Atkore (US:ATKR)2023-11-16 16:00Financial Performance - Net sales for fiscal 2023 decreased by $395.2 million to $3,518.8 million, a decline of 10.1% compared to $3,913.9 million in fiscal 2022[224] - The decrease in net sales was primarily due to lower average selling prices, which accounted for a reduction of $646.6 million, and the economic value of solar tax credits impacting sales by $30.4 million[224] - Net sales decreased by $338.7 million, or 11.2%, to $2,675.1 million for fiscal 2023 compared to $3,013.8 million for fiscal 2022, primarily due to lower average selling prices[231] - Adjusted EBITDA decreased by $268.6 million, or 21.1%, to $1,004.9 million for fiscal 2023 compared to $1,273.4 million for fiscal 2022[232] - Gross profit for fiscal 2023 was $1,339.5 million, a decrease of $300.5 million, or 18.3%, compared to $1,640.0 million for fiscal 2022[221] - Operating income fell by $340.3 million, or 27.6%, to $893.5 million for fiscal 2023, compared to $1,233.8 million for fiscal 2022[221] - Net income for fiscal 2023 was $689.9 million, a decrease of $223.5 million, or 24.5%, compared to $913.4 million for fiscal 2022[221] Expenses and Costs - Cost of sales decreased by $94.7 million, or 4.2%, to $2,179.3 million for fiscal 2023, primarily due to lower input costs of steel, copper, and PVC resin[225] - Selling, general and administrative expenses increased by $18.2 million, or 4.9%, to $388.2 million for fiscal 2023, driven by increased headcount and digital initiatives[225] - Intangible asset amortization expense rose by $21.6 million, or 59.8%, to $57.8 million for fiscal 2023, primarily due to acquisitions of definite-lived intangible assets[226] - Interest expense, net increased by $4.6 million, or 14.9%, to $35.2 million for fiscal 2023 compared to $30.7 million for fiscal 2022[227] Cash Flow and Investments - Cash and cash equivalents were $388.1 million as of September 30, 2023, a decrease of $0.6 million from the previous year, mainly due to acquisitions, capital expenditures, and share repurchases[253] - Operating activities provided $807.6 million of cash in fiscal 2023, an increase of $20.8 million or 2.6% compared to $786.8 million in fiscal 2022[263] - Cash used for investing activities decreased by $140.7 million to $302.2 million in fiscal 2023, primarily due to a reduction in cash used for acquisitions[264] - Cash used for financing activities was $506.8 million in fiscal 2023, a decrease of $17.4 million compared to $524.2 million in fiscal 2022, mainly due to lower share repurchases[265] Market and Economic Conditions - Approximately 90% of net sales in fiscal 2023 were generated from customers located in the United States, indicating a strong dependence on the U.S. economy[203] - Economic conditions, including interest rate increases and inflation, are creating uncertainty in the global economy, which may impact the company's operations[205] - The company anticipates increased demand for its products due to emerging industry trends, including the shift towards renewable energy and digital infrastructure[212] Acquisitions and Growth Strategy - The company has invested $468.5 million in acquisitions since 2021 to expand market share and product offerings[209] - In fiscal 2023, the company experienced a 4.3% increase in net sales attributed to acquisitions[222] - The company expects to continue pursuing synergistic acquisitions as part of its growth strategy[209] Segment Performance - Net sales in the Safety & Infrastructure segment decreased by $56.4 million, or 6.3%, to $844.2 million for fiscal 2023 compared to $900.6 million for fiscal 2022[235] - Adjusted EBITDA for the Safety & Infrastructure segment decreased by $35.2 million, or 25.4%, to $103.2 million for fiscal 2023 compared to $138.4 million for fiscal 2022[236] Tax and Regulatory Matters - Income tax expense decreased by $129.8 million to $160.4 million for fiscal 2023, with the income tax rate decreasing to 18.9% from 24.1% in fiscal 2022[229] - Future changes in tax legislation could impact the company's financial performance[294] Risks and Challenges - The company faces risks related to changes in financial obligations for pension plans in the United States[294] - There is a potential loss of production or distribution capacity due to interruptions at facilities or key suppliers[294] - The company may experience a significant loss of third-party agents or distributors affecting sales generation[294] - Security threats and disruptions to information systems pose risks to compliance with legal obligations and data protection[294] - Future impairment of goodwill or long-lived assets may occur due to declines in cash flow projections or customer demand[294] - The company faces challenges in effectively introducing new products and implementing innovation strategies[294] - There are risks associated with managing acquisitions, including identifying and integrating targets successfully[294] - The company may incur additional expenses and complexity in the supply chain due to regulations related to "conflict minerals"[294] - The company must generate sufficient cash flow from operations to meet existing obligations and support business development[294]