ATKORE INC. Management report and analysis of the financial position and operating results (Form 10-K)

0
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 the vast majority 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
2021, 90% 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 2021, our
sales and cost of sales were impacted by sharp increases in the prices of the
raw materials used in our products. We generally sell our products on a spot
basis and as such, were able to pass some of these increases on to our
customers. Additionally, we participated in the broader economic recovery from
the COVID-19 pandemic as our customers began to resume their operations at
pre-pandemic levels of activity.

We believe that our business and demand for our products is influenced by two
main economic indicators: United States gross domestic product, or "GDP," and
non-residential construction starts, measured in square footage. 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.

Impacts of COVID-19. The outbreak of COVID-19 has continued to spread and is
currently classified as a pandemic which is contributing to significant
volatility and uncertainty in markets and the global economy. This heightened
volatility and uncertainty makes it difficult for us to predict the extent of
COVID-19's impact on our operations going forward.

As of the date of this filing, customers and end markets face some uncertainty
and delays in the timing of work. In particular, some construction site closures
or project delays have occurred, and job sites have had to adjust to increased
physical distancing and health-related precautions. Given the continued
volatility within the economic impacts of the pandemic it is too difficult to
make any judgment on how significant COVID-19 effects could become.

Factors that contribute to our ability to adjust to the outbreak include
currently being deemed an "essential business," benefiting from mostly localized
supply chains, and continuing to take actions within our control to minimize the
disruptive impacts of the outbreak. However, there can be no assurance that we
will not be materially and adversely impacted in the
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future. The extent to which COVID-19 will impact our business will depend on
future developments and public health advancements, which are highly uncertain
and cannot be predicted with confidence.

Currently, we have no COVID-19 related facility closures as we look to serve our
current levels of demand. In response to COVID-19, we have implemented a variety
of countermeasures to promote the health and safety of our employees during this
pandemic, including health screening, physical distancing practices, enhanced
cleaning, use of personal protective equipment, business travel restrictions,
and remote work capabilities.

Raw Materials. We use a variety of raw materials in the manufacture of our
products, which primarily include steel, copper and PVC 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.

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.

Cost and availability of labor. Labor costs are a direct input in the manufacture of our products. Labor costs are capitalized as the cost of inventory.

Seasonality. In a typical year, our operating results are affected by seasonality. Historically, our product sales have been higher in the third and fourth quarters of each year due to favorable weather conditions for construction-related activities.

Recent Acquisitions. In addition to our organic growth, we have transformed the
Company through acquisitions in recent years, allowing us to expand our product
offerings with existing and new customers. In accordance with accounting
principles generally accepted in the United States of America ("GAAP"), the
results of our acquisitions are reflected in our financial statements from the
date of each acquisition forward.

Our acquisition strategy has focused primarily on growing market share by
complementing our existing portfolio with synergistic products and expanding
into end-markets that we have not previously served. In total, we have invested
$145.0 million in acquisitions since 2019.

We expect to continue to pursue synergistic acquisitions as part of our growth
strategy to expand our product offerings. See Note 3, "Acquisitions" to the
accompanying consolidated financial statements included elsewhere in this Annual
Report.

Foreign Currencies. In fiscal 2021, approximately 10% of our net sales came from
customers located outside the United States, most of which were foreign currency
sales denominated in British pounds sterling, European euros, Canadian dollars,
Australian dollars, Chinese yuan, Russian rubles 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.

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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.

Segments to be declared

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

Beginning in the first quarter of fiscal 2021, the Company renamed and redefined its reportable segments.

The Electrical Raceway segment was renamed as the Electrical segment. 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 Mechanical Products & Solutions segment was renamed as the Safety &
Infrastructure segment. This 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.

Effective in the first quarter of fiscal 2021, the Company also implemented the
Realignment of its segment financial reporting structure such that its domestic
cable management and prefabrication modular businesses are now reflected in its
Safety & Infrastructure segment. These businesses were previously reflected
within the Electrical segment. See Note 1, "Basis of Presentation and Summary of
Significant Accounting Policies" for additional information. Prior year results
have been revised for the impact of the Realignment for comparability.

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, 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 17, "Segment Information" to the accompanying consolidated
financial statements included elsewhere in this Annual Report.

Tax periods

The Company has a fiscal year that ends on September 30. The Company’s fiscal quarters generally end on the last Friday of December, March and June, as they follow a 4-5-4 schedule.

Key components of the results of operations

Net sales

Net sales represent external sales of electrical products to the non-residential construction and MR&R markets and of security and infrastructure products and solutions to the commercial and industrial markets. Net sales include gross product sales and freight billed to our customers, net of discounts, sales incentives, trade promotions, product returns and discounts.

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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 distribution costs 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 year 2021 compared to fiscal year 2020

The operating results of the closed financial years September 30, 2021 and
September 30, 2020 were as follows:

                                                    Fiscal year ended
($ in thousands)                     September 30, 2021           September 30, 2020           Change ($)              Change (%)
Net sales                          $         2,928,014          $         1,765,421          $ 1,162,593                        65.9  %
Cost of sales                                1,802,401                    1,274,107              528,294                        41.5  %
Gross profit                                 1,125,613                      491,314              634,299                       129.1  %
Selling, general and
administrative                                 293,019                      219,496               73,523                        33.5  %
Intangible asset amortization                   33,644                       32,262                1,382                         4.3  %
Operating income                               798,950                      239,556              559,394                       233.5  %
Interest expense, net                           32,899                       40,062               (7,163)                      (17.9) %
Loss on extinguishment of debt                   4,202                          273                3,929                     1,439.2  %
Other income, net                              (18,152)                      (2,777)             (15,375)                      553.7  %
Income before income taxes                     780,001                      201,998              578,003                       286.1  %
Income tax expense                             192,144                       49,696              142,448                       286.6  %
Net income                         $           587,857          $           152,302          $   435,555                       286.0  %



Net sales
                                                      Change (%)
                       Volume                              5.0  %
                       Average selling prices             55.4  %
                       Foreign exchange                    1.0  %
                       Acquisitions                        4.5  %

                       Net sales                          65.9  %



Net sales for fiscal 2021 increased $1,162.6 million to $2,928.0 million, an
increase of 65.9%, compared to $1,765.4 million for fiscal 2020. The increase in
net sales is primarily attributed to increased average selling prices of $977.9
million which were mostly driven by the plastic pipe and conduit category within
the Electrical segment and increased net sales of $79.1 million due to the
acquisitions of Queen City Plastics and FRE Composites Group. Pricing for PVC
products, as well as other parts of the business, are expected to return to more
normal historical levels over time, but that time is uncertain. The increase in
net sales was also driven by an increase in sales volume of $88.4 million across
the majority of product categories within both the Electrical and the Safety &
Infrastructure segments.

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Cost of sales
                                                    Change (%)
                        Volume                           5.0  %
                        Average input costs             30.4  %
                        Foreign exchange                 1.2  %
                        Acquisitions                     2.6  %
                        Other                            2.3  %
                        Cost of sales                   41.5  %



Cost of sales increased $528.3 million, or 41.5%, to $1,802.4 million for fiscal
2021 compared to $1,274.1 million for fiscal 2020. The increase was primarily
due to higher input costs of steel, copper and PVC resin of $386.5 million,
higher sales volume of $64.0 million and the acquisitions of Queen City Plastics
and FRE Composites Group of $32.5 million.

Selling, general and administrative expenses

Selling, general and administrative expenses increased $73.5 million, or 33.5%,
to $293.0 million for fiscal 2021 compared to $219.5 million for fiscal 2020.
The increase was primarily due to higher variable compensation of $24.1 million,
higher sales commission expense of $22.4 million, increased general spending on
business improvement initiatives of $10.8 million, the acquisitions of Queen
City Plastics and the FRE Composites Group of $5.4 million, and higher stock
compensation expense of $3.5 million partially offset by productivity
efficiencies of $4.1 million. The majority of the remaining increase was
primarily driven by the tight controls on expenditures put into place in the
prior year at the onset of the COVID-19 pandemic.

Amortization of intangible assets

Intangible asset amortization expense increased $1.4 million, or 4.3%, to $33.6
million for fiscal 2021 compared to $32.3 million for fiscal 2020. The increase
in intangible asset amortization is primarily due to the 2021 acquisition of FRE
Composites Group.

Interest expense, net

Interest expense, net, decreased $7.2 million, or 17.9% to $32.9 million for
fiscal 2021, compared to $40.1 million for fiscal 2020. The decrease is
primarily due to a lower average principal balance in fiscal 2021 from which
interest expense was derived. See Note 13, "Debt" to the accompanying
consolidated financial statements included elsewhere in this Annual Report.

Other income, net

Other income, net increased $15.4 million to income of $18.2 million for fiscal
2021, compared to income of $2.8 million for fiscal 2020. The increase was
primarily due to a $15.5 million business interruption insurance recovery from a
flood at one of the Company's manufacturing facilities. See Note 15,
"Commitments and Contingencies" and Note 6, "Other Income, net" to the
accompanying consolidated financial statements included elsewhere in this Annual
Report.

Income tax expense

Income tax expense increased $142.4 million to $192.1 million, compared to $49.7
million for fiscal 2020. The Company's income tax rate remained consistent at
24.6% for fiscal 2021, compared to 24.6% for fiscal 2020. The increase in tax
expense is due to higher income before taxes. See Note 7, "Income Taxes" to the
accompanying consolidated financial statements included elsewhere in this Annual
Report.

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Segment results

  Electrical
                                         Fiscal year ended
($ in thousands)             September 30, 2021      September 30, 2020      Change ($)      Change (%)
Net sales                   $       2,233,299       $       1,270,547       $  962,752           75.8  %
Adjusted EBITDA                       873,868                 292,809          581,059          198.4  %
Adjusted EBITDA Margin                   39.1  %                 23.0  %



Net sales
                                                      Change (%)
                       Volume                              3.8  %
                       Average selling prices             64.4  %
                       Foreign exchange                    1.5  %
                       Acquisitions                        6.1  %

                       Net sales                          75.8  %



Net sales increased by $962.8 million, or 75.8%, to $2,233.3 million for fiscal
2021 compared to $1,270.5 million for fiscal 2020. The increase in net sales is
primarily attributed to increased average selling prices of $817.4 million which
were mostly driven by the plastic pipe and conduit and the metal electrical
conduit and fittings product categories, increased sales volume across most
product categories and increased net sales of $78.8 million from the
acquisitions of Queen City Plastics and FRE Composites Group.

Adjusted EBITDA

Adjusted EBITDA up $ 581.1 million, or 198.4%, to $ 873.9 million for fiscal year 2021 compared to $ 292.8 million for fiscal 2020. The increase in Adjusted EBITDA is primarily due to the increase in sales volume and average selling prices mentioned above.

Security and infrastructure

                                         Fiscal year ended
($ in thousands)             September 30, 2021      September 30, 2020      Change ($)      Change (%)
Net sales                   $         698,320       $         497,523       $  200,797           40.4  %
Adjusted EBITDA             $          81,827       $          67,821       $   14,006           20.7  %
Adjusted EBITDA Margin                   11.7  %                 13.6  %



Net sales
                                                      Change (%)
                       Volume                              8.1  %
                       Average selling prices             32.3  %

                       Net sales                          40.4  %



Net sales increased $200.8 million, or 40.4%, to $698.3 million for fiscal 2021
compared to $497.5 million for fiscal 2020. The increase is primarily attributed
to increased average selling prices of $160.4 million primarily driven by higher
input costs of steel as well as increases in sales volumes across most product
categories.

Adjusted EBITDA

Adjusted EBITDA increased $14.0 million, or 20.7%, to $81.8 million for fiscal
2021 compared to $67.8 million for fiscal 2020. The Adjusted EBITDA increase was
primarily due to the increase in average selling prices and volume discussed
above.
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Fiscal year 2020 compared to fiscal year 2019

The operating results of the closed financial years September 30, 2020 and
September 30, 2019 were as follows:

                                                    Fiscal year ended
                                          September 30,          September 30,
($ in thousands)                               2020                   2019              Change ($)              Change (%)
Net sales                                $   1,765,421          $   1,916,538          $ (151,117)                       (7.9) %
Cost of sales                                1,274,107              1,419,338            (145,231)                      (10.2) %
Gross profit                                   491,314                497,200              (5,886)                       (1.2) %
Selling, general and
administrative                                 219,496                240,660             (21,164)                       (8.8) %
Intangible asset amortization                   32,262                 32,876                (614)                       (1.9) %
Operating income                               239,556                223,664              15,892                         7.1  %
Interest expense, net                           40,062                 50,473             (10,411)                      (20.6) %
Loss on extinguishment of debt                     273                      -                 273                       100.0  %
Other income, net                               (2,777)               (11,478)              8,701                       (75.8) %
Income before income taxes                     201,998                184,669              17,329                         9.4  %
Income tax expense                              49,696                 45,618          $    4,078                         8.9  %
Net income                               $     152,302          $     139,051          $   13,251                         9.5  %



Net sales
                                                                  Change (%)
                       Volume                                         (7.3) %
                       Average selling prices                         (2.0) %
                       Foreign exchange                               (0.1) %
                       Acquisitions                                    1.5  %
                       Net sales                                      (7.9) %



Net sales for fiscal 2020 decreased $151.1 million to $1,765.4 million, a
decrease of 7.9%, compared to $1,916.5 million for fiscal 2019. The decrease is
primarily attributed to lower volume of $140.3 million predominantly due to the
impacts of COVID-19. The Company experienced volume declines in most of its
product categories with the exception of the plastic pipe and conduit product
category within the Electrical segment and the mechanical pipe product category
within the Safety & Infrastructure segment. Additionally, net sales decreased
$37.7 million due to lower average selling prices resulting from lower input
costs of steel, which was partially offset by higher average selling prices
resulting from higher input costs of PVC resin and copper. The decrease in net
sales was partially offset by $28.5 million of sales from the 2019 acquisitions.

Cost of sales
                                                                Change (%)
                        Volume                                      (7.3) %
                        Average input costs                         (3.9) %
                        Foreign exchange                            (0.3) %
                        Acquisitions                                 1.9  %
                        Other                                       (0.6) %
                        Cost of sales                              (10.2) %



Cost of sales increased $145.2 million, or 10.2%, to $1,274.1 million for fiscal
2020 compared to $1,419.3 million for fiscal 2019. The decrease was primarily
due to lower volume of $103.8 million, the lower input costs of steel in excess
of higher input costs of resin and copper of $54.9 million, and $10.3 million,
respectively, from favorable inventory adjustments related to changes in market
prices. The decrease was partially offset by incremental costs related to the
2019 acquisitions of $26.7 million.
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Selling, general and administrative expenses

Selling, general and administrative expenses decreased $21.2 million or 8.8%, to
$219.5 million for fiscal 2020 compared to $240.7 million for fiscal 2019. The
decrease was primarily due to cost savings as a result of COVID-19, in
particular lower variable compensation of $6.0 million, reduced travel costs of
$5.1 million and lower insurance costs of $3.0 million. Additionally, due to
sales volume declines associated with COVID-19, commissions expense decreased
$2.4 million. Lastly, the Company had a gain on the sale of property and
equipment of $3.8 million offsetting expenses during fiscal 2020.

Amortization of intangible assets

Intangible asset amortization expense decreased $0.6 million, or 1.9%, to $32.3
million for fiscal 2020 compared to $32.9 million for fiscal 2019. The decrease
in intangible asset amortization is primarily due to certain assets that reached
the end of their amortized lives by the conclusion of fiscal 2019, partially
offset by additional amortization resulting from the fiscal 2019 acquisitions.

Interest expense, net

Interest expense, net, decreased $10.4 million, or 20.6% to $40.1 million for
fiscal 2020, compared to $50.5 million for fiscal 2019. The decrease is
primarily due to lower interest rates and the Company's principal payments in
fiscal 2019 and 2020 resulting in a lower principal balance in fiscal 2020 from
which interest expense was derived. See Note 13, "Debt" to the accompanying
consolidated financial statements included elsewhere in this Annual Report.

Other income, net

Other income, net decreased $8.7 million to income of $2.8 million for fiscal
2020, compared to income of $11.5 million for fiscal 2019, primarily due to the
$7.4 million of income generated from a bargain purchase gain on the acquisition
of Cor-Tek in fiscal 2019. See Note 3, "Acquisitions" and Note 6, "Other Income,
net" to the accompanying consolidated financial statements included elsewhere in
this Annual Report.

Income tax expense

Income tax expense increased $4.1 million, to $49.7 million, compared to $45.6
million for fiscal 2019. The Company's income tax rate decreased to 24.6% for
fiscal 2020, compared to 24.7% for fiscal 2019. The decrease in the effective
tax rate was primarily due to a larger benefit from the exercise of stock
options. The increase in tax expense, despite the decrease in the rate, is due
to higher income before taxes. See Note 7, "Income Taxes" to the accompanying
consolidated financial statements included elsewhere in this Annual Report.

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Segment results

Electrical
                                         Fiscal year ended
($ in thousands)             September 30, 2020      September 30, 2019    
 Change ($)      Change (%)
Net sales                   $       1,270,547       $       1,390,327       $ (119,780)          (8.6) %
Adjusted EBITDA                       292,809                 285,217            7,592            2.7  %
Adjusted EBITDA Margin                   23.0  %                 20.5  %



Net sales
                                           Change (%)
Volume                                         (9.6) %
Average selling prices                         (0.6) %
Foreign exchange                               (0.1) %
Acquisitions                                    2.0  %
Other                                          (0.4) %
Net sales                                      (8.6) %



Net sales decreased $119.8 million, or 8.6%, to $1,270.5 million for fiscal 2020
compared to $1,390.3 million for fiscal 2019. Net sales decreased by $132.9
million due to lower volume primarily attributed to the impacts of COVID-19. The
Electrical segment experienced declines predominately in the armored cable and
fittings and the metal electrical conduit and fittings product categories,
partially offset by volume gains in the plastic pipe and conduit product
category. Additionally, net sales decreased by $8.6 million as a result of lower
average selling prices resulting from lower input costs of steel, partially
offset by higher input costs for resin and copper. The decrease in net sales was
also partially offset by the 2019 acquisitions, which contributed $28.5 million
in sales for fiscal 2020.

Adjusted EBITDA

Adjusted EBITDA increased $7.6 million, or 2.7%, to $292.8 million for fiscal
2020 compared to $285.2 million for fiscal 2019. The increase in Adjusted EBITDA
was largely due to the benefit of lower material costs, operational
efficiencies, and the contributions from the 2019 acquisitions, in excess of
volume declines attributed to COVID-19.

Security and infrastructure

                                          Fiscal year ended
 ($ in thousands)             September 30, 2020      September 30, 2019    

Change ($) Change (%)

 Net sales                   $         497,523       $         527,511      

$ (29,988) (5.7)%

 Adjusted EBITDA             $          67,821       $          77,407      

$ (9,586) (12.4)%

 Adjusted EBITDA Margin                   13.6  %                 14.7  %



Net sales
                                           Change (%)
Volume                                         (1.4) %
Average selling prices                         (5.5) %

Other                                           1.2  %
Net sales                                      (5.7) %



Net sales decreased $30.0 million, or 5.7%, to $497.5 million for fiscal 2020
compared to $527.5 million for fiscal 2019. The decrease was primarily due to
lower average selling prices driven by lower input prices for steel of $29.1
million. Additionally, net sales decreased from lower sales volume of $7.5
million as a result of the impacts of COVID-19 for most product categories with
the exception of the mechanical pipe product category.

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Adjusted EBITDA

Adjusted EBITDA decreased $9.6 million, or 12.4%, to $67.8 million for fiscal
2020 compared to $77.4 million for fiscal 2019. The Adjusted EBITDA decrease is
primarily due to the lower volume and the mix of products sold in the prior year
period, partially offset by cost reductions in response to the impacts of
COVID-19 on volume.

Liquidity and capital resources

We believe we have sufficient liquidity to support our ongoing operations and to
invest in future growth and create value for stockholders. Our cash and cash
equivalents were $576.3 million as of September 30, 2021, of which $75.5 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 $291.8 million from
September 30, 2020, primarily due to cash provided from operating activities,
partially offset by debt repayments, capital expenditures and share repurchases.

In general, we require cash to fund working capital investments, acquisitions,
capital expenditures, debt repayment, interest payments, taxes and share
repurchases. We have access to the ABL Credit Facility to fund our operational
needs. As of September 30, 2021, there were no outstanding borrowings under the
ABL Credit Facility (excluding $9.5 million of standby letters of credit issued
under the ABL Credit Facility). The borrowing base was estimated to be $325.0
million and approximately $315.5 million was available under the ABL Credit
Facility as of September 30, 2021.

Our use of cash may fluctuate throughout the year and from year to year due to differences in demand and changes in economic conditions primarily related to the prices of the commodities we purchase.

Capital expenditures have historically been necessary to expand and update the
production capacity and improve the productivity of our manufacturing operations
and IT initiatives aimed to facilitate the ease of doing business with Atkore.

We have purchase commitments of $247.2 million and $5.3 million for the years
2022 and 2023, which represent purchases of raw materials in the normal course
of business for which all significant terms have been confirmed.

As of September 30, 2021, we had $73.0 million of income tax liability, gross
unrecognized tax benefits of $0.7 million and gross interest and penalties of
$0.1 million. Of these amounts, $0.7 million is classified as a non-current
liability in the consolidated balance sheet.

The projected contribution to the company pension plan for fiscal year 2022 is $ 0.2 million.

Servicing of our existing debt instruments includes the following estimated cash
outflows:

                                          Less than 1                                               More than 5
($ in thousands)                              Year            1-3 Years          3-5 Years             Years               Total
Senior Notes due June 2031                $       -          $       -      

$ – $ 400,000 $ 400,000
New Senior Secured Term Loan

                      -                  -                  -          $  371,095          $   371,095
Facility Due May 2028
Interest payments (a)                        27,868             55,889             55,601              98,592              237,950
Total                                     $  27,868          $  55,889          $  55,601          $  869,687          $ 1,009,045

(a) Interest expense is estimated on the basis of overdue loan balances assuming principal payments are made in accordance with the payment schedule and interest rates as at September 30, 2021 (4.25% for the senior notes, 2.5% for the new senior secured term loan).



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.
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Limitation of distributions and dividends by subsidiaries

AI, AII, and AIH are each holding companies, and as such have no independent
operations or material assets other than ownership of equity interests in their
respective subsidiaries. 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 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 13, "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, 2021 and September 30, 2020.
                                                                            Fiscal year ended
(in thousands)                       September 30, 2021          September 30, 2020          Change ($)              Change (%)
Cash flows provided by (used in):
Operating activities                $          572,902          $          248,762          $  324,140                       130.3  %
Investing activities                           (97,961)                    (27,513)            (70,448)                      256.1  %
Financing activities                          (184,456)                    (61,179)           (123,277)                      201.5  %



Operating activities

During fiscal 2021, operating activities provided $572.9 million of cash,
compared to $248.8 million during fiscal year 2020. The $324.1 million increase
was primarily driven by improved operating income of $559.4 million year over
year was partially offset by an increase of $137.7 million in net working
capital balances.

Investment activities

During fiscal 2021, we used $98.0 million of cash for investing activities
compared to $27.5 million during fiscal 2020. The $70.4 million increase in cash
used by investing activities was primarily driven by $43.2 million in cash used
for acquisitions in fiscal 2021 as well as increased capital expenditures of
$30.7 million primarily driven by additional investments in productivity and
digital initiatives.

Financing Activities

During fiscal 2021, we used $184.5 million for financing activities compared to
$61.2 million during fiscal 2020. Cash used for financing activities during
fiscal 2021 was primarily driven by payments of debt of $839.1 million and
repurchases of shares of $135.1 million offset by proceeds from the issuance of
debt of $798.0 million. For additional discussion of the debt transactions, see
Note 13, "Debt" to the accompanying consolidated financial statements included
elsewhere in this Annual Report.

The table below summarizes the cash flow information taken from our cash flow statements for the years ended. September 30, 2020 and September 30, 2019.

                                       42
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                                                                            Fiscal year ended
(in thousands)                        September 30, 2020          September 30, 2019           Change ($)             Change (%)
Cash flows provided by (used in):
Operating activities                 $          248,762          $          209,694          $    39,068                      18.6  %
Investing activities                            (27,513)                   (133,101)             105,588                     (79.3) %
Financing activities                            (61,179)                    (78,180)              17,001                     (21.7) %



Operating activities

During fiscal 2020, operating activities provided $248.8 million of cash,
compared to $209.7 million during fiscal year 2019. The $39.1 million increase
was primarily due to lower spending on working capital of $19.2 million driven
by improved collections and reduced purchases of inventory at lower prices as
well as improved operating income of $15.9 million.

Investment activities

During fiscal 2020, we used $27.5 million of cash for investing activities
compared to $133.1 million during fiscal 2019. The $105.6 million decrease in
cash used by investing activities is due primarily to $98.0 million in cash used
for acquisitions in fiscal 2019 as well as the cash received from the sale of a
property, plant and equipment in fiscal 2020 of $3.9 million.

Fundraising activities

During fiscal 2020, we used $61.2 million for financing activities compared to
$78.2 million during fiscal 2019. Financing activities decreased $17.0 million
due to a reduction in debt repayments of $21.0 million compared to fiscal 2019.

Critical accounting conventions and 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

                                       43
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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
7, "Income Taxes" to the accompanying consolidated financial statements included
elsewhere in this Annual Report.

Intangible assets with indefinite useful lives and impairment of goodwill

Goodwill and other intangible assets primarily result from business
acquisitions. 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.
                                       44
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For fiscal 2021, 2020 and 2019 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.

The Company did not record any goodwill impairments in
fiscal 2021, 2020 or 2019. As of September 30, 2021, the fair values of the
reporting units exceeded their respective carrying amount by 10% or more. A 10%
decrease in the discounted cash flows utilized in quantitative impairment
assessment for each of the reporting units would not have changed our
determination that the fair value of each reporting unit was in excess of its
carrying value.

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 year 2021, 2020, and 2019 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.

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.

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Recent accounting positions

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;
•widespread outbreak of diseases, such as the novel coronavirus (COVID-19)
pandemic;
•changes in prices of raw materials;
•pricing pressure, reduced profitability, or loss of market share due to intense
competition;
•availability and cost of third-party freight carriers and energy;
•high levels of imports of products similar to those manufactured by us;
•changes in federal, state, local and international governmental regulations and
trade policies;
•adverse weather conditions;
•increased costs relating to future capital and operating expenditures to
maintain compliance with environmental, health and safety laws;
•reduced spending by, deterioration in the financial condition of, or other
adverse developments, including inability or unwillingness to pay our invoices
on time, with respect to one or more of our top customers;
•increases in our working capital needs, which are substantial and fluctuate
based on economic activity and the market prices for our main raw materials,
including as a result of failure to collect, or delays in the collection of,
cash from the sale of manufactured products;
•work stoppage or other interruptions of production at our facilities as a
result of disputes under existing collective bargaining agreements with labor
unions or in connection with negotiations of new collective bargaining
agreements, as a result of supplier financial distress, or for other reasons;
•changes in our financial obligations relating to pension plans that we maintain
in the United States;
•reduced production or distribution capacity due to interruptions in the
operations of our facilities or those of our key suppliers;
•loss of a substantial number of our third-party agents or distributors or a
dramatic deviation from the amount of sales they generate;
•security threats, attacks, or other disruptions to our information systems, or
failure to comply with complex network security, data privacy and other legal
obligations or the failure to protect sensitive information;
                                       46
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•possible impairment of goodwill or other long-lived assets as a result of
future triggering events, such as declines in our cash flow projections or
customer demand and changes in our business and valuation assumptions;
•safety and labor risks associated with the manufacture and in the testing of
our products;
•product liability, construction defect and warranty claims and litigation
relating to our various products, as well as government inquiries and
investigations, and consumer, employment, tort and other legal proceedings;
•our ability to protect our intellectual property and other material proprietary
rights;
•risks inherent in doing business internationally;
•changes in foreign laws and legal systems, including as a result of Brexit;
•our inability to introduce new products effectively or implement our innovation
strategies;
•our inability to continue importing raw materials, component parts and/or
finished goods;
•the incurrence of liabilities and the issuance of additional debt or equity in
connection with acquisitions, joint ventures or divestitures and the failure of
indemnification provisions in our acquisition agreements to fully protect us
from unexpected liabilities;
•failure to manage acquisitions successfully, including identifying, evaluating,
and valuing acquisition targets and integrating acquired companies, businesses
or assets;
•the incurrence of additional expenses, increase in complexity of our supply
chain and potential damage to our reputation with customers resulting from
regulations related to "conflict minerals";
•disruptions or impediments to the receipt of sufficient raw materials resulting
from various anti-terrorism security measures;
•restrictions contained in our debt agreements;
•failure to generate cash sufficient to pay the principal of, interest on, or
other amounts due on our debt;
•challenges attracting and retaining key personnel or high-quality employees;
•future changes to tax legislation;
•failure to generate sufficient cash flow from operations or to raise sufficient
funds in the capital markets to satisfy existing obligations and support the
development of our business; and
•other risks and factors described in this report and from time to time in
documents that we file with the SEC.

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 the current period and any previous period are not intended to express future trends or indications of future performance, unless they are expressed as such, and should be considered only as indicative. historical data.

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