Atkore (US:ATKR)2025-11-20 14:00Financial Data and Key Metrics Changes - In Q4 FY2025, net sales were $752 million, exceeding the previous outlook, with adjusted EBITDA of $71 million, impacted by one-time inventory adjustments and non-routine items [6][11][12] - For the full year, net sales reached $2.9 billion, with adjusted EPS at $6.05 and adjusted EBITDA totaling $386 million [12] - The company reported a net loss of $54 million in Q4, which included a $19 million non-cash goodwill impairment charge and a $67 million impairment charge related to HDPE assets [11][12] Business Line Data and Key Metrics Changes - Organic volume growth was 1.4% in Q4, with significant contributions from plastic pipe conduit and finished products, particularly PVC, fiberglass, and HDPE, all showing double-digit growth [6][8] - The electrical segment generated net sales of $519 million, with organic volume growth contributing $7 million, while the Safety and Infrastructure (S&I) segment saw a 4% increase in net sales compared to the prior year [15][16] Market Data and Key Metrics Changes - The company anticipates mid-single digit volume growth in FY2026, driven by expected growth across all product areas, particularly in construction end markets such as data centers, healthcare, and renewable energy [10][17] - The demand for electricity is projected to grow at a compound annual growth rate of 2.6% through 2035, driven by the expansion of data centers and renewable energy adoption [19][20] Company Strategy and Development Direction - The board is exploring strategic alternatives, including a potential sale or merger of the entire company, to enhance focus on Atkore's core electrical infrastructure portfolio [5][4] - The company plans to cease operations at three manufacturing facilities and divest non-core assets to improve financial returns and focus on its electrical infrastructure portfolio [5][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth in construction end markets for FY2026, particularly in data centers and renewable energy, while acknowledging challenges in pricing versus cost dynamics [10][50] - The company aims to generate strong cash flows and maintain a healthy balance sheet to support strategic opportunities and return capital to shareholders [9][18] Other Important Information - The company has achieved three consecutive years of organic volume growth, with a total volume increase of approximately 1% in FY2025 [8][13] - Cash flow generation remains a strength, with $144 million returned to shareholders through share repurchases and dividends [9] Q&A Session Summary Question: Guidance for fiscal 2026 and pricing dynamics - Management confirmed expectations of mid-single digit volume growth for FY2026, with potential pricing benefits driven by sequential price increases in steel conduit and other products [26][27] Question: Strategic review and divestment magnitude - The board is exploring various outcomes, including the sale of the entire company, with ongoing discussions regarding the HDPE business and other non-core assets [36][37] Question: Cost savings initiatives - Expected annualized cost reductions of $10 million to $12 million from the closure of three plants, with ongoing efforts to identify further cost-saving opportunities [39][41] Question: Headwinds from imports and pricing - Management acknowledged continued price versus cost headwinds, estimating around $50 million in unmitigated headwinds for FY2026, with expectations for improvement in the second half of the year [49][50] Question: Impact of data centers on growth - Management noted that while data centers are a growing market, the overall impact on growth will depend on the execution of larger mega projects and existing product lines [56][60] Question: Intent to run the business for cash and dividend policy - Management confirmed no current intention to suspend dividends, emphasizing a commitment to maintaining a strong balance sheet while managing capital expenditures [80][82] Question: Seasonal dynamics affecting guidance - Management explained that the first quarter typically experiences a seasonal decline, with expectations for stronger performance in the second half of the fiscal year due to ongoing investments and project ramp-ups [89][90]