Financial Analysis

Commitments and Contingencies In the normal course of business, we are subject to the effects of certain contractual stipulations, events, transactions, and laws and regulations that may, at times, require the recognition of liabilities, such as those related to self-insurance estimated liabilities and claims, legal and contractual issues, environmental laws and regulations, guarantees, and indemnities. We establish estimated liabilities when the associated costs related to uncertainties or guarantees become probable and can be reasonably estimated. For the period ended May 31, 2026, no material changes have occurred in our estimated liabilities for self-insurance, litigation, environmental matters, guarantees, and indemnities, or relevant events and circumstances, from those disclosed in the Commitments and Contingencies footnote of the Notes to Consolidated Financial Statements within our Form 10-K. Product Warranty Costs Our products generally have a standard warranty term of five years or less that assures our products comply with agreed upon specifications. We record an accrual for the estimated amount of future warranty costs in accordance with ASC Topic 450, Contingencies (ASC 450) when the related revenue is recognized and when costs are deemed to be probable and can be reasonably estimated. Liabilities related to product warranty costs are subject to uncertainty because they require estimates of future costs. Estimated future warranty costs are primarily based on his …

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Debt and Lines of Credit Unsecured Notes On November 10, 2020, Acuity Brands Lighting, Inc., a wholly-owned operating subsidiary of Acuity Inc., issued $500.0 million aggregate principal amount of 2.150% senior unsecured notes due December 15, 2030 (the Unsecured Notes) at a price equal to 99.737% of their face value. Interest on the Unsecured Notes is paid semi-annually in arrears on June 15 and December 15 of each year. At issuance we recorded $4.8 million of deferred issuance costs related to the Unsecured Notes as a direct deduction from the face amount of the Unsecured Notes. These issuance costs are amortized over the 10-year term of the Unsecured Notes. The Unsecured Notes are fully and unconditionally guaranteed on a senior unsecured basis by Acuity Inc. and ABL IP Holding LLC, a wholly-owned subsidiary of Acuity Inc. Lines of Credit On May 8, 2026, we entered into a credit agreement (the Credit Agreement) with a syndicate of banks that provides us with an $800.0 million five-year unsecured revolving credit facility. The Credit Agreement will mature on May 8, 2031. Borrowings under the Credit Agreement bear interest at a rate equal to an adjusted base rate, Term Secured Overnight Financing Rate (SOFR), Euro Interbank Offered Rate (EURIBOR), Daily Simple Sterling Overnight Index Average (SONIA), or Term Canadian Overnight Repo Rate Average (CORRA), plus, in each case, an applicable margin. The applicable margin is based on, at our option, the Companys leverage ratio or …

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The following table shows revenue from contracts with customers by sales channel and reconciles to our segment information for the periods presented (in millions): Three Months Ended Nine Months Ended May 31, 2026 May 31, 2025 May 31, 2026 May 31, 2025 ABL: Independent sales network $ 690.5 $ 685.3 $ 1,973.5 $ 1,944.4 Direct sales network 73.4 101.5 234.4 306.1 Retail sales 40.4 41.4 127.5 127.3 Corporate accounts 46.3 35.5 126.9 103.8 OEM and other 54.6 59.5 155.4 168.2 Total ABL 905.2 923.2 2,617.7 2,649.8 AIS 303.5 264.1 809.0 509.1 Eliminations (10.7) (8.7) (29.3) (22.4) Total $ 1,198.0 $ 1,178.6 $ 3,397.4 $ 3,136.5

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Share-based Payments We account for share-based payments through the measurement and recognition of compensation expense for share-based payment awards made to employees and directors over the related requisite service period, including restricted stock, performance stock units, and stock options (all part of our equity incentive plan), as well as stock units representing certain deferrals into our director deferred compensation plan or our supplemental deferred savings plan. The following table presents share-based payment expense for the periods presented (in millions): Three Months Ended Nine Months Ended May 31, 2026 May 31, 2025 May 31, 2026 May 31, 2025 Share-based payment expense $ 13.6 $ 10.5 $ 39.2 $ 34.0 Further details regarding our share-based payments are included within the Share-based Payments footnote of the Notes to Consolidated Financial Statements within our Form 10-K.

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Fair Value Measurements We determine fair value measurements based on the assumptions a market participant would use in pricing an asset or liability. ASC Topic 820, Fair Value Measurement (ASC 820), establishes a three-level hierarchy that distinguishes between market participant assumptions based on (i) unadjusted quoted prices for identical assets or liabilities in an active market (Level 1), (ii) quoted prices in markets that are not active or inputs that are observable either directly or indirectly for substantially the full term of the asset or liability (Level 2), and (iii) prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement (Level 3). We utilize valuation methodologies to determine the fair values of our financial assets and liabilities in conformity with the concepts of exit price and the fair value hierarchy as prescribed in ASC 820. All valuation methods and assumptions are validated at least quarterly to ensure the accuracy and relevance of the fair values. There were no material changes to the valuation methods or assumptions used to determine fair values during the current period. No transfers between the levels of the fair value hierarchy occurred during the current fiscal period. In the event of a transfer in or out of a level within the fair value hierarchy, the transfers would be recognized on the date of occurrence. We may from time to time be required to remeasure the carrying …

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Goodwill and Intangible Assets Through multiple acquisitions, we acquired definite-lived intangible assets consisting primarily of customer relationships, developed technology and patents, distribution networks, and trademarks and trade names associated with specific products, which are amortized over their estimated useful lives. Indefinite-lived intangible assets consist of trade names that are expected to generate cash flows indefinitely. We recorded amortization expense for definite-lived intangible assets of $23.0 million and $20.0 million during the three months ended May 31, 2026 and May 31, 2025, respectively and $70.4 million and $45.5 million during the nine months ended May 31, 2026 and May 31, 2025, respectively. The following table summarizes the changes in the carrying amount of goodwill by segment during the periods presented (in millions): ABL AIS Total Balance at August 31, 2025 $ 1,016.0 $ 479.5 $ 1,495.5 Foreign currency translation adjustments (0.3) (0.6) (0.9) Balance at May 31, 2026 $ 1,015.7 $ 478.9 $ 1,494.6 ABL AIS Total Balance at August 31, 2024 $ 1,015.1 $ 83.6 $ 1,098.7 Provisional amounts from acquired businesses 363.5 363.5 Adjustments to provisional amounts from acquired businesses 31.5 31.5 Foreign currency translation adjustments (0.3) (0.8) (1.1) Balance at May 31, 2025 $ 1,014.8 $ 477.8 $ 1,492.6 Further discussion of goodwill and intangible assets is included within the Significant Accounting Policies footnote of the Notes to Consolidated …

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Accounting Standards Yet to Be Adopted Accounting Standards Update ( ASU ) 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software ( ASU 2025-06 ) In September 2025, the Financial Accounting Standards Board (FASB) issued ASU 2025-06, which modernizes the accounting for internal-use software costs by aligning the guidance with incremental and iterative software development methods used today. The amendment removes all references to development stages and requires capitalization of software costs to begin once management approves funds for the project and it is probable the software will be completed and used as intended. The amendment may be applied prospectively, retrospectively, or using a modified prospective approach, and early adoption is permitted. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, or our fiscal 2029. We are currently assessing the impact of the requirements on our consolidated financial statements and disclosures. ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Topic 220): Disaggregation of Income Statement Expenses ( ASU 2024-03 ) In November 2024, the FASB issued ASU 2024-03, which requires public entities to disaggregate specific types of expenses, including disclosures for purchases of inventory, employee compensation, depreciation, intangible asset amortization, and selling exp …

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Pension Plans We have pension plans, both qualified and non-qualified, covering certain hourly and salaried employees. Benefits paid under these plans are based generally on employees years of service and/or compensation during the final years of employment. We historically have made at least the minimum annual contributions to the plans to the extent indicated by actuarial valuations and statutory requirements. Plan assets are invested primarily in fixed income and equity securities. Service cost of net periodic pension cost is allocated between Cost of products sold and Selling, distribution, and administrative expenses in the Consolidated Statements of Comprehensive Income based on the function of the employee's services. All other components of net periodic pension cost are included within Miscellaneous expense, net in the Consolidated Statements of Comprehensive Income . Net periodic pension cost included the following components before tax for the periods presented (in millions): Three Months Ended Nine Months Ended May 31, 2026 May 31, 2025 May 31, 2026 May 31, 2025 Service cost $ 1.1 $ 1.4 $ 3.2 $ 4.1 Administrative cost 0.1 Interest cost 1.3 2.5 3.8 7.3 Expected return on plan assets (0.7) (2.1) (2.2) (6.3) Recognized actuarial loss 0.4 0.6 1.2 1.9 Net periodic pension cost $ 2.1 $ 2.4 $ 6.1 $ 7.0 Further details regarding our pension plans are included within the Pension and Defined Contribution Plans footnote of the Notes to Consolidated Financial Statements within …

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Special Charges We recognized no special charges during the three months ended May 31, 2026. During the nine months ended May 31, 2026, we recognized pre-tax special charges consisting of employee severance costs of $5.9 million related to productivity improvements in our ABL segment. These charges primarily related to labor cost reductions. During the three and nine months ended May 31, 2025, we recognized pre-tax special charges of $29.7 million comprised of impairments of long lived assets of $16.7 million, severance and employee-related costs of $7.2 million, and other items of $5.8 million. These costs were related to productivity initiatives in our ABL segment. As of May 31, 2026, remaining accruals related to special charges totaled $0.6 million and are included in Accrued compensation in the Consolidated Balance Sheets . These amounts related to unpaid severance and employee-related costs from our fiscal 2026 actions.

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Revenue We recognize revenue when we transfer control of goods and services to our customers. Revenue is measured as the amount of consideration we expect to receive in exchange for goods and services and is recognized net of rebates, sales incentives, product returns, and discounts to customers. We allocate the expected consideration to be collected to each distinct performance obligation identified in a sale based on its standalone selling price. Sales and use taxes collected on behalf of governmental authorities are excluded from revenues. Further details regarding revenue recognition are included within the Revenue Recognition footnote of the Notes to Consolidated Financial Statements within our Form 10-K. Contract Balances Our rights related to collections from customers are unconditional and are reflected within Accounts receivable on the Consolidated Balance Sheets at net realizable value. Further details regarding our method for developing our estimate of expected credit losses over the contractual term of our receivables are included within the Significant Accounting Policies footnote of the Notes to Consolidated Financial Statements within our Form 10-K. We do not have any other significant contract assets. Contract liabilities arise when we receive cash or an unconditional right to collect cash prior to the transfer of control of goods or services. The amount of transaction price from contracts with customers allocated to our contract liabilities consists of the fo …

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Segment Information We report our financial results of operations in two reportable segments, ABL and AIS, consistent with how our chief operating decision maker (CODM), Neil Ashe, Chairman, President and Chief Executive Officer, evaluates operating results, assesses performance, and allocates resources within the Company. See the Description of Business and Basis of Presentation footnote of the Notes to Consolidated Financial Statements for further details on how we identify our reportable segments. For both segments, our CODM uses segment operating profit as the measurement of segment profit to allocate resources and assess performance. Our CODM considers target-to-actual differences in operating profit when making decisions on how to allocate capital and resources. Additionally, he considers segment operating profit when evaluating employee compensation and personnel allocations. We allocate certain working capital assets and capital expenditures to our segments primarily to assess each segment's contribution to our consolidated operating cash flows and capital expenditures. Segment assets include accounts receivable and inventory. Unallocated assets are presented in corporate as a reconciling item to our total consolidated assets. The accounting policies of our reportable segments are the same as those described in the Significant Accounting Policies footnote of the Notes to Consolidated Financial Statements within our Form 10-K. Corporate expenses that are primarily admi …

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Significant Accounting Policies Use of Estimates The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. Reclassifications We may reclassify certain prior period amounts to conform to the current year presentation. No material reclassifications occurred during the current period.

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Changes in Stockholders' Equity The following tables summarize changes in the components of stockholders' equity for the periods presented (in millions): Common Stock Outstanding Shares (1) Amount Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock, at cost Total Balance, August 31, 2025 30.7 $ 0.5 $ 1,164.7 $ 4,285.8 $ (76.5) $ (2,649.6) $ 2,724.9 Net income 120.5 120.5 Other comprehensive loss (4.9) (4.9) Share-based payment amortization, issuances, and cancellations 0.1 0.1 (15.1) (15.0) Stock options exercised and other * 1.4 1.4 Cash dividends of $0.17 per share paid on common stock (5.3) (5.3) Repurchases of common stock (0.1) (27.6) (27.6) Balance, November 30, 2025 30.7 0.6 1,151.0 4,401.0 (81.4) (2,677.2) 2,794.0 Net income 96.8 96.8 Other comprehensive income 20.7 20.7 Share-based payment amortization, issuances, and cancellations * 12.6 12.6 Stock options exercised and other * 0.9 0.9 Cash dividends of $0.20 per share paid on common stock (6.3) (6.3) Repurchases of common stock (0.2) (77.9) (77.9) Balance, February 28, 2026 30.5 0.6 1,164.5 4,491.5 (60.7) (2,755.1) 2,840.8 Net income 141.0 141.0 Other comprehensive loss (10.9) (10.9) Share-based payment amortization, issuances, and cancellations * 13.3 13.3 Stock options exercised and other * 0.6 0.6 Cash dividends of $0.20 per share paid on common stock (6.1) (6.1) Repurchases of common stock (0.4) (127.2) (127.2) Balance, May 31, 2026 30.1 $ 0.6 $ 1,178.4 $ 4,626.4 $ (71.6) $ (2, …

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