Slide 1: Second Quarter Fiscal Year 2020 Earnings Presentation
AZZ Inc. Second Quarter Fiscal Year 2020 Earnings Presentation December 5, 2019
Slide 2: Safe Harbor Statement
Q2 FY2020 EARNINGS PRESENTATION 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- looki
Slide 3: 2nd Quarter Segment Revenue and Market Drivers
Q2 FY2020 EARNINGS PRESENTATION 2nd Quarter Segment Revenue and Market Drivers Total 2Q FY2020 Revenue: $236.2 million Metal Coatings Energy Segment Segment $124.8 $111.3 +7.4% vs. prior year +4.5% vs. prior year Market Drivers • Strong solar and petrochemical market activity • Strong Energy segment
Slide 4: 2nd Quarter Segment Results – Metal Coatings
Q2 FY2020 EARNINGS PRESENTATION 2nd Quarter Segment Results – Metal Coatings In millions $ Revenue Operating Income Operating Margin +7.4% +29.9% +400 bps Key Statistics $124.8 FY2019 Revenue $116.3 $116.3 23% $28.7 19% Organic $1.2 $22.1 Acquisitions $7.3 FY2020 Revenue $124.8 FY2019 FY2020 FY2019
Slide 5: 2nd Quarter Segment Results – Energy
Q2 FY2020 EARNINGS PRESENTATION 2nd Quarter Segment Results – Energy In millions $ Revenue Operating Income Operating Margin +4.5% -0.8% -20 bps Key Statistics FY19 Revenue $106.5 $106.5 $111.3 $4.3 $4.2 4.0% 3.8% FY19 Book to Ship 1.14 to 1 FY20 Revenue $111.3 FY20 Book to Ship 1.01 to 1 FY2019 FY2
Slide 6: YTD FY 2020 Financial Guidance and Key Assumptions
Q2 FY2020 EARNINGS PRESENTATION YTD FY 2020 Financial Guidance and Key Assumptions Key Assumptions: In millions , except for EPS Prior Current Metal Coatings: Stronger revenue due to price realization Revenue $950-1,030 $1,020-$1,060 and contribution from Surface Technologies Higher income from
Slide 7: 2nd Quarter Summary - Consolidated
Q2 FY2020 EARNINGS PRESENTATION 2nd Quarter Summary - Consolidated In $millions, except per share amounts Revenue Net Income Diluted EPS +6% +38.4% +37.2% $236.2 $222.8 $0.59 $0.43 $15.6 $11.2 FY2019 FY2020 FY2019 FY2020 2019 2020 • Organic growth • Lower zinc costs • Improved margins • Contribution
Slide 8: Q2 FY2020 Consolidated Results
Q2 FY2020 EARNINGS PRESENTATION Q2 FY2020 Consolidated Results In millions, except for EPS and percentages Q2 FY 20 Q2 FY 19 % Change Revenue $236.2 $222.8 6.0% Gross Profit $52.7 $46.9 12.3% Gross Margin 22.3% 21.1% Operating Profit $22.2 $17.1 29.8% Operating Margin 9.4% 7.7% EBITDA $33.8 $30.6 10
Slide 9: YTD FY 2020 Consolidated Results
Q2 FY2020 EARNINGS PRESENTATION YTD FY 2020 Consolidated Results In millions, except for EPS and percentages YTD FY 20 YTD FY 19 % Change Revenue $525.3 $485.0 8.3% Gross Profit $118.8 $105.6 12.5% Gross Margin 22.6% 21.8% Operating Profit $53.2 $40.8 30.3% Operating Margin 10.1% 8.4% EBITDA $76.7 $
Slide 10: YTD FY 2020 Cash Flow Highlights
Q2 FY2020 EARNINGS PRESENTATION YTD FY 2020 Cash Flow Highlights In millions, except for percentages YTD FY 20 YTD FY 19 Cash flows provided by operating activities $38.2 $16.7 Less: Capital Expenditures $(16.5) ($7.2) Free Cash Flow $21.7 $9.5 Net Income $36.8 $27.0 Free Cash Flow/Net Income 59.0%
Slide 11: Capital Allocation Focused on Growth
Q2 FY2020 EARNINGS PRESENTATION Capital Allocation Focused on Growth In millions • New business and product lines FY 2020 YTD Capital Deployment Capital • Systems and technology Expenditures Growth $39.9 • Strategic fit • Accretive within the first year Acquisitions • North American market focus Sha
Slide 12: YTD FY 2020 Risks
Q2 FY2020 EARNINGS PRESENTATION YTD FY 2020 Risks • Risks identified for the year still exist, and China trade tensions did have some impact during the second quarter: • Metal Coatings – improved pricing and operational initiatives are unable to offset any unplanned increase in costs • AZZ’s ongoing
Slide 13: Strategic Direction
Q2 FY2020 EARNINGS PRESENTATION Strategic Direction • Continue to grow Metal Coatings organically and with a robust acquisition program, while targeting 21-23% Operating Margins • Focus on operating excellence and providing outstanding customer service • Assumes continued inorganic growth in Surface
Slide 14: Q&A
Q&A
Slide 15: Reg G Tables
Reg G Tables
Slide 16: Non-GAAP Disclosure of EBITDA
Q2 FY2020 EARNINGS PRESENTATION Non-GAAP Disclosure of EBITDA • In addition to reporting financial results in accordance with Generally Accepted Accounting Principles in the United States ("GAAP"), AZZ has provided EBITDA, which are non-GAAP measures. Management believes that the presentation of the
Slide 17: Non-GAAP Disclosure of Consolidated EBITDA
Q2 FY2020 EARNINGS PRESENTATION Non-GAAP Disclosure of Consolidated EBITDA In millions Consolidated Consolidated Consolidated Consolidated YTD FY 20 YTD FY 19 Q2 FY 20 Q2 FY 20 GAAP Net Income $36.8 $27.0 $15.6 $11.2 Adjustments to reconcile GAAP to non-GAAP Financial Measures Interest Expense $7.1
Slide 18: Non-GAAP Disclosure of Metal Coatings and Energy EBITDA
Q2 FY2020 EARNINGS PRESENTATION Non-GAAP Disclosure of Metal Coatings and Energy EBITDA In millions Metal Coating Metal Coating Energy Energy Q2 FY 20 Q2 FY 19 Q2 FY 20 Q2 FY 19 GAAP Operating Income $28.7 $22.1 $4.2 $4.3 Adjustments to reconcile GAAP to non-GAAP Financial Measures Other Income / Ex