AZZ Inc. (NYSE:AZZ) Q1 2020 Results Earnings Conference Call July 8, 2019 11:00 AM ET
Joe Dorame - Managing Partner, Lytham Partners
Thomas Ferguson - CEO
Paul Fehlman - CFO
- Joe Dorame - Lytham Partners的执行合伙人
- Thomas Ferguson - 首席执行官
- Paul Fehlman - 首席财务官
John Franzreb - Sidoti & Company
Jonathan Braatz - Kansas City Capital
Noelle Dilts - Stifel
- John Franzreb - Sidoti＆Company
- 乔纳森布拉茨 - 堪萨斯城资本
- Noelle Dilts - Stifel
Good morning, and welcome to the AZZ, Inc. First Quarter Financial Year 2020 Financial Results Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, today’s event is being recorded.
At this time, I would now like to turn the conference over to Joe Dorame, Managing Partner, Lytham Partners. Please proceed.
早上好，欢迎来到AZZ，Inc。2020财年第一季度财务业绩收益电话会议。 所有参与者都将处于只听模式。 [操作员说明]在今天的演讲之后，将有机会提问。 [操作员说明]请注意，今天的活动正在录制中。
在这个时候，我现在想把会议转交给Lytham Partners的执行合伙人Joe Dorame。 请继续
Thanks Chris. Good morning and thank you for joining us today to review the financial results of AZZ Inc. for the first quarter of fiscal year 2020 ended May 31, 2019.
On the call representing the Company are, Mr. Tom Ferguson, Chief Executive Officer; and Mr. Paul Fehlman, Chief Financial Officer. After the conclusion of today’s prepared remarks, we will open the call for a question-and-answer session. Please note, there is a slide presentation for today’s call, which can be found on AZZ’s Investor Relations page under Financial Information at www.azz.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 are detailed from time-to-time in documents filed by AZZ with the United States Securities and Exchange Commission, including the Annual Report on Form 10-K for the fiscal year ended February 28, 2019.
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, 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 that AZZ serves, foreign and domestic, customer requested delays of shipments; acquisition opportunities; currency exchange rates; adequate financing and availability of experienced management and employees to implement the Company’s growth strategies.
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 said, let me turn the call over to Mr. Tom Ferguson, Chief Executive Officer of AZZ. Tom?
在代表公司的电话会议上，首席执行官Tom Ferguson先生;和首席财务官Paul Fehlman先生。在今天准备好的评论结束后，我们将打开一个问答环节。请注意，今天的电话会有一个幻灯片演示文稿，可以在www.azz.com上的财务信息下的AZZ投资者关系页面上找到。
Thanks, Joe. Welcome to our first quarter fiscal year 2020 earnings call, and thank you for joining us this morning. We are pleased with the solid start in fiscal year 2020. We generated 10% revenue growth and 35% net income growth versus the prior year. Our Energy segment had a fairly normal spring turnaround season, shipped a portion of the high-voltage Bus Chinese order that pushed out of the last quarter, and regained operational traction in most businesses.
The Metal Coatings segment experienced increased demand in the solar and petrochemical markets and contribution from the acquisition of Tennessee Galvanizing and K2 Partners. Overall we generated $289 million in revenue which is over 10% growth versus Q1 fiscal year 2019. The Metal Coatings team improved operational efficiencies as the usage of DGS which is our Digital Galvanizing System continues to grow in our galvanizing plants.
We also experienced improved contribution from Service Technologies and continued our emphasis on value pricing. We experienced lower cost of zinc flowing through our kettles, although labor costs continued to rise as the craft labor market remains tight. Overall we were able to drive net income up over 35% versus first quarter last year to $21.3 million. While our consolidated bookings were down 13% as compared to the first quarter of last year, it is important to note, during the first half of fiscal year 2019 we booked two large Chinese orders worth $45 million in the first quarter and $55 million in the second quarter and also had a very large international order for welding solutions.
We continue to build on the positive momentum in the Energy segment with a strong backlog of more than $300 million. This set the stage for solid performance into the back half of the year, while our Metal Coatings business continues to gain traction from our key initiatives to drive growth both organically and through acquisitions.
The Metal Coatings segment revenue increased 6% from the first quarter of last year. Operating margins increased to 24.1% compared to 21.9% in the first quarter of fiscal 2019. This is due to lower zinc costs flowing through our kettles, value pricing, and the immediate contributions from our two acquisitions made in the quarter. We have taken steps to improve labor productivity and are seeing our Digital Galvanizing System driving greater operational efficiencies and productivity. We remain the industry leader in North America with 41 galvanizing plants.
We are pleased to be gaining meaningful traction in our new businesses, powder coating, plating and galvanized rebar. These make up our AZZ's surface technologies business group. This gives us growing confidence that our investments will yield positive financial performance in the years to come.
Our Energy segment's high-voltage bus business had a strong first quarter executing on our large contract in China that along with other Chinese contracts will continue to be shipped throughout this fiscal year. While some of our electrical served markets displayed improvement compared to prior year, our oil patch [ph] businesses are seeing somewhat reduced demand.
金属涂料部门在太阳能和石化市场的需求增加，以及收购Tennessee Galvanizing和K2 Partners的贡献。总体而言，我们创造了2.89亿美元的收入，比2019财年第一季度增长了10％以上。金属涂料团队提高了运营效率，因为我们的数字镀锌系统DGS的使用在我们的镀锌厂继续增长。
We are especially pleased with the demand for our specialty welding solutions both domestically and internationally, particularly as our investments in Europe, Brazil and Canada have positioned us to participate in these opportunities and reduced our dependence on the U.S. nuclear market. We remain somewhat cautions due to the uncertainty related to tariffs and the Chinese trade situation, as well as the tighter market for labor in many of our U.S. locations.
Looking forward, we are reaffirming our previously issued fiscal 2020 guidance of earnings per share in the range of $2.25 to $2.75 per diluted share, and annual sales in the range of $950 million to $1.30 billion.
And with that, I'll turn it over to Paul Fehlman. Paul?
Thanks Tom. For the first quarter of fiscal year 2020 we reported net revenue of $289.1 million, a $26.9 million increase or 10.3% greater than the first quarter of fiscal year 2019. Net income for the first quarter of fiscal 2020 was $21.3 million, an increase of $5.6 million or 35.4% greater than the prior year first quarter. Reported diluted EPS rose 35% to $0.81 compared to $0.60 in the prior year first quarter.
Quarter one fiscal 2020 gross margins improved to 22.9% from 22.4% on a year-over-year basis primarily on strong market performance in the Metal Coatings segment. Operating profit for the first quarter of fiscal 2020 grew from $23.7 million in the prior year to $31 million in the current year representing a 30.7% increase. Operating margins of 10.7% increased 170 basis points compared to 9% in the prior year. Our effective tax rate for the quarter was 21.1% compared to last year's rate of 22%.
As for our segment results, first quarter revenues in our Energy segment were up 13.6% to $167 million compared to the prior year of $147 million. Much of the increase in sales can be attributed to high-voltage bus shipments to China and a stable domestic refinery turnaround market, somewhat offset by lower international refinery revenues as we lapped a very good prior year quarter.
Energy segment operating income increased 26% to $12.6 million compared to $10 million in the prior year. Gross profit in the segment improved to $32.6 million in fiscal year 2020 compared to $29.6 million in the prior year. This pushes the gross margin down slightly to 19.5% this year compared to 20.1% in the prior year first quarter. Operating margins for the first quarter however was 7.5% compared to 6.8% in on prior year.
In our Metal Coatings segment, first quarter fiscal 2020 revenues rose 6% to $122.2 million compared to the prior year at $115.3 million while operating income grew 16.7% to $29.4 million compared to the $25.2 million in the same period last year. The increase was due primarily to lower zinc costs and an increase in production. Operating margins finished at 24.1% for the quarter up 220 basis points compared to the 21.9% for the prior year.
Cash flow from operations fell by $6.2 million in Q1 compared to the prior year first quarter despite higher net income year-over-year. We normally see the first quarter as a negative cash quarter for the business and this year was no different. We continued to invest in the business in the first quarter with two acquisitions now operating as part of the Metal Coatings segment and already contributing to the bottom line in the first quarter. We will continue to seek more opportunities like these to continue to properly grow our Metal Coatings offerings.
The risks to fiscal year 2020 that we described in the last earnings call still exists for the year as a whole, but for the most part did not materialize in the first quarter of the year as Metal Coatings margins increased. We did indeed ship high-voltage bus ducts to China and we received firming orders for the fall turnaround season.
With that, I'll turn it back to Tom. Tom?
Thanks Paul. In closing, we are focused on improving productivity and efficiency throughout the company, continuing to adapt our products to new market opportunities and to develop innovative solutions for our served markets. We remain committed to driving our Metal Coatings operating margins back to the 23% to 25% range consistently and our Energy margins to above 10%. We believe our first quarter performance is an early indication that we have emerged stronger and much better positioned to generate consistent operating results going forward.
And now, we'll open it up to some questions.
谢谢保罗。 最后，我们致力于提高整个公司的生产力和效率，继续使我们的产品适应新的市场机会，并为我们服务的市场开发创新的解决方案。 我们仍致力于将我们的金属涂料业务利润率持续回升至23％至25％，并将我们的能源利润率提升至10％以上。 我们认为我们的第一季度业绩是早期迹象，表明我们已经变得更强大，更有利于未来产生一致的经营业绩。
[Operator Instructions] Today's first question will come from John Franzreb of Sidoti & Company. Please proceed.
[操作员说明]今天的第一个问题将来自Sidoti＆Company的John Franzreb。 请继续
It’s John, but good morning Tom and Paul, how are you doing?
Hey, good John.
Good start to the year. My first question is Tom, you kind of characterized this spring as a normal turnaround season. What are your initial thoughts on how the fall turnaround season is shaping up relative to the spring?
今年的良好开端。 我的第一个问题是汤姆，你认为这个春天是一个正常的转折季节。 关于秋季转折季节相对于春季如何形成的初步想法是什么？
Yes, this is Paul. It is stacking up to be stronger and we're quoting a lot of stuff already, we're getting some engineering bookings, we're seeing positive signs as we get closer to the fall season and that's both domestic and international in that case.
Okay, great. But much of the beat in the quarter actually had come from the Metal Coatings side of the business, so can we talk a little bit, I guess there's a couple of things here, one K2 and the Tennessee acquisitions, how much in revenue did they contribute to the quarter? And it doesn't sound like they contributed anything to the Op income line, is that true?
好，太棒了。 但本季度的大部分节拍实际上来自金属涂料业务方面，所以我们可以谈一点，我想这里有几件事，一件K2和田纳西州的收购，他们的收入是多少 有助于本季度？ 听起来他们没有为Op收入线做出任何贡献，这是真的吗？
Yes, they were relative. You know, there are normal bolt-on acquisitions, they are relatively small revenue. We were just pleased that they did contribute and they actually did contribute some operating income, but given their size it's not really significant. We just want to call it out because the teams did such a great job given they integrated quickly, giving the support they needed and just really for us it just shows we're back on track with how we can [indiscernible] and how we break them into the company and that we're acquiring good teams and good businesses.
是的，他们是亲戚。 你知道，有正常的螺栓式收购，它们的收入相对较小。 我们很高兴他们确实做出了贡献，他们确实贡献了一些营业收入，但考虑到他们的规模，这并不是很重要。 我们只是想把它叫出来，因为团队做得非常好，因为他们快速整合，提供他们需要的支持，而且对我们来说真的只是表明我们已经回到正轨，我们可以[音频不清晰]以及我们如何打破 他们进入公司，我们正在收购优秀的团队和良好的业务。
Okay, you know, I'm sure this is immaterial Tom; I'm going to ask it anyway. Just how you characterize the two businesses in the Q? It sounds like K2 is more of a normal regional galvanizer, but Tennessee seems like it has a client base that is throughout the country. Is there a particular reason for that difference, do they provide any kind of different services that they are making more of a countrywide business?
好的，你知道，我确信这是无关紧要的汤姆; 无论如何，我会问它。 您如何描述Q中的两个业务？ 听起来K2更像是一个普通的区域电镀器，但田纳西州似乎拥有遍布全国的客户群。 是否存在这种差异的特殊原因，他们是否提供他们在全国范围内开展业务的各种服务？
Yes, we need to flip them the other way, John.
K2 Partners is a power coater and plater out of close by in North Texas and then it got a location over in Tampa. So they do, because they do a lot of automated type powder coatings, they do attract business from further away than you normally see from a galvanizing business. Tennessee Galvez is outside of Chattanooga, Tennessee and they draw from that Southeast market and Eastern Tennessee and of course we have a facility up in Nashville that picks up as you go further north.
K2 Partners是德克萨斯州北部的一家电动涂布机和电镀工具，然后它在坦帕有一个位置。 他们这样做，因为他们做了很多自动型粉末涂料，他们确实吸引了比通常从镀锌业务更远的业务。 田纳西州的加尔维斯位于田纳西州的查塔努加之外，他们从东南部市场和东部田纳西州抽签，当然我们在纳什维尔设有一个设施，随着您往北走。
Okay, fair enough. And one last question, also in the Q there was mention of the Westinghouse settlement. I'm wondering if they had revenue contribution and the energy started business in the quarter and kind of maybe just update us just on where that all stands?
好的，公平的。 最后一个问题，也是在Q中提到了西屋的解决方案。 我想知道他们是否有收入贡献和能源在本季度开始营业，有点可能只是更新我们只是在所有的立场？
Yes, so we do call it out in the 10-Q as part of the contribution on the revenue side, it's not a big contributor though, but we don’t call out a number on it, but it's somewhat de minimis that what that is. In terms of the entire deal with Westinghouse basically we've entered into deals of how the representative of Westinghouse clear out the open items that we had filed with the bankruptcy court. So, pretty much getting to the end of it and it was a pretty favorable return.
是的，所以我们确实在10-Q中将其称为收入方面的贡献的一部分，但它不是一个很大的贡献者，但我们不会在其上标出一个数字，但它有点微不足道是。 就整个与西屋公司的交易而言，我们已经就西屋公司代表如何清理我们向破产法院提交的未清项目达成了交易。 所以，几乎要走到尽头，这是一个非常有利的回报。
Okay Paul, thank you very much. I'll get back into queue.
Our next question comes from Jon Braatz of Kansas City Capital. Please proceed.
我们的下一个问题来自堪萨斯城资本的Jon Braatz。 请继续
Good morning Tom and Paul.
Hi Jon, good morning.
On the coatings side you called out a couple of factors that contributed to the better margins, zinc prices, efficiency, productivity and so on. Can you give us little color on obviously zinc prices are going to go up and down, but some of the items that are more sustainable and your ability to retain these margins in the face of maybe some rising zinc costs, I'm trying to get better idea of how much real internal progress you're making on margins as opposed to maybe taking advantage of lower zinc prices?
在涂料方面，您提出了一些因素，这些因素有助于提高利润率，锌价，效率，生产率等。 您能否给我们一点颜色显然锌价会上涨和下跌，但是一些更具可持续性的项目以及您在面对锌成本上涨时保留这些利润的能力，我试图获得 更好地了解您在利润率方面取得多少实际内部进展，而不是利用较低的锌价？
Yes, that's a great question, or is that a question? Yes zinc costs move around. I think one of that we reorganized the sales effort little over a year ago, so and I think that's really taken where we tended to bring in more value oriented sales, technical sales folks and focused that effort on making sure that we're getting paid for the services that we provide, because we do in some cases we provide transportation services and in other plants we do more hand leading than in others. So we've got about 35 or 38 different services that we consider we offer. So that's focused on value pricing, is really taking root. I feel good about the team's ability to get paid for the value that they are delivering.
And then on the other side, DGS we've obviously had a lot of focus on labor productivity, on efficiencies, drive, keep our zinc scrap low if you will. But I think with DGS we're getting more instrumentation, more sensors, we're taking paper out of the plants. And when you think about how a plant, when galvanizing plants laid out, you can have, you have routers that are 150 to 200 yards away from the office to get them to, to bring them in and get things in putted. So to me that's where we're driving labor productivity and efficiencies because we're now doing a better job using the digital tools that we've been working on for the last couple of years are finally truly coming into play.
So I view that as that's what's going to allow the – we've got a great team there now and I feel like they are going to be able to sustain productivity and efficiency with the only caveat to that being that in some parts of the country we are scrambling to get direct labor and to handle the business. But we’ve done a lot of work on recruiting, retention, motivation and things like that to try to ease the demand for new labor as much as possible.
所以我认为，这就是允许的 - 我们现在在那里有一个伟大的团队，我觉得他们将能够保持生产力和效率，唯一需要注意的是，在该国的某些地区我们争先恐后地直接分工并处理业务。但是我们在招聘，保留，激励和类似的事情上做了很多工作，试图尽可能地减轻对新劳动力的需求。
If assuming zinc stays at the current levels, you still have a little bit of a headwind looking forward?
No, we’ve actually, we're in pretty good…
I mean tailwind, I meant tailwind.
Yes, okay. Yes, we do have a little more of a tailwind than the - I’d go along with that.
是的，好的。 是的，我们确实有一个顺风而不是 - 我会跟着它。
Yes, we have a hard time predicting the direction of commodity cost like zinc. If you look back over the last few years you know we’d probably be wrong if we made a guess. But we feel pretty good. There’s - the zinc supply and demand are kind of rocking in the range and so we have had - we have a done some things to, you know, keep our zinc predictable, I guess would be the way I’d like to put it.
So, as we look forward for the year, we have about six months of zinc inventory in our kettles. So we’re getting close to that point where the cost of our zinc is pretty much in the bag by the end of this quarter anyways.
是的，我们很难预测锌等商品成本的方向。 如果你回顾过去几年，你知道如果我们做出猜测，我们可能会错。 但我们感觉很好。 有 - 锌供应和需求在这个范围内摇摆，所以我们已经做了 - 我们做了一些事情，你知道，保持我们的锌可预测，我想这将是我想说的方式。
Okay. Tom, you've talked a little bit about uncertainty surrounding China and the tariffs. Are those uncertainties or concerns reflecting your ability maybe to bid on new business or is it issues that confront your customers and hence your ability to work with your customers? What exactly is the uncertainty and concerns around it?
好的。 汤姆，你已经谈了一些关于中国和关税的不确定性。 反映您的能力的那些不确定性或关注点是否可能是针对新业务的投标，还是您的客户面临的问题以及您与客户合作的能力？ 它周围的不确定性和担忧究竟是什么？
You know, a lot of these contracts date back a couple of years and so they weren’t anticipating things like tariffs and so, as we’ve mentioned before we have switched from having a joint venture over in China to go on with a wholly-owned manufacturing facility or - and having that capability of having technicians in country which allows us to control that better. But you know it is 30% tariffs for stuff coming out of the U.S. into China and we’re managing through that with the combination of one, negotiating with the customers and two, you know, what can we manufacture in-country that’s not going to be subject to those tariffs. So I feel like our team there is managing this very effectively, but it's, we keep it at the forefront just because it’s a big chunk of our backlog.
你知道，很多这些合同的历史可以追溯到几年前，所以他们没有预料到关税这样的事情，正如我们之前提到的那样，我们已经从在中国的合资企业转为完全继续 拥有制造设施或 - 并且具备在国内拥有技术人员的能力，使我们能够更好地控制这一点。 但是你知道对于从美国进入中国的东西是30％的关税，我们通过组合一个，与客户谈判和两个，你知道，我们可以在国内制造什么不能进行管理 受这些关税限制。 所以我觉得我们的团队非常有效地管理这个，但是，我们将它放在最前沿只是因为它是我们积压的一大块。
So making sure that we can generate the margins that we had estimated we’re going to get and abide by the contractual commitments for deliveries and not get hung up in customs. So the team working on that they’re really good. We’ve added some good resources in China and they’re helping us and then our folks in the facility in Medway, they've been doing business in China for quite a while. So while we feel comfortable, we also feel – we feel we should call it out here for you.
因此，确保我们能够产生我们估计将获得的利润，并遵守交付的合同承诺，而不是挂在海关。 所以团队正在努力，他们真的很好。 我们在中国增加了一些好的资源，他们帮助我们，然后帮助我们在梅德韦的工厂，他们在中国做了很长一段时间。 因此，虽然我们感到舒适，但我们也觉得 - 我们觉得我们应该在这里为您打电话。
Okay, thank you very much.
[Operator Instructions] Our next question comes from Noelle Dilts of Stifel. Please proceed.
[操作员说明]我们的下一个问题来自Stifel的Noelle Dilts。 请继续
Hi, good morning and congratulations on a nice quarter.
Good morning. So just - I just want to expand a bit on Jon’s question on the Metal Coatings margins. You know, is there any way you can kind of again walk us through how to think about how much of the improvement from the fourth quarter to the first quarter came from zinc versus pricing and then maybe incorporate the headwind from labor? And then just how are you thinking about - is there any clarity you can give us on how to think about the kettle cost of zinc through the year and if you think these margins and the around the 24% level are sustainable?
早上好。 所以，我只是想对Jon的金属涂料利润率问题进行扩展。 你知道吗，有什么方法可以再次告诉我们如何考虑从第四季度到第一季度的改善有多少来自锌与定价，然后可能加入劳动力的逆风？ 然后你是怎么想的 - 如果你认为这些利润和24％左右的水平是可持续的，你能否就如何考虑今年锌的水壶成本有什么清晰度？
While we typically don’t go too deep into that level of detail it’s pretty close to have them off from some pricing events and costs with action just for zinc. I would say that on the pricing it’s more of - we’ve gone into - we’ve gone in and chosen our pricing and how we’re going to price in certain markets. So we’re definitely not making blanket statements about the overall market.
As far as the zinc pricing goes, one of the things we learned last quarter is that we do a different amount of zinc in every market and that can be a little bit different the way it moves up and down. But I'd say going forward Noelle, as Tom alluded to earlier, basically on a comparative basis through the last year from here on out for another six months to nine months, you should expect it to be a positive comparison just because you know where those zinc markets come from and it's been down for the majority of the year.
There have been a couple of blips here and there, but I think we’re pretty well I think predictable. Let’s see where Tom, which I think is exactly the right supports to use for the next six to nine months. Now, having said that, we’re still keeping an eye on the labor cost, but I would say that we’re now getting into that zone that we had committed to get back to earlier and while it may not be exactly 24%, I think that, not making a forward looking statement on exactly what this margin is, but we’re back in that 23% to 24% range for a while. Tom?
虽然我们通常不会深入到这个细节水平，但是它非常接近于从某些定价事件中获取它们以及仅为锌行动的成本。我会说，在价格上更多的是 - 我们已经进入 - 我们进入并选择了我们的定价以及我们将如何在某些市场定价。因此，我们绝对不会对整体市场做出全面的陈述。
Yes, I think the one thing that as we continue to acquire powder coaters which so far are the ones we’ve acquired have been fairly like, I've got to say as we get more we start to get some of the same leverage points that we have with galvanizing. So that’s one of the reasons we’re trying to look at buying powder coaters and platers and building up in certain areas of a couple of states and then expanding beyond that. But those margins typically would be a little bit lower than our galvanizing margins and so as we do that, as continuous galvanizing rebar becomes a bigger part of our sales that’s why we’re giving the range of 23% to 25%. But we feel real good about the galvanizing ability to be in that range.
是的，我认为，到目前为止，我们继续收购粉末涂料的一件事就是我们已经获得的那些，我必须说，随着我们越来越多，我们开始获得一些相同的杠杆点 我们有镀锌。 所以这就是我们试图购买粉末涂料和塑料，并在几个州的某些地区建立，然后扩展到那个之外的原因之一。 但这些利润率通常会比我们的镀锌利润率略低一些，因此我们这样做，因为连续镀锌钢筋成为我们销售的一个重要部分，这就是为什么我们给出了23％到25％的范围。 但我们对于在该范围内的镀锌能力感到非常满意。
Okay great. Thanks that’s helpful. Then in terms of just shifting over to the Energy segment, two questions. One, any additional clarity you can provide on the timing of the shipment on the project in China through the year that might drive some variation across the quarters? And second, you mentioned that certain electrical markets are improving, I know you said that the oil field services the oil patch businesses has weakened a bit, but can you give us a little bit more detail on where you’re seeing improvements?
好，太棒了。 谢谢，这很有帮助。 然后就转移到能源部分而言，有两个问题。 一，您可以提供关于中国项目出货时间的任何额外清晰度，这可能会导致整个季度出现一些变化吗？ 第二，你提到某些电气市场正在改善，我知道你说油田业务的油田服务已经削弱了一些，但是你能不能给我们更详细一点你看到改进的地方？
Yes, I think the, you know, we now have three enclosure sites from Chattanooga, up outside of Baltimore than over to Kansas, and then we got the two switchgear plants and one in Missouri and the other up in Oshkosh, Wisconsin. And we feel good about that coverage that it is – so we feel like there is enough market activity, that's becoming, the focus now is more on operational excellence and taking care of customers, and because we can move the load around to some extent. We’re firing up a part in some cases the transportation can become a little bit of a burden, but we can at least share resources better than we used to be able to.
So we see the transmission distribution market is looking okay for us. We like the activity on data centers and that’s where I’d say we’ve adapted some of the things we’ve been doing in enclosures to go after that type of business and seeing those opportunities. And so that’s just a lot of our internal business development is going on targeting niches versus the broad market and but we feel good about those.
Where we haven't seen a lot of improvement is in medium voltage bus because we had to replaced that nuclear portion of the business that isn’t available to us anymore with norm, traditional bus business and that's where there's still lot of competition out there and demand hasn’t improved enough to at least from my perspective to occupy the capacity that’s available.
And then oil patch, those are relatively small business units overall, but we did want to call out the fact the oil patch related business which is lighting and tubing, they’re just seeing a little bit of slowdown and so that’s kind of the range of things we’re seeing across those businesses.
是的，我想，我们现在有三个来自查塔努加的围场，位于巴尔的摩以外的地方，而不是堪萨斯州，然后我们得到了两个开关厂，一个在密苏里州，另一个在威斯康星州的奥什科什。而且我们对这种报道感觉很好 - 所以我们觉得有足够的市场活动，现在变得越来越重要，现在的重点更多是卓越运营和照顾客户，因为我们可以在一定程度上减轻负担。在某些情况下，我们正在开辟一部分运输可能会带来一些负担，但我们至少可以比以往更好地共享资源。
Great, thanks very much.
This concludes our question-and-answer session. At this time, I would like to turn the conference over to Mr. Tom Ferguson, Chief Executive Officer of AZZ for any closing remarks.
这就是我们的问答环节。 在这个时候，我想把会议转交给AZZ首席执行官Tom Ferguson先生发表任何结束语。
Yes, thank you. You know this, we feel good about how we finished our first quarter. We feel good about where our teams are now positioned. We’re building out a leadership bench to ensure that we have the right capabilities as we go forward. We have a lot of good things going on in terms of innovation and pursuing new opportunities and as we de-risk away from nuclear to some extent and depend more on our international opportunities, international sales and business development organizations.
We feel good about the pipeline of [indiscernible] and bolt-on acquisitions and feel good about our ability to focus on those and get it done and get them integrated effectively. So, with that, I look forward to finishing out Q2 which, my one caution is that, that is when there's not a lot of turnaround or outages in the season, so then this Q2 tends to be a little bit lower and I just highlight that for you. But then we get into the fall season which right now looks positive for us. And with that, I appreciate and look forward to talking to you all on the next call.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
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