AZZ Inc. Misses on Q1 Earnings, Share Up on Strong Revenues

Zacks

Share price of electrical equipment manufacturer AZZ Inc. (AZZ) increased 7.5% to $45.18 on Jun 27, 2014, following the announcement of record revenue in the first quarter of fiscal 2015 results.

AZZ Inc. reported first-quarter fiscal 2015 adjusted earnings of 52 cents per share, missing the Zacks Consensus Estimate of 54 cents by 3.7%. Quarterly earnings decreased 7.1% from the year-ago figure primarily due to higher cost of sales and a rise in share counts.

Excluding a pretax gain of 6 cents from an insurance settlement associated with losses incurred at the Joliet galvanizing facility, the company’s GAAP earnings were 58 cents per share versus 57 cents per share a year ago.

Total Revenue

In first-quarter fiscal 2015, AZZ Inc.’s net revenues jumped roughly 18% year over year to $216.1 million, surpassing the Zacks Consensus Estimate of $197 million by 9.7%. The top line outperformance was primarily driven by a 35.3% year-over-year rise in sales under the company’s Energy segment on the back of positive impact from the acquisition of WSI LLC. However, revenues for the Galvanizing Service segment decreased 1.3% year over year.

Operating Highlights

In the quarter under review, AZZ Inc.’s cost of sales was $160.7 million, up 21.3% from the prior-year figure of $132.5 million.

Selling, general and administrative expenses increased around 3% year over year to $27.5 million.

At the end of the first quarter, the company’s product backlog spiked 14.2% to $309 million from $270.6 million a year ago.

AZZ Inc.’s quarterly incoming orders were $200.2 million and book-to-ship ratio was 93%. Overseas orders constituted 27% of the backlog.

Interest expenses decreased 6.7% year over year to $4.2 million due to a decline in long-term debt level.

Financial Highlights

AZZ Inc.’s cash and cash equivalents, as of May 31, 2014, were $25.6 million versus $27.6 million as of Feb 28, 2014.

As of May 31, 2014, the company’s debt due after one year was $378.6 million versus $384.8 million as of Feb 28, 2014.

In first-quarter fiscal 2015, net cash provided by operating activities was $12.1 million compared with $39.9 million in the prior-year comparable period.

Guidance

AZZ Inc. reiterated the earnings and gross revenues guidance for fiscal 2015 in the range of $2.40 - $2.80 per share and $850 - $900 million, respectively.

Other Company Release

EnerSys (ENS) is slated to release its first-quarter fiscal 2015 earnings on Aug 6, 2014. The Zacks Consensus Estimate is $1.05.

Zacks Rank

AZZ Inc. currently has a Zacks Rank #3 (Hold). However, other better-ranked stocks in the same industry include AO Smith Corporation (AOS) and ESCO Technologies Inc. (ESE). While AO Smith carries a Zacks Rank #1 (Strong Buy), ESCO Technologies holds a Zacks Rank #2 (Buy).

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