FORT WORTH, Texas, July 5, 2016 /PRNewswire/ -- AZZ Inc.
(NYSE:AZZ), a global provider of galvanizing services, welding
solutions, specialty electrical equipment and highly engineered
services, today announced financial results for the three month
period ended May 31, 2016.
Management Discussion
Tom Ferguson, president and chief
executive officer of AZZ Inc., commented, "The financial results
for the first quarter were solid reflecting the operational
performance of our two business segments. We are particularly
pleased with the 13.8% revenue growth and the 10% increase in
operating income in our galvanizing business, the 1.03 book-to-ship
ratio of our overall business, and the 11% increase in the backlog
at the end of the first quarter as compared to the first quarter
last year. We are also pleased with the 104% increase in the
operating cash flow versus last year's comparable quarter. Given
the mixed market dynamics that we currently face, our sales teams
are doing a great job."
"In the Energy Segment," continued Mr. Ferguson, "our
acquisition of PEI, at the start of the just completed quarter, is
doing very well, and we expect it to be accretive to earnings
during the fiscal year. We continue to see domestic
opportunities for growth during the fiscal year, despite the fact
that lower oil prices are having a moderate impact on both our
Energy and Galvanizing businesses. Looking ahead, we believe that
our industry leading products and services uniquely positions AZZ
to benefit from a number of international opportunities in the
coming quarters. We remain focused on leveraging our sales teams;
expanding our markets internationally; driving operational
excellence and maintaining an active M&A program, while seeking
to better focus our platforms around their core products and
markets."
Mr. Ferguson, concluded, "We expect fiscal 2017 to be a solid
year and we are reaffirming our guidance for fiscal 2017 EPS in the
range of $3.15 to $3.45 per diluted
share and revenues in the range of $930
million to $970 million. As we discussed in our
previous earnings call, we expect our results to be weighted
towards the second half of the year."
First Quarter Results
Revenues for the first quarter of fiscal 2017 were $242.7 million compared to $228.9 million for the same quarter last year, an
increase of 6.0%. Net income for the first quarter increased 5.7%
to $21.1 million, or $0.81 per diluted share, compared to net income
of $19.9 million, or $0.77 per diluted share, for the first quarter of
fiscal 2016.
Earnings for the first quarter of fiscal 2017 were positively
impacted by an improved gross margin of 26.1% compared to 25.9% in
the first quarter of fiscal 2016. SG&A as a percentage of
sales rose to 11.9% compared to 11.5% in the first quarter of
fiscal 2017. Additionally, the effective tax rate slightly
decreased to 31.6% in the current quarter compared to 31.7% in the
first quarter of the prior year.
Incoming orders for the quarter were $250.5 million while shipments for the quarter
totaled $242.7 million, resulting in
a book to ship ratio of 1.03. In the first quarter of fiscal
2016, incoming orders were $215.2
million, resulting in a book to ship ratio of 0.94. Our
backlog at the end of the first quarter of fiscal 2017 increased
11% to a record $354.2 million
compared to backlog at the end of the prior year first quarter of
$318.9 million. Approximately 25% of
the backlog is expected to be delivered outside the U.S.
Energy Segment
Revenues for the Energy Segment for the first quarter of fiscal
2017 were $138.1 million as compared
to $137.0 million for the same
quarter last year, increasing 0.8%. Operating income for the
segment increased 4.4% to $18.8
million compared to $18.0
million in the same period last year. Operating margins for
the first quarter rose to 13.6% as compared to 13.1% in the prior
year period. Revenues and operating income were moderately
affected as a result of a wildfire-related demobilization from a
large project in Canada during the
first quarter at our WSI business.
Galvanizing Segment
Revenues for the Galvanizing Segment for the first quarter were
$104.6 million, compared to the
$91.9 million in the same period last
year, an increase of 13.8%. Operating income for
the segment increased 10.0% to $24.3
million compared to $22.1
million in the prior year first quarter. Operating margins
for the first quarter were 23.2%, compared to 24.0% in the same
period last year. Increases in revenues, operating incomes, and the
reduction in operating margin all were primarily driven by the
effects of the acquisition of U.S. Galvanizing at the beginning of
the second quarter in the last fiscal year.
Announces Dividend
AZZ also announced today that its Board of Directors has
authorized a quarterly cash dividend in the amount of $0.15 per share on the company's outstanding
shares of common stock. The dividend is payable on August 1, 2016, to shareholders of record as of
the close of business on July 18,
2016.
Conference Call
AZZ Inc. will conduct a conference call to discuss financial
results for the first quarter of fiscal year 2017 at 11:00 A.M. ET on Tuesday,
July 5, 2016. Interested parties may access the
conference call by dialing (844) 855-9499 or (412) 317-5497
(international). The call will be webcast via the Internet at
http://www.azz.com/investor-relations. A replay of the call
will be available for three days following the call at (877)
344-7529 or (412) 317-0088 (international), confirmation #10088153,
or for 30 days at http://www.azz.com/investor-relations.
About AZZ Inc.
AZZ Inc. is a global provider of galvanizing services, welding
solutions, specialty electrical equipment and highly engineered
services to the markets of power generation, transmission,
distribution and industrial in protecting metal and electrical
systems used to build and enhance the world's infrastructure. AZZ
Galvanizing is a leading provider of metal finishing solutions for
corrosion protection, including hot dip galvanizing to the North
American steel fabrication industry. AZZ Energy is dedicated to
delivering safe and reliable transmission of power from generation
sources to end customers, and automated weld overlay solutions for
corrosion and erosion mitigation to critical infrastructure in the
energy markets worldwide.
Safe Harbor Statement
Certain statements herein about our expectations of
future events or results constitute forward-looking statements for
purposes of the safe harbor provisions of The Private Securities
Litigation Reform Act of 1995. You can identify forward-looking
statements by terminology such as, "may," "should," "expects,"
"plans," "anticipates," "believes," "estimates," "predicts,"
"potential," "continue," or the negative of these terms or other
comparable terminology. Such forward-looking statements are based
on currently available competitive, financial and economic data and
management's views and assumptions regarding future events. Such
forward-looking statements are inherently uncertain, and investors
must recognize that actual results may differ from those expressed
or implied in the forward-looking statements. This release may
contain forward-looking statements that involve risks and
uncertainties including, but not limited to, changes in customer
demand and response to products and services offered by AZZ,
including demand by the power generation markets, electrical
transmission and distribution markets, the industrial markets, and
the hot dip galvanizing markets; prices and raw material cost,
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, foreign
and domestic, customer requested delays of shipments, acquisition
opportunities, currency exchange rates, adequacy of financing, and
availability of experienced management and employees to implement
AZZ's growth strategy. AZZ has provided additional information
regarding risks associated with the business in AZZ's Annual Report
on Form 10-K for the fiscal year ended February 29, 2016 and other filings with the SEC,
available for viewing on AZZ's website at www.azz.com and on
the SEC's website at www.sec.gov. You are urged to consider
these factors carefully in evaluating the forward-looking
statements herein and are cautioned not to place undue reliance on
such forward-looking statements, which are qualified in their
entirety by this cautionary statement. 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.
Contact:
|
Paul Fehlman, Senior
Vice President - Finance and CFO
|
|
AZZ Inc.
817-810-0095
|
|
Internet: www.azz.com
|
|
|
|
Lytham Partners
602-889-9700
|
|
Joe Dorame or Robert
Blum
|
|
Internet:
www.lythampartners.com
|
AZZ
Inc.
|
Condensed
Consolidated Statement of Income
|
(in thousands, except
per share data)
|
|
|
Three Months
Ended
|
|
May 31,
2016
|
|
May 31,
2015
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
Net sales
|
$
|
242,667
|
|
|
$
|
228,888
|
|
Costs of
Sales
|
179,340
|
|
|
169,584
|
|
Gross Margin
|
63,327
|
|
|
59,304
|
|
|
|
|
|
Selling, General and
Administrative
|
28,819
|
|
|
26,419
|
|
Operating Income
|
34,508
|
|
|
32,885
|
|
|
|
|
|
Interest
Expense
|
3,925
|
|
|
3,847
|
|
Net Gain on Sales
or Insurance Settlement of
Property, Plant and
Equipment
|
(110)
|
|
|
(424)
|
|
Other (Income),
net
|
(122)
|
|
|
307
|
|
Income before income
taxes
|
30,815
|
|
|
29,155
|
|
Income Tax
Expense
|
9,752
|
|
|
9,231
|
|
Net income
|
$
|
21,063
|
|
|
$
|
19,924
|
|
Net income per
share
|
|
|
|
Basic
|
$
|
0.81
|
|
|
$
|
0.77
|
|
Diluted
|
$
|
0.81
|
|
|
$
|
0.77
|
|
Diluted average shares
outstanding
|
26,043
|
|
|
25,862
|
|
Segment
Reporting
|
(in
thousands)
|
|
|
Three Months
Ended
|
|
May 31,
2016
|
|
May 31,
2015
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
Net Sales:
|
|
|
|
Energy
|
138,102
|
|
|
$
|
137,003
|
|
Galvanizing
|
104,565
|
|
|
91,885
|
|
|
242,667
|
|
|
$
|
228,888
|
|
|
|
|
|
Segment Operating
Income :
|
|
|
|
Energy
|
18,753
|
|
|
$
|
17,956
|
|
Galvanizing
|
24,302
|
|
|
22,094
|
|
Corporate
|
(8,547)
|
|
|
(7,165)
|
|
Total
Segment Operating Income
|
34,508
|
|
|
$
|
32,885
|
|
Condensed
Consolidated Balance Sheet
|
(in
thousands)
|
|
|
May 31,
2016
|
|
February 29,
2016
|
|
(unaudited)
|
|
|
|
|
|
|
Assets:
|
|
|
|
Current
Assets
|
$
|
316,633
|
|
|
$
|
309,334
|
|
Net Property, Plant
and Equipment
|
230,165
|
|
|
226,333
|
|
Other Assets,
Net
|
463,810
|
|
|
446,343
|
|
Total
Assets
|
$
|
1,010,608
|
|
|
$
|
982,010
|
|
|
|
|
|
Liabilities and
Shareholders' Equity:
|
|
|
|
Current
Liabilities
|
$
|
154,586
|
|
|
$
|
148,405
|
|
Long Term Debt Due
After One Year
|
300,932
|
|
|
302,429
|
|
Other
Liabilities
|
52,200
|
|
|
49,960
|
|
Shareholders'
Equity
|
502,890
|
|
|
481,216
|
|
Total Liabilities and
Shareholders' Equity
|
$
|
1,010,608
|
|
|
$
|
982,010
|
|
Condensed
Consolidated Statements of Cash Flows
|
(in
thousands)
|
|
|
Three Months
Ended
|
|
May 31,
2016
|
|
May 31,
2015
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
9,637
|
|
|
$
|
4,722
|
|
Net cash used in
investing activities
|
(33,055)
|
|
|
(6,208)
|
|
Net cash provided by
(used in) financing activities
|
(4,817)
|
|
|
25,237
|
|
Effect of exchange
rate changes on cash
|
119
|
|
|
(514)
|
|
Net increase
(decrease) in cash and cash equivalents
|
$
|
(28,116)
|
|
|
$
|
23,237
|
|
Cash and cash
equivalents at beginning of period
|
40,191
|
|
|
22,527
|
|
Cash and cash
equivalents at end of period
|
$
|
12,075
|
|
|
$
|
45,764
|
|
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SOURCE AZZ Inc.