AZZ Inc.

Good morning and welcome to the AZZ Inc. First Quarter Financial Year 2020 Financial Results Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw a question, please press star then two. Please note, today's event is being recorded. At this time, I would like to turn the conference over to Joe Dorme, Managing Partner, Lithum Partners. Please proceed.

Thanks, Chris. Good morning and thank you for joining us today to review the financial results of AZZ Inc. for the first quarter of fiscal year 2020 ended May 31st, 2019. On the call representing the company are Mr. Tom Ferguson, Chief Executive Officer, and Mr. Paul Fellman, Chief Financial Officer. After the conclusion of today's prepared remarks, we will open the call for a question and answer session. Please note there is a slide presentation for today's call, which can be found on AZZ's Investor Relations page under Financial Information at www.azz.com. Before we begin with prepared remarks, I'd like to remind everyone certain statements made by the management team of AZZ during this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Except for the statements of historical fact, this conference call may contain forward-looking statements that involve risks and uncertainties some of which are detailed from time to time in documents filed by AZZ with the United States Securities and Exchange Commission, including the annual report on Form 10-K for the fiscal year ended February 28, 2019. Those risks and uncertainties include, but are not limited to, changes in customer demand and response to products and services offered by the company, including demand by the power generation markets, electrical transmission and distribution markets, the industrial markets, the metal coating markets, prices and raw material costs, including zinc and natural gas, which are used in the hot dip galvanizing process, changes in the political stability and economic conditions of the various markets that AZZ serves, foreign and domestic, customer requested delays of shipment, acquisition opportunities, currency exchange rate, adequate financing, and availability of experienced management and employees to implement the company's growth strategies. the company can give no assurance that such forward-looking statements will prove to be correct. These statements are based on information as of the date hereof, and AZZ assumes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. With that said, let me turn the call to Mr. Tom Ferguson, Chief Executive Officer of AZZ. Tom?

Thanks, Joe. Welcome to our first quarter fiscal year 2020 earnings call, and thank you for joining us this morning. We are pleased with a solid start in fiscal year 2020. We generated 10% revenue growth and 35% net income growth versus prior year. Our energy segment had a fairly normal spring turnaround season, shipped the portion of the high-voltage bus Chinese order that pushed out of the last quarter, and regained operational traction in most businesses. The metal coating segment experienced increased demand in the solar and petrochemical markets and contribution from the acquisition of Tennessee Galvanizing and K2 partners. Overall, we generated $289 million in revenue, which is over 10 percent growth versus Q1 fiscal year 2019. The metal coatings team improved operational efficiencies as the usage of DGS, which is our digital galvanizing system, continues to grow in our galvanizing plants. We also experienced improved contribution from surface technologies and continued our emphasis on value pricing. We experienced lower cost zinc flowing through our kettles, although labor costs continue to rise as the craft labor market remains tight. Overall, we were able to drive net income up over 35 percent versus first quarter last year to 21.3 million. While our consolidated bookings were down 13 percent as compared to the first quarter last year, it is important to note During the first half of fiscal year 2019, we booked two large Chinese orders with $45 million in the first quarter and $55 million in the second quarter, and also had a very large international order for welding solutions. We continue to build on the positive momentum in the energy segment with a strong backlog of more than $300 million. This sets the stage for solid performance into the back half of the year, while our metal coatings business continues to gain traction from our key initiatives to drive growth both organically and through acquisitions. The metal coating segment revenue increased 6 percent from the first quarter of last year. Operating margins increased to 24.1 percent compared to 21.9 percent in the first quarter of fiscal 2019. This is due to lower zinc costs flowing through our kettles, value pricing, and the immediate contribution our two acquisitions made in the quarter. We have taken steps to improve labor productivity and are seeing our digital galvanizing system driving greater operational efficiencies and productivity. We remain the industry leader in North America with 41 galvanizing plants. We are pleased to be gaining meaningful traction in our new businesses, powder coating, plating, and galvanized rebar. These make up our AZZ Surface Technologies business group. This gives us growing confidence that our investments will yield positive financial performance in the years to come. Our energy segment high voltage bus business had a strong first quarter, executing on a large contract in China that, along with other Chinese contracts, will continue to be shipped throughout this fiscal year. While some of our electrical serve markets displayed improvement compared to prior year, our oil past businesses are seeing somewhat reduced demand. We are especially pleased with the demand for our specialty welding solutions both domestically and internationally, particularly as our investments in Europe, Brazil, and Canada have positioned us to participate in these opportunities and reduced our dependence on the U.S. nuclear market. We remain somewhat cautious due to the uncertainty related to tariffs and the Chinese trade situation, as well as the tighter market for labor in many of our U.S. locations. Looking forward, we are reaffirming our previously issued fiscal 2020 guidance of earnings per share in the range of $2.25 to $2.75 per diluted share. and annual sales in the range of $950 million to $1 billion, $30 million. And with that, I'll turn it over to Paul Feldman. Paul? Thanks, Tom.