AZZ’s growth amid change

Robert Francis

To say 2013 was a year of changes for AZZ inc. would be an understatement. The Fort Worth-based company, a manufacturer of electrical products and a provider of galvanizing services, is continuing to grow and acquire other companies, but at the same time it abruptly faced a leadership change. In October 2013 longtime president and CEO David Dingus died. Dingus had joined the company in 1998 and had been CEO since 2001.

Named to replace Dingus was Tom Ferguson, who has held a variety of executive positions at firms in AZZ’s sector. He was CEO of privately held FlexSteel Pipeline Technologies and also worked for 25 years at Flowserve. Despite the changes, fiscal year 2014 saw strong growth and the company’s 28th consecutive year of profitability. For the 12-month period that ended February 28, 2014, revenues grew to $751.7 million compared with $570.6 million for the same period the previous year, an increase of 31.7 percent. Year-to-date net income was $59.6 million, compared with $60.5 million for the same period a year earlier, a decrease of 1.4 percent. Fully diluted earnings per share were $2.32, compared with $2.37 the previous year, a decrease of 2.1 percent. The company’s performance was hampered by a sluggish economy, lower-than-expected electric utility spending, delayed nuclear projects and severe winter weather in North America.

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The company’s growth was primarily in its electrical and industrial products and services segment, which generated revenues of $416.1 million compared with $233.6 million for fiscal year 2013, an increase of 78.2 percent, and operating income of $45.9 million compared with $34.2 million for fiscal year 2013, an increase of 34 percent. The company’s recent acquisitions were responsible for most of that increase in revenue. To better reflect the recent acquisitions – WSI’s specialty solutions and NLI’s products and services – AZZ is changing its electrical and industrial segment to the energy segment for fiscal year 2015. Within that new segment, it is dividing into three groups based on the markets they serve: nuclear, industrial and electrical. “Going forward we will continue to leverage our sales teams across all of our energy segment businesses in North America; aggressively expand our business internationally; streamline our platforms and grow our galvanizing business, both organically and with targeted acquisitions,” says Ferguson, commenting on the company’s first quarter 2015 results. “We see a large number of untapped opportunities that will permit us to continue to grow the company in the coming years.” AZZ has continued its growth this year, recently completing the acquisition of Zalk Steel & Supply Co., a small-kettle niche galvanizing company based in Minneapolis. The acquisition of Zalk brings to 36 the number of galvanizing plants owned and operated by AZZ.