Atkore Inc. · NYSE:ATKR
Atkore — Atkore International Group — Debt Investor Presentation (January 2018)
38 slides from Atkore's debt investor presentation, Jan 22, 2018
Slide 1: Public Lenders Presentation | January 2018
0 Public Lenders Presentation | January 2018
Slide 2: Forward-looking statements
1 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 statement
Slide 3: Presenters
2 Jim Mallak Chief Financial Officer, Atkore International Chuck Cohrs Treasurer, Atkore International Presenters Joseph Pandolfo Vice President, Deutsche Bank John Williamson Chief Executive Officer, Atkore International Alvin Varughese Director, Deutsche Bank Keith Whisenand Vice President - Inves
Slide 4: Agenda
3 1 2 4 3 5 Transaction overview Atkore overview Financial overview Key credit highlights Agenda Appendix
Slide 5: Transaction overview
4 • Atkore International Inc. (“Atkore” or the “Company”) is a leading manufacturer of Electric Raceway products primarily for the non- residential and construction and renovation markets, as well as Mechanical Products and Solutions for the construction and industrial markets • Electrical Raceway p
Slide 6: Sources & Uses and Pro Forma Capitalization
5 Sources & Uses and Pro Forma2 Capitalization 1 Equity as of 1/12/18 2 Pro forma adjustments to capitalization calculations add this transaction to equity as of 1/12/18 3 Pro forma Adjusted EBITDA adjustments add the Adjusted EBITDA impact of acquisitions completed in FY 2017 from 10/1/2016 to the
Slide 7: Atkore overview
6 1 2 4 3 Transaction overview Atkore overview Financial overview Key credit highlights 5 Appendix
Slide 8: Atkore overview
7 $ 164 $ 235 $ 228 $ 236 FY 2015 FY 2016 FY 2017 TTM Q1 '18 9.5% 15.4% 15.1% 14.9% ■ #1 or #2 market positions in most of our products ■ Offer must-stock products to distribution and OEM customers via single integrated platform ■ Established reputation as an industry leader in quality, availability
Slide 9: Atkore Overview: Transformation
8 Atkore Overview: 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 Atkore Bu
Slide 10: Atkore Overview: Atkore Business System
9 Atkore Overview: Atkore Business System ■ 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 ■ Com
Slide 11: Atkore All Around You
10 Atkore All Around you Cable Tray and Ladder Armored Cable Metal Framing & Fittings Flexible Electrical Conduit and Liquidtight Conduit PVC Electrical Conduit & Fittings Metal Electrical Conduit PVC Trunking Wire Basket Cable Tray Industrial Flexible Electrical Conduit Electrical Raceway Fittings:
Slide 12: Atkore's Electrical Raceway segment
11 Atkore’ Electrical Raceway segment $113 $182 $189 $203 10% 17% 17% 17% 6% 8% 10% 12% 14% 16% 18% 20% FY 2015 FY 2016 FY 2017 TTM Dec 2017 Adjusted EBITDA ($mm) Adjusted EBITDA Margin PVC Electrical Conduit & Fittings 22% Armored Cable & Fittings 34% Other 12% Metal Electrical Conduit & Fittings 3
Slide 13: Mechanical Products & Solutions segment
12 Metal Framing and Fittings 24% Mechanical Pipe 51% Other 25% ■ 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
Slide 14: Key credit highlights
13 1 2 4 3 Transaction overview Atkore overview Financial overview Key credit highlights 5 Appendix
Slide 15: Key Credit Highlights
14 Key Credit highlights Leading market positions and strong brands Superior customer value proposition with a compelling portfolio Significant scale providing barriers to entry Capitalize on attractive end-market growth dynamics Execute on strategic pricing and mix opportunities Expand product offe
Slide 16: Leading market positions and strong brands
15 Leading market positions and strong brands 1 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
Slide 17: Superior customer value proposition with a compelling portfolio
16 Superior customer value proposition with a compelling portfolio 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 a
Slide 18: Significant scale providing barriers to entry
17 Significant scale providing barriers to entry 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
Slide 19: Capitalize on attractive end-market growth dynamics
18 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 20: Execute on strategic pricing and mix opportunities
19 5 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 Shifting sales to most favorable products, geographies a
Slide 21: Expand product offering through innovation
20 Expand product offering through innovation MC Luminary Multizone™ example Opportunity RecognitionSolution ■ Daylight harvesting trends seek to save energy and reduce power costs by dimming lights proportionally to the availability of natural light. Electrical Construction and Maintenance Magazine
Slide 22: Strong profitability with clear runway for further improvement
21 15.1% 20%+ Atkore FY 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 Purchasing s
Slide 23: Strong cash flow generation and track record of deleveraging
22 Strong cash flow generation and long-term track record of deleveraging 1. See non-GAAP reconciliations in appendix. FY 2014, FY 2015, and FY 2016 utilize reported Adjusted EBITDA, FY 2017 and TTM Q1 2018 utilize Pro Forma Adjusted EBITDA to calculate Net Debt / Adjusted EBITDA or Pro Forma Adjust
Slide 24: Support from a team built to outperform
23 Support from a team built to outperform 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 Solu
Slide 25: Financial overview
24 1 2 4 3 Transaction overview Atkore overview Financial overview Key credit highlights 5 Appendix
Slide 26: Impressive financial momentum
25 Impressive financial momentum 8.4% 10.6% 15.5% 15.1% 15.2% FY FY 2014 FY 2015 FY 2016 FY 2017 PF TTM 12/29/17 $127 $164 $235 $228 $251 FY 9.2% 7.1% 13.7% 14.8% Q1 Adjusted EBITDA ($mm) and Y-o-Y growth rate1 -16% Adjusted EBITDA margin and Y-o-Y margin improvement -200 bps Y-o-Y % growth / margin
Slide 27: Consolidated Atkore Q1 2018 Financial Summary
26 ($’s in millions) Q1 2018 Q1 2017 Y/Y Change Net Sales $414.5 $337.6 22.8% Net Income $27.2 $17.4 56.5% Adjusted EBITDA(1) $58.5 $49.9 17.2% Net Income Margin 6.6% 5.1% +150 bps Adjusted EBITDA Margin(1) 14.1% 14.8% (70 bps) Net Income per Share $0.41 $0.26 57.7% (1) See non-GAAP reconciliations
Slide 28: Consolidated Atkore Q1 2018 highlights
27 Consolidated Atkore Q1 2018 highlights $59M $1 $6 $50M $8 $5 $3 2017 Volume Price vs. Cost M&A Productivity Other 2018 $415M $338M $32 $19 $25 $1 2017 Volume Price / Mix M&A FX 2018 Acquisitions and Organic Initiatives Driving Double Digit Growth in Net Sales, Adjusted EBITDA, and EPS Volume grow
Slide 29: Historical financial results
28Note: See non-GAAP reconciliation in appendix for Pro Forma Adjusted EBITDA and free cash flow. 1 FY15 and FY16 Adjusted Net Sales removing the impact of fence and sprinkler. See non-GAAP reconciliation in appendix 2 Free cash flow calculated as Adjusted EBITDA less changes in working capital and
Slide 30: Historical financial detail by segment
29 Historical financial detail by segment Electric Raceway $ millions, Fiscal Years ended September 25, 2015 and September 30, 2016 & 2017 2015 2016 2017 TTM 12/29/2017 Adjusted Net Sales1 $ 1,080 $ 1,069 $ 1,095 $ 1,169 % growth -1.1% 2.4% 6.8% Adjusted EBITDA $ 113 $ 182 $ 189 $ 203 % margin 10.4%
Slide 31: Appendix
30 1 2 4 3 5 Transaction overview Atkore overview Financial overview Key credit highlights Appendix
Slide 32: Adjusted EBITDA reconciliation
31 Adjusted EBITDA reconciliation Consolidated $ millions, Fiscal Years ended September 26, 2014, September 25, 2015 and September 30, 2016 & 2017 2014 2015 2016 2017 TTM 12/29/17 Net income (loss) (74) (5) 59 85 94 Add: Interest expense, net 44 45 42 27 23 Depreciation and amortization 59 59 55 55
Slide 33: Net Debt / Adjusted EBITDA reconciliation
32 Net Debt / Adjusted EBITDA reconciliation $ millions, Fiscal Years ended September 25, 2015 and September 30, 2016 & 2017 2014 2015 2016 2017 TTM 12/29/17 Short-term debt and current maturities of long- term debt 2.9 2.9 1.3 4.2 4.2 Long-term debt 690.0 649.3 629.0 571.9 527.8 Total Debt 692.9 65
Slide 34: Adjusted EBITDA Margin reconciliation
33 Adjusted EBITDA Margin reconciliation Q1 Q1 Q1 Q1 Q2 Q2 Q2 Q2 Q3 Q3 Q3 Q3 $ millions, 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 Adjusted EBITDA $32 $27 $48 $50 $27 $36 $58 $56 $30 $47 $67 $62 Sales 395 426 358 338 408 433 353 373 446 432 396 398 Impact of Fence-Sprinkler Sales (
Slide 35: Adjusted EBITDA reconciliation by quarter
34 Adjusted EBITDA reconciliation Consolidated 1 Represents other items, such as inventory reserves and adjustments, impact of Fence and sprinkler exit, realized or unrealized gain (loss) on foreign currency transactions and release of certain indemnified uncertain tax positions. $ millions, Quarter
Slide 36: TTM calculation reconciliation
35 TTM calculation reconciliation Q2 Q3 Q4 Q1 TTM Acquisition Proforma $ millions, FY2017 FY2017 FY2017 FY2018 DEC 2017 Impact TTM Dec 2017 Atkore Sales 373 398 396 415 1,581 72 1,653 Adjusted EBITDA 56 62 60 58 236 15 251 Adj EBITDA Margin 15.1% 15.6% 15.0% 14.1% 14.9% 20.6% 15.2% Net Income 19 27
Slide 37: Free cash flow reconciliation
36 Free cash flow reconciliation As reported Pro forma $ millions, Fiscal Year ended September 30, 2015 2016 2017 TTM 12/29/17 PF TTM 12/29/17 Adjusted EBITDA $ 164 $ 235 $ 228 $ 236 $ 251 Changes in: Accounts receivable 7 25 (13) (25) (25) Inventories 68 (2) (10) 3 3 Prepaid expenses and other curr
Slide 38: FY 2017 Net Sales and Adjusted EBITDA Bridge
37 $1,504M$99 $1 $5 $1,523M $87 2016 Volume Price / Mix M&A FX 2017 Working Days ($29M) Direct Solar ($33M) 2017 Acquisitions +$7M Fence & Sprinkler ($8M) FY 2017 Net Sales Bridge $228M $26 $0 $235M $18 $1 2016 Volume Price vs. Cost Productivity / Other M&A / FX 2017 Working Days ($6M) Direct Solar
Atkore International Group — Debt Investor Presentation (January 2018) on 6ix