Azz Inc. · NYSE:AZZ
Azz — Q2 FY2019 Earnings Presentation
11 slides from Azz's earnings presentation, Oct 9, 2018
Slide 1: Fiscal Year 2019 Second Quarter Earnings Release Conference Call
Fiscal Year 2019 Second Quarter Earnings Release Conference Call October 9, 2018
Slide 2: Safe Harbor Statement
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 statements by terminology suc
Slide 3: Q2 Fiscal 2019 Upturn
Q2 Fiscal 2019 Upturn • Focus on revenue growth is paying off • Regaining lost market share in Metal Coatings • Utilizing newly acquired facilities in Electrical Group • Normal weak season for the Industrial Group due to low turnaround and outage activity • Solid Metal Coatings quarter, but margins
Slide 4: Fiscal 2019 Markets
Fiscal 2019 Markets • Solid demand in Metal Coatings segment • Infrastructure spend increasing • Increasing demand for Galvabar, scouting for second site • Powder Coating demand growing • Energy segment full year outlook good • Q2 seasonally weaker than Q1 –limited turnarounds and outages during the
Slide 5: Q2 Fiscal 2019 Results
Q2 Fiscal 2019 Results (Millions Except for EPS and %) Q2 FY 2019 Q2 FY 2018 % change Revenue $ 222.8 $ 196.3 13.5% Gross Profit $ 46.9 $ 43.8 7.1% Gross Margin 21.1% 22.3% Operating Profit $ 17.1 $ 17.4 (1.6)% Operating Margin 7.7% 8.9% Net Income $ 11.2 $ 9.8 14.9% Diluted EPS $ 0.43 $ 0.38 13.2%
Slide 6: Total Company Revenue by Market
Total Company Revenue by Market Industrial - General Industry, Oil & Gas, Construction Transmission & Distribution Power Generation 20% 19% FY 2019 Expectation Industrial 59% 54% 21% 27% T&D Power Gen Q2 FY2018 Q2 FY2019 $196.3 million $222.8 million 6
Slide 7: First Half FY 2019 Cash Flow Highlights
First Half FY 2019 Cash Flow Highlights (Millions except for %) H1 FY 2019 H1 FY 2018 Cash flows provided by operating activities $17.5 $2.8 Less: Capital Expenditures $(7.2) $(16.6) Free Cash Flow $10.3 $(13.8) Net Income $27.0 $21.8 Free Cash Flow/Net Income 38.1% (63.3)% Acquisition of subsidiari
Slide 8: Q2 FY 2019 Segment Results
Q2 FY 2019 Segment Results (Millions except for %) Energy Metal Coatings Segment Segment Q2 FY 2019 Revenue $106.5 $116.3 Operating Income $4.3 $22.1 Operating Margin 4.0% 19.0% Q2 FY 2018 Revenue $97.3 $99.0 Operating Income $2.4 $23.4 Operating Margin 2.4% 23.6% 8
Slide 9: Updated FY2019 Guidance
Updated FY2019 Guidance FY 2019 Revenue $930 - $970 million Earnings per share $1.90 - $2.25 Updated from previous guidance of Revenue of $900-$960 million and EPS of $1.75-$2.25 per annum driven by: • Metal Coatings experiencing stronger market demand, and will benefit from a stronger selling effor
Slide 10: FY2019 Risks
FY2019 Risks • Metal Coatings cannot offset zinc and direct labor cost increases with price, and operational execution efforts falter • AZZ’s ongoing recruiting and retention efforts fail to provide enough skilled and semi-skilled craft to satisfy demand • Electrical Group’s operational improvement
Slide 11: Q&A
Q&A