Atkore Inc. (ATKR) Earnings Call Transcript & Summary

All right. We're going to get started again. Welcome to another afternoon session. We are really excited to have Atkore with us today. We've got Bill Waltz, who's the President and CEO. Bill, I think you joined Atkore in 2013. And then we've got David Johnson, who joined as CFO -- VP and CFO and Accounting Officer. You've got a lot of titles. And you joined Atkore in August 2018.

So Bill, maybe I'll just start off with most investor know the company by now, but maybe you could characterize again why the company has such a high win rate and such a high share in its primary markets. And then explain why that -- why Atkore was achieving mid-teens EBITDA margin before the pandemic now seems to be achieving sustainable mid-20% EBITDA margins post pandemic?

Yes. So Andy, I'll probably put -- and by the way, a great conference here so far. But I'll probably combine both to go why the move from mid-teens to mid-20s on margin. And there's probably 3 or 4 things, tying the first one is, over time, either it caused the success of us or other companies or acquisitions the industry has gotten more consolidated great competitors out there. But if you look back like a decade ago, as you just referenced with me in 2013, there was at least, I'll say, around a dozen PVC competitors, And over time, whether we have bought those companies up and rolled up the industry or our other competitors like in steel conduit has bought people we are now down to in most of the major markets we serve 2 to 3 different people -- companies. We're all competing really now, which I think is effectively on value, how do you bring better, more innovative products around delivery, service, relationships. But I'm sure that has helped both our margin and our competitors' margins. So that's one thing. Two, to almost on the M&A track is in addition to industries where it's down to 2 or 3 people, is we -- if you look back of our acquisitions over the last, let's say, 5, 7 years and go, hey, we bought companies that provide stainless steel conduit and fiberglass conduit where those typically are more specialty products, but also with a higher margin profile. And by the way, I'm just using fiberglass as an example, there is really 2 of us that have let's say a 90-plus percent market there. So both industry consolidation has helped increased margin, and then our acquisitions have helped increase the margin. Third thing there, I would say, is just new product development. We are doing a lot of innovative things. So a lot of people look and go, I'm not going to spin, that, it's not immature industry. We have brands that have been around for literally several -- for over 100 years. On the same hand, if you look at just one of those, our cable division that has been around for over 100 years. We've recently, in the last couple of years, come out with new products that deliver the same electrical needs but are just so much smoother to pull through the metal, call it, rafters stripe [ 2x4 ] that make it a lot more efficient for contractors, and that's the huge thing. I'm sure you'll get to supply demand things. There's a shortage of labor. That is the biggest thing governing the industry. So anything you can do to service that market better, anything you do more innovative products, and we're not talking huge differences, but 300, 400 basis points as everybody could appreciate, is a huge difference. And then the other thing back to service, and I have to imagine future questions from you, is around just the services. We add regional service centers, and this is truly an untapped opportunity for the future, but we're already seeing -- I'm going to call it the Amazon Effect that we can provide in that area. And again, that's providing -- we did a study last year for the regional service centers. In some cases, 700 basis points of incremental price for that, call it, Amazon Effect, call it, FedEx overnight delivery versus 2-day delivery. So -- you add all those things up, and that gets you from high teens to your mid-20s.

And then maybe a follow-up to that is, could you talk a little bit more about your one order, one delivery, one invoice mantra. Why does it differentiate you from competitors? You obviously have some relatively significant electrical competitors. Why can't they replicate sort of what you do.

Yes. So 2 great questions in there. And I do think if there is one thing that's misunderstood with Atkore from an investor perspective, and I'm going to say more future opportunity, it is that one order, one delivery, one invoice. If you think about our products, and I'm just going to randomly pick something to a circuit breaker. For whatever value -- delivering a circuit breaker, it probably could ship in a UPS box to the distributor. Here, our products like PVC conduit, HDPE still kind of just walk through metal framing. These are big bulky things that are truckload products. And then you look and say, well, that's a distributors value in life. And it's like, well, it is, but 2 things, for a distributor to effectively service contractors in the area, they want eventually it may be a hub-and-spoke system, but they want distribution close by 10, 15 miles from job sites that a guy can stop by and pick up or so forth and pick up product. And our products are so big and bulky that these small distribution locations don't have the space or be really space constrained to bring a truckload of steel conduit and a truckload of PVC. You just walk through a truckload of metal framing. So where we can combine all those products together on one truckload, it reduces their inventory, reduces the freight, reduces the space they need for those products. On top of that, even for the large distributors, and I won't mention specific names, but you can imagine with the large 3, 4, 5, they have much more a hub-and-spoke type of system, but even -- and they've invested a lot in the automation. But that automation doesn't work well for our products. I know at least with several of those large customers of ours. They've said, "Hey, this is perfect because we can directly from our service centers feed their call of spokes and not have to extra material handling." So the ability for us to bring in and then future value I kind of alluded to efficiently get an order in this industry is so far away at the electrical industry from what any of the shareholders have on the ability to have, I call it the Amazon Effect, but you place an order electronically and it's delivered in a day or 2, we get A grades all the time when they stratify their different competitors or my competitors because we'll deliver in 10 days, it's mind boggling. So there's a huge untapped opportunity and then for why not competitors replicating, the difference with Atkore and our competitors -- all great competitors. But as we are built around supplying the electrical industry. First of all, complements, competitors, but if you think of somebody like just randomly new core, great company, vertically integrated, but they're vertically integrated, how do I make high beams, how do I make metal conduit. I just can't imagine the General Manager of Nucor going to the Board of Directors and go, "Hey, I had this opportunity to get into plastics." And you can take that across other ones to go that copper company that's thinking wire, utility cables is not thinking about how he gets into PVC plastic and just go through. So it's not even the mindset versus they're thinking, how do I do adjacencies. And for the PVC resin company, it may be some other type of PVC pipe or application, window frames, whatever, it's not about how does a PVC resin company get into making copper wire.

Got it. So Bill, maybe just stepping back to about your overall markets. As you know, lead indicators, Dodge Momentum Index, ABI have been relatively muted. You've spoken about resilience, primarily in most nonres markets. Could you elaborate on how much visibility you really have? And where does it come from? I know you have such a short lead time business. So as visibility gotten better or worse over the last few months as interest rates have fluctuated.

Yes. So a couple of things. First to -- for us specifically, if you actually looked at our backlog, to your point, we have 1 or 2 weeks, and we aspire to get down to 1 or 2 days because of turnover. So it's not like other corporations that have 9 months of backlog and should be able to predict pretty well their next fiscal year by looking at their backlog. But what I can say that we see that every one of our shareholders can see is go out to associations of building contractors, A, B, C and go, how many months of backlog do my and our customers' customer, the contractors have. And that's been pretty steady. I'm going to say, around 8.5 months of backlog. It may be 8.3, it may be 8.9, but it doesn't vary more than 1 or 2 points on a month. Second thing to look at and more so -- I mean all great indicators, we probably look at dozen plus of Architectural Billing Index, Dodge Momentum Index, I mean the fed rate all the rest of the stuff, new housing starts. But what is the backlog of contractors? Second thing, are contractors hiring or not hiring. And right now, and these are rough numbers here, there's contractors have around 300,000 open positions. And they aspire that different forecasters within the ABC have said they need over 500,000 jobs. So at the end of the day, we can talk about whatever. I'm just randomly picking well, did this EV battery factory, increase sales or not increase, the jobs are there. So for us, where I have confidence as much as any company can and our future is there is a massive backlog of work. The biggest governor on how fast we go, our blue-collar workers. And then from there, which is a positive thing is some of our other public electrical companies, they don't compete directly with us, with the Schneider, the Eatons, the ABBs, they are making switchgear. Those companies do have record backlogs, but 2 things. One is they work through and add more capacity in short to the states, and they speed up and catch up, which I'm sure they're motivated to do that allows us to even serve the industry faster. So we're -- as much as we can be, Andy, we're comfortable for the future. That's the information. And at least I will complement David and our precedents and so forth, we've hit earnings, and we've guided through pricing a lot of things 3 years with a lot more transparency, I think, the most.

Totally. Just related to that, Bill, like -- maybe just focusing on fiscal secular megatrends you get asked the question a lot. But maybe where do you think we are in terms of the fiscal bills, whether it's IIJA, CHIPS at IRA on your business and then separately in terms of mega projects in general, we've seen some major EV projects, maybe semicon moving to the right a little bit. How do you think about mega projects impacting the business?

So I'm going to hit a couple of points and here David will add where I missed -- it's like in general, mega projects are not your point, the EV battery. I'd go back to answer the last one. There's still -- I'm saying 8.5, some [indiscernible] 8.3 or 8.7, but they're still 8.5 months of backlog out there. That's the key thing. From there, I think, with a lot of -- well, let me bifurcate this. For the inflation Reduction Act that has a time around to solar torque tubes that has hit an eye and the industry cannot keep up. And that's just because 2 things: one, within the solar industry, where we provide the torque tubes that go in the back of solar arrays. It used to be about half made in the U.S., half made in China. Well, along sudden with our government and the fiscal stimulus with tax credits all that makes economic sense no matter what to make in the state. So literally, overnight, the market has doubled. And like I said, for us as we're ramping up on plan, the customers would want 2x what we can supply. So that's definitely out there, and we're just trying to catch up, quite frankly. On the other side, some of this stuff, there's an act with fiber optic to a home called the BEADs Act, $65 billion, give or take. That's been slower than the government and any other person has forecasted. So we think it is really the start of our next fiscal year, the end of summer, September, October. It's not going to be a light switch thing, but that should ramp up that, by the way, for our forecast this year gives us one of numerous factors confidence into next year. And then the other thing I'd say around global maker projects in general is because of our value add, our relationships and stuff like that, at least some of either, I'll call it the Magnificent Seven or other ones that may not hit that less, but are still in the data center and chip manufacturing have come to us and say, you've done a really good job with your products and your kitting how do we make sure you are a vendor of choice. So we're respecting the channel. In other words, we sell to distributors that have general contractors. But if we do happen to have a relationship with that multibillion plus corporation that we're actually locking in with them and then literally feeding it through the channel, we pick the distributor, and we work with the general contractor. So I think we're going to see outsized growth for us going forward. But again, that's something just starting. That will be an excitement for FY '25 and FY '26 and beyond.

Just one point there to just remember, all that is still against the pressure of labor, though. So even if the money starts flowing and the jobs are there, we still have this issue of the 500,000 or 300,000 jobs, which are the way you want to look at it.

Got it. That's helpful, David. So for better or worse, it seems like occasionally, your stock is tied to some large U.S. electrical distributors. And so like maybe you could tell us a little bit more about what you think they're actually doing with their inventory -- no but I would just say, like, do they want to hold more safety stock? Are they holding less because costs are high? Like how do you think about -- because we saw WESCO and then all your stock goes down, like what should we think about that?

Yes. I think in general, and it's going to vary by each one making our own decision. It's about consistence. So I don't think there's this massive overstock, and I'll explain or is there a massive under ramp-up. But if anything, I lean there is slightly understocked. But I think even during COVID, they destock, but they still try to keep, if they had 6 or 8 weeks, they're looking out forecast and saying, "Hey, we think it's now spring time and to keep 8 weeks of safety stock or 6 weeks of safety stock ramp up." . So I don't really think there's a massive trend. We did back to one of the things I'm proud of us, David, our leaders, our IR team, is the transparency. We did call out where we had a great Q1 with 13% growth. And I'm thinking it's 100, 200 basis points, so 1 or 2 of those large customers bought an extra week and you think of 1 week and [ 13 ] is like 7%, 8%, but just 1 or 2 to go. Did that drive an extra 200 basis points of growth in Q1 that really would have been in January. But those customers are very transparent with us and we're buying up because we have to hit this number to get our rebate and they just bought slightly less in January. But overall, holistically, I don't think anything is changing substantially.

So I think for us -- Andy, we're a little less acceptable to the overstocking and what have you, just because of the size of our products. So other people can't physically bring our stuff in. And then the other thing that's good about our products is they use for all end markets. So unlike some where they might bring some in for resi and then resi soft and they're stuck with it. For us, our products are used across all end markets. So for them, it's a little bit easier of an inventory situation.

But you don't think we should get too crazy like again, I remember when WESCO, but I don't want to talk much about one customer. But your stuff was up 5%, like...

We wish it wasn't.

Yes. No. So -- but to David's point, also, I wanted -- everything David said is accurate. We are giving the perspective of Atkore which is our type of products. I have no idea what's happening with some circuit break or up or down. But no, you just can't be -- this is bread and butter stuff like one thing back to almost the price discussion that we've done really well with is the fact that our products are there on time. The last thing -- our whole products, by the way, add up 2% to 3% of a cost ability. A contractor, and if you accept our paradigm -- axiom that labor is the biggest constraint in this industry. The last thing a contractor rightfully so is going to accept is, we're all -- we're supposed to be there on Tuesday and we show up on Thursday and they have a work crew down because some of you either want to save a percent or a distributor want to work their turns and didn't have the right stock. I mean that's like a deal killer right there. So at the end of the day, we, over time, maybe up a week in overall stock in the channel down a week, but it just can't be the fluctuation either way.

Yes. That's helpful, Bill. So this is probably for you or David, like you had such precision in your pricing sort of like when we talk about giveback of $585 million, right like maybe it's been a little bit longer than expected to get back, but it's still seems like it's trending on those numbers. And how do you get so precise.

Do you want to do that David, I'll let you, but either one of us can answer all these questions...

I love to say -- this is super enthusiasm something. Now what we did, Andy, is because we knew investors would want to know when we had the $1.3 billion, we knew that we had a situation where we had more pricing than we thought would stick long term. And so we spent quite a bit of time going product line by product line, deciding, hey, we think this is going to end up at a certain EBITDA percentage over time. And we base that on the fact that we've had other product lines in our past, that have gone from, let's say, modest EBITDA margins to 25% to 30% because of the consolidation in the market, just how we service the market and what have you. So we went through all that, and that's when we came up with. We think that $585 million of the $985 million was temporary. And we always said that the longer the better it takes to get there because we're generating more cash, and I think we've deployed cash pretty rationally. But it's also painful going through that quarter-over-quarter over time. And last year, we gave up $250 million. We guided $250 million this year. So a couple of years in, we'd be at like $500 million to $585 million. Q1 was slightly better than what we thought. I think the most important thing is sequentially, our pricing is firming. So yes, year-over-year, you saw this or you're comparing against pretty robust quarters. But sequentially, we're starting to firm. So -- and I think generally speaking, we're in the ballpark of what our original expectations were.

And if I could add now, again, David answered your question and complement him and our presidents and GMs on the precision. And David mentioned some [ lock ], but pretty great job. The other thing to make sure of is we do have good competitors. In other words, even within our highest margin, our competitors are out leading price increases. I personally, maybe I'm bias, I think we lead more industry leader, but we're not the only ones or with some of those products, like David just mentioned, one that went from, let's say, over 10 years, from 0% to above 25%. And right now, and I'll call it the portfolio effect, but like we are holding and/or increasing price in that product line as to the underlying commodities dropping. So my point is, even if we did have some product going, "oh, we didn't expect a competitor to draw price, we had to match, " there's enough other products here that are year-over-year continuing to increase in price. So we're as comfortable as anybody you can be with 2 weeks backlog. And to your point, we've done pretty damn well over a multiyear period.

And a fairly strong demand are above that would certainly help. So...

Right. And would you say price versus cost has been kind of what you thought are better?

Yes, that's exactly.

Exactly what we're talking about. Exactly.

Yes. And then like confidence level seems like it's a $250 million this year, give or take, is still right, $90 million next year still, give or take.

Well, we haven't said anything for next year yet. All we said is $500 million -- $585 million, we'll see. I think we could have some that goes into FY '25, but we haven't really determined that.

Other than, as you know, and hopefully, our investors that we pretty much as much as anyone can put the line in the sand of the $18-plus EPS.

We'll get there. So I want to open it to the audience, one second. But like maybe just when you guided at the beginning of '24, right, you said EBITDA margin would normalize in the range of 25% give or take, 150 to 200 basis points. It's still a relatively big range, that thing. So could you give any more color on whether the high or low end is more likely or maybe the variables to consider when we're thinking about.

So one of the reasons why we give a little bit more of a range on percentage, Andy, is we still do have an effect of our commodities higher or lower because there is still a little bit of a -- if steel is at a 1,000, you're making 200 on that. You have 20% versus if it's 600, you're making 200 on that percentage is much higher. Yes. So we'll tend to have a little bit higher, I think, range of percentages because of that commodity.

Got it. Okay. That's helpful. Any questions from the audience? Anyone wants to ask a question. Line is blinding me, but... So let me go -- just talk about your guidance a little bit more this year. So one of the keys to the guidance is a pickup in volumes in electrical and you did see that as you talked about in Q1. I know you mentioned a couple of distributors took advantage of the program. But even rebate program. But even excluding them, there did seem to be a pickup. So what is changing in core PVC markets that's allowing you to predict I think you've got probably embedded high single-digit growth in PVC for '24.

Yes. I mean PVC was above that in Q1. So it was really pretty strong now. I will say that we are comping off of a destock of last year and had a little bit of that into Q1 of last year. But I think just generally speaking, that these projects that we've seen out there for quite a while are starting to let loose a little bit. And then Andy, I think during -- I would say, a normal year, which we haven't had one for a while. The winter months are usually slow, right? And then we're actually going full out in production, getting ready for the spring building season and the summer building season. I think we're starting to see that more of a normal trend.

Either It's good or bad, it's has been great profitable years, but I think we're back to normal.

Well, so let's speak about normal. So you did mention weather in starting fiscal Q2 in January, which I don't think you really mentioned weather before. So I have to ask you, was it only weather that started you off a bit slowly? Anything else that hit the business? And then have you seen some improvement in operations as the weather seemingly has been a little more benign.

Yes, I think -- again, David, you can add, but you're right, we -- I can almost swear we've never mentioned weather, yes. I don't like the afterwards. Let me explain or like, "Oh, well, you know it was Chinese New Year, like we didn't see that coming." So for us, two things. One, we said it before at the beginning of the quarter, but there was weather -- yes, and we pretty key point. And there really was, I don't want to get too much where we have great relationship with the customers on which one. But we -- I mentioned in the public earnings call where I'm was just talking to one customer alone that had over 50 distributor locations shut down for 2 or more days. And it's not really about the distributor, but the end contractor. You got to believe, again to that axiom, the biggest thing driving this market is, do you have enough workers out there. So it's not like I remember one shareholder afterwards like, well, you'll make it up. So no, those 2 days, 3 days of work are gone. You just can't when it's so tight on labor. So I think that truly was -- and then again, these are rough on scientific numbers but there probably is 200 basis points, 300, I don't know of that 13% that if they -- a couple of our key customers didn't buy up a little bit would have been 10% or 11%. And would our guidance around mid-single digits for this quarter, the 700 basis points don't false precision your guys in house, but have been 400 basis points. So -- and then your thing without us getting a habit of reconfirming guidance, I just don't want to go there for future. But no, we're comfortable we -- I scare -- when I say this, but David and I for 5-plus years have hit every earnings guide we've given. And I don't think this is a quarter that we're going to change that.

Look, I think it's a great follow-up to ask you about '24 in general because I got some questions about how it was a bit back-end loaded, $100 million increase in adjusted EBITDA I think, in the second half versus the first half. So maybe talk...

[indiscernible]. This is CEO math. In other words, it direct -- but here what David said earlier, typically and I hope this will make sense for everybody, the summer months for construction are 10% higher. You can look back for Atkore, a public company now, whatever it's been 8, 9 years or something, that it's always been that way. So you take 210 and I can get -- like for the first 2 quarters, you add 10%, you're at 230 and then we need to get closer to 250 and I think that's going to be Q3 and then Q4, a little bit of step-up. So for any buy side, sell side, don't have that reversed and go all we're bridging is 230 to 245. And everything either we talked about or future questions ago, we have this major opportunity with solar that customers -- we just can't service quick enough. And I think in our previous bridge -- you can help me out but like we had a $7 million cost in the last quarter only because in aspect, we forecasted this, but you're ramping up, you have 1 shift for -- instead of 3 shifts. You have doubled employees. We're bringing in people for the second shift, shadowing first shift employees. As we get that volume going up with that, as we get -- we're massive investments for -- we're bringing up 2 regional service centers that I really think will be a huge contributor for FY '25 and FY '26 that Amazon Effect, having -- but right now, it's 2 empty places. We just got the building permit to start putting stock in. And then the thing I think will be more in FY '25, but it's not binary where turns on is the whole fiber or HDPE but the whole fiber optic lines and stuff like that. So with our initiatives hitting with just the summer seasonality, it's not that far of a put. It's not put it at all in my mind. But we'll see.

Okay. No, that's helpful. And just regarding Hobart, Indiana facility [indiscernible] facility, like again, it's not -- how do I say this? It's not really like you guys to underestimate costs, let's just say, or and so like -- how do I know that you guys have your sort of arms around it now.

Well -- one, I think maybe a little bit of a false question, Andy. As you said, we didn't know about that cost. We put it in our guide and we beat the number, right? So I think we're just being more transparent to make sure people understood what's in the number. So it's a little bit more onetime oriented than ongoing. It wasn't anything that we didn't anticipate when we gave that.

Okay. Or let me rephrase -- I'll take ownership. Q4 in November, where we thought over the summer, we have 400, 500 basis points of growth. And we had 300. So I at least was too optimistic for that Q4 on volume. But to David's point, where we've hit earnings, we've known and we still will have -- we get 2 shifts up. And maybe it's a follow-on question, is ramping up as expected. Every day, we're starting to see slightly more volume, which you would hope to go record a week ago, a record 2 weeks ago, which if you're ramping up, it should be a record every week. So -- but we know and we had in our earnings or our estimates.

Right. So embedded in your guide going forward, there might be some start-up costs still, but they're in the guide...

They're in the guide, and there will be there hopefully in '25, that gives us back to earnings for next year. But no, in this quarter too, it's going to be a headwind. But again, it's in the guide. It's not like we're surprised here as we ramp up.

No, I got it. That's helpful. And then maybe just kind of expanding to sort of other conduits of growth, right, because that's how you talk about it and potentially helping us quantify the impact on your business as you go out late this year in '25. I know you mentioned Texas and Georgia, building out those regional service centers. You alluded to HDPE bouncing back in '25. But can you elaborate on how much impact each could have on your results?

I don't know if we have -- or like we know we have...

Whatever color you can give.

Yes. So let me try to do it this way and David to go. Whatever you assume GDP is. I'm saying CEO math because of precision, but if it's 300 basis points. I think, and I've said this on conference calls, it really is a complement to the whole electrical industry. The whole electrification got surprised where you could debate how fast an EV charger moves and so forth. But solar arrays, New York City, not wanting gas to heat the buildings over a 3-story building that should add a couple of hundred basis points. So just being in the electrical space, I don't care if it's my competitor making a different product, it will grow faster. . And then I think all the investments you look back over the last couple of years where we put over $200 million of CapEx into different things, whether it is the regional service centers and the Hobart with -- or that's where -- city where our facility is. But the solar torque tubes and keep going on, can that add another 100, 200 basis points above the market, regional service centers where some of these Magnificent 7 and beyond have actually realized the value and grow. So I don't want to sit here, back to David, and like give us an estimate for growth and so forth for next year and beyond. But it should at least be mid-plus single digits, and all these things, the market itself being a secular tailwind and then our self help a couple of hundred basis points beyond that. So.

I do think Andy, the industry itself some of the capacity that's being added with others of switchgear and transformers will eventually help the industry, maybe in '25 and beyond. We still have to solve the labor shortage issue.

For sure. And so the logical follow-on would be conduits growth are ramping up, second half run rate is going to be $18 plus already this year. So you can change the guidance at this conference if you want. Why wouldn't you change your guidance other than maybe you're worried about more price normalization or there might be other reasons, macro or something that in [ '25 ].

We're worried about that, Andy. We've stuck with the $18 because we came up with that 3 years ago, we feel like our valuation hasn't even caught up to $18 yet. So why give anything above that quite honestly. So I think if our valuation was where an extra dollar really meant that much of a difference, we might be more indicative to talk more specifics about next year. But right now, we just don't feel the need to have to do that.

Yes, it makes a lot of sense. And then one of the bull arguments for Atkore is that the company generates a lot of cash, which you talked about and we've distributed it. You've bought back, I think, about 20% of your market cap in the last 3 years. You've always done bolt-on M&A. It seems -- maybe talk about the strategy because it seems like maybe it slowed down a little lately. So what's happened in where are you going from here?

I'll start, but David is in -- by the way, for anybody, there's big books, David and I have read, capital deployment and so forth. Good luck I think, for Atkore is I don't think there's an ineffective place to place our capital well over the WACC. And there's several things for that. One, we did start a dividend. I think it's just again to give our shareholders confidence in our future forecast. And while it wasn't the primary, I think my own personal opinion in events like this, you do see shareholders going we could probably be more and if you had a dividend. So there is some on the fringes there have opened up market. So that's there. CapEx, we're probably where we spent around $200 million in the last 2 years, that will probably ramp down slightly, like one of the things David rightfully that was pushing our Presidents to go how to be like 4% sales for [ $160 million ] over time. But we're still going to invest because it's so many growth. But you have those 2 things, and then it just gets the share buyback and acquisitions that's in my mind, and there's a little bit tongue and cheek to go, do I buy another company or do I buy this company that we know well that we think is undervalued. So it's like a real simple thing here. I would say, again, I'm not here with [indiscernible] to more shadow future earnings, but we will have discussions with our Board, we go out and get another authorization. So that will actively at least a surprise, surprise be a conversation to do. And then actually for M&A, there's still a bunch of deals. So there's no deal shortage out there, and we have a very sales force funnel of the deals and what stage and they're as active as usual. But we probably raised the bar on -- and I'm scientific, but we always want a 300 or 400 basis points over our cost of capital is at now 5 or 6 for 2 reasons. One, we saw that Atkore that at least in mine and David's perception is, we're not getting the price we should have of our own stock. Second thing is we just have so many organic things going on right now that you get the regional service centers, getting HDPE acquisitions, getting the Hobart and solar torque to these global make projects with critical customers across the globe, and you keep going through to go, "Hey, right now, I'm concerned on the bandwidth, not concerned on the bandwidth, you're a great team, but like let's go get that stuff done versus something that would be a good return for shareholders." But if it's not a touch out, there's other things we can deploy it which to me, again, it's a great news. It's not like we're struggling thinking I'm wondering how we're going to grow the company. Yes.

Just one follow-up on that. So if you raised the bar, like and when you're looking at acquisitions, it also seems like maybe valuations are also up a little. You tell me like...

Not for us, let me explain why. I think I can only think of -- I hate, contradict where I'm wrong, but I can only think of one deal we've ever done that was even private equity owned. Everything we typically do not say this like an action we have to do is family-owned businesses. And if you look at a family owned -- and we have a great reputation here, I could elaborate on that family-owned business, they typically sell when there's a life event. So that's why we're keeping the funnel going. Unfortunately, the patriarch or the matriarch has to pass away -- just they don't have a kid or a grandkid who wants to get into business whatever those type of events are. But when it happens, and you think about us ago, if I had a business worth $100 million, I have more money than I know what to do with, and then go, okay, I want to be treated fairly. But I also want that brand name that my grandfather created to say, check with Atkore. I want to know that we're not going to close the facility versus build on it check with Atkore. For the employees themselves so that we have -- when we have stores where literally admin affiliates now like an HR Director making a couple of hundred thousand -- of general manager, one facility is now running 8 or 10 facilities. So we can demonstrate those type of things, how we're going to invest and grow those businesses in a lot by the criteria that we get down to, we are the natural person to own it. We can pay more than somebody else or if it's a one location, I'm making up PVC or something else is a private equity group want to come in and buy it and try to put a management team in there, likely no. So a lot of times you'll get like, well, the market is up or down, is PE going to be competing against you, that's not the type of deals we typically don't. So it's just really relevant outside.

Got it. Do you end up getting to like a critical mass in HDPE like with all the deals...

Yes, we're there because we're -- yes they're clearly the #1 person is larger than us. We're clearly #2. And I would also say besides clearly #2, we're the only one that if you look at, let's say, #3 or #4 that's much smaller than us, I'll say, they're not national. And that's one of the things back to a critical mass. If you are working with large distributors and so forth or even buying groups, they want to have service the industry. They want to set up a focused vendor, supplier, have a rebate program and have all their branches buy from that, and we're there.

Got it. So last question for me. Like -- we asked this question last year, asking of all the companies. What are the top 2 or 3 innovations and structural changes affecting your company over the next 5 years? And are there any emerging industry trends that are perhaps being overlooked in the current disclosure?

I'll start. But like so the big thing that I really think I'm excited, let's call it, the next half decade not beyond is that one order, one delivery, one invoice. And I just -- you can't underestimate if you were -- if you were a consumer, which everyone is, and it took you 10 days to get your e-cell batteries into delivery and somebody came along and said, "I can place an order online and it will show up in 2 days literal 1 day", what that does for the industry. And by the way, put 6 things on where there's electronically or going to, I'm going to go to a grocery store and buy my produce and a different store to buy my knee products and go to a different store for my hardware, you put all that together on one truck for these big bulky things. As we've -- I think I mentioned here, Andy, with you in this slide, 45 minutes, we're seeing over 500 points is higher than that when we've done a study last year of the price power of our own product to the same customer, the same week because the customers truly want that one order, one delivery. So that's the biggest thing, otherwise good or bad our industry is slow, and I mean that in a good way, codes and standards change once every 4 years, municipalities take 4 to 12 years to adopt it. So there is all of a sudden we're going to be upstaged. There's always new product development. We're at almost a 10% vitality. But it's not like the iPhone to go, oh my god or the Blackberry and it all of a sudden being up stage. That's not going to happen in our industry. So.

Awesome. Well, Bill, David, thank you very much for joining us. Very much appreciated.

A great conference.

Thank you.