Q4 2022 Atkore Inc Earnings Call
Good morning, My name is Rob and I'll be your conference operator today at this time I would like to welcome everyone to at Corp, fourth quarter and full year 2022 earnings conference call. All lines have been placed in a listen only mode. After the Speakers' remarks, there will be a question and answer session.
I'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again press the Star one as a reminder, this conference is being recorded.
I would now like to turn the conference over to your host John <unk>, Vice President of Treasury and Investor Relations. Thank you you may begin.
Thank you and good morning, everyone I'm joined today by Bill Waltz, President and CEO as well as David Johnson, Chief Financial Officer.
We will take your questions after comments by Bill and David.
I would like to remind everyone that during this call we may make projections or forward looking statements regarding future events or financial performance of the company.
Such statements involve risks and uncertainties such that actual results may differ materially.
Please refer to our SEC filings and today's press release, which identify important factors that could cause actual results to differ materially from those contained in our projections or forward looking statements.
In addition, any reference in our discussion today to EBITDA means adjusted EBITDA. Adjusted EBITDA is a non-GAAP measure reconciliation of non-GAAP measures in our presentation and the most comparable GAAP measures are available in the appendix to today's presentation.
With that I'll turn it over to Bill.
Thanks, John and good morning, everyone. Starting on slide three I am pleased to report that Accor again delivered outstanding operating results.
During our discussion today, David will discuss the quarterly and full year financials as we normally do but we'd also like to take this opportunity to review our successful growth journey over the past few years, providing additional details on our strategy and share our longer term outlook.
For the business.
But before we get into that let me start with a quick review of some of our highlights from the year.
Turning to slide for 2022 was a fantastic year across all facets of the organization.
We delivered record financial results made great progress on our operational plans and we were recognized for our innovation customer service and ESG achievements of course, none of this could be done without our talented employees, who work tirelessly to support our customers and I would like to.
Take this moment to recognize them for their great work.
In addition, we continue to execute our proven capital deployment model in FY 'twenty, two we deployed over $950 million through a combination of capital expenditures M&A and share repurchases last November we announced the goal to deploy over $1 billion.
And cash over the next two to three years and now with the recent acquisition of elite polymer solutions.
And the $150 million in share repurchases. We have completed since October one we've achieved that goal significantly ahead of schedule in terms of repurchases, we bought back more than 15% of the recent market capitalization over the past 12 months.
David and I are extremely proud to see our vision for <unk> realized through the achievement of these strategic objectives.
Were diligently to evolve <unk> into a leader in the industry that can be relied upon to consistently deliver on its commitments to our employees customers and shareholders without a doubt we are leading a team that is setting a high standard for its say do ratio.
Now I'll turn the call over to David to talk through the results from the fourth quarter and the full year.
Thank you Bill and good morning, everyone.
Turning to our consolidated results on slide five in.
In the fourth quarter net sales increased 11% year over year to $1 billion.
And our adjusted EPS increased 26% to $5 52.
For the full year, we achieved $3 $9 billion in revenue.
Our adjusted EPS grew 66% to $21 55.
Adjusted EBITDA for the full year was $1 3 billion.
Turning to slide six and our consolidated bridges.
These were positive in the quarter. In addition, we saw strong October volumes, which gives us confidence as we enter 2023.
Looking at the full year.
Net sales increased by $986 billion.
Due to higher selling prices and contributions from recent acquisitions, both of which contributed positively to the growth in adjusted EBITDA as well.
Very pleased with our performance in FY 'twenty, two and are confident in our ability to execute and drive value creation through capital deployment in the future.
With that I'll turn it back to bill to speak with you about our growth initiatives.
Thanks, David turning now to page eight we're confident accor is an outstanding company and a compelling investment opportunity.
With our exceptionally strong balance sheet and market leading positions supported by our disciplined operational focus and commitment to our values. We are well positioned to deliver long term value for all of our stakeholders.
David and I will spend the next few minutes touching on some of the highlights of our operations and strategy and then move into more detail regarding our future expectations and performance.
Moving to slide nine.
<unk> business system is the foundation of our company and it drives everything we do every day.
For example on slide 10.
You can see our broad operating our product solutions across the full lifecycle of the construction process. It is because of the <unk> business system.
We had the market insights and distribution capabilities to effectively provide electrical distribution channel and the electrical contractor with the mission critical products in a timely manner.
This has been and remains a true differentiator for accor.
On slide 11, our operating segments are highly integrated and aligned to support the electrical and overall infrastructure of ability between our segments, we share brands and customers and many of our safety and infrastructure products in the U S such as cable tray metal framing and our pre.
<unk> devices support electrical contractors as well.
Turning to slide 12.
Sales and earnings as the businesses have grown significantly since 2017 as we discussed in past, earning calls we recognize that we benefited significantly from the outperformance driven by elevated prices of our plastic pipe and conduit products. However at the same time, we've evolved our.
Business by leveraging our foundational <unk> business system.
This process driven approach has important many of the strategic decisions over the past several years, especially in the areas of pricing and M&A.
For example, we made strategic decisions to reduce our retail exposure and drive price increases in select categories piece decisions in combination with market declines in areas such as steel conduit have resulted in a $100 million decline in volumes over the past five years.
What's notable however is that the loss of earnings resulting from that decline has been negligible. This estimate Tastic Testament to our successful vision strategy and execution that focused on the most profitable opportunities for our business.
As we look at the significant benefit we've driven in regards to our pricing or profitability, we estimate that approximately 40% of that benefit is sustainable going forward.
Turning to slide 13, which shows how we have expanded and strengthened our business over the past five years since <unk> IPO, we have relapsed reach both organic and inorganic investments in high growth areas.
Our business mix and increased profitability.
This transformation has enabled us to grow our sales from one $5 billion in 2017 to just under $4 billion today and to more than double our adjusted EBITDA margin percent each over that same period.
Consistent execution and thoughtful decision, making has driven this success and enabled us to continue our ambition to be the customers' first choice.
Through the changes in our sales mix. We have also increased our total addressable market opportunity as well as our capability to successfully capture these opportunities in the future.
With that I'll turn the call back to David who will walk us through the end markets, we serve and underlying market fundamentals and mega trends that support our business.
Now turning to slide 14.
Our the success we have achieved in recent years is due to the universal nature of our products and our ability to serve multiple end markets.
Our products are used throughout the entire lifecycle of the building construction process.
Looking forward the underlying fundamentals of our end markets are strong slide 15 outlines several of the external factors, we track monthly and notably the Rolling 12 month average for each of them is moving in a positive direction compared to a year ago.
Our solid market fundamentals are underpinned by the Megatrends that support our diverse product portfolio is shown on slide 16.
While our different product categories have varying levels of exposure to these trends. This ensures that we are not too dependent on any one demand driver or one single area or opportunity.
For example, we believe the electrification of everything trend will be studied demand driver across our entire product portfolio, while the expected investments by certain utilities to underground power lines.
But an outsized benefit on our plastic pipe and conduit products.
In addition.
The projected growth in solar and the benefits from the inflation reduction Act should advantage, our mechanical tube products to list.
Is this balanced approach that we believe will be integral to our continued success as we move forward.
With that I'll turn it back to bill.
Thanks, David on Slide 17, we've outlined our conduit to grow M&A is central to our growth strategy and we have a robust pipeline and a proven playbook that we will utilize when pursuing and executing acquisitions.
Whether through M&A or organic investments. We are also focused on growing key categories. For example, we believe our expansion in hte products and large mechanical tubing will open up significant growth opportunities for us in the future and I'll touch on both momentarily.
Lastly, we seek to be our customers' first choice in part by striving to grow our focused product categories and deliberate innovation.
Underpinning all of these efforts is our goal to improve the customer experience and making it easy to do business with Accor. This is achieved through our digital investments and our strategy of one order one delivery and one invoice.
Turning to slide 18, we have a very disciplined and thoughtful approach to M&A with each deal. We make we are focused on driving synergy improvements through the execution of the <unk> business system.
Over the past several years the synergies have been a key driver in our growth and return on invested capital.
Slide 19 demonstrates the outstanding progress we made in terms of M&A over the past several years, we deployed $649 million in M&A between FY 2017, and FY 'twenty two to expand our geographical presence bolster our product capabilities and enter into new market.
<unk>.
Of that $329 million were spent on acquisitions between FY 17.
By 'twenty, one that group, but deals traded at a combined result of less than one times revenue and less than two times adjusted EBITDA in 2022, representing a tremendous synergy improvement driven by the execution of our <unk> business system our track.
Record of successful integration reaffirms, our expectation that the group of acquisitions recently completed will help drive our future performance.
Along those lines turning to page 20.
Like to welcome the employees of our latest acquisition elite polymer solutions, which we acquired approximately two weeks ago. We're happy to have you join our team and look forward to continuing to grow and strengthen our HDD portfolio together.
As outlined on slide 21, the HCP product category represents an approximately $7 billion market opportunity.
Through our strategic acquisitions and organic investments, we expect to be a leader in the kind of products for telecom and broadband applications and a top 10 player overall.
Our investments in this series to date have enable us to better serve customers and meet the growing demands, resulting from the expansion of <unk> networks and the broadband access for rural communities.
Another investment this year as outlined on slide 22 is large mechanical to production with key investments in our facilities in Arizona and Indiana. We believe we are well positioned to capture the growth from end markets such as solar.
Supporting our market driven approach is our focus on new product innovation and prioritizing the categories. We believe we have the rights of way.
Turning to slide 23, because we have a broad and diverse set of products. We have several opportunities to gain share in the key categories in which we operate.
Your first of Hydro poach is central to our success and also enables us to contribute to our customers and contractors success.
I'll now turn the call back over to David who will discuss how these initiatives can help drive our future financial performance.
Thanks Bill.
Slide 25, we outlined our strong financial performance over the past several years across various metrics.
I'd like to call your attention to the strength of our balance sheet and a reduction in our gross leverage ratio.
As you know, we take a disciplined approach to capital allocation and maintaining a strong balance sheet is always a focus.
Ours is especially important in an uncertain macro economic environment.
Although we are concerned about the potential for a global recession in the near term in the U S recession in the next 12 to 18 months, we're still moving forward with our projections for FY 'twenty, three and beyond given the strength of contractor backlogs and the market demand environment.
For example, several other large companies in the electrical industry has spoken about the growth in their backlogs, which in turn will drive future demand for our products.
That being said 2023 may be a bit volatile given the current economic uncertainties.
Turning to our outlook for fiscal year 2023 on page 26, we.
We expect net sales to be flat to down in 2023, and we expect adjusted EBITDA to be in the range of 852 $950 million.
This is $50 million higher than our preliminary perspective, we provided previously.
This outlook does not include any expected benefits from the tax credits associated with inflation reduction as.
As we expect the majority of these credits will flow through to our customers.
We prepared an illustrative bridge between FY 'twenty, two and FY 'twenty three on page 27, with the key drivers and as we've mentioned several times previously part of the pricing outperformance that we've enjoyed over the past several years have started to normalize and we expect lower adjusted EBITDA and adjusted EPS.
In FY 'twenty three versus FY 'twenty two.
That being said, we do expect solid mid single digit volume growth this year with strong incremental margins.
Moving to slide 28, even with the projected lower earnings next year, we still expect to generate healthy cash flow in FY 'twenty three and beyond.
We've updated our capital deployment framework to reflect that we've already achieved the goal we set out last November to deploy $1 billion over two years to three years.
Looking forward, we expect cash flow from operating activities to average 100% of net income over the next several years.
That strong cash flow, we will continue to invest in both organic and inorganic growth as well as to continue our share repurchase program.
Our board just approved an increase and extension to our prior share repurchase program. We're now halfway through our authorization of $650 million remaining to deploy through November 2025.
Turning to slide 29, we believe the initiatives that bill walked through today in combination with our updated capital deployment model will drive significant value creation over next several years.
On the bond absolute pages and illustrative EPS earnings bridge.
By 'twenty, five we expect to achieve greater than $18 per share and adjusted EPS with <unk>.
Our focus for EPS, because we believe some other factors impacting our business such as commodity input cost fluctuations and other items like EPS and more relevant target metrics.
In addition, focusing on EPS allows us to fully reflect the benefits from our capital deployment model, which we expect to help drive significant performance moving forward in combination with our conduits of growth.
Achieving more than $18 per share is a lofty goal, but one we believe is well within our reach and that we expect to achieve as a team.
With that I will turn it back to bill.
Thanks, David we are very pleased with what we've accomplished this fiscal year. We are even more excited about the opportunities ahead moving to slide 30.
<unk> has the foundation in place and strong Mega trends propelling us to deliver on our goal of greater than $18 and adjusted EPS by the end of 2025, we believe our disciplined operational focus market, leading positions and strong financial profile make <unk>.
Core at compelling investment.
I am confident the team strategy and processes, we put in place to continue <unk> strong trajectory.
And I firmly believe the best is yet to come for our company with that I'll turn it over to the operator to open the line for questions.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad, we'll pause for just a moment to compile the Q&A roster.
And our first question comes from the line of Deane Dray from RBC. Your line is open.
Thank you good morning, everyone.
Good morning, Good morning, Dave I appreciate all the guidance and longer term Gulf specifics that's real helpful.
I know, there's lots of focus on pricing and pricing normalization and you've given some some good insight here can we refer to slide 12, because this is a really interesting split that you've given at the bottom of that page between.
Price cost, where you identify the estimated pricing outperformance versus sustainable pricing improvements, maybe just kind of give us a sense of what the assumptions are there and just kind of flesh out the definitions of those two buckets because by appearances it looks like 60% of the pricing.
And that.
That outperformance you've gained.
Is it is not sustainable is that.
That's the part that gets normalized so it just kind of take us through the assumptions there.
Yeah. So a great set of questions Deane I'll start obviously this is an estimate going forward, but we have triangulated.
By looking at every product line, what we've sustained in the past because some of our product lines by the way are still increasing in profit margins.
So even as commodity costs are going down and that ties back to supply and demand and also as factory and things that are in our own self help <unk>.
One order one delivery, one invoice and the price extra that we can get to for the market for that so.
This is saying it has to go hey, 400 million or that we think we're actually going to hold on to and if you look at <unk>.
Covered us since we've gone public and you're familiar with the corporation every year, we've gained on price versus cost so.
On the same hand, we do think and we saw some in this year that we are probably going to give up some price not what I would say is the mindset of our internal team is how do we even turn that around and drive that more but I think it's a realistic.
External view to model around and then our job obviously, we've already given anchor points was $18 a share, but if we can hold on to more of this $5 85 that even means the $18 goes up so I think it's a realistic number that we've triangulated from a couple perspectives.
Right that's really.
That's real helpful. Now just maybe there's kind of a follow up here is the way we've thought about pricing normalization.
And thats consistent what you've just laid out here, but if I think about it is there's kind of three dynamics that there is market demand. So we can still see and you've given those indicators that there's good demand maybe if you can give us a sense of backlog the supply advantages that you have as a national supplier the one invoice.
<unk> et cetera, and also then the dynamics on the input costs, we can all see yet.
What's happened to PVC pricing, but again, that's not in it.
Its own driving the normalization, it's part of it. So if we think about it as three separate dynamics the demand that youre seeing what kind of backlog.
Your advantages as a national supplier and then the impact of the lower input costs.
Yes, so perfect game, so market demand. We're optimistic there is another slide in the deck here, but you avoided the last month. We're also had an abi types for one month in a month over month.
All type of factors going forward look optimistic and in sometimes in these different factors. So, let's say like Abi or something they don't include which David and I have covered all the mega trends all the investment and the inflation reduction Act and the infrastructure Act and specifically.
Within the infrastructure Act, what's called beads, which is $65 billion.
Ivor optic lines underground so theres, so many different dynamics here and whether it's you or others kind of our other companies the nonresidential market for almost any investor seems to be very bullish. So we're optimistic even if there is a consumer recession, it would not hit or would not be impacted.
Much on the non res side of the world So optimistic on market demand.
Good trends and then does supply advantages.
What we're doing and the relationships we have with customers. The full package of products that one order one delivery went invoice, we're actually seeing are saying mid to high single digit price advantage, even compared to <unk> like the difference between shipping a full truckload and the ability to bundle all of these products like you Ray.
If you went to a website you want to buy everything in one place and get it delivered our customers appreciate that so again, where we and one of the bridges show, we expect to grow a 100 200 basis points higher than the market and we are optimistic on the markets. That's why by the way. They don't go to input costs, you're seeing with that.
Well I think it's truly an inflection point back to your page to page 12, we referenced in the past, we have gotten price and costs improved customers.
Optimistic on mid single digit organic growth going forward and then M&A on top so between market and supply advantages I really think this is an inflection point track or off of obviously, an amazing year last half decade, plus of performance and then overall I think input costs are now starting to subside.
I'd go on going downward, but steel costs have gone from one third roughly 90 to $100 for hot roll down to around $600 copper has dropped from $4 50 to $3 50, PBC will still continue to go down through the end of the year and then start inching its way up so and then other.
Products by the way just to give you one like HD P/e, that's going down the input cost at the same time, we continue because of our ability to deliver on time confidence relationships that use you want example to raise our prices. So that's why as we look forward both for the guidance that we raised for this year and as we look at.
The comfort that we have it's still an estimate to get this $80 beyond in 2025 so.
Hopefully you realize the bullishness, both our past performance, but also we have in the future. Yeah. That's really helpful and I just wanted to end questions here with a view on your guidance, mostly on the cadence that you are expecting for the year.
First quarter guide is well above expectations.
And are you just what's your sense of the first half versus second half dynamic is there.
What's baked in.
Yeah, Great question Deane.
I'd say level loaded into your pointed for guided here in the $2 40 to $2 60 in the $8 50 to 950, where theres typically summer seasonality to the business.
Hopefully as conservatism, but with one of the things that David and the team never wanted to do is do one of the things you hear from other companies, what we simply underestimated the war or natural gas or a railroad is that right or the weather. So so hopefully as we go forward, we can pick up on these numbers, but I think.
It's a rational logical number that we're giving at this moment, which is kind of as we move forward, we're going to start seeing a lot of our initiatives go into place that's going to drive organic growth, but we will probably still have some of that price that we saw.
Signaled here in fact, the PVC market working as a headwind but comp.
Very comfortable with the numbers, we put in front of the group. That's all very helpful. Thank you.
Thank you.
Our next question comes from the line of Andy Kaplowitz from Citigroup. Your line is open.
Hey, good morning, everyone.
Good morning, Andy.
The volume growth in Q4 as you said was modestly positive after a few quarters of negative was that more of that you saw channel destocking come to an end or was it more of a function of supply chain headwinds continued to ease and then could you talk a little bit more about your core Mark markets. Obviously, you mentioned key nonresident caters to remain resilient and strong.
<unk> backlogs the Abi did soften a bit recently in October . So are you seeing any signs of weakening for non res markets and what assumptions for the core non res markets are you baking into FY 'twenty three.
So great set of questions Sandy.
They're not just because obviously, we've talked Duane the other discussions that youll be glad I think most of the quote on quote Destocking is behind us to your point, even use that word, but I will say that's behind us and therefore you solve.
Low single digit growth and with that.
Lot of our products were up mid high single digit to just the final look like Merrell Deane asked the question with cost going from $1800 over a year to 600 are customers are wise enough to probably lowered the amount of raw materials. They were stocking, but I think overall, that's all behind us and moving forward gives us.
Optimism when we've seen it in October as we give forecast so good mid single digit type of growth.
So good there.
I'm answering Andy maybe not for you, but for the audience in general one of the things with the architectural billing index is at a month over month. So yes. It went down for one month, but that just means for example, if it was September or October data. It's the same as two months ago and after 20 months arise.
Optimistic and then from backlog the backlog, whether you look at ABC Association ability contractors, you talked to other companies in the electrical industry.
<unk> again, we pride ourselves on taking an order and ship in a week. So I can't look at our own backlog versus much talk to other key customers see what other competitors that have switch gear, there literally out over a year six.
So for us the different indicators there are so many positive trends. So we're optimistic on the future. So I think I answered Andy most of the questions and then.
Things like healthcare that chips Act.
And what that's going to do for our customers and these are big facilities. If your different brands out there, making mega factories that have a lot of electrical content.
As Andy the only thing I would add this is David if you look at the starts data I mean, there is.
It's pretty broad based if you look at there's a lot of the starts around airports medical facilities.
Schools that sort of thing even like lately theres, some pretty big starts around hotels and people, adding convention centers this sort of thing so.
At least right now it looks like it's pretty broad based.
Very helpful guys, and then maybe just focusing in FY 'twenty five because you put it out there you look like you're baking in something close to mid teens EPS growth.
With little continued pricing normalization. After 'twenty three just maybe clarify that and I know you say, it's a goal but can you talk about the underlying market conditions that you need to see to get to that goal.
<unk>.
Why wouldn't you continue to see more price normalization of commodities do continue to come down and then what are your assumptions for share count and net leverage and then $18 forecast.
Yes, it's a good.
There is a good question, Dave So first of all I would say low single digit kind of market expectations over that period of time, and then obviously, we expect to sell.
With some of our initiatives.
Also say on that.
On the pricing you are correct in saying, we have a low red line there, perhaps between 23 and 25, but we do think the normalization will by and large be behind us. This year, but also remember it's more a supply demand of that really is the underlying commodities and then as we continue to pray.
<unk> our initiatives around our our D C. Our one voice for shipping as we start to.
Really enhances capabilities, we feel our pricing power will even be that more robust. So that's what we have built in as far as capital deployment I think we've been somewhat.
<unk> over this period of time, so I would say a little bit.
Not as robust as last year, but buybacks that similar level of buybacks you can see what we have in for this this year as far as an example of what we have into our guide and then M&A, we'll see.
Got it and David just one quick one just to clarify the $5 85 and pricing that you mentioned when you look at slide 27 in your 'twenty three outlook.
Basically on the revenue side, it looks like you're giving back something like maybe 10% of on price is that relatively accurate and then youre, giving back the majority of that 585. This year is that within the bridge more or less that's correct.
Yes, so that would be an accurate assumption it.
Okay. Thank you.
Thanks, Andy.
Your next question comes from the line of Chris Dankert, Sorry from Chris Moore from C. J S. Your line is open.
Alright, good morning, guys amazing quarter is always good.
Good morning, maybe you could talk good morning to talk maybe a little bit about how about free cash flow. It looks like it was it was a very good quarter. So you know.
On a yearly basis.
Didn't meet your.
Net income target, obviously inventory was up significantly maybe can we talk a little bit about 23 free cash flow is there. Some some catch up there I know that there's still lots of.
Capex is going to go up et cetera, just maybe kind of talk to 23 free cash flow a little bit.
Yeah, absolutely so I would say that in general the percentage of.
Net income adjusted net income will be slightly higher in FY 'twenty three I think a couple of things one operating cash flow should be down slightly because obviously, our EBITDA projections are down but then we won't have the working capital headwinds that we've had in the last say two years, so a little bit of benefit of working capital.
But we have increased our capex and we've increased that mainly due to the fact that we have pretty robust again organic growth opportunities to build out of Dallas continued investment in at HCP and such so.
That's probably why it's going to be a little bit lower than that 100% target over time here in the next year, but again, it's mainly because of the.
The robust opportunities we have for our growth initiatives.
Got it very helpful.
Yes.
And I Wonder if maybe we could talk just a little bit more about kind of H D. P E versus PVC markets kind of compare and contrast for example, you know from an interest rate sensitivity perspective of the end markets.
Is there any difference there you know kind of thinking in terms of you know that five G driver versus you know some of the things on the Red side could you know.
It could be quite different I'm, just would be curious to get your thoughts.
Yes, good set of questions Chris here so.
Optimistic for both product lines and the markets. They serve H D. P. I think there is so much demand out there that is constrained descent is what blue collar people can go quick aligns underground the demand.
Capital and Thats been set aside by the funding by the government.
It's literally expect it to be very high single digit.
Patterning growth for the next five seven plus years, so we're well positioned in the OE governor in a good way is how quickly the lines being installed so all great their PBC with also infrastructure.
Mentioned don't want they charged the hardening of the grid, so putting lines underground electrical lines and so forth also very optimistic and then we for example have.
Specific things, we called out their staff for example phone core where theres product lines that we can make it worse like 25% less material. Therefore lighter weight. So good for the contractor good for us on a cost position. So there's a lot of unique things there little bit of headwind going into the residential mark.
But again, that's one of the smaller markets that we serve so again I keep going back probably like David excuse me.
And say with all of those things out there, we think that we have enough with organic growth with investment in M&A and capital deployment that putting that $80 anchor point out there for EPS.
<unk>.
Let's get value there and then we'll talk about what <unk> can do to continue to raise the bar.
And then Chris one other thing if you mentioned <unk> and we did say about the softness there, but there's also some robustness.
In multifamily and just in general we benefit more in multifamily is up then than we do in residential only because our broader portfolio is impacted positively with multifamily.
Got it very helpful last one for me it.
May have been asked but I'm not sure I got it. So just in terms of the $18. Adjusted EPS is there a kind of a share count guide.
Things that you're thinking about that goes with that $18.
What I would suggest so I would just look at what we guide for 'twenty, three and just roll that forward to 'twenty five.
Yes, we have some optionality built in Chris This is John I mean between M&A and share repurchases right that we're going to so it's a difficult thing to get to a specific share count obviously.
Where the pricing will be on the shares of the period. So I think we're trying to balance there some.
Optionality and flexibility.
Very helpful I'll leave it there thanks guys.
Well, thank you Chris.
And your next question comes from the line of Chris Dankert from Loop capital. Your line is open.
Hey, good morning, Thanks for taking the questions I guess first off I'd Echo the earlier comments on slide 12 excellent waterfall really do appreciate the.
The amount of work that went into putting it out there. So thank you again on that.
Forgive me if I missed it on 23, specifically in the guide there took up the EBITDA range at the midpoint a bit what's giving you confidence there I mean is it the demand environment holding up well is it pricing just any additional details on kind of what gives you confidence taken up the midpoint would be great.
I think it's Chris its a little of everything.
Now that we're obviously, it's always easy to give this first quarter guidance I mean, we're halfway through the quarter.
But you know pricing is holding in there. So that's one thing we are now CEB.
Mid single digit volume volume increase we're seeing the investments, we're making that will hit later in this year continue to come to fruition, David talked about capital deployment. So it's one of those I'm going to answer two sets of questions. Both back to this year and also the $80. There is multiple paths here.
Always make the analogy of trying to drive through the city and assume you hit every green light here as one where we have planned it to go even if one thing thats a little bit less there's enough other strengths here, so Chris a little bit I'll be candid here on moving the guide up by $50 million.
Both obviously $50 million.
Five 6% increase in EBITDA for the year, but also our confidence we have in the year, we kind of just went to $8 to 900, and we lease wanted to signal guys. There is probably no risk on the downside here and make sense, David <unk> CEO and CFO , we have not missed a single earnings and we don't expect to hear in going forward.
No really appreciate the color on the comp guide there.
I guess just kind of following up on <unk> I guess, you could comment on the market but.
You guys have been very very busy on the M&A front I guess, what's the pipeline look there are there is still enough opportunities are you still looking for more just any comments on kind of what you are still looking to fill the HDD side.
Yes, I think we obviously they've been pretty active and there are still some other opportunities in HCP, but I'd also point out to the broader.
<unk> $40 billion of Tam that we've kind of outlined so we get a lot of questions around M&A and we do have high share in a number of our markets, but we do have a lot of opportunities in some broad categories of building wire does different things wire and cable that sort of thing. So I just wanted to point out. The fact that you know the way the portfolio is.
It's evolved we now have a tam which is much bigger than it would have been say six seven years ago.
I'll just add David to Chris's question, So, yes, theres ops, absolutely other H D. P acquisitions. The other thing into $200 million is heavy investment we've called out for example in Dallas to do organic lines to add to our portfolio and then not the U S. But a huge shout out on the one page in the M&A deck.
Where I've always Dave and I have always talked about how accretive our MAA has been when you look and say for acquisitions that have been over a year or so old we literally now have like a two times EBITDA multiple after synergies for what we buy these acquisitions at high <unk> business system in all fat.
<unk> from productivity pricing you can see the accretive capability, we can add so that's again why we're excited about the future.
We're playing and hitting on all cylinders here.
Really appreciate the color guys and best of luck on fiscal 'twenty three here.
Thank you Chris.
And this concludes the question and answer session I would now like to turn the call back over to Bill Waltz for some final closing remarks.
Before we conclude let me summarize my three key takeaways from today's discussion first fiscal 2022 was an outstanding year for Accor.
Second we are well positioned to build on our positive business momentum and have a strong outlook for FY 2023.
Third our strategy will drive further value creation into the future as we continue to execute on our growth opportunities and deliver on our updated capital deployment model with that thank you for your support and interest in our company and we look forward to speaking with you during our next quarterly call.
This concludes the call for today.
This concludes today's conference call you may now disconnect.
Please wait the conference will begin shortly.
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