FORT WORTH, Texas, April 23, 2021 /PRNewswire/ -- AZZ Inc.
(NYSE: AZZ), a global provider of metal coating solutions,
welding solutions, specialty electrical equipment and highly
engineered services today issued its audited consolidated financial
statements contained in the Company's Fiscal Year 2021 Annual
Report on Form 10-K for the year ended February 28, 2021.
Fiscal Year 2021 Overview and Recent
Highlights:
- Achieved 34th consecutive year of profitability
- Reported earnings per share of $1.52 and reported net income of $39.6 million
- Full Year adjusted earnings per share of $2.11 and adjusted net income of $55.0 million
- Sales of $838.9 million,
decreased by 21.0% compared to prior year
-
- Metal Coatings segment full year results versus prior
year:
-
- Sales of $457.8 million, down
8.3%
- Adjusted operating income of $106.7
million, down 1.1%
- Adjusted operating margin of 23.3%, versus 21.6%, or 170 bps
improvement
- Infrastructure Solutions segment full year results versus prior
year:
-
- Sales of $381.1 million, down
32.3%
- Adjusted operating income of $15.7
million, down 52.1%
- Adjusted operating margin of 4.1% versus 5.8%, or 170 bps
decline
- Cash provided from operating activities of $92.0 million decreased 35.3% versus prior
year
- Repurchased over 1.2 million shares, totaling $48.3 million, during the fiscal year
- Effective tax rate of 22.3%; 340 basis points improved over
prior year
- Company reaffirms fiscal year 2022 guidance; Sales of
$835 - $935
million, and earnings per share of $2.45 - $2.95,
excluding potential acquisitions or divestitures
Management Discussion
Tom Ferguson, President and Chief Executive
Officer of AZZ, commented, "Throughout fiscal year 2021, the
COVID-19 pandemic significantly impacted our operations and
financial results. Despite the extraordinary circumstances, the
safety and well-being of our employees and continued support of our
customers remained top priorities. We were able to generate sales
of $838.9 million and net income of
$39.6 million, or $1.52 per diluted share, on a reported basis, and
achieve our 34th consecutive year of
profitability. Our consolidated bookings for the year
decreased 19.3% to $785.3 million
while our backlog decreased 23.7% to $186.1
million, primarily due to both the pandemic as well as the
successful completion of multiple large multi-year international
electrical projects for which revenue was recognized in fiscal year
2021. We continued our long history of strong cash flows by
generating net cash provided by operating activities of
$92.0 million, a decrease of 35.3%
compared to prior year. Reported EPS of $1.52 includes pre-tax charges of $20.0 million for impairment and
restructuring and the loss on the disposal of the Galvabar and SMS
businesses during the year. Excluding these charges, adjusted net
income was $55.0 million, and
adjusted EPS was $2.11. During
the year we returned capital to shareholders by repurchasing 1.2
million shares for $48.3 million
dollars, and distributed $17.6
million in dividends."
"Our Metal Coatings segment again delivered solid operating
results with sales of $457.8 million,
and adjusted operating margins of 23.3%, an improvement of 170
basis points over the prior year. Results were driven
primarily by a combination of lower volume, which was offset by
lower zinc costs. Our Metal Coatings team continued to drive
operational efficiencies aggressively, while maintaining an active
acquisition pipeline to support our strategic growth initiatives.
While our ability to complete new deals was limited by the COVID-19
pandemic, we completed one acquisition (Acme Galvanizing) during
the fiscal year."
Mr. Ferguson continued, "Sales for the Infrastructure Solutions
segment decreased $181.7 million, or
32.3%, to $381.1 million for fiscal
year 2021, compared to $562.8 million
for fiscal year 2020. The decrease in sales for fiscal 2021 was
attributable to the weak refining turnaround activity, as well as
lower sales for some of our electrical products, as a result of
COVID-19. Within our Electrical Platform, sales results were mixed
across our end-markets of Power Generation, Transmission and
Distribution. The team is focused on aggressively pursuing
projects and building our backlog as we progress through our first
quarter of fiscal year 2022. Our Industrial Solutions platform
executed domestic and international turnaround projects, but at a
significantly reduced level, due to limited refinery activity and
pandemic related travel restrictions. As we have stated
previously, we remain cautiously optimistic for an improvement in
the refining market, and are positioning our operations for a solid
fiscal year 2022.
Reaffirms Fiscal Year 2022 Guidance
Mr.
Ferguson added, "We are reaffirming our fiscal year 2022 sales and
earnings per share guidance. We estimate sales to be in the range
of $835 million to $935 million and earnings in the range of
$2.45 to $2.95 per diluted share. Our fiscal year 2022
guidance is based upon the evaluation of information currently
available to management and reflects our best estimates given
current market conditions, current backlog expectations, and does
not include any potential acquisitions or divestitures, nor any
federal regulatory changes that may emerge. We continue to
experience COVID-related travel restrictions within certain
geographical areas served by our Infrastructure Solutions teams,
particularly in some key international markets."
"As we enter fiscal 2022," concluded Mr. Ferguson, "our focus
will be growing our Metal Coatings segment, and building the
backlog for enclosures, switchgear and welding solutions in our
Infrastructure Solutions segment. We have access to the capital
necessary to sustain our operations, fund organic growth,
aggressively seek opportunities that fit our strategic growth plan
and return capital to shareholders. We continue to actively pursue
initiatives to enhance shareholder value, drive growth, and
accelerate our strategy to become predominately a metal coatings
company, including the ongoing review of our portfolio and capital
allocation. I want to express my sincere gratitude to all our
employees for their hard work and dedication throughout the
pandemic. We expect to emerge from this year a much stronger
company, well-positioned to excel in the post-COVID era. We are
excited about the opportunities ahead."
Fourth Quarter Results
Sales for the fourth quarter of fiscal year 2021 were
$195.6 million, compared to
$245.4 million for the prior year, a
decrease of 20.3%. Net income for the quarter was
$16.2 million, or $0.63 per share on a diluted basis, up
$26.8 million from the prior year,
same quarter, which was impacted by charges related to the sale of
our Nuclear Logistics business and impairment of Welding Solutions
nuclear-related intangible assets. Incoming orders for the
three-month period declined to $207.4 million, as compared to $214.7 million for the same quarter last
year. The book-to-sales ratio increased slightly to 1.06,
compared to 0.87 in last year's comparable period. As anticipated,
backlog at the end of the quarter was $186.1
million, a decrease of 23.7% as compared to the same quarter
in the prior year, due to lower order volume in China, along with the effects on the business
resulting from the pandemic.
Metal Coatings Segment
For the fourth quarter of fiscal year 2021, Metal Coatings
segment sales decreased 13.6% to $106.1
million and operating income increased 17.6% to $26.6 million versus the comparable prior year
quarter. Segment operating margin improved to 25.1% of
sales, which was 670 basis points higher than the comparable prior
year fourth quarter operating margin. Improvement in
operating margin was a result of improved labor productivity and
operational efficiency driven by our Digital Galvanizing System
("DGS"), as well as lower zinc costs.
Infrastructure Solutions Segment
For the fourth quarter of fiscal year 2021, Infrastructure
Solutions segment sales decreased 27% to $89.5 million, as compared to $122.6 million in the same quarter of the prior
year. Infrastructure Solutions reported operating income of
$3.1 million was 321.5% higher than
the comparable prior year quarter which was impacted by the loss on
sale of Nuclear Logistics, Inc. Operating margin increased to
3.5% compared to prior year quarter operating margin of
(1.1%). During the fourth quarter of fiscal 2020,
the Company recorded an impairment charge of $9.2 million related to the Company's exit from
the nuclear certified portion of its Industrial Solutions
business. The decrease in net sales and operating income was
primarily attributable to COVID-related business disruption,
particularly within our Welding Solutions business.
The following chart provides an overview of operating income for
both our Metal Coatings and Infrastructure Solutions segments, as
adjusted for the impairment charges recorded during the
quarter:
AZZ
Inc.
|
Segment
Reporting
|
(dollars in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
February
28,
2021
|
|
February
29,
2020
|
|
February
28,
2021
|
|
February
29,
2020
|
Metal Coatings
Segment
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
106,149
|
|
|
$
|
122,796
|
|
|
$
|
457,791
|
|
|
$
|
498,989
|
|
Segment operating
income:
|
|
|
|
|
|
|
|
|
Metal Coatings, as
reported
|
|
26,591
|
|
|
22,603
|
|
|
95,946
|
|
|
107,926
|
|
Impact of
restructuring and impairment
|
|
(247)
|
|
|
—
|
|
|
10,796
|
|
|
—
|
|
Metal Coatings, as
adjusted
|
|
$
|
26,344
|
|
|
$
|
22,603
|
|
|
$
|
106,742
|
|
|
$
|
107,926
|
|
Adjusted operating
income as a % of sales
|
|
24.8
|
%
|
|
18.4
|
%
|
|
23.3
|
%
|
|
21.6
|
%
|
|
|
|
|
|
|
|
|
|
Infrastructure
Solutions Segment
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
89,480
|
|
|
$
|
122,569
|
|
|
$
|
381,126
|
|
|
$
|
562,828
|
|
Segment operating
income:
|
|
|
|
|
|
|
|
|
Infrastructure
Solutions, as reported
|
|
3,123
|
|
|
(1,386)
|
|
|
6,487
|
|
|
32,845
|
|
Impact of
restructuring and impairment
|
|
(23)
|
|
|
9,157
|
|
|
9,203
|
|
|
9,157
|
|
Infrastructure
Solutions, as adjusted
|
|
$
|
3,100
|
|
|
$
|
7,771
|
|
|
$
|
15,690
|
|
|
$
|
42,002
|
|
Adjusted operating
income as a % of sales
|
|
3.5
|
%
|
|
6.3
|
%
|
|
4.1
|
%
|
|
7.5
|
%
|
Conference Call Details
AZZ Inc. will conduct a conference call to discuss financial
results for the fourth quarter and fiscal year 2021 today,
Friday, April 23, 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 #10153959,
or for 30 days at http://www.azz.com/investor-relations.
There will be a slide presentation accompanying today's call.
The Company's slide presentation for the call will be available on
the Investor Relations page at
http://www.azz.com/investor-relations.
About AZZ Inc.
AZZ Inc. is a global provider of metal coating solutions,
welding solutions, specialty electrical equipment and highly
engineered services to the markets of power generation,
transmission, distribution and industrial in protecting metal and
electrical systems used to build and enhance the world's
infrastructure. AZZ Metal Coatings is a leading provider of metal
finishing solutions for corrosion protection, including hot dip
galvanizing to the North American steel fabrication industry. AZZ
Infrastructure Solutions is dedicated to delivering safe and
reliable transmission of power from generation sources to end
customers, and automated weld overlay solutions for corrosion and
erosion mitigation to critical infrastructure in the energy markets
worldwide.
Safe Harbor Statement
Certain statements herein about our expectations of future
events or results constitute forward-looking statements for
purposes of the safe harbor provisions of The Private Securities
Litigation Reform Act of 1995. You can identify forward-looking
statements by terminology such as "may," "should," "expects,"
"plans," "anticipates," "believes," "estimates," "predicts,"
"potential," "continue," or the negative of these terms or other
comparable terminology. Such forward-looking statements are based
on currently available competitive, financial and economic data and
management's views and assumptions regarding future events. Such
forward-looking statements are inherently uncertain, and investors
must recognize that actual results may differ from those expressed
or implied in the forward-looking statements. Certain factors could
affect the outcome of the matters described herein. This press
release may contain forward-looking statements that involve risks
and uncertainties including, but not limited to, changes in
customer demand for our products and services, including demand by
the metal coatings markets, power generation markets, electrical
transmission and distribution markets and the industrial
markets. In addition, within each of the markets we
serve, our customers and our operations could potentially be
adversely impacted by the ongoing COVID-19 pandemic.
We could also experience fluctuations in prices and raw material
cost, including zinc and natural gas which are used in the hot dip
galvanizing process; supply-chain vendor delays; customer requested
delays of our products or services; delays in additional
acquisition opportunities; currency exchange rates; adequacy of
financing; availability of experienced management and employees to
implement AZZ's growth strategy; a downturn in market conditions in
any industry relating to the products we inventory or sell or the
services that we provide; economic volatility or changes in the
political stability in the United
States and other foreign markets in which we operate; acts
of war or terrorism inside the United
States or abroad; and other changes in economic and
financial conditions. AZZ has provided additional
information regarding risks associated with the business in AZZ's
Annual Report on Form 10-K for the fiscal year ended February 28, 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 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
AZZ
Inc.
|
Condensed
Consolidated Statements of Income
|
(dollars in
thousands, except per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
February
28,
2021
|
|
February
29,
2020
|
|
February
28,
2021
|
|
February
29,
2020
|
Sales
|
|
195,629
|
|
|
245,365
|
|
|
838,917
|
|
|
1,061,817
|
|
Cost of
sales
|
|
149,859
|
|
|
194,261
|
|
|
650,170
|
|
|
824,589
|
|
Gross
margin
|
|
45,770
|
|
|
51,104
|
|
|
188,747
|
|
|
237,228
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
27,268
|
|
|
39,738
|
|
|
107,134
|
|
|
139,253
|
|
Restructuring and
impairment charges
|
|
(270)
|
|
|
18,632
|
|
|
19,999
|
|
|
18,632
|
|
Operating income
|
|
18,772
|
|
|
(7,266)
|
|
|
61,614
|
|
|
79,343
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
2,272
|
|
|
3,030
|
|
|
9,648
|
|
|
13,463
|
|
Other (income)
expense, net
|
|
144
|
|
|
623
|
|
|
969
|
|
|
990
|
|
Income before income
taxes
|
|
16,356
|
|
|
(10,919)
|
|
|
50,997
|
|
|
64,890
|
|
Income tax
expense
|
|
196
|
|
|
(276)
|
|
|
11,383
|
|
|
16,656
|
|
Net income
|
|
16,160
|
|
|
(10,643)
|
|
|
$
|
39,614
|
|
|
$
|
48,234
|
|
Earnings per common
share
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.64
|
|
|
$
|
(0.41)
|
|
|
$
|
1.53
|
|
|
$
|
1.84
|
|
Diluted
|
|
$
|
0.63
|
|
|
$
|
(0.41)
|
|
|
$
|
1.52
|
|
|
$
|
1.84
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding
|
|
25,648
|
|
|
26,209
|
|
|
26,045
|
|
|
26,281
|
|
AZZ
Inc.
|
Condensed
Consolidated Balance Sheets
|
(dollars in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
February 28,
2021
|
|
February 29,
2020
|
Assets:
|
|
|
|
|
Current assets
(including assets held for sale of $3,684)
|
|
$
|
303,492
|
|
|
$
|
354,562
|
|
Property, Plant and
Equipment, Net
|
|
205,909
|
|
|
213,104
|
|
Other assets,
net
|
|
487,041
|
|
|
506,165
|
|
Total
assets
|
|
$
|
996,442
|
|
|
$
|
1,073,831
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity:
|
|
|
|
|
Current
liabilities
|
|
$
|
113,850
|
|
|
$
|
280,613
|
|
Long-term debt due
after one year, net
|
|
178,419
|
|
|
77,878
|
|
Other
liabilities
|
|
80,881
|
|
|
80,974
|
|
Shareholders'
equity
|
|
623,292
|
|
|
634,366
|
|
Total liabilities and
shareholders' equity
|
|
$
|
996,442
|
|
|
$
|
1,073,831
|
|
AZZ
Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(dollars in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
Year
Ended
|
|
|
February
28,
2021
|
|
February
29,
2020
|
Net cash provided by
operating activities
|
|
$
|
92,035
|
|
|
$
|
142,310
|
|
Net cash used in
investing activities
|
|
(28,593)
|
|
|
(69,299)
|
|
Net cash provided by
(used in) financing activities
|
|
(88,425)
|
|
|
(59,739)
|
|
Effect of exchange
rates on cash
|
|
3,133
|
|
|
(590)
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
$
|
(21,850)
|
|
|
$
|
12,682
|
|
Cash and cash
equivalents at beginning of period
|
|
36,687
|
|
|
24,005
|
|
Cash and cash
equivalents at end of period
|
|
$
|
14,837
|
|
|
$
|
36,687
|
|
AZZ Inc.
Non-GAAP
Disclosure
Adjusted Operating Income, Adjusted Earnings
and Adjusted Earnings Per Share
In addition to reporting financial results in accordance with
Generally Accepted Accounting Principles in the United States ("GAAP"), the Company has
provided adjusted operating income, adjusted earnings and adjusted
earnings per share (collectively, the "Adjusted Earnings
Measures"), which are non-GAAP measures. Management believes
that the presentation of these measures provides investors with a
greater transparency comparison of operating results across a broad
spectrum of companies, which provides a more complete understanding
of the Company's financial performance, competitive position and
prospects for the future. Management also believes that investors
regularly rely on non-GAAP financial measures, such as adjusted
operating income, adjusted earnings and adjusted earnings per
share, to assess operating performance and that such measures may
highlight trends in the Company's business that may not otherwise
be apparent when relying on financial measures calculated in
accordance with GAAP.
The following tables provides a reconciliation for the three and
twelve months ended February 28, 2021
between the various measures calculated in accordance with GAAP to
the Adjusted Earnings Measures, which are shown net of tax (dollars
in thousands, except per share data):
|
|
Three Months
ended
February 28,
2021
|
|
Twelve Months
ended
February 28,
2021
|
Operating
income
|
|
$
|
18,772
|
|
|
$
|
61,614
|
|
Restructuring and
impairment charges
|
|
(270)
|
|
|
19,999
|
|
Adjusted operating
income
|
|
$
|
18,502
|
|
|
$
|
81,613
|
|
|
|
Three Months
ended
February 28, 2021
|
|
Year Ended
February 28, 2021
|
|
|
Amount
|
|
Per Diluted
Share(1)
|
|
Amount
|
|
Per Diluted
Share(1)
|
Net income and
diluted earnings per share
|
|
$
|
16,160
|
|
|
$
|
0.63
|
|
|
$
|
39,614
|
|
|
$
|
1.52
|
|
Adjustments (net of
tax):
|
|
|
|
|
|
|
|
|
Restructuring and
impairment charges:
|
|
|
|
|
|
|
|
|
Metal
Coatings
|
|
(247)
|
|
|
(0.01)
|
|
|
10,796
|
|
|
0.41
|
|
Infrastructure
Solutions
|
|
(23)
|
|
|
—
|
|
|
9,203
|
|
|
0.35
|
|
Subtotal
|
|
(270)
|
|
|
(0.01)
|
|
|
19,999
|
|
|
0.77
|
|
Tax benefit related to
restructuring and impairment charges
|
|
63
|
|
|
—
|
|
|
(4,584)
|
|
|
(0.18)
|
|
Total
adjustments
|
|
(207)
|
|
|
(0.01)
|
|
|
15,415
|
|
|
0.59
|
|
Adjusted earnings and
adjusted earnings per share
|
|
$
|
15,953
|
|
|
$
|
0.62
|
|
|
$
|
55,029
|
|
|
$
|
2.11
|
|
|
|
|
|
|
|
|
(1) - Adjusted
earnings per share amounts included in the table above may not sum
due to rounding differences.
(2) – The non-GAAP effective tax rates for both the three- and
twelve-month periods was 22.9%.
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content:http://www.prnewswire.com/news-releases/azz-inc-reports-fiscal-year-2021-results-generates-adjusted-eps-of-2-11-reported-eps-of-1-52--301275648.html
SOURCE AZZ Inc.