AZZ incorporated Releases Financial Results for First Quarter
07/07/2015 - AZZ incorporated, a global provider of galvanizing services, welding solutions, specialty electrical equipment and highly engineered services, announced financial results for the three month period ended May 31, 2015.
Revenues for the first quarter of fiscal 2016 were $228.9 million compared to $216.1 million for the same quarter last year, an increase of 5.9%. Net income for the first quarter increased 33.5% to $19.9 million, or $0.77 per diluted share, compared to net income of $14.9 million, or $0.58 per diluted share, for the first quarter of fiscal 2015.
Earnings for the first quarter of fiscal 2016 were positively impacted by an improved gross margin of 25.9% compared to 25.6% in the first quarter of fiscal 2015, despite the challenging comparison year over year from insurance proceeds related to business interruption settlements. In the first quarter of fiscal 2015 these proceeds benefitted the Galvanizing Services Segment gross profit by $2.4 million, compared to $0.3 million in the first quarter of fiscal 2016.
Earnings were also positively impacted by a reduction in SG&A as a percentage of sales to 11.5% compared to 12.7% in the prior fiscal year. Additionally the effective tax rate fell to 31.7% in the current quarter compared to 37.0% in the first quarter of the prior year.
Incoming orders for the quarter were $215.2 million while shipments for the quarter totaled $228.9 million, resulting in a book to ship ratio of 94%. In the first quarter a year earlier, incoming orders were $200.2 million, resulting in a book to ship ratio of 93%. Our backlog at the end of the first quarter of fiscal 2016 was $318.9 million compared to backlog at the end of the prior year first quarter was $309.0 million. Approximately 33% of the backlog will be delivered outside the U.S.
Tom Ferguson, president and chief executive officer of AZZ incorporated, commented, "We are off to a good start in fiscal 2016. In addition to solid top- and bottom-line results we are particularly pleased with the opportunity to have acquired the six galvanizing facilities of U.S. Galvanizing from Trinity Industries at the start of our second quarter of fiscal 2016. With 42 galvanizing facilities, we continue to offer our customers a wide array of services and options tailored to their needs. We have also made the strategic decision to build a new galvanizing plant in Reno, Nevada. We believe this is an underserved geographical area that represents significant opportunity and we expect to be a leading provider of corrosion protection services in the near future. Our last "greenfield" facility was built more than 20 years ago in Goodyear, Arizona. We have every expectation that the Reno facility will be very successful in the coming years."
"In the Energy Segment, WSI is now gaining traction as we have fully implemented our strategic reconfiguration of the business," continued Mr. Ferguson. "Our business development efforts are paying off as we have gained new customers, and have renewed business with previous customers in the refinery sector. We also improved efficiencies as operating margins in our Energy Segment increased by 264 basis points during the first quarter compared to the same period last year. As we look ahead, in addition to the progress that we have made in the U.S., we believe that our industry leading products and services uniquely positions WSI to benefit from a number of outstanding international opportunities in the coming quarters. We still remain cautious, however, as we continue to experience a slight impact on a couple of our businesses due to lower oil prices and reduced rig count, and we will continue to monitor zinc prices and competition in Galvanizing. To counter potential headwinds, we remain focused on leveraging our sales teams across our Energy Segment in North America; continuing to expand internationally; driving operational excellence and continuing to grow the galvanizing business."
Mr. Ferguson, concluded, "I am confident that fiscal 2016 will be a solid year and we are adjusting our guidance upward for fiscal 2016 EPS in the range of $2.85 to $3.30 per diluted share and revenues in the range of $900 million to $940 million, compared to our previously issued guidance of earnings of $2.75 to $3.25 per diluted share and revenues in the range of $875 million to $925 million. This is a direct result of our acquisition of U.S. Galvanizing and our expectation that it will provide accretion of approximately $0.10 in EPS for fiscal year 2016. We look forward to a solid 2016."
For a detailed breakdown of AZZ incorporated's financial results by business sector, continue to the company's Investor Relations homepage.
AZZ incorporated is a global provider of galvanizing services, welding solutions, specialty electrical equipment and highly engineered services to the markets of power generation, transmission, distribution and industrial in protecting metal and electrical systems used to build and enhance the world's infrastructure. AZZ Galvanizing is a leading provider of metal finishing solutions for corrosion protection, including hot dip galvanizing to the North American steel fabrication industry. AZZ Energy is dedicated to delivering safe and reliable transmission of power from generation sources to end customers, and automated weld overlay solutions for corrosion and erosion mitigation to critical infrastructure in the energy markets worldwide.
Earnings for the first quarter of fiscal 2016 were positively impacted by an improved gross margin of 25.9% compared to 25.6% in the first quarter of fiscal 2015, despite the challenging comparison year over year from insurance proceeds related to business interruption settlements. In the first quarter of fiscal 2015 these proceeds benefitted the Galvanizing Services Segment gross profit by $2.4 million, compared to $0.3 million in the first quarter of fiscal 2016.
Earnings were also positively impacted by a reduction in SG&A as a percentage of sales to 11.5% compared to 12.7% in the prior fiscal year. Additionally the effective tax rate fell to 31.7% in the current quarter compared to 37.0% in the first quarter of the prior year.
Incoming orders for the quarter were $215.2 million while shipments for the quarter totaled $228.9 million, resulting in a book to ship ratio of 94%. In the first quarter a year earlier, incoming orders were $200.2 million, resulting in a book to ship ratio of 93%. Our backlog at the end of the first quarter of fiscal 2016 was $318.9 million compared to backlog at the end of the prior year first quarter was $309.0 million. Approximately 33% of the backlog will be delivered outside the U.S.
Tom Ferguson, president and chief executive officer of AZZ incorporated, commented, "We are off to a good start in fiscal 2016. In addition to solid top- and bottom-line results we are particularly pleased with the opportunity to have acquired the six galvanizing facilities of U.S. Galvanizing from Trinity Industries at the start of our second quarter of fiscal 2016. With 42 galvanizing facilities, we continue to offer our customers a wide array of services and options tailored to their needs. We have also made the strategic decision to build a new galvanizing plant in Reno, Nevada. We believe this is an underserved geographical area that represents significant opportunity and we expect to be a leading provider of corrosion protection services in the near future. Our last "greenfield" facility was built more than 20 years ago in Goodyear, Arizona. We have every expectation that the Reno facility will be very successful in the coming years."
"In the Energy Segment, WSI is now gaining traction as we have fully implemented our strategic reconfiguration of the business," continued Mr. Ferguson. "Our business development efforts are paying off as we have gained new customers, and have renewed business with previous customers in the refinery sector. We also improved efficiencies as operating margins in our Energy Segment increased by 264 basis points during the first quarter compared to the same period last year. As we look ahead, in addition to the progress that we have made in the U.S., we believe that our industry leading products and services uniquely positions WSI to benefit from a number of outstanding international opportunities in the coming quarters. We still remain cautious, however, as we continue to experience a slight impact on a couple of our businesses due to lower oil prices and reduced rig count, and we will continue to monitor zinc prices and competition in Galvanizing. To counter potential headwinds, we remain focused on leveraging our sales teams across our Energy Segment in North America; continuing to expand internationally; driving operational excellence and continuing to grow the galvanizing business."
Mr. Ferguson, concluded, "I am confident that fiscal 2016 will be a solid year and we are adjusting our guidance upward for fiscal 2016 EPS in the range of $2.85 to $3.30 per diluted share and revenues in the range of $900 million to $940 million, compared to our previously issued guidance of earnings of $2.75 to $3.25 per diluted share and revenues in the range of $875 million to $925 million. This is a direct result of our acquisition of U.S. Galvanizing and our expectation that it will provide accretion of approximately $0.10 in EPS for fiscal year 2016. We look forward to a solid 2016."
For a detailed breakdown of AZZ incorporated's financial results by business sector, continue to the company's Investor Relations homepage.
AZZ incorporated is a global provider of galvanizing services, welding solutions, specialty electrical equipment and highly engineered services to the markets of power generation, transmission, distribution and industrial in protecting metal and electrical systems used to build and enhance the world's infrastructure. AZZ Galvanizing is a leading provider of metal finishing solutions for corrosion protection, including hot dip galvanizing to the North American steel fabrication industry. AZZ Energy is dedicated to delivering safe and reliable transmission of power from generation sources to end customers, and automated weld overlay solutions for corrosion and erosion mitigation to critical infrastructure in the energy markets worldwide.
