It depends of course -- and in the long run the cash flow and earnings balance out -- but in the short run you really have to focus on the details. Since AZZ has lots of long-term contracts and uses percentage of completion on some of them, the correlation between CF and Income can vary considerably.
My concern is that we are starting to bump into record revenues and the bottom line is not nearly at a record. Couple this with the fact that goodwill is not longer being amortized (as was the case when revenues were last at this level) and it makes the income to revenue performance even more disappointing.
I speculate that Dingus does not run a tight ship as LC once did. For a tiny company a few bucks here and there has a big impact on the bottom line. I hope the compensation committee demands performance for pay.
I am also concerned about the success of the CGIT and subsequent Dingus-era acquisitions. I see no point in growing via acquisition if you cannot create value. The shareholders would have been far better off if the $100 million that was spent in the last few years (that comes to almost $20 per share) had been banked and distributed as dividends.
I expect any future acquisitions better be value adding or it will be time for the shareholders to start banding together and asserting their ownership rights.
thanks for the thoughts/oped. I agree that something has to kick azz into gear..so to speak. If value isn't being added to the corp coffers why be a shareholder? Especiallywith no divd. Each qtrly report mentions competitive pressures in some way shape or form. And I am sure it is true. The 2005 Annual does not show, least as I can find, what part of sales is generated outside the U.S. In today's world that needs to be a major part of the "business plan" especially as azz is infrastructure oriented. Galv'ing is a local biz so it is hard to imagine that being an overseas effort but who knows? With alarm I note that Cash provided from Operations has gone from $22mil in 2003 to $15 in 2004 down to $6.3mil in 2005!