Q2 2021 AZZ Inc Earnings Call
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At this time I'd like to turn the conference call over to Mr., Joe Dorame with some partners. Sir. Please go ahead.
Thank you Jamie good morning, and thank you for joining us today to review the financial results of HBV Inc. for the second quarter of fiscal year 2021 ended March 31st 2020.
Joining the call today are Tom Ferguson, Chief Executive Officer.
Philip <unk> interim Chief Financial Officer, and David <unk>, Senior Vice President marketing and marketing and communications and Investor Relations.
After the conclusion of today's prepared remarks, we'll open the call for question and answer session. Please.
Please note there was a slide presentation for today's call, which can be found on easy Jeeves Investor Relations page under financial information.
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Before we begin with prepared remarks, I'd like to remind everyone that certain statements made by the management team of A's easy. 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 easy 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 coatings markets right.
This is a 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. It easy serves foreign and domestic customer requested delays of shipments acquisition opportunities currency exchange rates adequate financing Annabel.
Ability of experienced management and employees to implement the company's growth strategies.
In addition, 80 these customers and its operations could potentially be 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 hazy assumes no obligation to update any forward looking statements, whether as a result of new information future events or otherwise would.
With that out of the way, let me turn the call over to talk Ferguson, Chief Executive Officer of easy Tom.
Thanks, Joe and welcome to our second quarter fiscal 2021 earnings call and thank you for joining US. This morning, Let me first start by saying that COVID-19 is still very much front and center for all of US here at HSBC and continued continues to affect our results.
Top priorities and easy they continue to be ensuring employee health and safety supporting our customers.
During these unprecedented times, finishing this fiscal year, well and positioning the company for fiscal year 2022.
As well as young as an issue.
As an essential infrastructure manufacturing company all of our facilities remained open and screen.
I'm extremely proud of the where folks manage through this crisis during our first quarter and second quarter as well and took care of each other and our customers. During this pandemic, we're truly grateful for everyone's efforts allowed us to continue safe operation of our plants worldwide.
We entered the second quarter in June which is normally the final month of the seasonal spring turnaround season. Consequently, the quarter got off to a slow start historically, however, Q2 sequentially lower for our infrastructure solution segment under any circumstances.
Metal coating segment navigated the economic uncertainty well however results in our galvanizing business were impacted by several factors beyond cobot, but I will cover. These later as a.
As a result, our second quarter consolidated sales declined 13.9% versus the second quarter of the prior year adjusted net income decreased 16.7% to 30 million or.
Or 49 cents per diluted share in light of the disruption caused by coated owner markets in some of our operations, we decided to accelerate elements of our long term strategic plan and initiate some strategic actions that will have longer term benefits.
Our metal coating segment experienced a wide range of challenges plants experienced disruptions bifurcated in the Gulf to civil unrest in some cities and some even had difficulty finding direct labor.
Suffice it to say it was a crazy server.
Sales totaled $117 million for the quarter as compared to 125 million for the same quarter a year ago, I'm, particularly pleased with how our galvanizing team in particular.
Was able to benefit from lower zinc cost during the quarter, while maintaining above average industry pricing.
These actions coupled with our quality workmanship and outstanding customer service resulted in overall segment margins that were flat at 23%.
While our galvanizing margins in particular finished above 25%. Additionally.
Additionally, the metal coatings team did a nice job of integrating the powder coating and fighting operations and sales teams during the quarter. Many of our Patty powder coating customers that are close to reduce production because of cove. It begin to place orders again.
We remain committed to our strategic growth plan for the powder coating plating business and driving meaningful margin improvement postcode in 19 crisis. So much so that we chose to rename surface technologies to powder coating plating to better represent our focus for that business.
Because of the impact of cobin on the oil gas and petrochemical sectors, we made a difficult decision to classify some underutilized facilities as assets held for sale as.
As well as close a couple of sites and integrate their business into our other sites in these adjacent areas. We also.
We also closed an inflating say relocated its operations to a nearby plant.
We are excited by the progress the new an integrated team is making and the speed at which they are moving.
Leave the restructuring actions that are currently in process should provide approximately $2 million of savings benefits annually.
Our infrastructure solution segment segments second quarter fiscal 2021 sales decreased by 22.5% to 86 million.
Resulting in adjusted operating income of about 3 million as compared to about $4 million in the same quarter a year ago as I.
As I mentioned previously the decline in sales was a result of lack of refinery turnaround activity in June lower China high voltage bus shipments and lower overall demand for some of our electrical products and services.
While our industrial platform shops, we're opening working increase did begin deploying during the quarter. The summer is usually a period of weak activity in line.
In line with our strategy to reduce our participation in the U.S. nuclear sector lower outlook for activity in the oil patch sector and then our desire to focus on our core businesses. We initiated several restructuring actions. In this segment. These include personnel actions and site consolidations deciding to divest non core businesses. The buyers that are interested in.
The best in growing these businesses and impairing $2.5 million of inventory we believe.
We believe that third quarter will be sequentially better than Q2 of this year, but turnaround activity remains constrained by Covin travel restrictions and continued low demand for gasoline and jet fuel.
Due to the prolonged uncertainty associated with recent COVID-19 pandemic on many of our end markets and delays by some of our customers due to election uncertainty.
We were not able to accurately provide an update for the full year at this time.
We can say that our third quarter will be nicely improved sequentially over the second quarter, but it is unlikely to generate earnings we did in the strong third quarter of last year our load.
Our low debt levels combined with our consistent ability to generate cash gives us the confidence that we can manage both debt and liquidity satisfactorily throughout fiscal year 2001.
As well as beyond.
We hope to get back into a normal guidance cadence as we enter calendar year 2021.
And as we see customers returning to normal business engagement levels are metal coatings businesses operate in a fairly normal level, although there are restrictions and disruptions in some of the cities and states we operate it we're all.
We're also experiencing additional expenses as we work to keep our facilities clean saves our employees remain healthy and productive.
We are confident that our businesses remain vital to improving in sustaining infrastructure.
So we will use this time of global pandemic disposition, our core businesses to emerge stronger and better.
To provide sustainable profitability long into the future.
With that said I'll turn it over to Phil.
Thanks, Tom for the second quarter of fiscal year 2021, we reported sales of $203.4 million.
Trees to $32.8 million or 13.9% lower than the second quarter sales of $236.2 million last year.
Our earnings release, and 10-K reported due to the impacts the cove in Reais and certain restructuring and impairment charges. The company reported a net loss for the second quarter fiscal 21 of $1.8 million or 111.5% lower than the prior year second quarter. As a result reported diluted earnings per share was a loss of.
Seven cents compared to EPS of 59 cents in the prior year same quarter.
On an adjusted basis, reflecting the impact of the impairments. We took the company's net income was $13 million or 49 cents per diluted share.
In the current quarter, the company recorded restructuring and impairment charges of 18.7 million.
14.8 million net of associated tax benefits as a result of the restructuring we classified for operating facilities as assets held for sale to operating locations are within the infrastructure solutions segment and two are in our two other non operating locations are in the metal coating segment.
The impact of impairments to the metal cutting segment operating income was $11.3 million and includes a loss of sale of Galvabar assets held for sale impairments and impairments related to closing facilities there.
The impact of the impairments to the infrastructure segment.
Operating income was 7.4 million, including assets held for sale impairments and write down of oil and gas tubing inventories.
Q2 fiscal 21 gross margins improved to 22.7% from 22.3% on a year over year basis, primarily on continued strength in the metal cutting segment.
Operating profit as reported for Q2 fiscal year 21.7 million down from $22.2 million in the prior year.
On an adjusted basis operating income was $19.3 million or 9.5% of sales compared to 9.4% in the prior year and 10 point 10 basis point improvement over prior year.
EBITDA as reported for Q2 was $12 million EBITDA.
EBITDA as adjusted was $30.7 million or down 9.2% as compared to the second quarter of fiscal year 2012 with much of the reduction being directly attributable to the economic impact and business disruption associated with Covance pandemic.
Year to date through the second quarter fiscal 21 reported sales of $416.7 million, a 20.7% decrease in the strong prior year to date sales of $525 million.
90% of that decrease in sales occurred within the infrastructure solutions segment, where the company experienced the most prominent impacts of the pandemic.
Fiscal year 21 year to date net income for the second quarter as reported was $3.8 million a decrease of 33.1 million from the prior year to date results.
On an adjusted basis, taking into consideration the impairment related charges year to date net income was $18.5 million or 71 cents per diluted share of 49.3% reduction from the prior year to date diluted EPS of $1.40.
I will now provide highlights on the balance sheet and our liquidity position given the attention. This has garnered as a result of the pandemic for the first half of the year cash flow from operations was $32.2 million down 6 million or 15.7% from prior year as a result of lower sales net income generated by the business free.
Cash flow was $12.9 million on a year to date basis correct.
Current borrowings on our revolver ended the second quarter $47 million at 31 million or 39.7% reduction from the 78 million as of year end February.
We invested $19.3 million in capital spending during the first half of the year, an increase of 17% from the prior year to date capital spending of 16 and a half million.
We repurchased $6.4 million or 200000 shares of our stock during the quarter, an average price of just under $32 per share.
And we continue to announce make dividend payments.
While slope for a period of time by the pandemic, we continue to actively pursue acquisition targets, primarily in our metal coatings businesses.
And some great news on the liquidity front last Friday, we finalized the refinancing and upsizing of our 5.42% $125 million senior secured notes that are set to mature in January of 2001, we reentered the private placement market and borrowed $150 million for the combination of seven and 12 year senior secured notes in two tranches of 70.
And 80 million.
The fixed rate of 2.77% and 3.17% respectively for a blended rate of 2.98%. The notes will fund in December and January December 2020 in January 21, the company intends to use proceeds to read.
To repay the notes maturing in January as well as using excess borrowings to reduce our revolving credit and to repurchase shares to reduce further dilution from employee stock plans lastly, like Tom I'd like to thank our employees remain committed during the difficult year following in demonstrating the company trades.
Which we all spread by.
With that Tom I'd like to turn it back to you.
Thanks Philip.
As I did on the previous earnings call I want to close by sharing with you. Some key indicators that we continue to pay particular attention to for the metal coating segment fabrication activity remained solid in Q3.
And we got off to a good start in September within our galvanizing business. We are carefully tracking steel fabrication and construction activity zinc costs are relatively stable in the cost of zinc in our kettles continues to gradually decline.
For powder coating and plating, we're primarily focused on getting back to normal production levels with both existing and new customers, but we'd like to see more activity from our aerospace customers.
Within infrastructure solutions segments industrial platform, we're seeing the fall turnaround activity improve but.
But not to the same level from last year, particularly in the us market.
We are carefully monitoring the cobot situation in the states with large refining capacities currently we still have travel restrictions in some countries.
For the electrical group, we are carefully tracking proposal activity and expect bookings to continue to increase this quarter and beyond.
Which should provide sufficient backlog for many of our business units in the back half of the year.
Jimmy lighting, which make up some a portion of our electrical group. We continue to look for increased rig activity and have already taken significant realignment actions finally for corporate.
We have very good cash management processes and a further tightened our oversight on cash flow indicators and customer credit.
Currently we are not seeing any slowdown in customer payments.
So post of in 19 crisis or.
Or at least as it winds down at some point we were.
We remain committed to our growth strategy around metal coatings, and achieving 21% to 23% operating margins, including an increased contribution from powder coating inflated. We believe galvanizing would tend to run to the high end, if not above the 23% while powder coating plating should be able to consistently generate 15% to 20% we've.
We believe the integration will allow the outstanding galvanizing resources to be brought to bear to increased sales penetration drive operational efficiencies and leverage the season business development resources, and we are seeing the benefits of that.
For infrastructure solutions, we will continue to focus on our core businesses seek to divest things that are not core to our future strategic interest most of our infrastructure be user experience in a relatively modest level of disruption due to covance and we are taking this opportunity to right size operations at alignment with expected demand post.
Endemic.
We feel quite confident in spite of it another disruptions, but the actions we've already taken and the restructuring activities that are now underway, we intend to complete our restructuring actions quickly and effectively finished this fiscal year, well and position our businesses to enter fiscal 2022 with momentum finally, we remain active.
In the area.
M&A, primarily in uncoated with activities that support our strategic growth initiatives, while pandemic related deal travel was still somewhat restricted during Q2, we do see improving conditions and have an active portfolio of opportunities to pursue and have our teams actually out in the field as we speak we hope.
We hope to close on anywhere from one to three galvanizing deals the balance of this year.
With that we'll open it up for questions.
And ladies and gentlemen at this time, we will begin the question and answer session. Once again to ask a question you May Press Star and then one using a touchtone telephone if you are using a speakerphone. We do ask that you. Please pick up your handset before pressing the keys.
Joel Your question you May press Star and two.
Again that is star and then one to ask a question.
Well pause momentarily to assemble the roster.
[music].
Our first question today comes from John Franzreb from Sidoti and company. Please go ahead with your question.
Good morning, gentlemen.
Hi, John just thought with the comment you made about the hurricane season.
Perhaps Tom you can compare and contrast, the potential disruptions you've had in the quarter are currently having.
Versus the relative opportunity or not of any reconstruction activity in the region.
Yes, it's kind of interesting that none of our facilities Thankfully we're hit head on so we did have lot of facility damage.
But it did impact our customers and their ability to.
They were already in some some ways, particularly along the Gulf.
Struggling with reduced demand on the oil and gas products and some are struggling to get to two people working so.
So I think weve experienced.
Mm mid moderate disruption.
Hard to say what opportunities we're seeing big.
That that may come out of that we have not seen tremendous damage.
From our customers directly.
Which would be refining petrochemical and things like that.
So I'm going to guess, though that that on balance we're going to pick up.
What we lost as a year ago.
And that's assuming we don't have any more traders.
Certainly seep into the season.
Okay, and you talked a little bit about the turnaround season.
And the spring fall being a little muted spring getting sounds like bidding activity.
You than you expected.
Can you talk about why that's the case and why you think that might be the case.
Yes, I think on the refinery turnarounds sided view as we just as we talked last time, we weren't seeing the kind of activity that what you'd normally expect it that way.
Okay, we're ready to come into.
That was hopefully a busy season, but we just.
All the not all but a lot of the inquiry activity with already focused on this spring and I think thats just because the the refinery even.
Even though the price of oil has increased there is still a huge demand is.
In oil and gas is a gasoline indebtedness.
We see more flavor plan and today was the first day I looked out I found a window at all.
All of the freeways Dan for the traffic, so maybe they'll get better but.
But they just didnt have the demand in the summer.
To to drive.
Production so yes.
The good news for the.
The spring is that we've already gotten from orders, we've gotten engineering orders for the spring So our our challenge for the spring is going to be accessing all of the crap.
Possibly access and making sure we get our our crews deployed to to the best opportunities.
Also our have seen still countries with restricted travel internationally, So places like India and this.
To some extent in.
Parts of Asia, which.
Which restricts our ability to get the people could those jobs, but but even those customers say hidden.
We're going to art as we get into the new fiscal year.
Particularly Sprague and we also think that spring this would be a longer turnaround season, then we often experience so longer and.
Great Great and I apologize I missed this but.
Assets being held for sale.
Two and middle coatings and children.
Restructure which businesses are there.
We haven't we haven't we're not quite ready to announce that yet.
We've got some internal communication.
And we're in we're under India is in active negotiations so.
So I want to be.
Careful not to evaluate those NDS and but we will announce those as soon as we possibly can and they are active.
They are they are they are non core and.
Which gives you a little direction and NSR Im just apologize for having to be so obtuse at this point.
Well, how about maybe in a broader sense, what's what's the collective sales profile with those four businesses.
You know I.
I think on the infrastructure side, we're looking at about 60 million in revenue roughly.
And.
Really for.
Personally low margin businesses low margin contributors.
Or fortunately, if but we're hoping the businesses. They go to can can the.
Invest and do better than we've done with it.
As as Weve refocused I think on the metal coating side, we're really talking about.
Real estate for the most part of plants that have been closed and we are now holding the real estate for sale for the most part.
Great Great. We have taken action on one of the closures of one of the galvanizing plants, which are just too much capacity in the area and it was further impacted by.
By some of the issues, we've talked about in the Gulf Coast, we were fortunate rebuttal.
To get some really good season employees to relocate to afford it so.
With that.
Okay, great. Thanks for taking my questions I'll get back in queue.
Once again, if you would like to ask a question. Please press star and then one to withdraw your question you May press Star and two.
Our next question comes from Noelle Dilts from Stifel. Please go ahead with your question.
And oil.
Good morning.
I just wanted to build on Brian's questions are on the line.
On the non noncore assets I know you said there were low margin, but I guess I just wanted to confirm that they are contributing.
Q operating margin right now they're not a drag overall is that is that fair.
That's fair.
Okay.
And then the second question that again, it's probably comes on it's just can you tell us how many galvanizing facilities you're going to have.
After the close.
Given the closures that have occurred.
And the sales that you're you're planning.
Well, we have the we like to think were between the closures divestitures as Oregon disclosures.
And then the acquisitions will still be afforded.
Okay.
In terms of the acquisitions that you're pursuing.
Are they new geography could you help us sort of understand the strategic rationale.
Targeting to bring in sales yeah.
Yeah were looking to you know as you know from you know, it's pretty well so we.
We like to buy adjacent to where we already have facilities and so this.
This move is hopefully further north further northeast and.
Yes, so would this be a new geographies that will be.
Incremental to what we're doing and not overlapping for the most part.
Okay.
And then I just wanted to touch on the.
Energy into infrastructure solutions on the strategy there.
So when you kind of talk about the site yet infrastructure solutions.
Only presence there in transmission and distribution and could you give us a little bit more of a feel for how you're thinking about about that.
Serving infrastructure sector as we move forward.
I'll, let David answer that.
Good morning, Noah, Yes, we.
We have decided to rebrand it to really focus on those core.
Those core markets of transmission distribution and utility, we particularly like.
Like our enclosures and switch gear business continue to.
Invest in that area, we think that.
And so.
An area of secular growth.
The other area that we like is our welding solutions business, we've got a lot of great technology in that business.
And we've done a really good job there of expanding into other markets. They traditionally served just.
Refining and then they've moved away from nuclear and and our into all sorts of other interesting markets now that we're bringing that technology to bear.
Collectively I think those two markets, we really like and you'll continue to see us make moves there yeah, Noelle I want to add that I think in welding solutions that about 40% of their business is now non non refinery related.
So we've been able to transition.
Away from most of the nuclear and replace that a chunk of that refinery business.
With with other markets in the infrastructure sector.
And the technology is really outstanding.
Okay, Great that's helpful.
And finally just on.
Galvanizing and metal coating.
I know you mentioned aerospace, it's still a little bit weaker, but any other verticals that you could call out in terms of particular strength or weakness.
In the quarter.
We've seen.
Truck and trailer has been improving in Ags improving.
Ill wind solar has been really really active.
This move to renewables and lot areas has been really big for us and there's there's a lot of steel on those and then we've seen the.
Transmission the has been good as well.
Thank you.
And our next question comes from Deforest Hinman from Walt.
Susan and company. Please go with your question.
Hi, Thanks for taking my questions.
Very nice.
[noise] transaction on the debt side private placement.
Going out seven and 12 years lot further than we've been seeing some companies go out, but still maintaining a very attractive fixed rate.
Can you just give us any color there in terms of covenants attached to that that.
Yeah.
And the other thing we should be aware of out on that.
Yes. This is Philip on no we entered the market Thats, a good favorable rate environment when the private placement market. After 10 years of being outside that market and had a mix of new investors.
Existing investors join in on our on our deal we.
Were able to upsize, we had a tremendous amount of interest in our in our offerings, we were able to upsize and we're also able to spread out some of our risk related to covenants.
We're able to increase basket sizes and things like that the different.
Covenants within our.
Within our deal so that really help.
Really helps us as we look forward.
And so just to soil is there any ones to call out in our debt to EBITDA covenant.
No our primary covenant leverage our leverage covenant is.
In line with our current credit facility.
At three in the quarter to one but it was more the different covenants and baskets that we were able to stretch out acquisition baskets and.
Dividend payment baskets things like that.
Okay very very helpful.
Positioned the company very well.
Going forward and I'm, probably built into the next question.
M&A side.
You talked about deals it sounds like you want to try to get them closed I think you said by the end of the year is that your calendar year or fiscal year.
Well I'd like to get it done by the end of the calendar year, but given some of the travel things and stuff like that it may be.
Well, we'll get one or two done in the calendar year and I hope we get.
Three done by the end of the fiscal year.
Okay and can you help us.
I understand.
What you're seeing in terms of outlay I know, we just read that the.
Good that we've got a lot of availability on the revolver.
All park in terms of.
Cash outlay to get those deals done and.
And any color you can provide on multiple range that you're you're saying yeah. You know these are these are a traditional galvanizing deals.
So they tend to be.
Under under 10 million each.
Although in this case, there could be one larger but.
But that gives you a ballpark and we tend to target five to seven times and what I mean.
History of our galvanizing team as they tend to within that very quick integration.
Bringing their scale to bear that we are usually able to improve that by at least one tour within the first year.
Okay and then.
M&A on the sale side.
Can you give us any update in terms of what you think.
Timing wise on some of those transactions and then.
I know you had the idea is that correct.
Any color you could provide in terms of.
Proceeds country from those transactions.
And what would we do with those proceeds from yes, a couple of things there are we.
We're trying to get these does quickly as possible we've been working on it for a little while.
Yes, just somewhat restricted by travel but.
But now the focus is to get those done as quickly as possible. So my intent assuming we're successful get them done before the end of this calendar year.
Which means we probably have to get them done before we get deep into the holidays. So.
Proceeds are not going to be major not not anything that's going to move the needle to any great extent.
What we are doing is getting out from under.
The capex that they draw the resources they draw the.
Just the various corporate functions that support them and so we free up resources to focus on the growth side and focus on the core.
And they will generate a little bit of cash.
Okay.
And then can you give us all an update on the capital allocation.
Focus post restructuring.
And I know you're working on the deals you just discuss maybe more broadly as it relates to.
The dividend strategy going forward.
Share repurchase.
You know you bought some stock at.
Somewhat lower valuations to offset dilution, but.
Has there been an upgraded discussion with the board about.
Buybacks potentially.
More than offsetting dilution actually working to reduce the share count.
Yes, we have had discussions.
We're not ready to really announce.
Going beyond.
Minimizing dilution either or both.
Or buying in in the dilution.
But that is something we're continuing to focus on and we do deploy quite a bit of capex into particularly our metal coatings business to keep it productive inefficient and continue to invest in things like Bgs. We did have the big Capex, there will continue to deploy it particularly into.
WSE side for both there.
Their facilities and technology that I spoke of.
We announced the this David did we.
We it's been a long time since we haven't paid a dividend so that each time we.
We look at it and.
My my forward look on it I don't see any reason why we would we would.
Drawn at this point, it's got a decent yield.
And at this time and until we see bigger.
Acquisition opportunities that would be attractive, we're probably going to continue to be committed to that.
And then on the acquisition front.
Just given the cost of our debt. It's there's just not a huge drop.
All the deals we talked about it is pretty easy to tuck in.
Yes.
I would just add this is more of a comment.
Being able to term out your debt.
With the private placement balances.
Very positive development I know, you're working on getting that refinancing I think what we are discussing that at last call but.
Really locking in very attractive rates.
Seven years and 12.
12 years.
Kind of a game changer for you from.
From our cost of capital perspective.
I would agree we are already working on.
All discussions with your revolver right.
In an environment, where.
You have clear.
Cost of capital.
Outlook out potentially 567 years very low cost.
Yeah.
Maybe not very large.
Yields it would seem that.
Have to be a greater discussion.
Greater dividend payouts.
Share repurchases or.
Combination of both.
Well the good news is.
And as we as we get this quarter wrapped up this is.
This is where usually do or were little delayed on doing our strategic planning.
Engagements, so we'll be doing that over the next few weeks and we'll definitely take that into consideration.
Once again, if you would like to ask a question. Please press star and then one.
Do all your question you May press aren't too.
Our next question comes from Bill Baldwin from Baldwin Anthony Securities. Please go ahead with your question.
Thank you good morning.
Good morning, good morning.
Okay areas here Tom.
Can you give us any color as to kind of proposal activity or.
Sales pipeline you're seeing.
Yes.
Sure and switchgear businesses at this point in time.
Yeah, it's improving and we're seeing engine.
Engineering firms.
Contractors come back to you.
Okay, I don't know if they're coming back to the office, but we're definitely seeing more activity and we feel good about the about the outlook the balance of this year and hopefully get some things in place. We've we've also taken the opportunity to.
To continue to trade in and work on improving the drip professionalism of all our sales organizations. During this time and the insight.
And feel good about our.
Our opportunity pipeline as well as our visibility.
And ability to drive value. So so yeah, we're feeling pretty good.
Super Super so thanks.
It looks like maybe beyond the fiscal 20, a little bit of momentum going on.
I hope.
[laughter].
Got it.
Okay, sorry, I wanted to.
Just briefly Thomas.
Yes.
I know you've had some ongoing projects with joint ventures and.
Business.
Can you kind of bring us up to date as to where we stand on that.
On those.
Projects at this point.
You know the.
The high voltage bus business in China.
There is a ton of activity it tends to not be in our sweet spot we.
We are continuing to work on a joint venture partner over there that would allow us to.
To handle it better with.
From from that side.
We have seen activity or for the high voltage bus in domestically.
And we did.
We do have things going on in Saudi Arabia.
Saudi Arabia as well.
So you know, it's kind of a mixed bag, but.
We see a lot of activity is just we're not we're not seeing a whole lot that gets us to excite so.
We're using good discipline around that.
Okay. So that's more of a long term situation. It is it is in the middle.
Okay.
Second question internationally DC operative.
Opportunity time to take your enclosure and switchgear business.
Add to some international markets.
Crazy.
You know that would probably requires to go acquire something and right now that's just not on our own.
On our radar, so and that will be one that we'll take your comment too hard.
Heart and make sure we do have that discussion as we get into our strategic planning process.
And lastly, domestically switch gear and closure do you feel like you've got to facilities you need right now too.
And that then that's the way you want to hear north.
North America or do you.
I see a need for some additional products and or locations.
Really.
Flesh out that business for you.
I just took a tour those facilities with some of our our executive team and.
Really pleased with the progress our three enclosure sites is made and we made it to one of the switch gear sides and the big win in full.
The teams are really working well together I think I've seen progress.
In their supply chain their standard or design standardization.
Things that they've had to do well.
Working remotely I mean do it apart instead of putting teams together and I'm I mean.
Im encouraged.
Feel good with the five facilities, we currently have.
You know this will obviously be an area if as it as high.
As a as happened on the last two deals they have.
Particularly when we acquired electricity.
It was an opportunistic kind of thing.
Yes.
It's an area, we don't have anything on our radar screen right now.
But if it gets.
That popped up.
We'll take a look at it the key right now is we have plenty of capacity so.
And we like kind of the distribution of it so as we're over on the east coast outside of Baltimore, wherein in Chattanooga with a large facility we're in Fulton, Missouri.
The southeast were Kansas, where we were up in Oshkosh, Wisconsin. So so right now we like our distribution given where the activity is.
And we haven't had to go chase a whole lot down in the Gulf Coast.
So.
Yes, it's.
Plenty of capacity.
I just need to see more opportunities, but we feel good about our position.
Very good.
That's good color I appreciate it and.
Best of success.
All right. Thanks Bill.
Okay well.
I think thats it.
Good.
This time over at the end of the question and answer session.
Ill turn the call back over to Mr. Ferguson for any closing remarks, alright. Thank you.
All right. Thanks, everybody Weve had good discussions and the.
We look forward to finish in a reasonable.
Reasonable reasonable third quarter.
And a continual let go bid elections and things like that so and then we.
We will have completed a strategic planning process, which was delayed.
Well, we saw how things get sorted themselves out.
And we'll get back to that so hopefully by the time, we get to do this call for the third quarter, we will be able to talk to you in more detail about what's now fully core whats not core what is likely hopefully we'll have some announcements we have seen.
Some of the transactions, we've talked about and ER and then also talk to you about how the outlook is for metal coatings going forward and.
That kind of thing so thank you for your time look forward to talking.
Talking more over.
As this quarter plays out thank you.
Yes.
And ladies and gentlemen, with that we'll conclude today's conference call. We do thank you for joining us.
You may now disconnect your lines.