AZZ(US:AZZ)2023-04-24 16:00Financial Performance - For fiscal year 2023, total sales reached $1,323.6 million, a significant increase of 151.8% compared to $525.6 million in fiscal 2022[120] - The AZZ Metal Coatings segment generated sales of $636.98 million, up 21.2% from $525.6 million in the prior year, driven by improved pricing and increased steel processing volume[119] - The AZZ Precoat Metals segment, acquired on May 13, 2022, contributed $686.67 million in sales for fiscal 2023[120] - Net income for fiscal 2023 was $(61.2) million, a decline from $84.0 million in fiscal 2022, resulting in a net income margin of (4.6)% compared to 16.0% in the prior year[118] - Operating income for the AZZ Metal Coatings segment increased by $27.2 million, or 21.1%, to $156.0 million, maintaining an operating margin of 24.5%[123] - The AZZ Infrastructure Solutions segment reported a sales decline of 32.0% to $256.2 million for fiscal 2023, primarily due to its divestiture on September 30, 2022[129] - The company recorded a net income from continuing operations of $66.339 million for the year ended February 28, 2023, compared to $49.817 million in 2022, representing a 33% increase[169] - Adjusted EBITDA from continuing operations for the year ended February 28, 2023, was $267.385 million, significantly up from $113.029 million in 2022, indicating a strong operational performance[170] - The company reported a net loss of $61,214,000 available to common shareholders for the year, compared to a net income of $84,022,000 in 2022[206] - Basic earnings per share from continuing operations increased to $2.34, up from $2.00 in the previous year, while earnings per share from discontinued operations fell to $(4.81) from $1.38[204] Debt and Financing - Interest expense surged to $88.8 million in fiscal 2023, up from $6.4 million in fiscal 2022, primarily due to debt incurred from the Precoat Acquisition[125] - The company reported a debt-to-equity ratio of 1.24:1 at the end of fiscal 2023, compared to 0.34:1 at the end of fiscal 2022[125] - The 2022 Credit Agreement includes a senior secured initial term loan of $1.3 billion due May 13, 2029, and a revolving credit facility of $400.0 million due May 13, 2027[141] - The effective interest rate for the Revolving Credit Facility and Term Loan B was 8.81% as of February 28, 2023[143] - The leverage ratio as of February 28, 2023, was 5.75, with a maximum Total Net Leverage Ratio requirement decreasing to 4.5 by May 31, 2024[143] - The proceeds from the Convertible Notes issuance of $240.0 million were used to fund the Precoat Acquisition[144] - The company had total outstanding letters of credit amounting to $16.7 million as of February 28, 2023[145] - The company did not repurchase shares during fiscal 2023, prioritizing debt repayments instead, after repurchasing 601,822 shares for $30.8 million in fiscal 2022[151] Cash Flow and Investments - Net cash provided by operating activities of continuing operations was $91.4 million for fiscal 2023, an increase from $60.6 million in fiscal 2022[135] - Net cash used in investing activities of continuing operations rose to $1,228.9 million, largely due to the Precoat Acquisition[136] - Net cash provided by financing activities for continuing operations in fiscal 2023 was $1,027.3 million, a significant increase from $0.9 million in fiscal 2022[137] - Cash used in investing activities of continuing operations was $1,228,921,000, significantly higher than $82,143,000 in the previous year, indicating a substantial increase in investment activities[209] - Proceeds from the issuance of common stock amounted to $2,372,000, slightly down from $2,788,000 in 2022[209] Assets and Liabilities - As of February 28, 2023, total assets of AZZ Inc. amounted to $2,221.5 million, a significant increase from $1,133.0 million in 2022, representing an increase of approximately 96.3%[201] - Total liabilities reached $1,368.0 million in 2023, compared to $465.7 million in 2022, representing an increase of approximately 194.5%[201] - Long-term debt increased to $1,058.1 million in 2023 from $226.5 million in 2022, indicating a substantial rise of approximately 367.5%[201] - The company reported current assets of $417.4 million as of February 28, 2023, compared to $386.5 million in 2022, reflecting a growth of about 8.5%[201] - Accounts receivable increased to $183.4 million in 2023 from $85.1 million in 2022, marking an increase of approximately 115.0%[201] - Goodwill rose to $702.5 million in 2023, up from $190.4 million in 2022, reflecting an increase of about 268.5%[201] - The company reported retained earnings of $506.0 million as of February 28, 2023, down from $584.2 million in 2022, indicating a decrease of about 13.4%[201] Acquisitions and Divestitures - The acquisition of Precoat Metals on May 13, 2022, resulted in the recognition of $446.0 million in intangible assets, including customer relationships, tradename, and technology[187] - The company completed a joint venture with Fernweh Group LLC, contributing its AZZ Infrastructure Solutions segment at an implied enterprise value of $300 million, resulting in a loss on the sale of the segment[159] - The total purchase price for the Precoat Acquisition was approximately $1.3 billion, funded primarily through a term loan and convertible debt[274] - The divestiture of the AZZ Infrastructure Solutions segment resulted in a 60% interest sold to Fernweh Group LLC at an implied enterprise value of $300,000,000[290] - The company executed a plan to divest non-core businesses, including the sale of the Galvabar business for net proceeds of $8,300,000[300] Operational Metrics - Cost of sales for fiscal year 2023 was $49,413 million, a significant increase from $23,795 million in 2022, representing a growth of 107.5%[264] - Total depreciation expense for fiscal year 2023 was $51,977 million, compared to $25,423 million in 2022, marking an increase of 104.5%[264] - The company’s total accumulated depreciation for property, plant, and equipment was $293.2 million as of February 28, 2023[262] - The company’s lease expense for minimum lease payments is recognized on a straight-line basis over the lease term[253] - The company recognized $0.8 million in income from subleases during fiscal year 2023[311] Tax and Compliance - The non-GAAP effective tax rates for fiscal 2023 and 2022 were 24.0% and 22.9%, respectively, indicating a slight increase in the tax burden[169] - The company maintained effective internal control over financial reporting as of February 28, 2023, according to the audit opinion[194] - The company assesses its investment in unconsolidated joint ventures for recoverability when events suggest a decline in value, ensuring prudent financial management[160] - The Company did not recognize any impairment losses for goodwill or indefinite-lived intangible assets for fiscal years 2023, 2022, and 2021[240]