Atkore Inc. · NYSE:ATKR
Atkore — Atkore International Group — Investor Presentation (September 2017)
38 slides from Atkore's investor presentation, Sep 13, 2017
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Slide 2: Cautionary statements
1 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. For
Slide 3: Leading Electrical Raceway and Mechanical Products & Solutions provider
2 Leading Electrical Raceway and Mechanical Products & Solutions provider ■ #1 or #2 market positions in most of our products1 ■ Offer must-stock products to distribution and OEM customers via single integrated platform ■ Established reputation as an industry leader in quality, availability, deliver
Slide 4: Atkore all around you
3 Cable Tray, Wire Basket Tray & Cable Ladder Armored Cable, Luminary Cable & Fittings Metal Framing & Fittings Flexible Electrical Conduit and Liquidtight Flexible Metal Conduit & Fittings PVC Electrical Conduit & Fittings Metal Electrical Conduit & Fittings In-Line Galvanized Mechanical Tube Atkor
Slide 5: Electrical Raceway segment
4 $86 $107 $175 $179 9% 11% 18% 18% 6% 8% 10% 12% 14% 16% 18% 20% FY 2014 FY 2015 FY 2016 LTM June 30, 2017 Adjusted EBITDA ($mm) Adjusted EBITDA Margin PVC Electrical Conduit & Fittings 24% Armored Cable & Fittings 36% Other 5% Metal Electrical Conduit & Fittings 35% Atkore’s Electrical Raceway seg
Slide 6: Mechanical Products & Solutions segment
5 Metal Framing and Fittings 37% Mechanical Pipe 42% Other 21% ■ Comprehensive offering of metal framing and in-line galvanized tubular products ■ Offer critical combination of metal framing, value-added fittings and construction services to industrial and electrical distributors ■ ~60% of framing u
Slide 7: Atkore's significant transformation
6 Atkore’s significant transformation ■ Limited strategic vision ■ Little customer coordination ■ Underperforming leadership ■ No growth or M&A strategy 2011 2011 - 2017 Atkore strategy ■ Leading market positions/brands ■ Upgraded over 90% of leadership ■ Developed clear strategy ■ Implemented Atkor
Slide 8: The foundation for our improvement
7 The foundation for our improvement... ■ Market Intelligence, Benchmarking and VOC Analysis ■ Market-based Evergreen Strategy ■ Dynamic Portfolio Management ■ Dynamic Product Management ■ Active Account and Channel Strategy ■ Culture of Customer Centric Innovation ■ Engagement and Alignment ■ Commu
Slide 9: Management team experience
8 Name / Position Relevant Experience Electrical Industry Experience Experience Gained With John P. Williamson President & Chief Executive Officer 31 years 17 years James A. Mallak Chief Financial Officer 31 years 5 years Peter Lariviere President, Cable Solutions 26 years 11 years Bill Waltz Group
Slide 10: Investment highlights
9 Investment highlights Leading market positions and strong brands Superior customer value proposition with a compelling portfolio Significant scale providing barriers to entry Focused growth strategy to attack substantial market opportunity a. Capitalize on attractive end-market growth dynamics b.
Slide 11: Leading market positions and strong brands
10 Leading market positions and strong brands1 Leading market positions in each of our core businesses #2 #1 #2 #1 #2 Rank 35% 35% 36% 80% 21% Market share1 Steel Conduit PVC Conduit Armored Cable In-line Galvanized Mechanical Tube Metal Framing and Related Fittings 1 Management estimates based on m
Slide 12: Superior customer value proposition with a compelling portfolio
11 Global Electrical Distributors Independent Electrical Distributors Industrial Distributors & Big Box Retail ■ Brands and reputation ■ Product breadth ■ Bundling, co-loading and value-add advantages ■ Quality, availability, delivery and service 2 Value proposition Blue chip customer base Superior
Slide 13: Significant scale providing barriers to entry
12 3 Industry-leading scale that allows us to provide: Broad portfolio of products, enabling us to deliver integrated source-to-outlet electrical solutions Value-added reliable service and on-time delivery solidifying our customer value proposition Difficult-to-replicate manufacturing technolo
Slide 14: Focused growth strategy to attack substantial market opportunity
13 4 a) Capitalize on attractive end-market growth dynamics b) Grow market share with new and existing customers c) Execute on strategic pricing and mix opportunities d) Expand product offering through innovation e) Pursue M&A to deliver incremental growth Focused growth strategy to attack substanti
Slide 15: Capitalize on attractive end-market growth dynamics
14 OEM 16% International 8% Other 6% U.S. construction 70% MR&R 23% New residential construction 16% Infrastructure 5% New non- residential construction 56% Atkore is geared to U.S. non-residential construction 11% 10% 8% 7% 4% Source: Dodge Data & Analytics as of August 2017. 1 MR&R includes non-re
Slide 16: Grow market share with new and existing customers
15 Grow market share with new and existing customers4b A l l s t r a t e g i c b u s i n e s s u n i t s E l e c t r i c a l R a c e w a y i n f o c u s All customers Large national accounts Regional and smaller independent distributors Segment by 13 SBUs Incentivize each SBU General Manager to
Slide 17: Execute on strategic pricing and mix opportunities
16 Execute on strategic pricing and mix opportunities 4c Step 2: Improve performance Step 1: Develop capabilities Step 3: Optimize mix Step 4: Complete roll-out Developing mindset, skillset and toolset on how to price effectively Better quality, delivery, availability and ease of doing business Shif
Slide 18: Expand product offering through innovation
17 2016 ■ 9 new products (7 Electrical Raceway and 2 MP&S) A track record of successful innovation across businesses Luminary Cable example Opportunity RecognitionSolution ■ Demand for building and lighting automation due to increasing cost of electricity EC&M Magazine “Product of the Year” award fo
Slide 19: Pursue M&A to deliver incremental growth
18 2011 2012 Pursue M&A to deliver incremental growth ■ Focused effort to build out our Raceway and MP&S positions - Strengthening our value proposition by continued development of our existing portfolio - Expanding into higher margin adjacencies ■ Leverage our manufacturing technology and capabilit
Slide 20: Illustrative Atkore adjusted EBITDA margin opportunity
19 15.0% 20%+ Atkore TTM June 30, 2017 Adj. EBITDA margin Strategic pricing and mix initiatives Productivity initiatives Other initiatives and upside Illustrative long-term Adj. EBITDA margin Strategic pricing and mix Continued roll-out of strategic pricing to both Electrical Raceway and MP&S Pu
Slide 21: Financial overview
Avatkore Financial overview INTERNATIONAL
Slide 22: Financial Highlights – Q3 2017
21 Financial Highlights – Q3 2017 ($’s in millions) Third Quarter YTD 2017 2016 Y/Y Change 2017 2016 Y/Y Change Net Sales $397.7 $395.7 0.5% $1,108.1 $1,107.1 $1.0 Net Income $27.5 $20.6 33.0% $63.8 $43.2 47.7% Adjusted EBITDA(1) $62.0 $67.2 (7.7%) $168.0 $173.6 (3.2%) Net Income Margin 6.9% 5.2% +1
Slide 23: Electrical Raceway Segment – Q3 Highlights
22 Electrical Raceway Segment – Q3 Highlights Average selling prices up 6% from pass through of material costs Volume down 3% driven by soft steel conduit market; PVC & Copper products showing low single digit growth Adjusted EBITDA margin decline due to; • Dollar for dollar pass through of raw mate
Slide 24: Mechanical Products & Solutions Segment Highlights
23 Mechanical Products & Solutions Segment Highlights Price up 6% due to pass through of material cost increases and initiatives Volume down 9% due primarily to impact of solar comparison, soft agriculture vertical, and delays in datacenter projects Adjusted EBITDA margin decline due to; • Dollar fo
Slide 25: U.S. Construction Market
24 U.S. Construction Market F2017EAverage20102007 Prior peak Trough 45-year average Today US Nonresidential building construction starts (millions of square feet ) 1,667 1,275 1,048 Historical US single-family and multi-family housing starts (thousands of dwellings) 2005 2009 F2017EAverage Prior pea
Slide 26: Strong balance sheet and cash flow
25 Strong balance sheet and cash flow 1 Based on an assumed interest rate. At December 30, 2016, assuming LIBOR exceeded 1.00%, each one percentage point change in interest rates would have resulted in a change of approximately $5.1 million in the annual interest expense on our New Term Loan Facilit
Slide 27: 2017 Financial Outlook Summary
26 2017 Financial Outlook Summary Electrical Raceway Segment Consolidated Atkore Mechanical Products & Solutions Segment Prior Outlook Updated Outlook Volume (2) to 2% ~(4)% Adjusted EBITDA* $182 - $190mm $177 - $182mm Volume (4) to 0% ~(9)% Adjusted EBITDA* $80 - $85mm $70 - $76mm Adjusted EBITDA*
Slide 28: Appendix
atkore Appendix a INTERNATIONAL
Slide 29: Summary historical financial information
28 Summary historical financial information Note: Numbers in each column may not sum to their respective reported figures due to rounding. 1 Based on Adjusted net sales. Fiscal year ended LTM ($mm) Sept. 26, 2014 Sept. 25, 2015 Sept. 30, 2016 Jun. 24, 2016 Jun. 30, 2017 Net sales $1,703 $1,729 $1,52
Slide 30: Adjusted net sales reconciliation
29 Adjusted net sales reconciliation Note: Numbers in each column may not sum to their respective reported Adjusted net sales figures due to rounding. Consolidated Atkore Fiscal year ended LTM ($mm) Sept. 26, 2014 Sept. 25, 2015 Sept. 30, 2016 24-Jun-16 30-Jun-17 Net sales $1,703 $1,729 $1,523 $1,54
Slide 31: Adjusted EBITDA reconciliation – annual
30 Adjusted EBITDA reconciliation – annual A B C D E F G H Note: Numbers in each column may not sum to their respective reported Adjusted EBITDA figures due to rounding. 1 Includes the predecessor period from September 25, 2010 through December 22, 2010 and the successor period from December 23. 201
Slide 32: Adjusted EBITDA reconciliation – quarterly
31 Adjusted EBITDA reconciliation – quarterly Note: Numbers in each column may not sum to their respective reported Adjusted EBITDA figures due to rounding. A B C D E G H J I LTM ($mm) Sep. 26, 2014 Dec. 25, 2014 Mar. 27, 2015 Jun. 26, 2015 Sep. 25, 2015 Dec. 25, 2015 Mar. 25, 2016 Jun. 24, 2016 Sep
Slide 33: Adjusted EBITDA reconciliation (cont'd)
32 Adjusted EBITDA reconciliation (cont’d) Restructuring amounts represent exit or disposal costs including termination benefits and facility closure costs. Impairment amounts represent write-downs of goodwill, intangible assets and/or long-lived assets Represents pension costs in excess of cash fun
Slide 34: Segment information
33 Segment information Fiscal year ended September 30, 2016 September 25, 2015 ($mm) Net sales Impact of Fence & Sprinkler exit Adjusted net sales Adjusted EBITDA Adjusted EBITDA margin Net sales Impact of Fence & Sprinkler exit Adjusted net sales Adjusted EBITDA Adjusted EBITDA margin Electrical Ra
Slide 35: Segment Information
34 Segment Information Three Months Ended June 30, 2017 June 24, 2016 (in thousands) Net sales Adjusted EBITDA Adjusted EBITDA Margin Net sales Adjusted EBITDA Adjusted EBITDA Margin Electrical Raceway $ 266,275 $ 48,026 18.0% $ 259,826 $ 52,438 20.2% Mechanical Products & Solutions 131,679 $ 18,986
Slide 36: Adjusted earnings per share reconciliation
35 Adjusted earnings per share reconciliation Consolidated Atkore International Group Inc. Three Months Ended Nine months ended (in thousands, except per share data) June 30, 2017 June 24, 2016(b) June 30, 2017 June 24, 2016 (b) Net income $ 27,465 $ 20,645 $ 63,782 $ 43,224 Stock-based compensation
Slide 37: Net Income to Adjusted EBITDA reconciliation
36 Net Income to Adjusted EBITDA reconciliation Consolidated Atkore International Group Inc. Three Months Ended Nine months ended (in thousands) June 30, 2017 June 24, 2016 June 30, 2017 June 24, 2016 Net income $ 27,465 $ 20,645 $ 63,782 $ 43,224 Interest expense, net 5,811 10,169 20,872 30,617 Inc
Slide 38: Net debt / Adjusted EBITDA reconciliation
37 Net debt / Adjusted EBITDA reconciliation Consolidated Atkore International Group Inc. ($ in thousands) June 30, 2017 September 30, 2016 September 25, 2015 September 26, 2014 Short-term debt and current maturities of long-term debt $ 4,215 $ 1,267 $ 2,864 $ 42,887 Long-term debt 487,921 629,046 6
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