ACUITY INC DE

Previous wording

The purpose of this discussion and analysis is to enhance the understanding and evaluation of the results of operations, financial position, cash flows, indebtedness, and other key financial information of Acuity Inc. (referred to herein as “we,” “our,” “us,” the “Company,” or similar references) and its subsidiaries as of February 28, 2025 and for the three and six months ended February 28, 2025 and February 29, 2024. The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements included within this report. Also, please refer to Acuity Inc.'s Annual Report on Form 10-K for the fiscal year ended August 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on October 28, 2024 (“Form 10-K”).

Current wording

The purpose of this discussion and analysis is to enhance the understanding and evaluation of the results of operations, financial position, cash flows, indebtedness, and other key financial information of Acuity Inc. (referred to herein as “we,” “our,” “us,” the “Company,” or similar references) and its subsidiaries as of May 31, 2025 and for the three and nine months ended May 31, 2025 and May 31, 2024. The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements included within this report. Also, please refer to Acuity Inc.'s Annual Report on Form 10-K for the fiscal year ended August 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on October 28, 2024 (“Form 10-K”).

Previous wording

Our significant contractual cash requirements primarily include principal and interest on outstanding debt, accounts payable, accrued employee compensation, operating lease liabilities, and certain purchase obligations incurred in the ordinary course of business that are enforceable and legally binding. Our obligations related to these items are described further within Management’s Discussion and Analysis of Financial Condition and Results of Operations within our Annual Report filed on Form 10-K. Refer to Financing Arrangements below for a discussion of significant changes to our contractual obligations for the first six months of fiscal 2025.

Current wording

Our significant contractual cash requirements primarily include principal and interest on outstanding debt, accounts payable, accrued employee compensation, operating lease liabilities, and certain purchase obligations incurred in the ordinary course of business that are enforceable and legally binding. Our obligations related to these items are described further within Management’s Discussion and Analysis of Financial Condition and Results of Operations within our Annual Report filed on Form 10-K. Refer to Financing Arrangements below for a discussion of significant changes to our contractual obligations for the first nine months of fiscal 2025.

Previous wording

Our cash position at February 28, 2025 was $397.9 million, a decrease of $447.9 million from August 31, 2024. Cash generated from operating activities and cash on hand were used during the current year to partially fund the QSC, LLC (“QSC”) acquisition and our other capital allocation priorities as discussed below.

Current wording

Our cash position at May 31, 2025 was $371.8 million, a decrease of $474.0 million from August 31, 2024. Cash generated from operating activities and cash on hand were used during the current year to partially fund the QSC, LLC (“QSC”) acquisition and our other capital allocation priorities as discussed below.

Previous wording

We generated $191.6 million of cash flows from operating activities during the six months ended February 28, 2025, compared to $292.6 million in the prior-year period, a decrease of $101.0 million. This decrease reflects higher payments for purchases of inventory, the timing of sales and cash collections from our customers, payments for acquisition-related costs, and higher tax payments.

Current wording

We generated $398.9 million of cash flows from operating activities during the nine months ended May 31, 2025, compared to $445.1 million in the prior-year period, a decrease of $46.2 million. Cash flows from operations decreased as increased profitability on higher net sales was offset by payments for nonrecurring items as well as higher interest expense and the timing of collections from customers.

Previous wording

See the Debt and Lines of Credit footnote of the Notes to Consolidated Financial Statementsfor discussion of the terms of our various financing arrangements, including the $500.0 million aggregate principal amount of 2.150% senior unsecured notes due December 15, 2030 (the “Unsecured Notes”), the terms of our $600.0 million five-year unsecured revolving credit facility (“Revolving Credit Facility”), and the terms of our $600.0 million two-year unsecured term loan facility (“Term Loan Facility”).

Current wording

See the Debt and Lines of Credit footnote of the Notes to Consolidated Financial Statementsfor discussion of the terms of our various financing arrangements, including the $500.0 million aggregate principal amount of 2.150% senior unsecured notes due December 15, 2030 (the “Unsecured Notes”), the terms of our $600.0 million five-year unsecured revolving credit facility (“Revolving Credit Facility”), and the terms of our $500.0 million unsecured term loan facility (“Term Loan Facility”) due in two years.

Previous wording

At February 28, 2025, our outstanding debt balance was $1.1 billion, which consisted of our Unsecured Notes and borrowings on our Term Loan Facility, compared to our cash position of $397.9 million. We were in compliance with all covenants under our financing arrangements as of February 28, 2025.

Current wording

At May 31, 2025, our outstanding debt balance was $1.0 billion, which consisted of our Unsecured Notes and borrowings on our Term Loan Facility, compared to our cash position of $371.8 million. We were in compliance with all covenants under our financing arrangements as of May 31, 2025.

Previous wording

In January 2025, we drew the full $600.0 million on the Term Loan Facility to fund the QSC acquisition. In March 2025, we repaid $100.0 million of the outstanding obligation.

Current wording

In January 2025, we drew the full $600.0 million on the Term Loan Facility to fund the QSC acquisition. In March 2025, we repaid $100.0 million of the outstanding obligation. We had $500.0 million in borrowings outstanding under the Term Loan Facility at May 31, 2025.

Previous wording

We were in compliance with all financial covenants under the Credit Agreement as of the periods presented. At February 28, 2025, we had additional borrowing capacity under the Credit Agreement of $595.8 million under the most restrictive covenant in effect at the time, which represents the full amount of the Revolving Credit Facility less outstanding letters of credit of $4.2 million issued under the Revolving Credit Facility, primarily for securing collateral requirements under our casualty insurance premiums. As of February 28, 2025, our cash on hand combined with the additional borrowing capacity under the Revolving Credit Facility totaled $1.0 billion.

Current wording

We were in compliance with all financial covenants under the Credit Agreement as of the periods presented. At May 31, 2025, we had additional borrowing capacity under the Credit Agreement of $595.8 million under the most restrictive covenant in effect at the time, which represents the full amount of the Revolving Credit Facility less outstanding letters of credit of $4.2 million issued under the Revolving Credit Facility, primarily for securing collateral requirements under our casualty insurance premiums. As of May 31, 2025, our cash on hand combined with the additional borrowing capacity under the Revolving Credit Facility totaled $967.6 million.

Previous wording

We invested $28.6 million and $29.0 million in property, plant, and equipment during the six months ended February 28, 2025 and February 29, 2024, respectively. We invested primarily in new and enhanced information technology, equipment, tooling, and facility improvements in fiscal 2025 to date.

Current wording

We invested $43.6 million and $41.0 million in property, plant, and equipment during the nine months ended May 31, 2025 and May 31, 2024, respectively. We invested primarily in new and enhanced information technology, equipment, tooling, and facility improvements in fiscal 2025 to date.

Previous wording

On January 19, 2024, we acquired certain assets related to Arize® horticulture lighting products from Current Lighting Solutions, LLC. The assets have been included in ABL's financial results since the date of acquisition and did not have a material impact to our consolidated financial condition, results of operations, or cash flows.

Current wording

On May 1, 2025, we acquired certain assets of M3 Innovation, a sports lighting startup that uses innovative technology to lower the overall cost of the installation and operation of sports lighting solutions. The assets have been included in ABL's financial results since the date of acquisition and did not have a material impact to our consolidated financial condition, results of operations, or cash flows.

Previous wording

We paid dividends on our common stock of $10.0 million ($0.32 per share) and $8.8 million ($0.28 per share) during the six months ended February 28, 2025 and February 29, 2024, respectively. All decisions regarding the declaration and payment of dividends are at the discretion of the Board of Directors (the “Board”) and are evaluated regularly in light of our financial condition, earnings, growth prospects, funding requirements, applicable law, and any other factors the Board deems relevant.

Current wording

We paid dividends on our common stock of $15.3 million ($0.49 per share) and $13.4 million ($0.43 per share) during the nine months ended May 31, 2025 and May 31, 2024, respectively. All decisions regarding the declaration and payment of dividends are at the discretion of the Board of Directors (the “Board”) and are evaluated regularly in light of our financial condition, earnings, growth prospects, funding requirements, applicable law, and any other factors the Board deems relevant.

Previous wording

During the first six months of fiscal 2025 and 2024, we repurchased approximately 0.1 million shares and 0.4 million shares of our outstanding common stock for $21.5 million and $67.6 million, respectively. Total cash outflows for share repurchases during the six months ended February 28, 2025 and February 29, 2024 were $22.6 million and $67.8 million, respectively. We expect to repurchase shares on an opportunistic basis subject to various factors including stock price, Company performance, market conditions, and other possible uses of cash. On January 25, 2024, the Board approved an increase of three million shares to the maximum number of shares that may yet be repurchased under the share repurchase program. As of February 28, 2025, 3.7 million shares remained available within the program to repurchase.

Current wording

During the first nine months of fiscal 2025 and 2024, we repurchased approximately 0.3 million shares and 0.5 million shares of our outstanding common stock for $90.0 million and $88.3 million, respectively. Total cash outflows for share repurchases during the nine months ended May 31, 2025 and May 31, 2024 were $91.3 million and $88.7 million, respectively. We expect to repurchase shares on an opportunistic basis subject to various factors including stock price, Company performance, market conditions, and other possible uses of cash. On January 25, 2024, the Board approved an increase of three million shares to the maximum number of shares that may yet be repurchased under the share repurchase program. As of May 31, 2025, 3.4 million shares remained available within the program to repurchase.

Previous wording

In recent months, the U.S. government has imposed, and is considering imposing, additional tariffs and trade restrictions on certain goods produced outside of the United States, including steel and aluminum. In response to these actions, certain jurisdictions, including China, Mexico, Canada and the European Union, have imposed, or are considering imposing, tariffs and restrictions on certain goods produced in the United States. The situation concerning the imposition of additional tariffs and trade restrictions by the U.S. and other jurisdictions and the status of certain trade agreements, including the United States, Mexico, Canada Free Trade Agreement, continues to evolve and we cannot be certain of the outcome which could adversely impact demand for our products, costs, inflation, customers, suppliers, and the U.S. economy.

Current wording

In recent months, the U.S. government has imposed, and is considering imposing, additional tariffs and trade restrictions on certain goods produced outside of the United States, including steel and aluminum. In response to these actions, certain jurisdictions, including China, Mexico, Canada, and the European Union, have imposed, or are considering imposing, tariffs and restrictions on certain goods produced in the United States. The situation concerning the imposition of additional tariffs and trade restrictions by the U.S. and other jurisdictions and the status of certain trade agreements, including the United States, Mexico, Canada Free Trade Agreement, continues to evolve, and we cannot be certain of the outcome which could adversely impact demand for our products, costs, inflation, customers, suppliers, and the U.S. economy. Although we have taken actions to mitigate the impacts of tariffs and trade restrictions, including pricing actions and efforts to diversify our supply chain, competitive pricing or market pressures may not allow us to pass on the additional cost of these tariffs and may adversely affect our profit margins, results of operations, and/or cash flows.

Previous wording

(1)Fiscal 2025 includes $10.4 million in preliminary acquisition date fair value adjustments to inventory for the QSC acquisition.

Current wording

(1)Fiscal 2025 includes $19.2 million in preliminary acquisition date fair value adjustments to inventory for the QSC acquisition.

Previous wording

(2) Fiscal 2025 includes $14.1 million in acquisition-related costs and $7.8 million in preliminary amortization of intangible assets for the QSC acquisition.

Current wording

(2) Fiscal 2025 includes $2.5 million in acquisition-related costs and $11.6 million in preliminary amortization of intangible assets for the QSC acquisition.

Previous wording

Net sales for the second quarter of fiscal 2025 increased $100.4 million, or 11.1%, to $1.0 billion, compared with $905.9 million in the prior-year period due to an increase in sales in our Acuity Intelligent Spaces segment driven by the acquisition of QSC, which contributed $95.1 million in sales, as well higher net sales in our Distech and Atrius products. These increases were partially offset by a decrease in sales in our Acuity Brands Lighting segment.

Current wording

Net sales for the third quarter of fiscal 2025 increased $210.5 million, or 21.7%, to $1.2 billion, compared with $968.1 million in the prior-year period due primarily to an increase in sales in our Acuity Intelligent Spaces segment driven by the acquisition of QSC, which contributed $172.8 million in sales, as well as higher sales of Atrius and Distech products. Additionally, net sales increased in our Acuity Brands Lighting segment due primarily to higher net sales within the independent sales network, partially offset by lower net sales within the corporate accounts channel.

Previous wording

Gross profit for the second quarter of fiscal 2025 increased $55.6 million, or 13.5%, to $468.0 million, compared with $412.4 million in the prior-year period, and gross profit margin increased 100 basis points to 46.5% from 45.5% compared with the prior-year period. Our gross profit increased compared with the prior period due primarily to the contributions of the QSC acquisition as well as our strategic management of the relationship between price and cost escalations, including higher labor, overhead, and Asian-sourced finished goods costs.

Current wording

Gross profit for the third quarter of fiscal 2025 increased $118.0 million, or 26.1%, to $570.2 million, compared with $452.2 million in the prior-year period, and gross profit margin increased 170 basis points to 48.4%, compared with 46.7% in prior-year period. Our gross profit increased compared with the prior period due primarily to the fall through of higher net sales, including contributions from the QSC acquisition, as well as favorable materials cost. These increases were partially offset by increased production costs, acquisition date fair value adjustments to QSC's inventory, higher costs for Asian-sourced finished goods (including freight, duties, and tariffs), and additional non-Asian tariff costs.

Previous wording

Selling, distribution, and administrative expenses (“SD&A”) expenses for the second quarter of fiscal 2025 were $357.8 million, compared with $294.3 million in the prior-year period, an increase of $63.5 million, or 21.6%. The increase in SD&A expenses was due primarily to the addition of QSC operating expenses, acquisition-related costs, and higher amortization of acquired intangible assets in connection with the QSC acquisition. Acquisition-related costs for the QSC acquisition were recorded within unallocated corporate amounts.

Current wording

Selling, distribution, and administrative expenses (“SD&A”) expenses for the third quarter of fiscal 2025 were $400.7 million, compared with $306.9 million in the prior-year period, an increase of $93.8 million, or 30.6%. The increase in SD&A expenses was due primarily to higher employee-related costs, including amounts from the QSC acquisition, higher selling costs associated with higher sales, higher amortization, and acquisition-related costs. Acquisition-related costs were recorded within unallocated corporate amounts.

Previous wording

Operating profit for the second quarter of fiscal 2025 was $110.2 million (11.0% of net sales), compared with $118.1 million (13.0% of net sales) for the prior-year period, a decrease of $7.9 million, or 6.7%. The decrease in operating profit was due to the increase in SD&A expenses, partially offset by an increase in gross profit.

Current wording

Operating profit for the third quarter of fiscal 2025 was $139.8 million (11.9% of net sales), compared with $145.3 million (15.0% of net sales) for the prior-year period, a decrease of $5.5 million, or 3.8%. The decrease in operating profit was due to the recognition of special charges in the current period and higher SD&A expenses, partially offset by higher gross profit.

Previous wording

We reported net interest expense of $6.9 million and net interest income of $0.1 million for the second quarter of fiscal 2025 and 2024, respectively. The increase in net interest expense was due primarily to interest incurred on our $600.0 million Term Loan Facility and lower interest-bearing cash and cash equivalent balances held during the period as a result of our purchase of QSC.

Current wording

We reported net interest expense of $12.1 million and net interest income of $1.8 million for the third quarter of fiscal 2025 and 2024, respectively. The increase in net interest expense was due primarily to interest incurred on our outstanding Term Loan Facility and lower interest-bearing cash and cash equivalent balances held during the period as a result of our purchase of QSC.

Previous wording

Miscellaneous expense, net consists of non-service components of net periodic pension cost, gains and losses associated with foreign currency-related transactions, and non-operating gains and losses. We reported net miscellaneous expense of $1.0 million and $0.6 million for the second quarter of fiscal 2025 and 2024, respectively.

Current wording

Miscellaneous expense (income), net consists of non-service components of net periodic pension cost, gains and losses associated with foreign currency-related transactions, and non-operating gains and losses. We reported net miscellaneous expense of $2.3 million and net miscellaneous income of $0.5 million for the third quarter of fiscal 2025 and 2024, respectively.

Previous wording

Net income for the second quarter of fiscal 2025 decreased $11.7 million, or 13.1%, to $77.5 million, from $89.2 million reported for the prior-year period. This decrease was due primarily to lower operating profit and higher interest expense in connection with funding the QSC acquisition, partially offset by lower income tax expense. Diluted earnings per share for the second quarter of fiscal 2025 decreased $0.39, or 13.7%, to $2.45 compared with diluted earnings per share of $2.84 for the prior-year period. This decrease reflects lower net income as well as higher outstanding diluted shares.

Current wording

Net income for the third quarter of fiscal 2025 decreased $15.5 million, or 13.6%, to $98.4 million, from $113.9 million reported for the prior-year period. This decrease was due primarily to the recognition of nonrecurring special charges, higher SD&A expenses, and higher net interest expense, partially offset by higher gross profit and lower income tax expense. Diluted earnings per share for the third quarter of fiscal 2025 decreased $0.50, or 13.8%, to $3.12 compared with diluted earnings per share of $3.62 for the prior-year period. This decrease reflects lower net income as well as higher outstanding diluted shares.

Previous wording

Acuity Intelligent Spaces net sales for the second quarter of fiscal 2025 increased $103.4 million, or 151.8%, to $171.5 million, compared with $68.1 million in the prior-year period. The increase in sales within the Acuity

Current wording

Acuity Intelligent Spaces net sales for the third quarter of fiscal 2025 increased $188.4 million, or 248.9%, to $264.1 million, compared with $75.7 million in the prior-year period. The increase in sales within the Acuity Intelligent Spaces segment is attributed primarily to the acquisition of QSC, which contributed $172.8 million in sales. Additionally, sales of Atrius and Distech products increased during the current quarter.

Previous wording

Operating profit for Acuity Intelligent Spaces was $9.9 million for the second quarter of fiscal 2025, compared with $9.1 million in the prior-year period, an increase of $0.8 million. This increase was due primarily to contributions from higher net sales, partially offset by the addition of SD&A costs from the acquisition of QSC, including increased preliminary amortization and preliminary acquisition date fair value adjustments to inventory.

Current wording

Operating profit for Acuity Intelligent Spaces was $27.4 million for the third quarter of fiscal 2025, compared with $12.5 million in the prior-year period, an increase of $14.9 million. This increase was due primarily to contributions from higher net sales, partially offset by additional costs related to the acquisition of QSC, including preliminary pre-tax nonrecurring acquisition date fair value adjustments to inventory and preliminary amortization of intangible assets.

Previous wording

The following table sets forth information comparing the components of net income for the six months ended February 28, 2025 and February 29, 2024 (in millions except per share data):

Current wording

The following table sets forth information comparing the components of net income for the nine months ended May 31, 2025 and May 31, 2024 (in millions except per share data):

Previous wording

(1)Fiscal 2025 includes $10.4 million in preliminary pre-tax nonrecurring acquisition date fair value adjustments to inventory related to the acquisition of QSC.

Current wording

(1)Fiscal 2025 includes $29.6 million in preliminary pre-tax nonrecurring acquisition date fair value adjustments to inventory related to the acquisition of QSC.

Previous wording

(2) Fiscal 2025 includes $18.7 million in acquisition-related costs and $7.8 million in preliminary amortization of intangible assets related to the acquisition of QSC.

Current wording

(2) Fiscal 2025 includes $21.2 million in acquisition-related costs and $19.4 million in preliminary amortization of intangible assets related to the acquisition of QSC.

Previous wording

Net sales for the six months ended February 28, 2025 increased $117.3 million, or 6.4%, to $1.96 billion compared with $1.84 billion in the prior-year due to increases in sales in both our Acuity Intelligent Spaces and Acuity Brands Lighting segments. The increase was primarily driven by the acquisition of QSC, which contributed $95.1 million in revenue to the Acuity Intelligent Spaces segment, as well higher net sales of our Distech and Atrius products.

Current wording

Net sales for the nine months ended May 31, 2025 increased $327.8 million, or 11.7%, to $3.14 billion compared with $2.81 billion in the prior-year due to increases in sales in both our Acuity Intelligent Spaces and Acuity Brands Lighting segments. The increase in our Acuity Intelligent Spaces segment was driven by the acquisition of QSC, which contributed $267.9 million in sales, as well higher net sales of our Atrius and Distech products. Additionally, net sales increased in our Acuity Brands Lighting segment due primarily to higher net sales within the independent sales and direct sales networks, partially offset by lower net sales within the corporate accounts and retail channels.

Previous wording

Gross profit for the six months ended February 28, 2025 increased $76.5 million, or 9.1%, to $917.3 million compared with $840.8 million in the prior-year period. Gross profit margin increased 120 basis points to 46.9% for the six months ended February 28, 2025 compared with 45.7% in the prior-year period. Our gross profit increased compared with the prior period due primarily to the contributions of the QSC acquisition, fall through of higher net sales, and lower materials cost. This increase was partially offset by increased labor and overhead costs.

Current wording

Gross profit for the nine months ended May 31, 2025 increased $194.5 million, or 15.0%, to $1.49 billion compared with $1.29 billion in the prior-year period. Gross profit margin increased 140 basis points to 47.4% for the nine months ended May 31, 2025 compared with 46.0% in the prior-year period. Our gross profit increased compared with the prior period due primarily to the fall through of higher net sales, including contributions from the QSC acquisition, as well as favorable materials cost. These increases were partially offset by increased production costs, acquisition date fair value adjustments to QSC's inventory, higher costs for Asian-sourced finished goods (including freight, duties, and tariffs), and additional non-Asian tariff costs.

Previous wording

SD&A expenses for the six months ended February 28, 2025 were $673.8 million compared with $589.8 million in the prior-year period, an increase of $84.0 million, or 14.2%. The increase in SD&A expenses was due primarily to the addition of QSC operating expenses, higher employee-related costs, acquisition-related costs, and higher amortization of acquired intangible assets in connection with the QSC acquisition. Acquisition-related costs for the QSC acquisition were recorded within unallocated corporate amounts.

Current wording

SD&A expenses for the nine months ended May 31, 2025 were $1.07 billion compared with $896.7 million in the prior-year period, an increase of $177.8 million, or 19.8%. The increase in SD&A expenses was due primarily to higher employee-related costs, including amounts from the QSC acquisition, higher selling costs associated with higher sales, higher amortization, and acquisition-related costs. Acquisition-related costs were recorded within unallocated corporate amounts.

Previous wording

Operating profit for the first six months of fiscal 2025 was $243.5 million (12.4% of net sales) compared with $251.0 million (13.6% of net sales) for the prior-year period, a decrease of $7.5 million, or 3.0%. The decrease in operating profit was due to higher SD&A expenses, partially offset by higher gross profit.

Current wording

Operating profit for the nine months ended May 31, 2025 was $383.3 million (12.2% of net sales) compared with $396.3 million (14.1% of net sales) for the prior-year period, a decrease of $13.0 million, or 3.3%. The decrease in operating profit was due to the recognition of special charges in the current period and higher SD&A expenses, partially offset by higher gross profit.

Previous wording

We reported net interest expense of $2.9 million and $0.8 million for the six months ended February 28, 2025 and February 29, 2024, respectively. The increase in net interest expense was due to interest incurred on our $600.0 million Term Loan Facility and lower interest-bearing cash and cash equivalent balances as a result of our purchase of QSC.

Current wording

We reported net interest expense of $15.0 million and net interest income of $1.0 million for the nine months ended May 31, 2025 and May 31, 2024, respectively. The increase in net interest expense was due primarily to interest incurred on our outstanding Term Loan Facility and lower interest-bearing cash and cash equivalent balances as a result of our purchase of QSC.

Previous wording

We reported net miscellaneous expense of $3.5 million for the six months ended February 28, 2025 and $1.7 million for the six months ended February 29, 2024. This year-over-year change is due primarily to a non-cash loss in the first quarter of fiscal 2025 on an investment in a privately-held entity over which we do not exercise significant influence or control.

Current wording

We reported net miscellaneous expense of $5.8 million for the nine months ended May 31, 2025 and $1.2 million for the nine months ended May 31, 2024. This year-over-year change is due primarily to a non-cash loss in the first quarter of fiscal 2025 on an investment in a privately-held entity over which we do not exercise significant influence or control.

Previous wording

Our effective income tax rate was 22.3% and 23.6% for the six months ended February 28, 2025 and February 29, 2024, respectively. This decrease was due primarily to the recognition of higher favorable discrete items in the current year. We recognized excess tax benefits of $4.6 million and $1.5 million related to share-based payment awards during the six months ended February 28, 2025 and February 29, 2024, respectively.

Current wording

Our effective income tax rate was 22.0% and 23.3% for the nine months ended May 31, 2025 and May 31, 2024, respectively. This decline was due primarily to an increase in favorable discrete items recognized during the period. We recognized excess tax benefits of $4.8 million and $1.8 million related to share-based payment awards during the nine months ended May 31, 2025 and May 31, 2024, respectively.

Previous wording

Net income for the first six months of fiscal 2025 decreased $5.6 million, or 3.0%, to $184.2 million from $189.8 million reported for the prior-year period. This decrease was primarily due to lower operating profit and higher interest expense in connection with funding the QSC acquisition, partially offset by lower income tax expense. Diluted earnings per share for the six months ended February 28, 2025 decreased $0.25 to $5.80 compared with diluted earnings per share of $6.05 for the prior-year period. This decrease reflects lower net income as well as higher outstanding diluted shares.

Current wording

Net income for the first nine months of fiscal 2025 decreased $21.1 million, or 6.9%, to $282.6 million from $303.7 million reported for the prior-year period. This decrease was due primarily to the recognition of nonrecurring special charges, higher SD&A expenses, and higher net interest expense, partially offset by higher gross profit and lower income tax expense. Diluted earnings per share for the nine months ended May 31, 2025 decreased $0.75 to $8.92 compared with diluted earnings per share of $9.67 for the prior-year period. This decrease reflects lower net income as well as higher outstanding diluted shares.

Previous wording

The following table sets forth information comparing the operating results of our segments, Acuity Brands Lighting and Acuity Intelligent Spaces, for the six months ended February 28, 2025 and February 29, 2024 (in millions):

Current wording

The following table sets forth information comparing the operating results of our segments, Acuity Brands Lighting and Acuity Intelligent Spaces, for the nine months ended May 31, 2025 and May 31, 2024 (in millions):

Previous wording

Acuity Intelligent Spaces net sales for the six months ended February 28, 2025 increased 85.2% compared with the prior-year period. The increase in sales is attributed primarily to the acquisition of QSC, which contributed $95.1 million in revenues, as well as improvements in Distech and Atrius products.

Current wording

Acuity Intelligent Spaces net sales for the nine months ended May 31, 2025 increased 144.8% compared with the prior-year period. The increase in sales is attributed primarily to the acquisition of QSC, which contributed $267.9 million in sales, as well as higher net sales of Atrius and Distech products.

Previous wording

Acuity Intelligent Spaces operating profit was $20.7 million for the six months ended February 28, 2025 compared with $14.4 million in the prior-year period, an increase of $6.3 million. This increase was due primarily to contributions from higher net sales, partially offset by additional costs related to the acquisition of QSC, including preliminary pre-tax nonrecurring acquisition date fair value adjustments to inventory and preliminary amortization of intangible assets.

Current wording

Acuity Intelligent Spaces operating profit was $48.1 million for the nine months ended May 31, 2025 compared with $26.9 million in the prior-year period, an increase of $21.2 million. This increase was due primarily to contributions from higher net sales, partially offset by additional costs related to the acquisition of QSC, including preliminary pre-tax nonrecurring acquisition date fair value adjustments to inventory and preliminary amortization of intangible assets.