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In Transition: Changes ahead for rapidly growing AZZ

 

Marice Richter

Business Press Correspondent

AZZ incorporated is undergoing a transformation. The Fort Worth-based company, a manufacturer of electrical products and a provider of galvanizing services, is growing and will
transition to new leadership over the next year.
But the company announced in June that net income for the fiscal first quarter of 2014 was down 9 percent from the same quarter last year. The company reported first-quarter income of $14.5 million compared with $16 million a year ago.
However, revenue for the period rose 44 percent, to $183.2 million in this year’s first quarter from $127.1 million a year ago.
Company officials attributed its earnings fluctuations to losses from a fire at a plant in Joliet, Ill., a favorable settlement of a lawsuit and “significant expenditures” tied to recent acquisitions, according to the report.
The acquisitions of NLI in June 2012 and Aquilex Specialty Repair and Overhaul in April 2013 contributed $59 million to the revenue for the Electrical and Industrial Products and Services segment, which was reported at $96.5 million compared with $44.7 million in the first quarter last year. The acquisitions contributed $7.5 million to operating income for the first quarter, according to the earnings report.
First-quarter revenue for AZZ’s Galvanizing Service segment increased 5 percent to $86.7 million compared with $82.5 million during the same period last year. Operating income rose 13.5 percent, to $25.7 million from $22.6 million.
“We are extremely pleased with our accomplishments for the first quarter of fiscal ‘14, both strategically and operationally,” said David Dingus, president and CEO of AZZ. “Our first quarter continued to reflect solid operational performance as we continued to take organic actions to further position us for growth, as well as continued our assimilation of our recent acquisitions that are an integral part of our stated strategies for both of our segments.”
But with the earnings announcement, Dingus said he plans to retire on March 1 due to health issues. Dingus, who joined the company in 1998 and has been CEO since 2001, expressed his interest in remaining on the board of directors.
After accepting Dingus’ plans, the board appointed a committee to conduct a nationwide search for his successor.
After Dingus’ announcement, the board of directors also recently reorganized. H. Kirk Downey stepped down as chairman and board member Kevern Joyce moved into that role. Downey, who has served on the board for 21 years and as chairman for 10 years, will remain as a board member.
AZZ, which is on Forbes’ list of America’s Best Small Companies, is a specialty electrical equipment manufacturer that provides power generation, transmission and distribution to industrial markets around the world. The 57-year-old company is also a leading provider of hot dip galvanizing services to the North American steel fabrication market.
Company officials said AZZ is optimistic about its growth and continuing demand for its products and services.
“The balance sheet remains strong and we believe it is one of our core strengths and, along with our strong cash flow characteristics, provides us with adequate flexibility to continue our growth of our company,” said Dana L. Perry, chief financial officer, senior vice president of finance, secretary and director.

INDUSTRY
INSIGHT

Taking a dip
Hot dip
galvanizing is
a metallurgical
process in which molten zinc is
applied to a
customer’s
material. The zinc bonding renders corrosion protection to fabricated steel for up to 50 years.
 

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