0000008947false00000089472023-07-072023-07-07

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 7, 2023
Date of Report (Date of earliest event reported)

AZZ Inc.
(Exact name of Registrant as specified in its charter)
Texas1-1277775-0948250
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(I.R.S. Employer
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 SymbolName of each exchange on which registered
Common Stock  AZZNew 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 7, 2023, AZZ Inc. ("AZZ") issued a press release reporting AZZ’s first quarter financial results for the period ended May 31, 2023. 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 7, 2023, 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.



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 7, 2023
By:
 /s/ Philip A. Schlom
Philip A. Schlom
Chief Financial Officer







AZZ Inc. Reports Fiscal Year 2024 First Quarter Results

Strong Sales and Adjusted EBITDA
Reaffirming Fiscal 2024 Full Year Guidance

July 7, 2023 - FORT WORTH, TX - AZZ Inc. (NYSE: AZZ), the leading independent provider of hot-dip galvanizing and coil coating solutions, today announced financial results for the first quarter ended May 31, 2023.
First Quarter Overview (results from continuing operations(1),(2)):
◦Sales of $390.9 million, up 88.7% versus prior year, up 16.2% sequentially
▪Metal Coatings sales of $168.8 million up 3.3% versus prior year and 13.0% sequentially
▪Precoat Metals sales of $222.1 million, up 18.7% sequentially
◦Diluted EPS of $0.98, up 58.1% versus prior year, up 553.3% sequentially; Adjusted EPS of $1.14, up 3.6% versus prior year, up 280.0% sequentially
◦Net Income of $28.5 million, up 85.8% versus prior year, up 284.0% sequentially; Adjusted net income of $33.4 million, up 18.4% versus prior year, up 337.4% sequentially
◦Adjusted EBITDA $85.4 million or 21.8% of sales, up 62.6% versus prior year
◦EBITDA margin for Metal Coatings 30.7% and Precoat Metals 19.4% up sequentially by 370 and 560 bps respectively
◦Paid down debt of $20.0 million, resulting in net leverage of 3.5 times

(1) First quarter fiscal 2024 Precoat Metals included results for the full quarter compared to only 2 weeks of results for the first quarter of fiscal 2023.
(2) Adjusted Net Income, Adjusted EPS, and Adjusted EBITDA are non-GAAP financial measure as defined and reconciled in the tables below.

Tom Ferguson, President and Chief Executive Officer of AZZ, commented, "Our first quarter results reflect the strength of our Metal Coatings business coupled with a full quarter of Precoat Metals. On a sequential basis, sales grew by 16%, and Adjusted EBITDA increased by 49%. Our teams executed well, resulting in continued sales momentum in both segments. Metal Coatings generated EBITDA margin of 30.7%, above our targeted EBITDA range of 25-30%. I am encouraged by the actions we have taken at Precoat Metals to address operational inefficiencies, caused by excessively high customer inventories at most plants, allowing us to deliver 560 bps of sequential improvement in margins. Through a disciplined focus on working capital, we paid down debt of $20.0 million in what is typically a high cash consuming quarter. This positions us well to attain the $75-$100 million of debt reduction we are targeting for this fiscal year."

"Our business is on track this year to deliver solid sales and Adjusted EBITDA growth. While we are seeing softness in certain end markets, we expect to benefit from continued secular tailwinds supported by infrastructure and renewables spending, reshoring of manufacturing, and continued migration to more environmentally friendly pre-painted steel and aluminum. Additionally, our new plant construction in Washington, Missouri is proceeding ahead of schedule and tracking to budget. I want to thank our entire AZZ team for their dedicated performance in the first quarter of fiscal year 2024," concluded Ferguson.





1


Fiscal Year 2024 First Quarter Segment Performance

AZZ Metal Coatings
Sales increased year-over-year by 3.3% to $168.8 million, with quarterly sequential growth of 13.0%. Sequential sales increased on higher volume and continued price realization. EBITDA of $51.9 million or 30.7% of sales was above our 25-30% targeted EBITDA range.

AZZ Precoat Metals
Sales of $222.1 million increased 18.7% on a sequential basis. The sequential sales increase was primarily driven by seasonally improved volume, value-pricing initiatives, and a shift in sales mix for Precoat Metals. EBITDA of $43.2 million or 19.4% of sales represents a 560 basis point sequential improvement and was within our 17-22% targeted EBITDA range. We implemented plans to address production efficiencies and these plans are starting to deliver results.

Balance Sheet, Liquidity and Capital Allocation
The Company generated year-to-date operating cash flow of $46.9 million through solid earnings and prudent management of working capital. At the end of the first quarter, net leverage was 3.5x LTM EBITDA, which improved approximately 0.7x in the twelve months following the acquisition of Precoat Metals. During the first quarter, the Company paid down debt of $20.0 million and returned cash to shareholders through cash dividend payments totaling $7.8 million. Capital expenditures were $17.0 million during the quarter, and fiscal year 2024 capital expenditures are still expected to be approximately $80 million, which includes $30 million in cash outlays for AZZ's new coil coating plant in Washington, Missouri.

Financial Outlook - Reaffirming Fiscal Year 2024 Guidance
Management reaffirms fiscal year 2024 guidance:
◦Sales of $1.40 billion to $1.55 billion
◦Adjusted EBITDA of $300-$325 million
◦Adjusted earnings per diluted share of $3.85-$4.35(1)

Fiscal year 2024 guidance reflects higher interest expense, dividends on our Series A Preferred Stock, and the impact of an annualized effective tax rate of approximately 24%. This reflects our best estimates given expected market conditions for the full year, and does not include the impact of future acquisitions or divestitures, related expenditures, or any federal regulatory changes that may emerge.

(1) Fiscal Year 2024 guidance excludes equity in earnings on the investment in the AIS joint venture.

Conference Call Details
AZZ Inc. will conduct a live conference call with Tom Ferguson, Chief Executive Officer, and Philip Schlom, Chief Financial Officer to discuss financial results for the first quarter of fiscal year 2024, Monday, July 10, 2023, 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: 4865769, through July 17, 2023, or by visiting http://www.azz.com/investor-relations for the next 90 days.

There will be a slide presentation accompanying the first quarter conference call. The Company’s slide presentation for the call will be available on the Investor Relations page at http://www.azz.com/investor-relations.
2


About AZZ Inc.

AZZ Inc. is the leading independent provider of hot-dip galvanizing and coil coating solutions to a broad range of end-markets. Collectively, our business segments provide sustainable, unmatched metal coating solutions that enhance the longevity and appearance of buildings, products and infrastructure that are essential to everyday life.

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,” ”could,” “should,” “expects,” “plans,” “will,” “might,” “would,” “projects,” “currently,” “intends,” “outlook,” “forecasts,” “targets,” “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. Forward-looking statements speak only as of the date they are made and are subject to risks that could cause them to differ materially from actual results. 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 construction markets, industrial markets, and the metal coatings markets. We could also experience additional increases in labor costs, components and raw materials, including zinc and natural gas, which are used in our hot-dip galvanizing process; supply-chain vendor delays; customer requested delays of our products or services; delays in additional acquisition opportunities; an increase in our debt leverage and/or interest rates on our debt, of which a significant portion is tied to variable interest 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, including a prolonged economic downturn or macroeconomic conditions such as inflation 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 Part I, Item 1A. Risk Factors, in AZZ’s Annual Report on Form 10-K for the fiscal year ended February 28, 2023, 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:
Sandy Martin / Phillip Kupper
Three Part Advisors
(214) 616-2207
www.threepa.com


3



---Financial tables on the following page---


4


AZZ Inc.
Condensed Consolidated Statements of Income
(dollars in thousands, except per share data)
(unaudited)
Three Months Ended May 31,
20232022
Sales$390,873 $207,134 
Cost of sales293,854 147,081 
Gross margin97,019 60,053 
Selling, general and administrative31,523 32,144 
Operating income65,496 27,909 
Interest expense28,706 7,472 
Equity in (earnings) of unconsolidated subsidiaries(1,420)— 
Other (income) expense, net38 (27)
Income from continuing operations before income taxes38,172 20,464 
Income tax expense9,650 5,111 
Net income from continuing operations28,522 15,353 
Income from discontinued operations, net of tax— 8,724 
Net income from discontinued operations— 8,724 
Net income28,522 24,077 
Dividends on preferred stock(3,600)— 
Net income available to common shareholders$24,922 $24,077 
Basic earnings per share
Earnings per common share from continuing operations$1.00 $0.62 
Earnings per common share from discontinued operations$— $0.35 
Earnings per common share$1.00 $0.97 
Diluted earnings per share
Earnings per common share from continuing operations$0.98 $0.62 
Earnings per common share from discontinued operations$— $0.34 
Earnings per common share$0.98 $0.96 
Weighted average shares outstanding - Basic24,940 24,709 
Weighted average shares outstanding - Diluted29,150 25,675 

5

AZZ Inc.
Segment Reporting
(dollars in thousands)
(unaudited)
Three Months Ended May 31,
20232022
(In thousands)
Sales:
Metal Coatings$168,794 $163,443 
Precoat Metals
222,079 43,691 
Total sales$390,873 $207,134 
EBITDA(1)
Metal Coatings$51,862 $53,669 
Precoat Metals
43,156 9,829 
Infrastructure Solutions(2)
1,398 — 
Total Segment EBITDA(3)
$96,416 $63,498 
(1) See the Non-GAAP disclosure section below for a reconciliation between the various measures calculated in accordance with GAAP to the non-GAAP financial measures.
(2) Infrastructure Solutions segment includes the Company’s equity in earnings from its investment in the AVAIL joint venture, as well as other expenses related to receivables that were retained by the Company following the sale of the AIS business.
(3) Total segment EBITDA excludes Corporate EBITDA.



AZZ Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
As of
May 31, 2023February 28, 2023
Assets:
Current assets$408,489 $417,416 
Property, plant and equipment, net504,032 498,503 
Other assets, net1,293,456 1,305,560 
Total assets$2,205,977 $2,221,479 
Liabilities and Shareholders’ Equity:
Current liabilities$180,107 $187,240 
Long-term debt, net1,040,841 1,058,120 
Other liabilities113,656 122,659 
Shareholders' Equity871,373 853,460 
Total liabilities and shareholders' equity$2,205,977 $2,221,479 


6

AZZ Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
Three Months Ended May 31,
20232022
Net cash provided by operating activities of continuing operations$46,893 $21,675 
Net cash used in investing activities of continuing operations(17,027)(1,304,953)
Net cash provided by (used in) financing activities of continuing operations(29,545)1,368,939 
Cash used in discontinued operations— 304 
Effect of exchange rate changes on cash737 (49)
Net increase in cash and cash equivalents1,058 85,916 
Cash and cash equivalents at beginning of period2,820 15,082 
Less: Cash and cash equivalents from discontinued operations at end of year— (3,000)
Cash and cash equivalents from continuing operations at end of period$3,878 $97,998 


7

AZZ Inc.
Non-GAAP Disclosure
Adjusted Net Income, Adjusted Earnings Per Share and Adjusted EBITDA

In addition to reporting financial results in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”), we provided adjusted net income 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 greater transparency when comparing operating results across a broad spectrum of companies, which provides a more complete understanding of our financial performance, competitive position and prospects for future capital investment and debt reduction. Management also believes that investors regularly rely on non-GAAP financial measures, such as adjusted net income and adjusted earnings per share, to assess operating performance and that such measures may highlight trends in our business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP.
Management also provides EBITDA and Adjusted EBITDA, which are non-GAAP measures. Management defines EBITDA as earnings excluding depreciation, amortization, interest and provision for income taxes. Adjusted EBITDA is defined as earnings excluding depreciation, amortization, interest, provision for income taxes and acquisition and transaction related expenses. Management believes EBITDA and Adjusted EBITDA are used by investors to analyze operating performance and evaluate the Company's ability to incur and service debt and its capacity for making capital expenditures in the future. EBITDA and Adjusted EBITDA are also useful to investors to help assess the Company's estimated enterprise value. In addition, management believes that the adjustments shown below are useful to investors in order to allow them to compare the Company's financial results during the periods shown without the effect of each of these adjustments.

Management provides non-GAAP financial measures for informational purposes and to enhance understanding of the Company’s GAAP consolidated financial statements. Readers should consider these measures in addition to, but not instead of or superior to, the Company's financial statements prepared in accordance with GAAP. These non-GAAP financial measures may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.

The following tables provides a reconciliation for the three months ended May 31, 2023 and 2022 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):























Adjusted Net Income and Adjusted Earnings Per Share from Continuing Operations

Three Months Ended May 31,
20232022
Amount
Per
 Diluted Share(1)
Amount
Per
 Diluted Share(1)
Net income from continuing operations$28,522 $15,353 
Less: preferred stock dividends(3,600)— 
Net income from continuing operations available to common shareholders24,922 15,353 
Impact of after-tax interest expense for convertible notes— 547 
Impact of preferred stock dividends3,600 — 
Net income and diluted earnings per share from continuing operations28,522 $0.98 15,900 $0.62 
Adjustments:
Acquisition and transaction-related expenditures(2)
— — 12,614 0.49 
Amortization of intangible assets6,355 0.22 3,541 0.14 
Subtotal6,355 0.22 16,155 0.63 
Tax impact(3)
(1,525)(0.05)(3,877)(0.15)
Total adjustments4,830 0.17 12,278 0.48 
Adjusted net income and adjusted earnings per share from continuing operations(4)
$33,352 $1.14 $28,178 $1.10 
Weighted average shares outstanding - Diluted29,150 25,675 
(1) Earnings per share amounts included in the table above may not sum due to rounding differences.
(2) Includes expenses related to the Precoat Metals acquisition and the divestiture of 60% of the AVAIL joint venture.
(3) The non-GAAP effective tax rate for each of the periods presented is estimated at 24.0%.
(4) Adjusted net income from continuing operations includes $1.4 million of equity in earnings from the AVAIL joint venture for the three months ended May 31, 2023.

Adjusted EBITDA from Continuing Operations

Three Months Ended May 31,
20232022
Net income from continuing operations$28,522 $15,353 
Interest expense28,706 7,472 
Income tax expense9,650 5,111 
Depreciation and amortization18,523 11,973 
Acquisition and transaction-related expenditures— 12,614 
Adjusted EBITDA from continuing operations$85,401 $52,523 


8

EBITDA from Continuing Operations by Segment
Three Months Ended May 31,
20232022
Metal Coatings
Operating income$45,470 $45,270 
Depreciation and amortization expense6,416 8,389 
Other income (expense)(24)10 
EBITDA$51,862 $53,669 
Precoat Metals
Operating income$37,691 $6,648 
Depreciation and amortization expense5,465 3,181 
EBITDA$43,156 $9,829 
Infrastructure Solutions
Operating loss$(22)$— 
Equity in earnings of unconsolidated subsidiaries1,420 — 
EBITDA$1,398 $— 
Corporate
Operating loss$(17,643)$(24,009)
Consolidated operating income$65,496 $27,909 
9
AZZ Inc. Q1 FY2024 Earnings Release Presentation July 10, 2023

 
Q1 FY2024 Earnings Presentation Disclaimers Cautionary Statements Regarding Forward Looking Statements — 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," "could," "should," "expects," "plans," "will," "might," "would," "projects," "currently," "intends," "outlook," "forecasts," "targets," "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. Forward-looking statements speak only as of the date they are made and are subject to risks that could cause them to differ materially from actual results. 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 construction markets, the industrial markets and the metal coatings markets. We could also experience additional increases in labor costs, components, and raw materials including zinc and natural gas, which are used in our hot-dip galvanizing process; supply-chain vendor delays; customer requested delays of our products or services; delays in additional acquisition opportunities; an increase in our debt leverage and/or interest rates on our debt, of which a significant portion is tied to variable interest 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, including a prolonged economic downturn or macroeconomic conditions such as inflation 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, including in Part l, Item 1A. Risk Factors, in AZZ's Annual Report on Form 10-K for the fiscal year ended February 28, 2023, 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. Non-GAAP – Regulation G Disclosures — 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, 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. 2

 
Q1 FY2024 Earnings Presentation Q1 FY2024 Company Highlights Q1 Fiscal 2024 Sales $391 million(1) Metal Coatings Segment $168.8M Precoat Metals Segment $222.1M Key Accomplishments in the Quarter • Record-level Metal Coatings sales, up 3.3% from prior year and 13% sequentially • Precoat sales improvement reflects seasonally stronger quarter, up 19% sequentially • Precoat Metals has improved production efficiencies associated with customer-owned inventory (1) Reflects Sales from Continuing Operations 3

 
Q1 FY2024 Earnings Presentation Q1 FY2024 Continuing Operations Results Three Months Ended May 31, 2023 2022 Change vs. Prior Year(1) Sales $ 390.9 $ 207.1 +88.7% Gross profit $ 97.0 $ 60.1 +61.6% Gross margin 24.8 % 29.0 % (420)bps Selling, general and administrative $ 31.5 $ 32.1 (1.9)% Selling, general and administrative as % of sales 8.1 % 15.5 % +740bps Operating profit $ 65.5 $ 27.9 +134.7% Operating margin(2) 16.8 % 13.5 % +330bps Adjusted EBITDA(3) $ 85.4 $ 52.5 +62.6% Adjusted EBITDA margin 21.8 % 25.4 % (360)bps Adjusted net income(3) $ 33.4 $ 28.2 +18.4% Adjusted diluted earnings per share(3) $ 1.14 $ 1.10 +3.6% Weighted average shares outstanding - Diluted 29,150 25,675 13.5% (1) Quarter results reflect acquisition of Precoat Metals on 5/13/2022 and divestiture of controlling interest in AIS on 9/30/2022 (2) Excluding acquisition and transaction-related expenses of $12.6 million, operating margin would have been 19.6% for fiscal 2023 (3) Non-GAAP measure. See slides 13 and 14 for reconciliation of GAAP to Non-GAAP 4 In millions $, except percentages and per share amounts

 
Q1 FY2024 Earnings Presentation YTD FY2024 AZZ Cash Flow Highlights – Continuing Operations Three Months Ended May 31, 2023 2022 Net cash provided by operating activities $ 46.9 $ 21.7 Less: capital expenditures $ (17.0) $ (6.5) Free cash flow(1) $ 29.9 $ 15.2 Adjusted EBITDA $ 85.4 $ 52.5 Free cash flow conversion 35.0 % 28.9 % Acquisition of subsidiaries, net of cash acquired $ — $ 1,298.5 Payment of dividends on Common and Series A Preferred Stock(2) $ 7.8 $ 4.2 Debt repayments $ 20.0 $ — (1) Free cash flow is a Non-GAAP measure that is reconciled to the GAAP measure (free cash flow defined as Net cash provided by operations, less capital expenditures) (2) Payment of dividends includes $4.2 million for Common Stock and $3.6 million for Series A Preferred Stock 5 In millions $, except percentages

 
Q1 FY2024 Earnings Presentation FY2024 Capital Allocation Priorities High ROIC Investments •Organic growth •Strategic customer partnerships •Productivity and efficiency enhancements Reduce Leverage •3.0x leverage target Acquisitions •Deferred Return Capital •Committed to sustaining dividends 6

 
Q1 FY2024 Earnings Presentation Focused on Deleveraging • Total debt repayment of $20.0 million in Q1 FY2024; Target debt reduction of $75-$100 million in FY2024 • Net leverage 3.5X at the end of Q1 FY2024 represents 0.7X improvement since closing the Precoat transaction • No debt maturities until 2027 • Strong cash flow generation supports deleveraging • Tax benefits of Precoat acquisition reduces cash tax outlays Long-Term Target Range 2.5x-3.0x > 3/4 turn reduction in net leverage since close4.25x 3.5x 3.0x 7 Q1 FY2024

 
Q1 FY2024 Earnings Presentation 8 FY2024 Guidance - Continuing Operations Adjusted EPS(1) Sales $3.85 - $4.35 $1,400 - $1,550m Sales Adjusted EBITDA $300 - $325m Adjusted EBITDA Adjusted EPS (1) Adjusted earnings and Adjusted earnings per share includes after-tax add-back of amortization of acquisition-related intangibles Reaffirming Previously Issued GuidanceIn millions $, except per share amounts

 
Q&A 9

 
Appendix 10

 
Q1 FY2024 Earnings Presentation 11 Fiscal Year 2024 Earnings Per Share (EPS) Walk(1) - Continuing Operations (1) Earnings per share amounts included in the chart above may not sum due to rounding differences

 
Reg “G” Tables 12

 
Q1 FY2024 Earnings Presentation Continuing Operations Non-GAAP Disclosure Three Months Ended May 31, 2023 2022 Amount Per Diluted Share(1) Amount Per Diluted Share(1) Net income from continuing operations $ 28,522 $ 15,353 Less: preferred stock dividends (3,600) — Net income from continuing operations available to common shareholders 24,922 15,353 Impact of after-tax interest expense for convertible notes — 547 Impact of preferred stock dividends 3,600 — Net income and diluted earnings per share from continuing operations 28,522 $ 0.98 15,900 $ 0.62 Adjustments: Acquisition and transaction related expenditures(2) — — 12,614 0.49 Amortization of intangible assets 6,355 0.22 3,541 0.14 Subtotal 6,355 0.22 16,155 0.63 Tax impact(3) (1,525) (0.05) (3,877) (0.15) Total adjustments 4,830 0.17 12,278 0.48 Adjusted net income and adjusted earnings per share from continuing operations(4) $ 33,352 $ 1.14 $ 28,178 $ 1.10 Weighted average shares outstanding - Diluted 29,150 25,675 (1) Earnings per share amounts included in the table above may not sum due to rounding differences. (2) Includes expenses related to the Precoat Metals acquisition and the divestiture of 60% of the AVAIL joint venture. (3) The non-GAAP effective tax rate for each of the periods presented is estimated at 24.0%. (4) Adjusted net income from continuing operations includes $1.4 million of equity in earnings for the three months ended May 31, 2023. 13

 
Q1 FY2024 Earnings Presentation Non-GAAP Disclosure of Continuing Operations Adjusted EBITDA Three Months Ended May 31, 2023 2022 Net income from continuing operations $ 28,522 $ 15,353 Interest expense 28,706 7,472 Income tax expense 9,650 5,111 Depreciation and amortization 18,523 11,973 Acquisition and transaction related-expenditures — 12,614 Adjusted EBITDA from continuing operations $ 85,401 $ 52,523 14

 
Q1 FY2024 Earnings Presentation Non-GAAP Segment Disclosure from Continuing Operations Three Months Ended May 31, 2023 2022 Metal Coatings Operating income $ 45,470 $ 45,270 Depreciation and amortization expense 6,416 8,389 EBITDA $ 51,862 $ 53,669 Precoat Metals Operating income $ 37,691 $ 6,648 Depreciation and amortization expense 5,465 3,181 EBITDA $ 43,156 $ 9,829 Infrastructure Solutions Operating loss $ (22) $ — Equity in earnings of unconsolidated subsidiaries 1,420 — EBITDA $ 1,398 $ — Corporate Operating loss $ (17,643) $ (24,009) Consolidated operating income $ 65,496 $ 27,909 15

 
v3.23.2
Document and Entity Information Document and Entity Information
Jul. 07, 2023
Document & Entity Information [Abstract]  
Document Type 8-K
Document Period End Date Jul. 07, 2023
Entity Registrant Name AZZ Inc.
Entity File Number 1-12777
Entity Tax Identification Number 75-0948250
Entity Address, Address Line One One Museum Place, Suite 500
Entity Address, Address Line Two 3100 West 7th Street
Entity Address, City or Town Fort Worth
Entity Address, State or Province TX
Entity Address, Postal Zip Code 76107
City Area Code 817
Local Phone Number 810-0095
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock
Trading Symbol AZZ
Security Exchange Name NYSE
Entity Emerging Growth Company false
Entity Central Index Key 0000008947
Amendment Flag false
Entity Incorporation, State or Country Code TX
Document Information [Line Items]  
Document Period End Date Jul. 07, 2023
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