AZZ CEO pleased with FY08 results

Will Atkinson | Apr 04, 2008 3:02pm EDT | Comment

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AZZ Inc. (NYSE:AZZ) CEO David Dingus said he is pleased with the electrical equipment maker’s fiscal 2008 results. Dingus made the comments during a midday conference call.

“The aggressive steps we’ve taken seeking new domestic and international market opportunities, improving our distribution channels, lowering our cost structure, increasing our pricing levels, and improving operating efficiencies are all reflected in our improved operating results,” Dingus said. “We set another record year both in earnings and sales.”

In a statement, Fort Worth, Texas-based AZZ said it projects 2009 earnings to range from $2.28 to $2.41 per share, above its previous guidance range of $2.20 to $2.30 per share. A profit of $2.50 per share is the consensus estimate of Wall Street analysts for fiscal 2009. The company expects 2009 revenue of between $365 million and $380 million, compared with a previous range of $320 million to $330 million. Analysts expect $358 million.

Before Friday’s opening, AZZ reported fourth-quarter net income of $7.3 million, or $0.60 per share, up 4% from $7 million, or $0.58 per share, a year earlier. Wall Street analysts expected earnings of $0.59 per share.

“We continue to benefit from strong market conditions, favorable product mix and expanded served markets,” Dingus said. “International opportunities continue to play an important role in our growth potential and backlog recovery.”

Quarterly revenue for the three months ended Feb. 29 declined 4% to $76.6 million from $79.6 million during the year-ago period. The revenue results missed analysts’ expectation of $89 million in revenue.

AZZ managed to lower its cost of sales 6% to $56.7 million from $60.6 million during the year-ago period. However, the company’s selling, general and administrative expenses rose 14% to $8.4 million from $7.4 million a year earlier.

Electrical and industrial product sales declined 10% to $41.7 million from $46.4 million during the same period of 2007. Slower-than-expected international orders hurt the segment’s sales, AZZ said in a statement.

“The fourth-quarter backlog, while remaining strong, was down when compared to the second and third quarter as anticipated and has been forecast,” Dingus said. “The timing of international orders has had an adverse impact on our backlog.”

The chief executive said the domestic backlog compares favorably to prior periods.

“In the fourth quarter, our domestic backlog, exclusive of these large international orders, was actually up 6% and spread nicely across distributions,” Dingus said. “We just had very, very heavy shipments in the last six months of international orders and didn’t replace those with new orders. I think that’s why there’s that trend there.”

In midday trading, AZZ shares are down 15.67%, or $6.03, at $32.47. Over the last 52 weeks, shares have ranged between $22.90 and $41.58.