Azz Inc. · NYSE:AZZ
Azz — Three Part Advisors 2023 East Coast IDEAS Conference
29 slides from Azz's conference presentation, June 2023
Slide 1: Investor Presentation
INVESTOR PRESENTATION INVESTOR PRESENTATION June 2023
Slide 2: Disclaimers
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 Act of 1995, including t
Slide 3: AZZ Snapshot
AZZ Snapshot By Sales By EBITDA AZZ is North America’s largest independent hot-dip galvanizing and coil coating solutions company with #1 positions in both markets 39% 48% 52% $1.3 billion 61% FY2023 Sales $267.4mm Adj. EBITDA Metal Coatings Precoat Metals Headquarters: Coil Employees: Metal ~20.2%
Slide 4: AZZ Provides Technologically Advanced Metal Coatings and Related Value-Added Services
AZZ Provides Technologically Advanced Metal Coatings and Related Value-Added Services Highly differentiated solutions provider distinguished by scale, technology, customer service, breadth of offerings and proprietary know-how Industry Leading Business Segments Why AZZ Irreplicable Footprint refle
Slide 5: Investment Thesis
North America’s largest independent hot-dip galvanizing and coil coating company Irreplaceable footprint provides cost advantages and enables service capabilities to customers Investment Diversified and resilient end markets with secular growth tailwinds Thesis Value-added tolling business model pro
Slide 6: Portfolio Transformation Creates a Focused Market Leader in Protective Coating Solutions
Portfolio Transformation Creates a Focused Market Leader in Protective Coating Solutions with High Margins AZZ in 20191 AZZ Today2 Acquisition 31% of 39% ~$163mm Precoat ~$309mm Adj. EBITDA1 Metals Adj. EBITDA3 61% 69% Divestiture of AZZ Infrastructure Solutions AZZ Precoat Metals Metal Coatings Met
Slide 7: #1 in Hot-Dip Galvanizing and Coil Coating Businesses Across Large and Diverse Served Markets
#1 in Hot-Dip Galvanizing and Coil Coating Businesses Across Large and Diverse Served Markets METAL COATINGS PRECOAT METALS Continuous coil coating with value-added Galvanizing, powder coatings, plating, shape correction, embossing, slitting, anodizing blanking Capabilities Market #1 #1 Position Nor
Slide 8: Scale and Proximity to Customers Drives Significant Cost and Service Advantages
Scale and Proximity to Customers Drives Significant Cost and Service Advantages North America’s Largest Independent Hot-Dip Galvanizing and Coil Coating Company Precoat Metals Locations (13) Metal Coatings Locations (46) INVESTOR PRESENTATION 8 6
Slide 9: Trusted Long-Term Partner to Large, Blue Chip Customer Base
Trusted Long-Term Partner to Large, Blue Chip Customer Base Select Customers 85%+ of Top 25 Customers’ Construction & Building Products Relationships Span 10+ Years HVAC and Appliances Growing Base of Over 3,000+ Customers (Haier) Transmission & Distribution Diverse Customer Profile, No Single Custo
Slide 10: Diverse and Balanced End Market Exposure
Commercial Machinery / Construction Industrial Agriculture Trans. Renewable/Utility FY2023 Sales Other 12% Electrical Utility Diverse and 7% Balanced End Transportation 10% Construction 51% Market Exposure Consumer 8% Industrial 12% Residential HVAC Infrastructure Appliance Bridge and Hwy Constructi
Slide 11: Secular Drivers Enhancing Outlook
INFRASTRUCTURE AND RENEWABLES INVESTMENT RESHORING MANUFACTURING Secular Drivers Enhancing Outlook PREPAINTED STEEL AND ALUMINUM MIGRATION CONVERSION FROM PLASTICS TO ALUMINUM INVESTOR PRESENTATION 11 9
Slide 12: Significant Macro Tailwinds from the American Infrastructure Investment and Jobs Act
Significant Macro Tailwinds from the American Infrastructure Investment and Jobs Act Roads, Bridges and Clean Energy and Power Water, Airports and Other Major Projects Investment: $110bn Investment: $65bn Investment: +$75bn Investment to repair over 45,000 bridges and 1 in 5 Investment in clean ener
Slide 13: Tolling Model Limits Metal Commodity Cost Exposure
Tolling Model Limits Metal Commodity Cost Exposure Limited Metal Commodity Exposure (% Indexed to 2014 price) Limited exposure to metal price 200 150 100 Value-added pricing model 50 Zinc ($/ton) Metal Coating Sales ($mm) 0 2014 2015 2016 2017 2018 2019 2020 2021 (% Indexed to 2012 price) Highly var
Slide 14: Both Businesses Have Delivered Robust Top-line Growth and Profitability
Both Businesses Have Delivered Robust Top-line Growth and Profitability ($ in millions) Sales Adj. EBITDA1 Margin (%)1 21.1% 21.5% 24.2% 23.3% $1,324 $1,218 $1,060 $1,029 $687 $294 $309 $699 $561 $572 $224 $221 $120 $137 $86 $95 $519 $637 $189 $499 $457 $138 $157 $126 FY20 FY21 FY22 FY23 FY20 FY21 F
Slide 15: Mission-Driven, Experienced Management Team
Mission-Driven, Experienced Management Team Our Mission Create superior value in a culture where people can grow and TRAITS matter. We are diverse, collaborative, and service-minded, operating in a culture of TRAITS…Trust, Respect, Accountability, Integrity, Teamwork, and Sustainability Leadership H
Slide 16: Committed to ESG & Sustainability
Committed to ESG & Sustainability Highlights ESG Targets Extensive re-use and recycling of zinc, aluminum, steel, water • 10% Scope 1 & 2 emissions reduction of FY2023 Environmental and chemical solutions GHG emissions intensity by 2033 Launching baseline Scope 3 supply chain sustainability survey •
Slide 17: Financial Overview
INVESTOR PRESENTATION Financial Overview 15
Slide 18: Premier Margin and Cash Flow Profile
Premier Margin and Cash Flow Profile 3-Year Median EBITDA Margin3 Key AZZ Value Drivers of Profitability 18% 14% 12% ✔ Differentiated solutions command strong 7% gross margins AZZ Coatings Service Centers Steel Mills ✔ Flexible, efficient operating model supports attractive EBITDA margin 3-Year Medi
Slide 19: Proven Resilience Through Challenging Cycles
Proven Resilience Through Challenging Cycles ($ in millions) Highly Variable Cost Structure Performed Well Through Global Financial Crisis ~25% Strong Recovery Modest Decline +15% CAGR $169 (9%) CAGR ~75% $140 $142 $127 $71 Fixed Variable $57 $102 $59 $42 Diverse End Market Exposure FY2023 Sales $51
Slide 20: Rapid Deleveraging Profile
Rapid Deleveraging Profile Capital structure with no maturities until 2027 > ⁄ turn 4.25x reduction in net leverage since close Strong cash flow generation supports near-term deleveraging 3.5x priority 3.0x 3.0x Long-Term Target Range Business expected to generate 2.5x ~$200mm in free cash flow in f
Slide 21: Our Capital Allocation Priorities
Our Capital Allocation Priorities High ROIC Reduce Acquisitions Return Investments Leverage Capital 3.0x leverage by Opportunistic, Committed to Organic growth February 2024 highly accretive sustaining bolt-on dividends Strategic acquisitions customer partnerships Productivity INVESTOR P
Slide 22: High ROIC Strategic Investment: New Precoat Coating Line
High ROIC Strategic Investment: New Precoat Coating Line In November 2022, AZZ announced the construction of a new aluminum coil coating line outside St. Louis, Missouri with an estimated completion date of August 2024 …Achieved While Still Meeting Compelling Strategic and Financial Investment… Dele
Slide 23: FY2024 Guidance
FY2024 Guidance FY2024 Guidance - Continuing Operations $1,400 - $1,550m Sales(1) Sales Adjusted $300 - $325m EBITDA Adjusted EBITDA Adjusted $3.85 - $4.35 EPS(2) Adjusted EPS Note: FY based on February year-end 1. FY2024 guidance excludes equity income from AZZ’s minority interest in the AIS JV.. T
Slide 24: Current Strategy
1 Drive Organic Growth • Continued emphasis on customer service and quality • Invest in capacity to support specific customer demand 2 Sustain Target EBITDA Range • Metal Coatings EBITDA 25-30% • Precoat Metals EBITDA 17-22% Current 3 Optimize Corporate Structure With Simplified Metal Coatings Focus
Slide 25: Appendix
INVESTOR PRESENTATION Appendix 23
Slide 26: Reg “G” Tables
Reg “G” Tables 26
Slide 27: Continuing Operations Non-GAAP Disclosure
Continuing Operations Non-GAAP Disclosure Three Months ended February 28, Year Ended February 28, 2023 2022 2023 2022 Per Per Per Per Amount Diluted Share(1) Amount Diluted Share(1) Amount Diluted Share(1) Amount Diluted Share(1) Net income from continuing operations $ 7,427 $ — $ 11,322 $ — $ 66,33
Slide 28: Non-GAAP Disclosure of Continuing Operations Adjusted EBITDA
Non-GAAP Disclosure of Continuing Operations Adjusted EBITDA Three Months Ended Year Ended February 28, February 28, 2023 2022 2023 2022 Net income from continuing operations $ 7,427 $ 11,322 $ 66,339 $ 49,817 Interest expense 27,061 1,345 88,800 6,363 Income tax (benefit) expense 3,956 4,436 22,336
Slide 29: Non-GAAP Segment Disclosure from Continuing Operations (Metal Coatings and Precoat Metals)
Non-GAAP Segment Disclosure from Continuing Operations (Metal Coatings and Precoat Metals) Three Months Ended Year Ended February 28, February 28, 2023 2022 2023 2022 Metal Coatings Operating income $ 32,141 $ 31,960 $ 155,954 $ 128,758 Depreciation and amortization expense 8,170 7,843 32,955 30,453
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