Atkore International Surpasses Q1 Estimates

HARVEY, Ill. — Atkore International Group Inc. today announced earnings for its fiscal 2019 first quarter ended December 28, 2018.

“I’m pleased to report that Atkore delivered strong First Quarter results in net sales, adjusted EBITDA and earnings per share. Our continued focus on executing upon strategic initiatives has driven profitable growth and an improved customer experience, which enables Atkore to increase its full year guidance for Fiscal Year 2019,” commented Bill Waltz, Atkore President and Chief Executive Officer.

Net sales increased $37.5 million, or 9.0% to $452.0 million for the three months ended December 28, 2018 compared to $414.6 million for the three months ended December 29, 2017. Net sales increased $39.8 million primarily due to increased average market prices for the metal electrical conduit product category and the pass-through impact of higher average input costs of steel, copper, and freight. Additionally, net sales increased $13.0 million due to the acquisitions of Vergokan International NV (“Vergokan”) and Communications Integrators, Inc. (“Cii”) over the past twelve months, partly offset by a decrease in net sales of $4.9 million due to the divestiture of Flexhead in the second quarter of fiscal 2018. The increase in net sales was partially offset by lower volume of $11.0 million primarily in metal conduit and cable wire product categories sold within the Electrical Raceway segment.

Gross profit increased by $13.4 million, or 13.8% to $110.3 million for the three months ended December 28, 2018, as compared to $96.9 million for the prior-year period. Gross margins increased to 24.4% for the three months ended December 28, 2018, as compared to 23.4% for the prior-year period. Gross margins increased primarily due to increased average market prices for the metal electrical conduit product category.

Net income decreased by $0.2 million, or 0.9% to $26.9 million for the three months ended December 28, 2018 compared to $27.2 million for the prior-year period primarily due to higher income tax expense of $5.6 million and higher interest expense of $5.6 million, partially offset by higher operating income of $9.1 million.

Adjusted EBITDA increased by $11.5 million, or 19.7% to $70.0 million for the three months ended December 28, 2018 compared to $58.5 million for the three months ended December 29, 2017. The increase was primarily due to higher operating income of $9.1 million and incremental Adjusted EBITDA of $2.1 million from acquisitions during fiscal 2019 and fiscal 2018, partially offset by the divestiture of Flexhead during the second quarter of fiscal 2018.

Diluted earnings per share on a GAAP basis was $0.54 for the three months ended December 28, 2018, as compared to $0.41 in the prior-year period. Adjusted net income per diluted share increased by $0.18 to $0.74 for the three months ended December 28, 2018, as compared to $0.56 for the prior-year period.

Segment Results

Electrical Raceway

Net sales increased $26.9 million, or 8.5%, to $343.4 million for the three months ended December 28, 2018 compared to $316.5 million for the three months ended December 29, 2017. The increase was primarily due to increased average market prices for the metal electrical conduit and fittings product category and the pass-through impact of higher average input costs of steel, copper and freight of $25.0 million. Additionally, sales increased $13.0 million resulting from acquisitions during fiscal 2019 and fiscal 2018. The increase in sales was partially offset by lower volume of $11.0 million primarily in the metal electrical conduit and cable wire product categories.

Adjusted EBITDA for the three months ended December 28, 2018 increased $12.3 million, or 22.0%, to $68.5 million from $56.2 million for the three months ended December 29, 2017. Adjusted EBITDA margins increased to 19.9% for the three months ended December 28, 2018 compared to 17.7% for the three months ended December 29, 2017. The increase in Adjusted EBITDA was largely due to increased average market prices for the metal electrical conduit product category and incremental Adjusted EBITDA resulting from acquisitions during fiscal 2019 and fiscal 2018. The increase in Adjusted EBITDA was partially offset by lower volume for metal electrical conduit and cable wire product categories.

Mechanical Products & Solutions (“MP&S”)

Net sales increased $10.2 million, or 10.4%, for the three months ended December 28, 2018 to $108.8 million compared to $98.6 million for the three months ended December 29, 2017. The increase was primarily due to $14.8 million of higher average selling prices, partly offset by a decrease in net sales of $4.9 million due to the divestiture of Flexhead in the second quarter of fiscal 2018.

Adjusted EBITDA increased $0.1 million, or 0.7%, to $10.9 million for the three months ended December 28, 2018 compared to $10.8 million for the three months ended December 29, 2017. Adjusted EBITDA margins decreased to 10.0% for the three months ended December 28, 2018 compared to 11.0% for the three months ended December 29, 2017. Adjusted EBITDA increase primarily due to an increase in average selling prices, partially offset by the divestiture of Flexhead in the second quarter of fiscal 2018.

Second Quarter and Full-Year 2019 Guidance

The Company’s expects second quarter 2019 Adjusted EBITDA to be in the range of $69 million – $75 million and Adjusted net income per diluted share to be in the range of $0.70 – $0.80.

The Company is updating its expectation of fiscal year 2019 Adjusted EBITDA to be in the range of $290.0 million – $310.0 million and its expectation of fiscal year 2019 Adjusted net income per diluted share to be in the range of $3.05 – $3.35 .

Reconciliations of the forward-looking full-year 2019 outlook for Adjusted EBITDA and Adjusted net income per diluted share are not being provided as the Company does not currently have sufficient data to accurately estimate the variables and individual adjustments for such reconciliations.

Share Repurchase Program

On February 5, 2019, the Board of Directors approved a share repurchase program, under which the Company may repurchase up to $50 million of its outstanding common stock. The Company will conduct repurchases under the program in the open market and through broker negotiated purchases in compliance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended, and subject to market conditions, applicable legal requirements, and other relevant factors. The share repurchase program will be funded from the company’s available cash balances. This share repurchase program does not obligate the company to acquire any particular amount of common stock, and it may be terminated at any time at the company’s discretion. As of January 30, 2019, the Company had 45,980,471 shares of common stock outstanding.