Atkore (ATKR) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company achieved net sales of $702 million, reflecting a 5% organic volume growth driven by construction services, steel conduit, metal framing, and cable management products [6][11] - Adjusted EBITDA was$ 116 million, with adjusted EBITDA margins expanding sequentially to 16.6% from 15% in the previous quarter [11] - Adjusted EPS was reported at $2.04, showing a positive trend compared to the previous year [11] Business Line Data and Key Metrics Changes - Organic volumes increased by 5% compared to a 1% decline in the same quarter of the previous fiscal year [11] - Average selling prices declined by 17% year-over-year, primarily due to decreases in PVC and steel conduit products, although there was sequential pricing improvement for steel conduit [12][16] - The Electrical Cable and Flexible Conduit category grew year-to-date by low single digits, while metal framing, cable management, and construction services saw high single-digit growth [13][16] Market Data and Key Metrics Changes - The Dodge Momentum Index indicated a slowdown in planning activity across several non-residential categories [10] - Despite year-to-date increases in construction starts and planning activities, there are indications of potential slower activity moving forward [19][20] Company Strategy and Development Direction - The company remains committed to a balanced capital deployment model, focusing on returning cash to shareholders through share repurchases and dividends while investing in growth initiatives [18][25] - The management highlighted the importance of domestic manufacturing and the ability to serve customers effectively in the evolving electrical industry [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about demand for U.S.-made steel conduit in 2025, despite uncertainties related to tariffs and macroeconomic conditions [9][20] - The company is maintaining its full-year fiscal 2025 adjusted EBITDA guidance in the range of$ 375 million to $425 million and adjusted EPS between$ 5.75 and $6.85 [21][10] Other Important Information - An impairment charge of$ 50 million was announced for certain long-lived assets related to HDP pipe and conduit products due to competition from emerging technologies [8][67] - A new five-year labor agreement was ratified with the United Steel Workers at the Harvey, Illinois facility, which is expected to enhance productivity [7] Q&A Session Summary Question: Expectations for PVC conduits for the remainder of the year - Management indicated that pricing has continued to decline, but they are still on track with previous guidance regarding PVC conduit pricing [30] Question: Market share for PVC conduit - Management believes they remain a leader in the PVC conduit market, although imports have been increasing [31][32] Question: Recent import levels and potential pricing upside - Management noted that PVC imports have increased significantly year-over-year, but the future trajectory is uncertain due to tariffs [40][41] Question: Net tariff benefit in updated fiscal guidance - Management suggested that a 2% to 3% reduction in volume could be offset by tariff increases, indicating a net positive for shareholders [61] Question: Update on steel conduit imports from Mexico - Management confirmed that while there has been a reduction in imports, they do not expect a complete halt due to the 25% tariff [64][65] Question: Impairment of HD PVC and competitive changes - The impairment was influenced by competition from fiber optic technologies and the administration's plans to increase funding for satellite internet [66][69] Question: Direction from the administration on tariffs - Management stated they have not received specific guidance from the administration regarding tariffs or the BEAD program [73] Question: Cadence of demand for products - Management reported that demand has improved month-over-month, with customers remaining cautiously optimistic [94] Question: Construction services opportunity - Management indicated that data centers are expected to be a significant portion of construction services moving forward [96][98] Question: Pricing assumptions for FY 2025 - Management has not changed pricing assumptions despite tariff impacts, indicating that overall price versus cost dynamics remain within expected ranges [99][102]