FORT
WORTH, Texas, April 22, 2022 /PRNewswire/ -- AZZ
Inc. (NYSE: AZZ), a global provider of metal coating solutions,
welding solutions, specialty electrical equipment and highly
engineered services today issued its audited consolidated financial
statements contained in the Company's Fiscal Year 2022 Annual
Report on Form 10-K for the year ended February 28,
2022.
Fiscal Year 2022 Overview and Recent
Highlights:
- Achieved 35th consecutive year of profitability
- Reported diluted earnings per share of $3.35 and reported net income of $84.0 million
- Full Year adjusted earnings per share of $3.34 and adjusted net income of $83.8 million
- Sales of $902.7 million,
increased by 7.6% compared to prior year
-
- Metal Coatings segment full year results versus prior
year:
-
- Sales of $519.0 million, up
13.4%
- Adjusted operating income of $127.3
million, up 19.3%
- Adjusted operating margin of 24.5%, versus 23.3%, or 120 bps
improvement
- Infrastructure Solutions segment full year results versus prior
year:
-
- Sales of $383.7 million, up
0.7%
- Adjusted operating income of $33.7
million, up 115.1%
- Adjusted operating margin of 8.8% versus 4.1%, or 470 bps
improvement
- Cash provided from operating activities of $86.0 million decreased 6.5% versus prior
year
- Repurchased $30.8 million of
common shares during the year
- Effective tax rate of 21.0%; 130 basis points improvement over
the prior year
Management
Discussion
Tom Ferguson, President and Chief
Executive Officer of AZZ, commented, "I am quite pleased with how
well our leadership team and dedicated employees overcame supply
chain disruptions and labor shortages to take care of their
customers, improve our safety record and position AZZ for a strong
fiscal year 2023. Fiscal year 2022 was a year of
accomplishments for AZZ as we issued our first ESG Report, made
significant progress towards becoming predominantly a metal
coatings company, completed our 35th consecutive year of
profitability, and continued returning capital to our shareholders
through dividends and share repurchases. Our Metal Coatings
segment again delivered great operating results as they finished
with a strong 4th quarter. For the full year they
generated record sales of $519.0
million, and 24.5% operating margin, an improvement of
120 basis points over the prior year. The team expanded their spin
plant capacity, improved safety, drove improved profitability in
Surface Technologies and continued delivering unparalleled value to
their customers. Metal Coatings is also positioning to remain
the leader in galvanizing through ongoing technology investments in
conjunction with Texas A&M University. Our Metal Coatings
team continued to drive operational efficiencies utilizing our
digital galvanizing system (DGS), while supporting a very active
acquisition pipeline that resulted in the completion of two
acquisitions (Steel Creek Galvanizing and DAAM Galvanizing) in the
fourth quarter."
Mr. Ferguson continued, "Infrastructure Solutions also had a
solid year in spite of experiencing greater disruption from supply
chain and labor constraints, as well as international travel
restrictions that impacted some Industrial Solutions Platform
projects. While bookings activity was quite good, cycle times
have extended as supply chain and labor constraints persisted
throughout the year. The Electrical Platform's investment in
new applications development resulted in a large battery energy
storage system (BESS) project that positions them for a very strong
FY2023. Based on the growth of renewable energy sources we believe
this is the first of several significant BESS opportunities.
We are optimistic for an improvement in the refining turnaround
activity both domestically and internationally."
Subsequent Event:
On March 7, 2022, the Company, and
Sequa Corporation ("Sequa"), a portfolio company of global
investment firm Carlyle, jointly announced an agreement whereby the
Company will acquire Sequa's Precoat Metals business division
("Precoat Metals"). Precoat Metals is headquartered in
St. Louis, Missouri and is
North America's largest
independent provider of metal coil coating solutions. The
transaction, which is subject to certain closing conditions, has
cleared Hart-Scott Rodino and is expected to close in May,
2022.
Fiscal Year 2023
Guidance
Mr. Ferguson added, "Due to our recent announcement related to
the acquisition of Precoat Metals, we will not issue fiscal year
2023 guidance at this time. However, based upon the
evaluation of information currently available to management,
excluding the impact of the pending Precoat acquisition, we
anticipate Metal Coatings will exceed $150
million in sales and exceed 30% EBITDA for the first quarter
of fiscal year 2023. We anticipate Infrastructure Solutions
for the first quarter of fiscal 2023 will exceed their results in
the first quarter of fiscal 2022. This reflects our best
estimates given current market conditions, existing execution on
our current backlog, and does not include the impact of
acquisitions or divestitures, related expenditures, nor any federal
regulatory changes that may emerge."
"As we enter fiscal 2023," concluded Mr. Ferguson, "our focus
will be growing our Metal Coatings segment, completing the
acquisition of Precoat Metals, and continuing to pursue strategic
options for Infrastructure Solutions. AZZ has maintained excellent
cash management processes and will use these to reduce our debt. We
have access to the capital necessary to sustain our operations,
provide opportunities for organic growth and allow AZZ to continue
its dividend. I want to express my sincere gratitude to all our
employees for their hard work and dedication throughout the year.
We are excited about the opportunities ahead and look forward to
welcoming Precoat to the AZZ family."
Fourth Quarter
Results
Sales for the fourth quarter of fiscal year 2022 were
$224.7 million, compared to
$195.6 million for the prior year, an
increase of 14.8%. Net income for the quarter was
$21.6 million, or $0.87 per share on a diluted basis, up
$5.5 million from the prior year,
same quarter. Incoming orders for the three-month period increased
to $311.6 million, as compared to
$203.6 million for the same quarter
last year. The book-to-sales ratio increased significantly to
1.39, compared to 1.04 in last year's comparable period. As
anticipated, backlog at the end of the quarter was $304.5 million, an increase of 63.6% as compared
to the same quarter in the prior year.
Metal Coatings
Segment
For the fourth quarter of fiscal year 2022, Metal Coatings
segment sales increased 20.9% to $128.3
million and operating income increased 18.3% to $31.4 million versus the comparable prior year
quarter. Segment operating margin decreased to 24.5% of
sales, or 60 basis points lower than the comparable prior year
fourth quarter operating margin. The decline in operating margin
was a result of higher labor and material costs, including zinc.
During the latter part of the fourth quarter, AZZ successfully
acquired and has begun integrating Steel Creek Galvanizing
and DAAM Galvanizing in Canada
into its network of hot-dip galvanizing facilities in North America.
Infrastructure Solutions
Segment
For the fourth quarter of fiscal year 2022, Infrastructure
Solutions segment sales increased 7.7% to $96.4 million, as compared to $89.5 million in the same quarter of the prior
year. Infrastructure Solutions' reported operating income of
$9.7 million was 210.8% higher than
the comparable prior year quarter. Operating margin increased
to 10.1% compared to prior year quarter operating margin of
3.5%. On an adjusted basis, taking into consideration the
treatment of assets previously held for sale, operating income of
$7.9 million was 155.1% higher than
the comparable prior quarter-to-date period. Adjusted
operating margin, as percent of sales, was 8.2% compared to 3.5%,
as adjusted, in the prior year.
The following chart provides an overview of operating income for
both our Metal Coatings and Infrastructure Solutions segments, as
adjusted for the impairment charges recorded during the
quarter:
|
|
Three Months ended February 28,
|
|
Year Ended February 28,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Metal Coatings Segment
|
|
|
|
|
|
|
|
|
Sales
|
|
$
128,298
|
|
$
106,149
|
|
$ 519,000
|
|
$ 457,791
|
Segment operating
income:
|
|
|
|
|
|
|
|
|
Metal Coatings, as reported
|
|
31,446
|
|
26,591
|
|
127,335
|
|
95,946
|
Impact of restructuring and
impairment
|
|
—
|
|
(247)
|
|
—
|
|
10,796
|
Metal Coatings, as adjusted
|
|
$
31,446
|
|
$
26,344
|
|
$ 127,335
|
|
$ 106,742
|
Adjusted operating income as a %
of sales
|
|
24.5%
|
|
24.8%
|
|
24.5%
|
|
23.3%
|
|
|
|
|
|
|
|
|
|
Infrastructure Solutions
Segment
|
|
|
|
|
|
|
|
|
Sales
|
|
$
96,356
|
|
$
89,480
|
|
$ 383,664
|
|
$ 381,126
|
Segment operating
income:
|
|
|
|
|
|
|
|
|
Infrastructure Solutions, as reported
|
|
9,706
|
|
3,123
|
|
35,543
|
|
6,487
|
Impact of restructuring and
impairment
|
|
(1,797)
|
|
(23)
|
|
(1,797)
|
|
9,203
|
Infrastructure Solutions, as adjusted
|
|
$
7,909
|
|
$
3,100
|
|
$
33,746
|
|
$
15,690
|
Adjusted operating income as a %
of sales
|
|
8.2%
|
|
3.5%
|
|
8.8%
|
|
4.1%
|
Conference Call
Details
AZZ Inc. will conduct a conference call to discuss financial
results for the fourth quarter and fiscal year 2022 today, Friday,
April 22, 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), confirmation #8903619, through
April 29, 2022, or by visiting
http://www.azz.com/investor-relations for the next 90 days.
There will be a slide presentation accompanying today's call.
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
Infrastructure Solutions 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. 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 metal coatings markets, power generation markets, electrical
transmission and distribution markets and the industrial
markets. In addition, within each of the markets we serve,
our customers and our operations could potentially be adversely
impacted by the ongoing COVID-19 pandemic. We could also
experience fluctuations in prices and raw material cost, including
zinc and natural gas which are used in the hot dip galvanizing
process; supply-chain vendor delays; customer requested delays of
our products or services; delays in additional acquisition
opportunities; currency exchange rates; adequacy of financing;
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, 2022 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 in
thousands, except per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended February 28,
|
|
Year Ended February 28,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Sales
|
|
$
224,654
|
|
$
195,629
|
|
$
902,664
|
|
$
838,917
|
Cost of
sales
|
|
169,437
|
|
149,859
|
|
677,441
|
|
650,170
|
Gross margin
|
|
55,217
|
|
45,770
|
|
225,223
|
|
188,747
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
31,006
|
|
27,268
|
|
113,680
|
|
107,134
|
Restructuring and
impairment charges
|
|
(1,797)
|
|
(270)
|
|
(1,797)
|
|
19,999
|
Operating income (loss)
|
|
26,008
|
|
18,772
|
|
113,340
|
|
61,614
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
1,314
|
|
2,272
|
|
6,395
|
|
9,648
|
Other (income) expense,
net
|
|
(762)
|
|
144
|
|
600
|
|
969
|
Income before income
taxes
|
|
25,456
|
|
16,356
|
|
106,345
|
|
50,997
|
Income tax expense
(benefit)
|
|
3,834
|
|
196
|
|
22,323
|
|
11,383
|
Net income
|
|
$
21,622
|
|
$
16,160
|
|
$
84,022
|
|
$
39,614
|
Earnings per common
share
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.88
|
|
$
0.64
|
|
$
3.38
|
|
$
1.53
|
Diluted
|
|
$
0.87
|
|
$
0.63
|
|
$
3.35
|
|
$
1.52
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding
|
|
24,918
|
|
26,045
|
|
25,077
|
|
26,045
|
AZZ Inc.
|
Segment Reporting
|
(dollars in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended February 28,
|
|
Year Ended February 28,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
(In
thousands)
|
|
(In
thousands)
|
Sales:
|
|
|
|
|
|
|
|
|
Metal
Coatings
|
|
$
128,298
|
|
$
106,149
|
|
$
519,000
|
|
$
457,791
|
Infrastructure
Solutions
|
|
96,356
|
|
89,480
|
|
383,664
|
|
381,126
|
Total sales
|
|
$
224,654
|
|
195,629
|
|
$
902,664
|
|
$
838,917
|
|
|
|
|
|
|
|
|
|
Operating
income:
|
|
|
|
|
|
|
|
|
Metal
Coatings
|
|
$
31,446
|
|
$
26,591
|
|
$
127,335
|
|
$
95,946
|
Infrastructure
Solutions
|
|
9,706
|
|
3,123
|
|
35,543
|
|
6,487
|
Corporate
|
|
(15,144)
|
|
(10,942)
|
|
(49,538)
|
|
(40,819)
|
Total operating
income
|
|
$
26,008
|
|
$
18,772
|
|
$
113,340
|
|
$
61,614
|
AZZ Inc.
|
Condensed Consolidated Balance
Sheets
|
(dollars in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
February 28, 2022
|
|
February 28, 2021
|
Assets:
|
|
|
|
|
Current assets (including assets held for sale of
$225)
|
|
$
386,533
|
|
$
305,055
|
Property, Plant and Equipment, Net
|
|
230,848
|
|
207,089
|
Other assets, net
|
|
515,647
|
|
487,083
|
Total assets
|
|
$
1,133,028
|
|
$
999,227
|
|
|
|
|
|
Liabilities and
Shareholders' Equity:
|
|
|
|
|
Current liabilities
|
|
$
150,531
|
|
$
116,633
|
Long-term debt due after one year, net
|
|
226,484
|
|
178,419
|
Other liabilities
|
|
88,648
|
|
80,883
|
Shareholders' equity
|
|
667,365
|
|
623,292
|
Total liabilities and
shareholders' equity
|
|
$
1,133,028
|
|
$
999,227
|
(1) Amounts for FY2021
include adjustments for a business that was reclassified from
Assets held for sale
to assets held and
used.
|
AZZ Inc.
|
Condensed Consolidated Statements of Cash
Flows
|
(dollars in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
Year Ended
|
|
|
February 28,
2022
|
|
February 28,
2021
|
Net cash provided by
operating activities
|
|
$
86,010
|
|
$
92,035
|
Net cash used in
investing activities
|
|
(86,835)
|
|
(28,593)
|
Net cash provided by
(used in) financing activities
|
|
912
|
|
(88,425)
|
Effect of exchange
rates on cash
|
|
158
|
|
3,133
|
Net increase (decrease)
in cash and cash equivalents
|
|
$
245
|
|
$
(21,850)
|
Cash and cash
equivalents at beginning of period
|
|
14,837
|
|
36,687
|
Cash and cash
equivalents at end of period
|
|
$
15,082
|
|
$
14,837
|
AZZ Inc.
Non-GAAP
Disclosure
Adjusted Operating Income, Adjusted Earnings
and Adjusted Earnings Per Share
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.
The following tables provides a reconciliation for the three and
twelve months ended February 28, 2022 and 2021 between the
various measures calculated in accordance with GAAP to the Adjusted
Earnings Measures, which are shown net of tax (dollars in
thousands, except per share data):
|
|
Three Months ended
February 28, 2022
|
|
Twelve Months ended
February 28, 2022
|
Operating
income
|
|
$
26,008
|
|
$
113,340
|
Restructuring and
impairment charges
|
|
(1,797)
|
|
(1,797)
|
Acquisition related
expenditures
|
|
1,554
|
|
1,554
|
Adjusted operating
income
|
|
$
25,765
|
|
$
113,097
|
|
|
Three Months ended
February 28, 2022
|
|
Year Ended February 28,
2022
|
|
|
|
Amount
|
|
Per
Diluted
Share(1)
|
|
Amount
|
|
Per
Diluted
Share(1)
|
|
Net income and diluted
earnings per share
|
|
$
21,622
|
|
$
0.87
|
|
$
84,022
|
|
$
3.35
|
|
Adjustments (net of
tax):
|
|
|
|
|
|
|
|
|
|
Restructuring and impairment charges:
|
|
|
|
|
|
|
|
|
|
Metal Coatings
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Infrastructure
Solutions(2)
|
|
(1,797)
|
|
(0.07)
|
|
(1,797)
|
|
(0.07)
|
|
Acquisition related expenditures(3)
|
|
1,554
|
|
0.06
|
|
1,554
|
|
0.06
|
|
Subtotal
|
|
(243)
|
|
(0.01)
|
|
(243)
|
|
(0.01)
|
|
Tax
provision (benefit) related to restructuring and
impairment charges(4)
|
|
56
|
|
—
|
|
56
|
|
—
|
|
Total
adjustments
|
|
(187)
|
|
(0.01)
|
|
(187)
|
|
(0.01)
|
|
Adjusted earnings and
adjusted earnings per share
|
|
$
21,435
|
|
$
0.86
|
|
$
83,835
|
|
$
3.34
|
|
(1) Adjusted earnings per share amounts
included in the table above may not sum due to rounding
differences.
|
|
(2) Represents the reversal of
impairment charges recognized in FY2021 for a business that is no
longer held for sale.
|
|
(3) Acquisition related expenditures
represents expenses related to the Precoat Acquisition.
|
|
(4) The non-GAAP effective tax rates for
both the three-and twelve-month periods for FY2022 was
22.9%.
|
|
|
|
Three Months ended
February 28, 2021
|
|
Year Ended
February 28, 2021
|
|
|
Amount
|
|
Per
Diluted
Share(1)
|
|
Amount
|
|
Per
Diluted
Share(1)
|
Net income and diluted
earnings per share
|
|
$
16,160
|
|
$
0.63
|
|
$
39,614
|
|
$
1.52
|
Adjustments (net of
tax):
|
|
|
|
|
|
|
|
|
Restructuring and impairment charges:
|
|
|
|
|
|
|
|
|
Metal Coatings
|
|
(247)
|
|
(0.01)
|
|
10,796
|
|
0.41
|
Infrastructure
Solutions
|
|
(23)
|
|
—
|
|
9,203
|
|
0.35
|
Subtotal
|
|
(270)
|
|
(0.01)
|
|
19,999
|
|
0.77
|
Tax
provision (benefit) related to restructuring and
impairment charges(2)
|
|
59
|
|
—
|
|
(4,584)
|
|
(0.18)
|
Total
adjustments
|
|
(211)
|
|
(0.01)
|
|
15,415
|
|
0.59
|
Adjusted earnings and
adjusted earnings per share
|
|
$
15,949
|
|
$
0.61
|
|
$
55,029
|
|
$
2.11
|
|
|
|
|
|
|
|
|
|
(1) Adjusted earnings per share amounts
included in the table above may not sum due to rounding
differences.
|
(2) The non-GAAP effective
tax rates for the three-and twelve month periods was 22.0%
and 22.9%, respectively.
|
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SOURCE AZZ Inc.