AZZ Inc. Q4 2023 Earnings Call
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Good morning, and welcome to the AZZ, Inc, fourth quarter and fiscal year 'twenty to 'twenty three earnings conference call.
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Now like to turn the conference that Sandy Martin three part advisors. Please go ahead.
Thank you operator, good morning, and thank you for joining us today to review a Z financial results for the fiscal 2023 fourth quarter and full year ended February 28, 2023, joining the call today are Tom Ferguson, President and Chief Executive Officer Phillip from.
Chief Financial Officer, and David <unk>, Senior Vice President marketing Communications.
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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.
Azz's Investor Relations page under the latest earnings presentation at AZZ Dot 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 res.
<unk> or comments containing forward looking statements may involve risks and uncertainties. Some of which are detailed from time to time in documents filed by ACC 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 discussion of non-GAAP financial measures non-GAAP financial measures should be considered as a supplement to.
And not a 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 further detail. The earnings press release in Q4 presentation are posted on our website and had been included in the <unk>.
Form 8-K submitted to the SEC I would now like to turn the call over to Tom Ferguson CEO Tom <unk>.
Sandy welcomed azz's fourth quarter and fiscal year 2023 full year earnings call. Thank you for joining us this morning.
On slide three I am pleased with our performance for fiscal 2023, we made tremendous progress towards our strategy to become a pure metal coatings company I'm appreciative of the hard work of the entire <unk> Z Z T. I commend, our AZZ metal coatings team for generating record results in our AZZ pre co metals team for coming into AZZ is performing well.
<unk>.
We are fully committed to building, a stronger and more sustainable and focused company.
On a continuing operations basis, we achieved record annual sales of 1.32 billion up 46% versus reported fiscal 2022 sales of $903 million.
While generating EBITDA and adjusted earnings per share within our previously stated guidance.
We paid down debt, resulting in net leverage of three five times adjusted EBITDA at year end and received $2 6 million equity income from our remaining interest in Aaas.
As you can see here on slide four we achieved good flow through on higher sales generating over $267 million of adjusted EBITDA or 20% of sales.
These numbers reflect metal coatings for a full 12 months and presale metals for about 42 weeks in fiscal year 2023.
Net income on adjusted basis was $86 9 million up 55%, resulting in adjusted EPS of $3 48 ships.
Philip will talk more about our fourth quarter and full year financial results shortly.
Moving to slide five AZZ metal coatings had another strong year with sales up 21% to $637 million.
With over 16% coming from organic growth. The growth was a result of organic sales growth of $87 million and the earlier acquisitions of Dom and Steele Creek, which added another $25 million.
Operating income was up 21% versus prior year with an operating margin of 24, 5% despite inflationary pressures, particularly as zinc costs peaked in most of our jobs.
We continue to maintain our pricing discipline and focus on delivering value to our customers our investments in digitization continue to pay off in both productivity and customer service our investments in technology and innovation are focused on improving efficiencies asset maintain ability and supporting our energy efficiency and sustainability initiatives.
Yeah.
Turning to slide six pre co. During his 42 weeks as part of AZZ had solid sales growth to nearly 687 million and.
And generated 120 million of EBITDA breakout.
<unk> sales grew by 20% on a comparable basis versus the prior year, mostly through unit volume growth in paint cost increases that were passed through.
Pre codes business performance was solid and within our expectations through its seasonally slow slower quarters, where construction slows due to weather as.
As mentioned during our third quarter call.
The management team at breakout took action in the fourth quarter reduced the customer owned inventory that would cause bottlenecks at many locations. Additionally, the team recently finished the planets.
Spansion project at their M. M. C facility that had started prior to our acquisition. This wasn't an important expansion as it is this facility focuses on heavier gauge material that supports that our construction and infrastructure initiatives.
Yes.
Frito team is now reporting normalized inventory levels at most of their plants. Finally, I believe pre code has taken steps to bring us pricing curve in line with the cost curve that has experienced significant inflation.
While the teams still has more work to do on production efficiencies, we have realized over half the expected synergies and still expect identify sales synergies between pre coated metal coatings.
I am encouraged by the progress and expect their efforts to show up in our run rates in fiscal year, 2024, and with that I will turn it over to Philip to run through the financials.
Thanks, Tom.
My financial commentary will focus on the results from continuing operations. Our continuing operations include the results of our AZZ metal coatings segment and our pre cut metal segment from our acquisition date on May 13th equity in earnings, resulting from our Noncontrolling interest and the available infrastructure business.
And our corporate overhead supporting these businesses on.
On slide seven AZZ generated fourth quarter sales from continuing operations of $336 5 million significantly above the $138 1 million recognized in the same quarter of the prior year the.
A significant current year quarterly increase is a direct result of the addition.
Of AZZ Precut metals of $187 1 million and our current quarter AZZ metal coatings sales of $149 4 million.
The metal coatings segment sales were up 14, 8% in the quarter versus prior year on stronger volumes and pricing.
On a comparable basis pre cut metal sales for Q4 increased by roughly 17%.
Operating profit from continued operations for the fourth quarter were $36 2 million or 10, 8% of sales prior.
Prior year operating margins of 13, 1% reflected only were the results of our metal coating segment.
The current year reflects the inclusion of AZZ prefilled metals.
As we explained on our last earnings call pre first fourth quarter margins were compressed primarily due to normal seasonally lower volumes Cup.
Coupled with inflationary headwinds, we expect this to reverse in the first quarter due to improved volumes and the pricing curve as Tom noted catching up to the inflated cost curve.
Adjusted EBITDA in the fourth quarter of $57 2 million, what was $112, 6% higher than the prior year again as a result of the addition of pre Trump metals.
Just an EBITDA.
As a percentage of sales was 17% reflects some blended.
Right.
Sorry, it blended.
With prefab metals, and was 370 basis points lower than the prior year's fourth quarter a period in which included only our metal coatings segment. The combined results of the two businesses for the fourth quarter was in line with our expectations.
We anticipate higher EBITDA margins moving forward as contemplated in our full year guidance.
On slide eight our full year sales were up 132 billion, reflecting the addition of Precut metals for roughly 42 weeks of the year.
Our full year operating profit of $173 6 million was significantly above prior year, when including pickup metals for the period under ownership.
Operating margins from continuing operations of 13, 1% or 200 basis points below the prior year.
Period, only including our metal cutting segments, who had strong performance during the period.
Adjusted EBITDA of 207, $67 4 million or 22% reflects the strong performance of the newly combined businesses, both our metal coatings and pre cut metal segments have worked hard at managing the inflationary market pressures and generated results in line with our expectations.
Adjusted EPS from continuing operations for fiscal year, 2023 was $3.48 per diluted share compared with adjusted EPS of $2 24 per share in fiscal 'twenty two.
On slide nine cash flows from continuing operations for the fiscal year were $91 4 million compared with $60 6 million in the prior year.
Our fiscal year 2023 capital expenditures from continuing operations were $57 1 million compared with $23 6 million in the prior year. This increase was expected as part of our strategic rationale for the preferred acquisition.
Our fiscal 2020 for capital investment plan of nearly $80 million includes roughly $50 million of normal maintenance and growth capital spending and nearly 30 million allocated to the construction of our new pre coat Greenfield facility in St. Louis Missouri area.
We have continued to declare and pay quarterly common dividends for the full year, we paid common dividends of $16 9 million and made payments of $5 8 million in preferred dividends.
On slide 10.
We purchased Precut metals on May 13th 2022 from Carlyle sequel for $1 3 billion.
And then subsequently sold the controlling interest in our AZZ infrastructure solution segment.
Excluding our small lewisville tubing business for $220 million of cash on September 32022.
During the year, we reduced our debt by $2 37, and a half million through proceeds from the sale and from operating cash flows reducing our acquisition date leverage of 425 to $3 four six as of fiscal yearend.
While we have a good pipeline of M&A opportunities, particularly for galvanizing, we're focused only on highly accretive low risk deals that exceed our targeted returns.
Given our focus on growth and debt reduction we did not we did not buy back stock in fiscal 2023.
Slide 11, we reduced our term loan b debt since the preferred acquisition date improved our leverage to three and half times a good step towards our long term target of below three times leverage.
We continue to have more than 50% of our existing term loan.
That covered by a swap agreement to reduce further interest rate exposure.
Do not have any maturities under our current credit facility until 2027.
I'll turn it back to Tom now for his closing comments.
Thank you Philip movie.
Moving to slide 13, the outlook in the first quarter from metal coatings as far as seasonally strong spring fabrication and construction season with many of our customers, citing good backlogs as they benefit from increased infrastructure spending.
Fabrication activity remained solid with many of our customers, noting good backlogs.
Pre co continues to see solid customer demand, particularly in growing industries that directly relate to construction container in data centers as I mentioned earlier customer inventories are normalized due to the actions we've taken.
Our announced pricing actions to offset inflation are beginning to show positive impact on <unk> margins. We have entered the stronger quarters of the year and quite frankly, I'm glad to have the slower fourth quarter behind us.
Our corporate team will continue to focus on cash flow generation to allow rapid debt reduction customer credit metrics risk mitigation prudently allocating capital to the highest return on investment projects.
Before we move on to the guidance slide I would like to comment on strong secular growth drivers impacting our end markets that we're excited about for fiscal 2024.
Our financial outlook. This year reflects our expectation to directly or indirectly benefit from U S spending bills totaling over 250 billion from the American infrastructure investment and jobs Act.
We hold strong market positions in metal coatings, and freak out Madison with these leadership positions.
We are bullish about our perspective opportunities related to roads bridges and important clean energy and power transmission projects as well as data centers airports and other critical infrastructure.
Our long term growth drivers include the shift of manufacturing re shoring was the build America buy America focus as well as benefiting from the migration to prepaid at aluminum and steel.
In addition, there are there are important sustainability projects, they're supporting critical material conversions for example, the conversion from plastics to aluminum in the beverage industry.
All of these secular trends create incremental opportunities for AZZ. Finally, we are progressing with our greenfield plant construction that supports aluminum coatings with a valuable dedicated customer committed to filling a majority of our capacity in this new plan.
That is an exciting project for us and we will keep you updated on the progress.
Yeah.
As you can see here on slide 14, we are maintaining our full fiscal 2024 sales guidance of one four to 155 billion adjusted EBITDA guidance of $300 million to $325 million and adjusted EPS guidance of $3.85 to $4.35, while we're expecting some equity income from <unk>.
Our minority stake in avail, we're not ready to predict how much this would be while they are still working on their purchase price accounting.
I'll also note that the first quarter EPS is based on a more normalized tax rate than we experienced in the fourth quarter.
Finally on slide 15, as a reminder, why we believe AZ as AZZ is a great investment AZZ as the leading independent hot dip galvanizing in coil coating company with an irreplaceable footprint, serving a broad and diverse set of markets.
As a high value added tolling business, we are not directly exposed to metal commodities.
Also we have shown that we can protect margins with a long track record of profitability during all economic cycles.
We produce great margins and solid financial returns as well as generate free cash flow by delivering outstanding value to our customers emphasizing operational excellence and continuing to innovate and develop our people and technology.
We're driving sales expansion through both organic and acquisition growth and are committed to improving margins and cash flow generation to fund our growth strategy.
We will continue to focus on driving performance and financial results as well as maximizing long term shareholder value again, I want to thank all our shareholders and the board for their support and I, especially want to thank our ACG team for their hard work and dedication during our transformational journey to become a focused metal coatings company.
This is an exceptional accomplishment and I'm proud of our entire team with that well open it up for questions.
We will now begin the question and answer session.
And just a quick question you May press star.
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It was John Your question. Please press Star then two.
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Materially to assemble the roster.
Okay.
And our first question will come from Jonathan Franzen.
<unk> company.
Go ahead.
Good morning, guys and thanks for taking the questions.
Hey, John I'd like to start with the two business segments surprisingly good underlying growth roughly 15 and 17% in the fourth quarter could you just talk about.
What your growth assumptions are two segments and embedded in your revenue guide of $1 four and $1 55.
Yeah Jonathan.
I think on the on the two segments. When you look at the metal coating segment to start with.
They have continued to.
We're on a really solid business through Covid say over the last eight or 12 quarters in.
Yeah.
Well, we don't have a lot of backlog, but the opportunities.
For some of the secular drivers that Tom was speaking to.
Are there when you look at the pre coat.
Side of the business same thing they've got.
Good opportunities and a lot of their markets are seeing a slight slowdown in some of the construction, but overall a very solid business.
Yeah, John Let me just add I think you know, we don't have significant growth topline growth embedded.
And our guidance most of the uptick is going to come from having pre count for the full year and our focus on is going to be more on value and cash our cash flow management and generation. So.
So we don't we don't have to have significant growth to hit that guidance.
Yeah.
Okay fair enough and last quarter, you talked about roughly three to four plants.
Recall that was taking lower margin business and this is a.
Roughly three to four quarter solution and give you back then.
Fiscal 'twenty five to get resolved update.
Update us on the status of that and maybe talk about what kind of businesses, taking that's lower margin.
Yeah I think.
Some of it was more focused on just more our internal efficiency. Mrs. If you will.
So we've made some management changes at some of the at those plants we've.
Also made some organizational.
Changes to help support.
The focus on improving efficiencies and productivity.
And and we have made some pricing adjustments for some lower margin customers that.
It just kind of been consistently.
It is not really a category of customers. It's just you know things that have gone on for a while and the type of business.
It was not anything specific more just to focus on a general focus on we want to deliver value we want to perform well.
And the majority vast majority of pre co plants do exactly that.
Got it and just one last question I'll get back into queue.
The aluminum coil plant 80 million in Capex. This year, how does the how does that look two years from now on the Capex and maybe kind of any update of the status of the belt.
Yeah, we we had the groundbreaking ceremony with the Governor of Missouri, Oh that was a on a van on a cold dreary day.
So.
And quite frankly, they're there the groundbreaking there was more of they they were already doing quite a bit of excavation work on that site. So.
Official groundbreaking, but things have been going on we've got a the equipment.
On order and delivery secured we've got the long lead items.
Under control. We've you know it's a it's a really good schedule with you know enough float in it that we're going to hit hit the targets. So.
So I feel real good about it at this point, we are going to spend about $30 million. This year on that facility, which has both construction downpayments on equipment things like that to make sure we get critical items in that.
That that drifts off.
Especially as we get into <unk> I want to say a calendar 'twenty five that dropped pretty significantly we get get the facility open I'd also say that we're you know we're still having some somewhat slightly higher than normal capex spend in both metal coatings and.
Pre coat that Ah I think that normalizes back in you know nicely under the $50 million range. So.
You know we're doing things both for.
To drive some operational improvements I mentioned in my remarks is M M seafood facility expansion.
We had some other capex that's being deployed to <unk>.
Improved controls and continue to drive Digitization and those things just play out as is helping us improve efficiencies and productivity, but the investments start to to.
Go away.
Got it great. Thanks, Adam.
Yeah.
The next question comes from.
Okay.
Thompson Davis. Please go ahead.
Hey, good morning, guys. Congrats on the solid Q4.
Thank you.
You had a oh I wanted to get your thoughts on.
And you commented on sequential revenue growth in metal coatings, what what are the expectations just because we don't have a lot of history for sequential revenue growth at pre cut.
Q4 to Q1.
Pool, it's pretty it is significant because Q4 is the by far the slowest quarter for pre coat.
It's winter months, so construction just slows up when the construction Theyre doing is is inside a when they can.
We're you know, we're now into spring, which better weather more construction.
Quite frankly, I'd I'd have to check the percentage, but I'm going to say at least 10 10, 15% quarter over quarter Philip you ever yeah. Thank better no that's about right. It's.
Their fourth quarter is I think 12 of their 13th slowest weeks of the year. So we'll see a nice uptick in Q1.
Okay, and then you.
You had a comment in the.
Press release about it.
Seasonally higher first quarter was that or was that a sequential comment or is Q1, the highest EPS for the year.
You know Q1 and Q2 are both.
Strong quarters are they.
They I think if you look historically, particularly for metal coatings, it's sometimes it's Q1, sometimes it's Q2.
But mainly were just were talking about the seasonality coming out of winter come going into spring.
As a as a general seasonality thing and signaling of course now we we entered two really good strong quarters for both construction and infrastructure.
And then third quarter in the fall somewhat more dependent on weather, but you know it tends to be a reasonably good good quarter and then the fourth quarter you just get as Phil just said 12 of the 13 weeks tend to be heavy winter.
Particularly in some of the areas that we serve are as you get up north.
Our metal coatings business tends to do they tend to be a little stronger than third quarter, because most of our facilities are in the south and Ms. Midwest other than the things we have up in Canada. So.
Okay.
And then Philip within the EPS Guide.
What are you assuming for.
Share count and.
Preferred dividends.
Trying to get to the right E P S.
And within your range for revenue and EBITDA, but sometimes off on EPS and I'm, just wondering if it might be share count and the preferred dividends.
And the preferred dividends, there's $4 1 million shares associated with the Blackstone.
Preferred equity is $240 million.
And the conversion price was $58 30.
And the preferred will be dilutive for the year, So you need to take that into consideration.
Okay.
And then last one high level thoughts on cash flow from operations in fiscal 'twenty four.
When you look at our guidance I think it's in line with the EBITDA less Capex is a good barometer.
Four our ability to generate cash flow.
And then be voted yes.
Yeah as we're as we've noted we're targeting 75 to prep, yeah, hopefully $100 million of debt pay down.
Just to help us as we as we move on Q Q1 is more of a we we consume some cash or where we are.
So not likely to be paying down a lot of that in Q1, just because it's two things where we're ramping up some inventory.
For the Big season, and this is also when we do have bonus payouts and things like that so so then we get into.
The quarters, where you can expect to see more significant debt pay down.
I'll turn it over thanks guys.
Thank you.
Okay.
Our next question comes from Jon Braatz of Kansas City Capital. Please go ahead good morning, everyone.
Alright, John Tom.
It seemed like your let's say this year the focus at a pre cope will be on improving our productivity.
Productivity margins and so on so forth and I guess my question is as.
As you complete or.
For a complete some of those projects and so on and improve the efficiency what kind of improvement could we see in terms of the incremental margins once volume.
It's better at at pre coat, how much better my might those incremental margins be versus maybe where they were before and any any thoughts on that.
You know I think.
You know theres, a variety of things that particularly impacted.
I think we well I know we had done this presentation to try to explain how our fiscal year at AZZ.
Kind of hits Freak out pretty badgley terms.
And they used to have a better spread of of profit margins across their quarters.
So this is this is inflicted by our.
Fiscal year, but you know, we're still committed to getting them to the 20% EBITDA margins in.
And I, you know, which means we've we've.
Need to get improvements pretty quickly I think I'd think Kurt and the team they've taken some some good structural actions organizationally.
And in terms of some of the plants that were struggling.
This is this a I can't I can't understate, the the impact of.
That customer inventory on pre Covid. So most of that most of that's gone we've gotten rid of a lot of them almost all of the outside warehouses that that had to be a.
Lease to accommodate that and you just think about the impact on their efficiencies when you're having to go several miles down the road to an outside warehouse move material that creates time cost and and some quality issues.
That's pretty much gone.
So returning to their there the 20% margins we've talked about.
You know obviously, there's a lot of work that goes into that but the vast majority of the.
The actions to do it have been taken so you know we're going to see that pretty quickly as we get into into this year.
Okay, Okay, and then secondly.
The St. Louis Oh facility, how quickly does that get up and going in and begin to contribute.
Tribute to the to the bottom line.
You know, which it gets up and going in and it's a it but it's.
It's the constructions coinciding with the with the customers' demand for it as well.
And I believe that you know, we're not going to see any any measurable.
Impact on until 2025, okay.
Okay Alright.
Alright, thank you.
Alright. Thanks.
The next question is a follow up from John <unk> from Sidoti <unk> Company. Please go ahead.
Yeah, you guys I think it seems like everyone's got a kind of a good field of middle Karnes business, but as far as pre co. If we kind of separated into a tale of two halves.
For you guys on your calendar year, how much of revenue will fall into the first half of the fiscal year versus the second half.
It's about 56% Yeah, I think if you look at the seasonality charts. If you look over the five year history. They tend to be in our fiscal year more heavily weighted in our Q1 and Q2 than a fewer working days in Q3, and then as Tom explained earlier, the slower fourth quarter.
Seasonally yes.
Yeah.
Alright.
<unk> 50, 644 50 743.
And there's enough sensitivity in you know makes it particularly in these these days, where it's harder to get skilled labor.
So our tenants the tendency is to hold onto the capacity in and drive through this so you know you get that kind of movement in absorption levels, you get a lot of flow through pretty quickly when when we get that kind of volume shift.
Got it and then the fourth quarter.
The margins that we called registered.
How much was that normal seasonality impact versus deep inventory.
Inventory.
Rebalancing impact in the quarter do you have a sense of that.
Yes.
Yeah, I'd say, it's about 50 50 on seasonality because when you look at it the the revenue drop but not.
Not not materially greater than normal.
In terms of the season and the rest was United as I've toured the plants.
The constraints created by that phenomenon and that this move in between outside warehouses.
It was just dramatic I can't understate it so.
The fact, we're talking about that mostly being gone that's why sequentially. It's you know you you're going to stay a big pop.
Quarter over quarter.
Great.
And one last question.
It looks like zinc.
Turning up to one year low.
Hum.
Oh no.
Can you just talk about your thoughts about that and maybe why you Didnt reassess your guidance in light of that.
Well you know, we we've talked about this in before we leave.
We pretty much separated as much as we can the our pricing from the cost of zinc. So you know we're focused on delivering the value that that sustains the price levels.
The for US it'll take another six months before these lower cost this lower cost zinc starts to hit our kettles.
So we're well into this year before we see any of the benefit of this lower cost hitting our cattle. So.
You know well, we'll take a look at that again as we get deeper into the year, but.
It's just that that cycle of.
Call It six months on average debt.
In terms of the inventory in our kettles.
Then we've got to move first before we see the lower cost of that and then two we've got to make sure. We can hold our prices and continue to offer it in the the value services to to sustain that.
Right and who knows what that looks like in six months right.
Yeah.
Quite a bit just over this within a quarter.
Okay guys. Thanks for taking my follow ups appreciate it.
Thanks.
The next question comes from Bill Baldwin.
Followed one securities. Please go ahead.
Yes, good morning, gentlemen, and thanks for taking my call.
Sure Bill.
A quick.
Over side on this new plant as far as looking at it from 10000 feet.
When that gets up and running.
Should that be accretive in the first full 12 months of <unk>.
Of operation as far as accretive to.
Contribute to operating income.
Yeah. It will be in the first full 12 months of operation, Yes, because the volumes are committed.
You know theres a lot of testing that goes on to get it into full operation, but once that process is completed then.
The volumes ramp up fairly quickly.
And remind me Tom what what's the schedule.
Date for beginning of testing in this type of thing as far as the plant beginning to operate.
It's a you know we.
Yes.
I'm going to say it's early.
Next year as I'm thinking about it I should've brought to schedule and with me so I apologize but.
Early clearly in fiscal early fiscal 'twenty five.
Early fiscal 'twenty five I believe is the current schedule for that and it ramps up because it will require some FDA yet.
Approval, that's what Tom was talking about the testing so really ramp up as we get those approvals will then ramp up to a full year rate which is accretive.
And would it be reasonable to assume that you'd be operating at close to.
The capacity that Youre demand allows you to buy the second half of fiscal 'twenty five.
So I gave you six months to ramp up is that sufficient do you think.
I'd say, it's going to be a little bit longer than that there is as part of this is.
Also depending on how the customer new customer Merck demand ramps up with it but right I'd say more towards the latter part of the year.
Okay.
Very good.
Nice performance too with the latest quarter good job alright.
Thanks Bill.
The next question comes from Brett Kearney of Gabelli. Please.
Please go ahead.
Hi, guys. Good morning, Thanks for taking my question.
Good morning, Brett.
Tom You mentioned some of the physical support we've seen from.
The U S government the tailwind that provides for your businesses I guess.
No pretty familiar.
Like you know, particularly on the galvanizing side the funding sources behind that utility Capex budgets, we have good visibility of that from the municipal.
Highway and bridge activity.
It feels pretty good how about I guess fiscal support how that plays into the pre cope metal side and how you were thinking about you know any dislocations that could happen from you know financing and banking.
Banking channel.
On that side of the portfolio.
That's a great question.
Yeah.
You know I think on the pre code side. They you know they have been impacted by by some of the slower residential activity.
Some of these underlying.
Trends to convert to prepaying at aluminum and steel I think offset some of that.
On the non commercial investments, we're still seeing good activity there and you know part of this is the I guess I'll technically we will call. It re shoring of manufacturing if things like chips and stuff. That's all good stuff you know, we're seeing several factories being being constructed here in Texas project.
Really all of those use a ton of prepaid it cheap.
So that kind of activities continuing.
I wish I had a better crystal ball, how long that's going to continue with you know with the capital cost.
Remain high.
Right now the outlooks fine and and hopefully we're we're also continuing to find new not new opportunities, which we talked about some of those like the heavy gauge.
Expanding that facility, that's that's a fairly big deal for us because that.
That focuses more on infrastructure support culverts and things like that so you know we've been taken those steps, making those investments and.
Unless something dramatic happens hopefully we continue to benefit from an it freak out.
Excellent and then we've talked about.
<unk> will move in zinc prices, how there was a probably peaked in your kettles. How are you thinking about I guess two pieces. One you know assayed energy labor and the other portions of your cost base and then I guess.
Second question kind of how is the labor availability trending.
The markets Youre activin.
Yeah. This is Ken.
Canada.
Generally our labor is still tight so you know I bet, we're down I think at the peak, we probably had 400 openings for labor on any given day, we're probably down to a couple of hundred which as you know that's a level. We can cover with over time in an extra shifts and things like that.
It it's.
We just went through our Merit review process for the majority of the company.
You know it wasn't outrageous we had made adjustments as the year went on to attract labor and retain labor. So we feel pretty good at it you know it's not a it's not a high ramp at this point in terms of increase on increased cost on labor.
We're doing we've done some things to retain labor better and manage it more efficiently.
Pre coat uses more skilled highly skilled labor.
That's that's still tight.
In certain parts of the country and but once again we've implemented.
Programs to attract and retain in terms of the acid chemicals that some of the things that really impacted pre co was these attitudes and chemicals and things like that that were.
Outside of the outside of paint so that that's why we kind of got behind the cost curve there towards the latter part of the year.
On the metal coatings side, we're doing a bedroom I mean, one of our big focuses is is an asset and an asset disposal and managing the asset.
So even though costs are up on everything from wire to to asset we've been able to maintain the price.
Curve.
And at least staying even with it.
So you know it's it's.
Our focus has been on availability and making sure we can service our customers when when some of our competition can't so.
And we've been able to do all of that.
Excellent that's very helpful. Thanks, so much John .
Alright, thank you.
This concludes our question and answer session I would like to turn the conference back over.
Tom.
For any closing remarks.
Well. Thank you all for joining us today and I look forward to updating you on our first quarter results in just a few weeks and I'm confident that fiscal year 'twenty 'twenty. Four will result in further value creation as we capitalized on strong demand environment and azz's diverse markets and the investments that we've made thank you very much.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Uh huh.
[music].
[music].
Okay.
Okay.