AZZ Inc misses Wall Street's fiscal 2Q revenue and profit forecasts, hit by merger of two galvanizing plants

AZZ Inc (NYSE:AZZ) missed Wall Street’s estimate for fiscal second-quarter profit and revenue, hit by higher labor costs and lower margins related to the merging of two galvanizing plants in the Gulf Coast region.

The Fort Worth, Texas, based company reported net income of $0.43 per share on revenue of $222.8 million for the three months ended on August 31. The results fell short of the consensus estimate of $0.47 per share on revenue of $227.99 million.

The electrical-equipment maker and metal-coating provider’s margins also fell in the fiscal second-quarter of 2019 to 19% compared with 23.6% in the fiscal quarter of 2018. The lower margins were driven by a $1.3 million charge taken in the quarter to combine two galvanizing plants into one in the Gulf Coast region.

The company also closed an underperforming galvanizing plant in West Virginia, bringing its total number of galvanizing plants in North America to 40.

READ: Azz Inc soars after fiscal 1Q earnings beat Street on strength in metal coatings and energy businesses

Elsewhere, its bookings jumped 33.6% in the quarter to $253.9 million compared to $190.1 million in the second quarter of last year. Revenue from its metal coatings segment was similarly strong, jumping to $116.3 million, compared to $99 million in the year-ago quarter. Revenues for the Energy segment, meanwhile, came in at $106.5 million, up from $97.3 million for the same quarter last year.

Looking forward, AZZ expects full-year earnings to be $1.90 to $2.25 per share, with revenue in the range of $930 million to $970 million.

“We remain somewhat cautious due the uncertainty related to tariffs and the Chinese trade situation, as well as the tighter market for labor, but are optimistic about the full year,” noted AZZ CEO Tom Ferguson in a statement.

AZZ provides metal coating services, welding, specialty electrical equipment and highly engineered services and operates via two units. Its Energy segment provides specialized products and services designed to support industrial, nuclear and electrical applications. Its Metal Coatings segment, meanwhile, provides hot dip galvanizing and other metal coating applications to the steel fabrication industry.

AZZ shares dipped 1.2% to $48.08 in Tuesday’s afternoon trading session.

Story by ProactiveInvestors