In January of 2020, Acuity announced our plan to undergo a company-wide transformation. In Fiscal Year 2021 (FY21), the Acuity team delivered a series of strategic changes to improve our Company and its performance. The year presented ongoing challenges due to the global pandemic. Yet, our teams persevered by focusing on product vitality, customer service, and efficient, thoughtful execution, even in these difficult circumstances.

Fiscal Year 2021 was a pivotal year for us as we advanced our corporate transformation. I’m proud of what our associates have accomplished. Our key achievements include:

• Returning the Company to growth through increased sales. This Fiscal Year, sales increased year-over-year in the third quarter, fourth quarter, and full year. We also expanded margins for the full year.
• Realigning our Company into two segments, ABL, our Acuity Brands Lighting and Lighting Controls business, and ISG, our Intelligent Spaces Group. This alignment creates the necessary strategic focus on each segment and allows us to develop the leadership teams to deliver on the potential of each business.
• Maintaining our continued strong cash flow and creating value through effective capital allocation. Acuity acquired OSRAM’s North American digital systems business to broaden our portfolio, deliver smarter technology faster, and create the opportunity to become a key strategic supplier to the industry. We also took advantage of favorable market conditions to repurchase over 10% of our outstanding shares.
• Building a strong and diverse leadership team capable of maximizing the performance of our businesses, and continuing to attract, develop, and retain key talent for our organization.
• Creating the environment for the best people to come and do their best work. Our Company launched Acuity Anywhere — a hybrid work model. We also formed an Executive-level council to drive our diversity, equity, and inclusion initiatives.
• Forming an Executive-level EarthLIGHT council. We have made meaningful progress in our environmental, social, and governance initiatives, lessening our environmental footprint and improving our corporate governance structure.

Our 2021 performance was strong, and as we look forward, we expect to continue this performance.

Encouraging Financial Performance, Strong Business Units

I am pleased with our solid financial performance throughout FY21. We reported full-year net sales of $3.5 billion, an increase of 4 percent compared with Fiscal Year 2020, driven by improved sales in the second half of FY21. In addition, we reported a full-year gross profit margin of 42.6 percent, up 40 basis points over the prior year, and an operating profit margin of 12.4 percent, an increase of 180 basis points over the prior year. Full-year diluted earnings per share of $8.38 represented a 34 percent increase over the prior year. Our focus on innovation through product vitality and increasing our service levels for the benefit of our customers has delivered strong results. And we are continuing our efforts to drive our product expansion.

Acuity Brands Lighting and Lighting Controls: New products, industry-leading service

We were pleased with the results of our core ABL segment. Much of our success is attributed to a revitalized product portfolio, productivity improvements, higher service levels, diligent cost control, prudent price increases, and careful supply chain management.

Here are just a few of our ABL product revenue drivers:

In FY21, Acuity capitalized on the rapid growth in industrial spaces. At the center of that effort was our rapidly growing portfolio of Contractor Select products. For example, The Lithonia Lighting^® Compact Pro High Bay (CPHB), a breakthrough high bay luminaire, was designed to deliver improved performance in a smaller size to ensure ease of installation. Our CPHB has been in high demand due to the increase in warehouse renovations, driven by the shift to online retail and the expansion of logistics networks across North America. The product is more efficient to transport and can be manufactured in our facilities or sourced externally to ensure supply chain flexibility.

Another example from the Lithonia Lighting^® brand is the HomeGuard LED security floodlight introduced in the fourth quarter. The floodlight offers a technology upgrade, higher efficacy, greater safety options, and ease of installation. Sales have been strong. We’re off to a great start in a category where we currently have low share and strong growth opportunities.

Our new product innovations also included the introduction of the Gotham EVO^® LED Luminaires with UV technology. This product uses nanometer technology and circulation above the fixture to disinfect air locally in occupied and unoccupied spaces. We have installed this product in multiple Acuity locations and are developing specifications for its use in education, office, and healthcare applications.

Intelligent Spaces Group: Smarter, Safer, and Greener

The Intelligent Spaces Group is comprised of Distech Controls^® and our Atrius^® technology. It’s a collection of valuable technology assets and very talented people. We’re meeting customers where they are on their digital transformation journey and using our technology to solve problems in spaces and make them smarter, safer, and greener.

As part of our Intelligent Spaces Group, Distech Controls and our Atrius technology work together to reshape how people operate, use, and experience spaces. Distech Controls is an open protocol building management technology that optimizes energy efficiency and comfort in buildings while reducing operating costs. Our Atrius technology gathers, unlocks, and transforms raw data to enable a broad range of software solutions that solve critical business challenges. Between Distech Controls and Atrius, we have two essential pieces of the puzzle in delivering edge-to-cloud solutions to transform spaces.

Protecting the Environment, Improving our Corporate Governance

Protecting our planet is the right thing to do, and it is good business. Our team has made significant progress and a meaningful difference. We have committed that our put-in-place products and services will prevent 100 million metric tons of carbon emissions by 2030. In addition, we have reached carbon neutrality in our operations. We’ve also enhanced our corporate governance structure, including instituting an ongoing investor outreach program, evolving our Board of Directors, and changing our total rewards framework to align all of our interests.

Building an Environment for the Best People to do their best work

Acuity is transforming human resources and the associate experience to support the growth of our Company. We are working to provide our associates with what they need to do their jobs with passion and purpose through our listening strategies, professional development opportunities, and modernizing our internal tools. In addition, we strive to enable a more productive remote work environment and create an inclusive workplace culture that recognizes and embraces our differences.

Preparing for the year ahead

Acuity is positioned at the intersection of sustainability and technology. We are building a company that can anticipate the changing needs of the industry by enhancing our service levels, thoughtfully applying technology into our products, and focusing on product vitality.

We’re excited about the opportunities for growth in the future. Our strategy to continue leading and reinventing the industry is sound. Our Company has improved our profit margins through product and productivity improvements and by leveraging our costs as we’ve transformed. In addition, we have allocated capital effectively to grow our current businesses, add new companies, and take advantage of market conditions to repurchase our shares — all predicated on our strong organic cash flow.

Our transformation is ongoing and will continue to evolve. The Acuity team is making tremendous progress, and I’m optimistic about what’s to come. Finally, I want to express my sincere gratitude to our global team of dedicated associates for their hard work and our stockholders for their continued support.

Best,