Q2 2022 AZZ Inc Earnings Call
[music].
Good morning, and welcome to the AZZ, Inc. Second quarter fiscal year 2022 financial results Conference call.
All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the Starkey followed by zero.
After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad.
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Please note. This event is being recorded I would now like to turn the conference over to Joe Dormie Managing partner. Please go ahead.
Thank you Anthony good morning, and thank you for joining us today to review the financial results of AZZ, Inc. For the second quarter of fiscal year 2022 ended August 31, 2021, joining the call today are Tom Ferguson, Chief Executive Officer, Phillips, Chief Financial Officer, and David <unk> Senior Vice President.
Marketing communications and IR.
After the conclusion of today's prepared remarks, we will open the call for questions. Please note. There is a slide presentation for today's call, which can be found on Azz's Investor Relations page under latest earnings release presentation at AZZ Dot 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.
You 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 28, 2021, 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 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 at AZZ serves.
Foreign and domestic.
Customer requested delays of shipments acquisition opportunities currency exchange rate adequate financing and availability of experienced management and employees to implement the company's growth strategies and.
In addition, azz's 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 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 AZ.
Tom.
Thank you Joe and welcome to our second quarter fiscal 2022 earnings call and thank you for joining us this morning.
We continued to gain momentum in the second quarter and completed our fourth consecutive quarter of solid performance. After the disruption from Covid in the first half of last year.
I, especially want to thank our employees, who show up every day and do their job so well their perseverance through the past 19 months of COVID-19 turmoil has allowed AZZ to obtain the results we are now reporting.
Overall sales of 216 million improved six 4% versus the prior year or 8% when adjusted for the divestiture of SMS metal coatings turned in another excellent quarter with sales up 10, 7% almost $130 million in infrastructure solutions flat at about $87 million.
Sales were somewhat impacted by labor constraints, and COVID-19 related materials shortages in some businesses.
I'll get into the details of this as we go along.
We are pleased to have completed another strong quarter performance, we continue to generate strong cash flow during the second quarter. While also returning capital to our shareholders. We generated net income of $27.0 million and EPS of <unk> 76 per cent per diluted share, reflecting the resiliency of our businesses and the dedication of our people.
Our business has leveraged the realignment actions taken last year to improve profitability, while maintaining their focus on providing outstanding quality and service to our customers.
We also benefited from lower interest expense, while incurring a 24% tax rate for the quarter and.
In line with our strategic commitment to value creation, we've repurchased over 290000 shares for $15 million in distributed $6.0 million in dividends.
In metal coatings, which represented 60% of our sales in the second quarter, we achieved 24, 4% operating margins on sales of $130 million.
This resulted in operating income being up over 17% from the previous year. The margin improvement was primarily due to driving operating efficiencies and productivity, while realizing improved pricing in the face of rising zinc labor and energy costs.
While we have several active acquisition discussions underway, we were slowed somewhat due to the uptick in Covid Delta variant cases that reduced some travel.
Our metal coatings team continues to demonstrate their ability to perform and deliver great results, while managing labor shortages and the increasing zinc costs.
Our infrastructure solutions segment demonstrated continued profitability improvement through their seasonally slow second quarter, we were up about four 3% when considering the impact of the SMS divestiture.
The team delivered operating income of $7 million or 130% up dramatically versus the prior year.
The segment benefited from his realignment actions from last year, but did face some labor constraints and material delays. We are focused on strategic selling initiatives and are well positioned to deliver a strong fiscal year 2022.
Okay.
For fiscal year 2022, while Covid continues to generate some uncertainty in many sectors given our strong performance in the first half and due to seeing more opportunities than risks the balance of this year, we are tightening and raising our guidance, we anticipate sales to be in the range of $865 to $925 million in EPS.
At $92.0 to $23.0
This excludes any acquisitions or divestitures.
Metal coatings is continuing focus on sales growth, including leveraging our spin galvanizing operations at several sites operational execution and customer service as labor and operating expenses increased due to inflation.
Our infrastructure solutions segment is seeing more normalized business levels and entered the third quarter with some momentum in bookings activity, particularly in electrical.
Our WSI business is seeing good results from the expanded Poland facility, although internationally. The business continues to experience some intermittent project delays due to COVID-19 outbreaks at certain customer sites.
Electrical the electrical platform is focused on operational execution and growing its E house and switchgear businesses, we anticipate continuing to benefit from low interest rates.
While we expect solid performance in the third quarter due to the continued COVID-19 impact on our international markets. We do not anticipate quite as strong a performance as we experienced in this past first quarter.
While the fall turnaround activity is good we're seeing several projects that are already likely to stretch into the fourth quarter.
I will note that we are already seeing a lot of activity lining up for the spring season.
For fiscal year 2022, AZZ will continue to execute on our strategic growth objectives to drive shareholder value.
Our commitment to superior customer service is unwavering our ability to generate strong cash flows based on initiatives that drive operational excellence manage costs ensure pricing discipline and emphasis on receivables collection within our operating platforms. We are confident that our businesses remain vital to improving and sustaining infrastructure.
So we are actively working to position our core businesses to provide sustainable profitability and regardless of whether we see any infrastructure legislation, but that said I will turn it over to Philip.
Thanks, Tom.
Bookings or incoming orders in the second quarter were $239.0 million, a $25.0 million or 11%.
<unk> percent increase over the second quarter of the prior year, our bookings to sales ratio increased to 107% as we saw improving market conditions across both the metal coatings and infrastructure solutions segments.
Tom previously mentioned second quarter fiscal year, 2022 sales of $220.0 million.
Were $14.0 million or six 4% higher than the prior year second quarter sales of $207.0 million.
We generated gross profit of $56.0 million compared with gross profit of $47.0 million in the second quarter of the prior year. Our gross margin was 25, 5% for the quarter, which was a 280 basis point improvement compared with a gross margin of 22, 7%.
In the second quarter of last year as business in both segments continues to recover from the pandemic lows witnessed this time last year.
Operating income for the quarter was $31.0 million compared with 652000.
In the second quarter of the prior year during the prior year second quarter, we recorded restructuring and impairment charges of $25.0 million. We believe the difficult decisions and actions management took last year are strongly impacting our financial results in both of our segments. This fiscal year. We believe we have established a strong foundation.
<unk> for future growth.
Our earnings per share of <unk> 76 was <unk> 26 cents higher than last year's second quarter adjusted EPS of <unk> 50.
And 83 above the reported loss of <unk>.
The prior year second quarter loss was significantly impacted by the impairment and restructuring charges and impacts of the pandemic as previously discussed.
Second quarter EBITDA for fiscal year, 2022 was $42.0 million compared with adjusted EBITDA reported in the second quarter of fiscal year 2021 of $37.0 million, an increase an increase of $14.0 million or 19, 1%.
Year to date sales through the second quarter of fiscal year 2020 to $449.0 million a seven 1% increase from last year's second quarter year to date sales of $423.0 million.
Excluding the impact of the SMS divestiture sales would have increased 11% year over year.
Fiscal year 2022 year.
Year to date net income of $44.0 million was $22 eight or 122, 8% above the prior year to date adjusted net income of $23.0 million prior.
Prior year to date net income as reported was $11.0 million.
Year to date EPS of $65.0 was 131% higher than the prior year to date adjusted EPS of <unk> 71.
Turning to our liquidity and cash flows we continue to maintain a strong balance sheet and return capital to our shareholders.
Following our our.
Our capital allocation highlights during.
During the quarter, we negotiated and renewed our five year credit facility, retaining our facility to $600 million in borrowing capacity supported by a strong group of banks.
Gross outstanding debt as of the second quarter was 183 million $4 million above the $179 million in outstanding debt at the end of the second quarter of the prior year, which replete.
Which reflects increased share purchase activity as we have purchased nearly $70 million in outstanding shares during the last year.
Year to date, we have deployed $14.0 million in capital investments and we anticipate to still make capital investments of roughly $35 million this year.
Supply chain constraints are impacted and delayed to some extent the timing and spending of our planned capital expenditures.
As Tom noted, we repurchased $15 million in outstanding stock during the quarter and $23.0 million on a year to date basis, we declared and continuing to emit continued our prior history of making quarterly dividend payments.
For the first half of the year cash flow from operations was $45.0 million up $11.0 million or 17, 4% from prior year as a result of strong sales and solid net income generated by the business free cash flow was $25.0 million $13.0 million or <unk> 79, 8% above the 12.
$9 million realized in the prior year.
We continue to execute on several merger and acquisition opportunities and expect to make announcements regarding the same before the end of our fiscal year.
Lastly.
As I celebrate my second anniversary with the company and roughly a year serving as the company's CFO I would like to thank our employees and business partners for their support during what has been a challenging and rewarding period for the company.
As we navigate through the pandemic and align our operations and portfolio of businesses to our strategies.
I'll now turn it back to Tom for his final thoughts.
Thanks, Phil.
Here are some key indicators that we are paying particular attention to for the metal coatings segment's galvanizing business, we are carefully tracking fabrication and construction activity material and labor cost inflation and progress of led infrastructure legislation.
For the surface technologies platform, we are primarily focused on expanding our customer base and benefiting from improved operational performance.
For infrastructure solutions domestic turnaround and outage activity has returned to a normal level. The fall season is currently looking to be good, albeit somewhat muted as noted earlier due to international customers being impacted by Covid related issues.
The electrical platform is benefiting from transmission and distribution utility spending and growing datacenter and battery energy storage activity in.
In regards to the strategic review of infrastructure solutions. We have further narrowed the number of options. We are pursuing and are increasingly confident that AZZ candidate will become predominantly a focus metal coatings company.
As we've noted previously we are having regular meetings with the board, but due to the sensitivity of ongoing discussions and confidentiality agreements we cannot be more specific at this time, but realize we are rapidly approaching one year anniversary of our announcement.
Yes.
We remain committed to our growth strategy around metal coatings, and achieving 21% to 23% operating margins with galvanizing performance being quite steady, while we continue to improve surface technologies.
We will remain acquisitive, particularly in metal coatings for infrastructure solutions, we are focused on profitability and cash flow.
Our business units should benefit from more normalized turnaround and outage seasons, and a solid market for T&D utility and datacenter houses and switch gear.
Our corporate office is actively engaged in several merger and acquisition projects, while continuing to maintain tight accounting controls and providing support to the field for acquiring and retaining talent and finally, we will soon be issuing our first ESG report. So please stay tuned with that we'll open it up for questions.
Ill begin the question answer session.
Anthony we can hear you.
Sorry.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Yeah.
Our first question comes from John <unk>.
With Dougherty and company you May go ahead.
Good morning, everybody.
Good morning, John I wanted to go back go back to your references about the fall turnaround season.
Three months ago, I think you characterized it is looking quite good and now if I heard you correctly. This morning, you are saying that there are some delays on <unk> international or domestic I'm not sure.
Could you kind of in context for us.
Up in construction on a year over year basis or.
Yes, John I think the turnarounds are improved over the third quarter of last year.
But some of those international jobs are often.
The larger projects that we would see and its not that theyre going away. It's just there.
Somewhat delayed and stretching.
More towards the end of the quarter, which means that we will actually recognize revenue in the fourth quarter. So good activity.
But no we.
We're not seeing the really large international projects and it's either delays or also just refineries running.
Kind of running through the season.
So we feel good about the activity and that's why we've we've tried to couch. It is a good solid strong third quarter.
But probably not quite at the same level as our first quarter, which was which.
It was nicely strong at 88 cents of EPS.
And.
And do.
You had the margin pretty well in the metals.
Thanks Bye.
Rick.
Zinc prices can you just talk a little bit about what you're doing there to be successful in maintaining that margin profile.
Yes, im sitting across from some of the amount of coatings guys. So there.
I'm smiling there the team is highly focused.
On operational performance driving customer satisfaction, creating value for those customers.
We are benefiting from our digital galvanizing system given us information.
That we used to we used to have to handle manually and now we're pulling it together in an automated fashion and it allows us to react more quickly. It also improves our customer service our ability to respond and it has helped us manage through some of the later labor shortages, because theyre, probably operating a couple of one.
<unk>.
People direct labor short.
But theyre, making up for it with productivity inefficiencies so.
So thats whats, allowing them to continue to perform at a really high level.
And taken advantage of some of the growth opportunities in solar.
In other areas. So so we just feel real good about that business.
A really good about the leadership team and what they've been able to accomplish.
They are a push through pricing.
Yes, we're pushing price.
But I think thats, mostly in relation to offsetting the both labor wage increases.
As well as the continually rising zinc costs and as well as virtually all materials are are up somewhat.
But so yes, we are.
We're pushing that but trying to give the customers the service to to deserve the the pricing.
And just one.
I know you didn't ask this but.
Alright.
Infrastructure solutions, particularly now that could be more one off.
Calendar year end.
One.
We're pursuing what I would call III transformational deals and some of those are mutually exclusive so.
We would still prefer only havent won.
101, I don't know what you'd call it one initiative.
Versus.
Do anything small or not transformational.
Okay, alright, thanks, taking my questions.
Our next question comes from Noelle Dilts from Stifel. You May go ahead.
Hi, guys.
I was hoping that you could just kind of walk through some of the demand trends that youre seeing within.
The end market for metal coatings, I know you just mentioned solar.
But what youre seeing in T&D.
Industrial some of the other markets.
Would be helpful as well thank you.
Yes.
It's kind of across the board I would say so so so our AG business is really strong.
We're seeing interest.
Interestingly enough, we're still seeing some recreational type things.
Although I guess they are pulling docs in now.
And then the OEM side, so trailers and truck and trailer type stuff has been really strong and we see that continuing T&D has been good we usually look at it more on the electrical side, but but theres been good pole activity in <unk>.
Polls and tower.
Pieces or components.
So it's generally across the board, but solar has been probably the bigger driver.
On a year over year basis.
Okay, Great and then I was hoping you could do the same thing on the electrical side, maybe talk about some of the trends you're seeing with whats closers.
And Beth tax et cetera that would be great. Thank you.
Yes.
We're seeing really good.
The T&D has been strong, which which benefits, particularly our switchgear business and on the utility grade switch gear.
E houses have been really solid were seeing lots of activity.
On data centers, but the utility side is also also strong.
You get you get good solar activity with.
With enclosures.
But it's been.
I'd say there we came in with some backlog we've had to rebuild backlog.
Offsetting that.
The big piece of our business that came from China over the last couple of years. So so that's been the focus and that's been building.
More service work on the medium voltage bus side.
Fairly good activity on high voltage.
Sure.
So.
It's also kind of across the board on an electrical <unk>.
The T&D strong.
Okay great.
Then just given the $50 million share repurchase in the quarter, maybe you can comment on just how youre thinking about.
Priorities for cash and.
And we're repurchase stands moving forward.
No we've been.
Turning to follow a <unk>, one plan and Opportunistically.
Opportunistically purchasing shares in the market as Tom alluded to a little bit earlier, we've been hampered somewhat in our M&A activities, just with COVID-19 and ability to travel to locations.
So I think our priorities are continue to opportunistically purchase shares focused on our $35 million of capital spend on reinvesting in the business. This year continuing to make dividend payments as we move forward and then as evaluating.
How we split that up is the M&A opportunities present themselves.
Alright, Thank you very much.
Thanks Noel.
Our next question comes from Jon Braatz of Kansas City capital.
You May go ahead.
Good morning, Tom Hill.
Good morning.
Okay.
Tom you can talk about the on the metal coatings side that Youre short couple hundred workers and so on and but your productivity has been good.
You think about going forward.
Do you see the need to re hire those people.
Or.
Do you think you can continue to do.
What youre doing with sort of a minimum.
Minimum minimum number of people.
Well I think we look at it at a plant by plant level, because it's a balance between how much overtime can can we afford to work.
To make up for productivity.
Productivity and efficiencies are really good and have been solid, but but we do make up for a lack of labor with overtime.
So and then we do.
But we are prepared to deal with the shortages because we just aren't seeing that many applicants.
In certain areas of the country.
Not that we're not trying to hire but yes, I think every every month every quarter.
Our guys are getting more and more productive.
And benefiting more from the digital galvanizing system Dcs. So so we're hoping to retain some of that.
Product whatnot retain it but continue to improve it but.
We are going to need some of those bodies because some of this is just the labor of material handling and you just need you need folks to do it we have automated some things and we should continue to benefit from that so yes.
But it's a plant by plant decision that that our leadership teams look at every basically every day, yes, okay looking ahead.
Zinc prices have been moving up.
Six to nine months from now you'll be.
Facing.
Higher zinc zinc costs relative to the prior year.
And probably pricing prices have to go up a little a little further.
Do you think number one you can you'll be able to pass on.
Fully pass on those cost and.
Any concern about demand destruction as maybe these costs rise.
I think so.
It's.
It can't get challenging were at fairly high pricing levels.
But I think all of our customers are also experiencing a lot of those same inflationary pressure on their labor costs on their material costs and material availability.
So we're in line with that.
Whether it's zinc copper steel there is there are commodities are up and wages are up.
So we will continue to work that and try to work with.
Innovative ways with our customers to deliver more value to them, whether it's transportation logistics or.
We're just working more closely with them to to help them streamline. So so we have a wide variety of initiatives that are folks drive on.
So I hope customers will continue paying us for the value, we're delivering and that we continue to increase that value.
Okay, Alright, thank you very much.
Again, if you have a question. Please press Star then one.
Our next question comes from Brett Kearney of Gabelli funds.
You May go ahead.
Hi, guys. Good morning, Thanks for taking my question.
Brett good morning.
I wanted to ask about the opportunity you see in the marketplace for your spin galvanizing offering and kind of how you are thinking about internally. It sounds like that's an area you see an opportunity to expand going forward. So maybe the opportunity set there.
Yes, we see that as a good opportunity for US you tend to get into the smaller.
Final finish components, where you get more and.
More quantity more more pieces and.
A lot of our facilities were designed more for the structural side and then some are what I'll call hybrid, but having the dedicated spin lines in.
I think about six of our sites.
Right now I think we've seen the benefit of that the most recent one started up in Houston at the beginning of this fiscal year.
And we're seeing the business pick up for that.
And.
If you go into one of our galvanizing plants and you look at a pallet full of stuff that's.
We've gone through a spin.
Spin plant versus what's going through our normal.
<unk> plants.
It's just.
The quality and finish is significantly better so it gets us into that.
That small component market, so we like that it fits well for some of our sites.
We're regionally focused.
Two of our more recent acquisitions Chattanooga in.
Rockford, Illinois gave us.
Really focused spin capability and some resources that have helped us ramp ours up and be able to sustain that so we look at that as a continued growth market and are really happy with what the what our investments or are doing for us in that area.
Terrific and then just one other quick one.
Your international operations I know, it's a small part of the overall business and.
Even deep.
Decreasing relevance.
Thinking that those wood.
Stay with kind of the division they are associated with in any.
Possible paths forward.
<unk>.
Yes, we would particularly in WSI.
I would call it a hub and spoke concept. So there's a lot of technology that resides in that group in their U S operations that support the internationals. So so they're integrated.
Obviously, the international operations have their own welders and craft to a great extent, but when it comes to the engineering and technology.
Some of the other support services that that's that's handled more centrally or at least supported more centrally.
So that really sticks together in terms of those pieces.
Okay, great. Thanks, so much alright.
Alright. Thanks.
Yes.
Our next question comes from Deforest Hinman of Lofthouse and Cao.
Hi, Thanks for taking hi, thanks for taking my questions just a clarification on the you're talking about transformational deals I must have missed the first part of incentives are you talking about transformational transactions from a sales perspective or from an acquisition perspective.
Okay.
Both.
But.
I'd say both.
Okay, and then maybe on the acquisition side I know, we've been talking about purchasing businesses.
I guess, how do you define transformational is it more of a scale function.
Building on the metal coatings side or are we actually looking at businesses outside of.
Metal coatings.
Your line is open.
No I think our acquisition path right now is mostly on the Melco all on the metal coatings side at the moment.
Most of the deals we're working on in metal coatings.
R R.
The normal galvanizing type acquisitions, there are some larger opportunities that.
That we're engaged in and yes, we were a little more disrupt we've met two factors that I have mentioned one.
We were disrupted by the recent Covid Delta uptick just some travel was more restrained and people not wanting to visit but were also somewhat short handed in the corporate office.
Pursuing quite a few different.
Initiatives when it comes to M&A so.
So we're prioritizing and getting.
Hyper focused on on the ones that we really that are really more time sensitive.
And getting things done this year.
Okay. That's helpful.
And then just.
Anecdotally or high level.
The customers.
The dialogue back and forth in regards to looking to increase prices. There is there much pushback or is it more conversation of late.
On the same thing.
I'd say for the most part two.
Two different kinds of business, but in metal coatings. It's those are the conversations we're having with our fabricator customers, particularly.
Because they are experiencing the same things and.
Like I said, we're trying to figure out how we can do more for them.
To increase the value that we bring.
And those are good conversations.
Obviously, when we were raising prices it's never just.
They're never thrilled but.
But I do think we've got great relationships from the Salesforce transfer transformation.
It did three or four years ago, that's paying off we've got good relationships, we're providing great service on time delivery is outstanding and we're maintaining our cycle times and the vast majority of our plants in spite of labor shortages in some.
We do have plenty of zinc. So that's always good on the electrical side you get into more project business.
So there, it's we're still having to bid competitively for projects and be able to perform and our customers are seeing some of that inflation in steel and component costs, but.
But it's still more projects then.
Then run of the mill type business. So so they are the conversations are more around how effective can we perform on a project.
And are we competitively priced so two different scenarios.
And just for my own knowledge.
Also on the table too I think you had characterized.
In the past, but in the electrical space.
The bid discipline has been improving.
Structural changes in that space is that still the case, when we're putting out those bids right now.
I would say that's true I mean, we continue to bid and we don't get an order in 30 days, we're repricing those orders so we've increased our discipline and practices around our bidding efforts.
With the rising tide of inflationary costs.
Yeah, and I think we are part of it is just the ability to perform to schedules.
Expedite materials.
Sometimes including the components from the customers themselves. So.
That's just that's kind of a new dynamic caused by the supply chain disruption.
Okay very helpful and then on the labor availability side maybe.
Metals first in the electrical side.
Anecdotally are we seeing.
The higher volume of resumes better.
Yeah.
Imbalance for doing a job fair when some of these.
The state and federal benefits rolling off.
Is it is it getting better or worse staying the same.
Getting getting slightly better so.
So we are.
We've gone from not seeing any applications.
Solicited to see in a few and getting a few people coming in and and of course, we have we're doing more job fairs doing more advertising using more.
Tools and doubled our recruiting staff here.
The Fort worth headquarters.
So we're drawing more in.
And we're getting a few more as some of the benefits unemployment things roll off we do start to see applicants and.
But we're also trying to be disciplined to make sure we're getting the right.
Quality of individuals.
That are going to be able to contribute so so we're trying to maintain the discipline.
Face a relatively few applicants.
Okay, Perfect and then last question on Capex deployment.
Sorry go ahead.
No. So it is getting at is getting a little bit better I just.
It's a battle.
Okay. No. That's very helpful. And then the last question on capital deployment.
Balance sheet remains very strong you talked about looking at some of the deals.
Do you or the board.
See the company continuing to buy stock with the <unk>, one or are already deals of size where.
We take a breather.
The share repurchase activity.
Yes, we are likely to be taken a breather or we probably are.
Taken a breather at this point.
Just because of the number of potential deals.
He'd like to.
C, which which we can can close on so and we also have the ramp up in our capex in the second half of the year. So.
So both those factors.
We are.
The <unk> one as well.
We're not buying right now and probably well okay. That's helpful and then I.
I'll sneak one more in on in terms of the timing I think.
Last call or the one before that you had anticipated.
Transactions potentially closing before year end.
Is that statement still valid given some of the comments you just made around the delta variant if some of that potentially gets shifted into the next calendar year or does that previous comments still makes sense.
No. We've we've been able to get out more just in the last month so.
So we feel better.
Still getting.
<unk> done and interestingly enough.
Some of the opportunities are because folks want to close by the end of the year. So we're going to we're going to be challenged to get that or the end of the calendar year.
So we're going to be challenged to do that but we're going to give it our best bet our best effort.
Okay. Thank you for answering all my questions Alright.
Alright. Thanks.
Thanks Deforest.
Our next question comes from Bill Baldwin from Baldwin Anthony Securities You May go ahead.
Good morning, good morning folks.
Hi, good morning.
Okay.
First question kind of a definitional question on your.
All of our business.
Yes.
Does that show up in power generation are in the industrial category when you.
Record then in your 10 Qs.
Yes that falls within the industrial belt.
The solar falls within the industrial segment, Okay, yes, okay. Okay.
And <unk>.
In the electrical.
Infrastructure segment.
Looking at your electrical business.
What markets.
Offer you the best visibility looking out over the next six to 12 months or do you have that kind of visibility in any of your markets right now in the electrical area.
Yes, Bill again this is Dave.
As Tom had mentioned earlier in his comments.
Yes.
Continue to look at the T&D market, it's performed well.
<unk> performed well and driving.
Our improved order intake on the enclosures and switchgear side and as he said the team is also really focused on that data center and battery storage markets. Those those also are doing really well for us.
And in particular as we continue to see you mentioned solar projects.
We're starting to see more.
<unk> quoted where it's a combined project of both solar and battery storage, so that'll bode well for the electrical team going forward.
Okay.
And.
And the Capex $35 million, how much of that roughly would be maintenance.
How much is growth and kind of what areas are focused on the growth the growth capex.
Markets.
Well that's a good question, we typically it's been $48.0 million ish on our maintenance capital at a lot of that going towards our metal coatings business on the growth side on the WSI, our industrial segment, we're investing in.
Hot top hole size since apples with our.
Our welding equipment refresh so we're continuing to grow there. We recently finished our Poland facility.
We moved into a new facility there and started operations in the last six months solar further enhancing that as we move forward and then we're looking at some additional international growth that will come with time.
And on the metal coatings side.
Great.
Yes.
I'm not aware of it.
Any new stuff on the international front, but.
We do have a really good investment in Poland, We're thrilled with that it's doing well on the metal coatings side, where we are we do anticipate.
Building out another spin operation I'm not going to say, we're just because we don't let our competitors know but.
So we have that going in the back half of this year as well as some capital upgrades.
Continuing with furnace upgrades, so we're doing some things to streamline and improve and then we're also focused on.
Continuing to beef up our powder coating plating capabilities and improve our ability to deliver high end quality and service in that area.
Well, thank you very much and congratulate both of you and your team on excellent execution.
And obviously a difficult environment.
Thanks, a lot Bill I appreciate that comment thank you.
This concludes our question and answer session I would like to turn the conference back over to Tom Ferguson for any closing remarks.
I just want to thank you all and <unk>.
Appreciate the discussion.
We're excited about.
Not only how well we've performed through difficult times, but also the outlook for our businesses for our people for our teams and for the things that we have underway and while.
We can never guarantee we're going to close on any deals.
We're hyper focused on getting things done in the balance of this year. So I. Appreciate it look forward to talking to you at the end of our third quarter if not sooner.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yes.