Greetings, and welcome to the Atkore International Fourth Quarter 2019 Earnings Conference Call. At this time all participants will be in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. Please note this conference is being recorded. At this time I will turn the conference over to John Deitzer, Vice President of Investor Relations. Mr. Deitzer, 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 SEC filings in 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 excellent financial results for both the fourth quarter and the 2019 fiscal year. Let me begin with our highlights for the full year and David will go over the fourth quarter in more detail.As I mentioned 2019 was a very strong year for Atkore. We increased adjusted EBITDA by $53 million or approximately 20% compared to 2018. A remarkable achievement by everyone in our organization and a credit to the results that can be achieved by following the Atkore Business Systems. In addition to the growth in EBITDA free cash flow increased 63% and we increased our adjusted EPS by 30% up to $3.62. We also made significant progress this year on improving our leverage position. We ended 2019 with a net debt to EBITDA ratio of 2.2 times down considerably from where we were at this time last year.In summary 2019 was a year of great financial performance and EBITDA growth driven by the Atkore Business Systems. We were able to convert those earnings to cash which allowed us to both improve our leverage position and acquire four companies that will enhance our competitiveness in the marketplace. We plan to build upon that success from 2019 and continue to grow the company. For 2020 specifically we expect to increase our adjusted EBITDA to between $335 million and $345 million and use the Atkore Business Systems to drive that growth even further in the future. With that I want to thank all the employees in Atkore for their tremendous efforts this year. I'll turn the call over to David who will walk us through our financials for the fourth quarter in more detail.

Thanks Bill and good morning to everyone. As Bill mentioned the fourth quarter was very strong. Moving to our consolidated results on Slide 4 net sales were $502 million up $24 million versus prior year. As we anticipated and mentioned on our last call volume was quite strong this quarter up $40 million or 8.4%. Recent acquisitions also added $20 million in revenue or just over 4%. These positive contributions were partially offset by declines in our average selling prices and unfavorable foreign exchange rates.Moving down to the adjusted EBITDA bridge, our adjusted EBITDA for Q4 was 89 million up 25% or $18 million versus last year. The two largest drivers of adjusted EBITDA growth were the volume growth we experienced in both segments and the continuing use of the Atkore Business Systems to drive margin expansion. Volume growth contributed 13 million in the quarter and price versus cost was a benefit of $12 million. This growth was partially offset by additional investments in the business, inflation, and the timing of certain expenses.Moving to Slide 5, on a GAAP basis net income increased 41%, adjusted EPS was $1.01 up 28% from the fourth quarter 2018 reflecting the increase in adjusted earnings and favorable share count from our repurchases over the last year. Our adjusted EBITDA margin for the fourth quarter was 17.7% up 280 basis points versus prior year. Moving to our segments on Slide 6 and 7 electrical rates had another strong quarter with approximately 6% volume growth driven by solid expansion in our focused product categories. Adjusted EBITDA for the electrical rates may increase 17% or $12 million based on our disciplined approach to margin expansion and higher volumes. Also during the quarter we acquired the assets of Rocky Mountain Colby Pipe Company, a leader in PVC conduit…

Thanks David. Moving to our initial outlook for 2020 on Slide 9. Our view on the markets remains positive and we expect Electrical Raceway volume to be up 1% to 2% in 2020 and with the trends that we've seen recently for MP&S as well as her plans for growth we anticipate MP&S volume to be up 1% to 3% for the year. Between our expected volume growth in both segments and the revenue from our recent bolt on acquisitions we expect to drive approximately 5% top line growth for next year. We believe our strong financial performance from 2019 will continue in 2020 and we expect our adjusted EBITDA for the year to be between $335 million and $345 million.For next year we expect to benefits from the higher volumes and productivity to drive our EBITDA growth. These two factors combined for approximately $15 million to $25 million in growth. In addition we expect our three most recent acquisitions to provide $5 million to $10 million in incremental EBITDA. Given this strong positive contributions that we've experienced in 2019 between selling prices and input costs we are planning for an unfavorable impact of $10 million to $15 million in 2020. Moving to the bottom line, we expect our adjusted EPS to be between $3.80 and $3.90, an increase of approximately 6.5% at the midpoint of the range, a solid increase above 2019 levels. Turning to the first quarter for total Atkore, our adjusted EBITDA range is between $72 million and $77 million, our adjusted EPS range is between $0.80 and $0.85.In summary Q4 and the full year 2019 were very strong and we look to build upon that success in 2020. As we begin a new year our employees remain focused on executing the Atkore Business Systems and positioning the company for long-term success. I want to recognize them for their efforts to make 2019 a very special year for Atkore and their commitment to consistently driving value for our shareholders into the future. I also want to welcome all the employees from the recent acquisitions we completed this year, we are excited to have you as part of the Atkore team. Operator, please now open the lines for questions.

Thank you. [Operator Instructions]. Our first question is from the line of Andrew Kaplowitz with Citi. Please proceed with your question.

Good morning guys.

Good morning Andrew.

Can you talk about your volume growth, the 6.5% in Raceway in Q4, I think that's the highest line growth we've seen from since early 2018. I know you mentioned the five new products in the quarter that helped growth but can you give us some more color into your ability to outpace market growth going forward, do you think new product related growth could stay at these elevated levels for the next few quarters, and I know you always had a big focus on new products but what do you do differently now?

A couple of things Andrew; one, I do think is -- I am just summarizing what you said but then I will add one other piece of color. We are driving the new focused product categories growing up high single digits and new products which is low single digits but it all adds together. The one thing Andrew that I just in full disclosure we had an easier comp last year in this specific quarter so I think in our previous guidance when we had called out we would be above average growth it's relative to last quarter. So I just want to put that back in framework if you would look at Slide 9 of the deck that we're expecting to grow with acquisitions around 5% next year but I would not expect to see as strong as Q4 every quarter going forward. But it was a great quarter.

Yeah, that's helpful Bill and then in past calls you've talked about having six to nine months of visibility given the backlog that your distributors and contractors have in Raceway and that made you comfortable that you could forecast low single digit market growth within non-resident markets going forward. Obviously we are continuing to see some relatively weak start data. Have you seen any deterioration in the backlog that gets you concerned or are you just -- well that's an easy answer.

Yes, no, it's good. It's very consistent what we've always articulated and the trend continues, its low single-digit but in some ways the labor shortage out there is acting as a governor. So literally even just yesterday as we wrapped up our Board meetings and we're fortunate to have a lady that's the CFO of a large electrical contractor on the board, that voice of customer as the contractors is consistent with me on the road for the last several weeks with distributors and so forth and customers, contractors that we expect to continue. And as far as we can see which Andrews as you say is only six to nine months so it's pretty good guidance for the rest of the fiscal year being we're two months in already.

And then one more from me, you had this year 2019 almost 250 basis points of margin contribution from price versus cost, Q4 the number was even bigger than that. Really when you think about what is a more normal contribution for you when commodity prices aren't as volatile as they've been and what level of price risk costs contribution is baked in FY 2020?

So Andrew in my mind with that I think if you look at the comments I just gave in our guidance, in other words we had a phenomenal year with up almost 20% EBITDA. And it's off of a 2018 that was also up 19%. Some of that was on mix and driving value but that's one of the reasons kind of in caution that we don't hope to get back any price but just in caution as guidance we are guiding that there could be $10 million to $15 million to spread. So you can kind of work that in to the numbers we just presented and get a good feel for what we think the run rate for fiscal 2020 would be.

Thanks Bill, good quarter.

Awesome, thank you Andrew.

The next question is from the line of Deepa Raghavan with Wells Fargo. Please proceed with your questions.

Hey, good morning everyone. Great quarter. Hey, tagging on that price question how are you thinking about the first half, second half price contribution. I mean within that $10 million to $15 million it looks like it will be more weighted first half, right just given your comps or are you thinking about it more linearly spread out?

Alright, as Bill mentioned we had put in our guidance with little bit of a headwind for price versus cost. Deepa when you look at the way the quarters roll out in FY 2019 we expect that the first half to be somewhat on par with FY 2019 and then really it is the second half where we had really strong price versus cost. That's probably where we have most of our at least potential headwind put into our current financial forecast.

Oh sorry, was this price cost or was this price on the top line…

Price cost.

Oh okay, got it. Got it, sorry. So what would it be on the top line price, I mean your revenue is low single digits, you probably have some acquisitions in there too but how does it -- what's the -- what's the headwind from price pass through, I mean second half of fiscal 2019 it was down mid single-digits, low to mid single-digits so what are you expecting…?

Yeah, so we're expecting right now we guided on price versus cost being 10 million to 15 million. I would for planning purposes assume that that's the same on sales. And the reason why I say that is commodities have somewhat flattened out at this point in time and also we're starting to see a little bit of an uptick in some commodity input cost especially steel where some of the steel companies have been pushing through various $40 a ton increases. So I think for planning purposes Deepa I would assume that's 100%.

Thanks for that. And my follow-up would be, your Atkore Business Systems looks like that's contributing pretty nicely to your margins, what was the margin improvement in fiscal 2019 from the [indiscernible] productivity in Atkore Business Systems versus volume leverage and how much do you think it will be in fiscal 2020 at least directionally, does it improve, is your Atkore Business Systems going to add to more margin expansion potential in fiscal 2020 versus fiscal 2019, I mean any color there with regards to…?

A couple of things I would mention, in FY 2019 productivity contributed approximately $15 million of improved adjusted EBITDA. That was significantly more than the year before and I would say the reason for that is one of our strategic deployment initiatives was around productivity. And I would say just in general the business has a lot more rigor around the projects. We have a system that tracks all the kind of projects and where a funnel is and so on and so forth. So built into our FY 2020 guide would be a similar number to that which again would be 3x more than what we did year say like FY 2018.

Got it, my final one and I'll pass it on. On capital deployment, your share count assumption is higher than your exit rate in fiscal 2019, I mean this implies that dilution from options but not much buybacks in there. So how do we think about the buyback potential, are you saving it all up for acquisition spend, just curious what your thoughts are on buybacks which is acquisition in fiscal 2020? Thank you, and I will pass it on.

Sure, absolutely. So obviously we have a little bit of pollution when it comes to stock comp annually every year. We don't put in our plans, stock buybacks even though we have the ability to buy back $50 million worth of shares. So I think at this point in time right now our priorities remain the same. Our number one priority is our debt ratio and moving towards that two times goal that we have stated externally. Number two, tuck in M&A and when possible buyback stock and I just would remind everyone that we have bought back over a third of the company in the last couple of years. So we have had a substantial buyback program. Last year we bought back in the mid 20s kind of million dollars worth of shares and so we're not going to simply tell you what our number would be but we do have the opportunity to buy back 50 million if we decide that that's the best use of our cash.

Got it, thanks so much.

Great, thanks Deepa.

[Operator Instructions]. I have another question coming from the line of John Walsh with Credit Suisse. Please proceed with your question.

Hi, good morning.

Good morning John.

So I think at the midpoint productivity is adding about five -- solid mid single digit improvement in adjusted EBITDA year-on-year. I think you've commented before in the past you are relatively early in -- productivity. Is that a good place holder to think about what you kind of have in the pocket as we model out the years going forward from productivity?

Yeah John, I think so. I would paraphrase slightly differently. I think we are average in productivity versus beginning now. We did make a comment here at least I think David did, we started this as an SDP, strategic deployment process two years ago and really enhanced our funnel. Very humbly we have a lot to go but I think that $15 million number that feels like a good number for every year.

Gotcha. And then thinking about the free cash flow conversion obviously very strong this year on a full year basis also in the fourth quarter. What's kind of the sustainability or how are you guys viewing that free cash flow conversion on call it your adjusted net income going forward?

Yeah, so we typically talk about our free cash flow on net income. And our goal to be above 100%. This year obviously it was a very strong year. Last year John if you recall we were a little bit below that. And by and large the factor that determines whether we're above or below is working capital and to some extent the impact of commodities on our inventory and so on and so forth. So this year I would say is a very strong year. Our go forward goal would be to be above that 100%.

Good and then I guess obviously the renewable projects hit nicely in the quarter. I mean was that a benefit to cash is just kind of talked about your working capital there being one of those swing factors?

Yeah, I think it is but we obviously had a strong end of the year in volume. But I would say it's net-net the solar business when you add in from a free cash flow basis is pretty much on par with all the businesses.

Alright, thank you for taking the questions.

Hey John, thank you.

Next question is from the line of Deane Dray with RBC Capital Markets. Please proceed with your questions.

Good morning, this is Jeff on for Deane. Maybe touching on the Electrical Raceway volume guidance of 1% to 2% for next year. Can you maybe just discuss which verticals you're seeing the most in maybe lease growth and does that have any mix on your margins?

Great question, probably the areas where we see the largest growth is around health care and hotels as we go into next year, areas with a little less growth or warehouses. It's really -- it's exceptionally small on mix. There are some things like within healthcare we have some more sophisticated products like luminary cable and so forth but not enough to change our internal forecast. We're always driving as you saw how well we've done with driving the mix, the margin, and selling more value added products. But I won't go as far as say because one vertical is up or one is down that it's going to significantly change our forecast.

Got it and so you are leveraged now and you're pretty much approaching that two times target. Is there either a number that you target for M&A deployment annually or percentage of capital deployed and then also maybe just touch on your pipeline, what are the multiples you're seeing, etc?

I'll handle that question. You know this past year we deployed $100 million in tuck-in M&A across four acquisitions. I think if you think about going forward that somewhat level of M&A activity would be appropriate we think with our capital deployment and keeping our debt ratio in check. Maybe a little bit north of that if the opportunities are there. I would say right now our pipeline is about the same as it's been so it's pretty robust. Again our acquisition targets tend to be smaller tuck in around our core value, around the Electrical Raceway at this point in time and we're still seeing when you look at our last two or three that the valuations are still in that kind of mid single-digit range.

Great, thanks.

Thank you.

Thank you. We have reached the end of our question-and-answer session and I will turn the call back over to Bill Waltz for his closing comments.

Great, thank you. Before we conclude let me summarize three key takeaways. First, across multiple financial metrics 2019 was an astounding year. Second, we significantly improved our leverage position while at the same time acquiring four companies that will enhance and support our plans for growth. Third, we expect our strong financial performance to continue. For 2020 specifically we expect to increase our adjusted EBITDA to between $335 million and $345 million. Collectively our team, our culture, and the Atkore Business Systems enable us to maintain focus and deliver upon our commitments to our customers and shareholders. 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.

Thank you. Today's conference has concluded and you may now disconnect your lines at this time. Thank you for your participation.