AZZ Inc.

Hello and welcome to the AZZ Incorporated first quarter 2024 earnings conference call and webcast. 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. 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 from the question queue, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Sandy Martin with three-part advisors. Please go ahead.

Thank you, operator. Good morning, and thank you for joining us today to review AZZ's financial results for the fiscal 2024 first quarter ended May 31, 2023. Joining the call today are Tom Ferguson, President and Chief Executive Officer, Philip Schlaum, Chief Financial Officer, and David Nark, Senior Vice President, Marketing, Communications, and Investor Relations. After the conclusion of today's prepared remarks, we will open the call for questions. Please note there is a webcast and slide presentation for today's call, which can be found on AZZ's Investor Relations page under the latest earnings presentation at azz.com. Before we begin, I would like to remind everyone that our discussion today will include forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, by their nature, are uncertain and outside of the company's control. Except for actual results, our comments containing forward-looking statements may 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 10k for the fiscal year these statements are not guarantees of future performance and therefore undue reliance should not be placed upon them actual results could differ materially from these expectations in addition today's call will include a discussion of non-gap financial measures Non-GAAP measures should be considered as a supplement to and not substitute for GAAP financial measures. We refer you to the reconciliation of non-GAAP to the nearest GAAP measure included in today's earnings press release and investor presentation for future detail, further detail. The earnings press release and Q1 presentation are posted on our website and have been included in the form 8K submitted to the SEC. I would now like to turn the call over to Tom Ferguson. Tom?

Thank you, Sandy. Good morning, everyone. Thank you for joining us for a review of our fiscal 2024 first quarter results. Today, I will provide an overview of our first quarter performance, talk about progress made with our digital galvanizing system or DGS technology, and end with a discussion of what we are seeing in the demand environment this year, as well as our outlook for the rest of fiscal 2024. I'm quite pleased with the pride and passion of our employees as they kicked off fiscal year 2024 by continuing to provide outstanding customer service and drive operating performance. Please note that this quarter, we are focusing primarily on sequential comparisons due to only having pre-code for two weeks of the first quarter last year. Turning to slide three, we are off to a strong start to the fiscal year with total sales of $391 million. up 16.2% on a sequential basis. Metal Coatings delivered a record-setting sales quarter of $169 million, up 3.3% versus last year. I'm also pleased to report that our pre-code metals business delivered sequentially higher sales this quarter, totaling $222 million, up 18.7% compared to the fourth quarter. On a comparable basis, pre-code sales declined slightly versus a record first quarter in fiscal 2023. This is primarily attributable to last year's inventory ramp-up in reaction to supply chain disruptions and was not anticipated to repeat this year. We improved our profitability in the first quarter by delivering adjusted earnings per share of $1.14 against a prior year EPS comparison of $1.10, keeping in mind these are on significantly different share counts, which Phillip will cover in a minute. In addition, we generated strong adjusted EBITDA of $85.4 million, up 62.6% over the prior year, or 21.8% of sales. Our total adjusted EBITDA margin increased sequentially by 480 basis points over the fourth quarter due to seasonally higher sales that drove our improved fixed cost leverage, coupled with the impact of certain production improvement initiatives implemented previously. Our first quarter metal coatings EBITDA margin was 30.7%. up sequentially by 370 basis points, and our pre-coat metals EBITDA was 19.4% of 560 basis points. The past two quarters, we discussed the disruption caused by excessive customer-owned inventories at most pre-coat plants. In the first quarter, we successfully resolved these issues and achieved margins for pre-coat that fell comfortably within our intended targets. Pre-code did see softer demand in HVAC, transportation, and some construction markets in Q1, but we remain confident that the full year will be in line with projections as they continue to focus on converting customers to more environmentally friendly pre-painted solutions. Like the metal coatings business, pre-code has a highly variable cost structure that allows them to protect margins when volume fluctuations do occur for any extended period. I will cover this more in our outlook discussion in a few moments. However, we anticipated this current demand environment, which was built into our annual guidance, and we are pleased that first quarter results met our expectations. Kurt and the team will continue to drive growth through their supply chain solution strategies, focusing on market expansion through post-paint conversions and strategic long-term supply agreements with Blue Chip customers. In a few minutes, Phillip will provide more details of our first quarter results and speak to our current year capital allocation priorities. We continue to carefully manage cash and capital deployments to ensure that we invest in high return investments well above our cost of capital, pay down debt, and de-lever the company in a disciplined way. For the balance of this year, we have taken acquisitions off the table as we focus on reducing debt. In addition to high value investments and meaningful debt reduction, we are laser focused on value creation and high ROI projects and initiatives to drive incremental shareholder value. I will turn now to our digital galvanizing system, or DGS, technology. For the past seven years, we have been digitizing our galvanizing operations to improve productivity, efficiencies, and energy consumption. Approximately 18 months ago, we enhanced our proprietary state-of-the-art technology on the customer side to allow us to have a more integrated relationship with our customers. This was an important pivot away from an off-the-shelf CRM tool to full utilization of an internally built tool linking AZZ's important customer relationship management system to our enterprise-wide Oracle ERP system. We are excited to report that this technology has successfully eliminated nearly all paper in our shops and dramatically improved the quality and speed of our customer interactions. When combined with our outstanding servant-minor leadership team, deep management bench, and intense focus on service and quality, we believe AZZ has built a sustainably differentiated hot-dip galvanizing business. Precoat, which operates predominantly more continuous flow automated processes, has also developed primary proprietary applications such as CoilZone that provide them similar productivity and enhanced customer engagement. More broadly, we are very excited about the power and scale of the transformed AZZ. We are working collaboratively with our people, processes, and technology to deliver services and solutions to customers from both our metal coatings and coil coatings businesses. Based on our transformative actions over the last 12 months, we have effectively added more than $100 million of incremental EBITDA annually between the sale of our majority interest in AIS and the acquisition of Precub. This strategic pure play shift into coding segments that command industry-leading market positions, accompanied by a broad portfolio of galvanizing and cold coding services and solutions, allow us to deliver an exceptional customer experience. With that, I will turn it over to Philip.