Joe Dorame - Lytham Partners Tom Ferguson - Chief Executive Officer Paul Fehlman - Chief Financial Officer Tim Pendley - Chief Operating Officer, Galvanizing.

John Franzreb - Sidoti & Company Jon Braatz - Kansas City Capital Noelle Dilts - Stifel Andrew Storm - Cortina Bill Baldwin - Baldwin Anthony Securities.

Good morning and welcome to the AZZ Incorporated Third Quarter 2017 Financial Results Conference Call. [Operator Instructions] Please also note today’s event is being recorded. I would now like to turn the conference over to Joe Dorame of Lytham Partners. Please go ahead..

Thank you. Good morning and thank you for joining us today to review the financial results of AZZ Inc. for the third quarter of fiscal year 2017 ended November 30, 2016. As Rocco indicated, my name is Joe Dorame, I am with Lytham Partners and we are the Investor Relations consulting firm for AZZ Inc. With us on the call representing the company are Mr.

Tom Ferguson, Chief Executive Officer; and Mr. Paul Fehlman, 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 other 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 facts, 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 29, 2016.

Those risks and uncertainties include, but are not limited to changes in customer demand and response to products and services offered by the company, including demand by the power generation markets, electrical transmission and distribution markets, the industrial markets and the 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 political stability and the economic conditions of the various markets that company 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?.

we expanded the energy marketing role to include galvanizing immediately ramp up with our market activity indicators and process; implemented a formal key initiative review process to ensure these activities get the same focus as the day-to-day operations; reduced the number of initiatives to those that are mission-critical to our growth in fiscal year 2018.

We brought in some outside help to drive operational improvement across the businesses with greater accountability and effectiveness. I have personally engaged more deeply in the NLI divestiture process to drive its resolution one way or another and we repurposed resources to pursue the active acquisitions more aggressively.

While it is too early for these actions to have much impact on the balance of this fiscal year, I am intent on setting this up for significantly improved performance in fiscal year 2018. We have great people and very dedicated and experienced leaders within AZZ to implement and execute these strategic initiatives.

I am committed to ensuring that, that happens. While we are not renewing guidance due to the ongoing uncertainty around NLI, I do not see any significant opportunities to measurably improve our operating results in Q4 compared to the prior fourth quarter. And with that, I am going to turn it over to Paul..

Thanks Tom. For the third quarter of fiscal year 2017 we reported net sales of $227.5 million, a decrease of $15 million or 6.2% below the third quarter of fiscal 2016. Net income for the third quarter of fiscal 2017 was $18.3 million, a decrease of $5.3 million or 22.5% compared to the third quarter of the prior year.

Reported EPS fell to $0.70 per diluted share, compared to the third quarter of fiscal ‘16 EPS of $0.91 per diluted share. Our backlog finished at $347.3 million, which was up 7.1% versus the third quarter last year and our book-to-bill ratio for the third quarter of fiscal ‘17 was 0.98 compared to 0.94 in the third quarter last year.

Gross margins fell to 23.7% from 25.8% in the third quarter year-over-year, as the sales mix shifted a few percentage points in favor of energy and away from galvanizing. SG&A, which fell by nearly $1 million year-over-year, finished at 11.0% of sales compared to 10.7% for the third quarter last year.

The result was a reported third quarter operating margin of 12.7% compared to 15% in the third quarter of fiscal ‘16.

Our effective tax rate of 29.7% for the third quarter was up compared to the rate from the third quarter last year of 28%, as we were able to recognize certain favorable state tax benefits in the prior year that were not available to us this year.

Year-to-date cash flow from operations was $57.3 million compared to $104.2 million at the end of the third quarter of the prior year, mainly on increases in primarily working capital year-over-year.

As for our third quarter segment results, third quarter revenues in our energy segment were down 0.3% to $135.6 million compared to third quarter of the prior year, while operating income fell 18.1% to $15.4 million compared to the prior third – year quarter.

Operating margins in this segment fell from 13.9% in the third quarter last year to 11.4% in the third quarter of the current year as our market mix shifted to lower margin businesses within energy for the period. In our galvanizing segment, third quarter revenues fell 13.7% to $91.9 million compared to the third quarter last year.

Operating income fell to $21.3 million, but operating margins rose to 23.2% compared to 22.8% in the prior year. As we discussed in the prior quarterly call, we have now executed on modest share repurchase for the quarter of 100,000 shares at an average price of $52.82 per share.

The purpose of the program, once again, is to counteract the dilutive effects of share compensations and employee share repurchase programs. With that, I will turn it back to Tom for concluding remarks.

Tom?.

Thanks Paul. To summarize, I believe we have the capability within AZZ to perform better as we execute on our strategic initiatives positioning us as a leader in infrastructure protection. We have been focused on a lot of great things in terms of organization development, training, improving our talented bench and setting ourselves up to grow.

We have some great growth initiatives underway and are committed to driving them faster and more effectively to generate significant top and bottom line growth in fiscal year 2018.

While fiscal year 2017 is a challenging year, primarily due to weak market conditions, we believe we have taken the steps necessary to address these shortfalls and we will see the positive impact in fiscal year 2018.

We also anticipate a much better turnaround activity level in the spring season, improved markets for Galvanizing by the second half of fiscal year 2018, if not sooner, since we are finally seeing significantly higher level of petrochemical project activity being moved forward.

And we will benefit from an improving mood among industrial manufacturing companies. More importantly, we are not leaving fiscal year 2018 to the vagaries in market activity, so are focusing on margin improvement and accelerated M&A activities.

Additionally, if new infrastructure initiatives are undertaken by the incoming presidential administration and Congress, our energy and galvanizing businesses should be positively impacted.

We know that these projects, should they be green lighted, will take some time to commence, but when they do, we will be ready to play an important role to move these projects forward.

We feel fortunate that we generate strong cash flows, do not have any broken businesses, only a couple that are not achieving optimal performance against the backdrop of weaker markets. We are working towards issuing guidance for fiscal year 2018 within a few weeks. We will update our fiscal year 2017 full year outlook at that time.

We also hope to announce resolution of NLI one way or another by the end of this fiscal year. Thank you. And now we will open it up for questions..

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Today’s first question comes from John Franzreb of Sidoti & Company. Please go ahead..

Good morning Tom and Paul.

Tom, your last comments about much better spring turnaround season, could you just kind of put that in framework, is that relative to recent results or would you think be better on a year-over-year basis and kind of like inclusive or exclusive of NLI on both fronts?.

Yes. I think for the most part, NLI isn’t dependent on nuclear outages. They are more just pure maintenance type spend, so outages help them a little bit, but they really aren’t as dependent as, let’s say WSI. And what I am talking about is I think it should be positive year-over-year.

It will definitely be positive versus the third quarter with what we see pushed into the spring, mostly the spring turnaround cycle. In terms of nuclear outages, I think we are seeing some activity in, I think that will be kind of roughly similar to what we saw this year.

So I am really looking for the refinery turnarounds to be significantly improved. And we are hearing that from a lot of different sources.

To the level of I think some of the refineries I am worried about, whether they are going to have enough people to be able to do the work, because we are also concurrently seeing that petrochemical project activity finally start to take off..

So will there be any concerns about more difficult price environment ahead and you would expect pretty much to being through the pricing trough at some of the jobs that you have worked for?.

We haven’t on – I guess it depends on which segment of the business you are talking about. On the WSI and NLI business, it’s not so much pricing environment, it’s just really been for WSI, particularly just volume. And then they didn’t have any of the really big international jobs, which are usually very attractive to us from a margin perspective.

So the pricing environment for WSI, in my – from my perspective is fine. The pricing on NLI stuff, I think has been fine. While the nuclear industry is really trying to ratchet down their costs for the most part while we are providing – we had already seen those price levels deteriorate probably 18 months ago and they have stabilized.

In terms of galvanizing, as zinc costs have started back up, we have actually had price realization and part of that’s because of the little project activity – little big project activity, but generally, we are seeing nothing is not competitive because it is, but I think we are very – our folks in galvanizing are very focused on continuing to drive on value and provide high levels of service that they can maintain their price premiums..

Okay. I mean my question is really just on the energy segment, but since you mentioned galvanizing, just one more question.

On a year-over-year basis, galvanizing is down an awful lot, you kind of called out West Texas and Oklahoma regions has been particularly weak, it’s also down on sequential basis, I wonder if the problems in the oil and gas market or if so, has that spread to other regions for you, can you kind of talk to why it’s down so much year-over-year and sequentially?.

Yes. I think we saw – it has spread to amidst within those regions. And keep in mind, we’ve got a lot of concentration of facilities in Texas or North Texas, by the way, has been fine. The economy is fine. So, it’s South and West Texas, it’s Louisiana, along the Gulf Coast and Oklahoma. I think it has impacted us some as you go over to the Mississippi.

So that spread a little bit, but more importantly, it’s spread to other sectors of the economy in terms of industrial and non-res construction. So, we are just not seeing that activity. And a lot of the Bridge and Highway spend in those areas is kind of winding down as well. And then solar has been a big impact.

That’s been a very nice piece of business for us in several of our sites and that’s really, really slumped. And part of that’s going to depend on even though they have subsidies approved, I think as they are looking forward into next year, they have got to decide how does solar, how does wind fit into the overall power generation schemes.

So I would say solar has had a – and that’s why I continue to reference that, because it affects more than just our Western facilities, because there was – solar production and fabrication work being done in the Midwest as well. And so it’s affected several of our facilities..

Got it, got it. Thanks. I will get back into the queue. That was very helpful..

And our next question comes from Jon Braatz of Kansas City Capital. Please go ahead..

Good morning, Tom, Paul. Can you add a little bit of color to the new galvanizing product, if I am not mistaken most rebar is already galvanized.

And I am curious as to really what sets it apart and what the market opportunity might be for this – for the new rebar product?.

I have got Tim Pendley, our COO of galvanizing sitting here and I am just going to let him answer that..

Okay, thank you..

Yes, no problem. Just on hot-dip galvanized rebar, the advantage that we had with the GalvaBar is its formability. Current traditional systems do not allow for or permit the bar to be bent or processed in anyway after galvanizing.

And this typically creates a problem in the field by doing the straight bar that need to be bent and fabricated after galvanizing really opens up the opportunity for growth in that market..

Okay.

Anyway to quantify what that opportunity might be?.

Yes, I am going to be cautious just because I know we probably have some competitors sitting on the line. I will just say it’s significant and would involve – we have got one site ramping up. We would anticipate needing several sites dedicated to this process as the activity grows.

Of course, we can talk more about it once we get the first one up and running in March..

So that facility will be solely dedicated to the rebar galvanizing?.

Yes, it will. And we would see that normally as we repurpose sites. We did repurpose or we are in the process of repurposing another site, that’s for a different process.

The other comment and I am not sure it was mentioned, but right now, the majority of where they have high corrosion problems on bridges and highways for rebar, they are using epoxy coated..

Okay..

And then that’s bit more problematic. So, the majority of rebar is not treated to any extent at all, but we are really after the portion that’s currently epoxy coated. And we can envision multiple scenarios in this case, because it could be just purely continuous galvanized rebar, could be continuous galvanized rebar with epoxy coating over it.

There is a number of different scenarios and we see ourselves working with – working pretty significantly in this industry as we go forward..

Okay.

Is this process more expensive than the epoxy coating?.

No, it’s not. It’s very competitive and should offer better benefits, significantly better benefits as Tim alluded..

Okay. And then one last question, Tom, given the – it seems like there is a little bit of uncertainty that is crept into the NLI transaction.

If you were handicapping it, would you say you are less certain that it might be completed today than 2 months ago and you mentioned it was more of a concern about the future of the nuclear industry, is that – did I understand that correctly?.

You did. And I am going to resist the temptation to handicap just because I think we are in kind of the final stages and into the few weeks, but we will resolve it one way or another and announce it as quickly as we can.

But I think there is – you can read in the news there is the two new plants that are starting up, there is no new wins on the horizon. It’s hard to know how nuclear is going to play.

And just like with solar, how is it going to play as the new administration comes in and is it going to be more clean coal and natural gas going forward, is it going to continue to be a lot of renewables and where is nuclear going to play in that. So I just look at it. It’s a complex situation as I noted.

I think both parties would like to get the deal done. It’s not a lack of desire. It’s just – it’s a tough time in the market and it creates complexities in the transaction..

Okay, alright. Thank you, Tom..

And our next question comes from Noelle Dilts of Stifel. Please go ahead. Pardon me, Noelle, your line is open..

Good morning, Noelle..

Hi, good morning. Thanks. Yes. My first question, I just wanted to better understand the back half ‘18 improvement you are looking for in galvanizing.

You know, to what extent is that dependent on just petrochem projects activity improving, maybe more industrial activity versus some of these related infrastructure projects coming through?.

I am actually not counting on – Tim Pendley is sitting here and he is nodding along with you. But I am not, I am counting on these new initiatives taken off and that we are going to get the growth in the second half as those ramp up and if the markets do improve, that will just add to – that will give us some tailwinds.

So to me, this is much more self-help. Let’s not – if the markets are the way they are in the latter half of this year or have been, that’s just fine with me as long as our new initiatives take off, I am looking for growth..

Okay. And then shifting over to energy, you are expecting a stronger spring turnaround season. I guess what I would kind of – I would respond to that by saying we have seen this continued deferral of work. We have been dealing with this for a while now throughout the industry.

You know my question is really what do you think is changing as we move into sort of calendar ‘17, do you think there is something fundamental that’s changing refiners’ behavior or is it some timing issue?.

Yes, I think there is a couple of things. And I think one, they have been deferring for a long time. We saw lot of patch-it type of work, when you start, as we did in the third quarter, there was the same number of projects as we normally have. The issue was there were many emergencies, many patch-it, fix-it keep the refinery online or keep it safe.

So that’s an early signal that says, okay, now they got to start doing the planned major turnarounds, because they are having to do too much patching and fly. So to me that’s the first indicator, because the activity level was high, but not large.

So second thing is, our bidding activity is very high as well and so we are bidding a lot of jobs and they tend to be larger in scope than what we had seen coming into the quarter.

And I do think now, because they have deferred maintenance for so long when you do get into the full turnarounds, we are going to see more incremental work as once we are onsite with large crews. That’s what’s gives me confidence as we go into the next season and we are seeing like I said we are bidding more jobs and we are bidding larger jobs..

Okay. And then in my last question, I need to include another one. But my last question is, when you – I think you mentioned that the delay in the NLI closure, that’s up to three deals that you were looking at.

So I guess my first question is, one, can you give us a sense as to whether those deals were on the galvanizing side or the energy side? And then I look at your balance sheet and you are not going to overly extended.

It looks like you still have room to make acquisitions like 1.6x trailing 12-month EBITDA, I think on a net debt basis what would prevent you from, maybe moving forward with those deals even as NLI is a bit delayed?.

Yes. That’s couple of things. One, all three of them are galvanizing related. But they aren’t all exactly galvanizing, but they are related to the services we have talked about wanted to get into.

Our holdup has not been related to the balance sheet or cash or anything else, it’s been related to the very – we have a very small group of resources that focus on business development for these things. We don’t chase processes for the most part and we do relationship deals.

And those relationships are with the people that are doing the business development for us. So those resources have just not been freed to go close these deals, which is quite often going and spending time with the owners of these businesses until we can arrive at a final agreement and move forward. And that’s been the impact.

We have now – I won’t say, we have repurposed the resources, we just said, while we will continue working on this for a month, on the NLI deal for a month. How do we get everything done, but let’s go focus on these other deals. But the balance sheet is absolutely fine, Paul can comment on that..

Balance sheet is fine, Noelle. We do have dry powder there and you know how the agreement works in general that we do get to use the EBITDA we pick up, so that’s not been the limiting factor..

Okay. Thanks..

[Operator Instructions] Today’s next question comes from Andrew Storm of Cortina. Please go ahead..

Hi guys.

So I am curious, can you just help me think through sort of the lag time on the economy and how it flows through the year, we are seeing rig count starting to pickup again, we are seeing the ISM surveys for industrial demand positive for base the first time since ‘07, but conversely galvanizing sales look to be about as bad as they have been and year-over-year decline since the ‘08, ‘09 downturn, so how long does that take to flow through?.

On the galvanizing side, it’s going to take a while. From – just because it took a while for the impact on the economy to flow in and turn it down, it will take a while for it to ramp back up. And all they are doing right now is using rigs that were stacked.

So it’s not like there is any new rig construction or anything like that, which would help our lighting business and help our tubing business. So those, we do not see much turnaround there. They are going to have to go – they have got initiatives underway on the tubing and lighting side to go drive their own growth.

But on the galvanizing side, that’s why it’s normally an 8 months to 12 months cycle before you see that, which once again is why we are saying it’s the latter half of next year because we are seeing those same signs. And so that activity will start to flow through, but not until the latter half of this next fiscal year..

And so when we came out of ‘08, ‘09, I mean just looking at your sales, you are negative for that long and then you kind of rocketed out, I don’t think that any one market writer was there kind of one thing that really did it?.

I think it was, it was solar took off and that’s nice work for us. And that was probably the biggest piece. You had zinc going up. So you had price realization and had – you had a – not necessarily a combination of multiple things, but it was primarily solar and zinc.

And once again, it’s why we do think we – this next time, we anticipate growth as we go into next year. We are going to ensure that growth by making sure we have got some additional services to leverage across our asset base..

Okay.

Is there a short cycle work that could pickup to make a meaningful impact, I mean if we just saw a general, more construction HVAC, all that kind of stuff starting to improve, does that flow through pretty quick?.

It does, it flows through very quick. And so once again, this mood of – this improved mood among industrial manufacturing, non-res construction type activities, it’s good news for us. We feel it. It’s just now we are now into a new budget year and folks will start spending.

They weren’t spending at the end of last year, because they either didn’t have money in their budget or they had planning on a different outcome in the elections. So some of that we anticipate we will see it pretty quickly as we get into the New Year..

Got it.

So we can see a pretty fast recovery on general business if things start to improve and then the big ticket things we have talked about, that’s kind of the upside down a year from now, six months or nine months?.

That’s right….

And our next question comes from Bill Baldwin of Baldwin Anthony Securities. Please go ahead..

Okay. Thank you. Good morning..

Hi Bill..

Couple of items – good morning. Good to hear you guys talk about your bid this year..

Thank you, Bill..

On the initiative front, we have talked about initiatives in the galvanizing area, are there any other initiatives in other sectors that are part of your growth initiative program that you can offer any color or insight on?.

Yes, absolutely. I think we have announced and initiated a joint venture for on the electrical side in Saudi Arabia. We are working on a – we got to support the large orders we have booked over in China. So we are looking at expanding some operational capability, manufacturing capability in China through joint venture or partnering.

On the WSI side, we are looking at actively growing internationally and teeing up more opportunities internationally because they do tend to be so attractive. And as this in many cases, it’s the same customers as the Shell’s, it’s the Exxon, it’s the BP’s and Chevron’s.

So yes, we have got continued expansion initiatives on that side, which doesn’t take a lot of capital, which is why we usually don’t talk about them a whole lot. And then on – kind of think of anything else, that’s really it, it’s organic....

It depends I guess the C&I area, the bus, the high-voltage bus, medium growth bus?.

Absolutely. We have got new – I am not going to – we have got new initiatives for each one. And high-voltage bus is where we form the joint ventures and where we booked a lot of business in China and the Middle East. So we continue to feel good about that business, we just got to do a better job of supporting it operationally, locally.

And medium-voltage bus has their service opportunities that they are pursuing. They have done well with. Some of the nuclear service opportunities, they are continuing to expand on those and drive growth through that.

On the enclosure and switchgear side, they have got new initiatives pursuing new markets and I am not going to mention them, because we just don’t want to tell the competition where we are going with that right now.

But we have got some nice growth initiatives underway with not so much new technology, but call it, new applications of the existing technology..

With your joint venture agreement that you announced over in Saudi Arabia, when do you expect that to be up and running with local manufacturing content and this type of thing?.

I think we are really targeting towards kind of the latter part of this year – this calendar year to be fully up and running. It’s – as with a lot of things and internationally, they can move a little bit slower than we would like. But we feel good about setting it up and running and in production towards the latter part of this calendar year..

And are you pursuing other joint venture agreements in the Middle East, other than Saudi Arabia, Tom?.

We are, on the medium-voltage bus side, still looking to figure out how to do something there. We have tried with a couple of different partners and it hasn’t worked out. And we are being cautious.

But we are still looking to – because that’s another big market for medium-voltage bus, they have had a lot of nice orders over there over the last few years. And we want to be able to support that locally. On the other hand, we want to make sure it’s the good – it’s the right long-term partner..

Has the strong dollar impacted your ability to export some of those medium growth medium-voltage, high-voltage products, did that affect you...?.

It really hasn’t, at this point. We haven’t seen much impact. On the other hand, the orders we won in China recently, some of the big things that we would be able to announce once we put some formal announcements out and tell you who it was. But we had some really nice large orders and some are still pending.

And so far, we have not seen any fallout from the stops – from the stronger dollar versus the yuan, for instance..

Interesting..

But it is why we have to localize, because we have to be able to produce some of this equipment in local currency to stay competitive..

Right. I think the last time we talked about capacity I think you indicated your medium voltage plant capacity is pretty well utilized.

Has that been expanded or are we still running up pretty tight there?.

You know it’s loosened up a little bit. They are still relatively full. They just did a little bit of reorganizing mostly in the project management engineering side to try to be able to develop more capability, more throughput. So, it’s more de-bottlenecking ops improvement.

We have made some small investments and a little bit more cranage and floor space and stuff like that to reposition some stuff. So they have actually got a little bit more capacity and we will look to fill that as we get into next year and the enclosure business....

More room for growth there, then. That’s good..

There is. We have probably freed up 10%, 12% of capacity to be able to take on more..

Super. Okay. Well, best of luck and thanks for your time..

Alright. Thanks, Bill..

And our next question is a follow-up from Noelle Dilts of Stifel. Please go ahead..

Thanks..

Hi, Noelle..

Hi, again.

Just given the upcoming change in the administration, can you give us some thoughts on if we do see major Trump infrastructure move forward where you think you might have exposure there and any other thoughts you might have on proposed deregulation and even tax would be interesting?.

Yes, I will let Paul talk to the tax situation. But I think as I mentioned what we have sensed from our sales folks is that there is a better mood among some of our galvanizing customers just in terms of how they are looking at capital spend going forward.

Unfortunately, I think some of them got into the budget cycle for that already into this calendar year. And so we may not see a whole lot of impact until either late this year, even as we get into the next – into 2018 calendar.

What I anticipate is just bridge and highway would be the best place for us to get benefit partly because of our existing galvanizing business, but especially with the new products and services in the continuous galvanized rebar, we would really look forward to some nice highway spend helping us there, because normally bridge and highway isn’t that large a piece of our galvanizing business, but with these new products, we think it’s going to be a much more significant piece.

And then on the energy side, I think we just like to see some clarity. I think, as there is clarity in terms of what kind of power generation sources are going to be preferred going forward. I think we will see some movement.

The good news for us right now is there is a lot of substation upgrades and opportunities out there that are helping us on our electrical side as well as to some extent, a little bit on the galvanizing side. And we see that continuing for the next 4 or 5 years regardless of what the administration does. So for me, it’s just clarity.

I think a lot of our large customers are looking for some clarity and then they will make some decisions..

Okay..

Noelle, it’s Paul.

What was your – where were you going specifically with the next question?.

Just I mean if you have any comment on if we do see lower corporate tax rate, what are your expectations, your thoughts, do you have any expectations here on what we might see or just how you are thinking about potentially the benefit there?.

Sure, okay. Again, I was going to follow-up with what Tom said on clarity, which is there seems to be a lot of rhetoric in the market right now, of course, not to be kept obvious, but we would applaud anything that would support U.S. manufacturers, especially U.S. exporters like ourselves where we do lot of the work here.

And we are keeping a very close eye on as commentary on other things like cross-border tax, order tax. But I think you and most of our analysts have a pretty good handle on our cost flows and where the lot of the stuff that we put into these projects comes from.

So I would say most of our stuff is export and we are not importing nearly as much as we are exporting..

Okay, thank you..

Okay..

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

I think we have said a lot on the call and the questions were good. So I am going to keep this very short. I am very – I think we will continue to finish out this year. We have only got a few weeks left in this fiscal year. All our businesses are focused on finishing as strongly as they can.

But as you can probably tell from my comments, we are far more focused now on fiscal year 2018 getting started well in the first quarter of fiscal year 2018 and turning that into a very good, not only comparative year, but a very good year that we can be really proud of as we move forward. And we have got a lot of things going on.

I know I say that a lot. We have trimmed back a little bit, but our focus now is now on the major growth initiatives, but also on those ops improvement initiatives and driving best practices and starting to get that margin benefit with a lot better predictability than we have been able to so far.

So I am feeling very, very optimistic as we get prepared to go into our next fiscal year. And with that, I will thank everybody for your attention and look forward to talking to you on the next earnings call..

Thank you, sir. Today’s conference has now concluded and we thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day..