AZZ Inc.

Good day, and welcome to the AZZ Inc. Third Quarter of Fiscal Year 2021 Financial Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please know that this event is being recorded. I would now like to turn the conference over to Joe Dorme. Please go ahead, sir.

Thank you, Chuck. Good morning and thank you for joining us today to review the financial results of AZZ Inc. for the third quarter of fiscal year 2021, ended November 30th, 2020. Joining the call today are Tom Ferguson, Chief Executive Officer, Philip Shlom, Chief Financial Officer, and David Nark, Senior Vice President, Marketing, Communications, and IR. After the conclusion of today's prepared remarks, we'll 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 Securities and Exchange Commission, including the annual report on Form 10-K for the fiscal year ended February 29, 2020. 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, and 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 shipments, acquisition opportunities, currency exchange rates, adequate financing, and availability of experienced management and employees to implement the company's growth strategies. In addition, AZZ's customers and its operations could be potentially adversely impacted by the ongoing COVID-19 pandemic. 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 out of the way, let me turn the call over to Tom Ferguson, Chief Executive Officer of AZZ. Tom?

Thanks, Joe. Happy New Year to everyone, and welcome to our third quarter fiscal year 2021 earnings call. And thank you for joining us this morning. While we continue to be impacted by COVID-19, our markets are stabilizing and our businesses have adapted to the new normal way of operating, which encompasses a variety of challenges that we have had to overcome. While we have had an uptick in COVID cases, all of our plants have remained open with normal production. The collective efforts of our folks generated consolidated sales of $227 million for the third quarter, split almost equally between our metal coatings and infrastructure solution segments. We had sequential improvement in operating performance, and we have returned over $44 million of capital to shareholders in the form of cash dividends and share repurchases through the third quarter of this year. Also, we have made good progress on our board-led strategic review that we announced earlier. While sales were down 22% from Q3 of last year, our realignment activities and operational performance generated net income of $19.7 million, down about 10% from the same period of the prior year. This resulted in EPS of 76 cents per diluted share or 80 cents on an adjusted basis. Our metal coatings business continues to execute strongly while navigating the economic uncertainty resulting from COVID. Hot dip galvanizing sales were down 8.8% from the same quarter last year, while surface technologies was down more due to the nature of their customer base being more impacted by COVID. Within our infrastructure solution segment, third quarter sales results improved sequentially, even with a muted fall refining turnaround season. Segment results were below the same quarter of the prior year due to the protracted weak demand for refined oil products, as well as lower international sales, primarily from China. As we previously communicated earlier this year, due to shifting industry and customer dynamics and the protracted impact of the COVID-19 pandemic, we began to take aggressive steps to accelerate the strategic restructure of our portfolio of businesses with the goal of becoming predominantly a coatings business. Our actions during the quarter included recording a loss on the sale of SMS of $1.9 million and initiating a comprehensive board-led review of our businesses with the assistance of leading independent financial, legal, and tax advisors. As I mentioned, our review of the infrastructure solutions businesses and associated assets and the exploration of other capital allocation opportunities to maximize shareholder value is ongoing, and I am pleased with the progress the team has made during the quarter. Finally, given the share repurchase is currently in attractive use of our capital, we repurchased over 652,000 shares in the quarter, which brings our total for the year to over 850,000 shares. While our metal coating segment had lower sales than the third quarter of the prior year, they were able to generate higher operating income and improved operating margins to 24.8%. Surface technology sales were still way off at some plants, primarily due to how badly COVID impacted demand for several of their largest customers. However, during the quarter, Surface Technologies began to reopen powder coating lines in two Texas plants that had previously been idled earlier in the year. I am particularly pleased with how the metal coatings team continues to drive value through outstanding customer service and operational performance, while maintaining market-level pricing as they benefited from lower zinc costs during the quarter. We remain committed to our strategic growth plan for this segment, as evidenced by last week's announcement regarding the acquisition of Acme Galvanizing in Milwaukee, Wisconsin. Although COVID has slowed our normal pace of acquisitions, I am grateful that the team was able to close this acquisition right after the holidays and want to take a moment to welcome the Acme Galvanizing employees and customers to AZZ. As we previously indicated, On our second quarter earnings call, the third quarter turned out sequentially stronger, but turnaround activity remained constrained by COVID travel restrictions and continued low demand for refinery products. Our infrastructure solution segment's third quarter fiscal 2021 sales decreased by 31.5% to $111 million. This resulted in operating income of $8.7 million as compared to $17.4 million in Q3 a year ago. As I mentioned previously, the decline in sales was a result of muted refinery turnaround activity in the quarter, particularly in the U.S., as well as lower China high-voltage bus shipments and decreased demand for some of our oil patch-related products and services. WSI's domestic and foreign facilities remained open and working, and crews deployed on several smaller projects. All of the electrical platform's operations also remained open throughout the quarter as they effectively managed the uptick in COVID cases. Due to the prolonged uncertainty associated with COVID pandemic on many of our end markets, we will not provide an update to our previously suspended fiscal 2021 earnings and sales guidance range. However, we believe our fourth quarter will be seasonally lower than the third quarter, but we should generate improved earnings versus the fourth quarter adjusted earnings of last year. Our low debt level, combined with our consistent ability to generate strong cash flow, provides us with the ability to effectively manage our debt and liquidity throughout the remainder of fiscal year 2021 and beyond. We expect to establish guidance for our normal cadence for the fiscal 2022 as we wrap up our annual budgeting process and review it at our upcoming board meetings. Our metal coatings business is operating at a fairly normal level, despite some continued restrictions and disruptions in a few of the cities and states we operate in. We are confident, though, that our business remains vital to improving and sustaining infrastructure, so we will use the remainder of our fiscal year to position our core businesses to emerge stronger and better equipped to provide sustainable profitability growth long into the future. With that said, I'll turn it over to Philip.

Thanks, Tom. For the third quarter of fiscal year 2021, we reported sales, as Tommen noted, of $226.6 million, a $64.5 million decrease, or 22.2% lower than the third quarter of the prior year. Sales were down primarily as a result of lower sales in the company's infrastructure industrial platform as a result of the pandemic and lost aggregate sales from divested entities over the past year. Net income for the third quarter of fiscal 21 was $19.7 million, a decrease of $2.3 million or 10.6% below the prior year third quarter. Diluted EPS of 76 cents per share declined 9.5% compared to the 84 cents per share in the prior year third quarter. Despite the lower sales, third quarter fiscal 2021 gross margin improved 100 basis points to 24.1% on a year-over-year basis and was driven by continued strong margin performance within the metal coating segment. Operating margins of 12.3% of sales increased 80 basis points compared to 11.5% of sales in the prior year. Operating income for the third quarter of fiscal 2021 decreased 16.6% to $27.9 million from $33.4 million in the prior year third quarter. Third quarter EBITDA of $39.6 million decreased 15.4% compared to $46.8 million in EBITDA in last year's third quarter. As for the year-to-date results, through the third quarter of fiscal 21, we reported year-to-date sales of $643.3 million, 21.2% below the $816.5 million in sales in the same period last year. Year-to-date net income for the third quarter was $23.5 million, a decrease of $35.4 million, or 60.2% from the same period last year. Year-to-date net income, as adjusted for the restructuring and impairment charges primarily incurred early in the year, was $39 million, which was $19.9 million, or 33.8% lower than the comparable prior year results. Year-to-date reported diluted EPS declined 59.8% to $0.90 a share. as compared to $2.24 per share for the same period last year, primarily driven by restructuring and impairment charges, as well as softer markets and travel restrictions resulting from the pandemic, mostly in our infrastructure solution segment. On an adjusted basis, year-to-date 2021 diluted EPS was $1.49 per share, a reduction of 33.5% from the prior year. Our fiscal year 2021 year-to-date gross margin of 22.2% declined 60 basis points from the gross margin of 22.8% from the prior year. Year-to-date reported operating profit of 42.8 million was 43.8 million, or 50.5% lower than the 86.6 million reported for the same period last year. Year-to-date reported operating margin of 6.7% decreased 390 basis points compared to 10.6% last year. On a year-to-date basis, excluding the impact of the $20.3 million in restructuring and impairment charges, operating margins were 9.8% or 80 basis points below prior year. I'll now turn to discussion regarding our liquidity and capital allocation. On a year-to-date basis, our net cash provided by operating activities of $59.4 million declined $12.7 million or 17.6% from the comparable period in the prior year primarily the impact of lower year-to-date net income. During the third quarter of fiscal 2021, as Tom had noted, we repurchased 652,000 shares of our common stock at an average price of $37.66. On a year-to-date basis, we have repurchased 852,500,000 shares at an average price of $36.31 per share. Investments in capital equipment to support our business were $8.6 million for the third quarter and $27.9 million on a year-to-date basis, which are in line with our expectations of spending roughly $35 million for the year. At the end of our third quarter of 2021, our existing debt of $182 million is down $20.9 million from the end of the year as we continue to effectively manage our balance sheet. I will now turn it back to Tom for his final comments. Tom?

Thank you, Philip. I will close by sharing with you some key indicators that we continue to monitor. For the metal coating segment, fabrication activity will remain solid during the balance of our fourth quarter, and we were off to a reasonably good start in December. Within our galvanizing business, we are closely tracking steel fabrication and construction activity. Zinc costs in our kettles are relatively stable, but we anticipate increases in zinc costs in fiscal 2022, as zinc prices on the LME have been rising for a while now. The Acme galvanizing team is being quickly integrated into our existing operating network, bringing our total hot-dip galvanizing locations to a market-leading 40 sites in North America, in spite of recently closing two Gulf Coast locations. For surface technologies, we are primarily focused on growing sales with both existing and new customers and driving operational process improvements. Within the industrial platform of the infrastructure solution segment, we continue to carefully monitor the COVID situation in the states with large refining capacities. Currently, we still are experiencing travel restrictions in some countries. For the electrical platform of the infrastructure solution segment, we are carefully tracking proposal activity and experienced solid bookings in December. We will continue to focus on growing the backlog for many of our business units so that we enter fiscal year 2022 in good shape. Finally, for corporate, we have strong cash management processes and have further focused our oversight on cash flow indicators and customer credit. Currently, we have not experienced any slowdown in customer payments. Post-COVID crisis, we remain committed to our growth strategy around metal coatings and achieving 21% to 23% operating margins, including an increased contribution from surface technologies. We believe galvanizing will tend to run to the high end, if not above the 23%, while surface technologies is going to have to rebuild its margin profile as customer demand grows. For infrastructure solutions, we will continue to focus on improving operating margins while we complete the comprehensive strategic evaluation of this segment. We feel quite confident, in spite of COVID and other disruptions, about the actions we have already taken and the restructuring activities that are now underway. We intend to focus on completing the board-led review of our businesses and finish this fiscal year well-positioned to enter fiscal 2022 with momentum. Finally, we will remain active in the area of M&A, primarily in metal coatings, and will aggressively seek activities that support our strategic growth plan. While pandemic-related deal travel was still somewhat restricted during the third quarter, we are seeing improved travel conditions and have an active portfolio of opportunities that we will continue to pursue. And with that, we'll open it up for questions.

We will now begin the question and answer session. To ask a question, you may press stars and 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press stars and 2. At this time, we'll pause momentarily to assemble our roster. And our first question will come from John Fresrab with Sidoti & Company. Please go ahead.

Good morning, Tom.

Hey, John.

Just wanted to show you a couple quick questions. First, on the metal coating segment, the improvement in the margin on the year-over-year, how much does that, the operating margin, how much does that reflect the divestiture of some of the underperforming businesses versus the improvement in zinc pricing?

You know, that's a good question. It's still predominantly driven by operational improvement, driving zinc price versus cost. The divestiture of Galva Bar had some effect, but really not that much. And then the facilities we closed earlier in the year, we picked up most of that business in other locations.

Okay, so really it was more of a change in the business profile than the lower price of zinc. Am I getting that correct?

No, no, the lower cost of zinc and our ability to sell on value did play a part. But keeping our operations open and operating through COVID, I think, was something we point to a lot.

Okay. You spoke about last conference call that you anticipated a weak turnaround season this fall, but that the order bookings were promising for the spring. Is that still the case, or has it been changed either to the positive or negative on the infrastructure side of the business?

Yeah, fall came in about what we thought. You know, the WSI business was off significantly versus Q3 of last year for that reason. We were able to travel to some locations, so it's mostly driven by weak refined oil product demand, which doesn't drive turnarounds. As far as the spring, we still feel good about the spring. I wouldn't say it's stacking up to be a boomer of a spring turnaround season, but we are quoting well and getting some orders on the books. So we feel good about it, but definitely not. It seems like things are going to take a little bit longer for refineries to start doing turnarounds again as gasoline demand and jet fuel demand continues to grow. So while we feel pretty good about this spring, I'd say a lot of this is looking like it's going to spread through the year.

Okay. And one last question, I'll get back into Q. Were there any professional fees that you incurred during the quarter or anticipate in the fourth quarter you could parcel out for us?

Yeah, we are incurring some fees related to our comprehensive review that we've disclosed. I wouldn't say they're overly significant at this point in time.

Okay. I'll get back into you. Thanks, guys.

All right, John. Our next question will come from Noel Diltz with Stifel. Please go ahead. Pardon me. It seems that Diltz has It seems that she has left the question queue. Our next question will come from John Bratz with Kansas City Capital. Please go ahead.

Morning, everyone. Tom, a question. As you do your strategic review and you think about being more of a metal coatings company, you currently have galvanized and you have surface technology. What might else there be that would fit into that strategy?

You know, I think there's a lot of different types of coatings, lots of different types of plating, anodizing, things like that. So when we talk about coatings versus just metal coatings, it opens it up quite a bit because we're already, as we've found with the businesses we've acquired in the last couple of years, we're coating a lot more than just metal pieces. So that makes it a really, really wide market. The issue for us is finding things that have some scale, that can be differentiated, that require more than setting up a paint shop in a garage. So I think while it's a wide open set of opportunities for us, it's something that we do have you know, tight parameters on in terms of what we're looking for because of our commitments on the margin profile and our ability to differentiate. So, you know, I think that's, and there continues to be galvanizing opportunities. And one of the things we're completing another spin plant down in Houston that I think goes online due to all the weather delays and COVID delays, it's going online at the end of this month, I believe. And so we look at that as other opportunities for us to grow organically. And they're still, you know, obviously with the acquisition of Acme, we've been working on that deal for a while, and it had been delayed because of COVID. And so as we start to get out again, we're in contact with some of the traditional galvanizing deals.

Yep, okay.

And so we feel pretty good about things.

Okay. Is there a – we talk about parameters – Anything you want to – can you tell us in terms of financial parameters, size, what you might want to – what you might be looking at in terms of size?

You know, we pretty much have to look at things north of $10 million in revenue. You know, obviously 10 to – up to over $100 million is – so, you know, we prefer 15 to 25 million is probably, you know, our preferred target. But we're more focused on does it have, you know, an operating leadership team? Does it have – because we're, you know, unlike galvanizing, we're still building that talent bench. So we don't have people we can just plug and play the way we do on galvanizing. So we are a little more careful about, you know, what kind of leadership's in place. Usually we prefer the owners go away, but I'd say – size, and really, I'll say what we're not looking for, and there's a lot of this out there, is the 5 and 15s, as I call them, so 5% EBIT, 15% EBITDA, because if they're multi-site deals, they tend to have been acquisitive, and so they have a lot of DA, but not a lot of operating income. So this narrows down the slate of opportunities. and yet it's still a pretty good pipeline that we have in front of us.

Tom, one final question. Just after December, I had a nice conversation with a fertilizer company here domestically, and we talked about a lot of things, but they talked about their turnaround season, and it's going to be sort of abbreviated for them just because there's travel restrictions and so on and so forth. And I guess as you look at that spring turnaround season, and the activity you're bidding on and so on, is some of that still potentially at risk of being postponed or delayed, if you want to call it, because of this increase in COVID cases? Or are they sort of, you know, at this point locked in and it's going to happen?

I think that, Ken, as I answered a little bit earlier, that is what gives us some pause, you know, in thinking about it being as strong as we probably were thinking on the last earnings call. I do think some of this has to go forward and of course we prefer when we get engineering orders in and that starts to give us a line of sight to how big the project is and some surety that it is going forward. Very seldom once we have engineering orders do they not go forward. So yeah, there's still some concern. We are seeing some activity in January, February that probably normally we would see, either have seen in the fall or we would see in the spring. So it does seem that the petrochem sector is spreading things out a little bit, perhaps because of low demand. So they are able to spread things. So that's why I say some of this could, it could be a longer season, without the big spike in the spring, but actually that's good for us because we do have limitations on the number of crews we have to deploy.

Okay.

All right, Tom, thank you very much. Appreciate it. Sure. Our next question will come from Noelle Diltz with Stifel. Please go ahead.

Hey, good morning. Hey, Noelle. Good morning. I'm not sure what went on before I was on the line, but I didn't go anywhere. So I just wanted to start first on the demand side for infrastructure solutions a little bit more on the electrical side of the business. So sorry if I missed this, but could you just help me understand what's driving the stronger demand for switchgear than you were originally anticipating and the degree to which you think that might be sustainable over the next few quarters?

Yeah, I think the transmission distribution spend has been good, and some of the solar power gen activity has been good as well. So, you know, it's just the timing of some of these projects where they're getting to that stage where they need the switchgear. We also, with the acquisition of Oshkosh a couple years ago, we picked up more of an industrial switchgear line, and I call it industrial or even light rail, so it's broadened our opportunities for switchgear so we're not just dependent on the big utility grade stuff. So, although that's where we've had good activity recently. So, part of it's just our customer base and where we're focused and I'm not sure that it's indicative of a general uptick in the sector. more around our customer base. And enclosures is somewhat similar. I'd say some of our big OEM activity has been off on the enclosure side, but our industrial and some of the smaller stuff has been solid. So it's just a really mixed bag out there. And so part of this is just where we're selling and what we're picking up and and where our customers are active versus where they're not. Okay. Versus the bus side, which, you know, for the most part, the high voltage is focused on a lot of international activity. There's some domestic, and we've gotten some orders. But right now, you know, the last quarter was quiet. And medium voltage, we have a, you know, it's a fairly narrow offering that we have. So, you know, so we're – we're just slower than we were a couple of years ago.

Okay. Got it. And then sticking with infrastructure solutions, but shifting to profitability, you know, profitability in the quarter really exceeded my expectations. And particularly given that, you know, the, that the turnaround work has been that the industrial side, the turnaround work has still been slow. Could you speak to kind of how you're thinking about margins there moving forward? If this, as you said, you know, the term, turnaround equity remains somewhat muted as you look forward. I mean, I know the cost structure for that business is pretty flexible. So do you have it to a point where now where it's not, you know, as big of a drag as you were kind of looking at over the past few quarters?

Yeah, you touched on a good point there, Noel. We had taken pretty significant cost actions early, well, back in the spring when we saw that the spring had been wiped out. So we took out some of that, I hate to call it back office, but the SG&A in infrastructure solutions and adjusted capacity in some of the operations. So that, as we came into the third quarter with just moderate activity or even muted activity, we were able to get to pretty good margins on the work that we did have. because of our lower cost structure. As you know, though, that also then limits us on the upside when we have big opportunities, as we originally were anticipating in the spring. So, we do hope that it stretches out. I think the margin profile for infrastructure solutions, we continue to look at getting to that 10 to 12 percent operating margin, 15 percent EBITDA. And we think that's doable with the structure we have and with the actions we're taking on the international side to try to improve our ability to serve the international markets with a lower cost structure.

Okay, great. And then just shifting over to metal coating, any comments that you have on, again, I ask every quarter, any markets that were particularly strong or those that were particularly weak and, you know, how maybe any changes in the markets are impacting how you're thinking about the growth profile for that business over the next 12 months.

You know, we do love our metal coating side. So the galvanizing team did outstandingly well. keeping their facilities open and productive and efficient. So their margins were north of 25%, even probably close or in the 26% range for the quarter. And part of that, as I mentioned earlier, is driven by the price to zinc cost ratio, but also we give credit to some of the things we've done on the technology side with digital galvanizing system, DGS. It's allowing us to operate more efficiently and more productively and flex our plant capacity and adjust and then react to the data we're getting from it. So, we feel good about that on an ongoing basis. Our markets, As we kind of finish this year, we have a good line of sight for this quarter and feel good about how this year is going to turn out. As we get into next year, our customers are feeling okay right now. I think they're waiting to see is there going to be corporate tax reform, is there going to be an infrastructure bill, which wouldn't have much impact on them next year, but it kind of changes the attitude. I'd say we feel good about going forward. There is some competition coming into the market, a few new kettles next year that'll probably come online. At the same time, we've taken out some of our plants as have some other folks. We feel pretty good about the supply-demand balance in galvanizing and feel good about our team's ability to respond to it. I continue to believe sustaining North of 23, but my COO of Metal Coating doesn't like it when I say, you know, staying up around 25%, but they've demonstrated they're pretty good at doing that.

Okay, perfect. Thank you very much.

Our next question will come from DeForest Hinman with Wolthausen and Company. Please go ahead.

Hi, thanks for taking the questions. Just building on that last comment, can you extend that into pricing? You made, on the galvanizing side, you made reference to zinc pricing going up. Are we going to be able to move pricing directionally higher in 2021?

You know, I think there's a, generally that's, you know, as zinc, since zinc cost is about 25% of our cost, cost of goods sold on average, that it'll tend to move the market price up. As I like to tell people, we've got 40 galvanizing plants. We fight 40 different battles every week. But it would be our intent to, as our costs go up, to migrate our prices up. We did a good job, I think, of selling value, sustaining value. our prices. Some of that was because our facilities were open, and we were able to keep them fully staffed through COVID, which continues. So, yeah, that would be the intent, continuing to migrate price up as our costs go up, and we would hope that the market would respond to that, or our competitors would respond to that.

Okay, very helpful. Just clarity in the 10Q, there's a reference to the ACME transaction, and it says net proceeds were $4.2 million. Is that a bargain purchase gain, or is that just the way it's phrased, it was $4.2 million cash consideration?

That's the cash consideration. Okay.

Okay. And is that any type of EBITDA color there, or is that kind of more an asset-type purchase price number there that we're seeing?

That's more the asset purchase price. And as Thomas mentioned in the past, we get in pretty quickly, and we're able to integrate those facilities within the first three months. So we've already had a team up there on day one integrating them into our Oracle business system and moving them into the AZZ way of doing things.

Okay. And then related to the deal that we just announced, there's continued commentary that we're working on deals. Can you give us any color in terms of expectations for closing within the next six to 12 months and then potentially the outlay that any type of these deals could entail?

Oh, boy, I'm just hesitant to do it because, you know, we've been working on some deals we thought would be closed. So, yeah, I just hesitate to say we're going to get anything done in any specific time frame. We are traveling. We mostly do face-to-face deals. The ACME team we've been working with for quite a while, so there was a long relationship there. we have long relationships and a couple of other opportunities. And, and so I would hope that during the first part of the year, we can, can move those forward. But it's just, you know, I think there's, there's so many variables right now, but just look for us to continue to, we normally get a couple of deals every done every year. This year, we, you know, did divestitures and, In the early part of the year, and then only got one acquisition done. So I would think for this upcoming fiscal year, we'll get back into our normal, get a couple, three deals done on the acquisition side. But calling them in the first half versus the second, I really can't.

Okay, that's still helpful. And last question, can you just give us an update on the outlook for utilizing the share repurchase authorization? You know, pretty active in the third quarter. I think in the high 30s share price execution, you know, the markets responded well to the strategic review and the market's been moving up generally. Does the current share price dampen our expectations of utilizing the share purchase authorization when we're starting to think about capital deployment as it relates to, you know, buying our own stock or doing acquisitions?

That's a really good question. I think this is Philip. And one of the things we're doing is obviously going through this comprehensive review. And as part of that comprehensive review, we're looking at the valuation of AZZ and its pieces and where do we continue to buy. But we have board authorized $100 million in to spend, and depending on, as you were just asking, related to M&A activity, we'll evaluate how we deploy capital across the board.

Yeah, and I want to add, we had a 10B51 in place for the quarter, and one of the things we had not anticipated was the rapid run-up in our share price, and so we did outstrip it in the latter part of the quarter. You know, that's the kind of thing that maybe dampened our activity right at the end of the quarter. But, you know, those are the things we will look at. As Philip said, we've got a board meeting coming up. We've got, you know, an update on the evaluation activities, and one of that was looking at valuation. So, you know, we're just in the next couple of weeks. We'll have a better – idea which direction we're going to go.

Okay. Thank you for the call. I appreciate your time. Thank you.

Our next question will come from John Fresreb with Sidoti & Company. Please go ahead.

Yeah, Tom, I think you said in your prepared remarks that while you're continuing to suspend guidance that you're going to revisit it once you go through your budgetary process. Does that mean you'll be issuing guidance sometime this month like you have in the past or not?

You know, we would hope to. The only thing that gives me any pause is we do have this ongoing strategic evaluation activity And I just want to make sure we don't put guidance up for 22 and then two weeks later announce a strategic move. So that would be my only cautionary note. Other than that, it would be our intent to get back into cadence.

Got it. And just on the strategic review and the potential sale of the infrastructure business, what's the current likelihood of it being sold as a whole unit or being sold in piecemeal?

We're not at that point in the evaluation yet for me to handicap that, to be honest.

Okay. Give it a shot. Okay. Thank you.

All right, John. This concludes our question and answer session. I would like to turn the conference back over to Tom Ferguson for any closing remarks. Please go ahead, sir.

We just thank you all for being on the call. And as always, David Nark is available to take calls from folks if you want to have further discussions. We look forward to finishing out this year, being able to announce the direction from our strategic evaluation activities, and then we'll be talking to you at the end of this fiscal year, and hopefully on a positive note, and so we look forward to that. Thank you very much.

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