Azz Inc 8-K, filed Jul 9, 2021
Azz Inc (AZZ)
8-K
2021-07-09
For: 2021-07-09
View Original
Added on
April 04, 2026
About this 8-K
Azz Inc filed this 8-K on July 9, 2021.
Items reported
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
(Exact name of Registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
(Address of principal executive offices) (Zip Code)
(817 ) 810-0095
(Registrant’s telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On July 9, 2021, AZZ Inc. ("AZZ") issued a press release reporting AZZ’s first quarter financial results for the period ended May 31, 2021. A copy of this press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
The information in this Item 2.02 (including Exhibit 99.1) is being furnished and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. Nor shall the information in this Current Report be incorporated by reference in any other filing with the U.S. Securities and Exchange Commission made by AZZ, whether made before or after the date hereof, unless specifically identified therein as being incorporated therein by reference in such filing.
Item 7.01 Regulation FD Disclosure.
On July 9, 2021, AZZ also posted an investor presentation to its website at https://www.azz.com/investor-relations. A copy of the investor presentation is attached hereto as Exhibit 99.2 and incorporated herein by reference.
The information in this Item 7.01 (including Exhibit 99.2) is being furnished and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. Nor shall the information in this Current Report be incorporated by reference in any other filing with the U.S. Securities and Exchange Commission made by AZZ, whether made before or after the date hereof, unless specifically identified there as being incorporated therein by reference in such filing.
Item 9.01 Financial Statements and Exhibits.
The following exhibits are filed as part of this report.
| Exhibit | Description | ||||
| 99.1 | |||||
| 99.2 | |||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AZZ Inc. | |||||
| Date: July 1, 2021 | By: /s/ Tara D. Mackey | ||||
| Tara D. Mackey Chief Legal Officer and Secretary | |||||
AZZ Inc. Reports Results for First Quarter of Fiscal Year 2022; Generates EPS of $0.88 and Revises Guidance
Company revises fiscal year 2022 guidance; Sales of $855 - $935 million, and earnings per share of $2.65 - $3.05, excluding potential acquisitions or divestitures
July 9, 2021 - FORT WORTH, TX - 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 first quarter of fiscal year 2022, ended May 31, 2021.
First Quarter Overview:
a.Strong year-over-year financial results
i.Reported diluted earnings per share of $0.88, up 319.0%, and
ii.Reported net income of $22.3 million, up 303.1% versus last year’s period
iii.Sales of $229.8 million, up 7.8% versus last year’s period
b.Metal Coatings segment versus same quarter, prior year:
i.Sales of $127.7 million, up 7.3%
ii.Operating Income of $31.6 million, up 25.9%
iii.Operating margins of 24.7%, compared with 21.1% in prior year quarter
c.Infrastructure Solutions segment versus same quarter, prior year:
i.Sales of $102.1 million, up 8.3%
ii.Operating Income of $9.6 million, versus loss of $(1.0) million in prior year quarter
iii.Operating margins of 9.4% compared with loss of (1.1)% in prior year quarter
d.Declared quarterly cash dividend in the amount of $0.17 per common share
e.Repurchased 125,770 shares, totaling $6.3 million
Management Discussion
Tom Ferguson, President and Chief Executive Officer of AZZ, commented, “We are off to a solid start in fiscal 2022 with strong operating performance in the first quarter, including sales increasing 7.8%, operating income up 114.5% and net income up threefold. The solid financial results reflect the strength of our businesses and our team doing an outstanding job executing at a high level across the board, continuing our momentum of growth and improving operational efficiencies.”
“Our Metal Coatings segment delivered solid operating results with sales of $127.7 million, up 7.3%, and operating margin of 24.7%, up 360 basis points versus 21.1% in last year’s first quarter. Segment level results were driven by improved market conditions, customer mix, price, and operational improvement initiatives.”
Mr. Ferguson continued, “During the first quarter, our Infrastructure Solutions segment had sales of $102.1 million, up 8.3% and operating margin of 9.4%, a tenfold improvement, compared to last year’s COVID impacted first quarter. Results were driven by solid operating improvement in our global welding
solutions business, as refiners returned to performing turnarounds. We are gaining confidence for an improved second half of the year with increased domestic and international quoting activity for turnarounds, positioning AZZ for a potentially strong fiscal 2022. I want to thank all our employees for their hard work and dedication in delivering outstanding results, as well as continuing to provide exceptional service to our customers during the quarter.”
First Quarter Results
For the first quarter of fiscal year 2022, the Company reported sales of $229.8 million compared to $213.3 million for the comparable period last year, an increase of 7.8%. Operating income increased to $30.7 million, or 114.5%, compared to $14.3 million in last year’s comparable three-month period. Net income for the current quarter increased $16.8 million to $22.3 million, or $0.88 per diluted share compared to $5.5 million, or $0.21 per diluted share for the same quarter in the prior fiscal year. The provision for income taxes of $7.6 million reflects an effective tax rate of 25.5% for the three months ended May 31, 2021, as compared to $4.7 million, or 45.8%, for the prior year comparable period. Bookings for the three-month period increased to $229.8 million, compared to $174.9 million for the same quarter last year.
Metal Coatings Segment
For the first quarter of fiscal year 2022, Metal Coatings segment sales increased 7.3% to $127.7 million and operating income increased 25.9% to $31.6 million compared to $119.0 million and $25.1 million respectively, for the same period in the prior fiscal year. The higher sales for the quarter were primarily attributable to improved price realization and customer mix. Operating margins for the quarter were 24.7%, an improvement of 360 basis points compared to 21.1% in the first quarter of fiscal year 2021. Operating margin improvement was driven by both improved price realization in the current quarter, and a continued focus on operations excellence.
Infrastructure Solutions Segment
For the first quarter of fiscal year 2022, Infrastructure Solutions segment sales increased 8.3% to $102.1 million as compared to $94.3 million in the same quarter of the prior year. Operating income for the first quarter of fiscal year 2022 totaled $9.6 million as compared to an operating loss of $(1.0) million in the prior year quarter. The increase in net sales, operating income and margin for the three-month period was primarily attributable to improved market conditions within our Industrial platform, which saw an improvement in turnaround activity in both the U.S. and international markets.
Fiscal Year 2022 Guidance
Mr. Ferguson added, “Due to the improved market conditions for many of our end markets, we have revised our previously issued fiscal 2022 sales and earnings guidance. We now anticipate sales will be in the range of $855 million to $935 million and earnings per share to be in the range of $2.65 to $3.05 per diluted share for fiscal year 2022. This compares to the previous guidance of sales in the range $835 million to $935 million and earnings in the range of $2.45 to $2.95 per diluted share for fiscal year 2022.”
“As previously stated for fiscal 2022, we remain highly focused on growing our Metal Coatings segment and building our Infrastructure Solutions backlog in enclosures, switchgear and welding solutions. 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 flexing our capacity to better 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. The previously announced board-led strategic review of our portfolio and capital allocation is complete, and we are actively pursuing multiple recommendations that align with and support our strategy. 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 first quarter of fiscal year 2022 today, Friday July 9, 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 # 10157738, 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 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 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, 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.
Company Contact:
David Nark, Senior Vice President of Marketing, Communications and Investor Relations
AZZ Inc.
(817) 810-0095
www.azz.com
Investor Contact:
Joe Dorame, Managing Partner
Lytham Partners
(602) 889-9700
www.lythampartners.com
---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 May 31, | ||||||||||||||||||||||||||
| 2021 | 2020 | |||||||||||||||||||||||||
| Sales | $ | 229,826 | $ | 213,293 | ||||||||||||||||||||||
| Cost of sales | 171,899 | 171,085 | ||||||||||||||||||||||||
| Gross margin | 57,927 | 42,208 | ||||||||||||||||||||||||
| Selling, general and administrative | 27,215 | 27,890 | ||||||||||||||||||||||||
| Operating income | 30,712 | 14,318 | ||||||||||||||||||||||||
| Interest expense | 1,697 | 2,634 | ||||||||||||||||||||||||
| Other (income) expense, net | (969) | 1,456 | ||||||||||||||||||||||||
| Income before income taxes | 29,984 | 10,228 | ||||||||||||||||||||||||
| Income tax expense | 7,647 | 4,687 | ||||||||||||||||||||||||
| Net income | $ | 22,337 | $ | 5,541 | ||||||||||||||||||||||
| Earnings per common share | ||||||||||||||||||||||||||
| Basic | $ | 0.89 | $ | 0.21 | ||||||||||||||||||||||
| Diluted | $ | 0.88 | $ | 0.21 | ||||||||||||||||||||||
| Diluted weighted average shares outstanding | 25,270 | 26,192 | ||||||||||||||||||||||||
| AZZ Inc. | ||||||||||||||
| Segment Reporting | ||||||||||||||
| (dollars in thousands) | ||||||||||||||
| (unaudited) | ||||||||||||||
| Three Months Ended May 31, | ||||||||||||||
| 2021 | 2020 | |||||||||||||
| Sales: | ||||||||||||||
| Metal Coatings | $ | 127,735 | $ | 118,991 | ||||||||||
Infrastructure Solutions | 102,091 | 94,302 | ||||||||||||
| Total sales | $ | 229,826 | $ | 213,293 | ||||||||||
| Operating income: | ||||||||||||||
| Metal Coatings | $ | 31,576 | $ | 25,085 | ||||||||||
Infrastructure Solutions | 9,624 | (1,048) | ||||||||||||
| Corporate | (10,488) | (9,719) | ||||||||||||
| Total operating income | $ | 30,712 | $ | 14,318 | ||||||||||
| AZZ Inc. | ||||||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||||||
| (dollars in thousands) | ||||||||||||||
| (unaudited) | ||||||||||||||
| May 31, 2021 | February 28, 2021 | |||||||||||||
| Assets: | ||||||||||||||
Current Assets(1) | $ | 334,908 | $ | 303,492 | ||||||||||
| Property, Plant and Equipment, Net | 207,689 | 205,909 | ||||||||||||
| Other assets, net | 496,642 | 487,041 | ||||||||||||
| Total assets | $ | 1,039,239 | $ | 996,442 | ||||||||||
| Liabilities and Shareholders’ Equity: | ||||||||||||||
| Current liabilities | $ | 131,194 | $ | 113,850 | ||||||||||
| Long-term debt due after one year, net | 185,435 | 178,419 | ||||||||||||
| Other liabilities | 85,199 | 80,881 | ||||||||||||
| Shareholders' equity | 637,411 | 623,292 | ||||||||||||
| Total liabilities and shareholders' equity | $ | 1,039,239 | $ | 996,442 | ||||||||||
(1) Includes assets held for sale of $5,628 and $3,684 as of May 31, 2021 and February 28, 2021, respectively. | ||||||||||||||
| AZZ Inc. | ||||||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||||||
| (dollars in thousands) | ||||||||||||||
| (unaudited) | ||||||||||||||
| Three Months Ended May 31, | ||||||||||||||
| 2021 | 2020 | |||||||||||||
| Net cash provided by (used in) operating activities | $ | 11,060 | $ | (11,184) | ||||||||||
| Net cash used in investing activities | (7,466) | (10,847) | ||||||||||||
| Net cash (used in) provided by financing activities | (5,610) | 11,036 | ||||||||||||
| Effect of exchange rates on cash | (418) | 722 | ||||||||||||
| Net decrease in cash and cash equivalents | (2,434) | (10,273) | ||||||||||||
| Cash and cash equivalents at beginning of period | 14,837 | 36,687 | ||||||||||||
| Cash and cash equivalents at end of period | $ | 12,403 | $ | 26,414 | ||||||||||
AZZ Inc. Q1 FY2022 Earnings Release Presentation July 9, 2021
Q1 FY2022 EARNINGS PRESENTATION Safe Harbor Statement 2 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 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, 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.
Q1 FY2022 EARNINGS PRESENTATION Q1 FY2022 Segment Sales and Market Drivers Total Q1 FY2022 Sales: $229.8 million Market Drivers Metal Coatings Segment $127.7 Infrastructure Solutions Segment $102.1 • Galvanizing plants performed exceptionally well • Surface Technologies demand returning and operational improvement initiatives are underway • Full quarter with recently acquired ACME Galvanizing • Spring turnaround season significantly improved • Growing backlog for electrical switchgear and enclosures • Refinery utilization rates within normal five-year range • Sales, without divested SMS, increased 23.4% versus reported 8.3% 3 +7.3% vs. Q1 FY2021 +8.3% vs. Q1 FY2021
Q1 FY2022 EARNINGS PRESENTATION Sales Net Income Diluted EPS Q1 FY2022 Summary - Consolidated $213.3 $229.8 FY2021 FY2022 +7.8% • Metal Coatings focusing on service • Spring refining turnarounds improved • Electrical product demand growing • Metal Coatings margin expansion • Industrial Solutions operating leverage • Benefitting from realignment actions taken in prior year • Improved earnings across platforms • Lower interest expense from improved financing • Share repurchases continue in FY2022 +303% 319% In $millions, except percentages and per share amounts 4 $5.5 $22.3 FY2021 FY2022 $0.21 $0.88 FY2021 FY2022
Q1 FY2022 EARNINGS PRESENTATION Q1 FY2022 Segment Results – Metal Coatings • Overall segment operating margins of 24.7%, compared to 21.1% in the prior year a result of price, mix, and operational excellence • Galvanizing volume steady, versus same quarter in prior year period; First full quarter of sales from Acme Galvanizing acquisition • Increased costs in Galvanizing (zinc, labor, acid, energy) were offset by operating efficiencies, productivity and value pricing In millions $ except percentages Sales $119.0 $127.7 FY2021 FY2022 +7.3% Operating Income +25.9%Key Statistics FY2021 Sales Organic Acquisitions FY2022 Sales $119.0 $127.7 $2.5 $6.2 Segment Summary: 5 $25.1 $31.6 FY2021 FY2022 Operating Margin 21.1% 24.7% FY2021 FY2022 +360 bps
Q1 FY2022 EARNINGS PRESENTATION Q1 FY2022 Segment Results – Infrastructure Solutions • Enhanced profitability as a result of realignment actions taken in prior year • Much improved spring turnaround season • Industrial Platform operating leverage improvement • Backlog growing, particularly within switchgear and enclosure business units, partially offset by reduced bus backlog in China In millions $ except percentages Key Statistics FY2021 Book to Sales .82 to 1 Segment Summary: FY2022 Book to Sales 1.00 to 1 FY 2021 Sales $94.3 FY2022 Sales $102.1 6 Sales $94.3 $102.1 FY2021 FY2022 +8.3% Operating Income +1,018% Operating Margin +1,050 bps -$1.0 $9.6 FY2021 FY2022 -1.1% 9.4% FY2021 FY2022
Q1 FY2022 EARNINGS PRESENTATION FY2022 – Updated Full Year Financial Guidance Key Drivers: Metal Coatings: • Volume/mix and steel availability for customers • Ability to realize price as production costs increase Infrastructure Solutions: • Fall refining turnaround season • Orders for Electrical equipment Corporate: • Tax rate changes, and our ability to recognize planned tax savings in FY2022 • Debt refinancing and continued low cost of debt 7 Sales Earnings Per Share $835 - $935 $2.45 - $2.95 In millions, except for EPS Updated RangePrevious Range $855 - $935 $2.65 - $3.05
Q1 FY2022 EARNINGS PRESENTATION Q1 FY2022 Consolidated Results In millions, except for EPS and percentages Q1 FY 2022 Q1 FY 2021 % Change vs. Prior Year Sales $229.8 $213.3 7.8% Gross Profit $57.9 $42.2 37.2% Gross Margin 25.2% 19.8% 540 bps Operating Profit $30.7 $14.3 114.5% Operating Margin 13.4% 6.7% 670 bps EBITDA $42.8 $24.5 74.3% Net Income $22.3 $5.5 303.1% Diluted Earnings Per Share (EPS) $0.88 $0.21 319.0% Diluted Shares Outstanding 25,270 26,192 -3.5% 8
Q1 FY2022 EARNINGS PRESENTATION Q1 FY2022 Cash Flow Highlights In millions, except for percentages Q1 FY 2022 Q1 FY 2021 Cash flows used in operating activities $11.1 $(11.2) Less: Capital Expenditures $(7.5) $(10.8) Free Cash Flow $3.6 $(22.0) Net Income $22.3 $5.5 Free Cash Flow / Net Income 16.1% (400)% Acquisition of Subsidiaries, net of cash acquired $0.0 $0.0 Payment of Dividends $4.2 $4.4 Share Repurchases $6.3 $0.0 9
Q1 FY2022 EARNINGS PRESENTATION Capital Allocation Focused on Growth $7.5 $0.0 $6.3 $4.2 Capital Expenditures Acquisitions Share Repurchases Dividends Capital Expenditures Acquisitions Share Repurchases Dividends Q1 2022 Capital Deployment In millions • Safety, Health and Environmental • Productivity and capacity initiatives • General maintenance and sustainability • Active portfolio of acquisition opportunities, with emphasis on Metal Coatings • Share repurchases totaled $6.3 million • Approved first quarter FY2022 dividend Gr ow th Sh ar eh ol de r R et ur n 10
Key Indicators 11
Q1 FY2022 EARNINGS PRESENTATION 12 Metal Coatings Segment • Fabrication activity remains solid for Q2; some customers experiencing intermittent steel shortages • Surface Technology customers are returning to normal production levels in most markets • Zinc cost in our kettles continues to rise gradually Infrastructure Solutions Segment Industrial platform • Fall turnaround season expected to improve over prior year • Pandemic-related travel constraints to some international markets Electrical platform • Bookings expected to increase in second quarter and beyond Corporate • Continue to monitor cash flow, customer credit, expenses and ensure effective capital deployment Key Indicators
Q1 FY2022 EARNINGS PRESENTATION • The previously announced board-led strategic review of our portfolio and capital allocation is complete • We are actively pursuing multiple recommendations that align with and support our strategy • Long term strategy to continue to grow Metal Coatings organically and with a robust acquisition program, while targeting sustainable 21-23% Operating Margins • Focus on operating excellence and providing outstanding customer service • Assumes continued inorganic growth in Galvanizing and Surface Technologies • Infrastructure Solutions will continue to focus on operational excellence and profitable growth in its core businesses while divesting or exiting non-core operations • Specialty Welding will grow through continued international expansion and improved North American turnarounds, offering the best customized welding technology • Electrical businesses will continue to focus on improving profitability through business process alignment, and on market growth Strategic Direction 13
Q&A
Reg G Tables
Q1 FY2022 EARNINGS PRESENTATION • In addition to reporting financial results in accordance with Generally Accepted Accounting Principles in the United States ("GAAP"), AZZ has provided EBITDA, which is a non-GAAP measure. Management believes that the presentation of this measure provides investors with a greater transparency comparison of operating results across a broad spectrum of companies, which provides a more complete understanding of AZZ’s financial performance, competitive position and prospects for the future. Management also believes that investors regularly rely on non-GAAP financial measures, such as EBITDA, 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. Non-GAAP Disclosure of EBITDA 16
Q1 FY2022 EARNINGS PRESENTATION Non-GAAP Disclosure of Consolidated EBITDA In millions Consolidated Q1 FY 22 Consolidated Q1 FY 21 GAAP Net Income $22.3 $5.5 Adjustments to reconcile GAAP to non-GAAP Financial Measures Interest Expense $1.7 $2.6 Income Tax Expense $7.7 $4.7 Depreciation and Amortization Expense $11.1 $11.7 Total GAAP adjustments $20.5 $19.0 Non-GAAP EBITDA $42.8 $24.5 17
Q1 FY2022 EARNINGS PRESENTATION Non-GAAP Disclosure of Metal Coatings and Infrastructure Solutions EBITDA In millions Metal Coatings Q1 FY 22 Metal Coatings Q1 FY 21 Infrastructure Solutions Q1 FY 22 Infrastructure Solutions Q1 FY 21 GAAP Operating Income $31.6 $25.1 $9.6 $(1.0) Adjustments to reconcile GAAP to non-GAAP Financial Measures Other Income / Expense $0.0 $(0.1) $0.9 $(1.3) Interest Expense $0.0 $0.0 $0.0 $0.0 Depreciation and Amortization Expense $7.4 $7.8 $3.2 $3.3 Total GAAP adjustments $7.4 $7.7 $4.1 $2.0 Non-GAAP EBITDA $39.0 $32.8 $13.7 $1.0 18