AZZ(US:AZZ)2021-10-12 19:45Financial Data and Key Metrics Changes - Overall sales for Q2 fiscal year 2022 were $216 million, an increase of 6.4% compared to the prior year, or 8% when adjusted for the divestiture of SMS [7][14] - Net income was $18.9 million, with an EPS of $0.76 per diluted share, reflecting a significant recovery from the previous year's loss [8][15] - EBITDA for Q2 was $36.6 million, a 19.1% increase from the adjusted EBITDA of $30.7 million in the prior year [16] Business Line Data and Key Metrics Changes - Metal Coatings segment sales increased by 10.7% to nearly $130 million, representing 60% of total sales, with operating margins at 24.4% [9][10] - Infrastructure Solutions segment sales were approximately $87 million, flat compared to the previous year, but operating income increased by 130% to $7 million [10][14] Market Data and Key Metrics Changes - Bookings in Q2 were $231.8 million, an increase of 11.1% year-over-year, with a bookings-to-sales ratio of 107% [14] - The company noted strong demand across various markets, particularly in solar and electrical sectors, with good activity in T&D and industrial markets [31][33] Company Strategy and Development Direction - The company is focused on becoming predominantly a metal coatings company, with ongoing strategic reviews and potential transformational deals in the pipeline [21][47] - AZZ aims to achieve operating margins of 21% to 23% in Metal Coatings while maintaining profitability and cash flow in Infrastructure Solutions [21][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance despite ongoing COVID-19 uncertainties, tightening guidance for fiscal year 2022 with anticipated sales between $865 million and $925 million [10][12] - The company is actively pursuing several merger and acquisition opportunities, although COVID-related travel restrictions have slowed some discussions [18][47] Other Important Information - The company repurchased over 290,000 shares for $15 million and distributed $4.2 million in dividends during the quarter [8][18] - Supply chain constraints have impacted capital expenditures, with planned investments of approximately $35 million for the year [17][65] Q&A Session Summary Question: Fall turnaround season outlook - Management noted improvements in turnaround activity compared to the previous year, but some international projects are delayed, affecting revenue recognition [24] Question: Maintaining margin profile in Metal Coatings - The company is focused on operational performance and customer satisfaction, leveraging digital systems to improve efficiency despite labor shortages [26][27] Question: Demand trends in Metal Coatings - Strong demand is observed across various sectors, with solar being a significant driver, alongside recreational and OEM markets [30][31] Question: Share repurchase priorities - The company is currently prioritizing M&A opportunities and capital investments over share repurchases [35][56] Question: Labor availability and hiring outlook - There has been a slight improvement in labor availability, with increased applications and job fairs being conducted [54] Question: Pricing strategy amidst rising costs - The company is pushing for price increases to offset rising labor and material costs, while maintaining strong customer relationships [39][49]