Slide 1: AZZ Corporate Presentation June 2015
AZZ incorporated NYSE: AZZ Corporate Presentation June 2015
Slide 2: Forward Looking Statements
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. You can identify forward-looking statements by terminology such as, “may,” “should,
Slide 3: Corporate Overview and Vision
3 AZZ is a global provider of specialty electrical equipment and highly engineered services to the power generation, transmission, distribution and industrial markets as well as a leading provider of hot dip galvanizing services to the North American steel fabrication market Our Vision: To be the in
Slide 4: Total Company: Sales by Segment
4 Total Company: Sales by Segment 59% 41% Actual FY2013 $571 million 45% 55% Actual FY2014 $752 million 44% 56% Actual FY2015 $817 million Energy Galvanizing Services
Slide 5: Total Company: Sales by Market Segment
5 49% 19% 32% FY2014 $752 million Total Company: Sales by Market Segment 47% 21% 32% FY2013 $571 million Transmission & Distribution Industrial - General Industry, Oil & Gas, Construction Power Generation 53% 16% 31% FY2015 $817 million
Slide 6: Served Markets
Served Markets Oil & Gas Renewable Transmission & Distribution Nuclear Refining / Petrochem Power Generation Combined Cycle Our products help power up the world from any generation source and our services ensure the safety of lives and equipment. Industrial & OEM 6
Slide 7: Customers & Partners
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Slide 8: Key Investment Considerations
8 Leading Market Positions Diversified Portfolio of Businesses Strong Long Term Growth Drivers Strong Historical Financial Performance New Leadership Instilling New Culture Key Investment Considerations
Slide 9: Leading Market Positions
9 Galvanizing Leading Market Positions Industrial Solutions Nuclear Solutions Electrical Solutions • Largest galvanizer in North America • World’s largest producer of weld metal overlay services • Largest third-party supplier of safety-related nuclear equipment • Global leader in cost efficient turn
Slide 10: Diversified Portfolio of Businesses
10 Industrial Solutions (WSI and SMS Operations) Specialty Welding and Overlays Critical Boiler, Drum and Vessel Components Boiler Construction and Overhauls Structural Repair & Upgrade Specialized Engineering Support Corrosion/Erosion Protection Nuclear Solutions (NLI & WSI Operatio
Slide 11: Diversified Portfolio of Businesses
11 Electrical Solutions (Legacy Electrical & Industrial Products) High & Medium Voltage Bus Systems Switchgear Systems Enclosure Systems Tubular Products Hazardous and Specialty Lighting Systems Galvanizing Largest galvanizer in North America Corrosion protection services for steel
Slide 12: Strong Financial Performance
12 • FY 2015 – 28th consecutive year of profitability • 10 Year CAGR – Revenues 18.3%, Net Income 29.7% • Strong balance sheet and cash flows • Superior operating margins in legacy businesses • Solid Quarterly Cash dividend Strong Financial Performance
Slide 13: Key Long-Term Growth Drivers
13 • Aging U.S. energy and industrial infrastructure and required investment • Emerging North American energy independence • International demand for electricity and energy Key Long-Term Growth Drivers
Slide 14: New Management Instilling New Culture
14 New culture based on: • Operational excellence through 6-sigma practices and accountability • Accountability and change integrated throughout all layers of management • Early stages of adoption already reaping benefits • Returns-based metrics and margin growth • More financially driven organizati
Slide 15: Focus Areas for Fiscal Year 2016
15 Improving Energy segment operating margins through emphasis on international growth operational excellence leveraging fixed costs through top-line growth Growing our Galvanizing Services segment organically by acquisition seeking adjacent opportunities in metal finishing Continu
Slide 16: Galvanizing Services
16 Galvanizing Services
Slide 17: Galvanizing Market Opportunity
17 Galvanizing Market Opportunity Includes Galvanized: • Steel Sheet • Tube Steel Global Galvanized Steel Market Post-Fabrication Galvanized Steel Electrical Utility Industrial Petrochemical Bridge & Highway OEM AZZ Served Markets Evaluating other metal finishing process technologies
Slide 18: Galvanizing Services Locations
18 Galvanizing Services Locations Acquired 6 locations in Texas, Louisiana, and Mississippi from Trinity Industries in June 2015 Locations: 42 facilities in 17 states and 3 Canadian Provinces
Slide 19: Galvanizing Services Sales by Market
19 Galvanizing Services 39% 11% 30% 8% 12% FY 2013 $337 million Electrical Utility OEM's Industrial Bridge & Highway Petrochemical 35% 12% 35% 5% 13% FY 2014 $336 million 30% 13% 36% 7% 14% FY 2015 $358 million
Slide 20: Operating Margins: Galvanizing
20 Operating Margins: Galvanizing 26.1% 26.1% 26.1% 26.2% 24.7% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%
Slide 21: Energy Segment
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Slide 22: Energy: Revenue Mix
22 40% 16% 44% Actual FY2015 $458 million 36% 13% 51% Actual FY2014 $416 million Energy: Revenue Mix 25% 29% 46% Actual FY2013 $234 million Transmission & Distribution Industrial Power Generation
Slide 23: Operating Margins: Energy
23 Operating Margins: Energy 16.7% 14.2% 13.7% 10.7% 8.4% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% FY2011 FY2012 FY2013 FY2014 FY2015 15.9% Op Margin w/o Purch Price Accounting 13.8% Op Margin w/o Purch Price Accounting 11.2% Op Margin w/o Purch Price Accounting
Slide 24: Energy Backlog
24 Energy Backlog ($ in Millions) Table includes acquired backlog from NLI during FY 2013 and Aquilex SRO (WSI) during the first quarter of FY 2014, and reflects ending backlog including NLI and WSI balances for all periods shown. $(millions) FY 2012 FY 2013 FY 2014 FY 2015 Beginning Backlog 108.4 1
Slide 25: Consolidated Financials
Consolidated Financials
Slide 26: Consolidated Net Sales
26 Consolidated Net Sales ($ in Millions) $381 $469 $571 $752 $817 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 2011 2012 2013 2014 2015 2016 (est)* Fiscal Year $875 – $925 *Per previously announced FY 2016 guidance
Slide 27: Earnings Per Share (Fully Diluted)
27 Earnings Per Share (Fully Diluted) $1.39 $1.61 $2.37 $2.32 $2.52 $2.75 to $3.25 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 2011 2012 2013 2014 2015 2016 (est)* Fiscal Year *Per previously announced FY 2016 guidance
Slide 28: Cash Flow
28 Cash Flow ($ in Millions) -$20.0 $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Cash Pro. By Oper. Net Income Free Cash Flow
Slide 29: CAPEX / Depreciation & Amortization
29 CAPEX / Depreciation & Amortization ($ in Millions) $16.4 $19.8 $24.9 *$43.5 $29.4 $22.2 $22.6 $29.4 $43.3 $46.1 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 FY2011 FY2012 FY2013 FY2014 FY2015 CAPEX D&A *Includes $12 million for the rebuild of the Joliet Galvanizing facility in Fiscal 2014
Slide 30: Total Bank Debt / Long Term Debt to Equity
30 Total Bank Debt / Long Term Debt to Equity ($ in Millions) 0.98 0.60 0.37 0.32 0.16 0.32 0.00 0.53 0.44 0.88 0.81 0.63 1.08 0.80 0.00 0.20 0.40 0.60 0.80 1.00 1.20 $0.0 $50.0 $100.0 $150.0 $200.0 $250.0 $300.0 $350.0 $400.0 $450.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2
Slide 31: EBITDA Margins
31 EBITDA Margins ($ in Millions) 9.6% 10.4% 16.4% 16.7% 21.2% 23.7% 22.3% 21.4% 24.0% 20.7% 18.7% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% -$5.0 $95.0 $195.0 $295.0 $395.0 $495.0 $595.0 $695.0 $795.0 $895.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Fiscal Year Net Sales EBITDA EBITDA Ma
Slide 32: Q & A
Q & A
Slide 33: Appendix - Businesses
Appendix - Businesses
Slide 34: Galvanizing Services
North America’s largest provider of post-fabrication galvanization Galvanizing Services OEM Industrial Bridge & Highway Agriculture 36 facilities in 17 states and 3 Canadian Provinces 34
Slide 35: Welding Services (WSI)
Welding Services (WSI) Worldwide provider that develops and delivers design repairs, component upgrades and specialty maintenance services for all energy intensive industries Machine Weld Overlay Shop Services Component Replacement Remote Weld Operation 35
Slide 36: Southeastern Mechanical Services (SMS)
Boiler Construction Boiler Overhaul Component Replacement HSRG Maintenance Southeastern Mechanical Services (SMS) SMS provides qualified modifications, repairs and fabrication of boiler components and pressure parts to industries that rely on boilers and heat recovery units for steam and/or power ge
Slide 37: Nuclear Logistics Inc (NLI)
Nuclear Logistics Inc (NLI) A leading 3rd party supplier of critical and safety related equipment for the nuclear power industry Electrical Mechanical Instrumentation & Control Qualification & Dedication 37
Slide 38: Switchgear Systems
Switchgear Systems PowerAisle™ metal clad and arc-resistant switchgear and relay panels provide the safe and reliable operation of electricity Renewable /Wind Utility Portable Substation Mining 38
Slide 39: Bus Systems
Bus Systems Electrical bus for domestic and international utilities and industrial markets Non-Segregated Phase Bus Segregated Phase Bus Isolated Phase Bus Bus Services 600V- 38kV 15kV-69kV 600V-38kV Installation/Emergency Repair 39
Slide 40: High Voltage Bus Systems (HVBS)
High Voltage Bus Systems (HVBS) AZZ SF6 gas insulated bus provides a long distance power transmission alternative to transmission lines, high voltage cables, or GIS bus designs Vertical Underground Overhead Interconnections 40
Slide 41: Enclosure Systems
Enclosure Systems Factory fabricated electrical enclosures safely and securely protect instrumentation and control devices across a wide variety of markets. Electrical Industrial Oil & Gas Specialty Applications 41
Slide 42: Lighting Systems
Hazardous and Specialty lighting for severe and harsh environments Lighting Systems Industrial Marine Lighting Food Processing/Inspection Manufacturing 42
Slide 43: Tubular Products
Pup Joints and Full Length Tubing serving the Oil Country Tubular Goods Market Tubular Products Upset Pipe Thread Pipe Full Length Tubing Pup Joints 43
Slide 44: Reg G Tables
Reg G Tables
Slide 45: GAAP to Non-GAAP EBITDA Reconciliation FY 2004 - FY 2015
45 GAAP to Non-GAAP EBITDA Reconciliation FY 2004 - FY 2015 EBITDA ($000's) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Net Income 4,263 4,812 7,827 21,604 27,688 42,206 37,728 34,963 40,736 60,456 59,597 64,943 Depreciation 5,606 5,492 5,535 6,478 7,999 12,921 15,603 18,929 18,855 1
Slide 46: GAAP to Non-GAAP Free Cash Flow Reconciliation FY 2004 - FY 2015
46 GAAP to Non-GAAP Free Cash Flow Reconciliation FY 2004 - FY 2015 Free Cash Flow ($000's) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Cash from Operations 14,963 6,471 12,794 6,928 38,926 60,196 82,588 42,085 64,065 92,738 107,275 118,157 Less Capital Spending 3,645 6,649 6,602 10,
Slide 47: AZZ incorporated
AZZ incorporated