AZZ Inc., a global provider of galvanizing services, welding solutions, specialty electrical equipment and highly engineered services, announced financial results for the three and twelve-month periods ended February 28, 2017.
Tom Ferguson, president and chief executive officer of AZZ Inc., commented, "Fiscal 2017 was a challenging year. Our Galvanizing segment experienced reduced orders from soft markets in oil and gas, petrochemical, and solar. We continued to experience reduced refinery turnarounds and maintenance in our Energy segment during the fourth quarter and were also impacted by project delays for Westinghouse nuclear projects. Despite lower sales in both business segments, fiscal 2017 was AZZ's 30th consecutive year of profitability, a testament to all the employees of AZZ."
"We expect North American galvanizing market conditions to begin to improve in the second half of fiscal 2018 as infrastructure spend increases. During fiscal 2017 we were able to capture better pricing in the market to partially offset the weakness in demand. We believe this pricing dynamic will serve us well going forward. We also expect to introduce our new GalvaBar™ bendable galvanized rebar and enter the powder coating business in fiscal 2018. These are new opportunities that we believe will enable us to drive increased sales growth in fiscal 2018 and future years."
Mr. Ferguson continued, "We believe fiscal 2018 will benefit from an improvement in refinery turnarounds and nuclear maintenance outages that have now been deferred for several quarters. We are well positioned to execute on those projects once they are scheduled. We are pleased with our solid backlog and improving demand in other electrical and industrial markets, as incoming orders are strengthening."
"Given the market dynamics of fiscal 2017, and our potential exposure to the recent bankruptcy filing by Westinghouse, we are making an adjustment to our guidance for the fiscal year 2018 and revising our EPS range from $2.85 - $3.15 per diluted share to $2.60 – $3.10 per diluted share. We are also revising our sales guidance for fiscal 2018 from $900 million - $970 million to $880 million - $950 million."
"As we begin the new fiscal year, we maintain a positive outlook for fiscal 2018, and are encouraged by a more efficient operating platform as a result of our realignment efforts and will increase our focus on procurement and operating efficiencies. We also are seeing an increase in galvanizing demand and anticipate a rebound of our galvanizing business during the second half of the fiscal year. We continue to focus on fiscally responsible growth through our internal investment in new leading edge products in our Galvanizing segment; additional technology investments in our Energy segment; a robust pipeline of potential acquisition opportunities; and a new credit financing facility that will support our strategic growth initiatives. Looking forward, we believe that our businesses are well poised for the resurgence in infrastructure project spending not only in North America, but across the globe," concluded, Mr. Ferguson.
Fourth Quarter and Fiscal Year Results
Revenues for the fourth quarter were $193.8 million compared to $217.6 million for the same quarter last year, a decrease of 11 percent. Net income for the fourth quarter was $11.6 million, or $0.44 per diluted share, compared to net income of $16.1 million, or $0.62 per diluted share, for last year's fourth fiscal quarter.
For the twelve-month period, the Company reported revenues of $858.9 million compared to $903.2 million for the comparable period last year, a decrease of 4.9 percent. Net income for the twelve months was $60.9 million, which included an $8.0 million charge for realignment taken during the year, or $2.33 per diluted share, compared to $76.8 million, or $2.96 per diluted share compared to the prior fiscal year.
Bookings for fiscal 2017 were $858.9 million, compared to $905.1 million for the prior year, a decrease of 5.1 percent. Backlog at the end of the 2017 fiscal year was $346.4 million, an increase of 3.6 percent compared to backlog at the end of the prior year of $334.5 million. Incoming orders for the year were $858.9 million while revenues for the year totaled $858.9 million, resulting in a book to bill ratio of 1.0. Approximately 36.8% percent of the $346.4 million in backlog is expected to be delivered outside of the U.S.
Revenues for the Energy segment for the fourth quarter of fiscal 2017 were $112.1 million as compared to $117.0 million for the same quarter last year, decreasing by 4.2 percent. Operating income for the segment fell 23.8 percent to $9.6 million compared to $12.7 million in the same period last year. Operating margins for the fourth quarter were 8.6 percent as compared to 10.8 percent in the prior year period. For full year fiscal 2017, Energy segment revenues decreased 3.5 percent to $483.4 million and operating income decreased 11.0 percent to $52.0 million compared to $500.8 million and $58.5 million respectively, in the prior year period. Operating margins for the 2017 fiscal year were 10.8 percent as compared to 11.7 percent in the prior fiscal year, as a result of decreased sales volume.
Revenues for the Company's Galvanizing segment for the fourth quarter of fiscal 2017 were $81.6 million, compared to the $100.6 million in the same period last year, a decrease of 18.8 percent. Operating income was $18.4 million as compared to $23.1 million in the prior period, a decrease of 20.5 percent. Operating margins for the fourth quarter were 22.5 percent, compared to 22.9 percent in the same period last year. For full year fiscal 2017, Galvanizing segment revenues decreased 6.7 percent to $375.5 million and operating income decreased 16.6 percent to $79.0 million compared to $402.4 million and $94.8 million respectively, for the prior fiscal year, and were negatively affected by $7.3 million of realignment charges taken during fiscal 2017. As a result, operating margins for the 2017 fiscal year were 21.0 percent compared to 23.6 percent in the prior fiscal year.
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