On this page of StockholderLetter.com we present the 5/30/2023 shareholder letter from AZZ INC — ticker symbol AZZ. Reading current and past AZZ letters to shareholders can bring important insights into the investment thesis.

 •  5/30/2023 Letter Continued (Full PDF)
 •  5/28/2024 AZZ Stockholder Letter
 •  5/27/2025 AZZ Stockholder Letter
 •  More "Metals Fabrication & Products" Category Stockholder Letters
 •  AZZ Benford's Law Stock Score = 96

AZZ 5/30/2023 Shareholder/Stockholder Letter Transcript:

Fiscal Year 2023 Annual Report

A Stronger,
More
Sustainable
and More
Focused
Company.
TO OUR
SHAREHOLDERS,
CUSTOMERS,
PARTNERS, AND
EMPLOYEES:
For the period ended February 28, 2023, results from continuing operations included sales of $1.3 billion and
net income of $86.9 million, or $3.48 per diluted share, on an adjusted basis. Of the total net sales for fiscal
year 2023, approximately 52% were generated from the Precoat Metals Segment and approximately 48%
were generated from the Metal Coatings Segment. Net cash provided by operating activities for fiscal 2023
was $91.4 million, as compared to $60.6 million for fiscal 2022. Adjusted diluted earnings per share increased
by 55.4% to $3.48 per share for fiscal year 2023, compared to adjusted diluted earnings per share of $2.24
per share in fiscal 2022. We continued to return value to shareholders through both the payment of
common stock dividends totaling $16.9 million, as well as preferred dividends totaling $5.8 million during fiscal 2023.
AZZ has a developed strategy and periodically reviews the strategy against performance, opportunities, market conditions and competitive threats.
During fiscal year 2023, we executed upon the following strategic actions which we believe will accelerate our strategy to become predominantly a
metal coatings focused company, and will more rapidly enhance shareholder value.
On May 13, 2022, AZZ acquired all right, title, and interest in, Sequa Mezzanine Holdings L.L.C, a Delaware limited liability company for approximately
$1.3 billion. As part of the acquisition, AZZ acquired the Precoat Metals division from the Seller, which engages in the business of applying protective
and decorative coatings and films for continuous steel and aluminum coil through a network of 13 strategically located facilities throughout North
America. The acquisition supported our strategic goal of continued geographic expansion as well as portfolio expansion of our metal coatings
solutions.
On September 30, 2022, AZZ contributed our AZZ Infrastructure Solutions (   AIS   ) business, excluding AZZ Crowley Tubing, to a joint venture
and sold a 60% interest in the joint venture to Fernweh AIS Acquisition LP., at an implied enterprise value of $300 million. The agreement to divest
a controlling stake in AIS to Fernweh represents the continued transition of AZZ into a focused industry-leading provider of metal coating solutions.
On November 11, 2022, AZZ announced its plan to construct a new aluminum coil coating facility, complete with value-added downstream
processing, near St. Louis, Missouri. The 25-acre facility will be located in the new Oldenburg Industrial Park in Washington, Missouri and is expected
to generate over 80 skilled jobs when it becomes operational in 2025. The addition of the Washington coil coating facility with state-of-the-art
equipment and technology will strengthen AZZ   s position to effectively serve the growing aluminum market.
As of February 28, 2023, we employed approximately 3,837 people worldwide, of which 3,594 were employed in the U.S. and 243 were employed
in Canada. This workforce consisted of approximately 85% hourly employees and 15% salaried employees.
For fiscal year 2024, AZZ will continue to execute on strategic growth objectives that drive shareholder value. AZZ   s products and solutions are
critical to sustainable infrastructure. Our commitment to superior customer service is unwavering. We produce great margins and solid financial
returns, as well as generate free cash flow by delivering outstanding value to our customers, emphasizing operational excellence, and continuing to
innovate and develop our people and technology. We will drive sales expansion through organic growth and are committed to margin expansion
and cash flow generation to fund our growth strategy. We will continue to focus on driving performance and financial results that maximize longterm shareholder value.
Dan Feehan
Chairman of the Board
Tom Ferguson
President and Chief Executive Officer

AZZ AT A GLANCE
(in millions)
1,324
Net Sales
SELECT FINANCIAL INFORMATION
(in thousands, except per-share data and percentages)
For the four fiscal years
ending February 28/29
Net sales
2021
2022
2023(1)
$ 1,061,817 $ 838,917
$ 902,664
$ 1,323,649
84,022
66,339
2020
Net income
48,234
39,614
$1300
1200
1100 1,062
1000
900
839
800
700
600
500
400
300
200
100
0 2020 2021
903
2022
2023
66
Net Income
84
Earnings per share:
Basic earnings per common share
$80


2.34
70
1.84 $
1.53 $
3.38
Diluted earnings per common share
1.84
1.52
3.35
2.33
50
Return on shareholders    equity
7.6%
6.4%
12.6%
7.8%
40
Pretax profits to sales
6.1%
6.1%
11.8%
6.7%
Net income to sales
4.5%
4.7%
9.3%
5.0%
60
48
40
30
Total Assets
$ 1,073,831 $ 999,227
$ 1,133,028
$ 2,221,479
20
10
0
202,878
178,419
226,484
1,058,120
Total liabilities
439,465
375,935
465,663
1,368,019
Shareholders    equity
634,366
623,292
667,365
853,460
120
Debt-to-equity ratio
0.32 to 1
0.29 to 1
0.34 to 1
1.24 to 1
100
1.3 to 1
2.6 to 1
2.6 to 1
2.2 to 1
80
91,430
60
40
Cash provided by operations
$ 142,310 $
92,035 $
86,010

Capital expenditures
32,595
37,079
28,405
57,120
Basic average shares outstanding
26,191
25,897
24,855
24,828
2021
2022
Cash Provided
by Operations
Debt
Current ratio
2020
$140
2023
91
142
92
86
20
(1) FY2023 based on continuing operations
0
2020
2021
2022
2023

SERVING THE
GROWING
NEEDS OF CRITICAL
INFRASTRUCTURE
AZZ Inc. is the leading independent
provider of hot-dip galvanizing and
coil coating solutions to a broad range
of end-markets. Collectively, our
business segments provide sustainable,
unmatched metal coating solutions that
enhance the longevity and appearance
of buildings, products and infrastructure
that are essential to everyday life.
Our comprehensive capabilities create
enduring infrastructure for constructing
a stronger, safer, and more sustainable
world.

METAL COATINGS
North America   s leading galvanizer
The Metal Coatings segment provides hot-dip galvanizing, powder coating, anodizing and plating, and other surface coating applications to steel
fabrication and other industries through facilities located across the United States and Canada. Hot-dip galvanizing is a metallurgical process in
which molten zinc is applied to steel. The zinc alloying renders corrosion protection to fabricated steel for extended periods of up to 75 years.
As of February 28, 2023, we operated 41 hot-dip galvanizing plants and 6 Surface Technologies plants in various locations throughout the United
States and Canada.
    HOT-DIP
GALVANIZING
    SURFACE
TECHNOLOGIES
PRECOAT METALS
North America   s leading provider in metal coil coating solutions
The Precoat Metals segment engages in the advanced application of protective and decorative coatings and related value-added services for
steel and aluminum coil primarily serving the construction, appliance, heating, ventilation and air conditioning (HVAC); container; transportation,
and other end markets. Precoat Metals has approximately 1,100 employees and operates a network of 13 strategically located manufacturing
facilities with 15 coating lines and 17 value-added processing lines.
ating
    COIL COATING



 5/30/2023 Letter Continued (Full PDF)