AZZ Inc. (AZZ) Misses Earnings, Revenue Estimates in Q4

Electrical equipment manufacturer AZZ Incorporated AZZ posted earnings per share of 44 cents in the fourth quarter of fiscal 2017 (ended Feb 28), missing the Zacks Consensus Estimate by 27.87%.

Fiscal 2017 operating earnings came in at $2.33 per share, down 21.3% from $2.96 in fiscal 2016. The year-over-year decline in earnings was due to an $8 million realignment charge taken during the year. Reported earnings, also missed the Zacks Consensus Estimate of $2.67 by 12.7%.

Total Revenue

AZZ Inc reported fourth-quarter fiscal 2017 revenues of $193.8 million, lagging the Zacks Consensus Estimate of $211.2 million by 8.2%. Moreover, quarterly revenues dropped 10.9% from $217.6 million reported last year.

The top-line decline was primarily due to lower contributions from both Galvanizing and Energy segments.

Full-year revenues were $858.9 million, down 4.9% from than the prior-year figure of $903.2 million. The top line also missed the Zacks Consensus Estimate of $876.3 million by almost 2%.

Revenues of the Energy and Galvanizing segments declined 3.5% and 6.7%, respectively, in fiscal 2017. The markets for Galvanizing have started showing signs of a rebound and the company expects to see a stronger second half of fiscal 2018.

AZZ Inc. Price, Consensus and EPS Surprise

AZZ Inc. Price, Consensus and EPS Surprise | AZZ Inc. Quote

 

Backlogs & Booking

AZZ Inc’s backlog at the end of fiscal 2017 was $346.4 million, up 3.6% from $334.5 million at the end of fiscal 2016. Nearly 36.8% of the backlog was related to customers outside the U.S.

Fiscal 2017 order bookings were $858.9 million compared with $905.1 million in the prior year, reflecting a decline of 5.1%.

Quarterly Highlights

Total operating income for the quarter under review fell 24% to $20.2 million compared with $26.6 million in the same period last year.

Selling, general and administrative expenses came in at $25.5 million, down 9.9% from $28.3 million in the prior-year quarter.

Interest expenses for the fiscal fourth quarter increased marginally to $3.6 million from $3.5 million reported in the prior-year period.

Looking Ahead

Due to the market dynamics of fiscal 2017 and the potential exposure to the recent bankruptcy filing by Westinghouse, the company made adjustments to the guidance for fiscal 2018 and revised the EPS range from $2.85–$3.15 per diluted share to $2.60–$3.10.

The revenue guidance for fiscal 2018 was revised to $880–$950 million from $900 million–$970 million.

Price Movement

In the last six months, AZZ has underperformed the Zacks categorized Machinery- Electrical Market industry. The company’s shares returned 4.3% compared with the industry’s return of 10.6%.

Upcoming Peer Releases

EnerSys ENS is expected to release fourth-quarter fiscal 2017 earnings on May 4. The Zacks Consensus Estimate for the quarter is pegged at $1.21.

Eaton Corporation, PLC ETN is expected to release first-quarter 2017 earnings on May 2. The Zacks Consensus Estimate for the quarter is pegged at 87 cents.

Altra Industrial Motion Corp. AIMC is expected to release first-quarter 2017 earnings on Apr 28. The Zacks Consensus Estimate for the quarter is pegged at 40 cents.

Zacks Rank

AZZ Inc currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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