Atkore (ATKR) 31 Jan 222022 Q1 Earnings call transcript

Good morning. My name is Rene and I will be your conference operator today. At this time, I would like to welcome everyone to Atkore’s First Quarter Fiscal Year 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. Thank you. to Vice conference Investor President like host, to Relations. now Deitzer, John of would turn over the your I Treasury and Thank you.

You begin. may

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

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

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

am Slide profitability and good record the John Thanks, continued and outstanding first macroeconomic performance entire chain quarter. environment, quarter. sales again challenges results and I morning report increased we and in value Despite the Starting on that Atkore the delivered across in X, pleased everyone. to

our performing we are well Our businesses capital continue plans to and deployment. execute for

During in we the returned repurchases. million the Canada quarter, $XXX about share in we a one completed and moment two shareholders that and speak U.S. acquisitions, one in I will to via

‘XX. we results QX, and expectations and are performance EPS adjusted outstanding in adjusted increasing the fiscal also EBITDA Given for in our

with of to outstanding from our $XXX increasing FY is performance. million. million as profitability to X, adjusted line other in strong fiscal the range ‘XX Turning up in our puts levels in of expect EBITDA we expectations This are products PVC-related we continue for $XXX expectations This previous now XXXX. Slide to $XXX to our business million our us to a remain and parts

$XXX million at in now position, Given planning stock we cash to year. are our this least repurchase robust

committed welcome spend are are each share over to discuss like for I’d well-regarded This M&A. I’d capital companies of Tubes like December, prudently have that, customers. to strong to on been the having complements U.S. in Roll to plan very of to most Sasco repurchases another the years. Atkore. our least to Four deliver XX HDPE acquisitions. we Forming the in billion serve In Slide the you us help from employees existing become conduit brand Canada. operation product space. a our excited broader in to at part in & years using over acquisition a turn and and value better and will to both portfolio expenditures, recent our X industry, capabilities in With and Atkore’s provide for several Both Four the acquisitions solutions company performing customers enables Sasco of We $X and capital and in is Industries Star Star increases us South our range shareholders acquired and to Canada we capabilities two is our and increase and of these our our Carolina. Industries next

is years are excited the are broadband year beyond. Internet At are portfolio And come and this grow to of what’s Four expanding Star a Atkore, performance, and the even we about over HDPE choice on We this often data recent our protect recent expect rest platform category about great focus with our to are forward. market. looking as in while believe product we for to with constantly adding and Atkore we very to provide next we we will brand power the more legislation excited to of and and the pleased very grow infrastructure cables several access. this conduit the

As some and sustainably call. in update our I look give will that future, activities we a on to brief today’s growing end we of of to committed area are the at the

takes for from all our and As to do the I whole we the and I call and everything are the dedication to discuss the thankful our work the customers. success hard entire for to turn team grateful support will David With mentioned that, before, they organization over quarter.

and Thank morning good everyone. you, Bill

million, year-over-year our consolidated EBITDA to our adjusted increased X, year. $XXX XX% the increased on to the to significantly Moving Adjusted both quarter, to sales in margin Slide prior XX% $XXX net EBITDA which million. up versus results drove

EPS $X.XX. adjusted increased Our to

consolidated our to X $XXX primarily acquisitions by and XXXX. completed from contributions million increased prices Turning early and to bridges the net due sales Slide selling higher in

call we prices mentioned and down wide in shortages, to we steel QX industry due November, labor last inventories. availability, in with in and earnings be material delays challenges volatility to volumes our expected As related project to

segments. Our In results million adjusted team XX% segment the Electrical expansion adjusted Shifting by both XXX by EBITDA prior & Safety million grew to the $XXX our over we increased Slide X, EBITDA adjusted segment, from our and by margins by increased points. increased margin and basis sales EBITDA had XX%. between to progress track on Infrastructure adjusted year QX segment now are it million repurchases X share in and EBITDA $XXX EBITDA back $XXX review our We expenditures, With Slide commitments. I plan our And in Bill to next over on to billion will over to and X update X. our on quick years. deployment turn meet a capital the that, in on cash deploy net we M&A $X to ESG and capital deployed

David. Thanks,

the we to areas, details we focus and sustainable creation. around to report, read our efforts help guide our you and that and health which our efforts chain targets enable XXXX morning, second equity sustainability diversity our XX, inclusion. sets four value which external safety supply I our including invite will This believe Slide for issued safety, and Atkore. is of sustainability central and sustainability longevity report, to we strength, believe Turning that

these we organizations. Atkore’s with and products made We macro trends ESG years from in that that alternative these turn are to we in demonstrate able around to reality company very come. turn for will for past all independent leading operator we several received the of the years we into With terms recently line appreciate market are electrification the are and external our progress the over the in trends firmly have who have recognitions several to open line and we that, with questions. energy culture employees we and recognition external the pleased the believe the it to of stakeholders

question line Your the Thank first of from Citigroup. Instructions] you. comes from [Operator Andy Kaplowitz

open. is line Your

Hey, good morning guys.

Good Andy. morning,

Andy. morning, Good

but million $XXX suggesting slowdown from you still so the just that guidance significant another you obviously, raise, are or So reported.

cost $XXX ‘XX there businesses you beyond? across does is potential the So are anything possibility higher to you you basis $XXX normalize as normalizing and EBITDA tell a million your ability yet that could this than suggests your you what about the and talked is million year’s price seeing about versus in that that normal

Yes.

will starting backlogs through So million $XXX is sequentially. the there, to things Andy, this is In are estimate with happen the million $XXX million two our down. competitor at time to walk I try best to $XXX

they to X days to are Now be and X weeks, if weeks. used down XX went to X, they they

the and discounting. and up relatively you’re see are little bit to starting pricing a therefore, high they still So more

potentially. million would use to $XXX a forecast like too that’s to they there what the our know billion driving number. beyond is is there be – but that there continue us If to to So that’s that – ifs early path in a $X giving are, million. that’s I team what’s couple way $XXX things

stage, this around As to million for more we QX stay XXXX talk stage. next we’re year, the at about and this going $XXX will at with probably

But QX, in seeing And volumes and us supply anything terms of you what know your to your give you could terms I forward? volume going into the these expected give more Bill, very you color color said and underlying more could segments, is helpful. organic volume labor. you volume into in interrupting read then on segments about and in us markets? of disruptions how Omicron little in you’re there to were a how chain headwind

Yes.

we architects, parks. going Dodge Dodge Index, Andy, this up except to be almost low am press forecasted indicator is of positive, sector that’s every single I not forward. digits AII, for recreational So find an to Momentum architectural the index, think still Almost, hard billing

So through and there. walk as to It’s be should be was obviously seems just we surprise. it tough the first no quarter

side For opportunities that trying of of are and there slower that the are a to electrical and S&I, low do volume little January, side. us, people electrical so kind in the I forth back you see growth, for don’t where bit we purchases are forecasting to – into time that business through mid think mid And and in that’s large solar our so see and OEM still like things the like to can single-digit that in trying you come steel in so single-digits. we

So questions. that’s hopefully answered all your

It issues business And of what’s any for renewable ‘XX? did. side sort that or in the outlook on the incremental

I don’t know ‘XX. for specifically

emissions. electrification, We’re definitely way to optimistic lower the future, drive everything in from general, the just for investing for carbon

think, in where It’s For self-evident world the me, pretty go. I organization. is our to going

seen. year, how to if investing or XXXX be we’re much ‘XX still So versus that’s every is

Very much appreciated.

Andy. Thanks,

Your next RBC question Dray comes Deane Capital Markets. from from

everyone. morning, Good you. Thank

Hi, Deane.

Deane. morning, Good

being you you in ‘XX was that quarter could the similar if quarter the a first the strong, see books, and outlook the imagine... does however, first strength given holistically quarter. had fiscal are fiscal Then at ‘XX. at Bill, we to price first there? I framework got with Is – decline growth would for, goes, it it your in or now change strength looking you you’ve volume all the see

as Again, or No, and its $XXX either the record QX a in. up a Parse can and volume, history. think at Deane, on. strong followed explained in It’s down highest quarter Sorry, is obviously, David Andy jump million. we I

amazing repeat going I Andy’s talk but we’re we’re earnings $X that. you sure – sit with a things And here pathway but would is those question, last pretty to and way QX And there QX, us an going just to and too would billion. already love soon, year. nothing love year more. more to We for So about was say nothing to forward,

So progresses. as see will year the we

on we’re to set a record possibly So record.

in come thoughts And this on there? before the topics Any about – process. you the how hold up normalization been the has of margin to would much

is a difficult. you it’s a back a No. day pricing to binary year well, guess, up – that What would we number what it’s in Other happen sudden and go was precise say and I like precise all wake not than it think effect to is X XXXX. is goes yes, that

$X question $XXX get we now over to a mean, if but explained deployment has David headwind, scenes, X-year the the continuing $XXX in like $XXX may productivity above I if billion, that’s not we I we all be in that’s to then and that to confidence are XXXX, we not a M&A, what headwinds, you love quarters, of know upward trail a internally, million. price That that there whether put may, question, out it’s business X-year price of over. while or never in be, next that the think previous behind where makes maybe a don’t line a gives as may million. imagine when million. that Atkore faced could trail, of time, but marker we that’s Andy’s the one if sense. system But an almost us when that X-year I for date takes that get So to fashion XXXX. And trail, the And organic, investments be crank us that the year,

there of the quarter was. matter chain, of be lot to up rest indicators fiscal point strong And able decline out I you indicator a pretty It’s volume would I also the for expect that had business pick when thing getting our that one where execute how volumes all Deane, of over we out, there. think with too, a say of And to were able it’s we we to volume folks to nice it, indicated at look that that I’d quarter, hold to it pricing of the are projects, the supply but year. we a a is other the is were, and

prices helpful the cost all increases. of decline volume able all labor, steel described that’s really material terms so raw That’s in consistently through unique went to .As pass the factors forth, raw being sector-wide, you the material but that in project into volatility and delays, you’re

funnel this and look So Sasco has us. And like? Tubes deals question me HDPE? Is growth more the it a look with the expansion What’s in you’re capacity for take couple M&A ship? just a part we’ve and XXX is nice last then terms that’s product So map algorithm. through like more of – do Four Star. Is news up all your miles industry And growth times, with the where the couple – a good of And there for and of come seen tuck-in of that kind expansion? in you heat to you able this being is do at than M&A. funnel? Do are us like how of

Yes.

it’s almost The or funnel as than the above. simple been been. all it’s Deane, healthy of So healthier a answer, ever has

Some well we’ve XXX being A to so of as general not a those we quarter to up focus do the and not, our But team, executives of large bad the if size billion where of of and that pipeline on managers we on. again, is, A., think the touched deals every that, alternative. contacting large price forth, stock and spend in number of the explained, we’ve desire and deals evaluated. that’s a and on so want our over $X M& doubled followed the percentage

it’s there, like because Sasco, company. a you’ve from just seen this great it’s which So in ones you really quarter, saw are as actionable

sales Atkore bring increase think system and us our our to Canada. business in I can we helps

all category that synergies the of on all cable putting grid that focus lines there focus product to bill. just to a the about think into infrastructure and it’s up. the on And all invest underground, that different getting digital, HDPE additional go come lots all electrical there. opportunity requires and and then XG hardening M&A the So another we in this is you But organically will new

us is one customers. the delivery, like we growing have dynamically can bring of and our to we So just into invoice the this day for internally we more $X only long. we that partner them value billion one and about to one to like again, here on market do This can We bigger get perfect do we is this – a that’s things we’re with all think focused thing to deploy. bring need and can order, then because,

the businesses would One on we while, thing we well. internationally, say several of running add, and sure acquisitions a really have I integration were making kind that Deane, had we process is Those did are for waiting we done.

We’re growing single high of digits internationally. kind

for already the So our us. in areas in some the that and of other Europe opportunities was other footprint opportunities

Thank Great to you. hear.

Thanks, Deane.

Deane. Thanks,

CJS from next Your comes Securities. question Chris from Moore

line Your is open.

taking a of Hi, good morning questions. guys. Thanks for couple

like So, was bit – safety on you it of are and further up electrical, your XXX, or pricing you steel the XXX infrastructure. XXX S&I what’s…? looks It just kind XXX. break Can little just down all there side, a the

mainly, mainly S&I, at that Chris, look is business the when input you steel. Yes. to

significantly. year-over-year, slightly has down it’s up done you look when steel see it’s still now, now and when but So, what come at it crested you

So, that’s the business and go opportunity that through. to push

the quarter, at appropriately in conditions. for market And have so the price job S&I of they XX% continuing is when a look you up done really good EBITDA to adjusted

supply on Got QX, you something quite decline so of just – am supply it to trying just side, was but price it. demand volume down million, And is of or obviously and I like volume to just was that, understand, that issue more hold on breaking the able more maybe down $XX the it are side? one well. it volume kind between more a

customers had are to a our have but little winging can’t people just get you you percent. have labor to as am in up, Starbucks, we when then in they but get component and was have we backed sites tough. with even didn’t are best and a cold products waiting a COVID, trucking now, did all I other the – some challenge is it’s there. – if gone what a think our work employees the I job out just mean some because like it who on COVID, people ports there, that family unfortunately, a out we in job. just do – can extra the somebody and Chris, to was general, other port which it’s more would backed trying logistics their estimate, week X% up. I they And I of out There just shift that, or X% number are have add good don’t do or freight then every bit, LA manufacturer there jobs stock goes But right here

this I the So the the to again, sales out agents the am the and for comments actually there, to road I demands of But am up When see again the opening week, rest there digits as customers mid-single years. the now up, is feel line to therefore, questions, we go we everybody demand. evening feels high-single hitting percent is couple down every to the for just again, to trying right all. low lines everything go positive indicator think that growing from of it next get I because actually and

one Last Perfect. me. for

cash free the just are $XX how inventory $XX Free of on in was or up, now Obviously, where income, was million. in that was you looking the ability half flow. cash $XXX it? net receivables you of from year catch kind match GAAP the up of net so sit income at million, million, up of kind flow are Just to second terms

Chris. Yes,

on inventory. caught a side, on chains things up. steel Certainly, the get couple have of supply the started So, to

So, starting than a probably we higher the we bit are get raw to little typically hold. would we and material have

one that was So, element.

really ups probably this The not we but other reduction time time. volume knew enough did element to high adjust have in is that about, we the

payments great cash And reason inventories. the you we tax will that. is have of But our the earnings given even that tax couple growth and the side. are flow out. we we successes there is accruals all quarter net, this in for also had a why that some a like that’s then us. pretty rebate be payments, in saw for other So, which have never pay out And on typically large annual programs QX year paid we

and expect this we a by half, will strong little large, build. we first a bit just of year. of second working the the So very But half have capital

Got it. it appreciate I guys.

Thanks Chris.

Thanks Chris.

Your from Credit John next Walsh comes from Suisse. question

open. line Your is

Hi. everyone. morning Good

Good morning.

something acquisitions, question very spike that of the your just changing Obviously, kind out to performance. something of strong is part price in first you it’s but that, if business, market, wanted PVC just disclosures, in obviously, Maybe is around for of either understand etcetera, guys the if what kind years couple the on new forward? PVC larger uses versus and couple years that’s of versus last next there business you maybe are seeing kind structurally just of of going a forward

think no real HDPE. I like always is is it’s there entrants. new – There

use But that. it’s in – HDPE FRE, do get homes They city, increased their be the going development PVC, PVC versus can have they have of highway the use the going Somebody like a I is really like all own be could their niches. own going HDPE and PVC. to and to and into they is same to along be with fiberglass, really

that sub-developments that area so digital, I the as of back the couple and see kind that just years it’s buying Chris, millennials that growing. data, now switching, to whether is were or One is over don’t slow growth is are forth, market So, excuse residential and homes, the much. homes of nonresidential me, last

be stretching cast iron, the within Maybe, steel people and but using are and water, of used not be PVC forth. am think and lot poised I more here so piping than to strong, markets what forth. a I back to but

from So, more opportunity. status bit XX% a quo little But users.

seen all significant think uses power point lines to I of some bearings, and Bill’s pretty increase, And utilities, the like have do that. a really that

and the been we there what far the as significantly of investments higher some as have So out investments, and are in these past. California seen that than have things

Yes.

more just a In California like But lot one spinning yes, echo every So, I to a David, markets conduit. PVC from electrical product underground, substitution. the that’s spoke growing. of is are line

steady Obviously, maybe I you target, invested can front, there has perspective, more the diet. ones metrics from can. etcetera? a just One, kind of Great. the on And financial capital M&A return a been two whether if then quick you here us remind it’s just on

You a have very maintained cap?

Yes.

through as capital. at basis amount really with modeling, going So, all of points without we look our and above do the cost returns as quickly of of but a the standalone look synergies. it We

range, So, we XXX plus flow on of basis. looking of this type are cash John, XXX, kind

obviously, Are in think of color then about years? levels? some performance. up you lot strong talking incredibly a have about moving kind you where And next of it. about doing been be markets on strong outgrowth Just terms So, EBITDA guys Great. around adjacent investments? maybe you sustainability as to able we see reinvestment into of will just thinking of this Are you what last have of question you a talk But you one, can there? any taking over the couple are you

we do of here, previous years, the deck, realize question, Yes, you CapEx this how and XXXX or and while in question year, a million, specifics in rough is get again, give it’s and have advantage we are if year that’s had $XX CapEx. would But $XX not take, maybe been every going has at for this we a the here. are a absolute million, But but number good. million, $XX into that, look literally great answer on yes we And John, last We every like year. it’s facet. situation with unique why take to

Xx are like things to investing, in digital. again, We Xx

digital So, whether across from make customers. anything atkore.com, single moving digits, it’s finishing it’s new our organization, then organically, the development for board from new our it that’s whether in the easier rapidly systems to that’s mid-single digits. the ERP just product with digits apps, a low-single for the out also still that’s to but And whether

we people to that organization drive the over are in products things. years So and lots of adding

we already more across we M&A facets, at can we growth. then in investing mentioned think are to we We are behind how organic it. accelerate capital I how looking and all So, really putting are accelerate the

as we are we or key initiatives pushing do. example, for right literally, always now, three So four

a the in how to leadership even That’s move I there, just opportunities what go, are team going out senior managers things am things to a can month. skunkworks general to challenge other just we have will make We where faster.

unique we are business Atkore So, time. to to I now take system the has great talent the its that this use is And noticed time in us truly is this level. Atkore think culture to next we

for the questions. taking much very Thanks Great.

John. Thanks

John. Thanks

concludes I you. would to session. over question-and-answer the like the Thank turn Bill now closing to This call remarks. back for Waltz

we summarize Before key takeaways today’s let me three from conclude, my discussion.

for QX great the was a First, in strong outlook a to we earnings start have and XXXX. year,

are in we capital our executing QX. Second, deployment model with $XXX deployed million

core and in that, Third, with and ESG and your concludes call. With to the for sustainability today. you and excited very quarterly our are we next lies This call to speaking employees, and area. in look what Atkore are during products, you forward we our customers about this support interest ahead thank for

conference This concludes call. today’s

may You now disconnect.