Atkore Tops Q2 EPS

HARVEY, Ill. — Atkore International Group Inc. announced earnings for its fiscal 2020 second quarter ended March 27, 2020.

“I’m pleased to announce Atkore delivered strong second quarter results with net income up 32.6% compared to the prior year,” commented Bill Waltz, Atkore President and Chief Executive Officer. “Our team’s strong operational focus combined with our commitment to teamwork and collaboration enabled the strong earnings growth this quarter.”

Waltz continued, “Despite recent market disruptions caused by the COVID-19 pandemic, our team remains focused on ensuring we continue to meet our responsibilities in serving critical infrastructure sectors during this difficult time.

To continue meeting these commitments, Atkore has implemented protocols to enhance the safety of our employees, including daily temperature screenings, social-distancing rules in the plants and warehouses, working remotely whenever possible, enhanced cleaning procedures and increased personal protective equipment measures.

Our adherence to safety, first and foremost, combined with reliance on the Atkore Business System and strong financial management will help us effectively manage through this challenging period of global uncertainty and enable us to continue meeting customers’ needs and driving shareholder value.”

2020 Second Quarter Results

Net sales decreased by $13.7 million, or 2.9%, to $455.7 million for the three months ended March 27, 2020, compared to $469.3 million for the three months ended March 29, 2019. The decrease is primarily attributed to $18.6 million of lower average selling prices resulting from lower commodity input costs of steel and resin. Additionally, net sales decreased by $3.6 million due to lower volume, primarily in the armored cable and fittings product category sold within the Electrical Raceway segment, partially offset by higher volume in the mechanical pipe product category sold within the Mechanical Products & Solutions segment. The decrease in net sales was partially offset by increased sales of $10.6 million from the acquisition of the assets of United Structural Products, LLC. (“US Tray”) and Rocky Mountain Pipe (“Cor-Tek”) and the acquisition of Flytec Systems Ltd. and its parent holding company, Modern Associates Ltd., in fiscal 2019 (together, the “2019 acquisitions”).

Gross profit increased by $14.5 million, or 12.4%, to $131.6 million for the three months ended March 27, 2020, as compared to $117.1 million for the prior-year period. Gross margin increased to 28.9% for the three months ended March 27, 2020, as compared to 24.9% for the prior-year period. Gross margin increased primarily due to the benefits from lower material costs and operational efficiencies.

Net income increased by $9.6 million, or 32.6%, to $39.2 million for the three months ended March 27, 2020 compared to $29.6 million for the prior-year period primarily due to higher gross profit and lower interest expense.

Adjusted EBITDA increased by $9.9 million, or 12.9%, to $87.0 million for the three months ended March 27, 2020 compared to $77.1 million for the three months ended March 29, 2019. 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 $0.80 for the three months ended March 27, 2020, as compared to $0.61 in the prior-year period. Adjusted net income per diluted share increased by $0.16 to $0.99 for the three months ended March 27, 2020, as compared to $0.83 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 Raceway

Net sales decreased by $13.8 million, or 3.9%, to $339.7 million for the three months ended March 27, 2020 compared to $353.5 million for the three months ended March 29, 2019. The decrease in net sales is primarily driven by $13.5 million in lower volume, primarily in the armored cable and fitting product category, and lower average selling prices resulting from lower commodity input costs of steel and resin of $9.4 million. The decrease in net sales was partially offset by the 2019 acquisitions, which contributed $10.6 million in sales for the three months ended March 27, 2020.

Adjusted EBITDA for the three months ended March 27, 2020 increased by $11.6 million, or 17.2%, to $79.0 million from $67.4 million for the three months ended March 29, 2019. Adjusted EBITDA margins increased to 23.2% for the three months ended March 27, 2020 compared to 19.1% for the three months ended March 29, 2019. The increase in Adjusted EBITDA was largely due to the benefit of lower material costs, operational efficiencies, and the contributions from the 2019 acquisitions.

Mechanical Products & Solutions (“MP&S”)

Net sales increased by $0.5 million, or 0.4%, for the three months ended March 27, 2020 to $116.6 million compared to $116.2 million for the three months ended March 29, 2019. The increase is primarily attributed to higher volume of $9.8 million primarily in the mechanical pipe product category, partially offset by the pass-through impact of lower average input costs of steel products of $9.2 million.

Adjusted EBITDA decreased by $1.3 million, or 7.3%, to $16.1 million for the three months ended March 27, 2020 compared to $17.4 million for the three months ended March 29, 2019. Adjusted EBITDA margins decreased to 13.8% for the three months ended March 27, 2020 compared to 15.0% for the three months ended March 29, 2019. The Adjusted EBITDA decrease is primarily due to additional costs related to equipment maintenance at one of our facilities in the current period.

Full-Year 2020 Outlook

The Company is currently estimating fiscal year 2020 Net Sales, Adjusted EBITDA and Adjusted net income per diluted share to be down in the range of 10% – 15% compared to fiscal year 2019.

Reconciliations of the forward-looking full-year 2020 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.