Atkore Inc. · NYSE:ATKR
Atkore — Atkore International Group — Q2 2020 Earnings Presentation
31 slides from Atkore's earnings presentation, May 6, 2020
Slide 1: Second Quarter 2020 Earnings Presentation & Investor Overview
Second Quarter 2020 Earnings Presentation & Investor Overview May 2020
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: Second Quarter 2020 Earnings Presentation
Second Quarter 2020 Earnings Presentation As presented on May 5, 2020
Slide 4: Q2 2020 Financial Highlights and Business Update
Q2 2020 Financial Highlights and Business Update ▪ Delivered Net Income of $39.2M; up 32.6% versus prior year ▪ Increased Adjusted EBITDA(1) by 12.9%, or $9.9M in year over year improvement Q2 2020 Financial ▪ Grew Adjusted EPS(1) by 19.3% up to $0.99 Highlights ▪ Completed $15.0M in stock repurchas
Slide 5: Example Actions & Updates Related to COVID-19
Example Actions & Updates Related to COVID-19 Employee Health & Safety Business & Operations Management ▪ Stopped all non-essential business travel ▪ Established an Executive Committee task force to manage ▪ Required executive level approval for all visitors to all aspects of the company’s response
Slide 6: Q2 Income Statement Summary
Q2 Income Statement Summary Y/Y Y/Y % Q2 2020 Q2 2019 Change Change ($’s in millions) Net Sales $455.7 $469.3 ($13.7) (2.9%) Operating Income $61.2 $52.5 $8.6 16.4% Net Income $39.2 $29.6 $9.6 32.6% Adjusted EBITDA(1) $87.0 $77.1 $9.9 12.9% Adjusted EBITDA Margin(2) 19.1% 16.4% +270 bps - Net Income
Slide 7: Consolidated Atkore Q2 2020 Bridges
Consolidated Atkore Q2 2020 Bridges Q2 Net Sales Bridge Net Sales Growth Volume/Mix (0.8%) $469M $11 $456M $4 Price (4.0%) $1 $19 Acquisitions/Divestitures +2.3% FX/Other (0.4%) Total (2.9%) 2019 Volume/Mix Price M&A FX/Other 2020 Q2 Adjusted EBITDA Bridge Highlights $3 $87M $10 $1 ▪ Drove $9.9M of
Slide 8: Electrical Raceway Q2 Highlights
Electrical Raceway Q2 Highlights ▪ Adjusted EBITDA increased $11.6M, and Q2 Q2 Y/Y adjusted EBITDA margins increased 2020 2019 Change 410 bps to 23.2% ($’s in millions) Net Sales $339.7 $353.5 (3.9%) ▪ Volume declines in armored cable and International projects Adjusted EBITDA $79.0 $67.4 17.2% ▪ Co
Slide 9: Mechanical Products & Solutions Q2 Highlights
Mechanical Products & Solutions Q2 Highlights ▪ Strong volume growth of 8.5% led by Q2 Q2 Y/Y continued large renewable energy projects 2020 2019 Change and solid execution across the portfolio ($’s in millions) Net Sales $116.6 $116.2 0.4% ▪ Adjusted EBITDA margins in Q2 were 13.8% and in-line with
Slide 10: Key Metrics & Liquidity Review
Key Metrics & Liquidity Review Metrics Liquidity Review ($’s in millions) 3/27/2020 Cash and cash equivalents $137.2 ▪ Senior secured term loan of $845.7M (net of deferred financing costs) due in December 2023 Total Debt $845.7 o No scheduled principal payments prior to maturity Net Debt $708.5 ▪ As
Slide 11: Cash and Leverage Ratio Trends
Cash and Leverage Ratio Trends +$85.7M vs. Prior Year 164.1 Cash Review 137.2 123.4 ▪ Annually, Q2 cash balance is Cash & Cash 100.7 impacted by dual interest payments and dual tax Equivalents, 75.9 payments that occur during 51.5 $M the period ▪ Other annual items occur during Q2 from a cash outflo
Slide 12: Value Chain & Operating Structure
Value Chain & Operating Structure Value Chain Review ATKORE CUSTOMER OR IN BOUND ATKORE DISTRIBUTION CHANNEL END-USER SUPPLY CHAIN MANUFACTURING NETWORK DISTRIBUTION OVERVIEW & ▪ Key input categories are ▪ 37 manufacturing sites ▪ 28 Atkore operated ▪ Atkore products are a ▪ Electrical, industrial o
Slide 13: Financial Outlook Summary
Financial Outlook Summary Primary Operating Assumption ▪ Net Sales decline of ~30% in Q3 and ~15% in Q4 compared to prior year Outlook Items for Changes to 1H FY2020 Prior FY2020 Consolidated Atkore FY2020 Actual Outlook Note / Comment Outlook Results Favorable / (Unfavorable) Net Sales $903.1M N/A
Slide 14: Thank you for your efforts during this difficult time
Thank you for your efforts during this difficult time Members of the Construction Community Atkore Employees & Sales Agents • Electrical distribution employees; • Multiple emergency and rush production shipments NAED #electricalhero for metal framing and electrical products in order to • Electrician
Slide 15: Company Overview
atkore Company Overview = INTERNATIONAL Se
Slide 16: Electrical industry leader with strong financial performance
Electrical industry leader with strong financial performance ■ #1 or #2 market positions in most of our product categories Net sales breakdown By reportable segment By end market ■ Offer must-stock products to distribution and OEM customers Mechanical via single integrated platform Products & U.S. S
Slide 17: Performance driven by the Atkore Business System
Performance driven by the Atkore Business System Strategy Fundamental: ■ Market Insights ■ Portfolio Management ■ Innovation/New Product Development ■ Value Propositions ■ Strategic Pricing ■ Active Account and Channel Management People Fundamental: Processes Fundamental: ■ Engagement and Alignment
Slide 18: We manufacture products that are all around you every day
We manufacture products that are all around you every day 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 & Al
Slide 19: Broad and growing portfolio provides value to customers
Broad and growing portfolio provides value to customers 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 advantages ■ Qu
Slide 20: Brand reputations built over decades of service to customers
Brand reputations built over decades of service to customers Key brands # of Years in Use Market Categories & Brand Detail Pre-wired armored and metal clad cables, flexible wiring systems, >90 years flexible metal, non-metallic, and flexible metallic liquid tight conduits and fittings. Electrical me
Slide 21: Strong brands and leading market positions anchor portfolio
Strong brands and leading market positions anchor portfolio Leading market positions in each of our major lines of business Rank Market share1 Steel Conduit #2 ~35% PVC Conduit #1 ~35% Raceway Electrical Electrical Armored ~33% Cable #2 In-line Galvanized ~80% Mechanical #1 Tube Metal Mechanical Mec
Slide 22: Driving growth through innovation and portfolio expansion
Driving growth through innovation and portfolio expansion Product innovation and organic growth examples Super Kwik-Couple (SKC) Raintight Conduit BriteRail Product of the Year Category Winner: Product of the Year Category Winner: Conduit, Raceways & Wireways Fasteners, Hangers & Accessories ■ Indus
Slide 23: M&A strategy supporting and enhancing organic growth
M&A strategy supporting and enhancing organic growth Portfolio changes – 2012 to 2019 Added over $400 million in profitable proforma revenue + Built PVC business – acquired Heritage Plastics, Ridgeline Pipe Manufacturing and American Pipe & Plastics + Enhanced size and scale in PVC and Metal Conduit
Slide 24: Disciplined capital approach drives value for stockholders
Disciplined capital approach drives value for stockholders Long-term capital deployment approach Manage Reinvest in the Mergers & Return Cash to Leverage Business Acquisitions Stockholders ▪ Target ~2x times for ▪ Maintain and grow ▪ Structured ▪ $35M in stock buyback Net Debt to the business with a
Slide 25: Appendix
atkore Appendix a INTERNATIONAL Se
Slide 26: Segment Information
Segment Information Three months ended March 27, 2020 March 29, 2019 Adjusted Adjusted Adjusted EBITDA Adjusted EBITDA (in thousands) Net sales EBITDA Margin Net sales EBITDA Margin Electrical Raceway $ 339,705 $ 78,954 23.2 % $ 353,514 $ 67,375 19.1 % Mechanical Products & Solutions 116,649 16,144
Slide 27: Adjusted Earnings Per Share Reconciliation
Adjusted Earnings Per Share Reconciliation Consolidated Atkore International Group Inc. Three months ended March 27, March 29, (in thousands, except per share data) 2020 2019 Net income $ 39,193 $ 29,555 Stock-based compensation 4,523 1,834 Intangible asset amortization 8,071 8,196 Other (a) (1,503)
Slide 28: Net Income to Adjusted EBITDA Reconciliation
Net Income to Adjusted EBITDA Reconciliation Consolidated Atkore International Group Inc. Three Months Ended Fiscal Year Ended March 27, March 29, September September September September September (in thousands) 2020 2019 30, 2019 30, 2018 30, 2017 30, 2016 30, 2015 Net income $ 39,193 $ 29,555 $ 13
Slide 29: Trailing Twelve Month Adjusted EBITDA Reconciliation
Trailing Twelve Month Adjusted EBITDA Reconciliation Consolidated Atkore International Group Inc. TTM Three months ended March 27, March 27, December September June 28, (in thousands) 2020 2020 27, 2019 30, 2019 2019 Net income $ 156,530 $ 39,193 $ 34,790 $ 45,997 $ 36,550 Interest expense, net 46,1
Slide 30: Net Debt to Total Debt and Leverage Ratio
Net Debt to Total Debt and Leverage Ratio Consolidated Atkore International Group Inc. March 27, December September June 28, March 29, December ($ in thousands) 2020 27, 2019 30, 2019 2019 2019 28, 2018 Short-term debt and current maturities of long-term debt $ — $ — $ — $ — $ — $ 26,561 Long-term d
Slide 31: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation Consolidated Atkore International Group Inc. Six months ended (in thousands) March 27, 2020 March 29, 2019 Net cash provided by operating activities $ 49,284 $ 42,789 Capital Expenditures (17,139) (14,712) Free Cash Flow $ 32,145 $ 28,077 31
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