FORT WORTH, Texas, July 3, 2018 /PRNewswire/ -- AZZ Inc. (NYSE:AZZ),
a global provider of metal coatings services, welding solutions,
specialty electrical equipment and highly engineered services,
today announced financial results for the three month period ended
May 31, 2018.
Management Discussion
Tom Ferguson, president and chief
executive officer of AZZ Inc., commented, "I am pleased to announce
that we have started off fiscal year 2019 on a positive note, with
27.7% revenue growth year-over-year driven by strength in both our
Energy and Metal Coatings segments. Overall, our bookings
were up strongly in the quarter, growing to $320.5 million compared to $193.8 million in the first quarter last year. We
booked some larger electrical projects in China, executed on meaningful refinery
projects both domestically and internationally, and saw renewed
demand in our metal coating segment that resulted in record
quarterly sales of $115.3
million. The increase in bookings establishes a solid
base of backlog to support our plan for the balance of this fiscal
year."
"Metal Coatings segment revenue was up compared to the first
quarter of last year. Operating margins were 21.9%,
recovering sequentially from the 18.5% operating margin in the
fourth quarter of fiscal 2018," Ferguson noted. "We are pleased
with the operating results, and we recognize that there are still
headwinds in the galvanizing market due to both zinc and labor
costs, but I am cautiously optimistic for this year. We believe
that our Metal Coatings segment is well positioned for new revenue
streams with our new powder coating facility in Crowley, Texas, as well as our two most recent
Metal Coatings acquisitions of Enhanced Powder Coating, and
Rogers Brothers Galvanizing. In addition, our new operation
for AZZ's GalvaBar™ continuous galvanized rebar business is gaining
traction."
Mr. Ferguson continued, "I am particularly happy to see our
Energy segment's Welding Solutions group execute on several
domestic refinery turnarounds, as well as several larger projects
overseas. We are committed and focused on delivering organic
growth and driving operational efficiencies including additional
metal coatings offerings to drive future sales and maintaining an
active M&A program to support our strategic growth
initiatives. Looking forward, we are reaffirming our
previously issued fiscal 2019 guidance of earnings per share in the
range of $1.75 to $2.25 per diluted share and annual sales in the
range of $900 million to $960 million. While we are somewhat optimistic at
this point, we remain cautious due to the uncertainty related to
tariffs and the Chinese trade situation, as well as the tighter
market for craft labor."
First Quarter Results
Revenues for the first quarter of fiscal year 2019 were
$262.2 million compared to
$205.3 million for the same quarter
last year, an increase of 27.7%. Net income for the first quarter
increased 30.3% to $15.7 million, or
$0.60 per diluted share, compared to
net income of $12.1 million, or
$0.46 per diluted share, for the
first quarter of fiscal year 2018.
Gross margins for the first quarter of fiscal year 2019 were
22.4% compared to 23.1% in the first quarter of last year.
Operating margins were 9.0% compared to 9.8% the first quarter of
fiscal year 2018 as SG&A as a percentage of sales rose to 13.4%
of sales compared to 13.3% of sales in the prior year.
Additionally, the effective tax rate decreased to 22.0% in the
current quarter compared to 28.4% in the first quarter of the prior
year.
Incoming orders for the quarter were $320.5 million while shipments for the quarter
totaled $262.2 million, resulting in
a book to ship ratio of 1.22. In the first quarter of fiscal
year 2018 incoming orders were $193.8
million, resulting in a book to ship ratio of 0.94. Our
backlog at the end of the first quarter of fiscal year 2019
increased 7.6% to $329.7 million
compared to $306.4 million for the
first quarter of last year. Approximately 43% of the current
backlog is expected to be delivered outside the U.S., compared to
41% in the first quarter of fiscal year 2018.
Energy Segment
Revenues for the Energy segment for the first quarter of fiscal
year 2019 were $147.0 million as
compared to $113.2 million for the
same quarter last year, an increase of 29.8%. Gross profit rose
29.9% to $29.6 million compared to
$22.8 million for the same period
last year, with flat gross margins of 20.1% in both periods.
Operating income for the Energy segment increased 48.4% to
$10.0 million compared to
$6.7 million for the same period last
year. Operating margins for the first quarter of fiscal year 2019
rose to 6.8% as compared to 5.9% in the prior year period primarily
as a result of lower SG&A as a percentage of sales.
Sequentially, operating margins improved 560 basis points from 1.2%
in the fourth quarter of fiscal 2018.
Metal Coatings Segment
Revenues for the Metal Coatings segment for the first quarter of
fiscal year 2019 were a record $115.3
million, compared to the $92.1
million for the same period of last year, an increase of
25.2%. Gross profit rose 18.4% to $29.2
million from $24.6 million in
the same quarter last year, driving gross margins of 25.3% compared
to 26.7% in the same quarter last year. Operating income was
$25.2 million as compared to
$21.2 million in the first quarter
last year. As a result, operating margins for the first quarter of
fiscal year 2019 decreased slightly to 21.9%, compared to 23.1% in
the same period last year, and sequentially up from 18.5% operating
margin in the fourth quarter of fiscal 2018.
Conference Call
AZZ Inc. will conduct a conference call to discuss financial
results for the first quarter of fiscal year 2019 at 11:00 A.M. ET on Tuesday, July 3, 2018.
Interested parties can 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 at (877) 344-7529 or (412)
317-0088 (international), confirmation # 10121541, or for 30 days
at http://www.azz.com/investor-relations.
About AZZ Inc.
AZZ Inc. is a global provider of metal coatings 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 Metal Coatings 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 metal coatings 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 28,
2018 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, Robert
Blum or Joe Diaz
|
|
Internet:
www.lythampartners.com
|
|
|
|
|
---Financial
tables on the following page---
|
|
|
|
AZZ
Inc.
|
Condensed
Consolidated Statements of Income
|
(in thousands, except
per share data)
|
(unaudited)
|
|
|
|
Three Months
Ended
|
|
May 31,
2018
|
|
May 31,
2017
|
|
|
|
|
Net sales
|
$
|
262,236
|
|
|
$
|
205,283
|
|
Costs of
sales
|
203,531
|
|
|
157,901
|
|
Gross margin
|
58,705
|
|
|
47,382
|
|
|
|
|
|
Selling, general and
administrative
|
35,009
|
|
|
27,359
|
|
Operating income
|
23,696
|
|
|
20,023
|
|
|
|
|
|
Interest
expense
|
3,838
|
|
|
3,360
|
|
Other income,
net
|
(291)
|
|
|
(185)
|
|
Income before income
taxes
|
20,149
|
|
|
16,848
|
|
Income tax
expense
|
4,431
|
|
|
4,786
|
|
Net income
|
$
|
15,718
|
|
|
$
|
12,062
|
|
Earnings per common
share
|
|
|
|
Basic
|
$
|
0.60
|
|
|
$
|
0.46
|
|
Diluted
|
$
|
0.60
|
|
|
$
|
0.46
|
|
|
|
|
|
Diluted average
shares outstanding
|
26,034
|
|
|
26,093
|
|
|
|
|
AZZ
Inc.
|
Segment
Reporting
|
(in
thousands)
|
(unaudited)
|
|
|
|
Three Months
Ended
|
|
May 31,
2018
|
|
May 31,
2017
|
|
|
|
|
Net sales:
|
|
|
|
Energy
|
$
|
146,986
|
|
|
$
|
113,206
|
|
Metal
Coatings
|
115,250
|
|
|
92,077
|
|
|
$
|
262,236
|
|
|
$
|
205,283
|
|
|
|
|
|
Segment operating
income (loss):
|
|
|
|
Energy
|
$
|
9,958
|
|
|
$
|
6,711
|
|
Metal
Coatings
|
25,184
|
|
|
21,242
|
|
Corporate
|
(11,446)
|
|
|
(7,930)
|
|
|
$
|
23,696
|
|
|
$
|
20,023
|
|
|
|
|
AZZ
Inc.
|
Condensed
Consolidated Balance Sheets
|
(in
thousands)
|
(unaudited)
|
|
|
|
|
|
May 31,
2018
|
|
February 28,
2018
|
|
|
|
|
Assets:
|
|
|
|
Current
assets
|
$
|
375,370
|
|
|
$
|
329,154
|
|
Net property, plant
and equipment
|
214,341
|
|
|
216,855
|
|
Other assets,
net
|
480,473
|
|
|
482,200
|
|
Total
assets
|
$
|
1,070,184
|
|
|
$
|
1,028,209
|
|
|
|
|
|
Liabilities and
shareholders' equity:
|
|
|
|
Current
liabilities
|
$
|
126,900
|
|
|
$
|
131,739
|
|
Long term debt due
after one year, net
|
322,146
|
|
|
286,609
|
|
Other
liabilities
|
44,738
|
|
|
44,658
|
|
Shareholders'
equity
|
576,400
|
|
|
565,203
|
|
Total liabilities and
shareholders' equity
|
$
|
1,070,184
|
|
|
$
|
1,028,209
|
|
|
|
|
AZZ
Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(in
thousands)
|
(unaudited)
|
|
|
|
Three Months
Ended
|
|
May 31,
2018
|
|
May 31,
2017
|
|
|
|
|
Net cash used in
operating activities
|
$
|
(12,366)
|
|
|
$
|
(15,804)
|
|
Net cash used in
investing activities
|
(10,847)
|
|
|
(9,970)
|
|
Net cash provided by
financing activities
|
16,796
|
|
|
20,890
|
|
Effect of exchange
rate changes on cash
|
(498)
|
|
|
(81)
|
|
Net increase
(decrease) in cash and cash equivalents
|
$
|
(6,915)
|
|
|
$
|
(4,965)
|
|
Cash and cash
equivalents at beginning of period
|
20,853
|
|
|
11,302
|
|
Cash and cash
equivalents at end of period
|
$
|
13,938
|
|
|
$
|
6,337
|
|
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SOURCE AZZ Inc.