AZZ incorporated Reports Results for the First Quarter of Fiscal Year 2008
June 29 2007 - 6:00AM
PR Newswire (US)
For the first quarter - Revenues Up 44%, Segment Operating Income
Up 41% and Backlog Up 57%, FY 2008 earnings guidance increased to a
range of $1.65 to $1.75 per diluted share FORT WORTH, Texas, June
29 /PRNewswire-FirstCall/ -- AZZ incorporated (NYSE:AZZ), a
manufacturer of electrical products and a provider of galvanizing
services, today announced unaudited financial results for the first
quarter ended May 31, 2007. Revenues for the first quarter
increased 44 percent to $75.4 million compared to $52.5 million for
the same quarter last year. Net income for the quarter was $4.1
million, or $0.34 per diluted share, compared to net income of $4.1
million, or $0.35 per diluted share, in last year's first fiscal
quarter. Earnings per share numbers are stated after adjusting for
the two-for-one stock split effected in the form of a 100 percent
share dividend and paid on May 4, 2007. SG&A expenses
significantly increased in the first quarter as compared to the
same quarter of the prior fiscal year. This increase over the prior
period is primarily related to compensation expense for stock
appreciation rights that fully vested and were booked during the
quarter in the amount of approximately $4.4 million or 22 cents per
diluted share. Backlog at the end of the first quarter was $144.8
million versus $92.1 million at May 31, 2006, an increase of 57
percent. Backlog at February 28, 2007 year-end was $120.7 million.
Incoming orders for the first quarter totaled $99.5 million while
shipments for the quarter totaled $75.4 million, resulting in a
book to ship ratio of 132 percent. Incoming orders increased 41
percent over the same period last year and equaled the record
setting incoming order rate of the fourth quarter of the prior
fiscal year. Based upon current customer requested delivery dates
and our production schedules, 72 percent of the backlog at May 31,
2007 is expected to ship in the current fiscal year. Of the backlog
of $144.8 million, 35 percent is to be exported from the U.S.
Revenues for the Electrical and Industrial Products Segment
increased by 30 percent in the first quarter of the current fiscal
year to $40.9 million compared to $31.5 million in the same period
last year. Operating income for the segment increased 55 percent to
$6.3 million. Operating margins of 15.5 percent for the first
quarter compare favorably to the 13 percent in the first quarter of
last year. Revenues for the Company's Galvanizing Service Segment
for the first quarter were $34.5 million, an increase of 65 percent
compared to the $20.9 million in the same period last year.
Operating income improved 32 percent to $8.6 million. Revenues for
the first quarter continue to be favorably impacted by pricing
actions to offset increased zinc cost. Of the 65 percent increase
in revenues, 28 percent was attributable to volume and 37 percent
attributable to price. Our acquisition of Witt Galvanizing on
November 1, 2006, accounted for 69 percent of the volume increase.
David H. Dingus, president and chief executive officer of AZZ
incorporated, commented, "Regarding our Electrical and Industrial
Products Segment, we are pleased to report favorable increases in
our revenues, operating margins and backlog for the first quarter
of fiscal 2008. We have seen a continuation of improving market
demand and improved pricing. We continue our emphasis on booking
business at specific targeted margin levels and seeking out new
market opportunities. While the largest increases in our incoming
orders were related to our high voltage transmission products, all
of our served markets reflected an increase over the same period of
a year ago. Our domestic and international quotation and inquiry
levels continue at an encouraging pace. The operating margin
improvement is attributable to the leverage gained from increased
volumes, quick turn jobs, and pricing actions. The Galvanizing
Services Segment achieved record setting revenues in the first
quarter. Our operating results are reflective of strong market
conditions and good price realization required to offset the
increased cost of zinc. We are very pleased that the markets have
been strong enough to absorb this level of price increases. The
reduced volatility of zinc has not required us to significantly
adjust our pricing levels from the third and fourth quarter of last
year." Mr. Dingus concluded, "Cost escalation recovery through
pricing actions, expansion of domestic and international markets,
and seeking out new product opportunities to further enhance our
strategic position continue to be the focus and emphasis of our
activities. Based upon the evaluation of information currently
available to management, we are increasing our estimate of FY2008
earnings to be within the range of $1.65 to $1.75 per diluted share
and revenues to be within the range of $310 million to $320
million." AZZ incorporated will conduct a conference call to
discuss financial results for the first quarter of fiscal year 2008
at 11:00 A.M. ET on Friday, June 29, 2007. Interested parties can
access the conference call by dialing (877) 356-5706 or (706)
643-0580 (international). The call will be web cast via the
Internet at http://www.azz.com/AZZinvest.htm. A replay of the call
will be available for three days at (800) 642-1687 or (706)
645-9291 (international), confirmation #9773188, or for 30 days at
http://www.azz.com/AZZinvest.htm. AZZ incorporated is a specialty
electrical equipment manufacturer serving the global markets of
power generation, transmission and distribution and industrial, as
well as a leading provider of hot dip galvanizing services to the
steel fabrication market nationwide. Except for the statements of
historical fact, this release may contain forward-looking
statements that involve risks and uncertainties some of which are
detailed from time to time in documents filed by the Company with
the SEC. Those risks and uncertainties include, but are not limited
to: changes in customer demand and response to products and
services offered by the company, including demand by the electrical
power generation markets, electrical transmission and distribution
markets, the industrial markets, and the hot dip galvanizing
markets; prices and raw material cost, including zinc and natural
gas which are used in the hot dip galvanizing process; changes in
the economic conditions of the various markets the Company serves,
foreign and domestic, customer request delays of shipments,
acquisition opportunities, adequacy of financing, and availability
of experienced management employees to implement the Company's
growth strategy. The Company can give no assurance that such
forward-looking statements will prove to be correct. We undertake
no obligation to affirm, publicly update or revise any
forward-looking statements, whether as a result of information,
future events or otherwise. Contact: Dana Perry, Senior Vice
President - Finance and CFO AZZ incorporated 817-810-0095 Internet:
http://www.azz.com/ Lytham Partners 602-889-9700 Joe Dorame, Joe
Diaz or Robert Blum Internet: http://www.lythampartners.com/ AZZ
incorporated Condensed Consolidated Statement of Income (in
thousands except per share amounts) Three Months Ended May 31, 2007
May 31, 2006 (unaudited) (unaudited) Net sales $75,377 $52,453
Costs and Expenses: Cost of Sales 56,208 38,708 Selling, General
and Administrative 12,004 7,277 Interest Expense 535 388 Net (Gain)
Loss on Sales or Insurance Settlement of Property, Plant and
Equipment 3 (443) Other (Income) (194) (189) Other Expense - -
$68,556 $45,741 Income before income taxes and accounting change
$6,821 $6,712 Income Tax Expense 2,675 2,501 Income Before
Cumulative Effect of Changes in Accounting Principles 4,146 4,211
Cumulative Effect of Changes in Accounting Principles (Net of Tax)
- 85 Net income $4,146 $4,126 Net income per share Basic $0.35
$0.36 Diluted $0.34 $0.35 Diluted average shares outstanding 12,025
11,669 Segment Reporting (in thousands) Three Months Ended May 31,
2007 2006 (unaudited) (unaudited) Net Sales: Electrical and
Industrial Products $40,874 $31,506 Galvanizing Services 34,503
20,947 $75,377 $52,453 Segment Operating Income (a): Electrical and
Industrial Products $6,344 $4,080 Galvanizing Services 8,611 6,505
Total Segment Operating Income $14,955 $10,585 Condensed
Consolidated Balance Sheet (in thousands) May 31, 2007 February 28,
2007 (unaudited) (audited) Assets: Current assets $109,885 $111,967
Net property, plant and equipment $ 47,412 $ 46,628 Other assets,
net $ 42,290 $ 42,313 Total assets $199,587 $200,908 Liabilities
and shareholders' equity: Current liabilities $ 46,844 $ 49,715
Long term debt due after one year $ 27,700 $ 35,200 Other
liabilities $ 4,446 $ 4,845 Shareholders' equity $120,567 $111,148
Total liabilities and shareholders' equity $199,587 $200,908
Condensed Consolidated Statement of Cash Flows (in thousands) Three
Months Ended May 31, 2007 May 31, 2006 (unaudited) (unaudited) Net
cash provided by (used in) operating activities $ 7,668 $ 4,017 Net
cash provided by (used in) investing activities ($ 2,684) ($ 1,574)
Net cash provided by (used in) financing activities ($ 2,610) ($
1,115) Net increase (decrease) in cash and cash equivalents $ 2,374
$ 1,328 Cash and cash equivalents at beginning of period $ 1,703 $
1,259 Cash and cash equivalents at end of period $ 4,077 $ 2,587
DATASOURCE: AZZ incorporated CONTACT: Dana Perry, Senior Vice
President - Finance and CFO of AZZ incorporated, +1-817-810-0095;
or Joe Dorame or Joe Diaz or Robert Blum, all of Lytham Partners,
+1-602-889-9700, for AZZ incorporated Web site: http://www.azz.com/
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