FORT WORTH, Texas, May 20, 2019 /PRNewswire/ -- AZZ Inc.
(NYSE: AZZ), a global provider of metal coating solutions,
welding solutions, specialty electrical equipment and highly
engineered services, today announced that it issued on May 17, 2019 its 2019 audited consolidated
financial statements contained in the Company's Fiscal Year 2019
Annual Report on Form 10-K for the year ended February 28, 2019.
Management Discussion
Tom Ferguson, president and chief
executive officer of AZZ, said, "In Fiscal 2019 we achieved solid
double-digit year-over-year growth for both top- and bottom-lines,
while posting our 32nd consecutive year of
profitability. We experienced a resurgence in demand for
galvanizing services, refinery turnarounds, and an increase in
international projects for the Energy Segment, which generated
revenue growth of 14% and a 13% increase in net income. Our
consolidated bookings for the year increased 32% to $988.6 million and our backlog increased 25% to
$332.9 million; driving our book to
revenue ratio to 1.07 versus .92 in the previous year. We have a
strong cash flow business that for the year generated $114.7 million of net cash provided by operating
activities, an increase of 45%."
"During the year, we continued to develop our end-markets as we
integrated acquisitions made during the prior year: Powergrid
Solutions, Inc., Enhanced Powder Coating Ltd., and Rogers Brothers
Company, a business specializing in spinner galvanizing. We
successfully acquired the assets of Lectrus out of bankruptcy in
March 2018, another enclosure
business for our Energy segment. Also, during the past month we
acquired K2 Partners Inc. and Tennessee Galvanizing Inc. to add to
our Metal Coatings business. As discussed throughout the year, our
investments in digital galvanizing systems (DGS) are paying off,
and our powder coating and galvanized rebar businesses, that we
recently entered, continue to grow."
Throughout the year we encountered moderate cyclical headwinds
in commodity prices, labor costs and the continuing secular
downturn in the domestic nuclear business. We were
disappointed in our fourth quarter results, which was impacted by a
delay in shipping the first part of a major order from our
high-voltage bus business into China. However, we commenced shipping this
order during the first quarter of fiscal 2020 which began on
March 1, 2019. Our Specialty
Welding business had several key opportunities delayed, with most
expected to begin during fiscal 2020. We are also
experiencing a normal level of turnaround activity this
spring. Zinc costs in our kettles did not decline as quickly
as we expected, creating a drag on margins in our galvanizing
during the quarter."
"In Metal Coatings we delivered an industry leading operating
margin of 19% for the year despite the challenges of higher zinc
prices, higher labor costs and pricing pressure in a few regions,"
said Mr. Ferguson. "We partially offset these effects by increasing
our overall pricing while growing our volumes organically and
through investment and acquisition. We remain committed to
delivering on the investments made for organic growth, driving
operational efficiencies more aggressively, and maintaining an
active M&A program to support our strategic growth initiatives.
We believe we will gain measurable traction from these strategic
initiatives throughout fiscal 2020."
Mr. Ferguson continued, "Our Energy segment benefitted from the
rebound in domestic refinery turnaround activity during the fiscal
year, while we were also able to generate additional business
internationally in refinery services as well as power generation
projects. We believe that, despite the secular decline in the
domestic nuclear power generation market, we have taken appropriate
realignment actions during the past two years, including a change
in leadership of the Electrical platform, restructuring the sales
effort, and increasing emphasis on operational excellence and
customer satisfaction. We are seeing signs of improvement and are
looking forward to stronger markets in specialty welding, and more
normalized margins as we continue to grow our Electrical platform
in fiscal 2020."
Fiscal Year 2020 Guidance
Mr. Ferguson concluded, "We are gaining confidence in our
outlook for fiscal 2020 as we see improving market activity in
North American refinery turnarounds and are benefitting from our
sales and market development efforts in Metal Coatings.
Additionally, we should benefit from improved operational
performance as our DGS initiative gains traction, and expect
accretion from our recent acquisitions. We are re-affirming
our fiscal 2020 earnings per fully diluted share guidance range of
$2.25 to $2.75. We are also re-affirming our fiscal
2020 annual sales guidance range of $950
million to $1,030 million. We
believe we have taken the necessary actions to improve operating
performance and with the improved market dynamics, we are
optimistic for a much improved fiscal 2020."
Fourth Quarter and Fiscal Year Results
For the twelve-month period, the Company reported revenues of
$927.1 million compared to
$810.4 million for the comparable
period last year, an increase of 14.4%. Operating income
increased 59.5% to $77.0 million
compared to $48.2 million in last
year's comparable twelve month period. Net income for the twelve
months increased 13.4% to $51.2
million, or $1.96 per diluted
share, compared to $45.2 million, or
$1.73 per diluted share compared to
the prior fiscal year.
Bookings for fiscal 2019 were $988.6
million, compared to $746.5
million for the prior year, an increase of 32.4%.
Backlog at the end of the 2019 fiscal year was $332.9 million, an increase of 25.4% compared to
backlog at the end of the prior year of $265.4 million. Incoming orders for the
year were $988.6 million while
revenues for the year totaled $927.1
million, resulting in a book to bill ratio of 1.07.
Approximately 53% of the $332.9
million in backlog is expected to be delivered outside of
the U.S.
Revenues for the fourth quarter were $202.5 million compared to $200.7 million for the same quarter last year, an
increase of 0.9%. Operating income for the fourth quarter increased
44.2% to $13.4 million compared to
$9.3 million in last year's fourth
quarter. Net income for the fourth quarter was $8.9 million, or $0.34 per diluted share, compared to net income
of $23.5 million, or $0.90 per diluted share, for last year's fourth
fiscal quarter. The fiscal 2018 fourth quarter net income
included one-time non-recurring items, and the adjusted non-GAAP
net income without these benefits would have been $4.0 million or $0.15 per share, as disclosed in the accompanying
tables to our press release of May 15,
2018.
Energy Segment
For full year fiscal 2019, Energy segment revenues increased
15.6% to $486.8 million and the
operating income of $31.3 million was
a $33.1 million improvement over the
prior year. The increase in net sales for fiscal 2019 was
attributable to several factors including increased turnaround
activity in the U.S. refinery market, higher activity in the
international markets and increase in our electrical
business. Operating margins for the 2019 fiscal year were
6.4% as compared to a negative 0.4% in the prior fiscal year. This
increase was attributable to the improved refinery turnarounds
described above and better project margins. In fiscal 2018,
the Energy segment recognized impairment charges of $10.5 million and a provision for doubtful
accounts of $2.9 million resulting
from an adverse court decision related to certain outstanding
accounts receivables. No such charges were recorded in 2019.
Revenues for the Energy segment for the fourth quarter of fiscal
2019 were $101.3 million as compared
to $103.5 million for the same
quarter last year, a decline of 2.1%. Operating income for the
segment increased to $5.6 million
compared to $1.3 million in the same
period last year, an increase of 341%. Operating margins for the
fourth quarter improved to 5.5% as compared to 1.2% in the prior
year period.
Metal Coatings Segment
For full year fiscal 2019, Metal Coatings segment revenues
increased 13.1% to $440.3 million and
operating income decreased 0.9% to $83.6
million compared to $389.4
million and $84.3 million
respectively, for the prior fiscal year. The increased
revenue was attributable to incremental net sales from our
acquisitions during the year and increased prices. Operating
margins for the 2019 fiscal year were 19.0% compared to 21.7% in
the prior fiscal year. Operating margins were impacted by
higher zinc and labor costs that were not fully offset by the
increase in pricing.
Revenues for the Company's Metal Coatings segment for the fourth
quarter of fiscal 2019 were $101.3
million, compared to the $97.2
million in the same period last year, an increase of 4.2%.
Operating income was $18.0 million,
in line with the prior year fourth quarter. Operating margins for
the fourth quarter were 17.8%, compared to 18.5% in the same period
last year.
Today's Conference Call Details
Interested parties can access the conference call by dialing
(844) 855-9499 or (412) 317-5497 (international). A webcast of the
call will be available on the Company's Investor Relations page 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 #
10130814, or for 30 days at
http://www.azz.com/investor-relations.
There will be a slide presentation accompanying today's event.
The Company's slide presentation for the call will be available on
the Investor Relations page at
http://www.azz.com/investor-relations.
About AZZ Inc.
AZZ Inc. is a global provider of metal coating solutions,
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 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 28, 2019 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
|
AZZ
Inc.
|
Condensed
Consolidated Statements of Income
|
(in thousands, except
per share data)
|
|
|
Three Months Ended
February 28,
|
|
Twelve Months Ended
February 28,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
202,548
|
|
|
$
|
200,660
|
|
|
$
|
927,087
|
|
|
$
|
810,430
|
|
Costs of
sales
|
159,291
|
|
|
162,650
|
|
|
728,466
|
|
|
650,121
|
|
Gross margin
|
43,257
|
|
|
38,010
|
|
|
198,621
|
|
|
160,309
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
29,871
|
|
|
28,726
|
|
|
121,665
|
|
|
112,061
|
|
Operating income
|
13,386
|
|
|
9,284
|
|
|
76,956
|
|
|
48,248
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
3,430
|
|
|
3,593
|
|
|
14,971
|
|
|
13,860
|
|
Other (income)
expense, net
|
(181)
|
|
|
3,399
|
|
|
(1,020)
|
|
|
3,489
|
|
Income before income
taxes
|
10,137
|
|
|
2,292
|
|
|
63,005
|
|
|
30,899
|
|
Income tax expense
(benefit)
|
1,286
|
|
|
(21,195)
|
|
|
11,797
|
|
|
(14,270)
|
|
Net income
|
$
|
8,851
|
|
|
$
|
23,487
|
|
|
$
|
51,208
|
|
|
$
|
45,169
|
|
Earnings per common
share
|
|
|
|
|
|
|
|
Basic
|
$
|
0.34
|
|
|
$
|
0.91
|
|
|
$
|
1.97
|
|
|
$
|
1.74
|
|
Diluted
|
$
|
0.34
|
|
|
$
|
0.90
|
|
|
$
|
1.96
|
|
|
$
|
1.73
|
|
|
|
|
|
|
|
|
|
Diluted average
shares outstanding
|
26,153
|
|
|
25,998
|
|
|
26,107
|
|
|
26,036
|
|
AZZ
Inc.
|
Segment
Reporting
|
(in
thousands)
|
|
|
Three Months Ended
February 28,
|
|
Twelve Months Ended
February 28,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
Energy
|
$
|
101,297
|
|
|
$
|
103,507
|
|
|
$
|
486,823
|
|
|
$
|
421,033
|
|
Metal
Coatings
|
101,251
|
|
|
97,153
|
|
|
440,264
|
|
|
389,397
|
|
|
$
|
202,548
|
|
|
$
|
200,660
|
|
|
$
|
927,087
|
|
|
$
|
810,430
|
|
|
|
|
|
|
|
|
|
Segment operating
income (loss):
|
|
|
|
|
|
|
|
Energy
|
$
|
5,569
|
|
|
$
|
1,263
|
|
|
$
|
31,332
|
|
|
$
|
(1,766)
|
|
Metal
Coatings
|
18,010
|
|
|
18,000
|
|
|
83,591
|
|
|
84,332
|
|
Corporate
|
(10,193)
|
|
|
(9,979)
|
|
|
(37,967)
|
|
|
(34,318)
|
|
|
$
|
13,386
|
|
|
$
|
9,284
|
|
|
$
|
76,956
|
|
|
$
|
48,248
|
|
AZZ
Inc.
|
Condensed
Consolidated Balance Sheets
|
(in
thousands)
|
|
|
February 28,
2019
|
|
February 28,
2018
|
|
|
|
|
Assets:
|
|
|
|
Current
assets
|
$
|
378,545
|
|
|
$
|
329,154
|
|
Net property, plant
and equipment
|
210,227
|
|
|
216,855
|
|
Other assets,
net
|
499,798
|
|
|
482,200
|
|
Total
assets
|
$
|
1,088,570
|
|
|
$
|
1,028,209
|
|
|
|
|
|
Liabilities and
shareholders' equity:
|
|
|
|
Current
liabilities
|
$
|
164,771
|
|
|
$
|
131,739
|
|
Long term debt due
after one year, net
|
240,745
|
|
|
286,609
|
|
Other
liabilities
|
79,326
|
|
|
44,658
|
|
Shareholders'
equity
|
603,728
|
|
|
565,203
|
|
Total liabilities and
shareholders' equity
|
$
|
1,088,570
|
|
|
$
|
1,028,209
|
|
AZZ
Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(in
thousands)
|
|
|
Twelve Months Ended
February 28,
|
|
2019
|
|
2018
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
114,668
|
|
|
$
|
78,909
|
|
Net cash used in
investing activities
|
(32,073)
|
|
|
(73,939)
|
|
Net cash (used in)
provided by financing activities
|
(78,004)
|
|
|
3,800
|
|
Effect of exchange
rate changes on cash
|
(1,439)
|
|
|
781
|
|
Net decrease in cash
and cash equivalents
|
$
|
3,152
|
|
|
$
|
9,551
|
|
Cash and cash
equivalents at beginning of period
|
20,853
|
|
|
11,302
|
|
Cash and cash
equivalents at end of period
|
$
|
24,005
|
|
|
$
|
20,853
|
|
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SOURCE AZZ Inc.