Atkore Inc. Q3 FY2025 earnings call

• Bill announced his decision to retire from Atkore but will lead until a successor is appointed. - Third quarter results were strong with net sales, adjusted EBITDA, and adjusted EPS toward the top end of ranges presented in May. - Achieved 2% organic volume growth, supported by productivity gains, especially in S&I segment. - Sequential pricing improvement in steel conduit products for second consecutive quarter. - Discussed evolving tariff environment since third quarter start, with multiple tariff modifications and introductions. - Business generated $192 million in cash flow from operations year-to-date, with $14 million from divestiture and equipment sales.

In the third quarter, net sales were $735 million with 2% organic volume growth. The Electrical segment had adjusted EBITDA margins compressed year-over-year due to pricing declines in PVC and steel conduit. The S&I segment saw improved adjusted EBITDA margins year-over-year, driven by volume growth and better productivity from cost management in North American operations. Year-to-date, volume was up slightly, with metal framing, cable management, and construction services growing low single digits, plastic-pipe, conduit and fittings category flat after mid-single-digit decline in first half, metal electrical conduit and fittings up low single digits, and electrical cable and flexible conduit up low single digits.

• Maintaining full year adjusted EBITDA midpoint, narrowing the range to $390 million to $410 million. - Raising adjusted EPS midpoint to $6.50, with range $6.25 to $6.75. - Expecting fourth quarter adjusted EBITDA in range of $75 million to $95 million and adjusted EPS in range of $1.05 to $1.35. - Adjusted full year tax rate range to 19% to 21%, with fourth quarter tax rate range 20% to 23%. - Anticipating headwinds in FY '26 including PVC pricing, expanded aluminum tariffs, with estimated $50 million unmitigated headwinds, actively working to offset these.

• Tariffs influencing input costs and market pricing dynamics, with evolving environment having multiple modifications and new tariffs. - Potential headwinds in FY '26 from PVC pricing year-over-year decline, expanded aluminum tariffs from 25% to 50%, creating cost challenges and possible slowdown in demand activity.

Q: How much visibility on demand trends for '26?

A: Bill and John discussed end markets like data centers, solar being optimistic, with low single-digit growth expected.

Q: Water end market demand and investment?

A: Majority investments on pace, municipal picking up to fill void from residential decline.

Q: HDPE competition and inventory?

A: No major changes, fiber growth due to data centers, volumes picking up.

Q: Steel conduit imports and tariffs?

A: Year-to-date flat to up 2%, quarter over quarter down significant double digits, tariffs having impact.

Q: Demand visibility and backlog?

A: Backlog about 2 weeks, inventories average to lower, utility market end demand good.

Q: Pricing surprises?

A: Price guide in line with estimates, metal conduit slightly better, aluminum tariffs affecting.

Q: Capital allocation?

A: Guide to spend $150 million this year, no commitment to next year yet, capital allocation pillars include capex, dividend, share repurchases, M&A.

Q: IRA tax credit and solar margins?

A: Solar market growing, margins attractive with productivity and volume.

Q: Free cash flow FY '25 vs '24?

A: Slight weakness due to AR timing, inventories coming down, opportunity to optimize.

Q: Steel market share recapture?

A: Potential to recapture market share over time as importers face challenges