Why Metal Coating Services Company AZZ Shares Are Gaining Today

AZZ Inc AZZ reported third-quarter FY24 sales growth of 2.22% year-on-year to $381.61 million, beating the analyst consensus estimate of $374.73 million.

Metal Coating sales rose 3.1% to $163.2 million and Precoat Metals sales climbed 1.6% to $218.4 million.

Gross profit for the quarter increased 20.6% to $88.1 million. Operating income rose 16.4% to $52.8 million, and the operating margin was 13.8%.

Adjusted EBITDA was $86.4 million or 22.6% of sales, versus the prior year of $68.9 million or 18.5% of sales.

Adjusted EPS of $1.19 beat the consensus estimate of $1.00.

The company held $7.5 million in cash and equivalents as of November 30, 2023. Operating cash flow for nine months ending November 30, 2023, was $180.9 million.

"While the fourth quarter typically represents a seasonally slower period for AZZ, we anticipate meaningfully improved profitability over prior year same quarter. Secular tailwinds exist for non-building construction on infrastructure and renewables projects, reshoring of manufacturing, and continued migration to more environmentally friendly pre-painted steel and aluminum," said President and CEO Tom Ferguson.

Outlook: AZZ raised the lower end of its FY24 sales guidance, revising the range from $1.40 billion - $1.55 billion to $1.45 billion - $1.55 billion (consensus $1.51 billion).

AZZ revised the FY24 adjusted EPS outlook from $3.85 - $4.35 to $4.15 - $4.35 (consensus $4.12).

AZZ raised FY24 adjusted EBITDA outlook from $300 million - $325 million to $315 million - $335 million.

Price Action: AZZ shares traded higher by 4.70% at $59.75 premarket Wednesday.