ATKR - Earnings call transcript Q1 2018

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Operator

Greetings and welcome to Atkore International First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Keith Whisenand, Vice President, Investor Relations. ahead. go Please

Keith Whisenand

and like good statements actual first statements today’s and and With results important today make I could me and the in this that Thank of we from statements. future call XXXX and risks morning, events forward-looking results discuss may would Officer. Financial quarter performance to Mallak, identify or involve our release, those or company. refer press President remind Such X-K differ are which to factors may cause such everyone Jim to financial during forward-looking you materially. projections actual Chief everyone. to contained Please regarding John CEO that future differ projections Williamson, uncertainties that or our results materially

we fiscal which refer referring we call, quarter turn reference to is information during I John. that, relating a fiscal Any it the through are year a will over to period. year, to to year or runs full Finally, October a September. this With to corresponding the when a

John Williamson

everyone. Thanks, morning, Good Keith.

pleased with results started and the delivered in We are QX. year we how has the

numbers from year-over-year EBITDA up with reform. XX% momentum XXXX actions adjusted before EPS and are XX% of and reported adjusted about reported tax federal showing up as XX% our impact Our the

of Board to closed has walk our transition want delivered repurchase transaction high yield, I stock has we the you flow, through you and company leveraged Tyco’s first in cash QX continued cash the metric flow last of will XXXX. our than conversion progress made faster that of business cash am at Directors. but significant been evolution, say week Xx the pleased used, quarter highlighting Atkore We Jim remaining about first Atkore’s we Importantly, completed strong in the leverage. free market. single-digit organic growing recent volume we evolution. Atkore Xx Whichever in flow performer. the in purchased our or I EBITDA. We including results detail, XXXX announcements about in to growth review the interest a April cash

been of to continue products customers, strong with through our of our adjacent that acquisitions sold generation accretive cash portfolio to Our meeting same the to businesses flow while the and strategy has needs channels. deploying existing

an attractive sheet to we closed invest we debt shareholder. in As financing just and accomplished per ourselves have M&A. market year balance took the $XXX Dubilier that shares & allocation million favorable February Rice largest of and bolt-on X transaction solid XXXX change we over exceeded communicated terms $XXX to rates stock we very consistently, favorable $XXX with price, and Atkore’s with $XX capital retired. have million Most and target of acquisition by Clayton, our recently, of our from no an in on was strong and deploying in our by will to be advantage target repurchasing rating. million The shares That million credit

reduce CD&R and Electrical board. per from have resignation positively million as bringing goal of the the and transaction In remain believe M&A year debt average our to to financing their margins acquisitions directors of natural In concert portfolio that our repurchase with our our shareholders. Atkore allocation rate are Directors of impact loan to submitted evolution management of add Board interest Atkore, and repurchase Raceway we obtaining to in this the with fact of shares be in two shares, accretive part unwinding committed able of We capital on ownership The for as Atkore’s team term part existing Atkore this above $XXX million their clearly of to the for $XXX part process. our in and EBITDA. from

the begun the of the Atkore’s customers with have first choice strategic to new mission remains them process same. be board independent direction two replacing and members. We

detail we revenue hear favorable year-over-year. Mallak, will volume her you more As are and from in Electrical Jim up efforts Raceway seeing momentum with both around

in have with acquired ahead our businesses track position organic and progress in in in are acquisitions as on We we of The Raceway growth strengthened of place integration initiatives in the the of models. Electrical marketplace. XXXX all pleased remains the and our they the fact we

market, are always performing eye our Products segment and due face group to underperformed increases. In areas requires through price QX mix an our we business out Typically we than keen periods longer product the for faster could head keep those rising Mechanical unfavorable & below of sales. pass and raw the raw As material Solutions on of of with logistics costs time expectation. pass coupled MP&S to costs material our to that

We signs strong Adjusted grew revenue. and effects QX We in EPS above delivered are last volume the pricing our flow. improvement in are we up and over seeing of quarter. and strong to market EBITDA see a double of and expect cash through the pass XXXX. Overall, had of digits and we year rest

financials our provide insights and into in more the who that, manner. walk detail accretive to capital will We over With quarter. in additional integrating deployed and successfully I will we acquisitions the Jim turn efficient are shares and us through to call repurchase our

Jim Mallak

morning everyone. good Thanks John to and

from X from initiatives mix delivered acquisitions results to cost net XX% serve. to first Both growth. selling and high single-digit sales increases we segments up in the strengthening organic prices passing were volume and X% Moving material exchange. on increasing average markets year-over-year. Slide the foreign million, impacted mid of excluding our and up impact volume sales net was The by $XXX normalizing X, favorably quarter through after organically consolidated and acquisitions for momentum reflecting Net X% our

line. timing top the However, completed large we recover datacenter time. and are over expect the to and continue that in still the X% in The general in experiencing space softness added MP&S delays to XXXX acquisitions to

our first PVC quarter up impacts quarter the up versus sequentially. and X% costs XXXX up X% X% XX% was sequentially. in was of versus first XXXX was up first quarter up resin Copper X% of and of of the the at P&L XXXX And up key sequentially. quarter, X% our the year-over-year on and versus steel input Looking the

takes During $XX year-over-year we cost material incurred under instance of costs, those versus percentages. cost most market. of through to of and successfully the margin to factors amounts quarter, million to resulting equal in through time dollars. impact OEM Product we that the that increased sales impacting sold pass and the the pass the type increases it due just the and through distribution total Net in cost could marketplace customers of to input increases customer pass for the that unfavorably raw the of material are mix goods

ongoing were almost These freight adjustment EBITDA favorable is offset increases gross up and year. in $X versus million our non-cash raw in inventory, and Gross of for primarily by $X productivity and slightly productivity. the on cost to or volume first Investments which profitability profit the year-over-year. mathematical the lower impact, was line by business, than XXXX, same manufacturing, quarter, slightly million offset volume for believe X% cost partially million. and partially by negatively acquisitions mix partially a the account cost increases $X warehousing. freight or impacts was Those impacted in of the profit the headwinds material in the from the increases small margin increases million and offset quarter. XXXX last which greater market by adjusted EBITDA were organic added and The savings adjusted business of million the the the $X $XX driven of Excluding to measure $XX.X was gross better million inflation up we and period million by price increase margin Adjusted up year-over-year. EBITDA in compared $XX labor

and As I versus timing price combination is mentioned, of of to inflation costs. the those product raw material of gap pass-through due a the in quarter mix

we in have costs past, the we done do pass-through over as these expect to time. However,

Our tax was the quarter XX%. EPS a from first million, XXXX Adjusted higher $XX reform of on XX% have the basis of adjusted been at versus rate our year-over-year would $X.XX, million first EPS or the or of was would pre-tax XX% $X.XX up XX% have XXXX. quarter and if net up been guidance income $XX GAAP

or compared prices and increased Raceway segment net increased through XX% Adjusted price for of segment driven the X%. customers Organic driving about Higher to to by Slide all armored XX% by $XX increase acquisitions on mix accretive last $XX $XX million, The in $XXX and reported our up products the cost acquisitions X million of had Electrical of the up margin remainder. year. XX%. sales a year. selling in changes basis the in acquisition million XXXX. versus with impact about volumes strong pricing $X by to mix XX execution, Electrical versus increased million, $XX of passing lifting points, net the or our Reported favorable Raceway volume or favorable margins, EBITDA with and XXXX was reported margins sales to conduit were majority in adjusted to last average by of Moving total million account driving quarter revenue which material volume are EBITDA XX% cable million

of of market, by Mechanical same our all as straightening net basis productivity inflation price a was were a X, product by which versus X% adjusted combined to mix $XX unfavorable headwind unfavorable inputs in declined in period & quarter, XX% revenue resulted Slide freight These in last mix, on reduction Solutions to products raw year. margin up partially X% unfavorable on with but offset XXX prior EBITDA a Products by compared X%. million net increased driven of EBITDA Moving $XX an higher Volumes of sales by industrial and to the segment strong material reported costs, points by savings. were to the million. Adjusted year, reflecting

sequential second a expect margin stronger on and basis. dollars in year-over-year MP&S both and a We quarter from

X, spent flow the net balance CapEx was operating $XX Turning activities a total balance $XXX equivalents to cash Slide at decreased the quarter cash and in million. was We of the of million. debt sheet cash end to flow $X.X from and of and on million $XX the our cash net in quarter, million

acquisitions on financing trailing define for shares was adjusted and flow about continued the times cash XXXX support repurchase an John X million pro the Our flow conversion to XX-month our million to the or efforts needed closed borrowed a $XXX on revolver. The trailing XX.X in $XX CD&R strength impact the obtain from which million EBITDA. X.X on with of calculated has EBITDA leverage, and payoff which help adjusted in additional outstanding to balances repurchase of times We our basis forma we our mentioned cash February our net X. debt the XX-month share additional as

the markets were financing transaction. terms rate plus receptive incremental loan secure interest plus debt and the points strength term $XXX of the favorable to able were the points basis both after transaction. performance, the very to lien and pre-existing first credit million Given able to XXX We of ratings Atkore’s this our to We $XXX were this million LIBOR unchanged. basis from on remain LIBOR reduce XXX

forma leverage after pro this times X.X is Our transaction.

John mentioned $XXX this to million year strong is with liquidity balance acquisitions. a As significant still sheet for $XXX million earlier, per deploy to

X to Moving think current Atkore will we federal on reform understanding Slide to tax U.S. our going be based forward. favorable that

XX and will XXXX XX%, to be XX% the third due XXXX. September year the full XX% our results we liabilities Since tax tax quarter law rate fourth guidance tax and impact our non-cash expect our between any reform. one-time of and at approximately and The our prior now a second, absent we quarter effective XX% to from XX%, rate tax new year lower X% have main to down tax our we quarters to in at tax two, to federal of effective benefit first three expect be quarters fiscal reevaluation of only deferred drove first the items. our will rate. rate from end, We discrete reevaluation This tax down four

and to perspective. guidance turn will comments I his our the call for in back Now, John final

John Williamson

Thanks, Jim.

Slide our impact reform remain based transaction. unchanged performance our QX. our we our our federal based tax prior our volume XX, count the on guidance XXXX guidance. for on from repurchase view share on and to are Moving forecast on effective items share tax for our updating The of of and All other impact understanding current interest in rate the

volume QX Our evidenced. was performance

better are look a in markets will Our but are on year, wait-and-see Market does we activity we view improving. the than potential to trajectory market’s QX. the as last headwinds activity take saw there

repeat. not driven was by QX which efforts, activity recovery the the of some hurricane First, will

is in that Although difficult least was EBITDA impact $X quantify, in QX. it worth to at million we think adjusted

With non-recurring mix and buying driven growth up line that show volume of will was margin we included in in in construction be a expect lower modest will of partially industrial QX mind, markets at product. least activity, which the markets with Second, by XXXX our GDP. all

guidance our follows. as We are full year updating

the $XXX Raceway single-digit the For million in low expect million. Electrical of up to segment, be adjusted range EBITDA volume we range and in $XXX the to to mid

year. for MP&S we to the Calpipe. and reform, share range time understanding on all-in, tax second stock our volume the accounting. amortization $XX expect our expense with amounts tax of is range XXXX final million $XXX in we the XXXX will will will current for we continue we shares. segment, you adjusted After $XX be to up our first be to a also is fully Interest given the the mid million to expected about $X.XX adjusted the EPS be this preliminary low count $X.XX. in our million. QX. million. solidify Flexicon to XX continues guidance, our single-digit have estimate be $XX the CapEx million we million the between about Amortization range be QX finally EBITDA should This diluted to adjusted a and total, In approximately in the acquisition of estimate be in XX% quarter expect for million intangibles the to $XXX to between and turning reform, Based purchased $XX For tax purchase of incorporate range range EBITDA of federal and for to rate and And be

EBITDA drive to our additional and saw the between a initiatives and successfully just consolidated We We In pass-through in am accomplishments increases of to initiatives and between proud cost I $X.XX organic and savings $XX be million million quarter. with expect growth to adjusted summary, name $XX first our highlights. material from Atkore’s $X.XX. EPS continue few productivity

through repurchase, enabled Our time a Atkore significant while management financial our disciplined us loan. term re-pricing existing in favorably same reinvest to at the stock

Our of this employees possible. all make

independent taking build shareholders. the their care strengthen As to and to unwavering customers Atkore evolves as and an value capability, dedication for business of our improving our drive company, portfolio continues

open externally line in We being up the that are questions. pleased these marketplace. also Brock, please for results are recognized the

Operator

first Citigroup. Andrew Instructions] of Please Thank question go Our you, from sir. ahead. [Operator today comes Kaplowitz

Seth Girsky

guys. is Andy, Girsky morning for you Seth This how are Good today? Hey. on doing

John Williamson

Seth. Good

Seth Girsky

So pretty some talk guys looks up growth even it pickup to then that expectations in hurricane the step see more nice you growth, little and of hurricane volume your a X% it you the was seeing about restoration pretty impact strong of being related like you excluding possible and hurricane do in a a so can of the excluding think you talked hurricane from are from it’s bit about QX? work

John Williamson

into hurricane just we we to We the continuing. to take amount long on long-term that is are the fully the that hurricane, we recovery build projections, time that believe addressing is for trying as comment recovery hurricane will be do the – realized. I to Well, a think see it of but

that we rate. to that’s So accretive growth think the

in think we with we volume be. try to reluctant encouraged We the to that’s guess I going are to where QX. what are were

higher think year the has we the and about year we there is planning at a maybe being I the will the growth and ready rest prudent extrapolating critically just of lower pretty And last are are in appropriately of looking everybody that the think being couple for I volume and cautious over think growth of a rate remind being upside, we by starts. to but characterized been year that are think the for we I fits as watch unfolds. going years the rate. some over We that rest

Seth Girsky

bit near-term quarter, out costs makes quarter the but to throughout That in in guys and did turning And XXXX, a steel material seen good to expectations commodity the talk prices little getting price-costs like have Atkore? called your pretty of so price-costs for continue offset about then price we a you job to can timing you sense. looked rise the for and you into you

John Williamson

our of team metal Solutions on it. essentially is are steel or I our product & business importantly a but business challenge, made they it’s steel, think that Products so our pipe groups, there challenge of business. Most and it’s Mechanical framing as is The Yes. two are that fast, the has mechanical has grown – effect the a fast prices really up it’s completely gone our

way through the have it For handled. the is just pass to quicker we metal little pricing framing bit a opportunity

or where mechanical that it on up shown the a pricing of are that the takes our higher last that downside. we have able the effect of pass are percentage costs orders we to term through We on of and with higher percentage function purchase a and longer pass believe OEMs longer have couple commodity indexing For with timing. for through normal to years over of the dealing an typically we

through. we in but in pretty I part been strongly well in Raceway for just through would the to And something indexing and the like that moving we every challenge a us. make point have up as a well, something pass as done highlight day that’s orders, well something typically big Mechanical day it’s moving & Products – little every Electrical a cable business our that’s as that’s that up, pass but business. armored a of our pretty QX a out think we it’s something that I infused will we that’s up of challenge to sure purchase the picking it steel of remains Solutions just that on as bit copper function has in see

Seth Girsky

lot a helpful. that’s it, Thanks guys. Got

Operator

Please of comes ahead. Chris from UBS. go Belfiore The next question

Chris Belfiore

morning. Good

John Williamson

Chris. Hi

Chris Belfiore

So I to general, across provide the in want mean where just just general touch are could the seeing or strength some I markets of on just just weakness you color market? the kind you construction

John Williamson

Yes.

what really have a strong, I with really have within think I pretty we been segments, think rebound the been we of its it’s talking been has just consistent good number verticals. residential in as about non-res seeing

the apartments, much commercial downside being has a going years things, very bit side has the of the on be multifamily is plus of number which I to been been institutional a down, while been think, condos after on has on little of plus side.

I So, be and investment of seeing factories down investment constrained in would industries processing on with manufacturing gas had rate a through rippled manufacturing went This held we where U.S. in back think as spend. exchange that’s showing bit improvement. little are the as people the the pressures oil and and exports

So bit we a see that little rebounding well. as

Chris Belfiore

Okay. off you year. or spending of any carrying pass-through, effective for the kind your then potential upside lower I base? is from your during just build from infrastructure buzz any potential anything rates a some like of customer from kind around dovetailing benefits mentioned you increased of Are customers And CapEx tax mean given that, there

Jim Mallak

in the processing. little last manufacturing bit a verticals made and I Yes, with that comment on

do. same – see we us hard it’s seeing, gas tax challenged, our to a processing hard and that there investment benefits challenged with tax did to for are us people factories of through XXXX. for to few a pent-up that was market magnitude saying kind and sort exporting rebound was I do In – over don’t It’s a oil put just think to hard favorable. they Most customers layer quite our As going the it’s and cutback what all to for regards what are has really for with expectations just to people just honesty, been us in people really are on And demand plants. benefit. of but their

it more think another consider as see as something just I just So, quantify. of kind positive it a positive could opposed to we and we

Chris Belfiore

Okay.

John Williamson

out, get additional And to we engineer the all I anything before programs if them panned in by actually those think going on they quarters going it’s are also it. it see out push time them be to putting they and or

think the now. on got they and because time give it and get those things to we right them work plan drive there So, first, to have I for don’t

Chris Belfiore

if but more clarification little provide the Electrical like kind you base? could freight of guys a you color costs, business And MP&S why I mix on in it Okay. that or MP&S the then a of of was could like about just and customer just an just thing, in impact Raceway versus talked is increased

John Williamson

we for of Freight obviously all has Yes, can. up our gone businesses.

through couple talked bit the it’s And have a costs – because the are term Products steel, impact this last freight a there a pass It big longer MP&S of longer comparison just longer so us & year fundamentally, but much, favorable of working had same to in are some of place raw little for it timing. freight allocations making orders takes are market. in pass issue. Raceway. something we But unfavorable in just that’s things, issues to purchase It’s we year, that we little back Mechanical term through it’s material we of hard Electrical about more just and bit making to Pretty the Solutions. with orders just a in to in where nature compared goes purchase the

Chris Belfiore

Great. Thanks lot. a

Operator

ahead. The Bank. go John of next question from Deutsche Inch comes Please

John Inch

Thank morning, you. Good everyone.

John Williamson

John. Hi,

Jim Mallak

John. Hi,

John Inch

guys. Hi,

costs in in my to MP&S, freight freight on theme actually actually just industry. understanding is pickup that So

So next in months. the U.S. economy X we increase are actually significantly positioned to

talked patch with costs curious a little Have out? So lag that Jim or of given the to your be you these play expect tried still I rising can do come there, in respect how you pressure you up? do that mean under to am already segment does proactive margins we I about until bit to

John Williamson

place the our with business. X happy in And really team have Yes. really that years. we we have over last A to are contributions the freight, logistics on quick they comment we actually here strong put made

our pricing over into doing and with business up have protocols. at looking we are customers to X%, we and that so sure being interfacing fuel with being year rate up make X% that our We the leaders the are working the over we been very communications are at proactive

Products Solutions believe any So increase, about John cost strong Mechanical will it proactive take through longer that. to been of about we feel have will in that kind we pass But it. & but we

We it. have customers to been talking on

We through have improve think way. we to that on do pushing pretty it. we have on the hard been And mechanisms pass

we it in it. So think a of to I front going are is be challenge, but

John Inch

Okay.

think So for X% is that…? ‘XX, up freight your fiscal do you is

John Williamson

It’s going will Yes. single-digits to be up. It high actually. be up

John Inch

you That’s fine. ask Can core I estimate was X, do your you growth industries up serve you so did? that what

John Williamson

to Just X. below that X.X

John Inch

Anything on you words Okay. spot how in some in that where like noteworthy front share? did you, is particularly were there taking you any thought

John Williamson

Yes.

is I separate one we business, used to for think about our can businesses are where historically run thing Raceway individual happy we about we Atkore. those really in talk while at Electrical businesses a as this

costs truck, have wouldn’t just as segment it. went Raceway our our facility logistics we if It a got the going administrative talking out we great that all-in-one operating Raceway We on customers’ truckload call. to in X and that and President Electrical gotten one and Atkore to about products Waltz do phone X are under different Group that Bill invoice, us saved example of of out have X seven with customers able business suite, arguably been California Chino, people weren’t

I thing leveraging more think portfolio. be around type would So it of Raceway that our

John Inch

tax a the your company, why little confused tax that expect is mean Okay. you XX% your XX%? you basically are The that say long-term, ETR basically long-term release ‘XX why beyond rate I I going to by XX fiscal so January was U.S. to isn’t you XX%, to XX% be be rate on be

Jim Mallak

year to October. We is going rate. in in Well, then there. back you state three the go get reason the tax fiscal when and to down because and new those up in see XX also The bring begins it XX of have our is quarters you

rates different We grandfathered kind you it two also and straddled get up we so the tax to bring some fence X year also. under those deduction that for in rates, has state but on that the long-term get when old between our rate of were XX, really we help are code the

John Inch

example What’s no you longer an get? of that deduction

Jim Mallak

Like that the we in we get that for credit but XXX will XXXX, manufacturing XXXX. get won’t

John Williamson

the X% It’s impact. manufacturing Yes. credit, domestic almost

John Inch

alright. Okay,

rising just – of here, labor is the the and today one inflation mean it number John So you that’s to how been how guys do for the is called out some I what are wage lastly that only because it’s think increases thing one draws if on about how productivity cost under but how cost along labor pressures or based freight or the your that, are pressure, you we or just obviously you with that should to step pass can me you to concern cost, deal do own due the scope inflation or are you are manage it? pressures, going facing you

John Williamson

it’s script, let’s Well, labor it. called a address think great question. out I we the don’t Yes. pressure in but

our say to than labor are a generally experienced salary how have something actually that compensation. anything or and has incorporate tried think for first overall XXX% referring to paid in salary the be our mechanism, We different this a anything the wouldn’t productivity either to a salaried – can pricing employees on pays we of are pipeline incentive or basically we just different I being we our all happen I – employee the This through what to favorable been plan, generally at plan out. referring like year, is million incentive it we and an full our decent those $XX we we offsets thing that And our you probably have Not that’s well. One out what as generalized thing of just seeing X.X% year have a productivity prepared than annualized in that, it comparison range. even and situation I that offset is basis. to we handle. compensation you with effect of we then how a pass-through on are and million there do record maybe at for into depending $XX this at in of every productivity passing in terms you unfavorable be labor track the think will level a John incorporated to what is but into is get direct inflation to is

John Inch

me I that is signaling Yes, saying. was what

giving tax not you a because are you are of workers reform? curiosity So, to just be any of for bonus kind had

Jim Mallak

– at not haven’t is we that’s not, it’s are final No, – nothing but this say I would made we planned there point. a

John Inch

very Got appreciate I it. much. it. Thanks

John Williamson

John. Okay,

Operator

Our Please from Capital Markets. go question next Dray Instructions] ahead. [Operator RBC of Deane comes

Deane Dray

Thank you. Good morning, everyone.

John Williamson

morning, Good Deane.

Deane Dray

orderly got things back a buying the our seeing like stock favorable of bonds higher and the really period in really stock, you that down I and of issuing position ownership CDR on surprised one the terms by debt the Hey, here of creativity is rate. sell me issuing

it LIBOR plus XXX, what’s how end now it’s XXX, So, did labor plus that more favorable? up driving was

Jim Mallak

we marketplace out the was existing so new to just an the fungible, a wanted it on add when term. to to There on we Yes, very was make the went amendment churn, We were able good money. response were oversubscribed. with it. heavily and to term the in on existing we get able be for the demand oversubscription, to favorable And pricing that new

balance had everyone we to favorable time we the on we new just sheet our and term money being good existing are right and think in we holders are interested have market very I – demonstrated So, and at was both note very credit the hitting extremely jump we can board. and manage the –

John Williamson

X I been years, has would business. in over years CD&R major X the add this just to on that And going stakeholder that a

of a as our everyone and the involved Treasurer that Keith that everything credibility with Jim and there. with out job agencies, transparency very the have maintain quite this establishing credibility is with to ratings Whisenand as Chuck a and very who much think try is Cohrs, established and credibility with just it’s we banks, bit the with credibility with much well else. the I We of Along done investors as and good

it’s all So, that. I of think

Deane Dray

And to That’s terms for for you million the sheet think the good still side, $XXX capacity issuing debt capacity out M&A in right there as the what’s and called market? a $XXX total could Atkore name on that I what of see. the further credit real is here and is you be of demand balance million, and kind

Jim Mallak

one. Yes, will second the let and your me handle John handle one first let I

was it said the refinancing response given significantly I to oversubscribed. think I the as

there liquidity. So, demand a to there is still with good respect have credit. out We

is dry this with Our refinancing. entire ABL

balance available to on So, we forward. sheet the us now going liquidity have our

John Williamson

it integrate also of – M&A, or would be And to the leadership our think to integrate at ability on availability constraint. of the not possible and possible the constraint it the regards targets and the not is way with team we the part a that look it market to in capital of manage is believe constraints Yes. I ability leadership a really what’s and opportunities team and we think or M&A I the capital

that have pipeline $XXX our very to goals of deployment We of in $XXX strong is a excess million. stated million

but As those always, all. feel happen capital in an don’t they you and confident are the they or pretty things is not them, that timing issue at we of control always don’t availability that

that clear down. at accretive, of are path to was open EBITDA debt. We M&A to that paying be and would just if term X.Xx in was If right something are the we there that there absolute extending minded

on So, I that are think good in shape we front. really

Deane Dray

Yes.

the Just cash our as cash not a conversion this your expectation? don’t are XXX%, strong for estimates I specific you in calling conversion, there see free follow-up free what’s what’s year, was flow quarter out your it expectation at the flow a outlook by

John Williamson

were million we little been that, to be in similar but have probably what years. we don’t guide north of Yes, on going to if normally and a we prior $XXX bit

Deane Dray

million about $XXX cash, flow talking you or conversion? of about free are you North cash talking are

Jim Mallak

flow. cash Free

Deane Dray

Got it.

Jim Mallak

something be then range we percentage. million probably of that’s and that as something going $XXX the – we is Yes, a really is attention which to north million to pay conversion $XXX in

Deane Dray

see. That’s you. good Thank to

Jim Mallak

Yes.

Operator

Kwas question go is Rich of Please next from Fargo Securities. ahead. Wells Your

Rich Kwas

Hi, good morning everyone.

John Williamson

morning, Rich. Good

Rich Kwas

just follow-up in the doing? includes the on includes rate you that, amount that conversion the cash flow free benefits for benefit? are a Jim, cash dollar so tax, How from flow

Jim Mallak

Correct, correct.

Rich Kwas

Okay, the for okay, what’s go ahead, assumption sorry. –

Jim Mallak

don’t to going Now offset, in that’s we there be have interest increased to too. going are –

Rich Kwas

that? be lags able on ‘XX offset fully year some then to or should with regard for be And to what’s with to assume price recovery, is Right. going going we to the what whatnot, are there for and you dilution the

John Williamson

question Rich, up wouldn’t commodities to to If the typically little is lot it through or XX about through and do. year, all then If would go right about. down in way the able be really about answering start with don’t a in copper we something there because that in what that year, it’s April have spoken steel the the obviously we the are and going where to hypothetically challenge everyone year. that be lag would flattens hardest we Yes, out continue XX-day kind it peaks going that to fiscal steel and always and coming know all now think pass is bit that thing then talk we out recover a – all of a that theoretically if the we to rise we

you look you feel and period steel that we projection a of way the advantaged that about on a by in those your copper, we of on confident could will all superimpose and we volatility we profile is quarter you more our have you on that if timing. a year, a it think part that at top we over have do the but have believe even we that’s disadvantaged or big year could the time than then lags of and So, through fiscal projection or the steel pass typical

Rich Kwas

John. helpful that’s Alright, color,

you is recovery goes assumption going right steel be the able and just get up through to full then the So, now for April year? will that

John Williamson

the is That going assumption.

Rich Kwas

assumption point? Okay. for at this have And do you an copper

John Williamson

it more October What general, than in built global I steel. assume inflation think what flattening kind we dynamics some numbers. basically Midwest, much of by U.S. it we is Yes, is is driven usually out. it’s we with do, which with In we and steel assume copper do

probably around $X that’s commodity going to of year would headwind most be showing about through, are in million We I say. copper pass of for the

Rich Kwas

Okay, alright. of what about that it we it’s within in the sales mix make mechanical, percentage piece I mean enough OE affects it pass meaningful And up, as then that through? here sounds like think does

John Williamson

meaningful. It’s Yes.

of it’s ballpark about XX-XX. in think I the

Rich Kwas

adjusted Okay, one-time guidance, the that the clarification the does with include then regards deferred for million or rebound? liability tax Jim just $X XX-XX, EPS to a And alright. benefit is million $X

John Williamson

does. It

Jim Mallak

Yes, it does.

Rich Kwas

so so So that’s on…? it’s – – non-recurring, okay, we got really that’s

Jim Mallak

It’s non-recurring.

to Let’s due be going X% the down that our look first to are around at for quarter we revaluation. take deferred ETR

Rich Kwas

Thanks. alright. okay, Great,

John Williamson

Rich. Thanks

Operator

Baumann from The Patrick of ahead. go JPMorgan. Please is next question

Patrick Baumann

through and on you I the Hey down EBITDA, to am at higher I curious just guys, just missed volume expectations not the Tusa, wanted the know in growth the that just was had year and am the I some Thanks. growth because XXXX? the curious quarter one just you question expectations expectations first for look for have ask the I like good Steve beginning, volume now, EBITDA stronger guidance you a how offsets flows am sure volume for to morning. like about if looks I so had very just quick strong it, the are to quarter am unchanged, what what

John Williamson

is little Okay. Thanks. was strong, Good mix question. a Fundamentally, the but in unfavorable volume QX.

the the the Mechanical through first we little our to that through and the I effects for position have here us on a been to valuable One think commodity higher our sales. for commodity, over I great quarter been couple passing allows rising just which for bit been based of pass point taking is number would are emphasize XX% do pricing then the really the and on Raceway Products year. would’ve to that the higher feel of uses want us one in rest without – us Solutions. better, have just revenue Electrical is fixed in the wait see volume & does and We volume arising cost – I and quicker, things us, margins want would

and margin cost numerator we have the the be So pressure – in the the the of same rising to want up a the will situation one math based and on at thing going make rate. sure is will I always the that percentage emphasize sales commodity just denominator the

think mix. I the partially, that are that summarize Part some of going in volume brought QX strong And a the we attain natural the staying environment bit to through optimistic volume volume. wait economic mix think nice of is year P&L. at on to margin about through same it of fall unfavorable rebates through lower itself the margin EBITDA buying the that still end was about is – through So earnings, there even when number commodity a rising of volume We in be and little believe putting some before the distributors to year rest improving. to and but the you of taking down products a or percentage compression the as a margins see going the

Patrick Baumann

makes Got it. That sense.

moved components gave any adjusted all. around So growth when you projections, around EBITDA year-over-year quarter those last those of I about at think XXXX, have

components million or high you still million spread volume $X.X of dropping EBITDA said that any year-over-year, $XX net millions. add of of like contraction, around have you at $X and the I for was million, but think really Have then of million all $X investments is productivity acquisitions had year-over-year through framework single-digit you bridge? the those against changed it, kind

John Williamson

a I framework. it’s good think Pat, Yes, really

challenged a it rest you year probably but what little think little profile commodity of the up over volume will in is, I might happen the see place. is depending what go be We bit. the bit a will with on spread

model. some good our good are might still pretty of it’s on some productivity, but about I offset the be upsides inflation crushers, think feeling to We a that

Patrick Baumann

Thanks a Okay, Congrats. great. lot, guys.

John Williamson

Pat. Yes, thanks

Operator

[Operator Instructions]

John Williamson

Alright. will questions, of In summarize. we more absence

First of interest for in your all, you Atkore. thank

business We we have are excited like are we the first what really about we the of and – means quarter we are it the for proud believe year. of and this rest

our to on you cautious with deployed and we have being we how balance productivity much. a performance very growth, are on updating quarter. next progress in sheet. the really you with lot there volume, look and do of able is We what our showing been have Thank We but strong forward through to

Operator

This concludes today’s conference.

disconnect lines at time. Thank your this your may for You participation. you

Atkore (ATKR) 6 Feb 182018 Q1 Earnings call transcript