AZZ - Earnings call transcript Q4 2019

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Operator

Good morning, and welcome to the AZZ, Inc. Fourth 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, today’s event is being recorded. to Lytham conference Partners. like Dorame, to now Partner, Management would turn over the Joe I Please ahead, go sir.

Joe Dorame

results for Thank you, year today financial us you XXXX for AZZ Rocco. Good XXXX. morning to and ended February review and fourth quarter the thank XX, joining of fiscal Inc. the

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

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

Tom Ferguson

Thank fourth year the announcement you, you and We final Joe. XXXX results. had morning. delay release quarter and full fiscal need for due joining Welcome clarify to this our call, earnings to to to us our thank earnings

be standard, coming had to policy revenue the accounting Company in that the year. ASC weakness interpretation has with be recent the With XXX ASC line a our the recognition worked This implementation channels. material to converting from of XXX fiscal the resulted appropriate through into

percentage this several assist to added processes to This shipments. We months portion of in a ASC that of apply Oracle accounting larger us complying to complexity in much projects also would with to year since took address. rules chose our completion implement some XXX, reconciliation our

audit We’re completed. our confident fiscal point for this with financial at XXXX that results stated properly the are

should far are later clear our this stronger that be today to we confident year. weakness and able the We’re processes financial material

in and year Fiscal XX% operating we’re is year sales versus year. hand, fiscal XX% review flow, recovery million income of year-over-year. our to profitability increase prior cash a was an of generate row to XXXX pleased which of financial our results. we one by on On by improved XXXX XX% to a of our in XXnd Moving $XX achieve free as

we galvanizing resurgence for the are in in things. expectations international results During segment the the both and demand experienced services, below year, turnarounds, refinery which the our fourth And on three to quarter attributed electrical were for industrial. Energy the hand, our and products other

high-voltage large China. about $XX most delay for year. new and was this first This resulted income, of of phase the pushing of was into million shipments significant the first The bus of the QX delay fiscal associated the in order in

many business just for international to pass fix. lined solutions several XXXX their term year fiscal welding short Our pushed up and opportunities a for customer buses decided too had into large QX, but one

Finally, anticipated. traction we than while class in our Coatings high the to we Metal clear continue business, gain longer took zinc our kettles to

class higher in generally The demand. sites While Despite actually had sites the areas. offset zinc did we we impact. higher galvanizing at reduced QX, good few many volume able larger progress experienced demand with plants key of challenges was the several other not make inventory, our margin to at this on in

in NLI. to in opportunities industrial for for opportunities for have spring we renewed a the good and as seasons. The businesses stabilized efforts positioned the the to have are and outage improved emphasis on and seems service us sector XXXX, see customer fiscal has both beginning pipeline nuclear both WSI realignment margins Our in fall resulted of better

been Poland facility and expansion the of new beginning South to our both America very activity pay expansion to Radom also are Our opportunities. and have finally have refinery activity as off robust for Europe business we planning traditional demand. accommodate this in we The offshore undertaken international efforts in has

in opportunities. are and range practices Maryland, Missouri. our and to to a switchgear enclosure businesses experiencing resulting plants solid pursue and of pipeline a in Tennessee, momentum are well able The in backlog we both Kansas leveraging had wider opportunities. a and wider pursue business electrical Wisconsin strong of and Our sharing are together three as are plants businesses opportunities of facilities working range The positive synergies and projects with new best we

virtual Bryan team reorganized under team who October and AZZ across is career exceeding a leadership and and The the service system, new objectives Metal has our plants. significantly outstanding margins, Galvanizing our and all for DGS to providing the over while from of paper of our the risen work collaboration, DGS, Stovall all benefitting customer gaining regions. value improve of and consistent XX-year late and that Finally, the his sustain customer driving call plants and emphasis level his in track in is with AZZ. high on adoption plants. has over teams ensure through across galvanizing galvanizing Coatings which we record result is digital which a we demonstrated our and elimination efficiencies can ranks throughout maintain of developing will also will performing throughout the drive customers Bryan more productivity business took service creating

in could other to sites. also served We rationalize AZZ continue by two our areas galvanizing closing that by be plants footprint

strategic we major gaining standards as we our the product, which growing design with suppliers. with to Additionally, push and state traction GalvaBar work DOTs is are the with relationship change rebar market acceptance

us the in this of will and are resources initiatives need key accelerate the fruit the give to we Our and facilities area. scale addition also profitability powder two KX from and bearing both, believe, we coating Partners growth

at of reorganizing particularly almost processes, products year normal are fiscal much first They and are we building negotiating normal industrial fiscal are reduced, both quarter markets opportunities, of we businesses XXXX. and XXXX believe and Since strength been the we bodes systems actively our several grow of our that have than for positioned stronger zinc large services. year also season to a out as turnarounds is The While we’re we our new ourselves and all fiscal fall which the and in significantly well XXXX, now year. have seeing for improve to the costs are almost margins anticipating end seeing stronger outages.

Our BUs other and particularly backlogs, business improving benefit strong opportunities the for pipeline an of electrical of have most high-voltage in units. the electrical of bus

significantly as the finding in is backlog. their across Our shipping as are fiscal enclosure Chinese on executing improving They well switchgear on synergies others their and margins currently their the delayed and focus XXXX product platforms. working in backlog, on

these focused share in level, two geographic expertise well. bring businesses margins be on the even to back double will balance and and XXXX back of current to a could plants. XX% that year. operating closing All We towards add-on acquisition, demonstrated areas. they like nice backlog fiscal of And for Tennessee this the gives working Chattanooga, processes recently some bodes once margins of the figures as electrical, in during spending Galvanizing digit we grow. in while Galvanizing towards capacity which the positioning this continuing Metal XX% these more grow completed while well the Coatings also us new driving

customer improve and minimize platform powder our plating improved will distractions this focused we and on our let team through GalvaBar technologies coating market XXXX operation are and We focus powder to outstanding surface calling our generating sustaining integrating and be profitability. on service service what AZZ’s for continuing and to acceptance will profitability. which our is seek GalvaBar and significantly gain facilities fiscal coating to in growth

Paul? additional organic it on Paul with Energy the I’ll accretive business turn acquisitions growth galvanizing profitability profitable, segment And We be pursuing and opportunities. both to focused will while pursuing surface for technologies Fehlman. is improving that, and over

Paul Fehlman

Thanks, Tom.

$XXX.X year on Fiscal in million, basis greater full for an fiscal recovery XX.X% to XX.X% year-over-year $X.XX $XXX.X the a $XX current margins prior points year. was the XXXX, XX.X% representing or a $XX.X For of year XXX to reported million, Operating margins profit a the $XX.X compared year prior million reported than compared XXXX XX.X% XXXX year. fiscal of prior in the prior increase. on grew X% EPS of XXXX increase Net a to Energy year greater from X.X% $X million the net gross from basis, improved million to year. fiscal XX.X% grows Operating in $X.XX million XX.X% in the revenue GAAP to on than increased segment margins. year, basis in the XXXX. diluted primarily Reported fiscal income for or we increase

a Jobs evaluation realized XXXX, rate Act Cuts effective in a tax rate year compared of rate tax, year about under to primarily we December year's we in would million the of for $XX.X as booked the XXXX. fiscal XX.X%. In in last of XX.X% the we Our liabilities gain of net passed and year tax the XXXX XXXX, which would of result that deferred of estimate Without XX.X%. change, the Tax negative the tax have was

projects expect segment to in increase the receivable. factors to sales Energy impaired negative segment XX.X% year to our prior for our notes million, several Despite In international our the cash prior in results. in XX.X% $XX.X in flow year, to cash year electrical $XX.X was improved million the Full-year Free $XX.X the year. compared the goal points, achieve we XX.X% that year prior $XXX.X In prior be prior Coatings year. Metal $XX.X compared income total, pricing. challenging of of fiscal to declined by the decrease Much million, long-lived primarily in income a not flow labor during income increased higher an as million, requirements. net lower fiscal to income to Gross operations can the $XX.X $XX.X the to margins operations and from market, and turnaround of Tom in year year. charges XXX XX.X% flow And Page focused were At spending at zinc on improved higher XXXX, as XXXX. XX.X% loss XXXX million the up and compared capital increased XXX%, compared our activity which excess million and for the prior increase you basis due increased pretax see, would free X.X% XXXX, the included continued spending. prior CapEx million, point, to fiscal income improved above on down fiscal in compared were refinery million spend in compared X.X% in we once million and XXXX of $XXX.X increased revenues this margins excess of Cash segment increase slightly prior The to Operating working flow cash million. offset compared certain $XXX.X operating year. margins at improved in last period year, in Operating XXXX, generated compared while we to in million XX. segment, net in of operating U.S. when year. XX% the were to XXXX, CapEx and spend the already fully discussed, year net XXX.X% in As revenues on prior our in capital year, in we business. compared year. costs finished to to the to $XXX that Energy in rose same the by for fiscal to attributed X.X%, in assets compared working we can to for of the in were $X.X segment again.

However, have With ramp we up Tom? back that, operational Tom. it's it if for additional capital also turn to ability metrics areas in to the signal certain I investment. the will time

Tom Ferguson

Paul. the focused Company. throughout are and Tanks, efficiency we on In closing, productivity improving

the stabilize recovery as in operating margins U.S. as to growth. segment regain to high taken we focus our headwinds the Energy our and organization as of in faced, sector Metal the as nuclear discipline the impact organic on well the Given it has deliver decline longer from anticipated Coatings well than us consistently the

During changes and results businesses going improve had senior realign operational better the forward. consistent position the to generate much to have year, make to believe and several we stronger we And leadership operating we several performance.

our reaffirming to $X.XX. per fully $X.XX guidance diluted fiscal share are We of range earnings XXXX

We’re to fiscal actions for necessary our performance $XXX XXXX we dynamics, fiscal with range improve sales the million very-optimistic we’ll it improved to and questions. also annual open market are operating are now, million. And for we guidance believe up We reaffirming improved XXXX. of the taking $X,XXX

Operator

Thank you.

of question-and-answer comes Sidoti John Company. session. first ahead. question Instructions] from We Today’s go Please Franzreb will now & the begin [Operator

John Franzreb

Good morning, Paul. Tom and

Tom Ferguson

Good John. morning,

John Franzreb

I deferred quarter, with projects the the actually fourth revenues start here much wanted from quite first how into you on to didn’t clarification, one? quarter I that

Tom Ferguson

one million for the Well, a million on It’s really electrical exact on numbers $XX the any plus China We piece. side. mentioned of project in industrial the we the range. $XX give portion -- didn’t the

John Franzreb

million $XX been deferred of north has into talking you’re So, QX?

Paul Fehlman

[Ph] correct. That’s

John Franzreb

Can on just side, I demand zinc -- Okay. to incurring demand sorry, still of make zinc? on weaker higher cost. the long some taking talk Got was the how pieces demand you and it’s it to I'm and you said Why weaker you expected, you sure. wanted it. than run And both zinc higher through so is to galvanizing of the of that? come kind are

Tom Ferguson

Yes. lot as plants to anticipated kettle. we high QX. specific. Whereas cost I that have our was at large, zinc multi-kettle It was would still had weaker a went their had trying that be certain by through of of in cleared we

lower So, a what off plants, was cleared in other kettle zinc actually that higher those in was cost bit. and some little of the plants

overall But, on it zinc had cost of in in part. So, $XX an a obviously in this a during zinc, for points is of we most quarter. year-over-year had impact look something different it the Keeping probably case, average handful it’s really Zinc in over expensive in XX kettles and coming million. and weighted plus our we different we that large in not just $X.XX hindsight plants. the times across fourth at was the price was shift plants -- mind, in well at at clear just understood year,

John Franzreb

million $XX ‘XX in versus occurred ‘XX?

Tom Ferguson

Correct.

John Franzreb

Got it.

I Thank XX on what’s be again you the revenues. through should because just Okay. queue. SG&A line on it a this the go it in what was $XX lower going or higher SG&A any fees something line? And I Is I’ll ago, back $XX I then, seems and on in of, in expected. somewhat you. -- the XX versus year quarter, November line running And in quarter the cognizant Are million anything it like professional million, there could that than was guess,

Paul Fehlman

Sure.

corporate to made satisfying the year. better XXXX, field, do A higher have professional or there. professional paid the costs we terribly in were side. XXXX have of higher -- in but and on It’s to year-over-year fees that in also a than the fees been bonuses fees was had which We much they not did should the employees I John. fiscal it were fiscal SG&A the things Okay, couple acquisitions with

Operator

Instructions] from comes Noelle Please of [Operator Stifel. ahead. next question Dilts Today’s go

Noelle Dilts

Good guys. morning. Thanks,

Tom Ferguson

morning. Good

Noelle Dilts

Thanks.

we as looked then, zinc of question, you move the And trends year? kind you for forward, second through market us about could Coatings that your various the give improvement generally, an some are just part you’ve starting -- in update margin of moving across of with your plants, of business? Metal thinking the that the now the kettle and the how seeing cost kind of is, the key end on the you’re to back going verticals First, cadence at zinc

Tom Ferguson

ahead demand Noelle, some will. zinc you now budget, go kettles. Yes. if in projected and our we think that lock is in the zinc costs these We’ve of to and taken stay much lower sure lower make opportunity I at below our

So, to premium. low $X.XXs we continuing. see that been zinc has in the low hovering $X.XXs the plus And

stabilized. how we feel about good So, pretty of it’s kind

We also the much inventory feel in our DGS of going how a process through a more real actual our what plants. zinc get what weight We one in kettles about is lot our feel benefits better for of steel time much is. to of and

a So, looking lot was of the more to us mirror. to, it visible than words kind looking it’s forward used in rear-view in

forward what or we cost focused increases market we gain, is -- about so was to judge value braining good feel also ability on feel we’re months had moving. going zinc the where and and good we we losing we're about labor to -- are are to price holding is push We continuing how ago… share all on not XX price even can. where So, look our But, which

Noelle Dilts

Right.

Tom Ferguson

markets. Now about the

Paul Fehlman

of we resolve challenged. things and and still positive the rebar forward see As kind to bridge those the expect have trends, flat strong we OEMs be highway far as few until going market does. industrial and we year-over-year, in galvanize will as -- us that grow for electrical end particularly flat petrochem utility, markets, are as been to being

Noelle Dilts

we Thanks. the you just margins the headwind? buckets kind moving sense levers of of moving how to much the a us from of How the business? of that more helpful. a is is high say do little DGS, That’s give much it talked look most galvanizing through kind it the is surface teens technologies think it as the and just zinc of How Okay. about of improvement, about And at fiscal XX%, which maturation labor, XX% XXXX thinking can range, about then, are how You important of in that of bit. forward? getting we much

Tom Ferguson

Yes.

made I are they in out that, think of last but labor, need now. some in door. we're say just what be -- to of get outstanding through, we’re I right having costs, make early to the that settled won’t the trying now. we've experience, labor kind to customers I labor do part part can hold fine of still significant that we're out the sure year are equal. we are we we so that we -- almost mean, still not levels That's think, of Two, And increases gone consistently price. in our I is able terms with

So, there's year. surprises no this

going improve of labor at we're DGS the terms as there looking us has opportunity to think both to So, as chance productivity team I maintain is this in can from information forward, move maintain to a well quickly mentioned their think also and how and productivity, which efficiencies. -- gave as the be orders given to better I I process we much process looking what

now, door. through a to give the we're cost as biggest time at. over I'm So, XX% to holding and the efficiencies, just maintaining lower kettles a well probably is to about as as managing what a looking our productivity it's continuing labor say that going XX%, at the price. piece zinc but that in quarter of going it that’s our quarter of it’s labor get And singular much I'll

hindsight. team, in continuing all across they're a demand think demand. to make on really like for those better time they're and of what play manage our in than now, leveraging I real zinc lot So, zinc rather organization smart doing to that, And the some the the knowledge buying the bets regions or decisions

is zinc piece. biggest So, a

Noelle Dilts

move Okay. Energy us kind of sounds on with have if thoughts shipments going those I variables different any is about any the then, to Can Thanks. turnaround question may, of revenues of about how helpful. well? you're to cadence more phasing the how how That's few over One think both sort as just to the okay, you progressing fall can again give the year? you for we project are as business. season shipments? of how sense it shifting kind about You of here spring of thinking about like thinking China, into but think on And sort -- a

Tom Ferguson

year. the on think million, do That that side, of Electrical $XXX I they beyond have Chinese million Noelle, Yes, backlog. $XXX spreads this

one to out. continue of I QX first quarterization that's they than, tracking at that get of all and looked going in personally in that out did slug the have other project So, quarter. going the the not that's

this that of into out through and layers kind think I next year. year then

enclosure The bad. looking in of are business, but sites, seeing we're oil-patch revenues we and -- a related project-oriented. backlogs and not our they okay player bigger switchgear, are two switchgear other with will enclosures great is, part those But, are good the course in not sites

the on. to tend market. business big ship to When and medium-voltage to domestic get the domestic spikes them the piece quarters of rebuilding profitable those bus, their the as than comes it But go more really a focused So, some we’re general, you’re high-voltage in going bus. smoother little on

industrial, terms better. In of the a little is nuclear

more think the facilities I not a nuclear level. great spend but -- at a some opportunities, to normal NLI some seems starting of level are

up WSI quarters. And they’re remarks, piece season. fall kind it’s stacked SMS, that looking big in spread spring obviously season. through a kind So, year, of NLI, solid as for I through spread it a WSI, decent; mentioned mostly and of this the is my

about through. shape. not tends comes through, But all good it. optimistic it in all be seen really sometimes pretty of Assuming have though, to really, come we’ve to they’ll we’re I it admit

them. the because in so fall third, second And into nice of spreads and our through looking at starts we’re quarter kind a that

Noelle Dilts

you. Thank

Tom Ferguson

that And we’re that if winter, hopefully that through into the out continue get into terrible seeing over some January. get fourth, we to of carries play as don’t carries can and really help where that and we --

Operator

Jon comes Kansas next Please Today’s question Instructions] Capital. of [Operator Braatz ahead. from go City

Jon Braatz

Good morning Tom, morning, good Paul.

Tom Ferguson

Good morning, Jon.

Jon Braatz

a cash generating you Once certainly, good flow. that it in job about guess, free real or similar XXXX allocation maybe between And how in looks it’ll your increase, did process? debt capital again, at further of think repayment, dividend that you like, I be acquisitions guys would use XXXX. how you look

Paul Fehlman

Well, and Jon, of bankruptcy. out talk over our ‘XX, if dividend going took what you side you into not we’re do you a assets portfolio. first pick to one We’ll more give one of could up it future. we we bolster during take in for to did left look million where at ourselves bit picked little history, to roadmap the of up is, as a about just two we the we debt the gave Lectrus $XX room acquisitions, ‘XX look the And set and saw, at we fiscal fiscal

makes where I’d we’ve So, pickups anything we’re future. the to to not opportunities sense, the that future. bolster will with it guiding you the places with we’re feel in open we growth that the leave opportunistic But, got to looking good portfolio specific in we’re ourselves interested say, I'm looking we where bolster continue for

Tom Ferguson

Coatings the coating GalvaBar. Metal to in continue powder see invest and on A perspective. Yes. -- from think you’re couple going side, things to I of us my It’s

as year have wears we opportunities some the there’s So, on.

next space. as our could start We’re more been. the they the the to as easily margins plan of see seeing We’d start has up a fourth in we are that working the quarter not drag be coatings hold the the it’s acquisitions the to volumes partners. at like with to stretch margins next galvanizing get to and bit our take get And powder a and that year. But, But started of a into fiscal drag. some probably big GalvaBar where in on on some

to galvanizing, a maintenance think managing our far on in I got where capital if are terms fashion, better more It In emergencies. the we’ve emergency. rather be lot guys job of it the a for spend controllable, than a takes doing we maintainability of timely

So, out as we’ve a we have more mentioned coating pipeline, as the just galvanizing is active there not and this, and some -- side to place having on managing the getting we’re as we can in better doing at that. for team buy owners our they’re that with and spent in how maintenance a the really team’s it. good $XX bring capital, And work for decent a scream job well. out of some And the lot And process million, the we’ve bit it without we one-off million added and powder I but got we’re really, think better a a capital engineering price large then, people deploying more sites get deals of in galvanizing. $XX maintenance to ensure finally, side that that them into and little times doing long

And we use one the As really of finding good that’s a sure we’re or year, capital. Galv, of two done making those we we’re good. doing adjacencies. this are we Tennessee feel another If at get our

Jon Braatz

would mention XXXX? for you be Did your spending CapEx what Okay.

Tom Ferguson

We up. in hair where leaving ourselves a right expect now to up in But the XXXX. below be as possibilities it was just we’re it they again, come

Jon Braatz

Certainly, certainly.

Thank Paul. Okay, you.

Paul Fehlman

Thank you.

Operator

our And go a follow-up next from of Franzreb Company. Please question is & Sidoti John ahead.

John Franzreb

the wondering business. about the your just of current Tom, thoughts configuration about Yes.

at you’ve people, required firm? the there facilities. current right down more Are now, structure the rationalization some kind hired that’s closed is or satisfied of some with You’ve of AZZ you

Tom Ferguson

Yes.

we’ve do decided We’ve we’ve six I the of the I side. Metal is years, Coatings three about with plants. closed start I’ll think, -- things and -- one last to think, over the

we So so shot fairly we give it do customers. unless overlapping keep a to to generally, have don’t and do like any where not we we’re -- going that fair We or disappoint quiet. it capacity,

going that. We’re to always look at

it. be -- putting there the I’d but is more, in we’re to hard mode but I’d happens, every on maybe year. of want of have sites we done. there We is, If have lot a my one a there plants closing time well don’t finger it say, pretty

we like do plant three we’ve feel generally, get over what needed to the years need the So, to to last we we running. done

greenfield. looking It one was probably our and now for a one also We’re quite while. last last our

a we’ve Now, on has now. be to got right the -- we’ve greenfield it only because one GalvaBar side, out the there

get leverage enclosure electrical, operating if as across those Ken will, zinc we’re plants. to it it’s also is leverage our already. switchgear very they think, leverage are with find whether can procurement, structure, There are the on, the enclosure Oracle businesses I trying Lavelle some a find the on improvement, his most you in team plants, focused where three most continuous and of two -- some of an points, platform, really backbone that

leveraging the now, that shape there. improvement, the in back standard good we we and as think supply office possible opportunity been as on has is continuous So, there focus designs, the we’re more But that much feel chain, there.

how those So, independent as run been that’s business that. underway. doing been units, continue we a And with shift more that’s versus will we platforms

accounting, calling leadership terms in they're across the doing we doing SMS, calling perspective, can NLI, about mostly of probably we about on and as good feel got refineries. we nuclear pretty sales synergy what in side In what WSI, or we found as and on from then We’ve HR, in the are Industrial, much plants a organizations some find have back-office with as leverage that sales.

their to they different year. the leveraging in we of and on donuts. focusing and of DGS, sales used deliver beginning it good on then last leaders team, in, to lot controllers team the place, are things seventh we how with we’ve we're reorganized the -- put gotten talent year just I feeling that can we just end of helps we’ve organization they're So, towards call look those, call traction as doors, we stabilize how particularly we course the acquisitions are at value, good past we're still but inning. Metal things done, feel us brought continue in to some the got we do. probably in, a in year leveraging We’ll things wanted they it’s brought Coatings, leverage that in they’ve I’d this like sell But, and the acquisitions the We've And reorganization, the faster. knock about their not got to some they're seeing really really

now we what So, I is businesses. in leadership think see want the to the right

John Franzreb

but last for fiscal Fair one I And you be should this, guess don't I know kind of if XXXX? tax we Okay. enough. said Paul, what using question. rate

Paul Fehlman

we’ll didn't I’ll now. but -- stick around right guide XX% with I

Operator

our question from comes next Please today Oppenheimer. Sturges of John And go ahead.

John Sturges

was It's snapback towards been And a net was nice you and numbers. ago? color recovery where add closer the direction those you. to operating was margins. Could Thank sum operating in a some I on actually curious you've several nice there margins, back just margins years if income

Tom Ferguson

continue. John, you it. to want oddball There -- of which and XX% particularly years, kind years Yes. We that's used see to XX%. some galvanizing nailed have were

but trended lower in to I is have XX% of remarks, said end not powder to that, coating, this -- see north then from XX% would my XX% to back And mind which we keeping like to Coatings but as hopefully towards the also margin. XX% the -- it's Metal think we're in and we to total I that. So, asset continuing investment in do trended towards make year progress that

and We So, scale, more first XX% coating, galvanizing see role. is going we think powder that to the they’ll more where more a mark. trending towards start as bigger get plays leverage the we be improvement,

were operating to back In to terms nice we'd margins. of were electrical, the like where That's there double-digit see to. they going where impact that times in

business, work chain value-based and leverage. I got a of supply operating the the right terms think, finding customers, is volume. what we've efficiency mix kinds sales in done of on We how we we perspective to side, find of there of could driving the do some productivity from still -- do terms right

direction to -- those margins committed years. but back we’re of driving the next couple over in that I yes, So,

Operator

next our from a is Braatz Capital. And question Please follow-up Jon from go ahead. City Kansas

Jon Braatz

this, business bid Tom, I if discussed ability are China at but all to China? new issues impeding trade we’re with having don’t your know in you that the on

Tom Ferguson

-- capability here Ken establish to I is to on It this, a a spent with did in lot that forth want be No, Lavelle careful do have business. not really -- impeding time. us back new and the and between We China on that manufacture. commuter China. President has of He’s the impact of group is we like bidding

we manufacture have We And opportunity. can of that bus but so, we it. a can’t manufacture there high-voltage everything do for lot

us that. in And so, we’re to the China let going as to do will leverage that capability customers

they’re have And out because turn bid the now be. to So, we we’re the that’s focus. preference our China And right us bid. to from not there whatever of and our letting facility is it the capacity the tariffs at mercy

bid technical RMB. opportunities deliver focused we good some provide able as those, do to domestic we in So, China as keep domestic we a facility operations. opportunities we’re well we the shape. the have can in RMB midway as for on And in our as to prefer And long support contracts that

ship. it it responded able days tariffs, few to of were to but through advantage continue and a us concern. China that to have be gave able ago few we’d day-by-day to days play We sight a with ago, some a So, when line

don’t to watching bid terms So, where bid, in But projects. our are there toes far, very does keep and a us put product. these It pleased how And we’re good and from we of so very customers been big very, we The it. carefully. that. some I how with have do know very, something support -- create have how very does -- some it, on

So, our to sure on focus continue is can deliver. making we

So, question. answer complicated a long a to

Jon Braatz

completely. understand I

Thank Okay. very you much.

Operator

the question-and-answer to ladies And for concludes remarks. session. any over gentlemen, this Ferguson and like closing back to conference our I’d Mr. turn

Tom Ferguson

think I that everything can about talked talk we’ve to think I of about.

we XXXX. we the that I’d listening and and so, back committed like to year to to normal profitability us We generate year that one are tuned thank generate need today. things for cash and used. we’ve margins very the we’re fiscal us say, stable to stay where this you see do doing for And be and investors our to we to the demonstrate for

So, I in thank appreciate that can any to bring regard. you. us And you patience

Operator

attending sir. thank Today’s you, has now all conference And presentation. for today’s you we concluded. Thank

lines. day. your disconnect wonderful may Have You a

AZZ (AZZ) 20 May 192019 Q4 Earnings call transcript