Yahoo Finance AZZ Inc (AZZ) Q4 2024 Earnings Call Transcript Highlights: Strong Performance and Strategic ...
Total Sales: $1.54 billion, up 16.2% year-over-year.
Metal Coatings Sales: $656 million, increased by 3%.
Precor Metal Sales: $881 million, up 28.4%.
Adjusted EBITDA: $334 million for the full year.
Cash Provided by Operations: $245 million for the year.
Adjusted EPS: Grew to $4.53, up almost 35% from the previous year.
Q4 Total Sales: $366 million, increased by 8.9%.
Q4 Adjusted EPS: Increased by 210% to $0.93.
Q4 Adjusted EBITDA: $74 million, up 29%.
Q4 Cash Flow from Operations: $64 million.
Debt Reduction: Reduced by $115 million over the last year.
Free Cash Flow: $149.3 million, calculated as cash flows from operations minus capital expenditures.
Release Date: April 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Good morning, everyone. Missed my first question is on the balance sheet. Good job on getting the leverage ratio at 2.9 times. I wondered, with this, do you plan to maybe hold a little bit more cash on the balance sheet and do you think about acquisitions? And if so, where do you see more opportunities on the pre-COVID side or on the Metal Coatings side? Thank you very much. A: (Philip Schlom - AZZ Inc - Chief Financial Officer) We operate with pretty low cash balances and use excess cash to reduce the borrowings on the revolver. We have a $400 million revolver with about $355 million in capacity at the end of the year. So the acquisitions Tom was speaking to, we should be able to fund smaller bolt-on through the revolving credit facility. (Thomas Ferguson - AZZ Inc - President & Chief Executive Officer) There are a couple of potential galvanizing opportunities that have popped up that are the kind of bolt-on one-off sites that our team likes to look at. We would fund those off of the revolver.
Q: Got it. And then you mentioned bolt-on up to what level would you consider of EBITDA or volume? Would you consider bolt-on? And I'm just trying to get a sense for kind of what do you have a teaser? A: (Thomas Ferguson - AZZ Inc - President & Chief Executive Officer) These are typically in the $10 million to $20 million revenue side. So and usually they're going to have save three or four? Well, yes, probably $3 million or $4 million of EBITDA. We tend to pay roughly six times. So that that's what we consider bolt-on. And then our team, we anticipate good strong first year synergies often in the 500,000 basis point improvement range.
Q: Very helpful. And for this fiscal year here, how many of those do you think are realistic to take care if there hadn't been any last year. A: (Thomas Ferguson - AZZ Inc - President & Chief Executive Officer) We've taken the flag down that we were out there in acquisition mode. So I think we've kind of let folks know that as we've gotten our debt under three times quicker than we'd anticipated on that, while we're still going to be focused on paying down debt funding the facility in Washington and our normal CapEx needs. So we just recently kind of let it out that we're interested again. And these usually have a four to six month cycle times from when they become active to when we're able to do due diligence and close. So maybe one or two, I'd be about it.
Q: That's very helpful. And maybe just to round out the conversation on Avon growth. If you think about kind of organic growth, where would that factor in vis a vis some of these bolt-ons you mentioned. Thank you. A: (Thomas Ferguson - AZZ Inc - President & Chief Executive Officer) Yes, I think we still in our normal organic growth, particularly on the Metal Coatings side, tends to run with GDP. So when we can get a couple of acquisitions and that's going to going to add another 5%or 6% on a full year run rate basis. On the prepaid side, we've got two things going on. One, we feel volumes are improving as we saw in the fourth quarter, I believe we were up about 9% on volume. So we're seeing the volumes pick up on the precut side, which gives us nice organic growth. And then as we get into next year, finish out this year, get into next calendar year, that's when we'll start to have the Washington site coming online. So which should provide some additional revenue and EBITDA growth.
Q: Yes, gentlemen, very helpful. I appreciate all the color and continued Best of luck. A: (Thomas Ferguson - AZZ Inc - President & Chief Executive Officer) Thanks.
Q: Good morning, guys, and congratulations on another good quarter. And I'd like to start with the revenue profile. In the fourth quarter, you suggested there was some it was unusually warm and on seasonal basis, I'm wondering two things that suggests a spread on business is pulled from the first quarter into the fourth quarter and B, if that was the case. It does suggest that maintaining guidance is actually more of a positive thing because you are back PHIL some of that revenue. A: (Thomas Ferguson - AZZ Inc - President & Chief Executive Officer) That's a good point, John, I think on the on the Metal Coatings side, you get an earlier start, it kind of depends on what. Yes. So we did see some of that pull in and stay active hopefully, there's some additional projects to come in the pipeline as the summer as we get into the summer months and into fall. And then on the prepaid side, this the normal ordering cycles of the construction ramp up, I would not sure a whole lot pulled pulled in from from first quarter to potentially a little bit in terms of inventory buildup among some of our customers. So yes, we feel like at like the guidance is solid and as traditionally, we tried to be conservative. And then then we'll continue to update that as the year goes on.
Q: Fair enough. And you also mentioned in the press release there was market share gains on the prepaid side. Can you talk a little bit about the market share gains and we're getting it from. A: (David Nark - AZZ Inc - Senior Vice President of Marketing, Communications and Investor Relations) Yes, John, this is Dave. I think as you look at it, there's a couple of areas in the end markets. We're seeing some improvement and we believe we're outperforming the market in the construction segment and also in the appliance market has another area where we're outperforming and I'm seeing some conversions taking place. So those are the two main areas I'd point to.
Q: Okay. And one last question and I'll get back in queue. You talk about pricing initiatives on the Metal Coatings side of the business benefited the quarter, please. A little bit deeper on that. Is that in response to zinc prices, can you what's going on in the pricing initiative front end on an MC? A: (Thomas Ferguson - AZZ Inc - President & Chief Executive Officer) Yes, I think we've always tried to talk about how we I've tried to differentiate our value pricing versus zinc, but it does help zinc has been trending up. And so as things trends up. That tends to help support our price levels. I also think that we continue to add services and anywhere from adding more transportation so
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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