Wednesday, January 08, 2025
Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Third quarter financial results. For the fiscal year (FY) 2025, AZZ reported third quarter adjusted net income of $41.9 million or $1.39 per share compared to $34.8 million or $1.19 per share during the prior year period and our estimate of $37.7 million or $1.25 per share. Compared to the prior year period, sales increased 5.8% to $403.6 and exceeded our estimate of $398.5 million. AZZ generated a 24.2% gross margin as a percentage of sales compared to 23.1% during the prior year period and our estimate of 23.3%. Adjusted EBITDA increased 5.0% to $90.7 million, above our estimate of $86.1 million, representing 22.5% of sales versus 22.6% of sales during the third quarter of FY 2024. AZZ narrowed the range of its FY 2025 sales guidance range to $1.550 billion to $1.600 billion, lifted the lower end of adjusted EBITDA to a range of $340 million (from $320 million) to $360 million, and increased adjusted diluted EPS expectations to a range of $5.00 to $5.30 from $4.70 to $5.10.
Debt reduction. During the first nine months of FY 2025, AZZ generated operating cash flow of $185.6 million and reduced debt by $80 million and expects full year debt reduction to exceed $100 million. At quarter end, the company’s net leverage was 2.6 times trailing twelve months EBITDA, and cash and cash equivalents amounted to $1.5 million.
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