- Total Sales: Increased by 16.2% to $1.54 billion for fiscal 2024.
- Metal Coatings Sales: $656 million, up 3% year-over-year.
- Pre-Coat Metals Sales: $881 million, up 28.4% year-over-year.
- Adjusted EBITDA: Increased to $334 million for the full year.
- Cash Provided by Operations: $245 million for the year.
- Adjusted Earnings Per Share (EPS): $4.53, up almost 35% from the previous year.
- Fourth Quarter Sales: $366 million, up 8.9% year-over-year.
- Fourth Quarter Adjusted EPS: Increased by 210% to $0.93.
- Fourth Quarter Adjusted EBITDA: $74 million, up 29% year-over-year.
- Adjusted EBITDA Margins: 28.6% for metal coatings and 17.8% for pre-coat metals.
- Debt Reduction: Reduced by $115 million over the last year.
- Capital Expenditures: $95.1 million for the year, including $47.7 million for a new facility.
- Net Income for Fourth Quarter: $17.9 million, compared to $7.4 million in the prior year.
- Gross Profit for Fourth Quarter: $81 million, or 22.1% of sales.
- SG&A Expenses for Fourth Quarter: $38.8 million, including $6.8 million in legal accruals.
- Interest Expense for Fourth Quarter: $24.7 million, down from $27.1 million in the prior year.
- Effective Tax Rate for Fourth Quarter: 18.7%.
- Free Cash Flow: $149.3 million for the year.
- Fiscal 2025 Guidance: Sales of $1.525 billion to $1.625 billion, adjusted EBITDA of $310 million to $360 million, and adjusted EPS of $4.50 to $5.
Release Date: April 22, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- AZZ Inc (AZZ, Financial) achieved a record total sales increase of 16.2% to $1.54 billion for fiscal 2024.
- The company significantly reduced its debt by $115 million, surpassing its target of $75 million to $100 million.
- Adjusted earnings per share increased by almost 35% to $4.53 compared to the previous year.
- AZZ Inc (AZZ) improved its adjusted EBITDA by 24.8% to $333.6 million, reflecting strong operational efficiencies.
- The company maintained a strong liquidity position with no debt maturities until 2027 and successfully repriced its term loan and revolving credit facility to lower interest costs.
Negative Points
- Selling, General and Administrative expenses increased to $38.8 million in the fourth quarter, partly due to $6.8 million in legal accruals.
- The company faces increased labor and other variable costs, which could impact future profitability.
- Despite strong performance, the pre-coat metals segment continues to experience pressure in the container and transportation categories.
- The company is exposed to risks associated with macroeconomic impacts, which could affect demand and inventory management.
- AZZ Inc (AZZ) has not made any share repurchases during the year, focusing instead on debt reduction.
Q & A Highlights
Q: With the leverage ratio at 2.9 times, do you plan to hold more cash on the balance sheet, and are there acquisition opportunities?
A: We typically maintain low cash balances, using excess cash to reduce borrowings on our revolver. We have a $400 million revolver with $355 million in capacity, which can fund smaller acquisitions. Currently, we see potential galvanizing opportunities that could be funded through the revolver. These are typically bolt-on acquisitions with $10 million to $20 million in revenue.
Q: Was the warmer weather in Q4 indicative of business being pulled from Q1, and does maintaining guidance suggest a positive outlook?
A: The warmer weather allowed for an earlier start, potentially pulling some business into Q4. However, we expect additional projects in the pipeline for the summer and fall. On the pre-coat side, the normal ordering cycle was followed, with some inventory buildup among customers. We believe our guidance is solid and traditionally conservative.
Q: Can you elaborate on the market share gains in the pre-coat segment?
A: We are outperforming the market in the construction and appliance segments, seeing conversions and improvements in these areas. These gains are contributing to our overall performance.
Q: How do you see gross margins in metal coatings trending in fiscal '25?
A: We expect to maintain and potentially improve margins through our Digital Galvanizing System (DGS) and leadership playbooks. As long as volumes hold up, we believe we can drive margin improvements.
Q: Regarding the new facility in Washington, Missouri, what are the startup costs, and will there be a drag on margins this fiscal year?
A: We have planned for the ramp-up costs in our budgets, with contingencies in place. We do not expect a drag on margins. The facility is 75% contractually committed, with opportunities to sell the remaining capacity.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
