Slide 1: Investor Presentation October 2023
INVESTOR PRESENTATION INVESTOR PRESENTATION October 2023 (NYSE: AZZ)
Slide 2: Disclaimers
2INVESTOR PRESENTATION Disclaimers Cautionary Statements Regarding Forward Looking Statements — 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 A
Slide 3: Key Messages
3INVESTOR PRESENTATION Key Messages: Differentiated, high value-add metal coatings provider with scale, expertise and customer centric technology uniquely positioned to serve the growing North American steel and aluminum markets Strong business foundation capable of growing sales and margins at or a
Slide 4: AZZ Snapshot
INVESTOR PRESENTATION 4 57% 43% AZZ Snapshot (NYSE: AZZ) Sales EBITDA3 AZZ is North America’s leading independent post- fabrication hot-dip galvanizing & coil coating solutions company with #1 positions in both markets Precoat Metals Metal Coatings (1) 41 galvanizing locations and 6 surface technolo
Slide 5: AZZ's Strategic Journey
INVESTOR PRESENTATION 5 5 AZZ’s Strategic Journey 2013-2018 Optimized Legacy Footprint • Improved capabilities and profitability of Metal Coatings • Combined Electrical and Industrial assets into one operating segment (infrastructure Solutions) 2019-2022 Strategic Transformation – Positioning for th
Slide 6: Why Our Focus is Coatings
INVESTOR PRESENTATION 6 6 Why Our Focus is Coatings 65% 25% 5% 5% U.S. Demand by Product Type Flat Long Tubular Other Strategic acquisition of Precoat Metals creates new capability and allows AZZ to provide coatings solutions to the largest part of the market (flat steel) as well as the growing alum
Slide 7: Our Leading Segments
INVESTOR PRESENTATION 7 7 Our Leading Segments Operating Segment Production Route Value-Added Capabilities Market Size and Share 5-Year Historical EBITDA Performance ($ in millions) Metal Coatings Precoat Metals Batch Processing Continuous Processing Hot-Dip Galvanizing Spin Galvanizing Powder Coati
Slide 8: Diverse End Market Exposure
INVESTOR PRESENTATION 8 8 Total Construction starts are expected to rise by 2% in 2023, and 6% in 20241 Non-building (which includes sectors such as infrastructure) has more public funding, is more resilient, and has expected growth rates of 17% in 2023 and 8% in 2024 Institutional construction, inc
Slide 9: Secular Drivers Enhancing Outlook
INVESTOR PRESENTATION 9 Secular Drivers Enhancing Outlook Infrastructure and Renewables Investment Reshoring Manufacturing Pre-painted Steel and Aluminum Migration Conversion from Plastics to Aluminum 9
Slide 10: Macro Tailwinds - American Infrastructure Investment and Jobs Act
INVESTOR PRESENTATION 10 Macro Tailwinds -American Infrastructure Investment and Jobs Act Roads, Bridges and Major Projects 10 Clean Energy and Power Water, Airports and Other Investment: +$110bn Investment: +$65bn Investment: +$75bn Investment to repair over 45,000 bridges and 1 in 5 miles of highw
Slide 11: Investing in Future Growth
11INVESTOR PRESENTATION Enables AZZ to benefit from secular shift to aluminum cans Run-rate sales of $60+ million by FY 2026 at an EBITDA margin above Precoat overall margin ROIC well in excess of cost of capital Long-term contractual customer commitment for 75% of the new capacity Total investment
Slide 12: Technology Transformation – A Key Differentiator
12INVESTOR PRESENTATION Digital Galvanizing System (DGS) is a distinct competitive advantage - Near elimination of paper with proprietary, state-of-the-art tool linked to Oracle ERP system - Fully integrated; Allows real-time decisions and enhanced customer experience - Provides real-time order stat
Slide 13: Investing in Future Growth: Sustainability
INVESTOR PRESENTATION 13 13 Investing in Future Growth Sustai ability • Sustainability is intrinsic to hot-dip galvanized steel as both zinc and steel are 100% recyclable • Hot-dip galvanized steel is an infinitely renewable building material and used in renewable energy projects such as wind and so
Slide 14: Leadership team and mission
INVESTOR PRESENTATION 14 Tom Ferguson President and Chief Executive Officer Philip Schlom Chief Financial Officer David Nark SVP of Marketing, Communications and Investor Relations Matt Emery Chief Information and Human Resources Officer Tara Mackey Chief Legal Officer Chris Bacius Vice President Bu
Slide 15: Consistent Top-line Growth and Profitability
INVESTOR PRESENTATION 15 Consistent Top-line Growth and Profitability 12 Sales Adj. EBITDA1 Margin (%)1 Note: Financials exclude AIS which was divested in September 2022; Financial metrics based on results from fiscal year 2023, ending February 28, 2023, that includes only 42 weeks of results from P
Slide 16: AZZ - Proven Resilience Through Prior Cycles
INVESTOR PRESENTATION 16 AZZ - Proven Resilience Through Prior Cycles 17 Metal Coatings EBITDA Precoat Metals EBITDA $51 $81 $85 $85 $98 $51 $59 $42 $57 $71 $102 $140 $127 $142 $169 CY 2007 CY 2008 CY 2009 CY 2010 CY 2011 Modest Decline (9%) Strong Recovery +15% CAGR ($ in millions)Limited exposure
Slide 17: Balance Sheet and Liquidity
INVESTOR PRESENTATION 17 17 Balance Sheet and Liquidity 4.25x 3.5x 3.0x 3.0x 2.5x At Close Current Target Range > Τ3 4 turn reduction in net leverage since acquisition • No debt maturities until 2027 • Total debt to adjusted EBITDA 3.4X, on track to achieve our target of 3.0X in calendar year 2024 •
Slide 18: Strong Free Cash Flow
INVESTOR PRESENTATION 18 18 Strong Free Cash Flow1 • Focused on the cash conversion cycle • Deploying capital on high ROIC investments • Strong cash flow generation supports near- term deleveraging priorities 1. Defined as EBITDA from continuing operations less capex Year FY2023 TTM-August Adjusted
Slide 19: Our Capital Allocation Priorities
19INVESTOR PRESENTATION Acquisitions ◼ Deferred Return Capital ◼ Committed to sustaining dividends Deploying Capital on High ROIC Investments ◼ Organic growth ◼ Strategic customer partnerships ◼ Productivity Reduce Leverage ◼ At or below 3.0x leverage in calendar 2024 19 Our Capital Allocation Prior
Slide 20: FY2024 Guidance - Continuing Operations
INVESTOR PRESENTATION 20 21 Note: FY based on February year-end 1. FY2024 guidance excludes equity income from AZZ’s minority interest in the AIS JV.. The AIS JV comprises the Company’s Infrastructure Solutions segment. FY2024 guidance does not include the impact of any potential future acquisitions
Slide 21: Key Messages
21INVESTOR PRESENTATION Key Messages: Differentiated, high value add metal coatings provider with scale, expertise and customer centric technology uniquely positioned to serve the growing North American steel and aluminum markets Strong business foundation capable of growing sales and margins at or
Slide 22: Appendix
INVESTOR PRESENTATION Appendix 23
Slide 23: Reg “G” Tables
Reg “G” Tables 23
Slide 24: Non-GAAP Disclosure of Continuing Operations Adjusted EBITDA
Non-GAAP Disclosure of Continuing Operations Adjusted EBITDA 24 Three Months Ended August 31, Six Months Ended August 31, 2023 2022 2023 2022 Net income from continuing operations $ 28,332 $ 25,120 $ 56,854 $ 40,485 Interest expense 27,770 28,144 56,476 35,615 Income tax expense 5,967 10,822 15,617
Slide 25: Continuing Operations Non-GAAP Disclosure
Continuing Operations Non-GAAP Disclosure 25 Three Months Ended August 31, Six Months Ended August 31, 2023 2022 2023 2022 Amount Per Diluted Share(1) Amount Per Diluted Share(1) Amount Per Diluted Share(1) Amount Per Diluted Share(1) Net income from continuing operations $ 28,332 $ 25,120 $ 56,854
Slide 26: Non-GAAP Segment Disclosure from Continuing Operations
Non-GAAP Segment Disclosure from Continuing Operations (Metal Coatings and Precoat Metals) 26 Three Months Ended August 31, Six Months Ended August 31, 2023 2022 2023 2022 Metal Coatings Operating income $ 45,081 $ 44,996 $ 90,552 $ 90,266 Depreciation and amortization expense 6,553 8,171 12,969 16,