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What changed in Atkore Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Atkore Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+256 added−252 removedSource: 10-K (2023-11-17) vs 10-K (2022-11-18)

Top changes in Atkore Inc.'s 2023 10-K

256 paragraphs added · 252 removed · 209 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

42 edited+11 added−4 removed52 unchanged
Biggest changeHuman Capital Resources Culture Atkore believes that a culture of engagement and alignment drives continuous improvement, enhances our customers’ experience, and delivers strong performance. We aim to foster a workplace where our employees feel aligned with our mission, proud of our culture and engaged in their work.
Biggest changeThe Company continues to implement this ERP as it integrates acquired businesses. In today’s business environment, cybersecurity is of paramount importance and Atkore has also invested significantly to strengthen our cybersecurity posture. 7 Human Capital Resources Culture Atkore believes that a culture of engagement and alignment drives continuous improvement, enhances our customers’ experience, and delivers strong performance.
These combined efforts communicate the value proposition of the overall Atkore brand by bringing together complementary 6 solutions in our portfolio while reinforcing the individual value propositions of our leading sub-brands such as Allied Tube & Conduit, AFC Cable Systems, Kaf-Tech, Heritage Plastics, Unistrut, Power-Strut, Cope, US Tray, FRE Composites, United Poly Systems, Calbond and Calpipe.
These combined efforts 6 communicate the value proposition of the overall Atkore brand by bringing together complementary solutions in our portfolio while reinforcing the individual value propositions of our leading sub-brands such as Allied Tube & Conduit, AFC Cable Systems, Kaf-Tech, Heritage Plastics, Unistrut, Power-Strut, Cope, US Tray, FRE Composites, United Poly Systems, Calbond and Calpipe.
Distribution Atkore adds value to the customer experience with a comprehensive portfolio of electrical products and strategically located regional distribution centers. Additionally, we drive value for our customers through a single order across our broad product portfolio coupled with services like our ReliaRoutes hub-and-spoke fixed trucking lanes and technologies like our mobile app to track orders and schedule pickups.
Distribution Atkore adds value to the customer experience with a comprehensive portfolio of electrical products and strategically located regional service centers. Additionally, we drive value for our customers through a single order across our broad product portfolio coupled with services like our ReliaRoutes hub-and-spoke fixed trucking lanes and technologies like our mobile app to track orders and schedule pickups.
Human Rights Atkore is committed to supporting human rights and fair labor practices. We will not tolerate human rights abuses of any kind, including human trafficking, child labor or incidents of corruption within our company or supply chain. Employees are encouraged to report any potential violations or concerns, and all reports are promptly and impartially investigated.
Human Rights Atkore is committed to supporting human rights and fair labor practices. We will not tolerate human rights abuses of any kind, including human trafficking, child labor or incidents of corruption within our 9 company or supply chain. Employees are encouraged to report any potential violations or concerns, and all reports are promptly and impartially investigated.
We do not currently expect that any remaining obligations would have a material effect on our financial position, results of operations or cash flows. 10 In August 2014, we received from the IEPA the terms of a proposed new stormwater discharge permit for our Harvey, Illinois manufacturing facility.
We do not currently expect that any remaining obligations would have a material effect on our financial position, results of operations or cash flows. In August 2014, we received from the IEPA the terms of a proposed new stormwater discharge permit for our Harvey, Illinois manufacturing facility.
References to our website in this Annual Report on Form 10-K do not constitute an incorporation by reference of any of the information found on our website, and such information is not a part of this or any other report we file with or furnish to the SEC. 11
References to our website in this Annual Report on Form 10-K do not constitute an incorporation by reference of any of the information found on our website, and such information is not a part of this or any other report we file with or furnish to the SEC.
We believe Atkore’s investments in safety, health and well-being are critical to supporting and protecting our most important asset: our people. 8 Diversity, Equity and Inclusion At Atkore, we believe that diversity of all types contributes to our success and that our differences make us better.
We believe Atkore’s investments in safety, health and well-being are critical to supporting and protecting our most important asset: our people. Diversity, Equity and Inclusion At Atkore, we believe that diversity of all types contributes to our success and that our differences make us better.
Our employees are primarily located in the United States, with about 14% employed at our international locations in Australia, Belgium, Canada, China, New Zealand, and the United Kingdom. As of September 30, 2022, approximately 18% of our domestic and international employees were represented by a union under a collective bargaining agreement.
Our employees are primarily located in the United States, with about 14% employed at our international locations in Australia, Belgium, Canada, China, New Zealand, and the United Kingdom. As of September 30, 2023, approximately 18% of our domestic and international employees were represented by a union under a collective bargaining agreement.
We believe customers view Atkore as offering a strong value proposition based on our broad product offering, strong brands, short order cycle times, reliability and consistent product quality. For each of fiscal 2022, 2021 and 2020, approximately 91%, 90%, and 89% respectively, of our net sales were sold to customers located in the United States.
We believe customers view Atkore as offering a strong value proposition based on our broad product offering, strong brands, short order cycle times, reliability and consistent product quality. For each of fiscal 2023, 2022 and 2021, approximately 90%, 91%, and 90% respectively, of our net sales were sold to customers located in the United States.
Electrical Services Inc., Crescent Electric Supply Co. and United Electric Supply Company, Inc.) and members of buying groups (such as Affiliated Distributors, Inc., IMARK Group, Inc. and STAFDA) as well as industrial distributors and big-box retailers (such as The Home Depot, Inc.). We also support alternative energy OEMs, with many applications used in solar system infrastructure.
Electrical Services Inc., Crescent Electric Supply Co. and United Electric Supply Company, Inc.) and members of buying groups (such as Affiliated Distributors, Inc., IMARK Group, Inc. and STAFDA) as well as industrial distributors and big-box retailers. We also support alternative energy OEMs, with many applications used in solar system infrastructure.
A new permit was issued August 5, 2021 that included a less stringent permit limit based on the receiving stream evaluation, which also included a one-year start-up / shake-down period to meet the new zinc limit. We continued to keep the IPEA informed on our progress. The facility achieved compliance within the one-year start-up / shake-down period.
A new permit was issued August 5, 2021 that included a less stringent permit limit based on the receiving stream evaluation, which also included a one-year start-up / shake-down period to meet the new zinc limit. We continued to keep the IPEA informed on our progress.
Significant product categories within our Safety & Infrastructure segment include mechanical pipe, metal framing & fittings, construction services and perimeter security.
Significant product categories within our Safety & Infrastructure segment include mechanical tube, metal framing & fittings, construction services and perimeter security.
(collectively with all its subsidiaries referred to in this Annual Report on Form 10-K as “Atkore,” the “Company,” “we,” “us,” and “our”) was incorporated in the State of Delaware on November 4, 2010. Atkore is the sole stockholder of Atkore International Holdings Inc. (“AIH”), which in turn is the sole stockholder of Atkore International, Inc. (“AII”).
(collectively with all its subsidiaries referred to in this Annual Report on Form 10-K as “Atkore,” the “Company,” “we,” “us,” and “our”) was incorporated in the State of Delaware on November 4, 2010. As of September 30, 2023, Atkore was the sole stockholder of Atkore International Holdings Inc. (“AIH”), which in turn was the sole stockholder of Atkore International, Inc.
We provide opportunities for advancement through rotational and stretch assignments and best practice leadership roles. In fiscal 2022, approximately 34% of our total positions filled came from internal promotions, highlighting our commitment to developing our employees.
We provide opportunities for advancement through rotational and stretch assignments and best practice leadership roles. In fiscal 2023, approximately 22% of our total positions filled came from internal promotions, highlighting our commitment to developing our employees.
Some of our products are purchased by OEMs and used as part of their products and solutions in applications such as utility solar framing, and conveyor systems. OEM sales accounted for approximately 14% of our net sales for fiscal 2022.
Some of our products are purchased by OEMs and used as part of their products and solutions in applications such as utility solar framing, and conveyor systems. OEM sales accounted for approximately 13% of our net sales for fiscal 2023.
Our primary suppliers of steel are Cleveland-Cliffs, Steel Dynamics and Nucor; our primary suppliers of copper are AmRod and SDI LaFarga; and our primary suppliers of PVC resin are Westlake, Formosa and Oxy Vinyls. We strive to maintain strong relationships with our suppliers.
Our primary suppliers of steel are Cleveland-Cliffs, Steel Dynamics and Nucor; our primary suppliers of copper are AmRod, SDI LaFarga and Nexans; and our primary suppliers of PVC resin are Westlake, Formosa and Oxy Vinyls; and our primary suppliers of HDPE resin are LyondellBasell and Baystar. We strive to maintain strong relationships with our suppliers.
Distribution-based sales accounted for approximately 84% of our net sales in fiscal 2022. We distribute our products to electrical and industrial distributors from our manufacturing and distribution facilities as well as from over 40 dedicated distribution facilities operated by our agents. Our products are also stocked by electrical and industrial distributors who are located across the United States.
Distribution-based sales accounted for approximately 83% of our net sales in fiscal 2023. We distribute our products to electrical and industrial distributors from our manufacturing and distribution facilities as well as from over 38 dedicated distribution facilities operated by our agents. Our products are also stocked by electrical and industrial distributors who are located across the United States.
Manufacturing We currently manufacture products in 47 facilities and operate a total footprint of approximately 6.8 million square feet of manufacturing and distribution space in eight countries. Our headquarters are located in Harvey, Illinois, which is also the location of our largest manufacturing facility.
Manufacturing We currently manufacture products in 49 facilities and operate a total footprint of approximately 7.5 million square feet of manufacturing and distribution space in eight countries. Our headquarters are located in Harvey, Illinois, which is also the location of our largest manufacturing facility.
Our net sales by geographic area were as follows: Fiscal Year Ended (in millions) September 30, 2022 September 30, 2021 September 30, 2020 United States $ 3,553 $ 2,637 $ 1,563 International 361 291 202 Total $ 3,914 $ 2,928 $ 1,765 Atkore has a well-established customer base, which includes many of the largest companies in their categories.
Our net sales by geographic area were as follows: Fiscal Year Ended (in millions) September 30, 2023 September 30, 2022 September 30, 2021 United States $ 3,150 $ 3,553 $ 2,637 International 369 361 291 Total $ 3,519 $ 3,914 $ 2,928 Atkore has a well-established customer base, which includes many of the largest companies in their categories.
Over the past six years, Atkore has made significant investments in technology to improve our business and provide value to our customers. Currently, we operate our business using commercially available hardware and software products with well-developed support services.
Over the past six years, Atkore has made significant investments in technology to improve our business and provide value to our customers. Currently, we operate our business using commercially available hardware and software products with well-developed support services. These commercially available software products include the Company’s general ledger and financial reporting system.
Our employees are required to receive Atkore Kore Training and Safety Alerts, which cover high-hazard occupational safety concerns and compliance with both internal and external safety and environmental permits. Every one of our sites completes a self-assessment and certification of completion.
All employees are 8 required to certify compliance with the Life Saving Rules annually. Additionally, our employees are required to receive Atkore Kore Training and Safety Alerts, which cover high-hazard occupational safety concerns and compliance with both internal and external safety and environmental permits. Every one of our sites completes a self-assessment and certification of completion.
Our 2022 engagement and alignment survey had an overall participation rate of 78%. In fiscal 2022, 67% of our hourly workforce participated in the survey, compared to 61% of hourly employees in fiscal 2021. The result of the survey showed the following favorable percentages: Engagement 83%; Alignment 86%; Safety 91%; and Diversity Equity & Inclusion 83%.
Our 2023 engagement and alignment survey had an overall participation rate of 81%. In fiscal 2023, 72% of our hourly workforce participated in the survey, compared to 67% of hourly employees in fiscal 2022. The result of the survey showed the following favorable percentages: Engagement 83%; Alignment 87%; Safety 91%; and Diversity Equity & Inclusion 84%.
We entered into a consent order that required Allied Tube to pay a nominal penalty, install base low-flow oil and water separation equipment and take certain additional remedial actions to resolve the State’s claim. The installation of the low-flow oil and water separation equipment is complete and certain additional remediation activities are in progress.
We entered into a consent order that required Allied Tube to pay a nominal penalty, install base low-flow oil and water separation equipment and take certain additional remedial actions to resolve the State’s claim.
In addition to many other awards, in 2020, Atkore was recognized as a Great Place to Work-Certified TM company. Employee Base As of September 30, 2022, we employed approximately 5,000 full-time equivalent employees of whom approximately 20% are temporary or contract workers.
In addition to many other awards, in 2023, Atkore was recognized as a Great Place to Work-Certified TM company for the third year in a row. Employee Base As of September 30, 2023, we employed approximately 5,600 full-time equivalent employees of whom approximately 14% are temporary or contract workers.
Safety, Health and Well-Being At Atkore, nothing is more important than the safety and well-being of our people. We seek to ensure that employees, customers, contractors, and visitors to our facilities go home safely at the end of each day, and we empower everyone to proactively identify and eliminate risks to promote an injury-free and incident-free workplace.
We seek to ensure that employees, customers, contractors, and visitors to our facilities go home safely at the end of each day, and we empower everyone to proactively identify and eliminate risks to promote an injury-free and incident-free workplace.
The majority of Atkore products have Building Information Modeling (“BIM”) models available for our customers’ use. Significant product categories within our Electrical segment include metal electrical conduit and fittings, plastic pipe and conduit, electrical cable and flexible conduit, and international cable management systems, which are critical components of the electrical infrastructure for new construction and MR&R markets.
Significant product categories within our Electrical segment include metal electrical conduit and fittings, plastic pipe conduit and fittings, electrical cable and flexible conduit, and international cable management systems, which are critical components of the electrical infrastructure for new construction and MR&R markets.
In 2021, we launched our Supplier Business Review Agenda with several of our largest suppliers to ensure our partners could conduct business in alignment with our values. 9 Intellectual Property Patents and other proprietary rights can be important to our business.
Atkore’s Supplier Integrity and Sustainability Standards set forth our expectation that suppliers uphold our commitment to human rights. In 2021, we launched our Supplier Business Review Agenda with several of our largest suppliers to ensure our partners could conduct business in alignment with our values. Intellectual Property Patents and other proprietary rights can be important to our business.
Available Information We make available free of charge through our website, http://investors.atkore.com/sec-filings, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, other reports filed under the Securities Exchange Act of 1934 (“Exchange Act”), and all amendments to those reports simultaneously or as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.
Many of our current and former facilities have a history of industrial usage for which additional investigation and remediation obligations could arise in the future and which could materially adversely affect our business, financial position, results of operations or cash flows. 11 Available Information We make available free of charge through our website, http://investors.atkore.com/sec-filings, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, other reports filed under the Securities Exchange Act of 1934 (“Exchange Act”), and all amendments to those reports simultaneously or as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.
We hold periodic public meetings to keep the community apprised of the current monitoring data and the remedial efforts taken or planned. We do not expect planned remedial efforts to have a material adverse effect on our financial position, results of operations or cash flows.
We do not expect planned remedial efforts to have a material adverse effect on our financial position, results of operations or cash flows.
This segment serves contractors in partnership with the electrical wholesale channel. The Safety & Infrastructure segment designs and manufactures solutions including metal framing, mechanical pipe, perimeter security, and cable management for the protection and reliability of critical infrastructure. These solutions are marketed to contractors, original equipment manufacturers (“OEMs”), and end-users.
The Electrical segment manufactures high quality products used in the construction of electrical power systems including conduit, cable, and installation accessories. This segment serves contractors in partnership with the electrical wholesale channel. The Safety & Infrastructure segment designs and manufactures solutions including metal framing, mechanical pipe, perimeter security, and cable management for the protection and reliability of critical infrastructure.
In October 2013, the State of Illinois filed a complaint against our subsidiary Allied Tube, alleging violations of the Illinois Environmental Protection Act, or the “IEPA,” relating to discharges to a storm sewer system that terminates at Allied Tube’s Harvey, Illinois manufacturing facility.
The cost of compliance with environmental, health and safety laws and capital expenditures required to meet regulatory requirements is not anticipated to have a material effect on our financial position, results of operations, cash flows or competitive position. 10 In October 2013, the State of Illinois filed a complaint against our subsidiary Allied Tube, alleging violations of the Illinois Environmental Protection Act, or the “IEPA,” relating to discharges to a storm sewer system that terminates at Allied Tube’s Harvey, Illinois manufacturing facility.
Our annual Employee Engagement and Alignment Survey is one of our primary tools to assess our performance as an employer of choice and to measure employee engagement and satisfaction.
We aim to foster a workplace where our employees feel aligned with our mission, proud of our culture and engaged in their work. Our annual Employee Engagement and Alignment Survey is one of our primary tools to assess our performance as an employer of choice and to measure employee engagement and satisfaction.
We believe we hold #1 or #2 positions in the United States by net sales in the vast majority of our products. The quality of our products, strength of our brands, our scale and national presence provide what we believe to be a unique set of competitive advantages that position us for profitable growth.
The quality of our products, strength of our brands, our scale and national presence provide what we believe to be a unique set of competitive advantages that position us for profitable growth. Our mission is to be the customer’s first choice by providing unmatched quality, delivery, and value based on sustainable excellence in strategy, people, and processes.
In fiscal 2022, our top ten customers accounted for approximately 38% of net sales. No single customer, even after consolidating all branches of such customer, which often make independent purchasing decisions, accounted for more than 10% of our net sales in fiscal 2022, 2021 or 2020.
In fiscal 2023, our top ten customers accounted for approximately 38% of net sales. For Fiscal 2023, one customer, Sonepar USA accounted for more than 10% of sales, for fiscal 2022 and 2021, no single customer accounted for more than 10% of sales.
In total, we serve several end-markets, including new non-residential construction, maintenance, repair and remodel (“MR&R”), residential, OEM, and international markets. We continuously seek to improve our product offerings and develop innovative new products that meet the changing needs of our customers, which include industry trends toward digital design tools and labor saving solutions.
We continuously seek to improve our product offerings and develop innovative new products that meet the changing needs of our customers, which include industry trends toward digital design tools and labor saving solutions. The majority of Atkore products have Building Information Modeling (“BIM”) models available for our customers’ use.
Future remediation activities may be required to address contamination at or migrating from the Wayne, Michigan site. We have maintained good working relationships with the State of Michigan Department of Environment, Great Lakes, Energy, the City of Wayne and the residents surrounding our facility.
We have maintained good working relationships with the State of Michigan Department of Environment, Great Lakes, Energy, the City of Wayne and the residents surrounding our facility. We hold periodic public meetings to keep the community apprised of the current monitoring data and the remedial efforts taken or planned.
Ongoing compliance with the stormwater discharge permit is not expected to have a material effect on our financial position, results of operations or cash flows. We are continually investigating, remediating or addressing contamination at our current and former facilities. For example, we are currently monitoring and passively remediating groundwater contamination at our Wayne, Michigan facility.
We are continually investigating, remediating or addressing contamination at our current and former facilities. For example, we are currently monitoring and passively remediating groundwater contamination at our Wayne, Michigan facility. Future remediation activities may be required to address contamination at or migrating from the Wayne, Michigan site.
Our Human Rights Policy defines our dedication to protecting human rights and is driven by our core values and is aligned with national and international principles of human rights. Atkore’s Supplier Integrity and Sustainability Standards set forth our expectation that suppliers uphold our commitment to human rights.
Our Human Rights Policy defines our dedication to protecting human rights and is driven by our core values and is aligned with national and international principles of human rights. In fiscal 2023, we launched Human Trafficking Awareness and Prevention training for all salaried employees.
Our mission is to be the customer’s first choice by providing unmatched quality, delivery, and value based on sustainable excellence in strategy, people, and processes. Our Products Atkore is committed to providing our customers with a safe, sustainable, and innovative portfolio of high quality electrical, mechanical, safety, and infrastructure products and solutions.
Our Products Atkore is committed to providing our customers with a safe, sustainable, and innovative portfolio of high quality electrical, mechanical, safety, and infrastructure products and solutions. In total, we serve several end-markets, including new non-residential construction, maintenance, repair and remodel (“MR&R”), residential, OEM, and international markets.
We have also chosen to migrate our email service and various other information technology services to a cloud computing platform hosted by Microsoft. During fiscal 2019, we completed the implementation of an integrated system for order management, advanced warehouse management, finished goods inventory management and accounts receivable.
The Company’s email service and various other information technology services are on cloud computing platforms hosted by various prominent and reputable technology companies. Beginning in 2019, the Company began to standardize its ERP and has completed the implementation of modules for order management, advanced warehouse management, inventory management, accounts receivable and accounts payable across significant portions of the business.
We are a leading manufacturer of Electrical products primarily for the non-residential construction and renovation markets, as well as residential markets, and Safety & Infrastructure products for the construction and industrial markets. The Electrical segment manufactures high quality products used in the construction of electrical power systems including conduit, cable, and installation accessories.
(“AII”). On December 28, 2022, AIH merged into AII, with AII being the surviving entity. Accordingly, Atkore is now the sole stockholder of AII. We are a leading manufacturer of Electrical products primarily for the non-residential construction and renovation markets, as well as residential markets, and Safety & Infrastructure products for the construction and industrial markets.
The cost of compliance with environmental, health and safety laws and capital expenditures required to meet regulatory requirements is not anticipated to have a material effect on our financial position, results of operations, cash flows or competitive position.
Based on the updated stormwater calculations, the IEPA has agreed to a less-stringent permit limit for zinc (1.84 mg/L vs 1.15 mg/L). Ongoing compliance with the stormwater discharge permit is not expected to have a material effect on our financial position, results of operations or cash flows.
Removed
In addition to these widely available IT products, we developed a new application for our agents that we believe will improve the overall order entry process. Additionally, during fiscal 2016, we invested in installing and implementing a new general ledger and financial reporting system for the entire Company replacing a number of systems used in various parts of the Company.
Added
These solutions are marketed to contractors, original equipment manufacturers (“OEMs”), and end-users. We believe we hold #1 or #2 positions in the United States by net sales in the vast majority of our products.
Removed
We are in the final stages of a customer-facing technology investment that streamlines the process of designing installation plans, ordering, and managing the process through delivery, providing speed and accuracy not available from our competitors. 7 In today’s business environment, cybersecurity is of paramount importance and Atkore has also invested significantly to strengthen our cybersecurity posture.
Added
From time to time, our collective bargaining agreements expire and come up for re-negotiations. Our collective bargaining agreement with the Teamsters for our New Bedford, Massachusetts facility involving a bargaining unit of 194 employees expired in February 2023, and we successfully negotiated a new agreement, which now expires in February 2028.
Removed
In 2021, we integrated DE&I topics into our employee onboarding process and rolled out unconscious bias training for salaried employees. We include the importance of building diverse and inclusive teams in manager training and structure the interview process to minimize implicit biases. All employees are required to complete anti-harassment training. We regularly evaluate our progress on DE&I across the company.
Added
Our Harvey, Illinois Special Metal Processing Facility agreement with the United Steelworkers Union, involving a bargaining unit of 20 employees, expired in November 2022, and we successfully negotiated a new agreement, which now expires in November 2025.
Removed
Many of our current and former facilities have a history of industrial usage for which additional investigation and remediation obligations could arise in the future and which could materially adversely affect our business, financial position, results of operations or cash flows.
Added
Our Unistrut Construction agreement with the Southern Region Carpenters Union, involving a bargaining unit of 27 employees, expired in November 2022, and we successfully negotiated a new agreement, which now expires in November 2025.
Added
Our Hebron Ohio facility agreement with the GMPP Alied Worker International Union, involving a bargaining unit of 58 employees, expired in April 2023, and we successfully negotiated a new agreement which now expires in April 2027. Our Harvey, Illinois collective bargaining agreement with the United Steelworkers involving 367 represented employees, is set to expire in April 2024.
Added
We believe our relationship with our employees is good. Safety, Health and Well-Being At Atkore, nothing is more important than the safety and well-being of our people.
Added
In 2023, we expanded the scope DEI related training offerings, building upon our required unconscious bias training for salaried and hourly employees and reflecting our ambition to embed equity and inclusion across our business.
Added
In 2022, we also expanded our anti-harassment policy to expressly prohibit bullying, in addition to discrimination and all forms of harassment, and all Atkore employees are required to complete anti-harassment training.
Added
Our DEI Steering Committee sponsored a number of community events and contributions in 2023, including back-to-school backpack drives for lower social-economic communities, and engagement with a variety of LGBTQIA+ community organizations, including as a sponsor for the Center on Halsted's annual gala and career fair in Chicago, Illinois. We regularly evaluate our progress on DE&I across the company.
Added
The installation of the low-flow oil and water separation equipment is complete; however, the State is now requiring additional remedial investigation and remediation activities before considering a no further action determination and it has extended the deadline to perform all such activity through December 2025.
Added
The facility achieved intermittent compliance during the one-year start-up / shake-down period and throughout the remainder of 2022, and into 2023. Discussions were held with the IEPA regarding the zinc translator constant and the mixing zone study over the summer.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

79 edited+12 added−19 removed167 unchanged
Biggest changeOur amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or stockholders.
Biggest changeThe inclusion of this provision in our amended and restated certificate of incorporation may discourage or deter stockholders or management from bringing a lawsuit against directors for a breach of their fiduciary duties, even though such an action, if successful, might otherwise have benefited us and our stockholders. 28 Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or stockholders.
There are certain risks inherent in doing business internationally, including economic volatility and sustained economic downturns, difficulties in 20 enforcing contractual and intellectual property rights, currency exchange rate fluctuations and currency exchange controls, import or export restrictions, sanctions and changes in trade regulations, difficulties in developing, staffing, and simultaneously managing a number of foreign operations as a result of distance, issues related to occupational safety and adherence to local labor laws and regulations, potentially adverse tax developments, longer payment cycles, exposure to different legal standards, political or social unrest, including terrorism, risks related to government regulation and uncertain protection and enforcement of our intellectual property rights, the presence of corruption in certain countries and higher than anticipated costs of entry.
There are certain risks inherent in doing business internationally, including economic volatility and sustained economic downturns, difficulties in enforcing contractual and intellectual property rights, currency exchange rate fluctuations and currency exchange controls, import or export restrictions, sanctions and changes in trade regulations, difficulties in developing, staffing, and simultaneously managing a number of foreign operations as a result of distance, issues related to occupational safety and adherence to local labor laws and regulations, potentially adverse tax developments, longer payment cycles, exposure to different legal standards, political or social unrest, including terrorism, risks related to government regulation and uncertain protection and enforcement of our intellectual property rights, the presence of corruption in certain countries and higher than anticipated costs of entry.
These provisions eliminate a director’s personal liability to the fullest extent permitted by the DGCL for monetary damages resulting from a breach of fiduciary duty, except in circumstances involving: • any breach of the director’s duty of loyalty; 27 • acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; • Section 174 of the DGCL (unlawful dividends); or • any transaction from which the director derives an improper personal benefit.
These provisions eliminate a director’s personal liability to the fullest extent permitted by the DGCL for monetary damages resulting from a breach of fiduciary duty, except in circumstances involving: • any breach of the director’s duty of loyalty; • acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; • Section 174 of the DGCL (unlawful dividends); or • any transaction from which the director derives an improper personal benefit.
An unsuccessful product liability defense could be highly costly and accordingly result in a decline in revenues and profitability. From time to time, we are also involved in government inquiries and investigations, as well as consumer, employment, tort proceedings and other litigation. We cannot predict with certainty the outcomes of these legal proceedings and other contingencies.
An unsuccessful product liability defense could be highly costly and accordingly result in a decline in revenues and profitability. 20 From time to time, we are also involved in government inquiries and investigations, as well as consumer, employment, tort proceedings and other litigation. We cannot predict with certainty the outcomes of these legal proceedings and other contingencies.
Our business, financial position, results of operations or cash flows could be materially and adversely affected if we are unable to pass all of the cost increases on to our 13 customers, if we are unable to obtain the necessary energy supplies or if freight carrier capacity in our geographic markets were to decline significantly or otherwise become unavailable.
Our business, financial position, results of operations or cash flows could be materially and adversely affected if we are unable to pass all of the cost increases on to our customers, if we are unable to obtain the necessary energy supplies or if freight carrier capacity in our geographic markets were to decline significantly or otherwise become unavailable.
When the networks of our business partners are comprised, this also raises risks regarding payments and orders. Our business, financial position, results of operations or cash flows could be materially and adversely affected by the importation of similar products into the United States, as well as U.S. trade policy and practices.
When the networks of our business partners are comprised, this also raises risks regarding payments and orders. 14 Our business, financial position, results of operations or cash flows could be materially and adversely affected by the importation of similar products into the United States, as well as U.S. trade policy and practices.
Although we seek to have alternate sources and recover increases in input costs through price increases in our products, regulatory changes or other governmental actions could result in the need to change suppliers or incur cost increases that cannot, in the short term, or in some 21 cases even the long term, be offset by our prices.
Although we seek to have alternate sources and recover increases in input costs through price increases in our products, regulatory changes or other governmental actions could result in the need to change suppliers or incur cost increases that cannot, in the short term, or in some cases even the long term, be offset by our prices.
Accordingly, compliance with these laws, regulations, permits and approvals is a significant factor in our business. We have incurred, and expect to continue to incur, capital expenditures in addition to ordinary course costs to comply with applicable current and future 15 environmental laws, such as those governing air emissions and wastewater discharges.
Accordingly, compliance with these laws, regulations, permits and approvals is a significant factor in our business. We have incurred, and expect to continue to incur, capital expenditures in addition to ordinary course costs to comply with applicable current and future environmental laws, such as those governing air emissions and wastewater discharges.
Any of these consequences could materially and adversely affect our business, financial position, results of operations or cash flows. Our operating results are sensitive to the availability and cost of freight and energy, which are important in the manufacture and transport of our products. We are dependent on third-party freight carriers to transport many of our products.
Any of these consequences could materially and adversely affect our business, financial position, results of operations or cash flows. 13 Our operating results are sensitive to the availability and cost of freight and energy, which are important in the manufacture and transport of our products. We are dependent on third-party freight carriers to transport many of our products.
For example, our amended and restated certificate of incorporation and amended and restated by-laws collectively: 26 • authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to thwart a takeover attempt; • limit the ability of stockholders to remove directors; • provide that vacancies on our board of directors, including vacancies resulting from an enlargement of our board of directors, may be filled only by a majority vote of directors then in office; • prohibit stockholders from calling special meetings of stockholders; • prohibit stockholder action by written consent, thereby requiring all actions to be taken at a meeting of stockholders; and • establish advance notice requirements for nominations of candidates for election as directors or to bring other business before an annual meeting of our stockholders.
For example, our amended and restated certificate of incorporation and amended and restated by-laws collectively: • authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to thwart a takeover attempt; • limit the ability of stockholders to remove directors; • provide that vacancies on our board of directors, including vacancies resulting from an enlargement of our board of directors, may be filled only by a majority vote of directors then in office; • prohibit stockholders from calling special meetings of stockholders; 27 • prohibit stockholder action by written consent, thereby requiring all actions to be taken at a meeting of stockholders; and • establish advance notice requirements for nominations of candidates for election as directors or to bring other business before an annual meeting of our stockholders.
In addition, we warrant certain of our products to be free of certain defects and could incur costs related to paying 19 warranty claims in connection with defective products. We cannot assure you that we will not experience material losses or that we will not incur significant costs to defend or pay for such claims.
In addition, we warrant certain of our products to be free of certain defects and could incur costs related to paying warranty claims in connection with defective products. We cannot assure you that we will not experience material losses or that we will not incur significant costs to defend or pay for such claims.
If we are not able to meet customer requirements, customers may choose to disqualify us as a supplier, or we may be forced to reduce our prices to compensate for this lack of certification. Risks Related to Our Indebtedness Our indebtedness may adversely affect our financial health.
If we are not able to meet customer requirements, customers may choose to disqualify us as a supplier, or we may be forced to reduce our prices to compensate for this lack of certification. 23 Risks Related to Our Indebtedness Our indebtedness may adversely affect our financial health.
To the extent that lost production or distribution capacity could not be compensated for at unaffected facilities and depending on the length of the outage, our sales and production costs could be adversely affected. 18 We rely on the efforts of agents and distributors to generate sales of our products.
To the extent that lost production or distribution capacity could not be compensated for at unaffected facilities and depending on the length of the outage, our sales and production costs could be adversely affected. We rely on the efforts of agents and distributors to generate sales of our products.
Our third amended and restated certificate of incorporation (“amended and restated certificate of incorporation”) and our third amended and restated by-laws, (“amended and restated by-laws”) include a number of provisions that may discourage, delay or prevent a change in our management or control over us that stockholders may consider favorable.
Our third amended and restated certificate of incorporation (“amended and restated certificate of incorporation”) and our fourth amended and restated by-laws, (“amended and restated by-laws”) include a number of provisions that may discourage, delay or prevent a change in our management or control over us that stockholders may consider favorable.
In connection with any acquisitions or joint ventures and agreements relating to Tyco’s 2010 sale of a greater than 50% stake in the Company, we may acquire or become subject to liabilities such as legal claims, including but not limited to third-party liability and other tort claims; claims for breach of contract; employment-related claims; environmental liabilities, conditions or damage; permitting, regulatory or other compliance with law issues; liability for hazardous materials; or tax liabilities.
In connection with any acquisitions or joint ventures and agreements relating to Tyco’s 2010 sale of a greater than 50% stake in the Company or otherwise, we may acquire or become subject to liabilities such as legal claims, including but not limited to third-party liability and other tort claims; claims for breach of contract; employment-related claims; environmental liabilities, conditions or damage; 22 permitting, regulatory or other compliance with law issues; liability for hazardous materials; or tax liabilities.
Further, any impacts to our business and financial condition as a result of climate change are likely to occur over a sustained 17 period of time and are therefore difficult to quantify with any degree of specificity.
Further, any impacts to our business and financial condition as a result of climate change are likely to occur over a sustained period of time and are therefore difficult to quantify with any degree of specificity.
One or more of these factors could materially and adversely affect our business, financial position, results of operations or cash flows. Changes in foreign laws and legal systems could materially impact our business.
One or more of these factors could materially and adversely affect our business, financial position, results of operations or cash flows. 21 Changes in foreign laws and legal systems could materially impact our business.
We may not be able to obtain financing on terms and at interest rates that are favorable to us or at all. Any inability by us to obtain financing in the future could materially and adversely affect our business, financial position, results of operations or cash flows. 30 Item 1B. Unresolved Staff Comments None.
We may not be able to obtain financing on terms and at interest rates that are favorable to us or at all. Any inability by us to obtain financing in the future could materially and adversely affect our business, financial position, results of operations or cash flows. 31 Item 1B. Unresolved Staff Comments None.
From time to time, we may be held liable for the costs to address contamination at any real property we have ever owned, operated or used as a disposal site. We are currently, and may in the future be, required to investigate, remediate or otherwise address contamination at our current or former facilities.
From time to time, we may be held liable for the costs to address contamination at any real property we have ever owned, operated or used in our business activities or as a disposal site. We are currently, and may in the future be, required to investigate, remediate or otherwise address contamination at our current or former facilities.
Our top customers may also be able to exert influences on us with respect to pricing, 16 delivery, payment or other terms.
Our top customers may also be able to exert influences on us with respect to pricing, delivery, payment or other terms.
It is also possible that operations may be disrupted due to other unforeseen circumstances such as power outages, explosions, fires, floods, accidents, effects of the pandemic and severe weather conditions. Availability of raw materials and delivery of products to customers could be affected by logistical disruptions.
It is also possible that operations may be disrupted due to other unforeseen circumstances such as power outages, explosions, fires, floods, accidents, effects of a pandemic and severe weather conditions. Availability of raw materials and delivery of products to customers could be affected by logistical disruptions.
Increased imports of products similar to those manufactured by us in the United States could materially and adversely affect our business, financial position, results of operations or cash flows. We are indirectly subject to regulatory changes that may affect demand for our products.
Increased imports of products similar to those manufactured by us in the United States could materially and adversely affect our business, financial position, results of operations or cash flows. We are directly and indirectly subject to legislative and regulatory changes that may affect demand for our products.
The IRA contains significant tax law changes, including a corporate alternative minimum tax of 15% on adjusted financial statement income, which if applicable for us would be effective beginning October 1, 2023, a 1% excise tax on stock repurchases after December 31, 2022, and various tax incentives which include, but are not limited to, credits related to the manufacturing of solar powered energy which will take effect January 1, 2023.
The IRA contains significant tax law changes, including a corporate alternative minimum tax of 15% on adjusted financial statement income, which if applicable for us would be effective beginning October 1, 2023, a 1% excise tax on stock repurchases after December 31, 2022, and various tax incentives which include, but are not limited to, credits related to the manufacturing of solar powered energy which took effect January 1, 2023.
We have registered intellectual property (mainly trademarks and patents) in more than 75 countries. Because of the differences in foreign trademark, patent and other intellectual property or proprietary rights laws, we may not receive the same protection in foreign countries as we would in the United States.
We have registered intellectual property (mainly trademarks and patents) in more than 80 countries. Because of the differences in foreign trademark, patent and other intellectual property or proprietary rights laws, we may not receive the same protection in foreign countries as we would in the United States.
As of September 30, 2022, we had approximately $771.4 million of total long-term consolidated indebtedness outstanding (including current portion) under AI and AII’s credit facilities (“Credit Facilities”), which consist of: (i) an asset-based credit facility (“ABL Credit Facility”); (ii) the new senior secured term loan facility (the “New Senior Secured Term Loan Facility”); and (iii) the 4.25% Senior Notes due 2031 (the “Senior Notes”).
As of September 30, 2023, we had approximately $771.7 million of total long-term consolidated indebtedness outstanding (including current portion) under AI and AII’s credit facilities (“Credit Facilities”), which consist of: (i) an asset-based credit facility (“ABL Credit Facility”); (ii) the new senior secured term loan facility (the “New Senior Secured Term Loan Facility”); and (iii) the 4.25% Senior Notes due 2031 (the “Senior Notes”).
As of September 30, 2022, assuming availability was fully utilized, each one percentage point change in interest rates would have resulted in a change of approximately $3.3 million in annual interest expense on the ABL Credit Facility.
As of September 30, 2023, assuming availability was fully utilized, each one percentage point change in interest rates would have resulted in a change of approximately $3.3 million in annual interest expense on the ABL Credit Facility.
As of September 30, 2022, each one percentage point change in interest rates would have resulted in a change of approximately $3.8 million in the annual interest expense on the New Senior Secured Term Loan Facility.
As of September 30, 2023, each one percentage point change in interest rates would have resulted in a change of approximately $3.8 million in the annual interest expense on the New Senior Secured Term Loan Facility.
(“AI”), AIH, and AII are each holding companies, and as such they have no independent operations or material assets other than ownership of equity interests in their respective subsidiaries. AI, AIH and AII each depend on their respective subsidiaries to distribute funds to them so that they may pay obligations and expenses, including satisfying obligations with respect to indebtedness.
Atkore Inc. (“AI”) and AII are each holding companies, and as such they have no independent operations or material assets other than ownership of equity interests in their respective subsidiaries. AI and AII each depend on their respective subsidiaries to distribute funds to them so that they may pay obligations and expenses, including satisfying obligations with respect to indebtedness.
While we have implemented risk management and contingency plans and taken preventive measures and other precautions, no predictions of specific scenarios can be made with respect to the COVID-19 pandemic or any future pandemic and such measures may not adequately protect our business from the impact of such events.
While we have implemented risk management and contingency plans and taken preventive measures and other precautions, no predictions of specific scenarios can be made with respect to any future pandemic and such measures may not adequately protect our business from the impact of such events.
Because of our indebtedness: • our ability to obtain additional financing for working capital, capital expenditures, acquisitions, debt service requirements or general corporate purposes and our ability to satisfy our obligations with respect to our indebtedness may be impaired in the future; • a large portion of our cash flow from operations may be dedicated to the payment of principal and interest on our indebtedness, thereby reducing the funds available to us for other purposes; • we are exposed to the risk of increased interest rates because a significant portion of our borrowings are at variable rates of interest; • it may be more difficult for us to satisfy our obligations to other creditors, resulting in possible defaults on, and acceleration of, such indebtedness; • we may be more vulnerable to general adverse economic and industry conditions; • we may be at a competitive disadvantage compared to our competitors with proportionately less indebtedness or with comparable indebtedness on more favorable terms and, as a result, they may be better positioned to withstand economic downturns; • our ability to refinance indebtedness may be limited or the associated costs may increase; • our flexibility to adjust to changing market conditions and ability to withstand competitive pressures could be limited; and • we may be prevented from carrying out capital spending and restructurings that are necessary or important to our growth strategy and efforts to improve our operating margins. 23 Despite our indebtedness levels, we and our subsidiaries may incur substantially more indebtedness, which may increase the risks created by our indebtedness.
Because of our indebtedness: • our ability to obtain additional financing for working capital, capital expenditures, acquisitions, debt service requirements or general corporate purposes and our ability to satisfy our obligations with respect to our indebtedness may be impaired in the future; • a large portion of our cash flow from operations may be dedicated to the payment of principal and interest on our indebtedness, thereby reducing the funds available to us for other purposes; • we are exposed to the risk of increased interest rates because a significant portion of our borrowings are at variable rates of interest; • it may be more difficult for us to satisfy our obligations to other creditors, resulting in possible defaults on, and acceleration of, such indebtedness; • we may be more vulnerable to general adverse economic and industry conditions; • we may be at a competitive disadvantage compared to our competitors with proportionately less indebtedness or with comparable indebtedness on more favorable terms and, as a result, they may be better positioned to withstand economic downturns; • our ability to refinance indebtedness may be limited or the associated costs may increase; • our flexibility to adjust to changing market conditions and ability to withstand competitive pressures could be limited; and • we may be prevented from carrying out capital spending and restructurings that are necessary or important to our growth strategy and efforts to improve our operating margins.
These impacts may include changes in weather patterns and increased weather intensity, water shortages, changing sea levels and changing temperatures. The impacts of climate change may materially and adversely impact the cost of production, insurance availability, and financial performance of our operations.
These impacts may include changes in weather patterns and increased weather intensity, water shortages, changing sea levels and changing temperatures. The impacts of climate change may materially and adversely impact the ability to produce, cost of production, insurance availability, and financial performance of our operations.
Further uncertainty and delays in our end-markets could have a material adverse impact on the demand for our products, some jurisdictions may raise taxes to help cover pandemic-related costs and disruptions to or adverse conditions in the financial industry could affect our ability to obtain financing on favorable terms or at all.
Uncertainty and delays in our end-markets relating to public health conditions could have a material adverse impact on the demand for our products, some jurisdictions may raise taxes to help cover pandemic-related costs and disruptions to or adverse conditions in the financial industry could affect our ability to obtain financing on favorable terms or at all.
Additionally, if the ABL Credit Facility were fully utilized, the margin we pay on borrowings would increase by 0.5% from the current level and we would incur additional interest expense of $1.6 million.
Additionally, if the ABL Credit Facility were fully utilized, the margin we pay on borrowings would increase by 0.3% from the current level and we would incur additional interest expense of $1.0 million.
Among the factors that could affect our stock price are: • industry or general market conditions; • availability of labor and raw materials; • domestic and international economic factors unrelated to our performance; • changes in our customers’ preferences; • new regulatory pronouncements and changes in regulatory guidelines; • lawsuits, enforcement actions and other claims by third parties or governmental authorities; • actual or anticipated fluctuations in our quarterly operating results; • changes in securities analysts’ estimates of our financial performance or lack of research coverage and reports by industry analysts; • action by institutional stockholders or other large stockholders, including future sales of our common stock; • failure to meet any guidance given by us or any change in any guidance given by us, or changes by us in our guidance practices; 28 • announcements by us of significant impairment charges; • speculation in the press or investment community; • investor perception of us and our industry; • changes in market valuations or earnings of similar companies; • announcements by us or our competitors of significant contracts, acquisitions, dispositions or strategic partnerships; • war, terrorist acts and epidemic disease; • any future sales of our common stock or other securities; • additions or departures of key personnel; and • misconduct or other improper actions of our employees.
Among the factors that could affect our stock price are: • industry or general market conditions; • availability of labor and raw materials; • domestic and international economic factors unrelated to our performance; • changes in our customers’ preferences; • new regulatory pronouncements and changes in regulatory guidelines; • lawsuits, enforcement actions and other claims by third parties or governmental authorities; • actual or anticipated fluctuations in our quarterly operating results; • changes in securities analysts’ estimates of our financial performance or lack of research coverage and reports by industry analysts; • action by institutional stockholders or other large stockholders, including future sales of our common stock; • failure to meet any guidance given by us or any change in any guidance given by us, or changes by us in our guidance practices; • announcements by us of significant impairment charges; • speculation in the press or investment community; • investor perception of us and our industry; • changes in market valuations or earnings of similar companies; • announcements by us or our competitors of significant contracts, acquisitions, dispositions or strategic partnerships; • war, terrorist acts and epidemic disease; • any future sales of our common stock or other securities; • additions or departures of key personnel; and • misconduct or other improper actions of our employees. 29 Stock markets have experienced extreme volatility in recent years that has been unrelated to the operating performance of particular companies.
We cannot accurately predict the amount and timing of any impairment of assets, and we may be required to recognize goodwill or other asset impairment charges which could materially and adversely affect our results of operations. See “Item 8. Financial Statements and Supplementary Data”.
We cannot accurately predict the amount and timing of any impairment of assets, and we may be required to recognize goodwill or other asset impairment charges which could materially and adversely affect our results of operations. See “Item 8.
Certain of our customers, in particular buying groups representing consortia of independent electrical distributors, national electrical distributors, OEMs, data centers and medical center general contractors are material to our business, financial position, results of operations and cash flows because they account for a significant portion of our net sales.
Certain of our customers, in particular buying groups representing consortia of independent electrical distributors, national electrical distributors, OEMs and data center, medical center and global mega manufacturing project general contractors are material to our business, financial position, results of operations and cash flows because they account for a significant portion of our net sales.
Our inability to introduce new products effectively or implement our innovation strategies could adversely affect our ability to compete. We continually seek to develop products and solutions that allow us to stay at the forefront of developments in the Electrical and Safety & Infrastructure markets.
Financial Statements and Supplementary Data”. 19 Our inability to introduce new products effectively or implement our innovation strategies could adversely affect our ability to compete. We continually seek to develop products and solutions that allow us to stay at the forefront of developments in the Electrical and Safety & Infrastructure markets.
The markets for certain of our products are influenced by federal, state, local and international governmental regulations, trade policies and trade groups (such as the Buy America regulations, American Recovery and Reinvestment Act of 2009, Underwriters Laboratories, National Electrical Code and American Society of Mechanical Engineers) as well as other policies, including those imposed on the non-residential construction industry (such as the National Electrical Code and corresponding state and local laws based on the National Electrical Code).
The markets for certain of our products are influenced by federal, state, local and international governmental regulations, trade policies and trade groups (such as the CHIPS and Science Act of 2022, the inflation Reduction Act of 2022, other infrastructure legislation, Buy America regulations, American Recovery and Reinvestment Act of 2009, Underwriters Laboratories, National Electrical Code and American Society of Mechanical Engineers) as well as other policies, including those imposed on the non-residential construction industry (such as the National Electrical Code and corresponding state and local laws based on the National Electrical Code).
United States non-residential construction 12 starts, as reported by Dodge, reached a historic low of 690 million square feet in our fiscal 2010 and increased to 1,389 million square feet in our fiscal 2022, which was above historical average levels.
United States non-residential construction starts, as reported by Dodge, reached a historic low of 690 million square feet in our fiscal 2010 and increased to 1,468 million square feet in our fiscal 2023, which was above historical average levels.
As of September 30, 2022, we had an additional $312.9 million in availability under the ABL Credit Facility. Increases in interest rates would increase the cost of servicing our indebtedness and could reduce our profitability. A portion of our outstanding indebtedness bears interest or will bear interest at variable rates.
As of September 30, 2023, we had an additional $322.4 million in availability under the ABL Credit Facility. 24 Increases in interest rates would increase the cost of servicing our indebtedness and could reduce our profitability. A portion of our outstanding indebtedness bears interest or will bear interest at variable rates.
Future tax legislation could materially impact our business. Changes in international and domestic tax laws, including the reaction by states to federal legislation or the costs of responding to the COVID-19 pandemic, and changes in tax law enforcement, could negatively impact our tax provision, cash flow, or tax related balance sheet amounts.
Future tax legislation could materially impact our business. Changes in international and domestic tax laws, including the reaction by states to federal legislation and changes in tax law enforcement, could negatively impact our tax provision, cash flow, or tax related balance sheet amounts.
From time to time we have been adversely affected in various parts of the country by declines in non-residential building construction starts due to, among other things, supply chain disruptions and availability of construction labor and materials, changes in tax laws affecting the real estate industry, interest rate increases and governmental restrictions relating to the COVID-19 pandemic.
From time to time we have been adversely affected in various parts of the country by declines in non-residential building construction starts due to, among other things, supply chain disruptions and availability of construction labor and materials, changes in tax laws affecting the real estate industry, interest rate increases, governmental restrictions relating to public health conditions and business office usage.
The actions of our competitors may encourage us to lower our prices or to offer additional services or enhanced products at a higher cost to us, which could reduce our gross profit, net income or cash flows or may cause us to lose market share.
The actions of our competitors, including adding production capacity and the expansion of imported products, may encourage us to lower our prices or to offer additional services or enhanced products at a higher cost to us, which could reduce our gross profit, net income or cash flows or may cause us to lose market share.
Such decreases may be instigated by factors beyond our control, including economic recessions, the COVID-19 pandemic, supply chain disruptions, availability of raw materials and other items sourced for production and delivery of finished product, changes in end-user preferences, consumer confidence, inflation, availability of credit, fluctuations in interest and currency exchange rates and changes in the fiscal or monetary policies of governments in the regions in which we operate.
Such decreases may be instigated by factors beyond our control, including economic recessions, fluctuations in interest and currency exchange rates, supply chain disruptions, inflation, availability of raw materials and other items sourced for production and delivery of finished product, changes in end-user preferences, consumer confidence, public health conditions, including epidemics or pandemics, availability of credit, business office usage and changes in the fiscal or monetary policies of governments in the regions in which we operate.
As of September 30, 2022, we estimated that our pension plans were overfunded by approximately $2.7 million, both of which are frozen and do not accrue any additional service cost.
As of September 30, 2023, we estimated that our pension plans were overfunded by approximately $10.1 million, both of which are frozen and do not accrue any additional service cost.
The majority of our net sales are facilitated through the extension of credit to our customers, and a significant asset included in our working capital is accounts receivable from customers. As of September 30, 2022, one customer, CED National represented 10% of the Company’s accounts receivable, with no significant amounts past due.
The majority of our net sales are facilitated through the extension of credit to our customers, and a significant asset included in our working capital is accounts receivable from customers. As of September 30, 2023, Sonepar USA represented 14% and CED National represented 11% of the Company’s accounts receivable, with no significant amounts past due.
A decrease in liquidity could, among other things, limit our flexibility, including our ability to make capital expenditures and to complete acquisitions that we have identified, thereby materially and adversely affecting our business, financial position, results of operations and cash flows.
A decrease in liquidity could, among other things, limit our flexibility, including our ability to make capital expenditures and to complete acquisitions that we have identified, thereby materially and adversely affecting our business, financial position, results of operations and cash flows. 17 Widespread public health conditions including pandemics could have a material adverse impact on our business, financial position, results of operations and cash flows.
We cannot assure you that any costs relating to future capital and operating expenditures to maintain compliance with environmental, health and safety laws, as well as costs to address contamination or environmental claims, will not exceed any current estimates or adversely affect our business, financial position, results of operations or cash flows.
Moreover, we have sustained capital expenditure in complying with applicable health and safety laws and regulations, and any changes to such laws and regulations could increase our costs of operations. 16 We cannot assure you that any costs relating to future capital and operating expenditures to maintain compliance with environmental, health and safety laws, as well as costs to address contamination or environmental claims, will not exceed any current estimates or adversely affect our business, financial position, results of operations or cash flows.
As of September 30, 2022, AII had $312.9 million of available borrowing capacity under the ABL Credit Facility and there were no outstanding borrowings (excluding $12.1 million of letters of credit issued under the facility). Our indebtedness could have important consequences for you.
As of September 30, 2023, AII had $322.4 million of available borrowing capacity under the ABL Credit Facility and there were no outstanding borrowings (excluding $2.6 million of letters of credit issued under the facility). Our indebtedness could have important consequences for you.
Our amended and restated certificate of incorporation includes provisions limiting the personal liability of our directors for breaches of fiduciary duty under the DGCL. Our amended and restated certificate of incorporation contains provisions relating to the liability of directors in response to claims arising under the General Corporation Law of the State of Delaware (“DGCL”).
Our amended and restated certificate of incorporation contains provisions relating to the liability of directors in response to claims arising under the General Corporation Law of the State of Delaware (“DGCL”).
We and our subsidiaries may incur substantial additional indebtedness in the future. The terms of the credit agreements and indenture governing the Credit Facilities do not fully prohibit us or our subsidiaries from incurring additional debt.
Despite our indebtedness levels, we and our subsidiaries may incur substantially more indebtedness, which may increase the risks created by our indebtedness. We and our subsidiaries may incur substantial additional indebtedness in the future. The terms of thecredit agreements and indenture governing the Credit Facilities do not fully prohibit us or our subsidiaries from incurring additional debt.
For new construction, we estimate that our product installation typically lags United States non-residential starts by six to twelve months. The United States non-residential construction industry is cyclical, with product demand based on numerous factors such as availability of credit, interest rates, general economic conditions, consumer confidence and other factors that are beyond our control.
The United States non-residential construction industry is cyclical, with product demand based on numerous factors such as availability of credit, interest rates, general economic conditions, consumer confidence and other factors that are beyond our control.
In introducing new products and implementing our innovation strategies, any delays, unexpected costs, diversion of resources, loss of key employees or other setbacks could materially and adversely affect our business, financial position, results of operations or cash flows.
In introducing new products and implementing our innovation strategies, any delays, unexpected costs, diversion of resources, loss of key employees or other setbacks could materially and adversely affect our business, financial position, results of operations or cash flows. We are subject to certain safety and labor risks associated with the manufacturing and testing of our products.
We may be required to recognize goodwill, intangible assets or other long-lived asset impairment charges. As of September 30, 2022, we had goodwill of $289.3 million, intangible assets of $382.7 million, and other long-lived assets of $461.3 million. Goodwill and indefinite-lived intangible assets are not amortized and are subject to impairment testing at least annually.
We may be required to recognize goodwill, intangible assets or other long-lived asset impairment charges. As of September 30, 2023, we had goodwill of $311.1 million, intangible assets of $394.4 million, and other long-lived assets of $679.8 million. Goodwill and indefinite-lived intangible assets are not amortized and are subject to impairment testing at least annually.
We may be unable to refinance any of our indebtedness or obtain additional financing, particularly because of our indebtedness. Market disruptions, as well as our indebtedness levels, may increase our cost of borrowing or adversely affect our ability to refinance our obligations as they become due.
Market disruptions, as well as our indebtedness levels, may increase our cost of borrowing or adversely affect our ability to refinance our obligations as they become due.
Imports of products similar to those manufactured by us may reduce the volume of products sold by domestic producers and depress the selling prices of our products and those of our competitors. 14 We believe import levels are affected by, among other things, overall worldwide product demand, the trade practices of the U.S. and foreign governments, the cost of freight, the challenges involved in shipping, government subsidies to foreign producers and governmentally imposed trade restrictions, such as quotas, tariffs, and other trade barriers in the United States.
We believe import levels are affected by, among other things, overall worldwide product demand, the trade practices of the U.S. and foreign governments, the cost of freight, the challenges involved in shipping, government subsidies to foreign producers and governmentally imposed trade restrictions, such as quotas, tariffs, other trade barriers in the United States and government enforcement of such quotas, tariffs and trade barriers.
Efforts to attract talent to fill open roles in light of recent constrained labor availability may take more time than in the past and may cost the Company significantly more than in recent years. Moreover, the constrained labor conditions may mean that retention of existing talent may require significant additional pay and incentives.
Efforts to attract talent to fill open roles in light of recent constrained labor availability may take more time than in the past and may cost the Company significantly more than in recent years.
In the past, following periods of volatility in the market price of a company’s securities, class action litigation has often been instituted against the affected company.
These broad market fluctuations may adversely affect the trading price of our common stock. In the past, following periods of volatility in the market price of a company’s securities, class action litigation has often been instituted against the affected company.
The non-residential construction industry accounts for a significant portion of our business, and a downturn in the non-residential construction industry could materially and adversely affect our business, financial position, results of operations or cash flows. Our business is largely dependent on the non-residential construction industry.
Weakness in the markets in which we operate could have a material adverse effect on our business, financial position, results of operations or cash flows. 12 The non-residential construction industry accounts for a significant portion of our business, and a downturn in the non-residential construction industry could materially and adversely affect our business, financial position, results of operations or cash flows.
The Company’s success is dependent on our employees, so it’s critical that we continue to attract and retain talent. To accomplish this, the Company needs to offer a total rewards package that includes competitive benefits and pay, reflecting our long-term commitment to the well-being of our employees.
To accomplish this, the Company needs to offer a total rewards package that includes competitive benefits and pay, reflecting our long-term commitment to the well-being of our employees.
We are currently evaluating this legislation and determining what impact it would have on our financial statements. 29 Changes in U.S. tax law could also have broader implications, including impacts to the economy, currency markets, inflation environment, consumer behavior or competitive dynamics, which are difficult to predict, and may positively or negatively impact our business, financial position, results of operations or cash flows.
We are continuing to evaluate the Model GloBE Rules for Pillar Two and related legislation, and their potential impact on future periods. 30 Changes in U.S. tax law could also have broader implications, including impacts to the economy, currency markets, inflation environment, consumer behavior or competitive dynamics, which are difficult to predict, and may positively or negatively impact our business, financial position, results of operations or cash flows.
We have financial obligations relating to pension plans that we maintain in the United States. We provide pension benefits through a number of noncontributory and contributory defined benefit retirement plans covering eligible United States employees.
Moreover, the constrained labor conditions may mean that retention of existing talent may require significant additional pay and incentives. 18 We have financial obligations relating to pension plans that we maintain in the United States. We provide pension benefits through a number of noncontributory and contributory defined benefit retirement plans covering eligible United States employees.
If an acquired business fails to operate as anticipated or presents greater than expected liability profile or cannot be successfully integrated with our existing business, our business, financial position, results of operations or cash flows could be materially and adversely affected. 22 Regulations related to “conflict minerals” may force us to incur additional expenses, create complexities in our supply chain and damage our reputation with customers.
If an acquired business fails to operate as anticipated or presents greater than expected liability profile or cannot be successfully integrated with our existing business, our business, financial position, results of operations or cash flows could be materially and adversely affected.
Such disputes may arise under existing collective bargaining agreements with labor unions or in connection with negotiations of new collective bargaining agreements, as a result of supplier financial distress or for other reasons. Any amendments to existing collective bargaining agreements, or the implementation of new collective bargaining agreements, could result in increased labor costs.
Work stoppages or production interruptions could occur at our facilities or our suppliers’ facilities. Such disputes may arise under existing collective bargaining agreements with labor unions or in connection with negotiations of new collective bargaining agreements, as a result of supplier financial distress or for other reasons.
These provisions may facilitate management entrenchment that may delay, deter, render more difficult or prevent a change in our control, which may not be in the best interests of our stockholders.
These provisions may facilitate management entrenchment that may delay, deter, render more difficult or prevent a change in our control, which may not be in the best interests of our stockholders. Our amended and restated certificate of incorporation includes provisions limiting the personal liability of our directors for breaches of fiduciary duty under the DGCL.
Our Senior Secured Term Loan Facility is currently rated as investment grade while our ABL Credit Facility and the Senior Notes are currently rated as non-investment grade, and our overall corporate 24 rating is non-investment grade.
Our overall corporate rating and Senior Notes are currently rated as non-investment grade, but our New Senior Secured Term Loan Facility and ABL Credit Facility have been assigned investment grade ratings by certain ratings agencies.
Our ability to generate the significant amount of cash needed to pay interest and principal on our indebtedness and our ability to refinance all or a portion of our indebtedness or obtain additional financing depends on many factors beyond our control. Atkore Inc.
This could materially and adversely affect our business, financial position, results of operations or cash flows and could cause us to become bankrupt or insolvent. 25 Our ability to generate the significant amount of cash needed to pay interest and principal on our indebtedness and our ability to refinance all or a portion of our indebtedness or obtain additional financing depends on many factors beyond our control.
Our percentage of sales to our major customers may increase if we are successful in our strategy of expanding the range of products which we sell to existing customers.
In fiscal 2023, our ten largest customers (including buyers and distributors in buying groups) accounted for approximately 38% of our net sales. Our percentage of sales to our major customers may increase if we are successful in our strategy of expanding the range of products which we sell to existing customers.
If hurricanes, severe storms, floods, other natural disasters or similar events occur in the geographic regions in which we or our suppliers operate or through which deliveries must travel, our results of operations may be adversely affected.
If hurricanes, severe storms, floods, other natural disasters or similar events occur in the geographic regions in which we or our suppliers operate or through which deliveries must travel, our results of operations may be adversely affected. 15 We have incurred and continue to incur significant costs to comply with current and future environmental and health and safety laws and regulations, and our operations expose us to the risk of material environmental and health and safety laws liability.
The outcome of any personal injury, wrongful death or other litigation is difficult to assess or quantify and the cost to defend litigation can be significant.
In addition, prior to the introduction of new products, our employees test such products under rigorous conditions, which could potentially result in injury or death. The outcome of any personal injury, wrongful death or other litigation is difficult to assess or quantify and the cost to defend litigation can be significant.
In the future, our cash flow and capital resources may not be sufficient for payments of interest on and principal of our indebtedness, and such alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. 25 The outstanding borrowings under the ABL Credit Facility are scheduled to mature on May 26, 2026, the New Senior Secured Term Loan Facility has a maturity date of May 26, 2028, and the Senior Notes mature on June 1, 2031.
In the future, our cash flow and capital resources may not be sufficient for payments of interest on and principal of our indebtedness, and such alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.
The impact of increases in interest rates could be more significant for us than it would be for some other companies because of our indebtedness, thereby affecting our profitability.
The impact of increases in interest rates could be more significant for us than it would be for some other companies because of our indebtedness, thereby affecting our profitability. A lowering or withdrawal of the ratings, outlook or watch assigned to our indebtedness by rating agencies may increase our future borrowing costs and reduce our access to capital.
Any organizing efforts, significant work stoppages or increases in labor costs could materially and adversely affect our business, financial position, results of operations or cash flows. See Item 1, “Business—Human Capital Resources.” Our business requires skilled labor, and we may be unable to attract and retain qualified employees.
Any amendments to existing collective bargaining agreements, or the implementation of new collective bargaining agreements, could result in increased labor costs. Any organizing efforts, significant work stoppages or increases in labor costs could materially and adversely affect our business, financial position, results of operations or cash flows.
As of September 30, 2021, one customer, CED National represented 11% of the Company’s accounts receivable, with no significant amounts past due. See Note 17, “Segment Information” to the accompanying consolidated financial statements included elsewhere in this Annual Report.
See Note 17, “Segment Information” to the accompanying consolidated financial statements included elsewhere in this Annual Report.
We cannot predict economic conditions, or the timing or strength of demand in our markets. Weakness in the markets in which we operate could have a material adverse effect on our business, financial position, results of operations or cash flows.
We cannot predict economic conditions, or the timing or strength of demand in our markets.
Our business involves complex manufacturing processes and there is a risk that an accident resulting in property damage, personal injury or death could occur in one of our facilities. In addition, prior to the introduction of new products, our employees test such products under rigorous conditions, which could potentially result in injury or death.
As of September 30, 2023, we employed approximately 5,600 total full-time equivalent employees, a significant percentage of whom work at our 49 manufacturing facilities. Our business involves complex manufacturing processes and there is a risk that an accident resulting in property damage, personal injury or death could occur in one of our facilities.
As of September 30, 2022, approximately 18% of our domestic and international employees were represented with a collective bargaining agreement by labor unions. Work stoppages or production interruptions could occur at our facilities or our suppliers’ facilities.
As of September 30, 2023, approximately 18% of our domestic and international employees were represented with a collective bargaining agreement by labor unions. Several collective bargaining agreements to which the Company is a party, including the agreement covering the Company’s production in Harvey, Illinois, will expire in 2024.
A substantial portion of our revenue is generated through our operations in the United States.
A substantial portion of our revenue is generated through our operations in the United States. Imports of products similar to those manufactured by us may reduce the volume of products sold by domestic producers and depress the selling prices of our products and those of our competitors.
For example, certain of our subsidiaries have been named as defendants in product liability lawsuits claiming that our ABF II anti-microbial coated sprinkler pipe allegedly caused environmental stress cracking in chlorinated PVC pipe. See Note 15, “Commitments and Contingencies” to the accompanying consolidated financial statements included elsewhere in this Annual Report.
See Note 15, “Commitments and Contingencies” to the accompanying consolidated financial statements included elsewhere in this Annual Report.
Removed
We have incurred and continue to incur significant costs to comply with current and future environmental and health and safety laws and regulations, and our operations expose us to the risk of material environmental and health and safety laws liability.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeReportable Segment Owned Facilities Leased Facilities Electrical 15 41 Safety & Infrastructure 7 14 We believe that our facilities are well-maintained and are sufficient to meet our current and projected needs. We also have an ongoing process to continually review and update our real estate portfolio to meet changing business needs.
Biggest changeReportable Segment Owned Facilities Leased Facilities Electrical 16 39 Safety & Infrastructure 7 17 We believe that our facilities are well-maintained and are sufficient to meet our current and projected needs. We also have an ongoing process to continually review and update our real estate portfolio to meet changing business needs.
The following chart identifies the number of owned and leased facilities used by each of our reportable segments as of September 30, 2022. We believe that these facilities, when considered with our corporate headquarters, offices and warehouses are suitable and adequate to support the current needs of our business.
The following chart identifies the number of owned and leased facilities used by each of our reportable segments as of September 30, 2023. We believe that these facilities, when considered with our corporate headquarters, offices and warehouses are suitable and adequate to support the current needs of our business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities The following table shows our share repurchase programs, on a trade date basis, for each of our fiscal months for the quarter ended September 30, 2022 (in thousands, except per share data): Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program(1) Maximum Value of Shares that May Yet Be Purchased Under the Program(1) June 25, 2022 to July 22, 2022 1,210 $ 85.27 1,210 $ 300,017 July 23, 2022 to August 26, 2022 — $ — — $ 300,017 August 27, 2022 - September 30, 2022 — $ — — $ 300,017 Total 1,210 1,210 (1) On November 16, 2021, the board of directors approved a share repurchase program, under which the Company may repurchase up to $400.0 million of its outstanding common stock.
Biggest changeIssuer Purchases of Equity Securities The following table shows our share repurchase programs, on a trade date basis, for each of our fiscal months for the quarter ended September 30, 2023 (in thousands, except per share data): Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program(1) Maximum Value of Shares that May Yet Be Purchased Under the Program(1) July 1, 2023 to July 28, 2023 — $ — — $ 384,095 July 29, 2023 to September 1, 2023 90 $ 153.64 90 $ 370,238 September 2, 2023 - September 30, 2023 406 $ 150.68 406 $ 309,095 Total 496 496 (1) On November 16, 2021, the board of directors approved a share repurchase program, under which the Company may repurchase up to $400.0 million of its outstanding common stock.
For a description of the Omnibus Incentive Plan, see Note 5, “Stock Incentive Plan” to the accompanying consolidated financial statements included elsewhere in this Annual Report. Recent Sales of Unregistered Securities There were no sales of unregistered equity securities in fiscal 2022.
For a description of the Omnibus Incentive Plan, see Note 5, “Stock Incentive Plan” to the accompanying consolidated financial statements included elsewhere in this Annual Report. Recent Sales of Unregistered Securities There were no sales of unregistered equity securities in fiscal 2023.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Common Stock Market Prices Shares of our common stock have traded on the NYSE under the symbol ATKR since June 10, 2016. ** Assumes $100 invested on October 2, 2017 in stock or index, including reinvestment of dividends.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Common Stock Market Prices Shares of our common stock have traded on the NYSE under the symbol ATKR since June 10, 2016. ** Assumes $100 invested on October 1, 2018 in stock or index, including reinvestment of dividends.
The following group of 10 public companies represents the Company's peer group: • Acuity Brands • Encore Wire Corporation • AZZ Inc. • Hubbell Incorporated Class B • Belden Inc. • Littelfuse, Inc. • Cornerstone Building Brands, Inc. • nVent Electric plc • Eaton Corp. Plc • Valmont Industries, Inc.
The Company’s previously defined peer group included the following group of 10 public companies: • Acuity Brands • Encore Wire Corporation • AZZ Inc. • Hubbell Incorporated Class B • Belden Inc. • Littelfuse, Inc. • Cornerstone Building Brands, Inc. • nVent Electric plc • Eaton Corp.
Securities Authorized for Issuance Under Equity Compensation Plans The following table contains information, as of September 30, 2022, about the amount of common shares to be issued upon the exercise of outstanding options, performance share options (“PSUs”) and restricted stock units (“RSUs”) granted under the 2020 Omnibus Incentive Plan and the 2016 Omnibus Incentive Plan (together, the “Omnibus Incentive Plan”). 33 Equity Compensation Plan Information (share amounts in thousands) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1) Weighted Average Exercise Price of Outstanding Options Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in (1)) Equity compensation plans approved by shareholders 1,288 $ 26.00 4,383 Equity compensation plans not approved by shareholders — — — Total 1,288 $ 26.00 4,383 (1) Includes 713 stock options, 313 PSUs and 262 RSUs granted to officers pursuant to the Omnibus Incentive Plan.
Securities Authorized for Issuance Under Equity Compensation Plans The following table contains information, as of September 30, 2023, about the amount of common shares to be issued upon the exercise of outstanding options, performance share options (“PSUs”) and restricted stock units (“RSUs”) granted under the 2020 Omnibus Incentive Plan and the 2016 Omnibus Incentive Plan (together, the “Omnibus Incentive Plan”). 34 Equity Compensation Plan Information (share amounts in thousands) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1) Weighted Average Exercise Price of Outstanding Options Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in (1)) Equity compensation plans approved by shareholders 1,209 $ 32.93 1,805 Equity compensation plans not approved by shareholders — — — Total 1,209 $ 32.93 1,805 (1) Includes 690 stock options, 273 PSUs and 246 RSUs granted to officers pursuant to the Omnibus Incentive Plan.
The Company made these changes to its peer group to reflect companies in the Company’s industry more comparable in size to Atkore, based on market capitalization. 32 Holders As of November 11, 2022, there was one stockholder of record of our common stock. This number excludes stockholders whose stock is held in nominee or street name by brokers.
Plc • Valmont Industries, Inc. 33 Holders As of November 14, 2023, there was one stockholder of record of our common stock. This number excludes stockholders whose stock is held in nominee or street name by brokers.
Removed
The Company has updated its peer group by adding Belden Inc., Encore Wire Corporation and Valmont Industries, Inc. and removing Schneider Electric SE, ABB Ltd. Sponsored ADR, and Legrand SA.
Added
The Company has updated its peer group by replacing its select peer issuer group with the S&P MidCap 400 Industrials index. The Company made the change from select peer issuers to the published industry index to align this disclosure with the requirements under Item 402(v) of Regulation S-K that are effective for the Company in fiscal 2023.
Removed
Dividend Policy We have not and do not currently intend to declare or pay dividends on our common stock for the foreseeable future. We currently intend to use our future earnings, if any, to fund our growth, to develop our business, for working capital needs, for general corporate purposes, to repurchase shares and to repay debt.
Added
Dividend Policy On November 17, 2023, we announced that our board of directors approved a quarterly dividend program under which the Company intends to pay quarterly cash dividends on our common stock. The quarterly dividend program and the subsequent consideration, declaration and payment of each quarterly cash dividend will be subject to our board’s approval.
Added
Our board of directors retain the power to modify, suspend or cancel the dividend program in any manner and at any time that our board may deem necessary or appropriate.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

68 edited+18 added−14 removed74 unchanged
Biggest changeAdditionally, central bank interest rate increases, inflation and the Russia-Ukraine conflict, are creating additional uncertainty in the global economy, generally, and in the markets in which we operate. COVID-19, the Russia-Ukraine conflict and other factors have had and will continue to have adverse effects on global supply chains, which may impact some aspects of our business.
Biggest changeDuring those periods, our MR&R demand as a percentage of total demand typically increases, providing a more consistent revenue stream for our business. Additionally, central bank interest rate increases, inflation, and conflicts in Ukraine and the Middle East are creating additional uncertainty in the global economy, generally, and in the markets in which we operate.
Additional factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation: • declines in, and uncertainty regarding, the general business and economic conditions in the United States and international markets in which we operate; • weakness or another downturn in the United States non-residential construction industry; • widespread outbreak of diseases, such as the novel coronavirus (COVID-19) pandemic; • changes in prices of raw materials; • pricing pressure, reduced profitability, or loss of market share due to intense competition; • availability and cost of third-party freight carriers and energy; • high levels of imports of products similar to those manufactured by us; • changes in federal, state, local and international governmental regulations and trade policies; • adverse weather conditions; • increased costs relating to future capital and operating expenditures to maintain compliance with environmental, health and safety laws; • reduced spending by, deterioration in the financial condition of, or other adverse developments, including inability or unwillingness to pay our invoices on time, with respect to one or more of our top customers; • increases in our working capital needs, which are substantial and fluctuate based on economic activity and the market prices for our main raw materials, including as a result of failure to collect, or delays in the collection of, cash from the sale of manufactured products; • work stoppage or other interruptions of production at our facilities as a result of disputes under existing collective bargaining agreements with labor unions or in connection with negotiations of new collective bargaining agreements, as a result of supplier financial distress, or for other reasons; • changes in our financial obligations relating to pension plans that we maintain in the United States; • reduced production or distribution capacity due to interruptions in the operations of our facilities or those of our key suppliers; • loss of a substantial number of our third-party agents or distributors or a dramatic deviation from the amount of sales they generate; • security threats, attacks, or other disruptions to our information systems, or failure to comply with complex network security, data privacy and other legal obligations or the failure to protect sensitive information; 50 • possible impairment of goodwill or other long-lived assets as a result of future triggering events, such as declines in our cash flow projections or customer demand and changes in our business and valuation assumptions; • safety and labor risks associated with the manufacture and in the testing of our products; • product liability, construction defect and warranty claims and litigation relating to our various products, as well as government inquiries and investigations, and consumer, employment, tort and other legal proceedings; • our ability to protect our intellectual property and other material proprietary rights; • risks inherent in doing business internationally; • changes in foreign laws and legal systems, including as a result of Brexit; • our inability to introduce new products effectively or implement our innovation strategies; • our inability to continue importing raw materials, component parts and/or finished goods; • the incurrence of liabilities and the issuance of additional debt or equity in connection with acquisitions, joint ventures or divestitures and the failure of indemnification provisions in our acquisition agreements to fully protect us from unexpected liabilities; • failure to manage acquisitions successfully, including identifying, evaluating, and valuing acquisition targets and integrating acquired companies, businesses or assets; • the incurrence of additional expenses, increase in complexity of our supply chain and potential damage to our reputation with customers resulting from regulations related to “conflict minerals”; • disruptions or impediments to the receipt of sufficient raw materials resulting from various anti-terrorism security measures; • restrictions contained in our debt agreements; • failure to generate cash sufficient to pay the principal of, interest on, or other amounts due on our debt; • challenges attracting and retaining key personnel or high-quality employees; • future changes to tax legislation; • failure to generate sufficient cash flow from operations or to raise sufficient funds in the capital markets to satisfy existing obligations and support the development of our business; and • other risks and factors described in this report and from time to time in documents that we file with the SEC.
Additional factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation: • declines in, and uncertainty regarding, the general business and economic conditions in the United States and international markets in which we operate; • weakness or another downturn in the United States non-residential construction industry; • widespread outbreak of diseases, such as the novel coronavirus (COVID-19) pandemic; • changes in prices of raw materials; • pricing pressure, reduced profitability, or loss of market share due to intense competition; • availability and cost of third-party freight carriers and energy; • high levels of imports of products similar to those manufactured by us; • changes in federal, state, local and international governmental regulations and trade policies; • adverse weather conditions; • increased costs relating to future capital and operating expenditures to maintain compliance with environmental, health and safety laws; • reduced spending by, deterioration in the financial condition of, or other adverse developments, including inability or unwillingness to pay our invoices on time, with respect to one or more of our top customers; • increases in our working capital needs, which are substantial and fluctuate based on economic activity and the market prices for our main raw materials, including as a result of failure to collect, or delays in the collection of, cash from the sale of manufactured products; • work stoppage or other interruptions of production at our facilities as a result of disputes under existing collective bargaining agreements with labor unions or in connection with negotiations of new collective bargaining agreements, as a result of supplier financial distress, or for other reasons; 51 • changes in our financial obligations relating to pension plans that we maintain in the United States; • reduced production or distribution capacity due to interruptions in the operations of our facilities or those of our key suppliers; • loss of a substantial number of our third-party agents or distributors or a dramatic deviation from the amount of sales they generate; • security threats, attacks, or other disruptions to our information systems, or failure to comply with complex network security, data privacy and other legal obligations or the failure to protect sensitive information; • possible impairment of goodwill or other long-lived assets as a result of future triggering events, such as declines in our cash flow projections or customer demand and changes in our business and valuation assumptions; • safety and labor risks associated with the manufacture and in the testing of our products; • product liability, construction defect and warranty claims and litigation relating to our various products, as well as government inquiries and investigations, and consumer, employment, tort and other legal proceedings; • our ability to protect our intellectual property and other material proprietary rights; • risks inherent in doing business internationally; • changes in foreign laws and legal systems, including as a result of Brexit; • our inability to introduce new products effectively or implement our innovation strategies; • our inability to continue importing raw materials, component parts and/or finished goods; • the incurrence of liabilities and the issuance of additional debt or equity in connection with acquisitions, joint ventures or divestitures and the failure of indemnification provisions in our acquisition agreements to fully protect us from unexpected liabilities; • failure to manage acquisitions successfully, including identifying, evaluating, and valuing acquisition targets and integrating acquired companies, businesses or assets; • the incurrence of additional expenses, increase in complexity of our supply chain and potential damage to our reputation with customers resulting from regulations related to “conflict minerals”; • disruptions or impediments to the receipt of sufficient raw materials resulting from various anti-terrorism security measures; • restrictions contained in our debt agreements; • failure to generate cash sufficient to pay the principal of, interest on, or other amounts due on our debt; • challenges attracting and retaining key personnel or high-quality employees; • future changes to tax legislation; • failure to generate sufficient cash flow from operations or to raise sufficient funds in the capital markets to satisfy existing obligations and support the development of our business; and • other risks and factors described in this report and from time to time in documents that we file with the SEC.
Results of Operations Fiscal 2022 Compared to Fiscal 2021 The results of operations for the fiscal years ended September 30, 2022 and September 30, 2021 were as follows: Fiscal year ended ($ in thousands) September 30, 2022 September 30, 2021 Change ($) Change (%) Net sales $ 3,913,949 $ 2,928,014 $ 985,935 33.7 % Cost of sales 2,273,924 1,802,401 471,523 26.2 % Gross profit 1,640,025 1,125,613 514,412 45.7 % Selling, general and administrative 370,044 293,019 77,025 26.3 % Intangible asset amortization 36,176 33,644 2,532 7.5 % Operating income 1,233,805 798,950 434,855 54.4 % Interest expense, net 30,676 32,899 (2,223) (6.8) % Loss on extinguishment of debt — 4,202 (4,202) (100.0) % Other income, net (490) (18,152) 17,662 (97.3) % Income before income taxes 1,203,620 780,001 423,619 54.3 % Income tax expense 290,186 192,144 98,042 51.0 % Net income $ 913,434 $ 587,857 $ 325,577 55.4 % Net sales Change (%) Volume (3.2) % Average selling prices 34.0 % Acquisitions 3.3 % Other (0.4) % Net sales 33.7 % Net sales for fiscal 2022 increased $985.9 million to $3,913.9 million, an increase of 33.7%, compared to $2,928.0 million for fiscal 2021.
Fiscal 2022 Compared to Fiscal 2021 The results of operations for the fiscal years ended September 30, 2022 and September 30, 2021 were as follows: Fiscal year ended ($ in thousands) September 30, 2022 September 30, 2021 Change ($) Change (%) Net sales $ 3,913,949 $ 2,928,014 $ 985,935 33.7 % Cost of sales 2,273,924 1,802,401 471,523 26.2 % Gross profit 1,640,025 1,125,613 514,412 45.7 % Selling, general and administrative 370,044 293,019 77,025 26.3 % Intangible asset amortization 36,176 33,644 2,532 7.5 % Operating income 1,233,805 798,950 434,855 54.4 % Interest expense, net 30,676 32,899 (2,223) (6.8) % Loss on extinguishment of debt — 4,202 (4,202) (100.0) % Other (income) and expense, net (490) (18,152) 17,662 (97.3) % Income before income taxes 1,203,620 780,001 423,619 54.3 % Income tax expense 290,186 192,144 $ 98,042 51.0 % Net income $ 913,434 $ 587,857 $ 325,577 55.4 % Net sales Change (%) Volume (3.2) % Average selling prices 34.0 % Acquisitions 3.3 % Other (0.4) % Net sales 33.7 % 42 Net sales for fiscal 2022 increased $985.9 million to $3,913.9 million, an increase of 33.7%, compared to $2,928.0 million for fiscal 2021.
Safety & Infrastructure Fiscal year ended ($ in thousands) September 30, 2022 September 30, 2021 Change ($) Change (%) Net sales $ 900,588 $ 698,320 $ 202,268 29.0 % Adjusted EBITDA $ 138,390 $ 81,827 $ 56,563 69.1 % Adjusted EBITDA Margin 15.4 % 11.7 % Net sales Change (%) Volume (4.1) % Average selling prices 29.9 % Other 3.2 % Net sales 29.0 % Net sales increased $202.3 million, or 29.0%, to $900.6 million for fiscal 2022 compared to $698.3 million for fiscal 2021.
Safety & Infrastructure Fiscal year ended ($ in thousands) September 30, 2022 September 30, 2021 Change ($) Change (%) Net sales $ 900,588 $ 698,320 $ 202,268 29.0 % Adjusted EBITDA $ 138,390 $ 81,827 $ 56,563 69.1 % Adjusted EBITDA Margin 15.4 % 11.7 % 44 Net sales Change (%) Volume (4.1) % Average selling prices 29.9 % Other 3.2 % Net sales 29.0 % Net sales increased $202.3 million, or 29.0%, to $900.6 million for fiscal 2022 compared to $698.3 million for fiscal 2021.
The $213.9 million increase was primarily driven by improved operating income of $434.9 million year over year and was partially offset by increased tax impacts of $224.8 million, with cash used in working capital relatively flat year over year. Investing activities During fiscal 2022, we used $442.8 million of cash for investing activities compared to $98.0 million during fiscal 2021.
The $213.9 million increase was primarily driven by improved operating income of $434.9 million year over year and was partially offset by increased tax impacts of $224.8 million, with cash used in working capital relatively flat year over year. 47 Investing activities During fiscal 2022, we used $442.8 million of cash for investing activities compared to $98.0 million during fiscal 2021.
The Senior Secured Term Loan Facility requires AII to meet a certain consolidated coverage ratio on an incurrence basis in connection with additional indebtedness. The ABL Credit Facility contains limits on additional indebtedness based on various conditions for incurring the additional debt. AII has been in compliance with the covenants under the agreements for all periods presented.
The New Senior Secured Term Loan Facility requires AII to meet a certain consolidated coverage ratio on an incurrence basis in connection with additional indebtedness. The ABL Credit Facility contains limits on additional indebtedness based on various conditions for incurring the additional debt. AII has been in compliance with the covenants under the agreements for all periods presented.
Special Note Regarding Forward-Looking Statements and Information This Annual Report on Form 10-K contains forward-looking statements and cautionary statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on 49 management's beliefs and assumptions and information currently available to management.
Special Note Regarding Forward-Looking Statements and Information This Annual Report on Form 10-K contains forward-looking statements and cautionary statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's beliefs and assumptions and information currently available to management.
The increase is primarily attributed to increased average selling prices of $207.4 million 40 and increased net sales of $18.4 million from companies acquired during fiscal 2022, partially offset by lower volumes of $27.3 million across various steel product categories.
The increase is primarily attributed to increased average selling prices of $207.4 million and increased net sales of $18.4 million from companies acquired during fiscal 2022, partially offset by lower volumes of $27.3 million across various steel product categories.
Fair value under the comparable transaction method is determined based on exchange 48 prices in actual transactions and on asking prices for controlling interests in public or private companies currently offered for sale by applying market multiples for comparable public companies to the unit’s financial results.
Fair value under the comparable transaction method is determined based on exchange prices in actual transactions and on asking prices for controlling interests in public or private companies currently offered for sale by applying market multiples for comparable public companies to the unit’s financial results.
The key uncertainties in the guideline public company method and the comparable transaction method calculations are the assumptions used in determining the reporting unit's comparable public companies, comparable transactions and the selection of the market multiples. The Company did not record any goodwill impairments in fiscal 2022, 2021 or 2020.
The key uncertainties in the guideline public company method and the comparable transaction method calculations are the assumptions used in determining the reporting unit's comparable public companies, comparable transactions and the selection of the market multiples. The Company did not record any goodwill impairments in fiscal 2022 or 2021.
Limitations on Distributions and Dividends by Subsidiaries AI, AII, and AIH are each holding companies, and as such have no independent operations or material assets other than ownership of equity interests in their respective subsidiaries.
Limitations on Distributions and Dividends by Subsidiaries AI and AII are each holding companies, and as such have no independent operations or material assets other than ownership of equity interests in their respective subsidiaries.
Net sales includes gross product sales and freight billed to our customers, net of allowances for rebates, sales incentives, trade promotions, product returns and discounts. Cost of sales Cost of sales includes all costs directly related to the production of goods for sale.
Net sales includes gross product sales and freight billed to our customers, net of allowances for rebates, sales incentives, trade promotions, product returns and discounts. 38 Cost of sales Cost of sales includes all costs directly related to the production of goods for sale.
The key uncertainties in these calculations are the assumptions used in determining the reporting unit’s forecasted future performance, including revenue growth and EBITDA margins, as well as the perceived risk associated with those forecasts.
The key uncertainties in these calculations are the assumptions used in determining the reporting unit’s forecasted future performance, including revenue growth and EBITDA margins, as well as the perceived risk associated 49 with those forecasts.
Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data.
Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data. 52
Recent Accounting Pronouncements See Note 1, “Basis of Presentation and Summary of Significant Accounting Policies” to the accompanying consolidated financial statements included elsewhere in this Annual Report.
Recent Accounting Pronouncements 50 See Note 1, “Basis of Presentation and Summary of Significant Accounting Policies” to the accompanying consolidated financial statements included elsewhere in this Annual Report.
The Company can elect to perform a quantitative or qualitative test of impairment. For fiscal 2022, 2021 and 2020 the Company performed a quantitative impairment assessment for goodwill. The Company calculated the fair value of its six reporting units considering three valuation approaches: (a) the income approach; (b) the guideline public company method; and (c) the comparable transaction method.
The Company can elect to perform a quantitative or qualitative test of impairment. For fiscal 2023, 2022, and 2021 the Company performed a quantitative impairment assessment for goodwill. The Company calculated the fair value of its six reporting units considering three valuation approaches: (a) the income approach; (b) the guideline public company method; and (c) the comparable transaction method.
The key uncertainties in these calculations are the assumptions used in determining the revenue associated with each indefinite-lived intangible asset and the royalty rate. During fiscal year 2022, 2021, and 2020 the results indicated all indefinite-lived intangible assets had significant excess of fair value over the carrying value.
The key uncertainties in these calculations are the assumptions used in determining the revenue associated with each indefinite-lived intangible asset and the royalty rate. During fiscal year 2023, 2022, and 2021 the results indicated all indefinite-lived intangible assets had significant excess of fair value over the carrying value.
See “Quantitative and Qualitative Disclosures about Market Risk—Foreign Currency Risk.” See Note 1, “Basis of Presentation and Summary of Significant Accounting Policies” to the accompanying consolidated financial statements included elsewhere in this Annual Report. 36 Emerging Industry Trends .
See “Quantitative and Qualitative Disclosures about Market Risk—Foreign Currency Risk.” See Note 1, “Basis of Presentation and Summary of Significant Accounting Policies” to the accompanying consolidated financial statements included elsewhere in this Annual Report. 37 Emerging Industry Trends .
The table below summarizes cash flow information derived from our statements of cash flows for the fiscal years ended September 30, 2021 and September 30, 2020.
The table below summarizes cash flow information derived from our statements of cash flows for the fiscal years ended September 30, 2022 and September 30, 2021.
In fiscal 2022, approximately 9% of our net sales came from customers located outside the United States, most of which were foreign currency sales denominated in British pounds sterling, European euros, Canadian dollars, Australian dollars, and New Zealand dollars. The functional currency of our operations outside the United States is generally the local currency.
In fiscal 2023, approximately 10% of our net sales came from customers located outside the United States, most of which were foreign currency sales denominated in British pounds sterling, European euros, Canadian dollars, Australian dollars, and New Zealand dollars. The functional currency of our operations outside the United States is generally the local currency.
Our products are primarily used by trade contractors in the construction and renovation of non-residential structures such as commercial office buildings, healthcare facilities and manufacturing plants. In fiscal 2022, 91% of our net sales were to customers located in the United States.
Our products are primarily used by trade contractors in the construction and renovation of non-residential structures such as commercial office buildings, healthcare facilities and manufacturing plants. In fiscal 2023, 90% of our net sales were to customers located in the United States.
The borrowing base was estimated to be $325.0 million and approximately $312.9 million was available under the ABL Credit Facility as of September 30, 2022. Our use of cash may fluctuate during the year and from year to year due to differences in demand and changes in economic conditions primarily related to the prices of commodities we purchase.
The borrowing base was estimated to be $325.0 million and approximately $322.4 million was available under the ABL Credit Facility as of September 30, 2023. Our use of cash may fluctuate during the year and from year to year due to differences in demand and changes in economic conditions primarily related to the prices of commodities we purchase.
In total, we have invested $376.1 million in acquisitions since 2020. We expect to continue to pursue synergistic acquisitions as part of our growth strategy to expand our product offerings. See Note 3, “Acquisitions” to the accompanying consolidated financial statements included elsewhere in this Annual Report. Foreign Currencies .
In total, we have invested $468.5 million in acquisitions since 2021. We expect to continue to pursue synergistic acquisitions as part of our growth strategy to expand our product offerings. See Note 3, “Acquisitions” to the accompanying consolidated financial statements included elsewhere in this Annual Report. Foreign Currencies .
See Note 15, “Commitments and Contingencies” and Note 6, “Other Income, net” to the accompanying consolidated financial statements included elsewhere in this Annual Report. Income tax expense Income tax expense increased $98.0 million to $290.2 million, compared to $192.1 million for fiscal 2021. The Company's income tax rate decreased to 24.1% for fiscal 2022, compared to 24.6% for fiscal 2021.
See Note 15, “Commitments and Contingencies” and Note 6, “Other Income, net” to the accompanying consolidated financial statements included elsewhere in this Annual Report. 43 Income tax expense Income tax expense increased $98.0 million to $290.2 million, compared to $192.1 million for fiscal 2021.
Our cash and cash equivalents decreased $187.5 million from September 30, 2021, primarily due to acquisitions, capital expenditures and share repurchases and partially offset by cash provided from operating activities. In general, we require cash to fund working capital investments, acquisitions, capital expenditures, debt repayment, interest payments, taxes and share repurchases.
Our cash and cash equivalents decreased $0.6 million from September 30, 2022, primarily due to acquisitions, capital expenditures and share repurchases and partially offset by cash provided from operating activities. In general, we require cash to fund working capital investments, acquisitions, capital expenditures, debt repayment, interest payments, taxes and share repurchases.
We adjust these reserves in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities.
These tax liabilities are reflected net of related tax loss carryforwards. We adjust these reserves in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities.
Our cash and cash equivalents were $388.8 million as of September 30, 2022, of which $67.3 million was held at non-U.S. subsidiaries. Those cash balances at foreign subsidiaries may be subject to withholding or local country taxes if the Company's intention to permanently reinvest such income were to change and cash was repatriated to the United States.
Our cash and cash equivalents were $388.1 million as of September 30, 2023, of which $77.2 million was held at non-U.S. subsidiaries. Those cash balances at foreign subsidiaries may be subject to withholding or local country taxes if the Company's intention to permanently reinvest such income were to change and cash was repatriated to the United States.
We have access to the ABL Credit Facility to fund our operational needs. As of September 30, 2022, there were no outstanding borrowings under the ABL Credit Facility (excluding $12.1 million of standby letters of credit issued under the ABL Credit Facility).
We have access to the ABL Credit Facility to fund our operational needs. As of September 30, 2023, there were no outstanding borrowings under the ABL Credit Facility (excluding $2.6 million of standby letters of credit issued under the ABL Credit Facility).
Adjusted EBITDA Adjusted EBITDA increased $56.6 million, or 69.1%, to $138.4 million for fiscal 2022 compared to $81.8 million for fiscal 2021. The Adjusted EBITDA increase was primarily due to the increase in average selling prices and acquisitions, offset by volume declines as discussed above.
Adjusted EBITDA Adjusted EBITDA increased $56.6 million, or 69.1%, to $138.4 million for fiscal 2021 compared to $81.8 million for fiscal 2020. The Adjusted EBITDA increase was primarily due to the increase in average selling prices and volume discussed above.
Other income, net Other income, net decreased $17.7 million to income of $0.5 million for fiscal 2022, compared to income of $18.2 million for fiscal 2021. The decrease was primarily due to a $15.5 million business interruption insurance recovery from a flood at one of the Company’s manufacturing facilities recognized in fiscal 2021.
Other (income) and expense, net Other income, net increased $17.7 million to $0.5 million for fiscal 2022, compared to income of $18.2 million for fiscal 2021. The increase was primarily due to a $15.5 million business interruption insurance recovery from a flood at one of the Company’s manufacturing facilities.
See Note 7, “Income Taxes” to the accompanying consolidated financial statements included elsewhere in this Annual Report. 39 Segment results Electrical Fiscal year ended ($ in thousands) September 30, 2022 September 30, 2021 Change ($) Change (%) Net sales $ 3,013,755 $ 2,233,299 $ 780,456 34.9 % Adjusted EBITDA 1,273,410 873,868 399,542 45.7 % Adjusted EBITDA Margin 42.3 % 39.1 % Net sales Change (%) Volume (3.1) % Average selling prices 35.2 % Acquisitions 3.5 % Other (0.7) % Net sales 34.9 % Net sales increased by $780.5 million, or 34.9%, to $3,013.8 million for fiscal 2022 compared to $2,233.3 million for fiscal 2021.
Segment results Electrical Fiscal year ended ($ in thousands) September 30, 2022 September 30, 2021 Change ($) Change (%) Net sales $ 3,013,755 $ 2,233,299 $ 780,456 34.9 % Adjusted EBITDA 1,273,410 873,868 399,542 45.7 % Adjusted EBITDA Margin 42.3 % 39.1 % Net sales Change (%) Volume (3.1) % Average selling prices 35.2 % Acquisitions 3.5 % Other (0.7) % Net sales 34.9 % Net sales increased by $780.5 million, or 34.9%, to $3,013.8 million for fiscal 2022 compared to $2,233.3 million for fiscal 2021.
Cash Flows The table below summarizes cash flow information derived from our statements of cash flows for the fiscal years ended September 30, 2022 and September 30, 2021. 45 Fiscal year ended (in thousands) September 30, 2022 September 30, 2021 Change ($) Change (%) Cash flows provided by (used in): Operating activities $ 786,835 $ 572,902 $ 213,933 37.3 % Investing activities (442,802) (97,961) (344,841) 352.0 % Financing activities (524,206) (184,456) (339,750) 184.2 % Operating activities During fiscal 2022, operating activities provided $786.8 million of cash, compared to $572.9 million during fiscal year 2021.
Fiscal year ended (in thousands) September 30, 2022 September 30, 2021 Change ($) Change (%) Cash flows provided by (used in): Operating activities $ 786,835 $ 572,902 $ 213,933 37.3 % Investing activities (442,802) (97,961) (344,841) 352.0 % Financing activities (524,206) (184,456) (339,750) 184.2 % Operating activities During fiscal 2022, operating activities provided $786.8 million of cash, compared to $572.9 million during fiscal year 2021.
See Note 13, “Debt” to the accompanying consolidated financial statements included elsewhere in this Annual Report.
See Note 7, “Income Taxes” to the accompanying consolidated financial statements included elsewhere in this Annual Report.
Pricing for PVC products, as well as other products, has begun to decline from historic highs. 38 Cost of sales Change (%) Volume (2.9) % Average input costs 22.5 % Acquisitions 3.9 % Other 2.7 % Cost of sales 26.2 % Cost of sales increased $471.5 million, or 26.2%, to $2,273.9 million for fiscal 2022 compared to $1,802.4 million for fiscal 2021.
Cost of sales Change (%) Volume (2.9) % Average input costs 22.5 % Acquisitions 3.9 % Other 2.7 % Cost of sales 26.2 % Cost of sales increased $471.5 million, or 26.2%, to $2,273.9 million for fiscal 2022 compared to $1,802.4 million for fiscal 2021.
Our cash collection cycle is generally one to two months longer than our cash payment cycle. If our working capital requirements increase and we are unable to finance our working capital on terms and conditions acceptable to us, we may not be able to obtain raw materials to respond to customer demand, which could result in a loss of sales.
If our working capital requirements increase and we are unable to finance our working capital on terms and conditions acceptable to us, we may not be able to obtain raw materials to respond to customer demand, which could result in a loss of sales. Labor Cost and Availability .
We recognize potential liabilities and record tax liabilities for anticipated tax audit issues in the United States and other tax jurisdictions based on our estimate of whether, and the extent to which, additional taxes will be due. These tax liabilities are reflected net of related tax loss carryforwards.
We record interest and penalties related to unrecognized tax benefits as a component of provision for income taxes. We recognize potential liabilities and record tax liabilities for anticipated tax audit issues in the United States and other tax jurisdictions based on our estimate of whether, and the extent to which, additional taxes will be due.
The increase in income tax expense is due to higher income before taxes, while the decrease in effective tax rate was primarily due to a decrease in state income taxes.
The Company's income tax rate decreased to 24.1% for fiscal 2022, compared to 24.6% for fiscal 2021. The increase in income tax expense is due to higher income before taxes, while the decrease in effective tax rate was primarily due to a decrease in state income taxes.
As of September 30, 2022, the fair values of the reporting units exceeded their respective carrying amount by 10% or more.
Excluding the goodwill impairment on the Company’s Russia business, as of September 30, 2023, the fair values of the reporting units exceeded their respective carrying amount by 10% or more.
Any reduction in future taxable income, including but not limited to any future restructuring activities, may require that we record an additional valuation allowance against our deferred tax assets.
Any reduction in future taxable income, including but not limited to any future 48 restructuring activities, may require that we record an additional valuation allowance against our deferred tax assets. An increase in the valuation allowance could result in additional income tax expense in such period and could have a significant impact on our future earnings.
These increases are offset by decreased sales volume of $94.8 million across varying product categories within both the Electrical and the Safety & Infrastructure segments.
These increases are offset by decreased sales volume of $94.8 million across varying product categories within both the Electrical and the Safety & Infrastructure segments. Pricing for PVC products, as well as other products, has begun to decline from historic highs.
The projected company pension contribution for fiscal 2023 is $0.2 million. 44 Servicing of our existing debt instruments includes the following estimated cash outflows: ($ in thousands) Less than 1 Year 1-3 Years 3-5 Years More than 5 Years Total Senior Notes due June 2031 $ — $ — $ — $ 400,000 $ 400,000 New Senior Secured Term Loan Facility Due May 2028 — — — $ 371,381 $ 371,381 Interest payments (a) 45,198 90,002 80,013 81,389 296,602 Total $ 45,198 $ 90,002 $ 80,013 $ 852,770 $ 1,067,983 (a) Interest expense is estimated based on outstanding loan balances assuming principal payments are made according to the payment schedule and interest rates as of September 30, 2022 (4.25% for the Senior Notes, between 6.0% and 7.9% for the New Senior Secured Term Loan Facility).
Servicing of our existing debt instruments includes the following estimated cash outflows: ($ in thousands) Less than 1 Year 1-3 Years 3-5 Years More than 5 Years Total Senior Notes due June 2031 $ — $ — $ — $ 400,000 $ 400,000 New Senior Secured Term Loan Facility Due May 2028 — — — $ 371,667 $ 371,667 Interest payments (a) 47,173 83,958 77,290 51,708 260,129 Total $ 47,173 $ 83,958 $ 77,290 $ 823,375 $ 1,031,796 (a) Interest expense is estimated based on outstanding loan balances assuming principal payments are made according to the payment schedule and interest rates as of September 30, 2023 (4.25% for the Senior Notes, between 5.6% and 7.7% for the New Senior Secured Term Loan Facility).
Our cost of sales may be affected by changes in the market price of these materials, and to a lesser extent, other commodities, such as zinc, aluminum, electricity, natural gas and diesel fuel. The prices at which we sell our products may adjust upward or downward based on raw material price changes.
The cost to procure these raw materials is subject to price fluctuations, often as a result of macroeconomic conditions. Our cost of sales may be affected by changes in the market price of these materials, and to a lesser extent, other commodities, such as zinc, aluminum, electricity, natural gas and diesel fuel.
These costs include direct material, direct labor, production related overheads, excess and obsolescence costs, lower-of-cost-or-market provisions, freight and distribution costs and the depreciation and amortization of assets directly used in the production of goods for sale. 37 Selling, general and administrative expenses Selling, general and administrative expenses include payroll related expenses including salaries, wages, employee benefits, payroll taxes, variable cash compensation for both administrative and selling personnel and consulting and professional services fees.
These costs include direct material, direct labor, production related overheads, excess and obsolescence costs, lower-of-cost-or-market provisions, freight and distribution costs and the depreciation and amortization of assets directly used in the production of goods for sale.
Our results may be impacted by inventory sales at costs higher or lower than current prices we pay for similar items. Working Capital. Our working capital requirements are impacted by our operational activities. Our inventory levels may be impacted from time to time, due to delivery lead times from our suppliers.
Historically, we have not engaged in hedging strategies for raw material purchases. Our results may be impacted by inventory sales at costs higher or lower than current prices we pay for similar items. Working Capital. Our working capital requirements are impacted by our operational activities.
Also included are compensation expense for share-based awards, restructuring-related charges, third-party professional services and translation gains or losses for foreign currency trade transactions.
Selling, general and administrative expenses Selling, general and administrative expenses include payroll related expenses including salaries, wages, employee benefits, payroll taxes, variable cash compensation for both administrative and selling personnel and consulting and professional services fees. Also included are compensation expense for share-based awards, restructuring-related charges, third-party professional services and translation gains or losses for foreign currency trade transactions.
We believe several factors drive the pricing of our products, including the quality of our products, the ability to meet customer delivery expectations and co-loading capabilities, as well as the prices of our raw material inputs. Historically, we have not engaged in hedging strategies for raw material purchases.
The prices at which we sell our products may adjust upward or downward based on raw material price changes. We believe several factors drive the pricing of our products, including the quality of our products, the ability to meet customer delivery expectations and co-loading capabilities, as well as the prices of our raw material inputs.
Labor Cost and Availability . Labor costs are a direct input into the manufacture of our products. Labor costs are capitalized as a cost of inventory. Seasonality. In a typical year, our operating results are impacted by seasonality.
Labor costs are a direct input into the manufacture of our products. Labor costs are capitalized as a cost of inventory. Seasonality. In a typical year, our operating results are impacted by seasonality. Historically, sales of our products have been higher in the third and fourth quarters of each fiscal year due to favorable weather for construction-related activities.
Historically, sales of our products have been higher in the third and fourth quarters of each fiscal year due to favorable weather for construction-related activities. Recent Acquisitions . In addition to our organic growth, we have transformed the Company through acquisitions in recent years, allowing us to expand our product offerings with existing and new customers.
Recent Acquisitions . In addition to our organic growth, we have transformed the Company through acquisitions in recent years, allowing us to expand our product offerings with existing and new customers.
Certain tax positions may be considered uncertain requiring an assessment of whether an allowance should be recorded. Our provision for uncertain tax positions provides a recognition threshold based on an estimate of whether it is more likely than not that a position will be sustained upon examination.
Our provision for uncertain tax positions provides a recognition threshold based on an estimate of whether it is more likely than not that a position will be sustained upon examination. We measure our uncertain tax position as the largest amount of benefit that has greater than a 50% likelihood of being realized upon ultimate settlement.
In fiscal 2022, our sales and cost of sales continued to be impacted by high prices of the raw materials used in our products. We generally sell our products on a spot basis and as such, were able to pass some of these increases on to our customers.
In fiscal 2023, our sales and cost of sales were impacted by pricing normalization in certain raw materials used in our products. We generally sell our products on a spot basis and as such, were exposed to sales prices on our products that decreased faster than the cost for the related raw materials.
MR&R activity generally increases and represents a greater share of non-residential construction activity during challenging periods in the economic or construction cycle. During those periods, our MR&R demand as a percentage of total demand typically increases, providing a more consistent revenue stream for our business.
Our historic results have been positively impacted by growth in the non-residential construction market, as such growth leads to greater demand for our products. MR&R activity generally increases and represents a greater share of non-residential construction activity during challenging periods in the economic or construction cycle.
We believe that sources for these raw materials are well established, generally available and are in sufficient quantity that we may avoid disruption in our business. The cost to procure these raw materials is subject to price fluctuations, often as a result of macroeconomic conditions.
We use a variety of raw materials in the manufacture of our products, which primarily include steel, copper, PVC and HDPE resin. We believe that sources for these raw materials are well established, generally available and are in sufficient quantity that we may avoid disruption in our business.
Capital expenditures have historically been necessary to expand and update the production capacity and improve the productivity of our manufacturing operations and IT initiatives aimed to facilitate the ease of doing business with Atkore. During fiscal 2022, we made an investment of $24.4 million in new mills for our Hobart, Indiana facility.
Capital expenditures have historically been necessary to expand and update the production capacity and improve the productivity of our manufacturing operations and IT initiatives aimed to facilitate the ease of doing business with Atkore. In FY23, $142.7 million was spent on equipment related to growth initiatives in solar, plastics and regional services centers.
Additionally, we participated in the broader economic recovery from the COVID-19 pandemic as our customers began to resume their operations at pre-pandemic levels of activity. We believe that our business and demand for our products is influenced by two main economic indicators: United States gross domestic product, or “GDP,” and non-residential construction starts, measured in square footage.
We believe that our business and demand for our products is influenced by two main economic indicators: United States gross domestic product, or “GDP,” and non-residential construction starts, measured in square footage. The United States non-residential construction market has experienced modest growth over the past few years, in line with United States GDP.
The $70.4 million increase in cash used by investing activities was primarily driven by $43.2 million in cash used for acquisitions in fiscal 2021 as well as increased capital expenditures of $30.7 million primarily driven by additional investments in productivity and digital initiatives. 46 Financing Activities During fiscal 2021, we used $184.5 million for financing activities compared to $61.2 million during fiscal 2020.
The $140.7 million decrease in cash used by investing activities was primarily driven by $224.4 million in decreased cash used for acquisitions in fiscal 2022, partially offset by increased capital expenditures of $83.1 million. Financing Activities During fiscal 2023, we used $506.8 million for financing activities compared to $524.2 million during fiscal 2022.
Furthermore, we are mindful of the effects that adverse weather, such as hurricanes, can have on our domestic supply chain. 35 Raw Materials. We use a variety of raw materials in the manufacture of our products, which primarily include steel, copper and PVC resin.
The aforementioned conflicts and other factors have had and will continue to have adverse effects on global supply chains, which may impact some aspects of our business. Furthermore, we are mindful of the effects that adverse weather, such as hurricanes, can have on our domestic supply chain. 36 Raw Materials.
An increase in the valuation allowance could result in additional income tax expense in such period and could have a significant impact on our future earnings. 47 In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions across our global operations.
In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions across our global operations. Certain tax positions may be considered uncertain requiring an assessment of whether an allowance should be recorded.
Additionally, we purchased new land and buildings for $34.2 million in Dallas, Texas to expand our operations. We have purchase commitments of $175.3 million and $4.7 million for the years 2022 and 2023, which represent purchases of raw materials in the normal course of business for which all significant terms have been confirmed.
We have purchase commitments of $127.8 million and $3.8 million for the years 2023 and 2024, which represent purchases of raw materials in the normal course of business for which all significant terms have been confirmed. 45 As of September 30, 2023, we had $6.3 million of income tax liability, gross unrecognized tax benefits of $3 million and gross interest and penalties of $0.2 million.
Adjusted EBITDA Adjusted EBITDA increased $581.1 million, or 198.4%, to $873.9 million for fiscal 2021 compared to $292.8 million for fiscal 2020. The increase in Adjusted EBITDA was largely due to the increase in sales volume and average selling prices discussed above.
Adjusted EBITDA Adjusted EBITDA decreased $268.6 million, or 21.1%, to $1,004.9 million for fiscal 2023 compared to $1,273.4 million for fiscal 2022. The decrease in Adjusted EBITDA was largely due to lower average selling prices over input costs.
As of September 30, 2022, we had $5.5 million of income tax liability, gross unrecognized tax benefits of $1.0 million and gross interest and penalties of $0.1 million. Of these amounts, $1.0 million is classified as a non-current liability in the consolidated balance sheet.
Of these amounts, $2.4 million is classified as a non-current liability in the consolidated balance sheet. The projected company pension contribution for fiscal 2024 is $0.3 million.
See Note 7, “Income Taxes” to the accompanying consolidated financial statements included elsewhere in this Annual Report. 42 Segment results Electrical Fiscal year ended ($ in thousands) September 30, 2021 September 30, 2020 Change ($) Change (%) Net sales $ 2,233,299 $ 1,270,547 $ 962,752 75.8 % Adjusted EBITDA 873,868 292,809 581,059 198.4 % Adjusted EBITDA Margin 39.1 % 23.0 % Net sales Change (%) Volume 3.8 % Average selling prices 64.4 % Foreign exchange 1.5 % Acquisitions 6.1 % Net sales 75.8 % Net sales increased by $962.8 million, or 75.8%, to $2,233.3 million for fiscal 2021 compared to $1,270.5 million for fiscal 2020.
Segment results Electrical Fiscal year ended ($ in thousands) September 30, 2023 September 30, 2022 Change ($) Change (%) Net sales $ 2,675,074 $ 3,013,755 $ (338,681) (11.2) % Adjusted EBITDA 1,004,853 1,273,410 (268,557) (21.1) % Adjusted EBITDA Margin 37.6 % 42.3 % Net sales Change (%) Volume (0.3) % Average selling prices (15.7) % Acquisitions 5.3 % Other (0.5) % Net sales (11.2) % Net sales decreased by $338.7 million, or 11.2%, to $2,675.1 million for fiscal 2023 compared to $3,013.8 million for fiscal 2022.
Safety & Infrastructure Fiscal year ended ($ in thousands) September 30, 2021 September 30, 2020 Change ($) Change (%) Net sales $ 698,320 $ 497,523 $ 200,797 40.4 % Adjusted EBITDA $ 81,827 $ 67,821 $ 14,006 20.7 % Adjusted EBITDA Margin 11.7 % 13.6 % 43 Net sales Change (%) Volume 8.1 % Average selling prices 32.3 % Net sales 40.4 % Net sales increased $200.8 million, or 40.4%, to $698.3 million for fiscal 2021 compared to $497.5 million for fiscal 2020.
Safety & Infrastructure Fiscal year ended ($ in thousands) September 30, 2023 September 30, 2022 Change ($) Change (%) Net sales $ 844,158 $ 900,588 $ (56,430) (6.3) % Adjusted EBITDA $ 103,231 $ 138,390 $ (35,159) (25.4) % Adjusted EBITDA Margin 12.2 % 15.4 % 41 Net sales Change (%) Volume 15.0 % Average selling prices (19.1) % Other (2.2) % Net sales (6.3) % Net sales decreased $56.4 million, or 6.3%, to $844.2 million for fiscal 2023 compared to $900.6 million for fiscal 2022.
The increase was primarily due to higher input costs of steel, copper and PVC resin of $386.5 million, higher sales volume of $64.0 million and the acquisitions of Queen City Plastics and FRE Composites Group of $32.5 million.
The decrease was primarily due to lower input costs of steel, copper and PVC resin of $337.8 million and the impact of foreign exchange rates of $13.0 million partially offset by recent acquisitions during fiscal 2022 and 2023 of $130.3 million and higher sales volume of $107.7 million.
The Adjusted EBITDA increase was primarily due to the increase in average selling prices and volume discussed above. Liquidity and Capital Resources We believe we have sufficient liquidity to support our ongoing operations and to invest in future growth and create value for stockholders.
Our board of directors retain the power to modify, suspend, or cancel the dividend program in any manner and at any time that our board may deem necessary or appropriate. We believe we have sufficient liquidity to support our ongoing operations and to invest in future growth and create value for stockholders.
The $324.1 million increase was primarily driven by improved operating income of $559.4 million year over year was partially offset by an increase of $137.7 million in net working capital balances. Investing activities During fiscal 2021, we used $98.0 million of cash for investing activities compared to $27.5 million during fiscal 2020.
Cash provided by operating activities increased by $20.8 million primarily driven by less cash used in working capital of $105.8 million, tax impacts of $229.3 million and partially offset by lower operating income of $340.3 million. Investing activities During fiscal 2023, we used $302.2 million of cash for investing activities compared to $442.8 million during fiscal 2022.
Cash used for financing activities during fiscal 2021 was primarily driven by payments of debt of $839.1 million and repurchases of shares of $135.1 million offset by proceeds from the issuance of debt of $798.0 million. For additional discussion of the debt transactions, see Note 13, “Debt” to the accompanying consolidated financial statements included elsewhere in this Annual Report.
See Note 13, “Debt” to the accompanying consolidated financial statements included elsewhere in this Annual Report. 46 Cash Flows The table below summarizes cash flow information derived from our statements of cash flows for the fiscal years ended September 30, 2023 and September 30, 2022.
Income tax expense Income tax expense increased $142.4 million to $192.1 million, compared to $49.7 million for fiscal 2020. The Company's income tax rate remained consistent at 24.6% for fiscal 2021, compared to 24.6% for fiscal 2020. The increase in tax expense is due to higher income before taxes.
The Company's income tax rate decreased to 18.9% for fiscal 2023, compared to 24.1% for fiscal 2022. The decrease in income tax expense is due to lower income before taxes and solar tax credits generated during fiscal 2023, while the decrease in effective tax rate was primarily due to solar tax credits generated during fiscal 2023.
The increase in intangible asset amortization is primarily due to the 2021 acquisition of FRE Composites Group. Interest expense, net Interest expense, net, decreased $7.2 million, or 17.9% to $32.9 million for fiscal 2021, compared to $40.1 million for fiscal 2020.
Intangible asset amortization Intangible asset amortization expense increased $21.6 million, or 59.8%, to $57.8 million for fiscal 2023 compared to $36.2 million for fiscal 2022. The increase in intangible asset amortization is primarily driven by the acquisition of definite-lived intangible assets through businesses acquired in fiscal 2022 and 2023.
Removed
The United States non-residential construction market has experienced modest growth over the past few years, in line with United States GDP. Our historic results have been positively impacted by growth in the non-residential construction market, as such growth leads to greater demand for our products.
Added
Our inventory levels may be impacted from time to time, due to delivery lead times from our suppliers. Our cash collection cycle is generally one to two months longer than our cash payment cycle.
Removed
Fiscal 2021 Compared to Fiscal 2020 The results of operations for the fiscal years ended September 30, 2021 and September 30, 2020 were as follows: Fiscal year ended ($ in thousands) September 30, 2021 September 30, 2020 Change ($) Change (%) Net sales $ 2,928,014 $ 1,765,421 $ 1,162,593 65.9 % Cost of sales 1,802,401 1,274,107 528,294 41.5 % Gross profit 1,125,613 491,314 634,299 129.1 % Selling, general and administrative 293,019 219,496 73,523 33.5 % Intangible asset amortization 33,644 32,262 1,382 4.3 % Operating income 798,950 239,556 559,394 233.5 % Interest expense, net 32,899 40,062 (7,163) (17.9) % Loss on extinguishment of debt 4,202 273 3,929 1,439.2 % Other income, net (18,152) (2,777) (15,375) 553.7 % Income before income taxes 780,001 201,998 578,003 286.1 % Income tax expense 192,144 49,696 $ 142,448 286.6 % Net income $ 587,857 $ 152,302 $ 435,555 286.0 % Net sales Change (%) Volume 5.0 % Average selling prices 55.4 % Foreign exchange 1.0 % Acquisitions 4.5 % Net sales 65.9 % Net sales for fiscal 2021 increased $1,162.6 million to $2,928.0 million, an increase of 65.9%, compared to $1,765.4 million for fiscal 2020.
Added
Results of Operations Fiscal 2023 Compared to Fiscal 2022 The results of operations for the fiscal years ended September 30, 2023 and September 30, 2022 were as follows: Fiscal year ended ($ in thousands) September 30, 2023 September 30, 2022 Change ($) Change (%) Net sales $ 3,518,761 $ 3,913,949 $ (395,188) (10.1) % Cost of sales 2,179,260 2,273,924 (94,664) (4.2) % Gross profit 1,339,501 1,640,025 (300,524) (18.3) % Selling, general and administrative 388,206 370,044 18,162 4.9 % Intangible asset amortization 57,804 36,176 21,628 59.8 % Operating income 893,491 1,233,805 (340,314) (27.6) % Interest expense, net 35,232 30,676 4,556 14.9 % Other (income) and expense, net 7,969 (490) 8,459 (1,726.3) % Income before income taxes 850,290 1,203,620 (353,330) (29.4) % Income tax expense 160,391 290,186 (129,795) (44.7) % Net income $ 689,899 $ 913,434 $ (223,535) (24.5) % Net sales Change (%) Volume 3.2 % Average selling prices (16.5) % Acquisitions 4.3 % Other (1.1) % Net sales (10.1) % 39 Net sales for fiscal 2023 decreased $395.2 million to $3,518.8 million, a decrease of 10.1%, compared to $3,913.9 million for fiscal 2022.
Removed
The increase in net sales is primarily attributed to increased average selling prices of $977.9 million, which were mostly driven by the plastic pipe and conduit category within the Electrical segment and increased net sales of $79.1 million due to the acquisitions of Queen City Plastics and FRE Composites Group.
Added
The decrease in net sales is primarily attributed to lower average selling prices of $646.6 million, the economic value of solar tax credits to be transferred to certain customers of $30.4 million and the unfavorable impact of foreign exchange rates of $15.1 million.
Removed
Pricing for PVC products, as well as other parts of the business, are expected to return to more normal historical levels over time, but that time is uncertain.
Added
These decreases are partially offset by increased net sales of $168.9 million from companies acquired during fiscal 2022 and 2023 and higher sales volume of $125.1 million across varying product categories within both the Electrical and the Safety & Infrastructure segments.
Removed
The increase in net sales was also driven by an increase in sales volume of $88.4 million across the majority of product categories within both the Electrical and the Safety & Infrastructure segments. 41 Cost of sales Change (%) Volume 5.0 % Average input costs 30.4 % Foreign exchange 1.2 % Acquisitions 2.6 % Other 2.3 % Cost of sales 41.5 % Cost of sales increased $528.3 million, or 41.5%, to $1,802.4 million for fiscal 2021 compared to $1,274.1 million for fiscal 2020.
Added
Cost of sales Change (%) Volume 4.8 % Average input costs (15.0) % Acquisitions 5.8 % Other 0.2 % Cost of sales (4.2) % Cost of sales decreased $94.7 million, or 4.2%, to $2,179.3 million for fiscal 2023 compared to $2,273.9 million for fiscal 2022.
Removed
Selling, general and administrative Selling, general and administrative expenses increased $73.5 million, or 33.5%, to $293.0 million for fiscal 2021 compared to $219.5 million for fiscal 2020.
Added
Selling, general and administrative Selling, general and administrative expenses increased $18.2 million, or 4.9%, to $388.2 million for fiscal 2023 compared to $370.0 million for fiscal 2022. The increase was primarily due to increased headcount of $16.6 million, digital initiatives of $16.1 million, recent acquisitions in fiscal 2022 and 2023 of $14.6 million, and stock compensation of $3.8 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

12 edited+3 added−4 removed2 unchanged
Biggest changeSee Note 17, “Segment Information” to the accompanying consolidated financial statements included elsewhere in this Annual Report. We maintain provisions for potential credit losses and such losses to date have normally been within our expectations. We evaluate the solvency of our customers on an ongoing basis to determine if additional allowances for doubtful accounts receivable need to be recorded.
Biggest changeAs of September 30, 2022, one customer, CED National represented 10% of the Company’s accounts receivable, with no significant amounts past due. See Note 17, “Segment Information” to the accompanying consolidated financial statements included elsewhere in this Annual Report. We maintain provisions for potential credit losses and such losses to date have normally been within our expectations.
Although we report financial results in United States dollars, approximately 9% of our net sales and expenses are denominated in currencies other than the United States dollar, particularly British pounds sterling, European euros, Canadian dollars, Australian dollars, and New Zealand dollars.
Although we report financial results in United States dollars, approximately 10% of our net sales and expenses are denominated in currencies other than the United States dollar, particularly British pounds sterling, European euros, Canadian dollars, Australian dollars, and New Zealand dollars.
As a result, we are exposed to fluctuations in interest rates to the extent of our net borrowings under the New Senior Secured Term Loan, which were $373.0 million at September 30, 2022.
As a result, we are exposed to fluctuations in interest rates to the extent of our net borrowings under the New Senior Secured Term Loan, which were $373.0 million at September 30, 2023.
As of September 30, 2022, assuming availability was fully utilized, each one percentage point change in interest rates would result in an approximately $3.3 million change in annual interest expense on the ABL Credit Facility.
As of September 30, 2023, assuming availability was fully utilized, each one percentage point change in interest rates would result in an approximately $3.3 million change in annual interest expense on the ABL Credit Facility.
With the exception of certain foreign denominated intercompany loans, we generally do not use derivative instruments to hedge translation risks in the ordinary course of business, including the risk 52 related to earnings of foreign subsidiaries. Due to limited cross border transactions, we do not experience material foreign exchange transactional gains or losses. 53
With the exception of certain foreign denominated intercompany loans, we generally do not use derivative instruments to hedge translation risks in the ordinary course of business, including the risk related to earnings of foreign subsidiaries. Due to limited cross border transactions, we do not experience material foreign exchange transactional gains or losses. 54
As of September 30, 2022, 51 LIBOR exceeded 1.00%; therefore, each one percentage point change in interest rates would result in an approximately $3.8 million change in the annual interest expense on our Senior Secured Term Loan Facility.
As of September 30, 2023, SOFR exceeded 1.00%; therefore, each one percentage point change in interest rates would result in an approximately $3.8 million change in the annual interest expense on our Senior Secured Term Loan Facility.
Foreign Currency Risk Because we conduct our business on an international basis in multiple currencies, we may be adversely affected by foreign exchange rate fluctuations.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further details. 53 Foreign Currency Risk Because we conduct our business on an international basis in multiple currencies, we may be adversely affected by foreign exchange rate fluctuations.
We have historically not been exposed to a material amount of uncollectible receivable balances. Commodity Price Risk We are exposed to price fluctuations for our primary raw material commodities such as steel, copper and PVC resin. Our operating performance may be affected by both upward and downward price fluctuations.
We evaluate the solvency of our customers on an ongoing basis to determine if additional allowances for doubtful accounts receivable need to be recorded. We have historically not been exposed to a material amount of uncollectible receivable balances. Commodity Price Risk We are exposed to price fluctuations for our primary raw material commodities such as steel, copper and PVC resin.
We are also exposed to fluctuations in petroleum costs as we deliver a substantial portion of the products we sell by truck. We seek to minimize the effects of inflation and changing prices through economies of purchasing and inventory management resulting in cost reductions and productivity improvements as well as price increases to maintain reasonable gross margins.
We seek to minimize the effects of inflation and changing prices through economies of purchasing and inventory management resulting in cost reductions and productivity improvements as well as price increases to maintain reasonable gross margins. Such commodity price fluctuations continue to cause volatility in our financial performance and could do so in the future. See Item 7.
Additionally, if the ABL Credit Facility were fully utilized, the margin we pay on borrowings would increase by 0.5% from the current level and we would incur additional interest expense of $1.6 million. Both the ABL Credit Facility and Senior Secured Term Loan Facility contain provisions for an alternative base rate to LIBOR.
Additionally, if the ABL Credit Facility were fully utilized, the margin we pay on borrowings would increase by 0.3% from the current level and we would incur additional interest expense of $1 million. Credit Risk We are exposed to credit risk on accounts receivable balances. This risk is mitigated due to our large, diverse customer base.
Interest Rate Risk The Credit Facilities, excluding our Senior Notes, bear interest at a floating rate. The ABL Credit Facility currently bears interest at a floating rate of LIBOR plus an applicable margin. The Senior Secured Term Loan Facility currently bears interest at the greater of LIBOR or 1.00% plus an applicable margin.
Interest Rate Risk The Credit Facilities, excluding our Senior Notes, bear interest at a floating rate.
As of September 30, 2022, one customer, CED National represented 10% of the Company’s accounts receivable, with no significant amounts past due. As of September 30, 2021, one customer, CED National represented 11% of the Company’s accounts receivable, with no significant amounts past due.
In fiscal 2023, our ten largest customers (including buyers and distributors in buying groups) accounted for approximately 38% of our net sales. As of September 30, 2023, Sonepar USA represented 14% and CED National represented 11% of the Company’s accounts receivable, with no significant amounts past due.
Removed
As described in Note 13, “Debt” to the accompanying consolidated financial statements included elsewhere in this Annual Report, the ABL Credit Facility can alternatively bear interest under an alternate base rate plus an applicable margin ranging from 0.25% to 0.75%.
Added
On March 15, 2023, the Company entered into an amendment to the New Senior Secured Term Loan Facility to implement a forward-looking interest rate based on SOFR in lieu of LIBOR, consisting of an applicable margin of 2.00% and a credit spread adjustment of (i) 0.11448% for a one-month interest period, (ii) 0.26161% for a three-month interest period and (iii) 0.42826% for a six-month interest period.
Removed
The Senior Secured Term Loan Facility can bear interest under an alternate base rate (with a floor of 1.50%) plus 1.00%. We expect to transition to SOFR as the alternative base rate for both instruments in fiscal 2023. Credit Risk We are exposed to credit risk on accounts receivable balances.
Added
Further, on March 24, 2023, the Company entered into an amendment to the Amended ABL Credit Facility to implement a forward-looking interest rate based on SOFR in lieu of LIBOR consisting of an applicable margin ranging from 1.25% to 1.75% and a credit spread adjustment of 0.10%.
Removed
This risk is mitigated due to our large, diverse customer base. In fiscal 2022, our ten largest customers (including buyers and distributors in buying groups) accounted for approximately 38% of our net sales. However, no single customer comprised more than 10% of our consolidated net sales in fiscal 2022, 2021 or 2020.
Added
Our operating performance may be affected by both upward and downward price fluctuations. We are also exposed to fluctuations in petroleum costs as we deliver a substantial portion of the products we sell by truck.
Removed
Such commodity price fluctuations continue to cause volatility in our financial performance and could do so in the future. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further details.

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