Atkore Inc. (ATKR) Q4 2017 Earnings Report, Transcript and Summary

Greetings and welcome to Atkore International Fourth Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] I would now like to turn the conference over to your host, Keith Whisenand, Vice President of Investor Relations for Atkore International. Thank you. You may begin.

Thank you. Good morning, everyone. With me today to discuss our fourth quarter 2017 results are John Williamson, President and CEO; and Jim Mallak, Chief Financial Officer. I would like to remind everyone that during this call, we may make projections or forward-looking statements regarding future events or future financial performance of the Company. Such statements involve risk and uncertainties such that actual results may differ materially. Please refer to our 10-K for fiscal 2017 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. Finally, when we refer to the information relating to a quarter or a year during this call, we are referring to the corresponding fiscal period. Any reference to a year is a full fiscal year, which runs October through September. With that, I’ll turn it over to John.

Thanks, Keith. Good morning, everyone. Before we address the fourth quarter results, I want to take a few moments to review key highlights from our full year 2017 performance. As shown on slide three, for fiscal year 2017, our net sales were $1.5 billion, up about 3% when adjusted for fewer working capital days in 2017 and the unfavorable solar market comparison, or down 1% year-over-year on a reported basis. Adjusted EBITDA of $228 million was on the high side of our guidance range of $220 million to $228 million that was provided during our last earnings call; that’s after absorbing about $2 million of headwind from the hurricanes. Again, if you adjust for the number of working days and the solar comparison, adjusted EBITDA is up about 6% year-over-year. Additionally, we delivered adjusted earnings per share of $1.42, up 8% versus 2016 and in line with the Street consensus. Throughout 2017, Atkore faced a challenging environment due to several key factors. First, we experienced inconsistent volume and overall softness in non-residential activity throughout the year. Starts in square feet in the non-residential construction market were reported down about 2% by Dodge Data & Analytics. Second, we had one less working week compared to 2016 which is worth approximately $30 million in net sales and $6 million in EBITDA. Third, we had an unfavorable solar market comparison to 2016 worth approximately $33 million in net sales and $14 million in EBITDA. And lastly, we faced increased commodity costs in a tough volume environment, making it challenging to pass those costs through to our customers. Taking these factors into account as shown on the charts, Atkore was still able to deliver strong financial results for the year. Most notably, I’m proud to report that we were successful in passing through the dollar value of those commodity increases of almost $90 million. For the year, we overdelivered on our M&A capital allocation goal of $100 million to $150 million, with four acquisitions and a total of $186 million of capital deployed. The acquisition of Marco, Flexicon and Calpipe provide adjacent electrical products to our current risk weight portfolio, have accretive margins, and add $20 million to 2018 EBITDA. Additionally, Atkore’s productivity initiatives including conversion costs, material usage and transactional process improvement delivered $14 million to the bottom line, which was on the high end of our target of $10 million to $15 million per year. From an operational perspective, we were also able to implement improvements during the year. For instance, we strengthened our focus around ease of doing business with Atkore by implementing a customer portal and we launched a strategic initiative to integrate and streamline our order to cash process, which enables better availability of information for enhanced customer service. Additionally, the external marketplaces recognized in the value we bring to the market. Three of our new products, MC Luminary MultiZone, Super Kwik-Couple, and the Universal Super Fitting were awarded product of the year in their respective categories by Electrical Construction and Maintenance Magazine. Also, Atkore was recognized as Supplier of the Year for the Europe, Middle East and Africa region by a key customer Johnson Controls. With that, I’ll turn the call over to Jim, who will walk us through our financials in more detail and provide additional insights into the quarter.

Thanks, John, and good morning to everyone. Moving to our consolidated fourth quarter results on slides four and five. Total net sales were $396 million, up 1% organically after normalizing for fewer working days, acquisitions and foreign exchange differences, and down about 5% year-over-year on a reported basis. The impact of increasing average selling prices from passing through material cost increases and mix, favorably impacted net sales by 2% year-over-year. Net volume on a per day basis was down 1%, about 8% on a reported basis due to fewer working days in the fourth quarter of 2017. The per day decline in volume was due to the timing of large projects in the datacenter space in MP&S and international businesses in the Electrical Raceway. Excluding those large projects, our remaining business was up about 2% in the quarter on a per day basis. Looking at the impacts of our key input costs on our P&L in the quarter. Steel was up 2% year-over-year versus the fourth quarter of 2016 and flat sequentially versus the third quarter of 2017. Copper was up 25% versus the fourth quarter of 2016 and up 8% sequentially versus the third quarter of 2017. And PVC resin was down 5% versus the fourth quarter of 2016 and flat sequentially versus the third quarter of 2017. In the full year, we incurred material input cost increases of $87 million and we successfully passed those through to the market in total dollars. And in doing so, net sales and cost of goods sold increased in equal amounts, unfavorably impacting the resulting margin percentages. In the fourth quarter at the adjusted EBITDA margin line, that mathematical impact reduced margin by 40 basis points. Excluding that impact, margins improved by 70 basis points versus last year, driven by productivity and cost management. Gross profit was $90 million for the fourth quarter, down 4% or $3 million compared to the same period in 2016, driven by volume of fewer working days in 2017 accounting for a 7% decline. The volume decline in gross profit was partially offset by the non-cash lower-of-cost-or-market adjustment to inventory of just over $1 million and productivity savings in manufacturing, freight and warehousing costs. We passed through all of the material cost increases in the fourth quarter. Adjusted EBITDA which we think is a better measure of the profitability of our ongoing business was $60 million or down $2 million versus last year. We estimate the unfavorable impact to EBITDA from the hurricanes in the fourth quarter was about $2 million in absorption and lost sales. We expect that $2 million will show up as a one-time favorable impact in the first quarter of 2018. Additionally, we think we are seeing an incremental one-time positive impact in the first quarter of 2018, driven by our ability to source raw materials and deliver products during the aftermath of the hurricanes that will not repeat after the first quarter. The volume decline year-over-year reduced adjusted EBITDA by approximately $10 million in the quarter. We estimate the year-over-year impact from fewer working days was unfavorable to adjusted EBITDA by $6 million in the quarter and the full year. The volume decline was partially offset productivity savings and cost management of $7 million, some of that coming from lower incentive compensation this year and about $1 million contribution from the acquisitions. Our net income on a GAAP basis was $20.9 million up $5 million or 40% versus the fourth quarter of 2016. Adjusted EPS was $0.35, which was up 3% from the fourth quarter of 2016. At the beginning of the quarter, we announced our Board of Directors had approved a $75 million stock repurchase plan. During the fourth quarter, we took advantage of that opportunity and repurchased almost 800,000 shares for just under $14 million. As the plan is still active, we have purchased another 300,000 shares in the first quarter of 2018. We continue to believe, this is a good place to allocate capital and plan to continue our activity in the market. Before I move to our Electrical Raceway segment on slide six, I’ll remind you that these numbers have been updated to reflect the inclusion of our international businesses within the Electrical Raceway segment. Reported net sales for our updated Electrical Raceway segment declined by about 2% to $293 million. Fewer working days in the quarter account for 7% decline. Although total volume in the quarter was about flat on a per day basis, the year-over-year volume growth in the steel conduit market rebounded versus the unfavorable third quarter performance. Higher average selling prices driven by passing through material cost changes to customers and higher value products had a favorable impact to revenue of about $11 million or 4%. The M&A transactions, two of which closed late in the quarter increased net sales in the quarter by $5 million or just under 2% and foreign exchange was favorable by about $1 million. Adjusted EBITDA was $51 million, up $2 million or 4% compared to last year. Productivity savings and favorable price versus cost more than offset the impact fewer working days had on volume. Those favorable impacts also drove the reported adjusted EBITDA margin, which increased by 110 basis points or 170 basis points excluding the negative impact from the dollar-for-dollar pass through of raw material increases. Moving on to our Mechanical Products & Solutions segment on slide seven. Again, these numbers reflect our new segment structure. Reported net sales in the quarter declined by almost 13% at $103 million. Of the total decline, 7% was again from fewer working days in the quarter. There was also an unfavorable year-over-year impact of about $8 million or 7% due to the timing of large data center projects. We saw strong performance in our Razor Ribbon products and the recreation customer vertical, so the remainder of the business grew by couple of percentage points in the quarter. During the fourth quarter, we did not see any meaningful impact in volume from the hurricane recovery efforts, but we expect to see at least some volume uptick in the signposts business as those repair efforts continue. Adjusted EBITDA of $15 million declined by 27% as compared to the same period last year, driven by the loss of volume and a few onetime expenses in the quarter. Adjusted EBITDA margin declined by 290 basis points due to the mixed impact from the datacenter delays, the timing between steel increases and our ability to pass those increases through to our customers and the onetime expenses. Turning to our balance sheet and cash flow on slide eight. The balance of our cash and cash equivalents at the end of the quarter was $46 million. In 2017, we spent a total of $25 million in CapEx, net cash flow from operating activities was $122 million and net debt increased to $530 million, reflecting the acquisitions and share repurchase plan. In total, we paid $186 million for the four acquisitions we closed and $14 million to repurchase stock. Our leverage which we define as net debt to the trailing 12-month adjusted EBITDA was 2.3 times or about 2.1 times on a pro forma basis. This is still a very strong balance sheet with significant liquidity to fund our strategy of accretive M&A. Now, I will turn the call back to John for our guidance and his final comments and perspective.

Thanks, Jim. Moving to our market expectations for 2018 on slide nine. We expect the construction markets will show modest growth in 2018 with both the non-res and residential between flat and up 3%. We expect to see improvements in our industrial markets with growth in line with GDP at 2% to 3%. Those inputs drive our outlook on slide 10. For the Electrical Raceway segment, we expect volume to be up in the same range as the non-res market excluding any acquisitions we may do and the acquisitions we already have done, adjusted EBITDA to be in the range of $215 million to $225 million with the three Raceway acquisitions; Marco, Flexicon and Calpipe adding $20 million year-over-year. For our MP&S segment, we expect volume to be flat to up 2% and adjusted EBITDA to be between $60 million and $65 million. As we look to the full year 2018 in total, we expect adjusted EBITDA in the range of $245 million to $260 million. A simple bridge for the midpoint of that range is our $228 million of adjusted EBITDA in 2017; to that, add an incremental $20 million for our completed acquisitions, net productivity of about $6 million and EBITDA generated by volume, then subtract commercial investments focused on the ease of doing business with Atkore and technical sales capability and market pricing pressure given the volume environment. We estimate our adjusted EPS range to be between $1.45 and $1.60, which includes a preliminary estimate of reduction of $0.10 per share from the amortization of intangibles for the recently closed acquisitions of Flexicon and Calpipe. Interest expense will be approximately $27 million. Our diluted share count, 66 million shares. And assuming no change in the tax code, our tax rate should be about 35% all-in. CapEx is expected to be about $30 million for the year. Turning to the first quarter 2018 adjusted EBITDA guidance range of between $55 million and $60 million. The year has started out strong and as Jim mentioned, there are some one-time benefits that are helping Q1 2018 related to the hurricanes. Those non-recurring benefits to Q1 adjusted EBITDA are in the $5 million range. So, adjusted models for that and don’t extrapolate the whole year, based on our Q1 EBITDA guidance and normal seasonality. In summary, I am proud of what Atkore achieved in 2017, despite slower than expected market activity. We successfully managed the controllable elements such as completing four acquisitions, passing through increased raw material cost and pricing, and realizing savings from productivity initiatives. And our innovation efforts and capabilities are being recognized by the market. Managing our business through Atkore business system enabled us to confront many variables in 2017 and we are prepared to address challenges in the future. The critical element of all of this is Atkore people, who are dedicated and focused to taking care of customers, making the business better each and every day, and driving long-term value for our shareholders. Thank you for your commitment to Atkore. Operator, please open the line up for questions.

Thank you. At this time, we’ll be conducting a question-and-answer session. [Operator Instructions] Our first question is from Andrew Kaplowitz with Citi. Please state your question.

Good morning, guys, this is Seth Girsky on for Andy. How are you guys doing?

Doing well.

So, can we talk about your expectations for 2018 by the different end markets you guys operate in? We know solar and datacenters, and I think you guys called out ag last quarter. So, there has been a couple of end markets that have shown a few issues at times. So, can you talk about what you’re expecting for each specific end market?

Yes. Let me generalize and then we can follow up any very specific questions you might have. The real drivers of the business are going to be non-res construction and then residential construction. And then, thirdly, it’s going to be what we would call general industrial. With regards to non-res construction and residential construction, if we take the optimistic view and listen to our channel partners, and then what they’re saying, we’d be higher than the range we gave of flat to 3%. But, I think it’s going to be responsible for us to take a little bit of a wait and see on the volume there, as driven by construction. There is a lot of good signs, lot of cranes in the urban centers and there is activity going on. But we think that zero to 3% is really going to be the right number driven by construction. Residential has been a little bit better than non-res, but that tends to kind of -- they swap off a little bit depending on the quarter. I think the one that I want to focus on, Seth, is what we call general industrial. And this is the -- for the last couple of years, this has been pretty depressed. And what we throw into this category has a little bit of effect on our Electrical Raceway but it has a pretty meaningful effect on our mechanical products and solutions. This would be some of the mechanical products for our metal framing business, mechanical products for our mechanical pipe business where we’re selling into factories; we’re selling in terms of OEMs, making equipment, off-road vehicles; we’re selling into basic industrial applications. We see that being better, really kind of year-over-year for the first time in a couple of years. We’re being a little bit conservative on the growth rate, stated growth rate being between zero and 2%. And we think it’s prudent to be a little bit wait and see on that. Talking specifically about solar and ag before I talk a little bit about datacenters, keep in mind, solar is now pretty small numbers for us. So, although we see that’s rebounding a little bit, we have expanded our customer set in solar where we really only have the capacity in the busy days of the solar to take care of the top two or three. We have expanded our customer set. We are seeing good things. We are seeing growth, but reasonable growth and lower single-digit growth in that market. And keep in mind that solar is very small numbers for us. Ag, and I’ve heard this from a couple of different people in the industry, ag is looking better after a couple of years of not looking that good. We are seeing this in steel piping where we are making -- we are selling steel pipe for dairy stalls or other structural elements of a dairy installation. We are selling into OEM manufacturers who are making equipment, ag equipment. And that’s starting to look better. It’s projected to be up. We are saying general industrial zero to 2%; we are thinking ag is probably on the higher side of that. And we are seeing that -- we saw that in the fourth quarter. Let me talk just very quickly about datacenters and then take any specific questions you have. Datacenters are improving. They are being built across the country. But they are driven by design and redesign timing. And we certainly will see that in any given year where that could be a pretty lumpy business whereas it’s all percent of completion, revenue recognition and just depending on where it is in the cycle, you can get something pushed out at you or you could recognize a lot of revenue in the single quarter where you did a lot of work over literally many quarters. So, it is getting better. We do see -- we are a little bit subject to design and redesign timing. There seems to be a little bit of a trend right now for pushing out at least in North America. But generally, we feel pretty strong about datacenters and it has a pretty good impact on our construction business, our Unistrut Construction business and then it does flow through the Raceway as well.

Awesome, that’s really helpful. And then, looking on to 2018 guide on the margin side, you guys did pretty well on productivity this year with $14 million of productivity savings. And I think you talked about only $6 million at the midpoint. So, is there any potential to step up productivity in 2018? I know we had talked about that last quarter as well, as a potential offset if things are maybe a little bit worse than you are estimating right now?

Yes. There is a little bit of upside. Yes. And we expressed our productivity number this time as net productivity. The numbers we had always given in the past were more of a gross productivity and what we netted against that -- yes, I think it’s still right to think of double-digit gross productivity, $10 million, but what we netted against that is, is a handful of things. There were some one-time costs in some of our factory spend that were favorable, just 1 or $2 million. There’s a little bit of a true-up with regards to our how our bonuses will pay out; we’re going to pay out at a higher percentage in 2018, we believe. And then, there is just also an assumption on inflation in there. So, that’s where you’re kind of getting about $4 million that we’re netting against a gross productivity of 10. We’re pushing at a higher rate than that. And the team’s done a really good job of driving productivity over the last really five, six years, and we expect to see more of that. I think the six is the right now when you kind of bridge towards that midpoint of our range, but that upside would be -- and inflation not being as high as we planned or just over performing against that gross productivity number.

Our next question is from Deane Dray with RBC Capital Markets. Please state your questions.

Maybe we can start on pricing. And so, it looked good that you were able to get dollar-for-dollar on the material cost increases. But it’s still not enough to be able to offset the margin. Is there more room for price increases as we head into 2018 and do you feel also you’ve caught up on the surge that you’ve seen in copper and so forth?

Yes. Deane, It’s Jim. I think and we’ve always said this, as we pass this through mathematically, that’s going to put a downward trend on our margins. This has been a tough environment with lower volumes to pass through the commodity cost. We’ve worked really hard at that; we’re very glad that we did that. And it’s very important to maintain the economic earnings from that. So, we’re more concentrated on that than I think just the pure margins per se. I think over the long run, we’ll see those margins come back to normalized as the pricing stabilizes. But, I think we’re very pleased that we’re able to pass through almost $90 million across the business and recover and maintaining the economic profitability there.

Yes. Deane, this is John. Just to piggyback on Jim’s comments. If you take the last three years, four years, we’ve passed through in excess of what commodity costs have done. And we passed through dollar-for-dollar in 2017. We’re pretty proud of that. I mean, Deane, your part of the group that remembers this business from years and years ago where the swings could be pretty radical. So, two things, A, that we passed through dollar-for-dollar in 2017 in a tough volume environment, and believe me, this is day-to-day and it was hard. We’re pretty proud of that. And the fact that we’ve done this year-over-year for three years basically, I think says something about the stability of the business that was quite frankly in question by a lot of people with regards to commodities and pricing early on. So, I think we’ve done a good job on that. Jim did explain very well just the mathematical contraction when commodities go up and you pass that through, even when you passed it up, your percentage goes down, your EBITDA percentage goes down even when you maintain that EBITDA itself. So that’s just the reality. When you take that out of the equation, as Jim pointed out with numbers, we’re increasing our margin percentage. I do want to talk about 2018 with regards to commodities and pricing. As everyone on this call or who is familiar with the business, realizes timing around commodities is important. So, while we passed through $90 million, just short of $90 million one-to-one in commodity inflation, that didn’t come every month and that didn’t come every quarter, and it didn’t come in every segment. That’s the way it ended up in total for a whole year for our entire business. And because of those timing and the specific impacts on particular elements of our business, what I mean by that is resin-driven, steel-driven, or copper-driven, we are actually building into this bridge between 2017 and 2018, as I mentioned a little bit of spread contraction. It’s less than $5 million. It’s based really on the dynamics of the timing of where certain commodities have gone as at the end of 2018 and how that affects our business in early part of the year et cetera. We think that that’s pretty prudent to do. Believe me every, hour of everyday, we are working on passing through all of that. And as we -- if we are able to be as successful as we’ve been over the last three years in passing that through, that assumption of $4.5 million of spread contraction based on not in the timeframe, not passing through all of the commodity increase could manifest itself as upside. I would have to say though that given any particular year and what a specific commodity might do in a month or a quarter, there’s always that cyclical downside too. So, we think taking a slightly cautious approach with some spread contraction into our plan, into our numbers, less than $5 million but still some contraction, is a prudent take on it, given how commodities have played out at the end of 2017.

That’s really helpful. And let’s just stay with the 2018 guidance and some questions on cash flow. So, 2017 turned out to be a solid year for free cash flow conversion, was 114% by our numbers. How does it look for 2018, any dynamics there?

Yes. I think we are going to be looking at something pretty similar. We are looking at CapEx 30 -- might be a little bit higher than that but figure $30 million of CapEx; interest expense about $27 million; given what we know now assuming the current tax regulations about 35% tax rate. So, I think you have to see very similar characteristics to our cash flow modeling as 2017 presented.

Just last point and last question, and you may have answered part of that, Jim, was your guidance does not assume any benefit that could come out of Washington with regard to infrastructure spending or a tax reform, is that correct?

That’s correct, especially -- infrastructure is probably not even on the table there yet. And tax, let’s wait and see what they come out of -- what the boys do over there first.

Our next question is from Rich Kwas with Wells Fargo. Please state your question.

Just sticking on that last point there on tax, I mean, I know it’s a moving situation here, but you wouldn’t impacted by any of this excise tax that they’re talking about, correct? I mean, you would be pretty clean flow through that there wouldn’t be a lot of offset, is that the way to think about?

Yes. If you take a look at our -- most of our business is U.S., which is why our ETR right now is so high at 35%. So, if they come in with just a 20% corporate tax rate, we’re going to see the benefit of that coming down in a similar manner to our ETR and thus hit the cash flow on that.

Okay. And then, just on the walk there, just to clarify, John, is the -- the $6 million is next against -- productivity net against those negatives that you cited right after, I think it’s at the midpoint?

Yes. Rich, let me just reiterate. I’d say, it’s a supercritical point. If you take the 228 of 2017 and add 20 for acquisitions, then we add the fall through of EBITDA on the volume, we’re talking about, the 6 net productivity which I’ll just come right back to, and then offset that by potential for spread contraction of $4.5 million of spread contraction and then another $4 million of investment in our computer systems mostly and technical sales capability which is really critical for the future, you get to our midpoint of -- you get between 250 and 255, you get right to that midpoint of that range we gave you. Going back to the net productivity, the way we calculate that as a double digit gross productivity, so $10 million offset by a handful of items that roughly come up to around $4 million. There are some onetime manufacturing, and let’s call, they are manufacturing costs that were just favorable in 2017 in a way that won’t be favorable in 2018. So, it’s just a comp. There is some merit and then bonus payouts that add up to few million dollars that will be higher, we’re projecting to be higher in 2018, and then, there is just some general inflation that we’re netting against that gross productivity. So, the right number for the models to get to the midpoint of our range is $6 million in net productivity but that’s the construct of it.

And then, what’s the volume again, what’s the contribution from just your volume again within that?

It’s single digit millions, high-single digits.

And then, you’ve got this $4.5 million and $4 million that you just talked about as an offset?

Yes.

Okay, right. Okay. And then, -- so the resi volume, zero to 3 seems -- I know, you’re indicating that those trends have been good. It seems conservative, I mean, is that assuming multi-families down or what’s the dynamic -- I know, it’s not a huge piece of the business but just curious on what’s…

Yes. I know it’s the right question. There is probably the thing we churn mostly about. Rich, listening to our channel and listening to our partners and distributors, agents, contractors and then reading the tea leaves one year ago, I think led us to an optimism that was unwarranted. We believed it, it didn’t happen. And I think to some degree and I think prudently and appropriately, we are taking a -- we are planning for a more conservative growth even in the face of maybe some upside to that growth. I don’t want to emphasize that upside. I think we are doing the right thing with regard to our projection here. Keep in mind is, res might go up 3%, and might go up 4%. But how that filters through for our products is really the trick for us. So, I think the conservative take we have on volume is the right take. And what I think we’re more focused on is in the face of upside, should that happen, and it definitely might not happen, the upside, are we ready for it? And we think we are ready for it. I am just going to use a quick illustration. In the first quarter of 2018, we are seeing some EBITDA fall through that we are not going to -- we can’t really build into our run rate for the rest of the year. And what that was, was based on -- was our ability to move extremely quickly to produce supply of product when others couldn’t. Because of the hurricanes, the resin suppliers, if not all of them, most of them declared force majeure. There was -- it was hard to get resin and was hard to get PVC pipe. Our sourcing team worked hard on this in advance. Our manufacturing teams worked hard on this. And we were able to deliver upside in a short period of time that competitors couldn’t. And that’s going to be most of what you see in the first quarter that we’re going to ask you to kind of tap down as you project going forward. This is I’m going to just as an illustration that if we do get the upside, I think we’ll be able to move up and take care of it very quickly, very strongly. So, the appropriate way to look at this, especially given the last couple of years where it’s been a little choppy is to be conservative and be ready for the upside, should it happen.

That makes sense. And the last one for me on M&A. So buyback picked up here recently; you did a fair amount in the second half of the year. What’s the bandwidth for 2018, ability to do more, is this -- are you going to take a more or less a break here in the short-term integrating the ones done and should we think about buyback as being more of a focus?

Yes. From a capital point of view we -- our numbers just show this that we’re still in great shape and we absolutely have the capacity to do our stated goal of the 100 million and 150 million, but we could do as much as -- and perhaps even more than what we did last year with that closer to 200 million. That’s from a capital ability. As far as the pipeline, in all honesty, we don’t have a big hole in the pipeline. We have a strong pipeline. These are all individual, they are hard to predict. There’s a lot of work. Some of them we won’t want to do and some of them people who own the business won’t want to do. But, we feel that stated goal of 100 million and 150 million is the right number to look at and really to expect. It’s really hard to say what part of the year it’s going to happen. I would say, it’s probably a sure thing we’re not going to announce anything meaningful in the first quarter, so what happened in the second third and fourth quarter, but I think those are the best guidelines for you.

And just going on your question, I would tend to lean more towards the M&A side for capital use versus the share repurchase.

[Operator Instructions] Our next question is from Steve Tusa with JP Morgan. Please state your question.

So, on the volume declines this year and somewhat of a conservative guidance for next year. Are you -- how do you feel share is kind of shifting around? Is there I guess walking away, being a little more disciplined? Obviously, your volumes were down this year and perhaps growing market, maybe solar had an influence on that. But maybe if you could just talk about how disciplined or not you’re being in the marketplace in going after volumes?

Yes. We’re being disciplined. We basically do not go after volume with price. It’s a loser’s game and one we don’t play. With regards to share, when you look at 2017, and when we look at this very closely, and I’ll generalize it, just to be brief, we feel in aggregate, we lost a little bit of share, but we lost it one subcategory and we lost that early in the year. We feel at this point, we’re holding our own. We think in general, the market has -- we have different competitor sets in different parts of the market. They are kind of in the same boat as us as volume’s been tough. They want to make sure they fill their factories, but they also know the impact of giving away price too easily, it bites and it spirals down. So, I think there is a discipline going on there. We’re pretty focused on making sure we don’t lose share in aggregate. Where we have lost share? It’s on the lower end of the product margins and the higher end of volume. So, we might have had -- I’m going to give you an example where we lost -- in one part of our business and in one quarter, we thought we lost 3% in terms of volume. But we didn’t -- we actually didn’t lose hardly anything in terms of margin. So, we try to be very strategic where we lost where we gave up share, but we absolutely do not want to -- we don’t want to see it any share at all. We want to hold on to it. And since price is off the table for us, the way we do it is by adding value. We’re the only ones in Electrical Raceway who can provide our suite of products to the market, that’s becoming more and more of something that distributors and contractors can value where we can sale PVC conduit, steel conduit, armored cable and metal framing literally on the same truck delivered to the same job site, no competitor can do that. That’s where we’re fighting back with share. And we feel over the last numbers of quarters that we’re right there on share. So, we don’t project share loss in 2018. And where we will fight back against people who use price will be an added value based on our portfolio and our ease of doing business and our service.

Great. Thanks a lot for honesty on that. I don’t think there are really any companies that ever really say that they’re losing market share. So, I appreciate the refreshing level of honesty. It totally makes sense. That’s it. That’s all I got. Thanks a lot.

Thanks, Steve.

Thank you. Ladies and gentlemen, we have reached the end of our question-and-answer session. I would like to turn the call back over to management for closing remarks.

Great. Well, we appreciate very much everyone’s interest in Atkore. We are pretty proud of the quarter we had. There is a lot to be proud of, the maintenance of share in terms of tough volumes and tough competitive environment, passing through of commodity costs, continued productivity and traction on our innovation and growth initiatives. We feel pretty good about 2018. 2018, I think there’s elements of conservatism in the plan but we need to execute and deliver the numbers we have in front of you. Thank you very much. We look forward to updating you on Atkore’s progress in a number of weeks. And happy holidays to everybody.

Thank you. This concludes today’s conference. You may disconnect your lines at this time. And thank you for your participation.