AZZ Inc.

Good morning and welcome to the AZZ Inc. Second Quarter 2024 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. 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 your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Sandy Martin, Investor Relations. 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 second quarter ended August 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 of Marketing, Communications, and Investor Relations. After the conclusion of today's prepared remarks, we will open the call for questions. Please note there's a live webcast for today's call, which can be found at www.azz.com slash investor dash events. 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 followed by AZZ with the Securities and Exchange Commission, including the annual report on Form 10-K 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-GAAP financial measures. Non-GAAP financial measures should be considered as a supplement to and not a substitute for GAAP measures. We refer you to the reconciliations of non-GAAP to the nearest GAAP measure included in today's earnings press release. I would now like to turn the call over to Tom Ferguson. Tom?

Thank you, Sandy. Good morning, and thank you for joining us to review our fiscal 2024 second quarter results. Today, I will give you an overview of our second quarter performance, then pass it to Philip to walk through our detailed financials. After that, Dave will provide an update on AZZs and markets. And then I will cover our full year outlook and take your questions. Before we discuss second quarter, I first want to say that I am incredibly appreciative of all of our employees' dedication and disciplined execution of AZZ's strategies and goals this year. Now, turning to our results. As I discussed last quarter, we expected the second quarter's performance to mirror the first quarter's results, and that is essentially what happened. We did improve our adjusted EBITDA performance, both in terms of dollars and EBITDA margin compared to the first quarter. Total sales were $398.5 million, with Metal Coatings delivering another record-setting sales quarter of almost $170 million, up 2.4% versus last year. Our Metal Coatings team continues to demonstrate their ability to drive value by offering consistently great quality and service. As expected, due to lower market activity, volumes were down and pre-code sales for the second quarter declined by 5% to $229 million, versus the second quarter of last year. Let me note that overall construction unit volume, according to the MBMA, is down about 11% over the past year, and the Preco team has been able to defend share without chasing lower margin volume. Focusing on flexing capacity to the available volume and driving operating efficiencies has resulted in solid EBITDA margin performance. Despite slightly lower consolidated sales for the quarter, we exceeded our EBITDA target margins for metal coatings and performed nicely within the range for pre-coated metals. During the second quarter, we grew adjusted earnings per share to $1.27 versus $1.21 per share in the second quarter of last year. In addition, we generated adjusted EBITDA of $88 million or 22.1% of sales. Our second quarter metal coatings EBITDA margin was 30.4%, and our pre-coat metals EBITDA was 20.3%. We're pleased to have worked through customer inventory issues that impacted the end of last year to achieve margins for both segments that were within or above our targeted ranges. We continue to enhance our digital galvanizing system, or DGS, which is the proprietary technology embedded at our facilities. This critical system not only connects our locations to customers with timely quality engagements, but it also provides real-time visibility for time-sensitive issues that advance production, customer service, and financial results. We continue to expand the capabilities of DGS to improve our operations and customer-facing interactions. Ricoh Metals, which operates automated continuous flow paint coating lines, continues to enhance CoilZone, its proprietary application for managing customer inventory and providing them real-time access to their project scheduling and inventory. These technology-driven platforms coupled with our servant-minded leadership teams position AZZ as a sustainably differentiated metal coatings business for our customers. As Philip would discuss more in a few moments, we continue to prudently manage cash and capital deployments as we grow and build a structurally higher margin profile company. As interest expense continues to be a headwind versus our budgets, we remain committed to reducing debt and consequently are not actively pursuing acquisitions for the remainder of this fiscal year. Also, we continue to be laser-focused on value creation, high return on invested capital projects, and initiatives that drive shareholder value. Our expectations for growth and profitability have not changed. We will continue to use our industry-leading metal coating services and solutions to capitalize on market opportunities. We're further leveraging our scale in North America focusing on margins and on generating strong cash flows as we reduce working capital. Based on our strategic actions over the last 12 to 18 months, we are generating significantly higher run rate EBITDA and margin. We believe that AZZ's pure play metal coatings businesses are well positioned to uniquely serve customers with a fortified competitive moat created by extensive technical expertise and service capabilities, proprietary production technologies, and strategically placed facilities across North America. With that, I will turn it over to Philip.