What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-02 compared with 2022-05-03 · 72 added, 67 removed, 223 unchanged (38% of the section changed)

11 unchanged sentences

COVID-19, the Russia-Ukraine conflict and other factors have had and will continue to have adverse effects on global supply chains, which may impact some aspects of our business.

Furthermore, as hurricane season approaches, we are mindful of the effects that adverse weather can have on our domestic supply chain.

Furthermore, with the onset of hurricane season, we are mindful of the effects that adverse weather can have on our domestic supply chain.

RESULTS OF OPERATIONS

The consolidated results of operations for the three months ended March 25, 2022 and March 26, 2021 were as follows:

The consolidated results of operations for the three months ended June 24, 2022 and June 25, 2021 were as follows:

Three months ended

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

(in thousands) June 24, 2022 June 25, 2021 Change % Change

Net sales $ 1,061,590 $ 853,658 $ 207,932 24.4 %

5 unchanged sentences

Interest expense, net 7,243 8,090 (847) (10.5) %

Loss on extinguishment of debt — 4,202 (4,202) 100.0 %

Other income, net 150 (509) 659 (129.5) %

7 unchanged sentences

Net sales 24.4 %

Net sales increased by $343.0 million, or 53.6%, to $982.6 million for the three months ended March 25, 2022, compared to $639.5 million for the three months ended March 26, 2021.

The increase in net sales is primarily attributed to increased average selling prices across the Company’s products of $338.7 million which were mostly driven by the plastic pipe and conduit product category within the Electrical segment and increased net sales of $14.6 million from companies acquired during fiscal 2021 and fiscal 2022.

Net sales increased by $207.9 million, or 24.4%, to $1,061.6 million for the three months ended June 24, 2022, compared to $853.7 million for the three months ended June 25, 2021.

The increase in net sales is primarily attributed to increased average selling prices across the Company’s products of $244.0 million which were mostly driven by the PVC pipe and conduit product category within the Electrical segment and increased net sales of $13.8 million from companies acquired during fiscal 2021 and fiscal 2022.

These increases are offset by decreased sales volume of $43.9 million across varying product categories within both the Electrical and the Safety & Infrastructure segments.

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Cost of sales 18.1 %

Cost of sales increased by $166.5 million, or 41.6%, to $566.2 million for the three months ended March 25, 2022 compared to $399.7 million for the three months ended March 26, 2021.

Cost of sales increased by $92.9 million, or 18.1%, to $607.3 million for the three months ended June 24, 2022 compared to $514.4 million for the three months ended June 25, 2021.

The increase was primarily due to higher input costs of steel, copper and PVC resin of $98.0 million and recent acquisitions during fiscal 2021 and fiscal 2022 of $9.3 million partially offset by lower sales volume of $18.7 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 $21.6 million, or 32.0%, to $88.9 million for the three months ended March 25, 2022 compared to $67.3 million for the three months ended March 26, 2021.

The increase was primarily due to higher sales commission expense of $8.1 million, increased general spending on business improvement initiatives of $5.8 million, higher variable compensation of $2.0 million and recent acquisitions in fiscal 2021 and 2022 of $1.6 million.

The remaining increase of $4.1 million is spread across a variety of other spend categories.

Selling, general and administrative expenses increased by $14.1 million, or 17.3%, to $96.0 million for the three months ended June 24, 2022 compared to $81.8 million for the three months ended June 25, 2021.

The increase was primarily due to increased general spending on business improvement initiatives of $8.8 million, higher transaction costs of $1.7 million, higher sales commission expense of $3.6 million, higher variable compensation of $1.3 million and recent acquisitions in fiscal 2021 and 2022 of $1.0 million.

These increases were partially offset by decreases of $2.3 million spread across a variety of other spend categories.

Intangible asset amortization

Intangible asset amortization expense increased to $8.7 million for the three months ended March 25, 2022 compared to $8.1 million for the three months ended March 26, 2021.

The increase in intangible asset amortization was driven by the acquisition of definite-lived intangible assets in fiscal 2022.

Intangible asset amortization expense remained relatively flat at $8.6 million for the three months ended June 24, 2022 compared to $8.7 million for the three months ended June 25, 2021.

Interest expense, net

Interest expense, net decreased by $0.9 million, or 10.7% to $7.5 million for the three months ended March 25, 2022 compared to $8.4 million for the three months ended March 26, 2021.

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.

Interest expense, net decreased by $0.8 million, or 10.5% to $7.2 million for the three months ended June 24, 2022 compared to $8.1 million for the three months ended June 25, 2021.

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 decreased to $0.8 million for the three months ended March 25, 2022 compared to $7.2 million for the three months ended March 26, 2021.

The decrease was primarily due to a $6.0 million business interruption insurance recovery in fiscal 2021 from a flood at one of the Company’s manufacturing facilities.

Other income, net decreased to $0.2 million other expense for the three months ended June 24, 2022 compared to $0.5 million other income for the three months ended June 25, 2021.

The decrease was primarily due to foreign currency fluctuations.

Income tax expense

The Company ’ s income tax rate increased to 25.2% for the three months ended March 25, 2022 compared to 23.5% for the three months ended March 26, 2021.

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

The Company ’ s income tax rate decreased to 25.7% for the three months ended June 24, 2022 compared to 26.0% for the three months ended June 25, 2021.

The decrease in the current period effective tax rate was primarily driven by the prior year one-time tax expense from the deferred remeasurement of our UK subsidiaries due to the enactment of the Finance Act of 2021 which, among other things, changed the UK corporate tax rate from 19% to 25%.

SEGMENT RESULTS

4 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, 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.

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, (gain) 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.

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

Three months ended

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

(in thousands) June 24, 2022 June 25, 2021 Change % Change

Net sales $ 821,566 $ 661,163 $ 160,403 24.3 %

1 unchanged sentence

Adjusted EBITDA margin 42.8 % 40.5 %

Volume (6.2) %

Average selling prices 30.3 %

2 unchanged sentences

Net sales 24.3 %

Net sales increased by $272.4 million, or 55.9%, to $759.9 million for the three months ended March 25, 2022 compared to $487.5 million for the three months ended March 26, 2021.

The increase in net sales is primarily attributed to increased average selling prices of $263.4 million which were mostly driven by the plastic pipe and conduit product category and increased net sales of $9.2 million from companies acquired during fiscal 2021 and fiscal 2022.

Net sales increased by $160.4 million, or 24.3%, to $821.6 million for the three months ended June 24, 2022 compared to $661.2 million for the three months ended June 25, 2021.

The increase in net sales is primarily attributed to increased average selling prices of $200.1 million which were mostly driven by the PVC pipe and conduit product category and increased net sales of $6.9 million from companies acquired during fiscal 2021 and fiscal 2022.

These increases are offset by decreased sales volume of $41.2 million across varying product categories.

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 March 25, 2022 increased by $142.1 million, or 75.3%, to $331.0 million from $188.8 million for the three months ended March 26, 2021.

Adjusted EBITDA margins increased to 43.6% for the three months ended March 25, 2022 compared to 38.7% for the three months ended March 26, 2021.

Adjusted EBITDA for the three months ended June 24, 2022 increased by $83.6 million, or 31.2%, to $351.5 million from $267.8 million for the three months ended June 25, 2021.

Adjusted EBITDA margins increased to 42.8% for the three months ended June 24, 2022 compared to 40.5% for the three months ended June 25, 2021.

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

1 unchanged sentence

Three months ended

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

(in thousands) June 24, 2022 June 25, 2021 Change % Change

Net sales $ 241,909 $ 193,492 $ 48,417 25.0 %

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Net sales 25.0 %

Net sales increased by $71.6 million, or 46.9%, for the three months ended March 25, 2022 to $224.3 million compared to $152.7 million for the three months ended March 26, 2021.

The increase is primarily attributed to increased average selling prices of $75.2 million driven by higher input costs of steel and increased net sales of $5.4 million from companies acquired during fiscal 2022 partially offset by lower volumes of $9.0 million primarily in the mechanical pipe product line.

Net sales increased by $48.4 million, or 25.0%, for the three months ended June 24, 2022 to $241.9 million compared to $193.5 million for the three months ended June 25, 2021.

The increase is primarily attributed to increased average selling prices of $43.9 million driven by higher input costs of steel and increased net sales of $6.9 million from companies acquired during fiscal 2022 partially offset by lower volumes of $2.8 million primarily across various steel product categories.

Adjusted EBITDA

Adjusted EBITDA increased by $12.7 million, or 78.6%, to $28.9 million for the three months ended March 25, 2022 compared to $16.2 million for the three months ended March 26, 2021.

Adjusted EBITDA margins increased to 12.9% for the three months ended March 25, 2022 compared to 10.6% for the three months ended March 26, 2021.

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

The consolidated results of operations for the six months ended March 25, 2022 and March 26, 2021 were as follows:

Six months ended

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

Adjusted EBITDA increased by $23.3 million, or 104.2%, to $45.7 million for the three months ended June 24, 2022 compared to $22.4 million for the three months ended June 25, 2021.

Adjusted EBITDA margins increased to 18.9% for the three months ended June 24, 2022 compared to 11.6% for the three months ended June 25, 2021.

The Adjusted EBITDA increase is primarily due to higher average prices over input costs.

The consolidated results of operations for the nine months ended June 24, 2022 and June 25, 2021 were as follows:

Nine months ended

(in thousands) June 24, 2022 June 25, 2021 Change % Change

Net sales $ 2,884,963 $ 2,004,283 $ 880,680 43.9 %

5 unchanged sentences

Interest expense, net 21,676 24,760 (3,084) (12.5) %

Loss on extinguishment of debt — 4,202 (4,202) 100.0 %

Other income, net (964) (8,180) 7,216 (88.2) %

7 unchanged sentences

Net sales 43.9 %

Net sales increased by $672.7 million, or 58.5%, to $1,823.4 million for the six months ended March 25, 2022, compared to $1,150.6 million for the six months ended March 26, 2021.

The increase in net sales is primarily attributed to increased average selling prices of $707.9 million which were mostly driven by the plastic pipe and conduit product category within the Electrical segment and increased net sales of $25.6 million from companies acquired during fiscal 2021 and fiscal 2022.

Net sales increased by $880.7 million, or 43.9%, to $2,885.0 million for the nine months ended June 24, 2022, compared to $2,004.3 million for the nine months ended June 25, 2021.

The increase in net sales is primarily attributed to increased average selling prices of $950.8 million which were mostly driven by the PVC pipe and conduit product category within the Electrical segment and increased net sales of $39.1 million from companies acquired during fiscal 2021 and fiscal 2022.

These increases are offset by decreased sales volume of $103.1 million across varying product categories within both the Electrical and the Safety & Infrastructure segments.

6 unchanged sentences

Cost of sales 34.3 %

Cost of sales increased by $330.6 million, or 45.8% to $1,052.2 million for the six months ended March 25, 2022 compared to $721.6 million for the six months ended March 26, 2021.

Cost of sales increased by $423.4 million, or 34.3% to $1,659.4 million for the nine months ended June 24, 2022 compared to $1,236.0 million for the nine months ended June 25, 2021.

The increase in cost of sales was primarily due to higher input costs for steel, copper and resin of $414.8 million and recent acquisitions in fiscal 2021 and fiscal 2022 of $25.2 million, partially offset by lower sales volume of $59.6 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 $38.7 million, or 30.1% to $167.1 million for the six months ended March 25, 2022 compared to $128.4 million for the six months ended March 26, 2021.

The increase was primarily due to higher sales commission expense of $16.0 million, increased general spending on business improvement initiatives of $9.4 million, higher variable compensation of $4.2 million, recent acquisitions in fiscal 2021 and 2022 of $1.6 million and transaction costs of $1.1 million.

Selling, general and administrative expenses increased by $52.8 million, or 25.1% to $263.0 million for the nine months ended June 24, 2022 compared to $210.3 million for the nine months ended June 25, 2021.

The increase was primarily due to higher sales commission expense of $19.7 million, increased general spending on business improvement initiatives of $18.2 million, transaction costs of $3.3 million, higher variable compensation of $5.5 million, and recent acquisitions in fiscal 2021 and 2022 of $2.6 million.

The remaining increase of $3.5 million is spread across a variety of other spend categories.

Intangible asset amortization

Intangible asset amortization expense increased to $16.9 million for the six months ended March 25, 2022 compared to $16.4 million for the six months ended March 26, 2021.

Intangible asset amortization expense increased to $25.6 million for the nine months ended June 24, 2022 compared to $25.1 million for the nine months ended June 25, 2021.

The increase in intangible asset amortization was driven by the acquisition of definite-lived intangible assets in fiscal 2022.

Interest expense, net

Interest expense, net, decreased by $2.2 million, or 13.4% to $14.4 million for the six months ended March 25, 2022 compared to $16.7 million for the six months ended March 26, 2021.

Interest expense, net, decreased by $3.1 million, or 12.5% to $21.7 million for the nine months ended June 24, 2022 compared to $24.8 million for the nine months ended June 25, 2021.

The decrease is primarily due to the Company ’ s principal prepayments in fiscal 2020 and 2021, resulting in a lower principal balance in fiscal 2021 from which interest expense was derived.

Other income, net

Other income, net decreased to $1.1 million for the six months ended March 25, 2022 compared to $7.7 million for the six months ended March 26, 2021.

Other income, net decreased to $1.0 million for the nine months ended June 24, 2022 compared to $8.2 million for the nine months ended June 25, 2021.

The decrease was primarily due to a $6.0 million business interruption insurance recovery in fiscal 2021 from a flood at one of the Company’s manufacturing facilities.

Income tax expense

The Company ’ s income tax rate decreased to 23.6% for the six months ended March 25, 2022 compared to 23.7% for the six months ended March 26, 2021.

The decrease in the six month period effective tax rate was primarily due to an increase in the excess tax benefit associated with stock compensation partially offset by the increase in non-deductible executive compensation.

The Company ’ s income tax rate decreased to 24.4% for the nine months ended June 24, 2022 compared to 24.8% for the nine months ended June 25, 2021.

The decrease in the six month period effective tax rate was primarily due to an increase in the excess tax benefit associated with stock compensation.

SEGMENT RESULTS

Six months ended

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

Nine months ended

(in thousands) June 24, 2022 June 25, 2021 Change % Change

Net sales $ 2,220,482 $ 1,535,808 $ 684,674 44.6 %

6 unchanged sentences

Net sales 44.6 %

Net sales increased by $526.9 million, or 60.2%, to $1,401.6 million for the six months ended March 25, 2022 compared to $874.6 million for the six months ended March 26, 2021.

The increase in net sales is primarily attributed to increased average selling prices of $529.6 million which were mostly driven by the plastic pipe and conduit product category and increased net sales of $20.2 million from companies acquired during fiscal 2021 and fiscal 2022.

Net sales increased by $684.7 million, or 44.6%, to $2,220.5 million for the nine months ended June 24, 2022 compared to $1,535.8 million for the nine months ended June 25, 2021.

The increase in net sales is primarily attributed to increased average selling prices of $729.5 million which were mostly driven by the PVC pipe and conduit product category and increased net sales of $26.7 million from companies acquired during fiscal 2021 and fiscal 2022.

These increases were partially offset by decreased sales volume of $64.0 million.

1 unchanged sentence

Adjusted EBITDA

Adjusted EBITDA for the six months ended March 25, 2022 increased by $288.4 million, or 89.5%, to $610.5 million from $322.1 million for the six months ended March 26, 2021.

Adjusted EBITDA margins increased to 43.6% for the six months ended March 25, 2022 compared to 36.8% for the six months ended March 26, 2021.

Adjusted EBITDA for the nine months ended June 24, 2022 increased by $372.1 million, or 63.1%, to $962.0 million from $589.9 million for the nine months ended June 25, 2021.

Adjusted EBITDA margins increased to 43.3% for the nine months ended June 24, 2022 compared to 38.4% for the nine months ended June 25, 2021.

The increase in Adjusted EBITDA and Adjusted EBITDA margins was largely due to higher average selling prices in relation to changes in input costs, and contributions from acquisitions.

Safety & Infrastructure

Six months ended

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

Nine months ended

(in thousands) June 24, 2022 June 25, 2021 Change % Change

Net sales $ 666,704 $ 470,957 $ 195,747 41.6 %

4 unchanged sentences

Acquisitions 2.7 %

Other (0.1) %

Net sales 41.6 %

Net sales increased by $147.3 million, or 53.1%, for the six months ended March 25, 2022 to $424.8 million compared to $277.5 million for the six months ended March 26, 2021.

The increase is primarily attributed to increased average selling prices of $178.3 million primarily driven by higher input costs and increased net sales of $5.4 million from companies acquired during fiscal 2022 partially offset by lower volumes of $36.4 million primarily in the mechanical pipe product line.

Net sales increased by $195.7 million, or 41.6%, for the nine months ended June 24, 2022 to $666.7 million compared to $471.0 million for the nine months ended June 25, 2021.

The increase is primarily attributed to increased average selling prices of $221.3 million primarily driven by higher input costs and increased net sales of $12.5 million from companies acquired during fiscal 2022 partially offset by lower volumes of $39.2 million primarily across various steel product categories.

Adjusted EBITDA

Adjusted EBITDA increased $25.9 million, or 85.1%, to $56.3 million for the six months ended March 25, 2022 compared to $30.4 million for the six months ended March 26, 2021.

Adjusted EBITDA margins increased to 13.3% for the six months ended March 25, 2022 compared to 11.0% for the six months ended March 26, 2021.

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

Adjusted EBITDA increased $49.2 million, or 93.2%, to $102.0 million for the nine months ended June 24, 2022 compared to $52.8 million for the nine months ended June 25, 2021.

Adjusted EBITDA margins increased to 15.3% for the nine months ended June 24, 2022 compared to 11.2% for the nine months ended June 25, 2021.

The Adjusted EBITDA increase is primarily due to higher average prices over input costs.

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 $390.4 million as of March 25, 2022, of which $53.7 million was held at non-U.S.

Our cash and cash equivalents were $186.7 million as of June 24, 2022, of which $46.8 million was held at non-U.S.

subsidiaries.

2 unchanged sentences

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

As of March 25, 2022, there were no outstanding borrowings under the ABL Credit Facility and $12.1 million of letters of credit issued under the ABL Credit Facility.

The borrowing base was estimated to be $325.0 million and approximately $312.9 million was available under the ABL Credit Facility as of March 25, 2022.

As of June 24, 2022, there were no outstanding borrowings under the ABL Credit Facility and $12.1 million of letters of credit issued under the ABL Credit Facility.

The borrowing base was estimated to be $325.0 million and approximately $312.9 million was available under the ABL Credit Facility as of June 24, 2022.

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

19 unchanged sentences

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

Six months ended

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

Nine months ended

(in thousands) June 24, 2022 June 25, 2021

Cash flows provided by (used in):

3 unchanged sentences

Operating activities

During the six months ended March 25, 2022, the Company was provided $161.2 million by operating activities compared to $153.2 million during the six months ended March 26, 2021.

During the nine months ended June 24, 2022, the Company was provided $371.8 million by operating activities compared to $318.6 million during the nine months ended June 25, 2021.

The $53.2 million increase in cash provided was primarily due to higher cash flows from the increase in operating income of $404.0 million.

1 unchanged sentence

Investing activities

During the six months ended March 25, 2022, the Company used $60.8 million in investing activities compared to $60.9 million during the six months ended March 26, 2021.

Investing activities in both periods were primarily related to the acquisitions of Sasco and Four Star in fiscal 2022 and Queen City and FRE Composites in fiscal 2021, as well as consistent levels of capital expenditures in both periods.

During the nine months ended June 24, 2022, the Company used $336.7 million in investing activities compared to $74.3 million during the nine months ended June 25, 2021.

Cash used in acquisitions increased in fiscal 2022 by $212.2 million primarily as a result of the acquisition of United Poly in the third quarter of fiscal 2022.

The remaining increase in cash used in investing activities was driven by $47.7 million of additional capital expenditures.

Financing Activities

During the six months ended March 25, 2022, the Company used $285.6 million in financing activities compared to $75.4 million used during the six months ended March 26, 2021.

The increase in cash used in financing activities is primarily due to $226.1 million more cash used to repurchase common stock during the six months ended March 25, 2022 compared to the same period in the prior year.

During the nine months ended June 24, 2022, the Company used $421.2 million in financing activities compared to $135.4 million used during the nine months ended June 25, 2021.

The increase in cash used in financing activities is primarily due to $286.9 million more cash used to repurchase common stock during the nine months ended June 24, 2022 compared to the same period in the prior year.

CHANGES IN CRITICAL ACCOUNTING POLICIES AND ESTIMATES

53 unchanged sentences

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.

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.

3 unchanged sentences

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 2. Management’s Discussion and Analysis