AZZ Inc. Misses on Q4 Earnings - Analyst Blog

Electrical equipment manufacturer AZZ Inc. AZZ reported fourth-quarter fiscal 2014 adjusted earnings of 42 cents per share, missing the Zacks Consensus Estimate of 44 cents by 4.5%. Quarterly earnings dropped 26.3% from the year-ago figure primarily due to higher costs and expenses, and a rise in share counts.

On a GAAP basis, the company's earnings per share were 40 cents versus 52 cents in the prior-year quarter.

For fiscal 2014, the company's adjusted earnings were $2.16 per share, down 5.3% from $2.28 per share a year ago.

AZZ Inc. posted GAAP earnings of $2.32 per share in 2014 compared with the prior-year earnings of $2.37 per share. The variance between GAAP and adjusted earnings was due to the combined effect of a gain from the property insurance proceeds associated with the fire at the company's Joliet facility, gains from the law suit settlement and the Joliet facility fire-business interruption insurance proceeds, a loss related to fire at the Joliet facility, and acquisition and acquisition integration charges.

Revenues

In fourth-quarter fiscal 2014, AZZ Inc. posted net sales of $181 million versus $140.4 million a year ago. A 28.9% year-over-year surge was primarily driven by strong performance from the company's Electrical and Industrial Products and Services segment as a result of the acquisition of AZZ WSI LLC. This was partially offset by a decline in sales at the Galvanizing Services segment.

The company's fiscal 2014 net sales increased 31.7% to $751.7 million from $570.6 million a year ago.

Operating Highlights

In the quarter under review, cost of sales was $135.3 million, up 32.1% from the prior-year level of $102.4 million.

The company's total costs and expenses were $164.2 million, up 36.9% from the year-ago figure, primarily due to higher selling, general and administrative expenses.

At the end of the quarter, AZZ Inc.'s product backlog edged up 3.7% to $229.9 million from the year-ago level of $221.7 million.

The company's quarterly incoming orders were $199.1 million and book-to-ship ratio was 110%. Overseas orders constituted 33% of the backlog.

Interest expenses increased 42.6% year over year to $4.7 million due to higher long- term debt level.

Financial Highlights

AZZ Inc.'s cash and cash equivalents as of Feb 28, 2014 were $27.6 million versus $55.6 million as of Feb 28, 2013.

As of Feb 28, 2014, the company's long-term debt due after one year was $384.8 million versus $196.4 million as of Feb 28, 2013.

Net cash provided by operating activities in fiscal 2014 was $107.3 million compared with $92.7 million in the prior-year comparable period.

Dividend Update

AZZ Inc. announced that it will pay quarterly cash dividend of 14 cents per share on the common stock on May 5, 2014 to shareholders of record as of April 21.

Guidance

AZZ Inc. reiterated the earnings and gross sales guidance for fiscal 2015 to the range of $2.40–$2.80 per share and to the band of $850–$900 million, respectively.

Other Company Release

EnerSys ENS is slated to release its fourth-quarter of fiscal 2014 earnings on May 28, 2014. The Zacks Consensus Estimate is $1.11.

Zacks Rank

AZZ Inc. currently has a Zacks Rank #3 (Hold). However, other better-ranked stocks in the same industry include Franklin Electric Co., Inc. FELE and Plug Power Inc. PLUG, each with a Zacks Rank #2 (Buy).