Atkore Inc. 10-Q

Item 1. Financial Statements ATKORE INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three months ended Nine months ended (in thousands, except per share data) Note June 30, 2023 June 24, 2022 June 30, 2023 June 24, 2022 Net sales $ 919,117 $ 1,061,590 $ 2,648,872 $ 2,884,963 Cost of sales 568,316 607,267 1,610,836 1,659,416 Gross profit 350,801 454,323 1,038,036 1,225,547 Selling, general and administrative 103,019 95,952 291,198 263,020 Intangible asset amortization 11 15,192 8,624 42,778 25,554 Operating income 232,590 349,747 704,061 936,973 Interest expense, net 8,682 7,243 26,645 21,676 Other (income) and expense, net 5 3,689 150 7,588 ( 964 ) Income before income taxes 220,219 342,354 669,828 916,261 Income tax expense 6 18,931 88,041 120,854 223,630 Net income $ 201,288 $ 254,313 $ 548,974 $ 692,631 Net income per share Basic 7 $ 5.20 $ 5.81 $ 13.81 $ 15.30 Diluted 7 $ 5.13 $ 5.74 $ 13.62 $ 15.10 See Notes to unaudited condensed consolidated financial statements. 2 ATKORE INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three months ended Nine months ended (in thousands) Note June 30, 2023 June 24, 2022 June 30, 2023 June 24, 2022 Net income $ 201,288 $ 254,313 $ 548,974 $ 692,631 Other comprehensive (loss) income, net of tax: Change in foreign currency translation adjustment 4,404 ( 6,658 ) 18,128 ( 10,669 ) Change in unrecognized loss related to pension benefit plans 4 132 124 395 373 Total other comprehensive (loss) income 8 4,536 ( 6,534 ) 18,523 ( 10,296 ) Comprehensive income $ 205,824 $ 247,779 $ 567,497 $ 682,335 See Notes to unaudited condensed consolidated financial statements. 3 ATKORE INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except share and per share data) Note June 30, 2023 September 30, 2022 Assets Current Assets: Cash and cash equivalents $ 317,809 $ 388,751 Accounts receivable, less allowance for current and expected credit losses of $ 4,523 and $ 2,544 , respectively 566,946 528,904 Inventories, net 9 468,035 454,511 Prepaid expenses and other current assets 130,522 80,654 Total current assets 1,483,312 1,452,820 Property, plant and equipment, net 10 481,714 390,220 Intangible assets, net 11 410,529 382,706 Goodwill 11 312,741 289,330 Right-of-use assets, net 95,147 71,035 Deferred tax assets 6 9,860 9,409 Other long-term assets 3,341 3,476 Total Assets $ 2,796,645 $ 2,598,996 Liabilities and Equity Current Liabilities: Accounts payable 279,524 244,100 Income tax payable 3,864 5,521 Accrued compensation and employee benefits 38,563 61,273 Customer liabilities 96,431 99,447 Lease obligations 14,587 13,789 Other current liabilities 88,404 77,781 Total current liabilities 521,372 501,911 Long-term debt 12 762,149 760,537 Long-term lease obligations 81,029 57,975 Deferred tax liabilities 6 16,335 15,640 Other long-term liabilities 13,653 13,146 Total Liabilities 1,394,538 1,349,209 Equity: Common stock, $ 0.01 par value, 1,000,000,000 shares authorized, 37,771,723 and 41,351,350 shares issued and outstanding, respectively 379 415 Treasury stock, held at cost, 260,900 and 260,900 shares, respectively ( 2,580 ) ( 2,580 ) Additional paid-in capital 503,621 500,117 Retained earnings 932,310 801,981 Accumulated other comprehensive loss 8 ( 31,623 ) ( 50,146 ) Total Equity 1,402,107 1,249,787 Total Liabilities and Equity $ 2,796,645 $ 2,598,996 See Notes to unaudited condensed consolidated financial statements. 4 ATKORE INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine months ended (in thousands) Note June 30, 2023 June 24, 2022 Operating activities: Net income $ 548,974 $ 692,631 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 84,671 60,467 Deferred income taxes 6 ( 1,171 ) ( 12,649 ) Stock-based compensation 18,100 14,180 Amortization of right-of-use assets 14,713 9,868 Other non-cash adjustments to net income 6,684 13,268 Changes in operating assets and liabilities, net of effects from acquisitions Accounts receivable ( 33,501 ) ( 189,306 ) Inventories ( 13,611 ) ( 152,705 ) Prepaid expenses and other current assets ( 6,986 ) ( 17,236 ) Accounts payable 16,051 15,598 Accrued and other liabilities ( 11,580 ) 13,063 Income taxes ( 58,059 ) ( 76,996 ) Other, net ( 536 ) 1,592 Net cash provided by operating activities 563,748 371,776 Investing activities: Capital expenditures ( 122,535 ) ( 81,990 ) Proceeds from sale of properties and equipment 31 658 Acquisition of businesses, net of cash acquired ( 83,385 ) ( 255,361 ) Net cash used in investing activities ( 205,890 ) ( 336,693 ) Financing activities: Issuance of common stock, net of shares withheld for tax ( 14,589 ) ( 24,312 ) Repurchase of common stock ( 416,023 ) ( 396,929 ) Finance lease payments ( 990 ) — Net cash used for financing activities ( 431,603 ) ( 421,241 ) Effects of foreign exchange rate changes on cash and cash equivalents 2,803 ( 3,481 ) Decrease in cash and cash equivalents ( 70,942 ) ( 389,639 ) Cash and cash equivalents at beginning of period 388,751 576,289 Cash and cash equivalents at end of period $ 317,809 $ 186,650 Supplementary Cash Flow information Capital expenditures, not yet paid $ 10,593 $ 5,212 Operating lease right-of-use assets obtained in exchange for lease liabilities $ 33,677 $ 2,919 Acquisitions of businesses, not yet paid $ 14,125 $ 3,266 See Notes to unaudited condensed consolidated financial statements. 5 ATKORE INC. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited) Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Equity (in thousands) Shares Amount Amount Balance as of September 30, 2022 41,351 $ 415 $ ( 2,580 ) $ 500,117 $ 801,981 $ ( 50,146 ) $ 1,249,787 Net income — — — — 173,492 — 173,492 Other comprehensive loss — — — — — 11,324 11,324 Stock-based compensation — — — 5,270 — — 5,270 Issuance of common stock, net of shares withheld for tax 200 1 — ( 14,776 ) — — ( 14,775 ) Repurchase of common stock ( 1,683 ) ( 16 ) — — ( 150,040 ) — ( 150,056 ) 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 Net income — — — — 201,288 — 201,288 Other comprehensive loss — — — — — 4,536 4,536 Stock-based compensation — — — 5,966 — — 5,966 Issuance of common stock, net of shares withheld for tax 3 — — ( 155 ) — ( 155 ) Repurchase of common stock ( 1,169 ) ( 11 ) — — ( 148,312 ) — ( 148,323 ) Balance as of June 30, 2023 37,772 $ 379 $ ( 2,580 ) $ 503,621 $ 932,310 $ ( 31,623 ) $ 1,402,107 6 Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Equity (in thousands) Shares Amount Amount Balance as of September 30, 2021 45,997 $ 461 $ ( 2,580 ) $ 506,921 $ 388,660 $ ( 28,726 ) $ 864,736 Net income — — — — 204,843 — 204,843 Other comprehensive income — — — — — ( 1,333 ) ( 1,333 ) Stock-based compensation — — — 3,427 — — 3,427 Issuance of common stock, net of shares withheld for tax 355 4 — ( 24,509 ) — — ( 24,505 ) Repurchase of common stock ( 958 ) ( 10 ) — — ( 104,537 ) — ( 104,547 ) 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 Net income — — — — 254,313 — 254,313 Other comprehensive income — — — — — ( 6,534 ) ( 6,534 ) Stock-based compensation — — — 4,625 — — 4,625 Issuance of common stock 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 See Notes to unaudited condensed consolidated financial statements. 7 ATKORE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (dollars and shares in thousands, except per share data) 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation Organization and Ownership Structure — Atkore Inc. (the “ Company ” , “ Atkore ” or “ AI ” ) is a leading manufacturer of Electrical products primarily for the non-residential construction and renovation markets and Safety & Infrastructure solutions for the construction and industrial markets. Atkore was incorporated in the State of Delaware on November 4, 2010 under the name Atkore International Group, Inc. As of December 20, 2022, Atkore was the sole stockholder of Atkore International Holdings Inc. ( “ AIH ” ), which in turn was the sole stockholder of Atkore International Inc. ("AII"). On December 28, 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. This segment serves contractors, in partnership with the electrical wholesale channel. The Safety & Infrastructure segment designs and manufactures solutions including metal framing, mechanical pipe, perimeter security, and cable management for the protection and reliability of critical infrastructure. These solutions are marketed to contractors, original equipment manufacturers and end users. Basis of Presentation — The accompanying unaudited condensed consolidated financial statements of the Company included herein have been prepared in accordance with accounting principles generally accepted in the United States of America ( “ GAAP ” ). These unaudited condensed consolidated financial statements have been prepared in accordance with the Company ’ s accounting policies and on the same basis as those financial statements included in the Company ’ s latest Annual Report on Form 10-K for the year ended September 30, 2022, filed with the U.S. Securities and Exchange Commission (the “ SEC ” ) on November 18, 2022, and should be read in conjunction with those consolidated financial statements and the notes thereto. Certain information and disclosures normally included in the Company ’ s annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. The unaudited condensed consolidated financial statements include the assets and liabilities used in operating the Company ’ s business. All intercompany balances and transactions have been eliminated in consolidation. The results of companies acquired or disposed of are included in the unaudited condensed consolidated financial statements from the effective date of acquisition or up to the date of disposal. These statements include all adjustments (consisting of normal recurring adjustments) that the Company considered necessary to present a fair statement of its results of operations, financial position and cash flows. The results reported in these unaudited condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. Fiscal Periods — The Company has a fiscal year that ends on September 30. The Company ’ s fiscal quarters typically end on the last Friday in December, March and June as it follows a 4-5-4 calendar. Use of Estimates — The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclose contingent assets and liabilities at the date of the condensed consolidated financial statements and report the associated amounts of revenues and expenses. Actual results could differ materially from these estimates. 8 Recent Accounting Pronouncements 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. 2. REVENUE FROM CONTRACTS WITH CUSTOMERS The Company’s revenue arrangements primarily consist of a single performance obligation to transfer promised goods which is satisfied at a point in time when title, risks and rewards of ownership, and subsequently control have transferred to the customer. This generally occurs when the product is shipped to the customer, with an immaterial amount of transactions in which control transfers upon delivery. 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 when they meet certain criteria. When credits do not meet the transferability criteria, the benefit is recognized within the income tax expense in accordance with ASC 740, “Income Taxes.” As a result of internal analysis during the Company’s third quarter of fiscal 2023, the Company concluded that fiscal 2023 tax credits are not transferable and corrected the accounting for solar tax credits. As a result, the Company recognized the benefit of the fiscal 2023 tax credits in its income tax expense. The Company has contractual arrangements with some customers who purchase credit eligible components to transfer a portion of these tax credits to those customers. In instances where the Company has such arrangements, and the credits are not transferable, the Company may transfer the economic value of the agreed upon portion of the tax credits in a manner agreed upon between the Company and the customer. Pursuant to such contractual arrangements, if the tax credits are eligible for transfer and will be transferred to the customer, 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. When the Company does not transfer credits but instead transfers only the economic value, there is only a single performance obligation to transfer the promised goods with transfer of the economic value of the credits recognized as a reduction of revenue. 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 or the economic value is recorded in Customer Liabilities. For the nine months ended June 30, 2023, the Company has recognized a reduction of revenue of $ 15,877 for the economic value of tax credits to be transferred and a year to date benefit to income tax expense of $ 39,799 which reflected the benefit of these tax credits as part of the annual effective tax rate. As of June 30, 2023, the Company has a $ 15,877 liability for credits to be transferred or the economic value of the credits and a solar tax credit receivable of $ 20,248 . As of June 30, 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. The Company principally relies on historical experience, specific customer agreements, and anticipated future trends to estimate these amounts at the time of sale and to reduce the transaction price. 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. 9 The Company records amounts billed to customers for reimbursement of shipping and handling costs within revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as fulfillment costs and are included in cost of goods sold. Sales taxes and other usage-based taxes are excluded from revenue. The Company does not evaluate whether the selling price includes a financing interest component for contracts that are less than a year. The Company also expenses costs incurred to obtain a contract, primarily sales commissions, as all obligations will be settled in less than one year . The Company typically receives payment 30 to 60 days from the point it has satisfied the related performance obligation. See Note 16, “Segment Information” for revenue disaggregated by geography and product categories. 3. ACQUISITIONS From time to time, the Company enters into strategic acquisitions in an effort to better service existing customers and to obtain new customers. Fiscal 2023 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 tax deductible 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 June 30, 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. The Company incurred approximately $ 933 in acquisition-related expenses for fiscal 2023, 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. Fiscal 2022 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. 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. Northwest Polymers is a leading recycler of PVC, HDPE and other plastics and a strategic supply partner to Cascade and other manufacturers. The Company finalized the purchase price allocation of these companies in the third quarter of fiscal 2023. 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 $ 227,420 . United Poly is a manufacturer of high density polyethylene (“HDPE”) pressure pipe and conduit, 10 primarily serving the telecommunications, water infrastructure, renewables and energy markets. The Company finalized the purchase price allocation of United Poly in the third quarter of fiscal 2023. 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 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 . 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. On December 20, 2021, Columbia-MBF Inc., a wholly-owned subsidiary of the Company acquired all of the outstanding stock of Sasco Tubes & Roll Forming Inc. (“Sasco”), for a purchase price of $ 16,184 , of which $ 13,320 was paid at closing and additional purchase price payable of $ 2,864 was accrued. Sasco is a Canadian manufacturer of metal framing and related products serving the electrical, mechanical, construction and solar industries. The Company finalized the purchase price allocation of Sasco in the third quarter of fiscal 2022. The acquisitions in fiscal 2022 were funded using cash-on-hand. The Company incurred approximately $ 3,424 in acquisition-related expenses for these acquisitions, which were recorded as a component of selling, general and administrative expenses. The purchase price was allocated to tangible and intangible assets acquired and liabilities assumed, based on their fair values. 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 2022: (in thousands) United Poly Other Total Fair value of consideration transferred: Cash consideration $ 227,420 $ 93,044 $ 320,464 Purchase price payable — 12,628 12,628 Working Capital Adjustment — 668 668 Total consideration transferred $ 227,420 $ 106,340 $ 333,760 Fair value of assets acquired and liabilities assumed: Cash 11,514 126 11,640 Accounts receivable 23,679 9,291 32,970 Inventories 13,455 8,111 21,566 Intangible assets 128,840 54,330 183,170 Fixed assets 13,648 8,533 22,181 Accounts payable ( 11,940 ) ( 5,086 ) ( 17,026 ) Income taxes ( 15,542 ) ( 2,075 ) ( 17,617 ) Other ( 2,751 ) 245 ( 2,506 ) Net assets acquired 160,903 73,475 234,378 Excess purchase price attributed to goodwill acquired $ 66,517 $ 32,865 $ 99,382 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 11 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: United Poly Other (in thousands) Fair Value Weighted Average Useful Life (Years) Fair Value Weighted Average Useful Life (Years) Customer relationships $ 111,700 11 $ 50,020 9 Other 17,140 8 4,310 8 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, 2021. The results presented below are for the three and nine months ended: Three months ended Nine months ended (in thousands) June 24, 2022 June 24, 2022 Pro forma net sales $ 1,096,866 $ 2,992,265 Pro forma net income 256,356 696,012 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, 2021, 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 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, 2021, 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. 4. POSTRETIREMENT BENEFITS The Company provides pension benefits through a number of noncontributory and contributory defined benefit retirement plans covering eligible U.S. employees. As of September 30, 2017, all defined pension benefit plans were frozen, whereby participants no longer accrue credited service. The net periodic benefit credit was as follows: Three months ended Nine months ended (in thousands) Note June 30, 2023 June 24, 2022 June 30, 2023 June 24, 2022 Interest cost $ 1,294 $ 739 $ 3,882 $ 2,218 Expected return on plan assets ( 1,257 ) ( 1,348 ) ( 3,771 ) ( 4,044 ) Amortization of actuarial loss 167 158 501 473 Net periodic benefit cost (credit) 5 $ 204 $ ( 451 ) $ 612 $ ( 1,353 ) 12 5. OTHER (INCOME) AND EXPENSE, NET Other (income) and expense, net consisted of the following: Three months ended Nine months ended (in thousands) June 30, 2023 June 24, 2022 June 30, 2023 June 24, 2022 Undesignated foreign currency derivative instruments $ — $ ( 2,662 ) $ — $ ( 3,472 ) Loss on assets held for sale 3,919 — 7,577 — Foreign exchange loss (gain) on intercompany loans ( 316 ) 3,263 ( 482 ) 3,860 Pension-related benefits 86 ( 451 ) 493 ( 1,352 ) Other (income) and expense, net $ 3,689 $ 150 $ 7,588 $ ( 964 ) The Company recognized an impairment of $ 3,919 on assets related to the Company’s operations in Russia for the three months ended June 30, 2023 and cumulative impairment of $ 7,577 for those same operations for the nine months ended June 30, 2023. As of June 30, 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. 6. INCOME TAXES For the three months ended June 30, 2023 and June 24, 2022, the Company’s effective tax rate attributable to income before income taxes was 8.6 % and 25.7 %, respectively. For the three months ended June 30, 2023 and June 24, 2022, the Company’s income tax expense was $ 18,931 and $ 88,041 respectively. The decrease in the current period effective tax rate was driven by the benefit related to solar energy tax credits enacted as part of the IRA. For the nine months ended June 30, 2023 and June 24, 2022, the Company’s effective tax rate attributable to income before income taxes was 18.0 % and 24.4 %, respectively. For the nine months ended June 30, 2023 and June 24, 2022, the Company’s income tax expense was $ 120,854 and $ 223,630 respectively. The decrease in the current period effective tax rate was driven by the benefit related to solar energy tax credits enacted as part of the IRA. A valuation allowance has been recorded against certain net operating losses in certain foreign jurisdictions. A valuation allowance is recorded when it is determined to be more likely than not that these assets will not be fully realized in the foreseeable future. The realization of deferred tax assets is dependent upon whether the Company can generate future taxable income in the appropriate character and jurisdiction to utilize the assets. The amount of the deferred tax assets considered realizable is subject to adjustment in future periods. On August 16, 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. The Company is eligible for an $0.87 per kilogram credit on torque tubes manufactured and sold after the effective date. The Company recognized a year to date $ 39,799 benefit in its income tax expense in the third quarter of fiscal 2023 which reflected the benefit of these credits as part of the annual effective tax rate. This benefit included the value of the credit generated and other tax benefits derived from the accounting treatment described in Note 2, “Revenue from Contracts with Customers”. 13 7. EARNINGS PER SHARE The Company calculates basic and diluted earnings per common share using the two-class method. Under the two-class method, net earnings are allocated to each class of common stock and participating securities as if all of the net earnings for the period had been distributed. The Company ’ s participating securities consist of share-based payment awards that contain a non-forfeitable right to receive dividends and therefore are considered to participate in undistributed earnings with common stockholders. Basic earnings per common share excludes dilution and is calculated by dividing the net earnings allocated to common stock by the weighted-average number of common stock outstanding for the period. Diluted earnings per common share is calculated by dividing net earnings allocated to common stock by the weighted-average number of shares outstanding for the period, as adjusted for the potential dilutive effect of non-participating share-based awards. 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 30, 2023 June 24, 2022 June 30, 2023 June 24, 2022 Numerator: Net income $ 201,288 $ 254,313 $ 548,974 $ 692,631 Less: Undistributed earnings allocated to participating securities 3,086 3,883 8,457 11,002 Net income available to common shareholders $ 198,202 $ 250,430 $ 540,517 $ 681,629 Denominator: Basic weighted average common shares outstanding 38,132 43,072 39,143 44,553 Effect of dilutive securities: Non-participating employee stock options (1) 525 558 529 578 Diluted weighted average common shares outstanding 38,657 43,630 39,672 45,131 Basic earnings per share $ 5.20 $ 5.81 $ 13.81 $ 15.30 Diluted earnings per share $ 5.13 $ 5.74 $ 13.62 $ 15.10 (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 30, 2023 and June 24, 2022. Additionally, there were no anti-dilutive options outstanding during the nine months ended June 30, 2023 and June 24, 2022, respectively. 14 8. ACCUMULATED OTHER COMPREHENSIVE LOSS The following tables present the changes in accumulated other comprehensive loss by component for the three months ended June 30, 2023 and June 24, 2022. (in thousands) Defined Benefit Pension Items Currency Translation Adjustments Total Balance as of March 31, 2023 $ ( 16,532 ) $ ( 19,627 ) $ ( 36,159 ) Other comprehensive loss before reclassifications — 4,404 4,404 Amounts reclassified from accumulated other comprehensive income, net of tax 132 — 132 Net current period other comprehensive income (loss) 132 4,404 4,536 Balance as of June 30, 2023 $ ( 16,400 ) $ ( 15,223 ) $ ( 31,623 ) (in thousands) Defined Benefit Pension Items Currency Translation Adjustments Total Balance as of March 25, 2022 $ ( 19,068 ) $ ( 13,420 ) $ ( 32,488 ) Other comprehensive income before reclassifications — ( 6,657 ) ( 6,657 ) Amounts reclassified from accumulated other comprehensive income, net of tax 123 — 123 Net current period other comprehensive income 123 ( 6,657 ) ( 6,534 ) Balance as of June 24, 2022 $ ( 18,945 ) $ ( 20,077 ) $ ( 39,022 ) The following tables present the changes in accumulated other comprehensive loss by component for the nine months ended June 30, 2023 and June 24, 2022. (in thousands) Defined Benefit Pension Items Currency Translation Adjustments Total Balance as of September 30, 2022 $ ( 16,795 ) $ ( 33,351 ) $ ( 50,146 ) Other comprehensive loss before reclassifications — 18,128 18,128 Amounts reclassified from accumulated other comprehensive income, net of tax 395 — 395 Net current period other comprehensive income (loss) 395 18,128 18,523 Balance as of June 30, 2023 $ ( 16,400 ) $ ( 15,223 ) $ ( 31,623 ) 15 (in thousands) Defined Benefit Pension Items Currency Translation Adjustments Total Balance as of September 30, 2021 $ ( 19,318 ) $ ( 9,408 ) $ ( 28,726 ) Other comprehensive income before reclassifications — ( 10,669 ) ( 10,669 ) Amounts reclassified from accumulated other comprehensive income, net of tax 373 — 373 Net current period other comprehensive income 373 ( 10,669 ) ( 10,296 ) Balance as of June 24, 2022 $ ( 18,945 ) $ ( 20,077 ) $ ( 39,022 ) 9. 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 83 % and 82 % of the Company ’ s inventories were valued at the lower of LIFO cost or market at June 30, 2023 and September 30, 2022, respectively. Interim LIFO determinations, including those at June 30, 2023, are based on management ’ s estimates of future inventory levels and costs for the remainder of the current fiscal year. (in thousands) June 30, 2023 September 30, 2022 Purchased materials and manufactured parts, net $ 205,799 $ 166,038 Work in process, net 55,115 61,182 Finished goods, net 207,121 227,291 Inventories, net $ 468,035 $ 454,511 Total inventories would be $ 39,177 higher and $ 64,550 higher than reported as of June 30, 2023 and September 30, 2022, respectively, if the first-in, first-out method was used for all inventories. As of June 30, 2023, and September 30, 2022, the excess and obsolete inventory reserve was $ 27,422 and $ 18,996 , respectively. 16 10. PROPERTY, PLANT AND EQUIPMENT As of June 30, 2023, and September 30, 2022, property, plant and equipment and accumulated depreciation were as follows: (in thousands) June 30, 2023 September 30, 2022 Land $ 29,224 $ 22,113 Buildings and related improvements 181,036 172,633 Machinery and equipment 503,029 427,460 Leasehold improvements 15,843 10,512 Software 42,628 36,884 Construction in progress 132,070 99,491 Property, plant and equipment, at cost 903,830 769,093 Accumulated depreciation ( 422,115 ) ( 378,873 ) Property, plant and equipment, net $ 481,714 $ 390,220 Depreciation expense for the three months ended June 30, 2023 and June 24, 2022 totaled $ 14,913 and $ 11,804 respectively. Depreciation expense for the nine months ended June 30, 2023 and June 24, 2022 totaled $ 41,893 and $ 34,914 respectively. 11. GOODWILL AND INTANGIBLE ASSETS Changes in the carrying amount of goodwill are as follows: (in thousands) Electrical Safety & Infrastructure Total Balance as of September 30, 2022 $ 236,708 $ 52,622 $ 289,330 Goodwill acquired during year 18,604 14 18,618 Impairment ( 1,721 ) — ( 1,721 ) Other purchase accounting adjustments 1,989 — 1,989 Exchange rate effects 4,311 214 4,525 Balance as of June 30, 2023 $ 259,891 $ 52,850 $ 312,741 Goodwill balances as of June 30, 2023 included $ 5,645 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 Compan y recognized an impairment of $ 7,577 for the nine months ended June 30, 2023, which includes $ 1,721 o f 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. ” The measurement date is the first day of the fourth fiscal quarter, or more frequently, if events or circumstances indicate that it is more likely than not that the fair value of a reporting unit or the respective indefinite-lived trade name is less than the carrying value. 17 The following table provides the gross carrying value, accumulated amortization and net carrying value for each major class of intangible asset: June 30, 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 Amortizable intangible assets: Customer relationships 11 $ 598,584 $ ( 305,474 ) $ 293,110 $ 532,768 $ ( 267,940 ) $ 264,828 Other 8 43,880 ( 19,297 ) 24,583 35,681 ( 10,602 ) 25,079 Total 642,464 ( 324,771 ) 317,693 568,449 ( 278,542 ) 289,907 Indefinite-lived intangible assets: Trade names 92,836 — 92,836 92,799 — 92,799 Total $ 735,300 $ ( 324,771 ) $ 410,529 $ 661,248 $ ( 278,542 ) $ 382,706 Other intangible assets consist of definite-lived trade names, technology, non-compete agreements and backlogs. Amortization expense for the three months ended June 30, 2023 and June 24, 2022 was $ 15,192 and $ 8,624 , respectively. Amortization expense for the nine months ended June 30, 2023 and June 24, 2022 was $ 42,778 and $ 25,554 , respectively. Expected amortization expense for intangible assets for the remainder of fiscal 2023 and over the next five years and thereafter is as follows: (in thousands) Remaining 2023 $ 15,007 2024 54,636 2025 43,571 2026 40,965 2027 39,818 2028 29,494 Thereafter 94,202 Actual amounts of amortization may differ from estimated amounts due to additional intangible asset acquisitions, impairment of intangible assets and other events. 12. DEBT Debt as of June 30, 2023 and September 30, 2022 was as follows: (in thousands) June 30, 2023 September 30, 2022 Senior Secured Term Loan Facility due May 26, 2028 $ 371,595 $ 371,381 Senior Notes due June 2031 400,000 400,000 Deferred financing costs ( 9,446 ) ( 10,844 ) Long-term debt $ 762,149 $ 760,537 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 18 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 June 30, 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 %. 13. FAIR VALUE MEASUREMENTS Certain assets and liabilities are required to be recorded at fair value on a recurring basis. 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) and expense, 19 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 June 30, 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: June 30, 2023 September 30, 2022 (in thousands) Level 1 Level 2 Level 1 Level 2 Assets Cash equivalents $ 225,181 $ — $ 291,757 $ — 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 30, 2023 September 30, 2022 (in thousands) Carrying Value Fair Value Carrying Value Fair Value Senior Secured Term Loan Facility due May 26, 2028 $ 373,000 $ 374,399 $ 373,000 $ 370,203 Senior Notes due June 2031 400,000 345,604 400,000 318,912 Total Debt $ 773,000 $ 720,003 $ 773,000 $ 689,115 In determining the approximate fair value of its long-term debt, the Company used the trading values among financial institutions, and these values fall within Level 2 of the fair value hierarchy. The carrying value of the ABL Credit Facility approximates fair value due to it being a market-linked variable rate debt. 14. COMMITMENTS AND CONTINGENCIES The Company has obligations related to commitments to purchase certain goods. As of June 30, 2023, such obligations were $ 203,675 for the rest of fiscal year 2023 and $ 10,867 for fiscal year 2024 and beyond. These amounts represent open purchase orders for materials used in production. Insurable Liabilities — The Company maintains policies with various insurance companies for its workers’ compensation, product, property, general, auto, and executive liability risks. The insurance policies that the Company maintains have various retention levels and excess coverage limits. The establishment and update of liabilities for unpaid claims, including claims incurred but not reported, is based on management's estimate as a result of the assessment by the Company's claim administrator of each claim and an independent actuarial valuation of the nature and severity of total claims. The Company utilizes a third-party claims administrator to pay claims, track and evaluate actual claims experience, and ensure consistency in the data used in the actuarial valuation. 20 Legal Contingencies — Historically, a number of lawsuits have been filed against the Company and the Company has also received other claim demand letters alleging that the Company's anti-microbial coated steel sprinkler pipe, which the Company has not manufactured or sold for several years, is incompatible with chlorinated polyvinyl chloride and caused stress cracking in such pipe manufactured by third parties when installed together in the same sprinkler system, which the Company refers to collectively as the “Special Products Claims.” Tyco International Ltd. (“Tyco”), now Johnson Controls, Inc. (“JCI”), has a contractual obligation to indemnify the Company in respect of all remaining and future claims of incompatibility between the Company's antimicrobial coated steel sprinkler pipe and CPVC pipe used in the same sprinkler system. When Special Products Claims arise, JCI has defended and indemnified the Company as required. 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. These matters generally relate to disputes arising out of the use or installation of the Company ’ s products, product liability litigation, contract disputes, patent infringement accusations, employment matters, personal injury claims and similar matters. On the basis of information currently available to the Company, it does not believe that existing proceedings and claims will have a material adverse effect on its business, financial condition, results of operations or cash flows. 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. 15. GUARANTEES The Company had outstanding letters of credit totaling $ 2,594 supporting workers ’ compensation and general liability insurance policies as of June 30, 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 $ 35,812 as of June 30, 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. 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. In the normal course of business, the Company is liable for product performance and contract completion. In the opinion of management, such obligations will not have a material adverse effect on the Company ’ s business, financial condition, results of operations or cash flows. 16. SEGMENT INFORMATION The Electrical segment manufactures high quality products used in the construction of electrical power systems including conduit, cable and installation accessories. This segment serves contractors in partnership with the electrical wholesale channel. The Safety & Infrastructure segment designs and manufactures solutions including metal framing, mechanical pipe, perimeter security and cable management for the protection and reliability of critical 21 infrastructure. These solutions are marketed to contractors, original equipment manufacturers and end users. Both segments use Adjusted EBITDA as the primary measure of profit and loss. 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, loss on assets held for sale, restructuring costs and transaction costs. Intersegment transactions primarily consist of product sales at designated transfer prices on an arm ’ s-length basis. Gross profit earned and reported within the segment is eliminated in the Company ’ s consolidated results. Certain manufacturing and distribution expenses are allocated between the segments on a pro rata basis due to the shared nature of activities. Recorded amounts represent a proportional amount of the quantity of product produced for each segment. Certain assets, such as machinery and equipment and facilities, are not allocated to each segment despite serving both segments. These shared assets are reported within the Safety & Infrastructure segment. The Company allocates certain corporate operating expenses that directly benefit our operating segments, such as insurance and information technology, on a basis that reasonably approximates an estimate of the use of these services. Three months ended June 30, 2023 June 24, 2022 (in thousands) External Net Sales Intersegment Sales Adjusted EBITDA External Net Sales Intersegment Sales Adjusted EBITDA Electrical $ 705,603 $ 14 $ 266,556 $ 819,845 $ 1,721 $ 351,466 Safety & Infrastructure 213,514 92 21,493 241,745 164 45,669 Eliminations — ( 106 ) — ( 1,885 ) Consolidated operations $ 919,117 $ — $ 1,061,590 $ — Nine months ended June 30, 2023 June 24, 2022 (in thousands) External Net Sales Intersegment Sales Adjusted EBITDA External Net Sales Intersegment Sales Adjusted EBITDA Electrical $ 2,025,263 $ 24 $ 767,276 $ 2,218,535 $ 1,947 $ 961,983 Safety & Infrastructure 623,609 310 88,091 666,428 276 102,018 Eliminations — ( 334 ) — ( 2,223 ) Consolidated operations $ 2,648,872 $ — $ 2,884,963 $ — 22 Presented below is a reconciliation of operating Segment Adjusted EBITDA to Income before income taxes: Three months ended Nine months ended (in thousands) June 30, 2023 June 24, 2022 June 30, 2023 June 24, 2022 Operating segment Adjusted EBITDA Electrical $ 266,556 $ 351,466 $ 767,276 $ 961,983 Safety & Infrastructure 21,493 45,669 88,091 102,018 Total $ 288,049 $ 397,135 $ 855,367 $ 1,064,001 Unallocated expenses (a) ( 17,787 ) ( 19,605 ) ( 45,218 ) ( 47,295 ) Depreciation and amortization ( 30,105 ) ( 20,428 ) ( 84,671 ) ( 60,467 ) Interest expense, net ( 8,682 ) ( 7,243 ) ( 26,645 ) ( 21,676 ) Stock-based compensation ( 5,966 ) ( 4,625 ) ( 18,100 ) ( 14,180 ) Other (b) ( 5,289 ) ( 2,880 ) ( 10,906 ) ( 4,122 ) Income before income taxes $ 220,219 $ 342,354 $ 669,828 $ 916,261 (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, 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 nine months ended June 30, 2023 and June 24, 2022: Three months ended Nine months ended (in thousands) June 30, 2023 June 24, 2022 June 30, 2023 June 24, 2022 United States $ 824,356 $ 961,954 $ 2,374,005 $ 2,614,937 Other Americas 27,026 30,094 70,643 77,230 Europe 56,568 56,952 170,387 160,115 Asia-Pacific 11,167 12,588 33,837 32,681 Total $ 919,117 $ 1,061,590 $ 2,648,872 $ 2,884,963 23 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 the nine months ended June 30, 2023 and June 24, 2022: Three months ended Nine months ended (in thousands) June 30, 2023 June 24, 2022 June 30, 2023 June 24, 2022 Metal Electrical Conduit and Fittings $ 148,439 $ 181,196 $ 387,919 $ 484,122 Electrical Cable & Flexible Conduit 133,414 142,298 386,925 395,237 Plastic Pipe and Conduit 322,966 389,438 962,270 1,053,203 Other Electrical products 100,784 106,913 288,149 285,973 Electrical 705,603 819,845 2,025,263 2,218,535 Mechanical Pipe 98,841 115,156 276,342 339,217 Other Safety & Infrastructure products 114,672 126,589 347,267 327,211 Safety & Infrastructure 213,514 241,745 623,609 666,428 Net sales $ 919,117 $ 1,061,590 $ 2,648,872 $ 2,884,963 24