Slide 1: Investor Presentation June 9, 2022
Investor Presentation June 9, 2022
Slide 2: Disclaimers
INVESTOR PRESENTATION DISCLAIMERS 2 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
Slide 3: Non-GAAP Disclosure of EBITDA
INVESTOR PRESENTATION 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 presentation of these measures provides i
Slide 4: Key Themes in Today's Presentation
INVESTOR 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 Outlook 4 Key Themes In Today’s Presenta
Slide 5: Vision and Values
INVESTOR PRESENTATION 5 Vision and Values GUIDING VALUES ■ We Value Our Dedicated Employees and their communities by fully training and equipping them, and providing a safe environment to grow ■ We Value Our Customers by reliably providing high-quality products and services with outstanding customer
Slide 6: Experienced Management Team with History of Organic Growth and M&A Integration
INVESTOR PRESENTATION 6 Tom Ferguson President and Chief Executive Officer Kurt Russell President & COO Precoat Bryan Stovall President & COO Metal Coatings Gary Hill President & COO AIS Philip Schlom Chief Financial Officer David Nark SVP of Marketing, Communications and Investor Relations Since 19
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 ■ Collection of electrical and industrial businesses that support and extend the lifecycle of critical infrastructure ■ Continuing to pursue strategic options that will improve focus on coatings ■ 5-Year Average Adjusted EBITDA Margin: ~10% ■ Strong portfolio of complementary h
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 Positions AZZ in the Broader Coatings Market
INVESTOR PRESENTATION 10 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 –
Slide 11: Precoat Metals Advances AZZ's Strategy of Becoming Predominantly a Metal Coatings Company
INVESTOR PRESENTATION 11 Precoat Metals Advances AZZ’s Strategy of Becoming Predominantly a Metal Coatings Company While Significantly Enhancing Scale and Margins Highly Complementary Acquisition With Strong Strategic Fit Precoat Metals Sales $551 million $699 million Substrate Steel Steel, Aluminum
Slide 12: Highly Strategic Acquisition With Significant Upside Potential for Shareholders
INVESTOR PRESENTATION Near-term capital allocation plan focused on deleveraging through strong free cash flow generation with longer-term focus on reinvestment to drive future growth✓ Capitalize on shared vision of value-added metal coating solutions and best practices to drive continuous operationa
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 14 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 U.S. End Market Breakdown(1) U.S. Pre-painted
Slide 15: Demand for Coil Coating Expected to Significantly Outpace Market Capacity
INVESTOR PRESENTATION 15 Demand for Coil Coating Is Expected to Significantly Outpace Market Capacity Rebound in Demand Conditions Shift to Prepaint Coating Tight Supply With New Lines Needed to Meet Projected Demand Precoat’s Coil Coating Volume (in millions tons) 2021E Pre-paint Subsegment by U.S.
Slide 16: North American Hot-Dip Galvanizing Market
INVESTOR PRESENTATION ■ The North American Hot-Dip Galvanizing Market is estimated to be a ~$2 billion industry with growth rates similar to GDP. ■ The Hot-Dip market serves a diverse set of end markets and is benefitting from positive trends in key end markets, including a broader set of customers
Slide 17: Operating Overview
Operating Overview 17
Slide 18: Current Situation / Macro Update
INVESTOR PRESENTATION Current Situation / Macro Update Geopolitical Supply Chain / Inflation / Commodity Prices ■ AZZ’s Metal Coatings segment and Precoat are both 100% North America-based, resulting in no disruption/exposure from the Russia / Ukraine war, and insulated from broader global uncertain
Slide 19: Current Situation / Macro Update (Cont'd): COVID-19 and ESG
INVESTOR PRESENTATION Current Situation / Macro Update (Cont’d) COVID-19 ESG ■ 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
Slide 20: Our Leading Coatings Businesses
INVESTOR PRESENTATION 20 Our Leading Coatings Businesses AZZ Metal Coatings (PF FY22 Sales: $551 million) AZZ Precoat Metals (PF FY22 Sales: $699 million) Hot-Dip Galvanizing Surface Technologies Coil Coating Value Added Solutions ■ Protects, extends lives and enhances a variety of critical infrastr
Slide 21: AZZ Metal Coatings Business Summary
INVESTOR PRESENTATION 21 AZZ Metal Coatings Business Summary Pro Forma FY22 Sales (% of Total) $551 Million 59% of Total Note: Financials pro forma for acquisitions of Steel Creek and DAAM Galvanizing. (1) Segment adjusted operating income not burdened by corporate costs. (2) Other includes agricult
Slide 22: Hot-Dip Galvanizing Market Position in North America
INVESTOR PRESENTATION 22 # 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 back-office and logistics network drive sales and operational efficiencies o F
Slide 23: Metal Coatings Segment Continues Strong Year-Over-Year Performance
INVESTOR PRESENTATION Metal Coatings Segment Continues Strong Year-Over-Year Performance Note: Financials pro forma for divestiture of Galvabar. FY2022 financials pro forma for acquisitions of Steel Creek and DAAM Galvanizing. Segment adjusted operating income not burdened by corporate costs. Growth
Slide 24: Precoat Metals Business Overview
INVESTOR PRESENTATION ■ Leader in the advanced application of protective and decorative coatings and related value-added services for steel and aluminum coil in North America ■ Leading positions and strong track record servicing the fastest growing segments of the most demanding and highest value en
Slide 25: Leading Positions in Key End Markets for Precoat Metals
INVESTOR PRESENTATION 25 Leading Positions in Key End Markets for Precoat Metals Construction Appliance HVAC Container Transportation Market Position(1)Representative Product Applications Broad product offering across major end markets solidifies Precoat’s leading position (1) Estimated coil coating
Slide 26: Representative Customers
INVESTOR PRESENTATION Representative Customers 26 ~3,000 Total Customers Diverse Customer Base With No Customer Accounting For >5% of Sales 85% of Top 25 Customer Relationships 10+ Years 600+ Total Customers Diverse Customer Base With No Customer Accounting For >7% of Sales 25+ Years Average Tenure
Slide 27: Significantly Enhanced Scale and Attractive Margin Profile Following the Precoat Acquisition
INVESTOR PRESENTATION $699 Sales Adjusted EBITDA and Margin Pro Forma Pro Forma 17.6% 19.7% 18.5% Note: Based on financials as of LTM 2/28/2022 for AZZ and LTM 12/31/2021 for Precoat. AZZ financials pro forma for acquisitions of Steel Creek and DAAM Galvanizing. (1) Does not include any estimated ru
Slide 28: Strong Cash Conversion and Working Capital Management
INVESTOR PRESENTATION 28 ■ AZZ and Precoat exhibit strong cash conversion and working capital management ■ Limited working capital and capex requirements ■ Historical investments driving continued profitable growth and margin performance Cumulative 3-Year Adjusted Free Cash Flow(1) 102% 76% Note: Re
Slide 29: Resilient Financial Performance Through the Cycle
INVESTOR PRESENTATION AZZ Precoat Metals(1) 29 (1) Reflects Precoat historical adjusted EBITDA figures as disclosed by Precoat. ($ in millions) ($ in millions) $54 $86 $85 $85 $100 16.7% 20.9% 23.7% 22.3% 21.4% FY2008 FY2009 FY2010 FY2011 FY2012 Adjusted EBITDA Margin (%) $51 $59 $42 $57 $71 12.0% 1
Slide 30: Near-Term Focus on Rapid Deleveraging
INVESTOR PRESENTATION Net Leverage Near-Term Focus on Rapid Deleveraging ■ Pro forma net leverage of 5.0x (4.2x following conversion of Subordinated Convertible Notes into Series A Preferred Shares) as of 2/28/2022 with goal of returning to <3.0x by the end of FY2024, in line with AZZ’s publicly com
Slide 31: Business Outlook
Business Outlook 31
Slide 32: Pro Forma Historical Financial Performance (FY2020 – FY2022)
INVESTOR PRESENTATION 32 Pro Forma Historical Financial Performance (FY2020 – FY2022) Revenue Adjusted EBITDA ($ in millions) ($ in millions) Capex Adjusted EBITDA – Capex ($ in millions) ($ in millions) Note: Reflects fiscal year ending February 28 for AZZ and fiscal year ending December 31 for Pre
Slide 33: Hot-Dip Galvanizing Demand Outlook
INVESTOR PRESENTATION 33 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 environmentally friendly infinitely reusable material Strong demand outlo
Slide 34: Precoat Positioned in Stable End Markets with Secular Tailwinds
INVESTOR PRESENTATION 34 Precoat is well-positioned in highly stable end markets with secular tailwinds and “new norms” in pre-painted segment driving above end market growth Diverse, Growing Markets Foundation for Robust Market Growth Across End Markets Precoat 2021A Revenue by End Market Metal Mat
Slide 35: Fiscal Year 2023 Outlook
INVESTOR PRESENTATION Fiscal Year 2023 Outlook 35 • 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 firs
Slide 36: Illustrative Pro Forma Segment-Level Sales and EBITDA
INVESTOR PRESENTATION $170 $170 Sales Adjusted EBITDA and Operating Margin % 23-25% (1) Proforma estimates for FY2023 based on Management estimates for AZZ Metal Coatings and Precoat Metals. (2) Excludes corporate costs and deal related costs (3) Based on current market conditions and projections, a
Slide 37: NYSE: AZZ
NYSE: AZZ