Atkore Inc

NYSE:ATKR

Earnings Call Transcript 2018-Q2

[Operator]

Greetings, and welcome to the Atkore International Second Quarter 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Keith Whisenand, Vice President, Investor Relations. Please go ahead.

[Keith Whisenand, VP, IR]

Thank you, and good morning, everyone. With me today are John Williamson, President and CEO; Jim Mallak, Chief Financial Officer; and Bill Waltz, our new Chief Operating Officer. As they have done in prior quarters, John and Jim will discuss our second quarter results and John and Bill will address the leadership transition in their summary comments.

I would like to remind everyone that during this call we may make projections or forward-looking statements regarding future events or future financial performance of the company. Such statements involve risks and uncertainties such that actual results may differ materially. Please refer to our 8-K and today's press release, which identify important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Finally, when we refer to the information relating to a quarter or year during this call, we are referring to the corresponding fiscal period. Any reference to a year is a full fiscal year, which runs October through September.

With that, I'll turn it over to John.

[John Williamson, President & CEO]

Thanks, Keith. Good morning, everyone. We're proud to report Atkore's strong performance in the second quarter. We over delivered our guidance and delivered net sales of $445 million, adjusted EBITDA of $65 million and adjusted earnings per share of $0.63, up 19%, 16% and 58% versus last year, respectively. In addition, we drove year-over-year 4% organic volume growth due in part to continued traction of key initiatives.

During the quarter, we passed through $24 million of $25 million from commodity and freight inflation to our customers. We expect total inflation dollars for 2018 will be in the same range as we saw in 2017 for our blend of input cost, and we're on track to pass through 100% of the expected cost increases this year. Jim will walk you through the financial results in more detail. But first, I want to share a few key highlights that contributed to the quarter's solid performance. First, the electrical raceway segment delivered double-digit increases in net sales and adjusted EBITDA, primarily due to our acquisitions completed in the last 12 months. As well, net sales were favorably impacted by the successful pass-through of higher freight and raw material costs to the market. Second, the Mechanical Products & Solutions segment also delivered an increase in net sales from 17% higher volumes. Additionally, adjusted EBITDA increased 8% versus last year and more than 50% versus last quarter.

Third, our M&A initiatives continue to favorably impact our results. Acquisitions completed over the last year have contributed toward positive EBITDA and accretive margins as well as have driven synergies across the organization. Acquisitions and portfolio enhancements have been and will continue to be a big part of that -- Atkore value creation story. Additionally, the recent divestiture of Flexhead contributed more than $42 million in cash. We think this business is in good hands, its divestiture will enable more focus on our core businesses and the proceeds can be used to drive more value. Lastly, as previously announced, Atkore completed the stock repurchase transaction and subsequent retirement of just over 17 million shares from Clayton, Dubilier & Rice, our largest shareholder. The financing was accomplished with very favorable rates and terms and with no change to our credit ratings. Overall, we outpaced the market in volume and organic revenue growth.

Net sales, adjusted EBITDA and EPS are up double digits year-over-year and exceeded our guidance for the quarter. We delivered strong operating cash flow, more than double our prior year-to-date performance. We continued to successfully integrate our acquisitions and we deployed capital to repurchase shares in an efficient and accretive manner. We had another strong quarter and we have continued momentum going into the second half.

With that, I'll turn the call over to Jim, who will walk us through our financials in more detail and provide additional insights into the quarter.

[James Mallak, CFO]

Thanks, John, and good morning to everyone. Moving to our consolidated second quarter results on Slides 3 and 4. Net sales were $445 million, up 10% organically after normalizing for acquisitions and foreign exchange. The impact of increasing average selling prices from passing through material and freight cost increases and mix favorably impacted net sales by 6% year-over-year.

Net volume, excluding acquisitions, was up 4%, reflecting the strengthening industrial environment for MP&S and our organic growth initiatives. Volume for MP&S was up 17% and delivered the second quarter in a row of double-digit volume growth. As we expected, Electrical Raceway volume moderated in the second quarter and is up 4% year-to-date. Acquisitions added 9% to the top line. Looking at the impacts of our key material costs on our P&L in the quarter, steel was up 8% versus second quarter in 2017, and up 3% sequentially. Copper was up 15% versus the second quarter of 2017 and up 2% sequentially. And PVC resin was up 7% versus the second quarter of 2017 and down slightly sequentially. During the quarter, we incurred material input cost increases of just under $19 million year-over-year, and incremental freight and other cost inflation of approximately $6 million. We successfully passed through $24 million of these increases. We've broken out these items on the adjusted EBITDA bridge on Slide 4.

As we have mentioned previously, when we pass through these costs through to our customers in price, net sales and cost of goods sold increase in equal amounts, unfavorably impacting the resulting margin percentages. Excluding the mathematical impact just mentioned, adjusted EBITDA margin was up 50 basis points year-over-year. Gross profit was $109 million for the second quarter, up 25% or $22 million compared to the same period in 2017, driven primarily by volume and productivity savings and manufacturing. Gross profit was also favorably impacted in the quarter versus 2017 by the noncash lower-of-cost-or-market adjustment to inventory of almost $3 million. Adjusted EBITDA, which we believe is a better measure of the probability of our ongoing business, was $65 million and up $9 million or 16% versus last year. Our acquisitions completed within the last 12 months account for $7 million of the increase to adjusted EBITDA, and organic volume and productivity added $6 million. These increases were partially offset by our investments in the business and variable compensation differences.

Our net income on a GAAP basis was $43 million, up $24 million versus the second quarter of 2017. For consistency with our peers, we are now reporting adjusted net income and adjusted EPS with intangible amortization added back to give a better view on operational performance. With this change, and restating the prior year, adjusted EPS was $0.63, up 58% from the second quarter of 2017. In those numbers, the tax-affected impact of adding back intangible, amortization added $0.11 to the second quarter of 2018 and $0.05 to the second quarter of 2017. To be clear, compared to our prior communications, our EPS guidance for the second quarter was between $0.42 and $0.48 and that guidance range would have been between $0.53 and $0.59, based on the new calculation.

Moving to our Electrical Raceway segment on Slide 5; net sales increased by $54 million or 20% to $325 million. The acquisitions completed in the last 12 months, all of which are reported in Electrical Raceway, increased segment net sales in the quarter by $32 million or 12%. Organic volumes softened by 2% in the quarter. When combined with our strong first quarter, year-to-date volumes were up about 4% and in line with our expectations. Higher average selling prices driven by passing through cost increases to customers had a favorable impact to revenue of about $23 million or 8%. Adjusted EBITDA was $56 million, up $10 million or 21% compared to last year. The acquisitions account for $7 million of the adjusted EBITDA increase, with volume and price and mix driving the remainder. Reported adjusted EBITDA margin increased by 20 basis points with pricing execution, accretive acquisition margins and favorable mix driving the improvement.

Moving on to our Mechanical Products & Solutions segment on Slide 6; net sales in the quarter were up $18 million or 18% to $120 million. Volumes increased 17%, reflecting a strengthening industrial market. Price added 1% to revenue in the quarter. Adjusted EBITDA of $17 million increased by 8% compared to last year, driven by strong volume in mechanical pipe and metal framing as well as net productivity. Adjusted EBITDA margin is below the second quarter of 2017 by 120 basis points. Although -- however, it has increased by 290 basis points sequentially versus the first quarter of 2018. This is primarily due to the timing of passing through the latest commodity increases to our OEM customers with lagging index-based pricing.

Turning to our balance sheet and cash flow on Slide 7; the balance of cash and cash equivalents at the end of the quarter was $77 million. The $42 million of proceeds or about 10x trailing EBITDA we received for Flexhead is included in this number. We have spent a total of $17.2 million in CapEx year-to-date. Net cash flow from operating activities for the first six months was $53 million, about double last year at this time. Finally, our net debt of $831 million reflects a completed refinancing and $375 million stock repurchase we announced earlier in the second quarter. Our leverage, which we define as net debt to the trailing 12-month adjusted EBITDA was 3.4x. As we've communicated in the past, our long-term goal is to move this metric back to the low 2x range.

Now, I'll turn the call back to John for our guidance and his final comments and perspective.

[John Williamson, President & CEO]

Thanks, Jim. Moving to the full fiscal year on Slide 8. With a strong earnings quarter and our confidence in market activity, we believe it's prudent to update our guidance. We continue to expect the construction markets to be up in the low to mid-single digit range in 2018 and now expect our volumes in industrial markets will be up in the high single-digit range. Taking into consideration these factors, we are updating our full year guidance as follows.

For the Electrical Raceway segment, we still expect volume to be up in the low to mid-single-digit range and after a strong first half, we are increasing our adjusted EBITDA range to between $220 million and $230 million. For our MP&S segment, we are increasing our volume guidance to a high single-digit range and we are restating our adjusted EBITDA to account for the sale of Flexhead to be between $55 million and $60 million. In total, we're increasing our 2018 expected adjusted EBITDA to be between $250 million and $260 million. We estimate our adjusted EPS to be between $2.40 and $2.50. This range incorporates adding back the amortization of intangibles to adjusted net income, to better reflect our operating performance.

The add back of intangible amortization increases adjusted EPS by $0.42 for the full year compared to our prior calculation. Interest expense will be approximately $42 million, and our fully diluted share count will be 55 million shares. Our tax rate will be about 23% for the full year and 26% for Q3 and Q4. CapEx is expected to be right around $32 million for the entire year. And finally, turning to the third quarter 2018 guidance. We expect our consolidated adjusted EBITDA to be between $65 million and $70 million and EPS between $0.65 and $0.70.

In summary, we over delivered our guidance in the second quarter. We see continued momentum from both our initiatives and market activity, and we are increasing our EBITDA guidance to $250 million to $260 million for the full year. To be clear for your models, the high end would have been $262 million without the loss of EBITDA from the divestiture of Flexhead. Again, we delivered double-digit growth in net sales, adjusted EBITDA and earnings per share based on organic volume, our completed acquisitions, successful pass-through of increased raw material and logistics costs to customers as well as efficiencies gained from productivity initiatives.

The M&A activity completed in the last 12 months is driving value for Atkore and we have a strong pipeline of targets for future deals. I would be remiss if I didn't thank our employees for delivering such strong results. Our associates used our disciplined business system to drive continuous improvement, to build organizational capabilities and to deliver greater value for our customers. Ultimately our shareholders are the recipient of this benefit. A key element of our business system is our focus on people, building an engaged and aligned team, leadership development and succession planning to drive the future of Atkore.

As you've already seen this morning, I have announced my retirement scheduled for the end of our fiscal 2018. Our Board of Directors has approved an orderly leadership succession plan in which, effective immediately, Bill Waltz is appointed to Chief Operating Officer reporting to me with the transition to CEO when I retire at the end of September. After leading Atkore for seven years, announcing my retirement certainly mixes my emotions. I'm extremely proud of and attached to the Atkore business and team, but eager to move on to the next stage of my life.

I'm confident and excited about Atkore's future. Our foundation is strong and our momentum is true. Bill Waltz is an excellent executive and the best kind of leader. Strong foundation and values and unshakable belief in team and culture. Bill not only believes in, practices and models the Atkore business system, but has been one the main contributors to its form and effectiveness over the five years he has been with our business, and his results are second to none. Bill joined us to build our now industry-leading PVC conduit business, and he has led our pricing initiative, has led the Raceway organization and driven our Electrical Raceway go-to-market initiatives.

I'm committed to working closely with Bill through this transition and look forward to what he and the team will achieve in the future.

I'm going to invite Bill to say a few words.

[William Waltz, COO]

Yes. Thanks, John. And yes, a few thoughts from me. First, I am honored to have the opportunity to lead Atkore. I look forward to working with our entire team and the investment community as I immerse myself with my new role. I think we have a great culture, a great team and best-in-class business system.

I'm proud to have been part of what our entire team has accomplished today, and finally, thanks, John, for bringing me on board and your mentorship.

[John Williamson, President & CEO]

You'll all have a lot of time to talk to Bill and myself over the weeks and months of our transition. So I'd like to focus our Q&A session on our Q2 results and our outlook going forward.

Gelly, please open the lines for questions.

[Operator]

[Operator Instructions] The first question comes from Mr. Andrew Kaplowitz with Citi.

[Andrew Kaplowitz, Citigroup]

John, you mentioned Raceway organic volume declined 2% in the second quarter, and obviously it was up big in Q1 on hurricane recovery efforts. And you did mention that the 2% was in line with your quarterly expectations. But maybe give us a little bit more color on the raceway markets. Is the underlying growth of the market more in line with the 4% growth that you've recorded in the first half of the year, and would you say core non-res and residential construction markets are supportive of that 4% growth.

Is there anything in the quarter that did slow a little more than you thought in Electrical Raceway?

[John Williamson, President & CEO]

Yes, great question, an important question. One thing to keep in mind is -- well, to answer your question in the right order, we think the fundamental activity is strong and supports that 4% growth. We are seeing our weighted exposure to non-residential is in excess of 3% and then we have some market initiatives that were driving that is giving us a little bit better growth rate. When you look at the first and second quarter combined, we feel really good about activity and we feel real good about the pace that we are proceeding into the third quarter. Keep in mind, our first quarter is the fourth quarter of the calendar year, and as happens somewhat regularly, distributors will sometimes beef up on volume in the fourth quarter as they drive rebate programs, and it's not unusual to have our first quarter be a little bit heavier than our second quarter just in volumes as there is a change of kind of what distributors buy and what distributors sell-through.

So we expected that, we mentioned that last time and it acted as we expected, and I think the take away there is, we feel very good about that 3% to 4% activity range right now.

[Andrew Kaplowitz, Citigroup]

And then you mentioned the strengthening industrial environment within MP&S and you obviously raised your forecast a little bit there. Maybe give us a little more color on to what's happening in that business, is the improvement across the board including solar? I know large data centers have been a little weaker, is that getting better too? And then would you say there is more runway here for growth given your industrial business has been pretty weak for a long time?

[John Williamson, President & CEO]

Yes, I think that's really the point there is that I wouldn't say it's across-the-board, but I would it's broad. And in particular, we are seeing a bounce back in solar with a little bit different construct than the past. Our solar business in the past was very much centered on large two or three customers, and we actually are serving more solar customers with individually less volume. Collectively though, the solar business is coming back in a nice way. So it's a broad recovery, it's basically exactly what you said, a rebounce from some pretty low level, and we think that high single-digit growth rate as it defines our served market is the right number to focus on going forward.

Just keep in mind, good on solar, really strong growth rates, but on what ended up being a pretty small base.

[Andrew Kaplowitz, Citigroup]

And John, just follow-up on the large data centers. Are you seeing improvement there?

[John Williamson, President & CEO]

Yes, I think what we saw on data centers was a combination of mostly delays and just kind of a slowdown in finishing up of projects already underway. So I would say -- I wouldn't say there's a marked improvement in data centers, but we feel that it's not deteriorating.

[Operator]

The next question comes from Mr. Rich Kwas with Wells Fargo.

[Unidentified Analyst]

This is Deepa [ph] for Rich Kwas. John, congratulations on your retirement. Rich and I both wish you well. Bill, look forward to working with you.

[John Williamson, President & CEO]

Thanks, Deepa.

[Unidentified Analyst]

Question on price; could you comment on good -- better realization than you would have expected. Could you comment on how generally price has been -- price realization has been trending versus your expectations? Are there certain verticals you are able to get better price, realization over others? Or is it just the overall demand environment much better that you're able to realize better price?

[John Williamson, President & CEO]

Yes, great question. Now what we would say is that it really wasn't performance way better than expectations. We think we've been extremely consistent with investors since before we went public with regards to our ability to pass commodity prices through to the customer. Now we get to do that on the upside and we have to do it on the downside as well. And I think if there's anything that's misunderstood by a broader investor base, it's going to be this thing. We don't act -- commodity increases don't affect us or commodity decreases don't affect us the same way they are affecting other industrial companies because of that need for passing it through almost immediately.

So first thing, I would say is this isn't that unexpected for us, but to the spirit of your question, what I'd like to say is that keep in mind, we spent a lot of time on an initiative that a number of people worked very hard on, including Bill Waltz leading the initiative, couple of years ago. We have built into our business system and how we do things. We have a pricing skill sets and pricing tools that allow us to be very quick in moving price through to the market. And it's about our discipline, it's about our understanding of differences in our product line, which ones are more sensitive, less sensitive and our ability to bundle our product line together to the Electrical Raceway to make sure we get a slight premium here and there based on total value delivered. So I would say, it really -- it's not a different quarter than we expected. It's not a different quarter than we think anybody else should've expected.

And keep in mind, when steel is so publicly going up, it actually makes our job a little bit easier to talk to customers about the need for higher prices. So the publicity on it is really important. I would just like to reiterate in summarizing this answer. The Section 232 changes, the tariff, it really doesn't affect us the way it's going to affect other industrials. We have to pass it through when commodity prices go down and we have to pass it through when commodity prices go up. So we think given the time frames that we've kind of reiterated over and over, little bit quicker for Electrical Raceway, little bit slower for Mechanical because of the OEM customers and index pricing, we pass-through commodity fluctuation and have been doing it for years.

[Unidentified Analyst]

Could you comment on your free cash flow outlooks for the year and also is there a targeted net debt to EBITDA number we should be looking forward to by end of the year given that you have some proceeds now from Flexhead sale?

[James Mallak, CFO]

When we take a look -- we'd like to target a low 2x leverage number. We've shown that we can get there, we will generate cash and have a clear path to get there. When we take -- look at our free cash flow given the interest and the taxes that we have this year, our free cash flow is going to be in the $100 million to $120 million range.

[Unidentified Analyst]

My last one; John, could you comment on non-residential market verticals? What are you seeing across institutional intra-commercial, etcetera? And that's it. I'll pass it on.

[John Williamson, President & CEO]

Yes, thanks Deepa. Yes, non-res, important part of our business. What we're seeing -- I'll answer it on kind of the macro. We see and we think we have the underpinnings for this. We see non-res being strong through our fiscal year and strong through calendar 2019 and that's about the effective edge of our horizon. The numbers do say that, that square footage is down a little bit recently. Although, spend is up. And we think that's an important distinction to look at. The amount of spend per square foot has in some verticals has been increasing pretty regularly, based on a little bit more, I call it convergence, where you're adding in LED lighting, data Raceway along with Electrical Raceway when you're doing new buildings and/or maintenance repair and renovation. So we think the fundamentals look pretty strong. We see that in NEMA data. We see that in channel data, we see it in the numbers of cranes, the things we've talked about with you guys a lot. So we think very solid through our fiscal 2018.

We think still expanding through 2019. The crystal ball goes fuzzy a little bit there, but we feel really good about the content of electrical in new buildings going forward and that continuing to be strong. So I think we can move on to the next question.

[Operator]

[Operator Instructions] The next question comes from Mr. Deane Dray with RBC Capital Markets.

[Deane Dray, RBC Capital Markets]

And congrats, John and Bill, and for the folks that have covered Pentair for many years, like myself, know Bill pretty well and know that Atkore will be in good hands. So just wanted to add that. Just want to circle back on the discussion on pricing and the bottom line, at least from our perspective is, if there has ever been a time where Atkore needed to show ability to pass-through raw material costs, this is it. And you're holding up very well, almost dollar for dollar.

And just -- it begs the question, are you able to -- do you have line of sight on being able to recover more price here to offset the margin hit? Is that realistic? Or should we reset our expectations?

[James Mallak, CFO]

I think, Deane, on -- the most realistic is a one-for-one pass through on cost. If the volumes increase and pricing becomes more favorable to be a seller, then we might be able to, but I think for right now, given the current marketplace that we have, a one-for-one pass-through and maintaining our economic earnings is the, I think, the key way to look at it.

[John Williamson, President & CEO]

Yes, and keep in mind, Deane, when you exclude just the mathematical impact, as Jim mentioned earlier, of the commodity pass-through, we're up 50 basis points in margin.

[Deane Dray, RBC Capital Markets]

And then second question, just like to get some perspective on the move to cash EPS. We're clearly seeing it across so many companies on the industrial side, so that part is not new. But maybe the fact that you did it in the middle of the year is a little bit surprising. Did you give any consideration to the timing of this?

[John Williamson, President & CEO]

We -- of course we did. We -- when you decide to do something, our thought is to go about doing it. This is -- I think, a, consistent with the way other companies are doing it. We've been asked about why we didn't do it, very, very consistently for a couple of years. I think why we did it? It provides management and investors with greater transparency around the impact of acquisitions and operating performance. It does not change the trend at all. We're improving the business under either metric meaningfully with strong trends and so it's just a different number, but the comparison is essentially -- it's the same comparison. Strong trend of significant improvement, and basically the new presentation, the new treatment really has no impact on our ability to raise guidance or to be transparent about guidance. So I think it was a nonevent in all honesty.

[Deane Dray, RBC Capital Markets]

Yes, we have to agree. So -- and then just last question for me. And your -- John, in your answer to Andy's question regarding non-res. Just to make sure I understood it correctly, you said with respect to the 4% volume growth, non-res contributed about three percentage points of that and then you said there were some other company initiatives that drove it higher. I was hoping to get some clarification of what those other company initiatives were that would have driven the higher volume growth.

[John Williamson, President & CEO]

Yes, it's worth putting a finer point on that. First of all, we're talking about the full year. Right? And I think the way you add that up is that if we're talking 4%, about 3.5% of that is market growth and then the rest of it is initiatives.

[Deane Dray, RBC Capital Markets]

And what would you characterize as the initiatives and is that something that...

[John Williamson, President & CEO]

Yes, that's a great question. So what the initiatives are going to be is, as we've been really consistent about is we put together, we feel, the best portfolio of Electrical Raceway products sold to the same decision makers in the same part of construction, delivered on the same sites by the same trucks, and our ability to package logistics and freight savings to customers allows us to get share gains and slight pricing premiums. So that's one of the initiatives. We have been working very diligently on innovative new products that save electrical contractors time on site and labor content, and we're seeing some success on selling our new products to contractors. That would be the two biggest ones.

[Operator]

The next question comes from Mr. Steve Tusa with JPMorgan.

[Stephen Tusa, JPMorgan]

Congrats, again, on all the management changes to both of you guys. So just first of all, what is exactly is the spread compression embedded in the EBITDA guidance now? I think it was $10 million prior, something like that?

[John Williamson, President & CEO]

Yes, so we had talked about I believe $4 million to $5 million for the whole year. To date, it's $1 million. And I think we're feeling very good that through the second half, we'll be able to close that gap and pass-through a 100% of raw material and freight inflation.

[Stephen Tusa, JPMorgan]

So it should be positive?

[John Williamson, President & CEO]

Yes, I think it will be slightly positive.

[Stephen Tusa, JPMorgan]

And just to clarify, did you say the 100% to 120% free cash as a guide for '18, I guess, it would imply $2 of free cash flow per share? Is that around the right -- is that the right number for free cash flow? Sorry $100 million to $120 million.

[James Mallak, CFO]

$100 million to $120 million of free cash flow.

[Stephen Tusa, JPMorgan]

Yes, that's about $2 a share?

[James Mallak, CFO]

On the upper end, right.

[Stephen Tusa, JPMorgan]

So the difference between that and the cash EPS guide is just basically CapEx, and anything else in there like working capital or anything like that?

[James Mallak, CFO]

Correct.

[Stephen Tusa, JPMorgan]

So there is some working capital or what is the -- what's the walk from $245 million to $2 million?

[James Mallak, CFO]

It's going to be more price on working capital than anything. Because what we're seeing is a little bit of inflation come through in working capital. Our actual days are down about three days year-over-year.

[Stephen Tusa, JPMorgan]

Got it. So the execution is good, it's kind of the pricing that's impacting that?

[James Mallak, CFO]

Exactly, exactly. Execution and working capital still very strong.

[Stephen Tusa, JPMorgan]

And then just one last one, just on M&A, what's the capacity at this stage, given where your leverage is?

[James Mallak, CFO]

Yes, we're still comfortable with the $100 million to $150 million this year even with the leverage. If we bring in more, we'll make sure that the EBITDA also comes down. We want to keep our leverage at or below 4x, but we think we can still do that and manage our M&A targets.

[Operator]

[Operator Instructions] Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Mr. John Williamson, President and CEO, for any closing remarks.

[John Williamson, President & CEO]

All right, thanks. First of all, thank you for your interest in Atkore. I want to make sure I mention the fact that we also have just recently added Mike Schrock, former COO of Pentair, somebody I've dealt with in the past in a joint venture and Bill Waltz has experience with as well. So Mike Schrock is joining our board, so we're excited about that.

In summary, we had a great second quarter. We've delivered on what we said we would do and this performance is in line with number of quarters of passing through a pretty heavy inflation environment. We feel very strong about our ability to continue to grow with the market and even above and to pass-through the commodity costs.

So again, thanks for your interest, thanks to the Atkore team for a great quarter and we're looking forward to updating you in three months on our third quarter. That's the end of the call.

[Operator]

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.