AZZ Inc. (AZZ) Q3 2023 Earnings Call

AZZ Inc. (NYSE:AZZ) Q3 2023 Earnings Conference Call January 10, 2023 11:00 AM ET

Company Participants

Sandy Martin - Managing Director, Three Part Advisors

Tom Ferguson - CEO

Philip Schlom - CFO

David Nark - SVP, Marketing, Communications & IR

Conference Call Participants

John Franzreb - Sidoti & Company

Noelle Dilts - Stifel

John Braatz - Kansas City Capital

Operator

Good day, and welcome to the AZZ Inc. Q3 2023 Earnings Conference Call and Webcast. 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 Sandy Martin, Three Part Advisors. Please go ahead.

Sandy Martin

Thank you, operator. Good morning, and thank you for joining us today to review AZZ's financial results for the third quarter of fiscal 2023 ended November 30, 2022. Joining the call today are Tom Ferguson, President and Chief Executive Officer; Philip Schlom, Chief Financial Officer; and David Nark, Senior Vice President, Marketing, Communications and IR.

After the conclusion of today's prepared remarks, we will open the call for questions. Please note, there is a webcast and slide presentation for today's call, which can be found on AZZ's Investor Relations page under latest earnings releases presentation at azz.com.

Before we begin, I would like to remind everyone that our discussion today will include forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward looking statements by their nature are uncertain and outside of the company's control.

Except for actual results, our comments containing forward-looking statements may involve risks and uncertainties, some of which are detailed from time-to-time in documents filed by AZZ with the Securities and Exchange Commission, including the annual report on Form 10-K for the fiscal year ended February 28, 2022. These statements are not guarantees of future performance and therefore, undue reliance should not be placed upon them. Actual results could differ materially from these expectations.

In addition, today's call will include a discussion of non-GAAP financial measures. Non-GAAP financial measures should be considered as a supplement to and not a substitute for GAAP measures. We refer you to the reconciliation of non-GAAP to the nearest GAAP measure included in today's earnings release and investor presentation for further detail.

The earnings press release and Q3 presentation are posted on our website and have been included in the Form 8-K submitted to the SEC.

I would now like to turn the call over to Tom Ferguson, CEO. Tom?

Tom Ferguson

Thank you, Sandy. Welcome to AZZ's third quarter earnings call and thank you for joining us this morning. We accomplished a lot this quarter, including completing the divestiture of 60% of our Infrastructure Solutions segment. We also paid off over $230 million of our debt, which improves our leverage to 3.4 times EBITDA.

Both of our business groups grew their sales significantly and I will get into the specifics shortly, but let me first express, how appreciative I am of our AZZ Metal Coatings and AZZ Precoat Metals leadership teams. I commend them for the professionalism they have demonstrated as they have maintained focus on their customers, while dealing with continual supply chain and labor issues, as well as storms and other distractions. Working with leaders that demonstrate so much pride and passion for their teams and business is truly invigorating.

As you can see here, we achieved nice flow through of adjusted EBITDA on higher sales generating over $71 million or a 79% increase versus prior year. Net income on adjusted basis was $22 million, up 4% resulting in adjusted EPS of $0.88. Philip will talk about the one-time write-down on AIS shortly.

Metal Coatings had another strong quarter with sales up 17% to $158 million. The growth was a result of volume, the earlier acquisitions of DAAM and Steel Creek and adding tubing to the Metal Coatings as it was not divested along with the rest of AIS.

Operating income was only up slightly versus prior year due to inflationary pressures, particularly as zinc cost peaked in most of our kettles. We continue to maintain our pricing discipline and focus on delivering value to our customers. Tubing is a good business, albeit relatively small and was significantly lower margins than our galvanizing business.

Additionally, service technologies underperformed for the quarter. The net of these two things amounted to about 100 basis points of margin headwind for Metal Coatings. Metal Coatings team has already taken actions to strengthen Surface Technologies leadership and improved performance.

EBITDA of almost $42 million was up 3% over prior year. We continue to benefit from our investment in DGS for the Digital Galvanizing System, which is driving both productivity and customer service. We are also seeing potential in the longer-term to improve performance of our kettles of rising out of technology efforts in conjunction with Texas and [indiscernible].

The outlook in the fourth quarter is for a typical winter season and we would hope to not experienced any more major storms like we navigated in December. Precoat in its second full quarter with AZZ had nice sales growth to $215 million, which generated over $34 million of EBITDA.

While Precoat did grow its underlying unit volume modestly versus prior year, sales were lower than the second quarter due to normal seasonality as we have noted previously. The lower volume sequentially has about a 100 basis point impact due to the deleveraging effect on fixed cost.

Precoat's underlying business performance was solid given the continued inflation on indirect materials, labor shortages and extraordinarily high customer-owned inventories that caused significant inefficiencies and costs. We have taken actions to improve the inventory situation and have focused initiatives to improve productivity at several plants, but are still dealing with skilled labor shortages and some logistical inefficiencies.

Additionally, we have taken pricing actions to address the indirect material inflation and higher logistical costs. We have made progress on the $10 million of synergies we had noted at the time of the acquisition. And while so far the benefits have been balanced by the cost, these will be showing up in our run rates in fiscal year 2024.

Year-to-date, our business on a consolidated basis has done well. To put it in perspective, we have generated sales approaching $1 billion in the first nine months, which used to be what we did all year. We have generated over $238 million in adjusted EBITDA, which doubles the prior year.

Adjusted net income of $97 million and adjusted EPS of $3.89 are up 56% versus the prior year. For the AIS joint venture, we have recognized a little over $1 million of equity income. While it has been a tumultuous year, we are positioned well as we finish up this fiscal year and prepare for fiscal 2024.

So now, I'll turn it over to Philip.

Philip Schlom

Thanks, Tom. As Tom noted, we closed on the divestiture of our controlling interest in the AZZ Infrastructure Solutions segment to Fernweh Group at the end of September 2022, after just completing the second quarter. As a result, we are required to report the results of operation as continuing and discontinued ops from the second quarter onward.

My commentary will focus primarily on the results from continuing operations. I will also walk through the consolidated adjusted EBITDA and adjusted EPS and bridge results to our 2023 full year guidance ranges. For comparability, I may refer to Precoat or AIS sales, so investors can track quarterly sales inputs or exclusions.

Our adjusted numbers primarily exclude impacts from additional non-cash loss recorded on the finalization of the divestiture of AIS and excludes the depreciation and amortization related to the purchase accounting effects of the Precoat acquisition on both the quarter and year-to-date results.

AZZ generated third quarter sales of $373 million, $158 million for Metal Coatings and $215 million from Precoat. One month of sales from the Infrastructure segment for September prior to the divestiture of $42.3 million were included in the results from discontinued operations. Third quarter sales reflected continued stable demand with Metal Coatings up 17.2% and Precoat Metals up 14.8% on a comparable prior year same quarter basis.

Gross profits from continuing operations for the third quarter totaled $73.1 million or 19.6% of sales. While aggregate profits are higher from a dollar perspective, the gross margin reflects increased cost of zinc flowing through our kettles within the metal coatings as well as transitional operational expenses and warehousing costs for Precoat. As Tom mentioned, we have taken steps to address these issues.

Operating margins from continuing operations were 12.2% of sales for the third quarter, as compared to 15.8% in the prior year. Excluding the impact of the Precoat purchase accounting related amortization and depreciation of $8 million, operating margins for the quarter would have increased to 14.3% of sales.

Third quarter calculated EBITDA was $26.2 million, compared to $39.8 million in the prior year same quarter. When adjusted EBITDA for the quarter was $71.2 million or 19.1% of sales, up 78.8% compared to the prior year.

Earnings per share from consolidated operations was a loss of $0.97, which included a $45 million loss associated primarily with the non-cash write-off and discontinued operations of the AZZ Infrastructure segment related to historical currency translation adjustments. Excluding the loss and including the D&A from Precoat purchase accounting, third quarter EPS was $0.88, an increase of 3.5% versus 85% -- a $0.85 in the prior year quarter.

Year-to-date sales from continuing operations were $987.1 million, generating reported EBITDA of $63.3 million and adjusted EBITDA of $238.5 million. Year-to-date reported EPS was a loss of $2.35 as a result of the finalization of the AIS divestiture. Year-to-date adjusted EPS was $3.89 (ph). Year-to-date diluted EPS from continuing operations was $2.17, an increase of 39% compared to $1.55 diluted EPS from continuing operations through the third quarter of last year.

Cash flows from continuing operations for the nine months were $68.6 million compared with $45.9 million in the prior year. Our year-to-date capital expenditures from continuing operations were $35.1 million compared with $15.8 million in the prior year. The year-over-year cash flow (ph) increase was planned and contemplated in our strategic rationale associated with the Precoat acquisition.

In terms of capital allocation, the company's balance sheet is strong, and we continue to maintain a prudent capital allocation strategy. Utilizing proceeds received from the divestiture of AIS in addition to cash from operations. We reduced outstanding debt by $230 million. We invested $18.3 million during the quarter on capital expenditures. We expect to invest roughly $45 million in capital expenditures for the full fiscal year as we shuffle capital spending around due to continued supply chain disruptions.

Shareholder returns to common shareholders included Q3 dividend payments of $4.2 million, which represents an estimated annual dividend yield of 1.6% based on Friday's closing price. We have an active pipeline of acquisition targets. However, do not plan any actionable transactions in the near-term horizon. As we focus on reducing debt, we do not anticipate any share repurchases.

As described above, we reduced our Term Loan B by $230 million and improved our leverage to 3.4 times, a good step towards our 2024 target of getting back to or under 3 times leverage. As discussed last quarter, we have roughly 50% of our existing Term Loan B debt covered by swap agreement to reduce further interest rate exposure.

Lastly, other than our current $3.25 million mandatory quarterly principal payments on our term loan, we do not have any maturities into 2027.

I'll now turn it back to Tom for his closing comments.

Tom Ferguson

Thanks, Philip. Market activity generally for Metal Coatings is normal given we are in the seasonally slower winter months. Fabrication activity remains solid. Zinc costs have peaked in most of our plants and will begin to normalize with current market levels.

Precoat is more reliant on the construction sector, so they are typically more impacted by the winter season and major storms like we had over Christmas. We are beginning to see customer inventories normalize as supply chain disruptions are easing somewhat. And due to some of the actions we have already taken.

Our pricing actions are also catching up to some of the inflationary labor, energy and non-paint materials costs. Naturally, we are continuing to focus on debt reduction, monitoring customer credit carefully and ensuring effective CapEx deployment.

We are maintaining our sales guidance of $1.275 billion to $1.325 billion and also our adjusted EBITDA guidance of $285 million to $305 million. We are raising our adjusted EPS guidance by $0.25 from the $3.80 to $4 range to $4.05 -- from $4.05 to $4.25. This is based on the strong third quarter and the outlook for the businesses that we have previously discussed. This guidance does not include any potential equity income that we might receive in the fourth quarter from our 40% share of avail.

I will also note that the fourth quarter EPS will be impacted by a more normalized tax rate than we experienced in the third quarter. Dividends in preferred equity or dividends on preferred equity and seasonally slower volumes. Our guidance reflects these impacts. As a reminder, we will be getting back into our normal cadence on annual guidance and we'll be issuing fiscal 2024 guidance in a few weeks.

AZZ is the leading independent hot-dip galvanizing and coil coating company with an irreplaceable footprint serving a broad and diverse set of markets. As a high value-add tolling business, we are not directly exposed to metal commodities. Have the ability to shed variable costs quickly and thus are able to protect our margins pretty well during downturns.

We generate great margins, returns and free cash flow by focusing on providing outstanding value to our customers, emphasizing operational excellence and continuing to innovate and develop our technology.

With that, we'll open it up for questions.

Question-and-Answer Session

Operator

We will now begin the question-and-answer session. [Operator Instructions]. The first question comes from John Franzreb with Sidoti & Company. Please go ahead.

John Franzreb

Good morning, guys and thanks for taking the questions.

Tom Ferguson

Good morning, John.

John Franzreb

I'd like to start with the Metals Coatings business and the -- incurring the high zinc cost. Can you talk a little bit about where you stand as far as those costs coming down and what's the margin profile look like in the current quarter versus Q3?

Philip Schlom

On the margin profile, I think our zinc has peaked in December. And so we'll start to see some decrease as we move forward into the fourth quarter and into fiscal year 2024.

John Franzreb

Okay. And what was the impact in Q3 of the higher zinc on the segment in Q3?

Tom Ferguson

We really don't disclose that. But I'd say typically, we're -- well, because of -- keeping in mind that our -- we try to price in line with those zinc costs, so while we've kept our pricing discipline, I think the overall impact, we probably -- I'd say, we're looking at maybe 100 basis points overall, just kind of that headwind as we have about six months of zinc in our kettles and dependent on -- but there's a range of cost in each kettle across the fleet.

John Franzreb

Okay. And on the precoat side of the business, you talked about productivity issues at several plants where I thought you said, Tom. And you also talked about lower volume hurting the op margin profile by about 100 basis points. I guess two questions here. Is the balance of the volume sequentially? Is that the productivity issue? Is there anything else going on? And can you just remind us what the productivity issues are and when do you expect them to be resolved?

Tom Ferguson

Yeah. We've got a couple of different things going on. I think we've mentioned the very extremely high levels of customer inventory, which if you go into one of -- most of precoats plants, that tends to, to get in the way of being efficient logistically and moving materials which were a material handling business. So that's in the majority of plants that high inventory issue.

As we noted, that's coming down and I think, we're probably within a couple of three months of being to more normalized levels in the majority of the plants. We do have three or four plants that have struggled with, I'll call it, the mix of their business, so taking some of the lower margin type activity to maintain absorption levels and keep flow.

That's something that's going to take us probably a couple of quarters to work out. We've made some adjustments. We have several initiatives. There's a really good team within precoat of operating support and focus on quality. So -- but that's going to take a couple of quarters. We're going to be into next year before we see that move significantly.

In terms of -- we talked about the fixed cost leverage, that deleveraging effect as we had talked about, kind of just mostly because of how our fiscal quarters fall for precoat tends to hit the worst five months of the year in the third and fourth quarter. So fourth quarter is basically all winter, which construction activity is less and a lot of the metals building customers are kind of managing their inventories and managing their business.

So that part of the fixed cost deleveraging will continue through the fourth quarter. And then we hope for an early spring in March and bounce back to the really strong first and second quarters.

John Franzreb

Okay. Thank for taking my questions. I get back into queue.

Tom Ferguson

All right. Thanks, John.

Operator

Our next question comes from Noelle Dilts with Stifel. Please go ahead with your question.

Noelle Dilts

Hi. Thanks for taking my question. First, I was wondering if you could expand on the underperformance that you mentioned in Surface Technologies. And if you could quantify that impact, that would be great. And maybe how quickly you think that you'll start to make some of those improvements that you referenced?

Tom Ferguson

Yeah. It's not a huge impact overall, but it's enough to move the needle. So you're looking at a business of, what maybe $6 million, $7 million a quarter, but really low margins lower than we've experienced. So that the leadership changes were made several months ago and so I think that takes a little bit of time to gain traction. We like the initiatives that the team has going there.

But I think we're going to be into the first quarter probably well through spring before we start to see any significant improvement there. Part of it is just making sure we're going after the right kinds of business. We find powder coating to be better than the plating side. So these are all adjustments in how we're targeting the customers, how we're approaching the business and then driving the normal focus on efficiencies, productivity at the six plants.

Noelle Dilts

Okay. Great. And then I recognize you said you're giving guidance in a few weeks. But maybe could you give us some early thoughts on how you're thinking about the outlook, particularly for Precoat as we look into the next fiscal year? If you could just walk us through some of the puts and takes in terms of growth. I know obviously, you're continuing to gain share or see increased penetration of pre-coated metals. But I would think some of the more residential or consumer facing parts of pieces of the business might see a little bit more of a headwind. So could you just give us a sense of sort of how you're thinking directionally about growth? Thanks.

Tom Ferguson

Yeah. I think when it comes to residential construction isn't a huge piece. I'm going to let David talk to the markets a little bit here in just a second. But -- so for Precoat, the focus is obviously, it was disruptive to the Precoat leadership team going through this whole process and then coming on board with AZZ. And it's been a great, I'll call it a great onboarding process. So we've tried to make it as minimally impactful on them as possible, but it's still disruptive to come into a new organization, new processes of a public company.

I'd say we're through the vast majority of that. We don't anticipate any major systems, integrations or activities that can be disruptive as we go through at least the first part of next year. So I anticipate -- we don't anticipate, I know the focus is going to be on continuing to drive value with the customers. I do think there's opportunities to more quickly drive productivity and efficiency improvements. The team is really focused on that. And as some of these customer inventories are coming down, which they are. That's starting to open up the ability to drive their traditional productivity and efficiencies in their plants.

The plants that are underperforming there's a plan there and the team is very, very focused on that. It just takes a while. These are highly automated plants, so it takes a little time to gain traction on that. But these are things that we've been focused on since we've -- they've been in full. So I think what -- but those market headwinds you mentioned, that is going to have -- that is -- those are true headwinds. I think we'll focus on continuing to grow share.

And then we'll see how the economy goes. But -- so our focus is going to be more on let's improve our profitability on the volumes that we have and drive the efficiencies, make sure that we maintain that stability. We do think there's some synergies between on the sales side. And so we have really good effort going on there. But that will take -- that takes two or three quarters to gain traction on. So as we get through the first quarter and into the second. I think we'll start to see the benefits of those things.

The hard synergies, we've generated some of those and -- but the cost have offset it. So I'm pretty enthusiastic about both of our businesses, but both of them are going to be focused more on protecting their profitability, driving improvements. And then, we'll see where the volumes go. And David, if you want to talk about where you see construction things.

David Nark

Sure. Thanks, Tom. Yeah. Couple of things, Noelle, non-residential construction still remains pretty good, particularly on the Precoat side with metal intensive sectors like warehousing and manufacturing faring pretty well. We do have a specification of pre-painted insulated metal panels and things like data centers and cold storage construction, which continues to be a positive trend for them.

When you take a look at the residential construction, as you know, single-family housing starts have struggled in the broader market, but multi-family remains quite strong. We do have the use of prepayment metal roofing, continuing to gain traction in multiple markets within residential. So we think that's going to be a positive for us going forward.

Appliance and HVAC shipments have eased quite a bit from the solid pace experienced earlier in the year. And again, that related to general market and economic slowdown in the U.S. But the container market, which we've talked about on previous calls, particularly the beverage can shipments have benefited from favorable secular growth trends and the switch to aluminum for recyclability and consumer packaging preferences. So those are some of the highlights on the Precoat side specific to your question.

Noelle Dilts

Okay. Great. That's really helpful. And then I know you're not including the JV income in the fourth quarter. Would you anticipate that you would start to include that in guidance as you look at next year or is that still sort of a TBD item? Thanks.

Tom Ferguson

We did have our first Board meeting yesterday, and we like the leadership team. So they're very disciplined and focused. They're getting through the usual purchase price accounting things to go from being part of AZZ to being a private company. I think I'd like to give them a little bit of time, call it, a quarter. So I don't think we're going to be able to give guidance on what that equity income is going to look like as we issue our guidance.

I do think as we get into next year, I think we're going to be able to start providing some general guidance on what that equity income is going to look like for the balance of next year. But I think we've got to let them get through another -- at least another quarter of their operations and how they're managing the business and what their focus is. So my intent is not to have it in this guidance that we give towards the end of January. But that hopefully, we can start to provide better context as we hopefully, by the time we do our full year earnings call.

Noelle Dilts

Okay. Very good. Thank you.

Operator

Our next question comes from John Braatz with Kansas City Capital. Please go ahead.

John Braatz

Good morning, everyone.

Philip Schlom

Hey, John.

Tom Ferguson

Good morning.

John Braatz

Tom, going back to the Precoat, you mentioned that a couple of facilities took on some, I guess, lower margin business. And I guess as you look forward, how do you balance that against maybe some weakness in general market activity. How do you balance maybe taking maybe additional lower margin business versus saying no and risking maybe a little bit more deleveraging of the cost side of the equation?

Tom Ferguson

Yeah, I think that's -- we're spending a lot of time with the Precoat team, which was actually really enjoyable because it's so similar to our galvanizing business. But yeah, we're focused on profitable growth. And so -- but they've got great indicators in terms of how they're running their paint efficiencies, productivity, line feet per hour per day, all that kind of per minute. So there's a balancing act, but I think we want to defend our market share.

We are focused on what things are more profitable than others. We have made some leadership team, some leadership changes in a couple of those plants already. And we anticipate that, that's going to start to drive better performance, better consistency. And because right now, it's hard to say for sure that certain business isn't all that profitable when you've got some underperforming operational issues.

So dealing with that and the team has been dealing with that. So it's not like they've been sitting there. But those plants are also in markets where labor is even more constrained. And while I'm not going to give any specifics on which plants those are, they are in more labor constrained market. So we're having to pay more to get the folks we need, which we're willing to do because labor is still a relatively small piece of our overall cost structure in precoat.

So -- but yeah, we want to defend share overall, take care of our customers and then carefully balance the fixed cost absorption in those plants as well as against the overall. So that's a mouthful that I just gave you, but I can tell you, it's a daily, weekly review that the Precoat team does on this. So they're looking at this every single day.

John Braatz

Okay.

Tom Ferguson

And moving business between plants, if they're finding they're not serving their customers. So sometimes it's where we've been taking some expense to move it to the right places where we can service the customer the best.

John Braatz

Yeah. Okay. Secondly, on the galvanizing metal coating operation, you talked about zinc costs being relatively high. But natural gas costs have come down sharply here in the last 90 days. How much of an impact might that have on the margins of the business?

Tom Ferguson

Well, it's actually a significant spend, it's fairly de minimis in terms of the overall margin impact. And also because of the way our commitments flow with the utilities, we won't be seeing some of that until we get into next year anyways.

John Braatz

Okay. All right. Thank you very much.

Tom Ferguson

All right. Thanks.

Operator

Our next question comes from John Franzreb with Sidoti & Company. Please go ahead.

John Franzreb

Hi, guys. Thanks for taking the follow-up. Just a little bit of questions about the guidance here. [indiscernible] has the nine month number at $3.52 (ph). And I believe on Page, was it 7, you have it at $3.89 and your guidance is $4.5 to $4.25. I just want to know if we can kind of reconciliate what the number is we should be using as a baseline number in relationship to your guidance because if we use that $3.89 number, it seems like a really sizable drop in the fourth quarter. Can you just help us there?

Philip Schlom

Yeah, I think, John, it's a good question. And fourth quarter will be seasonally lower than the first nine months of the year. We've been working -- we've had a lot of change in the operations with the acquisition of Precoat Metals and the divestiture of the controlling interest and avail or AIS infrastructure. And so some of those outlets don't have fully updated numbers. So David's been working with those outlets on getting better historical numbers, but $3.89 is where we're bridging from for the guidance.

John Franzreb

So that suggests a number between $0.16 and $0.36 for the fourth quarter. Am I understanding that properly?

Tom Ferguson

Yeah. That's the way it will flow. Obviously, it's significantly lower volumes on the seasonality as we've talked about for -- particularly for Precoat. On the Metal Coatings side, I think we will kind of see the tailing off of these high zinc costs, and we are doing everything we can to hold price and so yeah, this is the -- probably our ugliest quarter. And then Q1, we get into the spring and build up into what I think going forward will traditionally be our strongest two quarters in the first half of the year.

John Franzreb

And I guess just a nagging question, what kind of share count are you using on that $3.89 and what are you thinking about for the full year? It's kind of bounced around based on profitability, I guess, level?

Philip Schlom

It's based on the dilutive and un-dilutive (ph) features, we're using about 25 million shares in the calculation, John. In the fourth quarter to finish out on Tom's question, what's putting pressure as we seasonally have lower sales, and we do have the fixed cost of our interest on the debt and then the preferred dividends on our Blackstone preferred equity. So that's what's pushing a little pressure in that seasonally low fourth quarter.

Tom Ferguson

Well, we also had the unusually low tax rate in the third quarter. And so that starts to normalize or go back towards normal in Q4.

Philip Schlom

Yeah. We'd expect [Multiple Speakers] We'd expect taxes to normalize in the 24% range for fiscal '24.

John Franzreb

You took my question. Thank you very much. Appreciate it.

Philip Schlom

Thanks, John.

Operator

This concludes our question-and-answer session. I would like to turn the conference over to Tom Ferguson for any closing remarks.

Tom Ferguson

Yeah. We really are excited about the addition of Precoat Metals and particularly as we see how well the culture and leadership teams fit with our Metal Coatings team. Both teams live by the same values have almost identical operating cultures. So we look forward to sharing next year's outlook and guidance within the next few weeks.

As we get back into the normal corporate operating mode, I also look for us to be able to provide a lot better clarity and transparency on what our -- what's in our margins and how to look at those going forward. I know everybody would prefer that. So we'll get out of the big adjustment mode into a stable operating mode that drive where we're demonstrating the great margins that both of these businesses can have and talking about our business from the normal markets, operational things that drive it and how we're getting back to growing share and driving profitability. So thank you for joining us today.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.