AZZ Inc. has reported its fiscal year 2024 third quarter results, showing growth in sales, profits, and cash flow, as well as debt reduction. The company's total sales increased by 2.2% to $381.6 million, with metal coatings sales up 3.1% to $163.2 million and precoat metals sales up 1.6% to $218.4 million. Diluted EPS increased by 55.9% to $0.92, and net income rose by 45.8% to $26.9 million.
Tom Ferguson, President, and CEO of AZZ, expressed satisfaction with the performance, stating, "Both segments performed well in the third quarter, delivering organic sales growth of 3.1% for metal coatings and 1.6% for precoat metals." He also highlighted the company's effective debt reduction and progress on the construction of a new plant in Washington, Missouri. Ferguson further added, "While the fourth quarter typically represents a seasonally slower period for AZZ, we anticipate meaningfully improved profitability over the prior year same quarter."
The company's balance sheet and liquidity remained robust, with a net leverage of 3.1x at the end of the third quarter, following a significant operating cash generation of $180.9 million for the year's first nine months. Additionally, AZZ paid down debt by $85 million and returned cash to common shareholders through cash dividend payments totaling $12.8 million.
In terms of financial outlook, AZZ revised its fiscal year 2024 guidance, narrowing and revising upward its sales to $1.45 - $1.55 billion and adjusted diluted EPS to $4.15 - $4.35. The company also mentioned its actions to offset the impact of the higher interest rate environment, including estimated interest expense benefits from the repricing of its term loan B and the reduction of another $25 million in debt in the third quarter.
AZZ Inc. will hold a live conference call to discuss these financial results on January 10, 2024, at 11:00 a.m. ET.
The company's full 8-K submission is available here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $810 | $927 | $1,062 | $481 | $526 | $1,324 |
| Revenue Growth | n/a | 14.39% | 14.53% | -54.74% | 9.37% | 151.84% |
| Operating Margins | 6% | 8% | 7% | 10% | 15% | 13% |
| Net Margins | 6% | 6% | 5% | 8% | 16% | 5% |
| Net Income (MM) | $45 | $51 | $48 | $40 | $84 | $66 |
| Net Interest Expense (MM) | $14 | $15 | $13 | $9 | $6 | $89 |
| Depreciation & Amort. (MM) | $51 | $50 | $50 | $32 | $32 | $75 |
| Earnings Per Share | $1.73 | $1.95 | $1.85 | $1.59 | $3.36 | $2.27 |
| EPS Growth | n/a | 12.72% | -5.13% | -14.05% | 111.32% | -32.44% |
| Diluted Shares (MM) | 26 | 26 | 26 | 25 | 25 | 29 |
| Free Cash Flow (MM) | $47 | $86 | $110 | $65 | $62 | $34 |
| Capital Expenditures (MM) | $30 | $25 | $33 | $27 | $24 | $57 |
| Current Ratio | 2.87 | 2.27 | 2.63 | 2.95 | 1.84 | 1.99 |
| Total Debt (MM) | $273 | $255 | $307 | $191 | $1,024 | $1,058 |
| Net Debt / EBITDA | 2.58 | 1.89 | 2.22 | 2.15 | 9.17 | 4.25 |
AZZ has weak operating margins with a positive growth rate, irregular cash flows, and a highly leveraged balance sheet. On the other hand, the company benefits from weak revenue growth and increasing reinvestment in the business and positive EPS growth.
