AZZ, Inc. (AZZ) Reports Q2 EPS of $0.38

October 5, 2016 6:31 AM EDT

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AZZ, Inc. (NYSE: AZZ) reported Q2 GAAP EPS of $0.38, versus $0.67 reported last year. Revenue for the quarter came in at $195 million, versus $214.2 million reported last year.

Adjusted EPS was $0.55, versus $0.71 expected.

om Ferguson, president and chief executive officer of AZZ Inc., commented, "Although historically our second quarter is seasonally weaker due to smaller number of outages and turnarounds that occur during the summer months, our second quarter financial results were disappointing. Revenues experienced a decrease in volumes from the continuing effects of depressed markets in oil and gas, petrochemical, and solar for our Galvanizing segment. Our Energy segment experienced reduced refinery turnarounds and maintenance spend during the second quarter, as well as the continuing effects of the oil and gas market, coupled with a tough year-over-year comparison in our Nuclear Logistics business due to a large shipment of a $14 million project."

"We believe our strategic decision to appropriately realign our business segments will drive $6.2 million of cost benefits on an annualized basis, helping to counter the headwinds in the current market. We have already announced our strategic divestiture of our Nuclear Logistics business, and expect that this will allow us to continue to focus on opportunities in our remaining core businesses by remaining committed to keeping an active M&A program. We will also look to continue to expand internationally, drive operational excellence, and continue to develop our industry-leading products and services for the protection of metal and electrical systems enhancing global infrastructure."

"As a result of the volume declines in the Galvanizing segment," continued Mr. Ferguson, "we made the strategic decision to reduce capacity in the Southern U.S. by closing production at two of our galvanizing plants, and repurposing a third plant from standard galvanizing to our new galvanized rebar product line. The steel volume currently handled by these three plants will be moved to nearby plants with negligible expected loss. We have also taken charges for various other smaller projects throughout the segment we believe will enhance productivity and profitability going forward. In our Energy segment, we have also taken steps to reduce management costs in our specialty welding business, which is feeling the effects of reduced turnarounds in domestic refineries. We are extremely focused on improving operational performance throughout the company and returning our margins to our customary levels as quickly as possible."

"As we look forward, I am confident that fiscal 2017 will be a solid year, despite the challenges in the second quarter. The upcoming fall outage season is anticipated to deliver strong bookings for solid second half of the year. Taking the measure of our current markets, as well as the total effects of the realignment program, and excluding the effects of the potential sale of our Nuclear Logistics business, we would expect our fiscal 2017 performance to fall slightly below our previously issued fiscal 2017 EPS guidance range of $3.15 to $3.45 and revenue guidance range of $930 million to $970 million. Rather than re-set the ranges at this time, given the uncertainties noted above and the potential charges related to the sale of Nuclear Logistics LLC, we will suspend our guidance for a short window until we have more clarity on these issues and the effect on EPS and sales for the year," concluded Mr. Ferguson.

For earnings history and earnings-related data on AZZ, Inc. (AZZ) click here.

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