HARVEY, Ill. — Atkore Inc. (the “Company” or “Atkore”) announced earnings for its fiscal 2021 full year and fourth quarter ended September 30, 2021 (“fourth quarter”).
“Atkore delivered outstanding earnings in the fourth quarter and for the full Fiscal Year 2021, driven by our leading position in PVC electrical conduit and solid volume recovery,” remarked Bill Waltz, Atkore President and Chief Executive Officer. “Our MC Glide™ product, which received a U.S. patent in the fourth quarter, continues to be well-received by customers due to its ability to speed up construction times and reduce overall costs – two clear advantages in today’s environment. We remained focused in our execution of the Atkore Business System, which enabled us to generate approximately $573 million in cash from operations this year, strengthen our balance sheet, return $135 million in cash to stockholders via share repurchases and acquire three companies that will enhance and improve our position in the market for years to come.”
Waltz continued, “As we enter fiscal 2022, we continue to invest in our business to drive value with a focus across our three key conduits of growth: advancing new product innovations, such as MC Glide, improving cross-selling opportunities in our focused product categories and strategically engaging our M&A pipeline to strengthen our portfolio. Through these efforts and supported by the megatrends of electrification and digitization, we expect to generate solid cash flow from operating activities, and deploy over $1 billion in cash to drive value creation over the next couple of years. We are increasing our projections for capital expenditures in fiscal 2022 up to approximately $80 to $90 million, and we are pleased to announce a new share repurchase program of $400 million over the next two years. Across Atkore, we are working to create an even stronger business for the future for the benefit of our employees, customers, shareholders and communities.”
The Company reported triple digit percentage year-over-year improvements in net income, adjusted EBITDA, diluted EPS and adjusted EPS for its fourth quarter and full year fiscal 2021.
Net sales for the fourth quarter of 2021 increased to $923.7 million, an increase of 93.5% compared to $477.4 million for the prior-year period, primarily due to higher average selling prices of $391.3 million and higher sales volume of $24.8 million within both the Electrical and Safety & Infrastructure segments. Additionally, entities acquired during fiscal 2021, to include Queen City Plastics and FRE Composites Group, contributed to the increase in net sales by $27.8 million.
Gross profit increased by $210.2 million to $357.3 million for the fourth quarter of 2021, as compared to $147.1 million for the prior-year period. Gross margins increased from 30.8% in the prior year period to 38.7% in the fourth quarter fiscal 2021 due to higher average selling prices of $391.3 million, partially offset by higher input costs of steel, copper and PVC resin of $183.5 million.
Selling, general and administrative expenses increased $28.0 million or 51.1%, to $82.8 million for the fourth quarter of 2021, as compared to $54.8 million for the prior-year period. The increase was primarily driven by commissions of $9.7 million, variable compensation of $8.4 million, increased general spending on business improvement initiatives of $8.7 million, and the acquisition of Queen City Plastics and FRE Composites Group of $2.4 million partially offset by a gain on sale of assets of $3.8 million.
Net income increased $148.3 million to $202.6 million for the fourth quarter of 2021, as compared to $54.2 million for the prior-year period, due to higher operating income of $181.7 million. Adjusted net income increased $148.5 million to $205.1 million compared to $56.5 million for the prior-year period.
Adjusted EBITDA increased $194.7 million, or 198.3%, to $292.9 million for the fourth quarter of 2021, as compared to $98.2 million for the prior-year period. Net income margin increased from 11.4% in the prior-year period to 21.9% and Adjusted EBITDA Margin increased 1,110 basis points from 20.6% to 31.7%.
Net income per diluted share was $4.26 for the fourth quarter of 2021, an increase of $3.15 from the prior-year period. Adjusted net income per diluted share was $4.39 per share for the fourth quarter of 2021 compared to $1.18 for the prior-year period.
Segment Results
Electrical
Electrical net sales increased $346.9 million, or 98.9%, to $697.5 million for the fourth quarter of 2021, as compared to $350.6 million for the prior-year period. The increase in net sales is primarily attributed to increased average selling prices of $304.1 million which were mostly driven by the plastic pipe and conduit category, the metal electrical conduit and fittings product categories and increased net sales of $27.6 million from the acquisitions of Queen City Plastics and FRE Composites Group. Pricing for PVC products, as well as other parts of the business, are expected to return to more normal historical levels over time, but that time is uncertain. Additionally, sales volume increased $11.3 million driven by increased volumes across all product categories.
Adjusted EBITDA increased $192.0 million, or 208.9%, to $283.9 million for the fourth quarter of 2021, as compared to $91.9 million for the prior-year period, and Adjusted EBITDA Margin increased from 26.2% to 40.7%. The increase in Adjusted EBITDA and Adjusted EBITDA margins was largely due to higher average selling prices in relation to changes in input costs, operational efficiencies and contributions from the acquisitions of Queen City Plastics and FRE Composites Group.
Safety & Infrastructure
Safety & Infrastructure net sales increased $99.9 million, or 78.3%, to $227.4 million for the fourth quarter of 2021, as compared to $127.5 million for the prior-year period. The increase is attributed to increased average selling prices of $87.1 million driven by higher input costs of steel, and by higher volumes of $13.5 million primarily driven by increases across all product categories.
Adjusted EBITDA increased $12.0 million, or 70.1%, to $29.0 million for the fourth quarter 2021, as compared to $17.1 million for the prior-year period. Adjusted EBITDA Margin decreased to 12.8% from 13.4%. The Adjusted EBITDA increase was primarily driven by the increase in average selling prices, while lag in pricing created downward pressure on EBITDA margins.
Fiscal 2021 Full-Year Results
Net sales for fiscal 2021 increased $1,162.6 million to $2,928.0 million, an increase of 65.9%, compared to $1,765.4 million for fiscal 2020. The increase in net sales is primarily attributed to increased average selling prices of $977.9 million which were mostly driven by the plastic pipe and conduit category within the Electrical segment and increased net sales of $79.1 million due to the acquisitions of Queen City Plastics and FRE Composites Group. Pricing for PVC products, as well as other parts of the business, are expected to return to more normal historical levels over time, but that time is uncertain. The increase in net sales was also driven by an increase in sales volume of $88.4 million across the majority of product categories within both the Electrical and the Safety & Infrastructure segments.
Gross profit for fiscal 2021 increased $634.3 million to $1,125.6 million, an increase of 129.1%, compared to $491.3 million for fiscal 2020. Gross margin increased to 38.4% in fiscal 2021 compared to 27.8% in fiscal 2020 due to higher average selling prices of $977.9 million, partially offset by higher input costs of steel, copper and PVC resin of $386.5 million.
Selling, general and administrative expenses increased $73.5 million, or 33.5%, to $293.0 million for fiscal 2021 compared to $219.5 million for fiscal 2020. The increase was primarily due to higher variable compensation of $24.1 million, higher sales commission expense of $22.4 million, increased general spending on business improvement initiatives of $10.8 million, the acquisitions of Queen City Plastics and the FRE Composites Group of $5.4 million, and higher stock compensation expense of $3.5 million partially offset by productivity efficiencies of $4.1 million.
Net income increased $435.6 million to $587.9 million for fiscal 2021, as compared to $152.3 million for fiscal 2020. Adjusted net income increased $432.6 million to $614.0 million for fiscal 2021 compared to $181.5 million for fiscal 2020. The increase in both net income and adjusted net income was primarily driven by higher operating income of $559.4 million.
Adjusted EBITDA increased $570.9 million or 174.8%, to $897.5 million for fiscal 2021, as compared to $326.6 million for fiscal 2020. The increase was primarily due higher operating income.
Net income per diluted share on a GAAP basis was $12.19 for fiscal 2021, an increase of $9.09 from fiscal 2020. Adjusted net income per diluted share was $12.98 for fiscal 2021 compared to $3.78 for fiscal 2020.
Liquidity & Capital Resources
During fiscal 2021, operating activities provided $572.9 million of cash, compared to $248.8 million during fiscal year 2020. Free cash flow increased to $508.4 million for fiscal 2021 from $215.0 million in fiscal year 2020. The increase in cash provided by operating activities and free cash flow was primarily due to operating income.
During the year ended September 30, 2021, the Company refinanced its previous debt under the First Lien Term Loan Facility with new debt under the $400 million Senior Notes and $400 million New Senior Secured Term Loan Facility. In the fourth quarter of fiscal 2021, the Company made a voluntary prepayment of $26 million on the New Senior Secured Term Loan Facility. The principal repayment in the fourth quarter, combined with the lower balances after the refinancing transactions and the increases in cash on hand and Adjusted EBITDA resulted in a reduction in the net debt leverage ratio to 0.2 as of September 30, 2021 from 1.6 as of September 30, 2020.
Fiscal 2022 First Quarter Outlook1
The Company expects the first quarter of fiscal 2022 Adjusted EBITDA to be in the range of $230 – $250 million and Adjusted net income per diluted share to be in the range of $3.30 – $3.60.
Full Year 2022 Outlook
The Company expects fiscal year 2022 Adjusted EBITDA to be in the range of $650-$700 million and Adjusted net income per diluted share to be in the range of $9.20 – $10.00.
The Company notes that the outlook provided may vary due to changes in assumptions or market conditions and other factors.
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