AZZ - Earnings call transcript Q1 2021

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Operator

Good day and welcome to the AZZ Inc.

First Quarter of Fiscal Year 2021 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Joe Dorame. Please go ahead.

Joe Dorame

Sarah. Thanks thank of us AZZ and the to for results financial Inc. you morning today joining review Good for the first May XXst, quarter of fiscal year XXXX. XXXX ended

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

XXXX. Before growth and availability management rates; markets opportunities; we Commission, electrical forward-looking remarks, gas, not markets; forward-looking historical economic markets, changes of zinc AZZ I'd that and management of some which stability including Securities remind coatings adequate in by of Reform meaning filed transmission in products and shipments; raw metal but and exchange Company's various to XX, by acquisition conference Except conditions during statements AZZ strategies. the and industrial natural implement this to risks limited made the like dip year financing to XXXX. fact, domestic; markets, on and the ended of Private the customer and which are hot in February fiscal within of statements statements include, offered are the generation Exchange to, distribution by delays are galvanizing and changes and material the may for process; risks political the Company, begin by that with to and experienced the the the services and team customer-requested time demand contain response from time the Form AZZ XX-K constitute and prepared everyone power employees including of serves, documents markets foreign including prices Litigation of certain Those statements call uncertainties, call the this currency demand with for uncertainties annual conference used of in report Securities costs, the the involve detailed and Act

date In AZZ's pandemic. can are of assurance give to statements statements the will the to Company impacted obligation of as future operations Chief by that Ferguson, customers hereof, could Executive addition, update turn information, forward-looking and be COVID-XX Tom Tom? correct. assumes a to and no potentially With let The whether such adversely the information otherwise. AZZ. result Officer of or statements, any over no ongoing based be forward-looking as that, me new its AZZ prove events call on These

Thomas Ferguson

quarter morning. this our Thank Thanks Joe. you fiscal to Welcome for earnings first call. joining XXXX us

us event me for and of QX largest first start that our COVID-XX much front all Let was is single center results. affecting the very by still saying and

Our at while and during health ensuring customers top priorities AZZ these safety, employee times. supporting continue unprecedented be to our

crisis this each As proud through did an our our our to way am all took facilities extremely and customers allowed quarter other manufacturing care remain open first and pandemic. the our during folks of essential so. and during were of of company, this infrastructure I managed

worldwide. to everyone's truly operation us all for We that continue our of allowed safe grateful of are plants efforts

guidance both April to decision metal our performance entered each $XX we when the energy the earnings revenue pass quarter and perhaps Refiners spring imagined. to XX.X% both strong segment's on uncertainty go and the slightly for beginning prior year, challenging sales For back first orders associated the fiscal maintenance our on overall $XXX X.X% season, restricted customers season. the same adjusted International - travel versus turnaround took totalling up us, Normally, was the fiscal we spending. refining quarter was or for declining contracted and COVID delayed in March spend U.S. great and strong being behind we particular record business was with we I coatings in more out businesses spring the our bus will $XXX pointed and announced first quarter reach with as CapEx coatings XXXX, of implemented in slashed revenue details production, fiscal segments, XXXX spending creating shores turnaround China high-voltage and had By demand social made as along. metal enthusiasm the we million We distancing and QX and total quarter as ended shutdown cited disruption pandemic In just with even get revenues essentially here to and than capital a a weaker to uncertainty suspend as in XXXX, XX.X% energy. million. significantly million guidelines. into capital declining the

$X.X a in per million or coatings X.X% call net $X.XX income in to result, normally declined wouldn't I diluted a As reduction our while metal revenue our share. business slid at spot. the XX% bright quarter,

we market, quarter than with to $XXX year compared a this for the I'd the as ago. of backdrop many performed $XXX probably same the better However quarter million expected. much say challenging Sales million totalled for

above-average outstanding benefit zinc Our from was in customer galvanizing outstanding and service. offering quality team, pricing by costs, maintaining particular industry lower to able while

basis XXX XX%, metal primarily our actually due our While above technologies conditions operational declined coatings remain margins business XX.X%, to volume margin improvement the driving plants surface meaningful finished reopened. shut-down close surface as as efficiencies also seeing decline segment finished margins from technologies pretty improving to We committed in points galvanizing temporary in and to post lost for are The year. COVID-XX crisis loss had was last our the market have some and customers due where to plan within now in overall to overall to strategic they growth most a customers.

quarter million of operating compared million a revenue an $XX.X fiscal million, energy segment Our as same first loss ago. 'XX $X quarter to $XX XX.X% year the in to in decreased resulting positive

resulting decline of restrictions the in season previously, a was turnaround result demand international business mentioned for work service shipments from delays COVID-related I of revenue in overall products. spring lack and a refining electrical As weaker both and and

our Industrial open during were that While cases, we shops our and to disruption. uncertainty actually our prolonged and deployed of sales on lockdown provide associated were home some this disruption from $XXX guidance crews with depth went million few to very already earnings normally crews this of additional had In range crews suspended COVID-XX to the cannot the projects many on time fiscal our of spring duration $X.XX at time. $X.XXX Due recent guidance to caused Neither $X.XX the countries to get be 'XX the accurately markets, and platform estimated had which pandemic previously end season. busy of this and update expense international at after billion. been we can an deployed, nor range working,

spending plans, plans adjusted and have capital the taken in have actions We operating headcount other mitigating to and crisis. response

debt beyond. our combined will to to as our this get level manage us work liquidity We fiscal consistent be we financial of gives Our cash, to our 'XX that fiscal can the ability outlook to to hope generate we both In possible. much half back context year re-establish interim, the and to confidence year. we the with provide low as and satisfactorily throughout as guidance debt able

and remain many normally a than electrical for have yet. regard, summer that slow shipments is industrial the to for season in slower our not normal normal customers So returned operations platform as

operate metal some Our normal a in. of level, states the operating at are restrictions coatings we business in is fairly although there

remain additional experiencing also expense our employees are We work and as clean keep to our and healthy facilities productive. safe so we

that improving infrastructure. We businesses and confident are vital remain our to sustaining

So, to sustainable stronger future. better profitability global to With long into to said, turn provide over pandemic equipped we our to will of core time use businesses that I'll and this Phil. it emerge position the

Philip Schlom

fiscal employees also for operational like remained peak to as quarter the of period in provide pandemic. liquidity, on discussing the balance this results Tom. COVID-XX we'll supporting an we financial a the by I'll then throughout strong sheet Thanks year fully start and by of quarter first begin environment. initial business maintaining importance I'd update and XXXX our first of our given the thanking

quarter. million COVID-XX fiscal year we decrease prior of the We attributable of the million. $XXX.X the year first million than believe the margin the $XXX.X was was below below prior QX XX.X% to earnings fiscal or revenues basis quarter of of XX.X% fiscal strong quarter For XX.X%, quarter. first XXXX, $X.XX the or the points first revenues $X.XX quarter. it reported in achieved than share quarter lower diluted than first had the $X.XX of was XXX $XX.X XXXX on quarter fiscal or was million for XX.X% of our lower a income Net impact suppliers. our first in million, lower XX.X% prior-year $XX.X multifaceted of year XXXX. prior QX that gross our a business, comparable operating first $X.X income customers $XX.X of XXXX the XXXX year's million first and was of per decrease Reported

quarter margin expense first the $X tax lower the the Our was in earnings, of than for prior million operating was pre-tax $X.X the comparable in year prior first quarter million X.X%, recognized On first quarter. points the of than XXX the XX.X% million income basis reduced year. $X.X lower

credits, metal establishment solutions, lower comprised recorded surface were XXX year quarter. operating XXXX in first million, last associated research for margins XX.X% results the $X.X this our tax rate basis and points to our primarily for the revenues the the foreign will effective in quarter as to the able and $XXX increase purposes development than well in income and tax benefit tax $XXX.X as within year. same quarter. of recognize reported million operating losses However, coatings now for million XX.X% in businesses, increased of Segment down The as Metal $XX.X related metal XX.X%, year year. energy the not million generated was last to to $X.X the revenues jurisdiction in coatings quarter in reserves our quarter our to time. of rate I million is compared segments. compared million U.S. were effective achieved prior $XX.X we In below tax XX.X% we our first operating incurring galvanizing XX.X% were coatings in the operations which quarter of tax turn or segment which prior at positions first Galvabar first uncertain segment, for to the of with technologies

the reduction lower due solutions While open XX.X% closures or remaining impact significantly due was revenues to technologies productivity offsetting zinc XX%, costs the affected of the which or segment exceeded business. pandemic the were higher the by galvanizing in in kettles higher prior of lower gross the surface galvanizing our during generated and In $XXX of quarter. to is compared lower temporary overall Partially through in segment more operating when slowdowns costs the the pandemic. margins significant was $XX.X year million in a in to million flowing business, these XX.X% reported solutions energy favourable costs, first our the margins

Tom solutions and significantly group electrical As mentioned had incoming our travel. was restricted and platform international to adapted by lower as domestic down customers energy impacted and the backlogs, several work shut customers impacted a pandemic. countries in bookings The operations industrial while was

the below incurred As our This segment mostly and first operating will segment. of XX.X% $X of cyclical compared energy COVID-related to negative in of different. X.X% $XX.X year margins into compared in was the to a typically a quarter. Gross negative year and million I with attributable operating income this a of quarter within in cash each million gross first industrial were margin June $XX was result same prior quarter million, operating of now last no first flows turn year quarter. turnarounds platform. for as The million quarter prior quarter Energy typically loss compared was the profit with Segment the our the prior with unprecedented in in disruption the strong year year carries sheet the to peaks third Company first was our of loss the XX.X% first conditions, result then of the balance liquidity market the quarter. segment quarter. experiences $XX.X is an discussion. that during a again in solutions first the year X.X% This spring business and the

cash operating net use million first with quarter ongoing million from compared used was million quarter of Capital in with the cash period. first of Company prior year. $X.X last the compared The $XX.X current in capital the However, of spending continues cash the safety $XX.X fund maintenance-related spend. use to million, in a our growth $XX.X and during $X.X improved of quarter in activities million initiatives,

we remain elected however, to borrowings; in our we temporarily our did are payments quarter, purchases to in share our repay which we generate of at end prior we shares the at continue and pay we customer to end the surrounding shareholders position of XX% quarter, the as in dividends debt we first first year to lower net quarter share the the $XX million intend credit Our diligent evaluate million, the accumulate quarter our the or million suspend cash repurchase than was light $XXX down under $XXX have our liquidity revolver following In strong we cash while quarter not all repurchase balance to sheet; on and cash on assessed to again not revolver; utilizing program; draw to we did inclusive, on now we we two, not flows position current of collections. place from operations. continue COVID-XX, we did the and actions: our taken

well As traditional without cash debt position We closing all boundaries first turn quarter we to within his to sheet. it for reduce Tom? evaluate to the a diligence, have our I'll comments. our through continue our on balance uncertainties significant strong and structure. deterioration negative back sheet of our capital balance now COVID-XX covenants and our been and able within result in our Tom remain to navigate any existing

Thomas Ferguson

Thanks Philip.

some earnings with did I I are to you that as particular our key attention call, share Just to. previous on indicators we paying want

and metal Within Zinc tracking our in construction we remained business, seeing segment, but fabrication costs kettles and coatings are some QX, For activity. galvanizing cost activity in drop. the remain fabrication carefully of zinc solid steel steel we the low reports shortages. to continues our of are

are production customers we back fiscal technologies, new surface to levels getting by end of For primarily on and focused normal QX both with the 'XX. existing

fall to international Within energy industrial in the season fill beginning in, are seeing particularly segment's platform, turnaround we markets. the

restrictions domestically. refining in We and have in capacities large still COVID the seasonally monitoring in are we Currently, situation the countries. normal carefully travel states months are the some with summer slow

and the tracking increase group we back carefully for quarter of proposal to which year. provide our in activity units in should beyond, half For business expect the are of electrical bookings the second backlog and sufficient many the

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

Oracle, customer margins, payments. We tightened our tend cash our metal technologies. growth a on Post strategy indicators fully around coatings surface we We allow allows incubated which to to they now were development to They penetration, galvanizing leverage technologies to outstanding be to XX%. easy. consistently from generate initially the galvanizing be efficiencies could increase XX% sales not we management processes if slowdown have and and customer while achieving should Finally separate from the on are growing galvanizing credit. would operational be the We are have facilities have. XX%, operating any cash for above bear good the surface COVID-XX team. integration galvanizing corporate, resources that flow the without very technologies seeing to to operating oversight to to further somewhat new distracting surface ensure remain crisis, and fairly operating now Currently, galvanizing with resources integration including and believe end, able will not believe XX% brought the we seasoned in run the the business plants contribution drive high committed full

businesses COVID taking modest them disruption will are that and core the demand a are and we For operations seek on due our business our to future strategic to experiencing with align energy, of we rightsize to energy Most level crisis are post-crisis. to to our opportunity not things continue of focus expected and interest. relatively the core divest units

downside models cash very severe the sustainable of and diversity we reasonable galvanizing anywhere, of have throughout and numerous run level and a base do not We level maintain not currently even see and scenarios a providing downside around are year. whereby our our customer of income do The scale operations flow. liquidity of

electrical to have customers Our fairly work are part with, some deliveries to good for but most the extent. backlogs delaying businesses

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

active of in our will area the in remain We that with M&A particularly support activities growth initiatives, metal strategic coatings.

an that to pandemic-related open opportunities travel we pursue. and active conditions QX, portfolio have deal improving see While was With restricted up we'll it for questions. of in do

Operator

Company. Instructions] with [Operator come Franzreb go from will Please Our John & question ahead. Sidoti first

John Franzreb

into there segment. being and jobs quarter deferred you were start jobs happening? I'd update that out right be quarter energy Also your also keep I that are of indicated in third. the second QX jobs energy from being an enough you cost you black? actually us if was give expectation like can still Last QX, to to those to on And revenues that went taken wonder the so, to they kind is that have sequentially? those business that flattish will with into were deferred the if pushed with

Thomas Ferguson

Yes, continued end activity there And only places able in India, projects industrial be deploy to travel - did you now, of hope things would There's couple we of really like summer, the we because up. few areas. of to John. we're have restrictions they got open a the that haven't that hoping to. going the One, a on side, there, active lot by there's some right a of on

to fill to watching decide carefully in, cases Domestically, end Its the the for QX, has pushing is of COVID what season see do the in of refineries fall. we for mentioned, kind the to pushed particularity QX I as rise for and starting right. with the are So, it it to fall internationally.

good any don't of which way going front. indication international to real have that's on domestically, but go good news So we the

deliveries, side, - On inspectors. deploying final that. - They orders customers aren't they've the had aren't customers electrical in accepting terms of like deliveries, aren't decisions things on final pushed because making

So that push. to continues

for but haven't but we little lower prior a I have, - probably think energy than QX, So side. maybe knows, we'll year a should sequentially on looking have energy while energy I the still at we're versus to do Philip year prior their - of than and better of And quite I still think but we're little action, surface XX% which to We've kind we for wait technology, cost on furloughs, the to large in taken customers starting mostly realigning bit some things. a side on headcount XX% is plants, fees, happen. reopen I

the we So, starting of areas. end backlogs getting side, would normalized And coatings improve, side, That's we particularly look don't we up good production to things the some in we're ramp technologies think the feel the the customers surface the they're key we continue their that. so committed fairly indication do to that see quarter, are will back on by fairly cost to be I metal at if again. from

John Franzreb

is you said Can what's mentioned the I normal provide just or driving coatings that? at, operating you on levels, metal to you normal in close what's good And coatings? think some metal color

Thomas Ferguson

the on and think diversity of customers side, deal we with. customer X,XXX that base, it's over that galvanizing I locations

steady areas are noted. that with normal pretty really, are got a access fabricators steel really and of supply. is biggest season. now right projects, access, busy kind continuing I good are it's areas on The Their here's to news. So, the that and active. And concern slow We've other

seen position then solar side, a transmission activity good pole there. are good and activity projects market. got we've seen those That's we've the really the continuing, we've really, - And there. in On good

of real bag. I and things as little saying, sets - business, But pretty going so rails, they're a they get good fallen kind it's we is long a a are off as stadium continue. that the feel can mean, their walkway and where mixed our part projects and overall, to are So, customers thing, steel, we decent that and don't off but construction of that

continue. going to is Solar

is So continuing. highway, parts bridge, most the at least south, in of

to Midwest, that's and of mostly but down through concentration somewhat in over is and of Arizona East, sort - So in then into Nevada plants the the Southeast Upper and galvanizing the the Rockies, Texas. Midwest, out our to

Texas, most crews projects, cases, So, we're they're repairing seeing, activity there's rise on just continuing positioned cities in of tremendous on road the most still cars see pretty a and not like on states where with here stuff well out lot there. states, those tons even of still while are - and of COVID And you a in road. the though the

fairly we're why you'd that's normal, - things call those guess, I So, it.

John Franzreb

last it and potential down York have on there there follow-up on what's or to with based sense is discussion of business don't good to Is this? in New likely your that on seems Tom. going the COVID that thoughts Or a rise in City. I'm disruptions? customers Just I thought, or through like going cases. it push are you any more

Thomas Ferguson

Yes.

be concern. I seeing the aren't think we're demand refineries for on our we Construction months, really turnaround, The one through. then pull moving and you only normally everywhere. crews summer that's going push forward. see would we're if do if, the gasoline they if they their seeing to focused, are on, busy of that going vacations it, businesses are driving rest concern see in what's The is grow,

the we're pretty located in. we feel we states about are that So good in

for geographic to [indiscernible]. of us peculiar kind So that it's us, positioning but feel our it's galvanizing maybe makes

Operator

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

Noelle Dilts

had few So on a of questions I coatings. metal on more focused - just kind

You noted the had that - noted in strong you was quarter. pricing pretty the

if could point? if trying you of like review just curious businesses to And for versus at sort size of the two to then differing of given way secondly, volume I kind looks sense there's of any galvanizing get margin a that those So of us the profile out this trended. was how versus surface Just parse what how of kind technologies, price?

Thomas Ferguson

a of pretty zinc our a partly look you adapted and slightly price areas. few in that's and we've think little I low level and off was Yes, just so volumes, at costs that bit good were they just continued given when the

LME. tied that We have the are agreements to pricing some

some So, price reduction. that's we had where

wasn't talking I that just points, XX or much. it XX think basis are We

So where off the beginning we of just most got off held of sites those feel sites in technologies. there already of parts like business. frames even the fairly a aircraft did surface and we our like in But off. things we were components that we coat, that, have and slightly, kind had that at That's things off. where bed trailer just very nicely powder we Volumes because mostly was volume significant prices reduction own, that's the to in last was business powder that some year, majority acquired we interior be careful volume coat, and that's truck of of that I the that's where the but things

on back that trailer off was plating anyway. obviously see the the aircraft they coating those and that levels and was powder already the it So now. same And not production, customers lower side. truck stuff pre-COVID, at parts gone as We were into with have up kind and like back of more picking for demand interior

that pretty that's normal - on we've surface technologies. technologies. of coatings and everywhere so of a but piece It metal the represents then it's And where galvanizing is just bigger been volume to demand still is surface X% overall off, business, X% else on

Noelle Dilts

Okay.

Thomas Ferguson

Does that help?

Noelle Dilts

heading coming into volume the through, Can then you lower in given, better margin of to back a on Margins kind that a metal second than zinc in how quarter, the - bit thinking just that sticking little bit. coming coming expecting. coatings were kind of profile. And again, It speak came you're with just did. in the you about little

curious about heading of you're the how quarter? second Just that kind into thinking

Thomas Ferguson

what That's touchless of system, DGS, our a using most got great question galvanizing but to big plants. don't I'm heads we've pleased the so in of done. team's want that with kind because to I receiving digital get

we delivery don't suppliers. contact So face-to-face with drivers and to have be people and

as It's cases possible productivity beneficial. made interaction - I trying scrambling that's us zinc because more very has some it's to have you to whereas of to and interesting better as we've quality sign anybody - application helped they're a we is don't also, operate teams. safer, maintain efficient, which were that on. made going few though we in very So months access had COVID through reasons. our more an very importantly, much of hire attribute all for which distance had them it's made focus It's But us quite And the which kettles, to our us, that ago interesting. could even frankly. it's It as their safely labor, record

our tanks is labor and quality quicker the and things that. has DGS So The that kettles labor composition is react allows improving. us our given to that the inside to of set chemical then information and us like improving acid

us So I sustain on be helping think DGS maintaining you which will know, do. our providing - service, focus we can is these It's by margins. price outstanding

in to face a drive keeps customers, of I are doing efficiencies quarter, sales they job, hope kettles cannot years be about able through as face rebuilt it. even feel place second and would with we that Our a force get but we we they contact those our good so in cost down as well. put coming may little the a better even management team the is get and to in zinc couple I of ago bit constant under great that as productivities this

Noelle Dilts

Two last questions.

just few a most focus potential been with us bill? exposure back years remind about it's infrastructure First, you we've seems feel it you since Could elections. of where be the have a been you the infrastructure kind to to talking stimulus, in

Thomas Ferguson

Upper lot out Minnesota, in think Indiana, lot of need when some bridges work. I those bridge Illinois, almost got ancient in They're are Texas, just highways, there the like look we Midwest, so you a bridge but throughout up and opportunities, getting in areas. we've where good Wisconsin, of plants states here our and operate, at the Yes highway. But in attention, a

tremendous would on a water that highway in kind activity of not airports - an of not then might And there, sure to not use bridge, any be system play. a from great because roads, galvanized - somewhat. build they tend So lot but where help stuff, that focuses but the that infrastructure of sure lot steel,

distribution, that work, of to go - So lot remote I'm the the and say, of our particularly because that still is work data so grid side other areas our lot helps transmission out - is a of centre thinking needs electrical as some into is poles a - getting Wi-Fi and well. that in that well, let's get activity. And you these all that place good also

Wi-Fi that's we'd looking bridge, network. So highway, building grid out for Internet in of T&D, the be in and that of terms where it, terms

Operator

[Operator ahead. Instructions] & go Our Please next DeForest Hinman Walthausen question will come Company. with from

DeForest Hinman

needs talked a turnaround is a little little them terms those in means? become do the just maintained of up, Can of that be critical a amount the done the Did being equipment turnaround fact, revenue? getting concern You of terms necessity still in color is being is in to and probability in can done, scheduled give of a on still and the of that work? high Or place of crews is, quotes the booked thing everyone. a the so I terms and internationally. up bit distancing that a done in in refiners the get a is like able know more ground social to activity, be what becoming or going if work bit it certain projects COVID protective of you about it's some air crews

Thomas Ferguson

on, vessels, where safety service that's companies, big certain them. One, have comes I huge in so a investments a our point. technology way. play do They where couple hazards and oil our These they a for to are drums, think are there. can and going also become into we maintain at reactor things of the - really, value-add they coker Yes, things is work critical refiners

So pushing their of frankly, to a while - them. they're been lot these a definitely on the And is of them and going question maintain had quite components turnarounds some already. for

I need not one the fall it's to So the a going them why - Demand, thought think school and I other. it's in production. low cases, of says, that one well, most so they pull to or going pull spring? wait There's down? only don't in to in are think we're going a down them matter or the they till they are It's situation, of the

pull after to maintain So down, eight they're them, years that. for them good three

do margin and the like, not cost? of why So if are the wait not two those the hand, On schools it's maintenance it? well, thought. but why anyways, you're constrained So other save

question is areas, particular in I think sites, we work have not Asia, only whether their where of allow these India, they conditions. of a one of of Internationally, have it's populated making company's a our It's travel. decisions they're on in is lot they around just - those work, in Southeast up where over camps. difficulty oil some in instance, probably every do for concern down set highly Canada, the to the

so camps, Hut. about obviously, number with Quonset the And work you social in effect a concerned and the of people get distancing

we tough. a good you we're We're We're work goes activity. seeing I of but that's at. on just usually thought, wish where kind that quoting So We're would it's it. seeing preclude of lots - color could good on, give more upfront just that the

you. July do give usually color these start they prev weeks as of as lot if and doing - of or much - things, by end when takes - the the two to we'll engineering they're to work August, the work should four We're the know go all to equipment about know get and of middle us can getting to that. to ready these jobs I a we I fall, in the going think that's

- next that anticipate we four So, the idea weeks stacking to up. how or better we're falls within going so, have of a over much

DeForest Hinman

firm you that confidence go? give ability does more And that does up to the some if to extent, with

Thomas Ferguson

of the monitoring feel we of have where really resources a this already deployed. We that's - to fall piece, the about get Absolutely. assets fall. the and domestic We're the piece international lot - just for fairly because good

Philip Schlom

there, just add workshare our think furloughs Tom, Tom something I on too. - to and spoke about risks. program,

So, the some and we during on come COVID, those put to of had as some quoting a had we employees taken sidelines back personnel actions the - people up. activities pulled

DeForest Hinman

but And so clear. question, answered this I think you just we're

the margins falling, sounds that side, it to really better the not towards activity's sequentially they're thinking are but some second the zinc running, piece, On in and Surface technology the now like the good first the quarter, should ramping quarter? running coating going be costs margins. be facilities we of end the zinc metal even of up in higher was

Thomas Ferguson

because call are easily we even one can costs lot to labor, move on can got moving And we the take tough our direct That's still though there. us. you of a pretty a pieces. fixed can out, Volume adjust

lot pressure. pretty help survive. of. stay take we just if good there of - productivity great into with probably down, zinc makes a we It's want So, It pretty sequentially continuing make but that improve, got running flattish, probably to out I'd them - sure we've customers to feel we some costs continuing to price care go

a So we'll I'd little pressure anticipate drive productivity. but to forward, going price more continue

Operator

Our & ahead. next follow-up is John question Sidoti Company. with go a Please Franzreb from

John Franzreb

little the Can Just a the bit firstly, expect should into what you of talk in current year? we quarter about the on tax rate. balance the

Philip Schlom

of you Yes, we whole be rate tax but credits. in research to look year, international pretty and rates. tax significant international, the the our federal my took state XX% should remarks that you the it, call in current we X% saw quarter, was reserves and When close for the - statutory the because development rates, at

in somewhere point. range estimate our is So best this at that XX%

John Franzreb

are we what when a balance spending talk your some as about the balance the think of bit about for capital and you little year, far can the continuing the sheet, discussion? sheet revolver, balance the thoughts just as more dividend And

Philip Schlom

projects we've spending, me we backwards. growth large let several initiative take that that capital funding. have Yes, been On

year have pay at continue in So, When this revolver, we our we're the we spending. capital as you on the down be as capital same going low neighborhood far maybe to look in to our slightly as been, higher mid-XXs debt. to

we LIBOR in have on sit and coming year, floating of We senior notes our right due January now. next

are X.X% somewhere our credit borrowing variables facility. look we mix But X.X% rate in looking we're So on forward. revolving the to and at fixed as we between that

So our right evaluating structure capital now. we're

Thomas Ferguson

January that And that bonds with replace piece. due fixed the likely in come a it's we'll

So --

John Franzreb

do that's secure? Okay. And the feel you dividend,

Thomas Ferguson

we dividend. Yes, the paying like

some funding buying we by employee it, go Then our in a at and stock continue down us. own are to on dilution dividend going of through our can programs. kind based some we're infrastructure you very If pay to we Paying to stock important improve debt, offsetting reducing to look is competitiveness. our

kind that's priorities. our of So,

Operator

Our Please Stifel. next Dilts Noelle ahead. with a question is follow-up from go

Noelle Dilts

Just a housekeeping question.

you're of year how remainder I First, the thinking the as rate? curious CapEx well for about as tax was the

Thomas Ferguson

Yes. into and normal committed invest The invested to capital we're year. about in going to on $XX and in run $XX of $XX things maintenance CapEx, or we'd about kind capital to safety of million the coming mid-XX-ish growth that million million with

So galvanizing investments. which hit. those those when I already We is underway feel hot-dip were mean, sinter plant great great still work COVID good - It's a Houston, about just in resources we to then for news our facility good us. expand our have move which it, Poland doing while to we're over technology our upgrade to And house is in to it. and or

two underway that we're were already couple capacity And were a opportunities projects capacity of plants right the those growth that than coming So have into then now. expanding more kettle got year. in they've

So, that's tax the sits then on Philip, kind how and that of rate?

Philip Schlom

your going estimate but the to just XX%. Yes, it at we're full I on I explain to the I'll to we're XX% similar John, looking to recent think at guess tax rate, year -

over of year our we quarter, rest the year, impact tax this the will the this of through the year. - course out had go we items from balance As the

Thomas Ferguson

one That's up. right. catch to be quarter should adjustment It

Noelle Dilts

Great, thank you.

that. to Sorry miss

Thomas Ferguson

All right. No problem.

Operator

from comes with Sam SER question Asset Management. next Rebotsky Our ahead. Please go

Sam Rebotsky

Tell a it there shareholder so - out currently? your Is from - the - bids are and has reduced bidding there how there much you competition on what lower lot Astec, of since was your prices a is the been on. me the and backlog, seen backlog which of about XX.X%. I've for AZZ going

Thomas Ferguson

the still where on it's of on eventually, are but of team about we're projects perception big not room forward. got backlog. remotely look rebuild - they would these to is Yes, there. seeing working engineering about multimillion-dollar some not because of equipment, a - lot And decision, firms pretty buying good in is One, good What projects, of these a my is electrical couple make some we the projects our to questions a moving they good. just and to these activity is what get close bidding pretty side, which

we on particularly And what's China good. is in backlog - is activity coming low will a margin. down year-over-year are that basis, part and continue ship the to quoting and relatively that's shipping quite which, So not frankly, is stuff of

not normal just share, losing higher-margin on seeing of to pricing our the we're So side, backlog with so of electrical finally aren't that kind We're we We're that placed. work - many. these as close hoping we're not enough jobs hoping actually, orders in some to winning replace book.

pretty is activity we it. the feel but - so about So there, good

Sam Rebotsky

prices Is you're than in to the profitable order you can the that bid So, costs. fair a and matching you're that's not are but not any lower because assumption? bidding other competitors be lower

Thomas Ferguson

these got somewhat business It's fair. units. We've different several

lower of it And relatively demand. price trying effect. has business, because oil was bid the high piece lower so small an but so That's it on margin. a absolutely a our side, patch market to are we relatively the to of

the are costs generally, material On the have remained because price and you - enclosures raw switchgear, stable. side, look are underlying if at electrical levels the pretty holding, partly

out the fill they to and enough our just they their to try to enough demand, well. that because need, bit we're look say, little basis if attractive adjust I'm that. a little will on And do where say I'd are - don't holding make drop win we where a bidding, load. don't fall this will have a prices, fits have units price our are will sure We price our reasonably - project generally, the lower is projects to business If So our us. they capacity, of hedging bid that in to up we they some on get load

different out about this units. battling business we're So a dozen in

being aggregate. But So now. when about right fairly got every on stable, different talking day I going talk we the battles I'm prices dozen about a

demand in their some relationships back take allow ensure customers and projects or that do long-term to fill we into gaps either to had break that with that to to flexibility strong we in want with. we've they So strategic try some

So the where price match in we're levels the we're have to, aggregate, battling to need we to good, to. but with we

Sam Rebotsky

Okay.

period? where I And May in we employees number Is XX? dependent number employees are dependent. the that of contracts? compared you has you - it's not sort have as the XX of to furloughed So the time of that on July, far present COVID or getting from May could it compare all do guess, as today that increased the Now at of and as

Thomas Ferguson

we you to sense I'll XX% compare probably people I'm were I'm actions we taking because QX, give a of the just struggling not were number. - But so during furloughed. and general sure. that

calling people, core have in called them needed and engineers, project our August early, industrial been back as be seasoned quality businesses maintain and side that's because we of where We in, filled we very them. the projects managers, on folks. demand available group need and fill back some So see plants to in those

need we And involved to to fall ensure process them quoting so be in the in. that fills

backlog quarter XX%. would start So that we're hopefully, down we those, to in see we're XXX surface back the and electrical down and including technologies, to - you being hopefully up XXX anticipate about fill of earlier. But in furloughs, called we third with industrial know as to

appreciate So Sam. it,

Operator

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

Thomas Ferguson

for joining morning. you everybody us right, this All thank

color basis more regular forward well we and a call next the more about perhaps more as as on go as strategic now some earnings our will between We of talk attempt provide to activities.

or appreciate day. at release that of press setting call an talk we whether With listening. I the good before hoping will you we end quarter. us if a the the second have that and to I'm your opportunity So, hear from interim up you support Have

Operator

The now presentation. Thank today's attending concluded. conference for has you

You may now disconnect.

AZZ (AZZ) 9 Jul 202021 Q1 Earnings call transcript