Atkore Inc. 10-Q

Item 1. Financial Statements ATKORE INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three months ended (in thousands, except per share data) Note December 27, 2024 December 29, 2023 Net sales $ 661,597 $ 798,481 Cost of sales 490,509 507,941 Gross profit 171,088 290,540 Selling, general and administrative 91,451 100,615 Intangible asset amortization 11 11,699 14,467 Operating income 67,938 175,458 Interest expense, net 8,209 7,793 Other expense, net 5 1,133 12 Income before income taxes 58,596 167,653 Income tax expense 6 12,260 29,272 Net income $ 46,336 $ 138,381 Net income per share Basic 7 $ 1.32 $ 3.66 Diluted 7 $ 1.31 $ 3.61 See Notes to unaudited condensed consolidated financial statements. 2 ATKORE INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three months ended (in thousands) Note December 27, 2024 December 29, 2023 Net income $ 46,336 $ 138,381 Other comprehensive income, net of tax: Change in foreign currency translation adjustment ( 17,532 ) 9,727 Change in unrecognized loss related to pension benefit plans 4 42 53 Total other comprehensive income 8 ( 17,490 ) 9,780 Comprehensive income $ 28,846 $ 148,161 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 December 27, 2024 September 30, 2024 Assets Current Assets: Cash and cash equivalents $ 310,444 $ 351,385 Accounts receivable, less allowance for current and expected credit losses of $ 5,584 and $ 6,322 , respectively 473,096 489,926 Inventories, net 9 526,261 524,695 Prepaid expenses and other current assets 173,749 158,382 Total current assets 1,483,550 1,524,388 Property, plant and equipment, net 10 655,283 652,093 Intangible assets, net 11 326,944 340,431 Goodwill 11 310,969 314,000 Right-of-use assets, net 175,259 180,656 Deferred tax assets 6 502 554 Other long-term assets 9,238 9,281 Total Assets $ 2,961,745 $ 3,021,403 Liabilities and Equity Current Liabilities: Accounts payable 241,093 262,201 Income tax payable 1,232 2,000 Accrued compensation and employee benefits 30,540 44,723 Customer liabilities 133,265 108,782 Lease obligations 23,342 22,038 Other current liabilities 59,848 71,122 Total current liabilities 489,320 510,866 Long-term debt 12 765,375 764,838 Long-term lease obligations 158,474 164,328 Deferred tax liabilities 6 25,600 26,574 Other long-term liabilities 15,628 14,897 Total Liabilities 1,454,397 1,481,503 Equity: Common stock, $ 0.01 par value, 1,000,000,000 shares authorized, 34,398,716 and 34,859,033 shares issued and outstanding, respectively 345 350 Additional paid-in capital 509,487 509,254 Retained earnings 1,034,100 1,049,390 Accumulated other comprehensive loss 8 ( 36,584 ) ( 19,094 ) Total Equity 1,507,348 1,539,900 Total Liabilities and Equity $ 2,961,745 $ 3,021,403 See Notes to unaudited condensed consolidated financial statements. 4 ATKORE INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three months ended (in thousands) Note December 27, 2024 December 29, 2023 Operating activities: Net income $ 46,336 $ 138,381 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 29,333 29,020 Deferred income taxes 6 ( 73 ) ( 1,668 ) Stock-based compensation 6,097 4,757 Amortization of right-of-use assets 8,690 6,140 Other non-cash adjustments to net income 173 2,074 Changes in operating assets and liabilities, net of effects from acquisitions Accounts receivable 11,733 43,837 Inventories ( 3,072 ) 2,015 Prepaid expenses and other current assets ( 10,061 ) ( 9,140 ) Accounts payable ( 6,963 ) ( 42,014 ) Accrued and other liabilities ( 7,294 ) ( 15,946 ) Income taxes ( 6,085 ) ( 260 ) Other, net 5,560 910 Net cash provided by operating activities 74,374 158,106 Investing activities: Capital expenditures ( 41,295 ) ( 44,331 ) Acquisition of businesses, net of cash acquired 3 — ( 5,973 ) Other, net 158 — Net cash used in investing activities ( 41,137 ) ( 50,304 ) Financing activities: Issuance of common stock, net of shares withheld for tax ( 5,864 ) ( 21,299 ) Repurchase of common stock ( 50,011 ) ( 96,428 ) Finance lease payments ( 672 ) ( 427 ) Dividends paid to shareholders ( 11,121 ) — Net cash used for financing activities ( 67,668 ) ( 118,154 ) Effects of foreign exchange rate changes on cash and cash equivalents ( 6,510 ) 3,160 Decrease in cash and cash equivalents ( 40,941 ) ( 7,192 ) Cash and cash equivalents at beginning of period 351,385 388,114 Cash and cash equivalents at end of period $ 310,444 $ 380,922 Supplementary Cash Flow information Capital expenditures, not yet paid $ 2,191 $ 5,030 Operating lease right-of-use assets obtained in exchange for lease liabilities $ 1,791 $ 24,752 See Notes to unaudited condensed consolidated financial statements. 5 ATKORE INC. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Equity (in thousands) Shares Amount Balance as of September 30, 2024 34,858 $ 350 $ 509,254 $ 1,049,390 $ ( 19,094 ) $ 1,539,900 Net income — — — 46,336 — 46,336 Other comprehensive Income — — — — ( 17,490 ) ( 17,490 ) Stock-based compensation — — 6,097 — — 6,097 Issuance of common stock, net of shares withheld for tax 99 1 ( 5,864 ) — — ( 5,863 ) Repurchase of common stock ( 559 ) ( 6 ) — ( 50,506 ) — ( 50,512 ) Dividends declared — — — ( 11,120 ) — ( 11,120 ) Balance as of December 27, 2024 34,398 $ 345 $ 509,487 $ 1,034,100 $ ( 36,584 ) $ 1,507,348 Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Equity (in thousands) Shares Amount Balance as of September 30, 2023 37,317 $ 375 $ 506,783 $ 994,901 $ ( 33,940 ) $ 1,468,119 Net income — — — 138,381 — 138,381 Other comprehensive income — — — — 9,780 9,780 Stock-based compensation — — 4,757 — — 4,757 Issuance of common stock, net of shares withheld for tax 309 3 ( 21,302 ) — — ( 21,299 ) Repurchase of common stock ( 721 ) ( 7 ) — ( 97,385 ) — ( 97,392 ) Balance as of December 29, 2023 36,905 $ 370 $ 490,238 $ 1,035,897 $ ( 24,160 ) $ 1,502,345 See Notes to unaudited condensed consolidated financial statements. 6 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, 2024, filed with the U.S. Securities and Exchange Commission (the “ SEC ” ) on November 21, 2024, 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. 7 Recent Accounting Pronouncements A summary of recently adopted accounting guidance is as follows. Adoption dates are on the first day of the fiscal year indicated below, unless otherwise specified. ASU Description of ASU Impact to Atkore Adoption Date 2023-07 Segment Reporting (Topic 280); Improvements to Reportable Segment Disclosures The ASU requires companies to provide additional segment disclosures including disclosing title and position of the chief operating decision maker (“CODM”), disclosure of significant segment expenses provided to and reviewed by the CODM, and that public entities provide all annual disclosures about a reportable segment’s profit or loss and assets required by Topic 280 in interim periods. The Company will adopt the standard in fiscal 2025 and include the disclosures required by the ASU within the Segment Footnote of the annual report and quarterly reports beginning in fiscal 2026. 2025 2023-09 Income Taxes (Topic 740); Improvements to Income Tax Disclosures The ASU requires companies to provide additional tax disclosures including specific categories in the rate reconciliations and reconciling items that meet a quantitative threshold. Additional disclosures are also required for income tax paid and the disaggregation of domestic and foreign income tax expense. The Company will adopt the standard in fiscal 2026 and include the disclosures required by the ASU within the Income Tax Footnote of the annual report. 2026 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) The ASU requires companies to disclose, in the notes to the financial statements, specified information about certain costs and expenses. The amendments in this update do not change or remove current expense disclosure requirements presented on the face of the income statement. However the amendments require the disaggregation on certain expense captions into specified categories in the notes to financial statements and inclusion of certain current disclosures in the same tabular format as the other disaggregation requirements in the amendments. The Company will adopt the standard in fiscal 2027 and include the disclosures required by the ASU within the annual report and quarterly reports beginning in fiscal 2027. 2027 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 income tax expense in accordance with ASC 740, “Income Taxes.” Beginning in fiscal 2024, the Company has concluded that the credits generated are transferable. As such, the benefit of the solar energy tax credits is recognized as a reduction of cost of sales. 8 The Company has contractual arrangements with certain customers to transfer a portion of the tax credits or to otherwise provide a rebate based on an agreed-upon value of the tax credits generated. Pursuant to such contractual arrangements, if the tax credits will be transferred to the customer, the Company identifies two separate performance obligations: (1) transfer the promised goods; and (2) transfer of 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. For arrangements with no transfer of tax credits there is only a single performance obligation to transfer the promised goods and a rebate, which is recognized as a reduction of revenue, is granted based on the agreed-upon value of the tax credits generated. The solar energy tax credit receivable is recorded in Prepaid Expenses and Other Current Assets and the liability to transfer the defined portion of the tax credits or the economic value is recorded in Customer Liabilities. For the three months ended December 27, 2024, the Company has recognized a reduction of revenue of $ 12,345 for the economic value of tax credits to be transferred and a benefit to cost of sales of $ 14,100 . As of December 27, 2024, the Company has a liability of $ 13,670 for credits to be transferred or the value thereof. As of December 27, 2024, all activity related to the solar energy 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. 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. During the three months ended December 29, 2023, the Company paid out $ 5,973 of accrued purchase price primarily related to the fiscal 2022 acquisition of Cascade Poly Pipe & Conduit and Northwest Polymers. No acquisition activity occurred during the three months ended December 27, 2024. 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: 9 Three months ended (in thousands) Note December 27, 2024 December 29, 2023 Interest cost $ 1,139 $ 1,316 Expected return on plan assets ( 1,081 ) ( 841 ) Amortization of actuarial loss 52 67 Net periodic benefit cost 5 $ 110 $ 542 5. OTHER EXPENSE, NET Other expense, net consisted of the following: Three months ended (in thousands) December 27, 2024 December 29, 2023 Loss (Gain) on assets held for sale $ 68 $ ( 64 ) Foreign exchange loss (gain) on intercompany loans 1,021 ( 198 ) Pension-related benefits 44 274 Other expense, net $ 1,133 $ 12 In fiscal 2023, the Company initiated plans to exit operations in Russia and expects to sell the related business at a loss. Accordingly, the Company recognized an impairment of the related assets in fiscal 2023 and continues to recognize any incremental losses on those assets. 6. INCOME TAXES In December 2021, the Organization for Economic Cooperation and Development (“OECD”) published a proposal for the establishment of a global minimum tax rate of 15% (“Pillar Two”). The OECD has since issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar Two global minimum tax. A number of countries have proposed or enacted legislation to implement core elements of the Pillar Two proposal effective for tax years beginning on or after January 1, 2024. The Company does not expect the changes to have a material impact on the income tax provision for fiscal year 2025. The Company continues to assess the potential impact of Pillar Two and monitor developments in legislation, regulation, and interpretive guidance in this area. For the three months ended December 27, 2024 and December 29, 2023, the Company’s effective tax rate attributable to income before income taxes was 20.9 % and 17.5 %, respectively. For the three months ended December 27, 2024 and December 29, 2023, the Company’s income tax expense was $ 12,260 and $ 29,272 respectively. The increase in the current period effective tax rate was driven 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. 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. 10 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 (in thousands, except per share data) December 27, 2024 December 29, 2023 Numerator: Net income $ 46,336 $ 138,381 Less: Undistributed earnings allocated to participating securities 557 2,072 Net income available to common shareholders $ 45,779 $ 136,309 Denominator: Basic weighted average common shares outstanding 34,794 37,242 Effect of dilutive securities: Non-participating employee stock options (1) 246 503 Diluted weighted average common shares outstanding 35,040 37,745 Basic earnings per share $ 1.32 $ 3.66 Diluted earnings per share $ 1.31 $ 3.61 (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 December 27, 2024 and December 29, 2023. 11 8. ACCUMULATED OTHER COMPREHENSIVE LOSS The following table presents the changes in accumulated other comprehensive loss by component for the three months ended December 27, 2024 and December 29, 2023. (in thousands) Defined Benefit Pension Items Currency Translation Adjustments Total Balance as of September 30, 2024 $ ( 10,408 ) $ ( 8,686 ) $ ( 19,094 ) Other comprehensive income before reclassifications — ( 17,532 ) ( 17,532 ) Amounts reclassified from accumulated other comprehensive income, net of tax 42 — 42 Net current period other comprehensive income 42 ( 17,532 ) ( 17,490 ) Balance as of December 27, 2024 $ ( 10,366 ) $ ( 26,218 ) $ ( 36,584 ) (in thousands) Defined Benefit Pension Items Currency Translation Adjustments Total Balance as of September 30, 2023 $ ( 10,801 ) $ ( 23,139 ) $ ( 33,940 ) Other comprehensive income before reclassifications — 9,727 9,727 Amounts reclassified from accumulated other comprehensive income, net of tax 53 — 53 Net current period other comprehensive income 53 9,727 9,780 Balance as of December 29, 2023 $ ( 10,748 ) $ ( 13,412 ) $ ( 24,160 ) 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 81 % of the Company ’ s inventories were valued at the lower of LIFO cost or market at each of December 27, 2024 and September 30, 2024. Interim LIFO determinations, including those at December 27, 2024, are based on management ’ s estimates of future inventory levels and costs for the remainder of the current fiscal year. (in thousands) December 27, 2024 September 30, 2024 Purchased materials and manufactured parts, net $ 151,438 $ 153,290 Work in process, net 64,810 74,158 Finished goods, net 310,013 297,247 Inventories, net $ 526,261 $ 524,695 Total inventories would be $ 21,017 lower and $ 14,425 lower than reported as of December 27, 2024 and September 30, 2024, respectively, if the first-in, first-out method was used for all inventories. As of December 27, 2024, and September 30, 2024, the excess and obsolete inventory reserve was $ 26,773 and $ 29,176 , respectively. 12 10. PROPERTY, PLANT AND EQUIPMENT As of December 27, 2024, and September 30, 2024, property, plant and equipment and accumulated depreciation were as follows: (in thousands) December 27, 2024 September 30, 2024 Land $ 28,990 $ 29,401 Buildings and related improvements 192,044 192,569 Machinery and equipment 604,032 596,748 Leasehold improvements 22,683 22,814 Software 60,383 57,363 Construction in progress 254,821 248,128 Property, plant and equipment, at cost 1,162,953 1,147,023 Accumulated depreciation ( 507,670 ) ( 494,930 ) Property, plant and equipment, net $ 655,283 $ 652,093 Depreciation expense for the three months ended December 27, 2024 and December 29, 2023 totaled $ 17,634 and $ 14,553 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, 2024 $ 261,284 $ 52,716 $ 314,000 Exchange rate effects ( 2,625 ) ( 406 ) ( 3,031 ) Balance as of December 27, 2024 $ 258,659 $ 52,310 $ 310,969 Goodwill balances as of December 27, 2024 included $ 5,645 and $ 43,000 of accumulated impairment losses within the Electrical and Safety & Infrastructure segments, respectively. The Company assesses the recoverability of goodwill and indefinite-lived trade names on an annual basis in accordance with ASC 350, “ Intangibles - Goodwill and Other. ” The measurement date is the first day of the fourth fiscal quarter, or more frequently, if events or circumstances indicate that it is more likely than not that the fair value of a reporting unit or the respective indefinite-lived trade name is less than the carrying value. 13 The following table provides the gross carrying value, accumulated amortization and net carrying value for each major class of intangible asset: December 27, 2024 September 30, 2024 (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 $ 596,405 $ ( 379,831 ) $ 216,574 $ 600,317 $ ( 371,600 ) $ 228,717 Other 8 43,479 ( 25,851 ) 17,628 43,968 ( 25,067 ) 18,901 Total 639,884 ( 405,682 ) 234,202 644,285 ( 396,667 ) 247,618 Indefinite-lived intangible assets: Trade names 92,742 — 92,742 92,813 — 92,813 Total $ 732,626 $ ( 405,682 ) $ 326,944 $ 737,098 $ ( 396,667 ) $ 340,431 Other intangible assets consist of definite-lived trade names, technology, non-compete agreements and backlogs. Included in the table above are the effects of changes in exchange rates which were not material for the three months ended December 27, 2024. Amortization expense for the three months ended December 27, 2024 and December 29, 2023 was $ 11,699 and $ 14,467 , respectively. Expected amortization expense for intangible assets for the remainder of fiscal 2025 and over the next five years and thereafter is as follows: (in thousands) Remaining 2025 $ 30,849 2026 40,743 2027 39,613 2028 29,336 2029 28,183 2030 24,683 Thereafter 40,795 Actual amounts of amortization may differ from estimated amounts due to additional intangible asset acquisitions, impairment of intangible assets and other events. 14 12. DEBT Debt as of December 27, 2024 and September 30, 2024 was as follows: (in thousands) December 27, 2024 September 30, 2024 ABL Credit Facility $ — $ — Senior Secured Term Loan Facility due May 26, 2028 372,023 371,952 Senior Notes due June 2031 400,000 400,000 Deferred financing costs ( 6,648 ) ( 7,114 ) Long-term debt $ 765,375 $ 764,838 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 (as defined below). AII ’ s availability under the ABL Credit Facility was $ 325,000 as of each of December 27, 2024 and September 30, 2024. The ABL Credit Facility will mature on the earlier of five years from May 26, 2021 or 91 days prior to the maturity date of the New Senior Secured Term Loan Facility if at least $ 100 million of obligations remain outstanding under the New Senior Secured Term Loan Facility on such date. The ABL Credit Facility uses a forward-looking interest rate based on the Secured Overnight Financing Rate (“SOFR”) consisting of an applicable margin ranging from 1.25 % to 1.75 % and a credit spread adjustment of 0.10 %. The New Senior Secured Term Loan Facility will mature on May 26, 2028 and borrowings thereunder bearing interest at the rate of forward-looking interest rate based on the “SOFR”, 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. Senior Notes - On May 26, 2021, the Company completed the issuance and sale of the $ 400.0 million aggregate principal amount of 4.25 % Senior Notes due 2031 (the “Senior Notes”) in a private offering. The Senior Notes were sold only to qualified institutional buyers in compliance with Rule 144A of the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons outside of the United States in compliance with Regulation S of the Securities Act. 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 expense, net within the condensed consolidated statements of operations. See Note 5, “Other Expense, net” for further detail. Cash flows associated with derivative financial instruments are recognized in the operating section of the condensed consolidated statements of cash flows. The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles. The Company had no active forward currency contracts or other derivative instruments as of December 27, 2024 or September 30, 2024. 15 The following table presents the Company ’ s assets and liabilities measured at fair value: December 27, 2024 September 30, 2024 (in thousands) Level 1 Level 2 Level 1 Level 2 Assets Cash equivalents $ 235,212 $ — $ 265,077 $ — 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: December 27, 2024 September 30, 2024 (in thousands) Carrying Value Fair Value Carrying Value Fair Value Senior Secured Term Loan Facility due May 26, 2028 $ 373,000 $ 375,798 $ 373,000 $ 373,000 Senior Notes due June 2031 400,000 352,484 400,000 364,456 Total Debt $ 773,000 $ 728,282 $ 773,000 $ 737,456 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 December 27, 2024, such obligations were $ 225,099 for the rest of fiscal year 2025 and $ 16,000 for fiscal year 2026 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. 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. 16 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 the fourth quarter of fiscal 2024, the Company has been named a defendant in several putative class action lawsuits, consolidated under the caption In re: PVC Pipe Antitrust Litigation (N.D. Ill. 24-cv-07639), seeking injunctive and monetary relief on behalf of both direct and indirect purchasers of PVC water pipe and PVC conduit. The suits generally allege anticompetitive conduct related the price of PVC pipes sold in the United States between approximately 2021 and the present. Specifically, the complaints allege that the defendant PVC pipe manufacturers improperly shared otherwise confidential information through their contribution of information to, and readership of, a weekly report called “PVC & Pipe Weekly” published by defendant Oil Price Information Service, LLC (“OPIS”), as well as through direct communications with each other. The complaints claim that this conspiracy violated Section 1 of the Sherman Act and certain state laws. All cases are pending in federal court for the Northern District of Illinois. The Company believes there are defenses, both factual and legal, to the allegations in these various proceedings and the Company plans to vigorously defend itself. As these proceedings are in the early stages, it is not possible for the Company to predict any outcome or estimate the amount of loss, if any, which could be associated with any adverse decision. While the Company does not believe that any of these proceedings will have a material adverse effect on its financial condition, the Company cannot give assurance that the proceedings will not have a material effect on its results of operations. 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 no outstanding letters of credit as of December 27, 2024. The Company also had surety bonds primarily related to performance guarantees on supply agreements and construction contracts, and payment of duties and taxes totaling $ 43,652 as of December 27, 2024. 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. 17 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 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 December 27, 2024 December 29, 2023 (in thousands) External Net Sales Intersegment Sales Adjusted EBITDA External Net Sales Intersegment Sales Adjusted EBITDA Electrical $ 465,355 $ — $ 92,387 $ 593,660 $ 1 $ 204,360 Safety & Infrastructure 196,242 482 15,579 204,821 305 19,512 Eliminations — ( 482 ) — ( 306 ) Consolidated operations $ 661,597 $ — $ 798,481 $ — Presented below is a reconciliation of operating Segment Adjusted EBITDA to Income before income taxes: 18 Three months ended (in thousands) December 27, 2024 December 29, 2023 Operating segment Adjusted EBITDA Electrical $ 92,387 $ 204,360 Safety & Infrastructure 15,579 19,512 Total 107,966 223,872 Unallocated expenses (a) ( 8,816 ) ( 10,349 ) Depreciation and amortization ( 29,333 ) ( 29,020 ) Interest expense, net ( 8,209 ) ( 7,793 ) Stock-based compensation ( 6,097 ) ( 4,757 ) Other (b) 3,085 ( 4,300 ) Income before income taxes $ 58,596 $ 167,653 (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. (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 (includes loss on assets held for sale in Russia. See Note 11, “Goodwill and Intangible Assets” in the form 10-Q filed November 21, 2024 for additional information), realized or unrealized gain (loss) on foreign currency impacts of intercompany loans and related forward currency derivatives, transaction and restructuring costs. The Company ’ s net sales by geography were as follows for the three months ended December 27, 2024 and December 29, 2023: Three months ended (in thousands) December 27, 2024 December 29, 2023 United States $ 573,360 $ 708,457 Other Americas 19,745 21,209 Europe 57,928 57,408 Asia-Pacific 10,564 11,407 Total $ 661,597 $ 798,481 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 27, 2024 and December 29, 2023: 19 Three months ended (in thousands) December 27, 2024 December 29, 2023 Metal Electrical Conduit and Fittings $ 102,205 $ 139,240 Electrical Cable & Flexible Conduit 109,467 115,693 Plastic Pipe and Conduit 162,561 243,840 Other Electrical products (a) 91,122 94,887 Electrical 465,355 593,660 Mechanical Pipe 66,259 84,498 Other Safety & Infrastructure products (b) 129,983 120,323 Safety & Infrastructure 196,242 204,821 Net sales $ 661,597 $ 798,481 (a) Other Electrical products includes International Cable Management, Fiberglass Conduit and Corrosion Resistant Conduit (b) Other S&I products includes Metal Framing and Fittings, Construction Services, Perimeter Security and Cable Management 17. SUBSEQUENT EVENTS On January 30, 2025, Atkore’s Board of Directors declared a quarterly cash dividend of $ 0.32 per share of common stock payable on February 28, 2025, to stockholders of record on February 18, 2025. 20