HARVEY, Ill.—Atkore Inc. (the “Company” or “Atkore”) (NYSE: ATKR) announced earnings for its fiscal 2023 full year and fourth quarter ended September 30, 2023 (“fourth quarter”).
Fourth-Quarter Highlights
- Net income per diluted share decreased to $3.63 from $5.18 in prior year period; Adjusted net income per diluted share decreased to $4.21 from $5.52 in prior year period
- Net income decreased by $79.9 million versus prior year period to $140.9 million; Adjusted EBITDA decreased by $93.1 million versus prior year period to $232.0 million
Fiscal 2023 Highlights
- Net income per diluted share decreased to $17.27 from $20.30 in prior year; Adjusted net income per diluted share decreased to $19.40 from $21.55 in prior year
- Net income decreased by $223.5 million versus prior year to $689.9 million; Adjusted EBITDA decreased to $1,042.1 million from $1,341.8 million in prior year
- Net cash provided by operating activities of $807.6 million; Free Cash Flow of $588.7 million
Additional Highlights
- The Board of Directors approves a new quarterly dividend program to be added to the capital deployment model; the Company expects the first quarterly cash distribution to be considered, declared and paid in calendar Q1 2024, following Atkore’s fiscal Q1 2024 earnings announcement.
- Full-year 2024 Net sales expected to be in the range of $3.50 – $3.65 billion
- Full-year 2024 Adjusted EBITDA outlook of $900 – $950 million; Full-year Adjusted net income per diluted share outlook of $16.00 – $17.00
- Maintaining Full-Year Adjusted net income per diluted share goal of greater than $18.00 in fiscal year 2025
“Atkore achieved solid results for fiscal 2023, as we continued to successfully execute on our strategic initiatives and deliver differentiated value to our customers,” said Bill Waltz, Atkore President and Chief Executive Officer. “As our performance and financial results continue to normalize after our significant levels of outperformance and record results in fiscal 2022, we are encouraged by the resilience of our business model, and the differentiated value that our product portfolio provides to our customers. We believe that we have transformed, diversified and elevated the profitability of this business since our initial public offering.”
Waltz continued, “In addition, I am proud of our disciplined approach to capital allocation. We have made great progress investing in the future of our Company while continuing to return cash to shareholders by executing over $990 million in share repurchases since the program was authorized in November 2021. The Board’s addition of a new quarterly dividend program is an exciting next step for Atkore and our shareholders.”
Net sales for the fourth quarter of 2023 decreased to $869.9 million, a decrease of 15.5% compared to $1,029.0 million for the prior-year period. The decrease was primarily due to lower average selling prices of $173.8 million as the result of expected pricing normalization and the economic value of solar tax credits to be transferred to certain customers of $14.5 million. These decreases were partially offset by higher sales volume of $19.2 million from entities acquired during fiscal 2022 and 2023 of $10.4 million.
Gross profit decreased by $113.0 million to $301.5 million for the fourth quarter of 2023, as compared to $414.5 million for the prior-year period. Gross margins decreased from 40.3% in the prior year period to 34.7%. Gross profit and gross profit margin decreased due to declines in average selling prices of $173.8 million, partially offset by slower declines in the costs of steel, copper and resin of $90.9 million.
Net income decreased $79.9 million to $140.9 million for the fourth quarter of 2023, as compared to $220.8 million for the prior-year period, due to lower operating income of $107.4 million, partially offset by decreased income taxes of $27.0 million. Adjusted net income decreased $70.5 million to $161.0 million compared to $231.6 million for the prior-year period.
Adjusted EBITDA decreased $93.1 million, or 28.6%, to $232.0 million for the fourth quarter of 2023, as compared to $325.1 million for the prior-year period. Net income margin decreased from 21.5% in the prior-year period to 16.2% and Adjusted EBITDA Margin decreased 490 basis points from 31.6% to 26.7%.
Net income per diluted share was $3.63 for the fourth quarter of 2023, a decrease of $1.55 from the prior-year period. Adjusted net income per diluted share was $4.21 per share for the fourth quarter of 2023 compared to $5.52 for the prior-year period.
Segment Results
Electrical
Electrical net sales decreased $145.4 million, or 18.3%, to $649.8 million for the fourth quarter of 2023, as compared to $795.2 million for the prior-year period. The decrease in net sales is primarily attributed to decreased average selling prices of $133.4 million as a result of expected pricing normalization and decreased volume of $23.1 million, partially offset by increased sales from companies acquired in fiscal 2022 and 2023 of $9.8 million.
Adjusted EBITDA decreased $71.2 million, or 23.1%, to $237.6 million for the fourth quarter of 2023, as compared to $308.8 million for the prior-year period, and Adjusted EBITDA Margin decreased from 38.8% to 36.6%. The decrease in Adjusted EBITDA was largely due to lower average selling prices over input costs.
Safety & Infrastructure
Safety & Infrastructure net sales decreased $13.6 million, or 5.8%, to $220.2 million for the fourth quarter of 2023, as compared to $233.9 million for the prior-year period. The decrease is attributed to lower average selling prices of $40.4 million and the economic value of solar tax credits to be transferred to certain customers of $14.5 million partially offset by higher volumes of $42.4 million.
Adjusted EBITDA decreased $21.2 million, or 58.4%, to $15.1 million for the fourth quarter of 2023, as compared to $36.4 million for the prior-year period. Adjusted EBITDA Margin decreased to 6.9% from 15.6%. The Adjusted EBITDA decrease was largely due to lower average selling prices over input costs and the impacts of solar tax credit accounting.
Fiscal 2023 Full-Year Results
Net sales for fiscal 2023 decreased $395.2 million to $3,518.8 million, a decrease of 10.1%, compared to $3,913.9 million for fiscal 2022. The decrease in net sales is primarily attributed to decreased average selling prices of $646.6 million, the economic value of solar tax credits to be transferred to certain customers of $30.4 million and the unfavorable impact of foreign exchange rates of $15.1 million. These decreases are partially offset by increased net sales of $168.9 million from companies acquired during fiscal 2022 and 2023 and increased sales volume of $125.1 million across varying product categories within both the Electrical and the Safety & Infrastructure segments.
Gross profit for fiscal 2023 decreased $300.5 million to $1,339.5 million, a decrease of 18.3%, compared to $1,640.0 million for fiscal 2022. Gross margin decreased to 38.1% in fiscal 2023 compared to 41.9% in fiscal 2022 due to declines in average selling prices of $646.6 million, partially offset by slower declines in the input costs of steel, copper and PVC resin of $337.8 million.
Net income decreased $223.5 million to $689.9 million for fiscal 2023, as compared to $913.4 million for fiscal 2022. Adjusted net income decreased $191.1 million to $763.0 million for fiscal 2023 compared to $954.1 million for fiscal 2022. The decrease in both net income and adjusted net income was primarily driven by lower operating income of $340.3 million.
Adjusted EBITDA decreased $299.7 million or 22.3%, to $1,042.1 million for fiscal 2023, as compared to $1,341.8 million for fiscal 2022. The decrease was primarily due to lower operating income.
Net income per diluted share on a GAAP basis was $17.27 for fiscal 2023, a decrease of $3.03 from fiscal 2022. Adjusted net income per diluted share was $19.40 for fiscal 2023 compared to $21.55 for fiscal 2022.
Liquidity & Capital Resources
During fiscal 2023, operating activities provided $807.6 million of cash, compared to $786.8 million during fiscal year 2022. Free cash flow decreased to $588.7 million for fiscal 2023 from $651.1 million in fiscal year 2022. The increase in cash provided by operating activities was primarily driven by less cash used in working capital of $105.8 million and tax impacts of $229.3 million, partially offset by lower operating income of $340.3 million. The decrease in free cash flow was primarily due to additional capital expenditures during fiscal 2023 of $83.1 million when compared to the prior fiscal year, partially offset by the increase in operating cash.
During fiscal 2023, the Company deployed $83.4 million on the acquisition of Elite Polymer Solutions with an additional $14.0 million to be paid in the future, repurchased $491.0 million in outstanding shares and had capital expenditures of $218.9 million.
The Board of Directors has approved a new quarterly dividend program to be added to the Company’s capital deployment model. The Company expects the first quarterly cash distribution to be considered, declared and paid in calendar Q1 2024, following Atkore’s fiscal Q1 2024 earnings announcement. All dividend declarations are subject to approval by the Board of Directors. Compliance with any applicable financial hurdles and the details of future dividend declarations, including the amount, timing and establishment of the record and payment dates, will be determined by the Board of Directors.
Outlook and Targets1
Fiscal 2024 First Quarter – The Company expects the first quarter of fiscal 2024 Adjusted EBITDA to be in the range of $200 – $210 million and Adjusted net income per diluted share to be in the range of $3.50 – $3.70.
Fiscal 2024 Full Year – The Company expects fiscal year 2024 Adjusted EBITDA to be in the range of $900-$950 million and Adjusted net income per diluted share to be in the range of $16.00 – $17.00.
Fiscal 2025 Full Year Goal –The Company is maintaining its fiscal 2025 Adjusted net income per diluted share target of greater than $18.00.
The Company notes that the outlook and target information provided may vary due to changes in assumptions or market conditions and other factors described under “Forward-Looking Statements.”
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