Manufacturers

Atkore Performs Better Than Expected in 2Q

HARVEY, Ill. — Atkore Inc. (the “Company” or “Atkore”) announced earnings for its fiscal 2021 second quarter ended March 26, 2021.

“Outstanding results in our metal electrical conduit and focused product categories, along with exceptional performance in our PVC electrical conduit business drove another record quarter with significant year over year improvements in earnings,” commented Bill Waltz, Atkore President and Chief Executive Officer. “Our team continues to adhere to the Atkore Business System, including particular focus on commercial and operational execution, enabling us to complete timely deliveries despite ongoing, widespread raw materials supply challenges. As we pursue growth organically and inorganically, we are also excited to have completed our acquisition of FRE Composites, which expands our product portfolio into high-quality fiberglass conduit systems and increases our exposure to the infrastructure market.”

“To reflect this better-than-expected performance as we continue to take full advantage of a favorable demand and pricing environment, Atkore is raising its outlook for the full year. Across Atkore, we remain focused both on driving results today and investing for the future, and I am grateful to our team for their unmatched focus and commitment to our customers, shareholders and communities.”

2021 SECOND QUARTER RESULTS

Effective in the first quarter of fiscal 2021, the Company renamed and redefined its reportable segments as “Electrical” and “Safety & Infrastructure.” See Segment Redefinition and Realignment discussion below.

Net sales increased by $183.9 million, or 40.4%, to $639.5 million for the three months ended March 26, 2021, compared to $455.7 million for the three months ended March 27, 2020. The increase in net sales is primarily attributed to increased average selling prices of $162.4 million which was mostly driven by the PVC electrical conduit and fittings product category within the Electrical segment and increased net sales of $16.2 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 period is uncertain. Sales volume was mixed with increased volume of $2.4 million primarily from international cable management products sold within the Electrical segment, partially offset by lower volume of $1.9 million in the Safety and Infrastructure segment.

Gross profit increased by $108.2 million, or 82.3%, to $239.8 million for the three months ended March 26, 2021, as compared to $131.6 million for the prior-year period. Gross margin increased to 37.5% for the three months ended March 26, 2021, as compared to 28.9% for the prior-year period. Gross profit increased primarily due to higher average selling prices of $162.4 million, partially offset by higher input costs of steel, copper and PVC resin of $58.9 million.

Net income increased by $85.7 million, or 218.8%, to $124.9 million for the three months ended March 26, 2021 compared to $39.2 million for the prior-year period primarily due to higher gross profit and lower interest expense, partially offset by higher income tax expense.

Adjusted EBITDA increased by $106.4 million, or 122.2%, to $193.4 million for the three months ended March 26, 2021 compared to $87.0 million for the three months ended March 27, 2020. 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 $2.58 for the three months ended March 26, 2021, as compared to $0.80 in the prior-year period. Adjusted net income per diluted share increased by $1.80 to $2.79 for the three months ended March 26, 2021, as compared to $0.99 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 lower interest expense.

SEGMENT RESULTS

Electrical

Net sales increased by $164.3 million, or 50.8%, to $487.5 million for the three months ended March 26, 2021 compared to $323.2 million for the three months ended March 27, 2020. The increase in net sales is primarily attributed to increased average selling prices of $141.4 million which was mostly driven by the PVC electrical conduit and fittings and the metal electrical conduit and fittings product categories and increased net sales of $16.2 million from the acquisitions of Queen City Plastics and FRE Composites Group. Additionally, sales volume increased $2.4 million primarily due to an increase in international cable management products sold, partially offset by declines in the armored cable and fittings and the metal electrical conduit and fittings product categories.

Adjusted EBITDA for the three months ended March 26, 2021 increased by $111.6 million, or 144.5%, to $188.8 million from $77.2 million for the three months ended March 27, 2020. Adjusted EBITDA margins increased to 38.7% for the three months ended March 26, 2021 compared to 23.9% for the three months ended March 27, 2020. The increase in Adjusted EBITDA was largely due to higher average selling prices in relation to changes in input costs and operational efficiencies and the acquisitions of Queen City Plastics and FRE Composites Group.

Safety & Infrastructure

Net sales increased by $19.6 million, or 14.7%, for the three months ended March 26, 2021 to $152.7 million compared to $133.1 million for the three months ended March 27, 2020. The increase is primarily attributed to increased average selling prices of $21.0 million, partially offset by lower volumes of $1.9 million primarily due to project delays and steel supply disruptions related to COVID-19.

Adjusted EBITDA decreased by $1.7 million, or 9.5%, to $16.2 million for the three months ended March 26, 2021 compared to $17.9 million for the three months ended March 27, 2020. Adjusted EBITDA margins decreased to 10.6% for the three months ended March 26, 2021 compared to 13.4% for the three months ended March 27, 2020. The Adjusted EBITDA decrease is primarily due to higher costs related to constrained supply chains in the steel market.

Segment Redefinition and Realignment

During the first quarter of 2021, Atkore made the decision to rename and reorganize its two reportable segments to better reflect each segment’s value proposition and go-to-market approach.

The Electrical Raceway segment, which was renamed as the Electrical segment, manufactures high quality products used in the construction of electrical power systems including conduit, cable, and installation accessories. This segment serves contractors in partnership with the electrical wholesale channel.

The Mechanical Products & Solutions segment, which was renamed as the Safety & Infrastructure segment, designs and manufactures solutions including metal framing, mechanical pipe, perimeter security, and cable management for the protection and reliability of critical infrastructure. These solutions are marketed to contractors, original equipment manufacturers and end users.

Effective in the first quarter of fiscal 2021, the Company also implemented the realignment of its segment financial reporting structure such that its domestic cable management and prefabrication modular businesses are now reflected in its Safety & Infrastructure segment. These businesses were previously reflected within the Electrical Raceway segment. Prior year results have been revised for the impact of the realignment for comparability.

FULL YEAR OUTLOOK

Based on market trends and Atkore’s continued execution, the Company is increasing its outlook for Net sales, Adjusted EBITDA and Adjusted net income per diluted share for fiscal year 2021. The Company expects Net Sales to be up approximately 40% to 50%, and Adjusted EBITDA to be in the range of $700 to $750 million, up approximately $260 million – $290 million dollars versus the prior outlook. In addition, the Company expects Adjusted net income per diluted share to be in the range of $10.00 – $10.70. This updated outlook reflects Atkore’s expectation that the strong demand and industry supply constraints in the PVC electrical conduit business will continue through the back half of the fiscal year and that they will normalize as we enter the next fiscal year.

In light of these trends and the current environment, the Company is also updating its perspective on fiscal year 2022. The Company expects fiscal year 2022 Adjusted EBITDA to be approximately $400 million – $450 million, which is in line with historical double digit growth rates when compared to fiscal year 2020. The Company notes that this perspective may vary due to changes in assumptions or market conditions and other factors described under “Forward-Looking Statements.”

Reconciliations of the forward-looking full-year 2021 outlook for Adjusted EBITDA and Adjusted net income per diluted share and full-year 2022 outlook for Adjusted EBITDA 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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