8-K
AZZ INC (AZZ)
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
July 11, 2022
Date of Report (Date of earliest event reported)
AZZ Inc.
(Exact name of Registrant as specified in its charter)
| Texas | 1-12777 | 75-0948250 |
|---|---|---|
| (State or other jurisdiction<br><br>of incorporation) | (Commission<br><br>File Number) | (I.R.S. Employer<br><br>Identification No.) |
One Museum Place, Suite 500
3100 West 7th Street
Fort Worth, Texas 76107
(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 |
|---|---|---|
| Common Stock | AZZ | New York Stock Exchange |
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 11, 2022, AZZ Inc. ("AZZ") issued a press release reporting AZZ’s first quarter financial results for the period ended May 31, 2022. 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 11, 2022, 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 | Press release, reporting financial results for the first quarter of fiscal year 2023, ended May 31, 2022. |
| 99.2 | Investor Presentation, dated July 11, 2022. |
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 11, 2022 | By: | /s/ Philip A. Schlom |
| Philip A. Schlom <br>Chief Financial Officer |
Document
AZZ Inc. Reports Results for First Quarter of Fiscal Year 2023; Generates EPS of $0.96 and Adjusted EPS of $1.40
July 11, 2022 - FORT WORTH, TX - AZZ Inc. (NYSE: AZZ), a global provider of metal coating solutions, coil coating solutions, welding solutions, specialty electrical equipment and highly engineered services today announced financial results for the first quarter of fiscal year 2023, ended May 31, 2022.
First Quarter Overview:
•Year-over-year financial results
◦Diluted earnings per share (EPS), as reported of $0.96, up 9.1%
◦Diluted EPS, as adjusted of 1.40, up 59.1%
◦Sales of $314.4 million, up 36.8%
◦Net income, as reported, $24.1 million, up $1.7 million, or 7.8%
◦Net income, as adjusted, of 36.0 million, up 61.0%
◦EBITDA of $54.2 million, up 26.8%
•Metal Coatings segment versus same quarter, prior year:
◦Sales of $160.8 million, up 25.9%
◦EBITDA of $52.7 million, up 35.0%
◦Operating income of $44.4 million, up 40.7%
◦Operating margins of 27.6%, up 290 basis points
•Precoat Metals segment, acquired May 13, 2022:
◦Sales of $43.7 million
◦EBITDA of $9.8 million
◦Operating income of $6.6 million
◦Operating margins of 15.2%
•Infrastructure Solutions segment versus same quarter, prior year:
◦Sales of $109.9 million, up 7.6%
◦EBITDA of $15.3 million, up 11.5%
◦Operating income of $12.9 million, up 33.5%
◦Operating margins of 11.7%, up 230 basis points
Management Discussion
Tom Ferguson, President and Chief Executive Officer of AZZ, commented, “We are off to a very good start in fiscal 2023 generating strong operating performance in the first quarter, including sales increasing 36.8%, and operating income up 29.9%. These results reflect the strength of our businesses and our team's ability to execute at a high level, while continuing to support our strategic transformation efforts."
“Our Metal Coatings segment continued to deliver great operating results with record sales of $160.8 million, up 25.9%, and EBITDA of $52.7 million, up 35.0% versus the prior year's first quarter. Improved sales were driven by increased volume for hot-dip galvanizing within the renewables, utility, OEM, and construction end markets, and includes the full-quarter results of the recently completed acquisitions of both DAAM Galvanizing and Steel Creek Galvanizing. I am pleased with the team’s ability to manage the increasing costs of materials and labor, through pricing and operational improvement initiatives, while focusing on providing outstanding customer service."
"Our new Precoat Metals segment, acquired May 13, 2022, generated sales of $43.7 million, and EBITDA of $9.8 million. While segment-level results reflect just two weeks of performance as part of AZZ, I am pleased with the team’s performance thus far and, on a proforma basis, the business is on track to deliver record-level sales and EBITDA growth versus prior year. The segment should continue to benefit from favorable market conditions, including growth in import steel shipments, as well as the growing trend in manufacturing toward the increasing use of pre-painted steel and aluminum.”
Mr. Ferguson continued, “During the first quarter, our Infrastructure Solutions segment (AIS) generated sales of $109.9 million, up 7.6% and EBITDA of $15.3 million, up 11.5% as compared to the same quarter, prior year. The solid start to the fiscal year was led by both sales and operating income improvements within many of our Electrical businesses, which continue to see growing bookings and backlog. Our Industrial Solutions platform, however, experienced slightly lower sales than the prior year, as customers have deferred certain projects until later this year. Infrastructure Solutions segment operating margin of 11.7%, improved 230 basis points compared to an operating margin of 9.4% for the same period last year. These improved results are a testament to the dedication and hard work of our employees who were able to deliver these results and provide exceptional service to our customers, while navigating supply chain and labor constraints.”
First Quarter Results
For the first quarter of fiscal year 2023, the Company reported sales of $314.4 million compared to $229.8 million for the comparable period last year, an increase of 36.8%. Operating income increased to $39.9 million, or by $9.2 million, compared to operating income of $30.7 million during last year’s comparable first quarter period. Net income for the first quarter increased $1.7 million to $24.1 million, or $0.96 per diluted share compared to net income of $22.3 million, or $0.88 per diluted share for the first quarter in the prior fiscal year, driven by stronger operational performance in each of our segments, partially offset by higher interest expense, higher depreciation and amortization, and $12.6 million in acquisition and divestiture-related corporate costs. The provision for income taxes of $7.6 million reflects an effective tax rate of 23.9% for the three months ended May 31, 2022, as compared to $7.6 million, or 25.5%, for the prior year comparable period. Bookings for the three-month period increased to $317.3 million, compared to $229.8 million for the first quarter last year. The book-to-sales ratio improved to 1.01, compared to 1.00 in last year’s comparable period. Backlog at the end of the first quarter was $307.4 million, an increase of 65.2% as compared to backlog at the end of the first quarter in the prior year. The increase in backlog of $121.3 million, to $307.4 million versus prior year is largely attributable to growing demand for our electrical products.
Subsequent Event
On June 23, 2022, AZZ and Fernweh Group LLC (“Fernweh”), jointly announced that they entered into a definitive agreement whereby AZZ will contribute its AZZ Infrastructure Solutions segment to AIS Investment Holdings LLC (the “AIS JV”), and sell a 60% interest in the AIS JV to Fernweh at an implied enterprise value of $300 million. The valuation represents approximately 8.1x AIS LTM 2/28/2022 adjusted EBITDA of roughly $37 million, and is expected to result in cash proceeds to AZZ of approximately $228 million. The transaction is expected to close before the end of 2022, and is subject to certain purchase price adjustments, obtaining the requisite governmental approvals and other customary closing conditions and approvals.
Fiscal Year 2023 Guidance
Mr. Ferguson added, “Due to the acquisition of Precoat Metals, and the recently announced definitive agreement whereby AZZ will divest a majority (60%) interest in the Company’s Infrastructure Solutions segment, via the AIS JV, we will not issue full-year fiscal year 2023 guidance at this time. However, based upon information currently available to management, we anticipate 2nd quarter sales to be within the range of $485 million and $510 million, and EBITDA within the range of $90 million to $110 million.”
“As we have previously stated, for the balance of fiscal 2023, we remain highly focused on executing upon our growth strategy and various initiatives within both our Metal Coatings and Precoat Metals segments, and on completing the recently announced divestiture of a majority interest in AIS. The underlying fundamentals of our business remain strong and provide us a good foundation upon which to execute 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’ demand for our products and services.”
“Previously, we have disclosed a desire for AZZ to become predominately a metal coatings company to drive growth and enhance shareholder value, and over the past two quarters we have significantly advanced that commitment,” concluded Mr. Ferguson.
Conference Call Details
AZZ Inc. will conduct a conference call to discuss financial results for the first quarter of fiscal year 2023 today, Monday, July 11, 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: 4637193, through July 18, 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 and coil 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 Precoat Metals segment is the leading independent provider of metal coil coating solutions in North America. Precoat engages in the advanced application of protective and decorative coatings and related value-added services for steel and aluminum coil primarily serving the construction, recreational vehicles, appliance, heating, ventilation and air conditioning (HVAC), container, transportation and other end markets. 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 which are used in our hot-dip galvanizing process and natural gas which is used in our hot-dip galvanizing and coil coating processes; supply-chain vendor delays; customer requested delays of our products or services; 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, 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.
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, | ||||
| 2022 | 2021 | |||
| Sales | $ | 314,398 | $ | 229,826 |
| Cost of sales | 229,942 | 171,899 | ||
| Gross margin | 84,456 | 57,927 | ||
| Selling, general and administrative | 44,546 | 27,215 | ||
| Restructuring and impairment charges | — | — | ||
| Operating income | 39,910 | 30,712 | ||
| Interest expense | 7,473 | 1,697 | ||
| Other (income) expense, net | 798 | (969) | ||
| Income before income taxes | 31,639 | 29,984 | ||
| Income tax expense | 7,562 | 7,647 | ||
| Net income | $ | 24,077 | $ | 22,337 |
| Earnings per common share | ||||
| Basic | $ | 0.97 | $ | 0.89 |
| Diluted | $ | 0.96 | $ | 0.88 |
| Diluted weighted average shares outstanding | 25,675 | 25,270 | ||
| AZZ Inc. | ||||
| --- | --- | --- | --- | --- |
| Segment Reporting | ||||
| (dollars in thousands) | ||||
| (unaudited) | ||||
| Three Months Ended May 31, | ||||
| 2022 | 2021 | |||
| Sales: | ||||
| Metal Coatings | $ | 160,846 | $ | 127,735 |
| Precoat Metals | 43,691 | — | ||
| Infrastructure Solutions | 109,861 | 102,091 | ||
| Total sales | $ | 314,398 | $ | 229,826 |
| Operating income: | ||||
| Metal Coatings | $ | 44,435 | $ | 31,576 |
| Precoat Metals | 6,648 | — | ||
| Infrastructure Solutions | 12,851 | 9,624 | ||
| Corporate | (24,024) | (10,488) | ||
| Total operating income | $ | 39,910 | $ | 30,712 |
| AZZ Inc. | ||||
| --- | --- | --- | --- | |
| Condensed Consolidated Balance Sheets | ||||
| (dollars in thousands) | ||||
| (unaudited) | ||||
| February 28, 2022 | ||||
| Assets: | ||||
| Current Assets(1) | 720,396 | $ | 386,533 | |
| Property, Plant and Equipment, Net | 230,848 | |||
| Other assets, net | 515,647 | |||
| Total assets | 2,782,292 | $ | 1,133,028 | |
| Liabilities and Shareholders’ Equity: | ||||
| Current liabilities | 334,413 | $ | 150,531 | |
| Long-term debt due after one year, net | 226,484 | |||
| Other liabilities | 88,648 | |||
| Shareholders' equity | 667,365 | |||
| Total liabilities and shareholders' equity | 2,782,292 | $ | 1,133,028 | |
| (1) Includes assets held for sale of 235 as of both May 31, 2022 and February 28, 2022. |
All values are in US Dollars.
| AZZ Inc. | ||||
|---|---|---|---|---|
| Condensed Consolidated Statements of Cash Flows | ||||
| (dollars in thousands) | ||||
| (unaudited) | ||||
| Three Months Ended May 31, | ||||
| 2022 | 2021 | |||
| Net cash provided by operating activities | $ | 23,314 | $ | 11,060 |
| Net cash used in investing activities | (1,306,289) | (7,466) | ||
| Net cash provided by (used in) financing activities | 1,368,940 | (5,610) | ||
| Effect of exchange rate changes on cash | (49) | (418) | ||
| Net increase (decrease) in cash and cash equivalents | 85,916 | (2,434) | ||
| Cash and cash equivalents at beginning of period | 15,082 | 14,837 | ||
| Cash and cash equivalents at end of period | $ | 100,998 | $ | 12,403 |
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 three months ended May 31, 2022, the Company did not recognize any restructuring and impairment charges. The following tables provides a reconciliation for the three months ended May 31, 2022 and 2021 between the various measures calculated in accordance with GAAP to the Adjusted Earnings Measures (dollars in thousands, except per share data):
| Three Months Ended | ||||
|---|---|---|---|---|
| May 31, 2022 | ||||
| Amount | Per<br> Diluted Share | |||
| Net income and diluted earnings per share | $ | 24,077 | ||
| Impact of after-tax interest expense for Convertible Notes | 547 | |||
| Net income for diluted earnings per share | $ | 24,624 | $ | 0.96 |
| Adjustments: | ||||
| Acquisition and transaction related expenditures(2) | 12,614 | 0.49 | ||
| Increase in interest expense due to Precoat Acquisition | 5,776 | 0.22 | ||
| Depreciation and amortization - Precoat Metals | 3,181 | 0.12 | ||
| Precoat Metals segment contribution | (6,666) | (0.26) | ||
| Subtotal | 14,905 | 0.58 | ||
| Tax benefit(3) | (3,577) | (0.14) | ||
| Total adjustments | 11,328 | 0.44 | ||
| Adjusted earnings and adjusted earnings per share | $ | 35,952 | $ | 1.40 |
| (1) Earnings per share amounts included in the table above may not sum due to rounding differences. | ||||
| (2) Includes expenses related to the Precoat acquisition as well as the divestiture of the Infrastructure Solutions business. | ||||
| (3) Tax benefit consists of 21% federal statutory rate and 3% blended state tax rate. |
q1_fy2023xearningsxdeckx
AZZ Inc. Q1 FY2023 Earnings Release Presentation July 11, 2022
Q1 FY2023 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, including the statements regarding our strategic and financial initiatives. You can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “intends,” “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 presentation 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 mandates regarding the same. We also continue to experience additional increases in labor costs, components, and raw materials 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 or disposition opportunities; currency exchange rates; availability of experienced management and employees to implement the Company’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. The Company has provided additional information regarding risks associated with the business in the Company’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 the Company’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 the Company’s assumes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.
Q1 FY2023 EARNINGS PRESENTATION In addition to reporting financial results in accordance with Generally Accepted Accounting Principles in the United States ("GAAP"), AZZ has provided EBITDA and Adjusted EBITDA, 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 AZZ’s financial performance given the influx of merger and acquisition and divestiture activities, competitive position and prospects for the future. Management also believes that investors regularly rely on non-GAAP financial measures, such as EBITDA and Adjusted 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 3
Q1 FY2023 EARNINGS PRESENTATION Company Highlights ✓ Significantly advanced previously announced strategic and financial initiatives to enhance shareholder value ▪ AZZ completed several actions following recommendations emanating from our comprehensive Board-led review of our portfolio – driving the efforts on becoming a ‘pure play’ metal coatings enterprise ❖ We completed the acquisition of Precoat Metals on May 13, 2022, adding about $800 million in run-rate revenue with strong profitability ❖ We entered into a definitive agreement to sell a 60% majority stake in the Infrastructure Solutions Segment(1) for estimated proceeds of $228 million on June 23, 2022 ✓ Expanded operating segments to three; AZZ Metal Coatings (AMC), AZZ Precoat Metals (APM), and AZZ Infrastructure Solutions (AIS) ▪ Metal Coatings set new operating records for sales and income in Q1-2023 ▪ Precoat Metals contributed sales and operating margins in line with expectations for ½ month ▪ Infrastructure Solutions bookings, backlog and operating income up significantly over prior year first quarter 4 (1) Excludes AZZ Crowley Tubing, Company’s original entity when business started in 1956.
Q1 FY2023 EARNINGS PRESENTATION Q1 FY2023 Sales and Segment Market Highlights Q1 Fiscal 2023 Consolidated Sales: $314 million Metal Coatings Segment $160.8M Infrastructure Solutions Segment $109.9M AZZ Metal Coatings (AMC) • Total pounds of steel galvanized up 8.1% with almost all served markets providing increased opportunities • Effectively managed inflationary pressures and labor constraints while maintaining strong customer service • Results include full quarter for recently acquired DAAM and Steel Creek galvanizing businesses AZZ Infrastructure Solutions (AIS) • Continued bookings above sales levels; increasing backlog in both Switchgear and Enclosures product lines • Transmission and Distribution markets remain strong, and battery energy storage provides new growth opportunities • WSI sales were 5% lower in spite of Refinery utilization rates returning to normal due to some projects delaying until later in the year 5 +25.9% vs. Q1 FY2022 +7.6% vs. Q1 FY2022 Precoat Metals Segment $43.7M Segment Market Highlights AZZ Precoat Metals (APM) • Consummated purchase May 13th with immediate integration activities commencing • Pre-acquisition record-level sales and EBITDA driven by strong volumes across most markets
Q1 FY2023 EARNINGS PRESENTATION Sales Net Income Diluted EPS Q1 Fiscal Year 2023 Summary – AZZ Consolidated Results $229.8 $314.4 FY2022 FY2023 +37% • First quarter sales were up 18% versus prior year when APM is excluded • Strong demand within both AMC and AIS drove sales growth • APM added $43.7 sales in the quarter • Continued strong operational performance across the Segments • Adjusted Net Income Q1-23 impacted by acquisition related expenditures • Improved earnings across all Segments • Q1 adjusted results include $0.44 of EPS related to acquisition and transaction-related expenditures, higher interest, depreciation and amortization expenses, and excludes Precoat earnings contribution +8% / (a) +61% +9% / (a) +59% In $millions, except percentages and per share amounts 6 $22.3 $24.1 $35.9 FY2022 FY2023 FY2023(a) $0.88 $0.96 $1.40 FY2022 FY2023 FY2023(a) EBITDA +27% / (a) +41% • Flow through from higher Sales, particularly AMC • Includes one-time acquisition and transaction-related costs $42.8 $54.3 $60.2 FY2022 FY2023 FY2023 (a) Note: See slide 13 for reconciliation of GAAP to Non-GAAP
Q1 FY2023 EARNINGS PRESENTATION Q1 FY2023 Segment Results – Metal Coatings • Record level results for Sales, Operating Income and EBITDA • Operating margins of 27.6% for the current quarter were a result of strong operational execution, price, and mix of products galvanized • Galvanizing volumes increased by 8.1% over prior year first quarter • Generated 20% in organic sales growth and benefitted from first full quarter of sales from recent Steel Creek (South Carolina) and DAAM Galvanizing (Canada) acquisitions • Increased costs in Galvanizing (zinc, labor, acid, energy) continued to be offset by operating efficiencies, productivity and value pricing In millions $ except percentages Sales $127.7 $160.8 FY2022 FY2023 +26% Operating Income +41%Key Statistics FY2022 Sales Organic Acquisitions FY2023 Sales $127.7 $160.8 $7.1 $26.0 AZZ Metal Coating Segment Summary: 7 $31.6 $44.4 FY2022 FY2023 EBITDA $39.1 $52.7 FY2022 FY2023 +35% 24.7% 27.6%
Q1 FY2023 EARNINGS PRESENTATION AZZ Precoat Metals Q1-2023 Pro Forma Results Actual – Partial May (5/14 to 5/31) • Sales of $43.7M • Operating Income of $6.6M, or 15.2% of sales • EBITDA of $9.8M, or 22.4% of sales Pro Forma Q1 - Actual vs Prior • Record Sales, EBITDA and Cash for Q1 • Attempting to keep pace with price increases to offset higher paint and other expenses • Targeted operational performance opportunities offset by increased paint blend cell savings • Warehousing volume of customer steel and aluminum has increased significantly, improving outlook, and resulting in some increased logistics expenditures 8 Note: May 31, 2022, operating income and EBITDA adjusted for $34m AZZ/ Sequa Transaction Costs Pro Forma as of May 31, 2022 Pro Forma as of May 31, 2021 $ Change % Chang e Net Sales 236.8$ 169.6$ 67.2$ 39.6% Gross Margin 56.6$ 39.9$ 16.7$ 41.9% Gross Margin % 23.9% 23.5% 40 bps Operating Income 45.4$ 28.9$ 16.5$ 57.1% Operating Margin % 19.2% 17.0% 220 bps EBITDA 54.1$ 38.6$ 15.5$ 40.2% EBITDA Margin % 22.8% 22.8% -
Q1 FY2023 EARNINGS PRESENTATION Q1 FY2023 Segment Results – Infrastructure Solutions • AIS off to a solid start, led by sales and operating income improvement within the Electrical Platform • Backlog increased year-over-year by $121.3M, or 65.2% • WSI had slightly lower sales, as compared to the same quarter prior year, as some projects pushed to later in the year • Subsequent event – announced definitive agreement to divest 60% of AIS through Joint Venture arrangement In millions $ except percentages Key Statistics FY2022 Book to Sales 1.00 to 1 AZZ Infrastructure Solutions Segment (AIS) Summary: FY2023 Book to Sales 1.01 to 1 FY 2022 Sales $102.1 FY2023 Sales $109.9 9 Sales $102.1 $109.9 FY2022 FY2023 +7.6% Operating Income +33.5% EBITDA +11.5% $9.6 $12.9 FY2022 FY2023 $13.7 $15.3 FY2022 FY2023 9.4% 11.7%
Q1 FY2023 EARNINGS PRESENTATION Q1 FY2023 Consolidated Results 10 (1) – Increase in shares directly attributable to Preferred Equity shares accounted for on the “as converted” method of accounting.
Q1 FY2023 EARNINGS PRESENTATION Q1 FY2023 AZZ Consolidated Cash Flow Highlights In millions, except for percentages Q1 FY 2023 Q1 FY 2022 Cash flows provided from operating activities $23.3 $11.1 Less: Capital Expenditures $(7.8) $(7.5) Free Cash Flow $15.5 $3.6 Net Income $24.1 $22.3 Free Cash Flow / Net Income 64.3% 16.1% Acquisition of Subsidiaries, net of cash acquired $1,299.2 $0.0 Payment of Dividends $(4.2) $(4.2) Share Repurchases $0 $6.3 11
Q1 FY2023 EARNINGS PRESENTATION Capital Allocation Focused on Growth $7.8 $1,299.0 $0.0 $4.2 $0.0 $200.0 $400.0 $600.0 $800.0 $1,000.0 $1,200.0 Capital Expenditures Acquisitions Share Repurchases Dividends Capital Expenditures Acquisitions Share Repurchases Dividends Q1 2023 Capital Deployment In millions • Safety, Health and Environmental • Productivity and capacity initiatives • General maintenance and sustainability • Focused on APM onboarding and completing the regulatory process for the AIS joint venture • No share repurchases in the quarter • Approved first quarter FY2023 dividend G ro w th Sh ar eh o ld er R et u rn 12
Q1 FY2023 EARNINGS PRESENTATION Q1 FY2023 GAAP to Non-GAAP Diluted Earnings Per Share Reconciliation 13 ❑ EPS impacted by transaction-related costs, higher interest and higher amortization related primarily to the Precoat Acquisition and AIS definitive agreement ❑ Interest cost significantly higher on the financing of the Precoat $1.3 billion acquisition; including $1.3B Term Loan and $240 million in Blackstone preferred equity ❑ Preliminary purchase accounting increased amortization related to intangible assets associated with the Precoat Acquisition. Company continuing to evaluate purchase accounting and expects further adjustments over the next couple quarters. Note: The charts provide a reconciliation of the “as reported” U.S. GAAP financial results to the “as adjusted” non-GAAP financial results, reflecting the impact of excluding Precoat Metals financial contribution since the acquisition on May 13, 2022. $0.88 $0.96 $1.40 $0.26 $0.14 $0.45 $0.04 $0.22 $0.13
Q1 FY2023 EARNINGS PRESENTATION Net Leverage Near-Term Focus on Rapid Deleveraging ■ Strong free cash flow generation supports deleveraging priority and future growth ■ Closely evaluated capital spending and cost management allow for quicker debt reduction (Net Debt / Pro Forma LTM Adjusted EBITDA) (1) - Based on financials as of LTM 2/28/2022 for AZZ and LTM 12/31/2021 for Precoat. AZZ financials include pro forma impact of Steel Creek and DAAM Galvanizing acquisitions. (2) - Assumes $228 million in divestiture proceeds upon closing, using same assumptions as Pro Forma 2/28/2022. 14 Rapid De-levering with Prudent Balance Sheet Management ❑ Leverage ratio of 5.0x was “as modeled” in acquisition financing ❑ Completed Q1-2023 at 4.7x ❑ Upon Proxy approval, subordinated notes become exchangeable into preferred equity ❑ Divestiture proceeds of $228M expected to quickly reduce leverage upon close ❑ Company’s long-term leverage target remains 2.5x to 3.0x 5.0 4.7 4.0 3.5 3.0 Pro Forma 2/28/2022 (1) Actual Q1-2022 Effect of Blackstone Preferred 7/13/22 Pro Forma AIS JV (2) FY24 Target
Key Indicators And Financial Guidance 15
Q1 FY2023 EARNINGS PRESENTATION 16 ✓ Metal Coatings Segment ▪ Markets remain, generally, strong with plenty of opportunities before us ▪ Fabrication activity remains solid for Q2; some customers experiencing intermittent steel shortages ▪ Surface Technology customers are returning to normal production levels in most markets ▪ The 2nd half of FY2023 zinc costs in our kettles will continue to rise ✓ Precoat Metals Segment ▪ Stable market conditions and Supply Chain Solutions (SCS) growth ▪ Market drivers include customer conversion to pre-painted steel and aluminum, as well as higher imported metals volume ▪ Inflationary pressures and logistical costs ✓ Infrastructure Solutions Segment ▪ Industrial platform ❖ Fall turnaround season expected to improve over prior year ❖ Potential for pandemic-related travel constraints ▪ Electrical platform ❖ Continued strong bookings expected in second quarter and beyond ✓ Corporate ▪ Continue to monitor cash flow, customer credit, expenses and ensure effective capital deployment Key Indicators All businesses are battling labor shortages and supply chain constraints, while finding ways to achieve plans and keep customers satisfied
Q1 FY2023 EARNINGS PRESENTATION Fiscal Year 2023 – Financial Guidance • We are not issuing Full Year guidance at this time due to the recently announced transactions o Precoat Metals acquisition, which closed on May 13, 2022 o Divestiture of 60% stake in AIS announced on June 23, 2022 • 2nd Quarter Financial Outlook (1) o Sales of $480 to $510 million o EBITDA of $90 to $110 million • Assumptions utilized in Outlook o AIS included in results for entire 2nd quarter o Full-quarter results for AZZ Precoat Metals o Subject to further purchase accounting evaluation and updates 17 (1) 2nd quarter financial outlook based upon information currently available, including assumptions related to ongoing purchase accounting evaluation.
Q1 FY2023 EARNINGS PRESENTATION ✓ AZZ has taken the actions necessary to become a ‘pure play’ metal coatings leader in North America ✓Our focus is on expanding our leading market positions in both AZZ Metal Coatings as well as recently acquired AZZ Precoat Metals to position the Company to remain the leader in the pre- and post-fabrication metal coatings markets ✓ In the shorter term our focus is on completing the announced AIS transaction, seamlessly onboarding Precoat Metals and paying down debt Strategic Direction 18
Q&A
Reg “G” Tables
Q1 FY2023 EARNINGS PRESENTATION Non-GAAP Disclosure of Consolidated EBITDA 21 In millions Consolidated Q1 FY 23 Consolidated Q1 FY 22 GAAP Net Income $24.1 $22.3 Adjustments to reconcile GAAP to non-GAAP Financial Measures: Interest Expense 7.5 1.7 Income Tax Expense 7.6 7.6 Depreciation and Amortization Expense 15.1 11.1 Total GAAP adjustments $30.2 $20.4 Non-GAAP EBITDA (1) $54.3 $42.7 Acquisition Costs 12.6 0.0 Precoat Contribution (6.7) 0.0 Adjusted EBITDA $60.2 $42.7 (1) - Refer to slide 13 for detailed walk-forward and summary of the expenditures incurred for acquisition and transaction-related activities for the current quarter.
Q1 FY2023 EARNINGS PRESENTATION Non-GAAP Segment Disclosure (Metal Coatings. Infrastructure Solutions and Precoat Metals) In millions Metal Coatings Q1 Fiscal Year 2023 Metal Coatings Q1 Fiscal Year 2022 Infrastructure Solutions Q1 Fiscal Year 2023 Infrastructure Solutions Q1 Fiscal Year 2022 GAAP Operating Income $44.4 $31.6 $12.9 $9.6 Adjustments to reconcile GAAP to non-GAAP Financial Measures: Other (Income) / Expense 0.0 0.0 (0.8) 0.9 Interest Expense 0.0 0.0 0.0 0.0 Depreciation and Amortization Expense 8.3 7.4 3.3 3.2 Total GAAP adjustments $8.3 $7.4 $2.5 $4.1 Non-GAAP EBITDA $52.7 $39.0 $15.4 $13.7 22 Precoat Metals Q1 Fiscal Year 2023 $6.6 0.0 0.0 3.2 $3.2 $9.8
Q1 FY2023 EARNINGS PRESENTATION $(millions) except share information As Reported Adjustment F/N As Adjusted Sales $ 314.4 - $ 314.4 Gross Profit 84.5 - 84.5 Gross Margin 26.9 % 26.9 % SG&A 31.9 (2.3) 34.2 Acquisition and transaction related expenditures 12.6 (12.6) - Operating Profit 40.0 14.9 (1) 54.9 Operating Margin 12.7 % 16.7 % Other (income) / expense, net 0.8 - 0.8 Interest 7.5 - 7.5 Tax 7.6 (3.6) (2) 4.6 Net Income $ 24.1 $ - $ 42.0 Diluted shares outstanding 25,675 0 24,870 Diluted EPS $ 0.96 $ 0.44 $ 1.40 Depreciation and Amortization $ 15.1 $ - $ 15.1 EBITDA $ 54.3 $ - $ 67.6 EBITDA Margin 17.3% 21.5% Footnotes: (1) Includes Precoat acquisition and AIS divestiture acquisition and transactions costs, respectively. (2) Tax benefit estimated at 24%. Current Quarter to date Non-GAAP Disclosure of Metal Coatings. Infrastructure Solutions and Precoat Metals EBITDA 23