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) (NYSE: ATKR) manufactures electrical, safety and infrastructure products for commercial, industrial, data center, utility, transportation and other construction markets. Its portfolio is designed to support the distribution, management and protection of electrical power and communications systems.

The company’s products include electrical conduit and fittings, cable management systems, wire and cable, metal framing, mechanical pipe, fire sprinkler pipe and related infrastructure components. Atkore sells products under brands that include Allied Tube & Conduit, AFC Cable Systems, Unistrut, Calbrite and Cope Cable Tray.

Founded in 1959, Atkore has expanded through acquisitions and operates manufacturing and distribution facilities serving customers in North America and international markets. The company sells through electrical distributors, specialty distributors, industrial suppliers and other channels, with products used by contractors, original equipment manufacturers and infrastructure operators.

Atkore Q2 2025 Earnings Call Transcript

Key Takeaways

• Strong Q2 results: Achieved net sales of $702 million (5% organic growth), adjusted EBITDA of $116 million and adjusted EPS of $2.04, driven by robust construction services and sequential price gains in steel conduit.
• Capital deployment: Repurchased approximately $50 million of shares and increased the quarterly dividend to $0.33 per share, marking the fifth dividend since adding it to the model in FY24.
• Impairment charge: Recognized a $128 million non-cash impairment on HDPE conduit assets due to competing fiber-optic technologies and delayed broadband funding, resulting in a $50 million net loss.
• Tariff outlook: With a uniform 25% tariff on imported steel and aluminum, Atkore expects to benefit from stronger demand for U.S.-made steel conduit, although the timing and duration of tariffs remain unpredictable.
• Maintained FY25 outlook of $375 million–$425 million in adjusted EBITDA and $5.75–$6.85 in adjusted EPS, while noting potential headwinds from moderated construction services backlog and macroeconomic uncertainty.

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 2025 earnings conference call. All lines have been placed in a listen-only mode. After the speaker, there will be a question-and-answer session. If you would like to ask a question during this time, simply press Star, followed by the number one on your telephone keypad. If you would like to withdraw your question again, press Star One. As a reminder, this conference is being recorded. Thank you. I would now like to turn the conference over to your host, Matt Kline, Vice President of Treasury and Investor Relations. Thank you. You may now begin.

[Matthew Kline, VP, Treasury and Investor Relations at Atkore]

Thank you, and good morning, everyone. I'm joined today by Bill Waltz, President and CEO; John Deitzer, Chief Financial Officer; and John Pregenzer, 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. 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.

[Matthew Kline, VP, Treasury and Investor Relations at Atkore]

Reconciliations of non-GAAP measures and a presentation of the most comparable GAAP measures are available in the appendix to today's presentation. With that, I'll turn it over to Bill.

[Bill Waltz, President and CEO at Atkore]

Thanks, Matt, and good morning, everyone. We appreciate you joining us today for our fiscal 2025 second quarter earnings call. Starting with our second quarter results on slide three, we are very pleased with our second quarter performance. We achieved net sales of $702 million, 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 million, and adjusted EPS was $2.04. 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 Polymer's recycling business after careful consideration and strategic review.

[Bill Waltz, President and CEO at Atkore]

I'm also pleased to highlight that we ratified a new five-year labor agreement with the United Steelworkers 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 million 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. In mid-April, we announced an impairment charge for certain long-lived assets related to our HDPE pipe and conduit products.

[Bill Waltz, President and CEO at Atkore]

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 million includes a $128 million non-cash impairment charge related to these HDPE 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. 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 U.S.-made steel conduit in 2025.

[Bill Waltz, President and CEO at Atkore]

A greater demand for U.S.-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. 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 2025 adjusted EBITDA with a midpoint of $400 million. 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 lean into our business system to execute our strategy and deliver value to our customers and shareholders.

[Bill Waltz, President and CEO at Atkore]

With that, I'll turn the call over to John to talk through the results from the quarter.

[John Deitzer, 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 $702 million and adjusted EBITDA of $116 million. Adjusted EBITDA margins expanded sequentially to 16.6% from 15% in the first quarter of fiscal 2025. Adjusted EPS was $2.04. Turning to slide five in our consolidated bridges, organic volumes were up 5% compared to down 1% in the second quarter of fiscal 2024. 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.

[John Deitzer, CFO at Atkore]

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. 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 2024, our plastic pipe and conduit products were up mid-single digits in volume, driven by strong performance in water-related PVC products.

[John Deitzer, CFO at Atkore]

During the first six months of fiscal 2025, 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. 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, particularly demand for U.S.-made products. Our electrical cable and flexible conduit category is also growing year to date, up low single digits.

[John Deitzer, CFO at Atkore]

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&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 million to segment EBITDA. 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&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.

[John Deitzer, CFO at Atkore]

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. 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 $325 million. This amended agreement expires in 2030. 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 million-$745 million. Our adjusted EBITDA is expected to be in the range of $85 million-$105 million. Our adjusted EPS is expected to be in the range of $1.25-$1.75.

[John Deitzer, CFO at Atkore]

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. 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.

[John Deitzer, CFO at Atkore]

That being said, we are excited about the additional capability and capacity we have for metal framing and cable management products that we believe should help continue to drive growth for this product area for FY25 and beyond. 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 Atkore primarily centers on our ability to reclaim and recapture lost market share and 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. Framing a forward-looking perspective for six months or even three months comes with the risk of inaccuracy.

[John Deitzer, CFO at Atkore]

Due to these factors, we believe our volume expectations for the full year will be closer to low single-digit %. Nonetheless, as Bill shared, we are maintaining our full year 2025 outlook and expect full year adjusted EBITDA in the range of $375-$425 million and adjusted EPS in the range of $5.75-$6.85. With that, I'll turn it over to John Pregenzer.

[John Pregenzer, Chief Financial officer and President of Electrical at Atkore]

Thanks, John. Moving to slide ten. 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. 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 provides 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.

[John Pregenzer, Chief Financial officer and President of Electrical at Atkore]

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. 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]

At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. 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.

[Bill Waltz, President and CEO at Atkore]

Yeah, good morning, Chris.

[Chris Moore, Senior Analyst at CJS Securities]

Good morning. Maybe we could start with PVC conduit and just kind of what you're expecting for the balance of the year. I know after Q1, kind of the idea would be pre-pandemic pricing, perhaps by the end of fiscal 2025. Just wanted to see if that's still in line with the way you're looking at it.

[Bill Waltz, President and CEO at Atkore]

Yeah, Chris, I think at this stage, again, I think John Deitzer said it's hard to predict out three and six months, even one month. 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. 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. What would be, from a market share standpoint on PVC conduit, would you have a best guess in terms of where Atkore is at this point in time?

[Bill Waltz, President and CEO at Atkore]

I don't know if share. I looked at the team for a precise number. I still think we're absolutely a leader out there. Imports, which I'm sure will be a question, seem to be continuing to grow. 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 tariff impact. It's just what's the noise in different product lines, like, "Hey, was up solid imports were up solid double digits in the last, let's say, three months," but were people trying to get products in ahead of the tariffs and stuff like that? We're absolutely still a leader, no question about that, and give or take probably around keeping our same market share. One of the things I'd also qualify with PVC is, unlike other products, it's pure estimates.

[Bill Waltz, President and CEO at Atkore]

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. Maybe I'll just stay with PVC conduit for my last question. Longer term, I'm talking three to five years. I'm just trying to understand your view of PVC conduit in terms of your overall offering. There's more competition, more imports. Just from big picture, how important is it to the kind of overall business in the longer term?

[Bill Waltz, President and CEO 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—well, 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. Both, it's a good product line for us, and it totally fits into Atkore's one order, one delivery, one invoice, which, as we've explained over the years, we think is a competitive advantage for us. We are continuing to invest. We talked a lot about productivity. A lot of that came on the S&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.

[Bill Waltz, President and CEO at Atkore]

Yeah, thanks, Chris.

[Operator]

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

[David Tarantino, AVP, Equity Research at KeyBanc Capital Markets]

Hey, good morning, everyone.

[Bill Waltz, President and CEO at Atkore]

Good morning, David.

[David Tarantino, AVP, Equity Research at KeyBanc Capital Markets]

Maybe starting out, could you give us some color of what you're seeing more recently in terms of the import levels in both PVC and steel, particularly around the improved metal pricing you guys noted? 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?

[Bill Waltz, President and CEO at Atkore]

Yeah, I'll start, David, but even then try to say projections if we get that specific on the future here. 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 %. 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, we shipped everything we could," and they literally do not even have capacity. Again, I do not know my specific competition domestically or internationally that well to know what's in their playbook.

[Bill Waltz, President and CEO at Atkore]

I do perceive that, again, with all the variability of the 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, well over 100%. That is not as economical. For the Latin American countries, the tariff right now on the major importers is 10%. Again, that is on product. You got to remember a lot of this we have talked about is the inefficiency of freight. I would not apply it. Their whole delivered cost is not 10% up because it is just on the product and so forth. Whatever estimate you want to say, 5-7%—I am making up a totally random number if you follow my math. It is a headwind. I mean, it helps us as we have covered in prepared remarks.

[Bill Waltz, President and CEO at Atkore]

Tariffs overall, and John Pregenzer 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. Just like I do not want to overread into PVC, I do not want to overread into steel, but from a year-over-year perspective, down. I do think, because that is what I think I covered in the very beginning remarks, we are seeing for all steel conduit now with 232, where the administration removed exemptions, is a 25% tariff. Can it be economical to bring products across? Yes. That is a higher headwind that either means whatever they do with that, but how aggressive they are or what pricing they sell at, independent companies, but that is a good thing for us.

[Bill Waltz, President and CEO at Atkore]

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 Deitzer 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. 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 were seeing up to 20% of jobs delayed or possibly postponed. We were just trying to balance good thing tariffs offset by maybe a little less volume. As John Deitzer said, and then I'll wrap up my filibuster here, we're still projecting, let's say, low single-digit growth.

[Bill Waltz, President and CEO at Atkore]

If we're at zero in the first half of the year with a good solid Q2, I mean, I'm over specific on that, but if you assume 3%, don't be locked on that number for the full year, implicitly that means 6%, that we expect to be mid to high single-digit growth here in the second half of the year. We're still pretty optimistic, but that's the balance of tariffs and volume and stuff like that.

[David Tarantino, AVP, Equity Research at KeyBanc Capital Markets]

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

[Bill Waltz, President and CEO at Atkore]

No. I do not know if we could go back, but I tell you, just like other PVC, but it has jumped around. Again, if you go back last year through this quarter, we had great steel conduit. It was growing single digits. Our price year over year was up. All of a sudden, the market kind of went the other way. It is kind of, again, hard to predict these things. At this stage, as we have called out, steel conduit sequentially Q1 to Q2, pricing is up and things are looking positive, but it is still less than last year. To go back, I guarantee there are years it has been higher and guarantee you there are years it has been lower than the current number. So John Deitzer.

[Matthew Kline, VP, Treasury and Investor Relations 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, etc. You do see significant volatility with that over time. 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. There are 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.

[Matthew Kline, VP, Treasury and Investor Relations at Atkore]

If we're at flat here in the first half of the year and we're still seeing that low single-digit type environment, it's pretty positive here from a volume perspective in the back half.

[David Tarantino, AVP, Equity Research at KeyBanc Capital Markets]

Okay, great. Maybe if I could sneak one more in just to follow up on the volume assumption, could 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?

[John Pregenzer, Chief Financial officer and President of Electrical at Atkore]

Yeah, I'll start here, David. Again, 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 of areas like global mega projects and some solar business, we are a business that ships typically in four days. To even have a week's worth of backlog is extreme. We do not have where other corporations can look at our backlog for the next year. Internally, these were submitted forecasts. They do seem to triangulate. I'll give you the two thoughts.

[John Pregenzer, Chief Financial officer and President of Electrical at Atkore]

We've done a lot of—we always do a lot of voice to customer, but either directly with myself and my executive staff with large customers that are, I'm going to say, cautiously optimistic, even just like we said, the second half has to be higher single digits. That's what they're seeing across, I'll say, most product lines here going forward. Our sales team has gone out and literally polled, I think, everybody, and they're seeing or estimating the same thing. The flip side of that, just to give is the balance is if you look at things like, and we called it out in the prepared remarks, but the Dodge Momentum Index has gone down. The ABI Architectural Building Index has been negative here for almost two years. I mentioned the ABC, the Association of Building Contractors, that we're expecting jobs to be delayed.

[John Pregenzer, Chief Financial officer and President of Electrical 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, and so forth are doing really well. I know a bunch of our sell-side and buy-side questions, data centers is the one area that's no surprise. I do not think to anybody is really a strong market right now, and our products that go into that are doing well. Other things are really what we see in the market and so forth there.

[David Tarantino, AVP, Equity Research at KeyBanc Capital Markets]

Okay, great. Thanks, guys.

[John Pregenzer, Chief Financial officer and President of Electrical 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.

[John Deitzer, CFO at Atkore]

Hey, good morning, Dean.

[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. I know you have to couch it with that 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 2025 guide?

[Bill Waltz, President and CEO at Atkore]

Deane, I would just try to do it this way: 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. If you took 2% or 3% off a volume and looked at our fall-through, you could hear 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 can get. You get it.

[Deane Dray, Managing Director at RBC Capital Markets]

Yes, fully understand the limitations here. Then how about just go back to the steel conduit, Mexican imports real specifically, because that was the big hot point last year. Maybe a real-time update. Has that flow of product stopped? Any indication, was there any sort of pre-buy that they sent a bigger volume? How long does that need to work through the system?

[Bill Waltz, President and CEO at Atkore]

John?

[John Pregenzer, Chief Financial officer and President of Electrical at Atkore]

Yeah, hey, Deane. Yeah, we have not seen a significant change in the marketplace as it relates to those imports. There was, as Bill mentioned earlier, reduced imports that came in, but it is not that it has completely stopped the inflow of product. Obviously, they have a 25% headwind to deal with going forward, but we will have to continue to track it and see what comes through in the import numbers.

[Bill Waltz, President and CEO at Atkore]

Great. I would say, Deane, we're not—we're not expecting—or at least let's put it this way: I'm not expecting Mexican imports with a 25% tariff to stop. I would assume most logical people would say, "Hey, they either would have to be more selective or raise their price," those type of things. Again, how much they absorb in margin versus try to pass through, those are dynamics we can only begin to estimate. To your first question, it's a net positive for Atkore shareholders.

[Deane Dray, Managing Director at RBC Capital Markets]

Understood. 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 size the impact?

[Bill Waltz, President and CEO at Atkore]

Oh, yeah. I'm glad you asked, Deane, because even in our prepared remarks to make it, 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. More specifically, covered in the Wall Street Journal, I'm going to forget—I read more than that, by the way—but was articles where the administration was looking to increase the use or open up the funding to satellites. 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 20-50% of the fiber optic. I've seen other CEOs' comments in this space, whether they're people making conduit or whether they're making fiber optics, that it may not be that much and so forth.

[Bill Waltz, President and CEO at Atkore]

That, along with my other prepared remarks on just the funding still has not gone through yet and things like that. One of the key drivers was the administration. We have talked in previous quarters. People have asked, "Hey, could there be satellites?" and so forth. That is a difference between speculation and the administration now saying they 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]

Just to be clear, the risk of or opportunity for using satellites, was that factored into the impairment?

[Bill Waltz, President and CEO at Atkore]

Oh, yeah. Yeah. Again, I don't want to say it's the only thing because it absolutely wasn't. As an engineer with one of your weighted averages, I'm not going to get that precise. 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.

[Bill Waltz, President and CEO at Atkore]

Thanks, Deane.

[Operator]

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

[Chris Dankert, Senior VP, Equity Research at Loop Capital]

Hey, morning, guys. Thanks for taking the question. Just 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 ask. Are you getting any actual concrete word from the administration on how they're rolling this out?

[Bill Waltz, President and CEO at Atkore]

No, at least Chris, I'm not aware of a specific other what's been covered in directors. I know Commerce—I think it was the Commerce Secretary. I could be wrong on which one, but 90% sure. And published a press release, Wall Street Journal article. That's where I'm going to say, Chris, if you look back and say, "Why?" It's running the math, making those assumptions. To go, "It's a little bit darn if you do, darn if you don't," to go, "Hold it. It's nine months from now. We're seeing it. Why now and why not earlier?" Hold it here is at least the key inflection point of the administration saying either they had or at least they intended to open it up.

[Bill Waltz, President and CEO at Atkore]

We decided to take the prudent action and run the analysis with our accounting partners and outside on different models and thought it was fiscally prudent to take the impairment now. I mean, by the way, yeah. Go. I've covered it. Thanks, Chris.

[Chris Dankert, Senior VP, Equity Research at Loop Capital]

Yeah, I appreciate the more.

[Bill Waltz, President and CEO at Atkore]

I appreciate that they were still investing, but yeah. That is why.

[Chris Dankert, Senior VP, Equity Research at Loop Capital]

That makes sense. I think taking the more conservative approach, given the current environment, does make sense. I just wanted to make sure that there was not something that we were missing on a more concrete basis.

[Bill Waltz, President and CEO at Atkore]

No. No, it's beyond that. Yeah. Or beyond that, Chris, it's very much like the last quarter with a little bit of, I say, internal frustration to go, "Hey, several states have approved it." Even again, what I perceive or when I read, as I mentioned earlier, you read other earnings announcements that whether it's people making fiber optic lines or others making HDPE that are public corporations, everybody still perceives it's one year out, which is frustrating because it's been one year out for three or four years now. It just felt like the right thing to do. Balanced internal discussion, third parties, and to your point, took the charge.

[Chris Dankert, Senior VP, Equity Research at Loop Capital]

Makes sense. Makes sense. 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?

[Bill Waltz, President and CEO at Atkore]

Yeah. The best is our estimate, Chris. I'd do it this way to go. If you went back several years ago, 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. 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 that impediment for bringing in as competitively imported steel.

[Bill Waltz, President and CEO at Atkore]

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 return on invested capital to start up a solar project. So that level of sophistication, Chris, 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. I still at least voice the customer here that we've talked on our calls, and I'm sure anyone covering other major electricals where there's a transformer backlog, there still seems to be a little bit of impediment there. I don't think it'd be the major driver. Again, to be able to say with precision two years out, it's hard to say.

[Matthew Kline, VP, Treasury and Investor Relations 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. 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. And then to extrapolate where we go into the future, I think as we improve that operation continually, I think that team is doing a great job. There have been commercial dynamics, though, in the near term. You can see the volumes in that mechanical tube segment have been down year to date. That has been an impediment to us. Assuming that market starts to recover, I think then we're back on track there.

[Chris Dankert, Senior VP, Equity Research at Loop Capital]

Understood. Thanks so much for the call there, guys.

[Bill Waltz, President and CEO at Atkore]

Yeah. Thanks. Thanks, Chris.

[Operator]

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

[Andy Kaplowitz, Managing Director at Citigroup]

Good morning, everyone.

[Bill Waltz, President and CEO at Atkore]

Hey, good morning, Andy.

[Andy Kaplowitz, Managing Director at Citigroup]

Good morning. 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 were already seeing sort of improvement in February. Did that sort of continue into March and April? I do not know if you addressed that earlier.

[Bill Waltz, President and CEO at Atkore]

No. Yeah, great point, Andy. And your supposition is correct, or I'll say that going every month was stronger than the previous month. Again, talking to some customers, I hate using—I think once we used the word weather in my seven years here, but I know with talking to some key customers, their results, they had mentioned that weather in January and February and stuff and picking up. It does feel like, Andy, again, our guide is our guide. Every month, what I can say is every month was stronger than the previous month for our fiscal Q2. 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.

[Andy Kaplowitz, Managing Director at Citigroup]

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? How do you expect that to progress moving forward?

[Bill Waltz, President and CEO at Atkore]

Yeah. I do the following. It's 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. Obviously, there's a difference, but it's a potato-potato there to a certain degree purely from the standpoint, why are we making so many chips? It's to support data centers. It's a little of both, Andy.

[John Deitzer, CFO at Atkore]

Yeah. In the near term, Bill, we're aligned here that we've probably seen more on a product side on 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. The past activity has probably been more on larger construction projects and then some of the chip manufacturing facilities that we've been a part of. I think the data center opportunity is more on the go-forward basis now for the services element, not just the product side.

[Andy Kaplowitz, Managing Director at Citigroup]

Got it. I apologize if someone asked you this, but you did not change your price assumptions for FY25, 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 yet right now? It is just interesting that you have not changed it as the tariffs have started to ladder in.

[Bill Waltz, President and CEO at Atkore]

Do you want?

[John Deitzer, CFO at Atkore]

Yeah, 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. 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. I'd say there's probably some puts and takes factors as we're evaluating that over the totality of the year. We still think it's within the range. That range was, I think we had a pretty sizable element. We still feel like the overall price versus cost dynamic is going to land within where we laid out.

[Bill Waltz, President and CEO at Atkore]

Yeah. 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 a top line, copper's jumping around a lot of late. Steel costs ran up, I'm saying a lot, directionally 25%, give or take, in the first quarter, but it's starting to come down slightly now. The top-line revenue is our guide with, again, estimates of where commodities are going to go. Net-net price versus cost is still within that range that John Deitzer spoke of. More as to a question I think Deane 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 and markets.

[Andy Kaplowitz, Managing Director at Citigroup]

Thanks. I appreciate the color, Bill.

[Bill Waltz, President and CEO 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.

[Bill Waltz, President and CEO 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. 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, VP, Treasury and Investor Relations
• Bill Waltz, President and CEO
• John Pregenzer, Chief Financial officer and President of Electrical
• John Deitzer, CFO

Analysts

• Deane Dray, Managing Director at RBC Capital Markets
• Chris Dankert, Senior VP, Equity Research at Loop Capital
• David Tarantino, AVP, Equity Research at KeyBanc Capital Markets
• Andy Kaplowitz, Managing Director at Citigroup
• Chris Moore, Senior Analyst at CJS Securities