FORT WORTH, Texas, Oct. 12, 2021 /PRNewswire/ -- AZZ Inc.
(NYSE: AZZ), a global provider of metal coating solutions, welding
solutions, specialty electrical equipment and highly engineered
services today announced financial results for the second quarter
of fiscal year 2022, ended August 31,
2021.
Second Quarter Overview (references throughout are to
adjusted amounts for FY2021)(1):
- Strong year-over-year financial results
-
- Diluted earnings per share of $0.76, up $0.27, or
55%
- Net income of $19.0 million, up
$6.0 million
- EBITDA of $36.7 million, up
$6.0 million
- Sales of $216.4 million, up 6.4%
versus last year
- Metal Coatings segment versus same quarter, prior year:
-
- Sales of $129.6 million, up
10.7%
- Operating income of $31.6
million, up 17.3%
- Operating margins of 24.4%, up 140 basis points
- Infrastructure Solutions segment versus same quarter, prior
year:
-
- Sales of $86.9 million, up
0.6%
- Operating income of $7.0 million,
up 129.6%
- Operating margins of 8.1%, up 460 basis points
- Declared quarterly cash dividend in the amount of $0.17 per share of common stock
- Repurchased $15.0 million in
shares during the quarter; year-to-date we have repurchased 416,279
shares of common stock, totaling $21.2
million
(1) See
"Non-GAAP Disclsoures" section included in the attached Financial
Tables for a reconciliation of non-GAAP Adjusted Earnings Measures
for the three and six months ended August 31, 2020.
|
Management Discussion
Tom Ferguson, President and Chief
Executive Officer of AZZ, commented, "We continue to build positive
momentum in fiscal 2022 with strong operating performance in the
second quarter, driven by sales increasing 6%, operating income up
37% and net income up 46%, compared to the same quarter last year.
The strength of our businesses coupled with our teams executing at
a high level are key drivers for our growth and improving
profitability across all segments."
"Our Metal Coatings segment delivered strong operating
results with sales of $129.6
million, up 10.7%, and operating margin of 24.4%, up 140
basis points compared with the operating margin of 23.0% in last
year's second quarter. Segment level results were driven by
improved market conditions in solar, agriculture, bridge and
highway and OEM, along with managing the increasing costs of
materials and labor, and delivering on several operational
improvement initiatives."
Mr. Ferguson continued, "During the second quarter, our
Infrastructure Solutions segment generated sales of $86.9 million, up 0.6% and operating margin of
8.1%, an improvement of 460 basis points, compared to operating
margin of 3.5% for the same period last year. Results were driven
by continued electrical sales and operations improvement, coupled
with the benefit from cost reduction actions taken last year in our
WSI business. I would like to thank our employees for
their hard work in delivering these results, managing COVID-19, and
continuing to provide exceptional service to our
customers."
Second Quarter Results
For the second quarter of fiscal year 2022, the Company reported
sales of $216.4 million compared to
$203.4 million for the comparable
period last year, an increase of 6.4%. Operating income
increased to $26.5 million, or by
$7.2 million, compared to
$19.3 million during last year's
comparable three-month period. Net income for the current
quarter increased $6.0 million to
$19.0 million, or $0.76 per diluted share compared to $13.0 million, or $0.49 per diluted share for the same quarter in
the prior fiscal year. The provision for income taxes of
$4.9 million reflects an
effective tax rate of 20.4% for the three months ended August 31, 2021, as compared to $3.8 million, or 22.7%, for the prior year
comparable period. Bookings for the three-month period
increased to $231.8 million, compared
to $208.6 million for the same
quarter last year. The book-to-sales ratio improved to 1.07,
compared to 1.03 in last year's comparable period. Backlog at the
end of the second quarter was $201.5
million, a decrease of 4.3% as compared to backlog at the
end of the same quarter in the prior year. The decrease in backlog
versus prior year is largely attributable to the completion of
large orders in China.
Sequentially, backlog was up $15.4
million, or 8.3% from the period ended May 31, 2021.
Metal Coatings Segment
For the second quarter of fiscal year 2022, Metal Coatings
segment sales increased 10.7% to $129.6
million and operating income increased 17.3% to $31.6 million compared to $117.0 million and $26.9
million, respectively, for the same period in the prior
fiscal year. Operating margins for the quarter were 24.4%, an
improvement of 140 basis points compared to operating margins of
23.0% generated in the second quarter of fiscal year 2021.
Operating margin improvement was driven by both improved price
realization in the current quarter, and a continued focus on
operational excellence.
Infrastructure Solutions Segment
For the second quarter of fiscal year 2022, Infrastructure
Solutions segment sales increased 0.6% to $86.9 million as compared to $86.3 million in the same quarter of the prior
year. Operating income for the second quarter of fiscal year
2022 totaled $7.0 million, an
increase of $4.0 million, or 129.6%
compared to operating income of $3.1
million in the prior year quarter. Operating margins
for the quarter were 8.1% an improvement of 460 basis points over
operating margin of 3.5% generated in the second quarter of fiscal
year 2021. The increase in net sales and operating income was
primarily attributable to improving end market conditions for both
our industrial and electrical products and services, both of which
faced significant COVID-related headwinds in their end markets
during the previous year.
Fiscal Year 2022 Guidance
Mr. Ferguson added, "Due to the continued operating performance
in our segments, we have revised our previously issued fiscal 2022
sales and earnings per share guidance. We now anticipate annual
sales to be in the range of $865
million to $925 million and
earnings per share to be in the range of $2.90 to $3.20 per
diluted share for fiscal year 2022. This compares to the previously
issued guidance of sales in the range $855
million to $935 million and
earnings in the range of $2.65 to
$3.05 per diluted share for fiscal
year 2022."
"For the remainder of fiscal 2022, we remain highly focused on
growing our Metal Coatings segment while focusing our
Infrastructure Solutions team on continuing to improve
profitability. The underlining fundamentals of our business
remain strong, providing us the foundation to aggressively pursue
growth opportunities that fit our strategic plan. As part of our
corporate commitment to Trust, Respect, Accountability, Integrity,
Teamwork and Safety ("TRAITS"), we continue to carefully manage our
workforce to ensure a safe and healthy operating environment, while
leveraging our operational capacity to match our customers'
improved demand for our products and services."
"We continue to actively pursue initiatives to enhance
shareholder value, drive growth, and accelerate our strategy to
become predominately a metal coatings company. We continue to
explore a small number of specific opportunities related to
Infrastructure Solutions, with increasing confidence that AZZ will
be able to become predominately a focused metal coatings
company. We are a much stronger company today and
well-positioned to meet the growing demands for infrastructure
improvements in the U.S and globally," concluded Mr.
Ferguson.
Conference Call Details
AZZ Inc. will conduct a conference call to discuss financial
results for the second quarter of fiscal year 2022 today,
Tuesday, October 12, 2021, at
11:00 A.M. ET. 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 #
10160370, 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.
Non-GAAP Disclosures
In addition to reporting financial results in accordance with
Generally Accepted Accounting Principles in the United States ("GAAP"), the Company has
provided adjusted operating income, adjusted earnings and adjusted
earnings per share (collectively, the "Adjusted Earnings
Measures"), which are non-GAAP measures. Management believes
that the presentation of these measures provides investors with a
greater transparency comparison of operating results across a broad
spectrum of companies, which provides a more complete understanding
of the Company's financial performance, competitive position and
prospects for the future. Management also believes that investors
regularly rely on non-GAAP financial measures, such as adjusted
operating income, adjusted earnings and adjusted earnings per
share, to assess operating performance and that such measures may
highlight trends in the Company's business that may not otherwise
be apparent when relying on financial measures calculated in
accordance with GAAP.
About AZZ Inc.
AZZ Inc. is a global provider of galvanizing and a variety of
metal coating solutions, welding solutions, specialty electrical
equipment and highly engineered services to a broad range of
markets, including but not limited to the power generation,
transmission, distribution, refining and industrial markets. The
Company's Metal Coatings segment is a leading provider of metal
finishing solutions for corrosion protection, including hot dip
galvanizing, spin galvanizing, powder coating, anodizing and
plating, to the North American steel fabrication industry. The
Company's Infrastructure Solutions segment 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 and waste management 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. Certain factors could
affect the outcome of the matters described herein. This press
release may contain forward-looking statements that involve risks
and uncertainties including, but not limited to, changes in
customer demand for our products and services, including demand by
the power generation markets, electrical transmission and
distribution markets, the industrial markets, and the metal
coatings markets. In addition, within each of the markets we
serve, our customers and our operations could potentially continue
to be adversely impacted by the ongoing COVID-19 pandemic,
including governmental issued mandates regarding the same. We
could also experience additional increases in labor costs,
components and raw materials, including zinc and natural gas which
are used in our hot dip galvanizing process; supply-chain vendor
delays; customer requested delays of our products or services;
delays in additional acquisition or disposition opportunities;
currency exchange rates; availability of experienced management and
employees to implement AZZ's growth strategy; a downturn in market
conditions in any industry relating to the products we inventory or
sell or the services that we provide; economic volatility or
changes in the political stability in the
United States and other foreign markets in which we operate;
acts of war or terrorism inside the
United States or abroad; and other changes in economic and
financial conditions. 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, 2021 and other filings with the
Securities and Exchange Commission ("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.
---Financial tables on the following
page---
AZZ
Inc.
|
Condensed
Consolidated Statements of Income
|
(dollars and shares
in thousands, except per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
August 31,
|
|
Six Months Ended
August 31,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Sales
|
|
216,447
|
|
|
203,372
|
|
|
446,273
|
|
|
416,664
|
|
Cost of
sales
|
|
161,332
|
|
|
157,278
|
|
|
333,231
|
|
|
328,363
|
|
Gross
margin
|
|
55,115
|
|
|
46,094
|
|
|
113,042
|
|
|
88,301
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
28,587
|
|
|
26,749
|
|
|
55,802
|
|
|
54,639
|
|
Restructuring and
impairment charges
|
|
—
|
|
|
18,693
|
|
|
—
|
|
|
18,693
|
|
Operating
income
|
|
26,528
|
|
|
652
|
|
|
57,240
|
|
|
14,969
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
1,754
|
|
|
2,470
|
|
|
3,451
|
|
|
5,104
|
|
Other (income)
expense, net
|
|
918
|
|
|
92
|
|
|
(51)
|
|
|
1,547
|
|
Income before income
taxes
|
|
23,856
|
|
|
(1,910)
|
|
|
53,840
|
|
|
8,318
|
|
Income tax
expense
|
|
4,878
|
|
|
(120)
|
|
|
12,525
|
|
|
4,567
|
|
Net income
|
|
$
|
18,978
|
|
|
$
|
(1,790)
|
|
|
$
|
41,315
|
|
|
$
|
3,751
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.76
|
|
|
$
|
(0.07)
|
|
|
$
|
1.65
|
|
|
$
|
0.14
|
|
Diluted
|
|
$
|
0.76
|
|
|
$
|
(0.07)
|
|
|
$
|
1.64
|
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding
|
|
25,135
|
|
|
26,175
|
|
|
25,216
|
|
|
26,198
|
|
AZZ
Inc.
|
Segment
Reporting
|
(dollars in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
August 31,
|
|
Six Months Ended
August 31,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Sales:
|
|
|
|
|
|
|
|
|
Metal
Coatings
|
|
$
|
129,593
|
|
|
$
|
117,037
|
|
|
$
|
257,328
|
|
|
$
|
236,027
|
|
Infrastructure
Solutions
|
|
86,854
|
|
|
86,335
|
|
|
188,945
|
|
|
180,637
|
|
Total
sales
|
|
$
|
216,447
|
|
|
$
|
203,372
|
|
|
$
|
446,273
|
|
|
$
|
416,664
|
|
|
|
|
|
|
|
|
|
|
Operating
income:
|
|
|
|
|
|
|
|
|
Metal
Coatings
|
|
$
|
31,589
|
|
|
$
|
15,600
|
|
|
$
|
63,165
|
|
|
$
|
40,684
|
|
Infrastructure
Solutions
|
|
7,024
|
|
|
(4,310)
|
|
|
16,648
|
|
|
(5,358)
|
|
Corporate
|
|
(12,085)
|
|
|
(10,638)
|
|
|
(22,573)
|
|
|
(20,357)
|
|
Total operating
income
|
|
$
|
26,528
|
|
|
$
|
652
|
|
|
$
|
57,240
|
|
|
$
|
14,969
|
|
|
|
|
|
|
|
|
|
|
AZZ
Inc.
|
Condensed
Consolidated Balance Sheets
|
(dollars in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
August 31,
2021
|
|
February 28,
2021
|
Assets:
|
|
|
|
|
Current
Assets(1)
|
|
$
|
329,039
|
|
|
$
|
303,492
|
|
Property, Plant and
Equipment, Net
|
|
202,220
|
|
|
205,909
|
|
Other assets,
net
|
|
491,979
|
|
|
487,041
|
|
Total
assets
|
|
$
|
1,023,238
|
|
|
$
|
996,442
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity:
|
|
|
|
|
Current
liabilities
|
|
$
|
118,991
|
|
|
$
|
113,850
|
|
Long-term debt due
after one year, net
|
|
182,451
|
|
|
178,419
|
|
Other
liabilities
|
|
83,370
|
|
|
80,881
|
|
Shareholders'
equity
|
|
638,426
|
|
|
623,292
|
|
Total liabilities and
shareholders' equity
|
|
1,023,238
|
|
|
996,442
|
|
(1) Includes assets held for sale of
$5,758 and $3,684 as of August 31, 2021 and February 28, 2021,
respectively.
|
AZZ
Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(dollars in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
Six Months Ended
August 31,
|
|
|
2021
|
|
2020
|
Net cash provided by
operating activities
|
|
37,758
|
|
|
32,166
|
|
Net cash used in
investing activities
|
|
(10,562)
|
|
|
(10,531)
|
|
Net cash used in
financing activities
|
|
(26,348)
|
|
|
(45,131)
|
|
Effect of exchange
rates on cash
|
|
(197)
|
|
|
837
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
651
|
|
|
(22,659)
|
|
Cash and cash
equivalents at beginning of period
|
|
14,837
|
|
|
36,687
|
|
Cash and cash
equivalents at end of period
|
|
15,488
|
|
|
14,028
|
|
AZZ Inc.
Non-GAAP
Disclosure
Adjusted Operating Income, Adjusted Earnings
and Adjusted Earnings Per Share
(dollars in thousands,
except per share data)
(unaudited)
In the second quarter of fiscal 2021, the Company developed and
began the implementation of a plan to divest certain non-core
businesses and later, divested several non-core businesses.
During the six months ended August 31,
2021, the Company did not recognize any restructuring and
impairment charges. The following tables provides a
reconciliation for the three and six months ended August 31,
2021 and 2020 between the various measures calculated in accordance
with GAAP to the Adjusted Earnings Measures (dollars in thousands,
except per share data):
|
|
Three Months Ended
August 31,
|
|
Six Months Ended
August 31,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Metal Coatings
Segment
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
129,593
|
|
|
$
|
117,037
|
|
|
$
|
257,328
|
|
|
$
|
236,027
|
|
Segment operating
income (loss):
|
|
|
|
|
|
|
|
|
Metal Coatings, as
reported
|
|
$
|
31,589
|
|
|
$
|
15,600
|
|
|
$
|
63,165
|
|
|
$
|
40,684
|
|
Impact of
impairment
|
|
—
|
|
|
11,324
|
|
|
—
|
|
|
11,324
|
|
Metal Coatings, as
adjusted
|
|
$
|
31,589
|
|
|
$
|
26,924
|
|
|
$
|
63,165
|
|
|
$
|
52,008
|
|
Operating income
percent, as adjusted
|
|
24.4
|
%
|
|
23.0
|
%
|
|
24.5
|
%
|
|
22.0
|
%
|
|
|
|
|
|
|
|
|
|
Infrastructure
Solutions Segment
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
86,854
|
|
|
$
|
86,335
|
|
|
$
|
188,945
|
|
|
$
|
180,637
|
|
Segment operating
income (loss):
|
|
|
|
|
|
|
|
|
Infrastructure
Solutions, as reported
|
|
7,024
|
|
|
(4,310)
|
|
|
16,648
|
|
|
(5,358)
|
|
Impact of
impairment
|
|
—
|
|
|
7,369
|
|
|
—
|
|
|
7,369
|
|
Infrastructure
Solutions, as adjusted
|
|
$
|
7,024
|
|
|
$
|
3,059
|
|
|
$
|
16,648
|
|
|
$
|
2,011
|
|
Operating income
percent, as adjusted
|
|
8.1
|
%
|
|
3.5
|
%
|
|
8.8
|
%
|
|
1.1
|
%
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
August 31,
2020
|
|
August 31,
2020
|
|
|
Amount
|
|
Per
Diluted
Share
|
|
Amount
|
|
Per
Diluted
Share
|
Net income (loss) and
diluted earnings (loss) per share
|
|
$
|
(1,790)
|
|
|
$
|
(0.07)
|
|
|
$
|
3,751
|
|
|
$
|
0.14
|
|
Adjustments (net of
tax):
|
|
|
|
|
|
|
|
|
Restructuring and
impairment charges:
|
|
|
|
|
|
|
|
|
Metal
Coatings
|
|
11,324
|
|
|
0.43
|
|
|
11,324
|
|
|
0.43
|
|
Infrastructure
Solutions
|
|
7,369
|
|
|
0.28
|
|
|
7,369
|
|
|
0.28
|
|
Subtotal
|
|
18,693
|
|
|
0.71
|
|
|
18,693
|
|
|
0.71
|
|
Tax benefit related to
restructuring and impairment charges
|
|
(3,930)
|
|
|
(0.15)
|
|
|
(3,930)
|
|
|
(0.15)
|
|
Total
adjustments
|
|
14,763
|
|
|
0.56
|
|
|
14,763
|
|
|
0.56
|
|
Adjusted earnings and
adjusted earnings per share
|
|
$
|
12,973
|
|
|
$
|
0.50
|
|
|
$
|
18,514
|
|
|
$
|
0.71
|
|
|
|
|
|
|
|
|
|
|
(1)
Earnings per share amounts included in the table above may not sum
due to rounding differences.
|
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multimedia:https://www.prnewswire.com/news-releases/azz-inc-reports-results-for-second-quarter-of-fiscal-year-2022-generates-eps-of-0-76-and-revises-guidance-301397615.html
SOURCE AZZ Inc.