AZZ 2Q17 Earnings Call Notes

AZZ’s (AZZ) CEO Tom Ferguson on Q2 2017 Results

Weak markets

“While I was disappointed the way our second quarter progressed due to the week markets I am ever more optimistic about the opportunity ahead of us and our ability to focus our business on higher growth markets and products. Since we don’t have backlog to buffer our results in galvanizing we have to be nimble when faced with slow market activity.”

Struggled to get good traction

“We starting fairly strongly in the first quarter, but struggled to get good traction in the second quarter. As we’ve cautioned previously we sense some softness in the regions impacted by low oil prices. And during the second quarter the galvanizing market along the Gulf Coast remain weaker than expected, particularly in West Texas and Oklahoma. The primary issue was volume and since galvanizing does not operate with much backlog the effects were felt quickly.”

Electrical platform performing well if not for oil price headwinds

” Quite frankly our electrical platform is performing well, if not for the oil price related headwinds. Our tubing business continued to suffer from lower oil pads activity and our lighting business finally began to feel the impact of low rig activities.”

Increase in transmission and distribution work

“The bright spot for electrical platform is the increase in transmission and distribution work as we are seeing numerous substation opportunities for our enclosure and switchgear business. Unfortunately our lighting and tubing businesses in spite of being a small portion of our portfolio are feeling the impact of the low rig activity in the oil patch.”

Seeing more substation work in T&D

“I think on the T&D side, we’re seeing more substation work and things like that. And that helps obviously our electrical businesses more than our galvanizing side. So we’re happy with that that’s replace some of the — for the electrical side it’s replace some of the pipeline activity that we’ve had the last few years and that it has been somewhat reduced. In terms of the solar, we’ve seen solar op as I mentioned in my comments. And so that’s usually a big piece of business for some of our plants and with that been off. And there hasn’t been other power generation construction at least not of any major significance. So we’ve seen that off.”

Solar business has been off

“While federal credits were approved and extended for solar power activity remain somewhat slow since companies now have some time to evaluate those projects. Our volumes have drifted lower as we are focused on maintaining price levels and since we see this activity continuing that’s why we chose to take out some of our capacity in the affected areas.”

“In terms of volume, Yes there was broader impacts on the volume that we talked about which is the lower than — significantly lower solar business. The fact that we’re still ramping up the new Reno plant. So you’ve got the investment there without — it’s doing just fine. We’ve anticipated it will hit its stride by the end of the fiscal year, which generally we still feel is true.”

Miscellaneous Earnings Notes 10.1.15

Jabil Circuit’s (JBL) CEO Mark Mondello on Q4 2015 Results

The world is changing at a frenetic pace

“The world is changing at a frenetic pace and we’re changing with it. Here are three simple takeaways of what’s driving our business today: engineering and technical expertise; addressing real problems with solution selling; and diversification of our solutions and the products we deliver.”

Apple is a 24% customer

“I don’t pay much attention to concentration issues around brands. I pay attention to concentration around risk. And I think we stated that Apple was a 24% customer, that’s public information.”

AZZ’s (AZZ) CEO Tom Ferguson on Q2 2016 Results

Electric utility market remains sluggish in US

“The electric utility market in the U.S. remains sluggish but we have benefited from strong international opportunities and a solid backlog.”

IHS’ (IHS) CEO Jerre Stead on Q3 2015 Results

Automotive and industrial segments performing well

“Automotive continues to be very strong, really good job across the Board, but the rest of the pieces in industrial are performing very well too. In fact I feel really good with the solid performance in total.’

Automotive customers are ahead of the game doing analytics to make better offers to customers

“the source of sales product that we were building that provided OEMs an ability to do more targeted marketing. What I would say about automotive is they’re probably as far ahead as anyone, any of the business in the company around doing analytics with the underlying information and providing more robust offerings to customers.”

We only expect modest trimming of budgets for energy companies in 2016

“There are some smaller players in the U.S. upstream that will be under pressure, but we do think most of the big companies have made most of their cost reductions and the IOCs and major independents are in the process, while they’re in the process of deciding their capital budgets for 2016 and we expect some modest trimming.”

Art’s Way Manufacturing’s (ARTW) Chairman Marc McConnell on Q3 2015 Results

The plight of a small ag equipment manufacturer:

“We are still noticing that the dealers are struggling as well and they are definitely not wanting to stock any of our inventory. So we do anticipate that the sales that we have, we need to have inventory on hand in order to capitalize on those sales.”…

“And so, as we’ve discussed before in April, orders got pretty slow and really price of milk in particular is one thing that was helping us for a period of time and when that went down as well as the other commodities, that’s when it really got quieter order wise for us. So the whole, both oil and gas and especially ag are really in a tough period. And it’s normal part of the cycle. This has happened since the beginning of time, it seems like in the ag industry. And so we are preparing in such a way that we will be able to sustain a long prolonged period of slow sales.”…

“We’re fortunate to have a very strong capital position. We have good relationship with our bank. We are focused on keeping a lot of availability in liquidity with our banks so that we don’t get into any point of vulnerability. ”

Paychex’s (PAYX) CEO Martin Mucci on Q1 2016 Results

Startups are good at selling the low end but cant match our scale

“I think we continue to see good results from a selling perspective and so while they’re out there, I don’t think anyone has — no one has the sales team that we have, the distribution model and the number of sales people and the effectiveness. And so on the low end I think they sell very effectively and the low end being size”

Seeing continued strong employment growth in small businesses

“we’re seeing continued — particularly in the small business under 50, we’re seeing continued better employment growth than prerecession levels of 2004 and so — and it’s down a little bit from last year, but it’s consistently above that level. So we’re feeling like a steady improvement in small business formation and employment hiring ”

Diamond Foods’ (DMND) CEO Brian Driscoll Q4 2015 Results

Expanding capacity for kettle chips

“we’ve seen huge growth in Kettle and we’ve gone from being — our plants being 60% utilized to being basically filled. We are in the process of ordering new fryers and putting them in and our total CapEx this year is likely to be – whereas the year just ended, our CapEx was in the mid-20s, 27 million, our CapEx next year is likely to be in the mid-30s to cover the cost of that kind of expansion.”

It’s a tough market for acquisitions

“I think it’s a tough market. I think everybody says that, it’s a tough market. Valuations are high but maybe that could change with this current ongoing correction, who knows but I think it is a difficult market but we are looking for things that fit our profile. And we’re pretty confident quite frankly that we’re going to find something, maybe something more modest in size that will fit the profile and will work for us, inside what we can afford to pay.”

AZZ FY4Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

$AZZ Earnings Call Notes

“we continue to experience a slowdown in the domestic fossil fuel power generation opportunities. And internationally, especially in the Middle East, the construction of power plants remain robust and we see strong demand for the products — for our products.

We expect the domestic fossil fuel generation market to be skewed further in the direction of natural gas for the construction and expect quotation activity to remain slow domestically in the near term.

NLI continues to see strong demand for their products and services in the nuclear power generation market. Demand for our domestic substation market is stable. Utility spending has not picked up significantly, and we expect that market to be at the current levels going forward in the year in the near term. Over the long term, we continue to be optimistic regarding the opportunities associated with the upgrade of the domestic distribution substation networks.

High voltage transmission market is seeing activity pickup internationally, particularly in Asia. Competition is intense from European and Asian vendors, and we hope to close projects despite pricing pressure in these markets.”