ATKORE INC. Second Quarter
2024 Earnings
Presentation and
Business Update
May 7, 2024
© Atkore
Cautionary Statements
This presentation is provided for general informational purposes only and it does not include every item which may be of interest, nor does it purport to present full and fair disclosure with respect to Atkore Inc. (the "Company" or "Atkore") or its operational and financial information. Atkore expressly disclaims any current intention to update any forward-looking statements contained in this presentation as a result of new information or future events or developments or otherwise, except as required by federal securities laws. This presentation is not a prospectus and is not an offer to sell securities.
This presentation contains forward-looking statements that are subject to known and unknown risks and uncertainties, many of which are beyond our control. All statements other than statements of historical fact included in this presentation are forward-looking statements. Forward-looking statements appearing throughout this presentation include, without limitation, statements regarding our intentions, beliefs, assumptions or current expectations concerning, among other things, financial position; results of operations; cash flows; prospects; growth strategies or expectations; customer retention; the outcome (by judgment or settlement) and costs of legal, administrative or regulatory proceedings, investigations or inspections, including, without limitation, collective, representative or any other litigation; and the impact of prevailing economic conditions. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "believes," "expects," "may," "will," "shall," "should," "would," "could," "seeks," "aims," "projects," "is optimistic," "intends," "plans," "estimates," "anticipates" and other comparable terms. We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes, including, without limitation, our actual results of operations, financial condition and liquidity, and the development of the market in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this presentation. In addition, even if our results of operations, financial condition and cash flows, and the development of the market in which we operate, are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in subsequent periods. A number of important factors, including, without limitation, the risks and uncertainties disclosed in the Company's filings with the U.S. Securities and Exchange Commission, including but not limited to the Company's most recent Annual Report on Form 10-K and reports on Form 10-Q and Form 8-K could cause actual results and outcomes to differ materially from those reflected in the forward-looking statements. Because of these risks, we caution that you should not place undue reliance on any of our forward-looking statements. New risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us. Further, any forward-looking statement speaks only as of the date on which it is made. We undertake no obligation to revise the forward-looking statements in this presentation after the date of this presentation.
Market data and industry information used throughout this presentation are based on management's knowledge of the industry and the good faith estimates of management. We also relied, to the extent available, upon management's review of independent industry surveys, forecasts and publications and other publicly available information prepared by a number of third-party sources. All of the market data and industry information used in this presentation involves a number of assumptions and limitations which we believe to be reasonable, but you are cautioned not to give undue weight to such estimates. Although we believe that these sources are reliable, we cannot guarantee the accuracy or completeness of this information, and we have not independently verified this information. While we believe the estimated market position, market opportunity and market size information included in this presentation are generally reliable, such information, which is derived in part from management's estimates and beliefs, is inherently uncertain and imprecise. Projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate are subject to a high degree of uncertainty and risk due to a variety of factors, including those described above. These and other factors could cause results to differ materially from those expressed in our estimates and beliefs and in the estimates prepared by independent parties.
This presentation should be read along with the historical financial statements of Atkore, including the most recent audited financial statements. Historical results may not be indicative of future results.
We use non-GAAP financial measures to help us describe our operating and financial performance. These measures may include Adjusted EBITDA, Adjusted EBITDA margin (Adjusted EBITDA over Net sales), Net debt (total debt less cash and cash equivalents), Adjusted Net Income Per Diluted Share (also referred to as "Adjusted Diluted EPS"), Leverage ratio (net debt or total debt less cash and cash equivalents, over Adjusted EBITDA on trailing twelve month ("TTM") basis), Free Cash Flow (net cash provided by operating activities less capital expenditures) and Return on Capital to help us describe our operating and financial performance. These non-GAAP financial measures are commonly used in our industry and have certain limitations and should not be construed as alternatives to net income, total debt, net cash provided by operating activities, return on assets, and other income data measures as determined in accordance with generally accepted accounting principles in the United States, or GAAP, or as better indicators of operating performance. These non-GAAP financial measures as defined by us may not be comparable to similarly-titlednon-GAAP measures presented by other companies. Our presentation of such non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. See the appendix to this presentation for a reconciliation of the non-GAAP financial measures presented herein to the most comparable financial measures as determined in accordance with GAAP.
Fiscal Periods - The Company has a fiscal year that ends on September 30th. It is the Company's practice to establish quarterly closings using a 4-5-4 calendar. The Company's fiscal quarters typically end on the last Friday in December, March and June.
© Atkore | 2 |
Solid Results in Q2 2024
Net Sales | Net Income | Adjusted EBITDA1 | Diluted EPS | Adjusted Diluted EPS1 | ||||||||||||||||||||||||||||||||||||
$M | $M | $M | $/share | $/share | ||||||||||||||||||||||||||||||||||||
983 | -11% | 233 | -21% | 346 | -23% | 5.08 | -15% | 5.39 | -16% | |||||||||||||||||||||||||||||||
896 | 4.87 | |||||||||||||||||||||||||||||||||||||||
793 | 4.31 | |||||||||||||||||||||||||||||||||||||||
640 | 174 | 276 | 3.67 | 4.08 | ||||||||||||||||||||||||||||||||||||
456 | 125 | 138 | 193 | 212 | 2.58 | 2.79 | ||||||||||||||||||||||||||||||||||
39 | 87 | 0.80 | 0.99 | |||||||||||||||||||||||||||||||||||||
Q2 | Q2 | Q2 | Q2 | Q2 | Q2 | Q2 | Q2 | Q2 | Q2 | Q2 | Q2 | Q2 | Q2 | Q2 | Q2 | Q2 | Q2 | Q2 | Q2 | Q2 | Q2 | Q2 | Q2 | Q2 | ||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2024 | 2020 | 2021 | 2022 | 2023 | 2024 | 2020 | 2021 | 2022 | 2023 | 2024 | 2020 | 2021 | 2022 | 2023 | 2024 | 2020 | 2021 | 2022 | 2023 | 2024 |
Business Update
Organic volume down 1% in Q2 2024 compared to the prior year; volume up 6% YTD in FY 2024
Q2 2024 Net Sales within projections; Adjusted EBITDA and Adjusted Diluted EPS exceeded previous Outlook
Capital deployment execution - repurchased $59M in stock in Q2 2024 for a total of over $150M repurchased YTD in FY 2024; completed first quarterly cash dividend payment of approximately $12M
Adjusting midpoint of FY 2024 Outlook
© Atkore | 1. See non-GAAP reconciliation in appendix. | 3 |
Q2 Income Statement Summary
($'s in millions)
Q2 2024 | Q2 2023 | Y/Y | Y/Y % |
Change | Change | ||
Net Sales | $792.9 | $895.9 | ($103.0) | (11.5%) | |
Operating Income | $178.8 | $239.9 | ($61.1) | (25.5%) | |
Net Income | $138.0 | $174.2 | ($36.2) | (20.8%) | |
Adjusted EBITDA1 | $211.9 | $276.0 | ($64.1) | (23.2%) | |
Adjusted EBITDA Margin2 | 26.7% | 30.8% | (410 bps) | - | |
Tax Rate | 18.7% | 23.5% | (480 bps) | - | |
Net Income Per Share (Diluted) | $3.67 | $4.31 | ($0.64) | (14.8%) | |
Adjusted Diluted EPS1 | $4.08 | $4.87 | ($0.79) | (16.2%) | |
© Atkore | 1. | See non-GAAP reconciliation in appendix. | 4 |
2. | Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of Net Sales. |
Consolidated Atkore Bridges
Q2 Net Sales Bridge | ||||||
2024 | $896M | $2 | $793M | |||
$8 | $86 | $11 | ||||
2023 | Volume/Mix | Price | Solar Credit | Other1 | 2024 |
Net Sales % Change
Volume/Mix | (0.8%) |
Price | (9.5%) |
Solar Credit | (1.2%) |
Total | (11.5%) |
Adjusted EBITDA Bridge2
$276M | $5 | |||||
$21 | $2 | $212M | ||||
$86 | $6 | |||||
2023 | Volume/Mix | Price | Cost | Solar Credit | Other1 | 2024 |
Changes |
Adjusted Diluted EPS Bridge2
$4.87 | |||||
$0.24 | $0.27 | $0.07 | $4.08 | ||
$1.37 | |||||
2023 | Quarterly | Solar Credit | Share Count | Other1 | 2024 |
Results |
© Atkore | 1. | "Other" may include items such as F/X, M&A, productivity, investments, interest and tax rate. | 5 |
2. | See non-GAAP reconciliation in appendix. |
Key Product Area Trends & Review
FY 2024 YTD Net Sales by | Volume/Mix % | |
Key Product Area1 | FY 2024 YTD vs. | |
FY 2023 YTD | ||
Plastic Pipe, | 31% | + MSD% |
Conduit & Fittings | ||
Metal Framing, | 21% | |
Cable Management & | + LSD% | |
Construction Services | ||
Metal Electrical | 21% | + HSD% |
Conduit & Fittings | ||
Electrical Cable & | 14% | + LSD% |
Flexible Conduit | ||
Mechanical Tube & | 13% | + DD% |
Other | ||
$1,591M | + 6% |
Product Area Review &
Key Comments
PVC related product volume up double digits year to date due to strong performance from our non-electrical PVC products
Demand for HDPE telecom related products remains challenged as the industry awaits rollout of government stimulus funding for broadband access
Growth led by megaprojects in the U.S. and internationally
Strong start to FY 2024
Modest growth in alignment with expectations
Strong volume performance with solar-related product volumes continuing to ramp from our Hobart, Indiana facility
© Atkore | 1. Sales of "Other Electrical products" and "Other Safety & Infrastructure products" have been allocated and included in the presentation of the product area groupings listed for presentation purposes. | 6 |
Source: Management estimates. |
Segment Results
Electrical | Safety & Infrastructure |
($'s in millions) | Q2 2024 | Q2 2023 | Y/Y |
Change | |||
($'s in millions) | Q2 2024 | Q2 2023 | Y/Y |
Change | |||
Net Sales | $590.8 | $681.0 | (13.2%) | Net Sales | $202.4 | $215.1 | (5.9%) | |||
Adjusted EBITDA | $195.8 | $256.9 | (23.8%) | Adjusted EBITDA | $25.5 | $33.2 | (23.1%) | |||
Adjusted EBITDA Margin | 33.1% | 37.7% | (460 bps) | Adjusted EBITDA Margin | 12.6% | 15.4% | (280 bps) | |||
Includes ~$3M related to start-up costs at our new Indiana facility | ||||||||||
Q2 Net Sales Bridge
$681M | ||||
$4 | $1 | $591M | ||
$87 | ||||
2023 | Volume/Mix | Price | Other1 | 2024 |
Q2 Net Sales Bridge
$215M | $2 | $202M | ||
$4 | ||||
$11 | ||||
2023 | Volume/Mix | Price | Solar Credit | 2024 |
© Atkore | 1. "Other" may include items such as F/X, M&A, productivity, investments, interest and tax rate. | 7 |
Cash & Balance Sheet Summary
Atkore's strong balance sheet enables continued execution of our capital deployment model with cash generated by the business.
FY24 YTD Cash Bridge
$M | |||
$245 | |||
$74 | |||
$388M | $156 | $368M | |
$12 | |||
$23 | |||
FY23 YE | Cash Flow | Capital | Stock | Dividend | Net Other | FY24 YTD |
Cash Balance | From | Expenditures | Repurchases | Payment | Uses of Cash Cash Balance | |
Operating | ||||||
Activities |
Debt Maturity Profile
$M
$373 | $400 |
$325 |
FY 2026 | FY 2027 | FY 2028 | FY 2029 | FY 2030 | FY 2031 |
Undrawn Asset Based Loan | Senior Secured Term Loan | Senior Notes | |||
© Atkore | 8 |
Update on Category Expansion Initiatives
Status update & timing of financial benefits related to key category expansion initiatives
HDPE Power & Telecommunications
HDPE-related products expected to be a strong future growth driver given the significant secular tailwinds
Demand recovery projected in FY 2025 in part due to the rollout of government stimulus funding
Atkore's FY 2024 full-year performance expectations have been adjusted to align with the current product-specific market challenges as end users work through excess levels of inventory
FY 2024 Current
Estimate vs. Original
Guidance
Volume
Price vs. Cost
Adjusted
EBITDA
Solar Related Torque Tube Capacity
Solar megatrend represents a growth opportunity for manufacturing torque tubes; Atkore's investment in manufacturing capacity will provide the necessary capacity to meet the increased demand
The new Hobart, IN facility is central to supporting the growth from solar and other large tube applications
Atkore's FY 2024 full-year performance expectations have been adjusted to align with the projected output of torque tubes
FY 2024 Current
Estimate vs. Original
Guidance
Volume
Net Sales
Adjusted
EBITDA
© Atkore | 9 |
Updated FY 2024 Outlook
Expect mid to high single digit percentage volume growth for FY 2024. Amending FY 2024 Outlook to reflect impacts of certain growth-related initiatives.
Outlook Summary
Outlook Items for
Consolidated Atkore
Q3 2024 Outlook
FY 2024 Outlook
Updates to FY 2024 Outlook
Net Sales
Adjusted EBITDA1
Adjusted Diluted EPS1
Interest Expense, net
Tax Rate
Capital Expenditures
Stock Repurchases
Diluted Shares Outstanding2
$815M - $835M | $3.3B - $3.5B | ($0.2B) |
$210M - $220M | $850M - $900M | ($50M) |
$3.85 - $4.05 | $16.00 - $17.00 | ($0.50) |
$35M - $39M | ||
~22% | ~21% - 24% | |
$175M - $200M | ||
≥$250M | ||
36M - 37M | ||
© Atkore 1. Reconciliations of the forward-looking quarterly and full-year 2024 outlook for Adjusted EBITDA and Adjusted Diluted EPS is not being provided as the Company does not currently have sufficient data to accurately10 estimate the variables and individual adjustments for such reconciliation. Accordingly, we are relying on the exception provided by Item 10(e)(1)(i)(B) of Regulation S-K to exclude these reconciliations.
2. Represents weighted-average shares outstanding in millions used in calculation of Adjusted Diluted EPS outlook.
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Atkore International Group Inc. published this content on 07 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 May 2024 10:21:32 UTC.
