Atkore (ATKR) 22 Nov 192019 Q4 Earnings call transcript

Greetings, and welcome to the Atkore International Fourth Quarter 2019 Earnings Conference Call. At this time all participants will be in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. Please note this conference is being recorded. will of conference Investor I Deitzer, to time President Vice Relations. this turn over the John At Mr. Deitzer, you may begin.

Johnson, Please as Thank or you actual Bill Such as would CEO; identify company. are may remind call, events everyone projections me and With involve Officer. that to results in may filings statements statements. David materially. could like well important cause which during to that and the of actual good future differ uncertainties Waltz, today's differ in or performance contained results or morning President risks forward-looking future those our refer that everyone. release regarding forward-looking Chief SEC financial our to I Financial we such this today make press from projections and materially factors statements

In means reference over EBITDA discussion adjusted turn today Bill. EBITDA. addition, to it in I'll to that, any our With

financial Atkore fiscal both and the pleased XXXX excellent year. am good morning fourth and the delivered I Thanks John everyone. quarter report results to that for

Let highlights full will David and fourth for more over our the me year go quarter the in begin with detail.

mentioned XXXX We adjusted approximately very achieved following a and by results can strong was year the that increased achievement or XXXX. the for be XX% by in $XX Atkore. million A to Systems. organization our a EBITDA compared Atkore remarkable I everyone As by credit Business to

free the cash adjusted and EBITDA increased $X.XX. growth by increased to to EPS in In up addition our flow we XX% XX%

down a ratio year. our XXXX this this we significant position. made improving net of considerably We to were where with progress last at also debt We from time EBITDA leverage X.X times on ended year

able growth a us convert financial that success year to to allowed Systems. summary driven position those were the We of marketplace. EBITDA our to continue plan from companies upon great In grow and the to that the XXXX in earnings which company. Atkore XXXX acquire We cash Business enhance by to and our performance improve competitiveness build and four leverage both will was

we to specifically in and Business I use EBITDA our future. adjusted that even further employees their between turn for With and XXXX Atkore financials fourth For increase Systems year. David that the $XXX in the in thank our expect want to $XXX growth million the efforts to drive through who quarter all this million for over walk the tremendous Atkore more call to us I'll detail. will to the

morning everyone. good and Bill to Thanks

the As Bill very mentioned fourth strong. quarter was

$XXX X on up results $XX to million prior million year. were sales consolidated Moving our versus net Slide

we just or strong last in declines As up anticipated quarter foreign selling volume quite over positive $XX unfavorable call by million These exchange rates. X%. in X.X%. and $XX acquisitions contributions offset mentioned were our million average prices Recent partially on or was and added our also this revenue

continuing expenses. the Moving million bridge, QX volume Systems growth was growth down or up The in of to $XX contributed the offset Business million. benefit a certain in additional growth partially of Atkore margin by to was of This and the Volume expansion. investments cost quarter versus inflation, XX price drive in and timing the was business, segments both two year. drivers EBITDA our adjusted EBITDA the for growth $XX were million the experienced use adjusted last EBITDA million adjusted we the largest and versus of XX% XX

favorable Moving from repurchases share quarter up $X.XX EPS increased fourth XX%, to basis the count the last increase XX% in adjusted was net earnings adjusted X, income year. and our on reflecting from the GAAP over Slide XXXX a

versus prior year. Our XXX was adjusted EBITDA up quarter margin for XX.X% the points fourth basis

may Adjusted had X expansion solid with categories. Rocky or to driven electrical EBITDA expansion growth in $XX focused X higher approach electrical by our based Slide disciplined Moving margin rates another to our quarter on name. Company, in and assets rates our product our the million our XX% volume the strong we business. acquisition approximately Mountain and increase for Colby the acquired product pipe the United and Pipe on and the Cor-Tek for segments brand This quarter X% coverage a improves during conduit expands conduit West geographic leader Also portfolio States our volumes. of Coast, sold in under plastic PVC

as and up strong very product business QX. over QX mechanical the was $X from MPM the delivered margin to that to million basis points climbed XX.X% EBITDA XXXX. growth up in [ph] Turning solutions adjusted EBITDA EBITDA and XXX segment,

to margins During exceeded the adjusted us EBITDA This quarter and margin the business allowed great percentage job increasing an profitability. of that expectations. deliver did a our

net year-to-date total a allowed as $XXX the to was flow flow of operating free cash million. additional cash X, million us Slide from generated our debt bolt flow during strong quarter flexibility acquisitions This the reduce well $XXX activities $XX by make On million. on roughly as cash which position

growth improved earnings times. leverage in X.X With ratio net the strong and our our to in reduction debt

very leverage with be progress in position to continue you year Bill, this times considering pleased ago. to approximately back our point for our at was ratio a We our at the three outlook.

Thanks David.

our XXXX X. initial Slide for outlook Moving on to

volume continue the and on Between XXXX X% positive and our X% acquisitions the approximately growth we strong recently recent for be to performance and be X% well $XXX be as million. trends as that for to growth markets the expect to EBITDA we for our $XXX our remains for plans to the Electrical up in We we expect from MP&S adjusted for segments volume anticipate to year up X% view next the bolt XXXX to drive revenue between XXXX our and line and X% on growth MP&S we've million we expected year. believe volume in Our Raceway expect top her from both will in with seen financial year.

to approximately million For volumes growth. and productivity from $XX million higher EBITDA growth. combined two to we $XX expect to benefits factors next our year the drive in These for

million our EBITDA. incremental million in provide In acquisitions three $XX to we expect addition most $X to recent

this impact to million we've that positive in $XX selling for XXXX. we prices million experienced in and contributions $XX costs XXXX between of input Given an are planning strong unfavorable

our Moving to at and solid levels. X.X% we bottom $X.XX, XXXX midpoint between approximately adjusted range, the increase an EPS $X.XX above of to a line, increase the the be of expect

first Turning Atkore, for quarter between EBITDA $X.XX adjusted to our EPS between and is adjusted $XX the our total and million, range million $X.XX. is range $XX

success XXXX In strong the summary to year we and very QX full that XXXX. upon build and look in were

acquisitions begin XXXX I year a long-term for to Atkore want focused special Business Atkore recognize executing Systems we to employees the positioning the we a their the our very year to value and I are to driving As this consistently for for questions. the the for now welcome have want Operator, success. our them on future. to new shareholders please excited efforts you from make remain company we team. part their open commitment year, the and employees completed also of lines for as Atkore into all the recent

Instructions]. you. Thank [Operator

first Our Andrew Kaplowitz question. Citi. with the is of your proceed with Please from line question

Good morning guys.

Andrew. morning Good

us that know think Can you growth Raceway helped more from talk seen in new give products the can about quarter the XXXX. I your in early you five ability volume since we've now? a growth, stay mentioned few some growth but that's the you you I for at quarters, you the focus going in had line highest know the but your X.X% think these market products could on outpace into next to growth growth do you elevated I and always new new what forward, related differently levels do do big color product QX,

other -- I think of is things do then one, of piece but said you am add I one Andrew; couple will color. A what summarizing just I

had the disclosure together. we Andrew up digits comp called full I We The easier low previous I one average it thing had focused high that would guidance driving in just are products categories in in last adds product above quarter be is new when last growing growth year quarter. which and out all but it's this digits to we think single our single an relative specific new so we

deck look every going grow to we're I X% acquisitions X forward. put but if great a in that So it want quarter. as But QX to would expecting as back to next you was Slide expect with not would just of strong that at I quarter the see framework year around

start Yeah, Obviously Have contractors data. have easy and past nine or you've to calls digit of forecast six are about well just you any your are you market deterioration in that Raceway then weak that single backlog that non-resident you markets see growth some Bill months gets that's having and going distributors answer. talked seen that's an in backlog within in relatively low to made and the visibility continuing you helpful -- concerned forward. given could you that the we comfortable

the and articulated always we've as there labor in single-digit is what consistent very continues, It's out good. ways it's some low no, governor. the a Yes, its shortage trend acting but

months as we so wrapped we're for contractor with weeks the see forth Andrews expect it's being the of good Board me last months nine you is we for our So literally which large meetings rest a the to consistent CFO say in only continue. distributors fiscal as far And have the board, so two as is electrical and to even customers, we six just pretty up the voice the and year a can with contractors as we're fortunate and that already. contractors guidance that's customer that on lady of the as of on to road yesterday several

than And points versus for price even a the had baked XXXX? bigger contribution then and contribution FY is think costs you one almost year when more you that. number from XXX XXXX of as basis cost, in is contribution me, Really QX what margin you this what aren't price more about was they've of level when prices volatile normal been commodity risk as from

my XX% look with comments other in gave in I think up it's off XX%. Andrew And guidance, that of at up we also XXXX mind a I with year words EBITDA. in our phenomenal the that if a was almost you just So had

one get are of million reasons in in caution guiding value we Some was to just mix $XX $XX of that be kind there could back price to any of don't that's guidance caution that and but to that the driving spread. we as on but million hope

the and get a XXXX we would good So that work just fiscal to presented we for be. rate for in feel can run the think you numbers of what kind

quarter. good Bill, Thanks

Andrew. you thank Awesome,

Wells is questions. question from of line your proceed Deepa the with Raghavan Please next Fargo. The with

question thinking morning about spread you $XX given out? or like more $XX half, comps tagging half your that second Great million more will thinking on you it are Hey, good million linearly mean within I contribution. be are looks just half, quarter. price right first it that Hey, everyone. it price the how weighted first to about

where is on when somewhat with at Deepa then you put Alright, of our most half strong the at bit the as in really forecast. XXXX cost. we a expect FY XXXX the current par versus little mentioned put headwind way FY look in the it Bill we cost. out our with That's probably price we to headwind guidance really financial price for roll half had where our had quarters that first we be of potential and into least have second versus

or this this sorry, Oh price price was the was on cost top line…

Price cost.

it, it. Got okay, sorry. Oh got

to would it the mean be mid the how -- half -- your too it line is some through, what pass what's acquisitions does low what probably mean are top of down revenue second So you it fiscal you so was from digits, the in single-digits, single-digits XXXX low I price, on there expecting…? have price what's mid single headwind I but

now point so that the out of reason that cost the see where pushing also some that's the commodity XX an why for steel versus expecting we're guided would we sales. on have same $XX steel say we're to input is purposes uptick planning XX in being on at of flattened cost increases. And little right this been companies time I to commodities somewhat starting through have million and assume various especially I bit in a ton a price Yeah, million. some

think Deepa I I purposes assume So XXX%. planning would for that's

Systems contributing and was Business improvement Atkore leverage Systems what productivity the And margins, pretty with for is like in think XXXX expansion versus least Business fiscal you would Atkore from the any in potential I your [indiscernible] XXXX to in improve, margin that's to…? it will volume fiscal margin going fiscal my Atkore directionally, that. it be looks to do XXXX add follow-up your nicely much Business there how Thanks in fiscal mean color XXXX, more does Systems to your at be, regards versus

than improved projects. productivity. productivity A the couple around I our significantly that in million say strategic lot And I in of the would would That rigor more approximately initiatives say reason of deployment more business one of $XX was mention, is was has the FY around year just for before things adjusted a I would XXXX general EBITDA. contributed and the

We all projects of where have a system is forth. tracks kind and and the and on so a that funnel so

XXXX which XXXX. that would So guide did a again FY what than Xx more would number be be our FY into built like to say similar year we

it, your capital count dilution not in there. higher pass this deployment, on. Got fiscal it buybacks On is implies I my one final exit I'll much XXXX, in assumption than and but that mean your rate from options share

you, how are on. all I just acquisition the up on for it about what in XXXX? pass which you acquisition Thank So will saving think buyback buybacks is it do we are thoughts your potential, and spend, curious fiscal

absolutely. Sure,

stock little in pollution though of buybacks a ability shares. million every have comp plans, bit the to $XX annually don't stock worth we obviously we our even of to when buy year. back comes We it So have put

at think our I point in So same. time remain this the right priorities now

our the buyback that stock of we over stated have number externally. last moving one third Number I and in bought just everyone of towards priority possible debt Our and years. in company that couple back tuck and goal ratio M&A would times when a two the that two, remind we have is

our back we're bought So million use would Last but tell have XXs if of that year and simply buy decide have mid substantial to we in we not million opportunity a we buyback worth you going be of XX what the program. number the of the shares had to do we so dollars that's cash. our kind back best

so much. thanks it, Got

Deepa. Great, thanks

question Instructions]. your [Operator from with have of question. the line Walsh coming Please another John Suisse. proceed with I Credit

morning. Hi, good

Good morning John.

is adjusted solid adding So productivity in single five digit EBITDA -- mid the year-on-year. midpoint I think at improvement about

holder in I forward what we have Is as that you've a think you pocket about before place commented -- going the you years productivity. of are out relatively kind good productivity? the past the early in think to model in from

think John, would so. paraphrase I slightly Yeah I differently.

we David to an make like we that beginning We years I and enhanced average number think now. for really a our strategic a versus productivity in deployment think did, at that $XX comment process Very least as but have started are ago here I a I two SDP, feels we lot every go year. good did number this humbly funnel. think million

fourth And a of thinking income very free Gotcha. your cash net on that guys how about conversion flow the flow you basis viewing then free or obviously in the year adjusted full cash strong What's kind this call the conversion forward? it on sustainability also going quarter. are year

if we're above very on our typically we be our John about that and to obviously extent the on so little talk year goal and determines we impact forth. XXX%. you This on and recall to whether above income. our cash And some was that. or of factor free year inventory it working capital large a Yeah, flow a and by commodities so year. below net were below Last the And so bit is strong

So is this I year. strong year very a would say

go be to above Our XXX%. would forward that goal be

working capital Good about kind to one I there projects obviously in was swing just that of hit and the is of quarter. your then renewable benefit those I cash guess a talked mean nicely being factors? the

from the but much obviously add end cash flow businesses. year a par with of is we basis you the say volume. But is it business I pretty think when in on I all the solar free net-net Yeah, it's a strong would had in

for Alright, the taking thank questions. you

you. Hey thank John,

Dray Capital Deane your is RBC with with question line Please proceed questions. from Markets. Next the of

on Deane. your next which margins? seeing this Can Raceway that Electrical and discuss for lease Jeff on you volume maybe year. of to guidance touching morning, is Good for mix on Maybe X% verticals any the most does in the X% just growth have you're maybe

going forth or margin, down done it's small areas growth you There warehouses. it's the significantly one driving how that and our probably go we've we see cable next is healthcare change areas always health products. Great because the and We're like hotels products with so enough some the little mix. as we but go the to forecast. have luminary really is value and more forecast. as a selling saw sophisticated on or question, not year, less -- some internal within won't added into with to up things as exceptionally are change care vertical It's well mix, I where around our growth driving largest like as far more one we is But say

Got leveraged approaching capital pipeline, number the Is much maybe pretty you're deployed and target. two percentage it then of just and or times now that multiples there touch and that you for target annually so M&A you are your seeing, are you're also a deployment either etc? on what

that handle question. I'll

know we past You acquisitions. deployed this $XXX million four tuck-in across M&A in year

level going with think so that would of three when and Maybe we're pretty little the acquisition in that tuck would smaller keeping or targets range. around are of right ratio in Electrical a opportunities last if kind our that this debt think be tend our is mid capital our that robust. the valuations activity still around our it's the pipeline to M&A look there. at are in our about appropriate say as and in you still Again point about I somewhat Raceway it's you core if we think been north check. at seeing single-digit value, time two the bit same forward be I deployment now of our

thanks. Great,

you. Thank

you. Thank

will call comments. to his end Bill and closing for our the the question-and-answer back turn I over Waltz of reached have We session

thank Great, you.

takeaways. me let summarize conclude we three Before key

metrics astounding year. financial an XXXX First, across was multiple

while companies the time improved position at enhance growth. support and our we leverage acquiring same that Second, significantly plans will our four for

financial expect to we Third, strong continue. our performance

our With to call. million. want million next to to the For and us today. the and focus speaking Collectively upon $XXX support look adjusted during concludes XXXX I specifically for that $XXX I our Atkore. our and with between our and deliver forward increase Atkore we to expect call to in our to Business Systems customers culture, for maintain quarterly shareholders. thank EBITDA our commitments team, you you interest your This and enable

at may lines you has Thank and your this your disconnect you. Today's participation. conference for you time. concluded Thank now