Atkore Inc. · NYSE:ATKR
Atkore — Atkore International Group — Q3 2018 Earnings Presentation
31 slides from Atkore's earnings presentation, Sep 5, 2018
Slide 1: Third Quarter 2018 Earnings Presentation & Overview
Third Quarter 2018 Earnings Presentation & Overview
Slide 2: Cautionary statements
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. Forwa
Slide 3: Consolidated Atkore Q3 2018 Financial Summary
Consolidated Atkore Q3 2018 Financial Summary Q3 Q3 Y/Y Net Sales Growth Change Organic Growth +18.1% ($’s in millions) 2018 2017 Acquisitions +6.6% Net Sales $498.0 $397.7 +25.2% FX +0.5% Net Income $34.2 $27.5 +24.5% Total +25.2% Adjusted EBITDA(1) $76.7 $62.0 +23.6% Net Income Margin 6.9% 6.9% --
Slide 4: Consolidated Atkore Q3 2018 Highlights
Consolidated Atkore Q3 2018 Highlights Performance exceeded expectations in Net sales, Adjusted EBITDA, and EPS Q3 Net Sales Bridge $498M $26 $2 $56 $16 Market activity stable sequentially; Organic $398M volume growth continued at ~4%, driven again by strength in Industrial markets Focused execution
Slide 5: Electrical Raceway Q3 Highlights
Electrical Raceway Q3 Highlights Acquisition performance and pricing Q3 Q3 Y/Y excellence drove a near 50% Adjusted 2018 2017 Change EBITDA increase ($’s in millions) Net Sales $370.3 $288.3 28.5% Market activity flat to slightly down in quarter, Adjusted EBITDA $74.5 $49.7 49.9% but continues to su
Slide 6: Mechanical Products & Solutions Q3 Highlights
Mechanical Products & Solutions Q3 Highlights Q3 Q3 Y/Y 2018 2017 Change Broad based volume improvement across ($’s in millions) industrial customer verticals Net Sales $128.2 $109.7 16.9% Adjusted EBITDA $12.0 $17.4 (30.8%) Year over year volume growth of 16% Adjusted EBITDA 9.4% 15.8% (640 bps) Ma
Slide 7: Key Balance Sheet and Cash Flow Metrics
Key Balance Sheet and Cash Flow Metrics Metrics Leverage Ratio(1) ($mm) 6/29/2018 Cash and cash equivalents $109.5 Total Debt $906.1 3.4 3.1 Net Debt $796.6 2.3 YTD Net cash from operating $120.6 activities TTM Adjusted EBITDA(1) $260.1 Leverage Ratio(1) Total debt / TTM Adjusted EBITDA(1) FY 2017 Q
Slide 8: 2018 Financial Outlook Summary
2018 Financial Outlook Summary FY 2018 Electrical Raceway Volume +Low-Single Digits Segment Adjusted EBITDA* $250 - $255M Volume +10% Mechanical Products & Solutions Segment Adjusted EBITDA* $48 - $52M Adjusted EBITDA* $265 - $272M Adjusted EPS* $2.65 - $2.75 Consolidated Atkore Capital Expenditures
Slide 9: Appendix
atkore Appendix a INTERNATIONAL —E
Slide 10: Segment Information
Segment Information Three months ended June 29, 2018 June 30, 2017 Adjusted Adjusted Adjusted EBITDA Adjusted EBITDA (in thousands) Net sales EBITDA Margin Net sales EBITDA Margin Electrical Raceway $ 370,333 $ 74,461 20.1 % $ 288,277 $ 49,661 17.2 % Mechanical Products & Solutions 128,239 $ 12,013
Slide 11: Adjusted earnings per share reconciliation
Adjusted earnings per share reconciliation Consolidated Atkore International Group Inc. Three months ended Nine months ended June 30, 2017 As June 30, 2017 As (in thousands, except per share data) June 29, 2018 Adjusted* June 29, 2018 Adjusted* Net income $ 34,199 $ 27,465 $ 103,946 $ 63,782 Stock-b
Slide 12: Net Income to Adjusted EBITDA reconciliation
Net Income to Adjusted EBITDA reconciliation Consolidated Atkore International Group Inc. Three months ended Nine months ended (in thousands) June 29, 2018 June 30, 2017 June 29, 2018 June 30, 2017 Net income $ 34,199 $ 27,465 $ 103,946 $ 63,782 Interest expense, net 12,442 5,811 28,322 20,872 Incom
Slide 13: Net Income to Adjusted EBITDA reconciliation (TTM)
Net Income to Adjusted EBITDA reconciliation Consolidated Atkore International Group Inc. TTM Three months ended December 29, September (in thousands) June 29, 2018 June 29, 2018 March 30, 2018 2017 30, 2017 Net income $ 124,803 $ 34,199 $ 42,558 $ 27,189 $ 20,857 Interest expense, net 34,048 12,442
Slide 14: Net Debt to Total Debt and Leverage Ratio
Net Debt to Total Debt and Leverage Ratio Consolidated Atkore International Group Inc. September September September September ($ in thousands) June 29, 2018 30, 2017 30, 2016 25, 2015 26, 2014 Short-term debt and current maturities of long-term debt $ 7,630 $ 4,215 $ 1,267 $ 2,864 $ 42,887 Long-ter
Slide 15: Overview
atkore Overview a INTERNATIONAL —E
Slide 16: Atkore Overview
Atkore Overview ■ #1 or #2 market positions in most of our products Net Sales Breakdown By reportable segment By end market ■ Offer must-stock products to distribution and OEM customers Mechanical Other via single integrated platform Products & Int'l 6% Solutions 8% 27% ■ Established reputation as a
Slide 17: Atkore Overview: Transformation
Atkore Overview: Transformation 2011 2011 - 2018 Atkore strategy ■ Drive growth ■ Limited strategic vision ■ Leading market positions/brands − Market position expansion ■ Upgraded over 90% of leadership − New product innovation ■ Little customer coordination − M&A growth execution ■ Developed clear
Slide 18: Atkore Overview: Atkore Business System
Atkore Overview: Atkore Business System How we continuously improve the Strategy business we have, and create ■ Market Intelligence, Benchmarking and VOC breakthrough to be the business Analysis ■ Market-based Evergreen Strategy we want to become... ■ Dynamic Portfolio Management ■ Dynamic Product M
Slide 19: Atkore All Around You
Atkore All Around you Wire Basket Cable Tray Armored Cable Cable Electrical Raceway Tray and Fittings: Conduit & Ladder Cable Electrical Metal Electrical Prefabrication Conduit Metal Specialty Electrical Framing & Conduit: Stainless Fittings Steel, PVC-Coated & Aluminum Flexible Electrical Conduit P
Slide 20: Atkore's Electrical Raceway segment
Atkore’ Electrical Raceway segment Products that deploy, isolate and protect a structure’s electrical circuitry from the original power source to the final outlet ■ Must-stock products for over 13,000 U.S. electrical distributor 2017 net sales by product category branches Metal Electrical PVC Electr
Slide 21: Atkore's Mechanical Products & Solutions segment
Atkore’s Mechanical Products & Solutions segment Products and services that frame, support and secure component parts in a broad range of structures, equipment and systems in electrical, industrial and construction applications ■ Comprehensive offering of metal framing and in-line galvanized FY 2017
Slide 22: Investment highlights
Investment highlights 1 Leading market positions and strong brands 2 Superior customer value proposition with a compelling portfolio Strong company 3 Significant scale providing barriers to entry 4 Focused growth strategy to attack substantial market opportunity a.a Capitalize on attractive end-mark
Slide 23: Leading market positions and strong brands
1 Leading market positions and strong brands Leading market positions in each of our core businesses Rank Market share1 Steel Conduit #2 35% PVC Conduit #1 35% Armored 32% Cable #2 In-line Galvanized 80% Mechanical #1 Tube Metal Framing and #2 21% Related Fittings 1 Management estimates based on mar
Slide 24: Superior customer value proposition with a compelling portfolio
2 Superior customer value proposition with a compelling portfolio Value proposition Blue chip customer base Global Electrical Distributors Independent Electrical Distributors ■ Brands and reputation Industrial Distributors ■ Product breadth & Big Box Retail ■ Bundling, co-loading and value-add advan
Slide 25: Significant scale providing barriers to entry
3 Significant scale providing barriers to entry Industry-leading scale that allows us to provide: Manufacturing and distribution footprint well-positioned in ✓ the largest electrical products markets across the U.S. Broad portfolio of products, enabling us to deliver integrated source-to-outlet elec
Slide 26: Capitalize on attractive end-market growth dynamics
4a Capitalize on attractive end-market growth dynamics Atkore is geared to U.S. non-residential construction FY 2017 net sales U.S. construction by end market Infrastructure 5% New residential construction U.S. construction 16% Other 70% New non- 6% residential construction 56% International 8% MR&R
Slide 27: Grow market share with new and existing customers
4b Grow market share with new and existing customers Strategy ✓ Segment by 15 SBUs ✓ Incentivize each SBU General Manager to serve and grow with top All customers customers ✓ Provide each SBU with necessary resources All All strategic enabled by ABS by enabled business units business Constant improv
Slide 28: Execute on strategic pricing and mix opportunities
4c Execute on strategic pricing and mix opportunities Step 1: Step 2: Step 3: Step 4: Develop Improve Optimize Complete capabilities performance mix roll-out (Launched in 2011; hit (Launched in 2013) (Launched in 2014) (Launched in H2 2016) critical level in 2015) Progress Shifting sales to most Lev
Slide 29: Expand product offering through innovation
4d Expand product offering through innovation Robust new product pipeline catalyzing incremental growth MC Luminary Multizone™ example ✓ Opportunity Solution Recognition 80+ total new products in the pipeline (all stages) ■ Daylight harvesting ■ MC Luminary Electrical Construction and ✓ trends seek
Slide 30: Pursue M&A to deliver incremental growth
4e Pursue M&A to deliver incremental growth Robust M&A capability... ...developed through a history of successful acquisitions ■ 10 acquisitions and 7 divestitures / closures completed 2011 2012 2013 2014 2017 since 2011 ■ Proven ability to integrate acquisitions - Strong track record of identifying
Slide 31: Strong profitability with clear runway for further improvement
5 Strong profitability with clear runway for further improvement Illustrative Atkore Adjusted EBITDA margin opportunity Potential upside from key initiatives Strategic pricing and mix Continued roll-out of strategic pricing to 20%+ both Electrical Raceway and MP&S Purchasing standard work Produc
Atkore International Group — Q3 2018 Earnings Presentation on 6ix