AZZ - Earnings call transcript Q4 2020

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Operator

Good morning, and welcome to the AZZ Inc. Fourth Quarter Fiscal Year 2020 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

to Partners. conference like Dorame to now Lytham of would turn over the Joe I ahead. go Please

Joe Dorame

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

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

uncertainties, this we including the Act conference of the certain which historical conference Private the ended report contain that year during Before to from forward-looking this fact, Reform and remarks, by are meaning like Securities AZZ statements call Form constitute XX-K Litigation of would remind statements risks on XXXX. statements forward-looking may annual statements of AZZ with call everyone the fiscal February of to Commission, in the within Exchange begin the by prepared documents XXXX. I some Securities XX, made detailed management with filed for of Except the time time for and involve team

natural customer-requested to foreign galvanizing growth AZZ rates; employees adequate and the political the conditions which exchange generation prices response various and strategies. availability experienced including shipments; power products and markets currency metal coating services domestic; implement the are offered opportunities; the economic and Those dip material serves, risks Company, process; and the in of changes the used electrical delays acquisition and stability customer demand industrial uncertainties raw costs, include, distribution but markets, gas, the by are to and in financing; and in demand by of not management limited transmission markets; to, zinc and that and markets changes including and of the hot markets, company's

impacted In addition, ongoing AZZ's customers COVID-XX pandemic. and its adversely operations potentially by the be could

no will no The result of forward-looking based statements forward-looking to events give hereof, AZZ as statements, or assumes on update future to Company correct. can statements whether assurance any of new be such are information and as obligation the These that date prove information, otherwise. a

Tom that the of With Tom? me of out Executive let the Ferguson, Officer to over turn call Chief way, AZZ.

Thomas Ferguson

Thanks, this joining is health priority top welcome at call, COVID-XX fourth our as for these and employee to supporting Joe, mind, as and you everyone's and earnings ensuring times. AZZ our morning. unprecedented full-year safety us customers XXXX quarter thank fiscal With and on during our well

if appreciation and I families not for the partners express way COVID our during crisis. be did I'd have the employees, my up stepped remiss great

the this of rampant home to that from uncertainty, processes other we're each took While am way during of safe and operation folks stepped up extremely the around countries ensure running and had realigned care proud pandemic. fear and our I world, got crews closed,

diligent Grant our I under also Thornton, remote want circumstances. for thank difficult their auditors, to efforts

be to today results grateful presenting truly We here our time. are on

we For Energy and year, will $XXX to $XXX into million. revenue XX% growing as XX.X% $X.XX to fiscal Metal along. total I reaching details go revenue growing with grew prior the record revenues billion, million, this versus of XXXX, XX% Coatings a get

double-digit and XXrd the income XXXX revenue, our year consecutive growth achieving operating cash profitability, activities We pleased are to strong fiscal provided for by operating in of year. while have completed

an to on businesses Coatings an Metal of XX% grew basis adjusted $XXX income over increase million, versus fiscal operating Our XXXX.

net activities, year. generated cash versus of We $XXX provided by million cash business operating have prior in almost that, XXXX, strong flow increase a an of fiscal XX%

XX% than call diluted Nuclear end per we which XXXX, of our successfully one-time we of excluding the Inc. divestiture as at Logistics, of year. compared prior delivered share, our to adjusted EPS year. $X.XX fiscal of NLI, an the business, expenses, completed more For We increase the fiscal

As of it it businesses, we was apparent core was completing NLI a stronger had business that a market. being to and the annual of previously commitment our company not our became strategic better upon part review communicated, suited that nuclear another

the We customers, also intangibles in lower major nuclear majority to impairment U.S. and the take outlook of WSI's opportunity the their took for the the continued nuclear of nuclear of demand to non-cash most challenging a due for industry

was sales prices within selling Coatings. in growth acquisitions along our four Coatings increased higher driven and Overall, Metal with volumes Metal by segment,

sales driven by Energy shipping in and switchgear large completion to turnaround successfully in the was contributing large international China Energy Also electrical The products, projects bus an in growth our the the and of uptick was of in high-voltage growth projects. refining international e-houses. highlighted by topline

in the income both across a the Technologies Operating predominantly as of segments. by grew Coatings operating Galvanizing. Metal impacted segment the margins overall lower result at for But Metal leverage for year, Coatings were revenue Surface somewhat mix Energy margins improved increased margins. and

the We this driving closed business COVID-XX we remain Texas strategic regard, our improvement plan meaningful Technologies recently growth the into remaining North one sites. site integrating plating margin operations customers committed affecting post Surface to our those for without and by In crisis.

revenues we as previous margins year. the to to $XXX In by posted and XXXX, Coatings, compared operating XX.X% of for million XX% Metal points XXX for basis fiscal improved record

of volumes For offering pricing quality and industry for reference, lower platform the costs above-average and primarily processed, our exceeded workmanship zinc Galvanizing of due service. outstanding steel by maintaining higher year, to operating customer XX% margin

both and to organic on the We meaningful remain returns our Technologies business. growth committed in Galvanizing acquisitions came our investments Technologies. Surface made in from Growth delivering Metal Coatings Surface continued for Galvanizing and business in

in Technologies, acquisitions we locations two seven the one. us a During we into completed Surface year, of facilities nearby three total giving consolidated as

and COVID-related has product somewhat expand as product and this Galvabar slower-than-anticipated now the approve continues by Admittedly, market presence for been Our across the bridge highway DOTs to States. spec the more its impacted projects United process lockdowns.

while a result switchgear by million, income of XX% for revenue China large $XXX year. platform fiscal our basis shipments operating operating by in the was segment growth and increased points previous XXXX increasing products. by to the Energy for Our and Electrical demand our and over Revenue margins adjusted XXX for high-voltage XX% e-houses to bus grew

projects year, refining platform The particularly Canada. with large Industrial during large a turnaround the completed project in

Although our Industrial year not our crews business have to Poland internationally, been from restrictions. COVID had travel to a deploy strong the able due

initial invest us pandemic, was with Prior markets key groups. into Working and their fiscal to XXXX the by signals lockdowns, customers momentum to positive while our all our of several another substantial plants four Coatings continue pre-pandemic end COVID-XX all year Galvanizing to to plants are in from COVID-XX at remain and Metal in some states' open, and restrictions. see key solid the COVID-XX levels, various for caused growth on business opportunities. developing acquisitions, declines beginning our continuing Since operate

and to has as impact our been continue investments we continue assess our end e-houses digital Uninterrupted lower and and the manufacturing in bus duct in remain moderate, while operations demand oil counts consolidated prices. patch switchgear, the leveraging are tubular Electrical oil operations thus by The far our platform markets lower lower within for daily galvanizing system. good, rig due to seeing to and activity hazardous-duty due less lighting products

industrial QX, QX as but work Collectively, shift busy seen crews platform has well the during platform defer a working, for deployed services are field refineries very turnarounds. open industrial spring scheduled originally shops the as and in being the into move season. summer Our are normally few as QX

have to we after able projects field little were our deployed, on at from where we going home went on While crews crews get this internationally had lockdown our international those time. countries activity

moment a COVID-XX now remains recent me priority. pandemic Again, That employee at and top take and said, safety AZZ, discuss bit let more. a just the health our

and Health the by Organization. the follow guidelines CDC to continue World and will We provided recommendations

includes sanitization ratcheted very have the guidelines work disinfecting following and up employees our from while of spread around the cases. COVID-XX protecting few physical distancing, handwashing, for We had best and workplace areas. have practices in This

shops of which droplets chance reduces dwell. viral high good Most circulation, for bays our the to have with air

few are have operating AZZ infrastructure. critical positive employees and very test maintaining to all products recovered. and virus almost services for We the produces that have now had and

Our products around to States globe. well needs counted throughout the the meet critical United on and the infrastructure services are as of as

Agency, essential in United in the Cybersecurity is business supporting critical needs and Security's Security the an AZZ Homeland For classified States. as infrastructure Infrastructure

of open our world and at time. this manufacturing are shortages labor around craft remain the facilities any All we not facing

estimated. to Due can our to discontinuing billion. duration the depth of pandemic with $XXX many associated issued previously well or range of $X.XX of million as sales currently disruption fully COVID-XX $X.XX as uncertainty earnings time, $X.XX be our or recent guidance the accurately neither on this this of to At we are range XXXX end diluted share guidance fiscal markets,

on freeze operating We plans have to We've have in actions headcount. executive other and crisis. implemented salary adjusted mitigating taken spending response and compensation plans, the a capital

debt we can level, ability debt beyond. year with that to our manage generate combined and fiscal confidence cash, satisfactorily both consistent XXXX and throughout us liquidity low Our the gives

first earnings an ended We during will provide XXXX release XX, for the May quarter XXXX. update period our

provider value. critical metal to are services a growth will and a core, For to of continue are our XXXX, manufacturer execute AZZ strategic that products drive that year on infrastructure. At fiscal objectives sustaining of shareholder and coatings we company

receivables unwavering, operational Our initiatives deliver is collection costs, platforms. ensure superior excellence, generation ability drive is operating commitment our our manage customer cash to and that discipline on based to service strong within pricing

so infrastructure to will remain provide stronger that our better this the we pandemic confident to global equipped our time improving profitability sustaining and use and businesses long position into future. vital are We core of to emerge businesses to sustainable

to Paul. I'll With turn it that said, over

Paul Fehlman

Thanks, Tom.

and was net For XX.X% fiscal increase the of year a million Specialty for the XXXX million, reported non-cash the quarter a a million greater of business Welding fiscal charges we assets nuclear fourth than in a fourth impairment business. the XXXX. $XX.X sale including on $XXX.X as some of on negative we of million $XX.X recorded quarter fourth income the Net of on revenue an quarter loss Nuclear of million of reported year fiscal Logistics XXXX, basis $XX.X or $X.X

strategy in while nuclear core supported businesses. business about for talking We've exiting decline focusing the the on been and domestic business that a secular our of

also one-time recognized from stemming We million purchase that was $X.X in the price fourth expense original of tax treatment NLI a as quarter tax well. the recognized

year. fourth for the charges, fiscal fourth been those income $XX.X higher in a million, would the XX.X% our is Without have the quarter which last increase than quarter net

we adjusted related refer they're this items. when to items to these in call, So

was Reported basis, share, share loss would which adjusted diluted EPS for the on of than higher XX.X% prior been at fourth $X.XX in quarter. quarter have but per per $X.XX a an the came year

compared the revenues prior fiscal and For at up $X.XX were billion. year full-year to XX.X% XXXX, finished

on on increase XXXX in XX.X% than an for a year prior Adjusted across adjusted gross board. driving the margins margin on fiscal grew the XX.X% representing basis year. and XX.X% million profit $XX margin better $XXX.X performance current year-over-year year in points in basis improved the XXX million from the higher to XX.X%, the margins higher from to X.X% prior operating year, of the Operating

on an $XXX.X for over year a the prior the adjusted EBITDA basis XX.X% million year, $XXX.X fiscal grew to XXXX current in year. increase the year million prior representing from in

full-year, performance. cash million For on to net $XX.X the fiscal operations XXXX grew better in strong or XX.X% prior year flow capital income compared and from the by working

in of in sale quarter to We of walk times. set liquidity strong a bankers were many balance lowest cash very the of flexible the to new very metric. leverage debt debt low $XXX of with a NLI, the a a fiscal able these with Combined to to debt and we creating million, reduce unprecedented ample the through from financing, our total year push years, sheet, into our fourth able level supportive were

we the with in invested as the now part operating segment. acquisitions, During the business of Coatings Metal four year,

for our small now giving of deployed to capital we still also marshal had as are amount back shareholders of repurchases, the and suspended which spend, We a in share organic form capital dividends are liquidity.

the ability have taken cash to to and do outflows, have back steps we so. throttle forward, Going already

Tom. With it that, to turn back I'll Tom?

Thomas Ferguson

Paul. Thank you,

we paying have we discontinued you are particular attention some key that to. indicators let our While guidance, me give

months. business, we Galvanizing carefully and tracking construction normally fabrication segment's through summer Coatings particularly Metal the activity, the are active For

we determining or back operations when reopening customers either Surface For focused on their will be, are our primarily Technologies, normal production. top to getting

travel For we schedule group, the is are their the the fall when and turnaround Europe U.S. restrictions normalize Energy in, how segment's in to seeking filling determine and Industrial will India

BUs proposal orders are many summer For for to turn particularly backlog since the our need Electrical the tracking we proposals to carefully balance group, sufficient of to during year. provide for the we the of activity,

taken and lighting, significant activity life actions. which realignment we Electrical For already portion are a make of up tubing for looking signs group, small have in but our rig of

management cash flow good corporate, customer and oversight Finally, have and we for cash our processes on have very further credit. tightened indicators

we including growing Metal strategy contribution to remain our operating to Technologies. margins, from crisis, around committed XX% and Coatings Surface growth XX% COVID-XX achieving Post a

core we For future and Energy, continue are interest. businesses our to to to that on our core seek will focus divest strategic not things

BUs While a COVID the most this to relatively due align experiencing crisis. operations are expected of our small taking disruption opportunity with to are Energy right-size post crisis, of level and demand we them

numerous models severe downside we see scenarios run and and of not level reasonable do whereby have We even maintain around any do downside not a liquidity. currently

and a The diversity through quarter level flow. due turnaround with associated to COVID-XX sustainable operations QX scale and distractions to cash to disruption but compare expenses, fiscal be XXXX income will the first the a our of are difficult of realignment providing season managing spring issues, Galvanizing year very the of the and

good Our Electrical with. to most backlogs have businesses, work part, for the

a majority these finally, to credit during of cost, craft pool of Industrial low And our times. our discipline, banks, as to businesses While dynamic market labor well the tier as first carry ability changing variable. cash debt line fixed management with certain positions react the quickly levels their and is uncertain amount

it questions. that, With open up we'll for

Operator

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

John Franzreb

with like And into taking of little year-over-year. good to going Thanks bit what the is the was I'm I end Good as that about the profile for how gone mean, we a – concerned? happening has start little you surprised of as number is mean, talk quarter, morning, was so COVID order can should the order so it's what It's of like? two as the idea kind and progressed following it my first XX% the want down much. I looking realized Can talk things February, about there? months, down What's a of question. I guys. you bit a have tempo so it's in I months far as two backlog.

Thomas Ferguson

reduction Yes, One, shipping backlog is high-voltage because there, John. a of couple things the orders. of of big Chinese most bus those

businesses relatively As switchgear. vast a matter other and the I'd but of say in We've of it. off Electrical in bookings in we've the Obviously, tubing majority normal activity fact, of terms particularly and had lighting, been tubing. e-houses in

been good in businesses, dynamic we've to picking which been a that amount work had is of bus, something more comes it service bus up interesting pretty and focused When the medium-voltage on. an we

So good some of to it's see happening. that

high-voltage we've domestic the profitable. orders, more to On side, bus decent been U.S. which picking up some be tend

So the customers little into obviously, doesn't A level of of up the we make the same you gotten backlog it But profitability would that as as it much been facilities. as slower expect. to contribution. to it their lot have, we've to China has a would have, of as as reduced year, take from access

folks in email have sales by So our been and contact telephone.

still don't indications project distribution, us encouraging. customers, to but teams say we the electric because transmission won't into direct feel. like say, this able be we're to we teams activity But together. a have from kind side with a the particularly get customers look there's we're get better been not – closing solar what why give pretty and of getting get strong, quarter project they're activity I forward that in as hearing expecting and lot on they're to able finish just is the you I'll contact just has That's summer, say up to. utility, good our good, is Proposal to but We more to together,

John Franzreb

other QX you question. into QX there's address two turnaround from you any two how Could queue. of about much into talk deferred guess, those I experienced How I'll of have about want I'm back just and cancellations, of QX? pieces about are here. then And I me issues, talking the I – much is Could the get curious sense when deferred just jobs, we give guess, you part Okay. you revenue and – a

Thomas Ferguson

any think had everything John. don't Yes, significant I cancellations. deferrals. had we've just we've Almost is

the have had to that. either teed context of So that were I the fall. into that pushed for give summer now or want some you up spring And we things

all the to you heavy you'd fuel produce is outages, things during running be have hearing in know, right look sure. refineries travel As obviously gasoline normally, summer, vacation out way jet And utility also season. going That continue the the during of to and activity. to not we're not there's now. terms We're

see Everything we comes teeing of really, have project only fall. up it there big a project be and when so turnarounds, told we summer. many for some managers many engineers. this into the – to is really pushing My that what we're is that caution else But some could is being so

only fall can deploy we can't craft spring and we So replicate We season. or more labor. get replace access direct labor to the while can the with

But our So stream, shops through processing not we're operations piece in Canada spring We've open deployed Atlanta a small industrial deployed plants got Brazil. a the orders season. this We're are, got handful and and all downside. revenue crews Europe. relatively We've significant and no of of in in looking the in at which that they're the U.S. recover Poland. going but are the whole and of is that fairly to have actually crews

to just a it's real year So for a going real It's be mixed bag. not industrial. good

projects. activities, as can is of we'll good get of cost which we've portion more contract because majority it labor our vast why look out, and easily very the So fixed a the taken some mentioned the at bit We things labor to get at play is hard realignment some I for what at. is

how managing that. we're that's So

John Franzreb

Thanks Okay. for my into questions. Thanks. queue. I'll taking get back

Operator

go Noelle comes ahead. Dilts of question from Stifel. Please next Our

Noelle Dilts

Good guys. morning. Hi

Thomas Ferguson

morning. Good

Noelle Dilts

year. on the good Congratulations

into give things thoughts could that Metal more little you end kind Metal bit look today markets are to of down a business a terms is you've how more. just where be then? there a bit you perhaps vulnerable. are And markets those So I if And cycle us that of is key the dig resilient bit discuss more this know done, side, first, think I guess, notable versus something in really things market that little on the last Coatings I but wanted might don't at the you any Coatings different the the some and in if and on

Thomas Ferguson

Yes.

I think pretty they've were Galvanizing One, first battle excited of of were plenty got they and in us are The quarter They're active. into came a particularly, then a of couple realized the of backlog couple quarter. things. the folks, our – we weeks in work March, telling the good is news to fabricators for on.

a been things breaks sanitation, like just and protocols, the distancing, staggering So slightly shifts bit that. with while we've It's our slowed physical little productivity. and impacted increased cleanliness,

across We're Surface Coatings, in more Metal are in X% not maybe Technology down things interiors, large to in much, that they've airline, that, impacted. side range got like a which handful more trucking, more XX% because the of that are the the customers

which we well, aggressive haven't in action taken the more realignment any So took why is we side. Galvanizing

have or took a furlough closed folks. few We to of Surface some and quite folks and the plant CARES in advantage taken Technologies some a Act

taken we've And those so actions.

volume reduced quarter. So buffered in that's how the the first we impact

side, up. construction construction we And terms solar, in not and seeing two The petrochem, enough, crew the ramped of stay projects are can't the continuing seeing outlook mean, Galvanizing interestingly our folks blocks chemical a Texas, that road need I crew. utility without you construction, in to or hearing refinery there, here drive side,

fabricators, to utilities of the EPCs still folks sales are In our active T&D, them. see the getting terms unlike very still the in refiners – are and some and and seeing solar, of

and just lot it we more have too access We're a not much, more but communication. encouraging a lot

good can we're feeling So far that's as out we see. why as pretty

we And was significant artificially it's looking one so we time side. obviously, high, X% were Also as difficult it to look and But market-driven, I to get we needed did up so at zinc was Last if we not were time, more time, as more driven. costs quickly and on able we at the had is – think and XX% the downturn, we last last the to compare. in prices were time, a Last not it our relatively cost to. revenue. as quickly downside respond this

this As reducing we've zinc this time, strong continually and into costs. value noted coming with we're pricing

our would industrial our So it of to I when backbone. Metal businesses, Galvanizing talk the – out are I but look say, majority like core Coatings, there. vast as our at all AZZ, we better feeling about, we comes folks folks particularly, it's our than,

Noelle Dilts

either comments see one things topic in Obviously, very I Thanks. And you're second the was at to any up, pricing the to of sort that start softness? of That experiencing competition. to is the That's point, Coatings see but like wanted side yet sounds we is there. environment, And Energy helpful. any see start beginning appreciate Are on I you of Metal the we to curious tough competition pricing the really this pricing discuss. it where on if holding of business? pockets any

Thomas Ferguson

Coatings side, first, great a system, to of the job done the value digital I Metal bring – galvanizing communication, the the information can Yes. we the flow, customers. on I think with mean, we've

we our steel the plants. into of developed Just receiving didn't shipping and element most we've one but almost note, side eliminated of human intend this interaction DGS, when a we

vast just with human the truck the have we have using drivers delivery majority of are And don't So appreciating and that. we folks our to that plants and to. used DGS that customers interaction are

quickly, they the the and it high it. survey just When And when have scale, service. getting gets we to So marks. we the value, respond executives are a the all problem, I way to we're which do think delivering in the really that division customers, up senior regularly, we we very really,

three So ago. four versus years differential a that's I or think

not places. some bus issues It's would Where just some, in of that seeing particular have demand piece. enough customers to out. pricing extent, medium-voltage wind seeing I say the we're capacity the in positioned. that Electrical, In We in we're sector. way are won't our for very be we There's kind significant most probably

still though, to high-voltage, we've a working take is Medway. the plant on China up got in busy. doesn't and backlog, and them Medway, the orders it keep the in In whole lot

we have capacity much very seen pricing some seeing just we're pricing not pressure. out So oil there. There's way patch, pressure. too In much yes,

piece So of our business. it's Does fortunately, help, a that small Noelle?

Noelle Dilts

so Thanks. in It And I'll queue. much. back get you does. Great. Thank

Operator

Instructions] question And our of DeForest ahead. next Please from & comes [Operator Hinman Co. Walthausen go

DeForest Hinman

Thank Hi. you.

of Just and couple clarification some a questions.

the On is X% through Galvanizing what on we've April? to March down range XX% and business, experienced the that

Thomas Ferguson

in right so again, that probably on the That's And on heavier range. once Yes. the Galvanizing Surface less Technology side, side.

DeForest Hinman

And then the and any within April March the commentary business trends Energy on percentage-wise?

Thomas Ferguson

backlog. off working a We're

So impacted of scheduling the shipments the is the more by backlog.

So it's oil side. less the patch in the demand about at other than moment the

our we're really in looking closing, this half wanting things, point of about not Activity at the we're capacity the So fill is to not is good for second projects concerned but for year. we what are and to careful. be

half. to know that backlog just And Electrical the that so got we see like the we're of being second So careful to some that we'd close we've with sustain through that.

DeForest Hinman

we Okay. And then about... when think

Thomas Ferguson

One of businesses news essential sent them. good us we're and piece notified Electrical our here are to many – customers that letters have us is

says So need orders, that need we're that not if so that but business, that you essential, will. attention. we're They just they're bodes still sustainable, paying we we know well. That

DeForest Hinman

crews big in with but a of of terms you some business, terms if is there, Energy that? us terms XX%, the ballpark, impact the like And on expectations? a turnaround change it that Okay. the business business meaningful spring down This the give some – we're pretty impact. seasonal that kind project dollar How aren't in impact the well. of sounds XX%, payroll of of the a some of revenue Is Can then keeping amounts is pretty color for of probably And the is an turnarounds. margin managers, XX%, them portion sizable on in XX%? of as

Thomas Ferguson

not down at the in as though, carry that's issue, significantly to I – for through the The spring. looking going full-year, yes, think I it's mentioned. is very

we the unusual would least Northern into summer of with have nothing almost have normally we projects Some at this, going hemisphere. where pushing situation in the on the

go ballpark And it, ahead. so this to at looking – is maybe

Paul Fehlman

XX% to XX%.

Thomas Ferguson

For the quarter?

Paul Fehlman

the quarter. For

Thomas Ferguson

ahead. Go Okay.

Paul Fehlman

Yes.

field, that down. second the third So pushed at business that cost into XX% quarter, But DeForest, again, because section a union get the it, of mostly as the out Tom a in we or take the as we labor one while getting out this XX%, halls. it's it's goes of look that's talked maybe the about, for highly is variable business, craft

there's so variable in of cost there. And lot a

You're right, we keep talked supervisors we're but some the variabilize managers, as awful do to of the an able about, cost and that lot. Tom

So if is the probably in one that's for be quarter whole to the affected, going first area the that there's section company. biggest

DeForest Hinman

Okay.

in we think million I Specialty the past that, conversation, about $XXX Welding does that business had said sales. of

quarter was how So like, first year, much let's last just – the say, in, Specialty of Welding revenue-wise.

Thomas Ferguson

those. break don't We

Paul Fehlman

probably for the year. We don't not for break that out is using within Energy, but the $XXX million the you're year that bad

DeForest Hinman

that talking time acquisitions. pause Okay. about And spent on Is some on some currently? working you then

Thomas Ferguson

buy on one. side. particularly Yes. relational Coatings the That's through situations, Metal usually We

folks And phone of so and contact by email They're all our that. relational are, in them, business two are development all sidelined. and

face-to-face the don't keeping and the to on looking We keeping get way done. thing that see summer, of things them during together balls opportunity active, the for we're get forward this happening So the the is some kind just anything stacking in air, up.

we'd in look get fall. So the to active again

are are what we're I'm We – but we as investigating at of actively divesting couple this going a well. not to point, on divestitures active specify

normally are the deferred kinds right are the everything from would we and that the onsite fall. get now transpire keeping diligence busy. team things to So But due of until got we probably yes, M&A

DeForest Hinman

liquidity the just about premium. Can And you placement refinancing moving we us environment that? color an is private debt? Or Okay. on into can planning else? That's looking thinking rolling of we the into short-term you there? that something notes where helpful. Are we're update or some us in how a We have revolver at terms a are at give

Paul Fehlman

an take unused that DeForest, we utilize that plenty accordion years up idea up to to we plan the the need inside it were up months. we've and is could set be, stick is million Yes. renewed we're the was of got the $XXX And that moment, feature about in million facility ago when need if revolving liquidity take and what the it revolver XX piece that the But we at mind other we the bankers, if to. $XXX in of have into going credit another to with that. capacity original that going that the going that revolving originally facility in a few in with

DeForest Hinman

priorities so understands, Okay. the for And terms of in That's cash everyone allocation. just helpful. free flow

can the just to but some top cash priorities walk for you extent, three I it free us think you answered flow? through

Paul Fehlman

keep Well, CapEx, I'll course, to our people a supplier safe. going we're our general to safe. to We're customers keep going you We're going our safe. outline. of give keep

CapEx. So goes our year as to an but flow a eye be tighter we'll going on And on, in CapEx. cash do keep the we'll we'll monthly on basis on what's continue safety with

and to liquidity cash to to In I dividends, Tom now of out, you to repos the lay we payable in see you'll announced to of we be belief shareholders. we answered terms take said and care marshal that dividend. on our near Share of earlier. that going as after continue our that. our acquisitions, That's just suspended for important will are it's our and We believe continue end demonstrate as the May.

Thomas Ferguson

revisit be to then get And The fall the will half cash and Yes. the second this start our is how the we as indicators key we'll deployment. for for us looking. time summer

Operator

Our from John Please ahead. of next Sidoti Company. go Franzreb & question comes

John Franzreb

you that how better Yes. in get last oil want just Can gas of exposure finished through for a the walk year? to how much segments. us sense you maybe two have I and

Thomas Ferguson

sub-XX% said, maybe. historically. segment Well, It's And patch. of and minimis. this a down patch-related obviously businesses galvanizing a bit big in But have oil oil that I to where coating not the just facilities. a few or from the reasonably total big profitable, even not de some – powder for it's a We're somewhat X% that's we still and us. the here we're X% Energy little Coatings Metal factor It's that exposed Texas, the at in quite their point. are revenues side, as to in exposed think two we've In but not

John Franzreb

right. segments. up up Why revenues just gross essentially thinking was roughly case? margin in XX% and All And reported Okay. was numbers, that were XX% to the the also, flat. really But back both the

Paul Fehlman

actually little were to adjusted Gross an basis. bit margins a when get than up you

John Franzreb

Adjusted?

Paul Fehlman

part charges took – non-cash was are small of of there out that those part But it. and we yes. a it Well,

Thomas Ferguson

Yes.

impairment Some of gross non-cash the side on hit the nuclear margin.

the So margin we had line. non-cash were these – gross above some some of write-offs

John Franzreb

just Okay. that of I pricing, with I wondering that better kind something was was Especially wouldn't right. I on I leverage. but get you all thought of was there. comments your if margin gross else I missing out, kind surprised pulled

Thomas Ferguson

improved. the side, gross the On are Galvanizing margins

were the because were experience they discussed, Surface impacted Technology They got – On side, we COVID-XX already lower even came widely too into January. to they been though pull that customers already as we seeing had started volume, not back.

lost they couple the during of a year. in absorption of months So some of last their fiscal little the

yes, Galvanizing and but So the year. was strong throughout strong continued

Paul Fehlman

Chinese bit little of there bit there of the was – have a stuff a through. been Yes, coming might too mix with little

Thomas Ferguson

side. On the Energy

Paul Fehlman

Yes.

John Franzreb

And more that Okay. going you I exactly? color, within about you're talk What realigning firm, missed provide just you some when can to it. realignment are maybe the you do

Thomas Ferguson

doing we're right just what quarter. the first Well, now is

on. turnarounds have about don't going you So that many think we

the So realignment has some side industrial actions. taken

few more quite And what permanent we are would furloughs. in force. just some reductions call But are a

where until money the CARES So they're runs August out. being X, Act furloughed

money. to an a folks opportunity themselves, care of take giving $XXX unemployment, So the collect week CARES collect go Act

first the of not more. Pretty if So itself low-cost to that's pays half happened. Relatively much the year, for us. in

of because like permanent Some year the will, the be we for benefit on more as a I riffs. that continue will to said, goes

about and total Chief things are what that off time the more things now looking dig just we specificity. impact needed spending with is of at of realignment books that to and and these be we've and and frame we we'll obviously, team then got closed, Officer and talk can, actions closing books, the of than, Accounting I into all doing would the this we're more that try And of better we looking we'll can if get the at. his our One and it

it, things doing In half Almost a shuttered for fact pays a has a full-year. the right and did maintain payback we safe, the of patch-related the benefit in the the first of two it ship year, within we're for keep quarters, out itself definitely Skeleton it has to site. everything inventory. oil during so businesses, now first crew

Technologies and its anything all than Texas. Surface in closed sites it closed not have one We of integrated site that the other other in the where we operations into North we have

– XXX week-to-week. capacity still And better as continue as business And folks but real to demand furloughed flexing terms broad of a have we they talking will units. sight scope that we to because have XXX, one or to see demand way, of are we under actions this and people. day-to-day, adjust their each including at capacity great riffed in We've in I'm line just going our Galvanizing the up down

So actions we're talking those kind are of the about.

John Franzreb

impacted going the And maybe your other It's reopening. Okay. China world? Pacific any in have into about the And has the whole Asia How first of regarding side are and you revenue? what that region. that operations that thoughts the quarter,

Paul Fehlman

early slowed Yes. know We late quarter some I reasons things February, had why in we were March. our had China in of, why December business. fourth for became bus which there in up think, that up didn't in slowed Clearly, in underlying aware it or

of business energized kind So of things nice they're had back lines couple the and like of as on makes usual. which that. to one projects, for We a videos

people. in normal, our back our and much offices service almost everybody work China Pretty to

then ship early normal first continue to in bit We that the normal China work, as well But and have So One, we the backlog things. lost we'll now two quarter. now are the pretty it's in of doing to what do. as back continuing and And going to a doing technicians so the installation much we traction as quarter. which and forward. little service it's is in

John Franzreb

Great. Thanks for color. appreciate the that. I

Operator

And Instructions] Bill Baldwin Anthony go Securities. [Operator from Baldwin question Please of come our ahead. next will

William Baldwin

morning you, and good Thank and Tom Paul.

Paul Fehlman

Bill. Hey

William Baldwin

of a business? you pickup need kind that the Things drivers are drivers Could bus indicate medium important voltage the What of that are business? you your to business? what see to in see to

Thomas Ferguson

Yes.

they're different I at think animals. power gen because you're looking things of that kind different in projects two high-voltage, The space. two

Or need old replacing either activity. replacing new expansion old lines some bus you technology. So or high-voltage project or

to tends solution, up be to It's an – that for tends expensive us, that be in side. the So the Northeast. high-voltage

over hydro to Canada China, be Northeast. in it's projects, up And in so on tends those in big So and the it vertical applications.

In the medium-voltage, need substations. we

we've We repair plant existing or can why and also go need revamps lines either service lines. which out upgrade work or new existing replace power pivoted because we the construction, to and some is

honest, that's see real attractive that to much going be we So to don't make year. this

taken take half see the We capacity. for about we of some So sight that's year. half this have now, line there just that's our out force first the some in it. reductions we these sadly, during – and don't times, during – to to of had furloughs align and the really much Right first

William Baldwin

the I Tom, it and/or do you venture in in you you was a one-time that bus think, running, based had Middle believe East. operation talking the around and have East? up business medium-voltage I over I Europe at know about bus a Middle joint the were business. getting

Thomas Ferguson

bus in Saudi is. Arabia. It's It high-voltage mostly

a We facility venture under have construction. There's a joint there.

emergencies. medium-voltage orders have when We had they have there, bus particularly

Middle efforts have is our can that Arabia, construction of We going venture it'll still still service the on facility within and on, just up some we ongoing we have Saudi service but some East that activity. And finishing region. service than will the focus joint so the the region. that So more

don't have right, things And in much to look Kingdom been it Saudi moving the quiet. do things because Bill. that as relatively so we you're But and been things in about that And permitted We terms Arabia of of forward slow getting out. talk finished normalize. absolutely it's

William Baldwin

over that raised. with program, a industrialization it they all they right. that's Well, on money I major mean got sounds there like, going

intermediate will business manner, So perhaps long-term. positive in your term, impact a that

Thomas Ferguson

No.

Bill. good a because that not on as much That's background. You're inactive, about been one. it's it's talk We been it's, just probably don't it, the it in

William Baldwin

Europe manufacture that U.S.? do there medium-voltage Is you that the have Or is bus? products? over facilities exported Now out of those

Thomas Ferguson

don't anything euro the value from We given it's We pretty have That's in and to No. inactive the of here. been export shipping costs. now, the dollar the right – Europe. just

all they're those right And to of are course, that's of COVID lockdowns. So slow. now, most down been – shut really countries due

William Baldwin

they running serve market? at term, get facilities Europe does up you it sense markets to looking as those have and Well, to in to somewhere intermediate make for that manufacturing again, longer

Thomas Ferguson

Poland. we've and got the in industrial Well, facilities the Netherlands

okay, take in infrastructure, to speak, where at around look time boots we our that. So strategies, we have already Every look we we ground, so always to at on we prefer look got at, a those. and build the

review strategic item our that this a discussing. fall to it's line that up end get we as So we always process

is So we'll how have there. over stacking at our marketing look market folks the a take up

William Baldwin

Okay. your Thanks time for

Thomas Ferguson

All right, Bill.

Operator

our turn I This any concludes session. remarks. over like Ferguson for the conference Tom question-and-answer to closing would back to

Thomas Ferguson

a folks. actually Thank on of out would close. nice nice of you report to thank time accounting all have field clean to you, our a and and give I corporate It's for all shout just us. joining and to like appreciation

our in to, reporting need quickly So environment I quarters the changing in because we quarters, focus we'll between to we pandemic. on because are COVID-XX them. just as If And continue thank communicating can. we much as of

times for So forward sooner, crazy Thank joining end not I to to all of you, the or closing. first our at talking least you. us after look thank if quarter you and May during at these

Operator

now and The conference may has you now you concluded. for disconnect. Thank presentation, attending today's

AZZ (AZZ) 29 Apr 202020 Q4 Earnings call transcript