What happened
Electrical components and infrastructure equipment manufacturer Atkore (ATKR 0.98%) posted quarterly results that came in well ahead of expectations, and boosted guidance for the year. The stock is charging higher as a result, up as much as 18% in Tuesday trading.
So what
Atkore earned $5.39 per share on revenue of $982.6 million in its fiscal second quarter, easily surpassing analyst expectations for $3.75 per share in earnings on sales of $800 million. Net sales were up 53.6% year over year, with Atkore's electrical products group growing revenue by 55.9% and its safety and infrastructure division up 46.9%.
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Analysts have been concerned that raw material costs and other expenses would eat into Atkore's business, and in particular its PVC piping and metal conduit sales. But the quarter marked a second consecutive beat for the company, and CEO Bill Waltz said the business continues to have momentum.
"Both segments contributed to the strong second quarter results, with positive trends across multiple product categories in each segment partially offset by declines in certain steel related product categories in the U.S.," Waltz said in a statement. "Our results in the first half of 2022 reflect our team's dedication to serving our customers and the resilience of the Atkore Business System, which continues to successfully guide our operations through pricing volatility, labor shortages across the value chain and other macro factors."
Now what
The company raised its full-year adjusted earnings guidance to $19.65 to $20.45 per share, from $12.80 to $13.60, which implies a lot of upside to the full-year consensus $13.44 per share estimate. Atkore also doubled the size of its current share repurchase program to $800 million, and said it expects full-year sales to come in up 25% to 30% year over year.
"We enter the back half of the fiscal year with a stronger base from which to grow and the financial flexibility and expected cash flow generation to continue to deliver on our capital allocation priorities," Waltz said.
With Tuesday's jump, Atkore shares are now up 40% over the past year and up 350% over the past three years. Atkore has established itself as a go-to supplier for much-needed electrical and construction supplies, and Wall Street so far has been behind the curve in valuing the potential of this business.
