Greetings. Welcome to Atkore International first quarter 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, sir. You may now 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 financial performance of the company. Such statements involve risk 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'm pleased to report that Atkore is off to a great start for the year. For the first quarter, we are continuing to build upon the momentum and strong operational performance that we drove in 2019. Let me begin with a few highlights, and David will go over the quarter and segment results in more detail.In the first quarter, we increased adjusted EBITDA by 11%, driven by solid volume growth in both segments. We grew adjusted EPS by 27% and drove our net debt-to-EBITDA position down to 2.1x. The solid financial results in the quarter are an output from the hard work and dedication of all our Atkore employees. Our team continues to focus on taking care of our customers and delivering value for our stockholders.As a result of this focus and consistent execution from the team, we're excited to increase our outlook for the year for adjusted EBITDA and adjusted EPS. We anticipate full year 2020 adjusted EBITDA to be between $340 million to $350 million and adjusted EPS to be between $3.95 and $4.05.With that, I'll turn the call over to David, who will walk us through our financials for the first quarter in more detail.

Thank you, Bill, and good morning, everyone. As Bill mentioned, the first quarter was a very good start to the year. Moving to our consolidated results on Slide 3. Net sales were $447 million, down 1% versus the prior year. Adjusted EBITDA increased 11%, and our adjusted EBITDA margin increased 190 basis points, up to 17.4%. Adjusted EPS increased 27% as the solid operational performance and a favorable tax rate related to the benefit recognized from stock-based compensation drove the significant year-over-year improvement. We generated a free cash flow of $42 million, which was 27% increase versus the same period last year.Turning to Slide 4. Volume growth was solid this quarter, up $14 million or 3%. Recent acquisitions also added $12 million in revenue. We've seen declines in market prices for several of our major input costs versus Q1 2019. Therefore, the positive contributions from volume and M&A were offset by declines in our average selling prices, which reduced our sales by $30 million in the quarter.Moving to the adjusted EBITDA bridge. Our adjusted EBITDA was $78 million, up 11% or $8 million versus last year. This increase was driven by profitable volume growth and productivity improvements in both segments. These results are a good example of the Atkore Business System network.Moving to our segment results on Slides 5 and 6. Electrical Raceway had a good quarter with approximately 2% volume growth, driven by our PVC products, and near double-digit growth in our focused product categories. We did experience some volume weakness in our international business this quarter, but this was more than offset by our domestic volume, which was up 3% for the quarter.Adjusted EBITDA for Electrical Raceway increased $2 million, driven by the volume gains we'd previously mentioned and continued operational improvements. Adjusted EBITDA margins increased 70 basis points to 20.6%.Turning to the Mechanical Products & Soultions segment. The business continued its recent trend of delivering significant year-over-year EBITDA growth and margin expansion. We anticipate this to moderate next quarter and in the back half of the year as the business will have very strong prior year comparables.Adjusted EBITDA in the quarter was up approximately $6 million and the MP&S adjusted EBITDA margin was 15.6% this quarter, up 560 basis points from Q1 2019.During the quarter, the business increased margins by selling additional value-added solutions to customers and managing the overall profitability of the product portfolio. On the top line, the strong volume gains from the continued ramp-up of several large renewable projects were completely offset by declines in average selling prices.Turning to Page 7. We ended the first quarter with a cash balance of $164 million. Net cash flow from operating activities was $52 million, which generated a free cash flow of $42 million in the quarter. Our net debt position declined with a rise in our cash balance, and when coupled with our growth in earnings, our leverage ratio improved to 2.1x.Bill, back to you for our outlook.

Thanks, David. Moving to our outlook for the second quarter and full year 2020 on Slide 8. For the second quarter, we anticipate our adjusted EBITDA range to be between $80 million and $85 million and our adjusted EPS range to be between $0.90 and $0.95. Turning for the full year outlook. We remain positive in our view of the markets, and we continue to expect low single-digit volume growth for both segments. We are increasing our outlook for adjusted EBITDA up by $5 million to a range of $340 million to $350 million for the year. We are also increasing our full year outlook for adjusted EPS, up to a range of $3.95 to $4.05.In summary, the first quarter was a great start to the year from a volume, operational performance and financial perspective, and we look to continue that success for the remainder of the year.Operator, please now open the line for questions.

[Operator Instructions]. Our first question is coming from the line of Deane Dray with RBC Capital Markets.

A nice execution this quarter. And maybe we can start with the dynamics on price/cost. So within price, I think we've all been used to this, and steady environment of rising raw material costs and the quick pass-through. Just remind us when that trend turns and you get falling raw materials, just the dynamics on the pricing and how that plays out and how that's reflected this quarter?

Yes. So great question, Deane. And thank you for the compliments at the beginning. With the Raceway segment, it's pretty real time. So again, for both these commodities or both our segments, we like it when prices go up or down, and you are - continue to see that volatility. And then a little bit to your point or maybe we're on point, with the mechanical business, where there is a little bit more index pricing in contracts, we're able to hold on to it a little bit longer. And therefore, some of the reason, not all of the reason, but some of the reason, we saw just such a great quarter for the mechanical business as commodity prices like steel drop some in Q4 - or Q1, excuse me.

That's helpful. And then what's your sense on nonres playing out? I mean there's so much uncertainty right now in terms of the macro and nonres is always such a reflection on CEO confidence. Are you seeing at the margin any changes, any pushouts, green light on projects? Just any color there would be really helpful here.

Yes, great. As much as we know, it's literally steady. No change. Low single digit. But I'd tell you, Deane, I even have more confidence in that now than I did probably 3 months ago, purely from some of the factors, like architectural billing index for the last 3 months have all been positive. If you even went back for the full year for ABI, it would be slightly up. If you look at calendar Q4, it's up even more. And then we just wrapped up meetings with distributors about 2 or 3 weeks ago. We had our largest sales agent conference in the country last week, and everybody continues to forecast at low single-digit growth, and the shortage of labor acts as a modifier governor out there to keep that pretty consistent. So obviously, the farther we get into our fiscal year, the more confidence we have in that low single digit, but I see no changes.

Got it. And just last one for me. What are you baking in assumptions for new product introductions this year? Is there anything that you would highlight?

Not really. It's a low single digit. It's built into our number. It's slightly higher margin. It's obviously a long-term growth emphasis that we're putting a lot of focus on. But Deane, it's a low single-digit number. So therefore, if we grew 20% or 3%, it gets into the rounding of whether we're up 1%, 2% or 3% overall.

Our next question is from the line of Andrew Kaplowitz of Citi.

Bill, following up on Deane's question, just around the pipeline of opportunity in nonres. Your volume was good in the quarter. You mentioned ABI. Dodge momentum also looks better. Any sort of actually improvement in the pipeline that you're seeing? It seems like you might be hinting that you are seeing a little bit of improvement in pipeline, but I want to put words directly in your mouth.

Yes, that may be slightly more because, again, I think the low single digit, I really said more confidence. In other words, if I were to went back at last quarter, I would have said low single digit. That's been kind of consistent for literally a year. But there were a couple of things a quarter ago, that would have said, "Hey, ABI was going below 50, therefore out 9 months. At the end of this fiscal year, going into 2021, where there maybe have been some concern and so forth. Whereas now, it's not like all said it swung super positive, but the indicators seem to be aligned with what our voice of customer has continuously told us, so low single digits. So I just think the risk has reduced as much as we can see.

Yes, I would say, Andrew, there were some macro indicators that might have turned slightly negative a few months ago, but that's been really consistent for quite some time the feedback from contractors, agents and distributors. So that gives us confidence in that low single-digit number.

Got it. And you did mention a little bit of international weakness impacting Raceway. So maybe you can give us a little more color on that. We know it's not a large portion of the business, but does it have the ability to hold you back? Just maybe a little more color there.

Yes, sure. So basically, international is 10% of our overall sales number. The business tends to be a little bit more project oriented. So you will have a quarter where your user is going up against a tough comp or a quarter where the projects are just lying up more or less for Q2 versus Q1, so on and so forth. So this quarter, in particular, we just had some timing on projects. The backlog is still looking pretty good, considered where we expected to be at this point in time. So I don't see it being a drag in the next three quarters. But we just wanted to highlight the fact that the U.S. market up 3% in Q1 was, we think, a very strong start to the year.

Got it. And then just focusing on MP&S for a second, your adjusted EBITDA margin there had stayed above your historical levels for the last several quarters. You had another good report here at 15.6%. We know price versus cost is helping EBITDA, but does the combination of improved pricing, productivity you've talked about in the past, the improved mix help you now maintain higher margin than you used to be able to achieve in that segment? Does that continue moving forward?

Yes, we - like we've said before, when we had some 17% kind of numbers that we feel that the longer-term position for the business would be 13% to 15%. We're slightly above that. The team has done a really good job, not only, I think, on price, cost and productivity but also more value-add to our customers with secondary operations, different value that we're bringing to the customers. So - and I'm thinking that 13% to 15% is more a long-term outlook for that business, given if commodities were stable over some point in time.

And then $15 million is still a good productivity number for the year for both segments, as you said in the past?

Yes. So we actually had a very good start to the year in productivity and our funnel continues to be strong.

Yes. Andy, if you want - one of the things - I just wanted to call out on Page 4 of the deck, there literally when we gave strong numbers here, it's all volume and productivity. This is actually a quarter where our price/cost, I think we don't want to drive it positive, it was actually a headwind for us and it - really the team with the Atkore Business System is what drove these strong results. So really proud of the team for what they made happen this quarter.

Our next question is from the line of John Walsh with Crédit Suisse.

And I'll echo a good solid quarter here to start the year. I wanted to have a quick discussion around kind of capital allocation priorities. Just thinking about the balance sheet is in really good shape. You kind of reiterated your CapEx number, shares are a little bit better. Just wanted to understand the priorities of deployment for repurchases? And if there's any kind of small bolt-on M&A or something larger in the pipeline that you're looking at?

Sure, John. I think it's pretty consistent. When we look at our debt ratio, we are comfortable it going below two, if you compare us against our electrical peers. Now in general, they're between 1 to 2, say 1.5 is somewhat average for our electrical peers. We'll also be looking at tuck-in M&A. And just like we were able to deploy almost $100 million last year in tuck-in M&A, we still feel that there is quite a few opportunities in our pipeline that are priced appropriately. And so for us, it's pay down debt, CapEx and then take advantage of our tuck-in M&A.

Got you. Okay. That's helpful. And then, I guess, following in - on Andy's question on MP&S. I mean the EBITDA came in better than we thought, and I think also your guide for this quarter were maintaining the full year from an absolute dollar basis. I know you were talking margin before. But just wondering was there any timing with renewables? Or is there anything you're assuming - you obviously talked a little bit about price/cost, but it would seem that you kind of overdrive the quarter and maintain the year?

Yes, I think that's, John, probably a good characterization. I don't think there is anything notable to call out. Obviously, there's a job shipped in December that could have shipped in January, and therefore, the 7% growth. And we just have tough comps in the second half of the year. We have some large projects. We had a great mix. So again, trying to give you, everybody accurate guidance, I wouldn't assume that, that would continue at that type of year-over-year increase in growth rate for the rest of the year. No reflection or anything bad to come, just it's what's compared to the end of last year.

Our next question is from the line of Deepa Raghavan with Wells Fargo Securities.

A few clarification questions. On the guide, last quarter, I think you guys guided - when you guys guided Q1 last quarter, you beat that by $0.11, right, I mean, versus your midpoint. And you raised your full year guidance by about $0.15 for the full year. You raised it by more than what you - I think you expected, right, I mean, what you did in Q1. So just curious, what's driving that momentum? Which segment? Or which part on the - which of the line items in the income statement is driving that?

Yes. I would say, Deepa, a little bit better on the volume number and the mix number and productivity. So when we gave that guide out for the full year, I would say, just a little bit better there, and particularly in Electrical Raceway. And you can see that's why we changed the full year guide for Electrical Raceway. And then we did roll through the favorable benefit in Q1 from our, I'd say, discrete tax benefit that we recognized in Q1. And that's how you get from 11% to about 15%. Yes, I guess, as the quarter went on, we just felt - we did have a strong quarter and things were firming up with the way we felt the guidance typically after Q1, we probably wouldn't guide up in the full year, but we felt like we're in a position to be able to move the guidance up.

Got it. Just a clarification on that price pass-throughs. So John, did I hear you right that the Electrical Raceway, you are passing through 100% of this commodity deflation, even as we speak. In MP&S, you're able to hold. Is that a fair characterization? And that's how you are thinking for the rest of the year also? I think the question is more, how much are you able to hold on to, but it looks like you're telling me nothing in ER and very little in MP&S? Is that right?

Typically, we don't break out the price/cost between dollars between the two segments. So we do say, overall, we look at the bridge this quarter, Deepa, and we're down $30 million in sales in total, and I would say we're flat on EBITDA. We're actually down slightly in EBITDA. So in that case, we were passing through lower commodity costs in our pricing, but holding our margin levels. As we guided for the full year, we did say there's going to be - we anticipate a headwind for the full year, and mainly because the second half of last year, especially in MP&S, we really had robust pricing and spreads in that case. So we were guiding that second half of the year would be negative; first half of the year, first quarter, we were flat.

Got it. Your Electrical Raceway, again, my last question, and just a clarification point. I mean, trends, low single digits. I mean you're still kind of keeping it, but I'm sensing there's some underpacing in some verticals versus your expectations. Can you talk through how that works, not just - I'm not just talking nonres low single digits? But within nonres low single digits, can you talk through verticals? And also overall perspective, can you talk about industrial versus nonres versus resi trends versus how you guided 90 days ago? And that will be it.

Okay. Thanks, Deepa. A couple of thoughts, Deepa. The way I would characterize it from the high level, then I'll be down to verticals for you is, the market - the voice of customer has been consistent all along. So nothing is changing, and it's always been the low single digits. What I tried to affirm and, Deepa, is thinking some of the publications you've done with Wells Fargo is that third-party information now seems to be aligning more with what we hear from our customer base of low single digit. So the confidence factor is up, not necessarily change anything, it's just the low single digit. Everybody seems to triangulate around that across every indicator, voice of customer, distributor, contractor, sales agent, whether group think or not, very consistent information. As for some of the verticals, offices, hotel, data center seem to be strong. I always put the caution out there that we sell exclusively through distribution. So we don't have a scientific level of precision there, but those seem to be the verticals going up. We don't sell as much into industrial, but same thing as, I assume, you and everybody else saw ISM came out with a pretty good number yesterday for the industrial side. So maybe that's going to see a bounce back for the economy as we go forward. So I think we're...

I'm sorry. Please go ahead, Mr. Waltz.

No. Operator to you, if there's any more questions.

At this time, there are no additional questions. I hand the floor back to you, Mr. Waltz, for closing remarks.

Okay, cool. Thank you. So before we conclude, let me summarize my key 3 takeaways for the quarter. First, we're off to a great start for 2020, and Q1 was very strong across multiple metrics. Second, we continue to remain positive on the nonresidential construction market and expect the low single-digit growth to continue for the remainder of the year. And third, we expect our strong financial performance from Q1 to continue, and we raised our full year outlook on adjusted EBITDA to be between $340 million and $350 million. Collectively, it's our team, it's our culture, it's the Atkore Business System that enable us to maintain and deliver upon our commitments to our customers and our shareholders.With that, we want to thank you for your support and interest in Atkore, and we look forward to speaking with you again during our next quarterly call. So thank you. This concludes the call for today.

Thank you. You may now disconnect your lines at this time. We thank you for your participation.