Letter to Our Stakeholders

2014 was a year of record financial performance for Acuity Brands as we reported all-time highs for net sales, operating profit, net income, diluted earnings per share, and cash flow from operations.

During the past year, we continued to successfully execute our strategy to extend our leadership position in the North American lighting solutions market by providing our customers with differentiated value from our industry-leading portfolio of innovative products and solutions along with superior service.

Acuity Brands’ 2014 financial results include:

Record net sales of $2.4 billion, an increase of 15% compared with fiscal 2013;
Record operating profit of $299.1 million, an increase of 35% compared with fiscal 2013;
Record net income of $175.8 million, an increase of 38% compared with fiscal 2013;
Record diluted earnings per share of $4.05, an increase of 37% compared with fiscal 2013;
Record net cash provided by operating activities of $233.1 million, an increase of over $100 million compared with fiscal 2013; and
We ended fiscal 2014 with a record cash balance of $552.5 million, while investing $35.3 million in capital expenditures, and paying $22.5 million of dividends to stockholders.

On the strategic front, we accomplished a number of items in 2014. We outperformed the growth rate of the overall lighting markets we serve due to our multiple sales channels and product diversification, as well as our strategies to better serve customers with new, more innovative lighting solutions and the strength of our many sales forces. This past year we won multiple major awards for product innovation and customer service, further demonstrating our leadership in solid-state lighting solutions.

In 2014, we continued our investments to enhance our production, distribution, and customer service and support capabilities and further accelerated the deployment of our lean business processes. A few specific examples that demonstrate these accomplishments include reducing late backlog to a historical low while improving on-time delivery to an all-time high, and increasing our productivity which is reflected in our nearly 11% increase in net sales per associate.

This is an extraordinary time to be in the lighting industry, particularly for a company of the caliber of Acuity Brands. Rapid advancements in technology, along with the need for greater energy efficiency, changes in public policy, and demand for environmental sustainability continue to drive profound changes in our industry, creating an exciting opportunity. Acuity Brands is capitalizing on these profound changes to provide lighting solutions that are efficient, elegant, and sophisticated, while at the same time simple to install, maintain, and use. We are at the forefront of transforming the lighting industry. Our experience, knowledge, and skill as lighting experts allow us to deliver superior lighting solutions for virtually any application, a promise best captured in our tag line: “Expanding the Boundaries of Lighting™.”

OUR FUTURE: GROWTH, INNOVATION, EXCELLENCE

As we enter 2015, our mission is to continue to build on our rich legacy of excellence, growth, and innovation. Our passion and intense focus continue to be centered on creating lighting solutions that deliver superior quality, energy efficiency and performance. We know that superior quality of light enhances how we live and interact, whether it is increasing students’ learning ability in schools, improving worker productivity and comfort in offices and industrial facilities, enhancing the shopping experience in retail establishments, or accelerating patient healing in hospitals. The possibilities of what can be achieved by the use of intelligent lighting solutions are still being explored. Technology, coupled with our deep knowledge of lighting, is allowing us to create ever more effective and energy-efficient solutions that are smart and simple, a slogan campaign we use to convey our value proposition in the many vertical markets we serve. Our associates are rapidly exploiting these new technologies and aggressively expanding our industry-leading portfolio by developing intelligent lighting solutions that represent significant advancements over traditional technologies and easily network with other building systems, improving energy efficiency, performance and safety.

We believe the emphasis on energy efficiency and environmental concerns will continue to drive significant growth in our industry. As the market leader in North America, we believe our deep expertise in technology, optics and thermal management, our understanding of the art and science of lighting, and our ability to provide tailored lighting solutions for numerous applications have positioned the company to excel. Our key strategies and tactical focus have remained consistent over the last few years. We expect to continue to execute our profitable growth strategy by focusing on the three mission-critical areas of operational excellence that we refer to as the 3 Cs:

Providing unparalleled customer service;
Pursuing world-class cost efficiency by eliminating non-value added activities and transaction costs; and
Creating a culture that demands excellence in everything we do through continuous improvement.

On behalf of Acuity’s management team and its Board of Directors, I would like to thank our 7,000 associates for making possible the success we experienced in 2014 and for their continued contributions and dedication to our vision. I also would like to thank our customers for their business, our suppliers for their support, and our stockholders for the partnership we share in our enterprise.

Sincerely,

VERNON J. NAGEL
Chairman, President, and Chief Executive Officer
November 17, 2014