Good morning. My name is Brent and I will be your conference operator today. At this time I would like to welcome everyone to Atkore’s Second Quarter Fiscal Year 2022 Earnings Conference Call. As a reminder, this conference is being recorded. Thank you. I would now like to turn the conference over to your host, Mr. John Deitzer, Vice President of Treasure 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. With that, I'll turn it over to Bill.

Thanks, John, and good morning, everyone. Starting on Slide 3, I'm pleased to report that Atkore again delivered outstanding performance and strong results in the second quarter of 2022. Despite continued challenges across the macro environment, we increased sales and profitability. Our businesses are performing well, and we continue to execute our plans for capital deployment. During the quarter, we repurchased $157 million in stock and continue to invest in our business for the future. Given the outstanding performance and results in the first half of the year, we've increased the size of our share repurchase authorization from $400 million to $800 million and we are increasing our expectations for fiscal year 2022. Turning to Slide 4, we are increasing our outlook for full year adjusted EBITDA to a range of $1.25 billion to $1.3 billion. This is up $375 million from our previous expectation as we continue to expect profitability levels in our PVC-related products and other parts of the business to remain strong. We are also now planning to repurchase at least $400 million in stock this year. With our increased expectations for FY’22, we also thought it would be helpful to provide some preliminary perspective on FY’23. Our initial expectations for adjusted EBITDA in FY’23 are in the range of $800 million to $900 million. There are many variables and market conditions that could cause this range to fluctuate, but we believe this is a good estimate for next year. With that, I'll turn the call to David to discuss the quarter.

Thank you, Bill. And good morning, everyone. Moving to our consolidated results in Slide 5 net sales increased 54% year-over-year to $983 million. Adjusted EBITDA increased to $346 million, which drove our adjusted EBITDA margin to 35% in the quarter, both up versus the prior year. Our adjusted EPS increased to $5.39. Turning of Slide 6 in our consolidated bridges. Net sales increased by $343 million, primarily due to higher selling prices and the contributions from recent acquisitions. As we've mentioned previously, volumes have been impacted by several factors. Within Q2, our volumes for certain steel-related products in the U.S. in both Electrical and Safety & Infrastructure were down approximately 20% as many customers were holding off on purchases, given the volatility in leasing recently with steel prices. For example, the average spot price for hot rolled steel was down over 30% in fiscal Q2 versus Q1. However, the average price of steel has rebounded approximately 20% in April versus Q2. And with the increased demand from the start of the building season, we expect volumes to improve for these products as we progress through the year. Volumes from the rest of our products were up over 12%. In addition, our award-winning MC Glide products continue to gain traction in the market. Our overall product vitality percentage reached high single digits as a percent of sales. Shifting to our segment results on Slide 7, the Electrical segment increased adjusted EBITDA by $143 million and adjusted EBITDA margins by 490 basis points. In our Safety & Infrastructure segment, net sales increased by 47% from the prior year, and adjusted EBITDA increased 79%. And now a quick update on our capital deployment progress on Slide 8. We are now on track to exceed our plan to deploy over $1 billion cash over the next two to three years that we announced in November and we've deployed approximately $325 million in the first half of 2022 across our three pillars of capital expenditures, M&A and share repurchases. We are very pleased with the performance of our two most recent acquisitions of Sasco and Four Star Industries and both of these teams are off to a great start. As Bill mentioned earlier, we've also increased the size of our current stock repurchase authorization, ending in November 2023 from $400 million to $800 million. One name to remember in this current interest rate environment is that in 2021, we were able to successfully refinance and restructure our 100% floating debt portfolio at very competitive rates. Today we have approximately 50% of our long-term debt with a fixed interest rate for the next nine years. As we wrap up the first half of 2022, we have extended our track record of outstanding operational performance over the past few years, during which we've continued to successfully execute our M&A program, invest in our business for future growth and consistently return capital to our shareholders via stock repurchases. Given our conviction in the future and our ability to execute, we will continue to buy back shares both consistently and opportunistically within our capital deployment model. With that, we'll turn it to the operator to open the line for questions.

Your first question comes from the line of Deane Dray with RBC. Your line is open.

Thank you. Good morning, everyone.

Good morning, Deane.

Good morning, Deane.

Hey, congrats on another outstanding quarter.

Thank you.

Thank you.

What's your latest thinking, because we get this question from investors about how much of the price will you keep? We had some volatility in steel this quarter and still you posted over 50% price. So just start here. How much of the price do you expect to keep? And any sort of visibility in terms of near-term demand? Thanks.

Yes, so I'll do them in reverse order, Deane. Near-term demand looks strong. Obviously, we're affected by labor, and I'm saying labor out contractors, other products, challenges out in the market. But things like Architectural Billing Index, Dodge Momentum Index, and so forth are all exceptionally positive. So we're still optimistic for the future. Pricing is a challenging one. We probably have—we're still seeing some growth in some areas, some other products probably hit peak, and so forth. And that's why, while it's hard to predict, Deane, I wish I had a crystal ball I could tell us exact three years out, we are at least comfortable enough that we're raising earnings for this year pretty dramatically. And then also giving that guidance of next year of $800 million to $900 million. I don't know if we move off the $600 million long-term, even though we've kind of said in the past we hope to always, with organic growth and M&A, exceed that number. So hopefully that helps that we see pricing lasting into at least 2024, if not beyond, as we start to give some type of estimate for 2023.

That's real helpful. And I really appreciate the fact you are giving this forward guidance into fiscal 2023. And we're expecting normalization to be something above, if not well above $600 million. But what are you thinking about normalization, when and how does that base $600 million become meaningfully increased? And what are the factors there?

Well, I think, Deane, it’s in fact a couple of things. Again, if anyone goes back, as you've been with the stock since it's been a stock, we've compounded our EBITDA 10% a year pre-COVID. So, like we're doing the right self of the Atkore business system, organic investments, new product development, and then M&A. So as you keep adding that up, based off against the headwind we will have margin compression or maybe we won't, but I would think it'd be very prudent to assume from an investor's standpoint it would be margin compression. Is that out a couple years? Just as those two intersect and exactly what number that margin compression normalizes, and then everything we do is upside, it's just hard to say, Deane. I would at least plan for 2024 just as we've given numbers here this morning. Go ahead.

Yes, Deane, as you know, there are just so many variables. And right now the world with interest rates and everything, there are just so many different unknowns. And we're already giving perspective a year and a half out at this point in time. So I think beyond that, I think, normal market dynamics, we're doing what we can – we obviously everyday work to make sure that there isn't a normalization impact.

Great. Just last question for me. And then Bill from a historical context, I actually covered Atkore when in its prior life, when it was part of the Tyco portfolio. So I go way back and that's the degree of confidence, and historically that you've always been able to pass through higher raw material costs of 100% to customers. So that's been proven. It just some context in color around what was going on in the steel products. It was really interesting that you say that some of the customers were holding off in a period of declining price, but what are the lessons learned? It seems to have rebounded in April. And any color there would be helpful.

Yes. So again, I'll just kind reverse it. It has rebounded at least that it's, again, without being too specific for April, that we're just wrapping up and getting into May as we close the books, is more in the flat versus down, I think, David mentioned 20% in the last quarter. These are rough numbers, I think. It depends on what type of steel and so forth. But steel prices went, for example, hot rolled directionally around $1,800 a ton to less than $1,000 all here in the last couple months and bounce back up $1,200 to $1,300. I haven't tracked in the last week or so. And our buyers are efficient. They need to buy, these are a lot of must-stock products, but if you are on the industrial side, for example, with a solar farm or something else, and you can hold off a month or two, it obviously, they get the forecast who make economic sense. And then on the Electrical side, it's more of a must-stock product, for example, with metal conduit. But again, a distributor that probably was trying to buy ahead just to make sure they could keep stock in this precarious supply environment, I’ll say, hey, let's hold off for two weeks, just one week of inventory in a 13-week quarter is 7%, 8%. So you see where all of a sudden, hey, let's cut a little bit; it's enough to swing that number in metals between our Safety & Infrastructure business and Electrical is a large portion of our business. So, but as David mentioned in the prepared remarks, I think this deal costs from what our forecasts say, it's moderating at this level. And as we go into kind of spring by and stuff like that, we're starting to see the demand pick back up. And the last statement I think David once had, again, the other parts of the market were just amazing. I mean, we were up 12% as David mentioned. So I think well above what they are, anybody would say is typical market at this point.

Deane, the other thing I would add is that was the cost of steel, but it's making that fluctuation not necessarily the price in the market of our products, because obviously there's other inflationary factors from freight and labor and energy and you name it. So it's not like there was a correlation and pricing, it's just more of a delay if people can reduce stock and so on and so forth in this quarter.

That was really helpful. Thank you.

Thanks Deane.

Your next question comes from the line of Andy Kaplowitz with Citigroup. Your line is open.

Hey, good morning guys.

Good morning, Andy.

Good morning, Andy.

Bill, so maybe I can follow up on Deane's question around pricing. Obviously you just raised guidance again by 40%. Maybe you give us a little more perspective on your price cost spread, it doesn't seem to be going down still despite I think last quarter you mentioned that competitors were starting to discount more. So maybe you can talk about lead times, the overall competitive environment you're seeing?

Yes. So I think, Andy, to your point overall you're correct. Margins have not gone down. I think we built that in not knowing what would happen and obviously, and by the way in some cases margins on some projects are still going up. So from there, I think lead times have continued to get a little bit better. And again, I’m giving directional numbers. It all depends on what competitor, what product, what region in the country, but if it was let's say four to five weeks, and last quarter estimate is it now instead of four to five, three to four. So I think slowly, the market is getting back to normal and that's why both the balance of, we don't think next year would be as strong. Obviously, we hope and wish and will drive to be in another almost $1.3 billion. But I don't think that's proven from an investor standpoint. On the same hand, just knowing where we are now, it's not like margins are pricing across every product with every competitor in every region is going to collapse in the next six months. And therefore we feel comfortable enough to give a preliminary, yes, preliminary estimate of $800 million to $900 million for next year.

And Bill, kudos to you for continuing to give that forward estimate, but let me maybe ask you a follow-up there like, what are your sort of assumptions at this point into that at $800 million to $900 million? What does the market look like? What does the price cost look like, any sort of extra color you could give us would be helpful?

Yes. Good question. So I'll share that we actually did a bottoms up, but you got to watch for a lot of false precision here, in other words to your point, Andy, doing all those estimates. So I think normal market, 2%, 3%, 4% low-to-mid single-digit organic growth, which seems to me very logical when I look at how strong Dodge is and ABI and all the other indicators like everything's positive from that standpoint. And then it's an assumption by each product line, but some compression of margin in other words, hey, assuming it's going down versus up that feeds that number and then to say precisely how much price, Andy, it's by-product line.

Got it. Then just maybe one more quick one, you obviously upped your share repurchases. Maybe just talk about sort of the M&A market that you're seeing now. Obviously, a lot more volatility and valuations these days, you still think you can sort of get your normal bolt-on strategy this year moving forward?

Yes. Without never – the challenge, then I'm going to say a definitive strong yes. But the challenge is it's binary. In other words, we can get down to the deal and all of a sudden have a disagreement, our working capital payment or something. And it just, at the point of it doesn't make sense if we're going to not have deal fever and keep to our values and our business system, that you can never absolutely know the deal, but I would reemphasize again. There's a lot out there. We double down on the size of our team. We have the balance sheet to make this happen, the cash flow, and therefore the bolt-on acquisitions and maybe even slightly larger ones than we've done in the past. They're still strategic, synergistic, debt responsible with our management bandwidth on relatively comfortable with that we will achieve.

Appreciate it.

Thanks, Andy.

Next question comes from the line of Chris Moore with CJS Securities. Your line is open.

Good morning guys.

Hey, good morning, Chris.

Good morning. Thanks for taking the questions. Maybe I'll just beat this pricing question to death, but when PVC pricing really increased sharply in calendar 2021, it seemed like the conversation with end-users was much more about guaranteeing on-time delivery than pricing. Has that dynamic changed at all?

I think it had some, in other words, there was no discussion of just ease off probably say no, but it was just, can we deliver what confidence do you have in a customer that we will, our say-do ratio, because it was all over this place. I think Chris, the earlier questions where I'm saying it's two to three, three to four weeks again on delivery. Prices are more of a consideration there, but it's still the value package of confidence and delivery. And then the other things Atkore really does well with the one order, one delivery, one invoice, our reputation and so forth that's helping keep the market strong at the moment, but not as much on pure supply demand.

And I would say one thing, Chris, that product line, the PVC-ACP product lines would be in that 12% growth we saw in this quarter. I would say the demand side is probably even stronger than what we thought of maybe six months ago, given utility spend on putting their electric line underground, all the continued residential construction, data center construction, what have you, the end market volume there is still really strong. So there's strong demand to Bill's point. I think that it's still an important aspect of getting the items on time.

Got it, very helpful. Just one more PVC, a little bit longer term what are the puts and takes for PVC pricing, never giving back too much from current levels?

Well, our job both – I say for our customers and for our shareholders is to provide a value equation that price isn't the largest thing. Just like if anyone orders online, it's this simplicity of dealing with clicking a button and getting your product the next day and so forth. So I would aspire that we never give it back, but we do have competitors out there and it's a competitive market and how they react to, there is that consideration that we'll have to factor in. So I think Chris, it feels weird as the CEO to say this, but I think factoring in some is just prudent. Now it's a question of fact that I think Deane asked of, when does that occur? And how much comes back? And that's just tough to say so at this moment. But at least we're comfortable enough that again besides raising this year substantially, putting a first pin in next year that's of the $600 million that we had before.

Got it. I know it's a long lead time in terms of people being able to ramp up on PVC manufacturing. Are you seeing anything on that front, in terms of any new supply capabilities coming into the market?

No. Again, I put the asterisk there that my competition does not call me and tell me about what they're doing internally, but we have not seen anything in the PVC. And again, I can't speak for somebody has that plan or if they plan on adding a line or something, but it's challenging. In other words, even somebody in the industry would have to have space in one of their factories, would have to have the silo space, would have to have the rail car space, would have to have the blender capacity. So even there to say, well, I'm just going to add one more line and have seven lines versus six is not a simple task even for somebody already in the industry. So that's why back to our competence in raising next year's estimate more in the 800 to 900 range than the 600 is we don't see supply demand change dramatically next year.

Got it. I'll leave it there. I appreciate it guys.

Yes. Thank you, Chris.

Your next question comes from the line of Victor Khong with Credit Suisse. Your line is open.

Good morning, everyone. Thank you for taking the question. Victor Khong on for John Walsh. So my first question is, can you talk a little bit about non-residential and residential demand transfer for steel versus PVC products in the quarter and in the outlook?

Yes. I think, Victor; if I understand your question I would say almost everything void of PVC is non-residential. So that's kind of simple. Therefore steel is all non-residential. I'm simplifying, but basically 90% plus, 95% plus. For PVC because we put in that V product line, but the PVC conduit is used for like underground lines going into a sub-development and or from the sub-development into the house, that market is probably 30%, 40% residential, and then the other 60% is non-residential, but PVC is probably the only residential product within our major contributor of the utility. These are third-party products out there.

Thank you. And the follow-up question, are you seeing any change in competitive dynamics around pricing from smaller suppliers specifically?

No, I don't think so. I think everybody's – everybody has their own value equation and what they're trying to do to go to marketing and so forth, but no, nothing jumps out.

I would say that everyone is really struggling with higher input costs, whether it's the stuff that makes a product itself or transportation or labor, you name it. I think a lot of people are struggling with high input costs. So I think the mindset of a lot of industries right now is around pricing and making sure that they're holding or maybe able to expand the margin slightly.

Yes. I'll just double down on David's comment that, I think, we've done a good job in the leadership team and the management at Atkore, but communicating that even in the past to know what's steel cost or what's PVC each of you investors understand from the tracking other companies, there's so much freight costs up over 40% in labor and what's the cost of lumber for a crate that we've done a pretty effective job of accurately communicating to our customers. That there's a lot more cost input than just what's copper, steel and PVC at the moment. But I think our competition also understands and has to adapt to that to keep in the business.

Okay. Thank you for the question. I'll pass it along.

Cool. Thanks, Victor.

Thanks, Victor.

This concludes the question-and-answer session. I'd now like to turn the call back over to Bill Waltz for closing remarks.

Before we conclude, let me summarize my three key takeaways from today's discussion. First, Q2 was a great quarter and we have a strong outlook for 2022. Second, we are executing our capital deployment model with $325 million deployed in the first half of this year. Third, we have a bright future ahead and we're committed to growing and building Atkore as a strong long-term franchise. With that, thank you for your support and interest in Atkore, and we look forward to speaking with you during our next quarterly call. This concludes the call for today.