Advertisement
Singapore markets open in 2 hours 33 minutes

  • Straits Times Index

    3,322.62
    +14.72 (+0.45%)
     

  • S&P 500

    5,267.84
    -39.17 (-0.74%)
     

  • Dow

    39,065.26
    -605.78 (-1.53%)
     

  • Nasdaq

    16,736.03
    -65.51 (-0.39%)
     

  • Bitcoin USD

    67,645.33
    -1,605.38 (-2.32%)
     

  • CMC Crypto 200

    1,472.10
    -30.56 (-2.03%)
     

  • FTSE 100

    8,339.23
    -31.10 (-0.37%)
     

  • Gold

    2,331.80
    -5.40 (-0.23%)
     

  • Crude Oil

    76.94
    +0.07 (+0.09%)
     

  • 10-Yr Bond

    4.4750
    +0.0410 (+0.92%)
     

  • Nikkei

    39,103.22
    +486.12 (+1.26%)
     

  • Hang Seng

    18,868.71
    -326.89 (-1.70%)
     

  • FTSE Bursa Malaysia

    1,629.18
    +7.09 (+0.44%)
     

  • Jakarta Composite Index

    7,222.38
    +36.34 (+0.51%)
     

  • PSE Index

    6,659.99
    +52.77 (+0.80%)
     

Atkore Inc (ATKR) Q2 2024 Earnings Call Transcript Highlights: Strong Performance Amid Market ...

GuruFocus Research
·4-min read

  • Net Sales: $793 million for Q2.

  • Adjusted EBITDA: $212 million for Q2, with a margin over 26%.

  • Adjusted Diluted EPS: Exceeded top end of outlook, specific figure not provided.

  • Share Repurchase: $150 million in Q2, new $500 million authorization announced.

  • Capital Expenditures: Over $70 million deployed in Q2.

  • Dividends: Payment of first quarterly dividend in Q2.

  • Investment Grade Status: Achieved by Fitch Ratings.

  • Adjusted EBITDA Outlook: Midpoint amended by $50 million to $875 million for FY24.

  • Volume: Down 1% YoY in Q2; up 6% year-to-date.

  • Tax Rate: Approximately 19% in Q2, benefited from stock compensation and solar tax credits.

Release Date: May 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Atkore Inc (NYSE:ATKR) reported a 6% year-to-date increase in volume, contributing to a strong first half of the fiscal year.

  • Adjusted EBITDA and adjusted diluted EPS both exceeded the top end of the company's outlook presented in February.

  • Atkore Inc (NYSE:ATKR) successfully executed on its capital deployment strategy, with $150 million in share repurchases and over $70 million in capital expenditures.

  • Fitch Ratings upgraded Atkore Inc (NYSE:ATKR) to investment grade status, reflecting the company's strong operating profile and financial flexibility.

  • The company announced a new $500 million share buyback program, following the near completion of the previous $1.3 billion authorization.

Negative Points

  • Organic volume was down 1% year-over-year in the second quarter, indicating some challenges in maintaining growth.

  • Atkore Inc (NYSE:ATKR) reduced its near-term growth expectations for its HGPE and solar initiatives due to current market challenges.

  • The company reported a $50 million reduction in the midpoint of its adjusted EBITDA outlook for fiscal 2024.

  • HDPE and solar segments underperformed, leading to an $80 million reduction in expectations, which was only partially offset by strong performance in other areas.

  • Despite strong year-to-date volume growth, there are ongoing concerns about the potential impact of pricing normalization and market conditions on future performance.

Q & A Highlights

Q: Can you provide more details on the expected recovery in HDPE and its current size as a percentage of core sales? A: William Waltz, President and CEO of Atkore, mentioned that while the specific size of HDPE in terms of sales percentage wasn't disclosed, the market for HDPE is currently slower than expected. The recovery is anticipated to start by the end of this year, with expectations of volume and pricing improvement as the market picks up.

ADVERTISEMENT

Q: What are the main drivers behind the projected increase from $16.50 to $18 adjusted EPS in FY25? A: David Johnson, CFO, explained that the improvement is expected mainly from the reversal of the current negative impacts of HDPE and solar, which are projected to turn positive and grow further. Additional contributions are expected from large project businesses and overall market improvements, offset slightly by continued price cost reductions and productivity benefits.

Q: Can you separate the manufacturing challenges from overall market conditions in solar torque tube production? A: William Waltz clarified that the market remains robust, but the challenges are primarily operational, involving fine-tuning equipment at their facilities. Despite these issues, customer and market demand remains strong, supporting confidence in future performance improvements.

Q: How is the pricing environment expected to impact the business if the anticipated spring and summer construction activities do not materialize? A: William Waltz reassured that there is no current indication of unexpected changes, and the situation is unfolding as anticipated. However, he noted the inherent unpredictability in their business given the short backlog period, emphasizing the need for flexibility and responsiveness to market conditions.

Q: What is the status of the destocking process, particularly concerning HDPE? A: David Johnson indicated that while destocking is largely behind them, HDPE experienced unexpected additional destocking this year. However, the overall market inventory levels are stabilizing, aligning with current reduced demand levels.

Q: Regarding large project opportunities, what specific end markets look promising, and how do you see these projects evolving? A: William Waltz highlighted significant opportunities in chip manufacturing and data centers, primarily in the U.S. but also expanding globally. Atkore is increasing its focus on these areas, expecting substantial growth and involvement in major projects moving forward.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.