Form 8-K Atkore International For: Feb 06
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 6, 2019
Atkore International Group Inc.
(Exact name of registrant as specified in its charter)
(Exact name of registrant as specified in its charter)
Delaware | 001-37793 | 90-0631463 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
16100 South Lathrop Avenue Harvey, Illinois | 60426 |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code:
(708) 339-1610
Not Applicable
(Former name or former address, if changed since last report)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
▪ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
▪ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
▪ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
▪ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.*
On February 6, 2019, Atkore International Group Inc. (the "Company" or "Atkore") issued a press release announcing the Company’s financial results for the first fiscal quarter ended December 28, 2018. Additionally, the Company announced that its Board of Directors has authorized the Company to enter into a share repurchase program for the repurchase of up to an aggregate amount of $50 million of the Company's common stock. A copy of the press release is being furnished as Exhibit 99.1 and incorporated herein by reference.
The information contained in Item 7.01 concerning the presentation to the Atkore investors is hereby incorporated into this Item 2.02 by reference.
Item 7.01. Regulation FD Disclosure.*
The slide presentation attached hereto as Exhibit 99.2, and incorporated herein by reference, will be presented to certain Atkore investors on February 6, 2019 and may be used by Atkore in various other presentations to investors.
Item 9.01. Financial Statements Exhibits.*
Exhibit No. | Description of Exhibit | ||
99.1 | |||
99.2 | |||
* | In accordance with General Instruction B.2 of Form 8-K, the information in Items 2.02 and 7.01 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 attached hereto, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 ("Exchange Act"), as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. | ||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ATKORE INTERNATIONAL GROUP INC.
By: /s/ Daniel S. Kelly
Daniel S. Kelly
Vice President, General Counsel and Secretary
Vice President, General Counsel and Secretary
Date: February 6, 2019
EXHIBIT INDEX
Exhibit No. | Description of Exhibit | |
99.1 | ||
99.2 | ||
| Exhibit 99.1 | |
Atkore International Group Inc. Announces First Quarter 2019 Results
• | Diluted earnings per share increased by $0.13 to $0.54; Adjusted net income per diluted share increased by $0.18 to $0.74 |
• | Net income decreased by $0.2 million to $26.9 million; Adjusted EBITDA increased by $11.5 million to $70.0 million |
• | Second quarter 2019 Adjusted EBITDA guidance of $69 million - $75 million |
• | Full-year Adjusted EBITDA guidance updated to $290.0 million - $310.0 million |
• | Second quarter 2019 Adjusted net income per diluted share guidance of $0.70 - $0.80 |
• | Full-year Adjusted net income per diluted share guidance updated to $3.05 - $3.35 |
HARVEY, IL. — February 6, 2019 (BUSINESS WIRE) - Atkore International Group Inc. (the "Company" or "Atkore") (NYSE: ATKR) announced earnings for its fiscal 2019 first quarter ended December 28, 2018.
"I’m pleased to report that Atkore delivered strong First Quarter results in net sales, adjusted EBITDA and earnings per share. Our continued focus on executing upon strategic initiatives has driven profitable growth and an improved customer experience, which enables Atkore to increase its full year guidance for Fiscal Year 2019,” commented Bill Waltz, Atkore President and Chief Executive Officer.
2019 First Quarter Results
Three months ended | ||||||||||||||||
(in thousands) | December 28, 2018 | December 29, 2017 | Change | % Change | ||||||||||||
Net sales | ||||||||||||||||
Electrical Raceway | $ | 343,406 | $ | 316,523 | $ | 26,883 | 8.5 | % | ||||||||
Mechanical Products & Solutions | 108,813 | 98,574 | 10,239 | 10.4 | % | |||||||||||
Eliminations | (191 | ) | (539 | ) | 348 | (64.6 | )% | |||||||||
Consolidated operations | $ | 452,028 | $ | 414,558 | $ | 37,470 | 9.0 | % | ||||||||
Adjusted EBITDA | ||||||||||||||||
Electrical Raceway | $ | 68,489 | $ | 56,160 | $ | 12,329 | 22.0 | % | ||||||||
Mechanical Products & Solutions | 10,887 | 10,809 | 78 | 0.7 | % | |||||||||||
Unallocated | (9,353 | ) | (8,482 | ) | (871 | ) | 10.3 | % | ||||||||
Consolidated operations | $ | 70,023 | $ | 58,487 | $ | 11,536 | 19.7 | % | ||||||||
Net sales increased $37.5 million, or 9.0% to $452.0 million for the three months ended December 28, 2018 compared to $414.6 million for the three months ended December 29, 2017. Net sales increased $39.8 million primarily due to increased average market prices for the metal electrical conduit product category and the pass-through impact of higher average input costs of steel, copper, and freight. Additionally, net sales increased $13.0 million due to the acquisitions of Vergokan International NV ("Vergokan") and Communications Integrators, Inc. ("Cii") over the past twelve months, partly offset by a decrease in net sales of $4.9 million due to the divestiture of Flexhead in the second quarter of fiscal 2018. The increase in net sales was partially offset by lower volume of $11.0 million primarily in metal conduit and cable wire product categories sold within the Electrical Raceway segment.
Gross profit increased by $13.4 million, or 13.8% to $110.3 million for the three months ended December 28, 2018, as compared to $96.9 million for the prior-year period. Gross margins increased to 24.4% for the three months ended December 28, 2018, as compared to 23.4% for the prior-year period. Gross margins increased primarily due to increased average market prices for the metal electrical conduit product category.
1
| Exhibit 99.1 | |
Net income decreased by $0.2 million, or 0.9% to $26.9 million for the three months ended December 28, 2018 compared to $27.2 million for the prior-year period primarily due to higher income tax expense of $5.6 million and higher interest expense of $5.6 million, partially offset by higher operating income of $9.1 million.
Adjusted EBITDA increased by $11.5 million, or 19.7% to $70.0 million for the three months ended December 28, 2018 compared to $58.5 million for the three months ended December 29, 2017. The increase was primarily due to higher operating income of $9.1 million and incremental Adjusted EBITDA of $2.1 million from acquisitions during fiscal 2019 and fiscal 2018, partially offset by the divestiture of Flexhead during the second quarter of fiscal 2018.
Diluted earnings per share on a GAAP basis was $0.54 for the three months ended December 28, 2018, as compared to $0.41 in the prior-year period. Adjusted net income per diluted share increased by $0.18 to $0.74 for the three months ended December 28, 2018, as compared to $0.56 for the prior-year period.
Segment Results
Electrical Raceway
Net sales increased $26.9 million, or 8.5%, to $343.4 million for the three months ended December 28, 2018 compared to $316.5 million for the three months ended December 29, 2017. The increase was primarily due to increased average market prices for the metal electrical conduit and fittings product category and the pass-through impact of higher average input costs of steel, copper and freight of $25.0 million. Additionally, sales increased $13.0 million resulting from acquisitions during fiscal 2019 and fiscal 2018. The increase in sales was partially offset by lower volume of $11.0 million primarily in the metal electrical conduit and cable wire product categories.
Adjusted EBITDA for the three months ended December 28, 2018 increased $12.3 million, or 22.0%, to $68.5 million from $56.2 million for the three months ended December 29, 2017. Adjusted EBITDA margins increased to 19.9% for the three months ended December 28, 2018 compared to 17.7% for the three months ended December 29, 2017. The increase in Adjusted EBITDA was largely due to increased average market prices for the metal electrical conduit product category and incremental Adjusted EBITDA resulting from acquisitions during fiscal 2019 and fiscal 2018. The increase in Adjusted EBITDA was partially offset by lower volume for metal electrical conduit and cable wire product categories.
Mechanical Products & Solutions ("MP&S")
Net sales increased $10.2 million, or 10.4%, for the three months ended December 28, 2018 to $108.8 million compared to $98.6 million for the three months ended December 29, 2017. The increase was primarily due to $14.8 million of higher average selling prices, partly offset by a decrease in net sales of $4.9 million due to the divestiture of Flexhead in the second quarter of fiscal 2018.
Adjusted EBITDA increased $0.1 million, or 0.7%, to $10.9 million for the three months ended December 28, 2018 compared to $10.8 million for the three months ended December 29, 2017. Adjusted EBITDA margins decreased to 10.0% for the three months ended December 28, 2018 compared to 11.0% for the three months ended December 29, 2017. Adjusted EBITDA increase primarily due to an increase in average selling prices, partially offset by the divestiture of Flexhead in the second quarter of fiscal 2018.
Second Quarter and Full-Year 2019 Guidance
The Company's expects second quarter 2019 Adjusted EBITDA to be in the range of $69 million - $75 million and Adjusted net income per diluted share to be in the range of $0.70 - $0.80.
The Company is updating its expectation of fiscal year 2019 Adjusted EBITDA to be in the range of $290.0 million - $310.0 million and its expectation of fiscal year 2019 Adjusted net income per diluted share to be in the range of $3.05 - $3.35 .
Reconciliations of the forward-looking full-year 2019 outlook for Adjusted EBITDA and Adjusted net income per diluted share are not being provided as the Company does not currently have sufficient data to accurately estimate the variables and individual adjustments for such reconciliations.
2
| Exhibit 99.1 | |
Share Repurchase Program
On February 5, 2019, the Board of Directors approved a share repurchase program, under which the Company may repurchase up to $50 million of its outstanding common stock. The Company will conduct repurchases under the program in the open market and through broker negotiated purchases in compliance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended, and subject to market conditions, applicable legal requirements, and other relevant factors. The share repurchase program will be funded from the company’s available cash balances. This share repurchase program does not obligate the company to acquire any particular amount of common stock, and it may be terminated at any time at the company’s discretion. As of January 30, 2019, the Company had 45,980,471 shares of common stock outstanding.
Conference Call Information
Atkore management will host a conference call today, February 6, 2019, at 8 a.m. Eastern time, to discuss the Company's financial results. The conference call may be accessed by dialing (877) 407-0789 (domestic) or (201) 689-8562 (international). The call will be available for replay until February 19, 2019. The replay can be accessed by dialing (844) 512-2921, or for international callers, (412) 317-6671. The passcode for the live call and the replay is 13686302.
Interested investors and other parties can also listen to a webcast of the live conference call by logging onto the Investor Relations section of the Company's website at http://investors.atkore.com. The online replay will be available on the same website immediately following the call.
To learn more about the Company, please visit the company's website at http://investors.atkore.com.
About Atkore International Group Inc.
Atkore International Group Inc. is a leading manufacturer of Electrical Raceway products primarily for the non-residential construction and renovation markets and Mechanical Products & Solutions for the construction and industrial markets. The Company manufactures a broad range of end-to-end integrated products and solutions that are critical to its customers’ businesses and employs approximately 3,500 people at 58 manufacturing and distribution facilities worldwide. The Company is headquartered in Harvey, Illinois.
Contact:
Keith Whisenand |
Vice President - Investor Relations |
708-225-2124 |
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements relating to financial outlook. Some of the forward-looking statements can be identified by the use of forward-looking terms such as "believes," "expects," "may," "will," "shall," "should," "would," "could," "seeks," "aims," "projects," "is optimistic," "intends," "plans," "estimates," "anticipates" or other comparable terms. Forward-looking statements include, without limitation, all matters that are not historical facts. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes, including, without limitation, our actual results of operations, financial condition and liquidity, and the development of the market in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this press release. In addition, even if our results of operations, financial condition and cash flows, and the development of the market in which we operate, are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods.
3
| Exhibit 99.1 | |
A number of important factors, including, without limitation, the risks and uncertainties discussed under the caption "Risk Factors" in our Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission ("SEC") on November 28, 2018 could cause actual results and outcomes to differ materially from those reflected in the forward-looking statements. Additional factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation: declines in, and uncertainty regarding, the general business and economic conditions in the United States and international markets in which we operate; weakness or another downturn in the United States non-residential construction industry; changes in prices of raw materials; pricing pressure, reduced profitability, or loss of market share due to intense competition; availability and cost of third-party freight carriers and energy; high levels of imports of products similar to those manufactured by us; changes in federal, state, local and international governmental regulations and trade policies; adverse weather conditions; failure to generate sufficient cash flow from operations or to raise sufficient funds in the capital markets to satisfy existing obligations and support the development of our business; increased costs relating to future capital and operating expenditures to maintain compliance with environmental, health and safety laws; reduced spending by, deterioration in the financial condition of, or other adverse developments with respect to, one or more of our top customers; increases in our working capital needs, which are substantial and fluctuate based on economic activity and the market prices for our main raw materials, including as a result of failure to collect, or delays in the collection of, cash from the sale of manufactured products; work stoppage or other interruptions of production at our facilities as a result of disputes under existing collective bargaining agreements with labor unions or in connection with negotiations of new collective bargaining agreements, as a result of supplier financial distress, or for other reasons; challenges attracting and retaining key personnel or high-quality employees; changes in our financial obligations relating to pension plans that we maintain in the United States; reduced production or distribution capacity due to interruptions in the operations of our facilities or those of our key suppliers; loss of a substantial number of our third-party agents or distributors or a dramatic deviation from the amount of sales they generate; security threats, attacks, or other disruptions to our information systems, or failure to comply with complex network security, data privacy and other legal obligations or the failure to protect sensitive information; possible impairment of goodwill or other long-lived assets as a result of future triggering events, such as declines in our cash flow projections or customer demand; safety and labor risks associated with the manufacture and in the testing of our products; product liability, construction defect and warranty claims and litigation relating to our various products, as well as government inquiries and investigations, and consumer, employment, tort and other legal proceedings; our ability to protect our intellectual property and other material proprietary rights; risks inherent in doing business internationally; our inability to introduce new products effectively or implement our innovation strategies; the inability of our customers to pay off the credit lines extended to them by us in a timely manner and the negative impact on customer relations resulting from our collections efforts with respect to non-paying or slow-paying customers; our inability to continue importing raw materials, component parts and/or finished goods; changes as a result of comprehensive tax reform; the incurrence of liabilities and the issuance of additional debt or equity in connection with acquisitions, joint ventures or divestitures; failure to manage acquisitions successfully, including identifying, evaluating, and valuing acquisition targets and integrating acquired companies, businesses or assets; the incurrence of liabilities in connection with violations of the U.S. Foreign Corrupt Practices Act and similar foreign anti-corruption laws; the incurrence of additional expenses, increase in complexity of our supply chain and potential damage to our reputation with customers resulting from regulations related to "conflict minerals"; disruptions or impediments to the receipt of sufficient raw materials resulting from various anti-terrorism security measures; restrictions contained in our debt agreements; failure to generate cash sufficient to pay the principal of, interest on, or other amounts due on our debt; and other factors described from time to time in documents that we file with the SEC. The Company assumes no obligation to update the information contained herein, which speaks only as of the date hereof.
Non-GAAP Financial Information
This press release includes certain financial information, not prepared in accordance with Generally Accepted Accounting Principles in the United States ("GAAP"). Because not all companies calculate non-GAAP financial information identically (or at all), the presentations herein may not be comparable to other similarly titled measures used by other companies. Further, these measures should not be considered substitutes for the performance measures derived in accordance with GAAP. See non-GAAP reconciliations below in this press release for a reconciliation of these measures to the most directly comparable GAAP financial measures.
4
| Exhibit 99.1 | |
Adjusted EBITDA and Adjusted EBITDA Margin
We use Adjusted EBITDA and Adjusted EBITDA Margin in evaluating the performance of our business and in the preparation of our annual operating budgets and as indicators of business performance and profitability. We believe Adjusted EBITDA and Adjusted EBITDA Margin allow us to readily view operating trends, perform analytical comparisons and identify strategies to improve operating performance.
We define Adjusted EBITDA as net income (loss) before: depreciation and amortization, interest expense, net, loss (gain) on extinguishment of debt, income tax expense (benefit), restructuring and impairments, stock-based compensation, certain legal matters, transaction costs, gain on sale of a business, gain on sale of joint venture and other items, such as inventory reserves and adjustments and realized or unrealized gain (loss) on foreign currency transactions. We believe Adjusted EBITDA, when presented in conjunction with comparable accounting principles generally accepted in the United States of America ("GAAP") measures, is useful for investors because management uses Adjusted EBITDA in evaluating the performance of our business. We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of Net sales.
We believe Adjusted EBITDA, when presented in conjunction with comparable accounting principles generally accepted in the United States of America ("GAAP") measures, is useful for investors because management uses Adjusted EBITDA in evaluating the performance of our business.
Adjusted Net Income and Adjusted Net Income per Share
We use Adjusted net income and Adjusted net income per share in evaluating the performance of our business and profitability. Management believes that these measures provide useful information to investors by offering additional ways of viewing the Company's results that, when reconciled to the corresponding GAAP measure provide an indication of performance and profitability excluding the impact of unusual and or non-cash items. We define Adjusted net income as net income before consulting fees, loss on extinguishment of debt, stock-based compensation, intangible asset amortization, gain on sale of joint venture, certain legal matters and other items. We define Adjusted net income per share as basic and diluted earnings per share excluding the per share impact of consulting fees, loss on extinguishment of debt, stock-based compensation, intangible asset amortization, gain on sale of joint venture, certain legal matters and other items.
Leverage Ratio - Net debt/Adjusted EBITDA
We define leverage ratio as the ratio of net debt (total debt less cash and cash equivalents) to Adjusted EBITDA on a trailing twelve-month ("TTM") basis. We believe the leverage ratio is useful to investors as an alternative liquidity measure.
5
| Exhibit 99.1 | |
ATKORE INTERNATIONAL GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended | ||||||||
(in thousands, except per share data) | December 28, 2018 | December 29, 2017 | ||||||
Net sales | $ | 452,028 | $ | 414,558 | ||||
Cost of sales | 341,772 | 317,691 | ||||||
Gross profit | 110,256 | 96,867 | ||||||
Selling, general and administrative | 56,379 | 51,595 | ||||||
Intangible asset amortization | 8,214 | 8,687 | ||||||
Operating income | 45,663 | 36,585 | ||||||
Interest expense, net | 12,160 | 6,594 | ||||||
Other (income) expense, net | (1,600 | ) | 286 | |||||
Income before income taxes | 35,103 | 29,705 | ||||||
Income tax expense | 8,154 | 2,516 | ||||||
Net income | $ | 26,949 | $ | 27,189 | ||||
Net income per share | ||||||||
Basic | $ | 0.56 | $ | 0.43 | ||||
Diluted | $ | 0.54 | $ | 0.41 | ||||
6
| Exhibit 99.1 | |
ATKORE INTERNATIONAL GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data) | December 28, 2018 | September 30, 2018 | ||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 75,919 | $ | 126,662 | ||||
Accounts receivable, less allowance for doubtful accounts of $2,534 and $1,762, respectively | 294,181 | 265,147 | ||||||
Inventories, net | 226,587 | 221,753 | ||||||
Prepaid expenses and other current assets | 28,952 | 33,576 | ||||||
Total current assets | 625,639 | 647,138 | ||||||
Property, plant and equipment, net | 241,699 | 213,108 | ||||||
Intangible assets, net | 295,203 | 291,916 | ||||||
Goodwill | 178,797 | 170,129 | ||||||
Deferred tax assets | 1,249 | 162 | ||||||
Other long-term assets | 2,197 | 1,607 | ||||||
Total Assets | $ | 1,344,784 | $ | 1,324,060 | ||||
Liabilities and Equity | ||||||||
Current Liabilities: | ||||||||
Short-term debt and current maturities of long-term debt | $ | 26,561 | $ | 26,561 | ||||
Accounts payable | 134,090 | 156,525 | ||||||
Income tax payable | 3,931 | 542 | ||||||
Accrued compensation and employee benefits | 21,197 | 33,350 | ||||||
Customer liabilities | 50,127 | 3,377 | ||||||
Other current liabilities | 51,642 | 52,392 | ||||||
Total current liabilities | 287,548 | 272,747 | ||||||
Long-term debt | 878,094 | 877,686 | ||||||
Deferred tax liabilities | 23,720 | 16,510 | ||||||
Other long-term tax liabilities | 907 | 1,443 | ||||||
Pension liabilities | 16,500 | 17,075 | ||||||
Other long-term liabilities | 13,860 | 16,540 | ||||||
Total Liabilities | 1,220,629 | 1,202,001 | ||||||
Equity: | ||||||||
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 45,980,471 and 47,079,645 shares issued and outstanding, respectively | 461 | 472 | ||||||
Treasury stock, held at cost, 260,900 and 260,900 shares, respectively | (2,580 | ) | (2,580 | ) | ||||
Additional paid-in capital | 460,264 | 457,978 | ||||||
Accumulated deficit | (314,831 | ) | (317,373 | ) | ||||
Accumulated other comprehensive loss | (19,159 | ) | (16,438 | ) | ||||
Total Equity | 124,155 | 122,059 | ||||||
Total Liabilities and Equity | $ | 1,344,784 | $ | 1,324,060 | ||||
7
| Exhibit 99.1 | |
ATKORE INTERNATIONAL GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended | ||||||||
(in thousands) | December 28, 2018 | December 29, 2017 | ||||||
Operating activities: | ||||||||
Net income | $ | 26,949 | $ | 27,189 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 18,021 | 17,210 | ||||||
Deferred income taxes | (1,306 | ) | (5,334 | ) | ||||
Stock-based compensation | 2,982 | 3,564 | ||||||
Other adjustments to net income | 2,201 | 1,559 | ||||||
Changes in operating assets and liabilities, net of effects from acquisitions | ||||||||
Accounts receivable | 22,111 | 19,967 | ||||||
Inventories | 4,263 | (5,396 | ) | |||||
Accounts payable | (30,405 | ) | (8,311 | ) | ||||
Other, net | (4,539 | ) | (1,508 | ) | ||||
Net cash provided by operating activities | 40,277 | 48,940 | ||||||
Investing activities: | ||||||||
Capital expenditures | (6,875 | ) | (8,235 | ) | ||||
Acquisition of businesses, net of cash acquired | (57,899 | ) | — | |||||
Other, net | (151 | ) | 784 | |||||
Net cash used in investing activities | (64,925 | ) | (7,451 | ) | ||||
Financing activities: | ||||||||
Borrowings under credit facility | — | 204,000 | ||||||
Repayments under credit facility | — | (247,000 | ) | |||||
Repayments of short-term debt | — | (1,250 | ) | |||||
Issuance of common stock | (695 | ) | 3,314 | |||||
Repurchase of common stock | (24,419 | ) | (6,681 | ) | ||||
Other, net | (62 | ) | (48 | ) | ||||
Net cash used for financing activities | (25,176 | ) | (47,665 | ) | ||||
Effects of foreign exchange rate changes on cash and cash equivalents | (919 | ) | 219 | |||||
Decrease in cash and cash equivalents | (50,743 | ) | (5,957 | ) | ||||
Cash and cash equivalents at beginning of period | 126,662 | 45,718 | ||||||
Cash and cash equivalents at end of period | $ | 75,919 | $ | 39,761 | ||||
Supplementary Cash Flow information | ||||||||
Capital expenditures, not yet paid | $ | 1,106 | $ | 615 | ||||
8
| Exhibit 99.1 | |
ATKORE INTERNATIONAL GROUP INC.
ADJUSTED EBITDA
The following table presents reconciliations of Adjusted EBITDA to net income for the periods presented:
Three months ended | |||||||||
(in thousands) | December 28, 2018 | December 29, 2017 | |||||||
Net income | $ | 26,949 | $ | 27,189 | |||||
Interest expense, net | 12,160 | 6,594 | |||||||
Income tax expense | 8,154 | 2,516 | |||||||
Depreciation and amortization | 18,021 | 17,210 | |||||||
Restructuring and impairments | 1,387 | 262 | |||||||
Stock-based compensation | 2,982 | 3,564 | |||||||
Transaction costs | 164 | 645 | |||||||
Other (a) | 206 | 507 | |||||||
Adjusted EBITDA | $ | 70,023 | $ | 58,487 | |||||
(a) | Represents other items, such as inventory reserves and adjustments, realized or unrealized gain (loss) on foreign currency transactions and release of certain indemnified uncertain tax positions. | ||||||||
9
| Exhibit 99.1 | |
ATKORE INTERNATIONAL GROUP INC.
SEGMENT INFORMATION
The following tables represent reconciliations of Net sales and calculations of Adjusted EBITDA Margin by segment for the periods presented:
Three months ended | |||||||||||||||||||||
December 28, 2018 | December 29, 2017 | ||||||||||||||||||||
(in thousands) | Net sales | Adjusted EBITDA | Adjusted EBITDA Margin | Net sales | Adjusted EBITDA | Adjusted EBITDA Margin | |||||||||||||||
Electrical Raceway | $ | 343,406 | $ | 68,489 | 19.9 | % | $ | 316,523 | $ | 56,160 | 17.7 | % | |||||||||
Mechanical Products & Solutions | 108,813 | $ | 10,887 | 10.0 | % | 98,574 | $ | 10,809 | 11.0 | % | |||||||||||
Eliminations | (191 | ) | (539 | ) | |||||||||||||||||
Consolidated operations | $ | 452,028 | $ | 414,558 | |||||||||||||||||
10
| Exhibit 99.1 | |
ATKORE INTERNATIONAL GROUP INC.
ADJUSTED NET INCOME PER SHARE
The following table presents reconciliations of Adjusted net income to net income for the periods presented:
Three months ended | |||||||||
(in thousands, except per share data) | December 28, 2018 | December 29, 2017 | |||||||
Net income | $ | 26,949 | $ | 27,189 | |||||
Stock-based compensation | 2,982 | 3,564 | |||||||
Intangible asset amortization | 8,214 | 8,687 | |||||||
Other (a) | 206 | 507 | |||||||
Pre-tax adjustments to net income | 11,402 | 12,758 | |||||||
Tax effect | (2,793 | ) | (3,317 | ) | |||||
Adjusted net income | $ | 35,558 | $ | 36,630 | |||||
Weighted-Average Diluted Common Shares Outstanding | 48,283 | 65,905 | |||||||
Net income per diluted share | $ | 0.54 | $ | 0.41 | |||||
Adjusted net income per diluted share(b) | $ | 0.74 | $ | 0.56 | |||||
(a) | Represents other items, such as inventory reserves and adjustments, realized or unrealized gain (loss) on foreign currency transactions and release of certain indemnified uncertain tax positions. | ||||||||
11
| Exhibit 99.1 | |
ATKORE INTERNATIONAL GROUP INC.
LEVERAGE RATIO
The following table presents reconciliations of Net debt to Total debt for the periods presented:
($ in thousands) | December 28, 2018 | September 30, 2018 | September 30, 2017 | September 30, 2016 | September 25, 2015 | |||||||||||||||
Short-term debt and current maturities of long-term debt | $ | 26,561 | $ | 26,561 | $ | 4,215 | $ | 1,267 | $ | 2,864 | ||||||||||
Long-term debt | 878,094 | 877,686 | 571,863 | 629,046 | 649,344 | |||||||||||||||
Total debt | 904,655 | 904,247 | 576,078 | 630,313 | 652,208 | |||||||||||||||
Less cash and cash equivalents | 75,919 | 126,662 | 45,718 | 200,279 | 80,598 | |||||||||||||||
Net debt | $ | 828,736 | $ | 777,585 | $ | 530,360 | $ | 430,034 | $ | 571,610 | ||||||||||
TTM Adjusted EBITDA | $ | 283,086 | $ | 271,549 | $ | 227,608 | $ | 235,002 | $ | 163,949 | ||||||||||
Total debt/TTM Adjusted EBITDA | 3.2 | x | 3.3 | x | 2.5 | x | 2.7 | x | 4.0 | x | ||||||||||
Net debt/TTM Adjusted EBITDA | 2.9 | x | 2.9 | x | 2.3 | x | 1.8 | x | 3.5 | x | ||||||||||
ATKORE INTERNATIONAL GROUP INC.
TRAILING TWELVE MONTHS ADJUSTED EBITDA
The following table presents a reconciliation of Adjusted EBITDA for the trailing twelve months ended December 28, 2018:
TTM | Three months ended | ||||||||||||||||||
(in thousands) | December 28, 2018 | December 28, 2018 | September 30, 2018 | June 29, 2018 | March 30, 2018 | ||||||||||||||
Net income | $ | 136,405 | $ | 26,949 | $ | 32,699 | $ | 34,199 | $ | 42,558 | |||||||||
Interest expense, net | 46,260 | 12,160 | 12,372 | 12,442 | 9,286 | ||||||||||||||
Income tax expense | 35,345 | 8,154 | 1,447 | 10,352 | 15,392 | ||||||||||||||
Depreciation and amortization | 67,703 | 18,021 | 17,637 | 16,192 | 15,853 | ||||||||||||||
Restructuring and impairments | 2,974 | 1,387 | 604 | 407 | 576 | ||||||||||||||
Stock-based compensation | 14,082 | 2,982 | 4,836 | 3,494 | 2,770 | ||||||||||||||
Certain legal matters | (4,833 | ) | — | (7,119 | ) | — | 2,286 | ||||||||||||
Transaction costs | 8,833 | 164 | 6,638 | 768 | 1,263 | ||||||||||||||
Gain on sale of a business | (27,575 | ) | — | — | (838 | ) | (26,737 | ) | |||||||||||
Other | 3,892 | 206 | 1,944 | (352 | ) | 2,094 | |||||||||||||
Adjusted EBITDA | $ | 283,086 | $ | 70,023 | $ | 71,058 | $ | 76,664 | $ | 65,341 | |||||||||
12
First Quarter 2019 Earnings Presentation February 6, 2019
Cautionary statements This presentation contains forward-looking statements that are subject to known and unknown risks and uncertainties, many of which are beyond our control. All statements other than statements of historical fact included in this presentation are forward-looking statements. Forward-looking statements appearing throughout this presentation include, without limitation, statements regarding our intentions, beliefs, assumptions or current expectations concerning, among other things, financial position; results of operations; cash flows; prospects; growth strategies or expectations; customer retention; the outcome (by judgment or settlement) and costs of legal, administrative or regulatory proceedings, investigations or inspections, including, without limitation, collective, representative or any other litigation; and the impact of prevailing economic conditions. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “believes,” “expects,” “may,” “will,” “shall,” “should,” “would,” “could,” “seeks,” “aims,” “projects,” “is optimistic,” “intends,” “plans,” “estimates,” “anticipates” and other comparable terms. We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes, including, without limitation, our actual results of operations, financial condition and liquidity, and the development of the market in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this presentation. In addition, even if our results of operations, financial condition and cash flows, and the development of the market in which we operate, are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in subsequent periods. A number of important factors, including, without limitation, the risks and uncertainties discussed under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K and the Quarterly Report on Form 10-Q filed with the U.S. Securities and Exchange Commission, could cause actual results and outcomes to differ materially from those reflected in the forward-looking statements. Because of these risks, we caution that you should not place undue reliance on any of our forward-looking statements. New risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us. Further, any forward- looking statement speaks only as of the date on which it is made. We undertake no obligation to revise the forward-looking statements in this presentation after the date of this presentation. Market data and industry information used throughout this presentation are based on management’s knowledge of the industry and the good faith estimates of management. We also relied, to the extent available, upon management’s review of independent industry surveys, forecasts and publications and other publicly available information prepared by a number of third party sources. All of the market data and industry information used in this presentation involves a number of assumptions and limitations which we believe to be reasonable, and you are cautioned not to give undue weight to such estimates. Although we believe that these sources are reliable, we cannot guarantee the accuracy or completeness of this information, and we have not independently verified this information. While we believe the estimated market position, market opportunity and market size information included in this presentation are generally reliable, such information, which is derived in part from management’s estimates and beliefs, is inherently uncertain and imprecise. Projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate are subject to a high degree of uncertainty and risk due to a variety of factors, including those described above. These and other factors could cause results to differ materially from those expressed in our estimates and beliefs and in the estimates prepared by independent parties. We present Adjusted EBITDA, Adjusted EBITDA margin (Adjusted EBITDA over Net Sales), Net debt (total debt less cash and cash equivalents), Adjusted Net Income Per Share, and Leverage ratio (net debt or total debt less cash and cash equivalents, over Adjusted EBITDA on trailing twelve month (“TTM”) basis) to help us describe our operating and financial performance. Adjusted EBITDA, Adjusted EBITDA margin, Net debt (total debt less cash and cash equivalents), Adjusted Net Income Per Share, and Leverage ratio are non-GAAP financial measures commonly used in our industry and have certain limitations and should not be construed as alternatives to net income, net sales and other income data measures (as determined in accordance with generally accepted accounting principles in the United States, or GAAP), or as better indicators of operating performance. Adjusted EBITDA, Adjusted EBITDA margin, Net debt, Adjusted Net Income Per Share, and Leverage ratio, as defined by us may not be comparable to similar non-GAAP measures presented by other issuers. Our presentation of such measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. See the appendix to this presentation for a reconciliation of Adjusted EBITDA to net income, Adjusted EBITDA Margin, Adjusted Net Income Per Share to Net Income Per Share, net debt to total debt, and Leverage Ratio. Fiscal Periods - The Company has a fiscal year that ends on September 30th. It is the Company's practice to establish quarterly closings using a 4-5-4 calendar. The Company's fiscal quarters end on the last Friday in December, March and June.
Consolidated Atkore Q1 2019 Highlights Q1 Net Sales Bridge Execution continued to deliver strong $8 year over year earnings growth $40 $0 $452M $415M $11 Distributor Organic net sales growth of 7% with volume / Rebate Push / Mix mix strength in key product categories Net Income per Share up more than 30% vs. 2018 Volume / Mix Price M&A FX 2019 prior year that benefited significantly from tax reform Q1 Adjusted EBITDA Bridge $2 $13 $1 $0 $70M $59M Repurchased and retired 1.2 million shares at $1 average cost of $19.85 Price offset by Commodities, Freight & Other COGS Increasing full year Adjusted EBITDA guidance 2018 Volume / Mix Price vs. Cost M&A FX Investment / 2019 Inflation / Productivity 3
Consolidated Atkore Q1 2019 Financial Summary Q1 Q1 Y/Y Net Sales Growth Change Organic Growth +7.0% ($’s in millions) 2019 2018 Acquisitions/Divestitures +2.0% Net Sales $452.0 $414.6 +9.0% FX +0.0% Net Income $26.9 $27.2 (0.9%) Total +9.0% Adjusted EBITDA(1) $70.0 $58.5 +19.7% Net Income Margin 6.0% 6.6% (60 bps) Adjusted EBITDA 15.5% 14.1% +140 bps Margin(2) Net Income per $0.54 $0.41 +31.7% Share (Diluted) Adjusted Net Income $0.74 $0.56 +32.1% per Share(1) (Diluted) (1) See non-GAAP reconciliation in appendix (2) Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of Net sales 4
Electrical Raceway Q1 Highlights Strong volume / mix performance in key Q1 Q1 Y/Y 2019 2018 Change product categories, but calendar yearend ($’s in millions) distributor rebate buy-in lighter than last year Net Sales $343.4 $316.5 8.5% Adjusted EBITDA $68.5 $56.2 22.0% Market activity continues to support 2 to 4% Adjusted EBITDA growth expectations 19.9% 17.7% +220 bps Margin Pricing environment was favorable to Q1 Net Sales Bridge expectations in quarter $343M $25 $13 $0 $317M $11 Distributor Rebate Push / Mix 2018 Volume / Mix Price M&A FX 2019 5
Mechanical Products & Solutions Q1 Highlights Q1 Q1 Y/Y 2019 2018 Change Strong pricing execution in the quarter ($’s in millions) Net Sales $108.8 $98.6 10.4% Macro indicators continue to support Industrial vertical growth Adjusted EBITDA $10.9 $10.8 +0.7% Adjusted EBITDA 10.0% 11.0% (100 bps) Adjusted EBITDA ($1M) lower vs last year due Margin to impact of Flexhead divestiture Q1 Net Sales Bridge $15 $5 $109M $0 $99M 2018 Volume / Mix Price Divestitures 2019 6
Key Balance Sheet and Cash Flow Metrics Metrics Leverage Ratio(1) ($mm) 12/28/2018 Cash and cash equivalents $75.9 Total Debt $904.7 3.4 Net Debt $828.7 Vergokan Acquisition and Share Repurchases 3.1 YTD Net cash from operating $40.3 activities 2.9 2.9 TTM Adjusted EBITDA(1) $283.1 Leverage Ratio(1) Total debt / TTM Adjusted EBITDA(1) Q2 2018 Q3 2018 Q4 2018 Q1 2019 3.2 Net debt / TTM Adjusted EBITDA(1) 2.9 Leverage ratio is moving back toward long- term target of ~2x after share repurchase (1) Leverage ratio for all periods and TTM Adjusted EBITDA is reconciled in the appendix. 7
2019 Financial Outlook Summary Updated Changes to Q2 2019 FY19 FY19 Electrical Raceway Volume +2 to 4% n/a Segment Adjusted EBITDA* $65 - $70M $270 - $290M +$5M / +$5M Mechanical Products & Volume +2 to 4% -2% / -1% Solutions Segment Adjusted EBITDA* $13 - $15M $55 - $60M n/a / +$2M Adjusted EBITDA* $69 - $75M $290 - $310M +$5M / +$5M Adjusted EPS* $0.70 - $0.80 $3.05 - $3.35 +$0.05 / +$0.05 Consolidated Atkore Capital $12M $35-40M n/a Expenditures Interest Expense $13M $52M +$2M Tax Rate 25% 25% n/a Diluted Shares** 48 48 -2 * Reconciliation of the forward-looking full-year 2019 outlook for Adjusted EBITDA and Adjusted EPS is not being provided as the Company does not currently have sufficient data to accurately estimate the variables and individual adjustments for such reconciliation. ** Represents weighted-average shares outstanding in millions used in calculation of Adjusted EPS guidance. 8
Appendix
Segment Information Three months ended December 28, 2018 December 29, 2017 Adjusted Adjusted Adjusted EBITDA Adjusted EBITDA (in thousands) Net sales EBITDA Margin Net sales EBITDA Margin Electrical Raceway $ 343,406 $ 68,489 19.9 % $ 316,523 $ 56,160 17.7 % Mechanical Products & Solutions 108,813 $ 10,887 10.0 % 98,574 $ 10,809 11.0 % Eliminations (191) (539) Consolidated operations $ 452,028 $ 414,558 10
Adjusted earnings per share reconciliation Consolidated Atkore International Group Inc. Three months ended (in thousands, except per share data) December 28, 2018 December 29, 2017 Net income $ 26,949 $ 27,189 Stock-based compensation 2,982 3,564 Intangible asset amortization 8,214 8,687 Other (a) 206 507 Pre-tax adjustments to net income 11,402 12,758 Tax effect (2,793) (3,317) Adjusted net income $ 35,558 $ 36,630 Weighted-Average Diluted Common Shares Outstanding 48,283 65,905 Net income per diluted share $ 0.54 $ 0.41 (b) Adjusted net income per diluted share $ 0.74 $ 0.56 (a) Represents other items, such as inventory reserves and adjustments, realized or unrealized gain (loss) on foreign currency transactions and release of certain indemnified uncertain tax positions. 11
Net Income to Adjusted EBITDA reconciliation Consolidated Atkore International Group Inc. Three months ended (in thousands) December 28, 2018 December 29, 2017 Net income $ 26,949 $ 27,189 Interest expense, net 12,160 6,594 Income tax expense 8,154 2,516 Depreciation and amortization 18,021 17,210 Restructuring and impairments 1,387 262 Stock-based compensation 2,982 3,564 Transaction costs 164 645 Other (a) 206 507 Adjusted EBITDA $ 70,023 $ 58,487 (a) Represents other items, such as inventory reserves and adjustments, realized or unrealized gain (loss) on foreign currency transactions and release of certain indemnified uncertain tax positions. 12
Net Income to Adjusted EBITDA reconciliation Consolidated Atkore International Group Inc. TTM Three months ended December 28, December 28, September 30, March 30, (in thousands) 2018 2018 2018 June 29, 2018 2018 Net income $ 136,405 $ 26,949 $ 32,699 $ 34,199 $ 42,558 Interest expense, net 46,260 12,160 12,372 12,442 9,286 Income tax expense 35,345 8,154 1,447 10,352 15,392 Depreciation and amortization 67,703 18,021 17,637 16,192 15,853 Restructuring and impairments 2,974 1,387 604 407 576 Stock-based compensation 14,082 2,982 4,836 3,494 2,770 Certain legal matters (4,833) — (7,119) — 2,286 Transaction costs 8,833 164 6,638 768 1,263 Gain on sale of a business (27,575) — — (838) (26,737) Other 3,892 206 1,944 (352) 2,094 Adjusted EBITDA $ 283,086 $ 70,023 $ 71,058 $ 76,664 $ 65,341 13
Net Debt to Total Debt and Leverage Ratio Consolidated Atkore International Group Inc. December 28, September 30, September 30, September 30, September 25, ($ in thousands) 2018 2018 2017 2016 2015 Short-term debt and current maturities of long-term debt $ 26,561 $ 26,561 $ 4,215 $ 1,267 $ 2,864 Long-term debt 878,094 877,686 571,863 629,046 649,344 Total debt 904,655 904,247 576,078 630,313 652,208 Less cash and cash equivalents 75,919 126,662 45,718 200,279 80,598 Net debt $ 828,736 $ 777,585 $ 530,360 $ 430,034 $ 571,610 TTM Adjusted EBITDA $ 283,086 $ 271,549 $ 227,608 $ 235,002 $ 163,949 Total debt/TTM Adjusted EBITDA 3.2 x 3.3 x 2.5 x 2.7 x 4.0 x Net debt/TTM Adjusted EBITDA 2.9 x 2.9 x 2.3 x 1.8 x 3.5 x 14
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