Deane Dray: Great. And that takes me to the heart of the question here is, take us through the pricing dynamics this quarter. And I know the recovery and the normalization is not going to be linear. But what were the specific dynamics this quarter, input costs, competitive positioning, where the demand was? I know geographically, that’s a factor as well. But just take us through those dynamics, if you could.
Bill Waltz: I’ll start and then again, David would like to add specificity to this with the charts. I’d say it’s overall on track. Again, without getting into each product line, they’re some are a little bit lower, but there is absolutely some going, hey, general manager and sales team, keep doing what you’re doing here. And I can think of — and again, if you go back to Page 6 reference, without me calling out specific of these products in at least two of those categories, maybe more, others have led price increases. So I think we’re a price leader, because we have that one order, one delivery, one invoice, and we have the ability to bring more value than many of our competitors to the industry, but we’re not the only one out there thinking about how you give good returns to their shareholders. So right on track overall.
David Johnson: Yes. And Deane, when you look at the — in Slide 5, if you net on the EBITDA bridge, the price versus cost changes, you’re around $90 million, and we had guided, I believe, a midpoint of around $150 million for the year. That was always going to be more front-end loaded, year-over-year if you look at that, because pricing went down all last year sequentially. So I would say to go to what Bill said, we’re definitely on track from our expectations for the year.
Deane Dray: Got it. And that kind of takes me to the next question on the assumptions first half, second half. And I get the seasonality piece, it’s clearly — that’s the construction season that drives that second half. But just there’s such a disparity here in first half EBITDA. If I have the numbers right, year-over-year, down 22% and then second half coming to almost even to last year. So is that the expected ramp between the 2? And how much of that — and I get the volume part, because we’re seeing that come through and we’re believers in the end market demand. So is pricing the key component there?
David Johnson: So a couple of things. I would look at it more sequentially in the year of FY ’24. Because when you compare it versus FY ’23 of last year, we still had some really strong quarters at the beginning of the year as pricing went down through the year. So said another way, our comps will get easier at the back half of the year. So when you look at what we have in the second half of our fiscal year this year versus the first half, you will see a number that you’ll need like in the $240 million, $250 million kind of EBITDA range versus the $210 million, $215 million or whatever average for Q1, maybe a little bit lower than for the first half. That is definitely, again, increases in Cobar, normal seasonality where you see the construction season picking up.
And then pricing firming versus last year where pricing was still going down. So I think if you add that all together, I would say the seasonality is fairly atypical. Just a little bit more back-end loaded because of our growth initiatives hitting in the back half of the year.
Deane Dray: All right. That was really helpful, David. I appreciate the precision, especially the reminder about the dynamics second half and those of last year and the comps. So that was really helpful. And just last one for me. You referenced the Indiana plant. Can you give us an update, the start-up? Where does it stand in terms of productivity, efficiencies and so forth?
Bill Waltz: Yes. So first thing — but Deane, to your question a little bit how I answered with Andy, it’s on track. So now on track means that, as David called out and we had the $7 million, it’s not generating the profits that we expect long term, but that’s to be expected. If you just — again, the complexity of every product SKU, it’s not like starting up a light bulb factory or a ketchup manufacturer that you just have one SKU and you run it, it starts or it doesn’t start. Here its each customer, each product, running it, taking the machines down for a couple of days, bringing up a second ship, bringing up a third ship. But we’re still — I mean, we have a phenomenal leadership team there, and it’s progressing. Basically, is the way we expect it is, their profit short term as you get a plant up and running, yes.
But it’s — again, to me, the reaffirmation is we have the forecast for the rest of the year. We’re still on it. Everything is moving as expected at this time.
Deane Dray: All good to hear. Thank you.
Bill Waltz: Thanks Deane.
Operator: Your next question comes from the line of Chris Moore from CJS Securities. Your line is open.
Chris Moore: Hi, good morning, guys. Thanks for taking a couple of questions. Maybe just on PVC pricing for January, was there a much change?
Bill Waltz: No. Not that — I mean, we expected volume, Chris, like a lot of our products, you can imagine, especially the products that go underground, which is PVC and HDPE and so forth there, probably fiberglass conduit. Again, these are smaller lines, fiber that’s actually go under bridges, so misspoke. But those types are definitely being impacted by the weather across the country, but pricing basically on track. And we’ve put in one or two price increases. It’s harder when the demand isn’t there to get them to realize, but we’re still optimistic going forward on these attempting to push the prices in the industry up.
David Johnson: Yes, Chris, as you recall, our backlog is less than a couple of weeks. So we do kind of every week look at where volumes are and what have you. And like Bill mentioned, we mentioned in our prepared remarks, January was light due to several factors. The first start of this week has been much stronger, so we’ll see — and versus our expectations here in Q2 how it lays out for the rest of the quarter.
Chris Moore: Got it. Appreciate that. Maybe just one more on Indiana. So obviously, you talked quite a bit about the driver from The Inflation Reduction Act. You guys are getting up and getting going. How would you characterize kind of demand for torque tubes overall? And how would you view that kind of against the current domestic capacity to meet that demand? Is it enough beyond where you guys are at? What are you seeing overall?
Bill Waltz: Yes, Chris, the best I can tell — and again, its estimates and so forth, is there more demand out there than capacity in the industry as we go forward. And again, I think as we’ve given prepared remarks or answers to questions over the years, and again, others including public customers, could probably comment on this. But with The Inflation Reduction Act, it should move all the volume into the States, which is a great thing for the U.S. and its economy. But that literally — even if the solar market did not grow, which we’ll come back to in a second, doubles the amount of slower torque tubes, and right now, I don’t think that capacity exists by anybody out there. So again, as we add the capacity of fine-tuning, getting multiple shifts up, I have to believe some of our competitors are doing the same thing and so forth.
But you add doubling the size of the domestic torque tube market, plus whatever double-digit plus growth of the solar market, I don’t think anyone would dispute that. It’s a really healthy and exciting market for both Atkore and I think just the country as we become more carbon free.
Chris Moore: I appreciate that. Maybe just one last one here. Obviously, you guys sell the majority of products through distributors. But you’ve talked about marketing efforts that go kind of way beyond this distribution channel, developing relationships with the big players in markets like array makers, fab owners, et cetera, with the goal of becoming a partner. Just wondering if you can provide kind of any update there and thoughts on — I know that’s a longer-term process, but kind of how are you viewing that?
