Atkore Inc. Announces First Quarter 2024 Results

HARVEY, Ill.--(BUSINESS WIRE)--Atkore Inc. (the "Company" or "Atkore") (NYSE: ATKR) announced earnings for its fiscal 2024 first quarter ended December 29, 2023.

"Atkore is off to a great start for fiscal 2024, with double digit organic volume growth in the first quarter driven by contributions across all key product areas," said Bill Waltz, Atkore President and Chief Executive Officer. "We continue to expect low double digit volume growth for the full year as we continue to realize the benefits from the investments we've made in the business, including the ongoing start up and ramp up of our new facility in Hobart, Indiana. Given our performance in the first quarter, we are raising our fiscal 2024 outlook for Adjusted EPS."

Waltz continued, "As we remain focused on our strategic initiatives and investing in the future of our company, we continued to execute our balanced capital allocation strategy by deploying $44 million in capital expenditures and repurchasing $96 million in shares in the first quarter. In addition, I am proud to highlight the declaration our first quarterly dividend earlier this week. This is a significant milestone for our company made possible by the transformation and structural improvements we've achieved over the past several years. With our broad portfolio of electrical infrastructure products and strong secular trends driving future growth, we remain confident in our future."

2024 First Quarter Results

		Three months ended
(in thousands)		December 29, 2023				December 30, 2022				Change				% Change
Net sales
Electrical		$	593,661			$	638,705			$	(45,044	)		(7.1	)%
Safety & Infrastructure			205,127				195,259				9,868			5.1	%
Eliminations			(306	)			(143	)			(163	)		114.0	%
Consolidated operations		$	798,481			$	833,821			$	(35,340	)		(4.2	)%
Net income		$	138,381			$	173,492			$	(35,111	)		(20.2	)%
Adjusted EBITDA
Electrical		$	204,360			$	243,836			$	(39,476	)		(16.2	)%
Safety & Infrastructure			19,512				33,404				(13,892	)		(41.6	)%
Unallocated			(10,349	)			(13,395	)			3,046			(22.7	)%
Consolidated operations		$	213,523			$	263,845			$	(50,322	)		(19.1	)%

Net sales decreased by $35.3 million or 4.2% to $798.5 million for the three months ended December 29, 2023, compared to $833.8 million for the three months ended December 30, 2022. The decrease in net sales is primarily attributed to decreased average selling prices across the Company's products of $130.4 million as a result of expected pricing normalization and the economic value of solar tax credits to be transferred to certain customers of $14.9 million. This decrease was partially offset by increased sales volume of $106.2 million.

Gross profit decreased by $43.8 million, or 13.1%, to $290.5 million for the three months ended December 29, 2023, as compared to $334.4 million for the prior-year period. Gross margin decreased to 36.4% for the three months ended December 29, 2023, as compared to 40.1% for the prior-year period. Gross profit decreased primarily due to declines in average selling prices of $130.4 million partially offset by slower declines in the costs of steel, copper and PVC resin of $62.3 million.

Net income decreased by $35.1 million, or 20.2%, to $138.4 million for the three months ended December 29, 2023 compared to $173.5 million for the prior-year period primarily due to lower gross profit and higher selling, general and administrative costs and intangible amortization, partially offset by lower income tax expense.

Adjusted EBITDA decreased by $50.3 million, or 19.1%, to $213.5 million for the three months ended December 29, 2023 compared to $263.8 million for the three months ended December 30, 2022. The decrease was primarily due to lower gross profit.

Net income per diluted share prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") was $3.61 for the three months ended December 29, 2023, as compared to $4.20 in the prior-year period. Adjusted net income per diluted share decreased by $0.49 to $4.12 for the three months ended December 29, 2023, as compared to $4.61 in the prior year period. The decrease in diluted earnings per share is primarily attributed to lower net income.

Segment Results

Electrical

Net sales decreased by $45.0 million, or 7.1%, to $593.7 million for the three months ended December 29, 2023 compared to $638.7 million for the three months ended December 30, 2022. The decrease in net sales is primarily attributed to decreased average selling prices of $114.3 million as a result of expected pricing normalization and partially offset by increased sales volume of $65.5 million.

Adjusted EBITDA for the three months ended December 29, 2023 decreased by $39.5 million, or 16.2%, to $204.4 million from $243.8 million for the three months ended December 30, 2022. Adjusted EBITDA margins decreased to 34.4% for the three months ended December 29, 2023 compared to 38.2% for the three months ended December 30, 2022. The decrease in Adjusted EBITDA and Adjusted EBITDA margins was largely due to lower average selling prices over input costs.

Safety & Infrastructure

Net sales increased by $9.9 million, or 5.1%, for the three months ended December 29, 2023 to $205.1 million compared to $195.3 million for the three months ended December 30, 2022. The increase is primarily attributed to higher volumes of $40.8 million, partially offset by decreased average selling prices of $16.1 million driven by lower input costs of steel and the economic value of solar tax credits to be transferred to certain customers of $14.9 million.

Adjusted EBITDA decreased by $13.9 million, or 41.6%, to $19.5 million for the three months ended December 29, 2023 compared to $33.4 million for the three months ended December 30, 2022. Adjusted EBITDA margins decreased to 9.5% for the three months ended December 29, 2023 compared to 17.1% for the three months ended December 30, 2022. The decrease in Adjusted EBITDA and Adjusted EBITDA margin was largely due to lower average selling prices over input costs.

Liquidity & Capital Resources

On January 30, 2024, the Board of Directors of Atkore Inc. declared a quarterly cash dividend of $0.32 per share of common stock payable on March 15, 2024, to stockholders of record on February 27, 2024. This is the first quarterly dividend to be paid by the Company as part of its new dividend program that was previously announced in November 2023.

Full-Year Outlook¹

The Company is maintaining its estimate for fiscal year 2024 Adjusted EBITDA to be approximately $900 million to $950 million, and increasing its estimate for Adjusted net income per diluted share to be in the range of $16.50 - $17.50.

The Company notes that this perspective may vary due to changes in assumptions or market conditions and other factors described under "Forward-Looking Statements."

Conference Call Information

Atkore management will host a conference call today, February 1, 2024, at 8 a.m. Eastern time, to discuss the Company's financial results. The conference call may be accessed by dialing [phone] (domestic) or [phone] (international). The call will be available for replay until February 15, 2024. The replay can be accessed by dialing [phone] for domestic callers, or for international callers, [phone]. The passcode for the live call and the replay is 5592214.

Interested investors and other parties can also listen to a webcast of the live conference call by logging onto the Investor Relations section of the Company's website at https://investors.atkore.com. The online replay will be available on the same website immediately following the call.

To learn more about the Company, please visit the Company's website at https://investors.atkore.com.

¹ Reconciliations of the forward-looking full-year 2024 outlook for Adjusted EBITDA and Adjusted net income per diluted share are not being provided as the Company does not currently have sufficient data to accurately estimate the variables and individual adjustments for such reconciliations. Accordingly, we are relying on the exception provided by Item 10(e)(1)(i)(B) of Regulation S-K to exclude these reconciliations.

About Atkore Inc.

Atkore is a leading manufacturer of electrical products for commercial, industrial, data center, telecommunications, and solar applications. With 5,600 employees and $3.5B in sales in fiscal year 2023, we deliver sustainable solutions to meet the growing demands of electrification and digital transformation. To learn more, please visit www.atkore.com.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements relating to financial outlook. Some of the forward-looking statements can be identified by the use of forward-looking terms such as "believes," "expects," "may," "will," "shall," "should," "would," "could," "seeks," "aims," "projects," "is optimistic," "intends," "plans," "estimates," "anticipates" or other comparable terms. Forward-looking statements include, without limitation, all matters that are not historical facts. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. 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 press release. 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 press release, 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. Additional factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation: declines in, and uncertainty regarding, the general business and economic conditions in the United States and international markets in which we operate; weakness or another downturn in the United States non-residential construction industry; widespread outbreak of diseases, changes in prices of raw materials; pricing pressure, reduced profitability, or loss of market share due to intense competition; availability and cost of third-party freight carriers and energy; high levels of imports of products similar to those manufactured by us; changes in federal, state, local and international governmental regulations and trade policies; adverse weather conditions; increased costs relating to future capital and operating expenditures to maintain compliance with environmental, health and safety laws; reduced spending by, deterioration in the financial condition of, or other adverse developments, including inability or unwillingness to pay our invoices on time, with respect to one or more of our top customers; increases in our working capital needs, which are substantial and fluctuate based on economic activity and the market prices for our main raw materials, including as a result of failure to collect, or delays in the collection of, cash from the sale of manufactured products; work stoppage or other interruptions of production at our facilities as a result of disputes under existing collective bargaining agreements with labor unions or in connection with negotiations of new collective bargaining agreements, as a result of supplier financial distress, or for other reasons; changes in our financial obligations relating to pension plans that we maintain in the United States; reduced production or distribution capacity due to interruptions in the operations of our facilities or those of our key suppliers; loss of a substantial number of our third-party agents or distributors or a dramatic deviation from the amount of sales they generate; security threats, attacks, or other disruptions to our information systems, or failure to comply with complex network security, data privacy and other legal obligations or the failure to protect sensitive information; possible impairment of goodwill or other long-lived assets as a result of future triggering events, such as declines in our cash flow projections or customer demand and changes in our business and valuation assumptions; safety and labor risks associated with the manufacture and in the testing of our products; product liability, construction defect and warranty claims and litigation relating to our various products, as well as government inquiries and investigations, and consumer, employment, tort and other legal proceedings; our ability to protect our intellectual property and other material proprietary rights; risks inherent in doing business internationally; changes in foreign laws and legal systems, including as a result of Brexit; our inability to introduce new products effectively or implement our innovation strategies; our inability to continue importing raw materials, component parts and/or finished goods; the incurrence of liabilities and the issuance of additional debt or equity in connection with acquisitions, joint ventures or divestitures and the failure of indemnification provisions in our acquisition agreements to fully protect us from unexpected liabilities; failure to manage acquisitions successfully, including identifying, evaluating, and valuing acquisition targets and integrating acquired companies, businesses or assets; the incurrence of additional expenses, increases in the complexity of our supply chain and potential damage to our reputation with customers resulting from regulations related to "conflict minerals"; disruptions or impediments to the receipt of sufficient raw materials resulting from various anti-terrorism security measures; restrictions contained in our debt agreements; failure to generate cash sufficient to pay the principal of, interest on, or other amounts due on our debt; failure to generate cash sufficient to pay dividends; challenges attracting and retaining key personnel or high-quality employees; future changes to tax legislation; failure to generate sufficient cash flow from operations or to raise sufficient funds in the capital markets to satisfy existing obligations and support the development of our business; and other risks and factors described from time to time in documents that we file with the SEC. The Company assumes no obligation to update the information contained herein, which speaks only as of the date hereof.

Non-GAAP Financial Information

This press release includes certain financial information, not prepared in accordance with Generally Accepted Accounting Principles in the United States ("GAAP"). Because not all companies calculate non-GAAP financial information identically (or at all), the presentations herein may not be comparable to other similarly titled measures used by other companies. Further, these measures should not be considered substitutes for the performance measures derived in accordance with GAAP. See non-GAAP reconciliations below in this press release for a reconciliation of these measures to the most directly comparable GAAP financial measures.

Adjusted EBITDA and Adjusted EBITDA Margin

We use Adjusted EBITDA and Adjusted EBITDA Margin in evaluating the performance of our business and in the preparation of our annual operating budgets as indicators of business performance and profitability. We believe Adjusted EBITDA and Adjusted EBITDA Margin allow us to readily view operating trends, perform analytical comparisons and identify strategies to improve operating performance.

We define Adjusted EBITDA as net income (loss) before income taxes, adjusted to exclude unallocated expenses, depreciation and amortization, interest expense, net, stock-based compensation, loss on extinguishment of debt, certain legal matters, and other items, such as inventory reserves and adjustments, loss on disposal of property, plant and equipment, insurance recovery related to damages of property, plant and equipment, release of indemnified uncertain tax positions, realized or unrealized gain (loss) on foreign currency impacts of intercompany loans and related forward currency derivatives, gain on purchase of business, loss on assets held for sale, restructuring costs and transaction costs. We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of Net sales.

We believe Adjusted EBITDA and Adjusted EBITDA Margin, when presented in conjunction with comparable GAAP measures, are useful for investors because management uses Adjusted EBITDA and Adjusted EBITDA Margin in evaluating the performance of our business.

Adjusted Net Income and Adjusted Net Income per Share

We use Adjusted net income and Adjusted net income per share in evaluating the performance of our business and profitability. Management believes that these measures provide useful information to investors by offering additional ways of viewing the Company's results that, when reconciled to the corresponding GAAP measure provide an indication of performance and profitability excluding the impact of unusual and or non-cash items. We define Adjusted net income as net income before stock-based compensation, loss on extinguishment of debt, loss on assets held for sale, intangible asset amortization, certain legal matters and other items, and the income tax expense or benefit on the foregoing adjustments that are subject to income tax. We define Adjusted net income per share as basic and diluted net income per share excluding the per share impact of stock-based compensation, intangible asset amortization, certain legal matters and other items, and the income tax expense or benefit on the foregoing adjustments that are subject to income tax.

Free Cash Flow

We define free cash flow as net cash provided by (used in) operating activities, less capital expenditures. We believe that Free Cash Flow provides meaningful information regarding the Company's liquidity.

ATKORE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
		Three months ended
(in thousands, except per share data)		December 29, 2023			December 30, 2022
Net sales		$	798,481		$	833,821
Cost of sales			507,941			499,468
Gross profit			290,540			334,353
Selling, general and administrative			100,615			89,977
Intangible asset amortization			14,467			12,796
Operating income			175,458			231,580
Interest expense, net			7,793			9,488
Other expense, net			12			41
Income before income taxes			167,653			222,051
Income tax expense			29,272			48,559
Net income		$	138,381		$	173,492
Net income per share
Basic		$	3.66		$	4.26
Diluted		$	3.61		$	4.20

ATKORE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share data)		December 29, 2023				September 30, 2023
Assets
Current Assets:
Cash and cash equivalents		$	380,922			$	388,114
Accounts receivable, less allowance for current and expected credit losses of $6,265 and $5,179, respectively			517,634				559,854
Inventories, net			493,637				493,852
Prepaid expenses and other current assets			105,951				96,670
Total current assets			1,498,144				1,538,490
Property, plant and equipment, net			586,983				559,041
Intangible assets, net			381,205				394,372
Goodwill			312,960				311,106
Right-of-use assets, net			144,828				120,747
Deferred tax assets			569				546
Other long-term assets			10,703				10,707
Total Assets		$	2,935,392			$	2,935,009
Liabilities and Equity
Current Liabilities:
Accounts payable			248,261				292,734
Income tax payable			4,625				6,322
Accrued compensation and employee benefits			30,516				45,576
Customer liabilities			131,121				121,576
Lease obligations			17,883				16,230
Other current liabilities			72,951				82,166
Total current liabilities			505,357				564,604
Long-term debt			763,225				762,687
Long-term lease obligations			129,050				105,517
Deferred tax liabilities			21,284				22,346
Other long-term liabilities			14,131				11,736
Total Liabilities			1,433,047				1,466,890
Equity:
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 36,905,528 and 37,317,893 shares issued and outstanding, respectively			370				374
Additional paid-in capital			490,238				506,783
Retained earnings			1,035,897				994,902
Accumulated other comprehensive loss			(24,160	)			(33,940	)
Total Equity			1,502,345				1,468,119
Total Liabilities and Equity		$	2,935,392			$	2,935,009

ATKORE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
		Three months ended
(in thousands)		December 29, 2023				December 30, 2022
Operating activities:
Net income		$	138,381			$	173,492
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			29,020				25,967
Deferred income taxes			(1,668	)			3,275
Stock-based compensation			4,757				5,270
Amortization of right-of-use assets			6,140				3,538
Other non-cash adjustments to net income			2,074				1,410
Changes in operating assets and liabilities, net of effects from acquisitions
Accounts receivable			43,837				26,841
Inventories			2,015				11,565
Prepaid expenses and other current assets			(9,140	)			(6,930	)
Accounts payable			(42,014	)			(48,826	)
Accrued and other liabilities			(15,946	)			(36,070	)
Income taxes			(260	)			38,787
Other, net			910				532
Net cash provided by operating activities			158,106				198,851
Investing activities:
Capital expenditures			(44,331	)			(35,006	)
Acquisition of businesses, net of cash acquired			(5,973	)			(82,181	)
Net cash used in investing activities			(50,304	)			(117,187	)
Financing activities:
Issuance of common stock, net of shares withheld for tax			(21,299	)			(14,775	)
Repurchase of common stock			(96,428	)			(150,056	)
Finance lease payments			(427	)			-
Net cash used for financing activities			(118,154	)			(164,831	)
Effects of foreign exchange rate changes on cash and cash equivalents			3,160				2,243
Decrease in cash and cash equivalents			(7,192	)			(80,924	)
Cash and cash equivalents at beginning of period			388,114				388,751
Cash and cash equivalents at end of period		$	380,922			$	307,827

		Three months ended
(in thousands)		December 29, 2023				December 30, 2022
Supplementary Cash Flow information
Capital expenditures, not yet paid		$	5,030			$	7,227
Operating lease right-of-use assets obtained in exchange for lease liabilities		$	24,752			$	1,181
Acquisitions of businesses, not yet paid		$	-			$	14,125
Free Cash Flow:
Net cash provided by operating activities		$	158,106			$	198,851
Capital expenditures			(44,331	)			(35,006	)
Free Cash Flow:		$	113,775			$	163,845

ATKORE INC.
ADJUSTED EBITDA
The following table presents reconciliations of Adjusted EBITDA to net income for the periods presented:
		Three months ended
(in thousands)		December 29, 2023			December 30, 2022
Net income		$	138,381		$	173,492
Interest expense, net			7,793			9,488
Income tax expense			29,272			48,559
Depreciation and amortization			29,020			25,967
Stock-based compensation			4,757			5,270
Other (a)			4,300			1,069
Adjusted EBITDA		$	213,523		$	263,845
(a) Represents other items, such as inventory reserves and adjustments, loss on disposal of property, plant and equipment, release of indemnified uncertain tax positions, gain on purchase of business, loss on assets held for sale, realized or unrealized gain (loss) on foreign currency impacts of intercompany loans and related forward currency derivatives, transaction and restructuring costs.

ATKORE INC.
SEGMENT INFORMATION
The following table presents reconciliations of Net sales and calculations of Adjusted EBITDA Margin by segment for the periods presented:
		Three months ended
		December 29, 2023										December 30, 2022
(in thousands)		Net sales				Adjusted EBITDA			Adjusted EBITDA Margin			Net sales				Adjusted EBITDA			Adjusted EBITDA Margin
Electrical		$	593,661			$	204,360		34.4	%		$	638,705			$	243,836		38.2	%
Safety & Infrastructure			205,127				19,512		9.5	%			195,259				33,404		17.1	%
Eliminations			(306	)									(143	)
Consolidated operations		$	798,481									$	833,821

ATKORE INC.
ADJUSTED NET INCOME PER DILUTED SHARE
The following table presents reconciliations of Adjusted net income to net income for the periods presented:
		Three months ended
(in thousands, except per share data)		December 29, 2023				December 30, 2022
Net income		$	138,381			$	173,492
Stock-based compensation			4,757				5,270
Intangible asset amortization			14,467				12,796
Other (a)			3,611				99
Pre-tax adjustments to net income			22,835				18,165
Tax effect			(5,709	)			(4,541	)
Adjusted net income		$	155,507			$	187,116
Diluted weighted average common shares outstanding			37,745				40,613
Net income per diluted share		$	3.61			$	4.20
Adjusted net income per diluted share		$	4.12			$	4.61
(a) Represents other items, such as inventory reserves and adjustments, loss on disposal of property, plant and equipment, insurance recovery related to damages of property, plant and equipment, loss on assets held for sale, release of indemnified uncertain tax positions and realized or unrealized gain (loss) on foreign currency impacts of intercompany loans and related forward currency derivatives.

ATKORE INC.
NET DEBT
The following table presents reconciliations of Net debt to Total debt for the periods presented:
($ in thousands)	December 29, 2023			September 30, 2023			June 30, 2023			March 31, 2023			December 30, 2022			September 30, 2022
Long-term debt	$	763,225		$	762,687		$	762,149		$	761,612		$	761,074		$	760,537
Total debt		763,225			762,687			762,149			761,612			761,074			760,537
Less cash and cash equivalents		380,922			388,114			317,809			354,342			307,827			388,751
Net debt	$	382,303		$	374,573		$	444,340		$	407,270		$	453,247		$	371,786
TTM Adjusted EBITDA (a)	$	991,804		$	1,042,127		$	1,135,233		$	1,242,501		$	1,312,626		$	1,341,790
(a) TTM Adjusted EBITDA is equal to the sum of Adjusted EBITDA for the trailing four quarter period. The reconciliation of Adjusted EBITDA for the quarter ended September 30, 2023 can be found in Exhibit 99.1 to form 8-K file November 17 2023 and is incorporated be reference herein. The reconciliation of Adjusted EBITDA for the quarter ended June 30, 2023 can be found in Exhibit 99.1 to form 8-K file August 8 2023 and is incorporated be reference herein. The reconciliation of Adjusted EBITDA for the quarter ended March 31, 2023 can be found in Exhibit 99.1 to form 8-K filed May 9, 2023 and is incorporated by reference herein. The reconciliation of Adjusted EBITDA for the quarter ended December 30, 2022 can be found in Exhibit 99.1 to form 8-K filed February 1, 2023 and is incorporated by reference herein. The reconciliation of Adjusted EBITDA for the year ended September 30, 2022 can be found in Exhibit 99.1 to form 8-K filed November 18, 2022 and is incorporated by reference herein.

ATKORE INC.
TRAILING TWELVE MONTHS ADJUSTED EBITDA
The following table presents a reconciliation of Adjusted EBITDA for the trailing twelve months (TTM) ended December 29, 2023:
	TTM			Three months ended
(in thousands)	December 29, 2023			December 29, 2023			September 30, 2023			June 30, 2023			March 31, 2023
Net income	$	654,788		$	138,381		$	140,925		$	201,288		$	174,194
Interest expense, net		33,538			7,793			8,588			8,682			8,475
Income tax expense		141,104			29,272			39,537			18,931			53,364
Depreciation and amortization		118,577			29,020			30,853			30,105			28,598
Stock-based compensation		20,587			4,757			3,001			5,966			6,863
Other (a)		23,210			4,300			9,074			5,289			4,547
Adjusted EBITDA	$	991,804		$	213,523		$	231,978		$	270,262		$	276,041
(a) Represents other items, such as inventory reserves and adjustments, loss on disposal of property, plant and equipment, release of indemnified uncertain tax positions, gain on purchase of business, loss on assets held for sale, realized or unrealized gain (loss) on foreign currency impacts of intercompany loans and related forward currency derivatives, transaction and restructuring costs.

Contacts

Media Contact:
Lisa Winter
Vice President - Communications
708-225-2453
[e-mail]

Investor Contact:
John Deitzer
Vice President - Treasury & Investor Relations
708-225-2124
[e-mail]