Azz Inc. · NYSE:AZZ
Azz — Non-Deal Roadshow (September 2024)
37 slides from Azz's roadshow presentation, September 2024
Slide 1: Investor Presentation
ROADSHOW PRESENTATION Investor Presentation David Nark Senior Vice President, Marketing Communications and Investor Relations September 2024 (NYSE: AZZ)
Slide 2: Disclaimers
Disclaimers This presentation shall not constitute an offer to sell or a solicitation of an offer to buy securities or an invitation or inducement to engage in investment activity nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawfu
Slide 3: Why Invest in AZZ?
Why Invest in AZZ? Differentiated, high value-add metal coatings provider with scale, expertise and customer centric technology uniquely positioned to serve the growing North American steel and aluminum markets Strong business foundation capable of growing sales and margins at or above market levels
Slide 4: AZZ Snapshot (NYSE: AZZ)
AZZ Snapshot (NYSE: AZZ) AZZ is North America’s FORT WORTH, TEXAS 3,873 Metal Coatings 48 Coil Coating 13 Headquarter: Employees: locations1: Locations2: leading independent post- fabrication hot-dip galvanizing & coil coating Segment Sales Segment Adj. EBITDA3 solutions company with #1 positions in
Slide 5: AZZ's Strategic Journey
AZZ’s Strategic Journey $469 $810 $1,537 Sales, in millions FY25+ Focused Metal Coatings FY19 - FY24 Company FY13 - FY18 Strategic Transformation – • Investing in our future - New aluminum coil coating facility, progressing according to plan for Positioning for the future full production in fiscal y
Slide 6: Achievements Against Stated Commitments
Achievements Against Stated Commitments Original Commitment Achievements to Date Target Leverage • Reduce Net Leverage from 5.0x to 3.0x by FYE 2024 ✓ • Total Net Leverage finished FY 2024 at 2.9x • Preliminary FY24E Adj. EBITDA1 guidance of $300 - $325 ✓ • TTM 2/29/2024 Adj. EBITDA1 of $334 million
Slide 7: 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 8: Diverse End Market Exposure
Diverse End Market Exposure Steel use by end-market2 Total value of construction spending put in place 10% 5% up 8% year-to-date through June 2024 1 Building/Infrastructure 2% 3% Automotive Total value of residential construction up 8% year-to-date Mechanical Equip 16% 52% Electrical Total value of
Slide 9: Secular Drivers Enhancing Outlook
Infrastructure and Renewables Investment Reshoring Manufacturing Secular Drivers Enhancing Outlook Pre-painted Steel and Aluminum Migration Conversion from Plastics to Aluminum INVESTOR PRESENTATION 9 5
Slide 10: Uniquely Positioned to Capitalize on Generational Infrastructure Investment in U.S.
Uniquely Positioned to Capitalize on Generational Infrastructure Investment in U.S. Roads, Bridges and Clean Energy and Power Water, Airports and Other Major Projects Investment: +$110bn Investment: +$65bn Investment: +$75bn Investment to repair over 45,000 bridges and roughly 1 in Investment in cle
Slide 11: Our Leading Segments (#1 Market Position in Each Segment)
Our Leading Segments (#1 Market Position in Each Segment) Operating Production Production Value-Added Market Size and 5-Year Historical Adjusted Segment Input Route Capabilities Share2 EBITDA Performance ($ in millions) Hot-Dip Galvanizing $2.2B $197 Spin Galvanizing $189 Metal Coatings Batch Powder
Slide 12: Strategic Value Proposition Built on Common Business Models
Strategic Value Proposition Built on Common Business Models Standout Market Leaders with Best-in-Class Financial Profiles Metal Coatings Tolling Based Businesses with Minimal Commodity and Inventory Risk Proprietary Systems Driving Efficiencies in Operations, Procurement, Supply Chain, IT and Back O
Slide 13: Metal Coatings Value Proposition
Metal Coatings Value Proposition Key Value Propositions Technology: Digital Galvanizing System (DGS) provides customers with near real- ✓ time updates and operational efficiencies ✓ Embracing Complexity: Quick turns on special projects to meet demanding customer schedules ✓ Value-Added Services: Ove
Slide 14: Metal Coatings Footprint Well-Positioned to Serve Key End-Markets
Metal Coatings Footprint Well-Positioned to Serve Key End-Markets State-of-the-Art Facilities Across North America1 Superior Capabilities Enable Leading Position Across All End-Markets2 Other 19% Construction 24% Electrical 15% Industrial Transportation 23% 19% Key Technologies Hot-Dip Galvanizing S
Slide 15: Metal Coatings Historical Financials
Metal Coatings Historical Financials ($ in millions) Historical Performance Sales $637 $656 $499 $458 $519 FY20 FY21 FY22 FY23 FY24 % Margin 27.7% 27.6% 30.3% 29.7% 30.0% Adjusted $189 $197 $138 $126 $157 EBITDA1 FY20 FY21 FY22 FY23 FY24 (1) Adjusted EBITDA prior to corporate allocations; For a reco
Slide 16: Precoat Metals Value Proposition
Precoat Metals Value Proposition Key Value Propositions Technology: Coilzone provides customers with near real-time access to inventory, ✓ production and shipping information generating operational efficiencies ✓ Embracing Complexity: Quickly accommodate customer needs by offering quick turns on spe
Slide 17: Precoat Metals Footprint Well-Positioned to Serve Key End-Markets
Precoat Metals Footprint Well-Positioned to Serve Key End-Markets State-of-the-Art Facilities Across North America1 Critical Service Provider to Diverse End-Markets2 Construction (78%) Appliance (8%) HVAC (3%) Container (4%) Transportation (2%) Key Technologies Existing Facility New Facility Coil Co
Slide 18: Precoat Metals Historical Financials
Precoat Metals Historical Financials ($ in millions) Historical Performance $882 $881 Sales $710 $587 $605 FY201 FY211 FY221 FY232 FY24 % Margin 17.5% 18.9% 21.8% 18.7% 19.0% $155 $165 $168 Adjusted $115 $103 EBITDA3 FY204 FY214 FY224 FY232 FY24 Note: FY based on February year-end (1) Precoat sales
Slide 19: Investing in Future Growth
Investing in Future Growth New aluminum coil coating line under construction in Washington, Missouri Compelling Strategic and Financial Investment Enables AZZ to benefit from secular shift to aluminum cans Run-rate contracted sales of $50+ million by FY 2026 at an EBITDA margin above Precoat overall
Slide 20: Technology Transformation – A Key Differentiator
Technology Transformation – A Key Differentiator Digital Galvanizing System (DGS) is a distinct competitive advantage - Near elimination of paper with proprietary, state-of-the-art tool linked to Oracle ERP system - Fully integrated; Allows real-time decisions and enhanced customer experience - Prov
Slide 21: Investing in Future Growth: Sustainability
Investing in Future Growth Sustainability We are essential and We are committed to sustainability We recognize that diversity is environmentally friendly initiatives and reporting key to sustainability • Sustainability is intrinsic to our products as • Tracking and Reporting on Scope 1 and • We embr
Slide 22: Consistent Top-Line Growth and Profitability
Consistent Top-Line Growth and Profitability ($ in millions) $1,519 $1,538 $1,229 $1,086 $1,062 $882 $881 $587 1 $7101 Sales $605 1 $499 $519 $637 $656 $458 FY20 FY21 FY22 FY23 2 FY24 COVID Year % Margin 22.2% 22.7% 25.4% 23.3% 23.7% Segment $354 $364 $312 Adjusted $241 $241 $168 $1554 $165 EBITDA3
Slide 23: AZZ's Attractive Financial Metrics Relative to Related Industrial Companies
AZZ’s Attractive Financial Metrics Relative to Related Industrial Companies CY21A – CY23A Revenue Growth 12.3% 7.5% 4.7% 1.0% (1.3%) AZZ Coatings Building Products Service Centers Steel Mills (FY22 – FY24) CY23A EBITDA Margin1 21.7% 20.7% 19.5% 15.9% 11.4% AZZ Coatings Building Products Service Cent
Slide 24: Impactful Deleveraging Post Transformational Acquisition
Impactful Deleveraging Post Transformational Acquisition Net Leverage Since Precoat Metals Acquisition1 Net Debt / Adjusted EBITDA 4.3x • Strong free cash (incl. preferred) flow generation with conversion2 3.6x improving from ~34% in Q2 FY 2023 Net Debt / to ~171% in FY 2024 Adjusted EBITDA 3.6x (ex
Slide 25: Our Capital Allocation Priorities
Our Capital Allocation Priorities Deploying Capital Reduce Leverage Return Capital on High ROIC Investments ◼ Committed to ◼ FYE 2024 net leverage ◼ Organic growth at 2.9x per compliance sustaining dividends certificate (3.6x incl. ◼ Strategic customer preferred) partnerships ◼ Productivity ◼ Bolt-o
Slide 26: Guidance
Guidance Sales Adjusted EBITDA EPS Range $1.525 - $1.625 billion $310 - $360 million $4.50 - $5.00 INVESTOR PRESENTATION 26
Slide 27: Why Invest in AZZ?
Why Invest in AZZ? Differentiated, high value add metal coatings provider with scale, expertise and customer centric technology uniquely positioned to serve the growing North American steel and aluminum markets Strong business foundation capable of growing sales and margins at or above market levels
Slide 28: Appendix
ROADSHOW PRESENTATION Appendix
Slide 29: Net Leverage Calculations
Net Leverage Calculations Q2 FY'23 Q4 FY'24 Adjusted Net Debt (excl. Preferred) $1,325 $989 Adjusted EBITDA $365 $339 Net Debt / EBITDA (excl. Preferred) 3.6x 2.9x Adjusted Net Debt (incl. $240M Preferred) $1,565 $1,229 Adjusted EBITDA $365 $339 Net Debt / EBITDA (Incl. $240M Preferred) 4.3x 3.6x No
Slide 30: Reg "G" Tables
Reg “G” Tables
Slide 31: Non-GAAP Disclosure of Continuing Operations Adjusted EBITDA
Non-GAAP Disclosure of Continuing Operations Adjusted EBITDA Three Months Ended Year Ended February 29/28, February 29/28, 2024 2023 2024 2023 Net income from continuing operations $ 17,863 $ 7,427 $ 101,607 $ 66,339 Interest expense 24,734 27,061 107,065 88,800 Income tax expense 4,099 3,956 28,496
Slide 32: Continuing Operations Non-GAAP Disclosure
Continuing Operations Non-GAAP Disclosure 32
Slide 33: 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 February 29, 2024 Metal Precoat Infrastructure Coatings Metals Solutions Corporate Total Net income (loss) from continuing operations $ 36,501 $ 30,121 $ 4,270 $ (53,029) $ 17,863 Interest e
Slide 34: Non-GAAP Segment Disclosure from Continuing Operations (Metal Coatings and Precoat Metals)
Non-GAAP Segment Disclosure from Continuing Operations (Metal Coatings and Precoat Metals) Year Ended February 29, 2024 Infra- Metal Precoat structure Coatings Metals Solutions Subtotal Corporate Total Net income (loss) from continuing operations $ 164,856 $ 139,571 $ 9,161 $ 313,588 $ (211,981) $ 1
Slide 35: Non-GAAP Disclosure of Debt Leverage Ratio Reconciliation
Non-GAAP Disclosure of Debt Leverage Ratio Reconciliation Trailing Twelve Months Ended FY24 Q4 FY23 Q2 Gross debt $ 1,010,250 $ 1,323,750 Less: Cash per bank statement (24,807) — Add: finance lease liability 3,474 1,115 Consolidated indebtedness $ 988,917 $ 1,324,865 Net income $ 101,607 $ 63,737 De
Slide 36: Non-GAAP Disclosure of Free Cash Flow and Free Cash Flow Conversion Reconciliation
Non-GAAP Disclosure of Free Cash Flow and Free Cash Flow Conversion Reconciliation FY 24 FY 23 Q1 Q2 Q3 Cash flow from operations $ 244,468 $ 21,675 $ 20,336 $ 26,611 Less: Capital expenditures (95,119) (6,472) (12,224) (16,389) Free cash flow $ 149,349 $ 15,203 $ 8,112 $ 10,222 Net income from cont
Slide 37: Notes for Non-GAAP Disclosure
Notes for Non-GAAP Disclosure (1) Earnings per share amounts included in the table above may not sum due to rounding differences. (2) For the three months ended and year ended February 29, 2024, diluted earnings per share is based on weighted average shares outstanding of 25,346 and 25,209, respecti