AZZ (AZZ) 8 Jan 252025 Q3 Earnings call transcript

Company Profile

Participants

Thomas Ferguson	executive
Jason Crawford	executive
David Nark	executive
Matthew Krueger	analyst
John Franzreb	analyst
Mark La Reichman	analyst
Adam Thalhimer	analyst
Daniel Rizzo	analyst
Jon Braatz	analyst
Timna Tanners	analyst

Call transcript

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Operator

Good day, and welcome to the AZZ Third Quarter Fiscal 2025 Conference Call. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Sandy Martin, of Three Part Advisors. Please go ahead.

Sandra Martin

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

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

from uncertain today statements remind Private Before by the Securities time control. These company's the results statements may which include I forward-looking to forward-looking Act safe in actual and want for we By uncertainties, undue Except are under Litigation Actual Securities guarantees are begin, of everyone statements Report are our involve on outside to that filed materially be Annual differ Exchange these detailed and from the made Form of XXXX. not comments performance. the our and upon XX-K containing placed discussion not documents nature, fiscal some of will reliance the harbor risks Therefore, future for could them. the year. results, Reform time Commission, of provisions their with of expectations. AZZ should forward-looking including statements

Non-GAAP be press non-GAAP financial In to the addition, supplemental should today's from to measures. measures. not will in earnings measures for reconciliation financial call measures GAAP a refer We today's non-GAAP discuss to considered release. substitute GAAP

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

Thomas Ferguson

Jason up quarter markets. I AZZ's sales us new to questions. Crawford to end the Good Nark will year morning. financial our and year. an our rest outlook David you we'll update will third all. our for happy Then will results, Today, industry and cover the open the provide on for you review of joining Thank discuss call and for

entered The I both we expectations our focus, tremendous exceeded had teams segments. versus quarter. the in third we great their as results give how execution and for quarter's our discipline were feeling credit

We growth. teams' segment sustain solid both pleased ability margins while sales generating are with to

through related the by highways, construction been and new XXXX have renovations driven U.S. sales mainly X construction first months to Fiscal infrastructure throughout the projects bridge

energy In on power transitions clean addition, resulting reshoring in positive manufacturing, accelerated business. calendar initiatives spending and for impacts centers, data in our XXXX, and

but segment organic while million quarter, quarter, by consolidated Metal The third prior Coatings of the prior $XXX growth. the X.X%. versus Our quarter increased X.X% compared at by was this sales increased overall Metals segment by third sales grew all sales year's year's X.X% and X.X%, when Precoat to galvanizing the grew

in coal productivity. primarily higher again exceeding prior processed momentum of Sales range volume almost entirely both XX%, our quarter third coating. due targeted the in and with delivered based volume the Coatings margin year to XX% fabricated EBITDA tonnage steel Metal and to on was improved higher zinc of XX.X%, and

operational due and to exceeded EBITDA volume, profitable year and business higher XX.X% of margin the strength primarily Precoat Metals performance. prior more also improved of mix demonstrated

the future. this substantial In cash allowed while addition, to year for flow strong for million of this debt the of discuss further investing in fiscal allowed of us in strong more cash operations first balance X million. in the detail, year, EBITDA flow us free $XX from the to our resulted operations will Jason months deleverage $XXX which sheet make repayments but

leading market our to galvanized continue coating coil and Metal hold positions in Coatings Precoat We segments.

relationships, through economies moat technology and competitive trusted customer specialized strong As our provider, gives solutions. repeated innovative Coatings a advantage Metal scale enduring of and us customer-centric

excellence reliability and enhances further for in our proposition. service value reputation customer Our

leadership bolt-on positions. strategic and growth organic both grow to our committed to and are We acquisitions maintain

model, and the Importantly, Precoat facilities, price Coatings a continue we moat in Metals. associated profitable process exposure Operating significant do avoid Metal tolling strengthen economic our not as will we with highly steel it. commodity own risk we so to to through our

plan all of at to proprietary that investing in customer-facing AZZ's are continue technologies We our utilized facilities.

platform access Coatings our transparency and Our North provide America. and to innovative paperless partner strategic technology service highly a real-time differentiated as improved throughout company Metal positioning provider customers

capital approach we But moment. in will to continue Jason debt that to and to a by discuss disciplined paying pay consistently quarterly underscore I cash want return our deployment to first, shareholders down dividends. capital

previously, our to ending by reduce expect in the for As year February. noted we million fiscal debt over $XXX

first the been earlier, year, growth fiscal for year. prior our our compared As to I X the months has of mentioned organic XXX%

add to remain continue to work evaluating potential best targets while We'll timing each valuations in optimal inorganic in acquisition carefully segment. the AZZ's leverage. We M&A patient target considering growth by the pipeline

aluminum new our we conversions. milestones in strategy, construction industry's We're allocation finalizing supporting Washington, our durable Finally, pursuit trend of of invested facility aluminum in ROI Missouri. have the beverage capital high in to secular plastic coatings a

We equipment testing facility certifications expect begins the quarter, the XXXX. ramp up first during are in new and currently which March doing and to

We new facility facility, are demonstrates as greener excited commitment particularly about our also come. for this AZZ's to spring a launch of this durations future to new support

to over I'll Jason. that, With turn it

Jason Crawford

Tom, and morning. you, good Thank

million, sales Precoat Coating galvanizing prior increased which our increased increase For year's of X.X%. X.X% and the segment reported sales the Metals Metal an within of X.X% third increased segment, quarter. quarter, X.X%, By we over $XXX.X our

by profit segments, from and an was points quarter's increase margins XX.X% segment Coatings in improved operational XXX the Precoat productivity in or higher improved higher segment. year volumes of Metal million the zinc in gross Metal in performance the of basis $XX.X and sales Gross of and sales sales sales prior quarter. and XX.X% both third supported The improved

of employee in or during expenses severance that year retirement $XX.X selling, sales $XX.X sales one-off to In third of the the expenses were quarter, The X.X% in and third for settled prior compared quarter. general increase accruals and quarter to the was costs cases administrative due million SG&A million X.X% the or quarter. were legal

$XX.X to quarter. the third $XX.X the Interest improved $XX.X million of XX.X% quarter to for was of prior income repricing decrease sales our recent million XX.X% sales down in the rates debt The Operational interest last million consistently or to expense or from paying year. year's various weighted compared $XX.X million and interest rate compared lower debt in is Fed to and due average third reductions.

year. to of are and million million earnings quarter ownership and $X.X from equity quarter Equity JV. the earnings our These $X.X interest third XX% unconsolidated for the was subsidiaries the for last AVAIL same minority compared in

impact $XX.X The our effective increase effective year nondeductible credits. to entertainment related items primarily rate attributable the quarter. in prior expense an from to in to Current was tax was XX.X% compared tax tax and the quarter million, reflecting income and rate R&D XX.X% higher meals lower of

income Reported basis, third On the net QX quarter. income from adjusted compared year million, an prior $XX.X $XX.X net XX.X% to was million quarter the compared from prior of $XX.X an adjusted the million $XX.X to for was year. million increase

$XX.X adjusted to XX.X% prior of of million quarter $XX.X the favorably EBITDA million or Third compares which year. sales, was XX.X% sales or in

balance financial Turning and position sheet. to our

of significant our cash the $XX.X $XX.X operations After funding million free months exceeding flows the coil generated million. million. year's year-to-date facility we company's first potent to our $XX.X remaining with Year-to-date expenditures mentioned, this of spend from flow be of project million, of million, in include Tom $XX.X the most the Washington, during spend approximately was X $XXX.X $XXX.X completed of capital expenditures of million new fourth As cash expected Missouri, capital quarter. last of on

to that consists allocation noted, strategy potential and we capital paying a shareholders our growth, and for evaluating business of returning dividends disciplined cash have share bolt-on Tom debt, acquisitions. through As the in investing buybacks down

reduced third XX, the the exceed and repayments full $XXX million ended During $XX million debt to by total quarter, which year. we November debt for

current third leverage X.Xx, adjusted XX-month to Our our quarter year. last to in favorably EBITDA of compares trailing of the X.Xx debt which is

repriced late bottom quarter Term reductions in we announced December, to Loan B and X.X% another our plus expect to we down these this that of reduction benefit SOFR and in line year. Fed the in fourth our the Recall quarter the fiscal moves with in September,

Our XXXX. debt have fixes rate for variable through rate XXXX, September notional XX, our interest until current any debt and portion not do swap maturities agreement a we

$X.X in we shareholders year, million quarter. the through to sheet growth, we capital preferred balance A May multiple and dividends to full with of reductions in completed common debt This our in have levers paid the this stock working of by organic in structure from the third the strengthened cash Series and Finally, proceeds improvements investments with the year. capital offering redemption was that company's the secondary equity using of

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

David Nark

same containers, the are in same in versus within and growing we renewables spending period over prior strength Good compared as small year transformative our as to quarter Jason. We in you, year. innings quarter same grew sales previous prior HVAC third for reported organic with end market ago. the nearly and that continuation utility and morning, year, transmission year and growth everyone. positive the such early construction, momentum quarter over as a attribute signs a of saw recreation to this categories quarter. we markets Thank gains for trended the in of industrial a the electrical share multiyear but Sales well growing and the distribution all of The infrastructure

spending. remain and we year, sector public all communicated have we As optimistic about private

come. to of we will need affordable outlays investments will reshoring housing ahead, Looking the infrastructure spur be manufacturing The the more support to energy housing elevated the medical data for centers, AI and transitions, years facilities in population. growing believe requirements for and and for

based necessity which as particularly nation's T&D. bridge are highway in communities electrical well as networks, These on sprawling further larger, ongoing creates our infrastructure spending investments and connecting an for

play we an aluminum a is well secular tail know role a food from we trend. addition, plastics many prepainted believe the to and steel and beverage industries, as as in In long aluminum critical which projects. that in conversion will essential

I'd to to it that, turn back now over like Tom. With

Thomas Ferguson

about near-, bullish Thanks, remain David. We medium- business and prospects. our long-term

year, fiscal involved also in and setting Although am incredibly we pleased deeply year XXXX. for this new planning team's and I the are progress with accomplishments milestones

business Jason the months. As and continued through momentum year's X first shared, David

annual billion the fourth our $X.XX to quarter construction expect be sales is year's range narrowed $X.X Concerning We typically have to our unchanged. to slower in as which midpoint similar we guidance, to last QX, impacted kept and winter billion the months. the is

to balance raised first $X.XX. EPS and We expectations year. to our adjusted adjusted million for of guidance lower interest $XXX million our strength increased EBITDA to $X EBITDA and costs for EPS this X-month $XXX narrowed period and midpoint with the narrowed also our to reflect We in range fiscal to the

any have that emerge. may changed, guidance overall regulatory federal changes excludes Our assumptions which not

CapEx. final Finally, year in to plant's and this unchanged at $XXX capital remain is are expenditures expected to for fiscal million the embedded the total million current $XXX new

earnings the million. equity in our million continues the $XX debt be are paydowns to The from minority to joint and exceed within and interest million expected venture $XX AVAIL $XXX range to

down a continue while are XXXX We potential debt evaluating confident We well. pipeline. paying fiscal and growing remain business actively acquisitions finish on prospects with enthusiastic to will about year we focus

year to for year we hard-working want talented single on X. of working few plan that weeks, provide a In growth improvements day. continuous and fiscal unwavering fiscal and March thank our begins every team XXXX vision for customer I service and guidance to the AZZ's executing

strategy focused highly creating and certain through our leadership, of are on sustainable long-term solutions. execution We value

through our differentiated organic value growth, flow significant our We scaling proposition generating inorganic continue cash plan business leveraging to customers. and to and

open to up With the call like that, questions. for operator, would I

Operator

session. question-and-answer the begin now will Instructions]. [Operator We

first from Krueger The Baird. with question comes Matthew

Matthew Krueger

bit seeing to Just picture from what perspective maybe to end a as off, a you about things big relates market talk could it kick demand. you're

versus on what seeing what generating comment you're that be could growth from too. angle, AZZ maybe would perspective from pause a there. you terrific a If is I'll growth market

Thomas Ferguson

of couple kind opine think well. markets things, we've I I'll a let choppy. seen then as Yes, But the David and of

real a segments. markets diverse both in serve of we set fortunately, So

So but our on from we providing focus I customer emphasis outstanding think innovation. benefited service, on

they're convert hot-dip market some prepaint, taking using. to galvanizing from getting share, getting whatever customers So customers to to to convert

ahead quarter we've generally, feel like perform, we're markets. the of in the particularly I able -- But to So the okay. markets are third been

hurdles some pending, to some a projects. markets. XXXX availability, projects going there's seen things get that's like on kind think think We've decision-making generally we going across hesitation. bit choppiness I little with of it's as significant I that. don't forward do And in into tariffs, I but created of happen are believe steel what's those

to want add may specifics. And David on some

David Nark

the Tom. add I same Thanks, I prior markets, quarter as Matt, is over Yes. mentioned the every end market year. at you call, look what reportable would as up on our nearly just was end

bright real thousands have new in there's and announced some literally miles out markets we been of utilities, yet that projects awarded spots to where continue transmission and and like come particularly have of We see of ground. construction, know industrial to distribution, the and

nonbuilding take you look pretty well think some from information centers, tracks and I either at -- So the like U.S. particularly that related data the as from well some Bureau, there and there release of and a when spots at you as in U.S. construction and or Census spending in safety are areas water public infrastructure, manufacturing around like bright spend. things building, look

ahead. So I the faster we than looking in feel and market would year forward Tom, grew QX and QX, optimistically agree like definitely with the to we're we

Matthew Krueger

growth the third third as sequential about a of out from any we Great. the Or the That's super Were second that quarter were acceleration we helpful. pushed quarter think there we should And and to quarter fourth any a weather one-off was perspective, nice quarter. should from there any to consider then model XXXX? benefits rate this unique other kind sequentially quarter? that into demand into year the factors third

Thomas Ferguson

that, Actually there's X to Yes. this. sides

So than overall negatively powder faster part the Tampa that we've grew we out of how the on of that our coming really hurricane, was And impact galvanizing Coatings. a in the about had got facility coating impacted. talked Metal

galvanizing. business, X.X% Technologies quarter, but isn't by which of X.X% our the you needle move bit versus So a in it growth portion saw little can Surface the the as the for overall large,

So negative there's impact. had a where the hurricane

of impact side up galvanizing just on little a out see We Carolina. bit the positive had didn't in benefit South of a that. think significant I

still think there's still turmoil lot as and through there's read on I going see North of can -- still the -- a Western news in lot in you media, the of a Carolina.

that I that X hurricane storms, about like of in what we it, I So expect mentioned, was other, quarter. sites. at the from in winter And course, feel now but the fourth the much that's all generally, don't in and benefited then we we're

on impacts So construction.

tackling, So was and for QX, customers, competitors. not one-off. taking It much outservicing care blocking and opportunities of yes, good our basically converting

Matthew Krueger

that business? like weeks be Just lastly opening, out plant FY That's for start me. just couple model Great. interest then Anything FY variances know helpful. that versus are volumes, versus of the could going as you're across year, of would here. formal in expense, the a 'XX specific have? to there I to thoughts getting issuing guidance for big And But kind that any to 'XX think like high-level next should we the Missouri about what guidance picture contribution into helpful. be we

Thomas Ferguson

growing Yes. I'll do and we But on certain places as interest continue get business hopefully then and about of of the the may get bolt-ons routine hopefully can level. expansion the an fleet of improving or we and over acquisition bolting things of rates our normal talk the course couple on to kind in done, and our back into look those Jason things, mention we're things to front. margins debt and do part their geographies months and where that few of X to a next through some

table we that. a -- course, about towards trail once We've excited get is we're debt, I feel potentially good acquisitions. we are we're gotten stock about Xx, pay and the to the our that, we to off in of increasing So on down of level think down options very leverage but trending back as buybacks dividends, that which acquisition all terms

that year. get and Coatings a impact the of projects. kind tariffs. available of are in Metal And side to steel us as administration we kind galvanizing a as on of bag actions what be having the mixed volumes, things, the of big on a we into on side, There's taken things but terms the So see I as for long in Trump taken nonfactor over we post for tariffs think don't Precoat other or down going settles is terms see it's side

to for the anything you might want you're financing and Jason, what in And doing front. interest on add

Jason Crawford

think the Yes. from this of of made point fiscal an our mean, majority I certainly, year. view, we've interest I moves

So you'll don't see look us. view external see a of is kind what impact But that really, happens the the just Obviously, that. we'll step world nullifies probably through at we have that. Fed annualization from our will X extending of functions. year the and next what major out there I then any point impact underlying that swap in of quarters, first

dropping we'll back as and the in CapEx view. normalized in functions not about think cash get point we've X in our invested of facility heavily any flow a really last that see Washington, step new So off more then. you years, Certainly, to the and

only that So through next about as having I we think impact. that's would say start to any year, that

Thomas Ferguson

I'd test start-up. getting full first effect. color would the half back facility big is back and working run new expect, a some are give And on get schedule And when testing well production the and be in samples it guidance. to partner get the that on certifications it on and everything out to But you and of with more rate We'll come facility. the will you give things we on while the slow closer year well year start and it's the a ramp-up the to half then of as moving, into we as full

XXXX. for here color weeks. you the I more couple So come most facility, that like of fiscal really give effect expect we'll But to of new the on in said, later a in

Operator

& from with Franzreb Sidoti John comes question next The Company.

John Franzreb

year really And prices. But than just business. 'XX. in recap to mentioned you margin XXXX about to the when X like modest this the start you what's margin increase Metal throughout segment? fundamentally fiscal selling with resetting should we the was there In remains profile maybe prior Q, the for impressive Can the of years? guardrails compared of I'd and average think different Coatings a profile the kind 'XX

Thomas Ferguson

Yes.

We are by considering next year's week Board, about guidance our approved that hopefully. resetting the those, as we and plans we'll next get talk

blocking partners system, the and and some productivity efficiencies So I talk We digital using think customer tremendous We've but quality. we galvanizing to alloy zinc tackling this than us capabilities, combinations got our done fundamental and service productivities discipline those -- like around in about test we've we've adjacent and that. is marketplace back and things Zinc that just and scale, differentiates opportunities. some as things we're the at both standards. to maintain with we allows us to able different industry working believe also and better got that

as XX So that these that's in like all sites what we it's sustainable and believe we things up, the witnessing positive all is doing start we switch XX. now of the you're all things in ramp and not flip

playbook So I majority is think what's of day. every the going on vast in they're sites, the now running just

our the And so time. of last benefiting of just year at plants the and a that part this business we're versus scale say, overall impact, majority units having given vast across only

sustainable. solid a fortunate, it's the hand, So and been, things, good dedicated very but develop keep on focused on to bench. people right also and it's a say, the I one motivated, we've train have think And I'll leaders effort team on

close it we're makes think So and peak. getting what to I that I that's think sustainable.

John Franzreb

I and looks get year a to was where know the there sustainable looked in you QX some Good and the strong. of business? this on income, Does seasonality year pretty weak go-forward regarding last kind a the And basis? Is QX see book look in And ahead. I hear. what that everything of like year order was mirrored JV noticed

Thomas Ferguson

Yes.

is is that had a always of the electrical, business. tell Welding got And turnarounds. only the it. backlog. to think course, very look during I at WSI, electrical business the they've busy nailed the to seasons you understand doing. portion always X That's good seasonality very, But really Powell Solutions because how They've how AVAIL's of people of some I doing

backlogs year. this year. So into calendar really, a really strong going they've They're got reporting on

and their finished it I say year can So finished well. they they've

they've we value encouraging out -- whatever. that over on that XX, at XX gotten electrical are And are So of to it and time our a look and partner business. a we the lot of next backlogs piece, think their potentially months, good that strong transacting this

margins job So Consulting there's trends, their drive using and because long-term we processes. a positive think improve McKinsey firmware also done nice they've techniques while former -- some to the

they is of we into shape potentially kind think going really level while a like reached at some like performance to it transacting look performance, and we so. that the business in XXXX. the -- also we So it's we that good good of And think

John Franzreb

Where where does besides -- last I it. the you the customer? plant stand of stand question. And do in look? you Washington primary How Got in one on guess the fulfilling combine balance that

Thomas Ferguson

Oh really that looks good.

the is would of chasing I been St. fill marries existing container brand-new that think Louis this lines to to mind, keeping we've some X plant opportunities kind plant that -- that. in a up balance already. has And of the that

opportunities. the got So backlog, got, on because customer I partnered definitely levels quarter, is moving -- St. Washington in and to between up the production we're we've but kinds us the got Louis also focused it call of that but to that bringing facilities is hate in it as nominal the so optimize We've speak. really the capacity, as get to and certified, ramped we getting as quickly and don't getting this opportunities we've line it possible business other with helping backlog have first we

a big complex facility. facility, feel real it's And that. And good so about we

milestones But on. a of now. the my disciplined started hitch say focused won't So team hitting this their one but things is factories lot working very there's there's last in I the right career, so and up going in suppliers get things has always go boy, well a with always up. for ramped I've the without months because that so and issues, few start-up been potential the to and and

as excited really we're So enter the we year.

John Franzreb

quarter. That's great to good another hear. on congratulations And

Thomas Ferguson

you. Thank

Operator

question comes from Capital Reichman Mark NOBLE next with Markets. The

Mark La Reichman

builds each But strong the growth of during acquisitions? normalized performance for already would on You and you in what ex segment segment quarter. some each drivers for new rates hit consider the the

Thomas Ferguson

I that balancing, as margins are something we've Yes, that think always think growth I level both protecting about talked business is growth GDP very a ourselves disciplined with about. teams

you then at just new And bit. conversions, exceed we opportunities drive drive drive and synergies to then can as the drive underlying then continue GDP our basically that acquisitions applications, to hopefully through. give we bolt-on little look and us So playbooks growth can opportunities, a new drive

So to build-out, when construction business. of -- should has now, chip transmission, generally, for we the follow distribution, because construction that all so a spend and lot I the we GDP years, pipelines but those next talks yes, be it's a activity, we're are is whether able We lot, exceed good. energy that activities reshoring. because right this and follow a will David about infrastructure things say few it's that, plants whether occur, it's like the to whether green that that

have. because that should I to growth prevailing these able X, exceed the GDP that So we nicely we do X, level X think years, next be of tailwinds over

really So we're terms in spot in a Go ahead. good of timing.

Mark La Reichman

one, the mean, same not? difference GDP and not Is segments terms growing about, rate. the any there they're exceeding at think and growth be X that you going way to one the of in Or between I

Just...

Thomas Ferguson

Great is infrastructure Coatings more overall. question. Metal on focused

over of more that as that the next then years. be the kind so beneficiaries So few occurs, of will spend they

the on which activity, think Precoat the overall side, of is construction their I it's XX% demand.

is of related to that's residential, more some construction, industrial, to -- to follow going which is which of the infrastructure, commercial, of to you general kind look related economy. So some back

can X. you differentiate how that's So the

Mark La Reichman

just Okay. And second then a question.

And little cross trends they federal any respect local publicly the levels Just projects. the between to policy Could you business? elaborate of state bit impact or and on with at kind fiscal a there the how funded your are X? dynamics

Thomas Ferguson

local, I roads, on like add public just process the for think it's David it's this. you're looking that to environmental water so let when it federal. that, projects, whether highways, things at generally, a longer comes going bridges, I'll that's studies, through projects, impact and But state, approvals to generally,

streamline which additional thing run usually cross biggest projects think while the if I review, into through of up, have long funds it, could one new up project things and any time just call public review so do was because the to can to before a administration particularly an you're a so a is what these obviously, we there attached requirements lot that shovel-ready, projects, on would federal slows actually, goes get help hung to up public slow and of that process permitting for X, it speak. between that the anything the them, level these

to But David, want that? you to if add

David Nark

them both again, these quicker. result as come from we spending. segments I you to good permitting these think the ahead for there a now of that of And gets and Act of that up a of about those said, out that's ultimately pump would can things it's IIJA, the and hopefully, whether for about new primed that really add, been public sector, planning only IRA Tom a Tom, things But as spending opportunities years private has free feel, ground with the or as the certainly so some CHIPS of some within several and sector fall that bit the projects again, lot public administration sector. I think that streamlined

Operator

comes Adam from question next Thalhimer Thompson, with The Davis.

Adam Thalhimer

I the year-over-year occur? on in there's if that And that on guidance. is Congrats a I've the revenue decline one most were beat. QX the the imply curious, could revenue And this I to segments? the where for potential you trying so, was of guess a question gotten morning

Thomas Ferguson

of you also on of -- the capital, the the are some dependent cost these and projects I as but tariffs of cost both that choppiness supply mentioned steel. could impact

away, make clauses up. can the It things projects, but it doesn't it. being are And negotiated. some have now you that sometimes escalator to So project so slows speak, just delay the go

has it at in our like was effect if just it And just revenue And continues so it a fourth concern slowing as quarter the we that seems is. what quarter. the as on looked then the

that's variable us, cost adjust For structure. we because not necessarily terrible adjust we thing shifts, a our

top is So it our profitability affects much as as our affect it line. doesn't

is activity not within the getting only it. So and and fall steel the the does when It's of paint to does concern. there. that's timing galvanize move and metal us And forward? it that just it It's that market it ship ship not

that's that's to. all So related

Adam Thalhimer

starts just was anchor then And up filling in then portion the year -- rest a How plant there on one when of the of Okay. the does What's quick of with capacity. customer. that What's the contracted kind a Like process in the the I plant the start Washington that work? and the fill anchor capacity. know you for customer extra later was up, plant. that to the

Thomas Ferguson

mentioned we've Yes. just with having container an St. -- It's it. lines. facility on and the X smaller operating Actually, already plant I demand Louis

our So for the X course, is facility services plants And it But move services, partner demand the it services. the also that partner, which, current provide Tri-Arrows. that way, capability. business plant, of the Louis between by we've both to ability and so but other has customers new got those St. the it

to and where to out. our of working the going So them commitment. the ability partner ones of sure with up that to made us to committed and be our I helping we the ramp make other We get everything they're we've lined it it's certified think around want XX%, care more caution take

on, start out demand ability to customers then early over phase, the in to in opportunity as our year or in skis produce. wears fill little terms be not cautious far bring we'll things. to the too And get a we'll of demand other So our to

I point. how looking at I'm So we at it how -- this that's think

Operator

from The Rizzo question comes Daniel Jefferies. next with

Daniel Rizzo

wondering. I was just

a a the expect be lot on like what infrastructure a guys talked to construction, do and things was what spending in recovery you private is. much I wondering how about in of if meant past could tailwind forward? commercial how is and that's that important spend it cyclical going there you So you

Thomas Ferguson

Yes, us. that's that a impact utilization, utilization can very significant. a that up been we a have got things. If on kinds yes, recovery go from -- XX% we It XX% to in of positive sector those

really to to be sustainable. -- see to kinds we'd So us. love And for love see it, tend be those tends to it good of projects we'd it

the I on -- to positive. David don't -- is Precoat more that. provide fill side, if and more real add to give to is where Jason this needs, our versus more combinations -- to know wants ability specific a different So capability color needs general them think is I to basically to our

David Nark

Yes.

is have would add of areas. provide a of down that If like all warehouse, commercial us. certainly were year and those been can only sectors tailwind for think kind thing the I really I rebound, some office spending that nice to those

Thomas Ferguson

to pretty we'd part quickly. other fairly it move those That's projects And nice see tend fast. the

Daniel Rizzo

X little should how months? I it? show does they as like as Meaning quarter? we mean, Or Or take it about up. think a

Thomas Ferguson

Yes, the it that quarters of to to stuff years X public X X versus so. I'd take call some can X

Daniel Rizzo

just then allocation on capital And strategy. of kind your

a debt do reduction thing? of kind Or know something remains it a mean, dilution? Certainly you I share focus. speaking, just big do been I offset So Just have buybacks that... to

Thomas Ferguson

to the continuing because at Yes, dividend... benefit the reduce or [indiscernible] price offset dilution. that quarter. dilution We're at we also look a within of And look we then would at well any as or our valuation, of look look the a acquisitions potentially we versus touched at it debt. share our actionable we going balance dividend as to haven't are taking And next portion

Daniel Rizzo

can if I lost guys. you hear Difficulty] me, [Technical thank don't know I you. but you

Operator

from Capital. question is John going next to with Kansas Our Braatz be City

Jon Braatz

we've movements. rates much how rates affected interest interest and much be thoughts? of a rate up. might with How much rates you interest end look But in by little Tom, business to business bit. when question. a move the mean sensitive how -- base previous I -- be is markets, and continuing your you go and your to your customer maybe, more seen of Obviously, David, Any of at follow-on chime might much can your sort up how

Thomas Ferguson

it's much. don't I think that

it start does does like change at projects think of projects cause can little move move think bps is out interest review and down, it. What going then I the particularly bit are approve that it's to viability-sensitive of think now forward the a and forward as the not cycle it long that. rates it's or trending these have rate to most comes at they infrastructure long-term as it I does to before just them another -- to and delay return as trend it curve it things that look they long and do and you to XX look as I and I so, think as when be

were get uncertain for an forward, the rates whatever in the to first we into see more they're have interest might these they because that's bit get push the I they quarter down So why revenue been trying about effect it tied quarter just and timing, a at. funding little just the we fourth try as to at things moving to price that and thought try their get point fixed might

little that steel of longer but that the tariffs a it a can a project. steel up create the uncertainty in a think can cost XX%, a that probably that term, around. short on likelihood significant XX%, there's as project If move it availability, have costs impact have in as on I impact more bit a the bigger moved term, well not because

the -- it So some choppiness on are calling decision-making I've of that I things been moving think choppiness, forward. the but those are projects kinds in causing it's

I So minor a effect. interest think has

I buttoned escalators you and it. starts the more confidence the reaction see with that to it, have as these think that and down for everybody give that, what get price significant to to that in account to have tariffs don't happens they

Jon Braatz

Okay.

into we Secondly, forward you zinc front? the head you pluses when as at XXXX or on think you look any cost zinc when minuses look -- XXXX the into environment, and fiscal

Thomas Ferguson

has LME Yes. trend to zinc I up. mean continued

single We to of like it's that When we when tend everything as you And pricing in on the has our X about their competitors largest value talk the so trend that to zinc and adjust, tend that. well. to months that know, component X galvanizing. prices effect on -- cost trends kettles costs But up, out. obviously, because as cost up

Obviously, that our gives X, kettles So to can do as adjust expectations. months a value our every is our see adjust X and yes, and going and be proposition the move calculate month us to in only that into time also what cost we we factor it's price prices factor. out. But that

So it, steady. not almost moving of when viewing call which it's up this, it relatively we're a slowly, sort as is like

that's lot actually get things to of This starts into balance, really of that when a you sorts it surcharges just uncertainty. and good a is thing. all create When

don't -- probably this So right terrible kind It's not thing. now, of this a as view we is a good thing.

Jon Braatz

Okay. One last question.

is And do of he's successful don't and know end the permits. going first the on to pause going the One Trump is LNG going how to try can I court probably moratorium challenges. LNG There's have on he's or that singularly, if rebirth, your impact be. be to call you some the positive going galvanizing? things But to renewal, to it, does want a

Thomas Ferguson

with you capacity sure -- a online can, Southeast, kind look we because when through when galvanizing to expectation occur. lot going was that It of came the of especially the

that Some of capacity gone has away.

been look we've been Some of would the it some terminals sites it of where go in, backyard you has acquired, of pretty -- closed. got them. one But each has of through galvanizing the in there those much

quarter, particularly that Texas so. the overall So a be nice Southeast would yes, market, through And help would that positive.

Jon Braatz

we'll Well, see happens. what

Thomas Ferguson

We what will see happens.

view a would as that So we positive.

Operator

John is & Company. Sidoti next The question from Franzreb follow-up with a

John Franzreb

Yes.

thoughts some on Just M&A.

that if galvanizing as it business. to down leverage. You of that's side? curious the are you'd I'm on reengage to paint might the said explore side opportunities the pull limited Or start there you the

can us just And examples? some so kind you give of

Thomas Ferguson

Yes.

active we if that Those multisite it in and obviously, margins looking the We'd the deals those. price, view growth. them galvanizing. of think, are line is almost them again. for we up slam for a I as our run for organic if we at bring any everybody and of we're the look We the be front came right one-off reasonable to dunks our happy. If playbook get fleet bolt-ons

you're be be But about tend is line, on because the a it million bigger you significant. end looking in to of we side at site to a high -- that's $XXX invested new you're high going one-off scale. they're the think side, Precoat of obviously to well, going even bigger -- the which the On still, fairly

opportunities some it out bolt-on. just still like are bolt-on there. There we as for view it view Precoat We as

playbook, infrastructure, of the G&A care So customers. performance, leverage operating improve the run take

on are them But So so. of screen it. if playbook those kind there's so yes, same we're radar will. But looking our as many not of you at

John Franzreb

Congratulations again.

Operator

question next Timna Wolfe The Tanners comes with from Research.

Timna Tanners

I about little ask wanted landscape. to bit the competitive just a

market for competitor Any share there, to of I more share? been some quarters. that try to share you've Or opportunities lost started please? So back update that gains market in referring gains? Are know to there recent market claw any has that

Thomas Ferguson

Yes, things. a couple of Great question.

-- it's which of kettles a abnormal. couple online, X something I that is & talk players a BNS up adding got so not coming capacity also multisite Hill the want as and or of folks which year, of there galvanizing there's or coming Smith, It's that. to typical kind the some every usually match -- the the buying mean side, the continue that either capacity be in and kind kettle There's it's to out about. we you've On go seeing operates like that are buying we we're Valmont U.S. why

think I the in in that's growth marketplace. demand all line economic with expected normal and growth the

in? where much. plants? have go more the kind don't it of got where around already where it Does space go For several open we that kettle does in Or go us, it's does we've into

that's added. -- capacity being for So it internal or is

So not a lot there. of change

or like new said, I kettles X year, is X think this which not online coming Just I abnormal.

side, the I'd fundamentally It and adding say that, relatively this capacity, year. this supply/demand. their a year Precoat folks lines the normal. a that does to change like And line SDIs expected are couple on to online not There's of come on the it's coming it's paint or mill

so independents capacity the paint -- coming -- being are the we're extent. And don't own part, themselves, seeing We're these Precoat on their seeing think not anything don't where added on great I adding going the it's side, they're most to to a lines for in. I -- capacity

down or either know, unconvert and to let then de-vertically paint and line customers still I guess So slowing XX-year-old or and seeing their, we're I instead -- out to line. don't get lines of if anything, or we're XX-year-old or XX trying us

Precoat So side. something you on or the if I have shifted dynamics to add to it, think particularly Jason, don't market the whole want David, a lot,

David Nark

no. again, think, don't I

Timna Tanners

demand you lines, at saying? regain what balance think to be corresponding other SDI you're paint attempts or do share, there'll the mentioned that capacity to additional so the with additional Is and that? So additional you

Thomas Ferguson

tariffs be if going Yes, steel then be -- paint are manufactured is paint would of that's one the at less countries. imported, that lines particularly, impacts those here the steel of being looking And to how we're to it. necessary painted the being that in

So the capacity. that that increased of just would accelerate use

Timna Tanners

also that then far structure, with And in USMCA Helpful. you as like restricted impact? about were how the think if would exports exports, as line tariff

David Nark

also more end Precoat as I Yes, but you think look out side, use our upon are key to help and going prepainted certain that it's of depending it's if in exports, got of product exports see a the what coming intended today. is. type using we're markets the side, steel to that's at on the galvanizing going We've lot customers

positive. that we So a as view

Operator

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

Thomas Ferguson

excited future And fiscal are Thank after you've balance finish hopefully, you -- right. to All look our and XXXX out fiscal in this into for forward issuing as next guidance for our to months. a talking XXXX now for couple about as and of everybody, going we us. you. the you joining we you, year, we year, are Thank of

thank to for forward So you and joining we you us, look to time. talking next

Operator

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

You may now disconnect.

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