Atkore (ATKR) Reports Sharp Drop in Profit

By Tamara Parker • Monday, August 03 10:50 • Permanent Link

Atkore’s fiscal third quarter brought higher sales, better adjusted earnings, and a sharp drop in reported profit as litigation costs weighed on results.

Net sales rose 8.1% to $794.8 million from $735.0 million a year earlier, an increase of $59.8 million. Sales gains came from $65.7 million in higher volume, $22.4 million in higher average selling prices, and $8.0 million of foreign exchange benefits, partially offset by $39.0 million from divestitures.

Gross profit increased 2.4% to $176.3 million from $172.1 million, but gross margin narrowed to 22.2% from 23.4%. Input costs rose $48.9 million, outpacing the $22.4 million gain in average selling prices.

Net income fell to $0.7 million from $43.0 million a year earlier, a decline of $42.2 million, or 98.3%. Diluted earnings per share dropped to $0.02 from $1.25. The company said the decline was driven mainly by a $50.0 million litigation settlement, related litigation costs, and transaction costs tied to divestitures and the strategic review.

Adjusted EBITDA rose 4.7% to $104.7 million from $99.9 million, an increase of $4.7 million. Adjusted net income per diluted share increased to $1.92 from $1.63, up $0.29.

By segment, Electrical posted the stronger quarter. Sales climbed 10.9% to $578.3 million from $521.3 million, up $57.0 million, while adjusted EBITDA increased 10.0% to $89.3 million from $81.2 million, up $8.1 million. Electrical’s adjusted EBITDA margin slipped to 15.4% from 15.6%.

Safety & Infrastructure sales edged up 1.3% to $216.8 million from $214.0 million, a gain of $2.9 million. But adjusted EBITDA fell 8.4% to $28.1 million from $30.7 million, down $2.6 million, and the margin declined to 13.0% from 14.4%.

The company also said its board approved a quarterly dividend of $0.33 per share, payable Aug. 28 to shareholders of record Aug. 18.

Atkore said it has entered into a definitive agreement to be acquired by Prysmian S.p.A. in an all-cash transaction at $95.00 per share, implying an enterprise value of about $3.8 billion. As a result of these announcements, the company's shares have moved 28.03% on the market, and are now trading at a price of $93.41. For more information, read the company's full 8-K submission here.

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