Atkore (ATKR) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) Presents the unaudited condensed consolidated financial statements for the quarterly period ended March 25, 2022, including statements of operations, balance sheets, cash flows, and related notes on accounting policies and key events Condensed Consolidated Statements of Operations Highlights (in thousands) | Indicator | Three Months Ended Mar 25, 2022 | Three Months Ended Mar 26, 2021 | Six Months Ended Mar 25, 2022 | Six Months Ended Mar 26, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $982,573 | $639,543 | $1,823,374 | $1,150,625 | | Gross profit | $416,416 | $239,849 | $771,224 | $429,040 | | Operating income | $318,797 | $164,413 | $587,225 | $284,266 | | Net income | $233,477 | $124,933 | $438,320 | $209,999 | | Diluted EPS | $5.08 | $2.58 | $9.39 | $4.33 | Condensed Consolidated Balance Sheets Highlights (in thousands) | Account | March 25, 2022 | September 30, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $390,399 | $576,289 | | Total current assets | $1,490,040 | $1,421,452 | | Total Assets | $2,304,120 | $2,210,099 | | Total current liabilities | $458,276 | $524,936 | | Long-term debt | $759,461 | $758,386 | | Total Liabilities | $1,280,846 | $1,345,363 | | Total Equity | $1,023,274 | $864,736 | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended Mar 25, 2022 | Six Months Ended Mar 26, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $161,159 | $153,246 | | Net cash used in investing activities | ($60,799) | ($60,935) | | Net cash used for financing activities | ($285,572) | ($75,404) | | Decrease in cash and cash equivalents | ($185,890) | $19,998 | - In fiscal 2022, the company acquired Four Star Industries for $23.2 million and Sasco Tubes & Roll Forming Inc. for $15.8 million to expand its HDPE conduit and metal framing product offerings[35][36] - Subsequent to the quarter end, on April 26, 2022, the board of directors increased the company's share repurchase program authorization from $400 million to a total of $800 million[97] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses significant financial performance improvements in Q2 and H1 FY2022, driven by increased selling prices, covering operational results, segment performance, liquidity, and capital resources, while acknowledging market uncertainties Results of Operations (Three Months Ended March 25, 2022) Net sales surged 53.6% to $982.6 million for the three months ended March 25, 2022, driven by a 52.9% increase in average selling prices, leading to an 86.9% rise in net income to $233.5 million Q2 FY2022 vs Q2 FY2021 Performance (in thousands) | Metric | Q2 2022 | Q2 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net sales | $982,573 | $639,543 | $343,030 | 53.6% | | Gross profit | $416,416 | $239,849 | $176,567 | 73.6% | | Operating income | $318,797 | $164,413 | $154,384 | 93.9% | | Net income | $233,477 | $124,933 | $108,544 | 86.9% | - The 53.6% increase in net sales was primarily driven by a 52.9% increase in average selling prices, while sales volume saw a slight decrease of 1.3%. Acquisitions contributed 2.3% to the sales growth[104] Results of Operations (Six Months Ended March 25, 2022) Net sales increased 58.5% to $1.82 billion for the six months ended March 25, 2022, primarily due to a 61.5% rise in average selling prices, resulting in a 108.7% increase in net income to $438.3 million Six Months FY2022 vs FY2021 Performance (in thousands) | Metric | Six Months 2022 | Six Months 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net sales | $1,823,374 | $1,150,625 | $672,749 | 58.5% | | Gross profit | $771,224 | $429,040 | $342,184 | 79.8% | | Operating income | $587,225 | $284,266 | $302,959 | 106.6% | | Net income | $438,320 | $209,999 | $228,321 | 108.7% | - The 58.5% increase in net sales for the six-month period was attributed to a 61.5% increase in average selling prices, partially offset by a 5.1% decrease in sales volume[121] Segment Results Both Electrical and Safety & Infrastructure segments reported strong Q2 2022 growth, driven by higher average selling prices, with Electrical net sales up 55.9% to $759.9 million and Safety & Infrastructure net sales up 46.9% to $224.3 million Q2 FY2022 Segment Performance (in thousands) | Segment | Net Sales | % Change | Adjusted EBITDA | % Change | Adjusted EBITDA Margin | | :--- | :--- | :--- | :--- | :--- | :--- | | Electrical | $759,877 | 55.9% | $330,970 | 75.3% | 43.6% | | Safety & Infrastructure | $224,285 | 46.9% | $28,917 | 78.6% | 12.9% | Six Months FY2022 Segment Performance (in thousands) | Segment | Net Sales | % Change | Adjusted EBITDA | % Change | Adjusted EBITDA Margin | | :--- | :--- | :--- | :--- | :--- | :--- | | Electrical | $1,401,560 | 60.2% | $610,517 | 89.5% | 43.6% | | Safety & Infrastructure | $424,795 | 53.1% | $56,349 | 85.1% | 13.3% | Liquidity and Capital Resources The company maintains a strong liquidity position with $390.4 million in cash and $312.9 million available under its ABL Credit Facility, with operating activities providing $161.2 million in cash for the first six months of fiscal 2022 - As of March 25, 2022, the company had $390.4 million in cash and cash equivalents and approximately $312.9 million available under its ABL Credit Facility[134][135] - Cash used in financing activities increased significantly to $285.6 million in the first six months of FY2022 from $75.4 million in the prior-year period, primarily due to a $226.1 million increase in common stock repurchases[145] Quantitative and Qualitative Disclosures about Market Risk No material changes have occurred in the quantitative and qualitative disclosures about market risk since the last Annual Report on Form 10-K filing - There have been no material changes to the quantitative and qualitative disclosures about market risk from the company's Annual Report on Form 10-K[151] Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 25, 2022, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[152] - No changes to internal control over financial reporting occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, these controls[153] PART II. OTHER INFORMATION Legal Proceedings The company refers to Note 14 for legal matters, highlighting ongoing "Special Products Claims" for which it is indemnified by Johnson Controls, Inc., and does not expect material adverse effects from current disputes - The company is involved in lawsuits referred to as "Special Products Claims" but is contractually indemnified by Johnson Controls, Inc. (formerly Tyco) for all related claims[79][155] - Management does not believe that existing legal proceedings will have a material adverse effect on the company's business, financial condition, or results of operations[80][81] Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K[155] Unregistered Sales of Equity Securities and Use of Proceeds Details the company's share repurchase activities, including a $400.0 million program approved in November 2021, subsequently increased to $800.0 million in April 2022, with 1,539 thousand shares repurchased during the quarter - On November 16, 2021, the board approved a $400.0 million share repurchase program. This was subsequently amended on April 26, 2022, increasing the total repurchase authorization to $800.0 million[155][97] Issuer Purchases of Equity Securities (Q2 FY2022) | Period | Total Shares Purchased (thousands) | Avg Price Paid Per Share | | :--- | :--- | :--- | | Dec 25, 2021 to Jan 21, 2022 | 271 | $107.27 | | Jan 22, 2022 to Feb 25, 2022 | 729 | $100.57 | | Feb 26, 2022 to Mar 25, 2022 | 539 | $100.49 | | Total | 1,539 | N/A | Defaults Upon Senior Securities This item is not applicable for the reporting period - Not applicable[157] Mine Safety Disclosures This item is not applicable for the reporting period - Not applicable[158] Other Information No other information to report for this period - None[158] Exhibits Lists exhibits filed with the Form 10-Q, including CEO and CFO certifications under Sarbanes-Oxley Act Sections 302 and 906, and XBRL data files - The exhibits filed with this report include CEO and CFO certifications under Sarbanes-Oxley Act Sections 302 and 906, and XBRL Instance Documents[159]