Azz Inc. · NYSE:AZZ
Azz — ThreePart Advisors Ideas Conference (August 2022)
37 slides from Azz's conference presentation, Aug 24, 2022
Slide 1: ThreePart Advisors Ideas Conference
ThreePart Advisors Ideas Conference August 24, 2022
Slide 2: Disclaimers
INVESTOR PRESENTATION DISCLAIMERS 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, including the statements regarding our strategic an
Slide 3: Non-GAAP Disclosure of EBITDA
INVESTOR 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 and Adjusted EBITDA, which are non-GAAP measures. Management believes that the presentatio
Slide 4: Key Themes In Today's Presentation
INVESTOR PRESENTATION Key Themes In Today’s Presentation Advancing our Strategic Objective of Becoming Predominately a Metal Coatings Company Strategically Investing with Purpose and Agility to Create Value Capturing a Larger Portion of the Metal Coatings Market Operating Business Overview and Outlo
Slide 5: Vision and Values
INVESTOR PRESENTATION Vision and Values Our Mission AZZ will create superior value in a culture where people can grow and TRAITS matter. We are diverse, collaborative, and service-minded, operating in a culture of Trust, Respect, Accountability, Integrity, Teamwork, and Sustainability GUIDING VALUES
Slide 6: Experienced Management Team with History of Organic Growth and M&A Integration
INVESTOR PRESENTATION Experienced Management Team with History of Organic Growth and M&A Integration Tom Ferguson Philip Schlom David Nark Bryan Stovall Kurt Russell Gary Hill President and Chief Chief Financial Officer SVP of Marketing, President & COO President & COO Precoat President & COO Execut
Slide 7: Advancing our Strategic Objective of Becoming Predominately a Metal Coatings Company
Advancing our Strategic Objective of Becoming Predominately a Metal Coatings Company 7
Slide 8: AZZ's Continued Strategic Transformation Into a Focused Coatings Provider
INVESTOR PRESENTATION AZZ’s Continued Strategic Transformation Into a Focused Coatings Provider AZZ has taken strategic actions in recent years to prioritize its Metal Coatings segment, paving the way for our continued evolution into a focused coatings provider Metal Coatings Infrastructure Solution
Slide 9: Strategically Investing with Purpose and Agility to Create Value
Strategically Investing with Purpose and Agility to Create Value 9
Slide 10: Recently Completed Precoat Acquisition Significantly Positions AZZ in the Broader Coatings Market
INVESTOR PRESENTATION Recently Completed Precoat Acquisition Significantly Positions AZZ in the Broader Coatings Market ■ On May 13, 2022, AZZ Inc. (“AZZ” or the “Company”) (NYSE: AZZ) completed the acquisition of Precoat Metals (“Precoat”) from Sequa Corporation, a portfolio company of Carlyle – Pu
Slide 11: Highly Complementary Acquisition Creates a Predominantly Metal Coatings Company
INVESTOR PRESENTATION Highly Complementary Acquisition Creates a Predominantly Metal Coatings Company with Leading Positions Across Value Chain Acquisition of Precoat represents a continued transition of AZZ from a portfolio of businesses to a focused provider of coating and galvanizing solutions fo
Slide 12: Highly Strategic Acquisition With Significant Upside Potential for Shareholders
INVESTOR PRESENTATION Highly Strategic Acquisition With Significant Upside Potential for Shareholders Integrate and enhance combined corporate culture and values to leverage the best ü practices of both organizations Greater investment and increased support to the Precoat team to drive improvements
Slide 13: Capturing a Larger Portion of the Coatings Market
Capturing a Larger Portion of the Coatings Market 13
Slide 14: U.S. Pre-Painted Coil Industry
INVESTOR PRESENTATION U.S. Pre-Painted Coil Industry Pre-painted coil is a subsegment of the overall metal materials market which adds valuable performance, durability, texture and aesthetics Commentary Prepaint Subsegment with Broader Metal Materials ■ The pre-painted coil market is a ~$3.7bn indus
Slide 15: Demand for Coil Coating Is Expected to Significantly Outpace Market Capacity
INVESTOR PRESENTATION Demand for Coil Coating Is Expected to Significantly Outpace Market Capacity Tight Supply With New Lines Needed to Meet Rebound in Demand Conditions Shift to Prepaint Coating Projected Demand Precoat’s Coil Coating Volume 2021E Pre-paint Subsegment by U.S. U.S. Coil Coating Dem
Slide 16: North American Hot-Dip Galvanizing Market
INVESTOR PRESENTATION North American Hot-Dip Galvanizing Market Post-Fabrication Hot-Dip Galvanizing is a subset of the overall metal coatings materials market which protects steel structures from corrosion, using zinc, a environmentally friendly infinitely reusable material Commentary ■ The North A
Slide 17: Operating Overview
Operating Overview 17
Slide 18: Current Situation / Macro Update
INVESTOR PRESENTATION Current Situation / Macro Update ■ AZZ’s Metal Coatings segment and Precoat are both 100% North America-based, resulting in no Geopolitical disruption/exposure from the Russia / Ukraine war, and insulated from broader global uncertainty ■ While AZZ and Precoat continue to monit
Slide 19: Current Situation / Macro Update (Cont'd)
INVESTOR PRESENTATION Current Situation / Macro Update (Cont’d) ■ AZZ and Precoat are both considered providers of critical infrastructure, so both companies remained open throughout the COVID-19 pandemic ■ AZZ’s Metal Coatings segment was impacted by lower volumes of steel processed in FY2021 due t
Slide 20: Our Leading Coatings Businesses
INVESTOR PRESENTATION Our Leading Coatings Businesses AZZ Metal Coatings AZZ Precoat Metals (PF FY22 Sales: $551 million) (PF FY22 Sales: $699 million) #1 in Hot-Dip Galvanizer in the post-fabrication market #1 Coil Coatings solution provider in the pre-fabrication market Hot-Dip Galvanizing Surface
Slide 21: AZZ Metal Coatings Business Summary
INVESTOR PRESENTATION AZZ Metal Coatings Business Summary Key Facts Service Offerings Business Highlights End Markets Served n Unmatched protection and Pro Forma $551 corrosion resistance for prefabricated steel FY22 Sales Million n Strategic footprint offers significant (% of Total) advantage 59% o
Slide 22: North America's Largest Independent Hot-Dip Galvanizer of Post-Fabricated Steel
INVESTOR PRESENTATION North America’s Largest Independent Hot-Dip Galvanizer of Post-Fabricated Steel # 1 Hot-Dip Galvanizing Market Position in North America ■ Expansive footprint with 41 galvanizing locations throughout North America o Proximity to customers offers competitive advantage o Strong b
Slide 23: Metal Coatings Segment Continues Strong Year-Over-Year Performance
INVESTOR PRESENTATION Metal Coatings Segment Continues Strong Year-Over-Year Performance Historical Growth Trajectory Near Term Priorities 2 C AG R : 5.9% ($ in millions) 2 FY18 – FY $551 $32 $496 ■ Continue to focus on customer service across the $457 $519 $440 platform $389 23.5% 24.3% 22.1% 22.3%
Slide 24: Precoat Metals Is the Leading Independent Metal Coil Coating Solutions Provider in North America
INVESTOR PRESENTATION Precoat Metals Is the Leading Independent Metal Coil Coating Solutions Provider in North America Precoat Metals Business Summary LTM 12/31/2021 Sales Breakdown ■ Leader in the advanced application of protective and decorative coatings and related value-added services for steel
Slide 25: Leading Positions in Key End Markets for Precoat Metals
INVESTOR PRESENTATION Leading Positions in Key End Markets for Precoat Metals Representative Product Applications Market Position(1) Commercial / Industrial / Architectural Agricultural Residential #1 Barndominium Overall Construction #1 #2 Weathered Metal Roof Print Entry Doors Garage Doors Structu
Slide 26: Diverse Blue-Chip Customer Base with Long-Term Relationships and Low Concentration
INVESTOR PRESENTATION Diverse Blue-Chip Customer Base with Long-Term Relationships and Low Concentration Representative Customers Representative Customers Diverse Customer Base Diverse Customer Base 85% of Top 25 Customer 25+ Years Average Tenure ~3,000 Total Customers With No Customer 600+ Total Cu
Slide 27: Significantly Enhanced Scale and Attractive Margin Profile Following the Precoat Acquisition
INVESTOR PRESENTATION Significantly Enhanced Scale and Attractive Margin Profile Following the Precoat Acquisition Sales Adjusted EBITDA and Margin ($ in millions) ($ in millions) Metal Coatings Infrastructure Solutions Precoat Metals 17.6% 19.7% 18.5% $699 $1,634 $137(1) $302 $935 $165 Coatings Coa
Slide 28: Strong Free Cash Flow Generation
INVESTOR PRESENTATION Strong Free Cash Flow Generation ■ AZZ and Precoat exhibit strong cash conversion and working capital management ■ Limited working capital and capex requirements ■ Historical investments driving continued profitable growth and margin performance Cumulative 3-Year Adjusted Free
Slide 29: Resilient Financial Performance Through the Cycle
INVESTOR PRESENTATION Resilient Financial Performance Through the Cycle AZZ ($ in millions) $100 $86 $85 $85 $54 20.9% 23.7% 22.3% 21.4% 16.7% FY2008 FY2009 FY2010 FY2011 FY2012 Adjusted EBITDA Margin (%) Precoat Metals(1) ($ in millions) $71 $59 $57 $51 $42 14.2% 15.0% 12.0% 12.4% 11.6% CY2007 CY20
Slide 30: Demonstrated Track Record of Conservative Balance Sheet Management
INVESTOR PRESENTATION Demonstrated Track Record of Conservative Balance Sheet Management Net Leverage (Net Debt / Illustrative Pro Forma Adjusted EBITDA) 5.0x 2.4x <3.0x 3.0x 1.7x 4.2x 1.5x 1.5x 0.9x 2.5x (1) FY2018 FY2019 FY2020 FY2021 FY2022 Pro Forma 2/28/2022 FY2024 Long-Term Target Target Near-
Slide 31: Business Outlook
Business Outlook 31
Slide 32: Pro Forma Historical Financial Performance (FY2020 – FY2022)
INVESTOR PRESENTATION Pro Forma Historical Financial Performance (FY2020 – FY2022) Revenue Adjusted EBITDA ($ in millions) ($ in millions) $1,548 $1,634 $302 $1,391 $235 $220 $561 $699 $572 $137 $86 $95 $987 $819 $935 $149 $125 $165 FY2020 FY2021 FY2022 FY2020 FY2021 FY2022 % YoY AZZ Precoat AZZ Pre
Slide 33: Highly Attractive End Markets Benefitting from Accelerating Tailwinds
INVESTOR PRESENTATION Highly Attractive End Markets Benefitting from Accelerating Tailwinds AZZ’s Post-Fabrication Hot-Dip Galvanizing business is focused on the subset of the overall metal coatings materials market which protects post-fabricated steel structures from corrosion, using zinc, a enviro
Slide 34: Highly Attractive End Markets Benefitting from Accelerating Tailwinds (Cont'd)
INVESTOR PRESENTATION Highly Attractive End Markets Benefitting from Accelerating Tailwinds (Cont’d) Diverse, Growing Markets Foundation for Robust Market Growth Across End Markets Precoat 2021A Metal Materials Pre-painted Metal 1 Normalizing Trends Affecting End Market Growth Rates: Revenue by End
Slide 35: Fiscal Year 2023 Outlook
INVESTOR PRESENTATION Fiscal Year 2023 Outlook • Volumes in the Metal Coatings segment continue to be strong. • Within our Metal Coatings business, we continue to see strong demand from several end markets including renewables, transmission and utility, industrial and construction • The 2023 first q
Slide 36: Illustrative Pro Forma Segment-Level Sales and EBITDA – Full Year
INVESTOR PRESENTATION Illustrative Pro Forma Segment-Level Sales and EBITDA – Full Year Sales Adjusted EBITDA and Operating Margin % ($ in millions) ($ in millions) $1,400(1) Metal Coatings Precoat Metals $340(2) Op. Margin % 16-17% $170 $800 $170 $600 23-25% Metal Metal Coatings Coatings ü More tha
Slide 37: NYSE: AZZ
NYSE: AZZ
AZZ — ThreePart Advisors Ideas Conference (August 2022) on 6ix