Azz Inc. · NYSE:AZZ
Azz — Oppenheimer 17th Annual Industrial Growth Conference (May 2022)
39 slides from Azz's conference presentation, May 4, 2022
Slide 1: Oppenheimer 17th Annual Industrial Growth Conference
Oppenheimer 17 Annual Industrial th Growth Conference May 4, 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: Executive Summary
INVESTOR PRESENTATION Executive Summary ■ On March 7, 2022, AZZ Inc. (“AZZ” or the “Company”) (NYSE: AZZ) entered into a definitive agreement to acquire Precoat Metals (“Precoat”) from Sequa Corporation, a portfolio company of Carlyle – Purchase price of $1.283 billion comprised of $1.25 billion of
Slide 4: Agenda
INVESTOR PRESENTATION Agenda 1■ Strategic Rationale and Macro / Business Update 2■ AZZ Overview 3■ Precoat Metals Overview 4■ Industry Overview 5■ Key Credit Highlights 6■ Financial Overview ■ Appendix 4
Slide 5: Strategic Rationale
INVESTOR PRESENTATION Strategic Rationale 1 Advances AZZ’s strategy of becoming predominantly a metal coatings company 2 Highly complementary acquisition extends AZZ’s position across the metal coating value chain 3 Leading industry positions across a broad and diverse set of customers 4 Attractive
Slide 6: Highly Complementary Acquisition Creates Predominantly Metal Coatings Company
INVESTOR PRESENTATION Highly Complementary Acquisition Creates 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 for
Slide 7: Closely Aligned With Our Previously Communicated Strategic Objectives
INVESTOR PRESENTATION Closely Aligned With Our Previously Communicated Strategic Objectives AZZ Acquisition Strategy North American Coatings Focus Strategic Fit Accretive Within the First Year Leading independent provider of value- Highly complementary acquisition extends Expected to be immedi
Slide 8: Integration-Lite Combination With Significant Upside Potential
INVESTOR PRESENTATION Integration-Lite Combination With Significant Upside Potential Strong systems and experienced management team at Precoat provide continuity and low integration complexity Opportunity to enhance combined corporate culture and values to bring out the best of both organization
Slide 9: Current Situation / Macro Update
INVESTOR PRESENTATION Current Situation / Macro Update ■ AZZ’s Metal Coatings segment and Precoat are both 100% North America-based, Pro Forma Revenue by Geography(1) resulting in minimal current disruption from the Russia / Ukraine war and insulation from broader global uncertainty International 7%
Slide 10: 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 11: AZZ at a Glance
INVESTOR PRESENTATION AZZ at a Glance By Pro Forma Sales Pro Forma Sales Contribution ($ in millions) Headquarters Ft. Worth, Texas International 12% 41% $987 $935 $856 $819 59% Total Employees ~3,900 North America 88% FY19 FY20 FY21 FY22 Facilities >60 By Pro Forma Operating Income PF Adj. Operatin
Slide 12: Our Current Portfolio
INVESTOR PRESENTATION Our Current Portfolio Metal Coatings Infrastructure Solutions (PF FY22 Sales: $551 million) (PF FY22 Sales: $384 million) #1 in Hot-Dip Galvanizing of Fabricated Steel Diverse portfolio of Electrical and Industrial businesses Galvanizing Surface Technologies Electrical Products
Slide 13: Our Leading Metal Coatings Business
INVESTOR PRESENTATION Our Leading Metal Coatings Business Key Facts Service Offerings Business Highlights End Markets Served Unmatched protection and Pro Forma FY22 $551 corrosion resistance for prefabricated steel Sales Million Strategic footprint offers significant (% of Total) advantage 59% o
Slide 14: North American Hot-Dip Galvanizing Market
INVESTOR PRESENTATION North American Hot-Dip Galvanizing Market Post-Fabrication Hot-Dip Galvanizing is a subset of the overall metal coatings materials market which protects steel structures from corrosion, using zinc, a environmentally friendly infinitely reusable material Commentary ■ The North A
Slide 15: North America's Largest Independent Hot-Dip Galvanizer of Post-Fabricated Steel
INVESTOR PRESENTATION North America’s Largest Independent Hot-Dip Galvanizer of Post-Fabricated Steel # 1 Hot-Dip Galvanizing Market Position in North America ■ Expansive footprint with 41 galvanizing locations throughout North America Proximity to customers offers competitive advantage Strong b
Slide 16: Metal Coatings Segment Continues Strong Year-Over-Year Performance
INVESTOR PRESENTATION Metal Coatings Segment Continues Strong Year-Over-Year Performance Historical Growth Trajectory Near Term Priorities ($ in millions) $551 $32 $496 ■ Continue to focus on customer service across the $457 $519 $440 platform $389 24.3% 22.1% 22.3% 23.5% ■ Effectively integrate rec
Slide 17: Considerations for Maximizing Value of Infrastructure Solutions
INVESTOR PRESENTATION Considerations for Maximizing Value of Infrastructure Solutions Portfolio Analysis Segment Overview $238 million ■ Eleven legacy businesses with minimal overlap – Sales (25% of Total) enhancing integration process to drive more synergies Electrical Products PF Adj. Operating ma
Slide 18: Infrastructure Solutions is a Portfolio of Diverse Businesses
INVESTOR PRESENTATION Infrastructure Solutions is a Portfolio of Diverse Businesses # of % Segment(1) Locations ■ Manufacturer of custom modular enclosures (“e-houses”), as well as relay panels Enclosures 22% 3 ■ Integration of customer furnished equipment Control Centers Power Distr. Centers Data C
Slide 19: 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 20: Precoat Metals Is the Leading Independent Metal Coil Coating Solutions Provider
INVESTOR PRESENTATION Precoat Metals Is the Leading Independent Metal Coil Coating Solutions Provider in North America Company Snapshot LTM 12/31/2021 Sales Breakdown ■ Leader in the advanced application of protective and decorative coatings and related value-added services for steel and aluminum co
Slide 21: A One-Stop-Shop for Coil Coating Solutions and Value-Added Processing
INVESTOR PRESENTATION A “One-Stop-Shop” for Coil Coating Solutions and Value-Added Processing Overview of the Coil Coating Process ■ Coil coating is a continuous, highly automated process whereby coatings and film laminates are applied to coils of metal before fabrication into end products ■ Steel o
Slide 22: Differentiated Business Model as Service-Oriented Independent Toll Processor
INVESTOR PRESENTATION Differentiated Business Model as Service-Oriented Independent Toll Processor Toll Processing Model Overview Key Advantages Commercial Independence • No direct metal or coating source affiliations • Customers can multi-source metal and coatings Transparency • No conflicts of int
Slide 23: Leading Positions in Key End Markets
INVESTOR PRESENTATION Leading Positions in Key End Markets 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 Structural and Mechanical
Slide 24: Unique Competitive Advantage Supported by Best-in-Class Service
INVESTOR PRESENTATION Unique Competitive Advantage Supported by Best-in-Class Service Precoat’s Positioning within the Prepainted Coil Coating Competitive Landscape Size • Only independent coil coating solutions provider of scale serving every end market reflects • Both large and small, complex runs
Slide 25: U.S. Prepainted Coil Coating End Market Trends
INVESTOR PRESENTATION U.S. Prepainted Coil Coating End Market Trends U.S. Annual Prepainted Coil Shipment Demand Volume Long-Term Growth (in millions of short tons) ■ Precoat’s broad and diverse range of capabilities across substrates, sizes and gauges provide ability to Comm./Ind./Arch. Constructio
Slide 26: Key Credit Highlights
INVESTOR PRESENTATION Key Credit Highlights 1 Nearly Pure-Play Metal Coatings Company with Leading Positions Across the Value Chain 2 Significantly Enhanced Scale and Attractive Margin Profile 3 Sustainable Competitive Advantage from Highly Strategic Facilities Footprint 4 Diverse Blue-Chip Customer
Slide 27: Sources & Uses and Pro Forma Capitalization
INVESTOR PRESENTATION Sources & Uses and Pro Forma Capitalization Sources of Funds Pro Forma Capitalization Standalone Pro Forma Sources $ % ($ in millions) 2/28/2022 Adjustments 2/28/2022 New Term Loan B $1,300 82% Cash & Cash Equivalents $15 ($4) $12 Debt: New Subordinated Convertible Notes 240 15
Slide 28: $240 Million Strategic Investment From Blackstone
INVESTOR PRESENTATION $240 Million Strategic Investment From Blackstone Overview ■ On April 25, 2022, AZZ announced that funds managed by Blackstone Tactical Opportunities (“Blackstone”) would make a $240 million strategic investment in the Company in order to support the Company’s previously announ
Slide 29: Significantly Enhanced Scale and Attractive Margin Profile
INVESTOR PRESENTATION 2 Significantly Enhanced Scale and Attractive Margin Profile Revenue Adjusted EBITDA and Margin ($ in millions) ($ in millions) Metal Coatings Infrastructure Solutions Precoat Metals 17.6% 19.7% 18.5% $699 $1,634 $137(1) $302 $935 $165 Coatings Coatings Related Related Pro Form
Slide 30: Diverse Blue-Chip Customer Base with Long-Term Relationships and Low Concentration
INVESTOR PRESENTATION 4 Diverse Blue-Chip Customer Base with Long-Term Relationships and Low Concentration Representative Customers Representative Customers Diverse Customer Base With Diverse Customer Base With 85% of Top 25 Customer 25+ Years Average Tenure of ~3,000 Total Customers No Customer Acc
Slide 31: Resilient Financial Performance Through the Cycle
INVESTOR PRESENTATION 5 Resilient Financial Performance Through the Cycle AZZ ($ 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 CY
Slide 32: Precoat's Meaningful Variable Cost Structure Provides Enhanced Agility
INVESTOR PRESENTATION 5 Precoat’s Meaningful Variable Cost Structure Provides Enhanced Agility Due to high material cost mix and flexible labor arrangements, Precoat enjoys a highly variable cost structure that supports stability and cycle resiliency. Toll processing model eliminates the need to own
Slide 33: Strong Free Cash Flow Generation
INVESTOR PRESENTATION 6 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 Fre
Slide 34: Demonstrated Track Record of Prudent Balance Sheet Management
INVESTOR PRESENTATION 6 Demonstrated Track Record of Prudent Balance Sheet Management Net Leverage (Net Debt / Pro Forma LTM Adjusted EBITDA) 5.0x 2.4x <3.0x 3.0x 1.7x 4.2x 1.5x 1.5x 0.9x 2.5x FY2018 FY2019 FY2020 FY2021 FY2022 Pro Forma 2/28/2022 FY2024 Long-Term (1) Target Target Near-Term Focus o
Slide 35: Highly Attractive End Markets Benefitting from Accelerating Tailwinds
INVESTOR PRESENTATION 7 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 envi
Slide 36: Highly Attractive End Markets Benefitting from Accelerating Tailwinds (Cont'd)
INVESTOR PRESENTATION 7 Highly Attractive End Markets Benefitting from Accelerating Tailwinds (Cont’d) Diverse, Growing Markets Foundation for Robust Market Growth Across End Markets Precoat 2021A Revenue Metal Materials Prepainted Metal 1 Normalizing Trends Affecting End Market Growth Rates: by End
Slide 37: Experienced Management Team with History of Organic Growth and M&A Integration
INVESTOR PRESENTATION 8 Experienced Management Team with History of Organic Growth and M&A Integration Tom Ferguson Philip Schlom David Nark Kurt Russell Bryan Stovall Gary Hill President and Chief Executive Chief Financial Officer SVP of Marketing, President & COO Precoat President & COO President
Slide 38: 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 $137 $572 $86 $95 $987 $819 $935 $149 $165 $125 FY2020 FY2021 FY2022 FY2020 FY2021 FY2022 % YoY AZZ Precoat AZZ Pre
Slide 39: NYSE: AZZ
NYSE: AZZ
AZZ — Oppenheimer 17th Annual Industrial Growth Conference (May 2022) on 6ix