Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - Atkore Inc. | atkr4q17exhibit991.htm |
| 8-K - 8-K - Atkore Inc. | atkr4q17form8-k.htm |
PRINTING INSTRUCTIONS
CHECK TOC BEFORE PRINTING
Color/grayscale: Color (regardless of printing in b/w)
Scale to fit paper: OFF
Print hidden slides: OFF
POWERPOINT OPTIONS > ADVANCED > PRINT
Print in background: OFF
Fourth Quarter and FY 2017 Earnings Presentation
November 29, 2017
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 the Annual Report on Form 10-K for the fiscal year ended September 30, 2017, filed with the U.S.
Securities and Exchange Commission on November 29, 2017 (File No. 001-37793), 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 net income, Adjusted earnings per share, Net debt (total debt less cash and cash equivalents), and Leverage ratio (net debt or total debt less
cash and cash equivalents, over Adjusted EBITDA on trailing twelve month basis) to help us describe our operating and financial performance. Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net
income, Adjusted earnings 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, Adjusted net income, Adjusted earnings per share, Net debt (total debt less cash and cash equivalents), and Leverage ratio (net debt or total debt less cash and
cash equivalents over Adjusted EBITDA on a trailing twelve month basis), 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 net income to adjusted net income per share, and net debt over Adjusted EBITDA.
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.
2
[VALUE]M $99
$1 $5
[VALUE]M
$87
2016 Volume Price / Mix M&A FX 2017
[VALUE]M
[VALUE]
$0
[VALUE]M
$18 $1
2016 Volume Price vs.
Cost
Productivity
/ Other
M&A / FX 2017
Working
Days
($29M)
Direct
Solar
($33M)
Working
Days
($6M)
Direct
Solar
($14M)
FY 2017 Highlights
Year ended September 30
Passed through $87M raw material inflation
Over-delivered M&A capital allocation goal
Delivered $14M productivity savings
Expanded capabilities to bring innovations
to market
Improved ease of doing business with
Atkore (Agent Portal / Order to Cash System)
2017
Acquisitions
+$7M
Fence &
Sprinkler ($8M)
Net Income of $84.6M and Earnings per
share of $1.27 were up 44% and 35% year
over year, respectively
FY 2017 Net Sales Bridge
FY 2017 Adjusted EBITDA(1) Bridge
(1) See non-GAAP reconciliation in appendix
3
Q4 2017 Financial Summary
($’s in millions)
Q4
2017
Q4
2016
Y/Y
Change
Net Sales $395.8 $416.2 (4.9%)
Net Income $20.9 $15.6 40.0%
Adjusted EBITDA(1) $59.6 $61.4 (2.9%)
Net Income Margin 5.3% 3.7% +160 bps
Adjusted EBITDA
Margin(1)
15.0% 14.7% +30 bps
Net Income per
Share
$0.31 $0.24 29.2%
Adjusted Net Income
per Share(1)
$0.35 $0.34 2.9%
(1) See non-GAAP reconciliation
Net Sales Growth
Organic Growth +0.8%
Fewer Working Days (7.0%)
Acquisitions +1.2%
FX +0.1%
Total (4.9%)
Net Sales on a per day basis,
earnings and margins up
year over year
4
[VALUE]M [VALUE]
[VALUE]
[VALUE]M
[VALUE]
$1
2016 Volume Price vs.
Cost
Productivity
/ Other
M&A / FX 2017
[VALUE]M $36
[VALUE]M
$9
$5 $1
2016 Volume Price / Mix M&A FX 2017
Working
Days ($6M)
Acquisitions adjacent to core offering add
differentiated electrical products with
accretive margin
Adjusted EBITDA margin increased ~70 basis
points excluding impact of dollar for dollar pass
through of raw material inflation
Passed through 100% of raw material inflation
Adjusted EBITDA headwinds from Q4 hurricanes
estimated at $2 million
Repurchased ~800k shares at average price of
$18/share
Total Atkore – Q4 Highlights
Q4 Net Sales Bridge
Q4 Adjusted EBITDA Bridge
Working
Days ($29M)
Data Center
Timing
($8M)
5
Electrical Raceway – Q4 Highlights
US volume strengthened in key categories
Average selling prices up 4 percent from
pass through of raw material inflation
Adjusted EBITDA margin up 170 basis
points adjusted for dollar for dollar pass
through of raw material inflation
[VALUE]M $22 [VALUE]M
$11 $5
$1
2016 Volume Price / Mix M&A FX 2017
Q4 Net Sales Bridge
Working
Days
($20M)
Improved margin by 110 basis points and
passed through raw material inflation in
a tough volume environment
($’s in millions)
Q4
2017
Q4
2016
Y/Y
Change
Net Sales $293.1 $299.1 (2.0%)
Adjusted EBITDA $50.9 $48.7 4.4%
Adjusted EBITDA
Margin
17.4% 16.3% +110 bps
6
Mechanical Products & Solutions – Q4 Highlights
Strength in Razor Ribbon products and
recreation customer vertical partially offset
volume declines from timing of large datacenter
projects and fewer working days
No meaningful volume uplift seen from hurricane
recoveries to date (DOT signposts, etc.)
Adjusted EBITDA margin decline due to
unfavorable mix and one time expenses in the
quarter
Challenged verticals are stabilizing, but
datacenter project timing a headwind in
the quarter
[VALUE]M
$14
$1
[VALUE]M
2016 Volume Price / Mix 2017
Working
Days
($8M)
Data
Center
Timing
($8M)
($’s in millions)
Q4
2017
Q4
2016
Y/Y
Change
Net Sales $103.0 $117.8 (12.5%)
Adjusted EBITDA $15.1 $20.6 (26.9%)
Adjusted EBITDA
Margin
14.6% 17.5% (290 bps)
Q4 Net Sales Bridge
7
Key Balance Sheet and Cash Flow Metrics
($mm)
9/30/2017
Cash and cash equivalents $45.7
Total Debt $576.1
CapEx $25.1
Net cash from operating activities $121.7
Adjusted EBITDA $227.6
Leverage Ratio (1)
Total debt / Adjusted EBITDA(1)
2.5x
Net debt / Adjusted EBITDA(1) 2.3x
Metrics Leverage Ratio(1)
1. Leverage ratio is defined as net debt (total debt less cash and cash equivalents) divided by the fiscal year Adjusted EBITDA. Total debt was
$692.9mm, $652.2mm, and $630.3mm, as of September 26, 2014, September 25, 2015, and September 30, 2016, respectively. Cash and cash
equivalents were $33.4mm, $80.6mm, and $200.3mm as of September 26, 2014, September 25, 2015, and September 30, 2016, respectively.
Leverage ratio for all periods above is reconciled in the appendix.
5.2x
3.5x
1.8x
2.3x
FY 2014 FY 2015 FY 2016 FY 2017
Strong Cash Flow and Leverage Ratio Continue
to Support M&A Capital Allocation Strategy
8
Non - Residential
Construction
Industrial
Residential
Construction
What We Expect from the Market
flat to +3%
+2 to 3%
Key Market Influences by Segment Market Growth
Modest Volume Growth Expected in 2018
Electrical Raceway
Mechanical Products
& Solutions
2018 Expectations
flat to +3%
9
2018 Financial Outlook Summary
Electrical Raceway
Segment
Consolidated Atkore
Mechanical Products &
Solutions Segment
Q1 2018 FY 2018
Volume Flat to +3%
Adjusted EBITDA* $50 - $55M $215 - $225M
Volume Flat to +2%
Adjusted EBITDA* $12 - $15M $60 - $65M
Adjusted EBITDA* $55 - $60M $245 - $260M
Adjusted EPS* $0.30 - $0.35 $1.45 - $1.60***
Capital Expenditures $6M $30M
Interest Expense $7M $27M
Tax Rate 35% 35%
Diluted Shares**
66 66
* Reconciliation of the forward-looking full-year 2018 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.
***Estimated Full Year EPS Impact of Purchase Accounting (-$0.10/share) included for Acquisitions
10
Appendix
2017 Financial Summary
Year ended September 30
($’s in millions)
2017 2016 Y/Y
Change
Net Sales $1,503.9 $1,523.4 (1.3%)
Adjusted Net Sales(1) $1,503.9 $1,515.6 (0.8%)
Net Income $84.6 $58.8 43.9%
Adjusted EBITDA(1) $227.6 $235.0 (3.1%)
Net Income Margin 5.6% 3.9% +170 bps
Adjusted EBITDA
Margin(1)
15.1% 15.5% (40 bps)
Net Income per
Share
$1.27 $0.94 35.1%
Adjusted Net Income
per Share(1)
$1.42 $1.31 8.4%
(1) See non-GAAP reconciliation
Sales Growth
Organic Growth +1.2%
Fewer Working Days (2.0%)
Acquisitions +0.4%
Divestures (0.5%)
FX (0.4%)
Total (1.3%)
Adjusted Net Sales reconciliation
A
B
C
D
E
F
G
H
Three Months Ended Fiscal year ended
($ in thousands)
September
30, 2017
September
30, 2016 Change
%
Change
September 30,
2017
September 30,
2016 Change
%
Change
Net sales $ 395,807 $ 416,239 $ (20,432 ) (4.9 )% $ 1,503,934 $ 1,523,384 $ (19,450 ) (1.3 )%
Impact of Fence and
Sprinkler exit —
—
—
* —
(7,816 ) 7,816
(100.0 )%
Adjusted net sales $ 395,807 $ 416,239 $ (20,432 ) (4.9 )% $ 1,503,934 $ 1,515,568 $ (11,634 ) (0.8 )%
Adjusted EBITDA $ 59,562 $ 61,364 $ (1,802 ) (2.9 )% $ 227,608 $ 235,002 $ (7,394 ) (3.1 )%
Adjusted EBITDA Margin 15.0 % 14.7 % 15.1 % 15.5 %
* Not meaningful
Segment Information
A
B
C
D
E
F
G
H
Fiscal year ended
September 30, 2017 September 30, 2016
(in thousands) Net sales
Adjusted
EBITDA
Adjusted
EBITDA
Margin Net sales
Impact of
Fence and
Sprinkler
exit
Adjusted
net sales
Adjusted
EBITDA
Adjusted
EBITDA
Margin
Electrical
Raceway $ 1,094,783
$ 189,351
17.3 % $ 1,068,630
$ —
$ 1,068,630
$ 181,939
17.0 %
MP&S 410,532 $ 63,687 15.5 % 456,821 (7,816 ) 449,005 $ 81,199 18.1 %
Eliminations (1,381 ) (2,067 ) — (2,067 )
Consolidated
operations $ 1,503,934
$ 1,523,384
$ (7,816 ) $ 1,515,568
Three Months Ended
September 30, 2017 September 30, 2016
(in thousands) Net sales
Adjusted
EBITDA
Adjusted
EBITDA
Margin Net sales
Adjusted
EBITDA
Adjusted
EBITDA
Margin
Electrical Raceway $ 293,126 $ 50,886 17.4 % $ 299,055 $ 48,722 16.3 %
MP&S 103,007
$ 15,086
14.6 % 117,760
$ 20,639
17.5 %
Eliminations (326 ) (576 )
Consolidated operations $ 395,807
$ 416,239
Adjusted earnings per share reconciliation
A
B
C
D
E
F
G
H
Consolidated Atkore International Group Inc.
Three Months Ended Fiscal Year Ended
(in thousands, except per share data)
September
30, 2017
September
30, 2016
September
30, 2017
September
30, 2016
Net income $ 20,857 $ 15,572 $ 84,639 $ 58,796
Stock-based compensation 3,420 4,230 12,788 21,127
Consulting fee — — — 15,425
Loss (gain) on extinguishment of debt — — 9,805 (1,661 )
Gain on sale of joint venture — — (5,774 ) —
Legal matters — 82 7,551 1,382
Other (a) 60 6,947 (10,247 ) 1,103
Impact of Fence and Sprinkler exit — — — 811
Pre-tax adjustments to net income 3,480 11,259 14,123 38,187
Tax effect (1,246 ) (5,087 ) (4,434 ) (14,511 )
Adjusted net income $ 23,091 $ 21,744 $ 94,328 $ 82,472
Weighted-Average Common Shares Outstanding
Basic 63,954 62,492 63,420 62,486
Diluted 66,503 64,269 66,585 62,820
Net income (loss) per share
Basic $ 0.33 $ 0.25 $ 1.33 $ 0.94
Diluted $ 0.31 $ 0.24 $ 1.27 $ 0.94
Adjusted Net income (loss) per share
Basic $ 0.36 $ 0.35 $ 1.49 $ 1.32
Diluted $ 0.35 $ 0.34 $ 1.42 $ 1.31
(a) Represents other items, such as inventory reserves and adjustments, release of indemnified uncertain tax positions and the impact of foreign exchange
gains or losses.
Net Income to Adjusted EBITDA reconciliation
A
B
C
D
E
F
G
H
Consolidated Atkore International Group Inc.
Three Months Ended Fiscal Year Ended
(in thousands) September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Net income $ 20,857
$ 15,572
$ 84,639
$ 58,796
Income tax expense 12,173
3,892
41,486
27,985
Depreciation and amortization 14,485
14,953
54,727
55,017
Interest expense, net 5,726
11,181
26,598
41,798
Loss (gain) on extinguishment of debt —
—
9,805
(1,661 )
Restructuring & impairments 556
1,701
1,256
4,096
Net periodic pension benefit cost —
110
—
441
Stock-based compensation 3,420
4,230
12,788
21,127
ABF product liability impact —
212
—
850
Gain on sale of joint venture —
—
(5,774 ) —
Consulting fees —
—
—
15,425
Legal matters 50
82
7,551
1,382
Transaction costs 2,235
2,484
4,779
7,832
Other (a) 60
6,947
(10,247 ) 1,103
Impact of Fence and Sprinkler exit —
—
—
811
Adjusted EBITDA $ 59,562
$ 61,364
$ 227,608
$ 235,002
(a) Represents other items, such as inventory reserves and adjustments, release of indemnified uncertain tax positions and the impact of foreign exchange gains or losses.
Net debt / Adjusted EBITDA reconciliation
A
B
C
D
E
F
G
H
Consolidated Atkore International Group Inc.
($ in thousands)
September
30, 2017
September
30, 2016
September
25, 2015
Short-term debt and current maturities of long-term debt $ 4,215 $ 1,267 $ 42,887
Long-term debt 571,863 629,046 649,980
Total Debt 576,078 630,313 692,867
Less cash and cash equivalents 45,718 200,279 33,360
Net Debt $ 530,360 $ 430,034 $ 659,507
Adjusted EBITDA $ 227,608 $ 235,002 $ 163,950
Total debt/Adjusted EBITDA 2.5 x 2.7 x 4.2 x
Net debt/Adjusted EBITDA 2.3 x 1.8 x 4.0 x