Greetings, and welcome to the Atkore Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, John Deitzer, Vice President of Treasury and Investor Relations. Thank you. You may begin.

Thank you, and good morning, everyone. I'm joined today by Bill Waltz, President and CEO; as well as David Johnson, Chief Financial Officer. We will take your questions after comments by Bill and David. 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 and 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. With that, I'll turn it over to Bill.

Thanks, John, and good morning, everyone. Starting on Slide 3. In the third quarter, Atkor again delivered outstanding performance across our businesses and what shaped up to be another record quarter. Revenue was $854 million and adjusted EBITDA was $274 million. This significant increase in earnings is driven primarily by the exceptional performance in our PVC and metal conduit businesses. In the third quarter, we had very strong results across multiple product categories and our volumes were up 24% versus prior year. We generated strong cash flow, and we continued our balanced approach to capital deployment by repurchasing $75 million of stock. We are also pleased that we completed our debt refinancing process and extended our asset-based loan credit facility. Looking forward, we are increasing our FY '21 outlook and now expect to achieve adjusted EBITDA in the range of $855 million to $875 million, and we raised our perspective on FY '22, up to a range of $500 million to $550 million. I'll provide more detail on the outlook after David walks us through this quarter's financials. But before I pass it off, I want to congratulate and recognize all of our employees for their tremendous effort and support of our customers. With that, I'll turn the call over to David to discuss the quarter.

Thank you, Bill, and good morning, everyone. Moving to our consolidated results on Slide 4, net sales increased 122% year-over-year primarily due to higher average selling prices across many parts of our business. Adjusted EBITDA increased to $274 million, which drove our adjusted EBITDA margin to 32% in the quarter, both up significantly versus the prior year. Our adjusted EPS increased to $3.96. As you look at our year-over-year comparisons, please recall that we had negative impact from temporary shutdowns related to the pandemic in Q3 last year. Turning to Slide 5 and our consolidated bridges. Net sales increased by $469 million due to higher selling prices and increased volume of 24%. Through outstanding operational and commercial execution, our team was able to fully overcome the impact from higher input cost inflation, and we grew adjusted EBITDA by $211 million. This profit growth was driven by our ability to service our customers despite the challenges associated with raw material supply as well as a very tight labor market. Shifting to our segment results on Slide 6. The Electrical segment led our profit and margin improvement year-over-year with adjusted EBITDA up $212 million and adjusted EBITDA margins above 40% due to the strong performance we had across the segment. We experienced strong volume growth in both North America and international, which increased our sales by $64 million in the quarter. In our Safety & Infrastructure segment, net sales increased by 71% from the prior year as the business was able to fully pass through higher input costs associated with raw materials, freight, labor and other items. Volume growth of 24% or $27 million also drove part of the top line growth as we saw solid demand across multiple end markets. Adjusted EBITDA increased 58% to $22 million and on a constant…

Thanks, David. Turning to our outlook on Slide 9. We are raising our outlook for net sales, adjusted EBITDA and adjusted EPS for the fiscal year 2021. The guidance reflects a number of factors, our stronger-than-expected results year-to-date, the unprecedented and continued strength in PVC conduit and favorable macro trends. This is supported by a stronger-than-expected performance in our other businesses such as metal conduit. Our fourth quarter 2021 outlook contemplates net sales up approximately 70% and adjusted EBITDA to be in the range of $250 million to $270 million. For fiscal 2021, we now expect our net sales to be up approximately 60% and adjusted EBITDA to be in the range of $855 million to $875 million. Just as we did in the first half of the year, our entire team continues to effectively navigate what remains a very dynamic operating landscape through the third quarter. We expect a combination of these dynamics and the macro trends sustain the pricing tailwinds through Q4 and into early fiscal 2022. In connection with our increased fiscal '21 guidance and our clear understanding of the near-term market, we are raising our perspective for fiscal '22. We now expect adjusted EBITDA to be in the range between $500 million and $550 million. This considers the continued PVC conduit demands and our ability to meet them, while also factoring in macro uncertainties such as labor, supply constraints, pricing and customer behavior, particularly in the back half of fiscal '22. Before we turn to Q&A, I just wanted to reinforce how pleased we are with the team's execution and how excited we are for what the future holds for this tremendous company. With that, we'll turn it over to the operator to open up the line for questions.

[Operator Instructions] Your first question comes from Deane Dray from RBC Capital Markets. Your line is open.

Just another outsized operating beat here and I really do appreciate that you're giving some framework for fiscal 2022, some normalization, but still at very, very healthy levels. So like the first question, and Bill, you touched on this talking about the sustainability of this supply and demand dynamic on both sides of the equation, outsized demand and supply constraints in the industry. So just could you expand more on your thoughts on the sustainability of both on the supply side? I know it's hard to get competition to -- it takes time to build new plants and so forth. So just your updated thoughts on the supply side? And then on demand, really interesting that you're seeing more on metal conduit, so that would imply some growth in non-resi, but I know there's a number of embedded questions here, but if we could start there, please.

Yes. Great question, Dean, a lot to unpack. So I'll start with demand, we see demand low single digits going forward. So it's not that robust, but I think I can -- I'm generalizing but I think I can speak for almost any product line, any competitor. The challenge right now is not whether it's low single digit, high single digit or quite frankly, flat almost, it's a question of can you supply it. So that's what's causing more of the constraint filling a market up a couple of single digits. If we had more product I think we could easily sell it at a good price. These constraints come across the board right now for Atkore, we would probably say labors are actually number one constraint. Last quarter, I think I would -- we would have said material while material is still a constraint where that steel that lead times used to be three weeks or now 12 weeks. And these are rough estimates, on the supplier and the material and so forth, which make forecasting more difficult and switching over more difficult same PVC resin suppliers have just come off force majeure where three of the four were portion is are what seems like most of the fiscal year. But still, it's your hand to mouth getting additives and stuff like that. So it's a challenge with all those things. I think as time goes forward, they should all start normalizing again. And therefore, both the mix thing them for you and the rest of the sell side and buy side, we want to be transparent and therefore, hey, do not expect was just say, $850 million, $875 wherever we end up this year, do not linearly expect that to reoccur next year, just like lumber prices went up $1,800 and drop back to 600, there will be some normalization. On the same plan, I think that Atkore's value prop will continue to hold forward into fiscal 2022 and also the supply-demand dynamics you just asked about will carry forward with some variability and a challenge to predict like anything in the world.

Deane, I'll just add. The demand in the market to, it's very hard to determine what it would be if labor wasn't a constraint not only for the manufacturers, but also the construction companies, which as you recall, we had a labor shortage going into the pandemic. And obviously, right now, it's even more of a constraint. So, I think the business is out there. Things are being designed and what have you, if you look at any of the future indicators. So, I think that's a good indication for the future, but it is hard to really determine with this labor shortage exactly what volumes could be.

Got it. And then just two follow-ups here. Can you comment on the mix with PVC and metal conduit, and you called out some increased demand on the metal side. Is that typically the non-res doing better? And then is there -- is there any price elasticity, I know we've talked about this before, but it really just seems the market will take as much can deliver right now? And is that still -- and the price is not a barrier. I just wanted to hear your thought there too.

Yes. Again, great set of questions, Deane. So we -- both residential is going strong and nonresidential. As we've always explained, since we sell to electrical distributors and then they sell to contractors, there is a little bit of difficulty in being overly precise, quite frankly, an electrical distributor. At times, it could be, hey, a contractor walked up to will call, pick up product. I didn't ask them where it was going. So, both seem to be moving along well and also -- and again, I'm sure somebody will follow up and going, hey, data centers are really strong. So there's a lot of great vertical markets in the non-res and commercial construction realm that are carrying forward. We called out metal conduit, and I think if we didn't say in the prepared remarks and other products, just to make sure you and other investors, PVC is going really well, but it's not a one trick pony. So we kind of laid out and go, okay, what's the next product on Nexwell, but our metal conduit business and metal framing, all of our businesses right now are doing well because, as I mentioned at the very beginning, If you have the material, you have a good say-do ratio, you're honest with your customers. They are, to your last part of the question, I'm willing to pay more. Now Deane, there's always some price elasticity on how much you can charge, but as you see in the results, I think we're paying more some of it, depending on the competitor, the market, the week is kind of an average thing for a competitor, it feels like, say, whatever Atkor is charging will charge 3% or 4% less. But for a distributor that trust and meets that material as you see in our results, they're willing to pay that slight premium. And we are, in many cases, I think, pulling the industry forward with price increases.

And Deane that 24% volume increase year-over-year, broadly speaking, was across all the product lines. So I think we did see strength across the entire portfolio.

Your next question comes from John Walsh from Credit Suisse. Your line is open.

This is Jing Peng on for John. So, it looks like you added automation when you reopened your Pendleton facility. So how much longer do you think you can continue to get productivity in the $10 million to $15 million range?

Yes, I would think that would go on -- I want to say forever, but there's no shortage of opportunities. I know a lot of so investors will ask about the ability to continue to drive productivity. I'm really proud of our Atkore business system and what it does in the fundamentals that we drive with it, but there's not a shortage of productivity opportunities across safety, quality, delivery and productivity. So you could probably model that type of number out for the next several years at least.

Got you, that's helpful. And if I could follow up, any color around your M&A funnel, and if you can please help us understand your aspirations in the safety market?

Yes. So again, great questions here. The funnel remains robust. We are actively working it, again, with this great financial year, and I'm sure questions to come at some point during the day with investors on our capital deployment and buying back stock is we're generating a lot of cash. So, we're doubling down on even our resources to make sure we're connected to all deals. And without having deal fever, I mean, Atkore's prided itself on is it strategic, is it synergistic? Is it debt responsible? And do we have the management bandwidth? And that's kind of in the four roles in Atkor was formed, and we continue to drive those kind of filters. But there are enough deals out there to keep moving forward with. And yes, we are expanding into safety and infrastructure, very much like the four rules. We have to make sure if it's our strategy. I do think in the safety and infrastructure, there are some vertical markets that are going to grow much faster than GDP. And I also think that there can be good synergies. So, now it's just what is the appropriate deal for us with management bandwidth, the right vertical channels and so forth, but we're actively working deals in both segments.

Your next question comes from Chris Moore from CJS Securities. Your line is open.

Obviously, pricing has been the biggest driver of 21 results at this point, recognizing that your fiscal '22 estimated EBITDA range at this point, like to clarity in detail of your '21 guide. Can you maybe just talk a little bit more about what's in there, for example, how do you look at volume growth in fiscal '22 versus '21 or '20?

Yes, we haven't given a lot of details, which we will, obviously, Chris, in one quarter's time when we give our official guidance for next year. But broadly speaking, I would say that kind of mid-single-digit volume number and then a normalization of pricing and then some continuation of M&A from the deals that we already have in this year that we've already announced that will lap a little bit into next year, and then our typical productivity improvements. So, I would say that in general, those would be the buckets that would be built into that outlook.

Got it. Obviously, much of the focus is on the areas where you're generating the exceptional results, PVC on the metal side and trying to predict when some of that will normalize. What about the flip side, end markets that have been soft throughout COVID, some of the non-res like office and retail hotels. Do you see those as being potential tailwinds in '22?

Yes, I think so, Chris. But there are tailwinds to go, if you look at some of these segments, they're 3% of our sales, 6%. I'm not being prescriptive to say which ones which that there's enough other things that are going well. Obviously, data centers, I think I just mentioned a couple of minutes ago when I was addressing Deane's question, warehousing continues to be strong. And I'm saying strong with some of these things Dodge is looking at double digits. And then also as we get into the latter half of 2022 and into 2023, Dodge even predicts things like hotels and stores and restaurants have bounced back. Now it's off of this year's low, but that's the reason relative to how we're performing this year is that I think David answered it well, and I did when we said low to mid-single-digit growth for next year. So if anyone travels, travels of like you will realize that airports are totally backpacked again and stuff like that, and airlines are investing. So low right now, probably for a little bit longer, but those things will bounce back. And with all the infrastructure build it hits and other things, we're pretty optimistic for the future here with growth.

Your next question comes from Andy Kaplowitz from Citigroup. Your line is open.

You're predicting slightly down Q4 versus Q3 in terms of EBITDA there doesn't appear to be that much historical seasonality between two quarters. So could you give us more color on what in your businesses is sequentially declining? You've talked about PVC a lot. Has that tailwind peaked at this point? Or are you predicting a decline in commodity places or is volume expect to be slightly off? Any color would be helpful.

Yes. So we're arguing, Andy, because both of us want to answer here. But yes, so how I think about to your point, we -- last quarter, what the quarter we just delivered was $274 million, and we're predicting $250 million to $270 million. So the top end of the range at $270 million is almost the same as the 274. And if we strive and we hit everything, I think we could get there. But -- so there's nothing dramatic. I think pricing probably spreads profit margins have probably peaked across different things. And the only thing I would put in perspective is with this like 274, I make the analogy that literally you drove through a major city and you got every green light. It literally is Dave and I, we called out metal condo. We called out PBC. I in these unprepared remarks, mentioned cable, metal framing, every product line contributed very well, and that even in the best of times, just doesn't occur. So, I don't think there's anything systemic as much as just being prudent on the range versus we're going to hit it out of the park exactly like we did in Q3 of this year. But by the way, as David will remind our teams, and I would like to remind investors and the best of years, Atkore would have $100 million in a quarter. And here, it's a really great question to go, hey, why are you only predicting 250 to 270. These are pretty impressive numbers here.

You've definitely come pretty far. So Bill, maybe I could follow up. Could you update us in terms of where you think PVC inventories how far do you think the industry is at this point behind demand? And are you assuming that inventories can catch up over the winter?

Yes. I think it's great questions that I will give you on, but that's why the variance and even the words we used on projections for next year, anybody's forecast and most companies can't predict two weeks a little on a year out. Right now, Andy, I would say that lead times within PVC conduit, which is what we sell most of is probably four to eight weeks out, where it's typically, let's say, two to three weeks. There's a little bit of offset with that where distributors understanding that are now placing orders for eight weeks out just because they need to get their product on time. I think some of the other markets, while we don't serve them and their competitors don't come in to serve us like miscible and plumbing are even out further, I read a report from an industry person on Friday that was, quite frankly, predicting some of the plumbing and municipal stuff would not get delivered until January if you place an order now. So even much longer lead times in some product lines, I think over time, getting into the winter months, it does normalize because there is seasonality in the business. And therefore, some of the reason why I think we have the appropriate numbers, the $500 million to $550 million. In other words, we will continue to much better than our old historical trends, which were, two years ago, $325 million and $327 million, that's a massive step up on the same hand as inventories come back in and things normalize, to earlier questions, we won't be able keep quite the price premium. So as much as we can look into our crystal ball, balance all those type of things where you thought the very appropriate and raised by $100 million forecast for next year of $500 million to $550 million seemed to hit all those factors.

Very helpful, and then maybe I just want to understand what you're saying about volume, though, in the sense that it was up 24%, obviously, you're talking about labor shortages and low single-digit volume, I guess, in non-res expected over time. But if you look at underlying volume growth, and you've talked in the past about having a good probability of above that, given your own new product cycle, there's obviously increased electrification out there. We kind of alluded to it a little bit in this conversation. But then also the infrastructure bill is out there now. I'm sure you've seen some of the details. So like when you put that all together, what's the probability that Atkore's growth rate is decently higher than that low single digit?

I would aspire and hope, Andy. I just think like the infrastructure Bill to say, yes, it's out there in draft form, what end up coming around what turns out to be shoveled ready. So, there's no uptick that we've put into the numbers. But I think David also appropriately frame just the number to go to an earlier question, hey, what's the size? Well, you have general guides, but could this number be $50 million more or less than the numbers we have, there's still a lot of variance out there. So -- and then specifically to the growth, the 24%, while an amazing realizes a comparison to last year when some of the things were shut down. So as we go forward off of a reasonably good year this year -- it could be mid-single digits because, Andy, tell your point is, we don't have new M&A in there, we don't have an infrastructure bill in there. But I know what we typically performed where we try to hold pricing in the markets and then try to grow 100 basis points above. We will talk a lot over the coming quarters on investments in new products and things we're just not ready to publicly announce on products and patents and so forth there. But we are driving that Canada at 100 to 200 basis points. And if everything clicks, could you walk into mid-single digits? Yes, there's a path to get there. At this stage, quite frankly, talking over a year out, I would still say the low to mid-single digits, but your logic has merit.

There is no further question at this time. I would now like to turn the call over back to Bill.

Before we conclude, let me summarize my three key takeaways from today's discussion. First, the outstanding results we delivered in the third quarter are a credit to the great efforts by everyone in our organization. Second, we believe in the long-term strength of our company, and we will continue to deploy capital effectively to drive value for our stockholders as evidenced by the $75 million in stock we repurchased during the quarter. Third, and in closing, we are very excited about the opportunities ahead of us for our business. With that, thank you for your support and interest in Atkore, and we look forward to speaking with you during our next quarterly call. This concludes the call for today.

This concludes today's conference call. Thank you all for joining. You may now disconnect.