Azz Inc. · NYSE:AZZ
Azz — Investor Presentation (February 2020)
32 slides from Azz's investor presentation, Feb 5, 2020
Slide 1: AZZ Inc. Investor Presentation February 2020
AZZ Inc. Investor Presentation February, 2020
Slide 2: Forward Looking Statement Disclosure
FEBRUARY 2020 INVESTOR PRESENTATION Forward Looking Statement Disclosure 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 iden
Slide 3: About AZZ
FEBRUARY 2020 INVESTOR PRESENTATION About AZZ We are a global provider of galvanizing and metal coating services, welding Overview solutions, specialty electrical equipment and highly engineered services to the power generation, transmission, distribution, refining and industrial markets. We envisio
Slide 4: AZZ at a Glance
FEBRUARY 2020 INVESTOR PRESENTATION AZZ at a Glance As of February 28, 2019 FY2019 Mix By Sales By Operating Income Company Profile (in millions) (in millions) Headquarters Ft. Worth, Texas $31.3 27% $486.8 $440.3 FY2019 Sales 53% 47% $927.1 Million $83.6 73% Market Cap $1.13 Billion Metal Coatings
Slide 5: Solutions Supporting Infrastructure Growth and Corrosion Protection
FEBRUARY 2020 INVESTOR PRESENTATION Solutions Supporting Infrastructure Growth and Corrosion Protection Metal Coatings Industrial Electrical • Hot Dip Galvanizing • Coke drum, boiler, waterwall, • Factory fabricated electrical • Spin Galvanizing superheater, reheater, economizer, enclosures, panels
Slide 6: Strategic Direction
FEBRUARY 2020 INVESTOR PRESENTATION Strategic Direction Market Position Priorities • We operate the largest integrated network of • Organic growth and incremental acquisitions in Metal Coatings hot-dip galvanizing plants (41) as well as powder hot-dip galvanizing; platform expansion in coating, anod
Slide 7: Secular Growth Trends
FEBRUARY 2020 INVESTOR PRESENTATION Secular Growth Trends Renewable Energy Modular Industrial and Energy Storage Solutions Secular Growth Trends Grid Hardening and Resilient Sustainable Metal Energy Transmission and Coatings Solutions Distribution 7
Slide 8: Galvanizing Locations
FEBRUARY 2020 INVESTOR PRESENTATION Galvanizing Locations 8
Slide 9: Select Financial Information
FEBRUARY 2020 INVESTOR PRESENTATION Select Financial Information Net Sales Net Income (in $millions) (in $millions) 76 1,019 68 927 61 889 864 810 51 45 FY2016 FY2017 FY2018 FY2019 LTM Q3 2020 FY2016 FY2017 FY2018 FY2019 LTM Q32020 Backlog Cash Provided by Operations (in $millions) (in $millions) 33
Slide 10: Strategic Direction
FEBRUARY 2020 INVESTOR 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 Sur
Slide 11: Capital Allocation Focused on Growth (FY2020 Q3 YTD)
FEBRUARY 2020 INVESTOR PRESENTATION Capital Allocation Focused on Growth In millions FY 2020 Q3YTD Capital Deployment • New business and product lines $60.6 Capital • Systems and technology Expenditures • Strategic fit Growth • Accretive within the first year Acquisitions • North American market foc
Slide 12: Capital Allocation Focused on Growth (FY2015-FY2019)
FEBRUARY 2020 INVESTOR PRESENTATION Capital Allocation Focused on Growth In millions FY2015 - FY2019 Capital Deployment • New business and product lines • Systems and technology $165.9 Capital Expenditures $147.6 • Strategic fit Growth • Accretive within the first year Acquisitions • North American
Slide 13: Strong and Flexible Balance Sheet
FEBRUARY 2020 INVESTOR PRESENTATION Strong and Flexible Balance Sheet Debt and Liquidity Profile As of Q3 FY2020 5-Year Historical Debt / EBITDA $14M Cash at 11/30/2019 FY2015 FY2016 FY2017 FY2018 FY2019 Debt 337.8 325.6 271.4 300.9 240.7 EBITDA 152.8 166.9 150.4 95.3 128.2 $450M Revolving credit fa
Slide 14: FY 2020 Financial Guidance and Key Assumptions
FEBRUARY 2020 INVESTOR PRESENTATION FY 2020 Financial Guidance and Key Assumptions Guidance based on January 9, 2020 affirmation Key Assumptions: In millions , except for EPS Current Metal Coatings: Continued operational execution No significant winter weather disruptions Revenue $1,020-$1,060 E
Slide 15: Why AZZ?
FEBRUARY 2020 INVESTOR PRESENTATION Why AZZ? √ Market leader focused on growth, margin improvement and customer satisfaction √ 31 consecutive years of profitable operations √ Management team has reshaped the organization √ Consistently strong cash generation √ Sensible capital allocation and ROIC 15
Slide 16: Acquisitions since 1990
FEBRUARY 2020 INVESTOR PRESENTATION 21 Acquisitions since 1990 $759 mil Capital Deployed since 2010 U.S. Galvanizing LLC Olsen Enterprises K2 Partners NuZinc Preferred Industries North American Galvanizing Enhanced Powder Coating Powergrid Electronics Tennessee Galvanizing 2012- 1990’s 2013 2016 201
Slide 17: We are Well Positioned for Future Growth
FEBRUARY 2020 INVESTOR PRESENTATION We are Well Positioned for Future Growth • AZZ’s foundation is solid • Our culture is strong Strategic Acquisitions • Our Model is proven and scalable • We have an excellent set of niche, Cash Flow Operational differentiated businesses Generation Excellence • Our
Slide 18: Appendix
Appendix 18
Slide 19: 3rd Quarter Segment Revenue and Market Drivers
FEBRUARY 2020 INVESTOR PRESENTATION 3rd Quarter Segment Revenue and Market Drivers Total 3Q FY2020 Revenue: $291.1 million Metal Coatings Energy Segment Segment $129.2 $161.9 +20.2% vs. prior year +22.7% vs. prior year Market Drivers • Strong solar and petrochemical market activity • Strong North Am
Slide 20: 3rd Quarter Segment Results – Metal Coatings
FEBRUARY 2020 INVESTOR PRESENTATION 3rd Quarter Segment Results – Metal Coatings In millions $ except percentages Revenue Operating Income Operating Margin Key Statistics +20.2% +48.8% +410 bps $129.2 $107.5 FY2019 Revenue $107.5 $27.3 21.1% Organic $13.1 17.0% $18.3 Acquisitions $8.6 FY2020 Revenue
Slide 21: 3rd Quarter Segment Results – Energy
FEBRUARY 2020 INVESTOR PRESENTATION 3rd Quarter Segment Results – Energy In millions $ except percentages Revenue Operating Income Operating Margin Key Statistics +22.7% +51.1% +210 bps 10.8% $161.9 $17.4 FY19 Revenue $132.0 $132.0 8.7% FY19 Book to Ship 0.79 to 1 $11.5 FY20 Revenue $161.9 FY20 Book
Slide 22: YTD Segment Results
FEBRUARY 2020 INVESTOR PRESENTATION YTD Segment Results In $ millions except percentages Revenue Operating Income Operating Margin +11.0% +30.1% +340 bps $376.2 $85.3 $339.0 22.7% $65.6 19.3% Metal Coatings FY2019 FY2020 FY2019 FY2020 FY2019 FY2020 Revenue Operating Income Operating Margin +14.2% +3
Slide 23: 3rd Quarter Summary - Consolidated
FEBRUARY 2020 INVESTOR PRESENTATION 3rd Quarter Summary - Consolidated In $millions, except per share amounts Revenue Net Income Diluted EPS +21.6% +43.1% +42.4% $291.1 $0.84 $22.0 $239.5 $0.59 $15.4 FY2019 FY2020 FY2019 FY2020 2019 2020 • Organic growth • Lower zinc costs • Improved margins • Contr
Slide 24: Q3 FY2020 Consolidated Results
FEBRUARY 2020 INVESTOR PRESENTATION Q3 FY2020 Consolidated Results In millions, except for EPS and percentages Q3 FY 20 Q3 FY 19 % Change Revenue $291.1 $239.5 21.6% Gross Profit $67.3 $49.8 35.3% Gross Margin 23.1% 20.8% Operating Profit $33.4 $22.8 46.8% Operating Margin 11.5% 9.5% EBITDA $46.8 $3
Slide 25: YTD Q3 FY 2020 Consolidated Results
FEBRUARY 2020 INVESTOR PRESENTATION YTD Q3 FY 2020 Consolidated Results In millions, except for EPS and percentages YTD FY 20 YTD FY 19 % Change Revenue $816.5 $724.5 12.7% Gross Profit $186.1 $155.4 19.8% Gross Margin 22.8% 21.4% Operating Profit $86.6 $63.6 36.2% Operating Margin 10.6% 8.8% EBITDA
Slide 26: YTD Q3 FY 2020 Cash Flow Highlights
FEBRUARY 2020 INVESTOR PRESENTATION YTD Q3 FY 2020 Cash Flow Highlights In millions, except for percentages YTD FY 20 YTD FY 19 Cash flows provided by operating activities $72.1 $58.1 Less: Capital Expenditures $(22.5) ($13.7) Free Cash Flow $49.6 $44.4 Net Income $58.9 $42.4 Free Cash Flow/Net Inco
Slide 27: Reg G Tables
Reg G Tables
Slide 28: Non-GAAP Disclosure of EBITDA
FEBRUARY 2020 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, which are non-GAAP measures. Management believes that the presentation of
Slide 29: Non-GAAP Disclosure of Consolidated EBITDA
FEBRUARY 2020 INVESTOR PRESENTATION Non-GAAP Disclosure of Consolidated EBITDA In millions Consolidated Consolidated Consolidated Consolidated YTD FY 20 YTD FY 19 Q3 FY 20 Q3 FY 20 GAAP Net Income $58.9 $42.4 $22.0 $15.4 Adjustments to reconcile GAAP to non-GAAP Financial Measures Interest Expense $
Slide 30: Non-GAAP Disclosure of Metal Coatings and Energy EBITDA
FEBRUARY 2020 INVESTOR PRESENTATION Non-GAAP Disclosure of Metal Coatings and Energy EBITDA In millions Metal Coating Metal Coating Energy Energy Q3 FY 20 Q3 FY 19 Q3 FY 20 Q3 FY 19 GAAP Operating Income $27.3 $18.3 $17.4 $11.5 Adjustments to reconcile GAAP to non-GAAP Financial Measures Other Incom
Slide 31: Non-GAAP Disclosure of Metal Coatings and Energy EBITDA
FEBRUARY 2020 INVESTOR PRESENTATION Non-GAAP Disclosure of Metal Coatings and Energy EBITDA In millions Metal Coating Energy FY 19 FY 19 GAAP Operating Income $83.6 $31.3 Adjustments to reconcile GAAP to non-GAAP Financial Measures Other Income / Expense $1.9 $(1.0) Interest Expense $0.0 $0.0 Deprec
Slide 32: Non-GAAP Disclosure of Consolidated EBITDA
FEBRUARY 2020 INVESTOR PRESENTATION Non-GAAP Disclosure of Consolidated EBITDA In millions Consolidated Consolidated Consolidated Consolidated Consolidated FY 15 FY 16 FY 17 FY 18 FY 19 GAAP Net Income $64.9 $74.9 $61.3 $45.2 $51.2 Adjustments to reconcile GAAP to non-GAAP Financial Measures Interes