Atkore (ATKR) 8-KAtkore Inc. Announces Fourth Quarter 2024 Results

HARVEY, IL. — November 21, 2024 (BUSINESS WIRE) - Atkore Inc. (the “Company” or “Atkore”) (NYSE: ATKR) announced earnings for its fiscal 2024 full year and fourth quarter ended September 30, 2024 (“fourth quarter”).

Net sales for the fourth quarter of 2024 decreased to $788.3 million, a decrease of 9.4% compared to $869.9 million for the prior-year period. The decrease was primarily due to lower average selling prices of $104.1 million as the result of expected pricing normalization and the economic value of solar tax credits to be transferred to certain customers of $5.4 million. These decreases were partially offset by higher sales volume of $26.9 million.

Gross profit decreased by $85.4 million to $216.1 million for the fourth quarter of 2024, as compared to $301.5 million for the prior-year period. Gross margins decreased from 34.7% in the prior year period to 27.4%. Gross profit and gross profit margin decreased primarily due to declines in average selling prices of $104.1 million, partially offset by slower declines in raw material costs of $2.2 million.

Net income decreased $67.8 million to $73.1 million for the fourth quarter of 2024, as compared to $140.9 million for the prior-year period, due to lower operating income of $87.4 million, partially offset by decreased income taxes of $20.8 million. Adjusted net income decreased $74.4 million to $86.6 million compared to $161.0 million for the prior-year period.

Adjusted EBITDA decreased $91.8 million, or 39.6%, to $140.2 million for the fourth quarter of 2024, as compared to $232.0 million for the prior-year period. Net income margin decreased from 16.2% in the prior-year period to 9.3% and Adjusted EBITDA Margin decreased 890 basis points from 26.7% to 17.8%.

Net income per diluted share was $2.02 for the fourth quarter of 2024, a decrease of $1.61 from the prior-year period. Adjusted net income per diluted share was $2.43 per share for the fourth quarter of 2024 compared to $4.21 for the prior-year period.

Electrical net sales decreased $85.3 million, or 13.1%, to $564.5 million for the fourth quarter of 2024, as compared to $649.8 million for the prior-year period. The decrease in net sales is primarily attributed to decreased average selling prices of $97.3 million as a result of expected pricing normalization partially offset by increased volume of $10.9 million.

Adjusted EBITDA decreased $91.9 million, or 38.7%, to $145.7 million for the fourth quarter of 2024, as compared to $237.6 million for the prior-year period, and Adjusted EBITDA Margin decreased from 36.6% to 25.8%. The decrease in Adjusted EBITDA was largely due to lower average selling prices over input costs.

Safety & Infrastructure net sales increased $4.3 million, or 1.9%, to $224.5 million for the fourth quarter of 2024, as compared to $220.2 million for the prior-year period. The increase is attributed to higher volumes of $16.0 million partially offset by lower average selling prices of $6.8 million and the economic value of solar tax credits to be transferred to certain customers of $5.4 million.

Adjusted EBITDA decreased $0.2 million, or 1.6%, to $14.9 million for the fourth quarter of 2024, as compared to $15.1 million for the prior-year period. Adjusted EBITDA Margin decreased from 6.9% to 6.6%. The Adjusted EBITDA and Adjusted EBITDA Margin were marginally consistent with the prior year quarter.

Net sales for fiscal 2024 decreased $316.7 million to $3,202.1 million, a decrease of 9.0%, compared to $3,518.8 million for fiscal 2023. The decrease in net sales is primarily attributed to decreased average selling prices of $406.1 million, the economic value of solar tax credits to be transferred to certain customers of $38.3 million. These decreases are partially offset by increased sales volume of $122.6 million across varying product categories within both the Electrical and the Safety & Infrastructure segments.

Gross profit for fiscal 2024 decreased $261.7 million to $1,077.8 million, a decrease of 19.5%, compared to $1,339.5 million for fiscal 2023. Gross margin decreased to 33.7% in fiscal 2024 compared to 38.1% in fiscal 2023 due to declines in average selling prices of $406.1 million, partially offset by slower declines in the input costs of steel, copper and PVC resin of $103.1 million and the net benefit of solar tax credits of $45.7 million.

Net income decreased $217.0 million to $472.9 million for fiscal 2024, as compared to $689.9 million for fiscal 2023. Adjusted net income decreased $230.1 million to $532.9 million for fiscal 2024 compared to $763.0 million for fiscal 2023. The decrease in both net income and adjusted net income was primarily driven by lower operating income of $268.7 million partially offset by lower income tax of $46.0 million.

Adjusted EBITDA decreased $270.4 million or 25.9%, to $771.7 million for fiscal 2024, as compared to $1,042.1 million for fiscal 2023. The decrease was primarily due to lower operating income.

Net income per diluted share on a GAAP basis was $12.69 for fiscal 2024, a decrease of $4.58 from fiscal 2023. Adjusted net income per diluted share was $14.48 for fiscal 2024 compared to $19.40 for fiscal 2023.

During fiscal 2024, operating activities provided $549.0 million of cash, compared to $807.6 million during fiscal year 2023. Free cash flow decreased to $399.2 million for fiscal 2024 from $588.7 million in fiscal year 2023. The decrease in cash provided by operating activities was primarily driven by lower operating income of $268.7 million and tax impacts of $6.5 million, partially offset by less cash used in working capital of $5.2 million and higher depreciation and amortization of $15.4 million. The decrease in free cash flow was primarily due to the factors above partially offset by less capital expenditures during fiscal 2024 of $69.0 million when compared to the prior fiscal year.

During fiscal 2024, the Board of Directors approved a new quarterly dividend program to be added to the Company’s capital deployment model. Dividends were declared and paid during the year totaling $34.5 million. Additionally, the Board of Directors approved a new share repurchase plan that authorized the Company to repurchase up to $500.0 million of its outstanding stock. During fiscal 2024, the Company repurchased $381.0 million of its outstanding stock, which exhausted the authorization of previously approved plans and leaving a $428.1 million of authorization remaining on the current plan.

The Company notes that the outlook and target information provided may vary due to changes in assumptions or market conditions and other factors described under “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 discussed or referenced under the caption “Risk Factors” in our Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on November 21, 2024 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, such as the novel coronavirus (COVID-19) pandemic; 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, increase in 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 the significant amount of cash needed 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 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.

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.

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.

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, gain on purchase of a business, 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 gain (loss) on extinguishment of debt, stock-based compensation, intangible asset amortization, gain on sale of a business, 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 Free Cash Flow as net cash provided by operating activities less capital expenditures. We believe that Free Cash Flow provides meaningful information regarding the Company’s liquidity.

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CONSOLIDATED STATEMENTS OF OPERATIONS

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CONSOLIDATED BALANCE SHEETS

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CONSOLIDATED STATEMENTS OF CASH FLOWS

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ADJUSTED EBITDA

The following table presents reconciliations of Adjusted EBITDA to net income for the periods presented:

The following table presents calculations of Adjusted EBITDA Margin for Atkore Inc. for the periods presented:

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SEGMENT INFORMATION

The following tables represent calculations of Adjusted EBITDA Margin by segment for the periods presented:

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ADJUSTED NET INCOME PER SHARE

The following table presents reconciliations of Adjusted net income to net income for the periods presented:

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NET DEBT

The following table presents reconciliations of Net Debt to Total Debt for the periods presented: