Atkore Announces Second Quarter 2019 Results

HARVEY, Ill. — Atkore International Group Inc. announced earnings for its fiscal 2019 second quarter ended March 29, 2019.

“Atkore again produced strong quarterly results with net sales and Adjusted EBITDA growth of 5% and 18% year over year, respectively,” commented Bill Waltz, President and Chief Executive Officer of Atkore. “Our primary focus on serving customers with the right products and solutions is a catalyst that has enabled us to raise our full year guidance for a second time this year and deliver upon our commitments to our shareholders.”

2019 Second Quarter Results

Net sales increased by $24.3 million, or 5.5%, to $469.3 million for the three months ended March 29, 2019 compared to $445.0 million for the three months ended March 30, 2018. Net sales increased by $28.0 million primarily due to increased average market prices for all product categories and the pass-through impact of higher average input costs of steel, copper, and freight. Additionally, net sales increased by $10.8 million due to the acquisition of Vergokan International NV (“Vergokan”) over the past twelve months, partly offset by a decrease in net sales of $4.5 million from the sale of the assets of FlexHead Industries, Inc. and SprinkFLEX, LLC (together “FlexHead”) in the second quarter of fiscal 2018. The increase in net sales was partially offset by lower volume of $6.5 million primarily in the metal conduit and fittings product category sold within the Electrical Raceway segment and in the mechanical pipe product category sold within the Mechanical Products & Solutions segment.

Gross profit increased by $7.9 million, or 7.3%, to $117.1 million for the three months ended March 29, 2019, as compared to $109.2 million for the prior-year period. Gross margin increased to 24.9% for the three months ended March 29, 2019, as compared to 24.5% for the prior-year period. Gross margin increased primarily due to implemented pricing strategies and favorable product mix.

Net income decreased by $13.0 million, or 30.6%, to $29.6 million for the three months ended March 29, 2019 compared to $42.6 million for the prior-year period primarily due to the fiscal 2018 pre-tax gain of 26.7 million on the sale of the assets FlexHead, partially offset by higher operating income of $11.3 million.

Adjusted EBITDA increased by $11.8 million, or 18.0%, to $77.1 million for the three months ended March 29, 2019 compared to $65.3 million for the three months ended March 30, 2018. The increase was primarily due to higher gross profit.

Diluted earnings per share on a GAAP basis was $0.61 for the three months ended March 29, 2019, as compared to $0.79 in the prior-year period primarily due to the prior year gain on the sale of FlexHead. Adjusted net income per diluted share increased by $0.20 to $0.83 for the three months ended March 29, 2019, as compared to $0.63 for the prior-year period primarily due to higher gross profit.

Segment Results

Electrical Raceway

Net sales increased by $28.7 million, or 8.8%, to $353.5 million for the three months ended March 29, 2019 compared to $324.8 million for the three months ended March 30, 2018. The increase was primarily due to increased average market prices for the metal electrical conduit and fittings product category of $15.1 million. Additionally, sales increased $10.8 million as a result of the acquisition of Vergokan during fiscal 2019. Lastly, sales increased $5.9 million due to higher volume, primarily in the cable wire product category. The increase in net sales was partially offset by foreign exchange losses of $3.4 million and by lower volume in the metal conduit and fittings product category.

Adjusted EBITDA for the three months ended March 29, 2019 increased by $11.0 million, or 19.5%, to $67.4 million from $56.4 million for the three months ended March 30, 2018. Adjusted EBITDA margins increased to 19.1% for the three months ended March 29, 2019 compared to 17.4% for the three months ended March 30, 2018. The increase in Adjusted EBITDA was largely due to pricing strategies and favorable product mix.

Mechanical Products & Solutions (“MP&S”)

Net sales decreased by $4.1 million, or 3.4%, to $116.2 million for the three months ended March 29, 2019 compared to $120.3 million for the three months ended March 30, 2018. The decrease was due to lower volume of $12.4 million primarily in the mechanical pipe product category and a decrease in net sales of $4.5 million from the sale of the assets of FlexHead in the second quarter of fiscal 2018. The sales decrease was partially offset by $12.8 million of higher average selling prices.

Adjusted EBITDA increased $0.7 million, or 4.2%, to $17.4 million for the three months ended March 29, 2019 compared to $16.7 million for the three months ended March 30, 2018. Adjusted EBITDA margins increased to 15.0% for the three months ended March 29, 2019 compared to 13.9% for the three months ended March 30, 2018. Adjusted EBITDA increased primarily due to pricing strategies and favorable product mix, partially offset by lower volume in the mechanical pipe product category as well as from the sale of the assets of FlexHead in the second quarter of fiscal 2018.

Full-Year 2019 Guidance

The Company is increasing its expectation of fiscal year 2019 Adjusted EBITDA to be in the range of $300.0 million – $310.0 million and its expectation of fiscal year 2019 Adjusted net income per diluted share to be in the range of $3.25 – $3.40.

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.