Greetings, and welcome to the Atkore International Third Quarter Fiscal 2019 Earnings Conference Call. [Operator instructions] As a reminder, this conference is being recorded.I would now like to turn the conference over to your host, John Deitzer, Vice President of Investor Relations. Thank you. You may begin.

Thank you, and good morning, everyone. With me today are Bill Waltz, president and CEO; as well as David Johnson, 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 risks and uncertainties such that actual results may differ materially. Please refer to our 10-Q 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. I am pleased to report that Atkore delivered strong financial results for the quarter that exceeded our prior outlook, with adjusted EBITDA up 15% or $12 million on a year-over-year basis. Looking at the highlights in the quarter, Atkore produced EBITDA growth, driven by productivity initiatives and our approach to pricing management.In addition, we produced strong volume growth in our focused product categories and generated strong cash flow which, coupled with our financial discipline, helped to improve our leverage ratio at 2.6 times. The financial results in the third quarter were very strong and demonstrated our ongoing commitment to driving improvements in areas in which we can control. And finally, one additional highlight that we are very pleased to discuss is the acquisition of US Tray, which will strengthen Atkore's position as a leader in the cable tray industry. As we've mentioned previously, we continue to maintain an active pipeline of acquisition candidates with a very structured approach to M&A.These transactions only occur if they meet the following criteria. They are a strategic fit. They deliver synergies, they maintain our debt responsibility, and we had the management bandwidth. We are excited to welcome all of the employees of US Tray and look forward to a strong future together. With that, I'll turn the call over to David, who will walk us through our financials in more detail and provide insights into the quarter.

Thanks, Bill, and good morning to everyone. Moving to our consolidated third-quarter results on Slide 3. Net sales were $493 million, down 1% for the quarter. Volume was up $3 million, an addition of $13 million in revenue from recent acquisitions was more than offset from declines in our average selling prices and unfavorable foreign exchange rates. electrical raceway volume was up 3% and volume for MP&S was down 5%, primarily due to the timing of certain long-term projects. Adjusted EBITDA was up 15% or $12 million year over year.The two largest drivers of adjusted EBITDA growth were the continued use of the Atkore business system to drive operational efficiencies, as well as our approach to margin management. Acquisitions accounted for $2 million, while foreign exchange provided a 1 million offset in the quarter. Moving to Slide 4. On a GAAP basis, net income and diluted earnings per share increased 7%.Adjusted EPS was $1.04, up 21% from the third-quarter 2018, reflecting the increase in adjusted earnings and favorable share count from our repurchases over the last year. Moving to our segments on Slide 5 and six. electrical raceway had another strong quarter with 3% volume growth with solid expansion in our focused product categories and 3% overall adjusted EBITDA growth. Margins continued to strengthen in the quarter as the adjusted EBITDA margin was up 50 basis points year over year.As many of you are aware, margins may expand or contract with commodity price fluctuations, but we remain focused on managing the overall profitability of the business across these environments. Also, as Bill mentioned, we completed the acquisition of US Tray in June, and the integration is on track. Turning to the Mechanical products and solutions segment, the business has delivered very strong EBITDA growth in Q3.EBITDA was up over $8 million and the MP&S adjusted EBITDA margin climbed to 17%, up 770 basis points from Q3 2018. Q3 will likely represent the high watermark for EBITDA margin for the year as we expect margins to return to historical levels that we've previously seen in the 13 to 14% range. On Slide 7, year-to-date net cash flow from operating activities was $120 million. Cash generation remained very strong, and the enterprise continues to convert earnings to cash as year-to-date free cash flow as a percentage of net income for the year is above 100%. Finally, our leverage ratio continues to improve. We view our leverage ratio as net debt to trailing 12 months adjusted EBITDA and we ended Q3 at 2.6 times.We are very pleased with the progress considering our leverage ratio was above three times at this point a year ago. As we've communicated in the past, our long-term goal is to move this metric to the low two times range. Bill, back to you for our updated outlook.

Thanks, David. Moving to our 2019 outlook on Slide 8. Our view on the markets remains positive, and we expect electrical raceway to be up 2% in 2019. And because of the delayed project timing that impacted MP&S volumes, we now expect MP&S volume to be down 1% to flat for the year. With our strong performance in the third quarter and our view for Q4, we are raising our full-year EBITDA outlook for both segments, as well as the total company. Our 2019 outlook is as follows.With electrical raceway segment, we expect the adjusted EBITDA range to be between 287 and $292 million. For our MP&S segment, we expect adjusted EBITDA to be between 62 and $66 million. For total Atkore, we expect 2019 adjusted EBITDA to be between 317 and $322 million. We estimate our adjusted EPS to be between $3.55 and $3.63. Interest expense remains at $52 million.Our tax rate is estimated to be at 25% for the full-year. CapEx is expected to be between 32 and $37 million for the year, and our fully diluted share count will be around 47 million shares. Turning to the fourth quarter. For total Atkore, our adjusted EBITDA range is between 81 and $86 million, and our adjusted EPS range is between $0.94 and $1.02. In summary, Q3 was another strong quarter, and we look to build upon that success in Q4. As we near the end of fiscal year 2019, our employees remain focused on ending the year strong, building momentum headed into next fiscal year and positioning the company for long-term success.I want to recognize them for their day-to-day efforts to drive continuous improvement that results in a more positive experience for our customers and greater value for our shareholders. Thank you for your commitment and dedication to this business. Operator, please open the line for questions.

[Operator instructions] The first question is from John Walsh of Credit Suisse. Please go ahead.

Hi, good morning. Congrats on a solid quarter and positive guidance revision again. I guess, you're talking about -- maybe you can give us some flavor around what you're seeing in the construction markets and hearing from your folks that are out there day to day. I mean, we've kind of seen a little bit of bifurcation, mix matters and some of the macro stuff has started to soften a little bit, kind of some color around what you're seeing.I think last quarter, you were talking about strength in the institutional verticals. Are you continuing to see that? Any color there would be helpful.

Yes. So John, a couple of things. Overall, the markets can -- from the markets from -- I'm out and our teams are out with customers; and customers defined is our distributors and then the contractors beyond them, continue to remain strong. Obviously, there's indicators out there, like the architectural billings index that starts to show moderated growth.But really because the shortage of labor. Other firms, not ours, have talked about weather delays last spring. The backlogs are strong, if not with a few distributors and contractors talking about record backlogs. So that's what gives us confidence as we look forward.Again, I'm defining confidence as low-single-digits growth, but it continues to grow in the markets. And then the standard markets, whether it's healthcare, education and so forth, data centers as verticals that you would expect to hear where we're seeing above-average growth.

Gotcha. And then, I guess, building on that, obviously, thinking about your products, there's not a lot of inventory on some of the larger stuff out there in the channel. But what are you hearing from your channel partners and where kind of inventory stand today?

From what we can tell, it's pretty much business as usual. Again, I think there are always times when some distributor tries to look and say, jey, what is copper and steel doing? But overall, it's the same, nothing -- I wouldn't even be able to guess is it slightly up or slightly down from the norm.

John, in the past, we've talked about distributers able to move a little bit of inventory from month to month or quarter to quarter, looking at different commodity prices. But when you look at given steel prices, they have bottomed up and started to come up slightly. So I don't see that as a big impact at this point in time.

Great. Appreciate the color. Thank you.

Thanks, John.

The next question is from Deepa Raghavan of Wells Fargo. Please go ahead.

Hey, good morning. Solid profitable metrics as ever, but volumes slightly anemic there. So curious if your strategy to exit lower-margin businesses has impacted this quarter also? And if it has, could you quantify that for us? Or if not, could you please explain this lower volume print?

Yes. So Deepa, I'll start here and then follow-up or if David has any. From a volume standpoint, we are slightly down from what we probably projected in MP&S. Otherwise, I think -- and again, some of this is timing of projects also.One thing is with the Atkore business system in serving our customers, we just don't have the mindset of, let me try to push an order out or accelerate anything into the channel. And therefore, almost back to the question that was raised before from John, overall, the markets are decent. And I expect, as we get into Q4, you're going to see more the mid-single-digit growth versus even a low-single-digit growth. Some timing of projects and also, then you get into just year-over-year comparables.But again, I say confidence but in the low-single-digit growth. Are we being selective on what products we focus on and making sure we get the price that we think we demand for the service and the quality of our products and the reputation of brands? Absolutely. But it's playing out almost exactly as we expected.

And Deepa, the only thing I would point out is when you look at electrical raceway, we actually had a low single-digit growth quarter, which was one of our better quarters for quite some time. So we feel pretty good about electrical raceway volume. And MP&S, we've talked a little bit about the delays in some of these renewable projects. We are starting to see those shift. So I would say that that's more of a timing than it is any kind of market dynamics.

Got it. So you're not necessarily calling out any weather impacts in the quarter? Or you're not calling out ---

No, no.

Okay.

No, no, no. I'm sorry for interrupting. No. If anything, I just referenced, even we're -- obviously, we listen to our competition and different people in the industry that may have called out weather.And I think there had been backlogs that people have talked about in the past. But no, there is no weather impact. It's just -- it's nothing significant enough to change our guidance or our actuals. Again, we run the Atkore business system, we focus on serving customers. And if we do that really well, our shareholders, as you can see, benefit from that focus.

Got it. My follow-up is on steel and resin. Obviously, it's starting to impact pricing a little bit. You gave some commentary on steel stabilization here, but what's your outlook for pricing or price cost, however you want to talk about it? But as you exit the year, what's your outlook? As you exit the year, I mean we have a couple more months, and how do you see that momentum, the pricing or price cost momentum playing out so far in July, entering August and probably as we exit the year?

Yes, Deepa, so I think as we've communicated throughout when commodity costs go up or down, our focus is on our margins. And this was the first quarter for quite some time when those overall commodities have come down. So you saw our total top line come down. But obviously, when you look at the EBITDA bridges, our margins were actually favorably impacted.Going forward, I do expect the steel prices to moderate up slightly and the resin prices to moderate, I would say. But overall, again, our focus on margin, we do not expect -- certainly in our guidance, you can do the math. We don't expect any negative impacts from margin in Q4 year over year.

Yes. And David, just to add, as you mentioned. And I think Atkore, we've proven -- even back when we were private, but over the public times, that whether it's steel costs, copper costs, PVC costs are up or down, we do a good job. Our customers expect us to provide a value and as long as we're buying that value, whether steel costs are $1,000 a ton or $600 a ton, we have successfully continued to drive our earnings up as we provide more shareholder value and customer value.

Great. Thanks for the color. I'll pass it off.

Thank you.

The next question is from Andrew Kaplowitz of Citi. Please go ahead.

Hey, good morning, guys. Bill, I think you reported the best margin we've seen from Atkore in MP&S at that 17.1%. You obviously mentioned that you are working on margin management and are enjoying productivity gains. But your company has always focused on driving productivity.So what's different this quarter that allowed you to have that margin? You talked a little bit about price versus cost. But is it better mix? Redoubled efforts around productivity? Could you give us a little more color there.

Yes. I'll start, and then David, please add. It's a little of everything. So it's good mix. Where we have best practice is on pricing management, they can still be continuous improvement. So there's some of that. We had, as you see in the bridges, a great quarter productivity wise.So obviously, where our sales organizations are doing a good job, our operations team did a great job from -- shout out to our sourcing team. So all of our lean manufacturing focus with the Atkore business system. So really, across the board, just things came together.

Yes. When -- earlier in the year, if you remember, our productivity was a little lower than we had expected, but we had talked a little bit about the funnel being sold up and our process improvements starting to take hold. And our CapEx being a little bit more toward productivity. And certainly, this quarter, we've seen all those things improve the bottom line.I think to me, the really interesting part of our productivity improvements, it wasn't like as one big project. So it was many projects over many facilities, including sourcing. And so yes, there was very strong productivity core.

And then could you guys help us a little more reconciling what we're seeing in the non res starts market. It's been weakening a bit more here over the last few months versus what you report in raceway volume and the strong backlog your customers have. I know you just talked about it, Bill, but is it really the labor scarcity and weather slowing down starts, so you just aren't worried about the data that you're seeing and you think that there's still a good outlook?

Yes, great follow-up question. Again, some of this may be repetitive, but to go overall as far out -- I'm going to say -- as we can see, the next six to nine months, without starting to get into giving guidance for next fiscal year, is the low-single-digit growth. I do think distributors, contractors, as I mentioned, do have either strong or, in many cases, I don't want to do specific cities or distributors literally are both seeing record backlog right now. Some of that, I think, is the constraint of labor that just can't get to projects.I actually even heard of one specific contractor turning away quoting future work at this current stage because of the backlogs they have. Now the flip side of that, which you or anyone else will be able to see from looking at things like the Architectural Billings Index and so forth and Dodge starts, the things that give indication out nine months is more moderated growth.So therefore is it the low-single-digit growth? Or I'd say, absolutely. As much as we can tell, that's what it feels like out there, six or nine months. So I'm not in any way advertising robust growth, but from what we see, and we actually do pretty deep analysis of taking Dodge information, looking at what markets it serves, what products we have and doing a density-time weighting. Our type of growth rates are about market when you strip out pricing, and that's the low-single-digit, and that's what we see out there for the next, let's say, half year or so.

Bill, that's helpful. And then just a final one on, your net leverage is down here, 2.6 times. Do you become more aggressive -- you announced US Tray -- in going after M&A again? Do you buy back more stock? Where do you go from here given your leverage is getting to levels that you're more comfortable with?

Yes, great question. And I'm saying great -- also, David and I are like fighting at who gets to answer the nice questions on getting our leverage ratio down. Yes, a compliment first again to the team for their cash flow work that we expect to continue as we go forward to make it a great cash flow year that helps us drive down that leverage ratio. At this stage, we'll continue to do very disciplined M&A bolt-on acquisitions. So some of the stuff I cover that go, hey, is it an acquisition that brings a lot of synergies, that's strategic, that is that responsible when we have management bandwidth. So we can never predict an acquisition.We will walk away if literally in the last week if we see something we don't like. On the same hand, could we have another acquisition, hypothetically in the quarter, if it was to fit, hypothetically, yes, because we have a great backlog. I think it's that continuation of capital deployment where we're going to continue to work down the debt ratio getting it closer to two over the next year or so and still doing bolt-on acquisitions like US Tray. So at this stage, for the next year or so, I don't see dividends.We'll do stock buyback to the point of stopping dilution of equity compensation for executives, but nothing more than that as a general indication.

Thanks.

The next question is from Deane Dray of RBC Capital Markets. Please go ahead.

Good morning. This is Jeffrey Reive on for Deane. Kind of keeping on that trend, fiscal third quarter was a really great cash flow quarter for you guys this year. So maybe how did the quarter play out versus your expectations? And kind of what are you thinking for free cash flow conversion for the full year?

Great question. Like we had talked about a little bit, we did expect a pretty, or actually, a really strong Q3. And Q3 is typically a strong quarter. Our Q2 is, obviously, our weakest quarter, kind of the way that the calendar and market -- construction markets and so on lay out.Q4, we would expect -- last year was a soft cash flow quarter. We expect a pretty strong cash flow quarter in Q4. And therefore we don't give guidance on it, but we do say our target is above 100% of net income on average over certain amount of periods, and we should solidly be there this year.

Got it. Great. And then maybe just touching on some of the larger renewable energy projects that you called out in MP&S, can you maybe just give us a little more color there, size of these projects? And then maybe the mix impact on margin?

I don't think we want to go to the point of calling out the exact amount of revenue of the project, and it's -- the backlog is healthy. We see it growing. We're optimistic for the future. It just gets down to environmental things that are going to us, they need to get concerned about, some frog or something that needs to get clearance and so forth logistical issues. So again, a good backlog in that area.It's actually, we perceive, going to be a growing trend, secular trend as we go into 2020. And again, it's just timing of a couple of projects.

This concludes the question-and-answer session. I would like to turn the floor back over to Bill Waltz for closing comments.

Great. Thank you. Before we conclude, let me summarize some of the key takeaways from this Atkore's third quarter. First, we did deliver strong EBITDA growth, driven by strategic focus on productivity improvements and margin management. The quarter also drove adjusted EBITDA and EPS up again double digits year over year and exceeded our previous outlook for the quarter. Third, as mentioned during this call, we had great strong cash flow that provides us the flexibility to continue to do M&A, as you saw with the US Tray acquisition, while simultaneously lowering our overall leverage ratio.And lastly, and most importantly, our focus on execution allows us to increase our EBITDA outlook for the full year. Collectively, our team, our culture and the Atkore business system, enable us to maintain our focus on the key objectives: Deliver upon our commitments to our customers and shareholders, as well as to achieve our goals for the remainder of fiscal 2019. With that, I want to thank you for your support and interest in Atkore. I look forward to speaking with you during our next quarterly call. This concludes the call for today.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.