Atkore Q2 2025 Earnings Report

Atkore EPS Results

• Actual EPS: $2.04
• Consensus EPS: $1.52
• Beat/Miss: Beat by +$0.52
• One Year Ago EPS: $4.08

Atkore Revenue Results

• Actual Revenue: $701.73 million
• Expected Revenue: $690.83 million
• Beat/Miss: Beat by +$10.90 million
• YoY Revenue Growth: -11.50%

Atkore Announcement Details

• Quarter: Q2 2025
• Date: 5/6/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, May 6, 2025
• Conference Call Time: 8:00AM ET

Atkore (NYSE:ATKR) engages in the manufacture and sale of electrical, mechanical, safety, and infrastructure products and solutions in the United States and internationally. The company offers conduits, cables, and installation accessories. It also designs and manufactures protection and reliability solutions for critical infrastructure, such as metal framing, mechanical pipe, perimeter security, and cable management. The company offers its products under the Allied Tube & Conduit, AFC Cable Systems, Kaf-Tech, Heritage Plastics, Unistrut, Power-Strut, Cope, US Tray, FRE Composites, United Poly Systems, Calbond, and Calpipe. It serves various end markets, including new construction; maintenance, repair, and remodel; infrastructure; diversified industrials; alternative power generation; healthcare; data centers; and governments through electrical, industrial, and mechanical contractors, as well as original equipment manufacturers. The company was formerly known as Atkore International Group Inc. and changed its name to Atkore Inc. in February 2021. Atkore Inc. was founded in 1959 and is headquartered in Harvey, Illinois.

Atkore Q2 2025 Earnings Call Transcript

Presentation

[Operator]

Good morning. My name is Van, and I will be your conference operator today. At this time, I would like to welcome everyone to Atkore's Second Quarter Fiscal Year twenty twenty five 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]

As a reminder, this conference is being recorded. Thank you. I would now like to turn the conference over to your host, Matt Klein, Vice President of Treasury and Investors Relations. Thank you. You may now begin.

[Matthew Kline, Vice President of Treasury & Investor Relations at Atkore]

Thank you, and good morning, everyone. I'm joined today by Bill Waltz, President and CEO John Dyser, Chief Financial Officer and John Pergenzer, Chief Operating Officer and President of Electrical. We will take questions at the conclusion of the call. 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.

[Matthew Kline, Vice President of Treasury & Investor Relations at Atkore]

Please refer to our SEC filings and 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, and any reference to EPS or adjusted EPS means adjusted diluted earnings per share. Adjusted EBITDA and adjusted diluted earnings per share are non GAAP measures. 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

[Matthew Kline, Vice President of Treasury & Investor Relations at Atkore]

over to Bill.

[William Waltz, President and Chief Executive Officer at Atkore]

Thanks, Matt, and good morning, everyone. We appreciate you joining us today for our fiscal twenty twenty five second quarter earnings call. Starting with our second quarter results on Slide three. We are very pleased with our second quarter performance.

[William Waltz, President and Chief Executive Officer at Atkore]

We achieved net sales of $7.00 $2,000,000 which included 5% organic volume growth, driven by strong contributions from construction services, steel conduit, metal framing and cable management products. Adjusted EBITDA was $116,000,000 and adjusted EPS was $2.4 In addition to our volume growth, our results benefited from better cost management and productivity. While our pricing was down year over year, we saw sequential quarter increases in our prices for our steel conduit products. Our teams have been focused on maximizing shareholder value which includes assessing the best use for our assets. For example, in February, we announced the divestiture of Northwest Polymers recycling business after careful consideration and strategic review.

[William Waltz, President and Chief Executive Officer at Atkore]

I'm also pleased to highlight that we ratified a new five year labor agreement with the United Steel Workers at our Harvey, Illinois facility last month. The new contract is retroactive to April 2024, which is when the previous contract expired. This new agreement is a critical element for enabling us to continue building on our commitment to productivity and serving our customers. We redeployed cash to shareholders having repurchased approximately $50,000,000 in shares in the second quarter and paid our fifth quarterly dividend since adding the dividend to our capital deployment model in FY24. As we announced last week, I'm also proud to highlight that Atkore's Board of Directors increased the dividend to $0.33 per share during our recent board meeting.

[William Waltz, President and Chief Executive Officer at Atkore]

In mid April, we announced an impairment charge for certain long lived assets related to our HDP pipe and conduit products. The impairment charge was triggered by the emergence of competing technologies to fiber optic cable and delays in the deployment of government stimulus funding for nationwide broadband infrastructure investments. The net loss of $50,000,000 includes a $128,000,000 non cash impairment charge related to these HTPE assets. When we met in February, we had not yet incorporated the impact that tariffs might have on the broader construction market. We indicated that if tariffs went into effect, we expected to be a net beneficiary since most of what we make and sell originates with materials, labor and equipment in the same geography.

[William Waltz, President and Chief Executive Officer at Atkore]

Following the elimination of exemptions and other actions taken by the administration, imported steel and aluminum products carry a 25% tariff regardless of the country of origin. As we sit here today, we are more optimistic about demand for US made steel conduit in 2025. A greater demand for US made steel conduit helps Atkore. While recent weeks have been encouraging, there remains unpredictability of how long and to what extent tariffs may be part of our economic landscape. We are very mindful of the impact uncertainty has on a macroeconomic level.

[William Waltz, President and Chief Executive Officer at Atkore]

The most recent Dodge Momentum Index suggested planning activity slowed across several non residential categories. On balance, we are proud to be maintaining the guidance we presented in February. We continue to expect full year fiscal twenty twenty five adjusted EBITDA with a midpoint of $400,000,000 I'm grateful for the dedication and resilience our teams have shown through a busy first half of the fiscal year and I'm confident that we will continue to lead into our business system to execute our strategy and deliver value to our customers and shareholders. With that, I'll turn the call over to John to talk through the results from the quarter.

[John Deitzer, VP, CFO at Atkore]

Thank you, Bill, and good morning, everyone. Moving to our consolidated results on slide four. In the second quarter, we achieved net sales of $7.00 $2,000,000 and adjusted EBITDA of $116,000,000 Adjusted EBITDA margins expanded sequentially to 16.6 from 15% in the first quarter of fiscal twenty twenty five. Adjusted EPS was $2.04 Turning to slide five and our consolidated bridges. Organic volumes were up 5% compared to down 1% in the second quarter of fiscal twenty twenty four.

[John Deitzer, VP, CFO at Atkore]

Our average selling prices declined 17% year over year with the majority of the decline coming from our PVC conduit and steel conduit products. However, we were pleased by sequential pricing improvement for our steel conduit products from the first quarter. Moving to slide six, year to date our volume is flat compared to the prior year having overcome a 5% decline in the first quarter. Last quarter, this slide showed volume growth in only one product area, metal framing, cable management and construction services. Our 5% year over year volume growth in the second quarter was supported by volume growth across three out of five product areas, a meaningful improvement over the first quarter.

[John Deitzer, VP, CFO at Atkore]

Year to date, our metal framing cable management and construction services have grown high single digits after being up low single digits in the first six months of the prior year. As a reminder, this growth is driven by large construction projects and data center activity and also due to the high density of metal framing products required for these types of construction. For the first six months of fiscal twenty twenty four, our plastic piping conduit products were up mid single digits in volume driven by strong performance in water related PVC products. During the first six months of fiscal twenty twenty five, electrical PVC conduit serving the commercial and industrial end markets grew while our water related products declined. This contributed to the overall decline in the product category.

[John Deitzer, VP, CFO at Atkore]

As we build out a broader water related portfolio, we're reviewing our customer base for both new and existing capacity in order to hopefully maximize our value offering. After our steel related products were down high single digits in volume in the first quarter, we are pleased that year to date volume for these products is now slightly positive. We believe this is due to the strength in the overall market, particular demand for U. S. Made products.

[John Deitzer, VP, CFO at Atkore]

Our Electrical Cable and Flexible Conduit category is also growing year to date up low single digits. Turning to slide seven. Adjusted EBITDA margins compressed in our Electrical segment primarily due to pricing declines related to our PVC and steel conduit products, which offset contributions from overall volume growth. Adjusted EBITDA margins improved in our S and I segment due to strong quarterly volume performance from construction services, metal framing and cable management. In addition, the segment had much improved productivity contributing approximately $11,000,000 to segment EBITDA.

[John Deitzer, VP, CFO at Atkore]

Our productivity gains were primarily due to better cost management in our manufacturing and project based work. While we are pleased with the operational and financial performance for S and I this quarter, we do believe a certain portion of the benefits and margin gains were isolated to Q2 and anticipate margins to be closer to low double digits for the remainder of the year. Turning to slide eight. We remain committed to executing a balanced capital deployment model with an emphasis on returning cash to shareholders. Our capital investments are largely to support previously announced growth initiatives.

[John Deitzer, VP, CFO at Atkore]

Our balance sheet remains in a strong position with no maturity repayments required until 2028. Subsequent to our quarter end, we refinanced our asset based lending agreement maintaining our borrowing capacity for March This amended agreement expires in 02/1930. While we have historically not borrowed against this facility, it remains an important component of our overall financial profile. Next on slide nine. We expect our Q3 net sales in the range of $715,000,000 and $745,000,000 Our adjusted EBITDA is expected to be in the range of $85,000,000 to $105,000,000 Our adjusted EPS is expected to be in the range of $1.25 and $1.75 As we've previously discussed, we are accustomed to anticipating some amount of seasonality and generally build in an expectation that the back half of the year will be stronger than the first half.

[John Deitzer, VP, CFO at Atkore]

While our second quarter results were better than our initial expectations, there are multiple factors we considered as we plan forward. Our first half of the year was supported by a strong contribution from our Construction Services business. We expect that the second half of the year will not provide the same contribution due to the number of projects we have in backlog. While there are numerous opportunities we are pursuing for new projects, we expect growth for the Construction Services business to moderate in the second half of the year. That being said, we are excited about the additional capability and capacity we have for metal framing products that we believe should help continue to drive growth for this product area for FY 2025 and beyond.

[John Deitzer, VP, CFO at Atkore]

Despite year to date increases in both construction starts and planning activities, recent forward looking construction sentiment suggests the possibility for slower activity moving forward. The topic of tariffs has received much attention in the past several weeks. Forecasting the impact related to tariffs is challenging. We believe the impact of tariffs for ATCOR primarily centers on our ability to reclaim and recapture lost market share in gross margin for certain product categories over time. Since tariffs were first announced both the time horizon and the applicable percentages have changed multiple times.

[John Deitzer, VP, CFO at Atkore]

Framing a forward looking perspective for six months or even three months comes with the risk of inaccuracy. Due to these factors, we believe our volume expectations for the full year will be closer to low single digit percentages. Nonetheless, as Bill shared, we are maintaining our full year 2025 outlook and expect full year adjusted EBITDA in the range of $375,000,000 to $425,000,000 and adjusted EPS in the range of $5.75 and $6.85 With that, I'll turn it over to John Pergenzer.

[John Pregenzer, COO & President, Electrical at Atkore]

Thanks John. Moving to slide 10. Although certain product categories source materials from countries impacted by recently announced or potential tariffs, we believe Atkore should be in a net benefit position. While the magnitude and precise details of various tariffs may continue to evolve over the upcoming quarters, this slide illustrates Atkore's geographic manufacturing footprint with its long lived assets relative to its revenue generation. Additionally, we've outlined the relevant impacts tariffs may create for each of our key product areas.

[John Pregenzer, COO & President, Electrical at Atkore]

Finally, turning to Slide 11, as we've said before, the electrical industry is a great place to be. Our financial profile remains strong and our diverse portfolio of domestically manufactured electrical infrastructure products provide solutions for nearly all types of construction end markets. Our domestic manufacturing footprint paired with our predominantly domestic customer base positions us well to serve our customers in the markets they operate. As demand for electricity intensifies and the design and requirements change, Atkore is prepared with high quality solutions to enable growth and ensure safe distribution of electricity to data centers, manufacturing locations, hospitals, and homes. Our products and solutions are situated well with secular tailwinds for increased electrification.

[John Pregenzer, COO & President, Electrical at Atkore]

We remain focused on a balanced and disciplined approach to capital deployment by returning cash to shareholders through a combination of share repurchases and quarterly cash dividends and investing to grow the business. Through it all, we are guided by our strategy, our process and our people, the three fundamentals of the Atkore business system. With that, we thank you again for joining our call this morning. Now we'll turn it to the operator to open the line for questions.

[Operator]

Your first question comes from the line of Chris Moore, CJS Securities. Please go ahead.

[Chris Moore, Senior Analyst at CJS Securities]

Hey, good morning guys. Thanks for taking a couple of questions.

[William Waltz, President and Chief Executive Officer at Atkore]

Good morning, Chris.

[Chris Moore, Senior Analyst at CJS Securities]

Good morning. So maybe we could start with PVC conduits and just kind of what you're expecting for the balance of the year. I know we after Q1 kind of the idea was would be pre pandemic pricing perhaps by the end of fiscal twenty twenty five. Just wanted to see if that's still in line with the way you're looking at it.

[William Waltz, President and Chief Executive Officer at Atkore]

Yes, Chris. I think at this stage, again, as I think John Deitzer said, it's hard to predict out three and six months, even one month. But what we guided in the last quarter still seems to be our best guess. From what we've seen, pricing has continued to go down some, at least for us. But it's kind of on track back to our earnings and everything we said with what we expect.

[William Waltz, President and Chief Executive Officer at Atkore]

So as much as we can forecast the future for ourselves, that's what we are estimating at this stage.

[Chris Moore, Senior Analyst at CJS Securities]

Got it. And what would be from market share standpoint on PVC conduit, would you have a best guess in terms of where Atkore is at this point in time?

[William Waltz, President and Chief Executive Officer at Atkore]

I don't know if, Cher, I look to the team for a precise number. I still think we're absolutely a leader out there. And you know, imports, which I'm sure will be a question, seem to be continuing to grow. You know? But it's also hard almost preempt future questions as The Wall Street Journal talked about the whole economy and saying it's hard to go what's the, you know, the tariff impact.

[William Waltz, President and Chief Executive Officer at Atkore]

Is just what's a noise in different product lines. Like, hey. It was up you know, solid imports were up solid double digits in the last, let's say, three months, but where people are trying to get products in ahead of the tariffs and stuff like that. So, you know, we're absolutely still a leader. No question about that.

[William Waltz, President and Chief Executive Officer at Atkore]

And give or take, probably around, you know, keeping our same market share. But one of the things I'd also qualify with PBC is unlike other products, it's pure estimates. There's no all we can do is look at, for example, how much resin is being sold into different markets and try to extrapolate from there what is municipal pipe, plumbing pipe, PVC pipe, and so forth. So it's much murkier to give precise estimates.

[Chris Moore, Senior Analyst at CJS Securities]

Got it. I appreciate that. And maybe just stay with PVC condoms for my last question. Longer term, I'm talking three to five years. I'm just trying to understand your view of PVC condos in terms of your overall offering.

[Chris Moore, Senior Analyst at CJS Securities]

There's more competition, more imports. Just from big picture, how important is it to the kind of overall business in the longer term?

[William Waltz, President and Chief Executive Officer at Atkore]

I still think it's a key part of our business, Chris. I think a good thing to call out because I focus on imports, we have mentioned in the past that there's the startup of one company and it does, while I say, does feel like we're pretty sure that others in the industry, maybe even in municipal pipe and things like that, have expanded some into conduit. But both, it's a good product line for us and it totally fits into ACCOR's one order, one delivery, one invoice, which as we've explained over the years, we think is a competitive advantage for us. So we're continuing to invest. We talked a lot about productivity.

[William Waltz, President and Chief Executive Officer at Atkore]

A lot of that came on the S and I side of the business, but we're driving productivity here to continue to be competitive and make it a good product in our portfolio.

[Chris Moore, Senior Analyst at CJS Securities]

Perfect. I'll leave it there. Thanks.

[William Waltz, President and Chief Executive Officer at Atkore]

Yes. Thanks, Chris.

[Operator]

Your next question comes from the line of David Tarantino from KeyBanc. Your line is now open.

[David Tarantino, Assistant Vice President at KeyBanc Capital Markets]

Hey, good morning everyone. Good morning, So maybe starting out, could you give us some color what you're seeing more recently in terms of the import levels in both PVC particularly around the improved metal pricing you guys noted? And then maybe on that, could you quantify what the potential upside in pricing could be? Should these tariffs be more sticky and imports return to more normal levels?

[William Waltz, President and Chief Executive Officer at Atkore]

Yes. I'll start, David. But even in trying to say projections, if we get that specific on the future here. So as I kind of mentioned with Chris or I did mention with Chris is PVC imports year over year for the last quarter are up solid double digit percents. It's hard to estimate going forward if that will continue or if it's just people getting in before the tariffs or even to go, hey.

[William Waltz, President and Chief Executive Officer at Atkore]

We shipped everything we could and, like, they literally don't even have capacity. Again, I don't know by specific competition domestically or internationally that well to know what's in their playbook. I do perceive that, again, with all the variability of administration and tariffs, that some imports were coming from China. And I would expect that to be decreased just because the current tariffs there across, I think, all products for China, but at least PVC conduit is well over 100%. So that's not as economical.

[William Waltz, President and Chief Executive Officer at Atkore]

For the Latin American countries, the tariff right now on the major importers is 10%. And again, that's on product. You got to remember a lot of this we've talked about is the inefficiency of freight. So I wouldn't apply it. Yeah.

[William Waltz, President and Chief Executive Officer at Atkore]

Like, their whole delivered cost isn't 10% up because it's just on the product and so forth. So whatever estimate you want to say, 5%, seven %, I'm making up a totally random number if you follow my math. But it is a headwind. I mean, it helps us as we've covered in prepared remarks, tariffs overall and John Briggs are discussed with one chart are typically a good thing for Atkore going forward. As for steel conduit, they were actually in the quarter down year over year.

[William Waltz, President and Chief Executive Officer at Atkore]

So again, just like I don't want to overread into PVC, I don't want to overread into steel, but from a year over year perspective down. There, I do think, because that is what I think I covered in the very beginning remarks. We're seeing for all steel conduit now with February where the administration removed exemptions is a 25% tariff. So again, can it be economical to bring products across? Yes.

[William Waltz, President and Chief Executive Officer at Atkore]

But that's a higher headwind that either means whatever they do with that, but how aggressive they are, what pricing they sell at, again, independent companies, but that's a good thing for us. And therefore, without dimensionalizing an exact dollar, where we've held the guide is the fact that we do see tariffs helping EBITDA profits a little bit offset, as John Geitzer said, just from the standpoint that if you look into the second half, it's hard to predict the economy. Good luck to the Fed over the next two days. But we could see some projects delayed, association of building contractors and things like that. I think there was a stat from them that their contractors are seeing up to 20% of jobs delayed or possibly postponed.

[William Waltz, President and Chief Executive Officer at Atkore]

So we were just trying to balance good thing tariffs offset by maybe a little less volume. And as John Dietser said, and then I'll wrap up my filibuster here, is we're still projecting, let's say, low single digit growth. But if we're at zero in the first half of year with a good solid Q2, I mean, I'm over specific on math, but if you assume 3%, don't be locked on that number for the full year, implicitly that means 6%, that we will we expect to be mid to high single digit growth here in the second half of the year. So we're still pretty optimistic, but that's the balance of tariffs and volume and stuff like that.

[David Tarantino, Assistant Vice President at KeyBanc Capital Markets]

Okay. That's helpful. And is there a way to frame that steel pricing assumption relative to what normal pricing is or at least pre pandemic pricing is?

[William Waltz, President and Chief Executive Officer at Atkore]

No. I don't know. We could go back, but I tell you just like other bulk PVC, but it's jumped around. Like, again, if you go back last year through this quarter, we had great steel conduit. Like, it was growing single digits.

[William Waltz, President and Chief Executive Officer at Atkore]

Our price year over year was up, And then all of a sudden, the market kinda went the other way. It's kinda you know, again, hard to predict these things. So at this stage, as we've called out, still kinda do it sequentially, q one to q two, pricing is up and things are looking positive, but it's still less than last year. But to go back, I guarantee there's years it's been higher and guarantee there's years it's been lower than the current number. So John Dyser, any?

[John Deitzer, VP, CFO at Atkore]

It's a good question, David. I would say the one dynamic here is the underlying volatility that you do see with whether it's hot rolled steel, cold rolled steel, etcetera. You do see significant volatility with that over time. And that probably has a little bit different of a dynamic versus, hey, how does this compare to a certain pinpoint in time kind of dynamic? I think where we're at today is we are seeing sequential improvement essentially month to month as we look forward.

[John Deitzer, VP, CFO at Atkore]

And so there's probably some puts and takes though across the entirety of the portfolio as Bill mentioned. We're probably a little softer on the volume expectation for the second half, but that still is a pretty positive one to Bill's math. If we're at flat here in the first half of the year and we're still saying that low single digit type environment, that's pretty positive here from a volume perspective in the back half.

[David Tarantino, Assistant Vice President at KeyBanc Capital Markets]

Okay, great. And maybe if I could sneak one more in just to follow-up on the volume assumption. You just walk us through the approach you guys took to updating the volume assumption just given the rapid change in the macro backdrop and maybe give us some color on what you're seeing in the ground in terms of end demand that supports it?

[William Waltz, President and Chief Executive Officer at Atkore]

Yes. I'll start here, David. Again, it's a you wish it was more scientific, but it is a combination of a couple of things. First, internally, it is obviously forecast from our general managers, our sales teams on specific projects. As we've explained, other than a couple areas like global mega projects and some solar business, you know, we are a business that ships typically in four days, so don't even have a week back a week's worth of backlog is extreme.

[William Waltz, President and Chief Executive Officer at Atkore]

So we don't have where, like other corporations, we can look at our backlog for the next year. But internally, these were submitted forecast. They do seem to triangulate. I'll give you the two thoughts. We've done a lot of we always do a lot of voice of customer, but either directly with myself and my executive staff with large customers that are, I'm gonna say, cautiously optimistic even just just like we said, you know, the second half has to be higher single digits.

[William Waltz, President and Chief Executive Officer at Atkore]

That's what they're seeing across, I'll say, most product lines here going forward. And, you know, my our sales team has gone out and literally pulled, I think, everybody, and they're seeing or estimating the same thing. Flip side of that, just to give us the balances, if you look at things like we called out in the prepared remarks, but the Dodge Momentum Index has gone down. The association of ABI Architectural Billing Index has been negative here for almost two years. And I mentioned the ABC, the Association of Building Contractors that were expecting jobs to be delayed.

[William Waltz, President and Chief Executive Officer at Atkore]

It feels like a good thing. From there, you can look at, as we had in the prepared remark or the chart on page six, things like metal framing, cable management, so forth are doing really well. So I know a bunch of our sell side and buy side questions. Data centers is the one area that's no surprise. I don't think anybody's really a strong market right now, and our products that go into that are doing well.

[William Waltz, President and Chief Executive Officer at Atkore]

And then other things are really what we see in the market and so forth there.

[David Tarantino, Assistant Vice President at KeyBanc Capital Markets]

Okay. Great. Thanks, guys.

[William Waltz, President and Chief Executive Officer at Atkore]

Thank you, David. Appreciate the question, sir.

[Operator]

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

[Deane Dray, Managing Director at RBC Capital Markets]

Thank you. Good morning, everyone.

[William Waltz, President and Chief Executive Officer at Atkore]

Hey. Good morning, Deane.

[Deane Dray, Managing Director at RBC Capital Markets]

Hey. Look, I appreciate all the commentary about limited visibility. That's just the nature of your short cycle business. So I know you have to couch it condition. But can you size for us, maybe directionally, but any position is helpful of what the net tariff benefit is you're assuming now in your updated fiscal twenty five guide?

[William Waltz, President and Chief Executive Officer at Atkore]

Dean, I would just try to do it this way is for the CEO math, and John can add to it. CEO math, by the way, is John Deitzer making fun of me for high level generalizations. Is if you took 2% or 3% off of volume and looked at our fall through, you could do here how much that is down and then assume it's picked up with the increase in tariffs for the second half. So whatever your estimate, that should get you close. Hopefully, that's as precise as I get it.

[Deane Dray, Managing Director at RBC Capital Markets]

Yes. Fully understand the limitations here. And then how about just go back to the steel conduit, Mexican imports real specifically? Because that was, like, the big hot point last year. And maybe a real time update.

[Deane Dray, Managing Director at RBC Capital Markets]

Has that flow of product stopped? And any indication, was there any sort of prebuy that they sent, you know, a bigger volume? And how long does that need to work through the system?

[William Waltz, President and Chief Executive Officer at Atkore]

John?

[John Pregenzer, COO & President, Electrical at Atkore]

Yeah. Hey, Dean. Yeah.

[John Pregenzer, COO & President, Electrical at Atkore]

We haven't seen, you know, a significant change in the marketplace as as it relates to to those imports. There was, as Bill mentioned earlier, you know, reduced imports that came in, but it's it's not that it has completely stopped the inflow of product. Obviously, they have a 25% headwind to deal with going forward, and but we'll have to continue to track it and and see what what comes through on the import numbers.

[William Waltz, President and Chief Executive Officer at Atkore]

Great. Would say, Dean, we're oh, Dean, we're not expecting, at least let's put it this way, I'm not expecting Mexican imports with a 25% tariff to stop. But any I would assume most logical people would say, hey, they either would have to be more selective or raise their price, you know, those type of things just to and, again, how much they absorb in margin versus try to pass through, those are dynamics we can only begin to estimate. But to your first question, it's a net positive for Atkore shareholders.

[Deane Dray, Managing Director at RBC Capital Markets]

Understood. And just a last one for me. Related to the impairment of HD PVC, what changed competitively? You made a reference about competing products for that market. Can you expand on that and what size the impact?

[William Waltz, President and Chief Executive Officer at Atkore]

Oh, yeah. I'm glad you asked, Dean, because even in our prepared remarks to make it is so it wasn't our product. So it's not like somebody came out with a new HDPE. What we were referring to, because it came in my comments, was competing technology for fiber optics. So more specifically, covered in the Wall Street Journal, I'm going to forget that.

[William Waltz, President and Chief Executive Officer at Atkore]

I read more than that, by the way, but was articles where the administration was looking to increase the user, open up the funding to satellites. So that's the competing technology. Again, it's all estimates, but at least the one Wall Street Journal article talked about how it could be 50% of the fiber optic. I've, you know, I've seen other CEO's comments in this space, whether they're, you know, people making conduit or whether they're making fiber optics that it may not be that much and so forth. But, you know, that along with my other prepared remarks on, you know, just the funding still hasn't gone through yet and things like that.

[William Waltz, President and Chief Executive Officer at Atkore]

But one of the key drivers was the administration. We've talked in previous quarters. You know, people have asked, hey. Could there be, satellites and so forth? But that's a difference between speculation and administration now saying they are either have done or plan on adding satellites to the way to get Internet to your home.

[Deane Dray, Managing Director at RBC Capital Markets]

And just to be clear, the risk of our opportunity for using satellites, was that factored into the impairment?

[William Waltz, President and Chief Executive Officer at Atkore]

Oh, yeah. Yeah. That was again, I don't wanna say it's the only thing because it absolutely wasn't. And as a engineer was going to do weighted averages, I'm not gonna get that precise. But that was a key factor here as the team did their analysis.

[Deane Dray, Managing Director at RBC Capital Markets]

That's very helpful. Thank you.

[William Waltz, President and Chief Executive Officer at Atkore]

Thanks, Dean.

[Operator]

Our next question comes from the line of Chris Dankert from Loop Capital. Your line is now open.

[Christopher Dankert, Senior VP - Equity Research at Loop Capital Markets LLC]

Hey, morning guys. Thanks for taking the question. Good morning,

[William Waltz, President and Chief Executive Officer at Atkore]

Chris. Good

[Christopher Dankert, Senior VP - Equity Research at Loop Capital Markets LLC]

had a quick follow-up on that last point actually. I mean, I guess, are you getting any direction from the administration on whether it's tariffs or specifically in this case on the Bead program? I guess it seemed early to be taking an impairment when at least I haven't seen an explicit change to the program. So we're almost preemptively impairing the act. I guess, are you getting any actual concrete word from the administration on how they're rolling this out?

[William Waltz, President and Chief Executive Officer at Atkore]

No. I'm at least, Chris, I'm not aware of a specific other what's been covered in, you know, directors. I know commerce I think it was the commerce secretary. I could be wrong on which one, but 90% sure. You know, and published, you know, a a press release, Wall Street Journal article.

[William Waltz, President and Chief Executive Officer at Atkore]

You know, that's where I'm gonna say, Chris, if you look back and say why, you know, it's running the math, making those assumptions. But to go, it's a little bit darn if you do, darn if you don't, to go, well, hold it. Well, nine months from now, we're seeing it. Well, why now and why not earlier? Well, hold it here.

[William Waltz, President and Chief Executive Officer at Atkore]

It's at least the key inflection point of the administration saying either they had or at least they intended to open it up. So, you know, we decided to take the prudent action and take you know, run the analysis with our accounting partners and outside, you know, in different models and start it was fiscally prudent to take the impairment now.

[Christopher Dankert, Senior VP - Equity Research at Loop Capital Markets LLC]

I mean By the way, you Yeah.

[William Waltz, President and Chief Executive Officer at Atkore]

Go. You No. I've covered it. Thanks, Chris.

[Christopher Dankert, Senior VP - Equity Research at Loop Capital Markets LLC]

Yeah. No. I appreciate the more

[William Waltz, President and Chief Executive Officer at Atkore]

we're still investing, but yeah. But but that's why.

[Christopher Dankert, Senior VP - Equity Research at Loop Capital Markets LLC]

That makes sense. And I think taking the more conservative approach given the current environment does does make sense. I just wanna make sure that there wasn't something that we were missing on a more concrete basis. No.

[William Waltz, President and Chief Executive Officer at Atkore]

No. It's beyond that. Yeah. Or beyond that, Chris, it's like very much like the last quarter with a little bit of, I say, internal frustration to go, hey. Several states have approved it.

[William Waltz, President and Chief Executive Officer at Atkore]

And but and even again, what I perceive or what when I read, as I mentioned earlier, you read other earnings announcements that, you know, whether it's people making fiber optic lines or others making HDPE that are public corporations, you know, everybody still perceives it's, you know, one year out, which is frustrating because it's been one year out for three or four years now. So it just felt like the right thing to do. Balanced internal discussion, third parties, to your point, took the charge.

[Christopher Dankert, Senior VP - Equity Research at Loop Capital Markets LLC]

Makes sense. Makes sense. And I and I guess I believe we talked about it in the past around the IRA, but just reconfirming, if we do get any withdrawal of support there for the torque tube business, again, I just want to reconfirm that business is still profitable without the IRA and some of the additional support there as well, correct?

[William Waltz, President and Chief Executive Officer at Atkore]

Yes. The best is our estimate, Chris. I'd do it this way to go. If you went back several years ago, I'll look to go so a couple of thoughts here. One, if you went back a couple of years ago, we started up the solar torque tube business before there was an IRA.

[William Waltz, President and Chief Executive Officer at Atkore]

What the IRA helped with was driving a lot of demand that was coming specifically from China to The States. The counterpoint now is with tariffs on steel, I think we have that, whatever you want to call, moat around, you know, that impediment we're bringing in as competitively imported steel. Now what I don't know and can't dimensionalize is how much that tariff or no, excuse me, that solar credit, that most of it gets passed on to our customers, how much is that an incentive for them to move faster because they have a lower, like, you know, return on invested capital to start up a solar project. So that level of sophistication, Chris, I can't I we don't know. Flip side, I would say, right now in the solar market, the challenges are more things like connecting to the grid.

[William Waltz, President and Chief Executive Officer at Atkore]

I still at least voice the customer here that we talked in our calls, I'm sure anyone covering other major electricals where there's a transformer backlog, there still seems to be a little bit of an impediment there. So I don't think it'd be the major driver. But again, just to be able to say with precision, two years out, it's hard to say.

[John Deitzer, VP, CFO at Atkore]

Yeah. I agree, Chris. I think there's too much to predict there. I would say the Hobart operation that we've had where we've invested has made great improvements. We talked about some of the productivity gains there.

[John Deitzer, VP, CFO at Atkore]

That being said, we don't comment specifically on the profitability by subsegment. That business has had its challenges, though. I mean, we've talked about that before. So you know? And then to extrapolate where we go into the future, you know, I think as we improve that operation continually, you know, the

[John Deitzer, VP, CFO at Atkore]

you know,

[John Deitzer, VP, CFO at Atkore]

I think that team is doing a great job. And so there's been commercial dynamics though in the near term. You can see the volumes in that mechanical tube segment have been down year to date. So that's been an impediment to us. But assuming that market starts to recover, I think then we're back on track there.

[Christopher Dankert, Senior VP - Equity Research at Loop Capital Markets LLC]

Understood. Well, thanks so much for the color there, guys.

[William Waltz, President and Chief Executive Officer at Atkore]

Yeah. Thanks. Thanks, Chris.

[Operator]

Our next question comes from the lines of Andy Kaplowitz from Citigroup.

[Andrew Kaplowitz, Managing Director at Citi]

So can you talk, Bill, about what you saw in terms of the cadence of demand for your products? Last quarter, I think you suggested that January came in a little light, but then you're already seeing sort of improvement in February. Did that sort of continue into March and April? I don't know if you addressed that earlier.

[William Waltz, President and Chief Executive Officer at Atkore]

No. Yeah. Good. Great question, Andy. And your the supposition is correct or I'll say that going every month was stronger than the previous month.

[William Waltz, President and Chief Executive Officer at Atkore]

So, you know, again, talking to some customers, I hate using think once we used the word weather in my seven years here, but I know we're talking to some key customers. Their results, they had mentioned that, you know, weather in January and February and stuff and picking up. So it does feel like, Andy, again, our guide is our guide. But every month you know, what I can say is every month was stronger than the previous month for our q fiscal q two. And, again, voice the customers back to their cautiously optimistic with a huge variability out there not knowing what the Fed's going to do and everything else that the rest of the year should be decent on volume for the overall markets and therefore also good for Atkore.

[Andrew Kaplowitz, Managing Director at Citi]

And then Bill, did you size the sort of construction services opportunity in the sense that obviously you've been talking about mega projects and data centers for a while, but it seems like you're getting more momentum there now. We used to ask you what your percentage of data center work was, but maybe just of the construction services overall business, are more of the projects data centers than anything else? And how do you expect that to progress moving forward?

[William Waltz, President and Chief Executive Officer at Atkore]

Yeah. I well, I do the following. It's data centers and data centers I think going forward, data centers will be the largest portion of it In the past and still in the future is chip manufacturing. So, obviously, there's a different, but is there potato potato there to a certain degree purely from the standpoint why are we making so many chips is to support data centers. But it's a little of both, Andy.

[John Deitzer, VP, CFO at Atkore]

Yeah. And the near term bills were aligned here that we've probably seen more on a product side on a metal framing and cable management opportunity there on data centers and those have done very well for us. Moving forward on the services side is probably the opportunity on the data centers. Past activity has probably been more on larger construction projects and then some of the chip manufacturing facilities that that we've been a part of. So I think the data center opportunity is more on on the go forward basis now for the services element, not just the product side.

[Andrew Kaplowitz, Managing Director at Citi]

Got it. And then I apologize if someone asked you this, but you didn't change your price assumptions for FY 2025 even with tariffs ramping up on steel in China. Have you seen any material impacts that you just got to be kind of careful with pricing right now. It's just interesting that you haven't changed it as the tariffs are starting to ladder in.

[William Waltz, President and Chief Executive Officer at Atkore]

Do you want to?

[John Deitzer, VP, CFO at Atkore]

Yes, I can start there and then Bill can jump in. There's probably some puts and takes just a little bit of noise around whether it's been the volatility we've seen in copper prices and things like that. So that's independent, I'd say, of tariffs specifically, Andy, but we have seen a lot of volatility there that obviously impacts our electrical cable and flexible conduit business. So I'd say there's there's probably some puts and takes factors as we're evaluating that over the totality of the year. But we we still think it's within the range.

[John Deitzer, VP, CFO at Atkore]

That range was, you know, I think we had a pretty sizable element. So we still feel like the overall price versus cost dynamics going to land within where we laid out.

[William Waltz, President and Chief Executive Officer at Atkore]

Yeah. And if you have a follow-up, I was not understanding if you meant the margin part or the top line price. Because again, same thing. On the top line, copper is jumping around a lot of late. Steel costs ran up, I'm saying a lot directionally twenty five percent, give or take, in the first quarter, but it's starting to come down slightly now.

[William Waltz, President and Chief Executive Officer at Atkore]

So, you know, the top line revenue is our guide with, again, estimates of where commodities are going to go. And then net net, price versus cost is still within that range that John Deitzer spoke of. More as to a question I think Dean asked, probably slight more optimism because again with the impact of tariffs, we think that's enough to offset maybe a couple hundred basis points of less volume because of the uncertainty in the future markets and so forth there end market.

[Andrew Kaplowitz, Managing Director at Citi]

Appreciate the color, Bill.

[William Waltz, President and Chief Executive Officer at Atkore]

You're welcome, sir.

[Operator]

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

[William Waltz, President and Chief Executive Officer at Atkore]

Thank you. Let me take a moment to summarize my three takeaways from today's discussion. First, Atkore had a strong second quarter of financial performance and was active in taking steps to further strengthen our company for the future. Second, we are maintaining our full year 2025 outlook while continuing to monitor the overall market dynamics and competitive landscape. Finally, we remain committed to our capital deployment strategy to create shareholder value over the long term.

[William Waltz, President and Chief Executive Officer at Atkore]

With that, thank you for your support and interest in our company. This concludes the call for today.

[Operator]

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

Participants

Executives

• Matthew Kline, Vice President of Treasury & Investor Relations
• William Waltz, President and Chief Executive Officer
• John Deitzer, VP, CFO
• John Pregenzer, COO & President, Electrical

Analysts

• Chris Moore, Senior Analyst at CJS Securities
• David Tarantino, Assistant Vice President at KeyBanc Capital Markets
• Deane Dray, Managing Director at RBC Capital Markets
• Christopher Dankert, Senior VP - Equity Research at Loop Capital Markets LLC
• Andrew Kaplowitz, Managing Director at Citi