Form 8-K Atkore International For: May 08
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 8, 2018
Atkore International Group Inc.
(Exact name of registrant as specified in its charter)
(Exact name of registrant as specified in its charter)
Delaware | 001-37793 | 90-0631463 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
16100 South Lathrop Avenue Harvey, Illinois | 60426 |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code:
(708) 339-1610
Not Applicable
(Former name or former address, if changed since last report)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
▪ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
▪ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
▪ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
▪ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.*
On May 8, 2018, Atkore International Group Inc. (the "Company" or "Atkore") issued a press release announcing the Company’s financial results for the second fiscal quarter ended March 30, 2018. A copy of the press release is being furnished as Exhibit 99.1 and incorporated herein by reference.
The information contained in Item 7.01 concerning the presentation to the Atkore investors is hereby incorporated into this Item 2.02 by reference.
Item 7.01. Regulation FD Disclosure.*
The slide presentation attached hereto as Exhibit 99.2, and incorporated herein by reference, will be presented to certain Atkore investors on May 8, 2018 and may be used by Atkore in various other presentations to investors.
Item 9.01. Financial Statements Exhibits.*
Exhibit No. | Description of Exhibit | ||
99.1 | Press Release, dated May 8, 2018. | ||
99.2 | Presentation to investors, dated May 8, 2018. | ||
* | In accordance with General Instruction B.2 of Form 8-K, the information in Items 2.02 and 7.01 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 attached hereto, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 ("Exchange Act"), as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. | ||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ATKORE INTERNATIONAL GROUP INC.
By: /s/ Daniel S. Kelly
Daniel S. Kelly
Vice President, General Counsel and Secretary
Vice President, General Counsel and Secretary
Date: May 8, 2018
EXHIBIT INDEX
Exhibit No. | Description of Exhibit | |
99.1 | ||
99.2 | ||
 | Exhibit 99.1 | |
Atkore International Group Inc. Announces Second Quarter 2018 Results
• | Diluted earnings per share increased by $0.51 to $0.79; Adjusted net income per diluted share increased by $0.23 to $0.63 |
• | Net income increased by $23.6 million to $42.6 million; Adjusted EBITDA increased by $9.2 million to $65.3 million |
• | Divested the assets of FlexHead Industries, Inc. and SprinkFLEX, LLC for proceeds of $42.0 million |
• | Full-year Adjusted net income per diluted share guidance updated to $2.40 - $2.50. |
HARVEY, IL. — May 8, 2018 (BUSINESS WIRE) - Atkore International Group Inc. (the "Company" or "Atkore") (NYSE: ATKR) announced earnings for its fiscal 2018 second quarter ended March 30, 2018.
"Once again, Atkore delivered strong results, as shown in our second quarter of fiscal 2018. We realized double-digit growth in Net sales, Adjusted EBITDA and Earnings per share through organic volume growth, productivity savings and accretive earnings from acquisitions," commented John Williamson, Atkore President and Chief Executive Officer.
"We're pleased to raise our full-year guidance based upon continued execution of our growth strategy, strong management practices and disciplined use of our business system that enable Atkore to deliver value for our customers and shareholders," Williamson added.
On March 30, 2018, the Company sold the assets of FlexHead Industries, Inc. and SprinkFLEX, LLC (together "Flexhead"). The Flexhead businesses manufacture commercial flexible sprinkler head connection products for use in a variety of markets, including for industrial, commercial, cold storage, institutional and clean room applications.
On January 8, 2018, the Company acquired the assets of Communications Integrators, Inc. ("Cii"), a manufacturer of modular, prefabricated power, voice and data distribution systems located in Tempe, Arizona for a total purchase price, including contingent consideration, of $4.0 million.
2018 Second Quarter Results
Three months ended | ||||||||||||||||
(in thousands) | March 30, 2018 | March 31, 2017 | Change | % Change | ||||||||||||
Net sales | ||||||||||||||||
Electrical Raceway | $ | 324,787 | $ | 270,995 | $ | 53,792 | 19.8 | % | ||||||||
Mechanical Products & Solutions | 120,310 | 102,180 | 18,130 | 17.7 | % | |||||||||||
Eliminations | (97 | ) | (384 | ) | 287 | (74.7 | )% | |||||||||
Consolidated operations | $ | 445,000 | $ | 372,791 | $ | 72,209 | 19.4 | % | ||||||||
Adjusted EBITDA | ||||||||||||||||
Electrical Raceway | $ | 56,404 | $ | 46,687 | $ | 9,717 | 20.8 | % | ||||||||
Mechanical Products & Solutions | 16,722 | 15,457 | 1,265 | 8.2 | % | |||||||||||
Unallocated | (7,785 | ) | (6,022 | ) | (1,763 | ) | 29.3 | % | ||||||||
Consolidated operations | $ | 65,341 | $ | 56,122 | $ | 9,219 | 16.4 | % | ||||||||
Net sales increased by $72.2 million, or 19.4% to $445.0 million for the three months ended March 30, 2018 compared to $372.8 million for the prior-year period. Net sales increased $31.7 million due to the acquisitions of Marco Cable Management, Flexicon Limited, Calpipe Industries, LLC and Cii over the past twelve months. Additionally, net sales increased $24.3 million due to higher net average selling prices resulting from the pass-through impact of higher input costs of copper and steel and higher freight costs, and increased market prices for PVC electrical conduit and fittings products. Lastly, net sales increased $12.7 million partly due to higher volume of products sold within the Mechanical Products & Solutions segment, partially offset by lower volume of armored cable and fittings products sold within the Electrical Raceway segment.
| Exhibit 99.1 | |
Gross profit increased by $21.5 million, or 24.6% to $109.2 million for the three months ended March 30, 2018, as compared to $87.6 million for the prior-year period. Gross margins increased to 24.5% for the three months ended March 30, 2018, as compared to 23.5% for the prior-year period. Gross margins increased primarily due to increased market prices for PVC electrical conduit and fittings products, partially offset by the pass-through impact of higher input costs of steel and copper and higher freight costs.
Net income increased by $23.6 million, or 124.8% to $42.6 million for the three months ended March 30, 2018 compared to $18.9 million for the prior-year period primarily due to a pre-tax gain on the sale of the assets of the Flexhead businesses of $26.7 million and higher operating income of $10.9 million. Partially offsetting the increase is a pre-tax gain on sale of a joint venture of $5.8 million during the three months ended March 31, 2017, higher interest expense of $4.1 million and higher income tax expense of $3.0 million.
Adjusted EBITDA increased by $9.2 million, or 16.4% to $65.3 million for the three months ended March 30, 2018 compared to $56.1 million for the three months ended March 31, 2017. The increase was primarily due to incremental Adjusted EBITDA from acquisitions over the past twelve months, increased volume and improved productivity costs, partially offset by higher average input costs of steel, copper and freight net of higher average selling prices and higher incentive-based compensation expense during the three months ended March 31, 2017.
Diluted earnings per share were $0.79 for the three months ended March 30, 2018, as compared to $0.28 in the prior-year period. Adjusted net income per diluted share increased by $0.23 to $0.63 for the three months ended March 30, 2018, as compared to $0.40 for the prior-year period.
Segment Results
Electrical Raceway
Electrical Raceway Net sales increased by $53.8 million, or 19.8%, to $324.8 million for the three months ended March 30, 2018 compared to $271.0 million for the three months ended March 31, 2017. The increase was due primarily to $31.7 million of additional sales resulting from acquisitions over the past twelve months and $23.1 million resulting from the pass-through impact of higher average input costs of copper and increased market prices for PVC electrical conduit and fittings products. The increase in sales was partially offset by lower volume of $4.3 million primarily of armored cable and fittings and flexible electrical conduit and fittings product categories.
Electrical Raceway Adjusted EBITDA for the three months ended March 30, 2018 increased by $9.7 million, or 20.8%, to $56.4 million from $46.7 million for the three months ended March 31, 2017. Adjusted EBITDA margins remained relatively flat at 17.4%. The increase in Adjusted EBITDA was largely due to increased market prices for PVC electrical conduit and fittings products and incremental Adjusted EBITDA resulting from acquisitions over the past twelve months, partially offset by an increase in average input costs that exceeded our increase in average selling prices for armored cable and fittings products.
Mechanical Products & Solutions ("MP&S")
MP&S Net sales increased by $18.1 million, or 17.7%, for the three months ended March 30, 2018 to $120.3 million compared to $102.2 million for the three months ended March 31, 2017. The increase was primarily due to $16.8 million of higher volume of products sold within the mechanical pipe and metal framing and fittings product categories.
MP&S Adjusted EBITDA increased by $1.3 million, or 8.2%, to $16.7 million for the three months ended March 30, 2018 compared to $15.5 million for the three months ended March 31, 2017. Adjusted EBITDA margins decreased to 13.9% for the three months ended March 30, 2018 compared to 15.1% for the three months ended March 31, 2017. Adjusted EBITDA increased primarily due to higher volume of products sold, partially offset by an increase in average input costs which exceeded the increase in average selling prices.
Full-Year 2018 Guidance
The Company is updating its expectation of fiscal year 2018 Adjusted EBITDA to be in the range of $250.0 - $260.0 million (includes $2 million reduction from the sale of Flexhead) and its expectation of fiscal year 2018 Adjusted net income per diluted share to be in the range to $2.40 - $2.50.
| Exhibit 99.1 | |
Reconciliations of the forward-looking full-year 2018 outlook for Adjusted EBITDA and Adjusted net income per diluted share are not being provided as the Company does not currently have sufficient data to accurately estimate the variables and individual adjustments for such reconciliations.
Conference Call Information
Atkore management will host a conference call today, May 8, 2018, at 8 a.m. Eastern time, to discuss the Company's financial results. The conference call may be accessed by dialing (877) 407-0789 (domestic) or (201) 689-8562 (international). The call will be available for replay until May 22, 2018. The replay can be accessed by dialing (844) 512-2921, or for international callers, (412) 317-6671. The passcode for the live call and the replay is 13678718.
Interested investors and other parties can also listen to a webcast of the live conference call by logging onto the Investor Relations section of the Company's website at http://investors.atkore.com. The online replay will be available on the same website immediately following the call.
To learn more about the Company, please visit the company's website at http://investors.atkore.com.
About Atkore International Group Inc.
Atkore International Group Inc. is a leading manufacturer of Electrical Raceway products primarily for the non-residential construction and renovation markets and Mechanical Products & Solutions for the construction and industrial markets. The Company manufactures a broad range of end-to-end integrated products and solutions that are critical to its customers' businesses and employs approximately 3,600 people at 58 manufacturing and distribution facilities worldwide. The Company is headquartered in Harvey, Illinois.
Contact:
Keith Whisenand |
Vice President - Investor Relations |
708-225-2124 |
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements relating to financial outlook. Some of the forward-looking statements can be identified by the use of forward-looking terms such as "believes," "expects," "may," "will," "shall," "should," "would," "could," "seeks," "aims," "projects," "is optimistic," "intends," "plans," "estimates," "anticipates" or other comparable terms. Forward-looking statements include, without limitation, all matters that are not historical facts. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes, including, without limitation, our actual results of operations, financial condition and liquidity, and the development of the market in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this press release. In addition, even if our results of operations, financial condition and cash flows, and the development of the market in which we operate, are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods.
A number of important factors, including, without limitation, the risks and uncertainties discussed under the caption "Risk Factors" in our Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission ("SEC") on November 29, 2017 and in our Quarterly Report on Form 10-Q filed with the SEC on February 6, 2018 could cause actual results and outcomes to differ materially from those reflected in the forward-looking statements. Additional factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation: declines in, and uncertainty regarding, the general business and economic conditions in the United States and international
| Exhibit 99.1 | |
markets in which we operate; weakness or another downturn in the United States non-residential construction industry; changes in prices of raw materials; pricing pressure, reduced profitability, or loss of market share due to intense competition; availability and cost of third-party freight carriers and energy; high levels of imports of products similar to those manufactured by us; changes in federal, state, local and international governmental regulations and trade policies; adverse weather conditions; failure to generate sufficient cash flow from operations or to raise sufficient funds in the capital markets to satisfy existing obligations and support the development of our business; failure of our indemnification agreements in connection with acquisitions to adequately protect us from liabilities; increased costs relating to future capital and operating expenditures to maintain compliance with environmental, health and safety laws; reduced spending by, deterioration in the financial condition of, or other adverse developments with respect to, one or more of our top customers; increases in our working capital needs, which are substantial and fluctuate based on economic activity and the market prices for our main raw materials, including as a result of failure to collect, or delays in the collection of, cash from the sale of manufactured products; work stoppage or other interruptions of production at our facilities as a result of disputes under existing collective bargaining agreements with labor unions or in connection with negotiations of new collective bargaining agreements, as a result of supplier financial distress, or for other reasons; challenges attracting and retaining key personnel or high-quality employees; changes in our financial obligations relating to pension plans that we maintain in the United States; reduced production or distribution capacity due to interruptions in the operations of our facilities or those of our key suppliers; loss of a substantial number of our third-party agents or distributors or a dramatic deviation from the amount of sales they generate; security threats, attacks, or other disruptions to our information systems, or failure to comply with complex network security, data privacy and other legal obligations or the failure to protect sensitive information; possible impairment of goodwill or other long-lived assets as a result of future triggering events, such as declines in our cash flow projections or customer demand; safety and labor risks associated with the manufacture and in the testing of our products; product liability, construction defect and warranty claims and litigation relating to our various products, as well as government inquiries and investigations, and consumer, employment, tort and other legal proceedings; our ability to protect our intellectual property and other material proprietary rights; risks inherent in doing business internationally; our inability to introduce new products effectively or implement our innovation strategies; the inability of our customers to pay off the credit lines extended to them by us in a timely manner and the negative impact on customer relations resulting from our collections efforts with respect to non-paying or slow-paying customers; our inability to continue importing raw materials, component parts and/or finished goods; changes as a result of comprehensive tax reform; the incurrence of liabilities and the issuance of additional debt or equity in connection with acquisitions, joint ventures or divestitures; failure to manage acquisitions successfully, including identifying, evaluating, and valuing acquisition targets and integrating acquired companies, businesses or assets; the incurrence of liabilities in connection with violations of the U.S. Foreign Corrupt Practices Act and similar foreign anti-corruption laws; the incurrence of additional expenses, increase in complexity of our supply chain and potential damage to our reputation with customers resulting from regulations related to "conflict minerals"; disruptions or impediments to the receipt of sufficient raw materials resulting from various anti-terrorism security measures; restrictions contained in our debt agreements; failure to generate cash sufficient to pay the principal of, interest on, or other amounts due on our debt; the significant influence the Clayton, Dubilier & Rice LLC investor will have continued to have over corporate decisions; and other factors described from time to time in documents that we file with the SEC. The Company assumes no obligation to update the information contained herein, which speaks only as of the date hereof.
Non-GAAP Financial Information
This press release includes certain financial information, not prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). Because not all companies calculate non-GAAP financial information identically (or at all), the presentations herein may not be comparable to other similarly titled measures used by other companies. Further, these measures should not be considered substitutes for the performance measures derived in accordance with GAAP. See non-GAAP reconciliations below in this press release for a reconciliation of these measures to the most directly comparable GAAP financial measures.
| Exhibit 99.1 | |
Adjusted EBITDA and Adjusted EBITDA Margin
We use Adjusted EBITDA and Adjusted EBITDA Margin in evaluating the performance of our business, and we use each in the preparation of our annual operating budgets and as indicators of business performance and profitability. We believe Adjusted EBITDA and Adjusted EBITDA Margin allow us to readily view operating trends, perform analytical comparisons and identify strategies to improve operating performance.
We define Adjusted EBITDA as net income (loss) before: depreciation and amortization, interest expense, net, loss (gain) on extinguishment of debt, income tax expense (benefit), restructuring and impairments, stock-based compensation, consulting fees, multi-employer pension withdrawal, certain legal matters, transaction costs, gain on sale of a business, gain on sale of joint venture and other items, such as inventory reserves and adjustments and realized or unrealized gain (loss) on foreign currency transactions. We believe Adjusted EBITDA, when presented in conjunction with comparable accounting principles generally accepted in the United States of America ("GAAP") measures, is useful for investors because management uses Adjusted EBITDA in evaluating the performance of our business.
We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of Net sales.
Net Income Margin
We define Net Income Margin as Net income as a percentage of Net sales.
Adjusted Net Income and Adjusted Net Income per Share
We use Adjusted net income and Adjusted net income per share in evaluating the performance of our business and profitability. Management believes that these measures provide useful information to investors by offering additional ways of viewing the Company's results that, when reconciled to the corresponding GAAP measure provide an indication of performance and profitability excluding the impact of unusual and or non-cash items. We define Adjusted net income as net income before consulting fees, loss on extinguishment of debt, stock-based compensation, intangible asset amortization, gain on sale of joint venture, certain legal matters and other items. We define Adjusted net income per share as basic and diluted earnings per share excluding the per share impact of consulting fees, loss on extinguishment of debt, stock-based compensation, intangible asset amortization, gain on sale of joint venture, certain legal matters and other items. Beginning in March 2018, the Company has excluded the impact of intangible asset amortization from the calculation of Adjusted Net income.
Leverage Ratio - Net debt/Adjusted EBITDA
We define leverage ratio as the ratio of net debt (total debt less cash and cash equivalents) to Adjusted EBITDA on a trailing twelve month ("TTM") basis. We believe the leverage ratio is useful to investors as an alternative liquidity measure.
ATKORE INTERNATIONAL GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended | Six months ended | |||||||||||||||
(in thousands, except per share data) | March 30, 2018 | March 31, 2017 As Adjusted* | March 30, 2018 | March 31, 2017 As Adjusted* | ||||||||||||
Net sales | $ | 445,000 | $ | 372,791 | $ | 859,558 | $ | 710,382 | ||||||||
Cost of sales | 335,843 | 285,182 | 653,534 | 531,109 | ||||||||||||
Gross profit | 109,157 | 87,609 | 206,024 | 179,273 | ||||||||||||
Selling, general and administrative | 60,118 | 51,725 | 111,713 | 95,652 | ||||||||||||
Intangible asset amortization | 7,765 | 5,493 | 16,452 | 11,082 | ||||||||||||
Operating income | 41,274 | 30,391 | 77,859 | 72,539 | ||||||||||||
Interest expense, net | 9,286 | 5,231 | 15,880 | 15,061 | ||||||||||||
Loss on extinguishment of debt | — | — | — | 9,805 | ||||||||||||
Other income, net | (25,962 | ) | (6,150 | ) | (25,676 | ) | (6,526 | ) | ||||||||
Income before income taxes | 57,950 | 31,310 | 87,655 | 54,199 | ||||||||||||
Income tax expense | 15,392 | 12,375 | 17,908 | 17,882 | ||||||||||||
Net income | $ | 42,558 | $ | 18,935 | $ | 69,747 | $ | 36,317 | ||||||||
Weighted-Average Common Shares Outstanding | ||||||||||||||||
Basic | 51,367 | 63,252 | 57,287 | 62,948 | ||||||||||||
Diluted | 54,003 | 66,888 | 59,945 | 66,446 | ||||||||||||
Net income per share | ||||||||||||||||
Basic | $ | 0.83 | $ | 0.30 | $ | 1.22 | $ | 0.58 | ||||||||
Diluted | $ | 0.79 | $ | 0.28 | $ | 1.16 | $ | 0.55 | ||||||||
* Adjusted due to the adoption of Accounting Standards Update 2017-07 Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.
ATKORE INTERNATIONAL GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data) | March 30, 2018 | September 30, 2017 | ||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 76,892 | $ | 45,718 | ||||
Accounts receivable, less allowance for doubtful accounts of $1,349 and $1,239, respectively | 245,355 | 224,427 | ||||||
Inventories, net | 202,517 | 200,003 | ||||||
Prepaid expenses and other current assets | 29,786 | 35,611 | ||||||
Total current assets | 554,550 | 505,759 | ||||||
Property, plant and equipment, net | 211,840 | 208,619 | ||||||
Intangible assets, net | 310,161 | 344,289 | ||||||
Goodwill | 169,107 | 147,716 | ||||||
Deferred tax assets | — | 1,657 | ||||||
Non-trade receivables | 6,384 | 7,052 | ||||||
Total Assets | $ | 1,252,042 | $ | 1,215,092 | ||||
Liabilities and Equity | ||||||||
Current Liabilities: | ||||||||
Short-term debt and current maturities of long-term debt | $ | 7,653 | $ | 4,215 | ||||
Accounts payable | 123,384 | 125,618 | ||||||
Income tax payable | 1,033 | 2,581 | ||||||
Accrued compensation and employee benefits | 28,652 | 26,387 | ||||||
Other current liabilities | 56,950 | 53,036 | ||||||
Total current liabilities | 217,672 | 211,837 | ||||||
Long-term debt | 900,556 | 571,863 | ||||||
Deferred tax liabilities | 17,378 | 17,464 | ||||||
Other long-term tax liabilities | 6,544 | 6,771 | ||||||
Pension liabilities | 23,960 | 25,239 | ||||||
Other long-term liabilities | 23,857 | 21,047 | ||||||
Total Liabilities | 1,189,967 | 854,221 | ||||||
Equity: | ||||||||
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 46,577,795 and 63,305,434 shares issued and outstanding, respectively | 467 | 634 | ||||||
Treasury stock, held at cost, 260,900 and 260,900 shares, respectively | (2,580 | ) | (2,580 | ) | ||||
Additional paid-in capital | 434,856 | 423,232 | ||||||
Accumulated deficit | (354,315 | ) | (42,433 | ) | ||||
Accumulated other comprehensive loss | (16,353 | ) | (17,982 | ) | ||||
Total Equity | 62,075 | 360,871 | ||||||
Total Liabilities and Equity | $ | 1,252,042 | $ | 1,215,092 | ||||
ATKORE INTERNATIONAL GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended | ||||||||
(in thousands) | March 30, 2018 | March 31, 2017 | ||||||
Operating activities: | ||||||||
Net income | $ | 69,747 | $ | 36,317 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 33,063 | 26,901 | ||||||
Deferred income taxes | (3,667 | ) | (1,997 | ) | ||||
Gain on sale of a business | (26,737 | ) | — | |||||
Loss on extinguishment of debt | — | 9,805 | ||||||
Stock-based compensation | 6,334 | 6,304 | ||||||
Other adjustments to net income | 4,611 | (2,836 | ) | |||||
Changes in operating assets and liabilities, net of effects from purchase price adjustments | ||||||||
Accounts receivable | (23,636 | ) | (5,271 | ) | ||||
Inventories | (11,691 | ) | (24,963 | ) | ||||
Other, net | 5,194 | (19,163 | ) | |||||
Net cash provided by operating activities | 53,218 | 25,097 | ||||||
Investing activities: | ||||||||
Capital expenditures | (17,173 | ) | (8,374 | ) | ||||
Divestiture of business | 42,000 | — | ||||||
Acquisition of businesses, net of cash acquired | (3,350 | ) | — | |||||
Proceeds from sale of assets held for sale | — | 3,024 | ||||||
Other, net | 1,469 | 35 | ||||||
Net cash provided by (used in) investing activities | 22,946 | (5,315 | ) | |||||
Financing activities: | ||||||||
Borrowings under credit facility | 309,000 | — | ||||||
Repayments under credit facility | (394,000 | ) | — | |||||
Repayments of short-term debt | (3,550 | ) | (4,200 | ) | ||||
Repayments of long-term debt | (1,217 | ) | (638,600 | ) | ||||
Issuance of long-term debt | 426,217 | 498,750 | ||||||
Payment for debt financing costs and fees | (5,767 | ) | (4,344 | ) | ||||
Issuance of common stock | 5,299 | 7,165 | ||||||
Repurchase of common stock | (381,805 | ) | — | |||||
Other, net | (78 | ) | — | |||||
Net cash used for financing activities | (45,901 | ) | (141,229 | ) | ||||
Effects of foreign exchange rate changes on cash and cash equivalents | 911 | (901 | ) | |||||
Increase (decrease) in cash and cash equivalents | 31,174 | (122,348 | ) | |||||
Cash and cash equivalents at beginning of period | 45,718 | 200,279 | ||||||
Cash and cash equivalents at end of period | $ | 76,892 | $ | 77,931 | ||||
Supplementary Cash Flow information | ||||||||
Capital expenditures, not yet paid | $ | 534 | $ | 589 | ||||
ATKORE INTERNATIONAL GROUP INC.
ADJUSTED EBITDA
The following table presents reconciliations of Adjusted EBITDA to net income for the periods presented:
Three months ended | Six months ended | ||||||||||||||||
(in thousands) | March 30, 2018 | March 31, 2017 | March 30, 2018 | March 31, 2017 | |||||||||||||
Net income | $ | 42,558 | $ | 18,935 | $ | 69,747 | $ | 36,317 | |||||||||
Interest expense, net | 9,286 | 5,231 | 15,880 | 15,061 | |||||||||||||
Income tax expense | 15,392 | 12,375 | 17,908 | 17,882 | |||||||||||||
Depreciation and amortization | 15,853 | 13,273 | 33,063 | 26,901 | |||||||||||||
Loss on extinguishment of debt | — | — | — | 9,805 | |||||||||||||
Restructuring and impairments | 576 | 412 | 838 | 801 | |||||||||||||
Stock-based compensation | 2,770 | 3,584 | 6,334 | 6,304 | |||||||||||||
Certain legal matters | 2,286 | 7,501 | 2,286 | 7,501 | |||||||||||||
Transaction costs | 1,263 | 138 | 1,908 | 1,698 | |||||||||||||
Gain on sale of a business | (26,737 | ) | — | (26,737 | ) | — | |||||||||||
Gain on sale of joint venture | — | (5,774 | ) | — | (5,774 | ) | |||||||||||
Other (a) | 2,094 | 447 | 2,601 | (10,483 | ) | ||||||||||||
Adjusted EBITDA | $ | 65,341 | $ | 56,122 | $ | 123,828 | $ | 106,013 | |||||||||
(a) | Represents other items, such as inventory reserves and adjustments, realized or unrealized gain (loss) on foreign currency transactions and release of certain indemnified uncertain tax positions. | ||||||||||||||||
ATKORE INTERNATIONAL GROUP INC.
SEGMENT INFORMATION
The following tables represent reconciliations of Net sales and calculations of Adjusted EBITDA Margin by segment for the periods presented:
Three months ended | |||||||||||||||||||||
March 30, 2018 | March 31, 2017 | ||||||||||||||||||||
(in thousands) | Net sales | Adjusted EBITDA | Adjusted EBITDA Margin | Net sales | Adjusted EBITDA | Adjusted EBITDA Margin | |||||||||||||||
Electrical Raceway | $ | 324,787 | $ | 56,404 | 17.4 | % | $ | 270,995 | $ | 46,687 | 17.2 | % | |||||||||
Mechanical Products & Solutions | 120,310 | $ | 16,722 | 13.9 | % | 102,180 | $ | 15,457 | 15.1 | % | |||||||||||
Eliminations | (97 | ) | (384 | ) | |||||||||||||||||
Consolidated operations | $ | 445,000 | $ | 372,791 | |||||||||||||||||
Six months ended | |||||||||||||||||||||
March 30, 2018 | March 31, 2017 | ||||||||||||||||||||
(in thousands) | Net sales | Adjusted EBITDA | Adjusted EBITDA Margin | Net sales | Adjusted EBITDA | Adjusted EBITDA Margin | |||||||||||||||
Electrical Raceway | $ | 641,310 | $ | 112,564 | 17.6 | % | $ | 513,380 | $ | 88,804 | 17.3 | % | |||||||||
Mechanical Products & Solutions | 218,884 | $ | 27,531 | 12.6 | % | 197,861 | $ | 31,238 | 15.8 | % | |||||||||||
Eliminations | (636 | ) | (859 | ) | |||||||||||||||||
Consolidated operations | $ | 859,558 | $ | 710,382 | |||||||||||||||||
ATKORE INTERNATIONAL GROUP INC.
ADJUSTED NET INCOME PER SHARE
The following table presents reconciliations of Adjusted net income to net income for the periods presented:
Three months ended | Six months ended | ||||||||||||||||
(in thousands, except per share data) | March 30, 2018 | March 31, 2017 As Adjusted* | March 30, 2018 | March 31, 2017 As Adjusted* | |||||||||||||
Net income | $ | 42,558 | $ | 18,935 | $ | 69,747 | $ | 36,317 | |||||||||
Stock-based compensation | 2,770 | 3,584 | 6,334 | 6,304 | |||||||||||||
Intangible asset amortization | 7,765 | 5,493 | 16,452 | 11,082 | |||||||||||||
Gain on sale of a business | (26,737 | ) | — | (26,737 | ) | — | |||||||||||
Loss on extinguishment of debt | — | — | — | 9,805 | |||||||||||||
Gain on sale of joint venture | — | (5,774 | ) | — | (5,774 | ) | |||||||||||
Certain legal matters | 2,286 | 7,501 | 2,286 | 7,501 | |||||||||||||
Other (a) | 2,094 | 447 | 2,601 | (10,483 | ) | ||||||||||||
Pre-tax adjustments to net income | (11,822 | ) | 11,251 | 936 | 18,435 | ||||||||||||
Tax effect | 3,074 | (3,424 | ) | (243 | ) | (5,995 | ) | ||||||||||
Adjusted net income | $ | 33,810 | $ | 26,762 | $ | 70,440 | $ | 48,757 | |||||||||
Weighted-Average Diluted Common Shares Outstanding | 54,003 | 66,888 | 59,945 | 66,446 | |||||||||||||
Net income per diluted share | $ | 0.79 | $ | 0.28 | $ | 1.16 | $ | 0.55 | |||||||||
Adjusted net income per diluted share(b) | $ | 0.63 | $ | 0.40 | $ | 1.18 | $ | 0.73 | |||||||||
(a) | Represents other items, such as inventory reserves and adjustments, realized or unrealized gain (loss) on foreign currency transactions and release of certain indemnified uncertain tax positions. | ||||||||||||||||
(b) | Beginning in March 2018, the Company has excluded the impact of intangible asset amortization from the calculation of Adjusted net income. The following table presents a reconciliation of Adjusted net income per diluted share as reported to the prior method for the periods presented: | ||||||||||||||||
Three months ended | Six months ended | ||||||||||||||||
March 30, 2018 | March 31, 2017 | March 30, 2018 | March 31, 2017 | ||||||||||||||
As reported | $ | 0.63 | $ | 0.40 | $ | 1.18 | $ | 0.73 | |||||||||
Intangible asset amortization (net of tax) | 0.11 | 0.05 | 0.20 | 0.10 | |||||||||||||
Prior method | $ | 0.52 | $ | 0.35 | $ | 0.98 | $ | 0.63 | |||||||||
ATKORE INTERNATIONAL GROUP INC.
LEVERAGE RATIO
The following table presents reconciliations of Net debt to Total debt for the periods presented:
($ in thousands) | March 30, 2018 | September 30, 2017 | September 30, 2016 | September 25, 2015 | September 26, 2014 | |||||||||||||||
Short-term debt and current maturities of long-term debt | $ | 7,653 | $ | 4,215 | $ | 1,267 | $ | 2,864 | $ | 42,887 | ||||||||||
Long-term debt | 900,556 | 571,863 | 629,046 | 649,344 | 649,980 | |||||||||||||||
Total debt | 908,209 | 576,078 | 630,313 | 652,208 | 692,867 | |||||||||||||||
Less cash and cash equivalents | 76,892 | 45,718 | 200,279 | 80,598 | 33,360 | |||||||||||||||
Net debt | $ | 831,317 | $ | 530,360 | $ | 430,034 | $ | 571,610 | $ | 659,507 | ||||||||||
TTM Adjusted EBITDA | $ | 245,423 | $ | 227,608 | $ | 235,002 | $ | 163,949 | $ | 126,597 | ||||||||||
Total debt/TTM Adjusted EBITDA | 3.7 | x | 2.5 | x | 2.7 | x | 4.0 | x | 5.5 | x | ||||||||||
Net debt/TTM Adjusted EBITDA | 3.4 | x | 2.3 | x | 1.8 | x | 3.5 | x | 5.2 | x | ||||||||||
ATKORE INTERNATIONAL GROUP INC.
TRAILING TWELVE MONTHS ADJUSTED EBITDA
The following table presents a reconciliation of Adjusted EBITDA for the trailing twelve months ended March 30, 2018:
TTM | Three months ended | ||||||||||||||||||
(in thousands) | March 30, 2018 | March 30, 2018 | December 29, 2017 | September 30, 2017 | June 30, 2017 | ||||||||||||||
Net income | $ | 118,069 | $ | 42,558 | $ | 27,189 | $ | 20,857 | $ | 27,465 | |||||||||
Interest expense, net | 27,417 | 9,286 | 6,594 | 5,726 | 5,811 | ||||||||||||||
Income tax expense | 41,512 | 15,392 | 2,516 | 12,173 | 11,431 | ||||||||||||||
Depreciation and amortization | 60,889 | 15,853 | 17,210 | 14,485 | 13,341 | ||||||||||||||
Restructuring and impairments | 1,293 | 576 | 262 | 556 | (101 | ) | |||||||||||||
Stock-based compensation | 12,818 | 2,770 | 3,564 | 3,420 | 3,064 | ||||||||||||||
Certain legal matters | 2,336 | 2,286 | — | 50 | — | ||||||||||||||
Transaction costs | 4,988 | 1,263 | 645 | 2,235 | 845 | ||||||||||||||
Gain on sale of a business | (26,737 | ) | (26,737 | ) | — | — | — | ||||||||||||
Other | 2,838 | 2,094 | 507 | 60 | 177 | ||||||||||||||
Adjusted EBITDA | $ | 245,423 | $ | 65,341 | $ | 58,487 | $ | 59,562 | $ | 62,033 | |||||||||
Second Quarter 2018 Earnings Presentation May 8, 2018
Cautionary statements This presentation contains forward-looking statements that are subject to known and unknown risks and uncertainties, many of which are beyond our control. All statements other than statements of historical fact included in this presentation are forward-looking statements. Forward-looking statements appearing throughout this presentation include, without limitation, statements regarding our intentions, beliefs, assumptions or current expectations concerning, among other things, financial position; results of operations; cash flows; prospects; growth strategies or expectations; customer retention; the outcome (by judgment or settlement) and costs of legal, administrative or regulatory proceedings, investigations or inspections, including, without limitation, collective, representative or any other litigation; and the impact of prevailing economic conditions. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “believes,” “expects,” “may,” “will,” “shall,” “should,” “would,” “could,” “seeks,” “aims,” “projects,” “is optimistic,” “intends,” “plans,” “estimates,” “anticipates” and other comparable terms. We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes, including, without limitation, our actual results of operations, financial condition and liquidity, and the development of the market in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this presentation. In addition, even if our results of operations, financial condition and cash flows, and the development of the market in which we operate, are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in subsequent periods. A number of important factors, including, without limitation, the risks and uncertainties discussed under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K and the Quarterly Report on Form 10-Q filed with the U.S. Securities and Exchange Commission, could cause actual results and outcomes to differ materially from those reflected in the forward-looking statements. Because of these risks, we caution that you should not place undue reliance on any of our forward-looking statements. New risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us. Further, any forward- looking statement speaks only as of the date on which it is made. We undertake no obligation to revise the forward-looking statements in this presentation after the date of this presentation. Market data and industry information used throughout this presentation are based on management’s knowledge of the industry and the good faith estimates of management. We also relied, to the extent available, upon management’s review of independent industry surveys, forecasts and publications and other publicly available information prepared by a number of third party sources. All of the market data and industry information used in this presentation involves a number of assumptions and limitations which we believe to be reasonable, and you are cautioned not to give undue weight to such estimates. Although we believe that these sources are reliable, we cannot guarantee the accuracy or completeness of this information, and we have not independently verified this information. While we believe the estimated market position, market opportunity and market size information included in this presentation are generally reliable, such information, which is derived in part from management’s estimates and beliefs, is inherently uncertain and imprecise. Projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate are subject to a high degree of uncertainty and risk due to a variety of factors, including those described above. These and other factors could cause results to differ materially from those expressed in our estimates and beliefs and in the estimates prepared by independent parties. We present Adjusted EBITDA, Adjusted EBITDA margin (Adjusted EBITDA over Net Sales), Net debt (total debt less cash and cash equivalents), Adjusted Net Income Per Share, and Leverage ratio (net debt or total debt less cash and cash equivalents, over Adjusted EBITDA on trailing twelve month (“TTM”) basis) to help us describe our operating and financial performance. Adjusted EBITDA, Adjusted EBITDA margin, Net debt (total debt less cash and cash equivalents), Adjusted Net Income Per Share, and Leverage ratio are non-GAAP financial measures commonly used in our industry and have certain limitations and should not be construed as alternatives to net income, net sales and other income data measures (as determined in accordance with generally accepted accounting principles in the United States, or GAAP), or as better indicators of operating performance. Adjusted EBITDA, Adjusted EBITDA margin, Net debt, Adjusted Net Income Per Share, and Leverage ratio, as defined by us may not be comparable to similar non-GAAP measures presented by other issuers. Our presentation of such measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. See the appendix to this presentation for a reconciliation of Adjusted EBITDA to net income, Adjusted EBITDA Margin, Adjusted Net Income Per Share to Net Income Per Share, net debt to total debt, and Leverage Ratio. Fiscal Periods - The Company has a fiscal year that ends on September 30th. It is the Company's practice to establish quarterly closings using a 4-5-4 calendar. The Company's fiscal quarters end on the last Friday in December, March and June.
Consolidated Atkore Q2 2018 Financial Summary Q2 Q2 Y/Y Net Sales Growth Change Organic Growth +10.0% ($’s in millions) 2018 2017 Acquisitions +8.5% Net Sales $445.0 $372.8 19.4% FX +0.9% Net Income $42.6 $18.9 +125% Total +19.4% Adjusted EBITDA(1) $65.3 $56.1 16.4% Net Income Margin 9.6% 5.1% +450 bps Adjusted Net Income per Share Adjusted EBITDA Reporting Change 14.7% 15.1% (40 bps) Margin(2) Q2 2018 Q2 2017 Net Income per Adjusted Net Income per Share $0.63 $0.40 $0.79 $0.28 +182% Share (Diluted) Intangible Amortization per ($0.11) ($0.05) share (post tax) Adjusted Net Income (1) $0.63 $0.40 +57.5% Adjusted Net Income per Share per Share (Diluted) $0.52 $0.35 using Prior Method Adjusted Net Income per Share for all periods now excludes Intangible asset amortization (1) See non-GAAP reconciliation in appendix (2) Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of Net sales 3
Consolidated Atkore Q2 2018 Highlights Strategy execution and pricing discipline Q2 Net Sales Bridge delivered double digit growth in Net $445M $32 $3 sales, Adjusted EBITDA, and EPS $13 $24 $373M Organic volume growth of ~4% Adjusted EBITDA margin up 50 basis points, 2017 Volume Price / Mix M&A FX 2018 excluding impact of the dollar for dollar pass- through of cost increases Q2 Adjusted EBITDA Bridge $2 $4 Pass through of inflation on track $7 $65M $4 $1 $56M Investments, Variable Price & Mix Comp, & offset by Other Adjusted EBITDA guidance increase supported Commodities, Inflation Freight & Other by Q2 results and full year market outlook COGS 2017 Volume Price vs. Cost M&A Productivity Other 2018 4
Electrical Raceway Q2 Highlights Q2 Q2 Raceway business model and go to Y/Y 2018 2017 Change market strategy continue to support ($’s in millions) volume and Adjusted EBITDA growth Net Sales $324.8 $271.0 19.8% expectations Adjusted EBITDA $56.4 $46.7 20.8% Volume growth on track with expectations Adjusted EBITDA 17.4% 17.2% +20 bps Margin Acquisition results outperformed pre- Q2 Net Sales Bridge acquisition models and synergy expectations $325M $32 $3 $23 $4 $271M Adjusted EBITDA margin growth in an Volume +4% YTD inflationary environment 2017 Volume Price / Mix M&A FX 2018 5
Mechanical Products & Solutions Q2 Highlights Q2 Q2 Y/Y A strengthening Industrial environment 2018 2017 Change ($’s in millions) and productivity savings drove Adjusted EBITDA improvement Net Sales $120.3 $102.2 17.7% Adjusted EBITDA $16.7 $15.5 +8.2% Broad based volume improvement Adjusted EBITDA 13.9% 15.1% (120 bps) Margin Productivity gains and volume drove the Adjusted EBITDA gains Q2 Net Sales Bridge $17 $1 $120M $102M Divested Flexhead business delivered Adjusted EBITDA of ~$2M in H1 2018 2017 Volume Price / Mix 2018 6
Key Balance Sheet and Cash Flow Metrics Metrics Leverage Ratio(1) ($mm) 3/30/2018 Cash and cash equivalents $76.9 Total Debt $908.2 5.2x YTD CapEx $17.2 3.5x 3.4x YTD Net cash from operating $53.2 activities 2.3x 1.8x TTM Adjusted EBITDA(1) $245.4 Leverage Ratio(1) Total debt / TTM Adjusted EBITDA(1) FY 2014 FY 2015 FY 2016 FY 2017 Q2 2018 3.7x Net debt / TTM Adjusted EBITDA(1) 3.4x Divested Flexhead for $42 million or ~10 times Common Shares Outstanding as of 46,577,795 trailing Adjusted EBITDA March 30, 2018 (1) Leverage ratio for all periods and TTM Adjusted EBITDA is reconciled in the appendix. 7
2018 Financial Outlook Summary Q3 2018 FY 2018 Electrical Raceway Volume +Low to Mid-Single Digits Segment Adjusted EBITDA* $ 55- $60M $220 - $230M Volume +High-Single Digits Mechanical Products & Solutions Segment Adjusted EBITDA* $12 - $16M $55 - $60M Adjusted EBITDA* $65 - $70M $250 - $260M Adjusted EPS* $0.65 - $0.70*** $2.40 - $2.50*** Consolidated Atkore Capital Expenditures $8M $32M Interest Expense $12M $42M Tax Rate 26% 23% Diluted Shares** 49 55 Increasing mid-point and maintaining high-end of Adjusted EBITDA range after divestiture of Flexhead * Reconciliation of the forward-looking third-quarter and full-year 2018 outlook for Adjusted EBITDA and Adjusted Net Income Per Share (Adjusted EPS) is not being provided as the Company does not currently have sufficient data to accurately estimate the variables and individual adjustments for such reconciliation. ** Represents expected weighted-average shares outstanding in millions used in calculation of Adjusted EPS guidance 8 ***Includes favorable impact of adding back intangible amortization to Adjusted Net Income per share of $0.11 in Q2 and $0.42 in FY 2018.
Appendix
Segment Information Three months ended March 30, 2018 March 31, 2017 Adjusted Adjusted Adjusted EBITDA Adjusted EBITDA (in thousands) Net sales EBITDA Margin Net sales EBITDA Margin Electrical Raceway $ 324,787 $ 56,404 17.4% $ 270,995 $ 46,687 17.2% Mechanical Products & Solutions 120,310 $ 16,722 13.9% 102,180 $ 15,457 15.1% Eliminations (97) (384) Consolidated operations $ 445,000 $ 372,791 Six months ended March 30, 2018 March 31, 2017 Adjusted Adjusted Adjusted EBITDA Adjusted EBITDA (in thousands) Net sales EBITDA Margin Net sales EBITDA Margin Electrical Raceway $ 641,310 $ 112,564 17.6% $ 513,380 $ 88,804 17.3% Mechanical Products & Solutions 218,884 $ 27,531 12.6% 197,861 $ 31,238 15.8% Eliminations (636) (859) Consolidated operations $ 859,558 $ 710,382 10
Adjusted earnings per share reconciliation Consolidated Atkore International Group Inc. Three months ended Six months ended March 30, March 31, March 30, March 31, (in thousands, except per share data) 2018 2017 2018 2017 Net income $ 42,558 $ 18,935 $ 69,747 $ 36,317 Stock-based compensation 2,770 3,584 6,334 6,304 Intangible asset amortization 7,765 5,493 16,452 11,082 Gain on sale of a business (26,737) — (26,737) — Loss on extinguishment of debt — — — 9,805 Gain on sale of joint venture — (5,774) — (5,774) Certain legal matters 2,286 7,501 2,286 7,501 Other (a) 2,094 447 2,601 (10,483) Pre-tax adjustments to net income (11,822) 11,251 936 18,435 Tax effect 3,074 (3,424) (243) (5,995) Adjusted net income $ 33,810 $ 26,762 $ 70,440 $ 48,757 Weighted-Average Diluted Common Shares Outstanding 54,003 66,888 59,945 66,446 Net income per diluted share $ 0.79 $ 0.28 $ 1.16 $ 0.55 (b) Adjusted net income per diluted share $ 0.63 $ 0.40 $ 1.18 $ 0.73 (a) Represents other items, such as inventory reserves and adjustments, realized or unrealized gain (loss) on foreign currency transactions and release of certain indemnified uncertain tax positions. (b) Beginning in March 2018, the Company excluded the impact of intangible asset amortization from the calculation of Adjusted net income. The following table presents a reconciliation of Adjusted net income per diluted share as reported to the prior method for the periods presented: Three months ended Six months ended March 30, 2018 March 31, 2017 March 30, 2018 March 31, 2017 As reported $ 0.63 $ 0.40 $ 1.18 $ 0.73 Intangible asset amortization (net of tax) 0.11 0.05 0.20 0.10 Prior method $ 0.52 $ 0.35 $ 0.98 $ 0.63 11
Net Income to Adjusted EBITDA reconciliation Consolidated Atkore International Group Inc. Three months ended Six months ended (in thousands) March 30, 2018 March 31, 2017 March 30, 2018 March 31, 2017 Net income $ 42,558 $ 18,935 $ 69,747 $ 36,317 Interest expense, net 9,286 5,231 15,880 15,061 Income tax expense 15,392 12,375 17,908 17,882 Depreciation and amortization 15,853 13,273 33,063 26,901 Loss on extinguishment of debt — — — 9,805 Restructuring and impairments 576 412 838 801 Stock-based compensation 2,770 3,584 6,334 6,304 Certain legal matters 2,286 7,501 2,286 7,501 Transaction costs 1,263 138 1,908 1,698 Gain on sale of a business (26,737) — (26,737) — Gain on sale of joint venture — (5,774) — (5,774) Other (a) 2,094 447 2,601 (10,483) Adjusted EBITDA $ 65,341 $ 56,122 $ 123,828 $ 106,013 (a) Represents other items, such as inventory reserves and adjustments, realized or unrealized gain (loss) on foreign currency transactions and release of certain indemnified uncertain tax positions. 12
Net Income to Adjusted EBITDA reconciliation Consolidated Atkore International Group Inc. TTM Three months ended December 29, September 30, (in thousands) March 30, 2018 March 30, 2018 2017 2017 June 30, 2017 Net income $ 118,069 $ 42,558 $ 27,189 $ 20,857 $ 27,465 Interest expense, net 27,417 9,286 6,594 5,726 5,811 Income tax expense 41,512 15,392 2,516 12,173 11,431 Depreciation and amortization 60,889 15,853 17,210 14,485 13,341 Restructuring and impairments 1,293 576 262 556 (101) Stock-based compensation 12,818 2,770 3,564 3,420 3,064 Certain legal matters 2,336 2,286 — 50 — Transaction costs 4,988 1,263 645 2,235 845 Gain on sale of a business (26,737) (26,737) — — — Other 2,838 2,094 507 60 177 Adjusted EBITDA $ 245,423 $ 65,341 $ 58,487 $ 59,562 $ 62,033 1 Acquisitions/Divestiture add-back 7,904 Pro Forma Adjusted EBTIDA $ 253,326 (1) Pro Forma adjustments add the Adjusted EBITDA for acquisitions completed in the last 12 months not reported in the Adjusted EBITDA 13 line due to acquisition date, and subtract Adjusted EBITDA reported in the last 12 months for divestitures.
Net Debt to Total Debt and Leverage Ratio Consolidated Atkore International Group Inc. March 30, September 30, September 30, September 25, September 26, ($ in thousands) 2018 2017 2016 2015 2014 Short-term debt and current maturities of long-term debt $ 7,653 $ 4,215 $ 1,267 $ 2,864 $ 42,887 Long-term debt 900,556 571,863 629,046 649,344 649,980 Total debt 908,209 576,078 630,313 652,208 692,867 Less cash and cash equivalents 76,892 45,718 200,279 80,598 33,360 Net debt $ 831,317 $ 530,360 $ 430,034 $ 571,610 $ 659,507 TTM Adjusted EBITDA $ 245,423 $ 227,608 $ 235,002 $ 163,949 $ 126,597 Total debt/TTM Adjusted EBITDA 3.7 x 2.5 x 2.7 x 4.0 x 5.5 x Net debt/TTM Adjusted EBITDA 3.4 x 2.3 x 1.8 x 3.5 x 5.2 x 14