FORT WORTH, Texas, Jan. 10, 2022 /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 third quarter of
fiscal year 2022, ended November 30,
2021.
Third Quarter Overview:
- Strong year-over-year financial results
-
- Diluted earnings per share of $0.85, up $0.09, or
11.8%
- Sales of $231.7 million, up 2.3%
versus last year
- Net income of $21.1 million, up
$1.4 million
- EBITDA of $39.8 million, up
0.5%
- Metal Coatings segment versus same quarter, prior year:
-
- Sales of $133.4 million, up
15.4%
- Operating income of $32.7
million, up 14.1%
- Operating margins of 24.5%
- Infrastructure Solutions segment versus same quarter, prior
year:
-
- Sales of $98.4 million, down
11.4%
- Operating income of $9.2 million,
up 5.4%
- Operating margins of 9.3%
- Repurchased $7.6 million shares
during the third quarter; year-to-date we have repurchased 564,279
shares of common stock, totaling $28.9
million fiscal year to date
Management Discussion
Tom Ferguson, President and Chief
Executive Officer of AZZ, commented, "We continue to deliver solid
results in fiscal 2022 with strong operating performance in the
third quarter, driven by sales increasing 2.3%, operating income up
8.0% and net income up 7.0%, compared to the same quarter last
year. The continued success of our businesses is due to our teams
executing at a high level to drive growth and profitability across
all business segments."
"Our Metal Coatings segment delivered great operating results
generating sales of $133.4 million,
up 15.4%, and operating margin of 24.5%, down slightly versus prior
year due to increasing labor and material costs. Improved sales
were driven by strong demand for hot-dip galvanizing within the
renewables, utility, OEM, and construction end markets. I am
pleased with the team's ability to continue to manage the
increasing costs of materials and labor, through value pricing and
operational improvement initiatives, while focusing on providing
outstanding customer service. Additionally, and subsequent to
our quarter-end, the team acquired Steel Creek Galvanizing in
South Carolina."
Mr. Ferguson continued, "During the third quarter, our
Infrastructure Solutions segment generated sales of $98.4 million, up $11.5
million sequentially but down $12.6
million or 11.4% compared to the same period last
year. Several business units were affected by material
delivery delays, including customer supplied components, and labor
shortages. Operating margin of 9.3%, improved 140 basis
points compared to operating margin of 7.9% for the same period
last year. I would like to thank our employees for their hard
work in delivering these third quarter results and continuing to
provide exceptional service to our customers."
Third Quarter Results
For the third quarter of fiscal year 2022, the Company reported
sales of $231.7 million compared to
$226.6 million for the comparable
period last year, an increase of 2.3%. Operating income
increased to $30.1 million, or by
$2.2 million, compared to net income
of $27.9 million during last year's
comparable third quarter period. Net income for the third
quarter increased $1.4 million to
$21.1 million, or $0.85 per diluted share compared to net income of
$19.7 million, or $0.76 per diluted share for the third quarter in
the prior fiscal year. The provision for income taxes of
$6.0 million reflects an
effective tax rate of 22.0% for the three months ended November 30, 2021, as compared to $6.6 million, or 25.1%, for the prior year
comparable period. Bookings for the three-month period
increased to $248.0 million, compared
to $194.4 million for the third
quarter last year. The book-to-sales ratio improved to 1.07,
compared to 0.86 in last year's comparable period. Backlog at the
end of the third quarter was $217.7
million, an increase of 24.9% as compared to backlog at the
end of the third quarter in the prior year. The increase in backlog
versus prior year is largely attributable to growing demand for our
electrical products. Sequentially, backlog was up $16.2 million, or 8.1% from the prior year third
quarter ended August 31,
2021.
Metal Coatings Segment – Year to date Summary
(1)
For the nine months ended November 30,
2021, Metal Coatings segment sales increased 11.1% to
$390.7 million and operating income
increased 38.3% to $95.9 million
compared to $351.6 million and
$69.4 million, respectively, for the
third period in the prior fiscal year. On an adjusted basis,
operating income increased 19.3% to $80.4
million compared to the prior year-to-date period.
Year-to-date operating margins through the third quarter were
24.5%, a 480 basis points improvement compared to operating margins
of 19.7% generated for the third quarter of the prior fiscal
year. On an adjusted basis, current year operating margins
improved 160 basis points from the adjusted prior year operating
margin of 22.9%.
Infrastructure Solutions Segment – Year to date Summary
(1)
For the nine months ended November 30,
2021, Infrastructure Solutions segment sales decreased 1.5%
to $287.3 million as compared to
$291.6 million for the same period in
the prior fiscal year. The decrease in net sales for the
Infrastructure segment was primarily attributable to supply chain
disruptions within our electrical platform and COVID-related
disruptions on customer locations within our welding solutions
platform. Year-to-date operating income totaled $25.8 million, an increase of $22.5 million, or 668.1% compared to operating
income of $3.4 million in the prior
year. On an adjusted basis, operating income for the segment
increased 105.2% to $12.6 million
compared to the prior year-to-date period.
Year-to-date operating margins were 9.0%, an increase of 780
basis points over the prior year. On an adjusted basis,
current year operating margins improved 470 basis points from the
adjusted prior year operating margin of 4.3%.
(1) See "Non-GAAP
Disclosures" section included in the attached Financial Tables for
a reconciliation of non-GAAP Adjusted Earnings Measures for the
three and nine months ended November 30, 2020.
|
Subsequent Event
On January 3,
2022, AZZ announced it acquired all the assets
of Steel Creek Galvanizing Company, LLC ("Steel Creek") on
December 31, 2021. Steel Creek
is a privately held hot-dip galvanizing company based in
South Carolina and will be
reported within the Metal Coatings segment. Terms of the
transaction were not disclosed. AZZ expects the acquisition
will be accretive to earnings within the first year of
operation.
Fiscal Year 2022 Guidance
Mr. Ferguson added, "Due to the consistent operating performance
in our business segments, we are reaffirming our sales guidance and
anticipate annual sales to be in the range of $865 million to $925
million and are narrowing earnings per share to be in the
range of $3.00 to $3.20 per diluted share for fiscal year 2022,
which excludes the impact of any future divestitures or
acquisitions".
"As we have previously stated, for the balance of fiscal 2022,
we remain highly focused on growing our Metal Coatings segment,
completing and integrating the recently announced hot-dip
galvanizing acquisitions, and will continue to focus our
Infrastructure Solutions team on supply chain improvements and
increasing its craft pool. The underlining fundamentals of
our business remain strong and provides us a good foundation to
aggressively pursue growth opportunities that fit our strategic
plan. As part of our corporate commitment to Trust, Respect,
Accountability, Integrity, Teamwork and Sustainability ("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' solid demand for our products and
services."
"We continue to actively pursue initiatives to drive growth and
enhance shareholder value. Previously, we have disclosed a
desire for AZZ to become a predominately metal coatings company and
over the past two quarters have meaningfully advanced our work on
specific strategic options designed to achieve this
commitment," concluded Mr. Ferguson.
Conference Call Details
AZZ Inc. will conduct a conference call to discuss financial
results for the third quarter of fiscal year 2022 today,
Monday, January 10, 2022, 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 at (877) 344-7529 or
(412) 317-0088 (international), replay access code: 2330111,
through January 17, 2022, or by
visiting http://www.azz.com/investor-relations for the next 90
days.
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 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
November 30,
|
|
Nine Months Ended
November 30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Sales
|
|
$
|
231,737
|
|
|
$
|
226,623
|
|
|
$
|
678,010
|
|
|
$
|
643,287
|
|
Cost of
sales
|
|
174,773
|
|
|
171,948
|
|
|
508,004
|
|
|
500,311
|
|
Gross
margin
|
|
56,964
|
|
|
54,675
|
|
|
170,006
|
|
|
142,976
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
26,872
|
|
|
25,228
|
|
|
82,674
|
|
|
79,867
|
|
Restructuring and
impairment charges
|
|
—
|
|
|
1,576
|
|
|
—
|
|
|
20,269
|
|
Operating
income
|
|
30,092
|
|
|
27,871
|
|
|
87,332
|
|
|
42,840
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
1,630
|
|
|
2,272
|
|
|
5,081
|
|
|
7,376
|
|
Other (income)
expense, net
|
|
1,413
|
|
|
(724)
|
|
|
1,362
|
|
|
823
|
|
Income before income
taxes
|
|
27,049
|
|
|
26,323
|
|
|
80,889
|
|
|
34,641
|
|
Income tax
expense
|
|
5,964
|
|
|
6,620
|
|
|
18,489
|
|
|
11,187
|
|
Net income
|
|
$
|
21,085
|
|
|
$
|
19,703
|
|
|
$
|
62,400
|
|
|
$
|
23,454
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.85
|
|
|
$
|
0.76
|
|
|
$
|
2.51
|
|
|
$
|
0.90
|
|
Diluted
|
|
$
|
0.85
|
|
|
$
|
0.76
|
|
|
$
|
2.48
|
|
|
$
|
0.90
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding
|
|
24,945
|
|
|
26,051
|
|
|
25,132
|
|
|
26,177
|
|
AZZ
Inc.
|
Segment
Reporting
|
(dollars in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
November 30,
|
|
Nine Months Ended
November 30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Sales:
|
|
|
|
|
|
|
|
|
Metal
Coatings
|
|
$
|
133,373
|
|
|
$
|
115,616
|
|
|
$
|
390,701
|
|
|
$
|
351,643
|
|
Infrastructure
Solutions
|
|
98,364
|
|
|
111,007
|
|
|
287,309
|
|
|
291,644
|
|
Total
sales
|
|
$
|
231,737
|
|
|
$
|
226,623
|
|
|
$
|
678,010
|
|
|
$
|
643,287
|
|
|
|
|
|
|
|
|
|
|
Operating
income:
|
|
|
|
|
|
|
|
|
Metal
Coatings
|
|
$
|
32,724
|
|
|
$
|
28,671
|
|
|
$
|
95,888
|
|
|
$
|
69,355
|
|
Infrastructure
Solutions
|
|
9,189
|
|
|
8,722
|
|
|
25,838
|
|
|
3,364
|
|
Corporate
|
|
(11,821)
|
|
|
(9,522)
|
|
|
(34,394)
|
|
|
(29,879)
|
|
Total operating
income
|
|
$
|
30,092
|
|
|
$
|
27,871
|
|
|
$
|
87,332
|
|
|
$
|
42,840
|
|
|
|
|
|
|
|
|
|
|
AZZ
Inc.
|
Condensed
Consolidated Balance Sheets
|
(dollars in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
November 30,
2021
|
|
February 28,
2021
|
Assets:
|
|
|
|
|
Current Assets
(1)
|
|
$
|
349,535
|
|
|
$
|
303,492
|
|
Property, Plant and
Equipment, Net
|
|
199,886
|
|
|
205,909
|
|
Other assets,
net
|
|
488,155
|
|
|
487,041
|
|
Total
assets
|
|
$
|
1,037,576
|
|
|
$
|
996,442
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity:
|
|
|
|
|
Current
liabilities
|
|
$
|
118,657
|
|
|
$
|
113,850
|
|
Long-term debt due
after one year, net
|
|
191,468
|
|
|
178,419
|
|
Other
liabilities
|
|
79,407
|
|
|
80,881
|
|
Shareholders'
equity
|
|
648,044
|
|
|
623,292
|
|
Total liabilities and
shareholders' equity
|
|
$
|
1,037,576
|
|
|
$
|
996,442
|
|
(1) Includes assets held for sale of
$4,409 and $3,684 as of November 30, 2021 and February 28, 2021,
respectively.
|
AZZ
Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(dollars in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
Nine Months Ended
November 30,
|
|
|
2021
|
|
2020
|
Net Cash Provided by
Operating Activities
|
|
$
|
49,668
|
|
|
$
|
59,394
|
|
Net Cash Used in
Investing Activities
|
|
(16,425)
|
|
|
(14,987)
|
|
Net Cash Used in
Financing Activities
|
|
(29,167)
|
|
|
(64,229)
|
|
Effect of Exchange
Rates on Cash
|
|
1,442
|
|
|
2,330
|
|
Net Increase
(Decrease) in Cash and Cash Equivalents
|
|
5,518
|
|
|
(17,492)
|
|
Cash and Cash
Equivalents at Beginning of Period
|
|
14,837
|
|
|
36,687
|
|
Cash and Cash
Equivalents at End of Period
|
|
$
|
20,355
|
|
|
$
|
19,195
|
|
AZZ Inc.
Non-GAAP
Disclosure
Adjusted Operating Income, Adjusted Earnings
and Adjusted Earnings Per Share
(dollars in thousands,
except per share data)
(unaudited)
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.
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 nine months ended
November 30, 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
November 30,
|
|
Nine Months Ended
November 30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Metal Coatings
Segment
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
133,373
|
|
|
$
|
115,616
|
|
|
$
|
390,701
|
|
|
$
|
351,643
|
|
Segment operating
income:
|
|
|
|
|
|
|
|
|
Metal
Coatings
|
|
$
|
32,724
|
|
|
$
|
28,671
|
|
|
$
|
95,888
|
|
|
$
|
69,355
|
|
Impact of
restructuring and impairment
|
|
—
|
|
|
(281)
|
|
|
—
|
|
|
11,043
|
|
Metal Coatings, as
adjusted
|
|
$
|
32,724
|
|
|
$
|
28,390
|
|
|
$
|
95,888
|
|
|
$
|
80,398
|
|
Operating income as
a % of sales
|
|
24.5
|
%
|
|
24.6
|
%
|
|
24.5
|
%
|
|
22.9
|
%
|
|
|
|
|
|
|
|
|
|
Infrastructure
Solutions Segment
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
98,364
|
|
|
$
|
111,007
|
|
|
$
|
287,309
|
|
|
$
|
291,644
|
|
Segment operating
income:
|
|
|
|
|
|
|
|
|
Infrastructure
Solutions
|
|
9,189
|
|
|
8,722
|
|
|
25,838
|
|
|
3,364
|
|
Impact of
restructuring and impairment
|
|
—
|
|
|
1,857
|
|
|
—
|
|
|
9,226
|
|
Infrastructure
Solutions, as adjusted
|
|
$
|
9,189
|
|
|
$
|
10,579
|
|
|
$
|
25,838
|
|
|
$
|
12,590
|
|
Operating income as
a % of sales
|
|
9.3
|
%
|
|
9.5
|
%
|
|
9.0
|
%
|
|
4.3
|
%
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
November 30,
2020
|
|
November 30,
2020
|
|
|
Amount
|
|
Per
Diluted
Share
|
|
Amount
|
|
Per
Diluted
Share
|
Net income and
diluted earnings per share
|
|
$
|
19,703
|
|
|
$
|
0.76
|
|
|
$
|
23,454
|
|
|
$
|
0.90
|
|
Adjustments (net of
tax):
|
|
|
|
|
|
|
|
|
Restructuring and
impairment charges:
|
|
|
|
|
|
|
|
|
Metal
Coatings
|
|
(281)
|
|
|
(0.01)
|
|
|
11,043
|
|
|
0.42
|
|
Infrastructure
Solutions
|
|
1,857
|
|
|
0.07
|
|
|
9,226
|
|
|
0.35
|
|
Subtotal
|
|
1,576
|
|
|
0.06
|
|
|
20,269
|
|
|
0.77
|
|
Tax benefit related to
restructuring and impairment charges
|
|
(347)
|
|
|
(0.01)
|
|
|
(4,459)
|
|
|
(0.17)
|
|
Total
adjustments
|
|
1,229
|
|
|
0.05
|
|
|
15,810
|
|
|
0.61
|
|
Adjusted earnings and
adjusted earnings per share
|
|
$
|
20,932
|
|
|
$
|
0.80
|
|
|
$
|
39,264
|
|
|
$
|
1.50
|
|
|
|
|
|
|
|
|
|
|
(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-third-quarter-of-fiscal-year-2022-generates-eps-of-0-85--301456907.html
SOURCE AZZ Inc.