FORT WORTH - AZZ Inc. (NYSE: AZZ), a global provider of metal coating solutions, welding solutions, specialty electrical equipment and highly engineered services today announced financial results for the second quarter of fiscal year 2021, ended August 31, 2020.
Second Quarter Overview and Recent Highlights
Adjusted EPS of $0.49 and net income of $13.0 million, excluding one-time pre-tax restructuring charges of $18.7 million or $0.71 per share; as reported EPS of $(0.07) or loss of $(1.8) million.
Completed refinancing through a private placement of $150 million seven and twelve year senior unsecured notes (maturity 2028 and 2032) at average coupon of 2.98%, which will generate approximately $2.5 million of annual interest savings.
Effectively managed debt; $393 million of available credit
Sales of $203.4 million, down 13.9% versus the same quarter, prior year.
Metal Coatings segment results versus same quarter, prior year: o Sales of $117.0 million, down 6.3% o Adjusted operating income of $26.9 million, down 6.1% o Adjusted operating margin of 23% for both periods
Infrastructure Solutions (formerly Energy) segment results versus same quarter, prior year: Sales of $86.3 million, down 22.5%, Adjusted operating income of $3.1 million, down 27.9%, Adjusted operating margin of 3.5% versus 3.8%
Declared second quarter cash dividend in the amount of $0.17 per common share.
Fiscal year 2021 Q3 expected to show sequential improvement in both revenue and earnings per share versus second quarter.
Management Discussion
Tom Ferguson, President and Chief Executive Officer of AZZ, commented, 'We continued to navigate the protracted global business disruption resulting from COVID-19 during the second quarter, with sales of $203.4 million and adjusted net income of $13.0 million, or $0.49 on a per share diluted basis. In the midst of a difficult macroeconomic environment, I am particularly pleased that our Metal Coatings segment continues to deliver solid operating results with sales of $117 million, and adjusted operating margins of 23%, which are consistent with the same quarter, in the prior year. Our digital galvanizing system (DGS) continues to provide operational efficiencies throughout our plants and contributes to the safety of our employees and customers. Within our Infrastructure Solutions segment, the ongoing impact of the pandemic caused travel restrictions within certain geographical areas and key international markets served by our teams, significantly reducing refining turnaround work, as customers delay or defer maintenance and lower order volume for electrical products. We are optimistic for continued modest improvement in the second half of the year, and are positioning our operations for a potentially strong fiscal year 2022, including a robust spring refining turnaround season following COVID-related maintenance delays. We are already seeing signs of improvement including earlier and stronger quoting activity for our welding solutions business.
Given shifting industry and customer dynamics, and continued impact from the pandemic, we are taking the necessary steps to restructure our portfolio of businesses to focus our future investments into our core operations. We recorded one-time impairment charges of $18.7 million during the second quarter and expect to divest or consolidate certain assets in both the Metal Coatings and Infrastructure Solutions segments to improve each segment's operational and financial performance. We believe restructuring our portfolio will streamline our continued efforts to improve operational efficiencies, increase margins and allow us to focus on organic growth from the core businesses.
As part of this strategic process, we are renaming our Energy segment to Infrastructure Solutions, which we believe better reflects the businesses we consider core to our corporate strategy. Additionally, we have announced the promotion of Gary Hill to Chief Operating Officer of Infrastructure Solutions as part of our overall strategic restructuring plan. Gary is a proven results-driven leader and has been instrumental in overseeing the strategic development of our Industrial platform. I am confident that consolidating both the Electrical and Industrial operating platforms under his leadership will result in rapid realization of greater organizational efficiencies, and a more successful Infrastructure Solutions segment in the future.
Again, I want to express my sincere gratitude to all our employees for their hard work and dedication during this unprecedented time. We remain committed to emerge from this year a much stronger company well positioned to excel in the post-COVID era.'
About AZZ Inc.
AZZ Inc. is a global provider of metal coating solutions, welding solutions, specialty electrical equipment and highly engineered services to the markets of power generation, transmission, distribution and industrial in protecting metal and electrical systems used to build and enhance the world's infrastructure. AZZ Metal Coatings is a leading provider of metal finishing solutions for corrosion protection, including hot dip galvanizing to the North American steel fabrication industry. AZZ Infrastructure Solutions (formerly Energy) is dedicated to delivering safe and reliable transmission of power from generation sources to end customers, and automated weld overlay solutions for corrosion and erosion mitigation to critical infrastructure in the energy markets worldwide.
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 such as 'may,' 'should,' 'expects,' 'plans,' 'anticipates,' 'believes,' 'estimates,' 'predicts,' 'potential,' 'continue,' or the negative of these terms or other comparable terminology. Such forward-looking statements are based on currently available competitive, financial and economic data and management's views and assumptions regarding future events. Such forward-looking statements are inherently uncertain, and investors must recognize that actual results may differ from those expressed or implied in the forward-looking statements. Certain factors could affect the outcome of the matters described herein. This press release may contain forward-looking statements that involve risks and uncertainties including, but not limited to, changes in customer demand for our products and services, including demand by the power generation markets, electrical transmission and distribution markets, the industrial markets, and the metal coatings markets. In addition, within each of the markets we serve, our customers and our operations could potentially be adversely impacted by the ongoing COVID-19 pandemic. We could also experience fluctuations in prices and raw material cost, including zinc and natural gas which are used in the hot dip galvanizing process; supply-chain vendor delays; customer requested delays of our products or services; delays in additional acquisition opportunities; currency exchange rates; adequacy of financing; availability of experienced management and employees to implement AZZ's growth strategy; a downturn in market conditions in any industry relating to the products we inventory or sell or the services that we provide; economic volatility or changes in the political stability in the United States and other foreign markets in which we operate; acts of war or terrorism inside the United States or abroad and other changes in economic and financial conditions. AZZ has provided additional information regarding risks associated with the business in AZZ's Annual Report on Form 10-K for the fiscal year ended February 29, 2020 and other filings with the Securities and Exchange Commission ('SEC'), available for viewing on AZZ's website at www.azz.com and on the SEC's website at www.sec.gov. You are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. These statements are based on information as of the date hereof and AZZ assumes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.
Contact:
David Nark
Tel: (817) 810-0095
Web: www.azz.com
AZZ INC. 
