What changed in this filing

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Item 1. Financial Statements

2023-02-01 compared with 2022-08-02 · 101 added, 194 removed, 372 unchanged (44% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended Nine months ended

(in thousands, except per share data) Note June 24, 2022 June 25, 2021 June 24, 2022 June 25, 2021

Three months ended

(in thousands, except per share data) Note December 30, 2022 December 24, 2021

Net sales $ 833,821 $ 840,801

5 unchanged sentences

Interest expense, net 9,488 6,918

Loss on extinguishment of debt — 4,202 — 4,202

Other income, net 5 150 ( 509 ) ( 964 ) ( 8,180 )

Other (income) and expense, net 5 41 ( 308 )

Income before income taxes 222,051 261,818

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended Nine months ended

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

Three months ended

(in thousands) Note December 30, 2022 December 24, 2021

Net income $ 173,492 $ 204,843

6 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data) Note June 24, 2022 September 30, 2021

(in thousands, except share and per share data) Note December 30, 2022 September 30, 2022

Current Assets:

24 unchanged sentences

Deferred tax liabilities 6 16,152 15,640

Pension liabilities 1,854 3,819

Other long-term liabilities 15,237 13,146

10 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months ended

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

Three months ended

(in thousands) Note December 30, 2022 December 24, 2021

Operating activities:

5 unchanged sentences

Amortization of right-of-use assets 3,538 3,124

Loss on extinguishment of debt — 4,202

Other non-cash adjustments to net income 1,410 4,050

12 unchanged sentences

Acquisition of businesses, net of cash acquired ( 82,181 ) ( 36,098 )

Other, net — 17

Net cash used in investing activities ( 117,187 ) ( 45,024 )

Financing activities:

Repayments of long-term debt 12 — ( 812,120 )

Proceeds from issuance of long-term debt 12 — 798,000

Payment for debt financing costs and fees — ( 11,294 )

Issuance of common stock, net of shares withheld for tax ( 14,775 ) ( 24,505 )

2 unchanged sentences

Effects of foreign exchange rate changes on cash and cash equivalents 2,243 ( 450 )

(Decrease) Increase in cash and cash equivalents ( 389,639 ) 112,671

Decrease in cash and cash equivalents ( 80,924 ) ( 77,330 )

Cash and cash equivalents at beginning of period 388,751 576,289

10 unchanged sentences

Net income — — — — 173,492 — 173,492

Other comprehensive loss — — — — — ( 1,333 ) ( 1,333 )

Other comprehensive income — — — — — 11,324 11,324

Stock-based compensation — — — 5,270 — — 5,270

2 unchanged sentences

Balance as of December 30, 2022 39,868 $ 400 $ ( 2,580 ) $ 490,611 $ 825,433 $ ( 38,822 ) $ 1,275,042

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

Net income — — — — 254,313 — 254,313

Other comprehensive loss — — — — — ( 6,534 ) ( 6,534 )

Stock-based compensation — — — 4,625 — — 4,625

Issuance of common stock, net of shares withheld for tax 25 — — 90 — 90

Repurchase of common stock ( 1,374 ) ( 14 ) — — ( 135,745 ) — ( 135,759 )

Balance as of June 24, 2022 42,530 $ 426 $ ( 2,580 ) $ 496,785 $ 684,400 $ ( 39,022 ) $ 1,140,009

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

2 unchanged sentences

Net income — — — — 204,843 — 204,843

Other comprehensive income — — — — — 7,313 7,313

Stock-based compensation — — — 5,522 — — 5,522

Issuance of common stock, net of shares withheld for tax 358 3 — ( 3,930 ) — — ( 3,927 )

Repurchase of common stock ( 1,140 ) ( 11 ) — — ( 35,026 ) — ( 35,037 )

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 — — — — — ( 1,333 ) ( 1,333 )

1 unchanged sentence

Issuance of common stock, net of shares withheld for tax 355 4 — ( 24,509 ) — — ( 24,505 )

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

Net income — — — — 175,297 — 175,297

Other comprehensive income — — — — — 2,414 2,414

Stock-based compensation — — — 3,768 — — 3,768

Issuance of common stock 38 3 — 421 — — 424

Repurchase of common stock ( 958 ) ( 10 ) — ( 104,537 ) — ( 104,547 )

Balance as of June 25, 2021 46,103 463 ( 2,580 ) 501,438 211,099 ( 33,383 ) 677,037

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

See Notes to unaudited condensed consolidated financial statements.

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Atkore was incorporated in the State of Delaware on November 4, 2010 under the name Atkore International Group, Inc.

Atkore is the sole stockholder of Atkore International Holdings Inc.

( “ AIH ” ), which in turn is the sole stockholder of Atkore International Inc.

As of December 30, 2022, Atkore was the sole stockholder of Atkore International Holdings Inc.

( “ AIH ” ), which in turn was the sole stockholder of Atkore International Inc.

On December 31, 2022, AIH merged into AII, with AII being the surviving entity.

Accordingly, Atkore is now the sole stockholder of AII.

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

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Recent Accounting Pronouncements

A summary of recently adopted accounting guidance is as follows.

Adoption dates are on the first day of the fiscal year indicated below, unless otherwise specified.

ASU Description of ASU Impact to Atkore Adoption Date

2019-12 Simplifying the accounting for income taxes (Topic 740) The ASU eliminates certain existing exceptions related to the general approach in ASC 740 relating to franchise taxes, reducing complexity in the interim period accounting for year to date loss limitations and changes in tax laws and clarifying the accounting for transactions outside of a business combination that result in a step up in the tax basis of goodwill.

The Company adopted this standard in the first quarter of 2022.

The adoption of the standard did not have a material impact on the Company ’ s consolidated financial statements.

Atkore has not adopted any accounting standards in the current fiscal year.

There are no accounting standards with adoption dates in the next fiscal year that are applicable to the Company.

REVENUE FROM CONTRACTS WITH CUSTOMERS

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These arrangements include sales discounts and allowances, volume rebates, and returned goods.

The Company records its obligations related to these items within the Customer Liabilities line on the balance sheet.

The Company records amounts billed to customers for reimbursement of shipping and handling costs within revenue.

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From time to time, the Company enters into strategic acquisitions in an effort to better service existing customers and to obtain new customers.

On November 7, 2022, Atkore International Inc., acquired the assets of Elite Polymer Solutions (“Elite”), for a purchase price of $ 89,981 .

Elite is a manufacturer of high density polyethylene (HDPE) conduit, primarily serving the telecommunications, utility, and transportation markets.

As a result of the acquisition, the Company preliminarily recognized $ 30,806 of goodwill, $ 55,260 of identifiable intangible assets, of which $ 55,000 relates to customer relationships with an estimated useful life of 7 years, and $ 3,915 of working capital and other net tangible assets.

As of December 30, 2022, the purchase price allocation has not been finalized as the Company is finalizing working capital, inventory, intangible assets, deferred tax assets and liabilities and fixed asset fair values.

The acquisition in fiscal 2023 was funded using cash-on-hand.

The Company incurred approximately $ 839 in acquisition-related expenses for this acquisition, which was recorded as a component of selling, general and administrative expenses.

Net sales and net income of the above acquisition are included in the condensed consolidated financial statement of operations for the post-acquisition period.

Due to the immaterial nature of this acquisition,

the Company did not include the pro forma results of operations for this acquisition for the current period or the previous interim period.

On August 31, 2022, Atkore International Inc., and Atkore HDPE, LLC, wholly-owned subsidiaries of the Company, acquired the outstanding stock of two separate, but related, companies doing business as Cascade Poly Pipe & Conduit (“Cascade”) and Northwest Polymers, for a total purchase price of $ 62,100 , of which $ 52,738 was paid at closing and an additional purchase price payable of $ 9,362 was accrued.

In the first quarter of fiscal 2023, the Company paid $ 3,111 of the accrued purchase price.

Cascade is a manufacturer specializing in smooth wall HDPE conduit made from recycled materials, primarily serving the telecommunications, utility and datacom markets.

Northwest Polymers is a leading recycler of PVC, HDPE and other plastics and a strategic supply partner to Cascade and other manufacturers.

The purchase price allocation has not been finalized as the Company is finalizing working capital, inventory, intangible assets, deferred tax assets and liabilities and fixed asset fair values.

On June 22, 2022, Atkore International Inc., a wholly-owned subsidiary of the Company acquired all of the outstanding stock of United Poly Systems, LLC (“United Poly”), for a purchase price of $ 227,234 .

2 unchanged sentences

On May 19, 2022, Allied Tube and Conduit Corporation, wholly-owned subsidiary of the Company acquired the assets of Talon Products, LLC (“Talon”), for a purchase price of $ 4,193 .

Included in Talon’s purchase price is a purchase price payable of $ 402 .

Talon is a manufacturer of non-metallic, injection molded cable cleats, primarily serving the power distribution markets.

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

The Company finalized the purchase price allocation of Talon in the fourth quarter of fiscal 2022.

On December 21, 2021, Atkore HDPE, LLC and Allied Tube and Conduit Corporation, wholly-owned subsidiaries of the Company, acquired the assets of Four Star Industries LLC (“Four Star”), for a purchase price of $ 23,195 .

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Excess purchase price attributed to goodwill acquired $ 65,197 $ 32,198 $ 97,395

The Company estimates $ 11.7 million of the goodwill recognized on the United Poly acquisition is deductible for tax purposes.

Goodwill recognized from the acquisitions in fiscal 2022 consists largely of the synergies and economies of scale from integrating this company with existing businesses.

The Company estimates $ 31.1 million of the goodwill recognized by the fiscal 2022 acquisitions is deductible for tax purposes, $ 11.7 million that relates to United Poly and $ 19.4 million that relates to Cascade and Northwest Polymer.

The Company estimates Goodwill recognized from the acquisitions in fiscal 2022 consists largely of the synergies and economies of scale from integrating this company with existing businesses.

The following table summarizes the fair value of intangible assets as of the acquisition date:

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Total intangible assets $ 128,840 $ 54,330

The following table presents unaudited pro forma results of operations for the Company and all companies acquired in fiscal 2022 as if those acquisitions had occurred on October 1, 2020.

The results presented below are for the three and nine months ended:

Three months ended Nine months ended

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

Pro forma net sales $ 1,096,866 $ 883,980 $ 2,992,265 $ 2,068,169

Pro forma net income 256,356 175,107 696,012 378,795

The pro forma condensed financial information is presented for illustrative purposes only and does not indicate the actual financial results of the Company if the closing of the acquisitions in the current year had been completed on October 1, 2020, nor is it indicative of the results of operations in future periods.

Included in the unaudited pro forma financial information for the three and nine months ended June 24, 2022 and June 25, 2021 were pro forma adjustments to reflect the results of operations of the acquisitions in the current year as though those acquisitions were completed as of the beginning of October 1, 2020, as well as the impact of amortizing certain acquisition accounting adjustments such as amortizable intangible assets.

The pro forma financial information neither indicates the impact of possible business model changes nor considers any potential impact of current market conditions, expense efficiencies or other factors.

Net sales and net income of the acquired companies are included in the consolidated statement of operations for the quarter and nine months ended June 24, 2022 for the post-acquisition period.

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

and separately the Company acquired all of the outstanding stock of FRE Composites Inc., collectively described as FRE Composites Group (“FRE Composites”), for a purchase price of $ 36,993 , net of cash received.

FRE Composites is a leading manufacturer of fiberglass conduit for the electrical and industrial market.

The purchase price was allocated to tangible and intangible assets acquired and liabilities assumed, based on their fair values.

On October 22, 2020, Atkore Plastics Southeast, LLC, a wholly-owned subsidiary of the Company acquired the assets of Queen City Plastics, Inc.

(“Queen City Plastics”), a leading manufacturer of PVC conduit, elbows and fittings for the electrical market.

The purchase price was allocated to tangible assets acquired and liabilities assumed based on their fair values.

The purchase price of $ 6,214 was deemed immaterial to the Company.

The purchase price for FRE Composites, which was finalized during the fourth quarter of fiscal 2021, was allocated to tangible and intangible assets acquired and liabilities assumed, based on their fair values.

The acquisitions in fiscal 2021 were funded using cash-on-hand.

The Company incurred approximately $ 646 in acquisition-related expenses for these acquisitions, which were recorded as a component of selling, general and administrative expenses.

The following table summarizes the Level 3 fair values assigned to the net assets acquired and liabilities assumed as of the acquisition date for fiscal 2021:

(in thousands) FRE Composites

Fair value of consideration transferred:

Cash consideration $ 36,993

Fair value of assets acquired and liabilities assumed:

Accounts receivable 2,163

Inventories 3,355

Intangible assets 18,300

Fixed assets 8,509

Accounts payable ( 1,186 )

Income taxes ( 4,293 )

Other ( 240 )

Net assets acquired 27,045

Excess purchase price attributed to goodwill acquired $ 9,948

The Company estimates $ 1.6 million of the goodwill recognized on the FRE acquisition is deductible for tax purposes.

Goodwill recognized from the acquisitions in fiscal 2021 consists largely of the synergies and economies of scale from integrating this company with existing businesses.

The following table summarizes the fair value of intangible assets as of the acquisition date:

FRE Composites

(in thousands) Fair Value Weighted Average Useful Life (Years)

Customer relationships $ 14,700 12

Other 3,600 6

Total intangible assets $ 18,300

Net sales and net income of both the above acquisitions are included in the condensed consolidated statement of operations for the post-acquisition periods.

Due to the immaterial nature of these acquisitions, both individually and in the aggregate, the Company did not include the full year pro forma results of operations for the acquisition year or previous years.

Net sales and net income of the acquired companies are included in the consolidated statement of operations for the post-acquisition period.

Due to the immaterial nature of the acquisitions acquired in the first quarter of fiscal 2022, the Company did not include the pro forma results of operations for these acquisitions for the current period or the previous interim period.

POSTRETIREMENT BENEFITS

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The net periodic benefit credit was as follows:

Three months ended Nine months ended

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

Three months ended

(in thousands) Note December 30, 2022 December 24, 2021

Interest cost $ 1,294 $ 739

1 unchanged sentence

Amortization of actuarial loss 167 158

Net periodic benefit credit 5 $ ( 451 ) $ ( 592 ) $ ( 1,353 ) $ ( 1,776 )

OTHER INCOME, NET

Other income, net consisted of the following:

Three months ended Nine months ended

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

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

Net periodic benefit cost (credit) 5 $ 204 $ ( 451 )

OTHER (INCOME) AND EXPENSE, NET

Other (income) and expense, net consisted of the following:

Three months ended

(in thousands) December 30, 2022 December 24, 2021

Undesignated foreign currency derivative instruments ( 14 ) ( 176 )

1 unchanged sentence

Pension-related benefits 204 ( 451 )

Gain on purchase of business — — — ( 731 )

Other income, net $ 150 $ ( 509 ) $ ( 964 ) $ ( 8,180 )

For the three months ended June 24, 2022 and June 25, 2021, the Company’s effective tax rate attributable to income before income taxes was 25.7 % and 26.0 %, respectively.

For the three months ended June 24, 2022 and June 25, 2021, the Company’s income tax expense was $ 88,041 and $ 61,654 respectively.

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%.

For the nine months ended June 24, 2022 and June 25, 2021, the Company’s effective tax rate attributable to income before income taxes was 24.4 % and 24.8 %, respectively.

For the nine months ended June 24, 2022 and June 25, 2021, the Company’s income tax expense was $ 223,630 and $ 126,922 respectively.

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

Other (income) and expense, net $ 41 $ ( 308 )

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted into law.

The IRA contains significant tax law changes, including a corporate alternative minimum tax of 15% on adjusted financial statement income, which if applicable for the Company would be effective beginning October 1, 2023, a 1% excise tax on stock repurchases after December 31, 2022, and various tax incentives which include, but are not limited to, credits related to the manufacturing of solar powered energy which will take effect January 1, 2023.

The Company is currently evaluating this legislation and determining what impact it would have to the Company’s financial statements.

For the three months ended December 30, 2022 and December 24, 2021, the Company’s effective tax rate attributable to income before income taxes was 21.9 % and 21.8 %, respectively.

For the three months ended December 30, 2022 and December 24, 2021, the Company’s income tax expense was $ 48,559 and $ 56,975 respectively.

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

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

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

During the nine months ended June 24, 2022, the balance of unrecognized tax benefits decreased by $ 1,893 primarily due to the resolution of a state tax matter.

For the nine months ended June 24, 2022, the Company made no additional provision for U.S.

During the three months ended December 30, 2022, the balance of unrecognized tax benefits increased by $ 1,671 primarily due to uncertain tax positions in various state jurisdictions.

For the three months ended December 30, 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.

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

Three months ended Nine months ended

(in thousands, except per share data) June 24, 2022 June 25, 2021 June 24, 2022 June 25, 2021

Three months ended

(in thousands, except per share data) December 30, 2022 December 24, 2021

Net income $ 173,492 $ 204,843

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Non-participating employee stock options (1)

558 684 578 742

Diluted weighted average common shares outstanding 40,613 46,575

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(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 June 24, 2022 and June 25, 2021.

Additionally, there were no anti-dilutive options outstanding during the nine months ended June 24, 2022 and June 25, 2021.

There were zero anti-dilutive options outstanding during the three months ended December 30, 2022 and December 24, 2021, respectively.

ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table presents the changes in accumulated other comprehensive loss by component for the three months ended June 24, 2022 and June 25, 2021.

(in thousands) Defined Benefit

Pension Items Currency

Adjustments Total

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

Other comprehensive loss before reclassifications — ( 6,657 ) ( 6,657 )

Amounts reclassified from accumulated other

comprehensive income, net of tax 123 — 123

Net current period other comprehensive income (loss) 123 ( 6,657 ) ( 6,534 )

Balance as of June 24, 2022 $ ( 18,945 ) $ ( 20,077 ) $ ( 39,022 )

The following table presents the changes in accumulated other comprehensive loss by component for the three months ended December 30, 2022 and December 24, 2021.

(in thousands) Defined Benefit

1 unchanged sentence

Adjustments Total

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

Balance as of September 30, 2022 $ ( 16,795 ) $ ( 33,351 ) $ ( 50,146 )

Other comprehensive income before reclassifications — 11,262 11,262

1 unchanged sentence

comprehensive income, net of tax 62 — 62

Net current period other comprehensive income 262 2,152 2,414

Balance as of June 25, 2021 $ ( 29,975 ) $ ( 3,408 ) $ ( 33,383 )

The following table presents the changes in accumulated other comprehensive loss by component for the nine months ended June 24, 2022 and June 25, 2021.

Net current period other comprehensive income (loss) 62 11,262 11,324

Balance as of December 30, 2022 $ ( 16,733 ) $ ( 22,089 ) $ ( 38,822 )

(in thousands) Defined Benefit

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

Balance as of June 24, 2022 $ ( 18,945 ) $ ( 20,077 ) $ ( 39,022 )

(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 — 8,385 8,385

Amounts reclassified from accumulated other

comprehensive income, net of tax 786 — 786

Net current period other comprehensive income 786 8,385 9,171

Balance as of June 25, 2021 $ ( 29,975 ) $ ( 3,408 ) $ ( 33,383 )

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

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 85 % and 81 % of the Company ’ s inventories were valued at the lower of LIFO cost or market at June 24, 2022 and September 30, 2021, respectively.

Interim LIFO determinations, including those at June 24, 2022, are based on management ’ s estimates of future inventory levels and costs for the remainder of the current fiscal year.

(in thousands) June 24, 2022 September 30, 2021

Approximately 80 % and 82 % of the Company ’ s inventories were valued at the lower of LIFO cost or market at December 30, 2022 and September 30, 2022, respectively.

Interim LIFO determinations, including those at December 30, 2022, are based on management ’ s estimates of future inventory levels and costs for the remainder of the current fiscal year.

(in thousands) December 30, 2022 September 30, 2022

Purchased materials and manufactured parts, net $ 152,805 $ 166,038

2 unchanged sentences

Inventories, net $ 445,780 $ 454,511

Total inventories would be $ 101,710 higher and $ 108,911 higher than reported as of June 24, 2022 and September 30, 2021, respectively, if the first-in, first-out method was used for all inventories.

As of June 24, 2022, and September 30, 2021, the excess and obsolete inventory reserve was $ 21,486 and $ 11,780 , respectively.

Total inventories would be $ 29,358 higher and $ 64,550 higher than reported as of December 30, 2022 and September 30, 2022, respectively, if the first-in, first-out method was used for all inventories.

As of December 30, 2022, and September 30, 2022, the excess and obsolete inventory reserve was $ 19,598 and $ 18,996 , respectively.

PROPERTY, PLANT AND EQUIPMENT

As of June 24, 2022, and September 30, 2021, property, plant and equipment and accumulated depreciation were as follows:

(in thousands) June 24, 2022 September 30, 2021

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

(in thousands) December 30, 2022 September 30, 2022

Land $ 26,696 $ 22,113

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Property, plant and equipment, net $ 418,550 $ 390,220

Depreciation expense for the three months ended June 24, 2022 and June 25, 2021 totaled $ 11,804 and $ 11,459 respectively.

Depreciation expense for the nine months ended June 24, 2022 and June 25, 2021 totaled $ 34,914 and $ 33,412 respectively.

Depreciation expense for the three months ended December 30, 2022 and December 24, 2021 totaled $ 13,171 and $ 11,817 respectively.

GOODWILL AND INTANGIBLE ASSETS

4 unchanged sentences

Exchange rate effects 2,996 68 3,064

Balance as of June 24, 2022 $ 228,923 $ 53,026 $ 281,949

Goodwill balances as of September 30, 2021 and June 24, 2022 include $ 3,924 and $ 43,000 of accumulated impairment losses within the Electrical and Safety & Infrastructure segments, respectively.

Balance as of December 30, 2022 $ 270,510 $ 52,704 $ 323,214

Goodwill balances as of September 30, 2022 and December 30, 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.

1 unchanged sentence

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

June 24, 2022 September 30, 2021

December 30, 2022 September 30, 2022

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

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

Amortization expense for the three months ended June 24, 2022 and June 25, 2021 was $ 8,624 and $ 8,707 , respectively.

Amortization expense for the nine months ended June 24, 2022 and June 25, 2021 was $ 25,554 and $ 25,063 , respectively.

Amortization expense for the three months ended December 30, 2022 and December 24, 2021 was $ 12,796 and $ 8,229 , respectively.

Expected amortization expense for intangible assets for the remainder of fiscal 2023 and over the next five years and thereafter is as follows:

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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 June 24, 2022 and September 30, 2021 was as follows:

(in thousands) June 24, 2022 September 30, 2021

Debt as of December 30, 2022 and September 30, 2022 was as follows:

(in thousands) December 30, 2022 September 30, 2022

Senior Secured Term Loan Facility due May 26, 2028 $ 371,452 $ 371,381

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subsidiaries of the Company (other than AII) that are guarantors of the Senior Notes.

AII ’ s availability under the ABL Credit Facility was $ 312,905 and $ 315,499 as of June 24, 2022 and September 30, 2021.

AII ’ s availability under the ABL Credit Facility was $ 312,905 as of December 30, 2022 and September 30, 2022.

FAIR VALUE MEASUREMENTS

Certain assets and liabilities are required to be recorded at fair value on a recurring basis.

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

This derivative instrument is not formally designated as a hedge by the Company and the remaining term of the instrument is two months .

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

These derivative instruments are not formally designated as a hedge by the Company.

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.

The fair value gains and losses are included in other income, net within the condensed consolidated statements of operations.

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

The total notional amounts of undesignated forward currency contracts were £ 30.6 million and £ 37.4 million as of June 24, 2022 and September 30, 2021, respectively.

The fair value gains and losses are included in other (income) and expense, net within the condensed consolidated statements of operations.

See Note 5, “Other (Income) and Expense, net” for further detail.

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

The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles.

The Company had no active forward currency contracts or other derivative instruments as of December 30, 2022 or September 30, 2022, with the last such contract having expired in the third quarter of fiscal 2022.

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

June 24, 2022 September 30, 2021

December 30, 2022 September 30, 2022

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

Cash equivalents $ 234,940 $ — $ 291,757 $ —

Forward currency contracts — 3,381 — 127

Forward currency contracts — 472 — 183

The Company ’ s remaining financial instruments consist primarily of cash, accounts receivable and accounts payable whose carrying value approximate their fair value due to their short-term nature.

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

June 24, 2022 September 30, 2021

December 30, 2022 September 30, 2022

(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 June 24, 2022, such obligations were $ 238,059 for the rest of fiscal year 2022 and $ 12,334 for fiscal year 2023 and beyond.

As of December 30, 2022, such obligations were $ 262,500 for the rest of fiscal year 2023 and $ 9,067 for fiscal year 2024 and beyond.

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

7 unchanged sentences

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

As of September 30, 2022, the Company believes that the range of reasonably possible losses for Special Products Claims and other product liabilities is between $ 1,000 and $ 8,000 .

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 $ 12,095 supporting workers ’ compensation and general liability insurance policies as of June 24, 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 $ 30,039 as of June 24, 2022.

The Company had outstanding letters of credit totaling $ 12,095 supporting workers ’ compensation and general liability insurance policies as of December 30, 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 $ 17,548 as of December 30, 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.

15 unchanged sentences

Three months ended

June 24, 2022 June 25, 2021

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

Electrical $ 819,845 $ 1,721 $ 351,466 $ 660,198 $ 965 $ 267,824

Safety & Infrastructure 241,745 164 45,669 193,460 32 22,365

Eliminations — ( 1,885 ) — ( 997 )

Consolidated operations $ 1,061,590 $ — $ 853,658 $ —

Nine months ended

June 24, 2022 June 25, 2021

December 30, 2022 December 24, 2021

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

4 unchanged sentences

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

Three months ended Nine months ended

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

Three months ended

(in thousands) December 30, 2022 December 24, 2021

Operating segment Adjusted EBITDA

5 unchanged sentences

Interest expense, net ( 9,488 ) ( 6,918 )

Transaction costs ( 1,708 ) ( 287 ) ( 3,274 ) ( 646 )

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

Stock-based compensation ( 5,270 ) ( 3,427 )

4 unchanged sentences

realized or unrealized gain (loss) on foreign currency impacts of intercompany loans and related forward currency derivatives, and restructuring charges.

The Company ’ s net sales by geography were as follows for the three months ended and nine months ended June 24, 2022 and June 25, 2021:

Three months ended Nine months ended

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

The Company ’ s net sales by geography were as follows for the three months ended December 30, 2022 and December 24, 2021:

Three months ended

(in thousands) December 30, 2022 December 24, 2021

United States $ 750,087 $ 757,398

3 unchanged sentences

Total $ 833,821 $ 840,801

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 nine months ended June 24, 2022 and June 25, 2021:

Three months ended Nine months ended

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

Three months ended

(in thousands) December 30, 2022 December 24, 2021

Metal Electrical Conduit and Fittings $ 111,158 $ 149,876

Electrical Cable & Flexible Conduit 123,726 115,695

PVC Pipe and Conduit 389,438 270,527 1,053,203 608,201

Plastic Pipe and Conduit 316,165 290,179

Other Electrical products 87,656 84,594

5 unchanged sentences

SUBSEQUENT EVENTS

Subsequent to quarter end, the Company has repurchased 1.2 million shares at a cost of $ 103.2 million as of July 29, 2022.

Subsequent to quarter end, the Company has repurchased 0.9 million shares at a cost of $ 102.6 million as of January 31, 2023.

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