Atkore Inc. Q4 FY2025 Earnings Call

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to Atkore's Fourth Quarter Fiscal Year 2025 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, Matt Kline, 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; John Deitzer, Chief Financial Officer; and John Pregenzer, Chief Operating Officer and President of Electrical. We will take questions at the conclusion of the call. 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 releases, 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. And any reference to EPS or adjusted EPS means adjusted diluted earnings per share. Adjusted EBITDA and adjusted diluted earnings per share are non-GAAP measures. Reconciliations 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.

Thanks, Matt, and good morning, everyone. Starting on Slide 3. Today, we will provide an update on strategic actions, discuss our fiscal 2025 fourth quarter, our full-year financial results and our outlook for fiscal 2026. We will share our perspective on the end markets we serve and our long-term strategic focus. Turning to Slide 4. Before we discuss our results, I want to highlight the announcement we made this morning related to the strategic actions we are pursuing with the goal of maximizing shareholder value. Back in September, we announced that the Board of Directors and the executive leadership team were evaluating a broad range of alternatives to enhance focus on Atkore's core electrical infrastructure portfolio. These alternatives included a potential sale of our HDPE business and the decision to close three manufacturing facilities. The Board has now decided to expand the scope of the strategic alternatives to include a potential sale or merger of the whole company. As a result of the Board's decision, I have agreed to stay at Atkore as CEO through at least the conclusion of this strategic review. To date, Atkore has identified and is executing upon a series of actions that we believe will improve the long-term financial returns of the company. The process of selling our HDPE business is ongoing, and we have identified two other modest noncore assets that we anticipate being able to successfully divest in late Q1 2026 or early in the second quarter. In addition, we plan to cease manufacturing operations at the three manufacturing facilities previously announced in the second quarter of fiscal 2026. By delivering on these actions and the planned divestitures, we expect to improve our financial profile and return to year-over-year growth in adjusted EBITDA in FY '27. Expanding our strategic alternatives also allows us to consider multiple scenarios, with the intention of creating shareholder value while positioning Atkore to succeed for the years to come. Turning to our results on Slide 6. Organic volume was up 1.4% in the fourth quarter with contributions from both segments. Notably, we saw double-digit growth in our plastic pipe, conduit, and fittings product category. This includes our PVC, fiberglass, and HDPE products, which all delivered double-digit volume growth in the quarter. Overall, our net sales of $752 million in the quarter exceeded the outlook that we presented in August. Our adjusted EBITDA of $71 million in the quarter includes approximately $6 million of one-time inventory adjustments related to one of the sites that has been previously announced for closure as part of our planned strategic actions. This inventory adjustment impacted our Safety and Infrastructure segment. Our results also included approximately $5 million of additional non-routine items related to advisory and legal expenses. Excluding the impact of the inventory adjustment and the non-routine items in the quarter, our adjusted EBITDA would have been $82 million and within our expectations set forth in August. Reflecting on the totality of the year, volume was up approximately 1%. This marks three consecutive years of organic volume growth for our company. As we've explained in the past, the breadth of our portfolio prevents overexposure to specific end markets. This is particularly important in years where certain end markets may be growing at a slower rate or even contracting. Our cash flow generation has been and continues to be a strength of our business. This year, we returned $144 million to shareholders through share repurchases and dividend payments. We also preserve financial flexibility by refinancing our existing asset-based lending agreement as well as our senior secured term loan, which moves out our maturity dates beyond fiscal 2030. Looking ahead, our focus remains on creating shareholder value, which we believe will be accomplished with an emphasis on our core electrical infrastructure portfolio. We anticipate generating strong cash flows, which provide us with optionality on how to best deploy capital and create shareholder value. We are encouraged by the growth projected across several construction end markets in FY 2026, including data centers, health care, power utilities, and education, while remaining focused on Atkore's ability to participate in long-term trends related to the adoption of renewable energy, grid hardening, digitization, and the increasing demand for electricity. I'd like to take a moment to recognize Atkore's talented teams for their efforts and dedication to our company. Thank you. Now I'll turn the call over to John Deitzer to talk through the results from the fourth quarter and full year in more detail.

Thank you, Bill, and good morning, everyone. Turning to Slide 7 and our consolidated results. In fiscal 2025, we stayed focused on executing our strategy while also exploring additional ways to strengthen our company for the future. The year was not without its challenges, but we are working to meet these challenges by announcing and completing certain actions in the fiscal year while pursuing additional opportunities to strengthen our financial profile for the future. Net sales in the fourth quarter were $752 million, and our adjusted EPS was $0.69. Adjusted EBITDA for the fourth quarter was $71 million. We generated a net loss of $54 million in the fourth quarter. Within our quarterly net loss was a $19 million non-cash goodwill impairment charge related to our mechanical tube business as well as the $67 million impairment charge related to certain HDPE assets. The goodwill impairment related to our mechanical tube business reflects forward-looking cash flows, which now assume lower volumes. The mechanical tube products are made in one of the three facilities that was previously announced to close, as well as another facility that shares capacity with steel conduit. By shifting our focus and priority towards electrical products, we plan to use the available capacity in favor of a higher concentration for our electrical infrastructure portfolio of products. The impairment charge related to our HDPE assets was triggered by the announcement of our intention to explore the sale of our HDPE business at the end of the fourth quarter. The impairment reflects an adjustment of the net assets relative to the forward-looking cash flows across various scenarios. For the full year, net sales were $2.9 billion, and our adjusted EPS was $6.05. Adjusted EBITDA for the full year was $386 million. Turning to our consolidated bridges on Slide 8. In fiscal 2025, net sales increased $22 million due to volume growth, contributing incremental adjusted EBITDA of $10 million. Our average selling prices decreased by $382 million. Bill mentioned that our fourth quarter results included select one-time inventory adjustments and additional non-routine items totaling approximately $11 million. Excluding the impact of those items, our adjusted EBITDA would have been $82 million in the quarter and $397 million for the full year. Moving to Slide 9. As Bill mentioned, we are proud to highlight that Atkore has achieved three consecutive years of organic volume growth. We grew volume 3.5% in fiscal '24 after growing volume 3.2% in fiscal '23, exemplifying the strength and resilience of our portfolio even in times of fluctuating end market conditions. As we look forward, construction end markets are expected to grow, and we anticipate our volume growth in fiscal 2026 to be mid-single digits. In FY '25, our metal framing, cable management, and construction services products grew low single digits due to increased support for mega projects, including data centers. In FY '25, we grew our PVC business, which included high single-digit growth in PVC conduit and especially strong double-digit growth from our fiberglass conduit products, which are increasingly being used for data center projects and included in our plastic pipe conduit and fittings product category. Turning to Slide 10 and our segment results in the fourth quarter. Net sales in our Electrical segment were $519 million, with $7 million contributed by organic volume growth, offset by continued pricing normalization in our PVC products. Our steel conduit products saw sequential price increases for the third consecutive quarter. Shifting over to our S&I segment. Net sales increased 4% during the quarter compared to the prior year. Our S&I segment EBITDA dollars and margin were both meaningfully higher than the prior year, in large part due to better cost management and productivity improvements. As Bill mentioned, we recorded an inventory adjustment in our S&I segment of approximately $6 million at one of the facilities that has been previously announced for facility closure. Turning now to our outlook on Page 11. We anticipate a mid-single-digit volume growth in FY '26, driven by expected growth in all five of our product areas. For the first quarter of FY '26, we are expecting net sales in the range of $645 million to $655 million and adjusted EBITDA between $55 million and $65 million. We expect adjusted EPS to be in the range of $0.55 and $0.75. For the full year, we expect FY '26 net sales in the range of $3.0 billion to $3.1 billion and adjusted EBITDA between $340 million and $360 million. Adjusted EPS is expected to be in the range of $5.05 and $5.55. As we have discussed in the past, our business experiences short lead times and limited visibility to end customer demand. To shift more focus to the medium to long term, we have made the decision not to provide a quarterly outlook starting in calendar year 2026 with our fiscal first quarter earnings call. However, we will continue to refine our full-year outlook during each quarterly call as we progress throughout the fiscal year. We expect the first quarter of fiscal '26 to be the softest quarter of the year, and for performance to ramp as the year continues. At this time, we expect the back half of the year to be higher than the first half of fiscal '26 on an adjusted EBITDA basis. Next, Slide 12 summarizes our solid financial profile. Our cash flow generation has always been a strength, which helps support a healthy balance sheet. Our liquidity provides the foundation that enables us to execute key strategic opportunities while returning capital to shareholders. With that, I'll turn it to John Pregenzer to give an update on our end markets and our long-term strategic focus.

Thanks, John. Turning to Slide 14. The breadth of our product portfolio is a differentiator for Atkore. Atkore's products broadly serve construction activities, making their way to each of the relevant end markets. Demand for electricity continues to increase. The need for power centers around the expansion of data centers to support AI. We are now in what some are calling the data era, with reshoring efforts and demand for data centers to help power the expansion of AI contributing to an expected 2.6% compound annual growth rate for electricity consumption through 2035. Electrification is required in most areas of construction. Our products provide comprehensive solutions to deploy, isolate and protect critical electrical infrastructure, emphasizing that Atkore really is all around you. The demand outlook for FY '26 reflects strength in most end markets. It's important to understand both expected growth rates as well as the relative size of the market. While data centers continue to draw most of the attention within the construction community, that end market, in total, is still smaller than several other end markets. Nonetheless, data center construction is growing significantly, and we participate in that growth. Renewable energy is expected to increase from approximately 20% of the power generation mix today to 28% by 2035, and solar continues to be the quickest path to online production available to the market, a key advantage for meeting the expected increase in U.S. energy demand. Finally, turning to Slide 15. Today and into the future, we are focused on prioritizing our portfolio of domestically manufactured electrical infrastructure products and delivering on the strategic actions that we believe will maximize shareholder value. We remain committed to maintaining a strong balance sheet and financial profile that enables us to return capital to shareholders while making modest capital investments that support operational excellence aligned to the Atkore business system. Our positioning in key electrical end markets gives us confidence in our ability to grow volume over the mid- to long term, while our diverse portfolio enables us to maintain resilience while navigating headwinds in certain end markets. We, as a management team, have conviction in our teams and are focused on delivering to our plan. We recognize our recent performance challenges, and we are determined more than ever to drive improved results that create greater value for our shareholders, employees and stakeholders. With that, we'll turn it over to the operator to open the line for questions.

And your first question today comes from the line of Justin Clare from ROTH Capital Partners.

I wanted to start out with the guidance for fiscal '26, where you're expecting mid-single-digit volume growth. The midpoint of the revenue guidance implies a 7% year-over-year growth, which suggests there could be some pricing benefits throughout the year. Could you comment on whether this expectation is accurate and what might be driving the potential price improvement?

Yes, you're on the same page, Justin. As mentioned in some of our prepared remarks, we've observed sequential price increases in our steel conduit business. There are also other areas where we've experienced pricing growth that impacts sales, but it’s really about the price versus cost dynamic. We expect to continue facing headwinds in that regard. However, when we analyze where some of the underlying raw material commodity inputs stand compared to historical levels, we do see some growth in average selling prices and sales, even though there can be instances of compression between price and cost. That's part of the overall dynamics. Additionally, there is an embedded benefit in the average selling price due to some of these elevated raw material input levels this year compared to last year, specifically comparing '26 to '25.

I understand. Regarding the guidance, for Q1, the projected EBITDA margin is around 11%, with expectations of nearly 12% for the full year. What do you anticipate will contribute to the margin improvement throughout the year? How clear is your visibility on this? Is the pricing dynamic the main factor behind this?

Yes, that's a good question. We are experiencing some softness in the first quarter as we transition from the fourth quarter. However, we have a positive outlook as we expect to see growth throughout the year, particularly with the construction services and large projects anticipated from Q2 to Q4. This is encouraging as we progress. Additionally, we are witnessing strong growth, particularly in the solar sector, as mentioned by John Pregenzer. We expect growth in this area to materialize in 2026, rather than in 2025, which has been more volatile due to uncertainty around the effects of subsidies from the Inflation Reduction Act. Overall, we see positive factors at play. Bill, do you have anything to add?

No, I think that's it. I mean that the cost actions we're taking to help with the margin and so forth that, again, I think even in my prepared remarks and what we sent out September 29 or whatever, that the second half of this year, as we do get the three facilities closed and continue to drive extra productivity off a really strong 2025 productivity, I do think things are lined up, especially as we go into the second half of the year here.

Your next question comes from the line of David Tarantino from KeyBanc Capital Markets.

Maybe could we start with the strategic review and maybe just kind of walk us through kind of the range of outcomes we could expect? And maybe what's the magnitude of the three divestments you outlined? And how should we be thinking about a suitable situation where you would consider a sale or a merger?

It's still early in the process. Since our announcements, we are continuing to pursue HDPE and there's interest that we are working through with our banks. The Board is focused on finding the best outcome for our shareholders. Since our late September announcement, we've received some interesting inbound calls. We are committed to keeping investors informed as we initiate this process. The potential outcomes range from selling the entire company to maintaining our current operations. For now, we are concentrating on exploring strategic alternatives and will see how that develops over the coming months.

Okay. Great. That's helpful color. And maybe could you give us some color on the cost savings initiatives? What should we be thinking around the magnitude of the savings? And maybe should we be thinking about this as a first step that you feel that there are more opportunities to take more meaningful cost actions within the core business? Any color there would be helpful.

Yes, David. So obviously, the three plants, we started the process of shutting those down. The teams are well organized. We're still in the early stages, but expect all production to cease by the end of Q2. And I think on an annualized basis, we would expect to see about $10 million to $12 million in cost reductions across the fiscal year.

I think, David, just to add on to that. I think these are just key contributors that we anticipate 2027 to be up versus 2026. And so I think that's really the balance here of where some of these actions are plus some other things we're starting to line up.

And maybe just a follow up on that comment within that assumption, should we be thinking about kind of the items you outlined today getting you there? Or should we expect some more down the line?

I believe that, without any additional items, just the actions regarding HDPE and the growth initiatives we mentioned, such as solar, indicate that we have verbal commitments from customers to begin ramping up early in the calendar year. We are also working on global mega projects with well-known customers as we expand from one region of the continent to another. Currently, we see sufficient pathways to achieve our goals without needing further actions. However, that doesn't mean we won't consider other actions in the future. While I don't want to provide specific guidance for the next fiscal year, we are optimistic about this year and as we approach 2027.

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

Bill and John, I just wanted to focus on last quarter, I think you told us about the $50 million headwind for '26. So as you sort of rolled out your guide, like is that still what the amount is? And maybe you can update us on imports in general, like what have you seen from the steel conduit side and the PVC side, steel was getting better, PVC maybe a little more slowly. So what have you seen there?

Yes, Andy, I'll begin by discussing our outlook expectations and then hand it over to Bill and John for more detailed insights into the markets you mentioned. We continue to face price versus cost headwinds moving into 2026 compared to 2025, which we've previously addressed. In our August call, we highlighted about $50 million in unmitigated headwinds. We anticipated some volume and productivity gains to help offset this impact. Our current outlook remains in the range of $340 million to $360 million, with our midpoint around $350 million, aligning with what we indicated in August. That said, we are observing additional improvements. The price versus cost dynamic will primarily affect the first quarter, but we expect it to ease as the year progresses. Additionally, we foresee quarterly growth in EBITDA with the first and second quarters projected to show unfavorable year-over-year results, while we expect the second half to improve on a year-over-year basis. Now, I'll turn it over to Bill or John for their comments on the steel conduit and PVC markets.

Yes, Andy. Steel conduit imports remain relatively strong, significantly affecting our operations. We have observed a slight decrease in import volume this year, down about 2% compared to last year, which is favorable considering the previous years of double-digit growth. The impact of tariffs doesn’t appear to be as pronounced as we anticipated. We are focusing on ensuring effective enforcement of tariff policies and collaborating with various groups since we expected to see more significant year-over-year reductions in steel conduit imports. However, the market overall is quite positive. PVC has shown strong performance, particularly driven by data centers which have created substantial demand for large diameter PVC conduit, positively influencing volume numbers for that product line. We have witnessed good growth in this area and anticipate that trend to continue.

Yes. I'll add to John's comment regarding two points. The administration is still working on improving the enforcement of tariffs. However, both product categories have been growing significantly over the past couple of years, around 20% annually. Steel has seen a decline of 2% this year with imports, shifting from growth to flat and slightly down. We hope to strengthen this further for U.S. companies and blue-collar workers, and the efforts have been somewhat effective. Regarding PVC, as John mentioned, we reported strong double-digit growth, and PVC appears to have increased by about 6% for the year. While imports are still arriving, they are not as robust as in the previous year. Overall, the tariffs have had a positive impact, and we aim to enhance that effect moving forward.

Helpful. And then, look, I can understand John P's comments about data center markets maybe not being the biggest. But at the same time, we've seen, as you guys know, massive orders across the industrial space over the last couple of quarters. So like when you think about your business, like I know you've talked about construction services in the past. Maybe they're on the comp, and it takes a while. But why shouldn't we see a bigger impact on '26 or maybe we will from data centers because, again, there is a massive amount of money there, as you guys know.

Yes, there is no doubt about the significant growth we are experiencing. If I were to estimate, it could be around 15%. We are certainly witnessing strong double-digit growth for any company producing relevant products. I believe that, as I previously mentioned, we will capture our fair share of the market with the products we have. Our global construction business, which is also focused on growth, is expected to expand at a robust double-digit rate this year. However, it's essential to compare how much of our company is represented in that versus the PVC segment illustrated in John Pregenzer's charts, especially since the residential market remains weak. Regarding our volume guidance of $340 to $360 million, there are possibilities for it to be even stronger. We will see how things evolve, but I remain optimistic as we move forward.

Yes. Andy, I think that the product lines that line up with data centers in our portfolio, we see them growing in those type of rates. When you say data centers are up 20% or whatever the numbers are, we're seeing that in certain parts of the portfolio. I think when the global mega projects that we have lined up and we've already started to get orders from and letters of intent from start to kick in in the second half of the year, then that will have more influence on our overall growth rates that I think John Deitzer alluded to in regards to the overall revenue growth we'll see in the back end of the year.

Your next question comes from the line of Chris Moore from CJS Securities.

The three plants that are closing, can you provide more details on what is being produced there? Will there be any learning curve when those products are transitioned to other facilities?

Yes, I'll start by providing more details. Our Phoenix operation produces metal pipes, conduits, and other safety and infrastructure products. We plan to relocate that production back to facilities here, like in Harvey, Illinois, and Hobart. Most of the capacity is already at those locations, so we’ll likely move just one production line. There's not much machinery to move, and while I have experienced challenges with this throughout my 40-year career, I believe we can manage the ramp-up effectively. Additionally, we’re focusing on electrical products, which we believe have the best growth potential. Although we took a small charge this quarter, we’re narrowing our focus and applying the 80/20 principle to concentrate on our key products and customers, which is promising. The next facility is a PVC plant in Fort Mill, and we won’t need to shift any production lines there either. We have the capability to increase output in other locations without moving machinery, minimizing risk in terms of investments and productivity. Lastly, we have an operation in Chino, near Los Angeles, that produces cable products, and we will be moving that production to our East Coast facilities where we also have the necessary capacity. This decision aligns with our productivity goals. Last year was one of our strongest in terms of productivity, and we will continue to pursue lean practices. John is actively engaging with teams through regular calls to ensure we maintain a rigorous structure, benefiting both our customers and shareholders. I hope this addresses your inquiries thoroughly.

No, very helpful. Maybe just a follow-up. HDPE is one of the areas in the strategic discussions. I'm trying to understand the potential value to be gained from Atkore. What’s the best case scenario for HDPE for someone outside of Atkore?

Yes. I'll provide a general overview without specific numbers. John Deitzer, if you would like to share more details, feel free, but I don't think we need to get into specifics. The good news in this market is that volumes are returning. We mentioned in our prepared remarks that we're experiencing double-digit growth, which aligns with what other public companies and fiber companies have reported. The markets are expanding, and we are capturing our fair share, if not more. Regarding potential acquisitions, one of our goals is to fully utilize the factory. It's challenging to operate a factory efficiently without long production runs, as frequent changeovers and lack of full absorption hinder performance. We believe we have a path toward achieving this over time, aiming for year-over-year improvements in productivity and profits. As we look ahead, we need to consider whether certain operations might be more effectively managed by others. We are investigating this, and we'll see how it develops in the coming months.

Your next question comes from the line of Deane Dray from RBC Capital Markets.

Is there any explicit intention to run the business more for cash? It appears that you've reduced your capital expenditures. Would you consider suspending the dividend at this point? Your balance sheet is strong, but I'm curious about the thought of managing the business for cash at this stage.

So Deane, let me address your question. We'll have a productive discussion, especially with the Board. Right now, I want to clarify that we are running this business effectively, and I can assure you that our employees are engaged. This business is performing well, and regarding your points, I want to emphasize that our profits in the second half of the year are expected to increase compared to the previous year, and this will support our growth initiatives for the next fiscal year. Returning to cash, we are maintaining our operations without any changes. To answer your question directly, there have been no discussions in the Board meeting about suspending dividends. Additionally, as we've communicated, we have made significant investments in areas such as solar and ERP systems, and many of these investments are starting to pay off. We do not require as much capital expenditure now and are returning to historical trends. Based on our prepared remarks and performance charts, we are confident in our ability to continue generating strong cash flows. This approach is simply the right thing to do for the company and our investors, and it is not related to any exploration of strategic alternatives.

You mentioned the Board several times, and while I understand there are limitations on what you can share, could you provide some insight into the current activist engagement, the new Board additions, and the level of alignment? Is there a sense of cooperation? If you could walk us through whatever details you can, it would be appreciated.

I'm glad you asked that. This is probably the easiest question of the session. We are completely cooperative. I won't mention specific names, but I can say that we are aligned. Going back to my earlier remarks, the Board is always focused on what’s best for the corporation and its stakeholders, including investors. When inbound calls came in, it made sense to officially address this. After thorough discussions, we believe it’s best to make a formal announcement instead of waiting for others to do so. We are open to various options, whether it’s a private equity firm or another strategic partner. Since day one, we have been aligned with Adam, Andy, and the whole team. We also value Board refreshment; some of our members are approaching retirement, and we’re excited to bring Frank onto the Board. Our entire team, including the Chairman, has met with him, and we look forward to collaborating as we engage in strategic reviews. It feels like the right move for us.

Your next question comes from the line of Chris Dankert from Loop Capital Markets.

I guess on the back half weighted nature of the guide, forgive me if I missed it, but I mean, there's some seasonality dynamic there. Can you just kind of walk us through the other components as we think about why the back half is stronger than the first half and kind of how that could change potentially?

I’ll begin and then let the rest of the team chime in with anything I might have overlooked. In the first quarter, one point to note is that we will conclude on December 26. This results in a slightly shorter week at the beginning of the fiscal first quarter and another short week at the end. This contributes to the compression we are experiencing in the first quarter. We’re looking at about 10% fewer shipping days in the first quarter compared to the fourth quarter. Additionally, we typically see a seasonal decline of a few percent from Q4 to Q1. However, looking ahead to the rest of the year, we anticipate a rebound due to the significant investments we’ve made. These investments are tapering off as we expected, but some of them, particularly in solar, are likely to yield results this year, with the industry poised for a strong recovery in calendar 2026. We will see these impacts from Q2 to Q4. We also have improved visibility on some of the larger mega projects we’ve mentioned, which come in significant batches rather than as consistent daily orders. John P. pointed out that we have letters of intent from major customers, which is promising. We’ve invested in initiatives like the PVC water sector, and we expect these investments to pay off as we have the necessary equipment ready. Considering all these factors, particularly in the second half of the year, we expect the fourth quarter to show an increase compared to the previous year.

Yes. I'm just going to add color to that to go just like John Deitzer mentioned where either orders, letter of intent with global mega projects, same thing. I think some of the orders in versus verbal commitment from solar customers, a significant ramp-up here starting in the first quarter of the calendar. And for the public, there's a couple of public solar companies. If you read their earnings, they're both bullish in that case and then other private ones as they look forward into next year. So again, the solar market should be growing. We've had verbal, if not, purchase orders there. And then there's some organic things like the regional service centers as we continue, again, with John Pregenzer and other leaders guide on just how we make it more efficient with the pulling even 80/20, like what are the real critical products that we have to drive and continue to perform even better there, that that's a winning proposition with one order, one delivery, one invoice that I think we're going to see a good maximization as we get into next year. So not that it hasn't worked yet, but even better. So I think it's a coal cross-section there that makes us excited, Chris.

No, that's extremely helpful. I guess as a follow-up, I mean, John, you mentioned the water investments there. I guess we've been talking about that in the past and then frankly, raised a couple of eyebrows. I guess, any comments you can give in terms of number of locations that have been changed over to water PVC from electrical capacity expected contribution? Anything at all you can kind of give us to put arms around that piece of the business?

Sure, let me take this question. I believe it's important for me to clarify our communication on this matter. We have about eight facilities that are spread out geographically. As we enhance productivity, we're achieving greater throughput in our lines. This includes improvements such as reducing scrap and minimizing turnover times, which is allowing us to utilize our capacity better across these facilities. Regarding your specific question, we purchase resin effectively and are already established in several markets. We're not planning to reduce our growth in electrical products. In fact, we anticipate continued growth in electrical conduit, which, as we noted, saw double-digit growth in Q4 and is expected to keep expanding. Electrical conduit remains our primary focus. Concurrently, we're considering investing in the production of one or two additional products, like C900, which we have the capacity for, to optimize our operations. This is a profitable venture and aligns with our core emphasis on electrical products, where we are witnessing growth. I've observed solid double-digit growth in new products like C900. From an investor's perspective, our focus on electrical products is indeed integral to Atkore's strategy for achieving organic growth and increasing profits. Furthermore, to address John Deitzer's earlier point, the growth we are seeing will significantly contribute to our performance in the second half of the year.

Yes. I think to Bill's point, we're happy to see the growth in PVC conduit that we've had here in the last couple of quarters. I mean it's been really positive to see the penetration we've had growing that product line, while we expand some capabilities in a handful of our PVC plants that we're already doing. Nonelectrical or water products in the past, they can do some additional product lines and have some additional capacity, but we really feel that we're on the back end of that investment, and then we'll start to see the commercial benefits as we execute that plan going forward. But again, the primary activity in all of our plants is PVC conduit.

And this concludes the question-and-answer session. I will now turn the call back over to Bill Waltz for some closing remarks.

Before we conclude, let me summarize our key takeaways from today's discussion. First, Atkore has a solid financial profile, differentiated product portfolio and placement in key electrical end markets, projecting growth into the next decade. Second, Atkore continues to evolve and drive towards excellence. Our announcement to explore strategic alternatives is intended to chart the best path forward. Finally, our decisions now and in the future will be made with a steadfast commitment to creating and maximizing shareholder value over the long term. 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.