Q2 2025 Atkore Inc Earnings Call

Van: Good morning, my name is Van and I will be your conference operator today. At this time, I would like to welcome everyone to Atkore's second quarter fiscal year 2025 earnings conference call.

Van: All lines have been placed in a leasing-only mode. After this figure, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, followed by the number 1 on your telephone keypad.

Van: If you would like to withdraw your question again, press star one. As a reminder, this conference is being recorded. Thank you. I would now like to turn the conference over to your host, Matt Kline, Vice President of Treasury and Investors Relations.

Thank you, you may now begin.

Matt Kline: Thank you, and good morning, everyone. I'm joined today by Bill Waltz, President and CEO , John Deitzer, Chief Financial Officer, and John Pergenzer, Chief Operating Officer, and President of Electrical.

We will take questions at the conclusion of the call.

Matt Kline: I would like to remind everyone that during this call we may make projections for four looking statements regarding future events or financial performance of the company.

Matt Kline: Such statements involve risks and uncertainties such that actual results may differ materially.

Matt Kline: 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 for looking statements.

Matt Kline: In addition, any reference in our discussion today to EBITDA means adjusted EBITDA, and any reference to EPS or adjusted EPS means adjusted diluted earnings per share.

Matt Kline: Adjusted EBITDA and adjusted diluted earnings per share are non-GAAP measures .

Matt Kline: Reconciliation of non-GAAP measures and a presentation of the most comparable GAAP measures are available in the appendix to today's presentation. With that, I'll turn it over to Bill.

Bill Waltz: Thanks, Matt. And good morning, everyone. We appreciate you joining us today for our fiscal 2025 second quarter earnings call.

Starting with our second quarter results on slide three.

Bill Waltz: We are very pleased with our second quarter performance. We achieved net sales of $702 million which included 5% organic volume growth driven by strong contributions from construction services, steel conduit, metal framing and cable management products.

Adjusted EBITDA was $116 million, and adjusted EPS was $2.04.

Bill Waltz: In addition to our volume growth, our results benefited from better cost management and productivity.

Bill Waltz: While our pricing was down year over year, we saw sequential quarter increases in our clean prices for our steel conduit products.

Bill Waltz: Our teams have been focused on maximizing shareholder value, which includes assessing the best use for our assets. For example, in February , we announced the investor of Northwest Polymer's recycling business after careful consideration and strategic review.

Bill Waltz: I'm also pleased to highlight that we ratified a new five-year labor agreement with the United Steel Workers at our Harvey O'Neil facility last month.

Bill Waltz: The new contract is retroactive to April 2024, which is when the previous contract expired. This new agreement is a critical element for enabling us to continue building on our commitment to productivity and serving our customers.

Bill Waltz: We redeployed cash to shareholders having repurchased approximately $50 million in shares in the second quarter and paid our fifth quarterly dividend since adding the dividend to our capital deployment model in FY 24.

Bill Waltz: As we announced last week, I'm also proud to highlight that Atkore's Board of Directors increased the dividend to 33 cents per share during our recent board meeting.

Bill Waltz: In mid-April, we announced an impairment charge for certain long live assets related to our HDP, PIP, and Conduit products.

Bill Waltz: The impairment charge was triggered by the emergence of competing technologies to fiber optic cable and delays in the deployment of government stimulus funding for nationwide broadband infrastructure investments.

Bill Waltz: The net loss of $50 million includes a $128 million non-cash impairment charge related to these HTTP assets.

Bill Waltz: When we met in February , we had not yet incorporated the impact that tariffs might have on the broader construction market.

Bill Waltz: We indicated that if tariffs went into effect, we expected to be a net beneficiary since most of what we make and sell originates with materials, labor and equipment in the same geography.

Bill Waltz: Following the elimination of exemptions and other actions taken by the administration, imported the only moon in products carry a 25% tariff, regardless of the country of origin.

Bill Waltz: As we sit here today, we are more optimistic about demand for U.S. May steel conduit in 2025. A greater demand for U.S. May steel conduit helps Atkore.

Bill Waltz: While recent weeks have been encouraging, there remains unpredictability of how long into what extent that terrors may be part of our economic landscape.

Bill Waltz: We are very mindful of the impact uncertainty has on a macroeconomic level. The most recent Dodge Momentum Index suggested planning activity slowed across several non-residential categories.

Bill Waltz: On balance, we are proud to be maintaining the guidance we presented in February . We continue to expect full-year fiscal 2025 adjusted EBITDA with a midpoint of $400 million.

Bill Waltz: I'm grateful for the dedication and resilience of our teams have shown through a busy first half of the fiscal year, and I'm confident that we will continue to lead into our business system to execute our strategy and deliver value to our customers and shareholders.

Bill Waltz: With that, I'll turn the call over to John to talk through the results from the quarter.

John: Thank you, Bill, and good morning, everyone. Moving to our consolidated results on slide four. In the second quarter, we achieved net sales of $702 million in adjusted EBITDA of $116 million.

John: Adjusted EBITDA margins expanded sequentially to 16.6% from 15% in the first quarter of fiscal 2025. Adjusted EPS was $2.04.

Turning to Slide 5 in our Consolidated Bridges

John: Organic volumes were up 5% compared to down 1% in the second quarter of fiscal 2004. Our average selling price is declined 17% year over year with the majority of the decline coming from our PVC conduit and steel conduit products.

John: However, we were pleased by sequential pricing improvement for our steel conduit products from the first quarter.

John: Moving to slide six, year to date, our volume is flat compared to the prior year, having overcome a 5% decline in the first quarter.

John: Last quarter, this slide showed volume growth in only one product area – metal framing, cable management and construction services.

John: Our 5% year-over-year volume growth in the second quarter was supported by volume growth across 3 out of 5 product areas, a meaningful improvement over the first quarter.

John: Year to date, our mental framing cable management and construction services have grown high single digits after being up low single digits in the first six months of the prior year.

John: As a reminder, this growth is driven by large construction projects and data center activity and also do the high density of metal framing products required for these types of construction.

John: For the first six months of fiscal 2024, plastic piping conduit products were up mid-single digits in volume, driven by strong performance in water-related PVC products.

John: During the first six months of fiscal 2025, electrical PVC conduit serving the commercial and industrial and markets grew while our water-related products declined.

This contributed to the overall decline in the product category.

John: As we build out a broader water related portfolio, we're reviewing our customer base for both new and existing capacity in order hopefully maximize our value offering.

John: After our steel-related products were down, high single digits in volume in the first quarter, we are pleased that year-to-date volume for these products is now slightly positive. We believe this is due to the strength in the overall market in particular demand for U.S. made products.

John: Our electrical cable and flexible conduit category is also growing year-to-date, up-low single digits.

John: Turning to slide seven, adjusted even a margins compressed in an electrical segment, primarily due to pricing declines related to our PVC and steel conduit products, which offset contributions from overall volume growth.

John: Adjusted EBITDA margins improved in our SNI segment due to strong quarterly volume performance from construction services, metal framing and cable management. In addition, the segment had much improved productivity, contributing approximately $11 million to segment EBITDA.

John: A productivity gains were primarily due to better cost management in our manufacturing and project-based work.

John: When we are pleased with the operational and financial performance for SNI this quarter, we do believe a certain portion of the benefits and margin gains were isolated to Q2 and anticipate margins to be closer to low double digits for the remainder of the year.

Furning the slide eight.

John: We remain committed to executing a balanced capital deployment model with an emphasis on returning cash to shareholders.

John: Our capital investments are largely to support previously announced growth initiatives.

John: A balance sheet remains in a strong position with no maturity repayments required until 2028.

John: Subsequent to our quarter end, we refinanced our asset-based lending agreement, maintaining our borrowing capacity for $325 million.

This amended agreement expires in 2030.

John: While we have historically not borrowed against this facility, it remains an important component of our overall financial profile.

Next on Slide 9

John: We expect our Q3 net sales in the range of $715 million and $745 million.

John: Our adjusted EBITDA is expected to be in the range of $85 to $105 million million dollars.

John: Our adjusted EPS is expected to be in the range of $1.25 and $1.75.

John: As we have previously discussed, we are accustomed to anticipating some amount of seasonality and generally build in an expectation that the back half of the year will be stronger than the first half.

John: While our second quarter results were better than our initial expectations, there are multiple factors we considered as we plan forward.

John: Our first half of the year was supported by a strong contribution from our construction services business.

John: We expect that the second half of the year will not provide the same contribution due to the number of projects we have in backlog.

John: While there are numerous opportunities we are pursuing for new projects.

John: We expect growth for the construction services business to moderate in the second half of the year.

John: That being said, we are excited about the additional capability and capacity we have for metal framing and cable management products that we believe should help continue to drive growth for this product area for FY 25 and beyond.

John: Despite year-to-date increases in both construction starts and planning activities recent forward-looking construction sentiment suggests the possibility for slower activity moving forward.

John: The topic of tariffs has received much attention in the past several weeks.

Forecasting the impact related to tariffs is challenging.

John: We believe the impact of tariffs for Atkore primarily centers on our ability to reclaim and recapture lost market share and gross margin for certain product categories over time.

John: Since tariffs were first announced, both the time horizon and the applicable percentages have changed multiple times.

John: Framing a forward-looking perspective for six months or even three months comes with the risk of inaccuracy Dray, Andrew Kaplowitz, David Tarantino,

John: Due to these factors, we believe our volume expectations for the full year will be closer to low single digit percentages.

Bill Waltz: Nonetheless, as Bill shared, we are maintaining our full-year 2025 outlook and expect full-year adjusted EBITDA in the range of $375 to $425 million.

and adjusted EPS in the range of $5.75 and $6.85.

What's that? I'll turn it over to John Pergenser.

Speaker Change: Thanks, John , moving to slide 10. Although certain product categories source materials from countries impacted by recently announced or potential tariffs, we believe Atkore should be in a net benefit position.

Speaker Change: While the magnitude and precise details of various tariffs may continue to evolve over the upcoming quarters, this slide illustrates Atkore's geographic manufacturing footprint with its long-lived assets relative to its revenue generation.

Speaker Change: Additionally, we've outlined the relevant impact tariffs may create for each of our key product areas.

Speaker Change: Finally, turning to slide 11, as we've said before, the electrical industry is a great place to be.

Speaker Change: Our financial profile remains strong in our diverse portfolio of domestically manufactured electrical infrastructure products provide solutions for nearly all types of construction and markets.

Speaker Change: Our domestic manufacturing footprint paired with our predominantly domestic customer base positions us well to serve our customers in the markets they operate.

Speaker Change: As demand for electricity intensifies and the design and requirements change, Atkore is prepared with high-quality solutions to enable growth and ensure safe distribution of electricity to data centers, manufacturing locations, hospitals and homes.

Speaker Change: Our products and solutions are situated well with secular tailwinds for increased electrification.

Speaker Change: We remain focused on a balanced and disciplined approach to capital deployment by returning cash to shareholders through a combination of share repurchases and quarterly cash dividends and investing to grow the business.

Speaker Change: Through it all, we are guided by our strategy, our process, and our people, the three fundamentals of the Atkore Business System.

Speaker Change: With that, we thank you again for joining our call this morning. Now we'll turn it to the operator to open the line for questions.

Speaker Change: 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 a Q&A roster.

Speaker Change: Your first question comes from the line of Chris Moore, CJS Securities, please go ahead.

Hey, good morning guys. Thanks for taking a couple questions

Speaker Change: Good morning, Chris. Good morning. So maybe we could start with with PVC conduits and just kind of

Speaker Change: What you're expecting for the for the balance of the year. I know we after Q1 kind of the idea was would be pre pre pandemic pricing perhaps by the end of fiscal 25. Just wanted to see if that's still in line with the way you're looking at it.

Speaker Change: Yeah, Chris, I think at this stage again, I think John Deitzer said it's hard to predict out three and six months, even one month, but what we guided in the last quarter still seems to be our best guess, you know, from what we've seen, pricing has continued to go down some police for us.

Speaker Change: But it's kind of on track, back to our earnings and everything we said with what we expect. So as much as we can forecast the future for ourselves, that's what we estimate the interest stage.

Speaker Change: Got it and what would be from a from a market share standpoint on PVC conduit? Would you have a best guest in terms of where Atkore is at this point in time?

I don't know if...

Speaker Change: Share. I look to the team for a precise number. I still think we're absolutely a leader out there. And, you know, imports, which I'm sure will be a question seem to be continuing to grow, you know, but it's also hard almost pre-empt future questions as the Wall Street Journal talked about the whole economy and saying it's hard to go what's the, you know, the tariff impact is just what's a noise in different pipelines like, hey, it was up. [inaudible]

Speaker Change: Yo, solid imports were up solid, double digits in the last, let's say three months, but

Speaker Change: where people are trying to get products in ahead of the tariffs and stuff like that, so...

Um, um...

Yo, we're happy to loolies.

Speaker Change: Still a leader, no question about that, and give or take, probably around the, you know, keeping our same market share, but one of the things I'd also qualify with PVC is unlike other products. [inaudible]

Speaker Change: It's pure estimates. There's no, all we can do is look at, for example, how much resin is being sold into different markets and try to extrapolate from there, what is municipal pipe, plumbing pipe, PVC pipe, you know, and so forth. So it's much murkier to give precise estimates.

Speaker Change: I got it, now I appreciate that and maybe I'll just stay with BBC Connors for my last question.

Speaker Change: Longer term, you know, I'm talking three to five years, I'm just trying to understand.

Speaker Change: You're a view of PVC conduits in terms of your overall offering. There's more competition, more and more imports, just from big picture how important it is to the kind of overall business in the longer terms.

Speaker Change: I still think it's a key part of our business, Chris, I think a good thing to call out because I focus on imports we have mentioned in the past that

Speaker Change: There's, you know, the startup of one company and it does, while I say does feel like we're pretty sure that others in the industry

Speaker Change: maybe even a municipal pipe and things like that have expanded some into conduit.

Speaker Change: but both, you know, it's a good product line for us and it totally fits into Atkore's one, you know, one order.

Speaker Change: One delivery, one invoice, which is we've explained over the years, we think is a competitive advantage for us, so...

Speaker Change: Work, you know, continuing to invest through it, you know, we talked a lot about productivity, a lot that came on the SNI side of the business, but we're driving productivity here to continue to be competitive and make it a good product in our portfolio.

Perfect, I'll leave there, thanks [inaudible]

Yeah, thanks Chris.

Speaker Change: Your next question comes from the line of David Tarantino from Keyback. Your line is now open.

Hey, good morning everyone.

Good morning, David.

Speaker Change: So maybe starting out, could you give us some color what you're seeing more recently in terms of the import levels in both PVC and steel, particularly around the improved metal pricing you guys noted, and then maybe on that could you quantify what the potential upset and pricing could be? Should these tariffs be more sticky and imports return to more normal levels?

Speaker Change: Yeah, I'll start, David, but even then try to say dumb.

Speaker Change: Projections, you know, we get that specific on the future here. So as I kind of mentioned with Chris, well, I did mention with Chris is PVC imports the year over year for the last quarter up, you know, solid double digit per cent.

It's hard to estimate going forward.

Speaker Change: If that will continue, or if it's just people getting in before the tariffs, or even to go, hey, we shipped everything we could. And like they literally don't even have capacity. Again, I don't know.

Speaker Change: My specific competition domestically or internationally that well to know what's in their playbook. I do perceive that. Thank you very much.

Again, with all the variability of the administration and tariffs,

that

Speaker Change: Some imports were coming from China, and I would expect that to be decreased just because the current tariffs there, you know, Cross, I think all products were China, but at least PVC conduits well over a hundred percent, so

That's not as economical.

Speaker Change: for the Latin American countries, the tariff right now on the major importers is 10% and again that's one product and you gotta remember a lot of this we've talked about is the inefficiency of freight so I wouldn't apply it you know like their whole delivered cost isn't 10% up because it's just on the product

Speaker Change: and so forth. So whatever estimates you want to say, 57% I'm making up a totally random number if you follow my math, but it is a headwind. I mean...

It helps us as we've...

covered and prepared the marks.

Terrence Overall and John Priggins are discussed with one chart.

Speaker Change: are typically a good thing for Atkore going forward as we're still kind to it.

They were actually in the quarter down your area. [inaudible]

Speaker Change: into steel, but from a year over year perspective down, there I do think, because that is what I think I covered in the very beginning remarks.

Speaker Change: You know, we're seeing for all steel conduit now with 232 where the administration removed exemptions is a 25% tariff. So again, can it be economical to bring products across? Yes.

Speaker Change: But that's a higher headwind that either means whatever they do with that, but how aggressive they are, what pricing they sell out again independent companies, but that's a good thing for us.

and therefore without dimensionalizing an exact dollar.

Speaker Change: where we've held the guide is the fact that we do see tariffs helping.

Speaker Change: EBITDAW Profits, a little bit offset as John Deitzer said, just from the standpoint that, um...

Speaker Change: You know, if you look into the second half, it's hard to predict the economy. Good luck to the Fed over the next two days, but

Speaker Change: You know, we could see some projects delayed association of building contractors and things like that. I think there is a stat from them that

Speaker Change: There are contractors who are seeing up to 20% of jobs delayed or possibly postponed, so we were just trying to balance good thing tariffs offset by maybe a little less volume and as John Deitzer said and then I'll wrap up my filibuster here is some.

Speaker Change: You know, we're still predicting, let's say, you know, low single digit growth, but if we're at zero in the first half of the year with a good solid q2 .

Speaker Change: I mean, I'm over a specific format, but be sure to be 3% don't be locked on that number for the full year and implicitly that means 6% you know that we will we expect to be

Speaker Change: You know, made the high single digit growth here in the second half of the year. So we're so pretty optimistic, but that's the balance of tariffs and volume and stuff like that.

Speaker Change: Okay, that's helpful. And is there a way to frame the steel pricing assumption relative to what normal pricing is, or at least pre-andemic pricing is?

Speaker Change: We had great steel kind of do it like it was growing single digits our price year over year was up and then all of a sudden in the market kind of went the other way it's kind of you know again hard to predict these things so at this stage is we've called out

Speaker Change: Still kind to it sequentially, Q1 to Q2, you know, pricing is up and you know things are looking positive but is still less than last year but to go back.

Speaker Change: I guarantee there's years it's been higher and guarantee you there's years it's been lower than the current number so John Deitzer it's a good question David I would say the one dynamic here is the

Speaker Change: Underlying volatility that you do see with whether it's hot-rolled steel, cold-rolled steel, etc., you do see significant volatility with that over time. And that probably has a little bit different of a dynamic versus, hey, how does this compare to a certain pinpoint in time? [inaudible]

Speaker Change: kind of dynamic. I think where we're at today is we are seeing sequential improvement, you know, essentially month to month as we look forward. And so there's probably some puts and takes over crosses.

Speaker Change: The entirety of the portfolio, as Bill mentioned, will probably a little softer on the volume expectation for the second half

Speaker Change: But that still is a pretty positive one to build math if we're at flat here in the first half of the year and we're still saying you know that low single digit type environment that's pretty positive here from a volume perspective in the back half.

Speaker Change: Okay, great. And maybe if I could sneak one more in just to follow up on the volume assumption, could you just walk us through the approach you guys took to updating the volume assumption just given the rapid change in the macro backdrop and maybe give us some color on what you're seeing and the ground in terms of end demand that supports it?

I'll start here, David. Again, it's a

Speaker Change: You wish it was more scientific, but it is a combination of a couple things. First, internally, it is obviously forecast from our general managers, our sales teams on specific projects as we've explained other than a couple areas like global mega projects and some solar business, you know, we are a business that

Speaker Change: Ships typically in four days, so you don't even have a week back weeks where the backlog is extreme so we don't have where like other corporations we can look at our backlog for the next year but internally these were submitted forecast.

Speaker Change: They do seem to triangulate, I'll give you the two thoughts, we've done a lot of boy, we always do a lot of boys to customer, but either directly with myself and my executive staff with...

Speaker Change: You know large customers that are I'm going to say cautiously optimistic even just like we said you know the second half has to be higher single digits. [inaudible]

Speaker Change: That's what they're seeing across, I'll say, most product lines here going forward. And, you know, my, our sales team is going out and literally pull it I think everybody and they're seeing the same thing.

Speaker Change: Flipside of that, just to give us the balances, if you look at things like we called out in the prepared remarks, but the Dodge Momentum Index has going down the Association of ABI Architectural Billion Index has been...

Speaker Change: Negative here for almost two years. And I mentioned the ABC, the Association of Building Contractors that were expecting jobs to be delayed. It feels like a good thing. From there, you can look at as we had in the prepared remark or the chart on page six.

Speaker Change: You know, things like metal framing, cable management, so forth are doing really well. I know a bunch of our self-sighted and by-side questions, data centers is the one area that's...

Speaker Change: No surprise. I don't think anybody's really a strong market right now and our products that go into that are doing well. And then other things, you know, really what we see in the market and so forth there.

Okay, great. Thanks, guys.

Speaker Change: and many others. Thank you for watching. I'm David Kline. I hope you enjoyed this video. If you did, please click on the subscribe button and the bell icon so you don't miss out on any future videos. And as always, thanks for watching. I'll see you in the next video.

Thank you, David. Appreciate the questions, sir.

Speaker Change: Our next question comes from the line of Deane Dray from RBC Capital Markets, very line is open

Thank you. Good morning, everyone.

Hey, good morning Deane!

Speaker Change: Hey, look, I appreciate all the commentary about limited visibility. That's just the nature of your business, your short cycle business. So I know you have to couch it with that with that condition, but. Thank you very much.

Speaker Change: Can you size for us, maybe directionally, but any position is helpful of what the net tariff benefit is you're assuming now in your updated fiscal 25 guide.

Speaker Change: Deane, I would just try to do it this way is for the CEO , Math and Johnkin ad to a CEO , Math by the way is John Deitzer making fun of me for high level generalizations is if you took

Speaker Change: Two or three percent off of volume and looked at our fall through, you could do here how much that is down and then assume it's picked up with the increase in tariffs for the second half, so whatever your estimate that should get you close.

Speaker Change: Hopefully that's as good or size as I can get, but you get it.

Speaker Change: Yes, fully understand the limitations here and then how about just go back to the steel conduit Mexican imports real specifically because that was like the big hot point

Speaker Change: last year, and maybe a real-time update has that flow of product stopped.

Speaker Change: And no indication was there any sort of pre-buy that they sent you know a bigger volume and how long does that need to work through the system?

Speaker Change: John . We haven't seen a significant change in the market place as it relates to those imports. There was, as Bill mentioned earlier, reduced imports that came in, but it's not that it has.

Speaker Change: Completely stopped the inflow of product. Obviously they have a 25% headwind to deal with going forward but we'll have to continue to track it and see what comes through on the import numbers.

Dean: Gravitating, we're not, oh, Dean, I'm, we're not expecting, at least let's put this way, I'm not expecting.

Mexican imports with a 25% tariff to stop

Dean: But any, I assume most logical people would say, hey, they either would have to be more selective or raise their price, you know, those type of things just to...

Dean: And again, how much they absorb and margin versus try to pass through, you know, those are dynamics we can only begin to estimate. But as to your first question, it's in that positive for Atkore share orders.

Speaker Change: Understood. And just the last one for me related to the impairment of HD, PVC, what change competitively? You made a reference about competing products for that market. Can you expand on that and identify the impact?

Speaker Change: Oh yeah, I'm glad you asked me because even in our prepared remarks to make it so it wasn't our product so it's not like somebody came out with the new HTTP what we were referring to. Thank you.

Speaker Change: because it came in my comments, was competing technology for fiber optics. So more specifically, covered in the Wall Street Journal, I'm going to forget, I read more than that by the way, but

Speaker Change: was articles where the administration was looking to increase the use or open up the funding to satellites. So that's the competing technology. Again, it's all estimates, but least the one Wall Street Journal article.

Speaker Change: talked about how it could be 20-50% of the fiber optic. You know, I've seen other

C.O.'s comment.

in this space, whether they're...

Speaker Change: You know, people making conduit or whether they're making fiber optics that it may not be that much and so forth but

You know, that along with my other prepared remarks on.

Speaker Change: You know, just the funding so hasn't gone through yet and things like that. But one of the key drivers was the administration. We've talked in previous quarters. You know, people have asked, Hey, could there be. [inaudible]

Speaker Change: You know satellites and so forth, but that's a difference between speculation and administration now saying they are either have done or plan on adding satellites to the way to get Internet to your home.

Speaker Change: It just to be clear, the risk of our opportunity for using satellites, was that factor into the impairment.

Speaker Change: Yo yeah, yeah, that was it. Again, I don't want to say it's the only thing because it absolutely wasn't and as an engineer was going to do weighted averages, I'm not going to get that precise, but that was a key factor here as the team did their analysis.

That's very helpful. Thank you.

Thanks, Dean.

Speaker Change: Our next question comes from the line of Chris Dankert from Loop Capital, her line is now open

Any morning guys, thanks for taking the question.

Speaker Change: Do you have a quick follow-up on that last point actually? I mean it gets…

Thank you.

Speaker Change: Are you getting any direction from the administration on whether it's tariffs or specifically in this case on the bead program? I guess...

It seemed...

Speaker Change: Early to be taking an impairment, when at least I haven't seen an explicit change to the program, so we're almost like preemptively impairing the <expletive> , are you getting any actual concrete word from the administration on how they're rolling this out? [inaudible]

Speaker Change: No, I'm at least Chris, I'm not aware of a specific other what's been covered in, you know, directors, I know Commerce, I think it was the Commerce Secretary, I could be wrong on which one but 90% sure it, you know, published a press release, Wall Street Journal article, you know, that's where I'm going to say Chris, if you look back and say why? Bye.

Speaker Change: Yeah, it's running the math, making those assumptions, but to go it's a little bit darn if you do darn if you don't to go well hold it well nine months from now we're seeing it well why now and why not earlier well hold it here as the least the key inflection point. [inaudible]

Speaker Change: of the administration saying either they had or at least they intended to open it up, so...

Yeah, we decide to take the prudent action.

Speaker Change: and take the Orunda Analysis with our accounting partners and outside the own different models and start it was physically prudent to take the impairment now.

Yeah, I mean, by the way, yeah.

Yeah, go, you know, I've covered it. Thanks, Chris.

We're still investing, but yeah, but but that's why

Speaker Change: That makes sense. I think taking the more conservative approach, given the current environment, does make sense. I just wanted to make sure that there wasn't something that we were missing on a more concrete basis.

Speaker Change: No, no, it's beyond that. Yeah, we're beyond that Chris. It's like very much like the last quarter with a little bit of I say internal frustration to go a several states have approved it and but and even again.

Speaker Change: What I perceive or what when I read, as I mentioned earlier,

Speaker Change: You read other earnings announcements that you know whether it's people making fiber optic lines or others making HDPE that are public corporations corporations.

Speaker Change: You know, everybody still perceives it's, you know, one year out, which is frustrating because it's been one year out for three or four years now. So it just felt like the right thing to do balanced.

Internal Discussion .

Third parties and...

To your point, took the charge

Makes sense.

Speaker Change: Makes sense. And I guess I believe we talked about it in the past around the IRA, but just reconfirming if we do get any withdrawal of support there for the torque to business. Again, it's one reconfirmed that business is still profitable without the IRA and some additional support there as well. Correct.

Speaker Change: Yes, best is our estimate, Chris. I do it this way to go. If you went back several years ago, look to go.

Speaker Change: So a couple of thoughts here. One, if you went back a couple years ago, we started up the solar or torque-tube business before there was an RRA. What the RRA helped with was driving a lot of demand that was coming specifically from China to the States.

Speaker Change: The counterpoint now is with terrorists on steel. I think we have that whatever you want to call moat around, you know, that impediment to bringing in as competitively imported steel. Now what I don't know and can't to mention lies is how much that.

Tariff, or no, excuse me, that...

Speaker Change: Solar Credit, that most of it gets passed on to our customers, how much is that an incentive for them to move faster because they have a lower, like, you know, return on invested capital to start up a solar project. So, that level of sophistication, Chris, I...

Speaker Change: Can't write, we don't know flip side it was a right now in the solar market

Speaker Change: The challenges are more things like connecting to the grid. I still at least voice a customer here that we've talked there are calls and I'm sure anyone covering other major electricals where there's a transformer backlog that still seems to be a little bit of an impediment there. So.

Speaker Change: I don't think it'd be the major driver, but again, to be able to say with precision two years out.

Speaker Change: It's hard to say. Yeah, I agree, Chris. I think there's too much to predict there. I would say the...

Speaker Change: The Hobart operation that we've had where we've invested has made great improvements. We talked about some of the productivity games there.

Speaker Change: That being said, we don't comment specifically on the profitability by sub-segment. That business has had its challenges, though. I mean, we've talked about that before. So, you know, and then to extrapolate where are we going to the future. [inaudible]

Speaker Change: You know, I think as we improve that operation continually, you know, the

Speaker Change: You know, I think that team is doing a great job and so there's been commercial dynamics though in the near term you can see the volumes in that mechanical tube segment have been Down year to date, so that's been an impediment to us, but you know assuming that market starts to recover, you know, I think then we're we're back on track there.

Understood. Well, thanks for what the car is there, guys.

Yeah, thanks.

Thanks Chris.

Speaker Change: Our next question comes from the lines of Andy Kaplowitz from City Group.

Your line is open. Good morning, everyone.

Hey, good morning, Andy.

Speaker Change: Good morning. So can you talk about what you saw in terms of the cadence of demand for your products? And last quote I think you suggested.

Speaker Change: January came in in a little light but then you already seen sort of improvement in February . Did that sort of continue into March and April ? I don't know if you addressed that earlier.

Speaker Change: No, good, great question Andy, and these supposition is correct, or I'll say that going every month was stronger than the previous month, so

Speaker Change: You know, again, talking to some customers I hate using. I think once we use the word weather in my seven years here, but I know we're talking to some key customers.

Speaker Change: There are results, they had mentioned that, you know, weather and January and February and stuff and picking it up. So it does feel like Andy again our guide is our guide, but every month, you know, what I can say is every month was stronger. Thank you for your time.

Speaker Change: then the previous month for our fiscal Q2 and, again, invoice the customers.

Speaker Change: Back to their cautiously optimistic, with a huge variability out there, not knowing what the Fed's going to do and everything else that the rest of the year should be decent on volume for the overall markets and therefore also good for Atkore.

Speaker Change: And then Bill, did you size the sort of construction services opportunity in the sense that obviously you've been talking about mega projects and data centers for a while, but it seems like you're getting more momentum there now. You know, we used to ask you what your percentage of data center work was, but maybe just of the construction services overall business are more of the project's data centers than anything else. And, you know, how do you expect that to progress and evolve?

Bill Waltz: Yeah, well, I do the following. It's data centers and data centers, I think going forward, data centers will be the largest portion of it in the past and still in the future is chip manufacturing. So,

Bill Waltz: Obviously there's a difference, but is there a potato potato there to a certain degree, purely from the standpoint why are we making so many chips is the support data centers, but it's a little both Andy and. [inaudible]

Bill Waltz: Yeah, and the near term bills were aligned here that we've probably seen more on a product side on a metal framing a cable management. Thank you, Mr. Chairman.

. . . . .

Bill Waltz: Opportunity there on data centers, and those have done very well for us.

Bill Waltz: Moving forward on the services side is probably the opportunity on the data centers . .

that the past activity has probably been more on...

Bill Waltz: larger construction projects and then some of the chip manufacturing facilities that that we've been a part of so

Bill Waltz: I think the data center opportunities more on the go-forward basis now for the services element, not just the product side.

Speaker Change: Got it. And then I apologize if someone asked you this, but you didn't change your price assumptions for FY25, you know, even with tariffs ramping up on steel in China. Have you seen any material impacts and you just got to be kind of careful, you know, with pricing. Yeah, you know, right now, it's just interesting that you haven't changed it as the tariffs are starting to ladder in. [inaudible]

You are

Speaker Change: Yeah, I can start there and then Bill can jump and there's probably some puts and takes just a little bit of noise around whether it's been the volatility we've seen in copper prices and things like that. So that's independent, I'd say, of tariff specifically Andy, but we have seen a lot of volatility there that obviously impacts our electrical cable and flexible conduit business. That's it.

Speaker Change: So, I'd say there's probably some puts and takes factors as we're evaluating that over the totality of the year, but we still think it's within the range.

Speaker Change: That range was, you know, I think we had a pretty sizable element, so we still feel like the overall price versus cost dynamics going to land within where we laid out.

Speaker Change: Yeah, and if you have follow up, I was not understanding if you met the margin part or the top line price because again, same thing. I don't have top line coppers jumping around a lot of late.

Speaker Change: Seal cost ran up I'm saying a lot to directly 25% give or take in the first quarter, but it's starting to come down slightly now so you know the top line revenue is our guide with again estimates where commodities are going to go and then net net.

Speaker Change: Price versus costs is still within that range that John Deitzer spoke of.

Speaker Change: Yeah, more is to a question I think Dean asked probably slight more optimism because again with the impact of tariffs we think that's enough to offset maybe a couple hundred basis points of less volume because of the uncertainty and the future markets and so forth there and markets. [inaudible]

Appreciate the color, Bill.

You're welcome, sir.

Speaker Change: This concludes the question and answer session I would now like to turn the call back over to Bill Waltz for closing remarks.

Bill Waltz: Thank you. Let me take a moment to summarize my three takeaways from today's discussion. First, Atkore had a strong second quarter of financial performance and was active in taking steps to further strengthen our company for the future.

Speaker Change: Second, we are maintaining our full year 2025 outlook while continuing to monitor the overall market dynamics and competitive landscape.

Speaker Change: Finally, we remain committed to our capital deployment strategy to create shareholder value over the long term.

Speaker Change: With that, thank you for your support and interest in our company. This concludes the call for today.

This concludes this conference call. You may now disconnect.