Azz Inc. · NYSE:AZZ
Azz — Lytham Partners Virtual Conference (May 2020)
31 slides from Azz's conference presentation, May 2020
Slide 1: AZZ Inc. Investor Presentation
AZZ Inc. Investor Presentation May 2020
Slide 2: Safe Harbor Statement
MAY 2020 PRESENTATION Safe Harbor Statement 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 statemen
Slide 3: Overview
MAY 2020 PRESENTATION Overview AZZ is a global provider of galvanizing and metal coating services, welding solutions, specialty electrical equipment and highly engineered services to the power generation, transmission, distribution, refining and industrial markets. Significant Barriers to Solid Oper
Slide 4: COVID-19 Summary
MAY 2020 PRESENTATION COVID-19 Summary Discontinued previously issued guidance Impact on Financial Results Galvanizing business remains solid, Electrical business continuing to process backlog, Industrial seeing shift of projects out of Q1 and into Q2 and Q3. Cash balance of $36.7 million as o
Slide 5: Full Year FY20 Segment Revenue and Market Drivers
MAY 2020 PRESENTATION Full Year FY20 Segment Revenue and Market Drivers Total FY2020 Revenue: $1.06 Billion Metal Coatings Energy Segment Segment $499.0 $562.8 +13.3% vs. prior year +15.6% vs. prior year Market Drivers • Strong hot-dip galvanizing demand in construction • Strong North American turna
Slide 6: Strategic Direction
MAY 2020 PRESENTATION Strategic Direction • Long term strategy 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 Galvani
Slide 7: Metal Coatings and Energy Segments
MAY 2020 PRESENTATION Metal Coatings Energy Segment Galvanizing, Surface Technologies Electrical Systems Welding Solutions 1 2 3 Multiple Infrastructure Markets Industrial, T&D, Power, Electric Utility Refinery & Power Hot Dip Galvanizing E-houses, Switchgear, Medium and Specialty Welding, Powder Co
Slide 8: Metal Coatings
MAY 2020 PRESENTATION Metal Coatings 1 The Metal Coatings Segment provides hot-dip galvanizing, powder coating, plating and other metal coatings to the steel fabrication industry through 48 facilities located throughout the United States and Canada
Slide 9: Metal Coatings' leading hot-dip galvanizing market position offers adjacencies
MAY 2020 PRESENTATION Metal Coatings’ leading hot-dip galvanizing market position in North America offers adjacency opportunities in corrosion protection. North America’s largest galvanizer • 41 locations throughout the U.S. and Canada • Differentiate on service & quality Expand into market adjacenc
Slide 10: The Energy Segment
MAY 2020 PRESENTATION The Energy Segment is a manufacturer of specialty electrical equipment focusing on safe and reliable transmission of power from generation sources to end customers, and a specialty welding service provider that ensures the safety and reliability of critical infrastructure in th
Slide 11: AZZ builds, maintains, rehabilitates and strengthens electrical and industrial infrastructure
MAY 2020 PRESENTATION 2 AZZ builds, maintains, rehabilitates and strengthens electrical and industrial infrastructure globally Enclosure Systems Switchgear Systems High Voltage Bus Medium Voltage Bus Hazardous Duty Lighting Tubular Products • Manufacturer of custom • Leading independent • Global lea
Slide 12: Specialized maintenance solutions through automated welding
MAY 2020 PRESENTATION Worldwide leader in developing and delivering specialized maintenance solutions through 3 automated welding, weld cladding and weld overlay technologies that extend the lifetime and maximize the value of assets throughout the energy industry. Coke Drum Repair Waterwall Services
Slide 13: Financial Overview
Financial Overview 13
Slide 14: Full Year FY20 Summary - Consolidated
MAY 2020 PRESENTATION Full Year FY20 Summary - Consolidated In $millions, except per share amounts Revenue Net Income Diluted EPS +14.5% -5.8% Reported / +39.1% Adjusted -6.1% Reported / +38.3% Adjusted $1,061.8 $71.3 $2.71 $927.1 $51.2 $1.96 $48.2 $1.84 FY2019 FY2020 FY2019 FY2020 FY2020 Adj. 2019
Slide 15: Full Year FY20 Segment Results – Metal Coatings
MAY 2020 PRESENTATION Full Year FY20 Segment Results – Metal Coatings In millions $ except percentages Revenue Operating Income Operating Margin +13.3% +29.1% +260 bps Key Statistics $499.0 $107.9 FY2019 Revenue $440.3 $440.3 $83.6 21.6% 19.0% Organic $25.5 Acquisitions $33.2 FY2020 Revenue $499.0 F
Slide 16: Full Year FY20 Segment Results – Energy
MAY 2020 PRESENTATION Full Year FY20 Segment Results – Energy In millions $ except percentages Revenue Operating Income Operating Margin +4.8% Reported / +34.1 Adjusted -60 bps Reported / +110 bps Adjusted Key Statistics +15.6% $42.0 7.5% $562.8 FY19 Revenue $486.8 $486.8 $32.8 6.4% 5.8% $31.3 FY19
Slide 17: Full Year Financial Guidance
MAY 2020 PRESENTATION Full Year Financial Guidance FY2020 In millions , except for EPS Range Reported Adjusted Key Drivers: Revenue $1,020-$1,060 $1,061 $1,061 Metal Coatings: Continued operational execution Lower zinc costs Earnings Per Share $2.60-$2.90 $1.84 $2.71 Energy Executed large refi
Slide 18: Full Year FY 2020 Consolidated Results
MAY 2020 PRESENTATION Full Year FY 2020 Consolidated Results In millions, except for EPS and percentages YTD FY 20 YTD FY 20 YTD FY 19 % Change vs. Adjusted Reported Adjusted Revenue $1061.8 $1061.8 $927.1 14.5% Gross Profit $239.2 $237.2 $198.6 20.4% Gross Margin 22.5% 22.3% 21.4% 110 bps Operating
Slide 19: Full Year FY 2020 Cash Flow Highlights
MAY 2020 PRESENTATION Full Year FY 2020 Cash Flow Highlights In millions, except for percentages Full Year FY 2020 Full Year FY 2019 Cash flows provided by operating activities $144.8 $111.5 Less: Capital Expenditures $(35.0) $(25.6) Free Cash Flow $109.8 $85.9 Net Income $48.2 $51.2 Free Cash Flow/
Slide 20: Capital Allocation Focused on Growth
MAY 2020 PRESENTATION Capital Allocation Focused on Growth In millions FY 2020 Capital Deployment • New business and product lines $60.6 Capital • Systems and technology • Safety, Health and Environmental Expenditures Growth • Strategic fit • Accretive within the first year Acquisitions • North Amer
Slide 21: Key Indicators
Key Indicators 21
Slide 22: Key Indicators
MAY 2020 PRESENTATION Key Indicators Metal Coatings Segment • Galvanizing • Will fabrication activity remain stable through summer? • Surface Technologies • When will our major customers either reopen, or get back to normal production levels? Energy Segment • IPG • When will Europe and India open up
Slide 23: Mission and Guiding Values
\y - ‘4 2 ‘e AZZwill create superior value in a culture where people can grow and MISSION Teamwork, and Te ; \ GUIDING VALUES We Value Our Dedicated Employees and their communities by fully training and equipping them, and providing a safe environment to grow spiritually, personally. and professiona
Slide 24: Reg G Tables
Reg G Tables
Slide 25: Non-GAAP Disclosure of EBITDA
MAY 2020 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, and other financial metrics, which are non-GAAP measures. Management believes that the
Slide 26: Non-GAAP Disclosure of Consolidated EBITDA
MAY 2020 PRESENTATION Non-GAAP Disclosure of Consolidated EBITDA In millions Consolidated Consolidated Consolidated Consolidated YTD FY 20 YTD FY 19 Q4 FY 20 Q4 FY 19 GAAP Net Income $48.2 $51.2 $(10.6) $8.8 Adjustments to reconcile GAAP to non- GAAP Financial Measures Interest Expense $13.5 $15.0 $
Slide 27: Non-GAAP Disclosure of Metal Coatings and Energy EBITDA
MAY 2020 PRESENTATION Non-GAAP Disclosure of Metal Coatings and Energy EBITDA In millions Metal Coating Q4 Metal Coating Q4 Energy Energy FY 20 FY 19 Q4 FY 20 Q4 FY 19 GAAP Operating Income $22.6 $18.0 $(1.4) $5.6 Adjustments to reconcile GAAP to non- GAAP Financial Measures Other Income / Expense $
Slide 28: Non-GAAP Disclosure of Consolidated Adjustments
MAY 2020 PRESENTATION Non-GAAP Disclosure of Consolidated Adjustments Full Year FY2020 Consolidated Q4 FY 2020 Consolidated $(millions) except EPS As Reported (a) Adjustment As Adjusted $(millions) except EPS As Reported (a) Adjustment As Adjusted Revenue 1,061.8 1061.8 Revenue 245.4 245.4 Gross Pro
Slide 29: Non-GAAP Disclosure of Energy Adjustments
MAY 2020 PRESENTATION Non-GAAP Disclosure of Energy Adjustments Full Year FY 2020 Energy Q4 FY 2020 Energy $(millions) except EPS As Reported (a) Adjustment As Adjusted $(millions) except EPS As Reported (a) Adjustment As Adjusted Revenue 562.8 562.8 Revenue 122.6 122.6 Gross Profit 112.2 2.0 (1) 11
Slide 30: Non-GAAP Disclosure of Consolidated Adjusted EBITDA
MAY 2020 PRESENTATION Non-GAAP Disclosure of Consolidated “Adjusted” EBITDA In millions Consolidated (1) Consolidated (1) YTD FY 20 Q4 FY 20 Non-GAAP Adjusted Net Income $71.3 $12.4 Adjustments to reconcile non-GAAP to non-GAAP Financial Measures Interest Expense $13.5 $3.0 Non-GAAP Income Tax Expen
Slide 31: Non-GAAP Disclosure of Energy Adjusted EBITDA
MAY 2020 PRESENTATION Non-GAAP Disclosure of Energy “Adjusted” EBITDA In millions Energy (1) Energy (1) YTD FY 20 Q4 FY 20 Non-GAAP Adjusted Operating Income $42.0 $7.8 Adjustments to reconcile non-GAAP to non-GAAP Financial Measures Other Income / Expense $(1.2) $(0.5) Interest Expense $0.0 $0.0 De