Atkore’s 3Q Results Surpass Expectations

HARVEY, Ill. — Atkore Inc. (the “Company” or “Atkore”) today announced earnings for its fiscal 2023 third quarter ended June 30, 2023.

“Atkore delivered solid results in the third quarter that surpassed our expectations,” said Bill Waltz, Atkore President and Chief Executive Officer. “I am pleased to see the strong execution and teamwork across the Company, which has allowed us to continue to serve and support our customers. In addition, I believe the third quarter results demonstrate the strength and stability of our business model.”

Waltz continued, “We enter the last quarter of the fiscal year in a position that is well-ahead of our initial projections. With our strong cash flow, and disciplined approach to capital deployment, we are increasing our full year outlook for Adjusted Diluted EPS for Fiscal Year 2023. Although the accounting methodology associated with the tax credits for our solar-related products has created some variance to our projections for Adjusted EBITDA in the fourth quarter and full year 2023, we are continuing to deliver solid operational performance. We are very excited about what the future holds for this business and Atkore overall, and we believe that our growth initiatives and dedicated teams will enable us to continue to strengthen our company and create value into the future.”

2023 Third Quarter Results

Net sales decreased by $142.5 million, or 13.4%, to $919.1 million for the three months ended June 30, 2023, compared to $1,061.6 million for the three months ended June 24, 2022. The decrease in net sales is primarily attributed to decreased average selling prices across the Company’s products of $196.3 million as a result of expected pricing normalization and the economic value of solar tax credits to be transferred to certain customers of $11.5 million. This decrease was partially offset by increased net sales of $47.7 million from companies acquired during fiscal 2022 and fiscal 2023 and increased sales volume of $19.6 million.

Gross profit decreased by $103.5 million, or 22.8%, to $350.8 million for the three months ended June 30, 2023, as compared to $454.3 million for the prior-year period. Gross margin decreased to 38.2% for the three months ended June 30, 2023, as compared to 42.8% for the prior-year period. Gross profit decreased primarily due to declines in average selling prices of $196.3 million partially offset by slower declines in the costs of steel, copper and PVC resin of $91.7 million, and companies acquired during fiscal 2022 and 2023 of $13.6 million.

Net income decreased by $53.0 million, or 20.9%, to $201.3 million for the three months ended June 30, 2023 compared to $254.3 million for the prior-year period primarily due to lower gross profit and higher selling, general and administrative costs, intangible amortization and interest expense, partially offset by a $39.8 million benefit to income tax provision recognized in the third quarter of fiscal 2023 related to solar tax credits.

Adjusted EBITDA decreased by $107.3 million, or 28.4%, to $270.3 million for the three months ended June 30, 2023 compared to $377.5 million for the three months ended June 24, 2022. The decrease was primarily due to lower gross profit and the impacts of solar tax credit accounting.

Net income per diluted share prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) was $5.13 for the three months ended June 30, 2023, as compared to $5.74 in the prior-year period. Adjusted net income per diluted share decreased by $0.35 to $5.72 for the three months ended June 30, 2023, as compared to $6.07 in the prior year period. The decrease in diluted earnings per share is primarily attributed to lower net income.

Segment Results

Electrical

Net sales decreased by $115.9 million, or 14.1%, to $705.6 million for the three months ended June 30, 2023 compared to $821.6 million for the three months ended June 24, 2022. The decrease in net sales is primarily attributed to decreased average selling prices of $160.9 million as a result of expected pricing normalization, partially offset by increased net sales of $46.9 million from companies acquired during fiscal 2022 and fiscal 2023 and increased sales volume of $1.8 million.

Adjusted EBITDA for the three months ended June 30, 2023 decreased by $84.9 million, or 24.2%, to $266.6 million from $351.5 million for the three months ended June 24, 2022. Adjusted EBITDA margins decreased to 37.8% for the three months ended June 30, 2023 compared to 42.8% for the three months ended June 24, 2022. The decrease in Adjusted EBITDA and Adjusted EBITDA margins was largely due to lower average selling prices over input costs.

Safety & Infrastructure

Net sales decreased by $28.3 million, or 11.7%, for the three months ended June 30, 2023 to $213.6 million compared to $241.9 million for the three months ended June 24, 2022. The decrease is primarily attributed to decreased average selling prices of $35.4 million driven by lower input costs of steel and the economic value of solar tax credits to be transferred to certain customers of $11.5 million, partially offset by higher volumes of $17.8 million, primarily in the mechanical tube, construction and metal framing product lines.

Adjusted EBITDA decreased by $24.2 million, or 52.9%, to $21.5 million for the three months ended June 30, 2023 compared to $45.7 million for the three months ended June 24, 2022. Adjusted EBITDA margins decreased to 10.1% for the three months ended June 30, 2023 compared to 18.9% for the three months ended June 24, 2022. The decrease in Adjusted EBITDA and Adjusted EBITDA margin was largely due to lower average selling prices over input costs and the impacts of solar tax credit accounting. The impacts of solar tax credit accounting included an $11.5 million reduction of sales as well as an increase of cost of sales of $6.0 million for tax credits that had previously been recorded as a reduction of cost of sales.

Full-Year Outlook¹

The Company is updating and narrowing its estimate for fiscal year 2023 Adjusted EBITDA to be approximately $1,020 million to $1,040 million primarily due to the change in accounting methodology related to solar credits, and increasing its estimate for Adjusted net income per diluted share to be in the range of $18.90 – $19.30.

The Company notes that this perspective may vary due to changes in assumptions or market conditions and other factors described under “Forward-Looking Statements.”

¹ Reconciliations of the forward-looking full-year 2023 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. Accordingly, we are relying on the exception provided by Item 10(e)(1)(i)(B) of Regulation S-K to exclude these reconciliations.