Atkore: Stabilization Seems To Arrive

Company Overview - Atkore produces electrical, safety, and infrastructure solutions, with the majority of sales coming from electrical and related products [3] - The company generated nearly $2 billion in sales before the pandemic, with operating margins increasing from low single digits to low double digits [3] Recent Performance - In 2022, Atkore's revenues doubled to $3.9 billion, and operating margins reached approximately 30% [4] - However, in November 2023, the company reported a 10% decline in full-year sales to $3.52 billion, with operating earnings down nearly 30% to $893 million, translating to margins of 25% [4][5] - The company has seen a significant drop in share value, from a high of $195 in March 2023 to trading in the mid-$80s [4][6] Financial Guidance - Atkore originally guided for flat sales between $3.50 and $3.65 billion for 2024, with EBITDA expected between $900-$950 million [5] - Following a decline in sales, the full-year EBITDA guidance was cut to a midpoint of $777 million, with earnings projected around $14.41 per share [7] Market Conditions - The company has faced challenges due to a softer macro environment and declining prices, particularly in the HDPE market [8] - An unexpected CFO transition occurred during this period of difficulty, and the company has been involved in an antitrust lawsuit related to pricing practices [7][8] Future Outlook - Despite current challenges, Atkore believes in a minimum earnings power of around $10 per share in 2025, with EBITDA projected at $650 million [8] - The safety and infrastructure segment is growing, now making up a quarter of sales, which may provide more stability going forward [8]