← Back to ATKR filing summaryThis is the extracted source text from the SEC filing. Formatting may differ from the original document.
The following information should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this report. The following discussion may contain forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those factors discussed below and included or referenced elsewhere in this report, particularly in the sections entitled “Forward-Looking Statements” and “Risk Factors.”
Incremental Market Uncertainties
Recent events, including the imposition of tariffs and other changes in international trade policy, central bank interest rate adjustments, inflation, and conflicts in Ukraine and the Middle East are creating additional uncertainty in the global economy, generally, and in the markets we operate in. 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 can have on our domestic supply chain.
Proposed Merger
On August 2, 2026, Atkore entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Prysmian S.p.A., a company organized under the laws of the Republic of Italy (“Prysmian”), Trinity Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Prysmian (“Merger Sub”), and, solely as provided in certain sections of the Merger Agreement, Prysmian Cables and Systems USA, LLC, a Delaware limited liability company (the “Guarantor”), pursuant to which, at the closing of the transactions contemplated by the Merger Agreement, Merger Sub will merge with and into Atkore, with Atkore surviving as a wholly owned subsidiary of Prysmian (the “Merger”).
Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of Atkore’s common stock issued and outstanding immediately prior to the Effective Time (subject to certain customary exceptions specified in the Merger Agreement) will be converted into the right to receive $95.00 per share in cash, without interest.
The consummation of the Merger is subject to the satisfaction or waiver of customary closing conditions, including, among others, the adoption of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding shares of Atkore’s common stock entitled to vote thereon at a meeting of Atkore’s stockholders duly called and held for such purposes, the expiration or termination of applicable waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and the receipt of certain regulatory approvals. Prysmian’s obligations are also conditioned upon the absence of any material adverse effect since the Merger Agreement. The Merger Agreement also contains customary representations, warranties and covenants by each of Prysmian, Merger Sub and Atkore and certain representations, warranties and covenants by the Guarantor, including, among others, covenants by Atkore to use commercially reasonable efforts to conduct its business in all material respects in the ordinary course and, to the extent consistent therewith, to preserve in all material respects its business organization, material assets and properties and maintain its existing material relationships and goodwill, and to refrain from taking certain specified actions without the consent of Prysmian.
32
RESULTS OF OPERATIONS
The consolidated results of operations for the three months ended June 26, 2026 and June 27, 2025 were as follows:
Three months ended
(in thousands) June 26, 2026 June 27, 2025 Change % Change
Net sales $ 794,800 $ 735,045 $ 59,755 8.1 %
Cost of sales 618,533 562,985 55,548 9.9 %
Gross profit 176,267 172,060 4,207 2.4 %
Selling, general and administrative 108,669 98,139 10,530 10.7 %
Intangible asset amortization 3,608 10,108 (6,500) (64.3) %
Operating income 63,990 63,813 177 0.3 %
Interest expense, net 6,948 8,873 (1,925) (21.7) %
Litigation settlement expense 50,000 — 50,000 100.0 %
Other expense (income), net 12,601 (150) 12,751 (8,500.7) %
Income (loss) before income taxes (5,559) 55,090 (60,649) (110.1) %
Income tax expense (benefit) (6,304) 12,128 (18,432) (152.0) %
Net income $ 745 $ 42,962 $ (42,217) (98.3) %
Net sales
% Change
Volume 8.9 %
Average selling prices 3.0 %
Foreign exchange 1.1 %
Divestitures (5.3) %
Other 0.4 %
Net sales 8.1 %
Net sales increased by $59.8 million, or 8.1%, to $794.8 million for the three months ended June 26, 2026, compared to $735.0 million for the three months ended June 27, 2025. The increase in net sales is primarily attributed to increased sales volume of $65.7 million, increased average selling prices of $22.4 million and foreign exchange benefits of $8.0 million partially offset by the impact of divestitures of $39.0 million.
Cost of sales
% Change
Volume 8.7 %
Average input costs 8.7 %
Foreign exchange 1.1 %
Divestitures (8.6) %
Other — %
Cost of sales 9.9 %
Cost of sales increased by $55.5 million, or 9.9%, to $618.5 million for the three months ended June 26, 2026 compared to $563.0 million for the three months ended June 27, 2025. The increase was primarily
33
due to increased input costs of $48.9 million, increased sales volume of $48.8 million and foreign exchange impact of $6.4 million, partially offset by the impact of recent divestitures $48.1 million.
Selling, general and administrative
Selling, general and administrative expenses increased by $10.5 million, or 10.7%, to $108.7 million for the three months ended June 26, 2026 compared to $98.1 million for the three months ended June 27, 2025. The increase was primarily due to increased transaction and litigation costs of $9.8 million, increased compensation costs, net of productivity initiatives, of $3.7 million and higher costs of $6.0 million across various other spend categories, partially offset by the impact of recent divestitures and plant closures of $9.1 million.
Intangible asset amortization
Intangible asset amortization expense decreased to $3.6 million for the three months ended June 26, 2026 compared to $10.1 million for the three months ended June 27, 2025. The decrease in amortization expense resulted from certain intangibles becoming fully amortized, the amortizable base decreasing as a result of impairment charges recorded in fiscal 2025 and the divestiture of the HDPE business in fiscal 2026.
Interest expense, net
Interest expense, net decreased by $1.9 million, or 21.7% to $6.9 million for the three months ended June 26, 2026 compared to $8.9 million for the three months ended June 27, 2025. The decrease is primarily due to decreased interest rates on the Company’s Senior Secured Term Loan Facility.
Litigation settlement expense
Litigation settlement expense increased to $50.0 million for the three months ended June 26, 2026 compared to no related expense for the three months ended June 27, 2025. The increase in expense is related to the settlement of one of the putative classes in the PVC antitrust litigation described in Note 16, “Commitments and Contingencies”.
Other expense (income), net
The Company recognized $12.6 million of other expense for the three months ended June 26, 2026 compared to $0.2 million of other income for the three months ended June 27, 2025. This change is primarily due to the divestitures of the HDPE business and Vergo G&C which resulted in recorded losses of $10.5 million and $1.2 million, respectively, as described in Note 3, “Divestitures”.
Income tax expense (benefit)
The Company’s income tax rate increased to 113.4% for the three months ended June 26, 2026 compared to 22.0% for the three months ended June 27, 2025. The increase in the current period effective tax rate was driven by the discrete impact of the PVC litigation settlement recorded in the third quarter of fiscal 2026.
SEGMENT RESULTS
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. These solutions are marketed to contractors, original equipment manufacturers and end users.
34
Both segments use Adjusted EBITDA as the primary measure of profit and loss. Segment Adjusted EBITDA is income (loss) before income taxes, adjusted to exclude unallocated expenses, depreciation and amortization, interest expense, net, stock-based compensation, loss on extinguishment of debt, gains and losses on the divestiture of a business, asset impairment charges, certain legal matters, and other items, such as inventory reserves and adjustments, (gain) loss on disposal of property, plant and equipment, insurance recovery related to damages of property, plant and equipment, release of indemnified uncertain tax positions, realized or unrealized gain (loss) on foreign currency impacts of intercompany loans and related forward currency derivatives, gain on purchase of business, loss on assets held for sale, restructuring costs and transaction costs. We define segment Adjusted EBITDA margin as segment Adjusted EBITDA as a percentage of segment Net sales.
Electrical
Three months ended
(in thousands) June 26, 2026 June 27, 2025 Change % Change
Net sales $ 578,310 $ 521,308 $ 57,002 10.9 %
Adjusted EBITDA $ 89,330 $ 81,235 $ 8,095 10.0 %
Adjusted EBITDA margin 15.4 % 15.6 %
Net sales
% Change
Volume 12.0 %
Average selling prices 2.6 %
Foreign exchange 1.5 %
Divestitures (5.3) %
Other 0.1 %
Net sales 10.9 %
Net sales increased by $57.0 million, or 10.9%, to $578.3 million for the three months ended June 26, 2026 compared to $521.3 million for the three months ended June 27, 2025. The increase in net sales is primarily attributed to increased sales volume of $62.8 million, foreign exchange benefits of $8.0 million and increased average selling prices of $13.7 million, partially offset by divestitures of businesses of $27.5 million.
Adjusted EBITDA
Adjusted EBITDA for the three months ended June 26, 2026 increased by $8.1 million, or 10.0%, to $89.3 million from $81.2 million for the three months ended June 27, 2025. Adjusted EBITDA margin decreased to 15.4% for the three months ended June 26, 2026 compared to 15.6% for the three months ended June 27, 2025. The increase in Adjusted EBITDA was primarily driven by increased sales volume while Adjusted EBITDA margin decreased largely due to increases in input costs outpacing increases in average selling prices.
35
Safety & Infrastructure
Three months ended
(in thousands) June 26, 2026 June 27, 2025 Change % Change
Net sales $ 216,828 $ 213,963 $ 2,865 1.3 %
Adjusted EBITDA $ 28,138 $ 30,731 $ (2,593) (8.4) %
Adjusted EBITDA margin 13.0 % 14.4 %
Net sales
% Change
Volume 1.4 %
Average selling prices 4.1 %
Solar energy tax credit rebates 1.3 %
Divestitures (5.4) %
Other (0.1) %
Net sales 1.3 %
Net sales increased by $2.9 million, or 1.3%, for the three months ended June 26, 2026 to $216.8 million compared to $214.0 million for the three months ended June 27, 2025. The increase is primarily attributed to an increase in average selling prices of $8.7 million, increased sales volume of $2.9 million, and lower solar credit rebates of $2.7 million, partially offset by the impact of recent divestitures of $11.5 million.
Adjusted EBITDA
Adjusted EBITDA decreased by $2.6 million, or 8.4%, to $28.1 million for the three months ended June 26, 2026 compared to $30.7 million for the three months ended June 27, 2025. Adjusted EBITDA margin decreased to 13.0% for the three months ended June 26, 2026 compared to 14.4% for the three months ended June 27, 2025. The decrease in Adjusted EBITDA and Adjusted EBITDA margin was largely due to higher input costs outpacing increases in average selling prices.
36
The consolidated results of operations for the nine months ended June 26, 2026 and June 27, 2025 were as follows:
Nine months ended
(in thousands) June 26, 2026 June 27, 2025 Change % Change
Net sales $ 2,181,724 $ 2,098,367 $ 83,357 4.0 %
Cost of sales 1,743,408 1,570,102 173,306 11.0 %
Gross profit 438,316 528,265 (89,949) (17.0) %
Selling, general and administrative 316,135 288,630 27,505 9.5 %
Intangible asset amortization 16,201 31,972 (15,771) (49.3) %
Asset impairment charges 11,553 127,733 (116,180) (91.0) %
Operating income 94,427 79,930 14,497 18.1 %
Interest expense, net 20,832 25,343 (4,511) (17.8) %
Litigation settlement expense 186,500 — 186,500 100.0 %
Other expense, net 35,886 7,409 28,477 384.4 %
Income (loss) before income taxes (148,791) 47,178 (195,969) (415.4) %
Income tax expense (benefit) (40,496) 7,935 (48,431) (610.3) %
Net income $ (108,295) $ 39,243 $ (147,538) (376.0) %
Net sales
% Change
Volume 5.4 %
Average selling prices 0.7 %
Solar energy tax credits (0.3) %
Foreign exchange 0.9 %
Divestitures (2.7) %
Net sales 4.0 %
Net sales increased by $83.4 million, or 4.0%, to $2,181.7 million for the nine months ended June 26, 2026, compared to $2,098.4 million for the nine months ended June 27, 2025. The increase in net sales is primarily attributed to increased sales volume of $113.3 million, higher average selling price of $14.6 million and foreign exchange benefits of $18.3 million, partially offset by the impact of divestitures of $56.8 million and the impact of solar credits rebates of $6.0 million.
Cost of sales
% Change
Volume 5.7 %
Average input costs 9.6 %
Freight (2.2) %
Foreign exchange 1.0 %
Divestitures (4.1) %
Other 1.0 %
Cost of sales 11.0 %
Cost of sales increased by $173.3 million, or 11.0%, to $1,743.4 million for the nine months ended June 26, 2026 compared to $1,570.1 million for the nine months ended June 27, 2025. The increase in cost of sales was primarily due to higher input costs of $151.5 million, higher sales volume of $89.4 million and
37
foreign exchange impacts of $15.3 million partially offset by lower freight costs of $34.4 million and the impact of recent divestitures of $64.3 million.
Selling, general and administrative
Selling, general and administrative expenses increased by $27.5 million, or 9.5%, to $316.1 million for the nine months ended June 26, 2026, compared to $288.6 million for the nine months ended June 27, 2025. The increase was primarily due to increased transaction and litigation costs of costs of $19.9 million, compensation costs, net of productivity initiatives, of $0.9 million, $13.6 million spread across a variety of other spend categories including restructuring, partially offset by the impact of divestitures and plant closures of $6.9 million.
Intangible asset amortization
Intangible asset amortization expense decreased to $16.2 million for the nine months ended June 26, 2026, compared to $32.0 million for the nine months ended June 27, 2025. The decrease in amortization expense resulted from certain intangibles becoming fully amortized, the amortizable base decreasing as a result of impairment charges recorded in fiscal 2025 and the divestiture of the HDPE business in fiscal 2026.
Asset impairment charges
Asset impairment charges decreased to $11.6 million for the nine months ended June 26, 2026 compared to $127.7 million for the nine months ended June 27, 2025. The decrease in asset impairment charges resulted primarily from the impairment charges recorded against the HDPE business in fiscal 2025 of $127.7 million compared to the fiscal 2026 impairments of goodwill related to the HDPE business of $6.5 million and impairment charges on other assets in connection with the closure of plants, as described in Note 6, “Restructuring Charges” of $5.1 million.
Interest expense, net
Interest expense, net, decreased by $4.5 million, or 17.8%, to $20.8 million for the nine months ended June 26, 2026, compared to $25.3 million for the nine months ended June 27, 2025. The decrease is primarily due to decreased interest rates on the Company’s Senior Secured Term Loan Facility.
Litigation settlement expense
Litigation settlement expense increased to $186.5 million for the nine months ended June 26, 2026 compared to no related expense for the nine months ended June 27, 2025. The increase in expense is related to the settlement of the PVC antitrust litigation described in Note 16, “Commitments and Contingencies”.
Other expense (income), net
Other expense, net, increased to $35.9 million of expense for the nine months ended June 26, 2026, compared to $7.4 million of expense for the nine months ended June 27, 2025. This is primarily due to a loss on assets held for sale of $25.7 million related to the HDPE business and a net loss on divestitures of $10.4 million in fiscal 2026 compared to a loss on the sale of Northwest Polymers of $6.1 million in fiscal 2025.
Income tax expense (benefit)
The Company’s income tax rate increased to 27.2% for the nine months ended June 26, 2026, compared to 16.8% for the nine months ended June 27, 2025. The increase in the current period effective tax rate was driven by the discrete impact of the PVC litigation settlement recorded in the current year.
38
SEGMENT RESULTS
Electrical
Nine months ended
(in thousands) June 26, 2026 June 27, 2025 Change % Change
Net sales $ 1,580,321 $ 1,479,340 $ 100,981 6.8 %
Adjusted EBITDA $ 218,782 $ 264,564 $ (45,782) (17.3) %
Adjusted EBITDA margin 13.8 % 17.9 %
Net sales
% Change
Volume 7.7 %
Average selling prices 0.1 %
Foreign exchange 1.2 %
Divestitures (2.3) %
Other 0.1 %
Net sales 6.8 %
Net sales increased by $101.0 million, or 6.8%, to $1,580.3 million for the nine months ended June 26, 2026, compared to $1,479.3 million for the nine months ended June 27, 2025. The increase in net sales is primarily attributed to increased sales volume of $114.6 million, the impact of foreign exchange of $18.1 million and increased average selling prices of $2.1 million, partially offset by the impact of divestitures of $33.8 million.
Adjusted EBITDA
Adjusted EBITDA for the nine months ended June 26, 2026 decreased by $45.8 million, or 17.3%, to $218.8 million from $264.6 million for the nine months ended June 27, 2025. Adjusted EBITDA margin decreased to 13.8% for the nine months ended June 26, 2026, compared to 17.9% for the nine months ended June 27, 2025. The decrease in Adjusted EBITDA and Adjusted EBITDA margin was largely due to the increase in input costs outpacing increases in average selling prices.
Safety & Infrastructure
Nine months ended
(in thousands) June 26, 2026 June 27, 2025 Change % Change
Net sales $ 602,179 $ 619,960 $ (17,781) (2.9) %
Adjusted EBITDA $ 75,628 $ 82,374 $ (6,746) (8.2) %
Adjusted EBITDA margin 12.6 % 13.3 %
39
Net sales
Change (%)
Volume (0.2) %
Average selling prices 2.0 %
Solar energy tax credits rebates (1.0) %
Divestitures (3.7) %
Net sales (2.9) %
Net sales decreased by $17.8 million, or 2.9%, to $602.2 million for the nine months ended June 26, 2026, compared to $620.0 million for the nine months ended June 27, 2025. The decrease is primarily due to the impact of divestitures of $23.0 million, the higher impact of solar tax credit rebates of $6.0 million and a decrease in volume of $1.3 million, partially offset by increased average selling prices of $12.5 million.
Adjusted EBITDA
Adjusted EBITDA decreased $6.7 million, or 8.2%, to $75.6 million for the nine months ended June 26, 2026, compared to $82.4 million for the nine months ended June 27, 2025. Adjusted EBITDA margin decreased to 12.6% for the nine months ended June 26, 2026, compared to 13.3% for the nine months ended June 27, 2025. The decrease in Adjusted EBITDA and Adjusted EBITDA margin was largely due to increases in input costs outpacing increases in average selling prices.
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 cash and cash equivalents were $346.2 million as of June 26, 2026, of which $132.6 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.
In general, we require cash to fund working capital investments, acquisitions, capital expenditures, debt repayment, interest payments, taxes, share repurchases and dividend payments. We have access to the ABL Credit Facility to fund operational needs. As of June 26, 2026, there were no outstanding borrowings under the ABL Credit Facility and no letters of credit issued under the ABL Credit Facility. The borrowing base was estimated to be $325.0 million and approximately $325.0 million was available under the ABL Credit Facility as of June 26, 2026. Outstanding letters of credit count as utilization of the commitments under the ABL Credit Facility and reduce the amount available for borrowings.
The agreements governing the Senior Secured Term Loan Facility and the ABL Credit Facility (collectively, the "Credit Facilities") contain covenants that limit or restrict AII’s ability to incur additional indebtedness, repurchase debt, incur liens, sell assets, make certain payments (including dividends), and enter into transactions with affiliates. AII has been in compliance with the covenants under the agreements for all periods presented.
We may from time to time repurchase our debt or take other steps to reduce our debt. These actions may include open market repurchases, negotiated repurchases or opportunistic refinancing of debt. The amount of debt, if any, that may be repurchased or refinanced will depend on market conditions, trading levels of our debt, our cash position, compliance with debt covenants and other considerations.
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 the commodities we purchase.
Capital expenditures have historically been necessary to expand and update the production capacity and improve the productivity of our manufacturing operations.
Pursuant to the Merger Agreement, prior to the closing of the Merger, we may not, without Prysmian’s prior written consent, declare, set aside, authorize or pay any dividend or distribution in respect of our
40
common stock, other than regular quarterly dividends in an amount no greater than $0.33 per share per quarter, paid at such times and in a manner consistent with our historical quarterly dividend practice. The quarterly dividend of $0.33 per share declared on July 30, 2026, and payable on August 28, 2026, to stockholders of record on August 16, 2026, is permitted under the Merger Agreement and does not require Prysmian’s consent.
Our ongoing liquidity needs are expected to be funded by cash on hand, net cash provided by operating activities and, as required, borrowings under the ABL Credit Facility. We expect that cash provided from operations and available capacity under the ABL Credit Facility will provide sufficient funds to operate our business, make expected capital expenditures and meet our liquidity requirements for at least the next twelve months, including payments of interest and principal on our debt.
There have been no material changes in our contractual obligations and commitments since the filing of our Annual Report on Form 10-K.
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. Each company depends on its respective subsidiaries to distribute funds to it so that it may pay obligations and expenses, including satisfying obligations with respect to indebtedness. The ability of our subsidiaries to make distributions and dividends to us depends on their operating results, cash requirements and financial and general business conditions, as well as restrictions under the laws of our subsidiaries' jurisdictions.
The agreements governing the Credit Facilities significantly restrict the ability of our subsidiaries, including AII, to pay dividends, make loans or otherwise transfer assets from AII and, in turn, to us. Further, AII's subsidiaries are permitted under the terms of the Credit Facilities to incur additional indebtedness that may restrict or prohibit the making of distributions, the payment of dividends or the making of loans by such subsidiaries to AII and, in turn, to us. 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 table below summarizes cash flow information derived from our statements of cash flows for the periods indicated:
Nine months ended
(in thousands) June 26, 2026 June 27, 2025
Cash flows provided by (used in):
Operating activities $ (90,335) $ 192,359
Investing activities (26,112) (69,302)
Financing activities (41,390) (143,149)
Operating activities
During the nine months ended June 26, 2026, the Company used $90.3 million cash flow in operating activities compared to generating $192.4 million during the nine months ended June 27, 2025. The $282.7 million decrease in cash provided was primarily due to changes in working capital and taxes payable. Net loss increased $147.5 million but was offset by an increase in transaction and impairment related non-cash charges of $36.4 million and an increase in other noncash adjustments, such as depreciation and deferred taxes, of $6.6 million. Changes in working capital represented $57.9 million of cash outflows primarily from the impact of certain legal settlements and increases in accounts receivable and income taxes, partially offset by decreases in inventory.
41
Investing activities
During the nine months ended June 26, 2026, the Company used $26.1 million in investing activities compared to $69.3 million during the nine months ended June 27, 2025. The $43.2 million decrease in cash used in investing activities was primarily due to a decrease of $44.5 million in capital expenditures and an increase in proceeds from the sale of a businesses of $22.6 million, partially offset by less proceeds from the sale of equipment of $7.1 million and cash contributed to a divested business of $15.0 million.
Financing Activities
During the nine months ended June 26, 2026, the Company used $41.4 million in financing activities compared to $143.1 million used during the nine months ended June 27, 2025. The decrease in cash used in financing activities is primarily due to $100.0 million less cash used to repurchase common stock during the nine months ended June 26, 2026.
CHANGES IN CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There have been no material changes in our critical accounting policies and estimates since the filing of our Annual Report on Form 10-K.
RECENT ACCOUNTING STANDARDS
See Note 1, “Basis of Presentation and Summary of Significant Accounting Policies” to our unaudited condensed consolidated financial statements.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q 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. Some of the forward-looking statements can be identified by the use of forward-looking terms such as “believes,” “expects,” “may,” “will,” “shall,” “should,” “would,” “could,” “seeks,” “aims,” “projects,” “is optimistic,” “intends,” “plans,” “estimates,” “anticipates” or other comparable terms. Forward-looking statements include, without limitation, all matters that are not historical facts. They appear in a number of places throughout this Quarterly Report on Form 10-Q and include, without limitation, statements regarding our intentions, beliefs, assumptions or current expectations concerning, among other things, financial position; results of operations; cash flows; prospects; growth strategies or expectations; customer retention; the outcome (by judgment or settlement) and costs of legal, administrative or regulatory proceedings, investigations or inspections, including, without limitation, collective, representative or class action litigation; and the impact of prevailing economic conditions.
Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes, including, without limitation, our actual results of operations, financial condition and liquidity, and the development of the market in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this Quarterly Report. In addition, even if our results of operations, financial condition and cash flows, and the development of the market in which we operate, are consistent with the forward-looking statements contained in this Quarterly Report, those results or developments may not be indicative of results or developments in subsequent periods. A number of important factors, including, without limitation, the risks and uncertainties disclosed in the Company’s filings with the SEC, including but not limited to the Company’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, could cause actual results and outcomes to differ materially from those reflected in the forward-looking statements. Additional factors
42
that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation:
•our ability to complete the Merger in the timeframe or manner currently anticipated or at all, including due to a failure to obtain the regulatory approvals required for the closing of the Merger or the occurrence of any event, change or other circumstance that could give rise to the right of one or both of the parties to terminate the Merger Agreement;
•the effect of the pendency of the Merger on our ongoing business and operations, including disruption to our business relationships, the diversion of management’s attention from ongoing business operations and opportunities, or the outcome of any legal proceedings that may be instituted against us following announcement of the Merger;
•restrictions on the conduct of our business prior to the closing of the Merger and on our ability to pursue alternatives to the Merger;
•the possibility that the Merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events;
•adverse effects of the inability to complete the Merger;
•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;
•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;
•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;
•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;
•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;
•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;
•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;
•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;
•widespread outbreak of diseases;
•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;
•our inability to introduce new products effectively or implement our innovation strategies;
•safety and labor risks associated with the manufacture and in the testing of our products;
•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 continue importing raw materials, component parts and/or finished goods;
43
•disruptions or impediments to the receipt of sufficient raw materials resulting from various anti-terrorism security measures;
•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, increases in the complexity of our supply chain and potential damage to our reputation with customers resulting from regulations related to “conflict minerals”;
•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 Quarterly Report and from time to time in documents that we file with the SEC.
You should read this Quarterly Report completely and with the understanding that actual future results may be materially different from expectations. All forward-looking statements attributable to us or persons acting on our behalf that are made in this Quarterly Report are qualified in their entirety by these cautionary statements. These forward-looking statements are made only as of the date of this Quarterly Report, and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, and changes in future operating results over time or otherwise.
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.