Manufacturers

Atkore Beats Estimates, Raises Guidance

HARVEY, Ill. — Atkore International Group Inc. announced earnings for its fiscal 2019 third quarter ended June 28, 2019.

“I’m proud of Atkore’s operational performance and financial results with strong Adjusted EBITDA growth, volume increases and solid cash flow this quarter. With continued focus on driving efficiencies and productivity improvements, Atkore is able to raise its full-year Adjusted EBITDA outlook for the Company,” commented Bill Waltz, President and Chief Executive Officer of Atkore.

2019 Third Quarter Results

Net sales decreased by $4.5 million, or 0.9%, to $493.5 million for the three months ended June 28, 2019 compared to $498.0 million for the three months ended June 29, 2018. Net sales decreased by $17.9 million primarily due to the pass-through impact of lower average input costs of steel and resin. The decrease in net sales was partially offset by increased sales of $12.5 million due to the acquisition of Vergokan International NV (“Vergokan”) and the acquisition of the assets of United Structural Products, LLC. (“US Tray”) in fiscal 2019 (together, the “2019 acquisitions”). Additionally, the decrease in net sales was partially offset by higher volume of $2.8 million primarily in the armored cable and fittings product category sold within the Electrical Raceway segment, partially offset by lower volume in the mechanical pipe product category sold within the Mechanical Products & Solutions segment.

Gross profit increased by $5.8 million, or 4.8%, to $126.1 million for the three months ended June 28, 2019, as compared to $120.3 million for the prior-year period. Gross margin increased to 25.6% for the three months ended June 28, 2019, as compared to 24.2% for the prior-year period. Gross margin increased primarily due to implemented pricing strategies and operating efficiencies.

Net income increased by $2.4 million, or 6.9%, to $36.6 million for the three months ended June 28, 2019 compared to $34.2 million for the prior-year period primarily due to higher gross profit.

Adjusted EBITDA increased by $11.8 million, or 15.4%, to $88.5 million for the three months ended June 28, 2019 compared to $76.7 million for the three months ended June 29, 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”) basis was $0.75 for the three months ended June 28, 2019, as compared to $0.70 in the prior-year period primarily due to the change in the effect of dilutive securities. Adjusted net income per diluted share increased by $0.18 to $1.04 for the three months ended June 28, 2019, as compared to $0.86 for the prior-year period primarily due to higher gross profit.

Segment Results

Electrical Raceway

Net sales increased by $2.9 million, or 0.8%, to $373.2 million for the three months ended June 28, 2019 compared to $370.3 million for the three months ended June 29, 2018. The 2019 acquisitions contributed $12.5 million of the increase in sales for the three months ended June 28, 2019. Additionally, sales increased $9.7 million due to higher volume, primarily in the armored cable and fittings product category. The increase was partially offset by lower average input costs of steel and resin-based products of $17.5 million. Lastly, net sales was further offset by foreign exchange losses of $1.7 million.

Adjusted EBITDA for the three months ended June 28, 2019 increased by $2.2 million, or 3.0%, to $76.7 million from $74.5 million for the three months ended June 29, 2018. Adjusted EBITDA margins increased to 20.6% for the three months ended June 28, 2019 compared to 20.1% for the three months ended June 29, 2018. The increase in Adjusted EBITDA was largely due to increased volume, operational efficiencies, and the contributions from the 2019 acquisitions.

Mechanical Products & Solutions (“MP&S”)

Net sales decreased by $7.6 million, or 6.0%, for the three months ended June 28, 2019 to $120.6 million compared to $128.2 million for the three months ended June 29, 2018. The decrease was primarily due to lower volume of $6.9 million primarily in the mechanical pipe product category.

Adjusted EBITDA increased by $8.6 million, or 71.4%, to $20.6 million for the three months ended June 28, 2019 compared to $12.0 million for the three months ended June 29, 2018. Adjusted EBITDA margins increased to 17.1% for the three months ended June 28, 2019 compared to 9.4% for the three months ended June 29, 2018. Adjusted EBITDA increased primarily due to pricing strategies and operational efficiencies.

Full-Year 2019 Guidance

The Company is increasing its expectation of fiscal year 2019 Adjusted EBITDA to be in the range of $317.0 million – $322.0 million and its expectation of fiscal year 2019 Adjusted net income per diluted share to be in the range of $3.55 – $3.63.

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.

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