Atkore Inc. (ATKR) Q4 2022 Earnings Report, Transcript and Summary

Good morning. My name is Rob, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Atkore's Fourth Quarter and Full-Year 2022 Earnings Conference Call. All lines have been placed in 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. Adjusted EBITDA is a non-GAAP measure. Reconciliations of non-GAAP measures and a presentation of the most comparable GAAP measures are available in the appendix to today's presentation. With that, I'll turn it over to Bill.

Thanks, John, and good morning, everyone. Starting on Slide 3, I'm pleased to report that Atkore again delivered outstanding operating results. During our discussion today, David will discuss the quarterly and full-year financials as we normally do, but we'd also like take this opportunity to review our successful growth journey over the past few years, provide additional details on our strategy and share our longer-term outlook for the business. But before we get into that, let me start with a quick review of some of our highlights from the year. Turning to Slide 4. 2022 was a fantastic year across all facets of the organization. We delivered record financial results, made great progress on our operational plans, and we were recognized for our innovation, customer service and ES&G achievements. Of course, none of this could be done without our talented employees who worked tirelessly to support our customers and I'd like to take this moment to recognize them for their great work. In addition, we continue to execute our proving capital deployment model. In FY 2022, we deployed over $950 through a combination of capital expenditures M&A and share repurchases. Last November, we announced a goal to deploy over 1 billion in cash over the next two to three years and now with the recent acquisition of Elite Polymer Solutions and the $150 million in share repurchase we've completed since October 1, we've achieved that goal significantly ahead of schedule. In terms of repurchases, we bought back more than 15% of the recent market capitalization over the past 12 months. David and I are extremely proud to see our vision for Atkore realize through the achievement of these strategic objectives. We work diligently to evolve Atkore into a leader in the industry that can be relied upon to consistently deliver on its commitments to our employees, customers, and shareholders. Without a doubt, we are leading a team that is setting a high standard for its say do ratio. Now, I'll turn the call over to David to talk through the results from the fourth quarter and the full-year.

Thank you, Bill, and good morning, everyone. Moving to our consolidated results on Slide 5. In the fourth quarter, net sales increased 11% year-over-year to $1 billion and our adjusted EPS increased 26% to $5.52. For the full-year, we achieved $3.9 billion in revenue and our adjusted EPS grew 66% to $21.55. Adjusted EBITDA for the full-year was $1.3 billion. Turning to Slide 6 in our consolidated bridges. Volumes were positive in the quarter and in addition we saw strong October volumes, which gives us confidence as we enter 2023. Looking at the full-year, net sales increased by [$986 million] [ph], due to higher selling prices and contributions from recent acquisitions, both of which contributed positively to the growth in adjusted EBITDA as well. Very pleased with the performance in FY 2022 and are confident in our ability to execute and drive value creation through capital deployment in the future. With that, I'll turn it back to Bill to speak with you about our growth initiatives.

Thanks, David. Turning now to Page 8, we're confident Atkore is an outstanding company and a compelling investment opportunity. With our exceptionally strong balance sheet and market leading positions supported by our disciplined operational focus and commitment to our values, we are well-positioned to deliver long-term value for all of our stakeholders. David and I will spend the next few minutes touching on some of the highlights of our operations and strategy and then move into more detail regarding our future expectations and performance. Moving to Slide 9, the Atkore Business System is the foundation of our company and it drives everything we do every day. For example, on Slide 10, you can see our broad offering of product solutions across the full lifecycle of the construction process. It is because of the Atkore Business System that we have the market insights and distribution capabilities to effectively provide the electrical distribution channel and the electrical contractor with the mission critical products in a timely manner. This has been and remains a true differentiator for Atkore. On Slide 11, our operating segments are highly integrated and aligned to support the electrical and overall infrastructure of ability. Between our segments, we share brands and customers and many of our safety and infrastructure products in the U.S. such as cable tray, metal framing, and our pre-fabrication devices support electrical contractors as well. Turning to Slide 12, the sales and earnings of the businesses have grown significantly since 2017. As we discussed in past earning calls, we recognize that we benefited significantly from the outperformance driven by elevated prices of our plastic pipe and conduit products. However, at the same time, we've evolved our business by leveraging our foundational Atkore Business System. This process driven approach has informed many of the strategic decisions over the past several years, especially in the areas of pricing and M&A. For example, we made strategic decisions to reduce our retail exposure and drive price increases in select categories. These decisions in combination with market declines in areas such as Steel Conduit have resulted in a $100 million decline in volumes over the past five years. What's notable, however, is that the loss of earnings resulting from that decline has been negligible. This is a fantastic testament to our successful vision, strategy, and execution that focus on the most profitable opportunities for our business. As we look at the significant benefit we've driven in regards to our pricing and profitability, we estimate that approximately 40% of that benefit is sustainable going forward. Turning to Slide 13, which shows how we've expanded and strengthened our business. Over the past five years since Atkore's IPO, we've leveraged both organic and inorganic investments in high growth areas to improve our business, mix, and increase profitability. This transformation has enabled us to grow our sales from $1.5 billion in 2017 to just under $4 billion today and to more than double our adjusted EBITDA margin percentage over that same period. Consistent execution and thoughtful decision making has driven this success and enabled us to continue our mission to be the customer's first choice. Through the changes in our sales mix, we've also increased our total addressable market opportunity, as well as our capability to successfully capture these opportunities in the future. With that, I'll turn the call back to David who will walk us through the end markets we serve and underlying market fundamentals and megatrends that support our business.

Moving to Slide 14, [other success] [ph] we have achieved in recent years is due to the universal nature of our products and our ability to serve multiple end markets. In addition, our products are used throughout the entire life cycle of the building construction process. Looking forward, the underlying fundamentals of our end markets are strong. Slide 15 outlines several of the external factors we track monthly and notably the rolling 12-month average for each of them is moving in the positive direction, compared to a year ago. Our solid market fundamentals are underpinned by the megatrends that support our diverse product portfolio as shown on Slide 16. While our different product categories have varying levels of exposure to these trends, this ensures that we are not too dependent on any one demand driver or one single area of our opportunity. For example, we believe the Electrification of Everything trend will be steady demand driver across our entire private portfolio, while the expected investments by certain utilities to underground power lines will have an outsized benefit on our plastic pipe and conduit products. In addition, the projected growth in solar and the benefits from the Inflation Reduction Act should advantage our mechanical tube [products list] [ph] as this balanced approach that we believe will be integral to our continued success as we move forward. With that, I'll turn it back to Bill.

Thanks, David. On Slide 17, we've outlined our conduits of growth. M&A is central to our growth strategy and we have a robust pipeline and a proven playbook that we will utilize when pursuing and executing acquisitions. Whether through M&A or organic investments, we are also focused on growing key categories. For example, we believe our expansion in HDPE products and large mechanical tubing will open up significant growth opportunities for us in the future and I'll touch on both momentarily. Lastly, we seek to be our customers first choice in part by striving to grow our focused product categories and deliver innovation. Underpinning all these efforts is our goal to improve the customer experience and making it easy to do business with Atkore. This is achieved through our digital investments and our strategy of one order, one delivery, and one invoice. Turning to Slide 18, we have a very disciplined and thoughtful approach to M&A. With each deal we make, we are focused on driving synergy improvements through the execution of the Atkore Business System. Over the past several years, these synergies have been a key driver in our growth and return on invested capital. Slide 19 demonstrates the outstanding progress we made in terms of M&A over the past several years. We deployed $649 million in M&A between FY 2017 and FY 2022 to expand our geographical presence, bolster our product capabilities, and enter into new markets. Of that, 329 million was spent on acquisitions between FY 2017 to FY 2021. That group of deals traded at a combined result of less than 1x revenue and less than 2x adjusted EBITDA in 2022, representing a tremendous synergy improvement driven by the execution of our Atkore Business System. Our track record of successful integration reaffirms our expectation that the group of acquisitions recently completed will help drive our future performance. Along those lines, turning to Page 20, we'd like to welcome the employees of our latest acquisition, Elite Polymer Solutions, which we acquired approximately two weeks ago. We're happy to have you join our team and look forward to continue to grow and strengthen our HDPE portfolio together. As outlined on Slide 21, the HDPE product category represents an approximately $7 billion market opportunity. Through our strategic acquisitions and organic investments, we expect to be a leader in the conduit products for telecom and broadband applications and a Top 10 player overall. Our investments in this year to date have enabled us to better serve customers and meet the growing demands resulting from the expansion of 5G Networks and the broadband access for rural communities. Another investment this year is outlined on Slide 22 is large mechanical tube production. With key investments in our facilities in Arizona and Indiana, we believe we are well-positioned to capture the growth from end markets such as solar. Supporting our market driven approach is our focus on new product innovation and prioritizing the categories we believe we have the right to win. Turning to Slide 23, because we have a broad and diverse set of products, we have several opportunities to gain share in the key categories in which we operate. Our diversified approach is central to our success and also enables us to contribute to our customers and contractor success. I'll now turn the call back over to David, who will discuss how these initiatives can help drive our future financial performance.

Thanks, Bill. On Slide 25, we outlined our strong financial performance over the past several years across various metrics. I'd like to call your attention to the strength of our balance sheet and our reduction in our gross leverage ratio. As you know, we take a disciplined approach to capital allocation and maintain a strong balance sheet, always a focus of ours is especially an important and uncertain macroeconomic environment. Although we are concerned about the potential for a global recession in the near term and a U.S. recession over the next 12 to 18 months, we are still moving forward with our projections for FY 2023 and beyond it given the strength of contractor backlogs in the market demand environment. For example, several other large companies in the electrical industry have spoken about the growth in their backlog, which in turn will drive future demand for our products. That being said, 2023 may be a big volatile given the current economic uncertainties. Turning to our outlook for fiscal year 2023 on Page 26, we expect net sales to be flat to down in 2023 and we expect adjusted EBITDA to be in the range of $850 million to $950 million. This is $80 million higher than our preliminary perspective we provided previously. This outlook does not include any expected benefits from the tax credits associated with the Inflation Reduction Act as we expect the majority of these credits will flow through to our customers. We prepared an Illustrative bridge between FY 2022 and FY 2023 on Page 27 with the key drivers. And as we mentioned several times previously, under the pricing outperformance that we've enjoyed over the past several years has started to normalize and we expect lower adjusted EBITDA and adjusted EPS in FY 2023 versus FY 2022. That being said, we do expect solid mid-single-digit volume growth this year with strong incremental margins. Moving to Slide 28, even with the projected lower earnings next year, we still expect to generate healthy cash flow in FY 2023 and beyond. We've updated our capital deployment framework to reflect that we've already achieved the goal we set out last November to deploy [$1 billion] [ph] to over two to three years. Looking forward, we expect cash flow from operating activities to average 100% net income over the next several years. With that strong cash flow, we will continue to invest in both organic and inorganic growth, as well as to continue our share repurchase program. Our Board just approved an increase in expenses to our prior share repurchase program. We're now halfway through our authorization [about $650 million] [ph] remaining to deploy through November 2025. Turning to Slide 29, we believe the initiatives that Bill walked through today in combination with our updated capital deployment model will drive significant value creation over the next several years. [Indiscernible] page is the illustrative EPS earnings bridge. By FY 2025, we expect to achieve greater than $18 per share in adjusted EPS. We've moved our focus to EPS because we believe some of the factors impacting our business such as commodity input cost fluctuation and other items make EPS a more relevant target metric. In addition, focusing on EPS allows us to fully reflect the benefits from our capital deployment model, which we expect to help drive significant performance moving forward in combination with our conduits of growth. Achieving more than $18 per share is a lofty goal. than when we believe this well within our reach and that we expect the team as a team. With that, I will turn it back to Bill.

Thanks David. We are very pleased with what we've accomplished this fiscal year. We're even more excited about the opportunities ahead. Moving to Slide 30, Atkore has the foundation in place and strong megatrends [repelling] [ph] us to deliver on our goal of greater than $18 in adjusted EPS by the end of 2025. We believe our disciplined operational focus, market leading positions, and strong financial profile make Atkore a compelling investment. I'm confident in the team, strategy, and processes we put in place to continue Atkore’s strong trajectory, and I firmly believe the best is yet to come for our company. With that, I'll turn it over to the operator to open the line for questions.

[Operator Instructions] Your first question comes from the line of Deane Dray from RBC. Your line is open.

Thank you. Good morning, everyone.

Good morning, Deane.

Good morning, Deane.

I appreciate all the guidance and longer-term goal specific. That's real helpful. I know there's lots of focus on pricing and pricing normalization and you've given some good insight here. Can we refer to Slide 12, because this is a really interesting split that you've given at the bottom of the page between price costs where you identified the estimated pricing outperformance versus sustainable pricing improvements? Maybe just kind of give us a sense of what the assumptions are there and just, kind of [indiscernible] the definitions of those two buckets, because by appearance as it looks like 60% of the pricing that outperformance you've gained is not sustainable? Is that – or that's the part that gets normalized? So, just kind of take us through the assumptions there.

Yes. So, great set of questions, Deane. I'll start. Obviously, this is an estimate going forward, but we are triangulated by looking at every product line what we've sustained in the past, because some of our product lines by the way are still increasing in profit margins, you know but even as commodity costs are going down and that ties back to supply demand and also as factory and things that [indiscernible] our own self help, like our one order, one delivery, one invoice, and the price extra that we can get for the market for that. So, what this is saying is to go, hey, 400 million or that, we think we're actually going to hold on to. And if you look back and you've covered us since we've gone public and you're familiar with the corporation, every year we've gained on price versus cost. So, on the same hand, we do think and we saw some in this year that we are probably going to give up some price. Now, what I would say is, the mindset of our internal team is, how do we even turn that around and drive that more. But I think it's a realistic external view to model around. And then our job, obviously, we've already given anchor points, let's say, $18 a share, but if we can hold on to more of this 585 that even means the $18 goes up. So, I think it's a realistic number that we’ve triangulated from a couple of perspectives.

All right. That's really helpful. Now, maybe just kind of a follow-up here is the way we've thought about pricing normalization and that's consistent what you've just laid out here, but If I think about it as kind of three dynamics that there is market demand. So, we can still see and you've given those indicators that there is good demand maybe if you can give us a sense of backlog? The supply advantages that you have as a national supplier, the one invoice etcetera, and also then the dynamics on the input costs, we can all see what's happened to PVC pricing, but again that's not in its own driving the normalization. It's part of it. So, if we think about it as three separate dynamics, the demand that you're seeing, what kind of backlog your advantages as a national supplier and then the impact of the lower input costs?

Yes, so perfect, Deane. So, market demand, we're optimistic there's another slide in the deck here. But avoided the last month, we're also [indiscernible] for one month and a month over month, all type of factors going forward, look optimistic, and sometimes in these different factors that would say like ABI or something, they don't include, which David and I covered all the megatrends, all the investment and Inflation Reduction Act and the Infrastructure Act and specifically within the Infrastructure Act, what's called [beads] [ph], which is $65 billion would put fiber optic lines underground. So, there is so many different dynamics here, and whether it's you or others cover other companies, the non-residential market from almost any investor seems to be very bullish. So, we're optimistic. Even if there is a consumer recession, it will not hit or would not be impacted as much on the non-res side of the world. So, optimistic on market demand and the megatrends and then just supply advantages, you know what we're doing, the relationships we have with customers, the full package of products at one order, one delivery, one invoice, we're actually seeing I'll say mid-to-high single-digit price advantage even compared to Atkore, like the difference between shipping a full truckload, and ability to bundle all these products like [you or I] [ph]. If you went to a website, you want to buy everything one place and get it delivered. Our customers appreciate that. So, again, where we in one of the bridges show we expect to grow 100 basis points, 200 basis points higher than the market and we're optimistic on the markets. That's why, by the way, then I'll go to input costs. You're seeing with that where I think it's truly an inflection point back to your page – or our Page 12, we referenced. In the past, we've gotten price and cost and proven customers we're optimistic on mid-single digit organic growth going forward and then M&A on top. So, between market and supply advantages, I really think this is an inflection point for Atkore, off of obviously an amazing last half decade plus performance. And then overall, I think input costs are now starting to subside the one's going downward, but steel costs are going from the one-third, roughly $80, $90, $100 per high roll down to around $600, coppers drop from 450 to 350. PVC will still continue to go down through the end of the year and then start inching its way up. So, and then, other products, by the way, just to give you one like HDPE, that's going down the input cost at the same time, we continue because of our ability to deliver on time, confidence, relationships. They use one example to raise our prices. So, that's why as we look forward both for the guidance that we raised for this year. And as we look out, and the comfort that we have, it's still an estimate to get this to $18 beyond in 2025. So, hopefully you realize the bullishness both our past performance, but also we have in the future.

Yes, that's really helpful. And I just wanted to – and questions here with a view on your guidance. Mostly on the cadence that you're expecting for the year, the first quarter guide is well above expectations. And are you – just what's your sense of the first half versus second half dynamic? Is there – [Multiple Speakers] take them?

Yes, good, great question, Deane. I would say level over to your point if we're guiding here in the 240 million to 260 million, and the 850 million to 950 million where there's typically summer seasonality to the business. Hopefully, it's conservatism, but with one of the things that I and David and the team never want to do is do one of the things you hear from other companies while we simply underestimated the war or natural gas or railroad strike or the weather. So, hopefully as we go forward, we can pick up on these numbers. But I think it's a rational, logical number that we're given at this moment, which is kind of as we move forward, we're going to start seeing a lot of our initiatives go into place that's going to drive organic growth, but we will probably still have some of that price that we [indiscernible] the PVC market working as a headwind. But I'm very comfortable with the numbers we put in front of the group.

That's all very helpful. Thank you.

Thank you, Deane.

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

Hey, good morning, everyone.

Good morning, Andy.

How are you Andy.

So, volume growth in Q4, you said was massive positive after a few quarters of negative. Was that more that you saw channel destocking coming to an end or was it more a function of supply chain headwinds continue to ease? And then, can you talk a little bit more about your core markets? Obviously, you mentioned key non-res indicators have remained resilient and strong contract to backlogs, but the ABI did soften a bit recently in October. So, are you seeing any signs of weakening core non-res markets? And what assumptions for the where non-res markets are you baking into FY 2023?

Yes. So, great set of questions, Andy. The thing that I just, obviously, we've talked during the other discussions that you'll be [glad] [ph], I think most of the core destocking is behind us. To your point [indiscernible] use that word, but I'll say that's behind us. And therefore, you saw the low single digit growth and with that, a lot of our products were up mid-high-single-digit to just the final of like metal. You know Deane asked the question with cost going from $1,800 over a year to 600. Our customers are wise enough to probably lower the amount of raw materials they were stocking, but I think overall that's all behind us and moving forward gives us optimism and we've seen it in October as we give forecast of good mid-single digit type of growth. So, [good there] [ph], I think I'm answering Andy, maybe not for you, but for the audience in general. One of the things with the architectural billing index is it's a month over month. So, yes, it went down for one month. But that just means, for example, if it was September's or October's data, it's the same as two months ago. And after 20 months of rise, I'm still optimistic and then from backlog, the backlog whether you look at ABC Association of Building Contractors you talked to other companies in the electrical industry that have laptops. Again, we pride ourselves on taking order and shipping in a week. So, I can't look at our own backlog versus much talk to other key customers, see what other competitors that have like Switchgear, they're literally out over a year, seed and so forth, the different indicators. There's so many positive trends that we're optimistic on the future. So, I think I answered Andy most of the questions and then things like healthcare, the chipset, or what that's going to do for customers and these are big facilities if your different brands out there, making mega factories that have a lot of electrical content in them. So…

Andy, the only thing I would add, this is David. If you look at the [start data] [ph], I mean there's – it's pretty broad based. If you look at – there’s a lot of starts around airports, medical facilities, schools, that sort of thing. Even like lately, there's some pretty big starts around hotels and people adding convention centers, this sort of thing. So, at least right now, it looks like it's pretty broad based.

Very helpful guys. And then maybe just focusing on FY 2025 because you put it out there. You look like you're baking in something close to mid-teens EPS growth with little continued pricing normalization after 2023, just maybe clarify that. And I know you say, it's a goal, but can you talk about the underlying market conditions that you need to see to get to that goal? And why wouldn't you continue to see more price normalization if commodities do continue to come down? And then what are your assumptions for share count and net leverage in that $18 forecast?

Yes, it's a good – it's seriously a good question. David. So, first of all, I would say low-single-digit kind of market expectation over that period of time and then obviously we expect to outgrow with some of our initiatives. I would also say on that on the pricing, you're correct in saying we have a little red line there perhaps between [23% and 25%] [ph], but we do think the normalization will by and large be behind us this year. But also remember, it's more supply demand and it really is the underlying commodity And then as we continue to progress our initiatives around our RDC, our one [indiscernible] shipping as we start to really enhance those capabilities. We feel our pricing power will even be that more robust. So, that's what we have built in. As far as capital deployment, I think we've been somewhat conservative over this period of time. So, I would say a little bit not as robust as last year with buybacks, but similar level of buybacks you can see what we have in for this year as far as an example of what we have in for our guide, and then M&A we'll see.

Got it. And David, just one quick one just to clarify, like the [585] [ph] on pricing that you mentioned, when you look at Slide 27 in your 2023 outlook, basically on the revenue side, it looks like you're giving back something like maybe 10% on price, is that relatively accurate? And then you're giving back the majority of that [585] [ph] this year, is that what's in the bridge more or less?

That's correct. That would be an accurate assumption Andy.

Okay. Thank you.

Thanks, Andy.

Your next question comes from the line of Chris Moore from CJS. Your line is open.

Alright. Good morning, guys. Amazing quarter as always.

Good morning.

Good morning. Talk maybe a little bit about free cash flow. It looks like it was a very good quarter. So, on a yearly basis didn't meet your net income target obviously inventory and was up significantly. Maybe can we talk a little bit about [2023 free cash flow] [ph]? Is there some catch up there? I know that there's still lots of, you know CapEx is going to go up etcetera? Just maybe kind of talk to 2023 free cash flow a little bit.

Yes, absolutely. So I would say that in general, the percentage of net income, adjusted net income will be slightly higher in FY 2023. I think a couple of things. One, operating cash flow should be down slightly because obviously our EBITDA projections are down, but then we won't have the working capital headwinds that we've had in the last say two years. So, over the benefit of working capital, do we have increased our CapEx and we've increased that mainly due to the fact that we have pretty robust again organic growth opportunities, the build-out of Dallas continued investment in HCP and such. So, that's probably why it's going to be a little bit lower than that 100% target over time here in the next year. But again, it's mainly because of the robust opportunities we have for our growth initiatives.

Got it. Very helpful. And I wonder maybe if we could talk just a little bit more about kind of HDPE versus PVC markets, kind of the compare and contrast. For example, from an interest rate sensitivity perspective of the end markets, Is there any difference there kind of thinking in terms of that 5G driver versus some of the things on the res side, could be quite different. I'm just – would be curious to get your thoughts.

Yes. Good set of questions, Chris here. So, optimistic for both product lines and the markets they serve. HDPE, I think there's so much demand out there that this constraint is what blue collar people can go put the lines underground, the demand, the capital that's been set aside by the funding by the government is literally expected to be very high single digit compounded growth for the next five, seven plus years. So, we're well-positioned in the [indiscernible] in a good way is how quick and the lines be installed. So, all right there. PVC with also infrastructure, we mentioned one that charged the hardening of grid, so putting lines underground, electrical lines and so forth, also very optimistic. And then we, for example, have specific things we called out in this deck. For example, [indiscernible] where there's product lines that we can make it where it's like 25% less material, therefore lighter weight. So, good for the contractor, good for us on a cost position. So, there's a lot of unique things there. Little bit of headwind going into the residential market. But again, that's one of the smaller markets that we serve. So, again, I keep going back probably like Dave, excuse me. And say, with all those things out there, we think that we have enough with organic growth with investment in M&A and capital deployment that putting that [$80] [ph] anchor point out there for EPS. Let's get valued there and then we'll talk about what Atkore can do to continue to raise the bar.

And then, Chris, one other thing if you mentioned resi and we did say about the [softness there] [ph], but there's also some robustness in multi-family, and just in general, we benefit more in when multi-family is up than we do in residential only because our broader portfolio is impacted positively with multi-family.

Got it. Very helpful. Last one for me. It may have been asked, but I'm not sure I got it. So, just in terms of the $18 adjusted EPS, is there a kind of a share count guide range that you're thinking about that goes with that $18?

Well, I would suggest – so I would just look at what we guide for 2023 and just roll that for the 2025.

Yes. We have some optionality built-in. Chris, this is John. I mean between M&A and share repurchases, right, that we're going to – so it's a difficult thing to get to a specific share count obviously where the pricing will be on the shares of the period. So, I think we're trying to balance there some optionality and flexibility.

Very helpful. I'll leave it there. Thanks guys.

Thank you, Chris.

And your next question comes from the line of Chris Dankert from Loop Capital. Your line is open.

Hey, good morning. Thanks for taking the questions. I guess, first off, I'd echo the earlier comments on Slide 12, excellent waterfall. I really do appreciate [indiscernible], so thank you again on that. Forgive me if I missed it. On 2023 specifically in the guide there, took up the EBITDA range of the midpoint a bit, what's giving you confidence there? I mean, is it the demand environment holding up well? Is it pricing? Any additional details on, kind of what’s given you comps taking up that midpoint would be great?

I think it's, Chris it's a little of everything. Like now that we're obviously – it's always so easy to give this first quarter guidance. I mean we're halfway through the quarter, but pricing is holding in there. So, that's one thing. We are now seeing the mid-single-digit volume increase. We're seeing the investments we're making that will hit later in this year continue to come to fruition, David, talked about capital deployment. So, it's one of those, I'm going to answer two sets of questions both back to this year and also the $18. There's multiple pass here. I always make the analogy of trying to drive through the city and assume you hit every green light. Here is one where we have planned in to go even if one thing does a little less, there's enough other strengths here. So, Chris, a little bit, I'll be quite candid here on moving the guide up by $50 million was through both obviously $50 million, a 5%, 6% increase in EBITDA for the year, but also a confidence we have in the year. We could have just went to 800 to 900 and we each want to signal, guys, there's probably no risk on the downside here, and since David and I have been CEO and CFO, we have not missed this single earnings and we don't expect to hear it going forward.

I really appreciate the color and the comment on the guide there. I guess, just kind of following up on HDPE, I guess you commented on the market, but you guys have been very, very busy on the M&A front, I guess, what does the pipeline look there? Are there still enough opportunities? Are you still looking for more? Just any comments on kind of what you're still looking to sell in the HDPE side?

Yes, I think we, obviously we’ve been pretty active and there are still some other opportunities in HDPE, but I'd also point out for the broader $40 billion of TAM that we've kind of outlined. So, we get a lot of questions around M&A and we do have high share in the number of our markets, but we do have a lot of opportunities in some broad categories of building wire, these different things, wire and cable, that sort of thing. So, I just want to point out the fact that the weighted portfolio has evolved, we now have a TAM which is much bigger than it would have been say 6, 7 years ago.

And I'll just add David to Chris' question. So, yes, there's absolutely other HDPE acquisitions. The other thing in the 200 million is a heavy investment we called out for example in Dallas to do organic lines to add to our portfolio. And then not the U.S., but a huge shout out on the one page in the M&A where I've always – Dave and I've always talked about how accretive our M&A has been where you look and say for acquisitions that have been over a year or so old, we literally now have like a 2x EBITDA multiple after synergies for what we buy these acquisitions at, buy that core business system in all facets from productivity or pricing. You can see the accretive capability we can add. So, that's again why we're excited about the future, because we're playing and hitting on all cylinders here.

Really appreciate the color guys. Best of luck on fiscal 2023 here.

Thank you, Chris.

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

Before we conclude, let me summarize my three key takeaways from today's discussion. First, fiscal 2022 was an outstanding year for Atkore. Second, we are well-positioned to build on our positive business momentum and have a strong outlook for FY 2023. Third, our strategy will drive further value creation into the future as we continue to execute on our growth opportunities and deliver on our updated capital deployment model. 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.