What changed in this filing

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Item 1. Financial Statements

2022-05-03 compared with 2022-01-31 · 120 added, 281 removed, 388 unchanged (51% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended

(in thousands, except per share data) Note December 24, 2021 December 25, 2020

Three months ended Six months ended

(in thousands, except per share data) Note March 25, 2022 March 26, 2021 March 25, 2022 March 26, 2021

Net sales $ 982,573 $ 639,543 $ 1,823,374 $ 1,150,625

14 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended

(in thousands) Note December 24, 2021 December 25, 2020

Three months ended Six months ended

(in thousands) Note March 25, 2022 March 26, 2021 March 25, 2022 March 26, 2021

Net income $ 233,477 $ 124,933 $ 438,320 $ 209,999

6 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data) Note December 24, 2021 September 30, 2021

(in thousands, except share and per share data) Note March 25, 2022 September 30, 2021

Current Assets:

37 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended

(in thousands) Note December 24, 2021 December 25, 2020

Six months ended

(in thousands) Note March 25, 2022 March 26, 2021

Operating activities:

12 unchanged sentences

Accrued and other liabilities ( 37,972 ) ( 2,502 )

Income taxes ( 80,415 ) 429

Other, net ( 383 ) ( 2,743 )

31 unchanged sentences

Balance as of December 24, 2021 45,394 $ 455 $ ( 2,580 ) $ 485,839 $ 488,966 $ ( 30,059 ) $ 942,621

Net income — — — — 233,477 — 233,477

Other comprehensive (loss) — — — — — ( 2,429 ) ( 2,429 )

Stock-based compensation — — — 6,128 — — 6,128

Issuance of common stock, net of shares withheld for tax 24 — — 103 — — 103

Repurchase of common stock ( 1,539 ) ( 15 ) — — ( 156,611 ) — ( 156,626 )

Balance as of March 25, 2022 43,879 $ 440 $ ( 2,580 ) $ 492,070 $ 565,832 $ ( 32,488 ) $ 1,023,274

Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Equity

7 unchanged sentences

Balance as of December 25, 2020 46,625 $ 467 $ ( 2,580 ) $ 488,815 $ ( 14,114 ) $ ( 35,241 ) $ 437,347

Net income — — — — 124,933 — 124,933

Other comprehensive (loss) — — — — — ( 556 ) ( 556 )

Stock-based compensation — — — 4,868 — — 4,868

Issuance of common stock, net of shares withheld for tax 358 4 — 3,566 — — 3,570

Balance as of March 26, 2021 46,983 $ 471 $ ( 2,580 ) $ 497,249 $ 110,819 $ ( 35,797 ) $ 570,162

See Notes to unaudited condensed consolidated financial statements.

49 unchanged sentences

Four Star is a manufacturer of high density polyethylene (HDPE) conduit, primarily serving the telecommunications, utility, infrastructure and datacom markets.

As a result of the acquisition, the Company preliminarily recognized $ 7,138 of goodwill, $ 11,946 of identifiable intangible assets and $ 4,111 of working capital and other net other tangible assets.

As of December 24, 2021, the purchase price allocation has not been finalized as the Company is finalizing working capital, intangible asset and fixed asset fair values.

As a result of the acquisition, the Company preliminarily recognized $ 7,348 of goodwill, $ 11,840 of identifiable intangible assets and $ 4,007 of working capital and other net tangible assets.

As of March 25, 2022, the purchase

price allocation has not been finalized as the Company is finalizing working capital, intangible asset and fixed asset fair values.

On December 20, 2021, Columbia-MBF Inc., a wholly-owned subsidiary of the Company acquired all of the outstanding stock of Sasco Tubes & Roll Forming Inc.

1 unchanged sentence

Sasco is a Canadian manufacturer of metal framing and related products serving the electrical, mechanical, construction and solar industries.

As a result of the acquisition, the Company preliminarily recognized $ 6,033 of goodwill, $ 6,715 of identifiable intangible assets and $ 3,019 of working capital and other net other tangible assets.

As of December 24, 2021, the purchase price allocation has not been finalized as the Company is finalizing working capital, intangible asset and fixed asset fair values.

As a result of the acquisition, the Company preliminarily recognized $ 6,398 of goodwill, $ 6,710 of identifiable intangible assets and $ 2,659 of working capital and other net tangible assets.

As of March 25, 2022, the purchase price allocation has not been finalized as the Company is finalizing working capital, intangible asset and fixed asset fair values.

On February 24, 2021, Atkore Southwest, LLC, a wholly-owned subsidiary of the Company acquired the assets of FRE Composites USA Inc.

36 unchanged sentences

The net periodic benefit credit was as follows:

Three months ended

(in thousands) Note December 24, 2021 December 25, 2020

Three months ended Six months ended

(in thousands) Note March 25, 2022 March 26, 2021 March 25, 2022 March 26, 2021

Interest cost $ 739 $ 682 $ 1,478 $ 1,364

4 unchanged sentences

Other income, net consisted of the following:

Three months ended

(in thousands) December 24, 2021 December 25, 2020

Three months ended Six months ended

(in thousands) March 25, 2022 March 26, 2021 March 25, 2022 March 26, 2021

Business interruption insurance recovery $ — $ ( 6,000 ) $ — $ ( 6,000 )

Undesignated foreign currency derivative instruments ( 634 ) 793 ( 810 ) 3,410

1 unchanged sentence

Pension-related benefits ( 451 ) ( 591 ) ( 902 ) ( 1,182 )

Gain on purchase of business — ( 731 ) — ( 731 )

Other income, net $ ( 807 ) $ ( 7,240 ) $ ( 1,115 ) $ ( 7,671 )

For the three months ended December 24, 2021 and December 25, 2020, the Company’s effective tax rate attributable to income before income taxes was 21.8 % and 24.1 %, respectively.

For the three months ended December 24, 2021 and December 25, 2020, the Company’s income tax expense was $ 56,975 and $ 26,964 respectively.

The decrease in the current period effective tax rate was primarily driven by an increase in the excess tax benefit associated with stock compensation.

For the three months ended March 25, 2022 and March 26, 2021, the Company’s effective tax rate attributable to income before income taxes was 25.2 % and 23.5 %, respectively.

For the three months ended March 25, 2022 and March 26, 2021, the Company’s income tax expense was $ 78,613 and $ 38,304 respectively.

The increase in the current period effective tax rate was primarily driven by a decrease in the excess tax benefit associated with stock compensation.

For the six months ended March 25, 2022 and March 26, 2021, the Company’s effective tax rate attributable to income before income taxes was 23.6 % and 23.7 %, respectively.

For the six months ended March 25, 2022 and March 26, 2021, the Company’s income tax expense was $ 135,588 and $ 65,268 respectively.

The decrease in the current period effective tax rate was driven by an increase in the excess tax benefit associated with stock compensation partially offset by the increase in non-deductible executive compensation.

A valuation allowance has been recorded against certain net operating losses in certain foreign jurisdictions.

4 unchanged sentences

We record interest and penalties related to unrecognized tax benefits as a component of income tax expense.

During the three months ended December 24, 2021, the balance of unrecognized tax benefits increased by $ 1,218 primarily due to the accrual of state reserves.

For the three months ended December 24, 2021, the Company made no additional provision for U.S.

During the six months ended March 25, 2022, the balance of unrecognized tax benefits decreased by $ 2,179 primarily due to the resolution of a state tax matter.

For the six months ended March 25, 2022, the Company made no additional provision for U.S.

income taxes for unrecognized deferred tax liabilities for temporary differences related to basis differences in investments in subsidiaries, as the investments are essentially permanent in duration.

2 unchanged sentences

Under the two-class method, net earnings are allocated to each class of common stock and participating securities as if all of the net earnings for the period had been distributed.

The Company’s participating securities consist of share-based payment awards that contain a non-forfeitable right to receive dividends and therefore are considered to participate in undistributed earnings with common stockholders.

The Company ’ s participating securities consist of share-based payment awards that contain a non-forfeitable right to

receive dividends and therefore are considered to participate in undistributed earnings with common stockholders.

Basic earnings per common share excludes dilution and is calculated by dividing the net earnings allocated to common stock by the weighted-average number of common stock outstanding for the period.

1 unchanged sentence

The following table sets forth the computation of basic and diluted earnings per share:

Three months ended

(in thousands, except per share data) December 24, 2021 December 25, 2020

Three months ended Six months ended

(in thousands, except per share data) March 25, 2022 March 26, 2021 March 25, 2022 March 26, 2021

Net income $ 233,477 $ 124,933 $ 438,320 $ 209,999

4 unchanged sentences

Non-participating employee stock options (1)

580 744 588 728

Diluted weighted average common shares outstanding 45,280 47,547 45,906 47,586

1 unchanged sentence

Diluted earnings per share $ 5.08 $ 2.58 $ 9.39 $ 4.33

(1) Stock options to purchase approximately 0.0 million and 0.1 million shares of common stock were outstanding during the three months ended December 24, 2021 and December 25, 2020, respectively, but were not included in the calculation of diluted earnings per share as the impact of these options would have been anti-dilutive.

(1) Stock options to purchase shares of common stock that would have been anti-dilutive are not included in the calculation.

There were no anti-dilutive options outstanding during the three months ended March 25, 2022 and March 26, 2021.

Additionally, there were no anti-dilutive options outstanding during the six months ended March 25, 2022 and March 26, 2021.

ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table presents the changes in accumulated other comprehensive loss by component for the three months ended December 24, 2021 and December 25, 2020.

The following table presents the changes in accumulated other comprehensive loss by component for the three months ended March 25, 2022 and March 26, 2021.

(in thousands) Defined Benefit

1 unchanged sentence

Adjustments Total

Balance as of September 30, 2021 $ ( 19,318 ) $ ( 9,408 ) $ ( 28,726 )

Balance as of December 24, 2021 $ ( 19,193 ) $ ( 10,866 ) $ ( 30,059 )

Other comprehensive loss before reclassifications — ( 2,554 ) ( 2,554 )

1 unchanged sentence

comprehensive income, net of tax 125 — 125

Net current period other comprehensive (loss) income 125 ( 1,458 ) ( 1,333 )

Net current period other comprehensive income (loss) 125 ( 2,554 ) ( 2,429 )

Balance as of March 25, 2022 $ ( 19,068 ) $ ( 13,420 ) $ ( 32,488 )

(in thousands) Defined Benefit

Pension Items Currency

Adjustments Total

Balance as of December 25, 2020 $ ( 30,499 ) $ ( 4,742 ) $ ( 35,241 )

Other comprehensive loss before reclassifications — ( 818 ) ( 818 )

Amounts reclassified from accumulated other

comprehensive income, net of tax 262 — 262

Net current period other comprehensive income (loss) 262 ( 818 ) ( 556 )

Balance as of March 26, 2021 $ ( 30,237 ) $ ( 5,560 ) $ ( 35,797 )

The following table presents the changes in accumulated other comprehensive loss by component for the six months ended March 25, 2022 and March 26, 2021.

(in thousands) Defined Benefit

2 unchanged sentences

Balance as of September 30, 2021 $ ( 19,318 ) $ ( 9,408 ) $ ( 28,726 )

Other comprehensive loss before reclassifications — ( 4,012 ) ( 4,012 )

Amounts reclassified from accumulated other

comprehensive income, net of tax 250 — 250

Net current period other comprehensive income (loss) 250 ( 4,012 ) ( 3,762 )

Balance as of March 25, 2022 $ ( 19,068 ) $ ( 13,420 ) $ ( 32,488 )

(in thousands) Defined Benefit

Pension Items Currency

Adjustments Total

Balance as of September 30, 2020 $ ( 30,761 ) $ ( 11,793 ) $ ( 42,554 )

Other comprehensive income before reclassifications — 6,233 6,233

2 unchanged sentences

Net current period other comprehensive income 524 6,233 6,757

Balance as of December 25, 2020 $ ( 30,499 ) $ ( 4,742 ) $ ( 35,241 )

Balance as of March 26, 2021 $ ( 30,237 ) $ ( 5,560 ) $ ( 35,797 )

INVENTORIES, NET

A majority of the Company ’ s inventories are recorded at the lower of cost (primarily last in, first out, or “ LIFO ” ) or market or net realizable value, as applicable.

Approximately 82 % and 81 % of the Company’s inventories were valued at the

lower of LIFO cost or market at December 24, 2021 and September 30, 2021, respectively.

Interim LIFO determinations, including those at December 24, 2021, are based on management’s estimates of future inventory levels and costs for the remainder of the current fiscal year.

(in thousands) December 24, 2021 September 30, 2021

Approximately 85 % and 81 % of the Company ’ s inventories were valued at the lower of LIFO cost or market at March 25, 2022 and September 30, 2021, respectively.

Interim LIFO determinations, including those at March 25, 2022, are based on management ’ s estimates of future inventory levels and costs for the remainder of the current fiscal year.

(in thousands) March 25, 2022 September 30, 2021

Purchased materials and manufactured parts, net $ 126,227 $ 105,460

2 unchanged sentences

Inventories, net $ 411,356 $ 285,989

Total inventories would be $ 135,488 higher and $ 108,911 higher than reported as of December 24, 2021 and September 30, 2021, respectively, if the first-in, first-out method was used for all inventories.

As of December 24, 2021, and September 30, 2021, the excess and obsolete inventory reserve was $ 15,421 and $ 11,780 , respectively.

Total inventories would be $ 121,895 higher and $ 108,911 higher than reported as of March 25, 2022 and September 30, 2021, respectively, if the first-in, first-out method was used for all inventories.

As of March 25, 2022, and September 30, 2021, the excess and obsolete inventory reserve was $ 18,650 and $ 11,780 , respectively.

PROPERTY, PLANT AND EQUIPMENT

As of December 24, 2021, and September 30, 2021, property, plant and equipment and accumulated depreciation were as follows:

(in thousands) December 24, 2021 September 30, 2021

As of March 25, 2022, and September 30, 2021, property, plant and equipment and accumulated depreciation were as follows:

(in thousands) March 25, 2022 September 30, 2021

Land $ 22,768 $ 23,043

7 unchanged sentences

Property, plant and equipment, net $ 285,936 $ 275,622

Depreciation expense for the three months ended December 24, 2021 and December 25, 2020 totaled $ 11,817 and $ 10,783 respectively.

Depreciation expense for the three months ended March 25, 2022 and March 26, 2021 totaled $ 11,293 and $ 11,170 respectively.

Depreciation expense for the six months ended March 25, 2022 and March 26, 2021 totaled $ 23,110 and $ 21,953 respectively.

GOODWILL AND INTANGIBLE ASSETS

4 unchanged sentences

Exchange rate effects ( 822 ) 195 ( 627 )

Balance as of December 24, 2021 $ 162,284 $ 49,644 $ 211,928

Goodwill balances as of October 1, 2021 and December 24, 2021 include $ 3,924 and $ 43,000 of accumulated impairment losses within the Electrical and Safety & Infrastructure segments, respectively.

The Company assesses the recoverability of goodwill and indefinite-lived trade names on an annual basis in accordance with ASC 350, “Intangibles - Goodwill and Other.” The measurement date is the first day of the fourth fiscal quarter, or more frequently, if events or circumstances indicate that it is more likely than not that the fair value of a reporting unit or the respective indefinite-lived trade name is less than the carrying value.

Balance as of March 25, 2022 $ 161,997 $ 50,170 $ 212,167

Goodwill balances as of September 30, 2021 and March 25, 2022 include $ 3,924 and $ 43,000 of accumulated impairment losses within the Electrical and Safety & Infrastructure segments, respectively.

The Company assesses the recoverability of goodwill and indefinite-lived trade names on an annual basis in accordance with ASC 350, “ Intangibles - Goodwill and Other.

” The measurement date is the first day of the fourth fiscal quarter, or more frequently, if events or circumstances indicate that it is more likely than not that the fair value of a reporting unit or the respective indefinite-lived trade name is less than the carrying value.

The following table provides the gross carrying value, accumulated amortization and net carrying value for each major class of intangible asset:

December 24, 2021 September 30, 2021

March 25, 2022 September 30, 2021

(in thousands) Weighted Average Useful Life (Years) Gross Carrying Value Accumulated Amortization Net Carrying Value Gross Carrying Value Accumulated Amortization Net Carrying Value

7 unchanged sentences

Other intangible assets consist of definite-lived trade names, technology, non-compete agreements and backlogs.

Amortization expense for the three months ended December 24, 2021 and December 25, 2020 was $ 8,229 and $ 8,260 , respectively.

Amortization expense for the three months ended March 25, 2022 and March 26, 2021 was $ 8,701 and $ 8,096 , respectively.

Amortization expense for the six months ended March 25, 2022 and March 26, 2021 was $ 16,930 and $ 16,356 , respectively.

Expected amortization expense for intangible assets for the remainder of fiscal 2022 and over the next five years and thereafter is as follows:

3 unchanged sentences

Actual amounts of amortization may differ from estimated amounts due to additional intangible asset acquisitions, impairment of intangible assets and other events.

Debt as of December 24, 2021 and September 30, 2021 was as follows:

(in thousands) December 24, 2021 September 30, 2021

Debt as of March 25, 2022 and September 30, 2021 was as follows:

(in thousands) March 25, 2022 September 30, 2021

Senior Secured Term Loan Facility due May 26, 2028 $ 371,238 $ 371,095

1 unchanged sentence

Deferred financing costs ( 11,777 ) ( 12,709 )

Total debt $ 758,924 $ 758,386

Long-term debt $ 759,461 $ 758,386

1 unchanged sentence

AII is the borrower under the ABL Credit Facility which is guaranteed by the Company and all other subsidiaries of the Company (other than AII) that are guarantors of the Senior Notes.

AII’s availability under the ABL Credit Facility was $ 315,499 as of December 24, 2021 and September 30, 2021.

AII ’ s availability under the ABL Credit Facility was $ 312,905 and $ 315,499 as of March 25, 2022 and September 30, 2021.

FAIR VALUE MEASUREMENTS

1 unchanged sentence

The Company uses forward currency contracts to hedge the effects of foreign exchange relating to certain of the Company’s intercompany balances denominated in a foreign currency.

These derivative instruments are not formally designated as hedges by the Company and the terms of these instruments range from six months to nine months .

These derivative instruments are not formally designated as hedges by the Company and the terms of these instruments range from two months to six months .

Short-term forward currency contracts are recorded in either other current assets or other current liabilities and long-term forward currency contracts are recorded in either other long-term assets or other long-term liabilities in the condensed consolidated balance sheet.

1 unchanged sentence

See Note 5, “Other Income, net” for further detail.

The total notional amounts of undesignated forward currency contracts were £ 37.4 million and £ 37.4 million as of December 24, 2021 and September 30, 2021, respectively.

The total notional amounts of undesignated forward currency contracts were £ 36.7 million and £ 37.4 million as of March 25, 2022 and September 30, 2021, respectively.

Cash flows associated with derivative financial instruments are recognized in the operating section of the condensed consolidated statements of cash flows.

1 unchanged sentence

The following table presents the Company ’ s assets and liabilities measured at fair value:

December 24, 2021 September 30, 2021

March 25, 2022 September 30, 2021

(in thousands) Level 1 Level 2 Level 1 Level 2

4 unchanged sentences

The estimated fair value of financial instruments not carried at fair value in the condensed consolidated balance sheets were as follows:

December 24, 2021 September 30, 2021

March 25, 2022 September 30, 2021

(in thousands) Carrying Value Fair Value Carrying Value Fair Value

6 unchanged sentences

The Company has obligations related to commitments to purchase certain goods.

As of December 24, 2021, such obligations were $ 361,295 for the rest of fiscal year 2022 and $ 9,789 for fiscal year 2023 and beyond.

As of March 25, 2022, such obligations were $ 281,924 for the rest of fiscal year 2022 and $ 10,789 for fiscal year 2023 and beyond.

These amounts represent open purchase orders for materials used in production.

3 unchanged sentences

The Company utilizes a third-party claims administrator to pay claims, track and evaluate actual claims experience, and ensure consistency in the data used in the actuarial valuation.

Legal Contingencies — Historically, a number of lawsuits have been filed against the Company and the Company has also received other claim demand letters alleging that the Company's anti-microbial coated steel sprinkler pipe, which the Company has not manufactured or sold for several years, is incompatible with chlorinated polyvinyl chloride and caused stress cracking in such pipe manufactured by third parties when installed together in the same sprinkler system, which the Company refers to collectively as the “Special Products Claims.” During fiscal 2019, after a court judgment was issued in one case between the Company and Tyco International Ltd.

(“Tyco”), the Company’s former parent, regarding the indemnification of expenses, fees and settlement amounts relating to the incompatibility issue, the Company and Tyco entered into a global settlement regarding the issue.

The Company agreed to fund the total settlement in exchange for Tyco's agreement to cap the Company’s Special Products Claim deductible at $ 12,000 , as opposed to the $ 13,000 cap negotiated within the original indemnity agreement.

In conjunction with the payment of that settlement, Tyco and the Company examined the Company’s total Special Products Claim payments and agreed that with that settlement payment and payment of a few other legal fee invoices, all of which have now been paid, the Company had met its $ 12,000 deductible obligation related to these Special Products Claims.

(“Tyco”), now Johnson Controls, Inc.

(“JCI”), has a contractual obligation to indemnify the Company in respect of all remaining and future claims of incompatibility between the Company's antimicrobial coated steel sprinkler pipe and CPVC pipe used in the same sprinkler system.

JCI is currently defending the Company in the Special Product Claims and since 2019 has defended and indemnified the Company on Special Products Claims as required.

When Special Products Claims arise, JCI has defended and indemnified the Company as required.

At this time, the Company does not expect the outcome of the Special Products Claims proceedings, either individually or in the aggregate, to have a material adverse effect on its business, financial condition, results of operations or cash flows, and the Company believes that its reserves are adequate for all remaining contingencies for Special Products Claims.

3 unchanged sentences

However, litigation is unpredictable, and the Company could incur judgments or enter into settlements for current or future claims that could adversely affect its business, financial condition, results of operations or cash flows.

The Company had outstanding letters of credit totaling $ 9,501 supporting workers’ compensation and general liability insurance policies as of December 24, 2021.

The Company also had surety bonds primarily related to performance guarantees on supply agreements and construction contracts, and payment of duties and taxes totaling $ 1,852 as of December 24, 2021.

The Company had outstanding letters of credit totaling $ 12,095 supporting workers ’ compensation and general liability insurance policies as of March 25, 2022.

The Company also had surety bonds primarily related to performance guarantees on supply agreements and construction contracts, and payment of duties and taxes totaling $ 19,157 as of March 25, 2022.

In disposing of assets or businesses, the Company often provides representations, warranties and indemnities to cover various risks including unknown damage to the assets, environmental risks involved in the sale of real estate, liability to investigate and remediate environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities and legal fees related to periods prior to disposition.

The Company does not have the ability to estimate the potential liability from such indemnities because they relate to unknown conditions.

However, the Company has no reason to believe that

these uncertainties would have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

However, the Company has no reason to believe that these uncertainties would have a material adverse effect on the Company ’ s business, financial condition, results of operations or cash flows.

In the normal course of business, the Company is liable for product performance and contract completion.

6 unchanged sentences

Both segments use Adjusted EBITDA as the primary measure of profit and loss.

Segment Adjusted EBITDA is income (loss) before income taxes, adjusted to exclude unallocated expenses, depreciation and amortization, interest expense, net, restructuring charges, stock-based compensation, loss on extinguishment of debt, certain legal matters, transaction costs and other items, such as inventory reserves and adjustments, loss on disposal of property, plant and equipment, insurance recovery related to damages of property, plant and equipment, release of indemnified uncertain tax positions, and realized or unrealized gain (loss) on foreign currency impacts of intercompany loans and related forward currency derivatives.

Segment Adjusted EBITDA is income (loss) before income taxes, adjusted to exclude unallocated expenses, depreciation and amortization, interest expense, net, stock-based compensation, loss on extinguishment of debt, certain legal matters, and other items, such as inventory reserves and adjustments, loss on disposal of property, plant and equipment, insurance recovery related to damages of property, plant and equipment, release of indemnified uncertain tax positions, realized or unrealized gain (loss) on foreign currency impacts of intercompany loans and related forward currency derivatives, gain on purchase of business, restructuring costs and transaction costs.

Intersegment transactions primarily consist of product sales at designated transfer prices on an arm ’ s-length basis.

Gross profit earned and reported within the segment is eliminated in the Company ’ s consolidated results.

Certain manufacturing and distribution expenses are allocated between the segments on a pro rata basis due to the shared nature of activities.

Certain manufacturing and distribution expenses are allocated between the

segments on a pro rata basis due to the shared nature of activities.

Recorded amounts represent a proportional amount of the quantity of product produced for each segment.

3 unchanged sentences

Three months ended

December 24, 2021 December 25, 2020

March 25, 2022 March 26, 2021

(in thousands) External Net Sales Intersegment Sales Adjusted EBITDA External Net Sales Intersegment Sales Adjusted EBITDA

3 unchanged sentences

Consolidated operations $ 982,573 $ — $ 639,543 $ —

Six months ended

March 25, 2022 March 26, 2021

(in thousands) External Net Sales Intersegment Sales Adjusted EBITDA External Net Sales Intersegment Sales Adjusted EBITDA

Electrical $ 1,398,691 $ 2,869 $ 610,517 $ 873,244 $ 1,401 $ 322,099

Safety & Infrastructure 424,683 112 56,349 277,381 84 30,445

Eliminations — ( 2,981 ) — ( 1,485 )

Consolidated operations $ 1,823,374 $ — $ 1,150,625 $ —

Presented below is a reconciliation of operating Segment Adjusted EBITDA to Income before income taxes:

Three months ended

(in thousands) December 24, 2021 December 25, 2020

Three months ended Six months ended

(in thousands) March 25, 2022 March 26, 2021 March 25, 2022 March 26, 2021

Operating segment Adjusted EBITDA

10 unchanged sentences

(b) Represents other items, such as inventory reserves and adjustments, loss on disposal of property, plant and equipment, insurance recovery related to damages of property, plant and equipment, release of indemnified uncertain tax positions, realized or unrealized gain (loss) on foreign currency impacts of intercompany loans and related forward currency derivatives, gain on purchase of business, restructuring costs and transaction costs.

The Company’s net sales by geography were as follows for the three months ended December 24, 2021 and December 25, 2020:

Three months ended

(in thousands) December 24, 2021 December 25, 2020

The Company ’ s net sales by geography were as follows for the three months ended and six months ended March 25, 2022 and March 26, 2021:

Three months ended Six months ended

(in thousands) March 25, 2022 March 26, 2021 March 25, 2022 March 26, 2021

United States $ 895,585 $ 572,427 $ 1,652,983 $ 1,027,191

3 unchanged sentences

Total $ 982,573 $ 639,543 $ 1,823,374 $ 1,150,625

The table below shows the amount of net sales from external customers for each of the Company’s product categories which accounted for 10% or more of consolidated net sales in either period for the three months ended December 24, 2021 and December 25, 2020:

Three months ended

(in thousands) December 24, 2021 December 25, 2020

The table below shows the amount of net sales from external customers for each of the Company ’ s product categories which accounted for 10% or more of consolidated net sales in either period for the three months ended and six months ended March 25, 2022 and March 26, 2021:

Three months ended Six months ended

(in thousands) March 25, 2022 March 26, 2021 March 25, 2022 March 26, 2021

Metal Electrical Conduit and Fittings $ 153,049 $ 148,405 $ 302,925 $ 273,234

7 unchanged sentences

Net sales $ 982,573 $ 639,543 $ 1,823,374 $ 1,150,625

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this report.

The following discussion may contain forward-looking statements that reflect our plans, estimates and beliefs.

Our actual results could differ materially from those discussed in these forward- looking statements.

Factors that could cause or contribute to these differences include those factors discussed below and included or referenced elsewhere in this report, particularly in the sections entitled “ Forward-Looking Statements ” and “ Risk Factors.

Impacts of COVID-19

The outbreak of the novel coronavirus (“COVID-19”) has continued to spread and is currently classified as a pandemic which is contributing to significant volatility and uncertainty in markets and the global economy.

This heightened volatility and uncertainty makes it difficult for us to predict the extent of COVID-19’s impact on our operations going forward.

As of the date of this filing, customers and end markets face some uncertainty and delays in the timing of work.

In particular, some construction site closures or project delays have occurred, and job sites have had to adjust to increased physical distancing and health-related precautions.

Given the continued volatility within the economic impacts of the pandemic it is too difficult to make any judgment on how significant COVID-19 effects could become.

Factors that contribute to our ability to adjust to the outbreak include currently being deemed an “essential business,” benefiting from mostly localized supply chains, and continuing to take actions within our control to minimize the disruptive impacts of the outbreak.

However, there can be no assurance that we will not be materially and adversely impacted in the future.

The extent to which COVID-19 will impact our business will depend on future developments and public health advancements, which are highly uncertain and cannot be predicted with confidence.

Currently, we have no COVID-19 related facility closures as we look to serve our current levels of demand.

In response to COVID-19, we have implemented a variety of countermeasures to promote the health and safety of our employees during this pandemic, including health screening, physical distancing practices, enhanced cleaning, use of personal protective equipment, and remote work capabilities.

Results of Operations

The consolidated results of operations for the three months ended December 24, 2021 and December 25, 2020 were as follows:

Three months ended

($ in thousands) December 24, 2021 December 25, 2020 Change % Change

Net sales $ 840,801 $ 511,082 $ 329,719 64.5 %

Cost of sales 485,993 321,891 164,102 51.0 %

Gross profit 354,808 189,191 165,617 87.5 %

Selling, general and administrative 78,151 61,078 17,073 28.0 %

Intangible asset amortization 8,229 8,260 (31) (0.4) %

Operating income 268,428 119,853 148,575 124.0 %

Interest expense, net 6,918 8,254 (1,336) (16.2) %

Other income, net (308) (431) 123 (28.5) %

Income before income taxes 261,818 112,030 149,788 133.7 %

Income tax expense 56,975 26,964 30,011 111.3 %

Net income $ 204,843 $ 85,066 $ 119,777 140.8 %

Volume (9.9) %

Average selling prices 72.0 %

Foreign exchange 0.2 %

Acquisitions 2.1 %

Net sales 64.5 %

Net sales increased by $329.7 million, or 64.5%, to $840.8 million for the three months ended December 24, 2021, compared to $511.1 million for the three months ended December 25, 2020.

The increase in net sales is primarily attributed to increased average selling prices across the Company’s products of $368.0 million and increased net sales of $10.7 million due to the acquisitions of Queen City Plastics and FRE Composites Group in the prior year.

These increases are offset by decreased sales volume of $50.7 million across varying product categories within both the Electrical and the Safety & Infrastructure segments.

Pricing for PVC products, as well as other parts of the business, is expected to return to more normal historical levels over time, but that time is uncertain.

Cost of sales

Volume (10.5) %

Average input costs 53.5 %

Foreign exchange 0.2 %

Acquisitions 1.8 %

Cost of sales 51.0 %

Cost of sales increased by $164.1 million, or 51.0%, to $486.0 million for the three months ended December 24, 2021 compared to $321.9 million for the three months ended December 25, 2020.

The increase was primarily due to higher input costs of steel, copper and PVC resin of $172.2 million and the prior year acquisitions of Queen City Plastics and FRE Composites Group of $5.7 million partially offset by lower sales volume of $33.6 million across varying product categories within both the Electrical and the Safety & Infrastructure segments.

Selling, general and administrative

Selling, general and administrative expenses increased by $17.1 million, or 28.0%, to $78.2 million for the three months ended December 24, 2021 compared to $61.1 million for the three months ended December 25, 2020.

The increase was primarily due to higher sales commission expense of $8.0 million, increased general spending on business improvement initiatives, including digital initiatives, of $3.6 million, and higher variable compensation of $2.1 million.

Intangible asset amortization

Intangible asset amortization expense remained fairly consistent to $8.2 million for the three months ended December 24, 2021 compared to $8.3 million for the three months ended December 25, 2020.

Interest expense, net

Interest expense, net decreased by $1.3 million, or 16.2% to $6.9 million for the three months ended December 24, 2021 compared to $8.3 million for the three months ended December 25, 2020.

The decrease is primarily due to interest expense being derived from a lower average principal balance resulting from the Company’s fiscal 2021 debt restructuring transactions.

Other income, net

Other income, net remained consistent at $0.3 million for the three months ended December 24, 2021 compared to $0.4 million for the three months ended December 25, 2020.

Income tax expense

The Company’s income tax rate decreased to 21.8% for the three months ended December 24, 2021 compared to 24.1% for the three months ended December 25, 2020.

The decrease in the current period effective tax rate was primarily driven by an increase in the excess tax benefit associated with stock compensation.

Segment Results

The Electrical segment manufactures high quality products used in the construction of electrical power systems including conduit, cable and installation accessories.

This segment serves contractors in partnership with the electrical wholesale channel.

The Safety & Infrastructure segment designs and manufactures solutions including metal framing, mechanical pipe, perimeter security and cable management for the protection and reliability of critical infrastructure.

These solutions are marketed to contractors, original equipment manufacturers and end users.

Both segments use Adjusted EBITDA as the primary measure of profit and loss.

We define segment Adjusted EBITDA margin as segment Adjusted EBITDA as a percentage of segment Net sales.

Three months ended

($ in thousands) December 24, 2021 December 25, 2020 Change % Change

Net sales $ 641,683 $ 387,145 $ 254,538 65.7 %

Adjusted EBITDA $ 279,547 $ 133,273 $ 146,274 109.8 %

Adjusted EBITDA margin 43.6 % 34.4 %

Volume (6.0) %

Average selling prices 68.6 %

Foreign exchange 0.3 %

Acquisitions 2.8 %

Net sales 65.7 %

Net sales increased by $254.5 million, or 65.7%, to $641.7 million for the three months ended December 24, 2021 compared to $387.1 million for the three months ended December 25, 2020.

The increase in net sales is primarily attributed to increased average selling prices of $265.8 million across the Electrical product lines and increased net sales of $10.6 million from the prior period acquisitions of Queen City Plastics and FRE Composites Group.

These increases were partially offset by decreased sales volume of $23.4 million.

Pricing for PVC products, as well as other parts of the business, is expected to return to more normal historical levels over time, but that time is uncertain.

Adjusted EBITDA

Adjusted EBITDA for the three months ended December 24, 2021 increased by $146.3 million, or 109.8%, to $279.5 million from $133.3 million for the three months ended December 25, 2020.

Adjusted EBITDA margins increased to 43.6% for the three months ended December 24, 2021 compared to 34.4% for the three months ended December 25, 2020.

The increase in Adjusted EBITDA and Adjusted EBITDA margins was largely due to higher average selling prices over input costs.

Safety & Infrastructure

Three months ended

($ in thousands) December 24, 2021 December 25, 2020 Change % Change

Net sales $ 200,510 $ 124,765 $ 75,745 60.7 %

Adjusted EBITDA $ 27,432 $ 14,252 $ 13,180 92.5 %

Adjusted EBITDA margin 13.7 % 11.4 %

Volume (22.0) %

Average selling prices 81.9 %

Acquisitions 0.1 %

Net sales 60.7 %

Net sales increased by $75.7 million, or 60.7%, for the three months ended December 24, 2021 to $200.5 million compared to $124.8 million for the three months ended December 25, 2020.

The increase is primarily attributed to increased average selling prices of $102.2 million driven by higher input costs of steel partially offset by lower volumes of $27.4 million primarily driven by decreases in the mechanical pipe product line.

Adjusted EBITDA

Adjusted EBITDA increased by $13.2 million, or 92.5%, to $27.4 million for the three months ended December 24, 2021 compared to $14.3 million for the three months ended December 25, 2020.

Adjusted EBITDA margins increased to 13.7% for the three months ended December 24, 2021 compared to 11.4% for the three months ended December 25, 2020.

The Adjusted EBITDA increase is primarily due to the price increases, partially offset by lower volume, discussed above.

Liquidity and Capital Resources

We believe we have sufficient liquidity to support our ongoing operations and to invest in future growth and create value for stockholders.

Our cash and cash equivalents were $499.0 million as of December 24, 2021, of which $54.6 million was held at non-U.S.

subsidiaries.

Those cash balances at foreign subsidiaries may be subject to withholding or local country taxes if the Company’s intention to permanently reinvest such income were to change and cash was repatriated to the United States.

In general, we require cash to fund working capital investments, acquisitions, capital expenditures, debt repayment, interest payments, taxes and share repurchases.

We have access to the ABL Credit Facility to fund operational needs.

As of December 24, 2021, there were no outstanding borrowings under the ABL Credit Facility and $9.5 million of letters of credit issued under the ABL Credit Facility.

The borrowing base was estimated to be $325.0 million and approximately $315.5 million was available under the ABL Credit Facility as of December 24, 2021.

Outstanding letters of credit count as utilization of the commitments under the ABL Credit Facility and reduce the amount available for borrowings.

The agreements governing the Senior Secured Term Loan Facility and the ABL Credit Facility (collectively, the "Credit Facilities") contain covenants that limit or restrict AII’s ability to incur additional indebtedness, repurchase debt, incur liens, sell assets, make certain payments (including dividends) and enter into transactions with affiliates.

AII has been in compliance with the covenants under the agreements for all periods presented.

We may from time to time repurchase our debt or take other steps to reduce our debt.

These actions may include open market repurchases, negotiated repurchases or opportunistic refinancing of debt.

The amount of debt, if any, that may be repurchased or refinanced will depend on market conditions, trading levels of our debt, our cash position, compliance with debt covenants and other considerations.

Our use of cash may fluctuate during the year and from year to year due to differences in demand and changes in economic conditions primarily related to the prices of the commodities we purchase.

Capital expenditures have historically been necessary to expand and update the production capacity and improve the productivity of our manufacturing operations.

Our ongoing liquidity needs are expected to be funded by cash on hand, net cash provided by operating activities and, as required, borrowings under the ABL Credit Facility.

We expect that cash provided from operations and available capacity under the ABL Credit Facility will provide sufficient funds to operate our business, make expected capital expenditures and meet our liquidity requirements for at least the next twelve months, including payments of interest and principal on our debt.

Limitations on distributions and dividends by subsidiaries

AI, AII, and AIH are each holding companies, and as such have no independent operations or material assets other than ownership of equity interests in their respective subsidiaries.

Each company depends on its respective subsidiaries to distribute funds to it so that it may pay obligations and expenses, including satisfying obligations with respect to indebtedness.

The ability of our subsidiaries to make distributions and dividends to us depends on their operating results, cash requirements and financial and general business conditions, as well as restrictions under the laws of our subsidiaries' jurisdictions.

The agreements governing the Credit Facilities significantly restrict the ability of our subsidiaries, including AII, to pay dividends, make loans or otherwise transfer assets from AII and, in turn, to us.

Further, AII's subsidiaries are permitted under the terms of the Credit Facilities to incur additional indebtedness that may restrict or prohibit the making of distributions, the payment of dividends or the making of loans by such subsidiaries to AII and, in turn, to us.

The Senior Secured Term Loan Facility requires AII to meet a certain consolidated coverage ratio on an incurrence basis in connection with additional indebtedness.

The ABL Credit Facility contains limits on additional indebtedness based on various conditions for incurring the additional debt.

AII has been in compliance with the covenants under the agreements for all periods presented.

The table below summarizes cash flow information derived from our statements of cash flows for the periods indicated:

Three months ended

(in thousands) December 24, 2021 December 25, 2020

Cash flows provided by (used in):

Operating activities $ 97,192 $ 86,276

Investing activities (45,024) (14,258)

Financing activities (129,048) (78,981)

Operating activities

During the three months ended December 24, 2021, the Company was provided $97.2 million by operating activities compared to $86.3 million during the three months ended December 25, 2020.

The $10.9 million increase in cash provided was primarily due to higher cash flows from the increase in operating income of $148.6 million.

This was partially offset by a $57.0 million increase in cash used in working capital primarily due to higher inventory build during the first quarter of fiscal 2022.

Investing activities

During the three months ended December 24, 2021, the Company used $45.0 million in investing activities compared to $14.3 million during the three months ended December 25, 2020.

The increase in cash used in investing activities is primarily due to the acquisitions of Sasco and Four Star for total cash paid of $36.1 million during the three months ended December 24, 2021.

Financing Activities

During the three months ended December 24, 2021, the Company used $129.0 million in financing activities compared to $79.0 million used during the three months ended December 25, 2020.

The increase in cash used in financing activities is primarily due to $69.5 million more cash used to repurchase common stock during the three months ended December 24, 2021 compared to the same period in the prior year.

Contractual Obligations and Commitments

There have been no material changes in our contractual obligations and commitments since the filing of our Annual Report on Form 10-K.

Changes in Critical Accounting Policies and Estimates

There have been no material changes in our critical accounting policies and estimates since the filing of our Annual Report on Form 10-K.

Recent Accounting Standards

See Note 1, “Basis of Presentation and Summary of Significant Accounting Policies” to our unaudited condensed consolidated financial statements.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements and cautionary statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management’s beliefs and assumptions and information currently available to management.

Some of the forward-looking statements can be identified by the use of forward-looking terms such as “believes,” “expects,” “may,” “will,” “shall,” “should,” “would,” “could,” “seeks,” “aims,” “projects,” “is optimistic,” “intends,” “plans,” “estimates,” “anticipates” or other comparable terms.

Forward-looking statements include, without limitation, all matters that are not historical facts.

They appear in a number of places throughout this Quarterly Report on Form 10-Q and include, without limitation, statements regarding our intentions, beliefs, assumptions or current expectations concerning, among other things, financial position;

results of operations;

growth strategies or expectations;

customer retention;

the outcome (by judgment or settlement) and costs of legal, administrative or regulatory proceedings, investigations or inspections, including, without limitation, collective, representative or class action litigation;

and the impact of prevailing economic conditions.

Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control.

We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes, including, without limitation, our actual results of operations, financial condition and liquidity, and the development of the market in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this Quarterly Report.

In addition, even if our results of operations, financial condition and cash flows, and the development of the market in which we operate, are consistent with the forward-looking statements contained in this Quarterly Report, those results or developments may not be indicative of results or developments in subsequent periods.

A number of important factors, including, without limitation, the risks and uncertainties discussed or referenced under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, could cause actual results and outcomes to differ materially from those reflected in the forward-looking statements.

Additional factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation:

• declines in, and uncertainty regarding, the general business and economic conditions in the United States and international markets in which we operate;

• weakness or another downturn in the United States non-residential construction industry;

• widespread outbreak of diseases, such as the novel coronavirus (COVID-19) pandemic;

• changes in prices of raw materials;

• pricing pressure, reduced profitability, or loss of market share due to intense competition;

• availability and cost of third-party freight carriers and energy;

• high levels of imports of products similar to those manufactured by us;

• changes in federal, state, local and international governmental regulations and trade policies;

• adverse weather conditions;

• increased costs relating to future capital and operating expenditures to maintain compliance with environmental, health and safety laws;

• reduced spending by, deterioration in the financial condition of, or other adverse developments, including inability or unwillingness to pay our invoices on time, with respect to one or more of our top customers;

• increases in our working capital needs, which are substantial and fluctuate based on economic activity and the market prices for our main raw materials, including as a result of failure to collect, or delays in the collection of, cash from the sale of manufactured products;

• work stoppage or other interruptions of production at our facilities as a result of disputes under existing collective bargaining agreements with labor unions or in connection with negotiations of new collective bargaining agreements, as a result of supplier financial distress, or for other reasons;

• changes in our financial obligations relating to pension plans that we maintain in the United States;

• reduced production or distribution capacity due to interruptions in the operations of our facilities or those of our key suppliers;

• loss of a substantial number of our third-party agents or distributors or a dramatic deviation from the amount of sales they generate;

• security threats, attacks, or other disruptions to our information systems, or failure to comply with complex network security, data privacy and other legal obligations or the failure to protect sensitive information;

• possible impairment of goodwill or other long-lived assets as a result of future triggering events, such as declines in our cash flow projections or customer demand and changes in our business and valuation assumptions;

• safety and labor risks associated with the manufacture and in the testing of our products;

• product liability, construction defect and warranty claims and litigation relating to our various products, as well as government inquiries and investigations, and consumer, employment, tort and other legal proceedings;

• our ability to protect our intellectual property and other material proprietary rights;

• risks inherent in doing business internationally;

• changes in foreign laws and legal systems, including as a result of Brexit;

• our inability to introduce new products effectively or implement our innovation strategies;

• our inability to continue importing raw materials, component parts or finished goods;

• the incurrence of liabilities and the issuance of additional debt or equity in connection with acquisitions, joint ventures or divestitures and the failure of indemnification provisions in our acquisition agreements to fully protect us from unexpected liabilities;

• failure to manage acquisitions successfully, including identifying, evaluating, and valuing acquisition targets and integrating acquired companies, businesses or assets;

• the incurrence of additional expenses, increases in the complexity of our supply chain and potential damage to our reputation with customers resulting from regulations related to “conflict minerals”;

• disruptions or impediments to the receipt of sufficient raw materials resulting from various anti-terrorism security measures;

• restrictions contained in our debt agreements;

• failure to generate cash sufficient to pay the principal of, interest on, or other amounts due on our debt;

• challenges attracting and retaining key personnel or high-quality employees;

• future changes to tax legislation;

• failure to generate sufficient cash flow from operations or to raise sufficient funds in the capital markets to satisfy existing obligations and support the development of our business;

• other risks and factors described in this Quarterly Report and from time to time in documents that we file with the SEC.

You should read this Quarterly Report completely and with the understanding that actual future results may be materially different from expectations.

All forward-looking statements attributable to us or persons acting on our behalf that are made in this Quarterly Report are qualified in their entirety by these cautionary statements.

These forward-looking statements are made only as of the date of this Quarterly Report, and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, and changes in future operating results over time or otherwise.

Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data.

Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes to the quantitative and qualitative disclosures about market risks previously disclosed in our Annual Report on Form 10-K.

SUBSEQUENT EVENTS

On April 26, 2022, the board of directors approved an amendment to the previously approved share repurchase program to purchase $400 million of the Company’s outstanding stock.

The amendment increased the total repurchase plan of the Company’s outstanding stock to $800 million.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements