Atkore Announces 1Q 2020 Results

HARVEY, Ill. — Atkore International Group Inc. (the “Company” or “Atkore”) announced earnings for its fiscal 2020 first quarter ended December 27, 2019.

“I’m pleased to announce Atkore delivered strong first quarter financial results across multiple metrics,” commented Bill Waltz, Atkore President and Chief Executive Officer. “Our focus on executing strategic priorities and taking care of customers has contributed toward solid volume growth, improved operational performance and solid earnings, which has resulted in greater value for our shareholders.”

2020 First Quarter Results

Net sales decreased by $4.6 million, or 1.0%, to $447.4 million for the three months ended December 27, 2019, compared to $452.0 million for the three months ended December 28, 2018. The decrease is primarily attributed to $30.0 million of lower average selling prices resulting from lower commodity input costs of steel and resin. The decrease in net sales was partially offset by higher volume of $14.1 million primarily in the PVC electrical conduit and fittings product category sold within the Electrical Raceway segment, as well as, the mechanical pipe product category sold within the Mechanical Products & Solutions segment. Additionally, the decrease in net sales was partially offset by increased sales of $12.4 million from the acquisition of the assets of United Structural Products, LLC. (“US Tray”) and Rocky Mountain Pipe (“Cor-Tek”) and the acquisition of Flytec Systems Ltd. and its parent holding company, Modern Associates Ltd., in fiscal 2019 (together, the “2019 acquisitions”).

Gross profit increased by $6.6 million, or 6.0%, to $116.8 million for the three months ended December 27, 2019, as compared to $110.3 million for the prior-year period. Gross margin increased to 26.1% for the three months ended December 27, 2019, as compared to 24.4% for the prior-year period. Gross margin increased primarily due to higher volume and operational efficiencies.

Net income increased by $7.8 million, or 29.1%, to $34.8 million for the three months ended December 27, 2019 compared to $26.9 million for the prior-year period primarily due to higher gross profit.

Adjusted EBITDA increased by $7.7 million, or 11.0%, to $77.7 million for the three months ended December 27, 2019 compared to $70.0 million for the three months ended December 28, 2018. The increase was primarily due to higher gross profit.

Diluted earnings per share prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) was $0.71 for the three months ended December 27, 2019, as compared to $0.54 in the prior-year period. Adjusted net income per diluted share increased by $0.20 to $0.94 for the three months ended December 27, 2019, as compared to $0.74 in the prior year period. The increase in diluted earnings per share and adjusted net income per share is primarily attributed to higher gross profit and the excess tax benefit associated with stock compensation.

Segment Results

Electrical Raceway

Net sales decreased by $2.0 million, or 0.6%, to $341.4 million for the three months ended December 27, 2019 compared to $343.4 million for the three months ended December 28, 2018. The decrease is primarily attributed to the pass-through impact of lower average selling prices of $19.1 million resulting from lower commodity input costs of steel and resin. The decrease in net sales was partially offset by the 2019 acquisitions, which contributed $12.4 million in sales for the three months ended December 27, 2019. Additionally, the decrease in net sales was offset by $6.7 million in higher volume, primarily in the PVC electrical conduit and fittings product category.

Adjusted EBITDA for the three months ended December 27, 2019 increased by $1.7 million, or 2.5%, to $70.2 million from $68.5 million for the three months ended December 28, 2018. Adjusted EBITDA margins increased to 20.6% for the three months ended December 27, 2019 compared to 19.9% for the three months ended December 28, 2018. The increase in Adjusted EBITDA was largely due to operational efficiencies, the contributions from the 2019 acquisitions, and incremental profit from higher volume.

Mechanical Products & Solutions (“MP&S”)

Net sales decreased by $2.2 million, or 2.0%, for the three months ended December 27, 2019 to $106.7 million compared to $108.8 million for the three months ended December 28, 2018. The decrease is primarily attributed to the pass-through impact of lower average input costs of steel products of $10.8 million, partially offset by higher volume of $7.3 million primarily in the mechanical pipe product category.

Adjusted EBITDA increased by $5.8 million, or 53.0%, to $16.7 million for the three months ended December 27, 2019 compared to $10.9 million for the three months ended December 28, 2018. Adjusted EBITDA margins increased to 15.6% for the three months ended December 27, 2019 compared to 10.0% for the three months ended December 28, 2018. Adjusted EBITDA increased primarily due to higher volume, pricing strategies and operational efficiencies.

Full-Year 2020 Outlook

The Company is increasing its expectation of fiscal year 2020 Adjusted EBITDA to be in the range of $340.0 million – $350.0 million and its expectation of fiscal year 2020 Adjusted net income per diluted share to be in the range of $3.95 – $4.05.

Reconciliations of the forward-looking full-year 2020 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.