Azz Inc. · NYSE:AZZ
Azz — Q4 FY2019 Earnings Presentation
18 slides from Azz's earnings presentation, May 20, 2019
Slide 1: Q4 and Fiscal Year 2019 Earnings Release Conference Call
Q4 and Fiscal Year 2019 Earnings Release Conference Call May 20, 2019 1
Slide 2: Safe Harbor Statement
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 suc
Slide 3: Fourth Quarter FY2019 Positives and Negative Impacts
Fourth Quarter FY2019 POSITIVES • Higher galvanizing revenue • International growth initiatives gained traction in Latin America, Europe, and China NEGATIVE IMPACTS • Start of large China high-voltage bus-duct shipment delayed into Q1 FY2020 • Delayed and lost opportunities for Welding Solutions • Z
Slide 4: Fiscal 2019 was a recovery year
Fiscal 2019 was a recovery year • Domestic refinery turnaround activity returned to a higher state • Resurgence in demand for galvanizing services • Increase in international projects for the Energy segment in both electrical and industrial markets • Nuclear markets stabilized at lower levels after
Slide 5: Total Company Revenue by Market
Total Company Revenue by Market Industrial - General Industry, Oil & Gas, Construction Transmission & Distribution Power Generation FY 2020 Expectation 19% 20% Industrial 57% 57% T&D 24% 23% Power Gen FY2018 FY2019 $810 million $927 million 5
Slide 6: Energy: Revenue by Market
Energy: Revenue by Market FY 2020 Expectation Power Gen 35% 36% 36% 34% Industrial 29% 30% T&D FY2018 FY2019 $421 million $487 million Power Generation Industrial Transmission & Distribution 6
Slide 7: Metal Coatings Revenue by Market
Metal Coatings Revenue by Market FY 2020 Expectation 5% 5% 6% 5% Electrical Utility 14% 14% 35% 42% OEM’s Industrial 34% Bridge & Highway 40% 0 Petrochemical FY 2018 FY 2019 $389 million $440 million Industrial Electrical & Telecommunication OEM's Bridge & Highway Petrochemical 7
Slide 8: Fiscal 2019 Results
Fiscal 2019 Results (Millions Except for EPS and percentages) FY 2019 FY 2018 % change Revenue $ 927.1 $ 810.4 14.4% Gross Profit $ 198.6 $ 160.3 23.9% Gross Margin 21.4% 19.8% Operating Profit $ 77.0 $ 48.2 59.5% Operating Margin 8.3% 6.0% Net Income $ 51.2 $ 45.2 13.4% Net Income Margin 5.5% 5.6%
Slide 9: FY 2019 Segment Results
FY 2019 Segment Results $(millions) Energy Metal Coatings Segment Segment FY 2019 Revenue $486.8 $440.3 Operating Income $31.3 $83.6 Operating Margin 6.4% 19.0% FY 2018 Revenue $421.0 $389.4 Operating Income $(1.8) $84.3 Operating Margin -0.4% 21.7% 9
Slide 10: Cash Flow Highlights
Cash Flow Highlights (Millions) FY 2019 FY 2018 Cash flows from operating activities $114.7 $78.9 Less: Capital Expenditures $25.6 $29.6 Free Cash Flow $89.1 $49.3 Net Income $51.2 $45.2 Free Cash Flow/Net Income 174.0% 109.1% Acquisition of subsidiaries, net of cash acquired $8.0 $44.8 Dividends $1
Slide 11: Cash Flow by Fiscal Year
Cash Flow by Fiscal Year ($ in Millions) $160.0 $140.0 $120.0 $100.0 $80.0 $60.0 $40.0 $20.0 $0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Cash Pro. By Oper. Net Income Free Cash Flow 11
Slide 12: CAPEX, Depreciation & Amortization
CAPEX, Depreciation & Amortization ($ in Millions) $60.0 $50.4 $50.5 $50.2 $50.0 $46.1 $47.4 *$43.5 $43.3 $41.4 $39.9 $40.0 $29.4 $29.4 $29.6 $30.0 $24.9 $25.6 $22.2 $22.6 $19.8 $20.0 $16.4 $10.0 $0.0 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 CAPEX D&A *Includes $12 million for
Slide 13: FY2020 Guidance
FY2020 Guidance FY 2020 Revenue $950 - $1,030 million Earnings per share $2.25 - $2.75 • Metal Coatings expects stronger revenue due to fabrication market growth and the expansion of new Surface Technologies offerings • Metal Coatings income is expected to benefit from lower zinc costs compared to p
Slide 14: FY2020 Risks
FY2020 Risks • Metal Coatings cannot offset zinc and direct labor cost increases with price • Refinery turnarounds for the Fall season do not materialize • AZZ’s ongoing recruiting and retention efforts fail to provide enough skilled and semi-skilled craft to satisfy demand • High voltage bus shipme
Slide 15: Q&A
Q&A 15
Slide 16: Reg G Tables
Reg G Tables 16
Slide 17: Non-GAAP Adjusted Earnings Reconciliation
Non-GAAP Adjusted Earnings Reconciliation In addition to reporting financial results in accordance with Generally Accepted Accounting Principles in the United States ("GAAP"), AZZ has provided adjusted earnings and adjusted earnings per share, which are non-GAAP measures. Management believes that th
Slide 18: GAAP to Non-GAAP Free Cash Flow Reconciliation
GAAP to Non-GAAP Free Cash Flow Reconciliation Fiscal Years 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Cash from Operations 82,588 42,085 64,065 92,738 107,275 118,157 143,589 111,176 78,909 114,668 Less Capital Spending 12,037 16,411 19,784 24,923 43,472 29,377 39,861 41,434 29,612 25,616 Fr