Core Viewpoint - Insteel Industries, Inc. (IIIN) and Atkore Inc. (ATKR) are positioned to benefit from growth in the construction sector, driven by repair and remodeling activities, with each company having distinct strengths and challenges in their respective markets [1]. Insteel Industries - IIIN is a leader in manufacturing steel wire reinforcing products for concrete construction, experiencing strong demand due to increased construction activity and contributions from acquired assets [2][3]. - In the second quarter of fiscal 2025, IIIN's net sales rose 26.1% year-over-year to $160.7 million, with shipments increasing by 28.9% [3]. - The company anticipates growth in the non-residential construction market, supported by federal funding from the Infrastructure Investment and Jobs Act, which is expected to enhance project activity [4]. - IIIN is focused on acquisitions to expand its customer base and product lines, including the acquisition of EWP and O'Brien Wire Products, which strengthened its position in the Midwest and enhanced its product offerings [5]. - In the first half of fiscal 2025, IIIN returned $20.6 million to shareholders in dividends and repurchased $1.7 million in shares [6]. Atkore Inc. - ATKR specializes in diversified electrical infrastructure products and is benefiting from strong demand in the data center market for its metal framing and cable management solutions [7]. - The company has invested in enhancing its construction services, leading to a 3.4% year-over-year increase in organic revenues in the Safety & Infrastructure segment in the second quarter of fiscal 2025 [8]. - In the first half of fiscal 2025, ATKR paid $22 million in dividends and repurchased $100 million in shares, with a 3.1% dividend increase announced in April 2025 [9]. - However, ATKR faces challenges with rising operating costs, as its cost of sales increased by 3% year-over-year, leading to a decline in gross margin by 1,040 basis points to 26.4% [10]. Earnings Estimates - The Zacks Consensus Estimate for IIIN's fiscal 2025 earnings is $1.86 per share, reflecting a 34.8% increase over the past 30 days and an 87.9% year-over-year growth [11]. - For ATKR, the fiscal 2025 earnings estimate stands at $6.00 per share, indicating a 3.6% increase over the past 30 days but a year-over-year decline of 52.7% [11]. Stock Performance and Valuation - Over the past three months, IIIN shares have increased by 27.5%, while ATKR stock has gained 4.3% [13]. - IIIN is trading at a forward price-to-earnings ratio of 14.46X, below its two-year median of 15.43X, whereas ATKR's forward earnings multiple is 11.53X, above its median of 9.73X [14]. Final Assessment - IIIN's strong momentum in the non-residential construction market, along with strategic acquisitions and growth investments, positions it favorably for future growth [15]. - In contrast, ATKR's profitability is being impacted by rising costs, despite its strengths in the Safety & Infrastructure segment [15]. - Based on current factors, IIIN is viewed as a more attractive investment compared to ATKR, with IIIN holding a Zacks Rank of 1 (Strong Buy) and ATKR a Zacks Rank of 3 (Hold) [16].

Group 1 - Atkore Inc. (ATKR) was initiated with a Buy rating due to its forward PEG ratio of 0.88x, indicating potential undervaluation [1] - The investment strategy at Henriot Capital emphasizes a quant-driven approach, relying on data-driven models for stock selection without human bias [1] Group 2 - The article does not disclose any positions in the mentioned companies, nor does it plan to initiate any within the next 72 hours [2] - The opinions expressed in the article are solely those of the author and do not reflect the views of Seeking Alpha [3]

Financial Performance - The company achieved net sales of $702 million with a 5% organic volume growth driven by construction services, steel conduit, metal framing, and cable management products [6][12] - Adjusted EBITDA was $116 million, with adjusted EBITDA margins expanding sequentially to 16.6% from 15% in the previous quarter [12] - Adjusted EPS was reported at $2.04, reflecting a strong performance despite a 17% year-over-year decline in average selling prices [12][13] Business Line Performance - Organic volumes increased by 5% compared to a 1% decline in the same quarter of the previous fiscal year, with significant growth in metal framing, cable management, and construction services [12][14] - The electrical cable and flexible conduit category saw low single-digit growth year-to-date, while PVC conduit products experienced a decline in volume [15][16] - The S and I segment improved adjusted EBITDA margins due to strong volume performance and better productivity, contributing approximately $11 million to segment EBITDA [16] Market Dynamics - The company noted a slowdown in planning activity across several non-residential categories, as indicated by the Dodge Momentum Index [11] - Despite recent increases in construction starts, there is a possibility of slower activity moving forward due to economic uncertainties and potential project delays [20][21] - The impact of tariffs on imported steel and aluminum products is expected to benefit the company, as most of its products are sourced domestically [10][22] Strategic Direction - The company remains committed to a balanced capital deployment model, focusing on returning cash to shareholders through share repurchases and dividends while investing in growth initiatives [18][25] - The management emphasized the importance of maintaining a strong financial profile and leveraging domestic manufacturing capabilities to serve the electrical infrastructure market [23][24] Management Commentary - Management expressed cautious optimism regarding future demand for US-made steel conduit, despite uncertainties surrounding tariffs and macroeconomic conditions [10][20] - The company is maintaining its full-year fiscal 2025 adjusted EBITDA guidance in the range of $375 million to $425 million, with adjusted EPS expected between $5.75 and $6.85 [21][25] - Management acknowledged the challenges posed by competing technologies, particularly in the fiber optic space, which contributed to an impairment charge for certain long-lived assets [9][65] Other Important Information - The company ratified a new five-year labor agreement with the United Steel Workers at its Harvey, Illinois facility, which is expected to enhance productivity [7][8] - The company repurchased approximately $50 million in shares during the second quarter and increased its dividend to $0.33 per share [8] Q&A Session Summary Question: Expectations for PVC conduits for the remainder of the year - Management indicated that pricing for PVC conduits has continued to decline, but they are maintaining their previous guidance regarding future pricing expectations [30] Question: Market share for PVC conduit - Management believes the company remains a leader in the PVC conduit market, although imports have been increasing [31][32] Question: Recent import levels and potential pricing upside - Management noted that PVC imports have increased significantly year-over-year, but the future trajectory remains uncertain due to tariffs [40][41] Question: Impact of tariffs on steel pricing - Management stated that the 25% tariff on imported steel is expected to benefit the company, although predicting exact impacts remains challenging [44][46] Question: Impairment of HD PVC and competitive changes - Management clarified that the impairment was influenced by competing technologies, particularly fiber optics, and not by the company's own product performance [64][67] Question: Direction from the administration regarding tariffs - Management confirmed that there has been no specific direction from the administration regarding tariffs, leading to a prudent decision to take the impairment charge [73][76] Question: Demand cadence for products - Management reported that demand has been improving month-over-month, with cautious optimism for the remainder of the fiscal year [92][94] Question: Construction services opportunity - Management indicated that data centers are expected to become a significant portion of the construction services business moving forward [95][96]

分组1 - Atkore Inc. reported quarterly earnings of $2.04 per share, slightly missing the Zacks Consensus Estimate of $2.05 per share, and down from $4.08 per share a year ago, indicating an earnings surprise of -0.49% [1] - The company posted revenues of $701.73 million for the quarter, surpassing the Zacks Consensus Estimate by 0.26%, but down from $792.91 million year-over-year [2] - Atkore has surpassed consensus EPS estimates only once in the last four quarters, while topping revenue estimates two times in the same period [2] 分组2 - The stock has underperformed, losing about 19.8% since the beginning of the year compared to the S&P 500's decline of -3.9% [3] - The current consensus EPS estimate for the upcoming quarter is $1.59 on revenues of $754.5 million, and for the current fiscal year, it is $6.79 on revenues of $2.85 billion [7] - The Wire and Cable Products industry, to which Atkore belongs, is currently ranked in the top 6% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

Financial Data and Key Metrics Changes - The company achieved net sales of $702 million, reflecting a 5% organic volume growth driven by construction services, steel conduit, metal framing, and cable management products [6][11] - Adjusted EBITDA was $116 million, with adjusted EBITDA margins expanding sequentially to 16.6% from 15% in the previous quarter [11] - Adjusted EPS was reported at $2.04, showing a positive trend compared to the previous year [11] Business Line Data and Key Metrics Changes - Organic volumes increased by 5% compared to a 1% decline in the same quarter of the previous fiscal year [11] - Average selling prices declined by 17% year-over-year, primarily due to decreases in PVC and steel conduit products, although there was sequential pricing improvement for steel conduit [12][16] - The Electrical Cable and Flexible Conduit category grew year-to-date by low single digits, while metal framing, cable management, and construction services saw high single-digit growth [13][16] Market Data and Key Metrics Changes - The Dodge Momentum Index indicated a slowdown in planning activity across several non-residential categories [10] - Despite year-to-date increases in construction starts and planning activities, there are indications of potential slower activity moving forward [19][20] Company Strategy and Development Direction - The company remains committed to a balanced capital deployment model, focusing on returning cash to shareholders through share repurchases and dividends while investing in growth initiatives [18][25] - The management highlighted the importance of domestic manufacturing and the ability to serve customers effectively in the evolving electrical industry [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about demand for U.S.-made steel conduit in 2025, despite uncertainties related to tariffs and macroeconomic conditions [9][20] - The company is maintaining its full-year fiscal 2025 adjusted EBITDA guidance in the range of $375 million to $425 million and adjusted EPS between $5.75 and $6.85 [21][10] Other Important Information - An impairment charge of $50 million was announced for certain long-lived assets related to HDP pipe and conduit products due to competition from emerging technologies [8][67] - A new five-year labor agreement was ratified with the United Steel Workers at the Harvey, Illinois facility, which is expected to enhance productivity [7] Q&A Session Summary Question: Expectations for PVC conduits for the remainder of the year - Management indicated that pricing has continued to decline, but they are still on track with previous guidance regarding PVC conduit pricing [30] Question: Market share for PVC conduit - Management believes they remain a leader in the PVC conduit market, although imports have been increasing [31][32] Question: Recent import levels and potential pricing upside - Management noted that PVC imports have increased significantly year-over-year, but the future trajectory is uncertain due to tariffs [40][41] Question: Net tariff benefit in updated fiscal guidance - Management suggested that a 2% to 3% reduction in volume could be offset by tariff increases, indicating a net positive for shareholders [61] Question: Update on steel conduit imports from Mexico - Management confirmed that while there has been a reduction in imports, they do not expect a complete halt due to the 25% tariff [64][65] Question: Impairment of HD PVC and competitive changes - The impairment was influenced by competition from fiber optic technologies and the administration's plans to increase funding for satellite internet [66][69] Question: Direction from the administration on tariffs - Management stated they have not received specific guidance from the administration regarding tariffs or the BEAD program [73] Question: Cadence of demand for products - Management reported that demand has improved month-over-month, with customers remaining cautiously optimistic [94] Question: Construction services opportunity - Management indicated that data centers are expected to be a significant portion of construction services moving forward [96][98] Question: Pricing assumptions for FY 2025 - Management has not changed pricing assumptions despite tariff impacts, indicating that overall price versus cost dynamics remain within expected ranges [99][102]

Financial Data and Key Metrics Changes - The company achieved net sales of $702 million, reflecting a 5% organic volume growth driven by construction services, steel conduit, metal framing, and cable management products [6][11] - Adjusted EBITDA was $116 million, with adjusted EBITDA margins expanding sequentially to 16.6% from 15% in the previous quarter [11] - Adjusted EPS was reported at $2.04, down from $2.4 year-over-year [6][11] Business Line Data and Key Metrics Changes - Organic volumes increased by 5% compared to a 1% decline in the same quarter of the previous fiscal year [11] - Average selling prices declined by 17% year-over-year, primarily due to decreases in PVC and steel conduit products, although there was sequential pricing improvement for steel conduit [11][12] - The Electrical Cable and Flexible Conduit category grew year-to-date by low single digits, while metal framing, cable management, and construction services saw high single-digit growth [13][15] Market Data and Key Metrics Changes - The Dodge Momentum Index indicated a slowdown in planning activity across several non-residential categories [10] - Despite year-to-date increases in construction starts and planning activities, there are indications of potential slower activity moving forward [19] - The company remains optimistic about demand for U.S.-made steel conduit in 2025, despite uncertainties regarding tariffs and their economic impact [9][19] Company Strategy and Development Direction - The company is focused on maximizing shareholder value through strategic asset management, including a recent divestiture of its Northwest Polymers recycling business [6][7] - A new five-year labor agreement was ratified with the United Steel Workers, enhancing productivity and customer service capabilities [7] - The company is committed to a balanced capital deployment model, emphasizing cash returns to shareholders through share repurchases and dividends [16][22] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding future demand, noting that while the second quarter exceeded expectations, growth in the Construction Services business is expected to moderate in the second half of the year [18][20] - The company maintains its full-year fiscal 2025 adjusted EBITDA guidance in the range of $375 million to $425 million and adjusted EPS between $5.75 and $6.85 [20] - Management highlighted the challenges posed by tariffs and the unpredictability of the macroeconomic environment, which could impact volume expectations [19][20] Other Important Information - An impairment charge of $50 million was recorded for certain long-lived assets related to HDP pipe and conduit products due to competitive technologies and delays in government funding [8][66] - The company has repurchased approximately $50 million in shares during the second quarter and increased its dividend to $0.33 per share [7][8] Q&A Session Summary Question: Expectations for PVC conduits for the balance of the year - Management indicated that pricing has continued to decline but remains aligned with previous guidance, making it difficult to predict future pricing accurately [29] Question: Market share for PVC conduit - Management believes Atkore remains a leader in the PVC conduit market, despite increasing imports [30][31] Question: Import levels and potential pricing upside - Management noted that PVC imports are up solid double digits year-over-year, but future trends are uncertain due to tariffs and market dynamics [38][39] Question: Net tariff benefit in updated fiscal guidance - Management suggested that a 2% to 3% reduction in volume could be offset by tariff increases, indicating a net positive for shareholders [59] Question: Update on steel conduit imports from Mexico - Management confirmed that while there has been a reduction in imports, they have not completely stopped, and the 25% tariff will impact pricing strategies [61][63] Question: Impairment of HD PVC and competitive changes - The impairment was influenced by emerging technologies in fiber optics and the administration's plans to increase funding for satellite internet [66][67] Question: Direction from the administration on tariffs - Management stated there has been no concrete direction from the administration regarding tariffs, leading to a prudent decision to take the impairment charge [72][75] Question: Profitability of the torque tube business without IRA support - Management confirmed that the torque tube business remains profitable even without IRA support, although the IRA has driven additional demand [83][86] Question: Cadence of demand for products - Management reported that demand has improved month-over-month, with cautious optimism from customers regarding future volumes [93][94] Question: Construction services opportunity and data centers - Management indicated that data centers are expected to become the largest portion of construction services moving forward, alongside chip manufacturing [95][96]

Q2 2025 Financial Performance - Net sales were $701.7 million, a decrease of 11.5% year-over-year[11] - Net loss was $50.1 million, compared to a net income of $138 million in Q2 2024[11] - Adjusted EBITDA was $116.4 million, a decrease of 45.1% year-over-year[11] - Adjusted diluted EPS was $2.04, a decrease of 50% year-over-year[11] Business Updates - The company achieved net sales of $702 million, including 5% organic volume growth compared to the prior year[10] - A net loss of $50 million includes a $128 million non-cash impairment charge for certain long-lived assets for HDPE pipe and conduit products[10] - The company completed approximately $50 million in share repurchases and $11 million in dividend payments in Q2[10] Segment Performance - Electrical Safety & Infrastructure net sales increased by 3.4% to $209.3 million[22] - Electrical Safety & Infrastructure adjusted EBITDA increased by 41.3% to $36.1 million[22] - Electrical adjusted EBITDA margin increased by 460 bps to 17.2%[22] Outlook - The company is maintaining its full-year 2025 outlook for net sales of $2.85 billion - $2.95 billion[29] - The company is maintaining its full-year 2025 outlook for adjusted EBITDA of $375 million - $425 million[29] - The company is maintaining its full-year 2025 outlook for adjusted diluted EPS of $5.75 - $6.85[29]

Financial Performance - Estimated net sales for Q2 2025 are approximately $695 million to $705 million, reflecting mid-single digit volume growth[6] - Q2 2025 estimated net loss is approximately $(77) million to $(41) million, with an adjusted EBITDA of approximately $115 million to $118 million[6] - Adjusted net income per diluted share is estimated to be approximately $2.01 to $2.08[6] - The company maintains its full-year fiscal 2025 outlook, projecting net sales of approximately $2,850 million to $2,950 million[14] - Adjusted EBITDA for the full year is projected to be approximately $375 million to $425 million[14] - The company reported a net loss of $76,726,000 for the three months ended March 28, 2025, compared to a net loss of $41,287,000 in the same period last year[27] - Adjusted net income per diluted share was $2.01, slightly down from $2.08 in the same quarter last year[27] - The company reported an adjusted net income of $68,758,000, down from $71,399,000 year-over-year[27] - The net loss per diluted share was $(2.24), compared to $(1.20) in the same quarter last year[27] Impairment and Charges - The company expects a pre-tax non-cash impairment charge of approximately $121 million to $162 million related to HDPE assets[5] - The impairment charge was triggered by emerging competing technology and adverse market conditions affecting public spending[4] - Impairment of assets amounted to $161,635,000, up from $120,604,000 in the previous year[27] - Pre-tax adjustments to net income were $188,718,000, compared to $144,987,000 in the previous year[27] - The tax effect on pre-tax adjustments was a reduction of $47,180,000, compared to $36,247,000 last year[27] Labor and Operations - A new 5-year labor contract has been ratified for the Harvey, IL facility, retroactive to April 2024[8] - The company sources and manufactures most products in the U.S., with a focus on domestic customers[4] Corporate Events - The company will release its Q2 earnings on May 6, 2025, and hold a conference call at 8:00 a.m. ET[9] Stock and Compensation - Stock-based compensation increased to $7,713,000 from $5,013,000 year-over-year[27] - The diluted weighted average common shares outstanding decreased to 34,288,000 from 37,166,000 year-over-year[27] - The company incurred a loss on the sale of business totaling $6,101,000, with no comparable loss in the prior year[27]

Financial Performance - Net sales decreased by $91.2 million, or 11.5%, to $701.7 million for the three months ended March 28, 2025, compared to $792.9 million for the same period in 2024[107]. - For the six months ended March 28, 2025, net sales decreased by $228.1 million, or 14.3%, to $1,363.3 million compared to $1,591.4 million for the same period in 2024[125]. - Net sales decreased by $226.4 million, or 19.1%, to $958.0 million for the six months ended March 28, 2025, from $1,184.5 million for the same period in 2024[134]. Profitability - Gross profit fell by $106.5 million, or 36.5%, to $185.1 million for the three months ended March 28, 2025, primarily due to lower net sales[105]. - Operating loss increased to $51.8 million for the three months ended March 28, 2025, compared to an operating income of $178.8 million for the same period in 2024, representing a change of $230.6 million[105]. - Adjusted EBITDA for the Electrical segment decreased by $104.8 million, or 53.5%, to $90.9 million for the three months ended March 28, 2025, with an Adjusted EBITDA margin of 18.5%[120]. - Adjusted EBITDA decreased by $216.8 million, or 54.2%, to $183.3 million for the six months ended March 28, 2025, from $400.1 million for the same period in 2024[135]. - Adjusted EBITDA margin decreased to 19.1% for the six months ended March 28, 2025, compared to 33.8% for the same period in 2024[135]. Expenses - Selling, general and administrative expenses decreased by $8.7 million, or 4.4%, to $190.5 million for the six months ended March 28, 2025, primarily due to increased productivity and reduced administrative costs[127]. - Other expense, net increased to $6.4 million for the three months ended March 28, 2025, compared to $0.7 million for the same period in 2024, primarily due to a loss on the sale of Northwest Polymers[113]. - Intangible asset amortization expense decreased to $21.9 million for the six months ended March 28, 2025, from $28.7 million for the same period in 2024[128]. Asset Impairment - Asset impairment charges rose to $127.7 million for the three months ended March 28, 2025, compared to no charges in the same period in 2024[111]. - Asset impairment charges increased to $127.7 million for the six months ended March 28, 2025, compared to no charges for the same period in 2024[129]. Cash Flow - Cash and cash equivalents were $330.4 million as of March 28, 2025, with $82.1 million held at non-U.S. subsidiaries[139]. - Cash flows provided by operating activities were $160.9 million for the six months ended March 28, 2025, down from $245.3 million for the same period in 2024[149]. - The company used $48.0 million in investing activities during the six months ended March 28, 2025, compared to $79.0 million for the same period in 2024[150]. - Financing activities resulted in a cash outflow of $129.2 million for the six months ended March 28, 2025, compared to $187.5 million for the same period in 2024[151]. Taxation - The company's income tax rate increased to 24.7% for the three months ended March 28, 2025, compared to 18.7% for the same period in 2024[114]. - The effective income tax rate increased to 53.0% for the six months ended March 28, 2025, from 18.1% for the same period in 2024[132]. Risks and Uncertainties - The company acknowledges that actual future results may differ materially from expectations due to various risks and uncertainties[156]. - There have been no material changes to the quantitative and qualitative disclosures about market risks previously disclosed in the Annual Report on Form 10-K[159]. - Comparisons of results for current and prior periods should only be viewed as historical data and not as indicators of future performance[158].

Group 1 - Atkore Inc. is facing a price-fixing lawsuit, declining revenues, and margins, along with a securities fraud lawsuit [1] - The company will record an impairment charge related to its HDPE business [1] Group 2 - Tomas Riba, an economist and former CFO, emphasizes investing in high-quality companies with strong competitive advantages and expanding margins [1]