For the three months-Revenues Increase 33%, Net Income up 144%.
Earnings per Share Increased 141% Fiscal 2009 Guidance Increased
FORT WORTH, Texas, June 27 /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, 2008.
Revenues for the first quarter increased 33 percent to $100 million
compared to $75.4 million for the same quarter last year. Net
income for the quarter was $10.1 million, or $0.82 per diluted
share, compared to net income of $4.1 million, or $0.34 per diluted
share, in last year's first fiscal quarter. Backlog at the end of
the first quarter was $141.8 million and compares favorably to the
February 28, 2008 year-end backlog of $134.9 million. Backlog at
the end of the first quarter of FY 2008 was $144.8 million.
Incoming orders for the first quarter were a record setting total
of $106.9 million while shipments for the quarter totaled $100.0
million, resulting in a book to ship ratio of 107 percent. There
were no significant international orders received in the first
quarter of FY 2009. Based upon current customer requested delivery
dates and our production schedules, 93 percent of the backlog at
May 31, 2008 is expected to ship in the current fiscal year. Of the
backlog of $141.8 million, 19 percent is to be exported from the
U.S. Revenues for the Electrical and Industrial Products Segment
increased 27 percent in the first quarter of the current fiscal
year to $52 million compared to $40.9 million in the same period
last year. Operating income for the segment increased 25 percent to
$7.9 million. Operating margins for the first quarter were 15.3
percent. Revenues for the Company's Galvanizing Service Segment for
the first quarter were $48 million, an increase of 39 percent
compared to the $34.5 million in the same period last year.
Operating income improved 55 percent to $13.4 million. Volume
increased 42 percent when compared to the prior period. This
favorable variance was partially offset by a negative 3 percent
attributable to price. Our acquisition of AAA Galvanizing on March
31, 2008, accounted for 70 percent of the revenue increase.
Operating margins for the first quarter were 27.9 percent. David H.
Dingus, president and chief executive officer of AZZ incorporated,
commented, "We are extremely pleased with the record setting
operating results and the strategic accomplishments of the first
quarter of our fiscal 2009. Strong operating performance of both
segments combined with lower SG&A expenses, led to net income
and earnings per share more than doubling. "Regarding our
Electrical and Industrial Products Segment, we are pleased to
report favorable increases in our revenues, increased operating
income and a strong backlog for the first quarter of fiscal 2009.
We have seen a continuation of strong quotation activity and
project opportunities. Despite significant increases in commodity
pricing, our margins held firm with the prior year. Our domestic
backlog reflects a 19 percent increase when compared to the prior
year. We still anticipate that we will see large international
orders booked in the second quarter. Additionally we are very
pleased to have signed an agreement to acquire the assets of
Blenkhorn and Sawle Limited in Canada and anticipate that we will
begin our operation of the Company on July 1, 2008. This is a very
strategic fit with our product offering and market penetration
objectives and will supplement the excellent business we currently
enjoy in Canada. Their emphasis on quality and customer service has
led to significant growth and their operating margins closely
mirror those we are currently achieving on our existing businesses.
"The Galvanizing Services Segment achieved record setting revenues
and earnings in the first quarter. Our operating results are
reflective of strong market conditions and good price realization.
We are very pleased that the markets have been strong enough to
allow us to maintain our pricing levels. The integration of AAA
Industries is progressing on schedule and we are very pleased with
the results to date. There remains concern over the impact economic
conditions and increased cost of steel may have on our customers
and their demand for our galvanizing services. This issue combined
with the seasonal winter impact on our North Central U.S.
facilities, may result in lower fourth quarter demand. Despite
these issues, we remain optimistic about this business and believe
we will have a very strong year for this Segment. Zinc prices have
continued to decrease as a result of lower industry demand and
higher inventories, but we still anticipate that the margins for
this business will continue above the 18 to 22 percent historical
levels for the current fiscal 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, and
accounting for the favorable eleven month impact of the AAA
acquisition, and the favorable accretion anticipated from the eight
months of the Blenkhorn and Sawle acquisition, we are pleased to
project an increase in our revenue and earning guidance. We are now
projecting that Fiscal 2009 revenues will be between $410 and $425
million and earnings per share to be between $2.95 and $3.05. We
continue to build upon the success we have been able to achieve,
and continually strive to enhance the performance of the Company.
Our estimates assume that we will not have any significant delays
in the delivery or timing in the receipt of orders of our
electrical and industrial products, or that there will be any
significant change in galvanizing demand prior to the fourth
quarter of fiscal 2009." AZZ incorporated will conduct a conference
call to discuss financial results for the first quarter of fiscal
year 2009 at 11:00 A.M. ET on Friday, June 27, 2008. 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 #50735902, 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/
---Financial tables on the following page--- AZZ incorporated
Condensed Consolidated Statement of Income (in thousands except per
share amounts) Three Months Ended May 31, 2008 May 31, 2007
(unaudited) (unaudited) Net sales $99,958 $75,377 Costs and
Expenses: Cost of Sales 73,689 56,208 Selling, General and 9,856
12,004 Administrative Interest Expense 1,121 535 Net (Gain) Loss on
Sales or Insurance Settlement of Property, Plant and Equipment 3 3
Other (Income) (484) (194) Other Expense - - $84,185 $68,556 Income
before income taxes and accounting change $15,773 $6,821 Income Tax
Expense 5,650 2,675 Income Before Cumulative Effect of Changes in
Accounting Principles 10,123 4,146 Cumulative Effect of Changes in
Accounting Principles (Net of Tax) - - Net income $10,123 $4,146
Net income per share Basic $0.83 $0.35 Diluted $0.82 $0.34 Diluted
average shares outstanding 12,290 12,025 Segment Reporting (in
thousands) Three Months Ended May 31, 2008 2007 (unaudited)
(unaudited) Net Sales: Electrical and Industrial Products $52,006
$40,874 Galvanizing Services 47,952 34,503 $99,958 $75,377 Segment
Operating Income (a): Electrical and Industrial Products $7,931
$6,344 Galvanizing Services 13,358 8,611 Total Segment Operating
Income $21,299 $14,955 Condensed Consolidated Balance Sheet (in
thousands) May 31, 2008 February 28, 2007 (unaudited) (audited)
Assets: Current assets $155,154 $102,995 Net property, plant and
equipment $83,171 $48,285 Other assets, net $75,449 $42,039 Total
assets $313,774 $193,319 Liabilities and shareholders' equity:
Current liabilities $51,334 $42,696 Long term debt due after one
year $100,000 $- Other liabilities $5,314 $4,467 Shareholders'
equity $157,126 $146,156 Total liabilities and shareholders' equity
$313,774 $193,319 Condensed Consolidated Statement of Cash Flows
(in thousands) Three Months Ended May 31, 2008 May 31, 2007
(unaudited) (unaudited) Net cash provided by (used in) operating
activities ($1,884) $7,668 Net cash provided by (used in) investing
activities ($86,220) ($2,684) Net cash provided by (used in)
financing activities $100,094 ($2,610) Net increase (decrease) in
cash and cash equivalents $11,990 $2,374 Cash and cash equivalents
at beginning of period $2,227 $1,703 Cash and cash equivalents at
end of period $14,217 $4,077 DATASOURCE: AZZ incorporated CONTACT:
Dana Perry, Senior Vice President - Finance and CFO of AZZ
incorporated, +1-817-810-0095; or Joe Dorame, Joe Diaz or Robert
Blum, all of Lytham Partners, +1-602-889-9700, for AZZ incorporated
Web site: http://www.lythampartners.com/ http://www.azz.com/
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