Signify. The Past Few Months. The Future?

Change is at the doorstep of Signify, the parent company of Genlyte Solutions and Cooper Lighting, two of the electrical industry’s largest lighting manufacturers. In fact, we’ve considered them part of the “Big 4” in lighting (Acuity, Cooper Lighting, Philips (now Genlyte Solutions Group) and Current Lighting,)

It started in the fall

• Cooper Lighting terminated its Tennessee lighting agent and awarded the territory to what is now JAW Lighting, which was started by a former Acuity agent who had an agency in Illinois,
• This expanded when Cooper Lighting then terminated two agents in Ohio and one in Kentucky and again, awarded these territories to JAW Lighting, who start-up, new to the market but experienced in lighting.
• Cooper Lighting’s Vice President of Channel then left the company for an opportunity in the plumbing industry.
• At the recent NAED Western, “rumors”, since confirmed and supported by a company announcement, surfaced about senior leadership change at Genlyte Solutions Group. Christy Tilton was named as head of sales for Genlyte Solutions in North America.
• It was shared that there was a North American senior leadership meeting held during this time. (Sounds like change is brewing!)
• Keith Eagle, who started the month as Signify’s / Genlyte’s Vice President and General Manager, US Professional Channel left the company on January 17^th and is now VP Business Development for WAC Group.
• Signify announced its 2024 results which resulted in a 6.6% decline globally. According to the earnings report, the decline was led by the company’s performance in China and Europe. Interestingly there is little mention of the US or North America in the results (more below.)
• Eric Rondolat, Signify’s CEO, in conjunction with their Supervisory Board, announces that he will be stepping down the beginning of April. This is shortly after having his contract renewed in 2024. Of note is that they affirmed the strategy (what else are they going to do with no future leaders) and that they are starting a search (which infers that they are looking outside as if they were in agreement on an internal candidate, that would probably have been announced. More change coming? Would a new person have a different strategy?)
  • Over Rondolat’s tenure the company has gone through much change. From the emergence of LEDs and how that has transformed the lighting industry as wll as lighting profitability to managing during a pandemic, to a changing European market due to wars, to a changing Chinese economy, a name change in the US and more … a tenure of change. Given the current challenges being faced in the lighting industry fueled by the effects of LEDs (longer-life, lower “lifetime value of a socket”) it is inevitable that business models have, are, and will change (witness connected lighting / controls and Acuity’s diversification with Distech and QSC and Amerlux’ evolution into Delta Intelligent Building Technologies.

Signify’s Earnings

Signify sales declines to €6.1 billion in 2024, down 6.6%. Edison Report shared the data from the report and some initiatives. It’s interesting that Signify stated that 93% of total sales are LED-based. Which means somewhere in the world they are selling incandescent and fluorescent lamps!

I then took a look at their presentation and earnings call transcript thinking “the North American market historically is about one-third of their sales (so $2 billion), there should be some insights?” Barely. The focus was about their issues in China and Europe.

Consider that $2 billion is Cooper Lighting and Genlyte Solutions. US and Canada (don’t know if there are sales in Mexico or the Caribbean). That is the Professional, Consumer, and OEM markets as well as, presumably, some direct sales.

Some notes, and observations, from the presentation and call:

• 2/3rds of cost reduction program were realized in 2024
• Repaid much debt
• Stated they are “progressively improving the topline” (hard to understand when overall sales are down 6.6%, especially since the US market, per our Pulse of Lighting Report, has been “down less, or flat” throughout 2024.
• Shared that the “decline of the Conventional business” led the drag effect on Signify.
• Professional segment (where the electrical distribution would be) faced headwinds in Europe as Europe and China sales in this segment were down 5.8% in these markets and reportedly down only 3.4% Q3 vs Q4 (the US market, overall, performed better according to our Q4 Pulse of Lighting report.)
  • Their Conventional business was down 24.5%.
  • They expect their 2025 Conventional business to drop another 20-30% in 2025.
• Expect momentum in the business will build throughout the year, resulting in low single digit topline growth, excluding the Conventional business. (No reason given of why.)
• Some analysts asked about tariffs. Signify shared that they import <20% of their material into the US from China. While they manufacturer in Mexico, reportedly “less than our competition, in our belief” but “we handled this before, we know the playbook.”
• An analyst asked about stock business (relating to Europe) but this is an indication that analysts do not understand that much of the lighting business is project and that stock is really “localized inventory to support projects.” This is a major change in how lighting manufacturers need to operate, especially since most have relatively quick drop ship capabilities.
• No major M&A in the pipeline throughout the company.
• Signify believes it is taking share in the US, especially on the Professional side of the business.
• The sense in reading the report is that their EU business, and the EU market, is “challenged” and that the US / North America market may be the only large market that has opportunity.

Is the lack of any US / North American results an indicator of something or a Euro-centric view of the company / world?

According to distributors, in the US / Canada Signify’s products (Cooper and Genlyte) are good. The reason for the ongoing challenges … no one can articulate “why” and how they get outperformed by others.

Thoughts?