HARVEY, Ill. — Atkore Inc. (the “Company” or “Atkore”) announced earnings for its fiscal 2024 third quarter ended June 28, 2024.
“Atkore delivered Adjusted EBITDA margins over 25% on essentially flat volume compared to the prior year,” said Bill Waltz, Atkore President and Chief Executive Officer. “Organic volume was up 8% sequentially from the second quarter and up 4% year to date. The Safety & Infrastructure business continues to improve the operational efficiency of our new facility in Hobart, Indiana. The S&I segment increased Adjusted EBITDA by 40 percent versus the prior year.”
Waltz continued, “The third quarter proved to be more challenging than we initially anticipated due to a limited increase in demand from the summer construction season and an overall soft pricing environment across most of our Electrical business. We anticipate these trends to continue into the fourth quarter and next year, and we’ve updated our expectations and outlooks accordingly. Despite these challenges, we have conviction in our people, strategy, and process, which are the three fundamentals of our business system and enable us to remain resilient and focused on the future. During the third quarter, we also repurchased $125 million in shares as part of our capital deployment strategy while continuing to invest in organic growth initiatives.”
Net sales decreased by $96.8 million or 10.5% to $822.4 million for the three months ended June 28, 2024, compared to $919.1 million for the three months ended June 30, 2023. The decrease in net sales is primarily attributed to decreased average selling prices across the Company’s products of $87.5 million, the increased economic value of solar tax credits to be transferred to certain customers of $7.2 million, and decreased sales volume of $1.2 million.
Gross profit decreased by $71.1 million, or 20.3%, to $279.7 million for the three months ended June 28, 2024, as compared to $350.8 million for the prior-year period. Gross margin decreased to 34.0% for the three months ended June 28, 2024, as compared to 38.2% for the prior-year period. Gross profit decreased primarily due to declines in average selling prices of $87.5 million and increased freight costs of $4.8 million, partially offset by the increased net benefit of solar credits generated of $21.8 million and declines in input costs of $2.9 million.
Net income decreased by $77.9 million, or 38.7%, to $123.4 million for the three months ended June 28, 2024 compared to $201.3 million for the prior-year period primarily due to lower gross profit of $71.1 million, lower selling, general and administrative expense of $5.0 million, and lower other expense of $3.1 million partially offset by higher income tax expense.
Adjusted EBITDA decreased by $64.1 million, or 23.7%, to $206.1 million for the three months ended June 28, 2024 compared to $270.3 million for the three months ended June 30, 2023. The decrease was primarily due to lower gross profit.
Net income per diluted share prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) was $3.33 for the three months ended June 28, 2024, as compared to $5.13 in the prior-year period. Adjusted net income per diluted share decreased by $1.92 to $3.80 for the three months ended June 28, 2024, as compared to $5.72 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 $99.7 million, or 14.1%, to $606.0 million for the three months ended June 28, 2024 compared to $705.6 million for the three months ended June 30, 2023. The decrease in net sales is primarily attributed to decreased average selling prices of $80.8 million and decreased sales volume of $18.2 million.
Adjusted EBITDA for the three months ended June 28, 2024 decreased by $84.0 million, or 31.5%, to $182.6 million from $266.6 million for the three months ended June 30, 2023. Adjusted EBITDA margin decreased to 30.1% for the three months ended June 28, 2024 compared to 37.8% for the three months ended June 30, 2023. The decrease in Adjusted EBITDA and Adjusted EBITDA margin was largely due to the decrease in average selling prices outpacing decreases in input costs.
Safety & Infrastructure
Net sales increased by $3.4 million, or 1.6%, for the three months ended June 28, 2024 to $217.0 million compared to $213.6 million for the three months ended June 30, 2023. The increase is primarily attributed to higher volumes of $17.0 million, partially offset by the increased economic value of solar tax credits to be transferred of $7.2 million and decreased average selling prices of $6.8 million.
Adjusted EBITDA increased by $8.5 million, or 39.8%, to $30.0 million for the three months ended June 28, 2024 compared to $21.5 million for the three months ended June 30, 2023. Adjusted EBITDA margin increased to 13.8% for the three months ended June 28, 2024 compared to 10.1% for the three months ended June 30, 2023. The increase in Adjusted EBITDA and Adjusted EBITDA margin was largely due to higher sales volume and the increased net benefit of solar tax credits.
Liquidity & Capital Resources
On May 2, 2024, the Board of Directors of Atkore Inc. declared a quarterly cash dividend of $0.32 per share of common stock to stockholders of record on May 21, 2024, which was paid on May 31, 2024.
On July 31, 2024, the Board of Directors of Atkore declared a quarterly cash dividend of $0.32 per share of common stock to stockholders of record on August 20, 2024, to be paid on August 30, 2024.
Full-Year Outlook 1
The Company is adjusting its estimate for fiscal year 2024 Adjusted EBITDA to be approximately $772 million to $782 million, and adjusting its estimate for Adjusted net income per diluted share to $14.30 – $14.52.
The Company notes that this perspective may vary due to changes in assumptions or market conditions and other factors described under “Forward-Looking Statements.”