Sign in

You're signed outSign in or to get full access.

AI

Atkore Inc. (ATKR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 came in within management’s updated expectations, but year-over-year declines persisted as pricing normalization and solar-credit transfers weighed on results; net sales fell 9.4% to $788.3M, Adjusted EBITDA fell 39.6% to $140.2M, and Adjusted EPS was $2.43 versus $4.21 last year .
  • The Electrical segment saw double-digit sales and margin compression on PVC and steel conduit pricing pressure; Safety & Infrastructure posted modest sales growth but EBITDA was roughly flat, with an operational headwind from material conversion/over-consumption flagged on the call as a one-time zinc issue .
  • FY 2025 guidance was introduced: net sales $2.9–$3.2B, Adjusted EBITDA $475–$525M, Adjusted EPS $7.80–$8.90; Q1 2025 Adjusted EBITDA $95–$105M and Adjusted EPS $1.45–$1.65. Bridging assumptions point to continued price vs. cost headwinds (down $285–$305M to EBITDA) partially offset by low/mid single-digit volume growth .
  • Management emphasized secular megatrends (data centers, grid hardening, electrification), ramping solar torque tube output, and expansion into PVC/HDPE water markets as 2025–2026 growth drivers; pricing stabilization and potential tariff actions on steel imports were cited as upside variables .

What Went Well and What Went Wrong

What Went Well

  • Organic volume growth: company-wide volumes rose 3.5% for FY 2024, with contributions across product areas; Q4 volumes up despite pricing declines .
  • Strategic initiatives progressing: solar torque tube sales posted double-digit sequential growth, Hobart facility operating better; water-related PVC/HDPE offerings and regional service centers expanded footprint .
  • Capital deployment: ~75% of operating cash flow returned via buybacks and dividends in FY 2024 ($381M repurchases; $34.5M dividends); quarterly dividend declared again in November .
    • Quote: “We returned approximately 75% of cash generated from operating activities to shareholders in the form of dividends and share repurchases.” – CEO Bill Waltz .

What Went Wrong

  • Pricing normalization and solar-credit impacts: Q4 net sales down 9.4% driven by $104.1M lower average selling prices and $5.4M solar credits transferred; gross margin fell 730 bps to 27.4% .
  • Electrical margin compression: Adjusted EBITDA margin dropped to 25.8% (from 36.6% YoY), as lower average selling prices outpaced input cost declines; steel conduit faced import competition .
  • S&I operational headwinds: one-time material conversion/over-consumption (zinc galvanization) reduced segment profitability sequentially; management classified it as a catch-up recorded in Q4 .

Financial Results

Consolidated Performance vs Prior Year and Prior Quarter

MetricQ4 2023Q3 2024Q4 2024
Net Sales ($USD Millions)$869.9 $822.4 $788.3
Gross Profit ($USD Millions)$301.5 $279.7 $216.1
Gross Margin (%)34.7% 34.0% 27.4%
Net Income ($USD Millions)$140.9 $123.4 $73.1
Diluted EPS ($)$3.63 $3.33 $2.02
Adjusted EBITDA ($USD Millions)$232.0 $206.1 $140.2
Adjusted EBITDA Margin (%)26.7% 25.1% 17.8%
Adjusted Diluted EPS ($)$4.21 $3.80 $2.43

Notes:

  • Q4 decline primarily from pricing normalization ($104.1M) and solar credits ($5.4M), partially offset by volume (+$26.9M) .
  • Estimates context: Wall Street consensus via S&P Global was unavailable for Q4 due to data request limits; estimate comparisons are therefore not provided (S&P Global unavailable).

Segment Breakdown

Segment MetricQ4 2023Q3 2024Q4 2024
Electrical Net Sales ($M)$649.8 $606.0 $564.5
Electrical Adjusted EBITDA ($M)$237.6 $182.6 $145.7
Electrical Adj. EBITDA Margin (%)36.6% 30.1% 25.8%
Safety & Infrastructure Net Sales ($M)$220.2 $213.6 $224.5
Safety & Infrastructure Adjusted EBITDA ($M)$15.1 $21.5 $14.9
Safety & Infrastructure Adj. EBITDA Margin (%)6.9% 10.1% 6.6%

KPIs (Full-Year)

KPIFY 2023FY 2024
Net Sales ($USD Millions)$3,518.8 $3,202.1
Adjusted EBITDA ($USD Millions)$1,042.1 $771.7
Adjusted Diluted EPS ($)$19.40 $14.48
Cash from Operations ($USD Millions)$807.6 $549.0
Free Cash Flow ($USD Millions)$588.7 $399.2
Share Repurchases ($USD Millions)$491.0 $381.0
Dividends Paid ($USD Millions)— $34.5

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($B)FY 2025N/A$2.9 – $3.2 New
Adjusted EBITDA ($M)FY 2025N/A$475 – $525 New
Adjusted EPS ($)FY 2025N/A$7.80 – $8.90 New
Adjusted EBITDA ($M)Q1 2025N/A$95 – $105 New
Adjusted EPS ($)Q1 2025N/A$1.45 – $1.65 New
Net Sales ($B)FY 2024$3.3 – $3.5 (May) $3.1 – $3.2 (Aug) Lowered
Adjusted EBITDA ($M)FY 2024$850 – $900 (May) $772 – $782 (Aug) Lowered
Adjusted EPS ($)FY 2024$16.00 – $17.00 (May) $14.30 – $14.52 (Aug) Lowered
Interest Expense ($M)FY 2025N/A~$38 – $42 New
Tax Rate (%)FY 2025N/A~24% – 26% New
Capital Expenditures ($M)FY 2025N/A$100 – $125 New
Share Repurchases ($M)FY 2025N/A≥$150 New
Diluted Shares (M)FY 2025N/A33 – 35 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024 / Q3 2024)Current Period (Q4 2024)Trend
Pricing normalization (PVC/steel)Pricing headwinds cited; FY24 guide cut, steel import pressure emerging Larger pricing headwind than expected; PVC challenged by new domestic entrants; steel imports still elevated Worsening year over year; stabilization possible later
HDPE telecom demandPersistently weak; awaiting government broadband funding Softness continued; 2025 recovery possible as funding rolls out Stabilization later in FY25
Solar torque tubes (Hobart)Ramp progressing; adjusted FY24 expectations to plant output Double-digit sequential growth; profitable independent of IRA credits; majority credits passed through Improving production and volumes
Data centers/megaprojectsGrowing contributions; Unistrut brand leveraged Highest product density; pipeline/backlog building; off-site manufacturing services expanding Strengthening into FY25–FY26
Water-related PVC/HDPE expansionEarly-stage initiative Lines running; national footprint leveraged; IIJA $55B water funding tailwind Ramp through 2H FY25
Tariffs/regulatory on steel importsEmerging topicPotential government intervention in steel imports could aid in back half/FY26; China tariffs at 50% Potential upside if actions taken
Operations/productivity—One-time zinc usage catch-up in S&I; highest productivity year forecast via lean initiatives Near-term headwind; medium-term tailwind

Management Commentary

  • Strategy and secular tailwinds: “We remain focused on Atkore's ability to participate in long-term trends related to the adoption of renewable energy, grid hardening, digitization and the surging demand for electrification.” – CEO Bill Waltz .
  • Pricing and competitive dynamics: “Pricing for our PVC conduit continues to be challenged… additional new domestic competition entering the market. Secondly, steel conduit continues to face pressure from import competition.” – CFO John Deitzer .
  • Capital returns: “Since November 2021, we repurchased… over 20% of Atkore's stock or over $1.3 billion, underscoring our confidence in the future of our business.” – CEO Bill Waltz .
  • Growth initiatives: “We have an opportunity to leverage our existing construction services capability to support growing demand for global mega projects… data centers, chip manufacturing plants.” – CEO Bill Waltz .

Q&A Highlights

  • Pricing bridge reset: Management revised the FY25 price vs. cost headwind higher than previously expected, driven predominantly by PVC; steel pricing declines continue but may moderate, with potential tariff upside in back half/FY25 or FY26 .
  • Volume vs initiatives: FY25 low/mid single-digit volume growth expected with approximately 50/50 contribution from end-market demand and initiatives (solar, water, megaprojects) .
  • S&I one-time issue: Material conversion/over-consumption (zinc galvanization) identified and recorded in Q4; characterized as one-time .
  • Seasonality and Q1 setup: Tough YoY comp in Q1, seasonally weaker first half; ramp expected in back half on volume and project timing .
  • Hobart/IRA sensitivity: Hobart torque tube facility economics viable without IRA incentives; majority tax-credit benefits pass through to end customers; China imports deterred by 50% tariffs .
  • Steel import mix: Mexico ~20% of steel conduit market; all imports slightly below ~25% YoY, with recent month-over-month declines; China imports down on tariff increases .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS, revenue, and EBITDA was unavailable due to data request limits at time of analysis; as a result, explicit beat/miss versus consensus cannot be provided (S&P Global unavailable).
  • Based on management’s prior Q4 guidance, actual Q4 results were within ranges for Adjusted EBITDA ($140.2M vs $140–$150M) and Adjusted EPS ($2.43 vs $2.32–$2.54), and slightly above the upper end for net sales ($788.3M vs $725–$775M) .

Key Takeaways for Investors

  • The core pressure remains pricing normalization in PVC and steel conduit; FY25 guidance embeds sizable price vs. cost headwinds, with volume growth and productivity actions working to offset .
  • Strategic growth vectors (solar torque tubes, data centers megaprojects, PVC/HDPE water) are gaining traction and should become more visible into 2H FY25 and FY26, supporting medium-term mix and margin resilience .
  • Capital returns remain robust with ongoing buybacks and the instituted quarterly dividend, supported by strong liquidity and modest leverage (~1x total debt/TTM EBITDA FY2024) .
  • Q1 FY25 will be seasonally and comp-driven soft; sequential improving trajectory in the back half is the internal plan, making intra-year execution and project timing important trading catalysts .
  • Potential regulatory/tariff support for domestic steel conduit could ease import pressure; any clarity or action would be a positive sentiment driver, particularly for 2H FY25/FY26 .
  • Watch solar credit accounting and any pass-through effects; management indicates limited net benefit to Atkore and operational progress at Hobart, reducing risk to margins from credits .
  • With consensus data unavailable, monitor sell-side revisions post-guide reset; management’s ranges suggest downside from FY24 levels but a path to stabilization as initiatives scale .