AZZ Inc. (AZZ) on Q3 2021 Results - Earnings Call Transcript
Operator: Good day, and welcome to the AZZ, Inc. Third Quarter of Fiscal Year 2021 Financial Results Conference Call. All participants will be in a listen-only mode. Please note that this event is being recorded. I would like to turn the conference over to Joe Dorame. Please go ahead sir. Joe Dorame: Thank you, Jack. Good morning, and thank you for joining us today to review the financial results of AZZ, Inc. for the third quarter of fiscal year 2021 ended November 30, 2020. Joining the call today are Tom Ferguson, Chief Executive Officer, Philip Schlom, Chief Financial Officer, and David Nark, Senior Vice President, Marketing and Communications and IR. After the conclusion of today's prepared remarks we will open the call for a question-and-answer session. Please note there is a slide presentation for today's call, which can be found on AZZ's Investor Relations page under Financial Information at www.azz.com. Thomas Ferguson: Thanks, Joe. Happy New Year to everyone and welcome to our third quarter fiscal year 2021 earnings call, and thank you for joining us this morning. While we continue to be impacted by COVID-19, our markets are stabilizing and our businesses have adapted to the new normal way of operating, which encompasses a variety of challenges that we have had to overcome. While we have had an uptick in COVID cases, all of our plants have remained open with normal production. The collective efforts of our folks generated consolidated sales of $227 million for the third quarter, split almost equally between our Metal Coatings and Infrastructure Solutions segments. Philip Schlom: Thanks, Tom. For the third quarter of fiscal year 2021, we reported sales, as Tom noted, of $226.6 million, a $64.5 million decrease or 22.2% lower than the third quarter of the prior year. Sales were down primarily as a result of lower sales in the company's infrastructure, industrial platform as a result of the pandemic, and lost aggregate sales from divested entities over the past year. Net income for the third quarter of fiscal '21 was $19.7 million, a decrease of $2.3 million or 10.6% below the prior year third quarter. Diluted EPS of $0.76 per share declined 9.5% compared to the $0.84 per share in the prior year third quarter. Despite the lower sales, third quarter fiscal 2021 gross margin improved 100 basis points to 21 -- 24.1% on a year-over-year basis, and was driven by continued strong margin performance within the Metal Coatings segment. Operating margins of 12.3% of sales increased 80 basis points compared to 11.5% of sales in the prior year. Operating income for the third quarter of fiscal 2021 decreased 16.6% to $27.9 million from $33.4 million in the prior year third quarter. Third quarter EBITDA of $39.6 million, decreased 15.4% compared to $46.8 million in EBITDA and last year's third quarter. As for the year-to-date results, in third quarter of fiscal '21, we reported year-to-date sales of $643.3 million, 21.2% below the $816.5 million in the sales in the same period last year. Year-to-date, net income for the third quarter was $23.5 million, a decrease of $35.4 million, or 60.2% from the same period last year. Year-to-date net income, as adjusted for the restructuring and impairment charges primarily incurred early in the year was $39 million, which was $19.9 million or 33.8% lower than the comparable prior year results. Year-to-date reported diluted EPS declined 59.8% to $0.90 a share, as compared to $2.24 per share for the same period last year, primarily driven by restructuring and impairment charges, as well as softer markets and travel restrictions resulting from the pandemic mostly in our Infrastructure Solutions segment. On an adjusted basis, year-to-date 2021 diluted EPS was $1.49 per share, a reduction of 33.5% in the prior year. Our fiscal year 2021 year-to-date gross margins of 22.2% declined 60 basis points from the gross margin of 22.8% from the prior year. Year-to-date reported operating profit of $42.8 million was $43.8 million, or 50.5% lower than the $86.6 million reported for the same period last year. Year-to-date reported operating margin of 6.7% decreased 390 basis points, compared to 10.6% last year. On a year-to-date basis, excluding the impact of the $20.3 million of restructuring and impairment charges, operating margins were 9.8% or 80 basis points below prior year. Thomas Ferguson: Thank you, Philip. I will close by sharing with you some key indicators that we continue to monitor. For the Metal Coatings segment, fabrication activity will remain solid during the balance of our fourth quarter, and we are off to a reasonably good start in December. Within our galvanizing business, we are closely tracking steel fabrication and construction activity. Zinc costs and our kettles are relatively stable, but we anticipate increases in zinc costs in fiscal 2022, as zinc prices on the LME have been rising for a while now. The Acme Galvanizing team is being quickly integrated into our existing operating network, bringing our total hot dip galvanizing locations to a market leading 40 sites in North America, in spite of recently closing two Gulf Coast locations. For surface technologies, we're primarily focused on growing sales with both existing and new customers and driving operational process improvements. Within the industrial platform of the Infrastructure Solutions segment, we continue to carefully monitor the COVID situation in the states with large refining capacities. Currently, we still are experiencing travel restrictions in some countries. For the electrical platform of the Infrastructure Solutions segment, we are carefully tracking proposal activity and experienced solid bookings in December. We will continue to focus on growing the backlog for many of our business units so that we enter fiscal year 2022 in good shape. Operator: And our first question will come from John Franzreb with Sidoti & Company. Please go ahead. John Franzreb: Hi, good morning, Tom and Philip. Thomas Ferguson: Hey, John. John Franzreb: Just wanted to throw a couple of quick questions. First, on the Metal Coatings segment, the improvement in margin on a year-over-year, how much does that -- in the operating margin, how much does that reflect the divestiture of some of the underperforming businesses versus the improvement in zinc pricing? Thomas Ferguson: That's a good question. It's still predominantly driven by operational improvement driving zinc price versus costs, the divestiture of Galvabar had some effect, but really not that much. And then the facilities we closed earlier in the year, we picked up most of that business in other locations. John Franzreb: Okay, so really, it was more of a change in the business profile than the lower price of zinc. Am I getting that correct? Thomas Ferguson: No, no, the lower cost of zinc and our ability to sell on value did play a part and -- but keeping our operations open and operating through COVID I think was something we point to a lot. John Franzreb: Okay. You spoke about last conference call that you anticipated a weak turnaround season this fall but that the order bookings were promising for the spring. Is that still the case or is going to change you consider positive and negative on the infrastructure side of the business? Thomas Ferguson: Yeah, fall came in about what we thought. The WSI business was off significantly versus Q3 of last year for that reason. We were able to travel to some locations, but it's -- so it's mostly driven by weak oil -- weak refined oil product demand which doesn't drive turnarounds. As far as the spring, we still feel good about the spring. I don't – wouldn’t say it’s stacking up to be a boomer of the spring turnaround season, but we are quoting well and getting some orders on the books. So, we feel good about it, but definitely not, it seems like things are going to take a little bit longer for refineries to start doing turnarounds again as gasoline demand and jet fuel demand continues to grow. So while we feel pretty good about the spring, I'd say a lot of this is looking like it's going to spread through the year. John Franzreb: Okay. And one last question, I’ll get back into queue. Were there any professional fees that you incurred during the quarter or anticipate in the fourth quarter you could parse it out for us? Philip Schlom: Yes. We are incurring some fees related to our comprehensive review that we've disclosed. I wouldn't say they're overly significant at this point in time. John Franzreb: Okay. I'll get back in queue. Thanks, guys. Thomas Ferguson: All right, John. Operator: Our next question will come from Noelle Dilts with Stifel. Please go ahead. Thomas Ferguson: Hi, Noelle. Operator: Pardon me, it seems Noelle Dilts has left. It seems that she has left the question queue. Our next question will come from John Braatz with Kansas City Capital. Please go ahead. John Braatz: Good morning, everyone. Tom, a question -- the -- as you do your strategic review, and you think about being more of a Metal Coatings company, currently you have galvanizing, you have surface technology. What might else there be that would fit into that strategy? Thomas Ferguson: I think it's -- there's a lot of different types of coatings, lots of different types of plating, anodizing and things like that. So, when we talk about coatings versus just metal coatings, it opens it up quite a bit, because we're already, as we found with the businesses we've acquired in the last couple of years, we're coating a lot more than just metal pieces, so that makes it a really, really wide market. The issue for us is finding things that have some scale, that can be differentiated, that require more than setting up a paint shop and a garage. So, I think while it's a wide open set of opportunities for us, it's something that we do have tight parameters on in terms of what we're looking for because of our commitments on the margin profile and our ability to differentiate. So, I think that's -- and there continues to be galvanizing opportunities. And one of the things we're completing another spin plant down in Houston, and that I think goes online -- due to all the weather delays and COVID delays, it's going online at the end of this month, I believe. And so, we look at that as other opportunities for us to grow organically. So and there's still, obviously with the acquisition of Acme, we've been working on that deal for a while and it had been delayed because of COVID. And so as we start to get out again, we're in contact with some of the traditional galvanizing deals. So, we feel pretty good about those things. John Braatz: Okay, is there a – and we talk about parameters, anything you want to -- can you tell us in terms of financial parameters, size of what you might want to, what you might be looking at in terms of size? Thomas Ferguson: We pretty much have to look at things north of $10 million in revenue, obviously 10 to up to over $100 million is -- we prefer $15 million to $25 million is probably our preferred target, but we're more focused on, does it have an operating leadership team, does it have -- because unlike galvanizing, we're still building that talent bench, so we don't have people we can just plug and play the way we do on galvanizing. So, we are a little more careful about what kind of leadership's in place. Usually, we prefer the owners go away. But I'd say size and -- really I'll say what we're not looking for and there's a lot of this out there is the 5 and 15s, as I call them. So 5% EBIT, 15% EBITDA, because if they're multisite deals, they tend to have been acquisitive. And so, they have a lot of DA, but not a lot of operating income. So, this narrows down the slate of opportunities. And yet it's still a pretty good pipeline that we have in focus. John Braatz: Tom, one final question, just after December, I had a nice conversation with a fertilizer company here domestically, and we talked about a lot of things, but they talked about their turnaround season. And it's going to be sort of abbreviated for them just because there are travel restrictions and so on and so forth. And I guess as you look at that spring turnaround season and the activity you're bidding on, and so on, is some of that still potentially at risk of being postponed or delayed, if you want to call it, because of this increase in COVID cases? Or are they sort of at this point locked in and it's going to happen? Thomas Ferguson: I think that -- and as I answered a little bit earlier, it's -- that is what gives us some pause in thinking about it being as strong as we probably were thinking on the last earnings call. I do think some of this has to go forward. And of course, we prefer when we get engineering orders in and we -- that starts to give us a line of sight to how big the project is and some surety that it is going forward. Very seldom once we have engineering orders, do they not go forward. So yes, there's still some concern. We are seeing some activity in January, February that probably normally we would see either it’s seen in the fall or we would see in the spring. So it does seem that the petrochem sector is spreading things out a little bit, perhaps because of low demand, so they are able to spread things. So that's why I say some of this could be a longer season without the big spike in the spring. But actually, that's good for us because we do have limitations on the number of crews we have to deploy. John Braatz: Okay, all right. Tom, thanks very much. Appreciate it. Operator: Our next question will come from Noelle Dilts with Stifel. Please go ahead. Noelle Dilts: Yes, good morning. Thomas Ferguson: Hey, Noelle. Noelle Dilts: I'm not sure what went on before though, I didn't go anywhere. So I just wanted to start first on the demand side for Infrastructure Solutions, and a little bit more on the electrical side of the business. So sorry if I missed this, but could you just help me understand what's driving the stronger demand for switchgear than you were originally anticipating, and the degree to which you think that might be sustainable over the next few quarters? Thomas Ferguson: Yeah, I think the transmission distribution spend has been good and some of the solar power gen activity has been good as well. So it's just the time in some of these projects where they're getting to that stage where they need switch gear. We also, with the acquisition of Oshkosh, couple of years ago, we picked up more of an industrial switchgear line and I call it industrial or even light rail. So it's broadened our opportunities for switchgears. So we're not just dependent on the big utility grade stuff. So although that's where we've had good activity recently. So, part of it's just our customer base and where we're focused and I'm not sure that it's indicative of a general uptick in the sector. It's more around our customer base. And in enclosures it is somewhat similar, I'd say the big -- some of our big OEM activity has been off on the enclosure side, but our industrial, and some of the smaller stuff has been solid. So it's just a really mixed bag out there. And so part of this is just where we're selling and what we're picking up and where our customers are active versus where they're not, versus the bus side which for the most part, the high voltage is focused on a lot of international activity. There's some domestic and we've gotten some orders, but right now, the last quarter was quiet. In medium voltage, we have a -- it's a fairly narrow offering that we have. So we're just slower than we were a couple years ago. Noelle Dilts : Okay. Got it. And then sticking with Infrastructure Solutions, but shifting to profitability. Profitability in the quarter really exceeded my expectations. And particularly given that the turnaround work has been -- at the industrial side, the turnaround work has still been slow, could you speak to kind of how you're thinking about margins there moving forward? If this as you said, the turnaround, that will remain somewhat muted as we look forward, I mean. I know the cost structure for that business is pretty flexible. So do you have it to a point where now where it's not as big of a drag, as you were kind of looking at over the past few quarters? Thomas Ferguson: Yes. You touched on a good point there, Noelle. We had taken pretty significant cost actions early, well, back in the spring, when we saw that the spring had been wiped out. So we took out some of that hate to call back office, but the SG&A in Infrastructure Solutions and adjusted capacity in some of the operations. So that as we came into the third quarter with just moderate activity or even muted activity, we were able to get to pretty good margins, on the work that we did have, because of our lower cost structure. And as you know, though, that also then limits us on the upside when we have big opportunities, and as we originally were anticipating in the spring. So we do hope that it stretches out. I think the margin profile for Infrastructure Solutions, we continue to look at getting to that 10% to 12% operating margin, 15% EBITDA. And we think that's doable with the structure we have, and with the actions we're taking on the international side to try to improve our ability to serve the international markets with a lower cost structure. Noelle Dilts : Okay. Great. And then just shifting over to Metal Coating, any comments that you have on I guess -- I ask every quarter, any markets that were particularly strong or those that were particularly weak, and how maybe any changes in the markets are impacting how you're thinking about the growth profile for that business over the next 12 months? Thomas Ferguson: You know, we do love our Metal Coating side. So they -- the galvanizing team did outstandingly well, keeping their facilities open and productive and efficient. So their margins were north of 25%, even probably close or in the 26% range for the quarter. And part of that, as I mentioned earlier, is driven by the price to zinc cost ratio, but also we give credit to some of the things we've done on the technology side with digital galvanizing system, DGS. It's allowing us to operate more efficiently and more productively and flex our plant capacity, and adjust and then react to the data we're getting from it. So we feel good about that on an ongoing basis. Our markets -- as we kind of finished this year, we have a good line of sight for this quarter and feel good about how this year is going to turn out. As we get into next year, we're -- our customers are feeling okay right now, I think they're waiting to see is there going to be corporate tax reform? Is there going to be an Infrastructure Bill, which wouldn’t have much impact on them next year, but it kind of changes the attitude. So I'd say we feel good about going forward, there is some competition coming into the market, a few new kettles next year, that'll probably come online. At the same time, we've taken out some of our plants as some other folks. So we feel pretty good about the supply demand balance in galvanizing and feel good about our team's ability to respond to it. So yeah, we -- I continue to believe sustaining north of 23 -- my COO of Metal Coating doesn't like when I say, stay it up around 25%, but they've demonstrated, they're pretty good at doing that. Noelle Dilts: Okay, perfect. Thank you very much. Operator: Our next question will come from the DeForest Hinman with Walthausen & Company. Please go ahead. DeForest Hinman : Hi, thanks for taking the questions. Just building on that last comment, can you extend that into pricing, you made. On the galvanizing side, you made reference to zinc pricing going up. Are we going to be able to move pricing directionally higher in 2021? Thomas Ferguson: I think there's generally that's -- as zinc -- since zinc cost is about 25% of our cost of goods sold on average, it'll tend to move the market price up. As I like to tell people, it's -- we've got 40 galvanizing plants. We fight 40 different battles every week. But it would be our intent to, as our costs go up to migrate our prices up. We did a good job, I think of selling values, sustaining our prices. Some of that was because our facilities were open. And we were able to keep them fully staffed through COVID, which continues. But -- so yeah, that would be the intent continuing to migrate price up as our costs go up. And we would hope that the market would respond to that, before our competitors respond to that. DeForest Hinman : Okay, very helpful. Just clarity in the 10-Q there's a reference to the Acme transaction, and it says net proceeds were $4.2 million. Is that a bargain purchase gain? Or is that just the way it's phrased, it was $4.2 million cash consideration? Philip Schlom: That's a cash consideration. DeForest Hinman : Okay. And is that any type of EBITDA color there? Or is that kind of more of an asset type purchase price number there that we're seeing? Philip Schlom: That's more of the asset purchase price, and as Thomas mentioned in the past year, we get in pretty quickly and we're able to integrate those facilities within the first three months. So we've already had a team up there on day one, integrating them into our Oracle business system and moving them into the AZZ way of doing things. DeForest Hinman : Okay. And then related to the deal that we just announced, there's continued commentary that we're working on deals. Can you give us any color in terms of expectations for closing within the next 6 to 12 months and then potentially the outlay that any type of these deals could entail? Thomas Ferguson: Just has to do it -- we have been working on some deals we thought would be closed and so, yes, I just hate to say we're going to get anything done in any specific time frame. We are traveling where we mostly do face to face deals. The Acme team, we've been working with for quite a while. So there was a long relationship there. We have long relationships in a couple of other opportunities. And so I would hope that during the first part of the year, we can move those forward. But it's just I think there's so many variables right now. But just look for us to continue to -- we normally get a couple of deals done every year. This year we did divestitures and -- in the early part of the year and then only got one acquisition done. So I would think for this upcoming fiscal year, we'll get back into our normal, get a couple, three deals done on the acquisition side. But calling them in the first half versus the second, I really can't. DeForest Hinman : Okay, that's helpful. And last question, can you just give us an update on the outlook for utilizing the share repurchase authorization, pretty active in the third quarter, I think in the high 30s share price execution, the markets responded well to the strategic review and the market's been moving up generally. Does the current share price dampen our expectations of utilizing the share repurchase authorization when we're starting to think about capital deployment as it relates to buying our own stock or doing acquisitions? Philip Schlom: That's a really good question. I think -- this is Philip and one thing we're doing is obviously going through this comprehensive review. And as part of that comprehensive review, we're looking at the valuation of AZZ and its pieces and where do we continue to buy. So we have Board authorized $100 million to spend, depending on as you were just asking related to M&A activity. We'll evaluate how we deploy capital across the board. Thomas Ferguson: Yes, and I want to add, we had a 10b5-1 in place for the quarter. And one of the things we had not anticipated was that the rapid run up in our share price. And so we did outstrip it in the latter part of the quarter. So that's the kind of thing that maybe dampened our activity right at the end of the quarter, but those are the things we will look at. As Philip said, we've got a Board meeting coming up. We've got an update on the evaluation activities and one of that was looking at valuation. So just in the next couple of weeks we'll have a better idea which direction we're going to go. DeForest Hinman : Okay, thank you for the color. I appreciate your time. Thomas Ferguson: Thank you. Operator: Our next question will come from John Franzreb with Sidoti and Company. Please go ahead. John Franzreb: Yes, Tom, I think you said in your remarks, that while you continue to suspend guidance that you're going to revisit it once you go through your budgetary process. Does that mean you'll be issuing guidance sometime this month like you had in the past or not? Thomas Ferguson: We would hope to. The only thing that gives me any pause is we do have this ongoing strategic evaluation activity. And I just want to make sure, we don’t put guidance out for 2022. And then two weeks later announce a strategic move. So that would be my only cautionary note other than that it would be our intent to get back into cadence. John Franzreb: Got it, and just on the strategic review and the potential sales, the Infrastructure business, what's the current likelihood of it being sold as a whole unit or being sold in piecemeal? Thomas Ferguson: We're not at that point in the evaluation yet for me to handicap that, to be honest. John Franzreb: Okay, I gave it a shot. Okay, thank you. Thomas Ferguson: All right, John. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Tom Ferguson for any closing remarks. Please go ahead, sir. John Franzreb: We just thank you all for being on the call, and as always, we -- David Nark is available to take calls from folks if you want to have further discussions. We look forward to finishing out this year, being able to announce the direction from our strategic evaluation activities. And then we'll be talking to you at the end of this fiscal year and hopefully on a positive note. And so we look forward to that. Thank you very much. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
AZZ Inc. (NYSE:AZZ) Surpasses Earnings Estimates with Strong Financial Performance
- AZZ Inc. (NYSE:AZZ) reported an EPS of $1.39, surpassing the estimated $1.24 and reflecting significant growth.
- The company's revenue reached approximately $403.65 million, indicating a 5.8% increase year-over-year.
- AZZ announced a debt reduction of $35 million for the quarter, contributing to a healthier balance sheet.
AZZ Inc. (NYSE:AZZ) is a prominent player in the metal coatings and coil coating industry, providing essential services like hot-dip galvanizing. The company competes with other industry leaders in delivering protective coatings for metal products. AZZ's recent financial performance highlights its strong market position and operational efficiency.
On January 7, 2025, AZZ reported earnings per share (EPS) of $1.39, surpassing the estimated $1.24. This performance also exceeded the Zacks Consensus Estimate of $1.29, marking a significant improvement from the $1.19 EPS reported in the same quarter last year. The company's revenue reached approximately $403.65 million, exceeding the estimated $396.64 million, and reflecting a 5.8% increase compared to the previous year.
AZZ's Metal Coatings segment saw a 3.3% rise in sales to $168.6 million, while Precoat Metals sales increased by 7.6% to $235.1 million. The company's net income for the quarter was $33.6 million, a 25% increase, with adjusted net income reaching $41.9 million, up 20.5%. The adjusted EBITDA was $90.7 million, representing 22.5% of sales, with segment margins of 31.5% for Metal Coatings and 19.1% for Precoat Metals.
The company also made a debt reduction of $35 million during the quarter, contributing to a fiscal year-to-date debt reduction of $80 million, resulting in a net leverage ratio of 2.6x. AZZ announced a cash dividend of $0.17 per share and successfully repriced its Term Loan B, reducing the future borrowing rate by 75 basis points to SOFR+2.50%.
AZZ's financial metrics indicate a strong market valuation, with a price-to-earnings (P/E) ratio of approximately 20.60 and a price-to-sales ratio of about 1.59. The enterprise value to sales ratio is around 1.61, and the enterprise value to operating cash flow ratio is approximately 10.26. The company's earnings yield is about 4.85%, and it maintains a low debt-to-equity ratio of 0.03, with a current ratio of approximately 1.77, indicating solid financial health.
AZZ Inc. (NYSE:AZZ) Surpasses Earnings Estimates with Strong Financial Performance
- AZZ Inc. (NYSE:AZZ) reported an EPS of $1.39, surpassing the estimated $1.24 and reflecting significant growth.
- The company's revenue reached approximately $403.65 million, indicating a 5.8% increase year-over-year.
- AZZ announced a debt reduction of $35 million for the quarter, contributing to a healthier balance sheet.
AZZ Inc. (NYSE:AZZ) is a prominent player in the metal coatings and coil coating industry, providing essential services like hot-dip galvanizing. The company competes with other industry leaders in delivering protective coatings for metal products. AZZ's recent financial performance highlights its strong market position and operational efficiency.
On January 7, 2025, AZZ reported earnings per share (EPS) of $1.39, surpassing the estimated $1.24. This performance also exceeded the Zacks Consensus Estimate of $1.29, marking a significant improvement from the $1.19 EPS reported in the same quarter last year. The company's revenue reached approximately $403.65 million, exceeding the estimated $396.64 million, and reflecting a 5.8% increase compared to the previous year.
AZZ's Metal Coatings segment saw a 3.3% rise in sales to $168.6 million, while Precoat Metals sales increased by 7.6% to $235.1 million. The company's net income for the quarter was $33.6 million, a 25% increase, with adjusted net income reaching $41.9 million, up 20.5%. The adjusted EBITDA was $90.7 million, representing 22.5% of sales, with segment margins of 31.5% for Metal Coatings and 19.1% for Precoat Metals.
The company also made a debt reduction of $35 million during the quarter, contributing to a fiscal year-to-date debt reduction of $80 million, resulting in a net leverage ratio of 2.6x. AZZ announced a cash dividend of $0.17 per share and successfully repriced its Term Loan B, reducing the future borrowing rate by 75 basis points to SOFR+2.50%.
AZZ's financial metrics indicate a strong market valuation, with a price-to-earnings (P/E) ratio of approximately 20.60 and a price-to-sales ratio of about 1.59. The enterprise value to sales ratio is around 1.61, and the enterprise value to operating cash flow ratio is approximately 10.26. The company's earnings yield is about 4.85%, and it maintains a low debt-to-equity ratio of 0.03, with a current ratio of approximately 1.77, indicating solid financial health.
AZZ Inc. (NYSE:AZZ) Earnings Preview: Key Financial Insights
- Earnings per share projected to be $1.24 with revenue expected to reach approximately $396.6 million.
- Price-to-earnings (P/E) ratio stands at 21.05, and price-to-sales ratio is 1.56, indicating market valuation.
- Enterprise value to sales ratio of 2.15 and enterprise value to operating cash flow ratio of 13.77 highlight AZZ's valuation and financial leverage.
AZZ Inc. (NYSE:AZZ) is a prominent player in the industrial sector, specializing in hot-dip galvanizing and coil coating solutions. The company is headquartered in Fort Worth, Texas, and is known for its robust service offerings. As AZZ prepares to release its quarterly earnings on January 8, 2025, investors are keenly observing the company's financial health and market performance.
Wall Street projects AZZ's earnings per share to be $1.24, with revenue expected to reach approximately $396.6 million. Despite these optimistic forecasts, Zacks Investment Research suggests that AZZ might not have the ideal mix of factors to exceed these expectations. This has led to a cautious approach among investors and analysts as they await the earnings report.
AZZ's financial metrics provide a deeper understanding of its market position. The company has a price-to-earnings (P/E) ratio of 21.05, reflecting the market's valuation of its earnings. Additionally, the price-to-sales ratio is 1.56, indicating the amount investors are willing to pay for each dollar of sales. These figures help investors gauge AZZ's market valuation.
The enterprise value to sales ratio of 2.15 and the enterprise value to operating cash flow ratio of 13.77 highlight AZZ's valuation, considering its debt and cash positions. These metrics are crucial for understanding the company's financial leverage and cash-generating capabilities. AZZ's debt-to-equity ratio of 0.92 further illustrates its leverage level, while a current ratio of 1.85 suggests a strong ability to meet short-term liabilities.
As the earnings release date approaches, analysts have revised their forecasts, reflecting the anticipation surrounding AZZ's financial performance. The company's earnings yield of 4.75% offers insight into the potential return on investment for shareholders. This upcoming announcement is expected to draw significant attention from investors and stakeholders interested in AZZ's market trajectory.
AZZ Inc. (NYSE:AZZ) Earnings Preview: Key Financial Insights
- Earnings per share projected to be $1.24 with revenue expected to reach approximately $396.6 million.
- Price-to-earnings (P/E) ratio stands at 21.05, and price-to-sales ratio is 1.56, indicating market valuation.
- Enterprise value to sales ratio of 2.15 and enterprise value to operating cash flow ratio of 13.77 highlight AZZ's valuation and financial leverage.
AZZ Inc. (NYSE:AZZ) is a prominent player in the industrial sector, specializing in hot-dip galvanizing and coil coating solutions. The company is headquartered in Fort Worth, Texas, and is known for its robust service offerings. As AZZ prepares to release its quarterly earnings on January 8, 2025, investors are keenly observing the company's financial health and market performance.
Wall Street projects AZZ's earnings per share to be $1.24, with revenue expected to reach approximately $396.6 million. Despite these optimistic forecasts, Zacks Investment Research suggests that AZZ might not have the ideal mix of factors to exceed these expectations. This has led to a cautious approach among investors and analysts as they await the earnings report.
AZZ's financial metrics provide a deeper understanding of its market position. The company has a price-to-earnings (P/E) ratio of 21.05, reflecting the market's valuation of its earnings. Additionally, the price-to-sales ratio is 1.56, indicating the amount investors are willing to pay for each dollar of sales. These figures help investors gauge AZZ's market valuation.
The enterprise value to sales ratio of 2.15 and the enterprise value to operating cash flow ratio of 13.77 highlight AZZ's valuation, considering its debt and cash positions. These metrics are crucial for understanding the company's financial leverage and cash-generating capabilities. AZZ's debt-to-equity ratio of 0.92 further illustrates its leverage level, while a current ratio of 1.85 suggests a strong ability to meet short-term liabilities.
As the earnings release date approaches, analysts have revised their forecasts, reflecting the anticipation surrounding AZZ's financial performance. The company's earnings yield of 4.75% offers insight into the potential return on investment for shareholders. This upcoming announcement is expected to draw significant attention from investors and stakeholders interested in AZZ's market trajectory.
Jefferies Initiates Coverage on AZZ with a Buy Rating
- Jefferies has initiated coverage on AZZ, signaling a positive outlook towards the company's future.
- AZZ holds an average brokerage recommendation (ABR) of 1.67, indicating a strong belief in its growth potential.
- The company's stock has shown significant growth, with a high of $84.52 from a low of $34.59, demonstrating resilience and potential for further appreciation.
Jefferies, a well-known financial services company, recently initiated coverage on NYSE:AZZ, giving it a Buy rating. This move, as reported by StreetInsider, signals a positive outlook from Jefferies towards AZZ. At the time of this rating, AZZ's stock was trading at $76.63. AZZ Inc. operates in the specialty electrical equipment and engineering services sector, providing solutions to industrial, power generation, and utility markets. Its activities include manufacturing electrical equipment and providing galvanizing services. The company competes with other firms in the electrical and industrial service sectors, but this optimistic rating from Jefferies suggests confidence in AZZ's market position and growth potential.
The optimism from Jefferies is echoed by other Wall Street analysts as well. According to Zacks Investment Research, AZZ holds an average brokerage recommendation (ABR) of 1.67, positioning it between Strong Buy and Buy. This rating is derived from the recommendations of three brokerage firms, with two-thirds of them rating AZZ as a Strong Buy. This consensus among analysts indicates a strong belief in AZZ's potential for growth and favorable market performance.
AZZ's stock performance and market valuation further support the positive outlook from analysts. Despite a slight decrease of $0.27 in its stock price, bringing it to $76.63, the company's shares have shown significant growth over the year, reaching a high of $84.52 from a low of $34.59. This growth trajectory highlights AZZ's resilience and potential for further appreciation. With a market capitalization of approximately $2.28 billion and a trading volume of 235,231 shares, AZZ demonstrates solid market presence and investor interest.
The company's stock price fluctuation within the trading day, ranging from a low of $75.455 to a high of $77.3, reflects normal market volatility. However, the overall positive trend in its yearly performance, coupled with strong support from financial analysts, suggests a stable and promising future for AZZ. The backing by Jefferies, along with the favorable average brokerage recommendation, underscores confidence in AZZ's strategic direction, operational efficiency, and ability to navigate market challenges.
In summary, the initiation of coverage by Jefferies with a Buy rating, alongside the optimistic view shared by other analysts, paints a bright picture for AZZ. The company's strong market position, evidenced by its stock performance and analyst ratings, indicates potential for continued growth and success in its sector. Investors and market watchers will likely keep a close eye on AZZ, anticipating its moves in the competitive landscape of the specialty electrical equipment and engineering services market.
AZZ Inc. Receives New $85 Price Target from B.Riley's Lucas Pipes
Lucas Pipes of B.Riley Financial Sets New Price Target for AZZ Inc. (NYSE:AZZ)
Lucas Pipes of B.Riley Financial has recently set a new price target of $85 for AZZ Inc. (NYSE:AZZ), as reported by StreetInsider on April 23, 2024. This adjustment suggests a potential upside of approximately 11.11% from the stock's trading price at the time of the announcement, which was $76.5. This optimistic outlook from the analyst comes on the heels of AZZ's Q4 2024 Earnings Conference Call, which provided a comprehensive overview of the company's financial performance and strategic direction. The earnings call, detailed in a transcript published by Seeking Alpha, featured key company participants and was attended by analysts including Lucas Pipes, indicating a keen interest in AZZ's business trajectory.
AZZ Inc. reported a notable quarterly earnings of $0.93 per share, surpassing the Zacks Consensus Estimate of $0.70 per share. This performance not only represents a significant improvement from the $0.30 per share reported in the same quarter a year ago but also marks an earnings surprise of 32.86% for the quarter. Such a strong financial outcome underscores the company's robust position in the electrical equipment manufacturing sector and its ability to exceed market expectations consistently. This follows a trend where AZZ outperformed earnings expectations in the previous quarter as well, with earnings of $1.19 per share against an anticipated $0.99, resulting in a 20.20% surprise.
In terms of revenue, AZZ announced figures of $366.5 million for the quarter ending in February 2024, which also beat the Zacks Consensus Estimate by 3.49%. This revenue figure not only represents an increase from the $336.5 million reported in the year-ago period but also highlights the company's consistent ability to surpass consensus revenue estimates in three of the last four quarters. Such performance is indicative of AZZ's strong presence and competitive edge in the Manufacturing - Electronics industry.
For the fiscal year 2024, AZZ Inc. achieved remarkable financial milestones, including total sales of approximately $1.54 billion, marking a 16.2% increase from the previous year. This sales growth was driven by its Metal Coatings and Precoat Metals segments, showcasing the company's diversified and robust business model. The company's diluted earnings per share (EPS) stood at $3.46, a 48.5% increase, highlighting significant profitability improvements. Additionally, AZZ reported a net income rise to about $101.6 million, a 53.2% increase, with adjusted net income at approximately $132.8 million, up 39.5%. Such financial health is further evidenced by the company's ability to reduce its debt by $115.0 million during the year, showcasing strong financial management and operational efficiency.
The financial results and strategic achievements discussed during AZZ's Q4 2024 Earnings Conference Call provide a solid foundation for Lucas Pipes' optimistic price target. The company's record sales, profitability, and cash flow for the fiscal year ended February 29, 2024, coupled with its consistent performance in exceeding earnings and revenue estimates, paint a promising picture for AZZ's future. This backdrop of strong financial health and strategic direction likely informed Pipes' analysis and the subsequent setting of a new price target, reflecting confidence in AZZ's continued growth and value creation.
