Azz Inc. · NYSE:AZZ
Azz — Investor Presentation (February 2024)
29 slides from Azz's investor presentation, Feb 1, 2024
Slide 1: Investor Presentation February 2024
INVESTOR PRESENTATION INVESTOR PRESENTATION February 2024 (NYSE: AZZ)
Slide 2: Disclaimers
2INVESTOR 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 A
Slide 3: Key Messages
3INVESTOR PRESENTATION Key Messages: Differentiated, high value-add metal coatings provider with scale, expertise and customer centric technology uniquely positioned to serve the growing North American steel and aluminum markets Strong business foundation capable of growing sales and margins at or a
Slide 4: AZZ Snapshot
INVESTOR PRESENTATION 4 57% 43% AZZ Snapshot (NYSE: AZZ) Sales EBITDA3 AZZ is North America’s leading independent post- fabrication hot-dip galvanizing & coil coating solutions company with #1 positions in both markets Precoat Metals Metal Coatings (1) 41 galvanizing locations and 6 surface technolo
Slide 5: AZZ's Strategic Journey
INVESTOR PRESENTATION 5 5 AZZ’s Strategic Journey 2013-2018 Optimized Legacy Footprint • Improved capabilities and profitability of Metal Coatings • Combined Electrical and Industrial assets into one operating segment (infrastructure Solutions) 2019-2023 Strategic Transformation – Positioning for th
Slide 6: Why Our Focus is Coatings
INVESTOR PRESENTATION 6 6 Why Our Focus is Coatings 65% 25% 5% 5% U.S. Demand by Product Type Flat Long Tubular Other Strategic acquisition of Precoat Metals creates new capability and allows AZZ to provide coatings solutions to the largest part of the market (flat steel) as well as the growing alum
Slide 7: Our Leading Segments
INVESTOR PRESENTATION 7 7 Our Leading Segments Operating Segment Production Route Value-Added Capabilities Market Size and Share2 5-Year Historical EBITDA Performance ($ in millions) Metal Coatings Precoat Metals Batch Processing Continuous Processing Hot-Dip Galvanizing Spin Galvanizing Powder Coat
Slide 8: Diverse End Market Exposure
INVESTOR PRESENTATION 8 8 Total Construction starts are expected to rise by 7% to $1.2 trillion in 20241 Non-building (which includes sectors such as infrastructure) has more public funding, is more resilient, and has expected growth rates of 17% in 2024 Institutional construction, including healthc
Slide 9: Secular Drivers Enhancing Outlook
INVESTOR PRESENTATION 9 Secular Drivers Enhancing Outlook Infrastructure and Renewables Investment Reshoring Manufacturing Pre-painted Steel and Aluminum Migration Conversion from Plastics to Aluminum 9
Slide 10: Macro Tailwinds - American Infrastructure Investment and Jobs Act
INVESTOR PRESENTATION 10 Macro Tailwinds -American Infrastructure Investment and Jobs Act Roads, Bridges and Major Projects 10 Clean Energy and Power Water, Airports and Other Investment: +$110bn1 Investment: +$65bn1 Investment: +$75bn1 Investment to repair over 45,000 bridges and 1 in 5 miles of hi
Slide 11: Investing in Future Growth
11INVESTOR PRESENTATION Enables AZZ to benefit from secular shift to aluminum cans Run-rate sales of $60+ million by FY 2026 at an EBITDA margin above Precoat overall margin ROIC well in excess of cost of capital Long-term contractual customer commitment for 75% of the new capacity Total investment
Slide 12: Technology Transformation – A Key Differentiator
12INVESTOR PRESENTATION Digital Galvanizing System (DGS) is a distinct competitive advantage - Near elimination of paper with proprietary, state-of-the-art tool linked to Oracle ERP system - Fully integrated; Allows real-time decisions and enhanced customer experience - Provides real-time order stat
Slide 13: Investing in Future Growth: Sustainability
INVESTOR PRESENTATION 13 13 Investing in Future Growth Sustai ability • Sustainability is intrinsic to hot-dip galvanized steel as both zinc and steel are 100% recyclable • Hot-dip galvanized steel is an infinitely renewable building material and used in renewable energy projects such as wind and so
Slide 14: Leadership team and mission
INVESTOR PRESENTATION 14 Tom Ferguson President and Chief Executive Officer Philip Schlom Chief Financial Officer David Nark SVP of Marketing, Communications and Investor Relations Matt Emery Chief Information and Human Resources Officer Tara Mackey Chief Legal Officer Chris Bacius Vice President Bu
Slide 15: Consistent Top-line Growth and Profitability
INVESTOR PRESENTATION 15 Consistent Top-line Growth and Profitability 12 Sales Adj. EBITDA1 Margin (%)1 Note: Financials exclude AIS which was divested in September 2022; Financial metrics based on results from fiscal year 2023, ending February 28, 2023, that includes only 42 weeks of results from P
Slide 16: AZZ - Proven Resilience Through Prior Cycles
INVESTOR PRESENTATION 16 AZZ - Proven Resilience Through Prior Cycles 17 Metal Coatings EBITDA Precoat Metals EBITDA $51 $81 $85 $85 $98 $51 $59 $42 $57 $71 $102 $140 $127 $142 $169 CY 2007 CY 2008 CY 2009 CY 2010 CY 2011 Modest Decline (9%) Strong Recovery +15% CAGR ($ in millions)Limited exposure
Slide 17: Balance Sheet and Liquidity
INVESTOR PRESENTATION 17 17 Balance Sheet and Liquidity 4.25x 3.5x 3.0x 3.0x 2.5x At Close Current Target Range > 1X turn reduction in net leverage since acquisition • No debt maturities until 2027 • Total debt to adjusted EBITDA 3.1X, on track to achieve our target of 3.0X or lower in calendar year
Slide 18: Strong Free Cash Flow
INVESTOR PRESENTATION 18 18 Strong Free Cash Flow1 • Focused on the cash conversion cycle • Deploying capital on high ROIC investments • Strong cash flow generation supports near- term deleveraging priorities 1. Defined as EBITDA from continuing operations less capex Year FY2023 TTM-November Adjuste
Slide 19: Our Capital Allocation Priorities
19INVESTOR PRESENTATION Acquisitions ◼ Deferred Return Capital ◼ Committed to sustaining dividends Deploying Capital on High ROIC Investments ◼ Organic growth ◼ Strategic customer partnerships ◼ Productivity Reduce Leverage ◼ At or below 3.0x leverage in calendar 2024 19 Our Capital Allocation Prior
Slide 20: FY2024E Guidance Narrowed As Part of Q3 Earnings
INVESTOR PRESENTATION 20 Note: FY based on February year-end 1. FY2024 guidance includes equity income from AZZ’s minority interest in the AIS JV.. The AIS JV comprises the Company’s Infrastructure Solutions segment. FY2024 guidance does not include the impact of any potential future acquisitions..
Slide 21: FY2025 Guidance
INVESTOR PRESENTATION 21 21 Note: FY based on February year-end 1. FY2025 guidance includes equity income from AZZ’s minority interest in the AIS JV. The AIS JV comprises the Company’s Infrastructure Solutions segment. FY2025 guidance does not include the impact of any potential future acquisitions.
Slide 22: AZZ's Attractive Financial Metrics vs peers
22INVESTOR PRESENTATION 4.3% 2.7% 1.8% (12.1%) (10.9%) AZZ Coatings Building Products Service Centers Steel Mills 21.4% 17.0% 20.3% 10.5% 14.6% AZZ Coatings Building Products Service Centers Steel Mills 12.9% 15.0% 13.2% 21.8% 18.1% AZZ Coatings Building Products Service Centers Steel Mills CY22A –
Slide 23: Key Messages
23INVESTOR PRESENTATION Key Messages: Differentiated, high value add metal coatings provider with scale, expertise and customer centric technology uniquely positioned to serve the growing North American steel and aluminum markets Strong business foundation capable of growing sales and margins at or
Slide 24: Appendix
INVESTOR PRESENTATION Appendix 23
Slide 25: Reg "G" Tables
Reg “G” Tables 25
Slide 26: Non-GAAP Disclosure of Continuing Operations Adjusted EBITDA
Non-GAAP Disclosure of Continuing Operations Adjusted EBITDA 26 Three Months Ended November 30, Nine Months Ended November 30, 2023 2022 2023 2022 Net income from continuing operations $ 26,890 $ 18,439 $ 83,744 $ 58,912 Interest expense 25,855 26,123 82,331 61,739 Income tax expense 8,780 2,447 24,
Slide 27: (1) Earnings per share amounts included in the table above may not sum due
(1) Earnings per share amounts included in the table above may not sum due to rounding differences. Year-to- date earnings per share does not always represent the sum of the quarters’ earnings per share when the preferred shares for any quarter in the year-to-date period are anti-dilutive. (2) For t
Slide 28: Non-GAAP Segment Disclosure from Continuing Operations
Non-GAAP Segment Disclosure from Continuing Operations (Metal Coatings and Precoat Metals) 28 Three Months Ended November 30, 2023 Metal Coatings Precoat Metals Infrastructure Solutions Corporate Total Net income (loss) from continuing operations $ 37,813 $ 32,752 $ 8,452 $ (52,127) $ 26,890 Interes
Slide 29: Non-GAAP Segment Disclosure from Continuing Operations
Non-GAAP Segment Disclosure from Continuing Operations (Metal Coatings and Precoat Metals) 29 Nine Months Ended November 30, 2023 Metal Coatings Precoat Metals Infrastructure Solutions Corporate Total Net income (loss) from continuing operations $ 128,353 $ 109,449 $ 4,892 $ (158,950) $ 83,744 Inter