Atkore Expects Modest Growth Amid Market Challenges

Atkore International Group Inc., a prominent manufacturer of electrical products and solutions, has delivered a mixed financial report during its third-quarter earnings call for fiscal year 2024.

The company noted that its Electrical business experienced flat organic volume growth and price softness, even as its construction services and solar segments performed robustly. Atkore is contending with heightened competition from imported steel conduit from Mexico, which has intensified price competition in the market.

Despite these challenges, Atkore maintains a positive outlook for its long-term prospects, having repurchased $125 million in shares and anticipating improvements in EBITDA in the upcoming fiscal year. Additionally, there has been a leadership change in the financial department, with CFO David Johnson set to depart and John Deitzer poised to take over the role.

### Key Insights
– Atkore’s organic volume remained flat in Q3 of FY 2024.
– Construction services and solar segments showed strong results, whereas the Electrical business faced price softness.
– Increased imports of steel conduit from Mexico have intensified price competition.
– The company repurchased $125 million in shares and adjusted its Q4 EBITDA outlook.
– Atkore expects an EBITDA of approximately $650 million for FY 2025.
– CFO David Johnson is transitioning out, and John Deitzer will succeed him.
– Price normalization for costs is projected to be around $325 million for the current year.
– Challenges persist in the utility and residential construction markets.
– Atkore anticipates adding at least $50 million of incremental EBITDA next year.
– Inventory levels are normal; however, distributors are cautious due to pricing pressures.

### Company Outlook
– Modest volume growth and EBITDA improvements from growth initiatives are anticipated in FY 2025.
– The company expresses cautious optimism regarding the impact of program funding on HDPE volumes, expecting a ramp-up through 2025 and 2026.
– Atkore considers FY 2025’s estimated EBITDA of $650 million as a threshold for growth, focusing more on collections than specific margins.

### Challenges
– Price competition in steel conduit due to increased imports.
– Difficult conditions in the utility and residential construction markets.
– PVC market pricing poses significant risks for the upcoming fiscal year.
– Distributors are being cautious, trying to reduce inventory levels due to pricing pressures.

### Opportunities
– The solar torque facility is ramping up well, with growth expectations for the next fiscal year.
– The Hobart ramp’s utilization rate is above 50%, with potential growth of 20-30% anticipated next year.
– Atkore has laid out a strong leadership succession plan with new appointments for the CFO and Chief Accounting Officer.

### Missed Expectations
– The adjustment of Q4 EBITDA outlook is due to ongoing market softness and adverse pricing dynamics.
– Uncertainties in the construction market could influence revenue goals.

### Q&A Highlights
– Discussion around potential tariffs that could reduce the market share of Mexican steel conduit.
– The company reiterated a target revenue of $650 million for the next fiscal year.
– The conversation included utilization rates at the Hobart ramp and cautious optimism surrounding the timing of program funding.

Atkore is committed to its strategy despite current market challenges, actively managing its portfolio for long-term growth. The upcoming fourth-quarter call in November is anticipated to provide more insights into the company’s performance and outlook.