Fort Worth company reports fiscal 1Q results impacted by COVID-19

AZZ: Fiscal 1Q Earnings Snapshot

FORT WORTH, Texas (AP) _ AZZ Inc. (AZZ) on Thursday reported fiscal first-quarter net income of $5.5 million.

The Fort Worth-based company said it had profit of 21 cents per share.

The electrical equipment maker posted revenue of $213.3 million in the period.

First Quarter Overview:

• Effectively managed liquidity; $342 million of additional available credit
• Cash and cash equivalents at the end of the period were $26.4 million versus $13.6 million
• Revenue of $213.3 million, down 26.2% versus last year’s period.
• Metal Coatings Segment versus same quarter, prior year:
  • Revenue of $119.0 million, down 2.6%
  • Operating Income of $25.1 million, down 14.7%
  • Margins were 21.1%, versus 24.1%
• Energy Segment versus same quarter, prior year:
  • Revenue of $94.3 million, down 43.5%
  • Operating Income of $(1.0) million versus $12.6 million
  • Margins were (1.1%) versus 7.5%
• Net Income of $5.5 million or $0.21 per share versus $21.3, or $0.81 per share.
• Declared quarterly cash dividend in the amount of $0.17 per common share.
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• , President and Chief Executive Officer of AZZ, commented, “The worldwide COVID-19 pandemic disrupted our first quarter operations, but our Metal Coatings Segment still delivered solid results.  Revenue for the quarter declined 26.2% compared to last year’s comparable quarter. In light of the global business shutdown brought on by the virus, our Energy Segment was particularly impacted with a 43% revenue decrease to $94.3 million, versus last year’s first quarter. Our Industrial Solutions Platform experienced postponement of most of its scheduled work for the first quarter as refiners deferred turnarounds amid the global pandemic. Although it is still early, we are optimistic for an improved second half of the year as we are seeing more quoting activity for turnarounds.
• “Our Metal Coatings Segment delivered solid operating results in this difficult environment with sales of $119 million, down slightly at 2.6%, and operating margin of 21.1% versus 24.1% in last year’s first quarter. Designated an essential business, we were able to keep all our galvanizing plants open and operating during this pandemic. While the galvanizing business experienced rather minimal disruption as infrastructure projects proceeded, our  Surface Technologies plants were negatively impacted by several customers slowing or stopping operations for a large portion of the quarter.  It is important to note, our DGS (digital galvanizing systems), which is deployed at all our galvanizing plants, continues to play an important part in the safety of our employees and customers by reducing the need for direct onsite contact, yet allowing for a seamless workflow.
• “Given the extraordinary circumstances, the safety and well-being of our employees and supporting our customers remain top priorities. I have the utmost confidence in our team to navigate through this crisis and to emerge as a stronger company thanks to their commitment.  I want to thank all our employees for their hard work and dedication in continuing to deliver outstanding service to our customers through this unprecedented time.  Our focus for the balance of this year is structuring our operations and footprint to be safe, efficient and effective.  This effort will include increased emphasis on divesting non-core businesses, and investing more heavily in ensuring our core businesses have the technology and resources to excel in the post-COVID era.”
• Fiscal Year 2021 Guidance
• Ferguson added, “Due to the continued uncertainty associated with the COVID-19 pandemic on many of our end markets, we cannot provide an update to our previously suspended fiscal 2021 sales and earnings guidance range at this time. As previously stated, we continue to operate as an ‘essential business’ in supporting critical infrastructure needs during these unprecedented times.  Our low debt level and ample borrowing capacity, combined with our consistent ability to generate cash, provides confidence that we will be able to successfully manage both debt and liquidity satisfactorily throughout fiscal year 2021.  We continue to be prudent with our cash by focusing capital expenditures on core growth initiatives and safety-related spending, paying a dividend, reducing debt, and repurchasing shares to minimize dilution due to employee stock compensation plans.  We are also carefully managing our workforce to ensure a safe and healthy operating environment, while flexing our capacity to better match our demand.  Additionally, we did not experience any unusual slowdown in customer payments as we navigated our first quarter in the midst of the pandemic. We will continue to drive operational efficiencies aggressively, and maintain active M&A activities in support of our strategic growth initiatives.  However, some M&A efforts have been impacted by our inability to meet with prospective parties due to the COVID-19 pandemic.
• “We hope to be able to re-establish our financial guidance as we get to the back half of this fiscal year.  In the interim we will work to provide as much context to our outlook as possible.  The risks we are focused on managing are:  fully integrating the Galvanizing and Surface Technologies platforms to drive market share growth and operating efficiencies; building backlog in our core Electrical Businesses; ensuring our ability to deploy resources effectively during, what appears to be, a strengthening fall turnaround season; and managing our cash well to ensure we enter FY2022 in a great position.”

AZZ shares have fallen 28% since the beginning of the year. The stock has fallen 32% in the last 12 months.

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This story was generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on AZZ at https://www.zacks.com/ap/AZZ