Acuity Brands Inc. (AYI)- More Problems Emerge in Q2'25

Warranty issue persists but new concerns come into view

In January, we published BTN Red Flag Note- Acuity Brands (AYI) in which we expressed our concern that the company’s Q1’25 beat was more than explained by a sharp drop in warranty provision expense. The stock began to trade down in February until its April 3^rd earnings report which featured 3-cps earnings beat, but sales that fell 2% of the mark. That was despite closing its $1.2 billion QSC deal during the quarter which added two months of sales. The market did not react well, driving the stock down 10% that day.

AYI has had a tough time topping revenue guidance for some time:

The warranty issue persisted into Q2’25 but new concerns emerged which we will explore below:

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