AZZ - Earnings call transcript Q1 2019

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Operator

Good morning, ladies and gentlemen, and welcome to the AZZ Inc.

First Quarter and Fiscal Year 2019 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. would of turn Lytham I to conference time, Dorame Joe Partners. this like the to over At Please go ahead, sir.

Joe Dorame

Inc. financial Thank you, us of of the joining XXXX XXXX. which you thank first ended AZZ fiscal results May year Denise. Good today morning to and for quarter the XX, for review

Investor is for firm AZZ As name I’m Lytham consulting Joe Denise indicated, Partners Relations with Dorame. my and we’re the Inc.

Chief and Financial company are After Mr. Ferguson, at Mr. call Paul today’s the be Officer; Fehlman, for a of will representing the conclusion note question-and-answer On we page session. for www.azz.com. presentation found which open Officer. today’s slide call Chief the can Tom AZZ’s remarks, on Please Relations Executive prepared a call, there’s the Investor

I AZZ for the begin conference conference but offered including by markets Litigation like electrical Private the the of statements Chief and the of not Securities United including process; domestic; include, raw changes with rates; employees risks to, zinc and prices everyone company, and can by requested for availability that acquisition transmission currency some response Securities industrial forward-looking markets, are in including to information be XXXX. the assumes limited shipments; conditions certain prove detailed various stability management the growth to no distribution filed remarks, exchange in material with AZZ the historical such Report information, management based hereof foreign of metal new and said, and of and the the that no that within to documents which galvanizing customer implement services demand Exchange on by forward-looking give events the of changes as statements on by and this serves, gas, hot-dip AZZ statements date which may and Tom? as generation let and over statements the and otherwise. products from during and These strategies. demand forward-looking fiscal we call the used company AZZ. statements economic of call ended a future that the result are power States risks fact, February Ferguson, remind involve markets, uncertainties, meaning me correct. prepared uncertainties are Those to Reform opportunities; markets and statements Commission, are company’s of assurance obligation year With statements made Executive Annual costs, or in the of forward-looking to update and coatings XX-K financing; to any political the Mr. experienced Form turn in whether XX, contain XXXX. and customer time-to-time team Act the natural will adequate AZZ the constitute of markets; of delays would of Officer Except The call Tom this Before

Tom Ferguson

us this Joe. XXXX fiscal you call, joining morning. earnings thank year you, quarter Thank and our for to first Welcome

to noted for growth call, solid new top we’ve positive regain last year. bottom As both fiscal were the and believe with double-digit accomplished traction start on lines. to that hoping we we We the

Brothers both first businesses. February segment underway. very our Energy in platform solid a enclosure start. sales. within Metal challenges strengthen into While we well Coatings record remain solid as Chattanooga, as in front active fully had look into acquired is that a on We still highly to M&A electrical with core Tennessee the the outside, We’ve well of integration we Lectrus have facility business Galvanizing our we're quarter Coatings to segment. several Metal The Rogers off within the we the as integrated our

right which and to Energy a internationally. these in only on segment reorganization higher segment are to traction improve we’ve electrical within year on in that operational complete gain our efforts skilled the operating tight QX normal We productivity improve continues a galvanized merit a to quarter, impact several continue In XXXX. but initiatives, face of their fiscal the and widely work strong spite U.S activity minor has The in had value-added beyond both businesses. continuous margins galvanizing versus remain sized While XX.X% procurement higher help be steel hiring turnaround also labor wages we The to and changes the throughput, increasing. and structure improve environment. volume coming and to attract at environment this process and quarters. it the in the improvement of this labor efficiencies plants. XX.X% refinery sector market, Due also our saw but margins some allowed The rebar nuclear challenging, improvement and experienced the in improved increased to some us markets, improve prices to selling selectively direct had operations continue its demand at of The are through to to but levels, coating these Tariffs been new platform will in several grow first annual pricing embraced. to labor, confident activity to it plants. continues our powder tough retention

voltage the felt a improved on it first energy medium demand voltage businesses. for based Overall, we product risk strong most seeing segment [indiscernible] was We the plant bus of nuclear some the bus collection prudent in During had first our business. to particularly the take some previously reserves of bookings shipped in project. we're for for quarter, high additional quarter,

as solid at coatings are our demand most of metal As we fabricators we in look regions. plants busy most forward, see

expect kettles zinc prices next increased direct our highest to zinc through we've While months. we higher the see based on the and cost labor flowing over costs, several the

offset these price costs. increased to on We are realization also and to while productivity continuing improving focused efficiency, increase

segment, imported which circumvent on assemblies, While seen projects had metal the carefully. the tariffs we're have small significant XX. plants bringing using small and tariffs steel these coatings operating did petrochemical to steel on projects. this Currently to any our participation quarter impact during is not some reduces this of pre-galvanized a solar demand, but only and a our plant underutilized we've network close our monitoring impact We

we're Additionally, plants looking might that have significant to other galvanizing demand little markets for where overlapping capacity potential we have growth.

have where focusing selling. On some more on by the other competitors defending share value we're to market aggressively take hand, satisfaction also customer and more markets attempted

Powder to growing our for looking our future efforts. build by plants, year beginning our demand both the began see As improved increased a progresses, second coating site helped is for of for to to and support growth. have we're GalvaBar demand selling facility

seasonality solid, businesses outlook caused energy we Our is activity months. by full-year QX lower outage the see and turnaround summer the is normal in when although

up, We fall cautious outages. are improved refinery seeing regarding we an level firming nuclear but activity for remain of the turnaround

detail. have discuss it disputes in had continue will trade the businesses more impact on and anticipate skilled our this tariffs I that, and Fehlman steel at to some for While experienced to prices that not to financials turn dramatic some electrical will energy over Paul areas. segment we increase craft in a continue will With shortages that point, worker

Paul Fehlman

Tom. Thanks,

X.X% basis, million, the first diluted of finished up first the and up which year million 'XX fully last XX.X% an for quarter million, $XXX million at higher higher year. fourth to backlog $XXX.X XX.X% 'XX. first of XXXX. quarter of $XX $X.XX was net sales quarter the of quarter Reported point million, backlog year was a we compared fiscal XX.X% than to first of sequential increase Net XX.X% or year. compared last than For $XX.X XXXX, And first versus the income of increase of quarter quarter a our fiscal was grew to EPS reported last on fiscal $X.XX fiscal the the $X.X

year. in book-to-bill finished quarter X.XX Our compared first .XX to quarter first at ratio the last the

first of XX.X% million expect to rewards paying higher to points U.S first operating XX.X% to fiscal $X backlog compared first of expense in ship finished businesses the the some a We of Jobs 'XX. the last Act result program all bad special recognition specific for issuing for result since quarter the the for of X% under margins for year-over-year XX% last We SG&A rising X.X% taking XX interest new the the a quarter adding portion of year, the the and first reserves at debt XX.X%, a year, our outside sales were Cuts by of through generated the lowest quarter in and below margin and basis same acquisitions implementing part Tax XX.X% quarter in last facility of year. basis, rose as for of retention of year. ranges quarter quarter first as Gross primarily XX% paid XX.X% of compared total just a employees debt compared last quarterly XXXX. On rates. quarter our interest balances comparative $XXX,XXX to bonuses and savings from of and employees for a funded of or margins the

first rate $X in by used Tax last year XX% the compared improved XX.X% a compared flow performance to the to again million operations tax fiscal in in quarter net XXXX. Act or the on to XXXX Jobs year-ago XX.X%, quarter rate effective quarter and by income. first the driven higher Our of improved Cuts of first of Cash the

and up a compared XX.X%, during new XX.X% Energy XXXX. basis points it to and to compared remained million the segment fiscal same the Coatings was will back which compared year-over-year. revenues quarter for were improved basis operating first for up Operating Coatings On quarter income first first last at to segment, that, down first segment to the segment. year grew in were of X.X% quarter basis a the points a the rose first concluding last [indiscernible] points year. Metal period XXX XX.X% the operating Operating remarks. over quarter $XX.X operating for improved XX.X% to was quarter -- million compared I revenue quarterly quarter, Tom Tom? QX segment XX.X% On fourth X.X% for of prior $XX segment, a however, income record segment year, first while of as margins XXX quarter last XX.X% was quarter fourth for With quarter margins fiscal million to in was revenues to compared compared sequential finished income prior to for to margins million, basis up gross million Energy in $XXX.X grew margins XX.X% the XX%, the compared basis, year, revenue our As to up at for up sequential the operating grew quarter of $XXX to his the turn XX.X% 'XX. increase XX.X% our results, the quarter prior Metal income AZZ flat to Operating first XXX.X margins the compared to was in year. In our first XXX year. the operating the

Tom Ferguson

the the We fiscal earnings we Paul. started QX demand little and having our maintaining influence to negotiations about feel our tax in continuing experiencing investments range tariffs remain We're share generally for in the manage better XXXX And We're may many initiatives actions retention expected, fully we're annual you, million reform We're our range made as taken of million. customers. pleased with as and and customers year XXXX. on share to spite and even commodity we've trade well $X.XX Thank commodity we the changes of the optimistic organizational costs fiscal $XXX and of demand. per improved guidance and labor as on of monitor than in off a and by sales as as for these confident improve our cautiously well closely with of created both $X.XX about in to hiring we've to diluted for had driving. $XXX conditions profitability we're market positive the the inflation impact our

demand fall that, the in will With for up, the I questions. solid for becomes another as turnaround approach call. up and As next trade QX, guidance it open clear the earnings performance we firms we assuming situation revisit will

Operator

first question Franzreb the & Thank go be ahead. of Ferguson. from John [Operator Please Company. you, will Mr. And Instructions] Sidoti

John Franzreb

quarter. Nice guys. morning, Good

Paul Fehlman

Good morning.

Tom Ferguson

morning. Good

John Franzreb

intake I made start quarter last about order to this guess, really I the comments would off with strong deferred quarter. like jobs. some It you like was looks

fiscal this or jobs you they to deferred expect half were there For quarter some of is all the second next or in within the get that realized were quarter still two? the XXXX,

Tom Ferguson

some have into lot would a of We shipped maybe some QX We of still and these it. a into left little QX. and drift

John Franzreb

turnaround seasonal business really to of Okay. your for And for the is turnaround remind the how much you us activity was quarter. good market? you tied directly Could just

Tom Ferguson

it Yes, interesting. is

Over a mostly the which and entire bit than of And have up welding in solutions it's fortunately year, by refineries. is that’s affected had we we outage course it's did nuclear a the probably higher. the weaker about first the by business made quarter little little more XX%, refineries. but -- was a for season It

John Franzreb

quarter, Okay. from jump And the in walk on just kind $XX Can February you happened the the million quarter. there? was first $XX SG&A million line what nearly through of

Paul Fehlman

had acquired us this. reserve about which still We bad we Yes, Sure. million businesses $X.X a through several SG&A on the for briefly. had that’s the [indiscernible]. four talked debt We about of that Tom pieces

also and money program the the and different in of of had addition is we that the some into acclaimed is the put rewards bonuses We something which added advance program. project starting recognition that

of is seven the probably normal -- Not growth. that to was together accrued sure going variance. bonus, it the rest it the the to related The stuff right. all would So about -- be that basically be of

have So of quite been in the quarter that it would bit a too. first

a timing out. in accrued quarter, before the end will bit and a but then we you the pushing of the little jump see we As enter quarter pay first until out, with up first bonuses those works them don’t

John Franzreb

$X.X portion continue nonrecurring a is fall the that say of million of The will is to that what the year? rest would debt being you bad -- on balance So the through the of kind number. is

Paul Fehlman

the on some no, relating not -- up payout on again program, bonuses I’m setting we and right a we’re Well, special tax. -- this the sure because no, to had one-time

Tom Ferguson

very did in the part bonus also -- we we worked was a normally good of bonuses to it of this last had year will, first we quarter if terms bonuses, of for accrue year because didn’t quarter the have kind which big and and Yes, payout. accrue year well full you

have lapping basically about -- employee kind bad every So -- on program. we quarter of do the accrual incentive because is for were a we

John Franzreb

That’s certainly a positive Tom. read through

I and ask -- actually will jump Thank queue some back into I you. So, questions. let somebody

Operator

next go be the of Please will question And Noelle from Stifel. Dilts ahead.

Noelle Dilts

Hi. Thanks. morning. Good

Paul Fehlman

Good morning.

Tom Ferguson

morning. Good

Noelle Dilts

wanted with I -- question. a just just to of So start housekeeping couple

first So, last the in four did those could in growth quarter that give you us acquisitions you year? complete just the given organic

Paul Fehlman

go first actually that other I year-ago The the the the around. about 'XX in revenue. will of way businesses million in quarter there weren't a for is revenue $XX

Noelle Dilts

about us project can profile? at China, the this helpful. $XX how then when some think contract That’s and margin And on the we thoughts that perfect. Okay, look in -- duration million award you the of give to

Paul Fehlman

will The way by expectations sorry, it our And year. be the this that 'XX done -- with is the project. set up expect 'XX same under right end now fiscal we full will are that we of fiscal expecting make that fiscal shipments the

laid the subject by current always it's and way Now customer, that’s change is schedule to the the out. movement

Noelle Dilts

Okay, perfect. That’s helpful.

how but how reiterated downside think about, of think I a you internal came where outperformance. is at kind some that maybe of to there some give quite you shifting level my Can in the maybe quarter about you curious talked which compared to about in the higher the just the your I you the key but lead about we of kind be obviously high-end risks, expectations, then -- how sense And you help guidance, you of asking pathway into to where I’m ahead the you question think us this results bit about of of first a consensus. the was factors guys was of as So guidance into, to guess, question look questions, well what high-end? to results second there get would do would think

Tom Ferguson

to would the also were expectations, is course a few trying why we and retention think of were over which productivity some in out able little improve we to play I Noelle, which invest above Yes, quarters. next

were did while reinvest ahead little somewhat So we a we bit.

that firms we turnaround numbers. that domestically of projects think the the internationally On of spread going or it's that into we up of the we to the see the top saw QX look kind hand, and season to I both the that fall if end drive now at as that nominal got other terms above, refinery right what’s same as really of we kind us

as strong top give remain the any some fallout driving confidence. QX it's that are end tariffs. cautious the if about will towards us we of the So we range, Two, from

keep when So most zinc as those but labor, of we’re and a lot to pricing, in able we a than -- some electrical then that it on are upper at can nominal starts outages. prices issues and comes to the up, And in electrical firm to and the really escalate, towards would we the side on at more we confidence of number us priced continue looking concerned steel. steel internal the the And in little for on But give as we been increases lot the we’ve end. play the We’ve with it will external cost issues so galvanizing. out to already year. see have to price did love whether up direct more side a a that nuclear got

So our solutions be will NLI welding beneficial activity of for any kind business.

Noelle Dilts

makes That sense.

was that So think of getting the refinery turnaround extending catch strength do patterns the we hurricanes somewhat it's normal move extent what or a quarter past back to kind deferred in work the in from you on up turnaround demand of following just curious event? you just it, as of think to the side

Tom Ferguson

of in -- projects -- but there. look was we affected so up to Asia, there the were couple those things Mexico, One, in was for continue. that and a side things that on Yes, some international catch weren't that

which we’re now the bidding projects us some like megaprojects just a we right quite course, see confidence. things few some Of solid gives and to

of what as created it's we we for maintenance our to than the them, continue, the going some needed deferred these some got found some was what expected. issues -- on where of turnarounds terms there more into In we was customers, repair of -- whether other had

think refinery of gives to other. So start, fall also each that kind us I in confidence they obviously that the talk

is these and we vessels time that like coker hope get of message to the and it's So into some would drums things that.

So there which turnaround probably was I'd was into while, thirds, normal is a it back catch think schedule. up, they're refinery two say I

Noelle Dilts

retain of some I get move to begs How this then you are robust tightness next kind really year And a one quite question having around retain seeing of my years? wages will ahead view, how in labor thinking in of labor labor ask sort of galvanizing. the we're cost even question, Okay. we to forward talk but kind the increase over thinking half, help downstream of and queue, in without as more bit labor about I market. to back guess, this and about a of and the kind you two and

Tom Ferguson

of for we’ve And of of we getting rewards a times, the rewards we what was because in shop, our understand expectations. $XXX, We culture. a drive galvanizing continue try that’s focus And Yes, a better. we on a -- reason after $XXX have we are couple of improve and also how the expanding job hire, but so into something program -- in been recruit, train. are hire putting we leaving don't early so attrition we and One, onboard, lot have don’t recognized. in will, we -- focused I we month recognition feel people are we're they to think lot the in, did or Two the benefit ongoing employees so particularly a and hiring you lot experienced more the each how invested leaving that an we -- spent hour. $X.XX they we’ve getting but we things. if $X.XX of we as of to will our they them them put -- They’re that, recognition on. really able how we're of They up recruiting put raised account, efforts that -- not use to entails something value because how

XX we of plant, a we steel of productivity only it you folks both up as give was the people. went well facility, just quarter care I plenty as got so had One shipment plenty XX we example, as plant people, of some increase were not a had things the that yard, XX%. took They down had to on happened, one to that was wages, inside business we about will great we in I but think hiring that the

bodies. So it's are just we not that filling with warm it

actually the hiring, to and boarding through are productivity some better up and us that cost We increases. on keep in with efficiency that's and flow of helping training, seeing

Noelle Dilts

Great. Thank you.

Operator

be Instructions] [Operator next Braatz of City ahead. Jon from Please The question Capital. will Kansas go

Jonathan Braatz

Paul. Tom, morning, Good

Paul Fehlman

Jon. Hi,

Jonathan Braatz

is $XX between million I think this year. that How from were you energy? coatings Paul, acquisitions that mentioned split and

Paul Fehlman

two say to to going I’m about that’s thirds. going be

quick. I real think energy. see be to me going mostly Let Yes, in it's

Tom Ferguson

Yes.

Jonathan Braatz

energy? in Mostly Okay.

And we get as a know by turnarounds the do you my you one would to time work? on end I not shutdowns much be of or would business. there's top here basically, to July you going some whether that and be now Tom, how type get mentioned of things top work the guess maintenance that this get you up for heads or at X question sit or of And is closures you to turnarounds would in Okay. range -- that the -- of nuclear

Tom Ferguson

and I some to of the of We sales a and one is that force and In we’ve lot firm that’s and and into the and opportunity this have was on into of them. very have why where coating good of where of we’re interesting we they’ve refinery do kind would we engineering see their things. management had The really advanced see you on a shortened spring that of trend we’re say It's a of markups same engineering. that the we that. process to activity. system of turn couple that’s tool, engineering We’ve orders. top being we into a projects coming decision from seen got are cycle. What orders of this did get we a process large -- And difference -- case, work we like the did stuff, doing -- lot the but have lot up really some this only is our very

we about pretty we're what confident feel So right seeing. now

good are fall. hurricanes looking like we the feel So as not things us about or we're long at where that, as at we there's as pretty

Jonathan Braatz

guess What there? the about heads specific, see Do of to you what just get a referring think more -- nuclear outages? -- I you you Because I up much were much refinery.

Tom Ferguson

was. do to I example, we of side, I Yes, containment, and more same there we're the few $XX half it. solutions of a the When get an nuclear think -- about of seeing give planning. welding we up more you yes, kind heads usually the you’re last over The because go months you in have probably our do to over of of was kind going work-related got million

has So it still pretty something if love wrong. usually, we would does, of gone depressed. is to that it's There means -- couple happen. see Unfortunately, that a things

just some that on other any as our are out So that we're as yes, stuff, some reaching we’re about not industrial fill customers. our wishing on we're it, capacity of with not nuclear petrochemical to and we’re things. well try to scrambling but excited -- not But, we both refinery that

Jonathan Braatz

the I talk the volume? galvanizing last Did I that? out about Paul, one you it price you prepared -- maybe break Did know, comments. versus missed Okay. question. don’t increase on

Paul Fehlman

No, give that. one we didn’t talked second. about But me

I and give you question another some will you generality. If have

Tom Ferguson

something He up. looking is

Jonathan Braatz

good I’m now. for

Paul Fehlman

out in Okay. call a second. will I it

Jonathan Braatz

Okay.

Operator

Anthony Baldwin Securities. Baldwin Please go question ahead. from Bill be next will of The

William Baldwin

Good Tom morning, Paul. and

Paul Fehlman

morning. Good

William Baldwin

assuming or be in either to XX, XX projects longer-term at for you Tom, at margins or over segment? do can Paul impact you what’s forth energy backlog from the can your target that so I’m you months targeted some some the -- on? go demand? And income, next color tariff business offer your on levels get think major lest with the things, can of so your Where cost you would -- operating looking once

Tom Ferguson

more activity. backlog I that’s have where side, Yes, there's particularly and around we project energy do the think electrical on

So we electrical we of focused EBIT. this some stuff said XX%, margins would But goes see are I really lower got this hopefully XX% as the up we’ve XX% out to back we as the -- of our go. north get particularly we’ve returning we before, think price backlog on, of say to and on ways towards the year

bidding of are manufactured still stuff U.S., some some China Most margins, improvement, the in lot that okay of it still and is that demand a of will activity. be seeing in We so we’re it's The early. China.

think in see XX% year as I next. XX% So, into we range that to return out and that this of get the we

terms solutions, activity and to absorption of welding down it all comes In the level.

as So we the we side. as look, to nuclear far have out can they the know predict It's to harder maintain refinery.

it around about as does nicely high have talked that cost year. of structure level. to continue the it energy. we’ve in out If the over -- we can last that can see XX%, We’ve the around that much all industrial the adjusted -- cost single-digit. taken they nuclear piece structured the we NLI, We component that see of about we’ve they for So last we would those of margins. way demand, When million did about decent be don’t year volume we $XX the demand, we’ve -- kind go that at on piece of

So we continued kind would just activity love to side. nuclear see of the on any

We’ve on back side, also continue on which particularly coating we're able value focus GalvaBar, the a but and of XX% drive coverage. of are on the and the control we price very efficiency. to to to grow them still our in Metal XX%, procurement improvement are still around to getting we the terms to costs little sales powder and start realization the total and we as investments galvanizing those margins, pay drag on investments we productivity comfortable so continue to as a In off the that’s more to the committed in ramping then focus Coatings, and bit also with and being seen up

operational confidence. galvanizing give our So activities in improvement us

to volume. can as long going are maintain return margins those the as we We to

William Baldwin

Tom. Okay. Good there, insight

offer, with new little legacy there operation thing are can ongoing Are [multiple there there of benders, that that With legacy having benders color the that a initiatives you -- any is speakers]? for or [ph] while? the head any electrical there are been in the any about talk E&I can on particular you now

Tom Ferguson

excited He's to not He's general fully across team, do about is confident thing driving they’re going as operational get They’re table. out pretty here, the plants XX big that we satisfied The integrating bring what of of talk. months have driving three all very procurement is also new we’re that those him they I’m back and office -- three the in terms on how they them. doing sitting managers in savings. improvement in with efficiencies I’m let operate to XX some but enclosure to fold, we probably rebuilt

So I gives us better more going more operating us it -- efficiencies. to standardization, offerings, that’s give think

business. the in smaller opportunities Powergrid. that’s some -- some to us the about well-positioned we to see it. love excited fit pretty I’m So offerings we're what also that different with traditional our demand nicely some as improvement would to doing take going what think on switchgear switchgear we they're of of and of what think acquisition gave between that side That do bring. business, great comes We offering, with I advantage

Houston. growth completely locations which in So talk and then about. two excited I then ensure in finally both pretty this broader the we're lighting the they’re fairly our hazards of small those for about resources driving coverage even excited between [indiscernible] plants. we're enthusiasm sales are We’ve And we in hurricane really to converted and offering they energy, LED, their the capacity and helps -- recovering improve both to have. us expanded and international it's expanded business of our the the our still and about the over they a offices And innovation, have sharing offering but and kind -- from though business, leveraging absorption Harvey really

improved like business lot the So operating a got an team Mr. like still satisfaction that driving it and improved with electrical efficiencies. and right direction we on has of in going and customer feel Lavelle focus

William Baldwin

Super.

side Tom, So in you’re out sales staffed the on pretty that well then, segment?

Tom Ferguson

electrical seasoned really around -- more a broader feel changes coverage has roles. internationally, strong made and face -- with We of gives us more sales put in more we technically side, couple about time he he the but sales We the and more switchgear which leaders and are key has a domestically customer. overall They’ve feel depth, are. We of about good what couple structure.

but So good good that our where it's pretty about we’re while our and value. coming, be now we about feel sell to like been a and feel we we need feel ability to

William Baldwin

good. Very good. Very

new person know side head away, status the What that you’re finding as -- how guess, thinking I there approaching we operation? of what's how the time far On can coating kind of is if a your you’re be, a but that? time I and briefly, getting there as schedule on

Tom Ferguson

a at I’m happy the that looking it. pretty at I’m I'm … not table. I’m happy. pretty right lot around senior of

William Baldwin

[multiple we why. speakers] But

Tom Ferguson

good, we've the strong feel -- we’ve team meet team got energy. lot and on had ideas Well, we’ve got energy, I now such it's right and makes meeting can in just -- terms the comfortable and we’re time so I’m a operationalized. at legal And finance comfortable that lot of with lot found a functions -- with extended feel candidates internally I I got working strong and just spend it so and of -- team and real that side. and enthusiasm and and that an of of IT it, coating some just leadership -- corporate good much have it very great me We that now

probably year this balance fiscal the So of going leadership for at now have. to and we're probably looking structure the you're

William Baldwin

with enough. through or a outside Canada the look point for U.S does program, as at to it far I Fair to in Right. mean, last as business, your M&A that sense time make coatings business and growth acquisition? active is your And begin question

Tom Ferguson

You know, to we’ve -- outreach to we Latin continue to have Europeans America. the

We that yet, call focused that I'd still have the little on contact maintained we're of say and Canada. with early. up Canada ready facilities but ball -- to we've so a things other have opportunities I priced … will -- it's don't still I'm there folks so we in a but because, in three we domestically, know lot bit in that

William Baldwin

Right. Fair enough.

Tom Ferguson

take will advantage we of opportunities. …

because several in of lined them up the have, got We we pipeline.

William Baldwin

good coating M&A side, see activity? business? potential Then -- the in on I domestic domestic mean, still you the Are

Tom Ferguson

Yes, there's out still several there. sites

we’re are won't -- too We them and good really say are we but have active the very and talking line, I to yes, trying them very goal relationships. we active push to over hard

William Baldwin

last And housekeeping. question, Okay.

didn’t I -- mentioned You down, it Tom. quite get

your business a think on that’s potentially impact I galvanizing import. Import some of type mentioned …? solar on You of because of some kind just product, what of

Tom Ferguson

in some most in pre-galvanized speakers] of the probably are out of [Multiple China. coming Asia, components solar

it. imported. was went of more that project there's pregalved that, of coming pre-galvanized, some just It's there there's a in So

could top So that we’re we something can just that it's if some mind, get impact, a folks tariffs obviously it's a circumvent. that's And so higher -- closely. huge monitoring not of be way

William Baldwin

Right.

your for much very time. you Thank Okay.

Tom Ferguson

Let's go.

Operator

Sidoti John will go [Operator next & a question Please Instructions] Company. be of from ahead. follow-up Franzreb The

John Franzreb

Yes.

commodity Just it's galvanizing as seems changing we for The narrative second as where prices, on were zinc zinc over point in impact bad. about zinc kind just op sticking one the us can long is about not we the company, costs walk the on and swing and that bit thinking covering little the is it good with Can going point prices at should I’ve one a margin how just And because business. been a the margins? the the of you higher higher the the like forward? the what profile through be zinc having price years of

Tom Ferguson

going and so perspective. like a volatility up. raise they think -- One, nicely, And in kind to not zinc when put prices if we as couple to What margins price of is able prices so to just tend I we’re and it pop can and of zinc volatility. hold probably things. -- is Yes, there's that our up we much go those our it's

this and probably flow one as cost So and got a each the it. push course of the trying a we And -- of takes We for upward we know that while prices as to market will much we monitor can longer try on through. then we our as much we we are bear. we zinc it the that, model in unaware trend not little average cost higher it's months when we it, of of our so And kettles. to kettle, zinc of see six about

the hold starts over see market up that and but that to and down back if trend back it's to we're margins price, very flips then conditions, trend then you of As quickly. kind able to subject

So Paul know it's really the volatility that I I add think to if something as to or wants that. I would don’t define

Paul Fehlman

the pound Yes, been than Jon, zinc, on last more had This lot lot in spikey to and and the I you volatility. back more very per years. to movements follow this, point, of a a it's particular increase a couple long if a lot it's Tom's past, way look has go if mean duration at the cost past the take over the moved you quite look

that’s a much up, was be about it's It's robust you the where past in very it's now offline going more sticky and pretty but could downward, some the like and we’ve different in the to So a typically situation will situation. difference. It's that's it prices go if we to, past. different made it margins talk

Tom Ferguson

four over gone. that in Quite to six dipped that of good that then a probably -- demand wrong. the but has say had in also get and I way I’m past couple frankly, last it and We you Yes, enough years, months points if The margins buy-in saw we where committed were XX there opportunity. that. we bet this from one of buy-in back benefited had

north and just There cost not was XX you And enough have off. we over try been saw prices really those was kind that some where had temporary to It's you margins about if saw had that So the it that we to think [indiscernible] I over the low a sticky, in those historically steady we increased Paul as it got because of kettle. of and stayed you state. XX%. obvious more And of look go talking is fall that up for dip the the last that with things haven't margins up. years XX%, XX%, do

Paul Fehlman

I need with ahead go the to -- one then need your clear from question to one clear Braatz. Jon I and

John Franzreb

cost of think course, time. driven just mostly six of or months Okay. hindering I’m would a it's inventory environment just there would that. you from that business competitive unless, you reconciling in of or visibility pricing worth doing capacity backlog have just I that's not so much the kind out a of on there's kind better

Paul Fehlman

markets. in got We’ve to Yes, one of most multiple I think our competitors.

different to and in to be $X a $X.X we it but be they’re slower prices than cost -- little kettles it's they’re always could small it also So plant about in million, stick then, our cost try owner, drive raise going for and if so business one and you whether doesn’t their that, a think or a making million probably to the their kettle.

increase way. and we flips it then we continue harder, hard in of cost service goes our it's push the the So the know aggressively other more even to months so quality, one for components is because only push can that and trying even the is new organization. we dependability to push sales us going to to the offer, it it kettle we and in zinc we’re as and over yes, the the for next cost value We like with feel the focus few

John Franzreb

I it. All your Tom. Okay. for update. right, appreciate Thanks

Tom Ferguson

…? to want you Paul,

Paul Fehlman

on little up high quarter from and then just basis first it was Jon volume The the low let’s bit single galvanizing say Yes, year-over-year then was in on price a and mid left and a and basis one the calm on then it it in digits. over variance. was price mid fussy teens volume

Okay. And [indiscernible].

Operator

for closing remarks. gentlemen, conclude you. back Thank will hand question-and-answer session. I the And over Ferguson Tom to ladies and his the conference to we like would

Tom Ferguson

We on to our quarter. look conclusion Thank you, Denise. in trading you call shortened day. participating the Thank you forward at again talking a second of today's to for

Thank All celebration. happy Independence here of was of fourth a July you. at Day us all AZZ safe you and

Operator

you concluded. Thank this Thank today's your presentation. you, for sir. the has attending lines. Ladies may conference At and disconnect gentlemen, you time,

AZZ (AZZ) 3 Jul 182019 Q1 Earnings call transcript