Atkore (US:ATKR)2022-11-18 15:30Financial Data and Key Metrics Changes - In Q4 2022, net sales increased by 11% year-over-year to $1 billion, and adjusted EPS rose by 26% to $5.52. For the full year, revenue reached $3.9 billion, with adjusted EPS growing by 66% to $21.55. Adjusted EBITDA for the full year was $1.3 billion [8][22][24]. Business Line Data and Key Metrics Changes - The company reported positive volume growth in Q4 and strong October volumes, contributing to confidence entering 2023. The full-year net sales increase of approximately $986 million was attributed to higher selling prices and contributions from recent acquisitions [8][12][22]. Market Data and Key Metrics Changes - The company noted strong underlying fundamentals in its end markets, supported by megatrends such as electrification and infrastructure investments. The rolling 12-month averages for key market indicators are moving positively compared to the previous year [15][16]. Company Strategy and Development Direction - M&A is central to the company's growth strategy, with a robust pipeline and a disciplined approach to capital deployment. The company aims to expand its HDPE products and large mechanical tubing to capture significant growth opportunities [17][20][24]. The Atkore Business System drives operational efficiency and market insights, enhancing the company's competitive position [11][12]. Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about market demand despite potential economic uncertainties, projecting flat to down net sales in 2023 and adjusted EBITDA in the range of $850 million to $950 million. The company anticipates mid-single-digit volume growth and strong incremental margins [22][23][24]. Other Important Information - The company achieved its goal of deploying over $1 billion in cash ahead of schedule through capital expenditures, M&A, and share repurchases, having repurchased over 15% of its market capitalization in the past year [6][7][24]. Q&A Session Summary Question: Insights on pricing normalization and assumptions - Management clarified that while some pricing outperformance is expected to normalize, they believe approximately 40% of the pricing benefits are sustainable moving forward [29][30]. Question: Market demand and backlog insights - Management indicated that core destocking is largely behind them, and they are optimistic about mid-single-digit growth driven by strong contractor backlogs and positive market indicators [41][42][44]. Question: Free cash flow expectations for 2023 - Management expects free cash flow to be slightly lower than the 100% net income target due to increased CapEx for growth initiatives, but overall cash flow remains healthy [51][52]. Question: HDPE versus PVC market dynamics - Management expressed optimism for both HDPE and PVC markets, highlighting strong demand for HDPE driven by government funding and infrastructure investments [53][54]. Question: Clarification on $18 adjusted EPS target - Management indicated that the $18 adjusted EPS target is based on conservative assumptions regarding share count and capital deployment, with a focus on maintaining flexibility [58][60].