AZZ Inc. (NYSE: AZZ), a global provider of metal coatings solutions, welding solutions, specialty electrical equipment, and highly engineered services, released its financial results for the 3.0-month duration finished August 31, 2k19.
Tom Ferguson, president, and chief executive officer of AZZ Inc., commented, “We continued our positive momentum in the 2nd-quarter of fiscal year 2k20, with 6.0 percent revenue and 38.40 percent net income growth year-over-year. Our Metal Coatings segment continues to strengthen with improved demand and pricing resulting in record quarterly revenue of $124.80M while driving operating margins of 23.00 percent. Our Energy segment, despite the typically slow summer season for turnarounds, made a solid contribution to 2nd-quarter consolidated revenue which inclined 4.50 percent to $111.30M. On a consolidated basis, net income was up 38.40 percent to $15.60M in the 2nd-quarter this year compared to $11.20M in the 2nd-quarter last year. Consolidated net income in the 2nd-quarter this year included $1.40M related to a one-time deferred income tax benefit resulting from corrections made following a review of deferred tax accounting practices. While our consolidated bookings were down 6.30 percent to $238.00M compared to $253.90M in the 2nd-quarter last year, it’s important to note we booked a large $55.00M order in China throughout the similar duration a year ago. With a solid backlog of $301.90M, our Energy Segment is poised for a strong performance for the remainder of our financial year. Our Metal Coatings business continues to gain traction from our key initiatives to drive growth both organically and through acquisitions. Year-to-date our Metal Coatings business has completed two acquisitions in the 1st-quarter, a 3rd-one in the 2nd-quarter, and we recently announced the closing of a 4th-one on September 30th. We are quite pleased with our Metal Coatings teams as they demonstrate their ability to successfully acquire and quickly integrate both Galvanizing and Surface Technology businesses.”
Revenues for the 2nd-quarter of financial year 2k20 were $236.20M, compared to $222.80M for the similar quarter last year, an incline of 6.00 percent. Net income for the 2nd-quarter inclined 38.40 percent to $15.60M, or $0.590 for each diluted share, compared to net income of $11.20M, or $0.430 for each diluted share, for the 2nd-quarter of financial year 2k19.
Gross margins for the 2nd-quarter of financial year 2k20 improved to 22.30 percent compared to 21.10 percent in the 2nd-quarter of the previous year. Operating margins inclined to 9.40 percent, compared to 7.70 percent in the 2nd-quarter of financial year 2k19, as SG&A fell to 12.90 percent of sales compared to 13.40 percent of sales in the previous year.
Incoming orders for the quarter were $238.00M resulting in a book to revenue ratio of 1.01. In the 2nd-quarter of the financial year, 2k19 incoming orders were $253.90M, resulting in a book to revenue ratio of 1.140. Our Energy segment backlog at the end of the 2nd-quarter of financial year 2k20 was $301.90M compared to $336.00M, a decline of 10.10 percent for the 2nd-quarter of last year. Approximately 42.00 percent of the current backlog is expected to be delivered outside the U.S., compared to 44.00 percent in the 2nd-quarter of financial year 2k19.
Metal Coatings Segment
Revenues for the Metal Coatings segment for the 2nd-quarter of financial year 2k20 were $124.80M, compared to the $116.30M for the similar duration of the previous year, an incline of 7.40 percent. Gross profit grew 27.00 percent to $32.70M from $25.80M in the similar quarter last year, driving gross margins of 26.20 percent compared to 22.10 percent in the similar quarter last year. Operating income inclined 29.90 percent to $28.70M as compared to $22.10M in the 2nd-quarter last year. As a result, operating margins for the 2nd-quarter of financial year 2k20 inclined to 23.00 percent, compared to 19.00 percent in a similar duration previous year.
Revenues for the Energy segment for the 2nd-quarter of financial year 2k20 were $111.30M as compared to $106.50M for the similar quarter previous year, an incline of 4.50 percent. Gross profit for the 2nd-quarter was $20.00M compared to $21.20M, a decline of 5.60 percent for a similar duration last year, with gross margins of 17.90 percent for the 2nd-quarter of financial year 2k20 compared to 19.90 percent in the previous year. Operating income for the Energy segment was slightly down 0.80 percent to $4.20M compared to $4.30M for a similar duration previous year. The Energy segment was impacted by $0.70M in Chinese tariffs throughout the 2nd-quarter of financial year 2k20. Operating margins for the 2nd-quarter of financial year 2k20 was 3.80 percent as compared to 4.00 percent in the previous year.
Tom Ferguson concluded, “Given our strong 1st-half performance and our confidence in the remainder of the year, we are raising our previously issued fiscal 2k20 guidance to earnings for each share to be in the range of $2.600 to $2.900 for each diluted share, and revenues to be in the range of $1,020.00 to $1,060.00M. This compares favorably to previously issued fiscal 2k20 guidance of earnings for each share in the range of $2.250 to $2.750 for each diluted share, and revenues to be in the range of $950.00M to $1,030.00M. Our fiscal year 2k20 guidance reflects our estimates given the current market conditions, current backlog expectations, and does not include any significant acquisitions or divestitures.”