Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Atkore's Third Quarter Fiscal Year 2022 Earnings Conference Call. All lines have been placed on a listen-only mode. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded. Thank you. I would now like to turn the conference over to your host, John Deitzer, Vice President of Treasury and Investor Relations. Thank you. You may begin.

Thank you, and good morning, everyone. I'm joined today by Bill Waltz, President and CEO; as well as David Johnson, Chief Financial Officer. We will take your questions after comments by Bill and David. I would like to remind everyone that during this call, we may make projections or forward-looking statements regarding future events or financial performance of the company. Such statements involve risks and uncertainties such that actual results may differ materially. Please refer to our SEC filings 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. Starting on slide three. I'm pleased to report that Atkore again delivered strong operating results in the third quarter of 2022 despite challenges in the overall global supply chains and labor availability. I'm also excited to speak about many of the opportunities that lie ahead for us do in large part to actions we've taken to position Atkore as a leader in our markets. We continue to execute against our operational plans, as well as our capital deployment model. Currently, we are well ahead of schedule on our plans to deploy over $1 billion over the next two to three years. Within this quarter alone, we deployed over $400 million combined in the areas of capital expenditures, M&A and share repurchases. In regards to M&A, we are very pleased to welcome the employees from both Talon Products, the United Poly Systems, into Atkore. These are two great companies, and we are excited about the opportunity to grow our businesses together. In addition to these acquisitions, during the quarter, we purchased a new property in the Dallas, Texas area that will be used to strategically grow our capacity for our HDPE products, as well as provide a strategic location for our new regional distribution center in the future. Heading into the last quarter of our fiscal year, we are increasing our expectations and outlook for FY '22 based on the strong performance we had in the first nine months. Turning to slide four. We are positive on the outlook for HDPE products given the expected growth in 5G and broadband Internet access. Building on our recent acquisitions of Four Star Industries in the United Poly Systems, along with our existing portfolio of products, we believe we have the opportunity to become a leading provider in this market over the next few years through additional organic and inorganic opportunities. It is for these reasons that we expect our HDPE business to be a growth driver frac core. Moving to slide five. We are adding new HDPE production equipment that we expect to receive in FY '23 to be placed in our new Dallas facility. By purchasing this property, we will not only have additional space for production capacity, but equally as important, we plan to build a new regional distribution center. We believe the RDC will allow us to better service our customers in this region in the United States, consistent with our strategy of one order, one delivery, one invoice. This way of doing business, having the capacity and infrastructure to do co-loads and save day pickups is what continues to differentiate Atkore and supports our mission to be the customer's first choice. With that, I'm especially thankful for each of our great employees and the work they do every day to support our customers. Now I'll turn the call over to David to talk through the strong results of the third quarter.

Thank you, Bill, and good morning, everyone. Moving to our consolidated results on slide six. Net sales increased 24% year-over-year to $1.1 billion. Adjusted EBITDA increased to $378 million, which drove our adjusted EBITDA margin to 36% in the quarter, both up versus the prior year. Our adjusted EPS increased from $6.07. Turning to slide seven and our consolidated bridges. Net sales increased by $208 million due to higher selling prices and the contributions from recent acquisitions. As we've previously mentioned, volumes have been impacted by several factors. Within Q3, our volumes for metal-related products in the U.S. were down and offset the gains we're seeing in other parts of the business. These declines were driven by the fuel price declines and volatility that we mentioned last quarter. EBITDA this quarter wasn't as strong from a volume perspective, we're still positive over the long term given the strength of some of the key forward-looking indicators, but as a contractor backlog in 17 consecutive months of positive ABI. However, total construction has been constrained by long lead times for non- Atkore electrical products in the availability of job-site labor. Moving across the bridge. We're very pleased with the performance and contributions from our two acquisitions completed in Q1 of this fiscal year, Sasco and Four Star industries. Turning to our segment results on slide eight. The Electrical segment increased adjusted EBITDA by $84 million and adjusted EBITDA margins by 230 basis points. In our Safety & Infrastructure segment, net sales increased by 25% from the prior year and adjusted EBITDA more than doubled. And now a quick update on our capital deployment progress on slide 9. As Bill mentioned, we are ahead of schedule to deploy over $1 billion in cash over the next two to three years that we announced in November, and we've deployed over $730 million in the first nine months of 2022. Our internal investments have increased with the addition of our new facility in Dallas, and we continue to find great companies to add into the portfolio. In fact, looking back across all of our recent deals, each of these acquisitions are performing ahead of our original expectations. This is a testament to the Atkore business system and our disciplined operational focus starting from the diligence prospect, all the way through to several years post integration. In addition to our M&A activity, we've been active with share repurchases in both Q3 and in Q4. As we sit here today, we've already repurchased $500 million in stock this fiscal year. This is likely our total outlook for the fiscal year, but we saw a $300 million authorization raised to deploy as we enter our next final year. With that, I'll turn the call back over to Bill to discuss the outlook.

Thanks, David. Turning to page 10. Given the strong results that David just covered, we are increasing our 2022 expectations for net sales, adjusted EBITDA and adjusted EPS. With the recent Dallas purchase, we've also increased our outlook for capital expenditures. Looking ahead, we continue to estimate that FY '23 adjusted EBITDA will be between $800 million to $900 million. We are confident in this estimate, but it is subject to market volatility and changes in assumptions. In November, we will provide our standard outlook for FY '23. As we approach the end of this fiscal year, we are very pleased with what we have accomplished, and we are excited about the opportunities ahead. With that, we'll turn it over to the operator to open the line for questions.

[Operator Instructions] Your first question comes from the line of Chris Moore from CJS Securities. Your line is open.

Hey. Good morning, guys. Thanks for taking. A couple of questions.

Good morning, Chris.

Good morning, Chris.

Good morning. I know dynamic pricing is kind of one of the - obviously, the key strengths of the company and the volume decisions are often impacted by pricing. I'm just trying to understand maybe a little bit better. As volume declines, how price is tied to that? Is it different for PVC than it is kind of another area?

Chris, I think it's the next level on the question. It all depends on what the demand that is out there because obviously, we want to maximize both price and volume. And then it's just a balancing act of what - what the demand is because obviously, if you drop your price in half, it's not like in a construction market, people are going to buy twice as much and assume the competitors react. So I think the team did really well this quarter. And the only other insight give you to volume is with steel pricing over the last year, literally dropping from its high to where it is now 60%. Anybody in the channel probably has worked through their volume, and that's a distributor or contractor just because they can see publicly what hot-rolled steel price and cold-rolled steel prices are. So beyond that, the non-steel things, we actually grew in volume this quarter and pretty very comfortable and bullish on both volume as we go into next year in prices is playing out probably exactly like we perceive it should be at this stage.

Got it. That's very helpful. To stay with that, you know a little bit. When you look at PVC pricing today, where does it stand relative to 12 months ago?

It sounds likely we - but exactly, oh absolutely - versus 12 months ago, you're right. Thank you, David. I apologize, Chris, because I'm thinking sequentially. It's actually up compared to a year ago, and that's what's helping to drive margins. Now it is down that was your question slightly quarter-over-quarter, but we quite frankly anticipated that and that's why you kind of see the guide for Q4, the 3.05 to 3.35. But everything is working out exactly as we anticipated ironically other than, if anything, we had even stronger Q3 with pricing and every other initiative we're driving.

Got it. And the last one for me is just, are you seeing any meaningful changes on the PVC supply side? Any reason to think Mitsubishi is ramping production or any other players are entering the market at this stage?

No, I'm not aware of in the electrical conduit market. Again, my competitors and I don't talk, but no, I'm not aware of anything. And the only thing I'd say is lead times for the industry have return to basically normal I think we wanted to communicate that. But no, it's - everything is moving along and therefore, the confidence in our mind that our shareholders should have that we established kind of a focal point, I'll say, the $800 million to $900 million in what we're giving - specific guidance in November in the middle of all the craziness out there from possible recession to wars or anything else. We're still very comfortable with our models and us be able to deliver all numbers that we set

Got it. I leave it there. Thank you. Terrific quarter, so again.

Thanks, Chris.

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

Thank you. Good morning, everyone.

Hey. Good morning, Deane.

Good morning, Deane.

I just want to follow up on pricing. Just as you see the price percent sequentially coming down, simplistically, I've always looked at pricing power also based upon your backlog. So as long as you have outsized backlog, then you have pricing power. So the extent you can share some color around how backlog stands today even if you want to pick a product line, like help to give some context about pricing and then the go forward like in the fourth…

Yeah. Deane, the way I would think about it is our typical lead times pre-COVID were four days and we aspire with our RDC to see our lead times down to one day. So there's going to be some real fun things we'll be able to do to deliver value as we go forward with that corporate customers. But if we're sitting in four days implicitly our backlog is four days. And I think as lead times across all of our products from a metal conduit to PVC conduit and so forth, there's a couple of product lines that are still back all by months. But overall for Atkore and the industry is they're not. Now if you look out at what contractors have, that's still - is where your question may be gone very robust at eight or nine months and may deviate up and down literally like 0.1% of a month in their backlog. But that's from indicators like that to the architectural billing index, that David, mentioned in his prepared remarks, 17 months of positive ABI, we're still more optimistic for the future than I am for this year on volume, our capabilities to deliver new products to grow on.

Great. That's helpful. And then for David, on - look, we've seen everywhere across the sector, free cash flow being below the quarterly averages, and we're seeing that here today. How much - my guess is it's working capital build given the demand. There may be some rebates in there, but just give us some context about the free cash flow conversion.

Yeah. If you look at the operating cash flow number, it's actually a record for us. So we actually had a very strong operating cash flow a month. Embedded in that, you're right. We still do have a working capital build because we still have elevated pricing, so our receivables a little bit higher in inventories. And then we also had higher CapEx this quarter, mainly because of the investment in Dallas, the investment in a couple of our other growth initiatives. So when you take that into consideration, again, very strong cash flow quarter. It just wasn't to the same level as we typically would expect in the third quarter as a percent of net income.

And then, David, if I can add without the financials, I think our aspiration is a typical year, not this year, but is to generate 100% free cash flow to net income.

Just as you know, Deane, for the last 1.5 years, there's been a working capital build. When you look at the days themselves, we just looked at this interestingly enough. Our days are - is exactly where they were three years ago. So it's not like the days have elevated. It's really the dollars.

Got it. And then if I could just last one on the Dallas facility. Really interesting that it's both going to be manufacturing, as well as a distribution center. How long will it take to bring the manufacturing capacity? And are you looking at still other opportunities to add capacity by buying plants as opposed to what sounds to be more like a greenfield.

Yes. So Dan, to your first part of the question, we'll start to see the positive impact of volume from that facility in fiscal year 2023. So both good news for our customers in a very – a market that's supposed to grow double over the next seven plus years with the different infrastructure builds and 5G networks and broadband. So good news for our customers, good news for our shareholders. And as we go forward. I think anything is on the table, both we've been obviously the most active year with M&A, with the dollars we've spent and both most active year with organic investments. So I would exceed both of those things continuing into our future. And that's why, again, when shareholders ask us questions about the ability to deliver our future earnings is all these things that we've mapped out is just at what point do we communicate out because, obviously, there's competitors and so forth there, but this drives exactly why we have comfort in our $800 million to $900 million and never seen $600 million as we go forward.

I appreciate the very last point there because you saved me from asking a question about the fiscal '23 guide. So, thank you.

Yes. All good stuff. Thanks, Deane.

Thanks, Deane.

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

Good morning, everyone. I will ask about the fiscal '23 guide. So you didn’t change your '23 outlook, but you continue to put in your release that you expect PVC and other metals pricing have returned to more normal levels. I think many of us are just trying to figure out what your new normal is. You said the business is trending mostly in line with your expectations now. But as we get closer to '23, can you give us some more color on what the new norm might be for PVC pricing or electrical margins in '23 and beyond. And really anything more color on what's embedded in that $800 million to $900 million of EBITDA?

Yes. So Andy, I'll start. But as you can expect, we'll give a lot more clarity in November. I think it's an unusual thing for Atkore where most companies don't give numbers out in future years besides kind of shareholder meetings at a very high level, but we want to ground everybody into that pact. More details will come in November. We are seeing a slight, as I mentioned to an earlier question, I think, from Chris, slowdown in pricing, were starting to subside slightly, but nothing significant. I would expect a slight drag over the next year and two years. But again, what we're doing internally is all these growth initiatives, some of which we've communicated. I think there's other agenda items that we already have lined up to talk about. There will be a great growth initiative in November. So as we formalize those plans a little bit more, I just tell you more to come. But pricing continue to subside slightly, and then having enough growth initiatives even with a flat market that will control our destiny. I am pretty comfortable with solid organic growth next year, just even in a flat market just because of the things that we have lined out in other areas.

That's helpful. And then maybe, David, give some color regarding the volume declines in the quarter. It still seems like you're positive on the volume outlook going forward and the headwinds you're seeing are mostly supply chain labor related or maybe that reaction to steel price declines. But are any signs of weakness in overall end market demand? And how do you think about volume growth moving forward? I think you talked about it, now Bill a little bit…

Yeah, I appreciate the follow-up just to give some clarity there. So yes, I'll go long term, short term, long term, its solid [ph] So long term, we're comfortable when you look at everything, as I think I mentioned already David, the ABI is up for 17 straight months. I haven't checked this, but it's probably a history of how many months of positive results in Dodge Momentum Index and the backlog out there are contractors. And as I mentioned, the infrastructure bill really hasn't hit yet. And a lot of those things aren't going to show up in a square footage report, if it's adding new electrical lines underground and new fiber optic lines underground. So there's things if somebody looks at conventional metrics, they will not see that will help grow the business. And I'm not talking just our business, but the industry. I mean there is so much here with the electrification, EV charging, hardening of our electrical infrastructure that's exceptionally positive. Go short term for a second, its playing out basically as we expected. Again, Atkore is in a great position right now. But at the end of the day, there's products, for example, that we don't provide like switchgear that there's four or five other people in the electrical industry that they've gone from seven, eight weeks delivery times to a year. That's slowing up job sites little long, employment still tight, trying to get trades people out of job sits, especially when they have logistical issues with other suppliers. So if anything it's Andy in a strange way, if we have to get all the inventory out of the channel right now where we're doing such a great year to position us for next year, I'm very comfortable with it. And the other point…

The only other thing I'd add on the short term, Andy, is if you look at the jobs numbers, non-res construction continues to add jobs. So in June, it was almost 17,000 jobs. So there is work out there, the backlog is there. It's just getting the people and the products to actually execute on the construction, which is probably a little bit of a headwind you know, short term.

Now I'm getting, sorry, Andy, one other thing. One could make the case that even if there's a slowdown in residential markets, and/or recession and consumer things that we need workers out on job sites, so I can make a case that there's a slight recession in those markets, and it opens up more people to work in the construction industry, where we're going to have a higher fall-through rate of our electric product, it could actually help Atkore. So again, I think we're in a unique position with U.S.-made products, not dealing with overseas issues, lots of great growth initiatives, be really well positioned for the future.

Another point on that, Andy. When you look at residential construction, you see multifamily, a little bit of strength there. Certainly, benefit Atkore more than single-family does. So I think that's a positive. And you also see in some urban sensors at least anecdotally, where some office buildings being turned into residential drawing units, which, again, any of that refurbishment activity certainly helps our business also.

Very helpful, guys. And then maybe just wanted to follow up on in the HDPE conduit business. You obviously highlighted it, you're putting it together over the last year or two. Can you give us more color on how big it could get? And what kind of growth you do expect because I know it's probably a smaller part of your business still, but it does seem like you're emphasizing it?

Yeah. So real rough the HDPE industry overall coming from outside consultants and so forth is supposed to double over the next five, seven years. And that's tied exactly to all the things, including the $1.2 trillion infrastructure. So for us, without giving specific numbers, I think it can be a reasonable portion of our business. I got here to say today is going to be the largest exactly in the middle, but it's going to grow, I think, with our investments and acquisitions inorganically, and it's going to be strong markets to go all the fiber optic lines that having broadband access for everyone in the country, the infrastructure build to help subsidize that. And then there's a lot of times where a customer could use either PVC conduit or HDPE, I could get into the details of why there's different preferences. But as we look to put electrical lines underground, so they're not knockout with storms and so forth, this will play well for both HDPE and PVC markets for us.

Appreciate it, guys.

Thanks, Andy.

Thanks, Andy.

Your next question comes from the line of Victor Khong from Credit Suisse. Your line is open.

Good morning.

Good morning, Victor.

So could I follow up and ask a little bit more about the HDPE offering. I was just wondering how much of the leverage it is to the infrastructure bill, for example, if you could give a little bit more color around that, that will be great?

Yeah. It's definitely a great question, Victor. The infrastructure bill is going to absolutely help. I forgot the exact number, but I want to say there's $50 million, $60 billion of the $1.2 year marking exactly to putting fiber optical lines in across the country. So as I mentioned earlier, we've had outside consultants look at it and estimate the current capacity of the industry and how much should be needed over the next five to seven years to meet demand just of the infrastructure bill itself and its very promising.

Awesome. Awesome. Thank you. Could I also get some thoughts around the potential of the dividend?

David, do you want to address it, right?

Yes. So right now, when you look at our capital deployment strategy we put in place at the end of last year, we focused primarily on organic opportunities through CapEx, which I think we've done a really good job there. Our M&A opportunities because we feel like there's still significant opportunities to add these companies. And we've added four this year. So I think it's been a strong M&A year. And then not having excess cash sitting on the balance sheet, we decided we think the most effective way, at least right now from where we are is stock buybacks and we bought back as of we sit here today, $500 million in the fiscal year. So really, we look at our business as more of a growth opportunity with all the mega trends that our business cost support. So we feel like, at this point in time, dividend is probably not the way we want to go with capital deployment. But it's something we think about on a regular basis and I'm not saying in the future, we won't do that. It's just right now, we feel like there's a lot of growth opportunities. We want to take advantage of those right now.

And then David to add take nothing away or no foreshadowing here, but obviously, in November when we give the fiscal year guidance, we'll also give capital deployment, including future expectations for stock buyback and everything else. So again, it's nice to earlier questions. We're generating a lot of cash, and I think we're investing it wisely on behalf of our shareholders, including returning it with stock buyback.

Got it. Got it. And my last question is, what is the expectation around price cost into fiscal quarter four and next year?

So in quarter four, like Bill had said a little bit of price softening going into Q4 versus Q3. So sequentially, you see it in our adjusted EBITDA number, slightly down, guide from where Q3 was. And then Q4, we'll give you more details when give our official guidance in November.

Thank you

Thank you, Victor.

Thanks, Victor.

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

Before we conclude, let me summarize my three key takeaways from today's discussion. First, Q3 was a great quarter, and we are increasing our expectations for FY '22. Second, we are executing our capital deployment model ahead of schedule with over $730 million deployed in the first nine months of this year. Third, we have a bright future ahead, and we're committed to growing and building Atkore. With our recent acquisitions and growth opportunities in HDPE and our RDCs, we really do believe that the best is yet to come for Atkore. With that, thank you for your support and interest in our company, and we look forward to speaking with you during our next quarterly call. This concludes the call for today.

This concludes today's conference call. You may now disconnect.