Atkore with us today. We've got Bill Waltz, who is the President and CEO of Atkore, and John Deitzer, who is the CFO. Bill, as I walk over to you, just starting off, there's a lot going on at Atkore, as you know. You're undergoing a strategic review, which includes a lot of potential alternatives, you know, potential sale of the company, maybe some divestitures. So any sort of update on what's going on, and why did the board, you think, decide to go this route?
Yeah. So I'll try to do it, Andy, great kick-off question, chronologically. I assume, like all companies, but at least I speak for Atkore, the board is always looking at what best strategically, whether it's over a two to five -year plan or long term. So, you know, as we went through the process last year and had the final review in July to go, it makes sense to do the following: One, focus more on the electrical industry itself.
Mm.
And that started to generate some of the things you see, like the selling of an operation, Tectron, in Wisconsin, to the announcement of, you know, exploring alternatives with HDPE. And then we did decide, as, you know, we got into, I forgot exactly, October timeframe, to at least explore an even broader set of alternatives with, potentially selling the whole company or any other derivation of that. And I think it's just a good process. I assume your follow-up questions, I'm very—I have strong expectations of what we can do if running the company as a whole company publicly like we are now. But if it's best for the shareholders in the long term to consider potentially selling the company, you know, the board is open-minded to that on both sides.
We're not rushing to sell, by any means, but we're also not putting up some defense against it. And for specifics, there is no time frame, so I can't really get in and say, "Oh, wait here two months," but you're not expecting that either.
Got it. No, that's helpful. And maybe just to back up and also talk about the markets for a second. You highlighted leading indicators such as DMI, suggesting favorable growth trends for Atkore. So, I know data centers are a big contributor to that. We'll get more into that in a little bit, but maybe tell about the health of non-res markets. So, like, are you more constructive on the verticals? Like, how are you feeling about that?
Yeah, so a couple of things. One, I do think, overall, most of the verticals are doing well. I'll try to bifurcate here in a second. But, you know, as you look for us, we've mentioned in the quarter, you know, give or take, around a mid-single-digit growth. Half of that's going to come organically. You know, from some of the verticals that, you know, have been strong, and this shouldn't come as a surprise, you just mentioned data centers. Obviously, they're up double digits for anybody. But, you know, healthcare is still strong, manufacturing is still strong, multifamily housing is strong. And then on the flip side of that, again, shouldn't come as a surprise, but single-family home, residential, I don't think it's any worse than it was, but I would just say it's anemic compared to, you know, pre-COVID-
Yeah
... or whatever else there.
Yeah. And then just to get it out of the way, you know, you're kind of halfway through Q2, obviously just reported. Anything different, you know, or same trends? It's obviously been pretty cold in the East. I don't know if that means anything, you know.
Not really, with the following thoughts: One, when it is super cold like that, it does have an impact. You know, any construction crew that's not on the site for two weeks is... You know, it's hard to make up that mythical man month and-
Mm
... do something. The flip side of that is, since we had our earnings call, I forget the exact date, but at the very end of January-
Mm
... some of that is that cold and the snowstorms had hit and/or projected hit. So I think we had worked those into our-
Mm
... informal guide for the quarter already.
Got it. That's helpful. And then following... Did you want to say something? Oh, so following that, you know, digging more into data centers, I think you said you're seeing strong backlogs and commitments for orders. There's a significant amount of investment, you know, that needs to be built. So can you comment your positioning, how it seems in certain cases you are bypassing distributors and working directly with hyperscalers?
Yeah.
Like, you know, maybe talk about how Atkore approaches the data center market.
Okay, yeah. So, and then let me, if you don't mind, with data centers, I'm also going to put chip manufacturing.
Sure, great.
So, but I'll bifurcate it in two ways. To your question, you have selling through distribution, which I think, again, you know, we've discussed on earnings, maybe future questions, of our ability to, you know, have a broad breadth of products, to co-load products, our regional service centers. That is, we're selling to a very large market, let's talk in the United States, sold through distribution. We're growing with, or hopefully, as we take market share faster than the market in that channel. Then on top of that, totally, as I say, separate from that, is an issue we kicked off a couple of years ago that I think finally this year we're seeing the ramp-up that we've talked about, is selling direct, as you just referenced, to data centers and also to chip manufacturers in the U.S. and across the globe.
Where, as you can imagine, usually in the U.S., but it's the same whether we're talking the Pac Rim , Europe, and other parts of the world, is the labor shortage and large data center chip manufacturers looking to be able to economize by having the same design, same supplier. And what we do is set up an off-site manufacturing location, take our products, our BIM designs, and so forth, and preassemble the racks for them and literally ship the rack that just needs the final assembly on their location. That has worked in the U.S. well. Obviously, I say obviously, but I'm not going to mention names, but if you imagine the top five-...
Two or three data center companies that have worked with us in the Pacific, and one company in a, or country, excuse me, moved to a second country, have now taken us into starting up jobs where they have commitments to your point, on backlog into Europe, and talking about the States, and literally talking about places like India. Now, stuff like that can be two or three years from now, but, you know, our finally, I really do think our data centers, data center initiatives as we get into Q3 and Q4, you're going to start seeing those results.
That's good to hear. And John, this one might be for you. You reported low single-digit volume growth in Q1, but you maintained your full year volume growth outlook of mid-single digits, and that does require, you know, some improvement in volume in the second half. So maybe you can bridge how you get there.
Yeah, great. And Andy, some of it's gonna build on what Bill just articulated-
Yeah
... as well in a lot of ways. So, you know, we had 2.5%-3% volume growth in the first quarter, and so there is an expectation of, you know, that low single-digit type market growth environment for the base business overall. And then, how we get to the, you know, mid single digits for our enterprise here, some of these initiatives, like Bill had talked about, whether it is outgrowing on the data center, chip manufacturers with our construction services, so combining the product sale as well as, you know, the assembly and, the off-site installation, et cetera, that's a key part of it.
And then certain other end markets, which I think we'll probably dig into a little bit more here in the conversation, but the solar business, we are anticipating in calendar 2026 to be stronger and to see the ramp, and we have the capacity and capability with the Indiana facility that's running very well. So, you know, we're excited about certain markets there. You know, and then the more we can do with certain of these larger projects in the U.S., even absent the construction services element, but these are good markets in the U.S. from a volume perspective. So pretty pleased there.
It's helpful, and I think, you know, two big businesses for you guys, PVC and metal conduits, did have a strong start to the year, you know, high single digits. You expect that momentum to continue? Is there anything going on there versus the previous years?
Yeah, I was going to say, I think to where we've answered is, yes, we expect it to continue, you know, being pulled by things like data center, then our, I say, our own self-help of, you know, where we have the co-load, the regional service center, the one order, one delivery invoice is helping us grow in good markets, I think, slightly faster than the market.
Yeah. And then I had this question about metal framing, cable management, construction services getting better through the year, but that's really data centers and some of the-
Yeah, that was timing.
Yeah.
so they should be, as we look back at the end of this year, up-
Yeah
... mid-single digits versus the, we could get an anomaly of year-over-year.
Yeah, yeah. And, and Bill, you've said to me, I mean, I know you check in with your distribution base, like, all the time. So maybe talk about what, you know, they're saying to you from a channel perspective. I know it's hard to get read into particular products, but, you know, how do you consider channel inventories right now? Healthy? You know, how would you think about that?
Yeah, I would say normal, which is a good thing. So in other words, both to your point with checking in formally and informally all the time with customers, I'll be with some next week, is that they see the markets like we do. You know, you get all the indicators, the Dodge and the ABI and whatever else, but, you know, just checking with them, they see a reasonable growth, and then from a market and their inventory, I would say normal. So there's not a destocking going on, but there's not an overstock going on. There's some about this time to kick off, you know, call it spring buy, even though we're in February, of stocking up for summer, where there's a seasonal pickup. So I would say we're, in some ways, I'm going to say, knock on wood, back to normal life in many ways.
Yeah, no, that's good. Maybe speaking of what normal is-
Yeah
... let's talk about the current competitive landscape. So, you know, the big pricing improvement, several markets, obviously in spike pricing-
Yeah
... as you know, it's been coming down. So I think the debate has always centered around, you know, are your products truly-- are they commoditized? You know, this whole sort of one order, one delivery, one invoice-
Yeah
... like, how differentiated is it? So maybe you can talk about why that relationship with distributors has been, you know, I think it's still been good, but it hasn't helped you as much as maybe I would've thought around price versus cost.
Yeah, so I'm going to spend a couple of minutes here, because I do feel this is something either way, over the last half dozen, you know, years I've explained this. So I'm going to go on a tangent, if you don't mind, Andy, to go.
We don't mind, Bill.
Yeah. So not that Lisa, I'm not looking to buy a diamond ring or something, but if you think about to go, a diamond, I would assume, is somewhat commoditized, like on the four Cs, you know, the cut, clarity, and so forth, that a diamond should be a diamond. But if I was to go buy a diamond, and I'm going to tie this quickly back to Atkore, to go, "Hey, am I willing to pay a premium for a diamond store that I can trust, that's a certified diamond, that has a large variety, that's going to be there if the diamond breaks or, you know, the ring breaks, or a selection of settings?" I personally would pay a premium for that.
Mm.
If diamond price is cut in half, I'm still going to pay a premium, but it's relative to the market.
Yeah.
That's how I think, and that's what I want to always convey with Atkore, is given to your point, the one order, one delivery, one ship—you know, invoice, the, the group rebates who we have, the bundling of projects from pricing. I can tell you with the majority of our customers, if they were to have, like, two suppliers... that our preferred supplier, almost carte blanche, we're one of those two. We do get a price premium, not every order, but in general, and we do get last look. Again, I'm making up fictitious numbers, if the price of a product was $950 by somebody in the past, and could we get $1,000, a $50 premium? Yes. Now, if pricing dropped in half and they're getting $450, can I get $480, $490? Yes.
So we are getting a last look premium. That premise hasn't stopped, but it's a premium kind of off the industry-
Yeah
pricing, and I think that's how, if it's got misconstrued, that its pricing went from $1,000 to $500, I can still charge $1,000. That's not there. But the ability for us to co-load and bundle, we're seeing that business expand, so we should get a price premium across more products as we do it, but it's still a premium to the market.
Totally fair. So maybe then current thoughts on imports across your various products, right? I mean, it seems like in your last earnings call, you're more comfortable in the import dynamics in steel versus PVC, so maybe talk about that.
Yeah, I do think, again, it's asking us to look forward, but to go at least at past indications, with the tariffs and so forth, that, you know, we're, to your earlier questions in our earnings, you know, steel conduit is going up and steel imports are actually going down. Now, we're talking, you know, percents up and percents down, but at least 5% down in imports here over the last three to six months. You know, a reasonable amount, but it's not shut off, but it's moving in the right direction. That's helping our pricing power that we've communicated. PVC is still growing. Now, whether that's the fact that, like, steel has a 50% tariff on it, if not more, from China, and PVC has a 10%.
But I think overall, even there, it's at least normalizing more than if you go back over the last three years. So I'm comfortable with where it is at this current stage.
Got it. And Bill, like, any comment on copper, aluminum price versus costs, you know, given the recent volatility?
Yeah, that's a challenge. Now, again, I don't want... We have it in our earnings guide, but the thing with copper that at least, you know, in my decade plus of leadership here, is it's just moving so frequently, so dramatically within a day. Like, the ideal situation, I'm not even picking a commodity, but pick PVC. A resin supplier announces a price increase 30 days out. We get out in front of it and announce our price increase. We actually get priced before the COGS hit us. Here, we're all of a sudden, copper's dropping, going from $4.80 to $5.60 in two days. By the time you announce the price increase, it's hitting. On the same hand, by the time your price increase goes out, copper's dropped again.
It's, it's like a sine wave is good for us in change, but not a sine wave that's so dramatic and within 24 hours cycle. So that's a little bit of a challenge here, just trying to price the market, and obviously distributors are aware of that. They're, you know, holding back on buying to see how things settle out. And then for aluminum, you know, prices are up with the tariffs and so forth, and the only anomaly we've called out in our earnings is, the fact that we do buy our aluminum share of the country from Canada, so we're facing a tariff that somebody who's purely vertically integrated in the U.S., we're facing slightly more tariff. Again, we have cost actions, designs to mitigate that, but that's a six-month, year-long process to work through that.
To be clear, Bill or John, you put copper kind of in your guides, that volatility, right? You know, more or less.
Yeah, yeah, I mean, I think it's tough to predict copper, though.
Yeah.
I mean, what can happen, the dynamics there, to Bill's point. So I mean, where we're at so far this year, but, you know, if there's future changes, obviously... I mean, the market, when it sees those spikes within 24, 48 hours-
Yeah
... people start kind of being cautious, and so we'll just monitor and continue.
Yeah
... to watch that as we move forward.
Okay, that's helpful. And I've asked you this before, Bill, but you know, we are pretty close to a Supreme Court decision, I think. You know, the common belief is that the administration would just move more towards Section 232. Like, so probably not too much change for you guys, but like-
Yeah, so very little. So great question. If nothing else, to clarify for any shareholder out there, is most, like, all the steel tariffs, I don't want to say all, because there you get the IEEPA on top, but what I've talked about to date is what you just referenced, is 232 tariffs or what's called 301 tariffs against China. That's not part of any Supreme Court decision.
Mm.
It's just this, what's called IEEPA. And so really, where that's impacting is, I referenced, like the 10% tariff on PVC products.
Yeah.
You know, I would say I like a tariff in general, but compared to 50%, 80%, and 90% tariffs-
Yeah
... it's, that's not going to change the world for us.
Got it. That's helpful. And then, you know, sort of backing up, maybe just talking about margin in general, right? Like, if I just look at margins below pre-pandemic levels, right? So maybe elaborate on the self-help capabilities that you have when it comes to getting your margin profile back up. I know you're working on initiatives. You actually had good productivity last quarter. So, you know, optimizing manufacturing, can quantify the impact from these actions and how soon we can see them benefit?
Yeah. John, do you want to?
I'll take that. I mean, I think you've mentioned it on, you know, there's a couple of different areas to touch on here that I think will impact margins, whether it's this year, but also moving forward. You did talk about, you know, we've announced three facilities where we're stopping our manufacturing and closing those from a manufacturing standpoint. The benefits associated with those would be in, you know, roughly in the $10 million-$12 million from those facility closures. We would start to see that, potentially come through at the back end of this year, but really more in our fiscal 2027.
Mm-hmm.
You know, as we're really winding those down here, you know, mid-calendar 2026 kind of timeframe, but those are on track and going well. They're those are not easy projects, but the teams are working on those diligently. Another area that we see, you know, some of the divestitures as well. So we've targeted certain businesses that weren't necessarily meeting our targets, whether it was from a margin perspective or a return on invested capital, and, you know, we've been able to divest two businesses here, whether it's our recycling business out in the Pacific Northwest or the Tectron Tube business that Bill mentioned, and those were dilutive from a margin perspective. So, you know, those are opportunities for us to continue to grow.
And then, we have been pretty strong from a productivity standpoint, as we saw here in the first quarter, and I think that continue. You know, we anticipate a lot of the projects and initiatives will continue to have benefits. And as we get the volume growth, you know, we're gonna get a lot of leverage off the cost footprint that we do have and have stronger incrementals as we look forward. So, you know, with the good market conditions that we're thinking for the electrical business, you know, I think that's positive for us as we think about margins moving forward.
It's helpful, John. And then, this one's probably for you, too. You were asked a question on your last earnings call regarding the $50 million of incremental headwind in 2026 versus 2025, from price versus cost, and I think in your answer, you said, you know, price versus cost could go positive in the second half, so maybe give more color and confidence of that.
Yeah, and as I take a step back, you know, when I look at the first quarter in particular, our prices were down 2.7%, roughly, so 2.5%-3% here in the first quarter of 2026. I look back, pricing was down 12% in the first quarter of 2025, right? And so, you know, when you look throughout the quarters in fiscal 2025, you know, I think our second quarter, our prices were down 17%, right? And so we're just seeing a significant moderation here. I think on the last call, we talked about we've had four sequential quarters of price increases on our steel-related products.
Now, the underlying raw material, you know, hot- rolled or- cold rolled steel has also increased over that period, but we've been able to maintain and increase our prices as well. So, you know, taking another step back, I think one of the items about Atkore is the breadth of the portfolio, right? I mean, we've talked at length about, you know, the normalization in our PVC prices for several years now, you know, but we have other product categories that, you know, do have a strong demand and that we have a really good footprint, or we have maybe a more specialized product, and we have the opportunity to be positive on a price versus cost standpoint there. So I think there's a lot of puts and takes.
And then, just to talk about another initiative that we've been, you know, working on very much internally, but I think Bill mentioned it in the last earnings call, we've really, you know, somewhat embraced 80/20 and focusing on a SKU rationalization initiative. You know, I think that's gonna be positive for us as we start to look forward.
Any questions from the audience? Anybody want to ask a question? While we wait for questions, let me ask you about that 80/20, John, just in the... Like, where are you in the stage of development there? And because it could be pretty impactful to your margins, to your point.
Yeah, I would say very early-
Yeah
... here, but I think the mechanical business is an area where an opportunity for us to see, you know, what is the right set of customers versus the assets, and then how is that complementary with the electrical business? I think there's a very good opportunity, but really early days for us here. But I think the opportunity moving forward over the next several years, because it isn't just a one-time initiative, right?
Yeah.
I think it's ongoing, and the folks in the industrial space who've done it well have really embraced it over a multi-year period.
Yeah.
I think that's where we'll start to see it, but, you know, I think that will be a contributor to us as we start to look forward.
Do you guys think that you have a lot of SKUs, let's just say?
Oh, yeah.
Like-
If I can add two things there. So I'll answer your question and it'll give some background.
Yeah.
Yeah. I literally, we just had a deep dive for, you know, an hour plus yesterday on 80/20 with the teams, and I forgot the exact number of thousands or tens of thousands of SKUs. But, you know, again, it's it—I don't want to over just micromanage SKUs, but, you know, a specific thing of dropping 10% of what I'll call active SKUs.
Yeah.
Like, that was one of the questions, like: Okay, you cancel a part number no one bought, like-
Yeah
... symbolism versus... No, these are parts that therefore mean less change over time and stuff like that. And one of the neat things, and I was driven, you know, we benchmark, obviously, well-run companies, driven from, you know, my staff down and so forth. But in the review, for example, with our Safety & Infrastructure group, they're seeing the results already. So, like, literally, when you're talking to the product manager, the general manager, you can feel the excitement that they've bought into, "Hey, I'm actually making more profit. My factory productivity is better." So this, I think, will expand rapidly.
Yeah.
But to John's point, we're in the first inning of a nine-inning game, so there's lots of opportunities moving forward.
Yeah, that seems interesting. And then, maybe it's for John or Bill, like, I think you mentioned that you think you can return to year-over-year growth and Adjusted EBITDA in 2027.
Yeah.
I understand it's early, self-help and strategic divestitures are progressing, but can you talk about your confidence in that sort of comment and EBITDA reflecting in 2027?
Yeah, it is still early, and I don't want to get too ahead of ourselves, but we have indicated that we believe we'll be up year- over- year-
Yeah
... in earnings and Adjusted EBITDA in 2027 versus 2026. I think as we look at the back half of this year, obviously embedded within our outlook, is a very positive second half with a lot of ramp, whether it's certain initiatives like we've talked about on the construction services side with data centers or on some of the solar business. And so some of that should hopefully continue on into 2027. We also continue to expect, you know, solid markets in 2027, you know, especially here in North America. And, you know, if there's any type of potential change, whether it's in other end markets that have been weak, like residential, you know, those could be positive contributors.
So I mean, there's a lot that we're watching and monitoring, but, you know, still early, so as we progress through the year, though, hopefully we can give some updates.
Yeah, John, and to that point, like with the understanding the markets are the markets, like how much is that gonna control the profitability, though? You know, there - it does feel like a lot of self-help going on as we go this time next year versus today.
Yeah, I would just say that the team is very focused on cost control, especially from an operational perspective. You know, we've had a lot of initiatives. I think we're starting to see some of those really progress. In, you know, some of the areas where we have had some challenges, I think we've worked through them now. I mean, we've talked about the production capability and how we're running from an efficiency standpoint in some of the newer facilities and, you know, we expect that to just continue to get better, and that's because they're running so well, that's enabled, you know, some of the facility closures that we talked about earlier, that they can absorb and take on that capacity and still have room to meet the market growth.
I mean, I think that's the opportunity as we look at the leverage moving forward and, you know, these investments that we have made. Some of them will continue to help us drive efficiencies in other areas of the business as well.
Got it. And you guys alluded to solar briefly. I think you expect an uptick in the second half of 2026. But, you know, more broadly, how are you thinking about the Torque Tube business, you know, given the administration? Like, they can't tell how supportive they are, maybe they're not that supportive. And then, you know, your facility, as you mentioned, is up and running, so should it continue to get more efficient as you go on?
Yeah. I'll take at least the lead on that one, John. Yeah, Andy, I think I'll try to hit a couple of your points or questions there. One, solar is doing really well. Even to your point, the second half of 2026, I would even expect, like, starting now, we're seeing it in a, you know, a good way. It's not like a date, but to go, customer orders are there, the factory's humming, and I think things like that build on each other. In other words, to John's point, the more efficient the factory runs, the more orders we have capacity for, the more our productivity goes up, and it's moving along, and we do have orders for the year. You know, obviously, a customer can move an order out or stuff like that, but, you know, as we...
To your earlier questions on, hey, what makes the second half of the year, and John Deitzer did answer, one of those is solar. It's really doing a great job right now.
Mm.
As for the administration and trying to forecast, you know, right now, you know, incentives are in place, and even if they don't, I think one of the things is you go back a couple of years where there were no incentives and there was no tariffs. So at least there, to go for the amount of solar growth, if you're just focused on USA's manufacturers, I think we're in a good spot. And, you know, I had dinner on Monday night with the leader of that division, and he was talking, like, literally to the point that I'm asking questions of my ops team on can we increase capacity more as he's lining up customers for the second half of the year, FY 2027.
Mm.
I think we're in a good spot.
Yeah, that's good. So maybe moving over to water, you know, you've been making investments in your water portfolio. I think you've had some maybe growing pains in the business. You transitioned from, I think, plumbing to more of a focus on-
Yeah
... municipal spending. Can you update us where you are with your products offering and expand on the demand expectations for this vertical?
Yeah, so a couple of things. To your point, we have, you know, I don't want to call it 80/20, but the pruning, it, it falls under there.
Mm.
But, you know, pruning, plumbing, that doesn't make us, at least for us, but I think in the industry as a whole, I don't know, more margin and, you know, municipal large product checks, I could get into specifics, than off the plumbing, and it is moving ahead. The factories have the products made now. You know, it's a kind of multi-step. First, you obviously have to make the products, then you need to get them certified, NSF certification. That, you know, can take a while, and it's by location, and then from there, you need to go out to the municipalities and get, like, that local, I'm making this up, but Dallas, Tampa, Miami, you know, approval from that municipality to sell and get spec'd in. So those things have taken longer than I probably would have thought three-four years ago.
But, you know, we're through most of that now. Obviously, there's 1,000 cities, so every city, but it's ramping up. And again, I wanna stress, like, the way to look at municipal for us, it's never been a start a new plant up or wherever, as much as maybe an extra extrusion line. Some of it's using extra capacity, and from there, it's one of those things, it depends on how you look. We are a very small, single-digit player-
Mm
... but we buy resin effectively, we have nine facilities, we're already in the market, and we just expand our product portfolio, and this is one where you look and say, "Hey, if we have 1 or 2% market share, can we double our business from 2% to 4%?" You know, literally 100%-
Mm
... growth for us, and that's, framing it, is 20% of our PVC. So it can be a good growth driver for us, but not a major impact that the big players in this market are gonna somehow... they shouldn't be reacting to us.
Right.
So-
That leads me into my next question: Is it different competitive landscape? You're the small guy, which is different, you know?
Yeah, I, again, everybody could think differently on this, but we are the small guy in this, therefore, I think we can opportunistically grow quickly, pick jobs off, and not be as concerned on, you know, if you're the guy with a larger market share trying to double market share, you know, what's the impact here, and so forth. So we can just think more nimbly and so forth and, you know, take and grow with customers. So I think we're in a good position.
Got it, and then you mentioned residential in the beginning of the conversation. It's been weak for a while, as you know.
Yeah.
But, you know, maybe residential stocks have done better. So then talk about, like, what you're looking for, for any sort of stabilization or recovery. I assume you haven't seen it yet, and, you know, what do your distributors tell you about that side of the business?
Yeah, so a couple things going on there. So again, trying to be objective versus how do I sell to shareholders.
Mm.
To your points, their stocks may be going up. One of the things we look at as almost an indicator, I'm not saying the right thing, but without naming the major public companies, but obviously, they're out there, is when they do their earnings on how much money they're spending on land development-
Mm
... 'cause that's the big mover for us. It's like you put a single home in a new development, it's nice, but you just think about the PVC. It's a new subdevelopment coming in where you're running all the lines to that subdevelopment, down every street, larger size conduits, that's the needle mover. Up till now, like I'm just saying January, when I reviewed and prepped for earnings, we haven't really seen that yet.
Yeah.
But, you know, again, now I'm conjecturing here, you know, the Fed drops their interest rates another 50 basis points.
Mm.
To your point, prices are already going up. Maybe that's gonna start swinging. The good news, we do not have that baked into any forecast, so-
Mm
... that turns around, that would be a great tailwind to help drive our business.
Yeah, helpful. And then maybe just an update on HDPE. I know you're planning to sell the asset, but maybe comment on the traction you're seeing from potential buyers. I assume you're not gonna tell me the timeline, but, you know, it seems like what's hard about HDPE from my point of view, right, is, and you know, I know it's big telecom exposure, and I do cover companies who, you know, do fiber infrastructure work-
Yeah
... and pretty solid demand. So, like, why isn't that sort of flowing through to you guys at all?
Yeah, well, I think in some ways, let me bifurcate a couple things. You're right. First off, I'm not going to get specific, but we are, we are working through the process, and there's no rush, or there's nothing to say if we don't get what we think is a fair deal that's best for our long-term shareholders, and so forth. But we are looking to go, does this fit in the exact electrical infrastructure or strategy? No, and therefore, let's do a strategic review, and that's progressing as expected. To your point, fiber is growing. HDPE is growing quicker than the Atkore portfolio as a whole.
Mm.
The challenge becomes a little bit, as you know, Andy, is both demand, which is growing. I'd even say double-digit demand growth-
Mm
... but is supply still there?
Mm.
There's a lot of inventory. The pricing pressure, just 'cause demand's growing-
Okay
... does it turn into good margin business and so forth? So I think we saw the right... It still makes prudent sense to consider strategic alternatives, and you will be the first to know-
Yeah
... like everybody else.
So, then maybe let me ask you about, you always have a good amount of cash. You bought back a lot of stock over time. It seems like you've kind of paused M&A, so maybe provide some clarity on what you do now. I think you slowed down repurchases this quarter after being active, you know, for a while. So is it fair to assume that, you know, you might accumulate a little cash, pay out a dividend? What are you gonna do?
Well, we just announced our, you know, quarterly dividend, which we've had in place here for just about two years now, so pleased with that. And, you know, so I think as we're working through some of these items here in the near term, we're a little bit sensitive and focused, you know, the dividend and CapEx. But, you know, long-term share repurchases have always been a key part of our capital allocation strategy.
Yeah.
So I think that's always going to be a key anchor point for us.
Yeah.
Near term, we're a little bit limited here, as we're working through a few of these items and evaluating. But, you know, fundamentally though, there was a time previously, and especially as part of the Atkore Business System , where M&A was an effective tool for us.
Mm.
You know, that is a key part of, you know, our ability to do more through the Regional Service Centers, et cetera, has, you know, can expand our value proposition, and things like that. But near term, I think we're focused on some of the more internal items right now.
Yeah. Got it.
Oh, and the only thing I'd add to that also, but again, we'll go through the strategic review, is I had purposely held up some M&A with the thought of all the investments we made in growth initiatives. But if you reflect back and going, solar is hitting, global construction into data centers is hitting, so the management bandwidth and productivity 80/20 is working, so the management bandwidth is opening up. Now, we gotta get through the strategic review-
Yeah
... but I think Atkore, assuming we, if we stayed as a public standalone company, I think we're ready to turn that lever back on.
Yeah, yeah. Bill, could I just go back to imports for one second?
Yeah.
Like, you know, in terms of the metal side, pretty stable now with the competition, the Mexican competition side?
Yeah, actually, it's working in our favor slightly. So again, you know, to go, if you quoted or referenced to go, we're up. You know, we had in our earnings charts, we're up in our metal, metal framing is down, but that was the timing. But metal conduit, and that's where the imports were, you know, it was growing at a good rate, both for us and I assume the competition. And the imports are actually down. You know, I'll just use a round number, but around 5%-
Mm
... you know, quarter, six months, you know, wherever there, it depends on what time frame. So, you know, it's working for us.
Okay. Question? Hold on for the mic.
... Just zoom back.
Thank you. I think you talked about factory closures. Like, when we think about your footprint, do you have, like, more optionality for optimization? And then does that impact your one delivery, one invoice, moat that you have?
Yeah. Yeah, so, yes, there's optionality—if I go back and go pre-COVID, post-COVID, we can go back and even in future earnings or for investors to go, we've always probably closed a rooftop plus a year. I mean, I go back to being here 13 years, and, you know, being in Florida, go, "Here's a Fort Largo, you know, over near Tampa," and just walk through Carrollton, Ohio, and, you know, like, things. So it's happening this year, probably more aggressive than ever, especially one of those three facilities is, depends on how you measure it, but I'd say our, probably our second largest facility. So these are, in this case, at least one is a massive facility. But no, there is obviously future opportunities.
On the same hand, I don't think it will impact our one order, one delivery, one invoice, because we're taking products and efficiently sending full truckloads to our, you know, six RSCs, Regional Service Centers, and then shipping out from there like a hub-and-spoke type of system. So, you know, we'll still be able to maximize that. Had a great review with our team yesterday on how we're picking that up. We're simultaneously improving our delivery performance, and we're reducing costs out of our RSCs, which is what we expected to do, but it's moving along well right now.
Last question, Bill. So 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?
Yeah, I'll try... A great question. So nothing is going to come as a surprise, but I think going for us as a whole over the next 2-5 years is this strategic review of just saying let's focus more on our core electrical.
Mm.
So let's, you know, continue without naming things. But, you know, I do think there could be potentially, in addition to HDPE, you know, other small things like our Tectron business, you know, across the globe, that we'll continue to look at. Are we the rightful owner, as John Deitzer brought up, whether it's margin, strategy, ROIC? So we're gonna keep doing those type of things, as we move forward. And then also, the good news for Atkore, if I look more holistically, call it a mega trend, is purely the thought of anybody in the electrical space, it's a good space to be in. Data centers, it's going to keep growing, but especially in the U.S., but I think worldwide, we have a shortage of skilled trade.
Mm.
So as Atkore continues to do things we talked about, but, you know, a new product vitality of over 10% to drive labor savings products, even just for distribution, to have the RSCs and be able to co-load products into one order, I think all those things will help. And the other thing that we're just starting, so I don't even know if we'll be talking about in the next year, but it's how we add artificial intelligence on top to make it a simpler process for our customers. So I'm excited both for this year, but really for the, you know, future of Atkore.
Bill, John, thank you very much. Appreciate it.
Great questions. Thanks, Andy.