between what they’re getting and what they’re paying for it. The second is that we’ve been strategic about our pricing. We price based on market conditions so that we can compete effectively in everyday products, and we can win the projects that we like to win. That combination of product vitality, having the right product at the right price, at the right value for customers, and our ability to manage price strategically has been what has allowed us to deliver the results in the past market that we’ve encountered.