Q3 2022 Acuity Brands Inc Earnings Call
Good morning, and welcome to the acuity brands third quarter earnings call of fiscal 2022 at this time all participants are in listen only mode.
After the Speakers' presentation. The company will conduct a question and answer session. Please be advised that today's conference is being recorded.
The conference over to Charlotte Mclaughlin, Vice President of Investor Relations Charlotte. Please go ahead.
Thank you Michele.
Good morning, and welcome to the acuity brands fiscal 2022 third quarter earnings call.
As a reminder, some of our comments today may be forward looking statements based on our management's beliefs and assumptions and information currently available to our management at this time.
Leaf is subject to known and unknown risks and uncertainties.
Any of which may be beyond our control, including those detailed in our periodic SEC filings.
Please note that our company's actual results may differ materially from those anticipated and we undertake no obligation to update these statements.
Reconciliations of certain non-GAAP financial metrics and their corresponding GAAP measures are available in our 2022 third quarter earnings release, which is available on our Investor Relations website at Www Dot investors does acuity brands Dot com.
With me. This morning is Neil Ash, our chairman President and Chief Executive Officer, who will provide an update on our strategy and highlights from the last quarter and carry hawken, our senior Vice President and Chief Financial Officer, who will walk us through our third quarter performance.
There will be an opportunity for Q&A at the end of the call.
For those participating please limit your remarks to one question and one follow up if necessary. We are webcasting today's conference call live. Thank.
For your interesting Qt brands I will now turn the call over to Neil Ash.
Thank you Charlotte and thank you to everyone on the call for joining us this morning.
Our team delivered a strong quarter of sales and operating profit growth driven by solid execution across both our lighting and spaces businesses.
Performance is a direct result of the significant and ongoing improvements that our team has made over the last two years.
Third quarter sales continue to trend and marked a bit of a milestone.
It was the fifth consecutive quarter of double digit revenue growth sales were over $1 billion. This quarter for only the second time in the company's history as we continue to successfully capture price and drive volume through product vitality and service in both the lighting and space businesses.
This quarter, we were aggressive with our share repurchases.
We repurchased about 5% of our shares outstanding in the third quarter. We are confident in the future of our company and these repurchases add leverage to our future success and create permanent shareholder value.
Moving on to our segments, both our lighting and spaces businesses performed well in the third quarter.
First on acuity brands lighting or.
Our lighting and lighting controls business had another very strong quarter with top line growth driven by our product vitality efforts and our focus on service.
Market demand in the third quarter remained strong and we continue to work through our backlog, which continues to be above normal levels.
Our strategy of increasing product vitality, increasing service levels and using technology to different differentiate both our products and our service is working.
Our product vitality efforts are the combination of new product introductions and improvements to our existing products over the last two years, we have dramatically accelerated these efforts as a result, our products are more valuable to our customers and more profitable for us.
One of our key product leaders recently finished a complete refresh of its product families and he asked me what do we do now and my answer was simple.
We do it again with product vitality I'd like to tell our team that if youre in front and you run faster than everyone else no. One can catch you.
We believe that we have the best engineering and design teams in the industry and they are delivering.
Our service has also been strong.
Several members of the ABL team and I went to the National Association of electrical distributors annual conference, where we met with many of our key distributor partners.
This was the first time this group have been together since the pandemic and each company. We met with had the same feedback for US acuity had the right products and was able to deliver throughout the pandemic and the subsequent supply chain shortages when others could not.
It was great for the team to receive affirmation from the marketplace on the changes that they've made.
It reflects the value of having the right products and being able to deliver them no matter what is going on in the world.
Now moving to our intelligence basis group.
<unk> continued to perform well with strong sequential quarterly sales growth of 17% and 5% year over year growth as well as year over year margin improvement.
The mission of our spaces group is to make spaces smarter safer and greener.
<unk> controls products power control sensors, and other activities and build spaces and our <unk> cloud based applications deliver value to owners and end users in those spaces.
I'd like to focus on smarter and greener for a few minutes.
A few weeks ago I was in California at the <unk> connect conference, where we gathered together key systems integrators, who buy and install our just tech products.
It was the first time that this group was in person since 2018 and everyone was excited to be back together.
Between 2018, and now <unk> has grown significantly through continued product development and strong partnership with these independent systems integrators.
Our open protocol technology and continued product innovation is proving to be the way to make spaces smarter faster.
And our partnership with independent systems integrators allows us to move quickly and service more and more of the market.
This tech powers, the facilities and generate data.
Curious as a collection of cloud based applications that use this data to solve specific problems in spaces.
Second atreus can operate independent of one another but together, we can deliver true edge to cloud technology and applications.
One of our core offerings under the <unk> brand is atreus building insights.
Which is targeted to multi building operators to provide a single source for their energy usage carbon and cost management through data adequate data aggregation excuse me. Currently this platform is used in thousands of buildings across North America.
<unk> our customers include a diverse group of some of the smartest technology companies commercial customers and institutions.
Our acuity buildings of course use atreus building insights to monitor and reduce our energy usage, our carbon footprint and our cost and is a key part of our <unk> initiative, you'll see more about this when we publish our Earth-like report later this year.
There's a lot to get excited about in ISG and I look forward to sharing more developments in the future.
Now I want to touch on capital allocation, our capital allocation priorities remain the same we will continue to prioritize investments for growth in our current businesses invest in acquisitions maintain our dividend and allocate capital for share repurchases. When we perceive there is an opportunity to create permanent value for shareholders.
Karen is going to talk about our decision to allocate capital to inventory later in the call and give more color on our additional share repurchases this quarter.
But before I pass this to Karen I want to leave you with a few thoughts.
I am proud of how our team continues to perform.
There continue their focus on product vitality and service, while managing the ongoing supply constraints.
We expect the market conditions in the fourth quarter to remain largely consistent and I am confident that our team will continue to deliver.
Now I'll turn the call over to Karen who will take a deeper dive into our third quarter performance and I'll be back later in the call for Q&A and for some closing remarks.
Thank you Neil we had a strong third quarter exceeding market expectations across the board.
We generated over $1 billion in sales our gross margin was 42% and operating profit increased by $25 million year over year we.
We allocated capital to inventory again, this quarter and we repurchased a significant amount of our outstanding shares.
Moving on to our sales performance net sales were just over $1 billion, an increase of 18% year over year and as Neil said this is a significant milestone.
It is only the second quarter in the company's history that revenue has exceeded $1 billion.
The increase this quarter was driven primarily by ABL and its focus on product vitality and service levels.
Demand remains strong and we continue to benefit from recent price increases and the awesome DFS business acquisition.
Gross profit was $445 million, an increase of $59 million or 15% over the prior year.
The increase in gross profit was driven by the impact of price realization and volume while cost was impacted by inflation on components and freight.
Most profit as a percentage of sales was 42%, which was up 100 basis point decrease from the prior year, but a 30 basis point improvement from the prior quarter.
Gross profit margin has been impacted by the dilutive mix with the acquisition of the awesome DFS business throughout the first three quarters of 2022.
We also continued to leverage operating expenses and increased operating profit dollars and margin our reported.
Operating profit in the third quarter was $143 million, an increase of $25 million or 21% over the prior year.
Operating profit margin was 13, 5% an increase of 40 basis points over the prior year.
Adjusted operating profit was $163 million, an increase of $26 million or 19% over the prior year and.
And adjusted operating profit margin was 15, 3% an increase of 10 basis points compared to the prior year.
Finally, we continued to grow earnings per share are diluted earnings per share of $3 seven with an increase of 70% or 30% year over year, while our adjusted diluted earnings per share of $3 52.
Increased 75 or 27% over the prior year.
Share repurchases favorably impacted adjusted diluted EPS by 18 during the third quarter.
I'd now like to expand on our segment performance.
Net sales of ABL increased to just over $1 billion, an increase of 19% compared with the prior year and was driven by product vitality and service as well and prices as well as price increases and the benefit from the acquisition of the <unk> business.
Sales in our independent sales network of $726 million grew 16% in the third quarter, driven by price realization and volume and continued strong demand across our end markets, particularly in commercial office education and industrial facilities.
Sales in the direct sales network of $96 million were flat with the prior year orders in this channel continued to be strong, but shipments were impacted by component availability.
As we discussed previously corporate account customers continue to move ahead with renovations that were previously deferred due to the pandemic as.
As a result sales in our corporate accounts channel of $59 million increased 34% over the prior year.
As we've said before the corporate account channel as an attractive business. This business is dependent on when customers choose to make renovations to their facility and as a result sales may be inconsistent from quarter to quarter.
In the retail channel we have now worked through the customer inventory transition that we mentioned on prior calls.
Third quarter sales in the retail channel of $45 million increased by 24%, which is a higher than normal growth rate as a result of the weaker prior year comparison.
Finally sales in the other channel increased due to our OEM business, which includes the impact of the acquisition of the <unk> business.
In the third quarter total sales in this channel were $83 million, an increase of $37 million compared with the prior year.
ABF <unk> operating profit for the third quarter of 2022 was $150 million, an increase of $23 million or 18% versus the prior year.
Adjusted operating profit of $160 million and $24 million or 18% versus the prior year.
Now moving onto ISG.
Spaces team had another good quarter with sales of $58 million and 5% growth year over year. As a reminder, they had a big quarter in the third quarter of fiscal 2021.
Sequentially from the second quarter of fiscal 2022 sales grew 17% in the third quarter.
ISG is operating performance also improved while we continued to invest in the business.
Operating profit in the third quarter of 2022 increased approximately $2 million to $9 million while.
<unk> operating profit of $14 million with an increase of $3 million versus the prior year.
Moving on to cash flow.
We generated $166 million of cash flow from operating activities in the first nine months of fiscal 2022.
This was down from the prior year as we allocated capital to inventory in order to support our growth as well as insulate our production facilities from inconsistent supply availability.
Cash flow was also impacted by increased tax payments of an additional $22 million.
We invested $38 million or one 3% of net sales in capital expenditures during the first nine months of fiscal 2022.
Finally, as Neil highlighted we invested $296 million to.
To repurchased one 7 million shares during the third quarter.
Since we began this repurchase effort in may of 2020 through the end of the third quarter of 2022, we have repurchased approximately 17% of our company shares at an average price of approximately $134 per share.
We financed the share repurchases this quarter with cash from the balance sheet and with borrowings under our credit facility.
Now I want to spend a few minutes to walk you through two strategic topics, our inventory investment and our new credit facility.
Our inventory has increased over the prior year in terms of dollars and days there are four factors affecting inventory.
First increased lead times of Asian finished goods.
Second increased inventory from the Austrian <unk> acquisition.
Third ongoing inflationary cost of materials.
And finally increased levels of components to mitigate the impact of shortages.
This investment in inventory is intended to be temporary although it is up year over year from the end of the second quarter to the end of the third quarter days has improved by three days.
To address the higher levels of inventory we are doing the following we've lowered our purchases of Asian finished good now that we have seen an improvement in lead time.
We have renegotiated terms with certain finished good suppliers.
And we are controlling purchases of components and manufacturing of products in line with current demand.
Now moving onto our new credit facility.
This morning, we closed on our new $600 million revolving credit facility, which provides us with additional flexibility if needed to accomplish our capital allocation priorities.
The new five year facility incorporates $200 million of additional borrowing capacity improved pricing and more favorable covenants.
Additional information around the terms of the facility is available in our third quarter 10-Q filings.
Just before I turn the call to the operator for questions I want to leave you with this.
These results highlight the effectiveness of the changes implemented over the last two years and our team's ability to drive performance our team delivered meaningful sales growth and leveraged our operating expenses to deliver increases in operating profit and margin demonstrating that we can deliver in a challenging environment. We've continued to generate cash and we.
Effectively deployed capital in a way that generated permit value.
Thank you for joining us today I will now pass you over to the operator to take your questions.
If you'd like to ask a question. Please press Star then one if your question has been answered.
And you'd like to remove yourself from the queue press the pound key.
Thank you. Our first question comes from Chris Snyder with UBS. Your line is open.
Thank you.
So the acuity and the broader industry as <unk>.
<unk> implemented a number of price increases over the last 18 months can you just provide some color on the companies.
<unk> strategy going forward should we expect further price increases from here.
Good morning, Chris Thanks, Thanks for joining us. Thanks for the question. So obviously on the pricing front. We have we have successfully implemented a number of price increases and we're in this inflationary market. We are evolving how we do price increases so they're more they're frequent.
And there are.
Oftentimes more targeted.
As long as the inflation inflationary market continues I think we you can expect that we will also be continuing to adjust our prices going forward.
Appreciate that.
Presumably at a point in time.
We won't be in such a hyper inflationary environment.
So as we get back to a normal environment wherever that may be.
Is your expectation that.
These industry price increases will plateau or potentially decline.
Is the company expecting that it will be able to maintain kind of the 42% gross margin target.
Even in an environment of pricing declines so eventually.
Yes.
So I wanted to kind of emphasize a couple of things, Chris because I think thats a really good question. So first our strategy has been to invest in product vitality invest in service and use technology to differentiate our products. So we have better products that are more valuable for our customers and more profitable for us.
So on a relative basis to to the rest of the industry. So as we look forward. We believe those are going to be the hallmarks of who our acuity brands lighting business will be going forward. So we will have the right products in the right place at the right price.
Our pricing strategy is is really straightforward.
We compete effectively where we need to on everyday lighting products and where the best solution sold through our independent sales network and direct sales network for broader product business. So I believe that because of our product vitality and because of our service we are positioned well for for whatever market presents itself to us.
Over the next three to five years.
Thank you.
Yeah.
Our next question comes from John Walsh with Credit Suisse. Your line is open.
Hi, good morning.
Nice quarter.
Thanks, John Good morning.
So maybe we could follow on.
That line of questioning but also bring in the cost piece of that equation right because it's not just price, but it's price cost so.
Can you one talk about I guess on the pricing front whats changed in the organization I think last analyst day, you really highlighted pricing is now more of a corporate function.
It was a little bit more.
Down in the brands, maybe last time and then about your ability if you do see deflation.
Some type of softness youre kind of variable cost structure.
Around your manufacturing because it is a price cost equation right.
Yeah. So let me kind of unpack both of those John first on the.
On the pricing execution, so I spend a second on pricing strategy before so now pricing execution at the.
In the lighting business the pricing execution is.
Is is centralized at a in a in a.
Consolidated function that is powered by a combination of our team who has a lot of obviously domain experience and the introduction of technology, which is which is allowing them better data to make better decisions. So.
So that's a that's an evolution from where the company was say three years ago.
And we will continue to invest there and I think that there is continued opportunity for for improvement and execution around the strategy that I outlined earlier.
On the cost side, you emphasized kind of two key points, there or you emphasize one I'm going to emphasize two the first is the cost of the inputs the SEC.
<unk> is the scalability of our of our supply chain and the manufacturing and the distribution piece. So first on the on the components, obviously, we're competing in an inflationary.
Larry environment. So you see this you see the movement in component prices.
Components to freight et cetera, we have demonstrated that we are have been pretty deck serious in our management of those going forward.
And I've told our team that while I would like to tell them that I think the next two years are going to be easier than the last two years.
No indication that it will be so they are ready to to continue to attack those challenges.
Second then is the scalability of our of our supply chain manufacturing.
In distribution, we have demonstrated that if you.
Go back to the if you go back to the kind of the pandemic and as we all went into it and no one knew what would happen we demonstrated the ability to.
To manage effectively through a period, where where revenue dropped.
And now we are I believe we've demonstrated our ability to execute at a period where revenue increased.
And I think that highlights a good way to think about the two.
Two things one is the scalability of our of our manufacturing and distribution number one and number two our team's ability to manage and deliver in and wildly different environments and a really short period of time, so that I think positions us again for whats going forward and as I said.
None of US know what the next two years are going to be like but we know that there they're not going to be straightforward. So were but I believe we're in a good position to manage through that.
Great. Thank you for that answer and then maybe just my second question just around.
The outlook. So I think you said Q4 remains largely consistent I just want to unpack that a little bit if you could I mean, typically you see a seasonal lift Q3 to Q4.
Is there anything that youre seeing on why that Wouldnt play out.
Yes, so so I will impact that thanks, John first on on the seasonality impact for US we have more shipping days in the fourth quarter that we do in the third quarter. So that's.
That's the natural kind of that's a piece of the natural seasonality.
We as you as you look at our Q3 performance, we hit on pretty much all of as Karen indicated all of our all of our key distribution channels. So for example, corporate accounts had a had a big quarter and as she mentioned that that's not always consistent because it's dependent on when those customers choose to make.
Renovate renovations.
Having said that we continue to have backlog levels above normal levels.
The demand continues.
And so as we look forward we are.
We think that as I said it'll be more of more of the same obviously, we're not going to grow 18% every quarter.
Kind of for the foreseeable future, but but things are more are more of the same or different in the fourth quarter.
Okay.
Great I appreciate you taking the questions. Thank you.
Thanks, John .
Our next question comes from Christopher Glynn with Oppenheimer. Your line is open.
Yes. Thank you good morning.
I was curious about the kind of volume price lists if you could frame that up any way for ABL.
As it is unit volume for comparisons as kind of a basis to evaluate where we are from cyclical strength in.
Kind of a key input for modeling the year.
The out year.
Yeah, Hi, Chris This is Karen let me give you some color around our price volume. So we are managing as Neil mentioned that relationship between price and volume. If you look at the ABL business and their performance. This quarter. It really is demonstrating the ability to do both so we were able to.
To capture and realized price to offset the inflationary costs that we mentioned we were able to grow our volume.
This year year over year, and we also benefited from the acquisition of <unk> as we mentioned so I think this quarter is really a good reflection of our ability to manage both of those components.
Do you think the organic side of ABL split, maybe 50 50 volume price.
Without getting into precise numbers I would say that we had a healthy mix of both this quarter.
Okay, that's great.
And then a question on ISG Curie.
Curious how to think about.
Fundamental margin and profitability model there.
Almost 100% sequential incrementals in.
Over 80% year over year Incrementals.
Okay.
I think we'll see that kind of leverage in perpetuity, but.
Yes.
Terms are informing our view.
It's kind of a run rate how to think about it in terms of margin index.
Yeah, Chris I'll take on that is as I indicated in the prepared remarks, obviously ISG is a combination of <unk>, which is which is the on prem and atreus, which is in the cloud so.
So what where we've guided kind of their strategic development is that we are going to continue to demonstrate that we can deliver to profitability, while we invest in new products and in new software and data capabilities. So what you see in this in this quarter I think is a is a risk.
Sponsel representation of the ability to do both the ability to grow and the ability to to to deliver some profit so.
Going forward. We we continue we expect to continue to do that so we will we will continue to demonstrate profit while we while we invest in growth the priority would be growth.
If we are forced to choose.
But as we've demonstrated I think we can do both.
Great. Thank you.
Our next question comes from Ryan Merkel with William Blair. Your line is open.
Thanks, Good morning, everyone and nice quarter.
Thanks, Brian .
So Neil I wanted to start with a question on the macro.
Are you starting to see any signs of a slowdown either in quoting activity year any feedback from the channel that maybe people are getting a little bit more nervous.
So so.
Not to be not to make upon but I'll start on the macro question I'll start with the macro which is obviously, we're all competing in the same economy and where we're where we're on the same data that you are that you are eyeing and where.
We are positioning ourselves appropriately for what could happen.
Because I don't think any of us know what will happen.
As of now.
As we indicated things are more of the same than they are different.
From an outlook perspective, so so we continue to see.
The order and quoting volume.
<unk>.
We have above normal backlog is as we indicated and so that positions us.
Going forward.
Of course, where we.
We acknowledge though that theres a lot of discussion about things potentially changing so but we are.
As of now things are more of the same than they are different.
Got it okay.
And then a question on inflation are you starting to see.
Inflation at this point or are costs still rising such that you may need to increase prices again back to the earlier question.
Yes, I think we are.
We are we're being pretty strategic about how we think about pricing. So we announced another price increase yesterday, which was targeted and specific.
And I think pricing in our industry should be should become more a little bit more dynamic over time, and we're and we're leading that from.
From a cost perspective.
We see things about the same as they have been in the past obviously you have some cost in our inventory, which we will be working through over the next couple of quarters, but but.
Going forward, we feel like we are.
There were more and more comfortable in a.
In a market where prices changing in costs are changing.
Very good thank you.
Thanks.
Our next question comes from Josh Chan with Baird. Your line is open.
Good morning, Neil Karen Charlotte Congrats on the quarter.
Yes.
Yes, hi.
Yes.
On the topic about the outlook.
You guys mentioned that backlog was above normal and if you take a look at sort of beyond your backlog.
Pipeline, assuming all of the projects kind of progress as you would expect how much visibility.
Do you have right now that youre comfortable.
About I guess I am asking because.
If demand were to slow I guess, how long will take you to kind of see it based on the very strong.
Great.
So obviously, we spent a lot of time focused on this and we think about kind of where are our growth is going to come from so to.
To tie this question to an earlier one that Karen answered. We are we are seeing a healthy combination of price and volume growth, which are in unit growth, which are driving our.
Our sales so as we look forward, we believe that we have because of the investments in product vitality and because we have and the investments in service.
Excuse me, we have a we have a runway that we're going to continue to to execute against so.
So the.
The relationship then between daily order rate, obviously will and shipments will be important but it will be less pronounced perhaps than it was in years past. So so we do have some runway as.
As we as we look forward to changes.
And our objective is to.
To deliver as as consistently as we can through <unk>.
In <unk>.
Economic times, which are inconsistent.
Alright, thanks for the color on that and I guess my second question on supply constraints.
The imported products might be getting a little bit better could you talk about where are the bottlenecks still are in your supply chain and how you feel like youre stacking against competitors in terms of procurement.
Yeah, I'll start Karen if you want to add anything to this.
So.
If there are bottlenecks, there really around chips, so kind of it all starts with silicon as you've heard we've obviously demonstrated an ability to do that better than others, but because we have a higher backlog. We've also are demonstrating to ourselves that we could still use more so so that's the place where we spend a lot of our.
A lot of our time and effort.
And to think through kind of the impact of that I'll, just kind of anecdotally give a piece of color that is a relatively inexpensive piece, but are highly important piece of the entire build of the luminaire. So the electronics that are part of the driver. The driver is part of the luminaire, so that relatively inexpensive component ties up or.
A lot of other components, which are waiting to be assembled into the final luminaire. That's part of the reason why our inventory is higher our raw material material inventory is higher because we're positioned so that when we do get those chips, we can we.
We can perform.
Hi.
I want to take my hat off to our to our sourcing team and their ability to be to be creative and to be next area. It's about finding these components I told a story last quarter I believe or the quarter before where we were even sourcing products for some of our competitors who are our suppliers.
Because they didn't have access to them. So so we're we're doing everything we can to differentiate ourself and as that.
As that starts to.
As those chips and silicon start to flow more consistently which we believe that they will.
It's just a matter of win as they then we can more consistently kind of work through the rest of the rest of our inventory position and continue to work through our backlog.
Josh I would just add that where we've seen some improvement is really around the flow of the purchased finished goods at the port. So we're able to now get those products.
So that we can ship them. So that you will see that worked through some of the inventory as well now that we've seen that that improvement.
Alright. Thanks. Thank you both for the color and good luck, finishing up the fiscal year.
Thank you.
Our next question comes from Jeff Osborne with Cowen <unk> Company. Your line is open.
Hey, good morning, I Might've missed this but I was just wondering if you could give us a sense of perspective Karen.
<unk> contribution in the quarter for both revenue and gross margins.
Sure from a topline perspective.
<unk> contributed about 300 basis points of the growth that you see year over year.
We mentioned in the near term it is dilutive to gross profit margins.
Had them almost a full year now I think July one.
A full year since we purchased that business and so we have been working to improve the profitability of the business and still have some work to do but it was dilutive to the gross profit margin.
Yes.
Got it and then on the share repurchase great to see in the quarter can you remind me I think it's $3 $5 million or so outstanding.
Is that something Youre active with now and could you remind me.
When that expires or that would be something you need to reinstate.
Yes, so last quarter, we did get into this I believe is last quarter guys. Additional authorization from the board. So we have plenty of runway left for our share repurchases.
We've now repurchased as I mentioned about 17% of our shares outstanding since we began this repurchase effort in may of 2020, and we have plenty of runway left should we decide to do more.
Got it. Thank you that's all I had.
Thank you.
Our next question comes from Brian Lee with Goldman Sachs. Your line is open.
Hi, everyone. This is miguel on for Brian .
Just a quick question on the.
<unk>.
On ABL with.
With the 1 billion you reported this quarter. It seems like you are now tracking.
Well above the high single digit growth target for the year, assuming if the fourth quarter is flat or even slightly declining quarter on quarter is that right.
And how do we think about that target for the year the cadence through the rest of the year for ABL. Thanks.
Miguel I complement you on your algebra.
That's where we're that's where we're rolling out for the for the rest of the year, obviously, we're not going to continue to grow at 18% as I as I indicated earlier, but the algebra would suggest that we will be above.
For.
For the full year.
Okay.
Okay great.
Okay.
Great, Yes, I just had one quick follow up there.
On the general demand backdrop as it relates to pricing.
Seeing anything on the customer appetite changing due to price increases or seeing any stress on demand or worried about.
Pricing getting a bit too intense for customers.
Yes, as we said on the outlook I think.
As of now things are more of the same than they are different. So so we continue as Karen indicated in our kind of disaggregated revenue.
We have strong performance through through all of our channels. So so as of now things are more of the same than they are different.
Okay. Thanks, that's all I had I'll pass it on.
Thank you and I'm showing no further questions in the queue. At this time I will turn the call back to Neil asked for any closing remarks.
Thank you all for joining us. This morning, we appreciate your interest in acuity I just want to reiterate that I'm really proud of how our team is performing through through.
Through downtime now up times, they are continuing their focus on product vitality and service, while they managed through the ongoing supply.
And so so I want to I want to take my hat off to our team for their performance and and we look forward to continuing that and we look forward to talking to you again soon have a good rest of your day.
This concludes the program and you may now disconnect.
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