For the three months - Revenues, Net Income, Earnings per share and
Backlog all achieved record highs FORT WORTH, Texas, Sept. 26
/PRNewswire-FirstCall/ -- AZZ incorporated (NYSE:AZZ), a
manufacturer of electrical products and a provider of galvanizing
services today announced unaudited financial results for the three
and six-month periods ended August 31, 2008. Revenues for the
second quarter increased 27 percent to a record setting level of
$103.3 million, compared to $81.6 million for the same period last
year. Net income for the second quarter increased 39 percent to
$11.3 million, or $0.92 per diluted share, compared to net income
of $8.1 million, or $0.66 per diluted share, in last year's fiscal
second quarter. For the six-month period, the Company reported
revenues of $203.2 million, an increase of 29 percent compared to
$157 million for the comparable period last year. Net income for
the six months rose 75 percent to record setting level of $21.4
million, or $1.74 per diluted share, compared to $12.3 million, or
$1.01 per diluted share for the comparable six-month period last
year. The acquisitions of AAA Galvanizing on April 1, 2008 and
Blenkhorn and Sawle on July 1, 2008 are included in the financial
results for the six-month period of fiscal 2009. Backlog at the end
of our second quarter ending August 31, 2008, was the highest in
company history at $190.8 million versus $149.2 million at August
31, 2007, an increase of 28 percent. Backlog at our February 29,
2008 year- end and our first quarter of fiscal 2009 was $134.9
million and $141.8 million, respectively. Incoming orders for the
second quarter totaled $139.1 million while shipments totaled
$103.3 million resulting in a book to ship ratio of 135 percent.
For the first six months, orders totaled $245.9 million while
shipments totaled $203.2 million, resulting in a year-to-date book
to ship ratio of 121 percent. Incoming orders for the first six
months increased 33 percent when compared to the same period a year
ago. Based upon current customer requested delivery dates and our
planned production schedule, 60 percent of our backlog is expected
to ship in the current fiscal year. Of our $190.8 million backlog,
29 percent is to be delivered outside of the U.S. Revenues for the
Electrical and Industrial Products Segment increased 15 percent to
$52 million for the second quarter ending August 31, 2008, compared
to $45.2 million in the previous year's second quarter. Operating
income for the second quarter ending August 31, 2008, was $9.8
million, compared to $7.9 million in the second quarter of last
year, an increase of 23 percent. Operating margins were 19 percent
for the second quarter ending August 31, 2008. For the first six
months, revenues increased 21 percent to $104 million and operating
income increased 24 percent to $17.7 million compared to $86
million and $14.3 million, respectively, for the first six months
of the prior year. Operating margin for the first six months was 17
percent. David H. Dingus, president and chief executive officer,
commented, "The operating results for our Electrical and Industrial
Products Segment continued at a very strong pace. The strong demand
for our products led to an outstanding level of orders with
strength in both the domestic and international markets. We are now
operating with a record backlog and are pleased with the balance
between our product offerings and the product destination
geography. The power generation, transmission and distribution
markets continued to expand and our industrial markets remained
strong. Our backlog for the quarter was also positively impacted as
a result of the backlog associated with the Blenkhorn and Sawle
acquisition in Canada. This impact was approximately $13 million.
The quarterly shipments were moderately adversely impacted by some
capacity constraints of our vendors and delays in receipt of
customer engineering specifications, which resulted in some
scheduled shipments moving from the second quarter to the third
quarter. The domestic and international quotation and inquiry
activity continues to be good. Our challenge is to continue to seek
out every opportunity to expand our served markets and add to our
product offerings." Revenues for the Company's Galvanizing Service
Segment increased 41 percent to $51.3 million for the second
quarter ending August 31, 2008, compared to $36.5 million in the
previous year's comparable quarter. Operating income for this
segment was $15.5 million, compared to $9.2 million in the same
quarter last year, an increase of 68 percent. Operating margins for
the second quarter ending August 31, 2008 were 30 percent. The
quarterly results do reflect the positive impact of an insurance
settlement related to a fire at one of our facilities. This
resulted in a gain of $1.3 million pre tax and is included in the
operating income. Without this gain, operating margins would be 28
percent as compared to 25 percent in the prior year second quarter
period. For the first six months of fiscal 2009, revenues increased
40 percent to $99.3 million, and operating income increased 62
percent to $28.8 million, compared to $71 million and $17.8
million, respectively, for the first six months of the prior year.
AAA Galvanizing acquired on April 1, 2008, contributed $21.8
million to our total six months revenues. Our revenues generated
from our historical operations prior to the acquisition of AAA for
the first six months period increased 9 percent. Volume of steel
processed increased 12 percent, while average selling price
decreased 2 percent as compared to the same six months period in
the prior year. Mr. Dingus continued, "Robust market demand for our
galvanizing services has positively impacted our ability to
maximize our operating results. The assimilation of the
acquisitions is going extremely well and demand has remained
excellent. Pricing pressures may increase due to changes in demand
brought about by economic conditions or the increased cost of
steel. These issues combined with the seasonal winter impact on our
North Central U.S. facilities may result in lower fourth quarter
demand. The strategic actions that we have taken in this segment
over the past few years has broadened our customer base and we
believe it will continue to help us to offset some portion of any
economic weakness we may encounter in a particular market area. Our
expanded geographic presence combined with our firm commitment to a
superior level of service and support should enable us to continue
to report good results for this segment for the balance of our
fiscal year that are above our historical 18 to 22 percent
operating margins. As long as demand remains strong, we do not
anticipate significant pricing pressures. While our zinc cost has
decreased, other operating materials and natural gas have
increased, requiring us to continue to strive to maintain pricing
in order to fully recover these costs." Mr. Dingus concluded,
"Based upon the evaluation of information currently available to
management, we are increasing our previously issued guidance for
fiscal year 2009. Our earnings are estimated to be within the range
of $3.25 and $3.35 per diluted share and revenues to be within the
range of $420 to $430 million. Our estimates assume that we will
not have any significant delays in the delivery of our electrical
and industrial products, or that there will not be a significant
change in galvanizing demand, pricing or any further adverse
weather conditions prior to the fourth quarter of fiscal 2009." AZZ
incorporated will conduct a conference call to discuss financial
results for the second quarter of fiscal 2009 at 11:00 a.m. ET on
September 26, 2008. Interested parties can access the call by
dialing (877) 356-5706 or (706) 643-0580 (international). The call
will be web cast via the Internet at
http://www.azz.com/AZZinvest.htm. A replay of the call will be
available for three days at (800) 642-1687, or (706) 645-9291
(international) confirmation #63934934, or for 30 days at
http://www.azz.com/AZZinvest.htm. AZZ incorporated is a specialty
electrical equipment manufacturer serving the global markets of
industrial, power generation, transmission and distributions, as
well as a leading provider of hot dip galvanizing services to the
steel fabrication market nationwide. Except for the statements of
historical fact, this release may contain forward-looking
statements that involve risks and uncertainties some of which are
detailed from time to time in documents filed by the Company with
the SEC. Those risks and uncertainties include, but are not limited
to: changes in customer demand and response to products and
services offered by the company, including demand by the electrical
power generation markets, electrical transmission and distribution
markets, the industrial markets, and the hot dip galvanizing
markets; prices and raw material costs, including zinc and natural
gas which are used in the hot dip galvanizing process; changes in
the economic conditions of the various markets the Company serves,
foreign and domestic, customer requested delays of shipments,
acquisition opportunities, adequacy of financing, and availability
of experienced management employees to implement the Company's
growth strategy. The Company can give no assurance that such
forward-looking statements will prove to be correct. We undertake
no obligation to affirm, publicly update or revise any
forward-looking statements, whether as a result of information,
future events or otherwise. Condensed financial tables on attached
page AZZ incorporated Condensed Consolidated Statement of Income
(in thousands except per share amounts) Three Months Ended Six
Months Ended August 31, August 31, August 31, August 31, 2008 2007
2008 2007 (unaudited) (unaudited) (unaudited) (unaudited) Net sales
$103,260 $81,606 $203,218 $156,983 Costs and Expenses: Cost of
Sales 73,782 60,365 147,472 116,574 Selling, General and
Administrative 11,372 8,363 21,229 20,367 Interest Expense 1,682
384 2,802 919 Net (Gain) Loss on Sales or Insurance Settlement of
Property, Plant and Equipment (1,148) (2) (1,145) 1 Other (Income)
(579) (361) (1,063) (556) Other Expense $85,109 $68,749 $169,295
$137,305 Income before income taxes 18,151 $12,857 $33,923 $19,678
Income Tax Expense 6,847 4,735 12,497 7,410 Net income $11,304
$8,122 $21,426 $12,268 Net income per share Basic $0.93 $.67 $1.77
$1.03 Diluted $0.92 $.66 $1.74 $1.01 Diluted average shares
outstanding 12,345 12,277 12,317 12,151 Segment Reporting (in
thousands) Three Months Ended Six Months Ended August 31, August
31, August 31, August 31, 2008 2007 2008 2007 (unaudited)
(unaudited) (unaudited) (unaudited) Net Sales: Electrical and
Industrial Products $51,959 $45,150 $103,965 $86,023 Galvanizing
Services 51,301 36,456 99,253 70,960 $103,260 $81,606 $203,218
$156,983 Segment Operating Income (a): Electrical and Industrial
Products $9,797 $7,942 $17,729 $14,286 Galvanizing Services 15,478
9,230 28,836 17,841 Total Segment Operating Income $25,275 $17,172
$46,565 $32,127 Condensed Consolidated Balance Sheet (in thousands)
August 31, February 29, 2008 2008 (unaudited) (audited) Assets:
Current assets $157,381 $102,995 Net property, plant and equipment
$83,831 $48,285 Other assets, net $88,360 $42,039 Total assets
$329,572 $193,319 Liabilities and shareholders' equity: Current
liabilities $55,114 $42,696 Long term debt due after one year
$100,000 $- Other liabilities $6,208 $4,467 Shareholders' equity
$168,250 $146,156 Total liabilities and shareholders' equity
$329,572 $193,319 Condensed Consolidated Statement of Cash Flows
(in thousands) Six Months Ended August 31, August 31, 2008 2007
(unaudited) (unaudited) Net cash provided by (used in) operating
activities $12,593 $15,085 Net cash provided by (used in) investing
activities ($102,364) ($5,961) Net cash provided by (used in)
financing activities $100,104 ($8,963) Effect of exchange rate
changes on cash ($42) $- Net increase (decrease) in cash and cash
equivalents $10,290 $161 Cash and cash equivalents at beginning of
period $2,227 $1,703 Cash and cash equivalents at end of period
$12,517 $1,864 Contact: Dana Perry, Senior Vice President - Finance
and CFO AZZ incorporated 817-810-0095 Internet: http://www.azz.com/
Lytham Partners 602-889-9700 Joe Dorame or Robert Blum Internet:
http://www.lythampartners.com/ DATASOURCE: AZZ incorporated
CONTACT: Dana Perry, Senior Vice President - Finance and CFO of AZZ
incorporated, +1-817-810-0095; or Joe Dorame or Robert Blum, both
of Lytham Partners, +1-602-889-9700, for AZZ incorporated Web site:
http://www.azz.com/ http://www.lythampartners.com/
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