Earnings Call Transcript - AZZ Q3 2021

Operator, Operator

Good day, and welcome to the AZZ, Inc. Third Quarter of Fiscal Year 2021 Financial Results Conference Call. All participants will be in a listen-only mode. Please note that this event is being recorded. I would like to turn the conference over to Joe Dorame. Please go ahead, sir.

Joe Dorame, Investor Relations

Thank you, Jack. Good morning, and thank you for joining us today to review the financial results of AZZ, Inc. for the third quarter of fiscal year 2021 ended November 30, 2020. Joining the call today are Tom Ferguson, Chief Executive Officer, Philip Schlom, Chief Financial Officer, and David Nark, Senior Vice President, Marketing and Communications and IR. After the conclusion of today's prepared remarks we will open the call for a question-and-answer session. Please note there is a slide presentation for today's call, which can be found on AZZ's Investor Relations page under Financial Information at www.azz.com. Before we begin with prepared remarks, I'd like to remind everyone that 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 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 Securities and Exchange Commission, including the annual report on Form 10-K for the fiscal year ended February 29, 2020. Those risks and uncertainties include, but are not limited to, changes in customer demand and responses to products and services offered by the company, including demand in the power generation markets, electrical transmission and distribution markets, the industrial markets, and the metal coatings markets; prices and raw material costs, including zinc and natural gas, which are used in the hot dip galvanizing process; changes in the political stability and economic conditions of the various markets that AZZ serves, both foreign and domestic; customer requested delays of shipments; acquisition opportunities; currency exchange rates; adequate financing; and the availability of experienced management and employees to implement the company's growth strategies. In addition, AZZ’s customers and its operations could be potentially adversely impacted by the ongoing COVID-19 pandemic. 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 out of the way, let me turn the call over to Tom Ferguson, Chief Executive Officer of AZZ. Tom?

Tom Ferguson, CEO

Thanks, Joe. Happy New Year to everyone and welcome to our third quarter fiscal year 2021 earnings call, and thank you for joining us this morning. While we continue to be impacted by COVID-19, our markets are stabilizing and our businesses have adapted to the new normal way of operating, which encompasses a variety of challenges that we have had to overcome. While we have seen an uptick in COVID cases, all of our plants have remained open with normal production. The collective efforts of our folks generated consolidated sales of $227 million for the third quarter, split almost equally between our Metal Coatings and Infrastructure Solutions segments. We had sequential improvement in operating performance, and we have returned over $44 million of capital to shareholders in the form of cash dividends and share repurchases through the third quarter of this year. Also, we have made good progress on our Board-led strategic review that we announced earlier. While sales were down 22% from Q3 of last year, our realignment activities and operational performance generated net income of $19.7 million, down about 10% from the same period of the prior year. This resulted in EPS of $0.76 per diluted share, or $0.80 on an adjusted basis. Our Metal Coatings business continues to execute strongly while navigating the economic uncertainty resulting from COVID. Hot dip galvanizing sales were down 8.8% from the same quarter last year, while Surface Technologies was down more due to the nature of their customer base being more impacted by COVID. Within our Infrastructure Solutions segment, third quarter sales results improved sequentially, even with a muted fall refining turnaround season. Segment results were below the same quarter of the prior year due to the protracted weak demand for refined oil products, as well as lower international sales, primarily from China. As previously communicated earlier this year, due to shifting industry and customer dynamics and the protracted impact of the COVID-19 pandemic, we began to take aggressive steps to accelerate the strategic restructuring of our portfolio of businesses with the goal of becoming predominantly a coatings business. Our actions during the quarter included recording a loss on the sale of SMS of $1.9 million and initiating a comprehensive Board-led review of our businesses with the assistance of leading independent financial, legal, and tax advisors. As I mentioned, our review of the Infrastructure Solutions businesses and associated assets and the exploration of other capital allocation opportunities to maximize shareholder value is ongoing, and I am pleased with the progress the team has made during the quarter. Finally, given the share repurchases, currently an attractive use of our capital, we’ve repurchased over 652,000 shares in the quarter which brings our total for the year to over 850,000 shares. While our Metal Coatings segment had lower sales in the third quarter of the prior year, they were able to generate higher operating income and improved operating margins to 24.8%. Surface Technology sales were still way off at some plants, primarily due to how badly COVID impacted demand for several of their largest customers. However, during the quarter, Surface Technologies began to reopen powder coating lines in two Texas plants that had previously been idled earlier in the year. I am particularly pleased with how the Metal Coatings team continues to drive value through outstanding customer service and operational performance while maintaining market level pricing as they benefited from lower zinc costs during the quarter. We remain committed to our strategic growth plan for this segment, as evidenced by last week's announcement regarding the acquisition of Acme Galvanizing in Milwaukee, Wisconsin. Although COVID has slowed our normal pace of acquisitions, I am grateful that the team was able to close this acquisition right after the holidays. I want to take a moment to welcome the Acme Galvanizing employees and customers to AZZ. As we previously indicated on our second quarter earnings call, the third quarter turned out sequentially stronger, but turnaround activity remained constrained by COVID travel restrictions and continued low demand for refinery products. Our Infrastructure Solutions segment’s third quarter fiscal 2021 sales decreased by 31.5% to $111 million. This resulted in operating income of $8.7 million as compared to $17.4 million in Q3 a year ago. As I mentioned previously, the decline in sales was a result of muted refinery turnaround activity in the quarter, particularly in the U.S., as well as lower China high voltage bus shipments and decreased demand for some of our oil-patch related products and services. WSI's domestic and foreign facilities remained open and working, and crews deployed on several smaller projects. All of the electrical platforms operations also remained open throughout the quarter, as they effectively managed the uptick in COVID cases. Due to the prolonged uncertainty associated with the COVID pandemic on many of our end markets, we will not provide an update to our previously suspended fiscal 2021 earnings and sales guidance range. However, we believe our fourth quarter will be seasonally lower than the third quarter, but we should generate improved earnings versus the fourth quarter adjusted earnings of last year. Our low debt level combined with our consistent ability to generate strong cash flow provides us with the ability to effectively manage our debt and liquidity throughout the remainder of fiscal year 2021 and beyond. We expect to establish guidance for normal cadence for fiscal 2022 as we wrap up our annual budgeting process and review it at our upcoming Board meetings. Our Metal Coatings business is operating at a fairly normal level despite some continued restrictions and disruptions in a few of the cities and states we’re operating in. We are confident that our business remains vital to improving and sustaining infrastructure, so we will use the remainder of our fiscal year to position our core businesses to emerge stronger and better equipped to provide sustainable profitability growth long into the future. With that said, I'll turn it over to Philip.

Philip Schlom, CFO

Thanks, Tom. For the third quarter of fiscal year 2021, we reported sales, as Tom noted, of $226.6 million, a $64.5 million decrease or 22.2% lower than the third quarter of the prior year. Sales were down primarily as a result of lower sales in the company's infrastructure, industrial platform as a result of the pandemic, and lost aggregate sales from divested entities over the past year. Net income for the third quarter of fiscal '21 was $19.7 million, a decrease of $2.3 million or 10.6% below the prior year third quarter. Diluted EPS of $0.76 per share declined 9.5% compared to the $0.84 per share in the prior year third quarter. Despite the lower sales, third quarter fiscal 2021 gross margin improved 100 basis points to 24.1% on a year-over-year basis and was driven by continued strong margin performance within the Metal Coatings segment. Operating margins of 12.3% of sales increased 80 basis points compared to 11.5% of sales in the prior year. Operating income for the third quarter of fiscal 2021 decreased 16.6% to $27.9 million from $33.4 million in the prior year third quarter. Third quarter EBITDA of $39.6 million, decreased 15.4% compared to $46.8 million in EBITDA from last year's third quarter. As for the year-to-date results, in the third quarter of fiscal '21, we reported year-to-date sales of $643.3 million, 21.2% below the $816.5 million in the sales for the same period last year. Year-to-date, net income for the third quarter was $23.5 million, a decrease of $35.4 million, or 60.2% from the same period last year. Year-to-date net income, as adjusted for the restructuring and impairment charges primarily incurred early in the year was $39 million, which was $19.9 million or 33.8% lower than the comparable prior year results. Year-to-date reported diluted EPS declined 59.8% to $0.90 a share, as compared to $2.24 per share for the same period last year, primarily driven by restructuring and impairment charges, as well as softer markets and travel restrictions resulting from the pandemic, mostly in our Infrastructure Solutions segment. On an adjusted basis, year-to-date 2021 diluted EPS was $1.49 per share, a reduction of 33.5% from the prior year. Our fiscal year 2021 year-to-date gross margins of 22.2% declined 60 basis points from the gross margin of 22.8% from the prior year. Year-to-date reported operating profit of $42.8 million was $43.8 million, or 50.5% lower than the $86.6 million reported for the same period last year. Year-to-date reported operating margin of 6.7% decreased 390 basis points compared to 10.6% last year. On a year-to-date basis, excluding the impact of the $20.3 million of restructuring and impairment charges, operating margins were 9.8% or 80 basis points below the prior year. I'll now turn to a discussion regarding our liquidity and capital allocation. On a year-to-date basis, our net cash provided by operating activities of $59.4 million declined $12.7 million, or 17.6% from the comparable period in the prior year, primarily the impact of lower year-to-date net income. During the third quarter of fiscal 2021, as Tom had noted, we repurchased 652,000 shares of our common stock at an average price of $37.66. On a year-to-date basis, we have repurchased 852.5 million shares at an average price of $36.31 per share. Investments in capital equipment to support our business were $8.6 million for the third quarter and $27.9 million on a year-to-date basis, which are in line with our expectations of spending roughly $35 million for the year. At the end of our third quarter of fiscal 2021, our existing debt of $182 million is down $20.9 million from the end of the year, as we continue to effectively manage our balance sheet. I'll now turn it back to Tom for his final comments.

Tom Ferguson, CEO

Thank you, Philip. I will close by sharing with you some key indicators that we continue to monitor. For the Metal Coatings segment, fabrication activity will remain solid during the balance of our fourth quarter, and we are off to a reasonably good start in December. Within our galvanizing business, we are closely tracking steel fabrication and construction activity. Zinc costs and our kettles are relatively stable, but we anticipate increases in zinc costs in fiscal 2022, as zinc prices on the LME have been rising for a while now. The Acme Galvanizing team is being quickly integrated into our existing operating network, bringing our total hot dip galvanizing locations to a market-leading 40 sites in North America, in spite of recently closing two Gulf Coast locations. For surface technologies, we're primarily focused on growing sales with both existing and new customers and driving operational process improvements. Within the industrial platform of the Infrastructure Solutions segment, we continue to carefully monitor the COVID situation in the states with large refining capacities. Currently, we still are experiencing travel restrictions in some countries. For the electrical platform of the Infrastructure Solutions segment, we are carefully tracking proposal activity and experienced solid bookings in December. We will continue to focus on growing the backlog for many of our business units so that we enter fiscal year 2022 in good shape. Finally, for corporate, we have strong cash management processes and a further focus on oversight of cash flow indicators and customer credit. Currently, we have not experienced any slowdown in customer payments. Post-COVID crisis, we remain committed to our growth strategy around Metal Coatings and achieving 21% to 23% operating margins, including an increased contribution from surface technologies. We believe galvanizing will tend to run to the high end, if not above 23%, while surface technologies is going to have to rebuild its margin profile, as customer demand grows. For Infrastructure Solutions, we will continue to focus on improving operating margins while we complete the comprehensive strategic evaluation of this segment. We feel quite confident, in spite of COVID and other disruptions, about the actions we've already taken and the restructuring activities that are now underway. We intend to focus on completing the Board-led review of our businesses and finish this fiscal year well-positioned to enter fiscal 2022 with momentum. Finally, we will remain active in the area of M&A, primarily in Metal Coatings, and we'll aggressively seek activities that support our strategic growth plan. While pandemic-related deal travel was still somewhat restricted during the third quarter, we are seeing improved travel conditions and have an active portfolio of opportunities that we will continue to pursue. And with that, we'll open it up for questions.

Operator, Operator

And our first question will come from John Franzreb with Sidoti & Company. Please go ahead.

John Franzreb, Analyst

Hi, good morning, Tom and Philip.

Tom Ferguson, CEO

Hey, John.

John Franzreb, Analyst

I have a couple of quick questions. First, regarding the Metal Coatings segment, how much of the year-over-year improvement in operating margin is due to the divestiture of underperforming businesses compared to the rise in zinc pricing?

Tom Ferguson, CEO

That's a good question. It's still predominantly driven by operational improvement driving zinc price versus costs. The divestiture of Galvabar had some effect, but really not that much. And then the facilities we closed earlier in the year, we picked up most of that business in other locations.

John Franzreb, Analyst

Okay, so really, it was more of a change in the business profile than the lower price of zinc. Am I getting that correct?

Tom Ferguson, CEO

No, no, the lower cost of zinc and our ability to sell on value did play a part, but keeping our operations open and operating through COVID I think was something we point to a lot.

John Franzreb, Analyst

Okay. You spoke about the last conference call that you anticipated a weak turnaround season this fall but that the order bookings were promising for the spring. Is that still the case or is it going to change? Do you consider positive and negative on the infrastructure side of the business?

Tom Ferguson, CEO

Yeah, fall came in about what we thought. The WSI business was off significantly versus Q3 of last year for that reason. We were able to travel to some locations, but it's mostly driven by weak refined oil product demand which doesn't drive turnarounds. As far as the spring, we still feel good about the spring. I wouldn't say it’s stacking up to be a boomer of the spring turnaround season, but we are quoting well and getting some orders on the books. So, we feel good about it, but definitely not. It seems like things are going to take a little bit longer for refineries to start doing turnarounds again as gasoline and jet fuel demand continues to grow. So while we feel pretty good about the spring, I'd say a lot of this is looking like it's going to spread through the year.

John Franzreb, Analyst

Okay. And one last question, I’ll get back into the queue. Were there any professional fees that you incurred during the quarter or anticipate in the fourth quarter you could parse it out for us?

Philip Schlom, CFO

Yes. We are incurring some fees related to our comprehensive review that we've disclosed. I wouldn't say they're overly significant at this point in time.

John Franzreb, Analyst

Okay. I'll get back in queue. Thanks, guys.

Tom Ferguson, CEO

All right, John.

Operator, Operator

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

Thomas Ferguson, CEO

Hi, Noelle.

Operator, Operator

Pardon me, it seems Noelle Dilts has left. It seems that she has left the question queue. Our next question will come from John Braatz with Kansas City Capital. Please go ahead.

John Braatz, Analyst

Good morning, everyone. Tom, as you conduct your strategic review and consider becoming more of a Metal Coatings company, currently you have galvanizing and surface technology. What other areas could align with that strategy?

Tom Ferguson, CEO

I believe there are many types of coatings and plating processes, including anodizing. When we refer to coatings beyond just metal, we are expanding our focus because, based on our recent acquisitions, we are applying coatings to a wide range of materials, not just metals. This broadens our market significantly. Our challenge lies in identifying scalable opportunities that are unique and require advanced processes rather than simply setting up a basic paint shop. While the opportunities are plentiful, we have specific criteria due to our margin objectives and the need for differentiation. Additionally, there are ongoing galvanizing opportunities. For instance, we are finalizing a new spin plant in Houston, which we expect to be operational by the end of this month following delays caused by weather and COVID. We see this as a chance for organic growth. Furthermore, after acquiring Acme, which faced delays due to COVID, we are reconnecting with traditional galvanizing partnerships. Overall, we feel optimistic about these prospects.

John Braatz, Analyst

Okay, is there anything you can share regarding financial parameters and the size of potential opportunities you may be considering?

Tom Ferguson, CEO

We generally look for opportunities with revenue exceeding $10 million. Ideally, our target range is between $15 million and $25 million. However, our main focus is whether there is a competent operating leadership team in place. Unlike galvanizing, we are still in the process of developing our talent pool, so we are not yet in a position to easily replace team members as we do in galvanizing. Therefore, we exercise more caution regarding the leadership involved. Typically, we prefer situations where the owners step back. I should also mention what we are avoiding, which are companies with 5% EBIT and 15% EBITDA margins. These multi-site deals often have undergone many acquisitions, resulting in significant debt adjustment but limited operating income. This criterion helps narrow down our options, and despite that, we still have a robust pipeline of opportunities we're considering.

John Braatz, Analyst

Tom, one final question, just after December, I had a nice conversation with a fertilizer company here domestically, and we talked about a lot of things, but they talked about their turnaround season. And it's going to be sort of abbreviated for them just because of travel restrictions and so on and so forth. And I guess as you look at that spring turnaround season and the activity you're bidding on, and so on, is some of that still potentially at risk of being postponed or delayed, if you want to call it, because of this increase in COVID cases? Or are they sort of at this point locked in and it's going to happen?

Tom Ferguson, CEO

I think that, as I mentioned earlier, this gives us some pause in considering it as strong as we initially thought during the last earnings call. I believe some of this has to progress. We prefer to receive engineering orders, as that gives us insight into the project's scale and assurance that it is moving forward. It is quite rare that when we get engineering orders, they don't proceed. So yes, there are still some concerns. We're seeing some activity in January and February that we would typically see in the fall or in the spring. It appears that the petrochemical sector is spreading things out a bit, possibly due to low demand, allowing them to do so. Therefore, I suggest that this could lead to a longer season without a significant spike in the spring. However, this is beneficial for us as we have limitations on the number of crews we can deploy.

John Braatz, Analyst

Okay, all right. Tom, thanks very much. Appreciate it.

Operator, Operator

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

Noelle Dilts, Analyst

Yes, good morning.

Tom Ferguson, CEO

Hey, Noelle.

Noelle Dilts, Analyst

I'm not sure what went on before though, I didn't go anywhere. So I just wanted to start first on the demand side for Infrastructure Solutions, and a little bit more on the electrical side of the business. So sorry if I missed this, but could you just help me understand what's driving the stronger demand for switchgear than you were originally anticipating, and the degree to which you think that might be sustainable over the next few quarters?

Tom Ferguson, CEO

I believe the spending on transmission distribution has been positive, and there has also been good activity in solar power generation. The timing for some projects has reached a point where they require switchgear. Our acquisition of Oshkosh a couple of years ago allowed us to expand into more industrial switchgear, including light rail applications, which has increased our opportunities. We are not solely reliant on large utility-grade projects, even though that has been where we've seen good activity lately. Our performance is more about our specific customer base and focus, rather than indicating a broader growth in the sector. Regarding enclosures, larger OEM activity has decreased, but our work in industrial and smaller segments has remained solid. Overall, the situation is quite mixed.

Noelle Dilts, Analyst

Okay. I understand. Now, regarding Infrastructure Solutions and its profitability, it really surpassed my expectations this quarter. Considering that the industrial side's turnaround has been slow, could you share your thoughts on margins going forward? If, as you mentioned, the turnaround will continue to be somewhat muted in the future, do you believe the cost structure for that business is now flexible enough that it won't be as significant of a burden as it has been in previous quarters?

Tom Ferguson, CEO

Yes. You touched on a good point there, Noelle. We had taken pretty significant cost actions early, well, back in the spring, when we saw that the spring had been wiped out. So we took out some of that, hate to call it back office, but the SG&A in Infrastructure Solutions and adjusted capacity in some of the operations. So that as we came into the third quarter with just moderate activity or even muted activity, we were able to get to pretty good margins on the work that we did have, because of our lower cost structure. And as you know, though, that also then limits us on the upside when we have big opportunities, and as we originally were anticipating in the spring. So we do hope that it stretches out. I think the margin profile for Infrastructure Solutions, we continue to look at getting to that 10% to 12% operating margin, 15% EBITDA. And we think that's doable with the structure we have, and with the actions we're taking on the international side to try to improve our ability to serve the international markets with a lower cost structure.

Noelle Dilts, Analyst

Okay. Great. Shifting over to Metal Coating, do you have any comments on markets that were particularly strong or weak, and how changes in the markets are affecting your growth outlook for that business over the next 12 months?

Tom Ferguson, CEO

We have a strong appreciation for our Metal Coating division. The galvanizing team performed exceptionally, maintaining operations that were both productive and efficient, leading to margins exceeding 25%, possibly reaching around 26% for the quarter. This success can be attributed to the price-to-zinc cost ratio, as well as advancements we’ve made in technology with our digital galvanizing systems, which enhance efficiency and productivity by allowing us to optimize plant capacity and respond to real-time data. We are optimistic about the future as we complete this year; we have a clear perspective for the quarter and feel confident about the overall outcome for the year. Looking ahead to next year, our customers currently seem stable, though they are anticipating potential changes like corporate tax reform and an Infrastructure Bill, which could shift market sentiment. While we expect new competition to enter the market with a few new kettles coming online, we have also scaled back some of our plants. Overall, we feel positive about the supply-demand dynamics in galvanizing and trust our team's capability to adapt. I maintain confidence in sustaining margins above 23%. Although my COO of Metal Coating may not favor my stating that we could hover around 25%, they have shown they can achieve that.

Noelle Dilts, Analyst

Okay, perfect. Thank you very much.

Operator, Operator

Our next question will come from DeForest Hinman with Walthausen & Company. Please go ahead.

DeForest Hinman, Analyst

Hi, thanks for taking the questions. Just building on that last comment, can you extend that into pricing? You made reference to zinc pricing going up. Are we going to be able to move pricing directionally higher in 2021?

Tom Ferguson, CEO

I believe that since zinc costs account for about 25% of our cost of goods sold on average, it will typically influence the market price upward. We operate 40 galvanizing plants, each presenting unique challenges weekly. Our aim is to adjust our prices in response to rising costs. We have successfully communicated our value, which helped us maintain our pricing. This success is partly due to keeping our facilities fully operational and staffed during COVID, and that continues. Our intention is to keep increasing prices as our costs rise, and we hope the market will react to that before our competitors do.

DeForest Hinman, Analyst

Okay, very helpful. Just clarity in the 10-Q there's a reference to the Acme transaction, and it says net proceeds were $4.2 million. Is that a bargain purchase gain? Or is that just the way it's phrased, it was $4.2 million cash consideration?

Philip Schlom, CFO

That's a cash consideration.

DeForest Hinman, Analyst

Okay. And is that any type of EBITDA color there? Or is that kind of more of an asset type purchase price number there that we're seeing?

Philip Schlom, CFO

That's more of the asset purchase price, and as Thomas mentioned in the past year, we get in pretty quickly and we're able to integrate those facilities within the first three months. So we've already had a team up there on day one, integrating them into our Oracle business system and moving them into the AZZ way of doing things.

DeForest Hinman, Analyst

Okay. And then related to the deal that we just announced, there's continued commentary that we're working on deals. Can you give us any color in terms of expectations for closing within the next 6 to 12 months and then potentially the outlay that any type of these deals could entail?

Tom Ferguson, CEO

We have been working on some deals that we thought would close, but I cannot guarantee anything will be completed within a specific timeframe. We primarily engage in face-to-face deals, and we have a long-standing relationship with the Acme team. There are also several other opportunities where we have established relationships. I hope that we can advance those in the early part of the year, but there are many variables to consider. Typically, we manage to complete a couple of deals each year. This year, we focused on divestitures early on and only completed one acquisition. For the upcoming fiscal year, I expect we will return to our usual pattern of completing a couple or three acquisitions. However, I cannot specify whether they will occur in the first half or the second half of the year.

DeForest Hinman, Analyst

Okay, that's helpful. And last question, can you just give us an update on the outlook for utilizing the share repurchase authorization? Pretty active in the third quarter, I think, at the high 30s share price execution, the markets responded well to the strategic review and the market's been moving up generally. Does the current share price dampen our expectations of utilizing the share repurchase authorization when we're starting to think about capital deployment as it relates to buying our own stock or doing acquisitions?

Philip Schlom, CFO

That's a really good question. This is Philip, and one thing we're doing is going through a comprehensive review. As part of that review, we're assessing the valuation of AZZ and its components, as well as opportunities for further purchases. We have Board authorization of $100 million to allocate, based on M&A activity. We'll evaluate how we use capital overall.

Tom Ferguson, CEO

Yes, and I want to add, we had a 10b5-1 in place for the quarter. And one of the things we had not anticipated was that the rapid run-up in our share price. And so we did outstrip it in the latter part of the quarter. So that's the kind of thing that maybe dampened our activity right at the end of the quarter, but those are the things we will look at. As Philip said, we've got a Board meeting coming up. We've got an update on the evaluation activities and one of those was looking at valuation. So just in the next couple of weeks we'll have a better idea which direction we're going to go.

DeForest Hinman, Analyst

Okay, thank you for the color. I appreciate your time.

Tom Ferguson, CEO

Thank you.

Operator, Operator

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

John Franzreb, Analyst

Yes, Tom, I think you said in your remarks, that while you continue to suspend guidance that you're going to revisit it once you go through your budgetary process. Does that mean you'll be issuing guidance sometime this month like you had in the past or not?

Tom Ferguson, CEO

We would hope to. The only thing that gives me any pause is we do have this ongoing strategic evaluation activity. And I just want to make sure, we don’t put guidance out for 2022 and then two weeks later announce a strategic move. So that would be my only cautionary note. Other than that it would be our intent to get back into cadence.

John Franzreb, Analyst

Got it, and just on the strategic review and the potential sales, the Infrastructure business, what's the current likelihood of it being sold as a whole unit or being sold in piecemeal?

Tom Ferguson, CEO

We're not at that point in the evaluation yet for me to handicap that, to be honest.

John Franzreb, Analyst

Okay, I gave it a shot. Okay, thank you.

Tom Ferguson, CEO

All right, John.

Operator, Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Tom Ferguson for any closing remarks. Please go ahead, sir.

John Franzreb, Analyst

We appreciate everyone joining the call today. David Nark is available if you wish to discuss anything further. We are eager to finish the year strong and announce the outcomes of our strategic evaluations. We look forward to speaking with you at the end of the fiscal year, hopefully with positive news. Thank you very much.

Operator, Operator

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