Good morning, and welcome to the AZZ Incorporated Fourth Quarter and Fiscal Year 2014 Financial Results Conference Call. All participants will be in listen-only mode. (Operator Instructions). Please note this event is being recorded. I would now like to turn the conference over to Mr. Joe Dorame of Lytham Partners. Please go ahead, sir.

Good morning and thank you for joining us today to review the financial results of AZZ Incorporated for the fourth quarter and the fiscal year 2014, ended February 28, 2014. As Denise indicated, my name is Joe Dorame. I'm with Lytham Partners and we are the Investor Relations consulting firm for AZZ Incorporated. With us on the call representing the company are Mr. Tom Ferguson, Chief Executive Officer; Mr. Dana Perry, Chief Financial Officer and Mr. Paul Fehlman, incoming Chief Financial Officer. At the conclusion of today's prepared remarks we will open the call for a question-and-answer session. If anyone participating on today's call does not have a full text copy of the press release you can retrieve it from the company's website at azz.com or numerous financial websites. Before we begin with prepared remarks I would 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, 2013. 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 electrical power generation markets, electrical transmission and distribution markets, the industrial markets and the hot-dip galvanizing markets; prices and raw material costs, including zinc and natural gas which are used in the hot-dip galvanizing process; changes in the economic conditions of the various markets the company serves, foreign and domestic; customer-requested delays of shipments; acquisition opportunities; currency exchange rates; adequate financing; and availability of experienced management 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?

Thank you, Joe. Good morning to all of you and we thank you for your continued interest in AZZ. First, I would like to recognize Dana Perry for his 39 years of service for AZZ since this will be his final earnings call as our CFO, although he will be remaining on the Board of Directors. His support as I've transitioned into the company is tremendously appreciated. I would also like to welcome Paul Fehlman, who is transitioning into Dana's CFO role. Paul brings a wealth of financial experience and expertise to the team and especially bolsters our international capabilities. I feel quite good to have a stable executive team as we enter fiscal year 2015. We are committed to growing -- to continuing to grow this business and to do it in a manner that is fiscally responsible and that will continue to drive value for our shareholders. While it's only been five months since my appointment I remain committed to maintaining the strategy of growth in both our Galvanizing and Electrical and Industrial segments. We will focus on the continued expansion of our Galvanizing Services business, both organically and through acquisitions. As the industry leader we are committed to leveraging our strong standard of operating practices to improve profitability and service. We are completing our integration of NLI, which is the nuclear component and certification company we acquired back in 2012, and WSI which is the specialty welding overlay business we acquired from Aquilex last year. And we are transitioning our emphasis from integration to growth. We recently organized our Electrical and Industrial businesses into three internal platforms, the nuclear, industrial and electrical. This allows us to leverage sales resources more effectively for similar markets, drive operational excellence where we have similar processes in supply-chain demands and provide…

Thanks, Tom. For the fiscal year 2014 we recognized net sales of $751.7 million, EPS of $2.32 and a backlog of $229.9 million. This reflects a year-over-year increase of 32% in revenues, a decrease of 2% in EPS and an increase in backlog of 3.6%. We posted 15.7% growth in annual net cash flow from operations year-over-year, up $14.5 million to $107.3 million. Full year revenues in our Electrical and Industrial Services segment were up 78% to $416.1 million compared to fiscal 2013 while operating income rose 34% to $45.9 million compared to the prior year. Operating margin for the segment fell to 11% compared to the prior year margin of 14.7% reflecting non-recurring period expense costs related to acquisitions as-well-as the effect of purchase price accounting from our acquisition of WSI. Excluding WSI full year operating margins in the segment would have been 13.9%. In our Galvanizing Services segment full year revenues were down just under a 0.5% to $335.6 million compared to fiscal 2013 while operating incomes rose 4.8% to $92 million compared to the prior year. For the full year we recognized non-recurring charges related to losses from the fire at the Joliet Galvanizing facility as well as gains from the settlement of losses while also recognizing certain non-recurring insurance proceeds from the Joliet fire. For the first quarter of fiscal 2014 we reported revenues of $181 million, EPS of $0.40 as compared to $140.4 million in revenues and EPS of $0.52 in the same quarter last year. As noted earlier our backlog at the end of the fourth quarter grew to $229.9 million reflecting a book-to-bill ratio of 1.1 for the quarter. In addition to the fourth quarter weather effects Tom discussed earlier we've separately disclosed on a table attached to the press release several non-recurring…

Thanks Paul. Our vision is to be the innovative solutions leader in protecting metal and electrical systems used throughout the world's infrastructure. We believe we are well positioned to achieve this vision as we enter fiscal year 2015 and are confident in our ability to grow our businesses profitably. The completion of another successful year, our 27th consecutive year of profitability, the financial strength of the company and a great group of employees with stable leadership as reflected in the confirmation of our fiscal year 2015 guidance. As we look ahead we will continue to focus on aggressively expanding our businesses, both domestically and internationally. We will continue to leverage our expertise and our internal spirit of innovation to enhance our position as the solutions leader in protecting metal and electrical systems that drive infrastructure throughout the world. We have the products and services, the people and the reputation to provide solutions to not only meet but exceed our customer needs. We are excited about the opportunities before us in fiscal year 2015 and beyond. Thank you for your participation today. We would like to open it up for any questions at this time.

Thank you. We will now begin the question-and-answer session. (Operator Instructions). The first question will come from John Franzreb of Sidoti & Company. Please go ahead.

Good morning Tom and Paul. First I'd like to wish Dana good luck on his retirement. Dana it's been a pleasure working with you all these years. Tom in your press release you mentioned that WSI's was able to pull in some jobs, in your prepared remarks you mentioned that there was a push out of jobs into 2015. Could you talk a little bit about the dynamics or what's going on in WSI, how those jobs were able to move back and forth so readily?

Yeah, I think as we were forecasting we prepared our guidance for the fourth quarter we were looking at a certain set of jobs being shipped out of WSI. And they were able to add a couple that had shipped out earlier or slipped out earlier in the year but then they were able to pull some other stuff into the quarter. And that's why it's kind of a timing issue in terms of what are our expectations were. So overall we felt real good about their ability to just re-prioritizing jobs that they can deliver a little bit earlier.

Could you give us a sense or magnitude of how much has moved into the fourth quarter?

I've got Ashok sitting here so…?

The fourth quarter jobs that moved in were slightly less than $10 million.

Okay, that actually makes sense to me, okay. And regarding the SG&A it seemed to drop rather significantly in Q4 versus Q3 and actually for the balance of the first three quarters of the year. What were the moving parts there that impacted SG&A?

We had felt kind of a softness, as you know when I came on Board and so we tightened up on our SG&A spend but nothing really particularly significant in any of that other than delaying a little bit of spend and some hires into the year into the New Year making sure that we made some adjustments on personnel as we now enter the new year. So nothing that I would really point to of real significance.

Okay, and one last question. The weather related issues, did that spill into Q1 of fiscal 2015 and if so what kind of progression would you expect the earnings to look like going forward to the balance of the year?

We did, it's continued to impact our galvanizing but I guess the good news is it hit early in the quarter instead at the end of it, so a little more time to recover. And I think particularly on the Electrical and Industrial side the impact there from weather probably are not going to affect the quarter. I'd say I think it's going to be a fairly normal cadence in terms of the first quarter.

Okay, thank you very much guys.

The next question will come from Schon Williams of BB&T Capital Markets. Please go ahead. Mr. Williams your line maybe muted.

Hi, Good morning.

Hi, good morning.

Hi, good morning.

And again echo the congrats to a well-deserved retirement for Dana and welcome to Paul, very solid company you are joining here. So wanted to focus a little bit, and maybe piggy backing on the last question as to the kind of the trend, I mean there is not a lot of visibility on our end as to when some of the shipments on the E&I side are going to go actually go out the door when obviously you are expecting a decent ramp here on the E&I side. So I was wondering if could we talk about either specific expectations for Q1 or maybe if you're not comfortable talking about Q1 but maybe first half of the fiscal year versus second half of the fiscal year just when we look at the guidance both the revenue and the margin guidance, how should we baking in kind of the traditional seasonality versus some of the shipments going out the door I mean for instance, E&I typically shipments in Q1 are actually down versus fiscal Q4, but I mean I would expect maybe that's not the case this time around just given what's sitting in the backlog. So just help us think about the timing as we progress throughout the year?

Yeah, I think the -- just to first comment, I would anticipate the second half being stronger than the first half, but the only caveat to that is we're with some of these large nuclear projects particularly the two new plants in the U.S. and the two plants in China, I think like everybody they may probably like to be able to predict when they are going to complete things. So we've been talking about that for -- by most of the past year I guess and so while we are pretty confident, they will ship this year, I'd kind of hedge that a little bit and say it could be as late as the second half. We're going to do everything we can on our side to make sure we are ready to ship whenever they are available.

Right, I guess at this point is your kind of your best guess that it is going to be more of the second half or it's scheduled for the first half or you want to be conservative and say that it may go out for the second half?

Yeah, I think that's my personal conservatism to give as much time during this year as we can to get those things out. But right now the China jobs are scheduled for late summer, August, September timeframe.

Okay, that's helpful. And then could you just talk about a little bit obviously the lack of outages hurt you significantly in fiscal '14. Can you talk about why you think that's not going to be a headwind as you move forward?

Yeah, I think the big issue there is I believe a lot of the nuclear sites delayed the outages pending potential Fukushima regulations and the regulations really have not come out yet but that I think the signal from the government is they are more related to planning, less hardware type effects. So the fact that the outages were delayed a year, usually they will get back into a normal cadence for the next couple of years and so will have a little bit of catch-up. So I am confident just because the nature of the way that nuclear plants handle our outages we're going to see a higher number. Currently the plants, as they release their plans for this year is up about 65 outages versus low 50s last year. That's what gives me some confidence and we see that impact in NLI because of the component side of the business as well as on the WSI cycle.

All right, thanks guys. I will get back in queue.

Our next question will come from Noelle Dilts of Stifel. Please go ahead.

Hi. Good morning. And again Dana congratulations on your retirement.

Thank you.

My first question, I just wanted to go -- to get a little bit more just granularity on your guidance. Has there been any change in terms of what you are expecting by segment in terms of profit -- I am sorry in terms of revenue or profit versus when you gave some of those details in January?

No. I actually, no it's Paul. We haven't talked about any change. We're not going to be projecting any change from those numbers.

Okay, and then second just going back to the opportunity in NLI in the past you've talked a bit about, what do you see in terms of revenue opportunity from both some of these outages and from Fukushima, post-Fukushima upgrades, again any changes in terms of their thinking there, in terms of the size of the opportunity?

No, not really. As I look at it we got a very strong sales organization in NLI and now as we crossed across all our nuclear opportunities, I think we look to be able to grow both by taking on new opportunities as well as benefit from just the higher number of outages where that's kind of run-rate business and if you take an average of say 60 outages a year in the U.S. then that forms a pretty good base. So the fact we're expecting some catch-up is just good news for NLI or should be as the year goes on. And then on the international side we're seeing activity in China picking back up, and so while I don't think the nuclear sector is real robust in terms of new equipment because we're especially focused on the maintenance side of the sector it tends to be maybe we're a little more bullish on it than some other folks might be.

Okay. And then you sounded pretty optimistic on the petrochem market within Galvanizing for this year. Could you just kind of talk about what you are seeing there in terms of give us some sort of sense of the pace of improvement you are seeing to-date and just kind of what you are getting in terms of enquiries in that market?

It's up a few percentage points which for us -- and most of what we're seeing is a higher level of enquiries. We're seeing projects moving forward and we will start to see more -- we will be going to be more of the metal to galvanize as that goes on. So we're -- I guess the real positive is we're just seeing what were budgeted projects now so far have been fairly small ones which isn't necessarily bad news for us but we've seen those move forward. And there is some -- there are several larger ones that we're seeing positive signs that they are going to go ahead and move those forward.

Okay, great. Thanks.

(Operator Instructions). The next question will come from Brent Thielman of D.A. Davidson. Please go ahead.

Hi, good morning.

Good morning.

Could you provide what range of WSI revenue is built into guidance for fiscal 2015?

I don't have that right in front of me. We can obviously get back with you on that, roughly $250 million -- $225 million to $250 million range.

Okay, perfect. Thank you. And then I am sorry if I missed this at the start but did you provide what the NLI revenue and operating profit are for the quarter?

I think we gave that in the press release.

Yeah Tom talked a little bit about that and it was on the -- it was in the prepared remarks and it was in the press release. Brent there is nothing that we typically would break that separately, because we operate as E&I efficiently for our operating segment.

Okay. That's fair. And then I was just kind of curious what was behind the decision to no longer provide quarterly guidance. Is it just simply because the business has become bit lumpier with the nuclear work, just a little discussion there?

Yeah, I think as you can imagine both Paul and I come out of that [closet] environment where you have a lot of projects, they move by a week and suddenly you look really foolish on your guidance for the quarter. And we just don't -- what we will do going forward is continue to as best as possible each quarter start to narrow that full year guidance for you, so that you can see the direction that we're heading, because there is -- now with WSI, NLI as-well-as several pieces of the legacy electrical business where we're heavy, heavy projects versus the Galvanizing Services side that your day-to-day run-rate business did and since they used to form 60% of our volume and the project side kind of 40% and now we're inverted. So we just have so much more project activity. That is lumpy and that can move by just a couple of weeks and throw quite bit of income one month out.

Brent I think we started that last year to kind of help guide you guys on what our quarterly revenues were going to be from the WSI in relation to their lumpiness quarter-to-quarter. And I think that's kind of service [inaudible].

Yeah, and now both of them are fully integrated and one of the phrases you will probably be hearing from me a lot is we're becoming less and less of a quarterly business. So we are not quarterly business, this is becoming more lumpy.

That's fair. I appreciate that. And then the four large nuclear projects you talked about, can you remind us what sort of revenue expectations with those are roughly?

Yeah. It's probably that those four constitute a little under $50 million of volume.

Okay, great. And I have one last one. Amortization of the acquisitions and E&I, was that about $3.4 million this quarter?

That sounds about right.

And that's down about half, by half next year or I guess this year, fiscal '15 on a quarterly run rate?

It's going to happen Nuclear Logistics, NLI will encash their backlog over a two and a half year period and that piece of the amortization goes away at the end of our third quarter.

Q3, okay.

We had a benefit this year and then next year is when we start seeing the real benefit of that.

And that's in fiscal '16?

Yes.

Got it, thanks. Great, thank you guys.

The next question will come from Jon Braatz of Kansas City Capital. Please go ahead.

Good morning gentlemen and Dana good luck in retirement. I appreciate all the work. Tom, question you mentioned that bidding activity is and quoting activity is up a little bit and I know you've only been there four months. But some of the initiatives that you instituted and started, are you seeing some, especially on the international side are you seeing some benefit from that, are your seeing that in some of the quoting activity or is it more still just sort of the legacy opportunities?

Yeah, I am not going to take a whole lot of credit for that. I think we are seeing the legacy, the benefit from the legacy. I will say that we have had a pick-up just from the reorganization along this nuclear platform line that's where we had a real strong sales force in NLI. And I think they've already started in both sites, WSI and NLI, they had different customer basis, they had strength with and we are seeing some of that benefit already just as they come together under one leadership. So I'd say that part of the new structural changes, but the run rate stuff in galvanizing and traditional legacy electrical and those kind of things. That's all just a result, I think…

Okay.

In stable and we did focus on it.

Okay. And secondly the Joliet facility, now it's up in full production, what kind of revenue contribution does that facility generate. I know it was the largest facility I think it was largest facility you had. Is it still the largest facility after the rebuild?

It's in the toppish line, just for competitive reason I'd rather not give any numbers by site.

Okay, I understand. But let me ask you this incrementally I know you had diverted some production to other facilities. So it's not what's coming back on stream will not all be incrementally new, am I correct in that?

That's correct. I think we will pick up a few percentage points overall.

Okay. All right Tom. Thank you very much.

Thanks.

The next question will come from William Bremer of Maxim Group. Please go ahead.

Good morning gentlemen.

Good morning, Bill.

Just a quick one, the incoming orders pretty impressive. Can you give some idea of the mix of those orders and more importantly the underlying pricing there, are they better sequentially or should we look at them as, or they better say year-over-year?

Well that's -- I should have known you were going to ask that question but I have to admit, I am struggling to answer it, because I am just -- I haven't really gotten a good deal for the rhythm of our pricing. What I would say is the opportunities as we've mentioned petrochem is -- we're feeling really good about it across our segments, and then we are picking up some international opportunities. So on a relative basis I have a hard time giving you much to trend with other than to say our pricing is still pretty just stable

Okay, all right, gentlemen, that's all I have. Thank you.

All right.

And our next question will be a follow-up from John Franzreb of Sidoti & Company.

Just about the reorganization along the platforms, could you just talk a little bit about what's in the industrial versus what's in the electrical groupings?

Sure the industrial is that, the WSI non-nuclear and it's the SMS which is kind of the general refinery boiler service pieces that Aquilex SRO business we bought.

Okay, and then in nuclear is NLI plus the nuclear side of WSI and then electrical is everything else.

Okay, and in that electrical bucket would you characterize that business as weaker in the fourth quarter versus a year ago? Well, just let me stop right there for now .

Yes I think as I came into it, that's right about the time I came in. It felt weaker; it felt like it had been fairly stronger the previous year.

And Tom what are your expectations for that business in 2015 are we at the trough yet or tell me how you see the electrical side of business playing out in the coming year?

Well, I think we had, we felt better about the incoming book and at the end of the year for that sector. I think that because it is so many disparate pieces we are going through a very comprehensive strategic review of that particular platform and what do we do with these business -- how do we see them progressing and how do we get focus in the right areas to be able to get take them to a new level of growth. But we are early in that process quite frankly.

Okay, right. That's fair enough, right. Thank you for the color.

The next question will be a follow up from Noelle Dilts of Stifel. Please go ahead.

Hi, first I was just hoping you could take a bit of a deeper dive into what you are seeing in the transmission market within Galvanizing and then also comment on what you are seeing in distribution on the electrical side?

Yes, I can, on Galvanizing it's just very stable, very flat, very stable. We are -- but we anticipate we will continue to focus more on the petrochemical and pick up that those opportunities. And then we do -- we would hope to see a bridge at highway in the electrical utility stuff as the year wears on. But right now it's pretty flat.

Okay. And the same thing with distribution, you are not really seeing much of an improvement yet?

Distribution on the substation portion of it is taken up low single-digit type of growth, and maybe low to mid-single-digit growth there but not up here in the double-digit that we would like to see that coming from off of kind of a low to moderate level.

Okay and I didn't do a lot of work on the transmission cycle, I guess we are seeing now and anticipating continued strength in Canada. Is that something you feel you are participating in or if there is something limiting you from a market standpoint and participating in some of that activity?

We expanded our -- on the Galvanizing we side we had acquired three Galvanizing plans in 2012. And so those, we've had those in our run-rate and they've been participating in that. And we do have one electrical site that we had moved and upgraded and we would hope to participate more with that new upgraded facility.

Okay, and then lastly can you just comment a bit in terms of what you are seeing in terms of the acquisition pipeline and pricing in the market for acquisitions?

Yes, I mean we are, right now as we are working on the Electrical and Industrial platform to finish up the integration of WSI, NLI and moving to this to market focus, the three market focused platforms. So we are not really looking to do much on that side at the moment. So Galvanizing I think that there is quite a few one site opportunities out there that will be active in pursuing and there is only a couple of multi-site Galvanizing organizations left in North America. So hard to predict it what happens with those given those small number. But we are active and multiples are pretty normal. I don't -- we haven't seen a lot of movement there.

All right, great. Thank you.

And ladies and gentlemen, this will conclude our question-and-answer session. I would like to turn the conference back over to Tom Ferguson for his closing remarks.

Very good, thank you. I am looking for my notes here so I apologize the -- as we look ahead we'll continue to focus on aggressively expanding our businesses. And we'll continue to leverage our expertise. We intend to be more innovative in offering solutions. We are excited about our future and I am just excited to be here and look forward because I think 2015 is a pivotal year for us 2016 and beyond look to be really, really good for -- as I am looking at them. So I want to thank everybody for your participation today and look forward to the next call.

Ladies and gentlemen, the conference has now concluded. We thank you for attending today's presentation. You may now disconnect your lines.