Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following information should be read in conjunction with the accompanying consolidated financial statements and related notes included in this Annual 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 elsewhere in this report, particularly in “Special Note Regarding Forward-Looking Statements and Information” and “Risk Factors” included elsewhere in this Annual Report. The percentages provided below reflect rounding adjustments. Accordingly, figures expressed as percentages when aggregated may not be the arithmetic sum of the percentages that precede them.
Business Factors Influencing our Results of Operations
We are a leading manufacturer of Electrical products primarily for the non-residential construction and renovation markets and Safety & Infrastructure 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. 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. We believe we hold #1 or #2 positions in the United States by net sales in a significant number of our products. The quality of our products, the strength of our brands and our scale and presence provide what we believe to be a unique set of competitive advantages that position us for profitable growth.
The following factors may affect our results of operations in any given period:
Economic Conditions. Our business depends on demand from customers across various end markets, including wholesale distributors, OEMs, retail distributors and general contractors. 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 2025, 88% of our net sales were to customers located in the United States. As a result, our business is heavily dependent on the health of the United States economy, in general, and on United States non-residential construction activity, in particular. A stronger United States economy and robust non-residential construction generally increase demand for our products. In fiscal 2025, our sales and cost of sales were impacted by continued 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.
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. 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. During 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 fluctuations, 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. 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.
Raw Materials. We use a variety of raw materials in the manufacturing 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. 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. 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. 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.
Import tariffs and potential import tariffs have resulted or may result in increased prices for imported goods and raw materials and, in some cases, may result or have resulted in price increases for domestically sourced goods and materials. Changes in U.S. trade policy have resulted and could result in additional reactions from U.S. trading partners, including adopting responsive trade policies making it more difficult or costly for us to export our products or import goods and materials from those countries. These measures could also result in increased costs for goods imported into the U.S. or may cause us to adjust our worldwide supply chain. Either of these could require us to increase prices to our customers which may reduce demand, or, if we are unable to increase prices, result in lowering our margin on products sold.
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. 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.
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. 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.
Divestitures and restructuring. On September 29, 2025, we announced our intention to reduce costs through headcount reductions, site closures and strategic divestitures. As of September 30, 2025, we have accrued $1.3 million of costs related to the aforementioned restructuring activity. We also recognized a $66.7 million impairment charge related to the potential sale of the HDPE business. We expect to incur additional restructuring costs in fiscal 2026 and may incur additional losses related to divestiture activity.
Foreign Currencies . In fiscal 2025, approximately 12% 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. Assets and liabilities of our non-U.S. subsidiaries are translated into United States dollars using period-end exchange rates. Foreign revenue and expenses are translated at the monthly average exchange rates in effect during the period. Foreign currency translation adjustments are included as a component of other comprehensive income (loss) within our statements of comprehensive income. 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.
Emerging Industry Trends . Pressure from regulators, and expectations from customers, to combat climate change may accelerate the move to more renewable power generation, the electrification of
buildings and transportation, and the use of more sustainable methods in construction in our markets. The rapid market growth for the use of digital technologies may continue to drive the need for more digital infrastructure such as data centers and the need for advanced warehousing and distribution centers to support e-commerce. Atkore offers products including electrical conduit & fittings, electrical cable & cable management, metal framing and racking structures that are commonly used in the construction of new and renovated buildings, infrastructure, renewable power systems, data centers, warehouses, and to connect electric vehicle charging stations to the electrical grid. Increases in demand for these applications in our markets may drive an increased demand for Atkore products.
Reportable Segments
We operate our business through two operating segments which are also our reportable segments: Electrical and Safety & Infrastructure. Our operating segments are organized based on primary market channel and, in most instances, the end use of products. We review the results of our operating segments separately for the purposes of making decisions about resource allocation and performance assessment. We evaluate performance on the basis of net sales and Adjusted EBITDA.
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.
Both segments use Adjusted EBITDA as the primary measure of profit and loss. Segment Adjusted EBITDA is the income (loss) before income taxes, adjusted to exclude unallocated expenses, depreciation and amortization, interest expense, net, loss on extinguishment of debt, restructuring charges, impairment charges, stock-based compensation, certain legal matters, transaction costs, gain on purchase of business, gain on sale of a business and other items, such as inventory reserves and adjustments, loss on disposal of property, plant and equipment, insurance recovery related to damages of property, plant and equipment, release of indemnified uncertain tax positions, and realized or unrealized gain (loss) on foreign currency impacts of intercompany loans and related forward currency derivatives. See Note 18, “Segment Information” to the accompanying consolidated financial statements included elsewhere in this Annual Report.
Fiscal Periods
The Company has a fiscal year that ends on September 30. The Company’s fiscal quarters typically end on the last Friday in December, March and June as it follows a 4-5-4 calendar.
Key Components of Results of Operations
Net sales
Net sales represents external sales of Electrical products to the non-residential construction and MR&R markets and Safety & Infrastructure products and solutions to the commercial and industrial markets. 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. These costs include direct material, direct labor, production related overheads, excess and obsolescence costs, lower-of-cost-or-market provisions, freight and the depreciation and amortization of assets directly used in the production of goods for sale.
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.
Results of Operations
Fiscal 2025 Compared to Fiscal 2024
The results of operations for the fiscal years ended September 30, 2025 and September 30, 2024 were as follows:
Fiscal year ended
($ in thousands)
September 30, 2025
September 30, 2024
Change ($)
Change (%)
Net sales
Cost of sales
Gross profit
Selling, general and administrative
Intangible asset amortization
Asset impairment charges
Operating income
Interest expense, net
Loss on extinguishment of debt
Other expense, net
Income before income taxes
Income tax (benefit) expense
Net income
Net sales
Change (%)
Volume
Average selling prices
Solar energy tax credits
Divestitures
Net sales
Net sales for fiscal 2025 decreased $351.7 million to $2,850.4 million, a decrease of 11.0%, compared to $3,202.1 million for fiscal 2024. The decrease in net sales is primarily attributed to decreased average selling prices of $381.8 million and divestitures of $9.3 million. These decreases are partially offset by increased sales volume of $21.6 million across varying product categories within both the Electrical and the Safety & Infrastructure segments and a decrease in the economic value of solar tax credits to be transferred to certain customers of $15.7 million.
Cost of sales
Change (%)
Volume
Average input costs
Solar energy tax credits
Freight
Cost of sales
Cost of sales increased $50.1 million, or 2.4%, to $2,174.3 million for fiscal 2025, compared to $2,124.2 million for fiscal 2024. The increase was primarily due to a decrease in the benefit of solar tax credits of $25.6 million, increased freight costs of $19.1 million and higher sales volume of $17.1 million and partially offset by lower input costs of $10.1 million.
Selling, general and administrative
Selling, general and administrative expenses decreased $0.9 million, or 0.2%, to $396.6 million for fiscal 2025, compared to $397.5 million for fiscal 2024. The decrease was primarily due to lower costs of $6.2 million spread across a variety of spend categories and savings from divestitures of $5.0 million, partially offset by increased costs on digital initiatives of $5.8 million, litigation costs of $3.9 million, increased compensation expense, net of productivity initiatives, of $0.6 million.
Intangible asset amortization
Intangible asset amortization expense decreased $13.6 million, or 24.5%, to $41.9 million for fiscal 2025, compared to $55.5 million for fiscal 2024. The decrease in intangible asset amortization resulted from certain intangibles becoming fully amortized, the divestiture of Northwest Polymers, LLC (“Northwest Polymers”), and the impairment of intangible assets in HDPE in fiscal 2025.
Asset impairment charges
Asset impairment charges increased to $214.4 million for fiscal 2025, compared to no asset impairment charges for fiscal 2024. The asset impairment charges were primarily related to the impairment of HDPE assets of $194.5 million as described in Note 14, “Fair Value Measurements” and the impairment of goodwill on the Mechanical reporting unit of $18.9 million as described in Note 12, “Goodwill and Intangible Assets.”
Interest expense, net
Interest expense, net decreased $2.3 million, or 6.5% to $33.3 million for fiscal 2025, compared to $35.6 million for fiscal 2024. The decrease is primarily due to decreased interest rates on the Company’s New Senior Secured Term Loan Facility.
Loss on extinguishment of debt
In fiscal 2025, the Company refinanced its Term Loan Facility, resulting in a loss on extinguishment of debt of $0.8 million as described in Note 13, “Debt.” There were no debt refinancing activities in fiscal 2024.
Other expense, net
Other expense, net increased $5.7 million to $7.7 million for fiscal 2025, compared to $2.0 million for fiscal 2024. The increase in expense was primarily due to a loss on the sale of Northwest Polymers of $6.2 million in fiscal 2025.
Income tax (benefit) expense
Income tax expense decreased $117.8 million to a benefit of $3.4 million, compared to expense of $114.4 million for fiscal 2024. The Company's income tax rate decreased to 18.4% for fiscal 2025, compared to 19.5% for fiscal 2024. The decrease in income tax expense is due to lower income before taxes, while the decrease in effective tax rate was primarily due the non-deductible loss on the disposal of Northwest Polymers and non-deductible goodwill impairment. Additionally, see Note 8, “Income Taxes” to the accompanying consolidated financial statements included elsewhere in this Annual Report.
Segment results
Electrical
Fiscal year ended
($ in thousands)
September 30, 2025
September 30, 2024
Change ($)
Change (%)
Net sales
Adjusted EBITDA
Adjusted EBITDA Margin
Net sales
Change (%)
Volume
Average selling prices
Divestitures
Other
Net sales
Net sales decreased by $356.8 million, or 15.1%, to $1,998.2 million for fiscal 2025, compared to $2,355.0 million for fiscal 2024. The decrease in net sales is primarily attributed to lower average selling prices of $355.1 million and divestitures of $9.3 million, partially offset by increased sales volume of $4.6 million.
Adjusted EBITDA
Adjusted EBITDA decreased $397.8 million, or 54.6%, to $330.5 million for fiscal 2025, compared to $728.3 million for fiscal 2024. The decrease in Adjusted EBITDA was largely due to lower average selling prices and higher input costs.
Safety & Infrastructure
Fiscal year ended
($ in thousands)
September 30, 2025
September 30, 2024
Change ($)
Change (%)
Net sales
Adjusted EBITDA
Adjusted EBITDA Margin
Net sales
Change (%)
Volume
Average selling prices
Solar energy tax credits
Other
Net sales
Net sales increased $4.3 million, or 0.5%, to $853.4 million for fiscal 2025, compared to $849.1 million for fiscal 2024. The increase is primarily attributed to higher sales volumes of $17.0 million and a decrease in the economic value of solar tax credits to be transferred to certain customers of $15.7 million, partially offset by lower average selling prices of $26.7 million.
Adjusted EBITDA
Adjusted EBITDA increased $19.2 million, or 21.3%, to $109.2 million for fiscal 2025, compared to $90.0 million for fiscal 2024. The Adjusted EBITDA increase was primarily due to decreases in input costs outpacing decreases in selling prices.
Fiscal 2024 Compared to Fiscal 2023
The results of operations for the fiscal years ended September 30, 2024 and September 30, 2023 were as follows:
Fiscal year ended
($ in thousands)
September 30, 2024
September 30, 2023
Change ($)
Change (%)
Net sales
Cost of sales
Gross profit
Selling, general and administrative
Intangible asset amortization
Operating income
Interest expense, net
Other (income) and expense, net
(Loss) Income before income taxes
Income tax (benefit) expense
Net (loss) income
Net sales
Change (%)
Volume
Average selling prices
Divestitures
Other
Net sales
Net sales for fiscal 2024 decreased $316.7 million to $3,202.1 million, a decrease of 9.0%, compared to $3,518.8 million for fiscal 2023. The decrease in net sales is primarily attributed to decreased average selling prices of $406.1 million and the economic value of solar tax credits to be transferred to certain customers of $38.3 million. These decreases are partially offset by increased sales volume of $122.6 million across varying product categories within both the Electrical and the Safety & Infrastructure segments.
Cost of sales
Change (%)
Volume
Average input costs
Solar energy tax credits
Freight
Other
Cost of sales
Cost of sales decreased $55.0 million, or 2.5%, to $2,124.2 million for fiscal 2024, compared to $2,179.3 million for fiscal 2023. The decrease was primarily due to lower input costs of steel, copper and PVC resin of $103.1 million and the benefit of solar tax credits of $84.0 million, partially offset by higher sales volume of $86.5 million and increased freight costs of $34.6 million.
Selling, general and administrative
Selling, general and administrative expenses increased $9.3 million, or 2.4%, to $397.5 million for fiscal 2024, compared to $388.2 million for fiscal 2023. The increase was primarily due digital initiatives of $10.0 million, increased headcount of $7.5 million, and increased compensation of $3.0 million. These increases were partially offset by increases in productivity of $6.0 million, lower sales commission expense of $4.1 million, and lower costs of $1.1 million spread across a variety of other spend categories.
Intangible asset amortization
Intangible asset amortization expense decreased $2.3 million, or 4.0%, to $55.5 million for fiscal 2024, compared to $57.8 million for fiscal 2023. The decrease in intangible asset amortization resulted from certain intangibles becoming fully amortized.
Interest expense, net
Interest expense, net, increased $0.4 million, or 1.0% to $35.6 million for fiscal 2024, compared to $35.2 million for fiscal 2023. The increase is primarily due to increased interest rates on the Company’s New Senior Secured Term Loan Facility.
Other expense, net
Other income, net decreased $6.0 million to expense of $2.0 million for fiscal 2024, compared to expense of $8.0 million for fiscal 2023. The decrease in expense was primarily due to impairments recognized in fiscal 2023 in connection with the Company’s plans to exit from operations in Russia of $7.5 million.
Income tax expense
Income tax expense decreased $46.0 million to $114.4 million for fiscal 2024, compared to $160.4 million for fiscal 2023. The Company's income tax rate increased to 19.5% for fiscal 2024, compared to 18.9% for fiscal 2023. The decrease in income tax expense was due to lower income before taxes, while the increase in effective tax rate was primarily due to the benefit of solar credits being recognized in cost of sales in fiscal 2024 whereas the benefit of solar tax credits was recognized in income tax expense in fiscal 2023, as described in the Summary of Significant Accounting Policies in Note 1, “Basis of Presentation and Summary of Significant Accounting Policies.” Additionally, see Note 8, “Income Taxes” to the accompanying consolidated financial statements included elsewhere in this Annual Report.
Segment results
Electrical
Fiscal year ended
($ in thousands)
September 30, 2024
September 30, 2023
Change ($)
Change (%)
Net sales
Adjusted EBITDA
Adjusted EBITDA Margin
Net sales
Change (%)
Volume
Average selling prices
Other
Net sales
Net sales decreased by $320.1 million, or 12.0%, to $2,355.0 million for fiscal 2024, compared to $2,675.1 million for fiscal 2023. The decrease in net sales is primarily attributed to lower average selling prices of $379.5 million, partially offset by increased sales volume of $54.3 million.
Adjusted EBITDA
Adjusted EBITDA decreased $276.5 million, or 27.5%, to $728.3 million for fiscal 2024, compared to $1,004.9 million for fiscal 2023. The decrease in Adjusted EBITDA was largely due to lower average selling prices over input costs.
Safety & Infrastructure
Fiscal year ended
($ in thousands)
September 30, 2024
September 30, 2023
Change ($)
Change (%)
Net sales
Adjusted EBITDA
Adjusted EBITDA Margin
Net sales
Change (%)
Volume
Average selling prices
Solar energy tax credits
Other
Net sales
Net sales increased $4.9 million, or 0.6%, to $849.1 million for fiscal 2024, compared to $844.2 million for fiscal 2023. The increase is primarily attributed to higher sales volumes of $68.3 million partially offset by lower average selling prices of $26.6 million and the economic value of solar tax credits to be transferred to certain customers of $38.3 million.
Adjusted EBITDA
Adjusted EBITDA decreased $13.2 million, or 12.8%, to $90.0 million for fiscal 2024, compared to $103.2 million for fiscal 2023. The Adjusted EBITDA decrease was primarily due to lower average selling prices versus higher input costs, partially offset by the net benefit of solar tax credits.
Liquidity and Capital Resources
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. 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. Our cash and cash equivalents were $506.7 million as of September 30, 2025, of which $106.6 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. Our cash and cash equivalents increased $155.3 million from September 30, 2024, primarily due to less cash used in capital expenditures and share repurchases partially offset by lower cash provided operating activities.
In general, we require cash to fund working capital investments, acquisitions, capital expenditures, debt repayment, interest payments, taxes, dividends and share repurchases. We have access to the ABL Credit Facility to fund our operational needs. As of September 30, 2025, there were no outstanding borrowings under the ABL Credit Facility (and no standby 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 September 30, 2025.
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.
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 fiscal 2025, $107.1 million was spent on equipment, which included both routine capital expenditures and spending on growth initiatives such as water pipe and other product categories to support Global Megaprojects.
We have purchase commitments of $110.9 million and $4.1 million for the years 2026 and 2027, which represent purchases of raw materials in the normal course of business for which all significant terms have been confirmed.
As of September 30, 2025, we had $0.7 million of income tax liability, gross unrecognized tax benefits of $4.5 million and gross interest and penalties of $0.6 million. Of these amounts, $4.4 million is classified as a non-current liability in the consolidated balance sheet.
The projected company pension contribution for fiscal 2026 is $0.4 million.
Servicing of our existing debt instruments includes the following estimated cash outflows:
($ in thousands)
Less than 1 Year
1-3 Years
3-5 Years
More than 5 Years
Total
Senior Notes due June 2031
New Senior Secured Term Loan Facility Due September 2032
Interest payments (a)
Total
(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, 2025 (4.25% for the Senior Notes, and 5.3% for the New Senior Secured Term Loan Facility).
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 Credit Facilities. 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 payment of interest and principal on our debt.
We do not have any off-balance sheet financing arrangements that we believe are reasonably likely to have a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Limitations on Distributions and Dividends by Subsidiaries
Atkore 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 them so that they 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 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. See Note 14, “Debt” to the accompanying consolidated financial statements included elsewhere in this Annual Report.
Cash Flows
The table below summarizes cash flow information derived from our statements of cash flows for the fiscal years ended September 30, 2025 and September 30, 2024.
Fiscal year ended
(in thousands)
September 30, 2025
September 30, 2024
Change ($)
Change (%)
Cash flows provided by (used in):
Operating activities
Investing activities
Financing activities
Operating activities
During fiscal 2025, operating activities provided $402.8 million of cash, compared to $549.0 million during fiscal year 2024. The decrease in cash provided by operating activities was primarily driven by lower operating income of $601.6 million, partially offset by non-cash asset impairments of $214.4 million, less cash used in working capital of $123.1 million, tax impacts of $105.5 million, higher depreciation and amortization of $8.6 million and a non-cash loss on sale of a business of $6.2 million.
Investing activities
During fiscal 2025, we used $85.6 million of cash for investing activities, compared to $154.3 million during fiscal 2024. The $68.8 million decrease in cash used for investing activities was primarily driven by decreased capital expenditures of $42.8 million year over year, $6.0 million in cash used for acquisitions in fiscal 2024 with no corresponding activity in fiscal 2025, proceeds from the sale of property, plant and equipment of $12.8 million in fiscal 2025 and proceeds from sale of a business of $7.0 million in fiscal 2025.
Financing Activities
During fiscal 2025, we used $160.5 million for financing activities, compared to $435.3 million during fiscal 2024. The decrease in cash used for financing activities during fiscal 2025 was primarily driven by decreased share repurchases of $281.0 million and decreased share issuance costs of $11.6 million, partially offset by increased dividends paid of $9.7 million and increased debt financing costs of $7.2 million.
The table below summarizes cash flow information derived from our statements of cash flows for the fiscal years ended September 30, 2024 and September 30, 2023.
Fiscal year ended
(in thousands)
September 30, 2024
September 30, 2023
Change ($)
Change (%)
Cash flows provided by (used in):
Operating activities
Investing activities
Financing activities
Operating activities
During fiscal 2024, operating activities provided $549.0 million of cash, compared to $807.6 million during fiscal year 2023. The decrease in cash provided by operating activities was primarily driven by lower operating income of $268.7 million and tax impacts of $6.5 million, partially offset by less cash used in working capital of $5.2 million and higher depreciation and amortization of $15.4 million.
Investing activities
During fiscal 2024, we used $154.3 million of cash for investing activities, compared to $302.2 million during fiscal 2023. The $147.8 million decrease in cash used for investing activities was primarily driven by $77.3 million in decreased cash used for acquisitions in fiscal 2024, compared to fiscal 2023 and decreased capital expenditures of $69.0 million.
Financing Activities
During fiscal 2024, we used $435.3 million for financing activities, compared to $506.8 million during fiscal 2023. The decrease in cash used for financing activities during fiscal 2024 was primarily driven by repurchases of shares of $381.0 million in fiscal 2024, as compared to $491.0 million of share repurchases in fiscal 2023, partially offset by dividends paid of $34.5 million in fiscal 2024.
Critical Accounting Estimates
The preparation of financial statements requires management to make estimates and assumptions relating to the reporting of results of operations, financial condition and related disclosure of contingent assets and liabilities at the date of the financial statements. Actual results may differ from those estimates under different assumptions or conditions. The following are our most critical accounting policies, which are those that require management's most difficult, subjective and complex judgments, requiring the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.
The following discussion is not intended to represent a comprehensive list of our accounting policies. For a detailed discussion of the application of these and other accounting policies, see Note 1, “Basis of Presentation and Summary of Significant Accounting Policies” to the accompanying consolidated financial statements included elsewhere in this Annual Report.
Revenue Recognition
The Company’s revenue arrangements primarily consist of a single performance obligation to transfer promised goods which is satisfied at a point in time when title, risks and rewards of ownership, and subsequently control have transferred to the customer. This generally occurs when the product is shipped to the customer, with an immaterial amount of transactions in which control transfers upon delivery. The Company primarily offers assurance-type standard warranties that do not represent separate performance obligations.
The Company has certain arrangements that require it to estimate at the time of sale the amounts of variable consideration that should not be recorded as revenue as certain amounts are not expected to be collected from customers, as well as an estimate of the value of products to be returned. The Company principally relies on historical experience, specific customer agreements, and anticipated future trends to estimate these amounts at the time of sale and to reduce the transaction price. These arrangements include sales discounts and allowances, volume rebates, and returned goods. Historically, adjustments related to these estimates have not been material.
Income Taxes
In determining income for financial statement purposes, we must make certain estimates and judgments. These estimates and judgments affect the calculation of certain tax liabilities and the
determination of the recoverability of certain deferred tax assets, which arise from temporary differences between the tax and financial statement recognition of revenue and expense. Certain deferred tax assets are reviewed for recoverability and valued accordingly, considering available positive and negative evidence, including our past results, estimated future taxable income streams and the impact of tax planning strategies in the applicable tax paying jurisdiction. A valuation allowance is established to reduce deferred tax assets to the amount that is considered more likely than not to be realized. Valuations related to tax accruals and assets can be impacted by changes in accounting regulations, changes in tax codes and rulings, changes in statutory tax rates, and changes in our forecasted future taxable income. 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. 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.
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. 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. 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. 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. If our estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result. If payment of these amounts ultimately proves to be less than the recorded amounts, the reversal of the liabilities would result in tax benefits being recognized in the period when we determine the liabilities are no longer necessary. See Note 8, “Income Taxes” to the accompanying consolidated financial statements included elsewhere in this Annual Report.
Business Combinations
We account for business combinations using the acquisition method of accounting, which requires that once control is obtained, all the assets acquired and liabilities assumed, including amounts attributable to noncontrolling interests, are recorded at their respective fair values at the date of acquisition. The determination of fair values of identifiable assets and liabilities requires estimates and the use of valuation techniques when market value is not readily available. For intangible assets acquired in a business combination, we typically use the income method. Significant estimates in valuing certain intangible assets include, but are not limited to, the amount and timing of future cash flows, growth rates, discount rates and useful lives. The excess of the purchase price over fair values of identifiable assets and liabilities is recorded as goodwill.
Indefinite-Lived Intangible Assets and Goodwill Impairments
Goodwill and other intangible assets primarily result from business combinations. The Company assesses the recoverability of goodwill and indefinite-lived trade names on an annual basis in accordance with Accounting Standards Codification (“ASC”) 350 “Intangibles - Goodwill and Other.” The measurement date is the first day of the fourth fiscal quarter, or more frequently, if events or circumstances indicate that it is more likely than not that the fair value of a reporting unit or the respective indefinite-lived trade name is less than the carrying value. The Company can elect to perform a quantitative or qualitative test of impairment.
For fiscal 2025, 2024, and 2023 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 income approach calculates the fair value of the reporting unit using a discounted cash flow approach. Internally forecasted future cash flows, which the Company believes reasonably approximate market participant assumptions, are discounted using a weighted average cost of capital (Discount Rate) developed for each reporting unit. The Discount Rate is developed using market observable inputs, as well as considering whether or not there is a measure of risk related to the specific reporting unit’s forecasted performance. 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. Fair value under the guideline public company method is determined for each reporting unit by applying market multiples for comparable public companies to the reporting 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.
In fiscal 2025, the Company recorded a goodwill impairment on the Mechanical reporting unit of $18.9 million as a result of its annual impairment test. The Company did not record any goodwill impairments in fiscal 2024. In 2023, as a result of the Company’s plan to exit operations in Russia and expectation to sell the related business at a loss, the Company recognized a $1.7 million goodwill impairment on the related reporting unit on a relative fair value basis. As of September 30, 2025, the fair values of the Conduit & Fittings and EMEA reporting units exceed their respective carrying value. However, less than significant changes in the valuation assumptions provided by management could have resulted in scenarios where carrying value exceeded calculated fair value and could have resulted in an impairment.
As noted above, ASC 350 also requires that the Company test the indefinite-lived intangible assets for impairment at least annually. Under ASC 350, if the carrying value of the indefinite-lived asset is higher than its fair value, then the asset is deemed to be impaired and the impairment charge is estimated as the excess carrying value over the fair value. The Company calculated the fair value of its indefinite-lived intangible assets using the income approach, specifically the relief-from-royalty method. The relief-from-royalty method is used to estimate the cost savings that accrue to the owner of an intangible asset who would otherwise have to pay royalties or license fees on revenues earned through the use of the asset. Internally forecasted revenues, which the Company believes reasonably approximate market participant assumptions, are multiplied by a royalty rate to arrive at the estimated net after tax cost savings. The royalty rate used in the analysis is based on an analysis of empirical, market-derived royalty rates for guideline intangible assets. The net after tax cost savings are discounted using the Discount Rate. The Discount Rate is developed using market observable inputs, as well as considering whether or not there is a measure of risk related to the specific indefinite lived intangible assets' forecasted performance. 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 2025, 2024, and 2023 the results indicated all indefinite-lived intangible assets had significant excess of fair value over the carrying value. A reasonably possible change in the estimated revenues associated with the indefinite-lived intangible assets, selected royalty rates or the residual growth rate would not result in an impairment of any of these assets.
Long-Lived Asset and Finite - Lived Intangible Asset Impairments
The Company reviews long-lived assets, including property, plant and equipment and finite-lived intangible assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the asset may not be fully recoverable.
The Company groups assets at the lowest level for which cash flows are separately identified in order to measure an impairment. Recoverability of an asset or asset group is first measured by a comparison of the carrying amount to its estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying amount exceeds its estimated undiscounted future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset or asset group exceeds the estimated fair value. If impairment is determined to exist, any related impairment loss is calculated based on the estimated fair value. Impairment losses on assets to be disposed of or held for sale, if any, are based on the estimated proceeds to be received, less costs of disposal.
The Company also considers potential impairment indicators associated with other finite-lived intangible assets, including its customer relationships, patents, and non-compete agreements. An impairment is recognized if the carrying value of an asset or asset group exceeds the estimated undiscounted future cash flows expected to result from the use of the asset or asset group and its eventual disposition. The Company's key customers are primarily wholesale and national distributors. The terms of these relationships are based on purchase orders and are not contractually based. Customer relationships are amortized on a straight-line basis over their useful lives, ranging from 6 to 14 years. The Company evaluates the appropriateness of remaining useful lives based on customer attrition rates. Other intangible assets are amortized on a straight-lined basis over their estimated useful lives, ranging from 1 to 20 years. During fiscal 2025, the Company identified indicators of impairment on the long-lived assets of the HDPE business, which resulted in non-cash impairment charges of $194,450 and a change in the estimated remaining useful life for the HDPE business’s customer relationship intangibles. See Note 13, “Goodwill and Intangible Assets” and Note 15, “Fair Value Measurements.” The Company did not have a triggering event in fiscal 2024 and 2023.
Inventories
We account for inventory valuation for a majority of the Company using the last-in, first-out (“LIFO”) method measured at the lower of cost or market value. We utilize the LIFO method of valuing inventories because it reflects how we monitor and manage our business and it matches current costs and revenues. Valuation of inventory using the LIFO method is made at the end of our fiscal year based on inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on estimates of expected year-end inventory levels and costs. Other inventories, consisting mostly of foreign inventories, are measured using first-in, first-out (“FIFO”) costing methods. Inventory cost, regardless of valuation method, includes direct material, direct labor and manufacturing overhead costs. In circumstances where inventory levels are in excess of anticipated market demand, where inventory is deemed technologically obsolete or not marketable due to its condition or where the inventory cost for an item exceeds its market value, we record a charge to cost of goods sold and reduce the inventory to its market value.
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.
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. 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 Annual Report 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 Annual 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 Annual 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 discussed or referenced under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, could cause actual results and outcomes to differ materially from those reflected in the forward-looking statements. 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;
• 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;
• 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, increase in 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 report and from time to time in documents that we file with the SEC.
You should read this Annual 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 Annual Report are qualified in their entirety by these cautionary statements. These forward-looking statements are made only as of the date of this Annual 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.
