8-K: Atkore Inc. Reports Lower Q4 and Full Year 2024 Results, Provides 2025 Outlook

Atkore Inc. announced a decrease in net sales and profitability for both the fourth quarter and full year 2024, while also providing an initial outlook for fiscal year 2025.

Summary

• Atkore's net sales for the fourth quarter of 2024 decreased by 9.4% to $788.3 million compared to $869.9 million in the prior year period.
• Net income for the fourth quarter decreased by 48.1% to $73.1 million, down from $140.9 million in the prior year period.
• Adjusted EBITDA for the fourth quarter decreased by 39.6% to $140.2 million, compared to $232.0 million in the prior year period.
• For the full fiscal year 2024, net sales decreased by 9.0% to $3,202.1 million, compared to $3,518.8 million in fiscal 2023.
• Full year net income decreased by 31.5% to $472.9 million, down from $689.9 million in the prior year.
• Adjusted EBITDA for the full year decreased by 25.9% to $771.7 million, compared to $1,042.1 million in the prior year.
• The company repurchased $381.0 million of its outstanding stock and paid dividends totaling $34.5 million during fiscal year 2024.
• Atkore expects full-year 2025 net sales to be in the range of $2.9 to $3.2 billion.
• The company anticipates full-year 2025 Adjusted EBITDA to be between $475 and $525 million, and Adjusted net income per diluted share to be between $7.80 and $8.90.

Sentiment

Score: 4

Explanation: The sentiment is moderately negative due to the significant decreases in sales and profitability, although the company is taking steps to address these challenges and has a positive outlook for long-term growth.

Positives

• Atkore achieved 3.5% organic volume growth in fiscal year 2024.
• The company returned approximately 75% of cash generated from operating activities to shareholders through dividends and share repurchases.
• Atkore has a strong balance sheet with a total debt leverage ratio of approximately 1x.
• The company has a diverse portfolio of electrical infrastructure products.
• Atkore is investing in growth initiatives to support global megaprojects and expand into water-related end markets.

Negatives

• Net sales decreased by 9.4% in the fourth quarter and 9.0% for the full year.
• Net income decreased by 48.1% in the fourth quarter and 31.5% for the full year.
• Adjusted EBITDA decreased by 39.6% in the fourth quarter and 25.9% for the full year.
• The company experienced lower average selling prices, impacting gross profit and margins.
• The telecom market softness negatively impacted performance of HDPE products.

Risks

• The company faces challenges from import competition, particularly in steel conduit.
• There is a risk of further normalization of average selling prices in key product lines.
• The company is exposed to potential delays in government stimulus programs and megaproject activity.
• There are potential risks from geopolitical conflicts and qualified labor shortages.
• The company's performance could be affected by changes in interest rates and mortgage rates.

Future Outlook

Atkore expects full-year 2025 net sales to be in the range of $2.9 to $3.2 billion, Adjusted EBITDA to be between $475 and $525 million, and Adjusted net income per diluted share to be between $7.80 and $8.90. The company anticipates low to mid single digit percentage volume growth in FY 2025.

Management Comments

• Atkore achieved annual volume growth of 3.5% with contributions from each of our key product categories in fiscal 2024, said Bill Waltz, Atkore President and Chief Executive Officer.
• Given the expected decline in net sales and profitability this year, we remained focused on executing our strategic initiatives which we believe will further strengthen our Company for the long-term.
• Our cash flow generation and disciplined approach to capital allocation are two of Atkore's greatest strengths.
• I am proud to say that since declaring our first quarterly dividend earlier in the year, Atkore returned approximately 75% of cash generated from operating activities to shareholders in the form of dividends and share repurchases.
• As we end our year and look forward, we are encouraged by the prospects of secular trends for which we have an opportunity to participate.
• We are mindful of the challenges we face in certain markets, and the competitive landscape in which we operate as we find opportunities to be the customer's first choice.

Industry Context

The results reflect a broader trend of pricing normalization and increased competition in the electrical products industry. Atkore is focusing on long-term strategic initiatives and growth in key areas such as renewable energy and data centers, which align with industry megatrends.

Comparison to Industry Standards

• Atkore's performance is being impacted by pricing normalization, a trend also seen in other companies in the building materials and electrical components sectors, such as ABB and Eaton.
• The company's focus on megaprojects and water infrastructure aligns with the growth strategies of companies like AECOM and Jacobs Engineering.
• The decrease in profitability is similar to what other companies in the sector have experienced due to increased input costs and pricing pressures.
• Atkore's share repurchase program is a common strategy among mature companies in the sector to return value to shareholders, similar to what companies like Leggett & Platt have done.
• The company's focus on renewable energy and data centers is consistent with the broader industry trend towards electrification and digital transformation, similar to the strategies of companies like Schneider Electric.

Stakeholder Impact

• Shareholders will experience lower returns in the short-term due to decreased profitability, but may benefit from long-term growth initiatives and share repurchases.
• Employees may be affected by cost-cutting measures or strategic shifts within the company.
• Customers may experience changes in pricing and product availability due to market conditions.
• Suppliers may be impacted by changes in Atkore's purchasing patterns.
• Creditors may be concerned about the company's decreased profitability, but the company's strong balance sheet provides some reassurance.

Next Steps

• Atkore will continue to execute its strategic initiatives to strengthen the company for the long-term.
• The company will focus on growth in key areas such as renewable energy, data centers, and water infrastructure.
• Atkore will continue to invest in its construction services capabilities to support megaproject demand.
• The company will maintain a balanced capital deployment model focused on share repurchases, capital investments, quarterly dividends, and M&A.

Key Dates

Keywords

electrical products, conduit, EBITDA, net sales, net income, share repurchases, dividends, megaprojects, water infrastructure, solar, construction services