Atkore Announces First Quarter 2021 Results, Name Change

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Feb 2, 2021

Atkore International Group Inc. announced earnings for its fiscal 2021 first quarter ended December 25, 2020 and plans to change its name to Atkore Inc.

“Atkore started fiscal year 2021 with another record quarter driven by strong performance across our businesses. In particular, we had better-than-expected results in our PVC electrical conduit business where we met increasing market demand amidst industry supply constraints through successful implementation of the Atkore Business System,” commented Bill Waltz, Atkore President and Chief Executive Officer. “Across Atkore, our teams continued to prioritize delivering excellent and reliable service to our customers, driving $511 million in net sales, while adhering to our health and safety policies. I want to thank them for their outstanding commitment to this level of operational execution.”

“We raised our outlook for the fiscal year to reflect the results we achieved in the first quarter and the outsized growth in the PVC electrical conduit business we expect to continue through the second quarter. With a strong balance sheet and a focus on driving value creation, we will continue to prudently deploy capital through a combination of investing in our business, returning capital to our shareholders and paying down debt. Our new share repurchase authorization underscores our confidence in our ability to continue to grow earnings and generate strong cash flows.”

2021 First 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 $63.6 million, or 14.2%, to $511.1 million for the three months ended December 25, 2020, compared to $447.4 million for the three months ended December 27, 2019. The increase in net sales is primarily attributed to increased average selling prices of $81.2 million which was mostly driven by the PVC electrical conduit and fittings product category within the Electrical segment, partially offset by lower volume of $27.8 million primarily attributed to declines in the armored cable and fittings and the metal electrical conduit and fittings product categories within the Electrical segment.

Gross profit increased by $72.3 million, or 61.9%, to $189.2 million for the three months ended December 25, 2020, as compared to $116.8 million for the prior-year period. Gross margin increased to 37.0% for the three months ended December 25, 2020, as compared to 26.1% for the prior-year period. Gross profit increased primarily due to higher average selling prices of $81.2 million and favorable inventory valuation reserve adjustments, partially offset by higher input costs of steel, copper and resin of $22.9 million above the pass through impact of average selling prices.

Net income increased by $50.3 million, or 144.5%, to $85.1 million for the three months ended December 25, 2020 compared to $34.8 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 $59.3 million, or 76.3%, to $137.0 million for the three months ended December 25, 2020 compared to $77.7 million for the three months ended December 27, 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 $1.75 for the three months ended December 25, 2020, as compared to $0.71 in the prior-year period. Adjusted net income per diluted share increased by $0.94 to $1.88 for the three months ended December 25, 2020, as compared to $0.94 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 $62.6 million, or 19.3%, to $387.1 million for the three months ended December 25, 2020 compared to $324.5 million for the three months ended December 27, 2019. The increase in net sales is primarily attributed to increased average selling prices of $81.4 million which was mostly driven by the PVC electrical conduit and fittings product category, partially offset by lower volume of $29.4 million primarily attributed to declines in the armored cable and fittings and the metal electrical conduit and fittings product categories.

Adjusted EBITDA for the three months ended December 25, 2020 increased by $65.2 million, or 95.6%, to $133.3 million from $68.1 million for the three months ended December 27, 2019. Adjusted EBITDA margins increased to 34.4% for the three months ended December 25, 2020 compared to 21.0% for the three months ended December 27, 2019. The increase in Adjusted EBITDA was largely due to higher average selling prices in relation to changes in input costs and operational efficiencies.

Safety & Infrastructure

Net sales increased by $1.3 million, or 1.0%, for the three months ended December 25, 2020 to $124.8 million compared to $123.5 million for the three months ended December 27, 2019. The increase is primarily attributed to higher volume of $1.6 million primarily in the mechanical pipe product category.

Adjusted EBITDA decreased by $4.5 million, or 23.9%, to $14.3 million for the three months ended December 25, 2020 compared to $18.7 million for the three months ended December 27, 2019. Adjusted EBITDA margins decreased to 11.4% for the three months ended December 25, 2020 compared to 15.2% for the three months ended December 27, 2019. The Adjusted EBITDA decrease is primarily due to the timing lag in reflecting the rising input costs of steel in average selling prices.

Share Repurchase Program

On January 28, 2021, the Board of Directors approved a share repurchase program, under which the Company may repurchase up to $100 million of its outstanding common stock over the next two years. The Company will conduct repurchases under the new program in the open market and through broker negotiated purchases in compliance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended, and subject to market conditions, applicable legal requirements, and other relevant factors. The share repurchase program will be funded from the company’s available cash balances. This share repurchase program does not obligate the company to acquire any particular amount of common stock, and it may be terminated at any time at the Company’s discretion.

Segment Redefinition and Realignment and Company Name Change

During the first quarter, 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. Quarterly historical segment financial information for fiscal 2020 and annual historical segment financial information for fiscal 2020 and 2019 have been provided in the attached financial schedules.

Consistent with recent rebranding activities, the Company’s Board of Directors has approved implementation of a name change from Atkore International Group Inc. to Atkore Inc. The Company will continue to use the ticker symbol ATKR.

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 16% to 20%, and Adjusted EBITDA to be in the range of $440 to $460 million, up approximately $100 million dollars versus the prior outlook. In addition, the Company expects Adjusted net income per diluted share to be in the range of $5.65 – $5.95. 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 second quarter and that they will normalize in the back half of the year.

In light of these trends and the current environment, the Company is also providing its initial perspective on fiscal year 2022. The Company expects fiscal year 2022 Adjusted EBITDA to be approximately $400 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.

Source

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