AZZ Inc. (AZZ) topped market estimates on revenue for the third quarter of 2019 but missed expectations on earnings. The stock dropped 2.2% in premarket hours on Tuesday.
Strength in the Energy segment drove revenue and earnings growth during the quarter. Consolidated revenue rose 15.1% to $239.5 million. The company reported a net income of $15.4 million, or $0.59 per share, compared to a net loss of $0.2 million, or $0.01 per share, in the prior-year period.
Consolidated bookings grew 17.5% to $211.3 million compared to the year-ago period. Backlog at quarter-end rose 8.7% to $307.8 million versus last year.
Revenues in the Energy segment grew 23.4% to $132 million in the quarter. Market demand improved, particularly in the industrial sector, as turnarounds and outages returned to more normal levels.
In the Energy segment, Welding Solutions saw momentum during the quarter, executing on several domestic and international projects. The industrial and electrical served markets improved versus the prior year and the demand for specialty welding remains healthy both domestically and internationally. In the Metal Coatings segment, revenues grew 6.3% to $107.5 million.
Tom Ferguson, President and CEO said, “We believe zinc costs should begin to recede by the fourth quarter of the year, and we have taken the necessary steps to close two underperforming galvanizing plants during the year. Although zinc costs, sequentially, were down slightly from the second quarter, we expect a steeper reduction in the fourth quarter. Further, we are taking steps to improve labor productivity and are confident our Digital Galvanizing System initiative will allow us to realize greater operational efficiency and productivity as we enter fiscal year 2020. AZZ remains the industry leader in North America with 40 galvanizing plants, and continues to pursue growth through organic and inorganic channels.”
AZZ narrowed its guidance for fiscal year 2019 and now expects EPS to come in the range of $1.95 to $2.20 versus the previous range of $1.90 to $2.25. The company expects sales to come in the range of $940 million to $960 million versus the prior range of $930 million to $970 million.