Again, we are really excited to have Atkore with us. Today we've got Bill Waltz, who is the President and CEO, and John Deitzer, who is the CFO. So, Bill, I'm going to walk over to you, and maybe I'm just going to ask you for a bit of just stepping back. Talk about sort of what differentiates Atkore. Again, there's been a pretty big debate about sort of whether Atkore sells commoditized product or not, but maybe just remind a lot of us know Atkore now, but just talk about sort of what you do and what you're good at, what you're not good at, and anything like, and then we'll go from there.
Okay, perfect. Thanks, Andy, and thanks for inviting us here to the conference. It's been great so far. So, Atkore is majority, like 90%, depending on what, even with both divisions, we have selling into the electrical market, mostly in North America. And with that, the competitive advantage that, to your point, what we do and what we do well, that we had pre-COVID, during COVID, and post-COVID, is we're the one-stop shop for the industry for our product suite. So, in most cases, competitors may have one product or two products, but if you say there's eight or nine different categories, we're the only one that can do that. Therefore, the ability to co-load products, put a group rebate, save our customers from multiple orders versus one order, one delivery, one invoice, set up regional service centers that we can deliver in a couple of days versus two weeks.
I could keep going on, but Andy, to your point, there is absolutely a sustainable competitive advantage with Atkore. Now, to commodities, and maybe this got lost over the rise up in profits, I would say our products themselves are not that differentiated. There is an exception I'll come back to in a second, but what we provide is all those things to the service, and because of that service, share of wallet, and so forth, our customers have a preference for us. Like, they go, most of the major ones will pick one or two companies and go, here are our strategic vendors. In almost every case, it's Atkore for every one of our products. Our customers will pay a premium for our products. They will give us last look because of our service and our breadth and so forth.
But what may have got lost is to go, if we are pick whatever number, 3%, 5%, 7% higher than our competition. If you're making selling something for $700 and you say 5%, we can sell for $735. But if the market pricing drops from $700 to $300, we cannot still be selling at $735. Can we be selling at $315 versus $300? The answer is yes. And the only thing I'd say, even with commodities, like again, it's the service breadth of our products, but we do have a 10%+ product vitality that I don't think anybody in our industry for our type of products have. So again, that does help with both pricing differential, growth preference, and so forth. And we have had that, and we continue to invest in R&D.
It's helpful, Bill. So I want to get back to that relationship you have with your customers in a minute, but let me just ask you maybe about the markets too, like just as an overview. I think, as you know, leading indicators are mixed. DMI is good, ABI is not. So maybe just the health of your core non-res and res markets. You spoke on your recent earnings call about a relatively weak December and January, but strong first week of February. So maybe you could update us on what you're seeing now in your markets. How much, if at all, is adverse weather, for instance, playing a factor in what you're seeing? Anything like that?
Yeah. So I'll first echo, Andy, your statement, though, at least for my decade plus here with Atkore, it's probably the most anemic economy and metrics like the Dodge Momentum Index. I'm going from memory here, was up 26%.
Yeah, it's crazy.
Really strong.
All data centers, but it's not all data centers.
But ABI has been down, and I could get into the nuances there of like, okay, how many jobs like data centers you don't need an architect and so forth, that maybe the ABI I wouldn't lean into as much versus construction backlog. At the end of the day, I think we're expecting markets themselves and markets to be up low a couple hundred basis points. From there, yeah, January, December was weaker, and I think some of that just does tie to weather it's the wildfires in California, the weather, the hard freezes. I know even from our factories, we had four or five from Houston up through Florida that shut down for a couple of days, ice storms and things like that. But I still think the markets, while they're not.
Potential is the fact that for a lot of our products, mostly PVC, it's when a subdivision starts. So if you have a, making this up, a 350-home subdivision, putting up those last 30 homes, there's a little bit of content of ours, but not much is when you're starting a new subdivision. If you did the research to go into public corporate, public builders and say, how many acres of land are they in CapEx, which our team does, we have a good feel that it's coming, but that's out a year.
Got it. Just one thought on all that, Bill. I know you don't want to get into weekly forecasting, but it was just interesting that you talked about that first week of February being better. Did you see that continue in February or?
No, I don't know. It's around our expectations. Andy, obviously, I know my numbers every day and see them.
That's fine.
If you read guide or say anything versus our guide.
That's fine. Okay. And then you highlighted a couple of important growth areas for Atkore, namely PVC and HDPE, water pipe, global Construction Services. You've talked about markets such as metal framing, cable management, Construction Services to drive your volume growth to low to mid-single digits. So could you update us on the progress of these initiatives and how you think about their impact in 2025 and beyond?
Yeah. So both, I'll do the two-year call because there's several even beyond that, but first for the water and then for Global Mega Projects or again, data center, chip manufacturing, and so forth. For water, I want to make sure people ask questions like why to go. I think when you look and we looked at ways, numerous ways that we can invest shareholder money in addition to stock buyback, dividends, and so forth. And over the last couple of years ago, this is a natural add-on strategy. We're still right to win. We're already in the water market. So I want to make that clear. Now it's been 10%-20% up PVC, but to go, it wasn't like we've never sold to large.
I won't mention other corporations here, but the large, what you would think of customers, we've already been selling to those markets, selling to ag markets, different things. To go, okay, we have a cost base here. We have 10 HDPE, 10 PVC facilities across the country. We know how to make PVC pipe really well. We buy resin really well. We have a good cost base. We're already in the market. So let's edge out, add a couple more product lines, some extra capacity, but not a lot, sell on the value of bringing PVC and HDPE to these customers. There's really one other company that has both HDPE and PVC. And it's a thing that our customers in that market are asking. By the way, for that market, it's like $800 billion, of which municipal is like half of that market.
I mean, my point being, it's a massive market. And we are like a small low single digit. So we can, with our right to play in this market, we could triple and still be low mid-single digit. And my point there is, as we grow selling value, not price, but value, we're not going to get a competitive reaction. Somebody with a 20% to 30% is not going to react to our gaining 100 basis points of share. So to me, it's moving along as we expected. Most of the equipment's in. There's still a little bit more CapEx. And really now it's with our sales team and they know that it'll be a linear ramp up. It's not like a binary date. You put an extrusion equipment on and it starts selling. But I'm optimistic for the future there.
Bill, is there a reason why you didn't pursue it more of the water business, or is it just because your capacity was full and now it's not, or any reason why you didn't go into that market earlier?
Oh, earlier? No, I think it's, well, two things. One, again, Andy, we always have been in it. So I think it was just to go with, again, call it the excess earnings in 2021 and 2022 to go, we have a unique capability. Obviously, we bought back shares, but going, are there organic initiatives? Because I do think, again, we got to get out of this really weird period. I know I had to believe you're going to probe more on it last year and pricing and so forth. But to go, can we turn this company into growing? Don't lock on a number of investors, but growing twice of GDP or something. To go, electrical market in a hole is a market that's going to grow faster than the economy.
And then, to go where do we have three or four initiatives that make sense, good return on invested capital? We have the right to play in, and water is an edge-out strategy. So again, it wasn't a binary thing versus let's add just three or four of our plants, one or two extra extrusion equipment, and also breadth, widen our product breadth here.
Yeah. And if I could just add one more, it was a decade to build that business between doing the first acquisition maybe in about 2013 and then still doing several acquisitions up through 2019 and early 2020. So it was about a decade of timeline to build that network of facilities, integrate them, and have the operational footprint to then start to move into an edge-out strategy, as Bill mentioned. Yeah. No, it's helpful. I do get the question just related to my last question around metal framing, cable management, Construction Services. In quotes, they seem more stable right now, at least in terms of pricing and all that kind of stuff. So why is that? I mean, I know they seem more mega project focused, if I may, but how are they different from PVC or steel?
Yeah, that's a good question. I would answer it probably this way to go. This demand-supply balance, quite frankly, didn't get as out of whack. So I'm saying out of whack, but they didn't have the run-up therefore to go down in price. And we've seen it more, obviously, in PVC that ran up higher. Therefore, by definition, has more of an opportunity, I guess, to go down. And then with metal framing and so forth, it is more of a value. There is slightly more you're selling on different specs and so forth.
Maybe not quite as common.
Yeah, exactly. There's not this, at least for us, to go, "Oh, here's the hard spec." But yeah, it's at least on the spectrum less.
Got it. And just finally, on this question, the opportunity in Construction Services, what is it?
Yeah, I'm excited for this. So, again, let me explain here, so we've always done this. We're like the first one to come up with strut products. It's over 100 years long. The whole metal framing that you'll hear called strut is because it's named Unistrut. We were the creators of this product literally over 100 years ago now. But we've also had a construction business, almost thing to go, "Hey, you're a manufacturer selling distributor sells construction," mostly, but not always dedicated to hospitals that do rehab operating rooms and stuff.
But over the last three, four years, again, a conscious effort to bring on new talent, BIM modelers and so forth to expand mostly around, but not always to data centers and chip manufacturers to go, "Hey, at the rate data centers are going in, I can speak at least for some, I can generalize for most," to go on, "They can't keep up with their ambitions to spend their CapEx. They don't have the manpower and so forth, so they're looking to outsource." And where we come in is we already have this capability. We've proven it with some marquee names. And others are realizing what we can do is, instead of just bringing them the metal framing and other products, is we can off-site assemble those products for them. And in some cases, actually then take that into the facility themselves and install it for them.
I'm stretching for my analogy here, but not that I buy IKEA furniture or whatever. But to go on, for me, it would take me if I was to buy something for IKEA, probably two days to assemble it. If I actually had the guy from the shop that does 100 beds or furniture, could probably do it in 20 minutes. It's the same analogy to go, "We have the expertise. We know how to do this. We can set up off-site assembly manufacturing." And I would tell you now, I look forward to talking in future quarters about very large data center corporations and others that have set us up on potentially multi-year, very large contractors.
What I would say at this stage is our quoters are having challenges with at least even a customer keeping up with the quote possibility. And that will change the business. I say change the business. Where I think another thing beneficial to our forecasting is if we actually had a six-month or a year backlog, the predictability. Now, again, I want to frame it. It will still be 10% to 20% of our business, but it will definitely grow quicker than market and quicker than data centers, I think, because we'll get a larger share.
Yeah. No, that's interesting, Bill. So you talked about residential a little bit. So granted, it's smaller than it used to be. When you think about its evolution, do you see the potential for the business to inflect? Do you really just need those subdivisions? Is there anything you can do to sort of jumpstart the business?
I wish. I think, again, trying to be logical here, it's mostly supply and demand. Now, we do see, and whether you call it part of residential or something different, it's like the utility market and so forth, where our PVC goes. After a tough year, we have easy comps. The orders we're starting to get now and different things around residential, undergrounding cables for fires and so forth going. But it really takes new subdevelopments to drive our business.
Got it. Okay, so let me go back to I should have asked you this when we were talking about Construction Services, but I think you're adding either capacity or you're sort of ramping up, and I guess my question is, why haven't we seen the impact already on your business? Because it seems like with mega projects or data centers, it should have already happened.
Yeah, I think in some ways. So it's all relative on seeing the impact. So to go up until let's pull Global Mega Projects aside for a second. I'll come back to that. To go, we are spread out the way I would think about all of our product sales because there's not a place that you don't have electricity from this hotel to a stoplight to wherever else to a data center, home that you don't have our products. So you can almost look and do two things. Take the Dodge square footage and then try to apply an intensity level. Like a hospital, a data center is going to have 3X or the amount of Atkore-type products that a warehouse is going to have, just the amount of stuff.
If you look at that and go, data centers are growing, therefore our products are growing in our last earnings deck. I don't know. I want to say it's page six, but there's a deck that we show the weighting of our products and growth. And if you look at the very top category, largest category, metal framing, cable management, it was last year and this year, one was up high single digits, one was up double digits. So we are growing faster. It's just to go, if we're spread out across all these products, across all these markets, we're not seeing it for somebody that's making up a hypothetical up 60% or 60% concentrating in data centers to go, "Wow, if you're up 10%." Now, I do think, again, where I talked about Global Mega Projects, that's just not selling our fair share.
That is partnering with some of these data center customers. And there we will grow much quicker than the market. And that will be, we will see that ramification in our growth going forward.
That's helpful, Bill. Then you obviously got a lot of questions during earnings call regarding new competition, as you know, both domestic, foreign. How do you get a read on price versus cost? With the understanding it's hard, right? But I think you said $400 million in price cost pressure and $25 million is the right number. Obviously, I always get the question, why can't it be worse? Why is this the right number? I'm sure you do too. Separately, it's interesting. I don't think we've seen this kind of competition really in Atkore's history. So why now? China has always been a concern for PVC, but it's been kind of small. And Latin America for steel. What happened?
Yeah. So let me do the second and tie into why that number, why the price decline is, why it's the estimate. So if you go back pre-COVID, I'm going to claim there was none to virtually insignificant imports of PVC. And the reason for that is cost base, for example, Latin America, U.S., about the same. We've actually done analysis. Resin costs about the same. We're more automated, but I face it, the labor costs in Colombia, we're probably paying $15, $18, $20 an hour for our rural non-union factories, but I'm sure it's lower in some of these countries. But freight costs back pre-COVID, if you ship within just 500 miles of a facility, it was 7%-8% of your costs. And my point being, when profits were not a lot higher, you had to really focus on being close.
Therefore, the cost to put PVC conduit, water pipe, anything on a container and ship it across would have been 30% of your costs. It just would not make economic sense. With profits go up 4X and there's 4 times the profit, then you can sit there and go, "Hey, you know what?" And I'm making up these numbers. Don't let me lock on what year. But if you're making 60% gross margin, you can pay 30% gross margin. And therefore, it comes in. As pricing goes back, almost I'm going to weave in a second here, your end question, if we model out that we think pricing is going to be back to around pre-COVID level by the end of the fiscal year. Now, is that 2017? Is that 2019? It's not that precise, to be honest.
But to go, at that point, if freight costs are back 20%-30% cost, it no longer makes economic sense for an import to come in. And I do think they either go away or they just become significantly irrelevant at that price. Now, maybe we hold on the price longer or maybe imports are still there into next year because our pricing stayed up. That's a little bit like maybe that's a good news story. Pricing stays. And then for imports, for steel, they've always been around or I'll go back and say back in 2015 to 2017, the average of those three years, it was 3%. But again, a couple of things happened. Back then, there was NAFTA and there was a 25% tariff. And the Mexican government and part of the USMCA agreed to go, "We'll kind of stay with the same volume.
We will not surge." So we can grow implicitly with the market, but not above. No one has since USMCA went into effect enforced USMCA that says so. Now, I think you've seen that. And therefore, the growth just because, hey, again, these are markets where back to people do make a reasonable return on the rest of the capital. But with President Trump putting the 25% tariff in that I personally think this one will stick. In other words, versus the. I'm not judging what will stick and not with the other 25% that went in for a day came off on immigration and fentanyl. But this seems like a sticking power. So I think that will change the equation as we go forward there.
Yeah. And maybe just while we're at it, your U.S. competitor who's come into PVC from steel, is that just because it takes time to build capacity and they saw those big? You think they would come in now if they knew then?
I don't know. So I think, again, I don't talk. So this is all what would I do if I were in the seat because I'm not sitting here talking to my competition. I take it as a compliment. It's a first step to go. We tell the shareholders, our customers know this, that we have a unique value prop of having the best agents in the industry because we have a whole suite of products you can go. And so when you're selling, you're working with one Atkore that gave a bundle price versus trying to get six manufacturers for your sales agent. You can co-load. You can do group rebate. The presence of our Atkore name.
So I look at that one competitor, which is a very well-run company and going, "Hey, at least today, I can't emulate everything Atkore does, but I can partner with this relatively unknown PVC conduit company." And there's wisdom into having more products to sell, better agents, and so forth. And that's why I think I'm assuming he's getting into the market.
Got it. And so back to what you said in the beginning about, again, I definitely thought that one order, one delivery, one voice was going to protect you at least a little from some of these lower-cost competitors. To your point, if their price is half yours, it's not going to. But at the same time, what have your distribution customers said when invariably they just kind of move from you guys?
Yeah, but see, that's a great question because I'm not sure it's exactly how it's playing out. Some of our I won't call out specific customers, but some of the largest customers out there have never bought a single imported product. And they're loyal to us. Now, here's the difference, though, to go, "Hey, if you imagine them sitting there and they have a brand and they have long-term relationships and they just, same as Atkore, they don't have to be the same price, nor do they want to be the same price as the person with three shops and so forth." But if that distributor, and I'm saying three shops, to be it because there is, by the way, distribution, there's a massive tail. There's four or five, and then there's literally probably over 500 distributors, private different companies.
So if 10 of those, I'm just picking 40 of those, decide I'm going to compete on price and I can go buy an imported product that, yes, it doesn't have the brand reputation. I'm not sure if anybody would back it up. It doesn't even meet all the different quality specifications. But if I can go do that and undersell the big names by 15% in price, there's a contractor out there that's time and materials or whatever it is and going, "Hey, I can win this job with this price." And then for the large customer coming to us going, "Hey, we will partner with you, but here's the market price you have to keep around." So that's the dynamic. It's not like they're leaving us, but we back to they are partners and we do need to support them.
So they're not sacrificing because we're trying to keep pricing artificially above what others can buy it at.
I want to ask you one more question about the domestic competitor that's coming to your PVC market, and I'll open up to the audience for any questions. Have they behaved in a way that you thought? Before this quarter, if you go back to when you first gave out fiscal 2025 guidance, I think you did put in pretty significant contingency for them for pricing coming down. Have they done what you thought? I know it's hard to disagree.
Yeah, it's hard to disagree, but I would say yes. So Andy, just to go for the group here, as we were sitting on, I was just thinking to myself, as I sat on stage with you last year after pricing and COVID in 2020 and really 2021, shooting up to $1.3 billion, we did the following things. Don't anybody model this. It's irrational exuberance. We guided down and we hit every quarter to the last year at this time where we just did earnings. We actually raised our earnings a year ago in this quarter, and we had hit every number. And by the way, we hit that quarter that we were in with you on and so forth. So I think the domestic competitors have acted as a whole, as I would expect, but are they responding to import pricing?
And if you are an importer, I'm now speaking more PVC to go, and you don't have the invested capital. You don't have a factory. You're just buying from a foreign country, and any sale is extra profit. The only thing that you can do is keep a domestic match, drop your price again. That's why two things. One, the market price, I think, is dropping quicker than we expected. Two, it's us getting out front because I can't commit to anybody our earnings. I would love to, obviously, but this is how I see it. I, Atkore management, see it playing out and therefore to go, "Hey, let's not get six months from now and go, 'Wow, last year was such a large decrease.
This year just can't be as large versus let's actually assume pricing goes down with PVC specifically." And that was a major cut we took that we just got back to pre-COVID by the end of the year. And by the way, besides pricing pre-COVID, I do think at that point, imports start to leave the market.
Got it. Any questions from the audience? Anybody have a question they want to ask, so let me sort of tackle that last point you made, Bill. To your point, you're trying to pick, in quotes, I don't know, conservative might not be the right word, but something that makes sense in terms of guidance. Is that how you've changed your guidance philosophy at all? Again, you were, I kind of thought, you just were a beat and raiser for a while, and then you weren't, and is that just the markets, or can you do anything better?
I don't know. So I wrestle with that with the following thoughts. Again, for two minutes of pride, as I kind of stated, since I've been CEO now for going on seven years, up until this last year, we've always hit our EPS, if not beat our EPS. And it really started, I could walk through what happened with metal conduit, with pricing dropping significantly within a month or two, last April through June, now this tail of importers and PVC and why it's taken three years to even set up shop and now get momentum that people are matching. I don't know. I mean, what I'm saying, I don't know is you want to give a realistic number. So I've never said, "Oh, let's put an optimistic number." I don't think that would be a stupid.
However, with this time, but to go, "Let's just assume things go back quicker" versus up till now, it's been a three-year decline that we've followed pretty well versus let's just extrapolate down. Now, in metal conduit, we also took out some pricing there that we thought tariffs would help with. And obviously, I think over time, tariffs will help there. So I think it's a reasonable guide. Also, I don't want to be blinded by opportunistic thoughts or whatever. I didn't think so before.
Yeah. No, it's fair. Let me just follow up on one thing. Then I understand there's seasonality in the business, right? There's a definitive construction season, what have you. There does still seem to be a massive ramp-up in your quarterly EBITDA expectations for the second half versus the first half. So what is that? What's getting better?
Yeah. Well, I'll just jump in on some of that. I think there's some natural seasonality uplift that we would have. The summer construction seasons are in general better than the more winter, which would be kind of our Q1 and Q2 time. So there's some natural element. And then it alludes to some of the initiatives that Bill had talked about with the move into the water from a PVC standpoint and HDPE opportunities to grow there. Also, we have some capacity that we've talked about from a metal framing perspective that can support some of those larger mega projects. So we think it's those elements combined in with that natural just uplift that we have historically always seen that would make the second half here stronger than the first half.
It's helpful, John. Then, Bill, if we were to assume that, let's say, more difficult competition is here to stay, what can you do? I know you talked about on the call about closing the facility in Arizona, but when might it be time to go after costs more significantly? I think, as you said, you elevated John to be your Chief Operating Officer, and you did say that you would pull as many levers as you can, but why not a big restructuring program or something like that?
Yeah, I think first, nothing's off the table. But at this stage, even just Andy sent some, I guess, last night, this morning, but sometime this morning, we did announce. Now, again, it's not massively material, but we did divest the division that does recycling. I could walk through.
Okay. I missed that.
Yeah. No, it's literally this morning. So that we bought with an HDPE acquisition. So it was like, "Hey, they came together, same ownership." And there's some synergy there, but we're not the rightful owners versus, in this case, a company that vertically integrated largely multi-facility recycler. Let's get rid of management focus on the organic growth and things. So we are doing that. We are looking at other things without foreshadowing for investors or employees. We're looking and just doing line balancing to go, "Hey, is metal conduit and tariffs come up and growth does come back? How do we shift lines and maybe making one product over to make more metal conduit?" So without foreshadowing anything more, I think we are every option to help, again, our customers also, but our shareholders.
So just to that point, Bill, I think of you as a beneficiary of tariffs, but at the same time, what's the opposite side of that for you guys? You just pass through price as metal, as resins or any when you're thinking about, you're mostly U.S., so it doesn't matter. But I'm just thinking, are there any sort of negatives?
Honestly, not that I can think of with the following type. I'll try to go down negative, so for the U.S., that is like 90% of our business because we do have operations in the U.K. and Belgium, but these are all rough numbers. 98%, the very max almost is products either your raw components like steel, resin come from in the U.S., and we make our products in the U.S., so therefore, tariffs are good things for us.
If steel prices go up, you just pass through the price.
Yeah, pass through. And I also think to go, where is our conversation for the last year or this last 30 minutes in the last year since we've been here together? It's the PVC imports coming. Again, there's other puts and takes. I don't want to say it's all like the boogeyman here, but it's the Mexican conduit coming across. So yeah, will steel costs go up? I'm giving steel anybody a lock, but if they're $800 a ton for hot roll, could they go to $900? Yes. But if that goes up 10% to 15%, and we can A, pass that along, plus if we say just in that case, since I'm using steel, Mexican conduit costs go up 25%. That's a win proposition here for us. So yeah, the president, I'm speaking for Atkore shareholders here.
But the more tariffs President Trump wants to put on the imports coming, yeah, from a shareholder perspective.
Got it. Okay. And then maybe let's talk solar torque tubes for a second. You mentioned on the earnings call that downstream constraints are still impacting your utility scale solar market, but Hobart's operating more efficiently. So maybe talk about the two sides of that.
Yeah, I'll go to the two sides in the middle here, or I'll go from so Hobart's run really well. So I mean, again, it's taken a little bit longer we thought, but it also shows where there's a competitor to go, why did it take three years for an import to come? It's like it's not that simple to get equipment set up, certification set up, people trained, run 24/7, but it's running really well now, so compliment the team there. And I would say short term, to your point, where it called out, whether it's logistics of hooking to the grid and getting approval paperwork, whether it's and these are more hypothetical, but still getting transformers in needed to make the hook up to the grid, different things like that, right now seems to be slower.
But I would without other than saying there are at least two public solar array companies, one that's already announced has said, "Hey, they have record backlog and really optimistic for the future," that's us just keeping up with it. I think the solar industry with or without, if President Trump was to take tariffs off or not tariffs, excuse me, I'll come back to that, incentives off, it's a good market. And one way to benchmark that is I don't think we can talk what the growth of the industry is other than our customers have record backlogs is if you go back three, four years ago, 50% of the products that we make came in from China, and the solar torque tube made it economically infeasible.
And so even if those type of tariffs go away, or excuse me, solar credits go away, you now have a 25%, actually with China adding that 10% on, you have massive tariffs there that just you won't be importing. So it's a market that's doubled for the U.S. people in size in the last three, four years that I'm optimistic for the long term with it.
And Bill, to that point, President Trump has not seemed that supportive in general of renewables. We can see if there's anything that happens with IRA, but how does that you still have confidence from when you talk to your customers? You mentioned the public customers and stuff. Renewables bottlenecks are more supply chain for you still than demand? Is that how you'd say it, or is that?
Yeah. Well, short term, it's demand, but then I think it does; it right-sizes itself over time because I think our supply capabilities are up there and as demand then increases. I think that's why we look out into future years and say, "Hey, things are optimistic for Atkore." Using just the solar torque tube as one of the we talked about water, we talked about Global Mega Projects. We talked some about the one order, one delivery, one invoice with regional service centers. Again, Atkore, the fundamental company with strategic competitive advantages has been there and we're even stronger as we go forward. We just got to get through.
Can you decide roughly how big the torque tube business is right now?
John, you're big.
Oh, yeah. I mean, I think we're probably still sub 10% of total company sales, but I mean, I think we've been steadily increasing that. So we're probably in that neighborhood, but right now today, probably north of $100 million, but that's the type of neighborhood that we're in.
Do you anticipate growth in just the business this year or flat down? What do you think? Because capacity would have ramped up fully by the end of last year.
Yeah. I think this year we're going to work through some of the dynamics that Bill had talked about. There is clearly some demand dynamics, and then there is some supply chain dynamics as we talked about on the earnings call and put there. So I think right now we're probably looking somewhat cautiously this fiscal year, but I think as Bill alluded to, I mean, I think the strength of the facility into the future is still very strong. You were able to hopefully see it and see the investment. And what we've tried to really build there is, we think, pretty special. So I think the long-term view here is pretty optimistic, even if we do have to pivot at some point and add in some additional capabilities. And we can also think about how to service some of the electrical demand too out of there.
Right. So I'm just getting at what's embedded in your guide is a pretty weak solar torque tube business.
Yeah, for this year. Yeah. Yeah. For your earlier question, the first half year, second half, it's not like there's significant growth in terms of.
Okay. And maybe the same kind of questions for HDPE, right? That's been a tough market for you guys for the last couple of years. It seems like the stock on the sort of telecom component side has kind of run its course more or less. The guy covering institutional telecom who seem modestly optimistic. And then BEAD is maybe out there.
Yeah. The only thing I would say, so everything you said, where I would go with BEAD, which again, for everybody, part of IIJA that's been out over four years ago or close to four years is starting to happen, but it's mostly at 26. So three states have been approved. We actually won a job, at least one job in a state. We're getting more quotes that, well, I'm saying reference BEAD, but going, "Hey, you have to meet this spec or that spec that's part of these." So I think in we're maybe it's group think, but whether you're a fiber optic company or one competitor or other people in this space, most think it's a late 25 story as more people start funding. But the quote activity is picking up.
So you've always generated a good amount of cash. I think you bought back over 20% of your shares since 2021. And let's just say your stock is in quotes cheap right now. So what do you do? Do you buy back more stock? What's the philosophy?
Yeah, I think it is. With two things. We're going over time, so let me quickly call out CapEx allocation. We have the dividend, and that's around $45 million a year. CapEx will go down, but we've called that out for years too to go, "Hey, this is significant investments, all these growth, but that now will be less than $100 million." Now giving a guide for next year. With our excess cash, it's either stock buyback or M&A. For now, for two reasons. One, I'll just use your words online, but it seems like you can make a case that our stock is cheap to lean into that. We do have guided $150 million for this year. The other thing is management bandwidth, one of our criteria for doing different things.
For M&A, there are opportunities we may pursue, but right now, let's get the regional service centers performing at their best. Let's get the Global Mega Projects locked up. Let's do the water things. Let's get the tower at that Hobart facility you toured up and sold out. So right now, the right M&A and it will be part of Atkore's future, but for the next year, it'll be stock buyback.
So I got 20 more seconds. I'm going to fit this last question I've asked you before. What are the top two or three innovations and structural changes affecting your company over the next five years? Are there any emerging industry trends that are perhaps being overlooked in the current discourse?
I think the only thing is now maybe it's my optimism for future. I really do think this global mega project should go either short or long where data centers are going so fast that customers there have placed two or three orders at $4 million or $5 million each to go, "Let's test this and let's see how fast you can ramp," so that could be a great story in the future.
Great. Well, we really appreciate you guys doing this.
Yeah, thanks. I appreciate it.