Manufacturers

Atkore Posts Double-Digit Growth in Third Quarter

Atkore Posts Double-Digit Growth in Third Quarter

HARVEY, Ill. — Atkore International Group Inc. announced earnings for its fiscal 2018 third quarter ended June 29, 2018.

“I’m pleased to report that Atkore continues to deliver strong performance with double digit growth in Net sales, Adjusted EBITDA and Earnings per share on a year over year basis,” commented John Williamson, Atkore President and Chief Executive Officer.

“Atkore’s recent performance has enabled us to increase our full year guidance, with discipline that enables successful pass-through of increased raw material costs, delivery of quality products to the market, and focus on driving greater value for our customers, employees and shareholders.”

Net sales increased by $100.3 million, or 25.2% to $498.0 million for the three months ended June 29, 2018 compared to $397.7 million for the prior-year period. Net sales increased by $31.9 million due to the acquisitions of Marco Cable Management, Flexicon Limited, Calpipe Industries, LLC and Cii during fiscal 2017 and fiscal 2018, partially offset by a decrease in net sales of $5.6 million resulting from the divestiture of Flexhead Industries, Inc. and SprinkFLEX, LLC (together “Flexhead”). Additionally, net sales increased by $56.0 million due to higher net average selling prices resulting from the pass-through impact of higher average input costs of copper, steel and freight, and increased average market prices for Metal and PVC electrical conduit and fittings product categories. Lastly, net sales increased by $15.2 million due to higher volume of products from the mechanical pipe and metal framing and fittings product categories sold within the Mechanical Products & Solutions segment, partially offset by lower volume of products from the armored cable and fittings and flexible electrical conduit and fittings product categories sold within the Electrical Raceway segment.

Gross profit increased by $27.8 million, or 30.1% to $120.3 million for the three months ended June 29, 2018, as compared to $92.5 million for the prior-year period. Gross margins increased to 24.2% for the three months ended June 29, 2018, as compared to 23.3% for the prior-year period. Gross margins increased primarily due to increased average market prices for the Metal and PVC electrical conduit and fittings product categories, partially offset by the pass-through impact of higher average input costs of copper, steel and freight costs.

Net income increased by $6.7 million, or 24.5% to $34.2 million for the three months ended June 29, 2018 compared to $27.5 million for the prior-year period primarily due to higher operating income of $10.7 million and lower income tax expense of $1.1 million, partially offset by higher interest expense of $6.6 million.

Adjusted EBITDA increased by $14.6 million, or 23.6% to $76.7 million for the three months ended June 29, 2018 compared to $62.0 million for the three months ended June 30, 2017. The increase was primarily due to incremental Adjusted EBITDA from acquisitions during fiscal 2017 and fiscal 2018, increased average market prices for the Metal and PVC electrical conduit and fittings product categories and increased volume of products sold across most product categories, partially offset by higher average input costs of copper, steel and freight, higher incentive-based compensation expense and the Flexhead divestiture.

Diluted earnings per share were $0.70 for the three months ended June 29, 2018, as compared to $0.41 in the prior-year period. Adjusted net income per diluted share increased by $0.37 to $0.86 for the three months ended June 29, 2018, as compared to $0.49 for the prior-year period.

Segment Results

Electrical Raceway

Electrical Raceway Net sales increased by $82.1 million, or 28.5%, to $370.3 million for the three months ended June 29, 2018 compared to $288.3 million for the three months ended June 30, 2017. The increase was primarily due to the pass-through impact of higher average input costs of copper, steel and freight and increased average market prices for the Metal and PVC electrical conduit and fittings product categories of $50.3 million. Additionally, Net sales increased by $31.9 million resulting from acquisitions during fiscal 2017 and fiscal 2018. The increase in Net sales was partially offset by lower volume of products sold of $2.9 million primarily from the armored cable and fittings and flexible electrical conduit and fittings product categories.

Electrical Raceway Adjusted EBITDA for the three months ended June 29, 2018 increased by $24.8 million, or 49.9%, to $74.5 million from $49.7 million for the three months ended June 30, 2017. Adjusted EBITDA margins increased to 20.1% for the three months ended June 29, 2018 compared to 17.2% for the three months ended June 30, 2017. The increase in Adjusted EBITDA was largely due to the pass-through impact of higher average input costs of copper and steel, increased average market prices for the Metal and PVC electrical conduit and fittings product categories and incremental Adjusted EBITDA resulting from acquisitions. The increase in EBITDA was partially offset by an increase in freight costs and lower volume of products from the armored cable and fittings and flexible electrical conduit and fittings product categories sold.

Mechanical Products & Solutions (“MP&S”)

MP&S Net sales increased by $18.6 million, or 16.9%, for the three months ended June 29, 2018 to $128.2 million compared to $109.7 million for the three months ended June 30, 2017. The increase was primarily due to $18.3 million of higher volume of products sold within the mechanical pipe and metal framing and fittings product categories as well as higher average selling prices, partly offset by a decrease in Net sales of $5.6 million resulting from the Flexhead divestiture.

MP&S Adjusted EBITDA decreased by $5.4 million, or 30.8%, to $12.0 million for the three months ended June 29, 2018 compared to $17.4 million for the three months ended June 30, 2017. Adjusted EBITDA margins decreased to 9.4% for the three months ended June 29, 2018 compared to 15.8% for the three months ended June 30, 2017. Adjusted EBITDA decreased due to an increase in average input costs, which exceeded the increase in average selling prices, and as a result of the Flexhead divestiture, partially offset by higher volume of product categories sold.

Full-Year 2018 Guidance

The Company is updating its expectation of fiscal year 2018 Adjusted EBITDA to be in the range of $265.0 – $272.0 million and its expectation of fiscal year 2018 Adjusted net income per diluted share to be in the range of $2.65 – $2.70.

Reconciliations of the forward-looking full-year 2018 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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