Atkore (ATKR) 1 May 212021 Q2 Earnings call transcript

Thank you for standing by, and welcome to the Atkore Second Quarter Fiscal 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] Thank you. to of conference Treasury like Deitzer, to now President Vice and would hand over the John I Investor Relations. Mr. ahead. go please Deitzer,

Thank as everyone. Waltz, morning, Chief you, today and Bill by Financial I'm Officer. President as well joined CEO; David Johnson, and good

to uncertainties that actual results release, and to our that to your differ our may like statements important in or make press contained results events forward-looking could regarding projections everyone identify will may projections I take Bill today's differ or forward-looking refer David. this future such those of risks Such materially. after or materially cause involve questions We actual that SEC Please the financial by filings which during comments from and would remind we company. performance call, factors in statements statements.

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

the John, quarter. results and had was of product up in $XXX morning, on million again everyone. be XXXX, what Starting Thanks, and adjusted strong X. million We good was $XXX the outstanding in record across our another very and both our second conduit metal and to quarter. Atkore shaped businesses categories. quarter Revenue delivered performance EBITDA In Slide focused

growth whole terms business. in volume high the In $X million end Across markets up exceptional to led business, residential of in levels. volume performance demand data our We see volume, by continued to addition, pre-COVID centers. high key QX, continue driven such we from has in international our single-digit by ended PVC and rebounded as company,

Cable EC&M has recognized announce to Glide category. new MC are and in of armored by cable Product very recently product We as Wire Year the our the also that been Magazine excited

driven achievements the financial site, approximately to committed this and X,XXX team. employees are to culture our we across operational These core products for dedication company. and a we're tremendous recognition. innovative the experience results job focus is thrilled by and are of as contractors the were help The developing that teamwork improve on with who of We

and our walks continue and strategy invest detail future. achieve expect the regarding through X. update off, increasing 'XX today remains our outlook for adjusted to million FRE Slide But David we deliver now at and range FY market are this we EBITDA M&A I financials. to to more Our of provide shows robust, on $XXX acquisition on Therefore, our of before million. $XXX outlook our in the bolt-on I'll pass want work. quarter's after Composites to proven share recent I it acquisition This an results

high-quality welcome their turn I'll solid few discuss for to business. team the Atkore. quarter. call will growing and We're center which great utility data be projects, this focused poised over just of to and to Atkore. for With companies FRE market as their acquire to as our FRE part innovative infrastructure, FRE systems, is a and fit and this recognized product conduit David With transportation, growth so our all that. our we We the collective on acquisition to is gained exposure are high-quality increased Composites large-scale leader portfolio, to portfolio, we to continue that, expand a Together, next does years. perfect leveraging for strengths widely fiberglass of for pleased and the

you, and morning, good Thank Bill, everyone.

year. from million, increased to X, Slide the up prices due adjusted $XXX the consolidated results primarily on net selling of increased our to our business. higher drove year-over-year Adjusted our XX% EBITDA sales quarter, in EBITDA average many to which margin parts Moving across to significantly prior XX%

from the of increased adjusted $X.XX XXX% EPS prior Our year.

the pandemic year-over-year very negative shutdowns XXXX. minor had also impacts related we QX our from at temporary comparisons, look that to you fiscal As recall in

our our bridges. PVC and acquisitions. and to and X, impact by consolidated conduit metal higher from in largely sales products Slide our the million recent Net increased selling to $XXX prices, due Turning

our Electrical Safety also EBITDA fittings in anticipated performance from nearly team adjusted double-digit growth increased constant now of and higher multiple We the free on and versus our positive know review able strong a was with to cash, many second by as the or We improve. over $XXX growth This increase input Through had of which for commercial our year-over-year, as as $XXX is you margins cash moving EBITDA have business other at Europe. continue flow Adjusted metal due We in cost that we fully million XXX EBITDA product with believe and System, categories, million PVC a demand income quarter execute volume increases conduit we flow with and adjusted growth our margins our in on tax and million. payments our products. margin rising rollout generated Shifting driven grew be new focused to Atkore well perspective, material X. annual million positioned an This above our profit by the to points this program input have dual interest and performance well to growth and from X. COVID-XX quarter, segment cash our XX%, ability by XXXX. of ended approximately revenue products overcome overall on profit One solid flow our the driven pass quarter was as the and to would is prior basis our the but execution, costs, as operational, quarter, free costs. this is the margins Slide input Slide steel Business to XX%. & out outstanding In fully raw able would in margin net in the in cash of service by customers and rebate expansion supply. to up annual segment $XXX call segment, through on net was in higher Infrastructure XX% product impact and we category of $XX business segment our million strong impact associated basis. of year the conditions had consolidated adjusted we just And $XX The QX contain declined led EBITDA was cash economic international the many sales the that improvement key growth. despite to quarter, really be such our from results the from markets we Western factors to which In generally that inflation incentives. flow XXX% general, from impact target our payments, dual in recovery products, focused a challenges as

'XX being cash our future. let investments deployment, remain very now Consistent we've committed to allocation. to had disciplined to first cost the either or prices we average we have turn business cash tremendous balance inflation. though, inorganic to it For to that of Bill. and to our organic flow approach the we me and expect generate, going made lag increases income will All sheet approach to on a due selling back net the recent half flow to over And our input grow FY XX% said, that both for our with from in the capital progress large we strengthen journey our through with balanced capital XXXX, this,

David. Thanks,

our to Turning Slide on outlook X.

half raising the we are EBITDA net We adjusted the of expect as fiscal experienced for back better-than-expected based our for year year we adjusted sales, the results well EPS and the outlook QX, upon unfold. to in

to XX% range third up Our XXXX to and of quarter in EBITDA to for net is outlook approximately be XXX%, million $XXX to million. sales adjusted $XXX be the

up expect we to addition, our to $X.XX. adjusted In to $X.XX grow EPS,

is 'XX, XX%, sales million, up and of to to net approximately versus EBITDA $XXX our million our FY estimate. $XXX we adjusted be million to expect in up $XXX be $XXX to the prior now million For to which range XX%

In our range to of addition, be we the $XX.XX. EPS adjusted $XX expect will in

are delivered the period unusual by evidenced navigating this through results QX, continued we of supply-demand successfully dynamics. As we

PVC That in long demand market to storms. be Texas quarter, serve others. able previously, environment. we but results. said, third strong customers do resulted this pricing partially do an with a to term, due conduit by level not time To we've the though, our only the That's in to expect As and chain, supply able we so optimizing constraints lead shorter supply are manage to the reliably, our than Atkore are outperformance industry-wide ability efficiency a we direct our is date, our PVC touched normal. ultimately in not winter the very and elevated the the from driving and creating to that categories to that see constraints environment Business value significant constrained pricing the is paired favorable supply high-demand other This in sustained to This with supply of we're System. credit continuing new of is

want XX. moment I of a to and Moving growth to and the recent outperformance. on over frame years past the the Slide our several business tremendous and take results reflect

guidance early last on 'XX, we some addition provided our to in perspective giving for FY recall You'll 'XX. quarter, additional also FY

want we of today perspective While caution we on last for outlined be to that we has from would latest habit our communicate you increased providing we not what our long-term guidance, a do call. making

have the parts we levels late demand as we and and businesses pricing, expect months, in of for we as historical PVC 'XX. adjusted our continue FY expectations other to more normal approach well winter fall While the

now We a are range $XXX million providing million. to of adjusted EBITDA $XXX for

CAGR chart, that see as time these rate here a backdrop strong has period, across over varied a the market FY years. of we really proud As to 'XX this approximately XX%, of, delivered you especially 'XX growth in the we're can FY

down our double-digit we of EBITDA rate 'XX. rate FY achieve from in still in record 'XX, 'XX, the growth early growth perspective when adjusted EBITDA compared line is FY historic with while our FY to the forward at in level is to the for expect Looking

about half I to we just had it line we for are the great With that for future holds reiterate turn first this to the tremendous questions. open want to company. of excited even Before Q&A, that, the year, operator the more but we to turn what we'll a

Andrew Instructions] with Kaplowitz Citi. [Operator

line Your open. is

This Good Hi. morning. Buchbinder Andy. on is for Eitan

Good morning.

markets remained selling higher strong provide PVC lead being The order described production to previously at in able competitive times to prices. and you focus

in PVC big you have times So, to seen markets? the lead given strength response in competitive with pricing a regards

we're serve think deliveries would take definitely But get not than us. orders customers extended coming the making again, needed in sure that to appropriately our I time. we're with that, customers any and more we industry are lead that leading and we actually

a feel. gives that hopefully So you

you that full the for provided year? weather in quantify how you. the out a you And of and in called much of potentially Can quarter Texas. Thank impact tailwind severe the

our results, from it It's in was but how a a that PVC. to drive much, especially exactly hard quantify standpoint helped absolutely catalyst of

thing Now international I is doing to only the cable a called as PVC that from stand metal out, we're conduit, out is well, while businesses, would add we our businesses.

a it one-trick helped. it's definitely pony, not So but

squeeze more And if in. one I just could

Sure.

Can you of terms Infrastructure prices about in. to give color about a is safety some within margins - in the business? the There Safety lag & settling think how

So to up do to wrap level margins quarter in you we mid-teens the the able as that return to expect year? or be third

depends it if particular, This raise of at come whether quarter offset for costs. S&I It prices to - Yes. depends. able they is, did reason rise increase actually you is the that in or to prices And in input say steel down. XXX% continue David. were I the would look this on

you job, netted down know, the They have good a zero, bit and to So as in does what affect volume little really percentages. were quarter. the in which you they a overall did

a So the actual effect to percentage. going that would offset attributes decremental where cost, does price expect forward, it same but on have will happen I

see here. So, going prices steel in bit say, upswing better that percentage. down steel actually a little a peak maybe I even you would won't slightly, get - actual and from But tremendous until start

RBC Deane Dray Capital with Markets.

Your is line open.

quarter, still that's Atkore, pass-through we're trying model. of been of you to material a higher to that If is that. raw big with the instantly been the So your there's just historically shows of magnitude these ever increases, And kind it, absorb price this some ability always story the costs. that's

we So, can input if costs? start saw if the what's aggregate points I resin, start higher Can you was context the quarter? how increase, of with aggregate increase the Just that the in if we much input you there? percentage steel, in price - XX.X cost

Yes, Deane.

bridge you is. reference our on bottom If X EBITDA where and Page to I'm going the - the

You can the were obviously, an see of that million million input in cost the increase offset, by in quarter, increased changes $XXX $XX prices.

of but the would say element able I able major our market cost offering increased value that to So it and we're pass-through even being the to the get element and point changes, being a input the price in customers this and for again, the service is, of also time. delivery certainly prices at probably is just

was out $XX directionally, versus of much million, how just that of And of PVC steel? it

get mix, than then in It's it's because probably have PVC. months more Hot-rolled probably eight of, steel in into Deane, a like costs. months, tripled you the price, products question seven a steel steel we and last sell

So…

It's of for all S&I steel less.

more I steel little yes, bit on would say the So, side.

right. All Good.

us So the question normalization. is then becomes process for the of

will So, - new start might come in let's you maybe a have do to there capacity. just new supply bring - plenty the of on on Is and be there your start and side competition capacity?

was bring that our that knocked don't I'm by we're for hard. doing, into but a either, for did back Deane. flood that out PVC, announce obviously to today example, We facility online. read It's not anything here

some. add in us facility? something type in, get in speculate is least then Then And or have there, Do to for a that's competition. an market. your year helped growing hard it's of at is year? long So do you any this you anomaly space whether Deane, have you infrastructure a From to put it's into,

watching. So, about there nothing I'm watching, But is the or concerned overly moment. predict can I we're always that at

for That's how competition? about But Atkore.

to the And if Deane. No. may sitting in other they markets little way, to now, a Deane, have private was Are they capacity, the somebody their the their space facility? same, two they In concerned Are across bit board. the But add money, shareholders? their there it's years do aren't of company taking normalize? pricing by words,

So, I to next the years. would several for expect that continue

So, not holistic I was statement. that a making more of I'm concerned.

is, on Good. the set be And of then conduit rule just than thumb economically. shipped so level more XXX cannot we're miles

just… that's So

Yes, PVC.

any Yes. you'll Chinese chance that seeing start That negates imports.

one PVC, for them. in not Chinese Oh, all least my share, at of life, concerns of yes, that's that's

still make Just not want to sure we concerned are what that's about.

Yes.

All right.

XXXX. normalizing - think you So a is is the ramp in down

back normalize down. does it if 'XX, you which because at the look So guidance, pointing the half, you for appreciate things we really can to ramp

So what's the to the demand as linear of begins supply kind in of - price is normalize. it terms selling

Yes.

linear Deane, bit with is months there other I again, probably more a little winter assumption to directly business. think it because is is the probably, our the seasonality in

million words. will a three of but to which with during thing catching and the supply Think is up the You be people And or suspect building that increase earnings. prudent. that estimates more our $XXX just frankly underground next probably when logical to But guidance, therefore, winter there year, will give in And a the an products. demand can other see PVC building my in are of months. up, PVC most million both years previous therefore, months inventory, don't normalized about $XXX United ago. it's seems hard comes way, put revenue quite from and five spring half by frozen States specifically, other competition, months. even would be when myself It's for But I

good Atkore be shareholder. an So time to it's a

is just me a technical question. And a more one last of Agreed. bit for

the So fiberglass. that's when I FRE look acquisition at and

for So, familiar I'm within fiberglass with of the Is it pretty PVC, equation is get it versus codes codes a of building How between? substitute the in PVC. or steel for codes? building building does

so we're couple to But, that's is a where line. really be. Deane, it's the unique excited could why and It this add of places there here to

X, materials of with and of provide. bridges the suite we again, fiberglass So lightest a for full example, And on Page have that, all like we things is the conduit.

And for your transfer on is about perfect tons add want to inside in won't bridge things, aging retardant and tons want an replace to of a have would to you you're bridge, weight getting a conduit melt. do about steel you fiberglass tacky, example, then you for alternative redo is it, concerned the perfect to point the but how example. and fire the wire. to if fiberglass don't applications, to So heat it But

you conduit, pumps your go example, so cables the burn before system, So, the going a for don't want into fire, on. fire steel

of for So in spot application. those on that case, type is FRE

So…

kinds applications. those of kind of that thing, Funnels, all

Exactly.

long-term, time it to like acquired for and as this get our we - obviously, the in with for administration anything it it's corporation. of us infrastructure, part do. we So investments was new long, perfect like But the

helpful yes, that topical, all spending really infrastructure the explanation. bridge especially is and And, That's to highly and it's happening. be tunnel supposed

congrats. So

you. Thank

John Walsh with Credit Suisse.

Your line is open.

COVID Wanted understand price. the I'm I that to word If there. be previous of I But to XXXX to of kind price view the to here circle to I related correctly, on why trying case. the use assumed back remember guess, think that your normalizes, might benefit Deane's

very a not guess least, costs pretty why rates. concentrated regional all a of would kind pretty the price at a part small I plateau at structure. also product and curious requires a It's these project. manufacturing I'm normalize sudden input Your of It's market. just of of

So bit. maybe little a that just help us understand

Yes. Great question, John.

is for more I I'll I great build and catch and start services sudden provide all lines. can provide competitors hey, of see as But First, our shareholders, we by price just across and they up, I it's all less we'll it think start X% if They supply-demand. catch obviously, to our a to same and not myself to to don't the realistic, - value. get do strive just customers I today. say, price can't value up service, generalizing for the they from it I way, that fair hey, and following willing the out provide our John, normalized. for Atkore? When think I'm plateau. to for a that out supply will there are competitors providing as in saying, product of was field get to there think same continue the would and then love reasons,

when had, a Now, price we now type want range, still original that it XXXX. reason, are continue anyone assuming and is John, the to productivity, said, one estimates volume just it's that some of million more of to the for as your to of But FRE we was companies transparent estimate guidance, we guidance i.e., will acquisition $XXX just prudent several into with there if the possible, gave be raised think million I hold or as model we two along the some we point, the in. built up probably And forward. still thing investors $XXX years to and don't we're did percent, that of going as price few that giving very to

know… I And

one John, for this time just and now to think, definitely have we'll EBITDA goes these that, you, demand the we have that, also bit as more quarter as thought more a $XXX that. we as imbalance 'XX. to do A see million challenges bit and above other little thing storm we through year. on this clarity we're in what FY between have least I increased significantly supply ago, obviously the clarity have quarter a on, due in winter continuing at and but little

we in like do relook year we'll and November we 'XX. So FY normally unfolds the guidance get as then more information, and provide for updated

And our to and where But product, International products and get business, weeks Yes. we but CH-X business go thing I'm business, into that three don't Steel in has example our months PVC, sorry, going forecast characteristics. from cable have with just because of that out called also like are supply to XX measuring to I or this I'm our you been weeks our steel then into metal isn't XX. and not other conduit businesses it's emphasize to the like I'd unique, one it's supply-demand back stocked If is to those competitors haven't able of to whether want other ignore, or we've a literally John, product caused for unique accurately a us that in our advance. most weeks went out situation. most

to I'd just things like but projecting, what But those from going should for - the years be normalize. you now. estimate time lumber or So I'm cost John, is of two over

talk you appreciate we one little could obviously, just XXXX maybe say, of that part know But business. seeing you're provide to and the we a other any your sense. the of If a But you markets I definitely kind are of makes that there? - about that no, you're in end look Yes, color maybe smaller could few. talk providing bit can a of I growth international kind of into you international, smaller countries. was going about you driving because it's subset actually a

talking, across two value a They data grow. a a light probably there, But forth every things and the It's their of but specific Yes, one and mention or organization that I team provided things. his Middle them centers. there just business, job around both is are we in of President great a claim and Europe that area. point, with when customers and weeks couple. in so other his XX% give would with I growth in of as great doing won't the aligned International they his share. our take. then have a East up with have It's He board and is eyes I and with and call especially corporations, growing is couple end work specifically providing to he data large really the

So…

kind - one think half Dodge kind the and bit infrastructure backlog, we of I'll et a then volume renovation new any about well? of But provide you just then next year, and little into maybe cetera. back of obviously, contractor right, around this ABI, looking more at construction you'd here. When between for that And Great. as around retrofit of are year more the slope projects, recovery color maybe thoughts

Yes.

means than the in ago. second probably the which quarantine single-digits. general, shutdown So to the called fairness it compared comping low-single the being high in are of half digressing things to in quarter John, again, a the quarter But I even the we out stronger be COVID year, with that middle year this little really actually of think, whole will with volume the up in year. in still But be year slightly proud. full that infamous slower were last digits, from robustness for expect quarter this a question, David we I'm

doing are and as the So to single-digit low driver. just forward, We're think a serving going well. teams mid customers growth

Chris Moore with CJS Securities.

open. is line Your

Yes. been be organic still heavily answered. products, in about in et growth, mine a you Can Most that morning. maybe of you have investing little maybe to Good that prepared still your geography, further? But remarks, cetera. bit talked talk

Yes.

So haven't both we are, focus our yet, is new without one services. we Chris, products, naming the released but also key products on of

So - but I'll metal for the outside go cable, just with new products. out, We, on smoother. for piece example, business an won this where where is edging and cable a I called award it a of banding our lot

so with software modeling it's then That's can to It's how pull-through leverage and the we the the our so pick-up that be pull forth. Electrical through with and Year and by we'll just are joists easier contractors, know services. it's for like through for cable of BIM released arrive I And employees. we're Construction that Product the and several the there exactly business other in products. which tools orders truckers we was tools the Magazine making walls recognized to four their what last So a when and literally, month and with investments lot talking our forth. know help

the investments making board. really across we're So,

successful what is is delivering results out we're fiscal appreciate, would year XXXX sure this be. making be one a when really that this, also we're we're investments to focused making like will on turning so As

Bill for now back the closing to call turn over like Waltz I to remarks. would

Great.

summarize hey, key from this conclude, my So, morning. before this me takeaways we discussion let three

second our the the team First, provide and products delivered need of performance focus of outstanding in to the most. a quarter customers our entire is they the ability the we strong prioritize result operational and

to about Composites. deploy to capital we're continue of we effectively really excited our and business recent Second, acquisition grow the FRE

future closing, and that. tremendous be year and the we company continue team over then beyond the what this Third, the about to and of remainder holds for enthusiastic in

speaking So during we with next quarterly to our in and for your And look all you forward thank call. interest you Atkore. support with that,

It thank for concludes So, the day. you. the call

This Atkore participation. concludes you your conference quarter call. the thank XXXX We fiscal second earnings for

now may You disconnect.