While we achieved record financial performance on various measures, fiscal 2018 was a difficult operating environment characterized by continued overall weak end market demand, aggressive price competition for certain basic, lesser featured fixtures, and significant input cost inflation. Fiscal 2018 operating profit declined $64.2 million to $454.6 million, or 12.4% of net sales, compared with prior year’s operating profit of $518.8 million, or 14.8% of net sales. The increase in diluted earnings per share was due primarily to the benefits of lower tax expense and stock repurchases, which more than offset the negative impact of the decline in operating profit.

On the strategic front, we had many significant accomplishments, including the following key items during fiscal 2018:

At August 31, 2018, the 1 and 3-year total returns on the Company’s common stock were below that of the respective benchmark indexes, which include the S&P Midcap 400 Index, the Dow Jones U.S. Electrical Components & Equipment Index, and the Dow Jones U.S. Building Materials & Fixtures Index. However, the Company’s 5-year annualized return was in line with the respective benchmark indexes as noted in the following table:

Our Future: Growth, Innovation, Excellence

This is an extraordinary time to be in the lighting and building management industries, 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 exciting opportunities. Acuity Brands is capitalizing on these profound changes to provide lighting and building management solutions that are efficient, elegant, and sophisticated, while at the same time

As the world entered the 21st century, digital technology was evolving in a way where many discussed the possibility of creating connected solutions where vast amounts of data could be collected and utilized to enhance the interface between humans and infrastructure of all kinds ushering in the world of “Smart Cities” through “connected, intelligent buildings.” At Acuity Brands, we are turning this dream into reality where our many solutions are creating “connected, intelligent buildings” for customers transforming their buildings into strategic assets for owners and users alike.

As we enter 2019, our mission is to continue to build on our rich legacy of excellence, growth, and innovation to provide great returns for our shareholders, superior value for our customers, and growth opportunities for our associates. Our passion and intense focus continue to be centered on creating lighting and building management 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

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 and building management 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 three mission-critical areas of operational excellence that we refer to as the 3 Cs: