Joe Dorame - Lytham Partners, IR Tom Ferguson - CEO Paul Fehlman - CFO

John Franzreb - Sidoti & Company John Duni - BB&T Capital Markets Brent Thielman - D.A. Davidson Stephen Folse - Stifel Nicolaus Jon Braatz - Kansas City Capital

Good morning, and welcome to the AZZ Incorporated Second Quarter Fiscal Year 2015 Financial Results 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 this event is being recorded. I would now like to turn the conference over to Joe Dorame of Lytham Partners. Please go ahead, sir.

Thank you, Denise. Good morning. And thank you for joining us today to review the financial results of AZZ Incorporated for the second quarter of fiscal year 2015 ended August 31st, 2014. As Denise indicated, my name is Joe Dorame, I'm with Lytham Partners, and we're the Investor Relations consulting firm for AZZ. With us on the call, representing the company are Mr. Tom Ferguson, Chief Executive Officer; and Mr. Tom -- or I'm sorry, 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 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 28th, 2014. 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 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?

Thanks, Joe. Good morning to all of you on today's call and we thank you for your continued interest in AZZ. Before I get into the discussion on our quarter, it struck me that last year; this was the last quarterly earnings call for David Dingus, our former CEO. On this call, we will be spending time talking about execution and operational issues as well as markets, but I want to emphasize that I share David's vision of having two strong service pillars, Galvanizing and Energy Solutions, supporting a portfolio of component businesses. This makes a lot of sense and we will continue to evolve this model. The problem over the past 18 months is around execution, not vision. You've heard us say that with the addition of WSI and NLI, AZZ is not a quarter-over-quarter business, and the second quarter was definitely a good example of that. Our overall financial results were mixed, as the second quarter is always a weaker one for us, but the earnings and margins particularly at WSI and NLI were disappointing. As you know, I assumed direct leadership of our Energy segment at the beginning of the second quarter after making a senior leadership change. Early in the quarter, it became apparent that we needed to make additional changes deeper in the organization, and the best action was to trigger a modest realignment program to improve operational performance. As a result of our actions, I believe we now have the right leadership team in place to move us forward and the realignment captured the cost of change, and the write-off of certain assets that are no longer needed. The new GMs and controllers identified some issues we had with the expected margins in our backlog on a handful of projects and took the appropriate actions to understand these issues and correct them. Paul will cover the details of this later in the call. We also uncovered poor operational performance on a number of jobs and we have taken action to improve our focus on customer service, quality, and project management particularly at NLI and WSI nuclear. We reintegrated the WSI nuclear and industrial groups under one leadership team, which allows us to leverage resources and ensures we have the best departmental leaders in place, and also to drive standard processes across all aspects of this business. I believe we have made significant progress integrating WSI into AZZ over the past quarter. The majority of the realignment program has already been implemented and we are seeing positive results. WSI's industrial sales team has improved significantly and I was impressed by the caliber of talent we now have as I attended their recent sales meeting. They are generating a lot of new quoting opportunities, and I am confident this will result in bookings growth as we move forward. We added a new controller at NLI to support the GM we brought in at the end of Q1. This team now brings us significant wealth of engineer project experience to bear at NLI. While the adjustments had significant impact on margins in the quarter, we now have the right leadership and a large backlog to perform on for the balance of this year. Additionally, while the nuclear market remains weak, we're identifying more opportunities as we drive improved on-time performance, quality, and project management. We have a strong sales team for the nuclear market, and believe this business represents growth for us in 2015 and 2016. Based on the cost overruns though and the short-term prospects in the nuclear market and as part of our normal quarterly review, we elected to reverse the $9.1 million reserve related to the earn-out bonus of to be paid to the former owners of NLI. Naturally, we would be ecstatic if the new team was able to over-perform and we ended up having to pay this out. The seasoned leadership team in our legacy businesses has allowed their performance to remain quite stable. Our electrical platform is led by a 25-year AZZ veteran, and while some businesses are doing well and others are more challenged, their overall performance is reasonably good, given their mixed market conditions. The electric utility market in the U.S. remains sluggish, but we have benefited from strong international opportunities and a good backlog. Bookings continue to strengthen, although we did have a couple of large opportunities slip out of the quarter. We're optimistic about their performance in the second half of the year based on very strong backlog, and their stable team, and operating performance. We will continue to explore opportunities to divest a business or two that don't fit the core capabilities of this platform. On a longer-term, we're likely to be looking for acquisitions once the platform composition is finalized. Galvanizing Services had another solid quarter of performance. The leadership team are long-standing AZZ veterans, including the COO of this business who has been here 16 years and has almost 30 years of experience in the galvanizing industry. We completed the acquisition of Zalk Steel & Supply in Minnesota and fully integrated them. We continue to look for bolt-on galvanizing acquisitions as well. Additionally, while unable to complete any transactions in the quarter, we will continue to explore non-galvanizing metal finishing business to enhance our service offerings in this segment. Paul will talk about the financial comparison versus prior year, but I'm very confident with the ability of this group to continue to achieve strong financial performance. While zinc prices have slowly escalated over the past year, we have seen little opportunity to increase prices beyond covering the cost increase. This is due primarily to the level of competition in the market and the sluggish performance of the electric utility sector, which has a significant impact on our volume. We have seen improvement from the petrochemical market, but this is a significantly smaller opportunity for us compared to the electric utility market. You may also have heard we had a fire at our Arizona plant, so let me briefly touch on that. The fire was in our pickling area and occurred between shifts and fortunately there were no injuries. The Goodyear Fire Department responded very quickly and I truly appreciate their efforts in protecting the majority of the plant. Although, we will be rebuilding there for 60 to 90 days, the impact on our business is quite manageable, since we have a second albeit smaller plant on the same site. For Galvanizing Services, we will continue to focus on operational excellence, pricing on our value, and growth through acquisitions in new metal finishing services. Overall, I'm quite bullish on our future at AZZ. While Q2 was challenging due to the leadership changes, sluggish markets, margin adjustments, and realignment actions, we accomplished a lot and set ourselves up for a very strong second half of the year. We are holding our guidance range of $2.40 to $2.80 earnings per share and $850 million to $900 million in revenue. I would have liked to have narrowed the range towards the upper end as we're at the mid-year point, but want to remain somewhat guarded in my optimism given the number of moving pieces we had in the quarter. Additionally, to demonstrate our confidence, and our outlook for our businesses and our ability to deliver solid operating results and our strong cash flows, we're increasing our quarterly dividend from $0.14 to $0.15. We believe this is prudent, given our improving capital efficiency, tax rate, strong cash flow, and our commitment to drive shareholder value. We have the available capital resources we need to invest in our infrastructure and also to complete the bolt-on acquisitions we see on the horizon. Now, I'd like to turn it over to Paul Fehlman to cover the financial highlights.

Thanks, Tom. For the second quarter of fiscal 2015, we're reporting revenues of $193.4 million and EPS of $0.53 which includes $0.11 of realignment, as compared to $189.8 million in revenues and EPS of $0.64 in the same quarter last year. Bookings were $213.4 million this quarter compared to $213.2 million in the second quarter of fiscal 2014. Our backlog at the end of the second quarter grew to $329 million, reflecting a book-to-bill ratio of 1.1 for the quarter. That's down from 1.12 book-to-bill posted second quarter last year, but up sequentially from the 0.93 we posted last quarter in Q1 of this year. We have disclosed some exceptional operating items that affected this quarter on a table attached to the press release from this morning, namely cost overruns of $5.2 million at NLI and WSI in our Energy segment, a charge of $4 million for our realignment program spread across both operational segments as well as corporate, and $3.4 million of operating income lost for the quarter as a result of customer-requested delivery delays of $16.2 million of revenue, also at NLI and WSI. Revenues were up 1.9% year-over-year despite the customer delays in the Energy segment, primarily on the 8.4% revenue growth in Galvanizing Services compared to the same period last year. Gross margins for the quarter finished at 21.8% compared to 29.5% during the second quarter last year, due primarily to the cost overruns, shipment delays, and realignment charges I spelled out earlier from this quarter. Additionally, proceeds from insurance also benefited last year's second quarter, further widening the comparison. SG&A fell to 9.9% of sales on the reversal of the NLI earn-out reserve Tom described. This benefit was taken at the corporate level and was not part of the segment earnings. As a result, we achieved an operating margin of 11.9% for the second quarter of fiscal 2015, down 380 basis points compared to the second quarter of fiscal 2014. Our cash flow from operations for the quarter was $41.7 million, up around $26.4 million versus the second quarter of fiscal 2014, on strong working capital performance. We also made much headway in improving our tax position and recorded a tax rate -- an effective tax rate of 26.4% in the second quarter, compared to 36.6% for the same quarter last year. The improvement this year is primarily due to capturing U.S. manufacturing deduction benefits and tax credits related to R&D and foreign taxes. While we probably cannot sustain this sort of a rate for the long-term, I'm confident that our tax team will continue to drive rates to a better level than we've seen in the past several years. As Tom mentioned, based upon the evaluation of information currently available to management, we continue to anticipate our fiscal 2015 revenues to be in the range of $850 million to $900 million and for earnings to be within a range of $2.40 to $2.80 per diluted share. And I'll also add that is using GAAP EPS -- GAAP diluted EPS for the first two quarters of this year. While I'm disappointed that we had what some of you're going to call a noisy quarter, I feel that most of the charges and benefits taken are a product of the work that we're doing to drive a more efficient and effective operation. With that, I'll turn it back to Tom for concluding remarks. Tom?

Thanks, Paul. The key takeaways I'd like to leave you with are, I believe AZZ remains a compelling investment due to another quarter of profitable operations, our strong balance sheet and cash flows, great portfolio of products and services, significant international growth opportunities, and a talented and seasoned leadership team. We will continue to focus on growing our Galvanizing business, both organically and through acquisitions. We will continue to expand the presence of our Electrical businesses internationally, both directly and through joint venture. We will accelerate our emphasis on operational excellence and customer service at both WSI and NLI. While we have made a lot of progress over the past nine months, we have tremendous upside going forward, as our leadership team continues to gain traction on our key initiatives and our customers see the improvement in our service performance. Thank you for your participation on the call today. And now we'll open it up for questions.

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Our first question will come from John Franzreb of Sidoti & Company. Please go ahead. John Franzreb - Sidoti & Company: Good morning, Tom and Paul.

Good morning John.

Good morning. John Franzreb - Sidoti & Company: I'd like to start with the deferred revenues on WSI and NLI. Could you talk a little bit about why the customer deferrals were put there in the first place? How firm are those deferrals in regards to being recognized? And maybe a little bit more about the timeline, I know you said into the first half of next year. Just a little bit more color around those items would be helpful.

Okay. Yeah these are items that we had expected to go in the second quarter. I think that you got multiple questions in there. One of them, John, is why do we call that out, if I am reading you the right way? And I think it was a matter of just being very clear to the investors and letting them know that there was some items in there that were causing those margins to be down. The second thing is, we expect these to be fairly evenly spaced over those four quarters. We didn't want to be too lumpy in the way that we described that or too exact, because little pieces of those jobs can shift between quarters, but we would expect those to be out during the next four, fairly evenly. The reason that the customers had delayed them, it was simply a matter of -- they were either shifting their outages or they had -- they weren't ready to actually take the orders. John Franzreb - Sidoti & Company: Okay. Regarding the realignment or restructuring charges that you have taken; will we see visible cost savings and benefits from those actions going forward? And if so, what's the timing of those benefits?

The timing of the benefits would be almost immediately. The biggest payoff on that -- obviously would be from savings in salary and benefits. I would say that we are expecting to be around $5 million annually on a run rate for these savings and they would start almost immediately. John Franzreb - Sidoti & Company: And will --.

Sorry, more skewed towards the savings on salary and benefits and then as far as the fixed assets goes, it is just the depreciation. John Franzreb - Sidoti & Company: Okay. And switching over to the Galvanizing side of the business, two questions there. The fire at the Phoenix facility, you said 60 to 90 days. What kind of magnitude of revenue or operating income loss should we expect from that? And do you have a sense of what the galvanizing margin would be ex all the one-time items for the quarter?

Yeah, it has only got about -- because we have the other kettle and plant there, it's -- we're moving work all over it. We added a shift. So, the impact is maybe 30% of that site, and it is one of our larger sites. It's -- we got that covered in our guidance. It's not that huge quite frankly as compared to how we had Joliet that we talked about for several quarters.

Okay. And then the operating margin for galvanizing, are you asking about the second quarter? John Franzreb - Sidoti & Company: Yes.

If you had the puts and takes in there, [2.7 million] -- I'm sorry, I'm comparing it to last year. For this year, it would be about 25.7%. John Franzreb - Sidoti & Company: 25.7%. Okay. Thank you very much. I'll get back in the queue.

Sure.

And our next question will come from John Duni of BB&T Capital Markets. Please go ahead. John Duni - BB&T Capital Markets: Hi, good morning.

Good morning.

Good morning. John Duni - BB&T Capital Markets: You talked about customer deferrals for a minute there, but I guess switching over to the cost overruns, I'm just trying to get a sense of how these are truly one-time in nature. Because at first glance, it just seems that these would be part of ongoing earnings and wouldn't get adjusted out. If you could just provide a little more color there, that would be helpful?

Yeah, you've really got two things going on here. One of them are jobs that I would best describe it as the project management was poor on it, very inefficient. And the new -- or the controllers took a look at them and said we've got a loss making job here and we need to recognize the loss immediately, which is the proper accounting for that. Okay. So these would be jobs that had accumulated costs that as we scrubbed through the backlog, they determined that they were going to be loss making.

Yeah and I think one of the things I want to mention is, you look at some of these jobs -- they were -- the bidding process was not very robust at the time. So, when I look at it, the way they were bid, it wasn't using a real solid process to ensure that they were going to generate the margins that we would expect and want to have. So, we've corrected that as part of this overall process. So, as we look forward the stuff we're bidding now, we'll perform very tightly to our in and out expectations. So, some of it -- and that's why I think we are referring to it as kind of costs in the period and -- because we changed several processes going forward that should alleviate that -- those kind of issues.

So that was -- that's the first kind. The second kind is somewhat related, which is there are jobs of multiple elements that had partial shipments, and we just need to have the right cost associated with those partial shipments. So, again, correcting what I would best call, a process error. And these are things that we believe are just part of this quarter, which we don't expect to go on. John Duni - BB&T Capital Markets: Okay, great. Thanks. That's helpful. And then you had offered some positive commentary on transmission demand. Are these projects in one particular geographic region? I mean, is this something that's happening right now or do you see this positive demand environment six to 12 months out from now?

Some of it's happening now, but the way we book orders and then perform on them, those can stretch out over the year. Where we're seeing activity? Quite frankly, we're seeing more international type opportunities. Although, we're very active in our enclosure and switch gear business, but we've got limited capacity, so we can get pretty excited over a few million dollars of orders, because of our limited capacities. John Duni - BB&T Capital Markets: Okay, great. And then, maybe just one more, switching over to nuclear. You -- I believe it was last quarter, you talked about how the volume of scheduled outages had increased, but the size and scope were smaller than what you had expected. Is this -- is still the case or has that changed?

No, that's still the case on the nuclear side. There is quite a few outages, but they tend -- they are relatively short. Their scopes are fairly narrow. So it's benefiting our NLI business somewhat more than our WSI business, which tends to need the longer scopes, to get those larger welding solutions type opportunities. But -- so we're getting some benefit from the number, but definitely not the nice, long, large outages that tend to go on over a longer cycle. So, we'd still like to see those. John Duni - BB&T Capital Markets: Okay. Thanks. I'll hop back in queue.

Sure.

Our next question will come from Brent Thielman of D.A. Davidson. Please go ahead. Brent Thielman - D.A. Davidson: Yeah, hi, good morning.

Good morning Brent.

Good morning. Brent Thielman - D.A. Davidson: Just kind of looking at the guidance range here, could you just provide a little more commentary on kind of what needs to happen to get yourself towards the higher end versus the lower end at this point?

Its volume related for -- well, obviously we now need to perform on some of these jobs that we haven't been performing on. And while we feel good about improved project management, improved engineering, improved bidding, improved overall leadership in those businesses, it still takes a little time to gel. So, we -- that's why we were a little more guarded. We're seeing improvement. We're seeing better communications. We're seeing just that kind of weekly, monthly kind of performance improvement that we want to see, but our on-time deliveries in some of those businesses is still poor. So, we're not earning the premiums with customers yet by over performing. I think as -- the other part that we just need is the volume. And because we got the backlog, we got to get the backlog out. And so I kind of come back to we need to perform. And then, maybe the third piece, where we do have -- some things we're watching closely is on the -- for WSI on the refinery side. We've got a better sales force. They are making the contacts. We're getting lots of small opportunities. The concern we have this quarter is the refinery margins are high. They are not taking their normal turnarounds. So, we're not seeing as many turnaround opportunities large scale, but we're seeing a lot of smaller things. So, we need that to continue to -- those kinds of orders, book-to-ship to come in, both this quarter and then the fourth quarter. If those things happen, yeah, we're going to do really well. Brent Thielman - D.A. Davidson: Okay, that's helpful. And then as far as the guidance goes, you talked about some work on the tax side this quarter. What quarter -- sort of tax rate are you implying for the year?

No, I tell you what -- obviously, we had pretty successful run with our new tax department here in this quarter. It’s a little early to guide exactly on where we are there. But I think it would be fair to say that, you start to the -- down a few points from where we are historically, I think you are safe going there. Brent Thielman - D.A. Davidson: Got you. That's great. And then, on the Galvanizing side, just the comment on incremental gains from pricing and it's a little more difficult right now -- I mean, has something changed in terms of the competitive field?

No, there has been sites -- or competitor sites come into play, but I don't view it as that as much. It's just not a really robust market. Without those big electric utilities, solar kinds of opportunities, there is just no -- there's not enough volatility, also in the zinc price. And usually when it's volatile, you're able to get those swings and hopefully hold the higher prices. So, this slow escalation just doesn't -- the market just kind of adjusts to it over time. So, you can't ratchet things up a couple hundred basis points. So, it's good for our customers, but it's not necessarily good for our margin improvement. Brent Thielman - D.A. Davidson: Okay, got it. And one last one, if I could. On the costs for overruns, to be clear, do you have an opportunity to collect on these at a later date or are they sort of shot at this point?

Well, no, they are pretty much shot at this point. What you would do, is you would see -- on the ones that have zero margin left in them, you're done. You're just going to see the revenue. And as they ship -- and then -- actually most of them shipped in the quarter. And then as far as the ones with the extra cost, you're going to see normal margins on those for what is remaining on the jobs.

Yeah, I will note though, that the leader we put over the new integrated WSI, SMS business, he was driving the industrial WSI business already. And one of the things that he tracks very, very closely, is that in and out multiple. So, if you bid it at a 1.3, does it go out the door 100 basis points higher or so? And on the industrial side, he has been driving that, and we have been seeing it. On the nuclear side, it was the inverse. They were going out below the expected multiple. So, we'll see that improvement. Are we going to get any of that in the next couple of quarters? I think it just takes -- it takes him a quarter or two to get the organization structured right, to get the performance, to get the behaviors in the right places. So, I don't know that we will see much of it over the next couple of quarters. But over the longer term, I definitely have high expectations that we're going to start seeing those positive outs versus the ins on the nuclear WSI side. Brent Thielman - D.A. Davidson: Okay. Thank you.

And the next question will come from Stephen Folse of Stifel. Please go ahead. Stephen Folse - Stifel Nicolaus: Hi, good morning.

Good morning. Stephen Folse - Stifel Nicolaus: So first question, touched a little bit on the guidance range but -- so you've kept the same guidance. It sounds like some of these push-outs on WSI, NLI are going to be pushed out until fiscal 2016. You've kind of said what it takes to get the high end. But is it appropriate way to look at it, that you are actually incrementally more positive on certain markets, in order to keep the guidance the same with those push-outs? And if so, where specifically is that?

We're seeing -- we got some nice jobs in our backlog that if we perform on them, we will -- and we're confident -- we're more confident we will, as we go forward. And it's just a matter of getting them shipped. And we do have a couple of risks out there; there is a couple of big jobs. If the customer delays again -- they are scheduled to ship in January, if the customer delays by one month; it's out of the year. So, that's why we're being a little bit more cautious. But there is nice margin on a couple of those opportunities that are larger. The other part is internationally, we're gaining traction. We're doing well in Brazil. We're on another large job. We're performing the way we need to. We keep doing that, we're going to have a really strong third and fourth quarter. When I look at it -- and it's kind of -- using a football analogy as I look forward. In the first half, we just had way too many fumbles. We didn't block well. We didn't tackle well. But we did score some points and we're still in the game. So, better yet, we have got our best players in the key positions on the field for the second half. So, that's why I'm confident. But getting into specifics, I'd almost have to get into specific projects to go through why I'm feeling better about that second half. Stephen Folse - Stifel Nicolaus: Okay. That's fine. Thanks. Switching gears to the petrochemical market. In the -- you kind of called out a little bit of shrink there. Can you kind of directionally talk about orders of magnitude, what kind of increase you're seeing? And what kind of visibility you have going forward and when you see that market kind of peaking?

Yeah, I think that the problem -- but we do -- we see that positively on the Galvanizing side, and also even on some of the pipeline enclosures, things like that, we're seeing nice opportunities. The problem for Galvanizing, particularly though where we have those really, really nice margins, is petrochem is just so much smaller in terms of contribution to our business than the electric utility side. So, it can be up 15%, but it only moves the -- it only gives us a couple hundred basis points of growth versus electrical. Does that help? Stephen Folse - Stifel Nicolaus: Yeah, sure, sure. That makes sense. I guess then on the Electrical side, in the Q, it said you were kind of seeing a little bit shrink in the Galvanizing Transmission market. But your commentary kind of suggests that you're kind of a little bit more muted on where you think that market is going. Kind of where directionally, do you see it the next couple of quarters? Do you think that this -- that second quarter shrink was kind of one-off, or how do you see that?

We kind of see it rocking along at this level in -- for the balance of this year. And then, we continue to be hopeful that there's going to be more spend, as we go into the next fiscal year and beyond, just because it's necessary. It's needed. Stephen Folse - Stifel Nicolaus: Okay. That's great. And, I guess, lastly on gas fire generation in North America, it has been kind of weak the last several years, but we're starting to hear reports of some new power plants being built, especially in the Southeast. How are you seeing that market trend?

Yeah we're seeing some of that. And it's -- unfortunately for us, it doesn't generate as much bust duct business, or even as much galvanizing as a nice, big coal-fired power plant, or a big nuclear plant, things like that. So, it is good, but it takes a lot of them to really move the needle significantly for us. But we're seeing some of it. And we get some of that on the -- on our WSI and SMS business as well, because its service, field service type related opportunities. So, yeah, we're seeing some of it. It's not enough to really move the needle a lot for us, but it's better than a stick in the eye so. Stephen Folse - Stifel Nicolaus: Great. Thank you.

Our next question will come from Jon Braatz of Kansas City Capital. Please go ahead. Jon Braatz - Kansas City Capital: Good morning, Tom, Paul.

Good morning. Jon Braatz - Kansas City Capital: A couple questions. You talked about some personnel changes, leadership changes. I guess, my question is how extensive were they, were a lot of changes? And were people brought in from the outside or were they just sort of promoted from within?

Well, that's why I noted -- on the Galvanizing side, it's the same team. Some of them are sitting here across the table from me, so I'm very comfortable with that. On the Electrical Components side, it's the same team, same General Manager, same folks. NLI, we brought in a very seasoned GM out of the nuclear sector at the -- in the first quarter -- at the end of the first quarter. We added a very seasoned controller from the outside, who knows engineered project accounting inside out in August. So, that's NLI. Quite a few changes deeper in that organization, in terms of operations. So, the engineering folks are kind of pretty much the same, but in terms of who is driving operational excellence? How they are doing project management? They have made some changes deeper in the organization. Some of it through promotion, some of it, some folks from the outside. But moving over to WSI, we took out the VP GM on the nuclear side, as we integrated industrial and nuclear at WSI and SMS. We took the industrial leader and put him over the whole thing, because he has a proven track record. He comes out of an industrial sector. He had been in WSI for several years, knows his way around. He had done a great job for WSI over in Europe. He had been running the industrial business for a couple of quarters. And as -- he earned the job, good discipline, drive process hard, focuses on his customers, accelerated getting the sales force rebuilt. He has made some changes as he has integrated that organization to leverage the top talent across operations, across engineering, across project management, his customer operations as he calls it. So, we're seeing -- industrial, we were already seeing the improved performance in the field. Nuclear, that will -- we only made that change in -- I guess, it was June. He only has got a couple of months under his belt, but I've seen the changes already. The attitude is better, the discipline is better, the communication is better. All the things I look for as leading indicators are trending positive. But I fully understand, it takes a little while for this stuff to gel. And so, he is duly -- he is keeping his -- he is keeping things in the right perspective. Jon Braatz - Kansas City Capital: Tom, are there any meaningful holes left in the structure?

No, we added a Vice President of Business Development, so that will help us on the M&A. I think we had been -- we had some stops and starts over the last couple of quarters, just because we didn't have a leader in that role to support the teams. Operationally, very solid now. We've -- strong from a General Managers. There is -- we brought in the new GM at Rig-A-Lite -- I think that was Q1. So, I look at the new GMs, all of which are seasoned, experienced, proven folks, some of which I knew from a prior life. I look at the Finance department. You've seen the benefit of tax, just from bringing in some resources. We're getting better analytics, putting better accounting process in place with the new CIO who joined us at the end of last year. And we got the new Chief Legal Officer, brings us a wealth of international experience and compliance as well. So, I look across the organization -- I had all of them in a couple of weeks ago and that's the team I feel real good with. I don't see holes in that group anymore. I can look -- are we very deep? We're not. But the first line is now very solid. So, we will now work on depth. Jon Braatz - Kansas City Capital: Okay, great. One last question. You talked about some projects being mis-bid prior and that you are changing the processes. Is there more of a corporate overview of all the bidding, and more responsibility at the top level in terms of approving bids? And when you look back at maybe projects that were bid six to nine months ago, are there any "mis-bidding" that might have taken place on those projects?

Yeah well, some of it did, which is of course, the adjustments on some of our estimated backlog margins and things like that that we took in the quarter. So, we did have some of that, and you saw the result of it in the quarter. The -- and once you bid these things, we fulfill our contracts. We meet our commitments. So, we didn't go back and renegotiate some of these things. None of it put us at -- there was none of this -- unlimited consequential damages and things like that, that you'd see in terms. So, the terms were pretty good, in terms of tightness, but we are looking more at that. Tara Mackey, our Chief Legal Officer reviews the large contracts before they get inked, and before we bid them. Paul and his team look at jobs here from a financial perspective. And I'm looking at all of the energy projects of any significance that we're bidding, to make sure that it fits with where we want to go and the value we're trying to drive in the marketplace. The other problems was when you have got this underlying poor operational performance, you can't be pricing for value. So, they were pricing to be the low bid and that's a change. But for us now to drive those prices up, we have to be able to demonstrate the value to the customer. So, that's going to take a little longer. But, yes, we're providing a lot more oversight at the top. Jon Braatz - Kansas City Capital: Okay, all right. Thank you very much.

And our next question will be a follow-up from John Duni of BB&T Capital Markets. Please go ahead. John Duni - BB&T Capital Markets: Thanks. Just a couple of follow-ups here. Did you give the organic growth number for Galvanizing? I don't think I saw that in the Q, or was Zalk not a big enough piece of it to give that?

Let's see, it was about 2%?

Yeah, it was a couple of percent. It wasn't great growth, but then the markets aren't really growing either. So, yes, Zalk is relatively small. It offset that a little bit.

Yeah and you have Joliet coming back online which --

Yeah.

Positively affected.

So, just rough numbers, organic was probably a little under 2%. Zalk probably provided another percentage point or so of growth for us, yes.

Yeah. It was 8% year-over-year. John Duni - BB&T Capital Markets: Okay, perfect. And then the operating margin in galvanizing adjusted, you said that was 25.7% is that right?

Yeah. John Duni - BB&T Capital Markets: Okay. So, the $4 million pretax charge -- realignment charge, I think $2.7 million of that was allocated towards energy?

Let me break that out for you. It's $2.7 million Energy. It's -- well, it rounds to $800,000 for Galvanizing, and so it's about $500,000 for corporate. John Duni - BB&T Capital Markets: Okay, perfect. Thanks. I appreciate it.

Yeah.

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

Thank you for participating in today's call. We look forward to talking with you again at the conclusion of the current quarter. And again, thank you, and have a great day.

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