AZZ (NYSE:AZZ)
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AZZ incorporated Reports Year-to-Date and Second Quarter Results
of Fiscal-Year 2005
For the Six Months - Revenues Increase 8%, Net Income Up 15%, Earnings per
Share Increase 11% and Backlog Is Up 11%
FORT WORTH, Texas, Sept. 23 /PRNewswire-FirstCall/ -- AZZ incorporated
(NYSE:AZZ), a manufacturer of electrical products and a provider of galvanizing
services, today announced unaudited financial results for the three and
six-month periods ended August 31, 2004. Revenues for the second quarter were
$36.5 million, compared to $34.0 million for the comparable period last year.
Net income for the second quarter was $0.9 million, or $0.16 per diluted share,
compared to net income of $1.0 million, or $0.19 per diluted share, in last
year's fiscal second quarter.
Backlog at the end of the second quarter was $53.8 million, compared to $51.9
million at the end of the previous quarter and $48.5 million for the comparable
period last year. Incoming orders for the second quarter totaled $38.4 million
for a book to ship ratio of 105 percent for the quarter.
Outstanding debt at the end of the quarter was $28.6 million, down 11 percent
from the comparable period last year. AZZ's long-term debt to equity ratio is
now .32 to 1. Compliance cost associated with Sarbanes Oxley and
implementation cost associated with our new Oracle ERP system in the amount of
$399,000 are included in Selling, General and Administrative expense for the
six month period ending August 31, 2004.
For the six-month period, the Company reported revenues of $76.2 million,
compared to $70.4 million for the comparable period last year. Net income for
the six months was $2.2 million, or $0.39 per diluted share, compared to $1.9
million, or $0.35 per diluted share for the comparable six-month period last
year. Incoming orders for the first six-month period were $76.9 million for a
year to date book to ship ratio of 101 percent.
Revenues for the Electrical and Industrial Products Segment were $23.4 million
for the second quarter, compared to $22.1 million in the previous year's second
quarter. Operating income for this segment was $1.3 million, compared to $1.5
million in the second quarter of last year. For the first six months, revenues
were $51.0 million and operating income was $3.2 million compared to $46.3 and
$3.0 million respectively for the first six months of the prior year.
David H. Dingus, president and chief executive officer of AZZ incorporated,
commented, "Quotation activity in our Electrical and Industrial Products
Segment continued to show some signs of improvement, both domestically and
internationally. While our second quarter book to ship ratio showed
improvement over the first quarter, several projects continued to be delayed
due to some remaining economic uncertainty in the industrial markets, and
pending energy legislation. Competitive pricing pressures continued and some
opportunities were lost due to pricing being below our acceptable margin level.
Additionally, margins continued to be adversely impacted by our inability to
pass along many of the material cost increases we have incurred, due again to
competitive pricing levels. We remain optimistic that our efforts to
continually improve on our operating efficiency and lower our internal cost
structure, combined with our expansion of served markets, should facilitate
future improvement in revenues and operating margins."
Revenues for the Company's Galvanizing Service Segment were $13.1 million for
the second quarter, compared to $11.9 million in the previous year's comparable
quarter. Operating income for the Segment was $2.4 million compared to $2.0
million in the same quarter last year. For the first six months of fiscal
2004, revenues were $25.2 million, and operating income was $4.7 million
compared to $24.1 and $4.0 million, respectively, for the first six months of
the prior year.
Mr. Dingus continued, "We are very pleased with the operating results of this
segment for the second quarter and year-to-date. The stabilization of our
served markets, the ability to recover our cost increases in our pricing, and
the leverage gained from prior adjustments to our cost and operating structure,
allowed us to show a substantial improvement in margins on a modest increase in
volume. We believe that a sustained improvement in our served markets will
continue to reflect improved operating results for this Segment."
Mr. Dingus concluded, "On a year to date basis, our revenues and income are
consistent with our internal targets. This combined with the evaluation of
information currently available to management, we are continuing to estimate
FY2005 earnings to be within the range of $0.75 to $0.85 per diluted share and
revenues to be within the range of $140 to $150 million. Our earnings per
share estimate includes the portion of Oracle ERP system implementation project
cost of $650,000, which does not qualify for capitalization, in fiscal 2005.
Approximately $280,000 of this amount was incurred in the first six months of
the current fiscal year.
AZZ incorporated will conduct a conference call to discuss financial results
for the second quarter of fiscal 2005 at 4:15 P.M. Eastern on September 23,
2004. Interested parties can access the call at (719) 457-2625. The call will
be web cast via the Internet at http://www.azz.com/AZZinvest.htm. A replay of
the call will be available for three days at (719) 457-0820, confirmation
#265129, or for 30 days at http://www.azz.com/AZZinvest.htm.
AZZ incorporated is a specialty electrical equipment manufacturer serving the
global markets of industrial, power generation, transmission and distribution,
as well as a leading provider of hot dip galvanizing services to the steel
fabrication market nationwide.
Except for the statements of historical fact, this release may contain
forward-looking statements that involve risks and uncertainties some of which
are detailed from time to time in documents filed by the Company with the SEC.
Those risks and uncertainties include, but are not limited to: changes in
customer demand and response to products and services offered by the company,
including demand by the electrical power generation markets, electrical
transmission and distribution markets, the industrial markets, and the hot dip
galvanizing markets; prices and raw material costs, including zinc and natural
gas which are used in the hot dip galvanizing process; changes in the economic
conditions of the various markets the Company serves, foreign and domestic,
customer requested delays of shipments, acquisition opportunities, adequacy of
financing, and availability of experienced management employees to implement
the Company's growth strategy. The Company can give no assurance that such
forward-looking statements will prove to be correct.
Condensed Consolidated Statement of Income
(in thousands except per share amount)
Three Months Ended Six Months Ended
August 31, August 31, August 31, August 31,
2004 2003 2004 2003
(unaudited) (unaudited) (unaudited) (unaudited)
Net sales $36,510 $34,011 $76,204 $70,358
Income before taxes $1,440 $1,607 $3,417 $3,031
Net income $908 $996 $2,153 $1,879
Net income per share
Basic $0.17 $0.19 $0.40 $0.35
Diluted $0.16 $0.19 $0.39 $0.35
Diluted average
shares outstanding 5,513 5,366 5,509 5,336
Condensed Consolidated Balance Sheet
(in thousands)
August 31, February 28,
2004 2004
(unaudited) (audited)
Assets:
Current assets $44,572 $43,713
Net property, plant and equipment $34,932 $34,201
Other assets, net $42,351 $42,112
Total assets $121,855 $120,026
Liabilities and shareholders' equity:
Current liabilities $24,874 $23,504
Long term debt due after one year $23,125 $25,375
Other liabilities $1,940 $1,850
Shareholders' equity $71,916 $69,297
Total liabilities and shareholders' equity $121,855 $120,026
Condensed Consolidated Statement of Cash Flow
(in thousands)
Six Months Six Months
Ended Ended
August 31, August 31,
2004 2003
(unaudited) (unaudited)
Net cash provided by (used in) operating
activities $5,385 $12,146
Net cash provided by (used in) investing
activities ($3,493) ($338)
Net cash provided by (used in) financing
activities ($2,080) ($11,712)
Net increase (decrease) in cash and cash
equivalents ($188) $96
Cash and cash equivalents at beginning of year $1,445 $1,984
Cash and cash equivalents at end of quarter $1,257 $2,080
DATASOURCE: AZZ incorporated
CONTACT: Dana Perry, Senior Vice President - Finance and CFO of AZZ
incorporated, +1-817-810-0095; or Retail: Robert Blum, or
Institutional/Analysts: Joe Dorame, or Media: Kristen Klein, all of RCG
Capital Markets Group, Inc., +1-480-675-0400, for AZZ incorporated
Web site: http://www.azz.com/AZZinvest.htm
http://www.azz.com/