Welcome everyone to the 19th Annual Oppenheimer Industrial Growth Conference. Next up, we have the Atkore team. Happy to have CFO David Johnson and VP of Treasury and IR, Matt Kline, with us today. Welcome, guys. Thank you, Brian. Hi. We appreciate being here. I appreciate you participating. For those a little newer to the Atkore story, maybe provide a brief introduction to the company, your recent history, discuss the current portfolio. Yeah. Yeah, excellent. So we're a mainly U.S. based company, about a little under a $6 billion market cap. In our primary markets that we serve, we're a manufacturer of what I would call electrical infrastructure products. So when you think about all the conduit, all these sort of things that are in the ground, or if you look at, if you're in a parking garage and you look up, you'll see a lot of our metal framing products, so on and so forth. We go through the electrical distribution channel in the United States. About 10% of the business is outside of the U.S. We've been around for quite a long time. As a public company, now, only about seven years. The company was originally part of a much larger company, and then it was sold to CD&R, which is a private equity company, and then we went public, roughly seven years ago. Some of our product lines have been around for almost 100 years, so we have quite a long history of manufacturing these type of products. And over the last several years, we've added about, you know, 14+ acquisitions over the last five years, so we've been fairly acquisitive during this period of time. The general markets, if you think about any construction, so construction of a building that needs electricity, be it a data center, hospital, anything like that, they need our products. We tend to be one of two or three major players in all of our markets, and again, I think with a lot of... We can go into some of the possible tailwinds to the business, but anything about the electrification, you know, AI data center build-out, fab plant build-out, so on and so forth, would be, you know, some of the, I would say, volume generators for our business in the future. Excellent. I appreciate the intro. Yeah. And, we got AI and data center in there in less than three- Oh, yeah, I guess, Well, we'll definitely circle back to those. All right. So your team just printed, you know, a pretty, pretty solid results, but you did have to revise, you know, guidance and, you know, stock sold off yesterday. Just the optics of that, you know, unsurprising to see a little bit of a bleed in shares. Yeah, I don't want a myopic focus on the short term, get a little more strategic in our discussion here. But just to cover the quarter, you know, and investor response, was there anything outside of, you know, having to revise the guide and, you know, the simple, you know, reset of models and all that, that you heard yesterday, you know, any, you know, real points of contention that were raised, you know, pushback outside of what was expected, you know, during your call last? Yeah. So I would say, Brian, there probably wasn't anything directly communicated, but if I back up and look at our performance over the last several years, I think there's a reason why we had the reaction we did yesterday. So we, during the COVID period of time, experienced a really robust market for one of our product lines. It's called PVC Conduit, which is used in single-family housing when you're building out a big neighborhood and all this sort of thing. So going into COVID, markets were pretty strong, and then we had a pretty significant disruption in supply of resin, which in turn led to some very large pricing gains for us and for our competitors. So in this timeframe, we went up from, like, $400 million of EBITDA to, like, $1.3 billion of EBITDA during this period of time. I'm giving you a little bit of history because I think it is pertinent to today's kind of mindset in the, our investor base. During that whole ramp-up, we always articulated that this would not be permanent, so we would not be making $1.3 billion forever, that there was a certain amount that we would call as over-earned that would normalize over a period of time, and we pegged that number at $585 million. So it sounds pretty exact, but, you know, getting there probably wasn't as exact. And we said it would be a multi-year experience. Probably not a pleasant one, because you're gonna see, you know, declining EBITDA over multiple periods of years, but it's nothing that's gonna happen really quick. And we always said, the longer the better, because we'd be making... You know, generating a lot more cash, we'd be deploying it, I think, in appropriate places. So we're now in the, you know, two-year timeframe of that, and our guide currently is aligned 100% with what we said two years ago. But I think there's still a lot of concern, I wouldn't say concern, but let's say debate about where is our normalized EBITDA level that we'll then grow off of into the future. I think when you saw the reaction to the stock yesterday, it's some of that backdrop, and we did take down our EBITDA midpoint by $50 million, from $900 million-$875 million. I think that's why we had the reaction we did yesterday, so hopefully that, that helps. Okay, although the guidance reset, and please keep in mind, there was amid a lot of other activity. So I did, you know, scan the print and read, you know, your transcript, but haven't really dug into the numbers. But the reset related to, you know, the growth growth initiatives that you have, HDPE and solar, and resetting some of those underlying assumptions, and in turn, the, you know, the bridge for the year. Right. So, that would be outside of the, you know, direct price cost realm, correct? Totally. So I, I think we did isolate our issues to two. So one, we expected more of a ramp-up from our solar business, and that is more an element of us getting a new plant up and running to capacity than it is, like, market demand or anything like that. We have a really good relationship with our customers. They really like our products. And then HDPE was a business that we consolidated some of the market a couple of years back, and everyone's expecting, you know, what's called BEAD money, which is a public funding for broadband internet in rural areas, underdeveloped areas. It's just taking a lot longer to get that money allocated and moving, and I would say we were also against a backdrop where people were really nervous about the capacity in the market, so a lot of folks pre-bought. We've been going through destocking levels over the last, I would say, you know, several quarters. So yes, we changed our guide mainly due to those two items. Those two items probably equated to about $80 million worth of adjustment from our expectations. And then to your point, the whole rest of the business, which is by far the bigger part of the business, was actually better by $30 million. So, you know, that would include the price cost discussions that we have. It would include volume, you know, productivity, all these other sort of things, but slightly favorable than what we had before. And the other thing I will say, Brian, that we did do is, the $50 million would typically be $1 a share- Mm ... you know, kind of where our share count is. I would say that we were able to look at our favorable tax rates we've seen, interest, expense, so on, so forth, and we were able to adjust our midpoint of our EPS just by $0.50, so. Okay, understood. I appreciate the breakdown. So 3% adjustment turned into whatever, 10% stock reaction or whatever it was. Well, it's it is what it is on days like that. Yeah. But nonetheless, I do appreciate that, that breakdown. You mentioned that, you know, the rest of the business, the majority of that quarter, you know, is trending a bit better than expected. Maybe you could offer some color there, and the puts and takes of, you know, end market demand and your own operating trends. Yeah, so end market demand, I mean, I think there's a good backdrop for construction in general. And the way we look at it is... and we don't have a great level of backlog that we're able to sit back and look at and do our forecasting, what have you. Our backlog average is about two weeks. So our backlog average is two weeks. Most of our product lines, our pricing adjust every single day. So here you have two weeks of backlog, pricing adjusts every day, your input cost is changing, your commodities, whatever, and you're doing a forecast for however long a period of time. So we tend to take a more macro viewpoint when we start to talk about the market. One of the things we look at is the backlog that contractors have, Brian. If we look at some data that a group called the Associated Builders and Contractors, it's actually ABC. Mm. They put out some really interesting information, and basically, that's about eight months supply right now. So contractors on average have a backlog about eight months. I would say that's a healthy level. So I would say they probably don't want to get too much bigger to get exposure to pricing and all this sort of thing. So that's pretty healthy. And then we look at... Probably the more important piece would be: What's the employment levels of construction for non-res construction? And when you look at that, for April, say, of this year, it's up of 3%-4% versus last year. So you have more people, which you would say would be great, there should be some growth there, what have you, to execute all these projects. But I would say the productivity, I would guess, is not as good as it used to be, because you have a lot of people leaving the construction industry that have a lot of experience, and you have a lot of new folks coming in. So you add all that other backdrop, I would say there's plenty of demand, there's plenty of opportunities for growth. I think the thing that's holding the industry back a little bit right now is, one, the people to execute the projects, and then specifically in the electrical industry, there's a couple products that are under capacity, and it's holding back growth in general. We don't make these products. They're made by other very large manufacturers. They've announced increases in capacity, and now we're starting to see some of that taking place, and that's very important, because when they start shipping more, we will tie into all that. Like, our stuff is behind the scenes, and so that will mean more growth for us. So I really feel like we've grown 6% year to date, the first half of our fiscal year, so we are September year-end. So I think that's good, not great. The back half of the year, we expect to be about the same. Okay. I appreciate the color there in terms of, you know, the underlying demand and, you know, what's signaled by, you know, contractor backlogs, other leading indicators. And obviously, we know that there's, you know, tremendous interest, you know, unprecedented level of funding for mega projects, and- Right ... everyone gets excited about that. We don't push back the reality of that demand.... you know, most of it should happen. Most of the construction should take place, but there are the gating factors that you referenced. You know, some key component supply up front, and labor is just a through-the-cycle, you know, pain point. Totally agree. I mean, every time someone brings up a new possible tailwind, whatever, you know, one for us would be, like, grid hardening, where in California you're putting your lines underground because you don't want forest fires, or in Florida because you don't want the repercussions of hurricanes. I mean, all this stuff is great, except it all takes the same people, you know? So it's not like there's a labor pool just waiting for work out there. And so I think, you know, having a slower single-family market's not necessarily a bad thing because some of those folks, I think, are in the non-residential construction market now. But eventually that will pick up, too, which would be good for our business, but you're gonna need more people, so. Yep, understood. It does, however, you know, prolong the... I guess we're- we would be amid somewhat of a mega cycle, and- Yeah, it- it's- It's somebody mentioned that because even before COVID, we were having these exact same conversations about having labor constraints and it being elongating the cycle, but maybe muting the total potential, you know, volume. And I just feel like we're somewhat there again, maybe even in a more, you know, in a larger way, so. Yeah. Understood. And that's a pretty good segue. You know, thinking about your path forward, all the growth potential that your company has, you know, you again brought up, you know, data centers, AI, you know, right off the bat. And I say that partly in jest, but they're real drivers for your business. They are. You know, maybe, you know, touch on just electrical infrastructure overall, you know, the mega projects that are out there, a lot of the thematic, you know, spending focus that, that's driving, you know, interest in industrials, you know, how much your team, you know, plays in those markets, applications, and, you don't have, you know, long-term guidance out there. We can get to your fiscal 2025 target. I'd like to do that, briefly, but just to the extent that you can quantify- Mm-hmm ... what these drivers, you know, can mean for the next three, five, seven years. The way we tend to look at, the way I like to communicate to potential investors and investors is, we participate in the construction market by segment the way the market is. So I would say that we don't have, like, double share in one segment and no share in another segment. So, generally speaking, like, if data centers becomes 10% of non-residential construction market, or eight or whatever, we'll probably participate in it in that realm. So kind of with the market, we have high share in many of our products. I think what gets us excited about things like data centers is there's a certain amount of what we would call, like, product intensity of different applications. And I'll give you an example. So if you're looking at a big, empty warehouse, for instance, the amount of our products that are used in there, the PVC, electrical conduit, whatever, I would say would be below average. Then if you look at maybe something like multifamily or something, an office building, I would say that's on average. You use all of our products at a certain rate. When you look at these very electrically dense applications, and data centers is a perfect example, it uses all of our products. It uses our metal framing, our cable tray, armored cable, PVC, I mean, you name it. So it's very much more application dense for us, and by the way, these projects tend to last a little bit longer, too, which is always good, too. Because one of the other things we would like to remind folks is, we participate through the entire construction cycle. So we're not, like, there. We're there at the beginning, the middle, and end, but different products. So what's nice about us, we have a little bit of a portfolio effect there, where as an investor, you don't have to pick and choose what segment, if there's any as long as construction's going on, our products are gonna be needed. If the whole market is skewed more towards data centers and these intense kind of applications, I would say that that's better for us, which is good. If they last two or three years, like an airport project or a fab plant or something like that, that's also good, 'cause we're likely to get, us and our competitors, you know, business over that whole period of time. I always like to contrast that against maybe like an elevator company, where you have to pick, does the building even have an elevator or not, and when is it delivered? Which is one piece at a time. We're more kind of broad-based across the entire construction activity. That makes a ton of sense. Is there any way to quantify, you're referencing, you know, product intensity, like, you know, content per square foot or any kind of a metric of that sort that you could reference? We've tried this many times, and I think that we had a deck... Matt, you can remind me. I think it was maybe last year, at the end of the year, we put together a slide or two, which at least showed a little bit of the progression of what would be more product intense versus others. I'm not sure we put a ton of numbers to it. We've done some work, and Brian, in all seriousness, the reason why we don't is we've tried this. We've literally taken building drawings and put contents in the... Like, everyone is different. Mm-hmm. And there's actually a fair amount of variability, depending on what type of facility, how much, you know, different equipment you have in it, and so on and so forth. So we were really never ever to get a great, simple way of looking at it. But Matt, I think that was at the end of last year, correct? ... It was, it was. I mean, I think just broadly speaking, as you said, I mean, data centers I think directionally proved out to be, you know, quite a bit higher, you know, than your lowest level, you know, empty warehouse scenario. More of an art than a science, but, you know, I think it's fair to say it's a, it's a significant adjustment upward, you know, in terms of per square foot for data center. Brian, probably one other thing to keep in mind, too, is, like, even, like, an empty warehouse is changing over time. So when they become more automated, you need more of our products. Maybe someday, if they're using electric vehicles and have vehicle charging, you're gonna need more of our products to kind of install those, those chargers. So even just the general construction, even a building like in New York City now over so many floors and what have you, you can't have gas heat anymore, you have to have electric heat. So that's just gonna be more of our product. So I think just generally speaking, you know, you look at the move towards more electrification, that's gonna be more demand for our products. Yep. Now, there's secular underpinning, there's no doubt. Yeah. So I mentioned the you know fiscal 2025 you know $18+ EPS target. Given your operating run rate, you know, demand visibility, you know, now, maybe speak to your level of confidence in reaching that next year. I know you don't have an official annual guide yet. Right ... for fiscal 2025, but you've had that target out there, you know, to hopefully instill confidence in investors that, like, "Look, we, we have a reasonable sense of how price cost is going to shake out. As long as there's construction activity, we're going to lever that. And this is kind of the, you know, profitability range where we should be, you know, approximately, at that point in time." And you've been reasonably accurate with that, from what I can tell. Yeah, just, I guess, speak to those moving parts and- Yeah ... again, the level of confidence you now have for that target. Yeah, so we're, you know, starting off the base of this year. We're halfway through this year, and we have a midpoint of $16.50. So to get to $18, that's another $1.50, and at our current level of shares, that's about $75 million of EBITDA, okay? So we feel just the solar HDPE kind of swing from what we expected even this year into next year, we feel that's a really nice tailwind. We still will have some remaining resin price cost into next year, 'cause if we said $585 a couple years ago, we're roughly, say, $500 at the end of this fiscal year, that reasonably would make you expect... And And pricing has stabilized quarter-over-quarter, but I think year-over-year, we'll still have a little bit of a tail there. And then we should see, okay, decent market growth. Again, if some of these constraints come out, it'll be even better. So I feel good about that. The one other thing I would think that's gonna be positive next year is these mega projects around, mainly the fab plants, are really gonna get going next year. We have a construction business that has really good, I would say, direct responsibilities or direct relationships with some of these big players. We've been doing things for them that just added a lot of value, like prefabrication, like of our metal framing and so on and so forth, so that when it gets to their construction site, they can use their limited labor on just implementing kind of these pre-construction modules, rather than making everything bespoke on site. So I think that's gonna be a really good opportunity for us. You add all that together, and then, okay, you can add in some capital deployment. We typically buy back, you know, shares and what have you. I think getting to $18 off of a $16.50 base is well within our expectations. Okay, that's encouraging. Appreciate the, you know, the breakdown. All makes sense. I mean, there's always, like, 14,000 things that can happen, Brian, you know? Politics, this, that, the other, but, you know, as we sit here... I mean, if we had got any kind of little uptick in single family, that would be really helpful also. Understood. So you brought up politics. I wasn't gonna get into it, you just mentioned it. Well, we're in Chicago. The president's coming here to, I think, fundraise today, so. What current policies and potential policy changes are, you know, the biggest watch items or potential catalysts for that? It's a very good question. I mean, I usually say it's a wash, and I would say things like the BEAD funding, I feel pretty good. I mean, of all the stimulus that's been out there, you can argue whether or not it's needed or makes sense or what have you. To me, the BEAD, you know, having high-speed internet, broadband internet access for rural folks to make them more competitive and all that, to me, is at least one that I think would survive, you know, multiple different administrations. For us, I will say that the prior administration was a little bit more, shall we say, active in making sure things like tariffs and quotas and all this sort of thing were adhered to. And I would say that our markets aren't very much import. There's not that many imports in some of our segments. One of our segments has some imports, and I will say under the prior administration, it was just a better operating environment for U.S. manufacturers than it is today. That being said, I think that's a positive. Our solar business, you know, we don't retain much of the solar credit-... so you could argue whether or not that's a plus or minus. I'd like to think that generally speaking, we're fine with the political environment. If it changes, I think we'd be just as fine with it, so. Okay. All fair. Yeah. Uh, then, uh- Is that politically correct enough? Or what I question? I think... Yeah, I think you balanced that well. Mm-hmm. Final, yeah, topic for me, you know, first talk about capital deployment. You mentioned, I think it's 14 deals that they've done over the relatively recent past. You've, you know, repurchased a lot of shares. The investor conversations I've had, you guys get a lot of credit for, you know, the, you know, prudent capital deployment strategy that you have in utilizing the cash flow that you do. Yeah, maybe speak to how you prioritize the, you know, relatively significant amount of capital you have it at your disposal, how that's shifted over time, what the current focus areas are for M&A, and, you know, relative prioritization between M&A and share repurchase activity, you know, in the current market. Okay. Yeah, great question. I think when you look at, you know, I've been here almost six years, and when I first got here, our leverage was over three, you know, three, three and a half. And I think that was one of our first priorities, probably was just kind of getting that more in line with our industry, which tends to be pretty conservative when it comes to balance sheet leverage. And I would also say, at that time, small mid caps were really being penalized for having, you know, too much debt on their balance sheet. So we spent quite a bit of this first year or two just getting our debt ratios, I think, in line. And now you could argue, I mean, we're at a really good spot where our gross debt is about $800 million. Net fluctuates between $400 million and $500 million, and then EBITDA of $875, you like, net leverage under a half or something. So I think we have that kind of... So as far as debt repayment, all that, not a priority. Okay? So then over time, when we had this influx of the $1.3 billion of EBITDA, we knew that, you know, buybacks was gonna be a significant piece of that. We believe, like probably a lot of CFOs at their company, that we're undervalued against some multiple different metrics. So we made that a, a stellar part of our capital deployment, while making sure that, you know, we were looking at the M&A market. We've always been pretty robust, active in the M&A market. I mean, our PVC business basically was built out of consolidating a bunch of acquisitions during the CD&R time. So we have some history of being able to do that, and they've been really good, you know, I'd say, generators of value over time. So we did that over the last several years. I think where we sit today, one, we had some work to do for all the acquisitions, making sure we have them integrated, get this HDPE business up and running, you know, seeing what's going on there. We've been spending more management bandwidth kind of internally on working on those. So I would say our hurdle rates for M&A right now are a little bit higher than normal because of management bandwidth. But there's always, like, five or six out there that, you know, timing, if they came up or whatever, we would absolutely always go after those targets. And then there's the other ones, right? And so those continue to be a focus. We have a monthly meeting. We have your... Just like many companies, I'm sure they, they have their funnel in, in all their activities they do, and we do a pretty good job there. We did start a dividend, so it's a fairly, modest spend for us for a, I think, a, a decent dividend. We did that for a few reasons. One, just to signal we do have, you know, confidence in our cash flows, and then we have gotten some feedback that, you know, perhaps that would open up the, the spectrum of potential investors and what have you. I think it's just a decent way of going forward and giving some standard capital deployment. So then you're left with CapEx and buybacks. CapEx has been elevated for the last couple of years, and that was mainly oriented around growth opportunities around solar, our new plant, we're upgrading all of our systems, getting our capacities in line for things like mega projects, and that has been elevated for two years. I think this year will be about $175 million-$200 million, and then the rest does come down to buybacks. You know, we guide that every year so that people get a good understanding of what our expectations are, so it's not like a one-time thing. We're just finishing up. We have $100 million in change left on our $1.3 billion buyback program, but the board just last week approved another $500 million authorization. So we have some runway, certainly, for the near future on buybacks. Yep, understood. A very helpful color. And, I guess I was somewhat remiss in not bringing up the dividend, but it's the Industrial Growth Conference, so it's not- Yeah, I know. As much of a focus, Yeah, it's a small division. It's like, it's pretty modest, like we said, like, comes to our total sales, so. Yeah, understood. But it, it is a, you know, it's a hurdle for, you know, a certain portion of investors. You know, with that box being checked, then, you know, your stock is available to, to more strategies, so- Correct. Certainly makes sense. We did get. We're now investment grade with one of the three rating agencies, so, you know, we've come a long way in the last five or six years. Absolutely. All right, gentlemen, we've covered a lot. We've kind of exhausted my question list. Any message that you'd like to leave the audience with today? No, I just... Again, I appreciate the opportunity to speak. Always really excited about talking about Atkore, talk about the electrical industry, and, you know, if there's any follow-ups, just please let us know. Absolutely. David, Matt, thank you very much. Yes, thanks for your participation and interest, everyone. Thanks.