AZZ incorporated Reports Year-To-Date and Third Quarter Results of Fiscal - Year 2010

Jan 08, 2010, 05:00 ET from AZZ incorporated

FORT WORTH, Texas, Jan. 8 /PRNewswire-FirstCall/ -- AZZ incorporated (NYSE: AZZ), a manufacturer of electrical products and a provider of galvanizing services today announced unaudited financial results for the three and nine-month periods ended November 30, 2009. Revenues for the third quarter were $81.5 million compared to $108.9 million for the same quarter last year, a decrease of 25.1 percent. Net income for the third quarter was $8.7 million, or $0.70 per diluted share, compared to net income of $10.8 million, or $0.88 per share, in last year's third quarter.

For the nine-month period, the Company reported revenues of $272.2 million compared to $312.1 million for the comparable period last year, a decrease of 12.8 percent. Net income for the nine months was $29.8 million, or $2.39 per share, compared to $32.2 million, or $2.62 per share in the comparable period of last year.

Backlog at the end of our third quarter ending November 30, 2009 was $131.8 million, as compared to backlog at the end of the third quarter of fiscal 2009 which was $195.2 million, $139.4 million at August 31, 2009 and $174.8 million at February 28, 2009. Incoming orders for the third quarter totaled $74 million while shipments totaled $81.5 million resulting in a book to ship ratio of 91 percent. For the first nine months, orders totaled $229.2 million while shipments totaled $272.2 million, resulting in a year-to-date book to ship ratio of 84 percent. Based upon current customer requested delivery dates and our planned production schedule, 36 percent of our backlog is expected to ship in the current fiscal year. Of our $131.8 million backlog, 44 percent is to be delivered outside of the U.S.

Revenues for the Electrical and Industrial Products Segment decreased 29.6 percent to $43.6 million for the third quarter ending November 30, 2009, compared to $62 million in the previous year's third quarter. Operating income for the third quarter of fiscal 2010 was $9.1 million, compared to $10.4 million in the third quarter of last year, a decrease of 12.5 percent. Operating margins were 20.9 percent for the third quarter of fiscal 2010. For the first nine months, revenues decreased 7 percent to $154.6 million and operating income increased 13 percent to $31.7 million compared to $165.9 million and $28.1 million, respectively, for the first nine months of the prior year. Operating margins for the first nine months were 20.5 percent.

David H. Dingus, president and chief executive officer, commented, "The operating margin for our Electrical and Industrial Products Segment continued strong despite lower volumes. The release of the orders for new and existing projects remains sluggish. We believe these delays have resulted from the current reduction in the demand for oil and gas and electrical power, the uncertainty in the worldwide economy and financial markets, as well as increasing uncertainty as to the impact that potential regulatory changes could have on our customers businesses. We do believe that our long term opportunities remain strong and that this delay in capital project investment decisions should subside if financial markets continue to stabilize and the impact of regulatory changes are more predictable. These conditions have impacted our domestic market more than our served international markets. It is difficult to forecast timing of improved order trends. Based upon quotation levels and customer feedback, we do not anticipate that the recovery will be seen during the balance of our current fiscal year. We will continue our efforts to effectively and efficiently secure and execute on the available business opportunities that we do have."

Revenues for the Company's Galvanizing Service Segment decreased 19 percent to $37.9 million for the third quarter ending November 30, 2009, compared to $46.9 million in the previous year's comparable quarter. Operating income for this segment was $10.5 million, compared to $13.1 million in the same quarter last year, a decrease of 20 percent. Operating margins for the third quarter of fiscal 2010 were 28 percent. For the first nine months of fiscal 2010, revenues decreased 20 percent to $117.6 million, and operating income decreased 15 percent to $35.6 million, compared to $146.2 million and $42 million, respectively, for the first nine months of the prior year. Operating margin for the nine month period was 30 percent. Volume of steel processed decreased 13 percent, while average selling price decreased 6 percent when compared to the same nine months period in the prior year.

Mr. Dingus continued, "Demand for our galvanizing services continues to be below the record setting pace of last year. Despite this lower demand, we had another outstanding margin performance quarter. We will continue our efforts to implement our strategic plans for the segment that should broaden our customer base and expand geographic presence. The actions we have taken should continue to help us to offset some of the economic weakness in particular market areas."

Mr. Dingus concluded, "As a company, we are extremely well positioned to take advantage of any improving market conditions combined with opportunities to better our positioning with new products and new markets, and the strength of our balance sheet should increase our chances for success in implementation of our strategic plans. Based upon the evaluation of information currently available to management, we are revising our previously issued revenue guidance for fiscal year 2010, while maintaining our previously issued earnings guidance. Our earnings are estimated to be within the range of $3.00 and $3.10 per diluted share and revenues to be within the range of $355 million to $365 million. The previous estimates were for earnings to be within the range of $3.00 to $3.10 and revenues to be in the range of $370 million to $380 million. Our estimates assume that we will not have any appreciable change in our current market conditions, competitive activity or significant delays or timing in the receipt of orders of our electrical and industrial products, and demand for our galvanizing services."

AZZ incorporated will conduct a conference call to discuss financial results for the third quarter of fiscal 2010 at 11:00 a.m. ET on January 8, 2010. Interested parties can access the call by dialing (800) 860-2442 or (412) 858-4600 (international). The call will be web cast via the Internet at www.azz.com/azzinvest.htm. A replay of the call will be available for three days at (877) 344-7529, or (412) 317-0088 (international) confirmation #436361, or for 30 days at www.azz.com/azzinvest.htm.

AZZ incorporated is a specialty electrical equipment manufacturer serving the global markets of industrial, power generation, transmission and distributions, 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 costs, 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 requested delays of shipments, acquisition opportunities, currency exchange rates, 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:  www.azz.com

                     Lytham Partners 602-889-9700
                     Joe Dorame or Robert Blum
                     Internet: www.lythampartners.com

Condensed financial tables on attached page


                                 AZZ incorporated
                    Condensed Consolidated Statement of Income
                      (in thousands except per share amounts)

                           Three Months Ended            Nine Months Ended
                        November 30,  November 30,  November 30,  November 30,
                            2009          2008          2009          2008
                        (unaudited)   (unaudited)   (unaudited)   (unaudited)
                        ===========   ===========   ===========   ===========

    Net sales              $81,518      $108,860      $272,167      $312,078
    Costs and Expenses:
      Cost of Sales         55,805        79,372       186,152       226,845
      Selling, General
       and Administrative   10,238        11,317        33,751        32,545
      Interest Expense       1,729         1,682         5,146         4,484
      Net (Gain) Loss on
       Sales or Insurance
       Settlement of
       Property, Plant
       and Equipment           (48)            9          (118)       (1,136)
      Other (Income)           (82)         (315)         (464)       (1,378)
      Other Expense
                           -------       -------      --------      --------
                           $67,642       $92,065      $224,467      $261,360
                           -------       -------      --------      --------

    Income before income
     taxes                 $13,876       $16,795       $47,700       $50,718
    Income Tax Expense       5,133         5,982        17,938        18,479
                             -----         -----        ------        ------
    Net income              $8,743       $10,813       $29,762       $32,239
                            ======       =======       =======       =======
    Net income per share
      Basic                   $.71          $.89         $2.43         $2.66
      Diluted                 $.70          $.88         $2.39         $2.62
      Diluted average
       shares outstanding   12,521        12,295        12,469        12,310




                                Segment Reporting
                                  (in thousands)

                         Three Months Ended           Nine Months Ended
                       November 30, November 30,  November 30,  November 30,
                          2009          2008          2009          2008
                       (unaudited)  (unaudited)   (unaudited)   (unaudited)
                       ===========  ===========   ===========   ===========

    Net Sales:
      Electrical and
       Industrial
       Products           $43,622      $61,960      $154,576      $165,925
      Galvanizing
       Services            37,896       46,900       117,591       146,153
                           ------       ------       -------       -------
                          $81,518     $108,860      $272,167      $312,078

    Segment
     Operating
     Income (a):
      Electrical and
       Industrial
       Products            $9,109      $10,411       $31,715       $28,140
      Galvanizing
       Services            10,537       13,125        35,634        41,961
                           ------       ------        ------        ------
      Total Segment
       Operating Income   $19,646      $23,536       $67,349       $70,101



                       Condensed Consolidated Balance Sheet
                                  (in thousands)

                                                  November 30,  February 28,
                                                      2009          2009
                                                  (unaudited)    (audited)
                                                  ===========    =========

    Assets:
          Current assets                            $207,199      $182,023
          Net property, plant and equipment          $89,686       $87,667
          Other assets, net                          $87,538       $85,025
                                                     -------       -------
          Total assets                              $384,423      $354,715
                                                    ========      ========

    Liabilities and shareholders' equity:
          Current liabilities                        $51,035       $58,371
          Long term debt due after one year         $100,000      $100,000
          Other liabilities                          $10,640        $9,232
          Shareholders' equity                      $222,748      $187,112
                                                    --------      --------
    Total liabilities and shareholders' equity      $384,423      $354,715
                                                    ========      ========




                  Condensed Consolidated Statement of Cash Flows
                                  (in thousands)

                                                  Nine Months Ended
                                        November 30, 2009  November 30, 2008
                                           (unaudited)        (unaudited)
                                           ===========        ===========

    Net cash provided by (used in)
     operating activities                     $65,496            $21,381
    Net cash provided by (used in)
     investing activities                    ($16,715)         ($107,593)
    Net cash provided by (used in)
     financing activities                      $2,143            $98,104
                                               ------            -------
    Effect of Exchange Rate                      ($48)             ($211)
    Net increase (decrease) in cash and
     cash equivalents                         $50,876            $11,681
    Cash and cash equivalents at
     beginning of period                      $47,558             $2,227
                                              -------             ------
    Cash and cash equivalents at end of
     period                                   $98,434            $13,908
                                              =======            =======


SOURCE AZZ incorporated



RELATED LINKS

http://www.azz.com