AZZ, Inc. (AZZ) Misses Q1 EPS by 19c; Reaffirms FY18 Outlook

AZZ, Inc. (NYSE: AZZ) reported Q1 EPS of $0.51, $0.19 worse than the analyst estimate of $0.70. Revenue for the quarter came in at $208.6 million versus the consensus estimate of $225.08 million.

Tom Ferguson, president and chief executive officer of AZZ Inc., commented, "First quarter financial performance reflected continued delays and smaller than expected scopes in refinery turnarounds and maintenance projects in our Energy segment. We experienced some margin pressure in our Electrical platform as we continued to feel the effects of soft markets in oil and gas sector and the uncertainty and delays related to the Westinghouse nuclear projects. We did, however, see improving performance in some of the other markets served by our Energy segment. Overall on a sequential basis, we had improved top and bottom line financial performance with 7.6% and 14.3% growth, respectively, compared to the fourth quarter of fiscal year 2017.

"Although the Metal Coatings segment revenue was down versus the first quarter of last year, on a sequential basis, it was up 12.8% compared to last quarter of fiscal year 2017 and performed as expected. There are still headwinds in the galvanizing market, however, I continue to believe that the second half of the fiscal year will strengthen as infrastructure spend improves. Our Metal Coatings segment is well positioned for new revenue streams with our new powder coating facility in Crowley Texas that is now open and the recent acquisition of Enhanced Powder Coating. In addition, our new operation for AZZ's GalvaBar™ corrosion resistant galvanized rebar is now open for business. We expect all of these businesses to be important contributors in the coming years, and we have changed the name of the Galvanizing segment to the Metal Coatings segment to reflect the impact and importance of our expanded metal coating product offerings."

Mr. Ferguson concluded, "Despite the current market conditions, we are cautiously optimistic that fiscal year 2018 will benefit from improved infrastructure project spending during the second half of the year. We are committed and focused on delivering organic growth and driving operational efficiencies, by investing in new organic growth initiatives, including additional metal coatings offerings to drive future sales and maintaining an active M&A program to support our strategic growth initiatives. Looking forward, we are reaffirming our previously issued fiscal 2018 guidance of earnings per share in the range of $2.60 to $3.10 per diluted share and annual sales in the range of $880 million to $950 million. We expect to be even better positioned when overall market conditions improve."

GUIDANCE:

AZZ, Inc. sees FY2018 EPS of $2.60-$3.10. AZZ, Inc. sees FY2018 revenue of $880-950 million.

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