ACUITY BRANDS (AYI)

Acuity Brands, Inc. (NYSE: AYI) today announced record quarterly results for net sales, net income, and earnings per diluted share in the third quarter of fiscal 2007. Diluted earnings per share for the third quarter of fiscal 2007 increased 39.7% to $0.88 per diluted share compared with $0.63 per diluted share in the prior year's third quarter. Net income increased 34.7% to $38.7 million for the quarter ended May 31, 2007 from $28.7 million reported in the year-ago period. Net sales for the third quarter of fiscal 2007 increased $44.6 million, or 7.4%, to $647.8 million from $603.3 million reported in the prior year.

Third quarter diluted earnings per share of $0.88 was negatively impacted by $0.01 per share in the aggregate as a result of three unusual items: a special pre-tax charge of $5.0 million at Acuity Specialty Products (?ASP?) for anticipated environmental remediation costs explained in further detail below; higher corporate expense due to an unusual increase in professional fees; and a non-recurring pre-tax gain of $6.6 million for a favorable legal settlement at Acuity Brands Lighting (?ABL?) related to a long-standing commercial dispute.

Net sales for the third quarter of fiscal 2007 at ABL and ASP increased 9.5% and 0.6%, respectively, compared to the year-ago period. The growth in net sales at ABL was due primarily to more favorable pricing, increased shipments of new products, and higher units sold in certain key channels. Net sales growth at ASP was due primarily to increased prices and higher international sales which were largely offset by volume declines in certain U.S. markets.

Consolidated operating profit margin expanded 170 basis points in the third quarter to 10.4% compared with 8.7% in the year-ago period. Operating profit margin at ABL improved 350 basis points to 13.3%, including the above-mentioned favorable settlement that contributed 130 basis points. The operating profit margin at ASP declined 380 basis points to 6.9%; however, the above-mentioned environmental remediation charge negatively impacted ASP's operating profit margin by over 340 basis points. The improvement in the consolidated operating profit margin was due primarily to more favorable pricing at both businesses and incremental profit contribution on unit volume growth at ABL, partially offset by higher costs for materials and component parts as well as greater commission and incentive compensation expense resulting from increased net sales and net income.

During the fiscal third quarter, the Company received the results of environmental studies of the soil and groundwater at the primary manufacturing facility of ASP, which has been operating at the site for over fifty years, and obtained conceptual remediation plans that would address the contamination revealed in those studies. The Company recorded a special pre-tax charge of $5.0 million related to these soil and groundwater issues, primarily for costs anticipated to be incurred over the next five years in connection with a company-initiated voluntary remediation plan at this site.

The Company also achieved record diluted earnings per share, net income, and net sales for the first nine months of fiscal year 2007. Diluted earnings per share for the nine months ended May 31, 2007 was $2.20, an increase of 53.8% compared to prior year's $1.43 per share. Net income for the first nine months of fiscal 2007 rose to $96.6 million, an increase of 48.2% versus the year-ago period, while net sales climbed 6.9% to $1,837.7 million.

For the nine months ended May 31, 2007, net cash flow generated from operating activities was $123.4 million compared to $63.9 million in the year-ago period, an increase of $59.5 million, or 93.2%. The growth in net cash flow from operating activities was due primarily to higher net income as well as increased accrued liabilities. The increase in accrued liabilities was due in part to higher taxes payable and accruals for environmental matters. The Company ended the third quarter with $178.4 million in cash and cash equivalents, an increase of $89.7 million since the beginning of the fiscal year. The net debt-to-capital ratio (defined as debt less cash divided by the sum of debt and equity less cash) declined to 23.2%. The Company did not repurchase any shares during the third quarter.

The consolidated financial statements presented in accordance with accounting principles generally accepted in the United States (GAAP) are supplemented by a table of adjusted business segment operating results, which includes non-GAAP financial information. This non-GAAP financial information is provided to enhance the user's overall understanding of the Company's current financial performance and prospects for the future. Specifically, management believes the non-GAAP financial information provides useful information to investors by excluding or adjusting certain items affecting reported operating results that were unusual and not indicative of the Company's core operating results. This non-GAAP financial information should be considered in addition to, and not as a substitute for or superior to, results prepared in accordance with GAAP. The non-GAAP financial information included in this news release has been reconciled to the nearest GAAP measure.

Please see the Company's Form 10-Q filed with the Securities and Exchange Commission today for more information on the results for the third quarter of fiscal 2007. You may access the 10-Q through the Company's website at www.acuitybrands.com.

Vernon J. Nagel, Chairman, President, and Chief Executive Officer of Acuity Brands, said, "We are, once again, pleased to report record quarterly results. Our performance for the third quarter of fiscal 2007 reflected the benefits of greater sales volume, additional sales of higher margin products, and more favorable pricing required to offset continued increases in costs, including certain raw materials and component parts, as well as initiatives to improve customer service and productivity.

"Net sales in the lighting business increased nearly 10% compared with the prior year due primarily to higher selling prices, the introduction of new products, benefits from previous investments to increase market presence, and continued growth in the key sectors of the non-residential commercial and industrial market. The 220 basis point improvement in ABL's operating profit margin, after excluding the gain from the favorable resolution of a commercial dispute, reflected the continued benefits from higher selling prices, a better mix of products sold, and volume growth. We enjoyed this improvement while seeking to increase our market presence through investments such as the opening of our New York City sales office and the introduction of ROAM?, an innovative wireless network and service that allows utilities and municipalities to more effectively monitor and control their lighting systems. In addition, ABL announced price increases ranging from 3% to 5% on a large portion of its product offering effective July 27, 2007 to mitigate the impact of rising costs, particularly for raw materials, component parts, and fuel.

?In our specialty chemical business, net sales were up slightly compared with the same quarter a year ago due primarily to higher selling prices and greater international sales volume, which were largely offset by a modest volume decline in the U.S. commercial, institutional, and industrial market and lower sales to the home center channel. Excluding the environmental remediation charge, ASP's operating profit margin declined 40 basis points to 10.3% as positive price realization was outpaced by lost contribution from lower sales volume in certain domestic markets and higher costs, particularly for fuel and wages, as well as investments made in the quarter to strengthen sales force effectiveness and to improve sales support and manufacturing productivity.

Mr. Nagel continued, ?Overall, we remain optimistic about our performance for the remainder of 2007 in spite of continued cost pressures and the potential impact of declining demand in the residential housing market. Our expectations for positive performance are due primarily to anticipated favorable demand in key sectors of the non-residential lighting market; benefits from our many actions to enhance service to our customers and improve productivity; the introduction of new innovative products and services; and higher selling prices. As we look beyond our fiscal year 2007 and into 2008, we believe favorable conditions will remain intact in key sectors of the non-residential market despite the potential negative impact from a continuing weak residential housing market.?

Conference Call

As previously announced, the Company will host a conference call to discuss third quarter results today at 10:00 a.m. ET. Interested parties may listen to this call live today or hear a replay at the Company's Web site: www.acuitybrands.com.

Acuity Brands, Inc., with fiscal year 2006 net sales of approximately $2.4 billion, is comprised of Acuity Brands Lighting and Acuity Specialty Products. Acuity Brands Lighting is one of the world's leading providers of lighting fixtures and includes brands such as Lithonia Lighting®, Holophane®, Peerless®, Hydrel®, American Electric Lighting®, Gotham®, Carandini®, SpecLight®, MetalOptics® and Antique Street Lamps?. Acuity Specialty Products is a leading provider of specialty chemicals and includes brands such as Zep®, Zep Commercial®, Enforcer®, and Selig?. Headquartered in Atlanta, Georgia, Acuity Brands employs approximately 10,000 people and has operations throughout North America and in Europe and Asia.

Forward Looking Information

This release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that may be considered forward-looking include statements incorporating terms such as "expects," "believes," "intends," "anticipates" and similar terms that relate to future events, performance, or results of the Company, including, without limitation, the following: optimism concerning performance in the remainder of fiscal year 2007 which the Company expects will benefit from favorable demand that is anticipated in the non-residential lighting market, from the Company's many continuous improvement efforts to enhance service to its customers and improve productivity, from the introduction of new innovative products and services, and from higher selling prices; and the belief that conditions existing within the non-residential construction market will remain favorable despite the potential negative impact from a continuing weak residential housing market. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the historical experience of Acuity Brands and management's present expectations or projections. These risks and uncertainties include, but are not limited to, customer and supplier relationships and prices; competition; ability to realize anticipated benefits from initiatives taken and timing of benefits; market demand; litigation and other contingent liabilities; and economic, political, governmental, and technological factors affecting the Company's operations, tax rate, markets, products, services, and prices, among others. Please see the other risk factors more fully described in the Company's SEC filings including the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on July 10, 2007.

ACUITY BRANDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per-share data)
		THREE MONTHS ENDED MAY 31							NINE MONTHS ENDED MAY 31
		2007				2006			2007			2006
Net Sales		$	647,826			$	603,265		$	1,837,698		$	1,718,672
Cost of Products Sold			374,332				354,223			1,065,684			1,029,152
Gross Profit			273,494				249,042			772,014			689,520
Selling, Distribution, and Administrative Expenses			206,059				196,803			599,216			565,090
Operating Profit			67,435				52,239			172,798			124,430
Other Expense (Income):
Interest expense, net			7,366				8,282			23,361			24,836
Miscellaneous (income) expense, net			(410	)			143			80			81
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