HARVEY, Ill.--(BUSINESS WIRE)--Atkore International Group Inc. (the "Company" or "Atkore") (NYSE: ATKR) announced earnings for its fiscal 2018 second quarter ended March 30, 2018.
"Once again, Atkore delivered strong results, as shown in our second quarter of fiscal 2018. We realized double-digit growth in Net sales, Adjusted EBITDA and Earnings per share through organic volume growth, productivity savings and accretive earnings from acquisitions," commented John Williamson, Atkore President and Chief Executive Officer.
"We're pleased to raise our full-year guidance based upon continued execution of our growth strategy, strong management practices and disciplined use of our business system that enable Atkore to deliver value for our customers and shareholders," Williamson added.
On March 30, 2018, the Company sold the assets of FlexHead Industries, Inc. and SprinkFLEX, LLC (together "Flexhead"). The Flexhead businesses manufacture commercial flexible sprinkler head connection products for use in a variety of markets, including for industrial, commercial, cold storage, institutional and clean room applications.
On January 8, 2018, the Company acquired the assets of Communications Integrators, Inc. ("Cii"), a manufacturer of modular, prefabricated power, voice and data distribution systems located in Tempe, Arizona for a total purchase price, including contingent consideration, of $4.0 million.
2018 Second Quarter Results
| Three months ended | ||||||||||||||||
|
(in thousands) |
March 30, 2018 | March 31, 2017 | Change | % Change | ||||||||||||
| Net sales | ||||||||||||||||
| Electrical Raceway | $ | 324,787 | $ | 270,995 | $ | 53,792 | 19.8 | % | ||||||||
| Mechanical Products & Solutions | 120,310 | 102,180 | 18,130 | 17.7 | % | |||||||||||
| Eliminations | (97 | ) | (384 | ) | 287 | (74.7 | )% | |||||||||
| Consolidated operations | $ | 445,000 | $ | 372,791 | $ | 72,209 | 19.4 | % | ||||||||
| Adjusted EBITDA | ||||||||||||||||
| Electrical Raceway | $ | 56,404 | $ | 46,687 | $ | 9,717 | 20.8 | % | ||||||||
| Mechanical Products & Solutions | 16,722 | 15,457 | 1,265 | 8.2 | % | |||||||||||
| Unallocated | (7,785 | ) | (6,022 | ) | (1,763 | ) | 29.3 | % | ||||||||
| Consolidated operations | $ | 65,341 | $ | 56,122 | $ | 9,219 | 16.4 | % | ||||||||
Net sales increased by $72.2 million, or 19.4% to $445.0 million for the three months ended March 30, 2018 compared to $372.8 million for the prior-year period. Net sales increased $31.7 million due to the acquisitions of Marco Cable Management, Flexicon Limited, Calpipe Industries, LLC and Cii over the past twelve months. Additionally, net sales increased $24.3 million due to higher net average selling prices resulting from the pass-through impact of higher input costs of copper and steel and higher freight costs, and increased market prices for PVC electrical conduit and fittings products. Lastly, net sales increased $12.7 million partly due to higher volume of products sold within the Mechanical Products & Solutions segment, partially offset by lower volume of armored cable and fittings products sold within the Electrical Raceway segment.
Gross profit increased by $21.5 million, or 24.6% to $109.2 million for the three months ended March 30, 2018, as compared to $87.6 million for the prior-year period. Gross margins increased to 24.5% for the three months ended March 30, 2018, as compared to 23.5% for the prior-year period. Gross margins increased primarily due to increased market prices for PVC electrical conduit and fittings products, partially offset by the pass-through impact of higher input costs of steel and copper and higher freight costs.
Net income increased by $23.6 million, or 124.8% to $42.6 million for the three months ended March 30, 2018 compared to $18.9 million for the prior-year period primarily due to a pre-tax gain on the sale of the assets of the Flexhead businesses of $26.7 million and higher operating income of $10.9 million. Partially offsetting the increase is a pre-tax gain on sale of a joint venture of $5.8 million during the three months ended March 31, 2017, higher interest expense of $4.1 million and higher income tax expense of $3.0 million.
Adjusted EBITDA increased by $9.2 million, or 16.4% to $65.3 million for the three months ended March 30, 2018 compared to $56.1 million for the three months ended March 31, 2017. The increase was primarily due to incremental Adjusted EBITDA from acquisitions over the past twelve months, increased volume and improved productivity costs, partially offset by higher average input costs of steel, copper and freight net of higher average selling prices and higher incentive-based compensation expense during the three months ended March 31, 2017.
Diluted earnings per share were $0.79 for the three months ended March 30, 2018, as compared to $0.28 in the prior-year period. Adjusted net income per diluted share increased by $0.23 to $0.63 for the three months ended March 30, 2018, as compared to $0.40 for the prior-year period.
Segment Results
Electrical Raceway
Electrical Raceway Net sales increased by $53.8 million, or 19.8%, to $324.8 million for the three months ended March 30, 2018 compared to $271.0 million for the three months ended March 31, 2017. The increase was due primarily to $31.7 million of additional sales resulting from acquisitions over the past twelve months and $23.1 million resulting from the pass-through impact of higher average input costs of copper and increased market prices for PVC electrical conduit and fittings products. The increase in sales was partially offset by lower volume of $4.3 million primarily of armored cable and fittings and flexible electrical conduit and fittings product categories.
Electrical Raceway Adjusted EBITDA for the three months ended March 30, 2018 increased by $9.7 million, or 20.8%, to $56.4 million from $46.7 million for the three months ended March 31, 2017. Adjusted EBITDA margins remained relatively flat at 17.4%. The increase in Adjusted EBITDA was largely due to increased market prices for PVC electrical conduit and fittings products and incremental Adjusted EBITDA resulting from acquisitions over the past twelve months, partially offset by an increase in average input costs that exceeded our increase in average selling prices for armored cable and fittings products.
Mechanical Products & Solutions ("MP&S")
MP&S Net sales increased by $18.1 million, or 17.7%, for the three months ended March 30, 2018 to $120.3 million compared to $102.2 million for the three months ended March 31, 2017. The increase was primarily due to $16.8 million of higher volume of products sold within the mechanical pipe and metal framing and fittings product categories.
MP&S Adjusted EBITDA increased by $1.3 million, or 8.2%, to $16.7 million for the three months ended March 30, 2018 compared to $15.5 million for the three months ended March 31, 2017. Adjusted EBITDA margins decreased to 13.9% for the three months ended March 30, 2018 compared to 15.1% for the three months ended March 31, 2017. Adjusted EBITDA increased primarily due to higher volume of products sold, partially offset by an increase in average input costs which exceeded the increase in average selling prices.
Full-Year 2018 Guidance
The Company is updating its expectation of fiscal year 2018 Adjusted EBITDA to be in the range of $250.0 - $260.0 million (includes $2 million reduction from the sale of Flexhead) and its expectation of fiscal year 2018 Adjusted net income per diluted share to be in the range to $2.40 - $2.50.
Reconciliations of the forward-looking full-year 2018 outlook for Adjusted EBITDA and Adjusted net income per diluted share are not being provided as the Company does not currently have sufficient data to accurately estimate the variables and individual adjustments for such reconciliations.
Conference Call Information
Atkore management will host a conference call today, May 8, 2018, at 8 a.m. Eastern time, to discuss the Company's financial results. The conference call may be accessed by dialing (877) 407-0789 (domestic) or (201) 689-8562 (international). The call will be available for replay until May 22, 2018. The replay can be accessed by dialing (844) 512-2921, or for international callers, (412) 317-6671. The passcode for the live call and the replay is 13678718.
Interested investors and other parties can also listen to a webcast of the live conference call by logging onto the Investor Relations section of the Company's website at http://investors.atkore.com. The online replay will be available on the same website immediately following the call.
To learn more about the Company, please visit the company's website at http://investors.atkore.com.
About Atkore International Group Inc.
Atkore International Group Inc. is a leading manufacturer of Electrical Raceway products primarily for the non-residential construction and renovation markets and Mechanical Products & Solutions for the construction and industrial markets. The Company manufactures a broad range of end-to-end integrated products and solutions that are critical to its customers' businesses and employs approximately 3,600 people at 58 manufacturing and distribution facilities worldwide. The Company is headquartered in Harvey, Illinois.
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements relating to financial outlook. Some of the forward-looking statements can be identified by the use of forward-looking terms such as "believes," "expects," "may," "will," "shall," "should," "would," "could," "seeks," "aims," "projects," "is optimistic," "intends," "plans," "estimates," "anticipates" or other comparable terms. Forward-looking statements include, without limitation, all matters that are not historical facts. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes, including, without limitation, our actual results of operations, financial condition and liquidity, and the development of the market in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this press release. In addition, even if our results of operations, financial condition and cash flows, and the development of the market in which we operate, are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods.
A number of important factors, including, without limitation, the risks and uncertainties discussed under the caption "Risk Factors" in our Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission ("SEC") on November 29, 2017 and in our Quarterly Report on Form 10-Q filed with the SEC on February 6, 2018 could cause actual results and outcomes to differ materially from those reflected in the forward-looking statements. Additional factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation: declines in, and uncertainty regarding, the general business and economic conditions in the United States and international markets in which we operate; weakness or another downturn in the United States non-residential construction industry; changes in prices of raw materials; pricing pressure, reduced profitability, or loss of market share due to intense competition; availability and cost of third-party freight carriers and energy; high levels of imports of products similar to those manufactured by us; changes in federal, state, local and international governmental regulations and trade policies; adverse weather conditions; failure to generate sufficient cash flow from operations or to raise sufficient funds in the capital markets to satisfy existing obligations and support the development of our business; failure of our indemnification agreements in connection with acquisitions to adequately protect us from liabilities; increased costs relating to future capital and operating expenditures to maintain compliance with environmental, health and safety laws; reduced spending by, deterioration in the financial condition of, or other adverse developments with respect to, one or more of our top customers; increases in our working capital needs, which are substantial and fluctuate based on economic activity and the market prices for our main raw materials, including as a result of failure to collect, or delays in the collection of, cash from the sale of manufactured products; work stoppage or other interruptions of production at our facilities as a result of disputes under existing collective bargaining agreements with labor unions or in connection with negotiations of new collective bargaining agreements, as a result of supplier financial distress, or for other reasons; challenges attracting and retaining key personnel or high-quality employees; changes in our financial obligations relating to pension plans that we maintain in the United States; reduced production or distribution capacity due to interruptions in the operations of our facilities or those of our key suppliers; loss of a substantial number of our third-party agents or distributors or a dramatic deviation from the amount of sales they generate; security threats, attacks, or other disruptions to our information systems, or failure to comply with complex network security, data privacy and other legal obligations or the failure to protect sensitive information; possible impairment of goodwill or other long-lived assets as a result of future triggering events, such as declines in our cash flow projections or customer demand; safety and labor risks associated with the manufacture and in the testing of our products; product liability, construction defect and warranty claims and litigation relating to our various products, as well as government inquiries and investigations, and consumer, employment, tort and other legal proceedings; our ability to protect our intellectual property and other material proprietary rights; risks inherent in doing business internationally; our inability to introduce new products effectively or implement our innovation strategies; the inability of our customers to pay off the credit lines extended to them by us in a timely manner and the negative impact on customer relations resulting from our collections efforts with respect to non-paying or slow-paying customers; our inability to continue importing raw materials, component parts and/or finished goods; changes as a result of comprehensive tax reform; the incurrence of liabilities and the issuance of additional debt or equity in connection with acquisitions, joint ventures or divestitures; failure to manage acquisitions successfully, including identifying, evaluating, and valuing acquisition targets and integrating acquired companies, businesses or assets; the incurrence of liabilities in connection with violations of the U.S. Foreign Corrupt Practices Act and similar foreign anti-corruption laws; the incurrence of additional expenses, increase in complexity of our supply chain and potential damage to our reputation with customers resulting from regulations related to "conflict minerals"; disruptions or impediments to the receipt of sufficient raw materials resulting from various anti-terrorism security measures; restrictions contained in our debt agreements; failure to generate cash sufficient to pay the principal of, interest on, or other amounts due on our debt; the significant influence the Clayton, Dubilier & Rice LLC investor will have continued to have over corporate decisions; and other factors described from time to time in documents that we file with the SEC. The Company assumes no obligation to update the information contained herein, which speaks only as of the date hereof.
Non-GAAP Financial Information
This press release includes certain financial information, not prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). Because not all companies calculate non-GAAP financial information identically (or at all), the presentations herein may not be comparable to other similarly titled measures used by other companies. Further, these measures should not be considered substitutes for the performance measures derived in accordance with GAAP. See non-GAAP reconciliations below in this press release for a reconciliation of these measures to the most directly comparable GAAP financial measures.
Adjusted EBITDA and Adjusted EBITDA Margin
We use Adjusted EBITDA and Adjusted EBITDA Margin in evaluating the performance of our business, and we use each in the preparation of our annual operating budgets and as indicators of business performance and profitability. We believe Adjusted EBITDA and Adjusted EBITDA Margin allow us to readily view operating trends, perform analytical comparisons and identify strategies to improve operating performance.
We define Adjusted EBITDA as net income (loss) before: depreciation and amortization, interest expense, net, loss (gain) on extinguishment of debt, income tax expense (benefit), restructuring and impairments, stock-based compensation, consulting fees, multi-employer pension withdrawal, certain legal matters, transaction costs, gain on sale of a business, gain on sale of joint venture and other items, such as inventory reserves and adjustments and realized or unrealized gain (loss) on foreign currency transactions. We believe Adjusted EBITDA, when presented in conjunction with comparable accounting principles generally accepted in the United States of America ("GAAP") measures, is useful for investors because management uses Adjusted EBITDA in evaluating the performance of our business.
We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of Net sales.
Net Income Margin
We define Net Income Margin as Net income as a percentage of Net sales.
Adjusted Net Income and Adjusted Net Income per Share
We use Adjusted net income and Adjusted net income per share in evaluating the performance of our business and profitability. Management believes that these measures provide useful information to investors by offering additional ways of viewing the Company's results that, when reconciled to the corresponding GAAP measure provide an indication of performance and profitability excluding the impact of unusual and or non-cash items. We define Adjusted net income as net income before consulting fees, loss on extinguishment of debt, stock-based compensation, intangible asset amortization, gain on sale of joint venture, certain legal matters and other items. We define Adjusted net income per share as basic and diluted earnings per share excluding the per share impact of consulting fees, loss on extinguishment of debt, stock-based compensation, intangible asset amortization, gain on sale of joint venture, certain legal matters and other items. Beginning in March 2018, the Company has excluded the impact of intangible asset amortization from the calculation of Adjusted Net income.
Leverage Ratio - Net debt/Adjusted EBITDA
We define leverage ratio as the ratio of net debt (total debt less cash and cash equivalents) to Adjusted EBITDA on a trailing twelve month ("TTM") basis. We believe the leverage ratio is useful to investors as an alternative liquidity measure.
| ATKORE INTERNATIONAL GROUP INC. | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| Three months ended | Six months ended | |||||||||||||||
| March 30, | March 31, 2017 | March 30, | March 31, 2017 | |||||||||||||
|
(in thousands, except per share data) |
2018 | As Adjusted* | 2018 | As Adjusted* | ||||||||||||
| Net sales | $ | 445,000 | $ | 372,791 | $ | 859,558 | $ | 710,382 | ||||||||
| Cost of sales | 335,843 | 285,182 | 653,534 | 531,109 | ||||||||||||
| Gross profit | 109,157 | 87,609 | 206,024 | 179,273 | ||||||||||||
| Selling, general and administrative | 60,118 | 51,725 | 111,713 | 95,652 | ||||||||||||
| Intangible asset amortization | 7,765 | 5,493 | 16,452 | 11,082 | ||||||||||||
| Operating income | 41,274 | 30,391 | 77,859 | 72,539 | ||||||||||||
| Interest expense, net | 9,286 | 5,231 | 15,880 | 15,061 | ||||||||||||
| Loss on extinguishment of debt | — | — | — | 9,805 | ||||||||||||
| Other income, net | (25,962 | ) | (6,150 | ) | (25,676 | ) | (6,526 | ) | ||||||||
| Income before income taxes | 57,950 | 31,310 | 87,655 | 54,199 | ||||||||||||
| Income tax expense | 15,392 | 12,375 | 17,908 | 17,882 | ||||||||||||
| Net income | $ | 42,558 | $ | 18,935 | $ | 69,747 | $ | 36,317 | ||||||||
| Weighted-Average Common Shares Outstanding | ||||||||||||||||
| Basic | 51,367 | 63,252 | 57,287 | 62,948 | ||||||||||||
| Diluted | 54,003 | 66,888 | 59,945 | 66,446 | ||||||||||||
| Net income per share | ||||||||||||||||
| Basic | $ | 0.83 | $ | 0.30 | $ | 1.22 | $ | 0.58 | ||||||||
| Diluted | $ | 0.79 | $ | 0.28 | $ | 1.16 | $ | 0.55 | ||||||||
* Adjusted due to the adoption of Accounting Standards Update 2017-07 Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.
| ATKORE INTERNATIONAL GROUP INC. | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
|
(in thousands, except share and per share data) |
March 30, 2018 | September 30, 2017 | ||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 76,892 | $ | 45,718 | ||||
| Accounts receivable, less allowance for doubtful accounts of $1,349 and $1,239, respectively | 245,355 | 224,427 | ||||||
| Inventories, net | 202,517 | 200,003 | ||||||
| Prepaid expenses and other current assets | 29,786 | 35,611 | ||||||
|
Total current assets |
554,550 | 505,759 | ||||||
| Property, plant and equipment, net | 211,840 | 208,619 | ||||||
| Intangible assets, net | 310,161 | 344,289 | ||||||
| Goodwill | 169,107 | 147,716 | ||||||
| Deferred tax assets | — | 1,657 | ||||||
| Non-trade receivables | 6,384 | 7,052 | ||||||
| Total Assets | $ | 1,252,042 | $ | 1,215,092 | ||||
| Liabilities and Equity | ||||||||
| Current Liabilities: | ||||||||
| Short-term debt and current maturities of long-term debt | $ | 7,653 | $ | 4,215 | ||||
| Accounts payable | 123,384 | 125,618 | ||||||
| Income tax payable | 1,033 | 2,581 | ||||||
| Accrued compensation and employee benefits | 28,652 | 26,387 | ||||||
| Other current liabilities | 56,950 | 53,036 | ||||||
| Total current liabilities | 217,672 | 211,837 | ||||||
| Long-term debt | 900,556 | 571,863 | ||||||
| Deferred tax liabilities | 17,378 | 17,464 | ||||||
| Other long-term tax liabilities | 6,544 | 6,771 | ||||||
| Pension liabilities | 23,960 | 25,239 | ||||||
| Other long-term liabilities | 23,857 | 21,047 | ||||||
| Total Liabilities | 1,189,967 | 854,221 | ||||||
| Equity: | ||||||||
| Common stock, $0.01 par value, 1,000,000,000 shares authorized, 46,577,795 and 63,305,434 shares issued and outstanding, respectively | 467 | 634 | ||||||
| Treasury stock, held at cost, 260,900 and 260,900 shares, respectively | (2,580 | ) | (2,580 | ) | ||||
| Additional paid-in capital | 434,856 | 423,232 | ||||||
| Accumulated deficit | (354,315 | ) | (42,433 | ) | ||||
| Accumulated other comprehensive loss | (16,353 | ) | (17,982 | ) | ||||
| Total Equity | 62,075 | 360,871 | ||||||
| Total Liabilities and Equity | $ | 1,252,042 | $ | 1,215,092 | ||||
| ATKORE INTERNATIONAL GROUP INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| Six months ended | ||||||||
|
(in thousands) |
March 30, 2018 | March 31, 2017 | ||||||
| Operating activities: | ||||||||
| Net income | $ | 69,747 | $ | 36,317 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 33,063 | 26,901 | ||||||
| Deferred income taxes | (3,667 | ) | (1,997 | ) | ||||
| Gain on sale of a business | (26,737 | ) | — | |||||
| Loss on extinguishment of debt | — | 9,805 | ||||||
| Stock-based compensation | 6,334 | 6,304 | ||||||
| Other adjustments to net income | 4,611 | (2,836 | ) | |||||
| Changes in operating assets and liabilities, net of effects from purchase price adjustments | ||||||||
| Accounts receivable | (23,636 | ) | (5,271 | ) | ||||
| Inventories | (11,691 | ) | (24,963 | ) | ||||
| Other, net | 5,194 | (19,163 | ) | |||||
| Net cash provided by operating activities | 53,218 | 25,097 | ||||||
| Investing activities: | ||||||||
| Capital expenditures | (17,173 | ) | (8,374 | ) | ||||
| Divestiture of business | 42,000 | — | ||||||
| Acquisition of businesses, net of cash acquired | (3,350 | ) | — | |||||
| Proceeds from sale of assets held for sale | — | 3,024 | ||||||
| Other, net | 1,469 | 35 | ||||||
| Net cash provided by (used in) investing activities | 22,946 | (5,315 | ) | |||||
| Financing activities: | ||||||||
| Borrowings under credit facility | 309,000 | — | ||||||
| Repayments under credit facility | (394,000 | ) | — | |||||
| Repayments of short-term debt | (3,550 | ) | (4,200 | ) | ||||
| Repayments of long-term debt | (1,217 | ) | (638,600 | ) | ||||
| Issuance of long-term debt | 426,217 | 498,750 | ||||||
| Payment for debt financing costs and fees | (5,767 | ) | (4,344 | ) | ||||
| Issuance of common stock | 5,299 | 7,165 | ||||||
| Repurchase of common stock | (381,805 | ) | — | |||||
| Other, net | (78 | ) | — | |||||
| Net cash used for financing activities | (45,901 | ) | (141,229 | ) | ||||
| Effects of foreign exchange rate changes on cash and cash equivalents | 911 | (901 | ) | |||||
| Increase (decrease) in cash and cash equivalents | 31,174 | (122,348 | ) | |||||
| Cash and cash equivalents at beginning of period | 45,718 | 200,279 | ||||||
| Cash and cash equivalents at end of period | $ | 76,892 | $ | 77,931 | ||||
| Supplementary Cash Flow information | ||||||||
| Capital expenditures, not yet paid | $ | 534 | $ | 589 | ||||
| ATKORE INTERNATIONAL GROUP INC. | ||||||||||||||||||
| ADJUSTED EBITDA | ||||||||||||||||||
|
The following table presents reconciliations of Adjusted EBITDA to net income for the periods presented: |
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| March 30, | March 31, | March 30, | March 31, | |||||||||||||||
|
(in thousands) |
2018 | 2017 | 2018 | 2017 | ||||||||||||||
| Net income | $ | 42,558 | $ | 18,935 | $ | 69,747 | $ | 36,317 | ||||||||||
| Interest expense, net | 9,286 | 5,231 | 15,880 | 15,061 | ||||||||||||||
| Income tax expense | 15,392 | 12,375 | 17,908 | 17,882 | ||||||||||||||
| Depreciation and amortization | 15,853 | 13,273 | 33,063 | 26,901 | ||||||||||||||
| Loss on extinguishment of debt | — | — | — | 9,805 | ||||||||||||||
| Restructuring and impairments | 576 | 412 | 838 | 801 | ||||||||||||||
| Stock-based compensation | 2,770 | 3,584 | 6,334 | 6,304 | ||||||||||||||
| Certain legal matters | 2,286 | 7,501 | 2,286 | 7,501 | ||||||||||||||
| Transaction costs | 1,263 | 138 | 1,908 | 1,698 | ||||||||||||||
| Gain on sale of a business | (26,737 | ) | — | (26,737 | ) | — | ||||||||||||
| Gain on sale of joint venture | — | (5,774 | ) | — | (5,774 | ) | ||||||||||||
| Other (a) | 2,094 | 447 | 2,601 | (10,483 | ) | |||||||||||||
| Adjusted EBITDA | $ | 65,341 | $ | 56,122 | $ | 123,828 | $ | 106,013 | ||||||||||
| (a) | Represents other items, such as inventory reserves and adjustments, realized or unrealized gain (loss) on foreign currency transactions and release of certain indemnified uncertain tax positions. | |||||||||||||||||
| ATKORE INTERNATIONAL GROUP INC. | ||||||||||||||||||||||
| SEGMENT INFORMATION | ||||||||||||||||||||||
|
The following tables represent reconciliations of Net sales and calculations of Adjusted EBITDA Margin by segment for the periods presented: |
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| Adjusted | Adjusted | |||||||||||||||||||||
| Adjusted | EBITDA | Adjusted | EBITDA | |||||||||||||||||||
|
(in thousands) |
Net sales | EBITDA | Margin | Net sales | EBITDA | Margin | ||||||||||||||||
| Electrical Raceway | $ | 324,787 | $ | 56,404 | 17.4 | % | $ | 270,995 | $ | 46,687 | 17.2 | % | ||||||||||
| Mechanical Products & Solutions | 120,310 | $ | 16,722 | 13.9 | % | 102,180 | $ | 15,457 | 15.1 | % | ||||||||||||
| Eliminations | (97 | ) | (384 | ) | ||||||||||||||||||
| Consolidated operations | $ | 445,000 | $ | 372,791 | ||||||||||||||||||
| Six months ended | ||||||||||||||||||||||
| March 30, 2018 | March 31, 2017 | |||||||||||||||||||||
| Adjusted | Adjusted | |||||||||||||||||||||
| Adjusted | EBITDA | Adjusted | EBITDA | |||||||||||||||||||
|
(in thousands) |
Net sales | EBITDA | Margin | Net sales | EBITDA | Margin | ||||||||||||||||
| Electrical Raceway | $ | 641,310 | $ | 112,564 | 17.6 | % | $ | 513,380 | $ | 88,804 | 17.3 | % | ||||||||||
| Mechanical Products & Solutions | 218,884 | $ | 27,531 | 12.6 | % | 197,861 | $ | 31,238 | 15.8 | % | ||||||||||||
| Eliminations | (636 | ) | (859 | ) | ||||||||||||||||||
| Consolidated operations | $ | 859,558 | $ | 710,382 | ||||||||||||||||||
| ATKORE INTERNATIONAL GROUP INC. | ||||||||||||||||||
| ADJUSTED NET INCOME PER SHARE | ||||||||||||||||||
|
The following table presents reconciliations of Adjusted net income to net income for the periods presented: |
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| March 30, | March 31, 2017 | March 30, | March 31, 2017 | |||||||||||||||
|
(in thousands, except per share data) |
2018 | As Adjusted* | 2018 | As Adjusted* | ||||||||||||||
|
Net income |
$ | 42,558 | $ | 18,935 | $ | 69,747 | $ | 36,317 | ||||||||||
| Stock-based compensation | 2,770 | 3,584 | 6,334 | 6,304 | ||||||||||||||
| Intangible asset amortization | 7,765 | 5,493 | 16,452 | 11,082 | ||||||||||||||
| Gain on sale of a business | (26,737 | ) | — | (26,737 | ) | — | ||||||||||||
| Loss on extinguishment of debt | — | — | — | 9,805 | ||||||||||||||
| Gain on sale of joint venture | — | (5,774 | ) | — | (5,774 | ) | ||||||||||||
| Certain legal matters | 2,286 | 7,501 | 2,286 | 7,501 | ||||||||||||||
| Other (a) | 2,094 | 447 | 2,601 | (10,483 | ) | |||||||||||||
| Pre-tax adjustments to net income | (11,822 | ) | 11,251 | 936 | 18,435 | |||||||||||||
| Tax effect | 3,074 | (3,424 | ) | (243 | ) | (5,995 | ) | |||||||||||
| Adjusted net income | $ | 33,810 | $ | 26,762 | $ | 70,440 | $ | 48,757 | ||||||||||
| Weighted-Average Diluted Common Shares Outstanding | 54,003 | 66,888 | 59,945 | 66,446 | ||||||||||||||
| Net income per diluted share | $ | 0.79 | $ | 0.28 | $ | 1.16 | $ | 0.55 | ||||||||||
| Adjusted net income per diluted share(b) | $ | 0.63 | $ | 0.40 | $ | 1.18 | $ | 0.73 | ||||||||||
| (a) | Represents other items, such as inventory reserves and adjustments, realized or unrealized gain (loss) on foreign currency transactions and release of certain indemnified uncertain tax positions. | |||||||||||||||||
| (b) | Beginning in March 2018, the Company has excluded the impact of intangible asset amortization from the calculation of Adjusted net income. The following table presents a reconciliation of Adjusted net income per diluted share as reported to the prior method for the periods presented: | |||||||||||||||||
| Three months ended | Six months ended | |||||||||||||||||
| March 30, 2018 | March 31, 2017 | March 30, 2018 | March 31, 2017 | |||||||||||||||
| As reported | $ | 0.63 | $ | 0.40 | $ | 1.18 | $ | 0.73 | ||||||||||
| Intangible asset amortization (net of tax) | 0.11 | 0.05 | 0.20 | 0.10 | ||||||||||||||
| Prior method | $ | 0.52 | $ | 0.35 | $ | 0.98 | $ | 0.63 | ||||||||||
| ATKORE INTERNATIONAL GROUP INC. | |||||||||||||||||||||
| LEVERAGE RATIO | |||||||||||||||||||||
|
The following table presents reconciliations of Net debt to Total debt for the periods presented: |
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|
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| March 30, | September | September | September | September | |||||||||||||||||
|
($ in thousands) |
2018 | 30, 2017 | 30, 2016 | 25, 2015 | 26, 2014 | ||||||||||||||||
| Short-term debt and current maturities of long-term debt | $ | 7,653 | $ | 4,215 | $ | 1,267 | $ | 2,864 | $ | 42,887 | |||||||||||
| Long-term debt | 900,556 | 571,863 | 629,046 | 649,344 | 649,980 | ||||||||||||||||
| Total debt | 908,209 | 576,078 | 630,313 | 652,208 | 692,867 | ||||||||||||||||
| Less cash and cash equivalents | 76,892 | 45,718 | 200,279 | 80,598 | 33,360 | ||||||||||||||||
| Net debt | $ | 831,317 | $ | 530,360 | $ | 430,034 | $ | 571,610 | $ | 659,507 | |||||||||||
| TTM Adjusted EBITDA | $ | 245,423 | $ | 227,608 | $ | 235,002 | $ | 163,949 | $ | 126,597 | |||||||||||
| Total debt/TTM Adjusted EBITDA | 3.7 | x | 2.5 | x | 2.7 | x | 4.0 | x | 5.5 | x | |||||||||||
| Net debt/TTM Adjusted EBITDA | 3.4 | x | 2.3 | x | 1.8 | x | 3.5 | x | 5.2 | x | |||||||||||
| ATKORE INTERNATIONAL GROUP INC. | ||||||||||||||||||||
| TRAILING TWELVE MONTHS ADJUSTED EBITDA | ||||||||||||||||||||
|
The following table presents a reconciliation of Adjusted EBITDA for the trailing twelve months ended March 30, 2018: |
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| TTM | Three months ended | |||||||||||||||||||
| March 30, | March 30, | December 29, | September 30, | June 30, | ||||||||||||||||
|
(in thousands) |
2018 | 2018 | 2017 | 2017 | 2017 | |||||||||||||||
| Net income | $ | 118,069 | $ | 42,558 | $ | 27,189 | $ | 20,857 | $ | 27,465 | ||||||||||
| Interest expense, net | 27,417 | 9,286 | 6,594 | 5,726 | 5,811 | |||||||||||||||
| Income tax expense | 41,512 | 15,392 | 2,516 | 12,173 | 11,431 | |||||||||||||||
| Depreciation and amortization | 60,889 | 15,853 | 17,210 | 14,485 | 13,341 | |||||||||||||||
| Restructuring and impairments | 1,293 | 576 | 262 | 556 | (101 | ) | ||||||||||||||
| Stock-based compensation | 12,818 | 2,770 | 3,564 | 3,420 | 3,064 | |||||||||||||||
| Certain legal matters | 2,336 | 2,286 | — | 50 | — | |||||||||||||||
| Transaction costs | 4,988 | 1,263 | 645 | 2,235 | 845 | |||||||||||||||
| Gain on sale of a business | (26,737 | ) | (26,737 | ) | — | — | — | |||||||||||||
| Other | 2,838 | 2,094 | 507 | 60 | 177 | |||||||||||||||
| Adjusted EBITDA | $ | 245,423 | $ | 65,341 | $ | 58,487 | $ | 59,562 | $ | 62,033 | ||||||||||
