AZZ - Earnings call 2 2024

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Operator

Good morning, and welcome to the AZZ Inc.

Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Sandy Martin, Investor Relations. Please go ahead.

Sandra Martin

operator. you, Thank thank AZZ's and quarter joining today us August Good results you for review financial XXXX. Xnd the to XX, morning, for fiscal ended XXXX,

live Executive Tom Joining we today Senior will for prepared for found After Vice webcast Communications call Officer; Ferguson, the Officer; Marketing, Nark, Philip questions. of open there Investor www.azz.com/investor-events. President and the at the which David Schlom, are is call, Please remarks, and can and call President conclusion Financial Chief today's a Chief today's note, Relations. of be

to Before XXXX. everyone pursuant we begin, the Private I would forward-looking of are provisions our like include today made statements Securities harbor that remind will Litigation of discussion Act safe the to that Reform

uncertain may AZZ followed involve detailed the and which Commission, on including by of actual from time the nature, Form outside annual time for report Except of documents Securities statements, the for risks statements our by control. their comments forward-looking to fiscal with Exchange are results, XX-K the are and and uncertainties, year. some containing company's Forward-looking in

them. statements from results guarantees are performance, upon future therefore, could reliance These should placed be differ of undue materially these not expectations. and not Actual

of for will substitute of to GAAP be non-GAAP the financial measures. release. considered today's In refer include measures non-GAAP a earnings addition, a included non-GAAP in We today's to should and nearest to as call discussion financial reconciliations the not press measures, GAAP a measure you supplement

the Tom? now Tom to Ferguson. turn would to over like I call

Thomas Ferguson

your markets. through walk take then that, detailed year And on then give an our fiscal to I end quarter second AZZ's for Dave you Today, overview Thank review of will Philip XXXX, to I and outlook our After you, cover results. and Sandy. thank will morning, provide pass us Good questions. Xnd you quarter full an update our to financials. will it joining performance, our

I execution quarter, am all second that disciplined Before first goals of we want AZZ's our this incredibly of and I discuss appreciative and say of strategies dedication to employees' year.

to Now results. our turning

the last improve discussed the to in I EBITDA did and first what We our the quarter's performance As second both and EBITDA with that sales adjusted we is quarter's happened. record-setting terms performance, quarter. margin Total dollars $XXX mirror of quarter compared quarter, million, Metal to up essentially last results, $XXX.X versus of expected first delivering million X.X% were almost sales another year. Coatings

drive their to by Our service. Metal to offering ability team Coatings continues value and demonstrate great quality consistently

declined down the to Precoat market due and $XXX of quarter for expected, activity, second lower the sales to were million year. volumes As last quarter by versus second X%

to down that able unit team construction the year, has note according XX% been MBNA without over [ chasing lower past to share about me margin volume. overall ] Precoat the Let volume and is the defend

Precoat target on the Focusing nicely in capacity performance. our efficiencies Coatings exceeded available the margin EBITDA flexing we for driving sales quarter, for Metal the Despite resulted has within solid Metals. lower to consolidated volume slightly margins performed operating range and and for EBITDA

per second adjusted the the versus $X.XX grew quarter During second per we last $X.XX share quarter, to share year. earnings of in

of adjusted XX.X% $XX In or of we sales. EBITDA addition, million generated

Metals EBITDA margin Metal our Our second quarter XX.X%, was Coatings and EBITDA Precoat XX.X%. was

within ranges. targeted margins the that through of were end or are impacted our above for We inventory that segments have year pleased worked both to issues achieve last customer to

advance time-sensitive service not real-time This critical visibility or continue at system production, our digital We only system, technology and with to is customer locations also galvanizing our which results. to proprietary customers that issues it our connects engagements provides facilities. the for but timely enhance embedded financial quality DGS,

of flow lines Precoat customer providing a interactions. platforms, to capabilities sustainably to enhance managing coupled the [ our automated improve expand customers. Coatings These business Metals, of their operations customer-facing to differentiated access continuous Metal for proprietary and continues is indiscernible ] ], with and coating application continue paint as technology-driven which project to DGS our We team's inventory. for scheduling them minded real-time leadership our AZZ inventory position and [ operates indiscernible

As a company. discuss structurally as prudently build in and grow more and manage we margin capital continue we few Philip profile cash will moments, a to deployments higher

not we and actively expense committed drive interest a to and consequently that invested value on budgets, As creation, Also, debt for high fiscal focused versus be our remainder continue we reducing of year. value. the projects capital initiatives remain on this return pursuing be headwind continues acquisitions to laser to are shareholder

for growth have changed. expectations and not profitability Our

Coatings will to capital. Based on on market our use We our opportunities. on EBITDA Metal and pure-play are reduce in across positioned to and margins and Metal America. competitive are capitalize cash we Coating generating North believe uniquely facilities We fortified leveraging services rate by expertise further strong created customers run to a higher actions flows technical that America, XX significantly extensive capabilities, working XX solutions North technologies continue proprietary generating production and the to We're placed focusing are as margin. strategically we businesses with last serve moat service our well months, over scale AZZ's industry-leading and strategic

to will turn Philip. it I that, With over

Philip Schlom

morning. Good Tom. you, Thank

results All from continuing numbers are to today operations. of the referring

Xnd quarter. fiscal As million Tom $XXX.X million quarter we declined year year ago. XXXX, sales to a earlier Total from $XXX.X of X% compared year's sales reported last in mentioned, second

markets appliance quarter Metal Coatings X.X%. second Metal that some increasing record Tom see reported mentioned, the had transportation as However, Coatings included in sales HVAC, construction. to continued for AZZ with and sales AZZ pressure end

cost UAW does last compared impacted segment. profit on will of decreased This material on year-over-year our ongoing pressure significant year. For automotive Gross was costs impact the of Coatings second the any higher lower Metal not market kettles second last well was and zinc business. for the as margins metals, costs not Precoat include sold the last in as strike in storage quarter and by or the and higher million costs year partially million goods versus Gross quarter a the lower to volumes to of of XX.X% have year. work freight offset $XXX which had were compared transportation $XX.X labor AZZ, sales in

Selling, a quarter which charge controlling in when a to administrative infrastructure company where nonrecurring litigation $XX.X expenses and the was project last reported year. AIS second disposed matter general related segment, the $X.XX included XX% the interest settlement in Solutions of by million of retained we million the in Infrastructure legacy the

this X.X% the for of SG&A charge, 'XX million fiscal or Excluding been quarter. the $XX.X for nonrecurring sales expenses have quarter would second

quarter prior to tax In $X million, outstanding a of XX.X% of second I the effective $XX.X in nonrecurring XX.X% B. Interest par in million on a debt, moment, an was our of in last million We lower adjusted compared the period related million, property a second with quarter the prior $X.X the $XX.X reported included million year. the to of Term higher the for will year in essentially segment. Loan Metal repricing insurance interest which of the on compared that adjusted recorded of discuss Tax EBITDA rate EBITDA rates. of expense quarter quarter $XX $XX.X of sale and the was second to or quarter XX.X% reflects the in sales, proceeds Coatings A items from offset in gain by million expense year. the

benefited state previously matter we the In the Precoat with acquisition. a associated tax from the quarter, resolution reserved second of

in XX% compared As rates the $XX.X year the million full tax current million benefit, expected longer-term a fiscal for remain the income be we $XX.X to result year, to rate the X.X%. in range. quarter XX.X% to effective of up prior tax was the expect approximately with tax net for Adjusted year, quarter

adjusted above in adjusted quarter. earnings the earnings share prior year above $X.XX per reported As $X.XX Tom had was mentioned, our X% diluted diluted the of second

preferred to and EPS preferred are the periods the are full weighted ended in outstanding dilutive computation. Therefore, Since the XX. resulted equity average quarter a XX.X both assume for company's presented, conversion shares August X which earnings of shares in preferred back for convertible shares million added the dividends in months the the

is cash net basis, position activities first higher Coatings period by and and margins cash capital a we of AZZ financial reflects ago XXXX generated Metal $XX.X AZZ Free the Metals Precoat than our with strong of for and million higher to On sheet. associated $XXX.X a free and the of flow operating balance X million, year year-to-date months expenditures. provided comparable flow Turning fiscal year of cash Xx segments.

We debt prudently continue for to on managing remain improve focused working operational allow and performance reduction. to capital further

typical were Capital Washington, million the safety, maintenance as X approximately first coating expenditures spending the including new gross and well $XX plant. to Missouri million, related $XX.X coil as for months

team. compared high flow. not We the XX-plus project. This continue new long-term During the ability of to fund built-in estimated rent finance under fund made cap the payback by our X.X% the years, a cash strong plant to next rates, the years. escalators over lightly under we management of the operating decision X including today's the to company's including to to build, impact plant X% company's economic sheet to was leasing has The decision cash of made evaluated an flows and balance equipment out of utilize quarter, the

model confidence the customer sustainable generation a term for return contract. margins. long-term a in on our capacity, provides plant's under us plant's is projections the considered of XX% further investment to contractually In This committed addition, long capability future operating

$XX from fiscal another for previously full to million year, budget. ahead year capital year. to schedule million $XX total of million of funding of XXXX reduction the by the year, below a down and include $XXX is the Our in million the to now of with for stated the reduce we $XX which of for fiscal first million half plans $XX million Washington the million, $XX full increased expenditure the $XXX for debt debt remains both to paid plant, projections throughout debt fiscal rest Through

XX the billion term interest repriced adjustment reducing from B, $X.XX and XXX by basis to plus loan In XXX SOFR August, points the of SOFR credit spread we basis our as removed plus transaction. XX part point rates

also, the into roughly allocation helping us interest -- actions the year to environment. of arrangement rate capital into fix are variable debt. rate impact the of a entered swap we offset These last rising enter we As half

debt confident sheet and to We continue flow reduce balance debt leverage. will plans strengthen EBITDA to until maturities are have no the XXXX support that generation and our to cash

common to of the shareholders. preferred $X.X We dividends million paid no shareholders months fiscal to we Series repurchases of quarter. X first the cash A share our and During made million $X.X year, during the

to it to update the joint in wanted an venture. markets, XX% our over about by providing the to in David speak investment Avail turning Before I to end regard

the quarter by have audits joint their venture that impacted now subsidiaries run included far. adjustments from in we which equity a and the expect may second see couple The third earnings completed, the We the of of been accounting JV our be we understand than quarter, million during quarter. that improved rate the purchase earnings unconsolidated may second earnings and thus higher

I'd over like call to With to David. that, the pass

David Nark

strengthens AZZ's you, leading positions our galvanizing described our part our position Good morning, #X moat due Thank coil as competitive across independent well coating. that everyone. earlier strategic in as North Philip. is What post-fabrication dip in footprint to America. hot market market are Tom

group differentiated a services categories, attract of solutions wide and industrial, primary into X construction, highly including and Our we electric utility consumer. range customers transportation, that

this digits Other through home education XXXX, we Construction to grow segment by years. care markets bridge and point new now while fiscal construction are showing year, is high. as starts seen the health include a XX.X% the a think residential construction X-month shortage increase with and bottom that approvals residential mid-single level broad the multifamily permits. year. the for of October strong August to end surged like driven balance building facilities, pressure nonbuilding we've while expected under of that the we to of in And by by which the category next supply highway projects X been the highest since Projections has captures a of over see work X.X% construction homes,

directly within should and AII transmission in We the our affects distribution XXXX market, are This our Acts in end projects. and calendar utility positively that company includes the JA early which with the associated infrastructure work chips innings late impact projects of and critical electric XXXX.

for We have ] key transmission monopoles demand number and [ strong of indiscernible this work to year a and and projects towers. underway distribution on continue see

Additionally, U.S. in pockets and demonstrate strength projects continue regionally business solar to of the renewable

to the agriculture. aluminum residential although Finally, and in business in throughout transportation of steel encouraged plastics nonresidential construction from the by consumer, source strength in and saw prepainted QX, saw and -- manufacturing manufacturing in markets end category our reshoring the trends from North and movement construction demand container migration remain aluminum softer of a warehousing, We longer-term America.

are gain pre-painted Coatings galvanizing and well for conversions Precoat as actively dip key share hot Metal also customers. metals with coil as Our teams pursuing activities

to turn would that, I call now over to With like the Tom.

Thomas Ferguson

on you, A business comments Thank few Dave. our outlook.

impacted the Although in seasonality, weather our activities. especially construction when by markets impact are end fourth can quarter

be customers to increasing and value our facilities. all to continue improving our on operations We focused our in

customers fabrication just our backlogs due to in markets Coatings, Metal that continuing are the site For to increased end discussed. Dave activity solid

year. since Additionally, labor availability improved last has

several have that provide We us impacts. zinc opportunities shifts adjust working due of other to initiatives more to weather or capital and underway paint macroeconomic as inventories demand

you for are We quarter exciting and of each we within keep schedule our the updated continuing on on progressing project budget. construction facility, and is an and track progress. the aluminum coating with are This will to coil we us,

from benefit market Dave As in industries. diverse of end mentioned, segments growing activity our both

demand to the trends, guidance. environment economic our monitoring carefully have are develop and which used we We

Precoat anticipate second year. a situation, second as customer operational the the half last improvements Given half we of to of inventory the and stronger compared improved

has Our ability to to the volume spite their drive of operational Precoat demand. weaker team efficiencies sustain in margins service maintaining and demonstrated quality levels, while their

year our that second were previously expectations. All that estimates and pleased confident in us to say, outlook I results this or would in has adjust the am line that materially changed time. nothing our our guidance our with So make with annual issued quarter at this

supply expansion We will strategically continue customers. growth to with and through blue-chip drive market long-term agreements

to $XX this to million fiscal EPS now committed for guidance guidance billion, guidance $X $XXX to million target of And million related $XXX reaffirming XXXX billion which mentioned, $X.XX. expenditures $XXX plant. debt capital adjusted sales remain achieving Philip year. our coil our to $XX greenfield Missouri $X.X adjusted $X.XX XXXX are and are EBITDA as million, to coating We of fiscal includes reduction the million to fully of $X.XX And Washington, our of we

at is provide an in believe sense. are not on progressing We we well joint when makes ownership Avail business is AIS forecasting XX% and it in this full the will the minority equity plan Our included it venture as guidance we not year its on outlook portion point. our

the we am and and that are XXXX growth I summary, I proud positioned fiscal am execution our team's plans success. In of well confident of for

value stakeholders. of We strategic to growth, and I the thank are with and committed focus successful believe for significant a our generating continued drive of will momentum profitability and capital plans cash support. We our want all driving further flow improving the their disciplined execution allocation. to on our build creation sustainable shareholders Board for

call Now we the will for have open questions. the operator up

Operator

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

John Franzreb

your going we a they were as an year, I the you're into highlighted do the the that HVAC, year maybe year -- context X cadence only saw half want are of the But half we the to than this they you ago. you Precoat guess construction? that I the with improved in year. than transportation not expecting what or Are maybe commentary with of about second being saw better of in start any markets, second

David Nark

Yes, John, this Dave. is

you -- I residential that. end at certainly and of I mentioned being think look seeing X in my some the of the them. we it, bottom, the to are as tied And markets think are that appliance HVAC as commentary,

end appliance bottom balance to HVAC the of the As year. forward, some the customers that both optimistic about markets and talked the in feeling and the seeing you we've look are of

but So prior over think with and the things it to year. them, certainly we'll is going be how see go -- we improved

John Franzreb

kind debt of And with thinking financing us you how give we on enough. should about term? plans change the Can thoughts in in levels facility, the just near there? some be Okay. the new Fair the

Philip Schlom

we down this as drive comments, the John, through our debt well spoke help during as new Yes, to funding, we $XX both We're million paid in debt to prepared continuing year. year. working further capital our committed as reduce the to facility

John Franzreb

of color working second the in the seasonal some year? down second the with capital. capital the on the does in working Just half requirements of I'm lower the just half come curious, year, maybe

Thomas Ferguson

mentioned it. absolutely. That we I'd think I -- Yes,

inventories be continue able We inventories drive down. to some to the of will paint and zinc

I'd The sink our our cost come other in down. to kettles to on the continue thing is comment going for is

that as So out. year will level inventory reduce plays the

John Franzreb

question just clarification. last Great. And X on

be there on you dollars couple million think of a I JV change mentioned that a might of income.

prepared Just Or -- is are a remarks? that change? onetime -- your that And is into ] what thoughts the there? that was thrust [ why

Philip Schlom

for business John, the cyclicality and within standing up because that's equity forecasted earnings of a nature business. good the not the their question. of We've transaction, and their the Avail them

end that their run of we So then better going July we a the them rate audit see and forward. completed at post should see stabilizing,

So be going business at able forward. point, to, some hopefully, we'll that forecast

Thomas Ferguson

that based out so add And I'd completed going can they that the now past on books, adjustments forward. audit income their getting of on the they have way the forecast just actual

cadence So into I get Philip both board. shortly, avail think I and that we on are will here a

be I'm able that guidance it on we're basis. color quarterly able give to a to more some around as do that, provide we'll So hopeful actual and

Operator

Thalhimer question comes Thompson Adam next of The Davis. from

Adam Thalhimer

bit trends on thinking year in line of a with what I'm just QX curious quarter. half down Congrats a in the back Metal little we talk kind back up the revenue for level, kind of you're if of is the nice High in saw about Coatings? you can in Precoat half? growth? little bit

Thomas Ferguson

that's we to think forward. look as I continue Yes, going

quarter. lapping particularly a fourth pretty the on pretty weak Now though, Precoat side weak we're

and markets X% sustained down. We the don't that, though those continue seeing as the for stabilizing. look on about, markets David in are we've half. down talked other volumes first construction to We're even our sales volume So significantly lower

the folks, then metal sales as a of wake XX fight and well times, every at look battles half second significant they majority we XX continue perspective. win for I've perform our from to those comparative plants battles. their coatings to day on joked a in and Precoat across basis So a up And

just outstanding we providing service So to look continue customers' that for business. that earns them their

be them. should half for it another So good

Adam Thalhimer

pricing was and struck Okay, thing was positive then the in that X really great me Precoat.

I think for Is should how that pricing both we said you going a segments year? think plus this one-off of about forward? probably X%. kind Or

Thomas Ferguson

quarters suppliers since part about price largest far, where underlying is think increase we their -- price. the they're, had And in paint cost by I the talked of Well, to on Precoat previous the paints component. had continued that

really seeing, the on what on plus paint that value relationship that's you're the cost the is So price mix. flow-through flow-through driving pricing

we to So the I in of continue think value coating they provide see just for their metal that terms side, customers. outstanding

in continued plants, think providing and I and I of those you've XX price they'll defend So also quality. And think value you and when working based we some drive do got operations. on have continuing outstanding them certain you're their they're on, levels service realization always -- that do better to

So I think -- so defendable. yes, it's

Adam Thalhimer

said Okay. are rates any of good gotten you're And on mean from some from coating think your is stressed side hit. still But of -- clients stocks metal And electric like you customers backlogs kind where still feedback out and getting it T&D on seeing my expectations. then are you impact I I have the your sound doesn't -- strong, still renewable of where you're strong. mentioned and that you is said, about utility

Thomas Ferguson

Yes.

utility you've here it in Texas, ] of sorts around of region lot projects projects, very -- [ markets, -- projects, seeing of all -- infrastructure. it's seeing the is got can't population. highway like diversity without and most the part, A these For the it's new growing you we're customers far drive is

on lot on things or highway, it So of whether like T&D, infrastructure, be that. front solar bridge the and a the

clean still but Dave of is have the as got got said, lot got believe a do improved early transportation. in that innings, you've spending roads, we have we have water, So to to to

of we with that. to back a And So feel comfortable great spread facilities. we have our

on to in are the So from. contractors them East projects to depending in West the on decide where the we're buy service on of able whether and both are that, sides they going

a view we our So advantage given that portfolio. as significant

Operator

of Mike from is next Markets. The question Capital Noble Heim

Michael Heim

like falling the to a the you spend how jump-up of and year. for got we've the see the that fourth little in million more you quarter? $XX it between With third maybe capital looks just talk bit expenditures, rest Can about

Philip Schlom

evenly project That between should The fall up. Missouri has X quarters. Washington, been the pretty ramping

QX was X maybe as quarter quarters, the heavier So be a in quarter double fourth. go QX and between X should well X balanced QX. we pretty through little the

Michael Heim

And maybe I Okay. Phil, tax to acquisition. you repeat, you you something And referred rate reasoning with believe that the Precoat just quarter. talked the wonder if upon about lower then the expand in could I the

Philip Schlom

exposures. resolve Without due getting we during -- too those themselves. Yes. related state tax diligence, able had, to in reserves the address our acquisition Precoat some to into much post-acquisition during of taken were Metals, and We

of the So during our were of state taxes, to we working we're a the quarter, states. reserve still and through significant for other able most portion couple reduce

Michael Heim

then And amortization legal talk as assume the that? the probably nature finally, the provided. about just I of Okay. intangibles. the GAAP the you've we some onetime that that talk in ongoing about you What adjustments nature. of Can a of settlement about to is

Philip Schlom

is Yes. because of corporate the to purchase accounting operations. it amortization that directly the hold related we segment at impact and acquisition doesn't The intangible

was and And right, a excluded the related legal our to we've nonrecurring so we you're consistently onetime sold, settlement we business ad from And that as the that backs. item. see

Operator

Pipes comes Securities. Riley question from Lucas B. next The of

Lucas Pipes

appreciate the what planning, schedule Thank planning, markets the stages very How broadly, your often What about wanted budget. a on? everyone. are of that. you kind so Good quarter higher of in those you middle focused to today? to with also Early on much, project of have on these pipeline seeing I planning, and -- That's focused seemingly resilient good not and Do projects you a really region very potential demand more growth? about on really kind hear what be what despite would think geographical market are one days. color of and would I late greenfield and ask given you're projects Washington operator. on most what similar projects ahead Good the you you job something rates keeping organic morning, if Washington and do such. the job

Thomas Ferguson

don't -- actually done. is X since second I've greenfields Yes. have We here. we've actually been any This the

X on to Reno, years us. the competitors and side first in up X were territory then X was we're provided in about Missouri, ago reach buy galvanizing Washington, The galvanizing Usually, where one-off tended plant adjacent we've and new for this they

So we've coil been with this that our find tended any Right to pump is cash until it, flow has line the that I'll way. we pipeline better Washington call in which acquisitions through the quiet, is now, on desire cutting not to do facility. get

new looking So always we're at opportunities.

out One of existing to is the with doing so vertically the I'll we side things working buy are on to them. are de lines call integrate we it, customers Precoat their

And going But mention we success customers. got with the have specific that. we've not success. in We've place. to I'm had had some some NDAs

the So market. capacity out that allows out add us to to better but also of take capacity utilize our it having without

side specific greenfield but did going for at we of just the building as particularly coating to our the look our our So businesses footprint. make to how existing between We squeeze been continuing demand forward. coal plan those is capacity be and completed in, strategies any capacity increase, going we out another demand X as on have the commitments need strategic not X get we -- can there to

facilities Solutions to it have now. the services think continuing just we metal we side. call add what by drive growth we -- ongoing we an similar We with for what is we that's right coating every year. comfortable yes, to We exercise we're And do So do. organic the Precoat. can Supply but have with -- Chain opportunities very

current take with continuing businesses. just share So our to

Lucas Pipes

The very most of in the kind some add helpful. this. your customers, de-integration the a think you buyout? would is follow-up capacity That do such customers, value Quick to you what be vertical of the at would of on pitch what

Thomas Ferguson

Yes.

we is for I a for it's us, think -- do what living. this

may at So to be technology. them. X/X to got X/X faster our the to line can give running old be we lines really, It If of going are than speed really tend they've theirs.

schemes. We They're them capability. also We've lines. can better we're frankly, a providing blending their XX operating XX operating and of And own our X color color do quite job core just business. different plants, it's not got

taking we XX,XXX, to our we're give of XX,XXX thing for about So the large those tons money, of facilities. it another take off is talking of current assets, are books. demand But that can not amounts the those and us but assets kind

comes proximity of locations And record to capabilities, able have great it. to on track so our them that down a to which depend being our we do

Lucas Pipes

X That's very helpful. quick a second question. A for

Just targets and given at is you longer head where term, us leverage your remind backdrop could now, kind of rates right financing broader on markets.

Philip Schlom

to with Yes. that We facility get a year change we to of down X.Xx track target end the at leverage ended in the the range. in around leverage on the quarter get Xx with to by the Washington, for are still

to continue capital. on our to stops So pulling working all focus we're

Thomas Ferguson

changing on year-to-date, just the current of working we funding go and from debt -- far comfortable moving why so to not in it and ourselves. the And Both the our ahead in point. a our targets repricing sale reduction debt we're Yes, into this that's our perform felt at our improvement improvement capital. ability small current leaseback

the stick So with target.

Operator

from Braatz question John comes of The City Kansas next Capital.

Jon Braatz

debt, no $X interest the annualized about Phil, interest repricing are your of increases, in we savings. million assuming additional rate talking

Philip Schlom

to to that opportunities working can at with help equates for continue markets things billion do to It XX about per outstanding. our we're bring reduction $X It And $X that watch continue bps and actively group, million is, interest to we'll cost. and down some bank a yes, year.

Jon Braatz

Okay.

good. Okay,

you to profile? tailwind -- operating through that's costs zinc through coating, to currently Do X, be you're basis. maybe a your road. X going Is metal your a Secondly, boost of eventually, those in little lower are months costs. work going to that off prove on that a down or to to a the to operating year-over-year bit little And work going margins see

Thomas Ferguson

Yes, we would hope so.

But for -- is -- price we're better. budget those to how right next it's that's when range done what team is a added great premiums the you to value. to looking but had the in is metal with here to now factor think are the done But a talked start confident. we're having we is. coatings I we've got We LME about faces and do think have -- job negotiations we month whatever providing this of we've big about their or year. for the of within $X.XX, add zinc is $X.XX so going the inquiring some They've do sitting the next they're suppliers. And with our

what to yes, So year. that's part is this some I look provide of would going point premiums those this like anticipate But are us tailwinds. the unknown next will at

Jon Braatz

premiums year-to-year those vary . a bit Can quite

Thomas Ferguson

can vary the last call regions then less movement quite the you've from some just got and variance $X.XX a of they the range bit the $X.XX on And They depending than also $X.XX, year to in country. have year-to-year the range. it,

So as these play have chain into feel allows our our on been zinc and who now which of down commitments supply come suppliers and we -- work to about zinc, bring right of some are all us the stocks. things availability make we our with the that any -- good safety

Jon Braatz

say, bit before becomes finance your your be let's Will it net costs some additive. Will start-up are a -- in your into or looking little costs, what -- there facility. ahead have Tom, initially what -- might it a of statement. new contribution terms to absorb will of what XXXX, kind on on income drag? Washington sort Washington be of the Okay. of

Thomas Ferguson

all in. those got factored We've

So in fiscal XXXX. startup formal and complete with the

doesn't -- will on, plans we and But into some look period. already add there's forward get not and that's a it them outlooks there's -- the So go factored of as long skilled trained. that so in we on because But for yes, them bring labor there. our

Operator

Gabelli The from Brett next Kearney of question Funds. comes

Brett Kearney

Congrats momentum. on the continued

Thomas Ferguson

Brett. Thanks,

Brett Kearney

improvement it's to this Metals Precoat in margins great fiscal On see the consistency year. in

at sounds at those whether think locations? of like curious of excess I the I about, for guess, would below any the you're expenses productivity it the warehousing potential that some a I a are here on of margins you or lifting done, going to room was kind heavy lot of even incremental and average feeling fleet . improvements few -- just sites unlock eliminating know improvement, guys sustainability that investments there focused how business be

Thomas Ferguson

we feel in team inventory as think has getting cleaner, I and excess been can of focus great They're the maneuver. to the Yes, really from and rid easier sites. that's Metals you they're that a good. The of Precoat walk discipline customer -- the lot

just feel You and can efficiency. for the productivity improved opportunities

So that's helpful, and continuing. that's

of I to think to set whole our metals. customer inventory bunch and of great continuing service a solutions a we're and still providing customers

way. but So effective a in -- more

XX% really the I a So fact our that EBITDA in of couple target quarters we've like the range. range. I like got

that's more I we look as far think forward. becoming sustainable

it or but sites X We're X -- much on shifts, the had but that win. a X, And the better. X because X, I'm now going and have added focused and operating it's team they -- to do we cadence never rhythm. say in a are me. they're we another there of up the because And good I X easy would good But are, they think shoot there's still we've then is

declare those some never on So the way, victory some when continually improving vertically And customers. de facilities. integrating -- this mentioned I the by of we'll

some with That us demand. just more some volume volume plants -- a also couple gives our more and needed of

now. So continue it last months. and sustainable and other up XX% more XX to hopefully to the deployed make more as new that we that's And already to have value us we range go that running to new then predictable, embedded all and and capital over beyond and slitters, it allows capabilities add drive providing services.

Operator

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

Thomas Ferguson

Thank Have you great look you very a forward on a operator. our you just to results in months. much. few and your I updating Thank third time you, day. quarter for today, Thank

Operator

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

AZZ (AZZ) 11 Oct 232024 Q2 Earnings call transcript