What changed in this filing

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Item 1. Financial Statements

2023-05-09 compared with 2023-02-01 · 146 added, 75 removed, 398 unchanged (36% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended

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

Three months ended Six months ended

(in thousands, except per share data) Note March 31, 2023 March 25, 2022 March 31, 2023 March 25, 2022

Net sales $ 895,934 $ 982,573 $ 1,729,755 $ 1,823,374

14 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended

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

Three months ended Six months ended

(in thousands) Note March 31, 2023 March 25, 2022 March 31, 2023 March 25, 2022

Net income $ 174,194 $ 233,477 $ 347,686 $ 438,320

6 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(in thousands, except share and per share data) Note March 31, 2023 September 30, 2022

Current Assets:

36 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended

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

Six months ended

(in thousands) Note March 31, 2023 March 25, 2022

Operating activities:

23 unchanged sentences

Repurchase of common stock ( 269,168 ) ( 261,173 )

Finance lease payments ( 660 ) —

Net cash used for financing activities ( 284,262 ) ( 285,572 )

13 unchanged sentences

Net income — — — — 173,492 — 173,492

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

Other comprehensive loss — — — — — 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 — — — — 174,194 — 174,194

Other comprehensive loss — — — — — 2,663 2,663

Stock-based compensation — — — 6,863 — — 6,863

Issuance of common stock, net of shares withheld for tax 44 — — 336 — — 336

Repurchase of common stock ( 974 ) ( 10 ) — — ( 120,293 ) — ( 120,303 )

Balance as of March 31, 2023 38,938 $ 390 $ ( 2,580 ) $ 497,810 $ 879,334 $ ( 36,159 ) $ 1,338,795

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 loss — — — — — ( 1,333 ) ( 1,333 )

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

Stock-based compensation — — — 3,427 — — 3,427

2 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

See Notes to unaudited condensed consolidated financial statements.

34 unchanged sentences

The Company primarily offers assurance-type standard warranties that do not represent separate performance obligations.

Under the Inflation Reduction Act of 2022 (“IRA”), the Company is eligible for tax credits related to the manufacturing and selling of components used in the solar energy industry.

These tax credits are transferable under the IRA and are accounted for under a government grant accounting model.

The Company has contractual arrangements with some customers who purchase these components to transfer a portion of these tax credits to those customers.

Pursuant to such contractual arrangements, the Company identifies two separate performance obligations under these contracts with the first being to transfer the promised goods and the second being to transfer the defined portion of the tax credits earned.

The Company allocates the total value of these transactions between the two performance obligations.

As a result of this allocation, the Company recognizes a reduction to revenue, similar to a rebate.

Separately, the Company recognizes the benefit of the credit generated as a reduction of cost of sales.

The solar tax credit receivable is recorded in Prepaid Expenses and Other Current Assets whereas the liability to transfer the defined portion of the tax credits is recorded in Other Current Liabilities.

For the six months ended March 31, 2023, the Company has recognized a reduction of revenue of $ 4,349 and a reduction of cost of sales of $ 6,010 .

As of March 31, 2023, the Company has a $ 6,209 liability for credits to be transferred and a solar tax credit receivable of $ 7,870 .

As of March 31, 2023, all activity related to the solar tax credits is within the Safety & Infrastructure segment.

The Company has certain arrangements that require it to estimate at the time of sale the amounts of variable consideration that should not be recorded as revenue as certain amounts are not expected to be collected from customers, as well as an estimate of the value of products to be returned.

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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 .

On November 7, 2022, Atkore HDPE, LLC, a wholly-owned subsidiary of the Company, acquired the assets of Elite Polymer Solutions (“Elite”), for a purchase price of $ 90,230 , of which $ 75,981 was paid at closing and an additional purchase price payable of $ 14,000 was accrued.

As of the end of the second quarter of fiscal 2023, an additional $ 249 working capital true up payment has been made.

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 $ 18,604 of goodwill, $ 68,480 of identifiable intangible assets, of which $ 68,200 relates to customer relationships with an estimated useful life of 8 years, and $ 3,146 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.

As of March 31, 2023, 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.

1 unchanged sentence

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.

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.

As of the end of the second 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.

9 unchanged sentences

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 .

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

Four Star is a manufacturer of high density polyethylene (HDPE) conduit, primarily

serving the telecommunications, utility, infrastructure and datacom markets.

The Company finalized the purchase price allocation of Four Star in the third quarter of fiscal 2022.

11 unchanged sentences

Purchase price payable — 12,628 12,628

Working Capital Adjustment — 668 668

Total consideration transferred $ 227,420 $ 106,340 $ 333,760

24 unchanged sentences

The net periodic benefit credit was as follows:

Three months ended

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

Three months ended Six months ended

(in thousands) Note March 31, 2023 March 25, 2022 March 31, 2023 March 25, 2022

Interest cost $ 1,294 $ 739 $ 2,588 $ 1,478

4 unchanged sentences

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

Three months ended

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

Three months ended Six months ended

(in thousands) March 31, 2023 March 25, 2022 March 31, 2023 March 25, 2022

Undesignated foreign currency derivative instruments $ — $ ( 634 ) $ — $ ( 810 )

Loss on assets held for sale 3,658 — 3,658 —

Foreign exchange loss (gain) on intercompany loans ( 4 ) 278 ( 166 ) 597

1 unchanged sentence

Other (income) and expense, net $ 3,858 $ ( 807 ) $ 3,899 $ ( 1,115 )

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.

The Company recognized an impairment of $ 3,658 on assets related to the Company’s operations in Russia.

As of March 31, 2023, the Company is finalizing plans to exit its operations in Russia and expects to sell the related business at a loss, which resulted in the impairment charge taken during the quarter.

For the three months ended March 31, 2023 and March 25, 2022, the Company’s effective tax rate attributable to income before income taxes was 23.5 % and 25.2 %, respectively.

For the three months ended March 31, 2023 and March 25, 2022, the Company’s income tax expense was $ 53,364 and $ 78,613 respectively.

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

For the six months ended March 31, 2023 and March 25, 2022, the Company’s effective tax rate attributable to income before income taxes was 22.7 % and 23.6 %, respectively.

For the six months ended March 31, 2023 and March 25, 2022, the Company’s income tax expense was $ 101,923 and $ 135,588 respectively.

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

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

2 unchanged sentences

The amount of the deferred tax assets considered realizable is subject to adjustment in future periods.

The Company recognizes the benefits of uncertain tax positions taken or expected to be taken in tax returns in the provision for income taxes only for those positions that we have determined are more likely than not to be realized upon examination.

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

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.

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 and various tax incentives which include, but are not limited to, credits related to the manufacturing of solar powered energy, both of which have taken effect as of January 1, 2023.

EARNINGS PER SHARE

5 unchanged sentences

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

Three months ended

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

Three months ended Six months ended

(in thousands, except per share data) March 31, 2023 March 25, 2022 March 31, 2023 March 25, 2022

Net income $ 174,194 $ 233,477 $ 347,686 $ 438,320

4 unchanged sentences

Non-participating employee stock options (1)

537 580 534 588

Diluted weighted average common shares outstanding 39,749 45,280 40,182 45,906

2 unchanged sentences

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

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

There were no anti-dilutive options outstanding during the three months ended March 31, 2023 and March 25, 2022.

Additionally, there were no anti-dilutive options outstanding during the six months ended March 31, 2023 and March 25, 2022, respectively.

ACCUMULATED OTHER COMPREHENSIVE LOSS

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.

The following tables present the changes in accumulated other comprehensive loss by component for the three months ended March 31, 2023 and March 25, 2022.

(in thousands) Defined Benefit

1 unchanged sentence

Adjustments Total

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

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

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

Other comprehensive loss before reclassifications — 2,462 2,462

Amounts reclassified from accumulated other

1 unchanged sentence

Net current period other comprehensive income (loss) 201 2,462 2,663

Balance as of March 31, 2023 $ ( 16,532 ) $ ( 19,627 ) $ ( 36,159 )

(in thousands) Defined Benefit

Pension Items Currency

Adjustments Total

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

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

Amounts reclassified from accumulated other

comprehensive income, net of tax 125 — 125

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

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

The following tables present the changes in accumulated other comprehensive loss by component for the six months ended March 31, 2023 and March 25, 2022.

(in thousands) Defined Benefit

6 unchanged sentences

Net current period other comprehensive income (loss) 263 13,724 13,987

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

Balance as of March 31, 2023 $ ( 16,532 ) $ ( 19,627 ) $ ( 36,159 )

(in thousands) Defined Benefit

Pension Items Currency

Adjustments Total

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

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

Amounts reclassified from accumulated other

comprehensive income, net of tax 250 — 250

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

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

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 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

Approximately 81 % and 82 % of the Company ’ s inventories were valued at the lower of LIFO cost or market at March 31, 2023 and September 30, 2022, respectively.

Interim LIFO determinations, including those at March 31, 2023, are based on management ’ s estimates of future inventory levels and costs for the remainder of the current fiscal year.

(in thousands) March 31, 2023 September 30, 2022

Purchased materials and manufactured parts, net $ 144,945 $ 166,038

2 unchanged sentences

Inventories, net $ 416,050 $ 454,511

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.

Total inventories would be $ 20,883 higher and $ 64,550 higher than reported as of March 31, 2023 and September 30, 2022, respectively, if the first-in, first-out method was used for all inventories.

As of March 31, 2023, and September 30, 2022, the excess and obsolete inventory reserve was $ 21,070 and $ 18,996 , respectively.

PROPERTY, PLANT AND EQUIPMENT

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

As of March 31, 2023, and September 30, 2022, property, plant and equipment and accumulated depreciation were as follows:

(in thousands) March 31, 2023 September 30, 2022

Land $ 26,950 $ 22,113

7 unchanged sentences

Property, plant and equipment, net $ 443,291 $ 390,220

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

Depreciation expense for the three months ended March 31, 2023 and March 25, 2022 totaled $ 13,808 and $ 11,293 respectively.

Depreciation expense for the six months ended March 31, 2023 and March 25, 2022 totaled $ 26,980 and $ 23,110 respectively.

GOODWILL AND INTANGIBLE ASSETS

3 unchanged sentences

Goodwill acquired during year 18,604 14 18,618

Impairment ( 1,771 ) — ( 1,771 )

Exchange rate effects 4,437 72 4,509

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.

Balance as of March 31, 2023 $ 257,978 $ 52,708 $ 310,686

Goodwill balances as of March 31, 2023 included $ 5,695 and $ 43,000 of accumulated impairment losses within the Electrical and Safety & Infrastructure segments, respectively.

As described in Note 5, “Other (Income) and Expense, net”, the Company is finalizing plans to exit operations in Russia and expects to sell the related business at a loss.

The Company recognized an impairment of $ 3,658 , which includes $ 1,771 of impaired goodwill that was allocated from the reporting unit on a relative fair value basis.

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:

December 30, 2022 September 30, 2022

March 31, 2023 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

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 30, 2022 and December 24, 2021 was $ 12,796 and $ 8,229 , respectively.

Amortization expense for the three months ended March 31, 2023 and March 25, 2022 was $ 14,790 and $ 8,701 , respectively.

Amortization expense for the six months ended March 31, 2023 and March 25, 2022 was $ 27,586 and $ 16,930 , respectively.

Expected amortization expense for intangible assets for the remainder of fiscal 2023 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 30, 2022 and September 30, 2022 was as follows:

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

Debt as of March 31, 2023 and September 30, 2022 was as follows:

(in thousands) March 31, 2023 September 30, 2022

Senior Secured Term Loan Facility due May 26, 2028 $ 371,524 $ 371,381

3 unchanged sentences

The asset-based credit facility (the “ ABL Credit Facility ” ) has aggregate commitments of $ 325,000 .

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 $ 312,905 as of December 30, 2022 and September 30, 2022.

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 $ 322,406 as of March 31, 2023 and $ 312,905 as of September 30, 2022.

New Senior Secured Term Loan Facility - On May 26, 2021, the Company entered into a new $ 400.0 million senior secured term loan facility (the “New Senior Secured Term Loan Facility”).

The New Senior Secured Term Loan Facility will mature on May 26, 2028 and borrowings thereunder initially bearing interest at the rate of either (x) the London Inter-Bank Offered Rate (“LIBOR”) (with a floor of 0.50 %) plus 2.00 %, or (y) an alternate base rate (with a floor of 1.50 %) plus 1.00 %.

The New Senior Secured Term Loan Facility has an annual amortization rate of 1.00 %.

On March 15, 2023, the Company entered into an amendment to the New Senior Secured Term Loan Facility to implement a forward-looking interest rate based on the Secured Overnight Financing Rate (“SOFR”) in lieu of LIBOR, consisting of an applicable margin of 2.00 % and a credit spread adjustment of (i) 0.11448 % for a one-month interest period, (ii) 0.26161 % for a three-month interest period and (iii) 0.42826 % for a six-month interest period.

ABL Credit Facility — On August 28 2020, AII amended the ABL Credit Facility (the “Amended ABL Credit Facility”).

The amendment, among other things, extended the maturity of the facility to August 28, 2023, and increased the interest rate margins applicable to loans under the facility to (i) in the case of United States dollar-denominated loans, either (x) LIBOR plus an applicable margin ranging from 1.75 % to 2.25 %, or (y) an alternate base rate plus an applicable margin ranging from 0.75 % to 1.25 %, each based on available loan commitments or (ii) in the case of Canadian dollar-denominated loans, either (x) the BA rate plus an applicable margin ranging from 1.75 % to 2.25 % or (y) a Canadian prime rate plus an applicable margin ranging from 0.75 % to 1.25 %, each based on available loan commitments.

The Amended ABL Credit Facility bears a commitment fee, payable quarterly in arrears, of 0.375 % per annum.

The Amended ABL Credit Facility also bears customary letter of credit fees.

The revisions to the ABL Credit Facility were accounted for as a debt extinguishment, resulting in immediate expensing of unamortized financing costs of $ 273 for the year ended September 30, 2020.

On May 26, 2021, the Company entered into an amendment to the Amended ABL Credit Facility.

The amendment (i) extends the maturity of the facility to the earlier of five years from entering into the amendment or 91 days prior to the maturity date of the New Senior Secured Term Loan Facility if at least $ 100.0 million of obligations remain outstanding under the New Senior Secured Term Loan Facility on such date (ii) decreases the interest rate margins applicable to loans under the facility to (a) in the case of United States dollar-denominated loans, either (x) LIBOR plus an applicable margin ranging from 1.25 % to 1.75 %, or (y) an alternate base rate plus an applicable margin ranging from 0.25 % to 0.75 % or (b) in the case of Canadian dollar-denominated loans, either (x) the bankers acceptance rate plus an applicable margin ranging from 1.25 % to 1.75 % or (y) a Canadian prime rate plus an applicable margin ranging from 0.25 % to 0.75 %.

(iii) decreases the fee payable with respect to unutilized availability under the facility from 0.375 % to 0.30 %, and depending on the remaining availability under the Amended ABL Credit Facility the rate may decrease to 0.25 % and (iv) made certain other changes agreed upon by the lenders under the Amended ABL Credit Facility.

Further, on March 24, 2023, the Company entered into an amendment to the Amended ABL Credit Facility to implement a forward-looking interest rate based on SOFR in lieu of LIBOR, consisting of an applicable margin ranging from 1.25 % to 1.75 % and a credit spread adjustment of 0.10 %.

FAIR VALUE MEASUREMENTS

7 unchanged sentences

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 Company had no active forward currency contracts or other derivative instruments as of March 31, 2023 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:

December 30, 2022 September 30, 2022

March 31, 2023 September 30, 2022

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

2 unchanged sentences

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

December 30, 2022 September 30, 2022

March 31, 2023 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 December 30, 2022, such obligations were $ 262,500 for the rest of fiscal year 2023 and $ 9,067 for fiscal year 2024 and beyond.

As of March 31, 2023, such obligations were $ 243,801 for the rest of fiscal year 2023 and $ 10,463 for fiscal year 2024 and beyond.

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

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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.

As of the date of this filing, no Special Product Claims are currently pending against the Company as JCI has resolved all claims at their sole cost and expense.

Accordingly, 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 and other product liabilities.

In addition to the matters discussed above, from time to time, the Company is subject to a number of disputes, administrative proceedings and other claims arising out of the ordinary conduct of the Company ’ s business.

2 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 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.

The Company had outstanding letters of credit totaling $ 2,594 supporting workers ’ compensation and general liability insurance policies as of March 31, 2023.

The Company also had surety bonds primarily related to performance guarantees on supply agreements and construction contracts, and payment of duties and taxes totaling $ 26,394 as of March 31, 2023.

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.

10 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, (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.

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

6 unchanged sentences

Three months ended

December 30, 2022 December 24, 2021

March 31, 2023 March 25, 2022

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

3 unchanged sentences

Consolidated operations $ 895,934 $ — $ 982,573 $ —

Six months ended

March 31, 2023 March 25, 2022

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

Electrical $ 1,319,660 $ 10 $ 500,720 $ 1,398,691 $ 2,869 $ 610,517

Safety & Infrastructure 410,095 218 66,597 424,683 112 56,349

Eliminations — ( 228 ) — ( 2,981 )

Consolidated operations $ 1,729,755 $ — $ 1,823,374 $ —

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

Three months ended

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

Three months ended Six months ended

(in thousands) March 31, 2023 March 25, 2022 March 31, 2023 March 25, 2022

Operating segment Adjusted EBITDA

9 unchanged sentences

(a) Represents unallocated selling, general and administrative activities and associated expenses including, in part, executive, legal, finance, human resources, information technology, business development and communications, as well as certain costs and earnings of employee-related benefits plans, such as stock-based compensation and a portion of self-insured medical costs.

(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, gain on purchase of business.

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 December 30, 2022 and December 24, 2021:

Three months ended

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

(b) Represents other items, such as inventory reserves and adjustments, loss on disposal of property, plant and equipment, release of indemnified uncertain tax positions, gain on purchase of business.

loss on assets held for sale, 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 the six months ended March 31, 2023 and March 25, 2022:

Three months ended Six months ended

(in thousands) March 31, 2023 March 25, 2022 March 31, 2023 March 25, 2022

United States $ 799,562 $ 895,585 $ 1,549,649 $ 1,652,983

3 unchanged sentences

Total $ 895,934 $ 982,573 $ 1,729,755 $ 1,823,374

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 30, 2022 and December 24, 2021:

Three months ended

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

Three months ended Six months ended

(in thousands) March 31, 2023 March 25, 2022 March 31, 2023 March 25, 2022

Metal Electrical Conduit and Fittings $ 128,322 $ 153,049 $ 239,480 $ 302,925

8 unchanged sentences

SUBSEQUENT EVENTS

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

Subsequent to quarter end, the Company has repurchased 0.8 million shares at a cost of $ 102.5 million as of May 9, 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