HARVEY, Ill. — Atkore International Group Inc. announced earnings for its fiscal 2017 first quarter ended December 30, 2016 (“first quarter”).
“Our first quarter Adjusted EBITDA and Adjusted earnings per share were in-line with our expectations,” commented John Williamson, Atkore’s President and CEO. “The Atkore team continues to outperform the market inputs by focusing on productivity through the Atkore Business System and driving margin expansion by selling higher value innovative products and managing input cost changes. Feedback from our channel partners, customers and market indicators point to a strong second half in 2017 and give us confidence to reconfirm our prior guidance.”
2017 First Quarter Results
Net sales for the first quarter of 2017 decreased to $337.6 million, a decline of 5.8% compared to $358.4 million for the prior-year period. Adjusted net sales, which exclude the Fence and Sprinkler product lines which the Company exited in the first quarter of fiscal 2016, declined 3.7%, as compared to the first quarter of 2016 driven mainly from lower demand for mechanical pipe product offset by average selling price increases.
Gross profit increased by 27.1% to $92.0 million for the first quarter of 2017, as compared to $72.4 million for the prior-year period. Gross margin expanded to 27.3% in the first quarter from 20.2% in the prior-year period. Gross margin increased primarily due to the Company’s ability to pass through its material cost increases and improving productivity in manufacturing freight and warehousing costs.
Net income increased $8.8 million to $17.4 million for the first quarter, as compared to $8.6 million for the prior-year period. Adjusted net income increased to $18.4 million as compared to $14.5 million for prior-year period. The increase in both net income and adjusted net income was primarily driven by the Company’s expanded gross margins.
The Company completed a refinancing of our credit facilities and lowered our total debt by $136.6 million as compared to September 30, 2016. As a result, the Company recorded a loss on extinguishment of debt of $9.8 million during the first quarter of 2017.
Adjusted EBITDA increased $1.8 million, or 3.8%, to $49.9 million for the first quarter, as compared to $48.1 million for the prior-year period. Net income margin increased to 5.1% from 2.4% in the prior-year period and Adjusted EBITDA Margin increased to 14.8% from 13.7%.
Basic and diluted earnings per share were $0.28 and $0.26, respectively, for the quarter compared to $0.14 and $0.14 in the prior-year period. Adjusted diluted earnings per share increased by $0.05 to $0.28 per share for the first quarter as compared to $0.23 per share for the prior-year period.
Segment Results
Electrical Raceway
Electrical Raceway net sales decreased $0.6 million, or 0.3%, to $223.0 million for the first quarter, as compared to $223.6 million for the prior-year period, primarily due to lower volume of products sold offset by increased pricing in the nonresidential markets.
Adjusted EBITDA increased $5.9 million, or 17.1%, to $40.3 million for the first quarter, as compared to $34.4 million for the prior-year period, and Adjusted EBITDA Margin increased to 18.1% from 15.4% primarily attributable to productivity savings, selling higher value products and our ability to pass through input cost changes.
Mechanical Products & Solutions
MP&S net sales declined $19.9 million, or 14.7%, to $115.2 million for the first quarter, as compared to $135.1 million for the prior-year period. Adjusted net sales, which exclude the Fence and Sprinkler businesses, decreased $12.1 million, or 9.5%, primarily due to lower demand for mechanical pipe product in the solar end market offset in part by higher volume for construction services and international businesses.
Adjusted EBITDA decreased $1.8 million, or 9.3%, to $17.6 million for the first quarter as compared to $19.4 million for the prior-year period due to the decrease in volume offset partially by productivity savings and increased prices.
2017 Full-Year Guidance
Adjusted EBITDA guidance remains unchanged in the range of $235.0 million – $250.0 million for 2017. The Company is raising its Adjusted EPS guidance range to $1.55 – $1.70, an increase of $0.15 from the mid-point of the prior forecast, primarily due to the impact of the debt refinancing.
The full report can be viewed here.
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