AZZ Inc. plunges after depressed energy markets impact quarterly results
Shares of AZZ Inc. (AZZ), which provides galvanizing and welding services to the power generation, transmission, distribution, and industrial market, are sharply lower after the company reported quarterly results that drastically missed analyst estimates for the quarter. WHAT'S NEW: Amidst a depressed oil market, the company reported adjusted earnings per share of 55c on revenue of $195M. Both EPS and revenue came in below consensus estimates of 71c for EPS and $222M for revenue. Tom Ferguson, president and chief executive officer of AZZ, noted that Q2 results were "disappointing," as revenue was impacted from a persistent "effect of depressed markets in oil and gas petrochemical, and solar for its Galvanizing segment." The CEO continued, "Our Energy segment experienced reduced refinery turnarounds and maintenance spend during the second quarter, as well as the continuing effects of the oil and gas market, coupled with a tough year-over-year comparison in our Nuclear Logistics business due to a large shipment of a $14M project." In order to counter the headwinds the company is facing, AZZ decided to implement a cost reduction realignment that "will drive $6.2M of cost benefits on an annualized basis. Citing volume declines in its Galvanizing segment the company will reduce capacity in the Southern U.S. by closing production at two of its galvanizing plants, and repurposing a third plant from standard galvanizing to the new galvanized rebar product line. WHAT'S NOTABLE: The company anticipates FY17 fiscal performance to "fall slightly" below its previously issued fiscal 2017 EPS guidance range of $3.15 to $3.45 and revenue guidance range of $930M to $970M. The company also decided to suspend guidance for a short window to gain more clarity on issues that will effect EPS and sales for the year. PRICE ACTION: Shares of AZZ are down 10%, or $6.54, to $58.61 per share in afternoon trading, which is improved from the earlier low of $56.29.