AZZ : Fiscal Year 2022 Third Quarter Earnings Presentation

AZZ Inc.

Q3 FY2022 Earnings Release Presentation

January 10, 2022

Q3 FY2022 EARNINGS PRESENTATION

Safe Harbor Statement

Certain statements herein about our expectations of future events or results constitute forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. Such forward-looking statements are based on currently available competitive, financial and economic data and management's views and assumptions regarding future events. Such forward-looking statements are inherently uncertain, and investors must recognize that actual results may differ from those expressed or implied in the forward-looking statements. Certain factors could affect the outcome of the matters described herein. This presentation may contain forward-looking statements that involve risks and uncertainties including, but not limited to, changes in customer demand for our products and services, including demand by the power generation markets, electrical transmission and distribution markets, the industrial markets, and the metal coatings markets. In addition, within each of the markets we serve, our customers and our operations could potentially continue to be adversely impacted by the ongoing COVID-19 pandemic, including governmental issued mandates regarding the same. We could also experience additional increases in labor costs, components and raw materials, including zinc and natural gas which are used in our hot-dip galvanizing process; delays in additional acquisition opportunities; currency exchange rates; adequacy of financing; availability of experienced management and employees to implement AZZ's growth strategy; a downturn in market conditions in any industry relating to the products we inventory or sell or the services that we provide; economic volatility or changes in the political stability in the United States and other foreign markets in which we operate; acts of war or terrorism inside the United States or abroad; and other changes in economic and financial conditions. AZZ has provided additional information regarding risks associated with the business in AZZ's Annual Report on Form 10-K for the fiscal year ended February 28, 2021 and other filings with the Securities and Exchange Commission ("SEC"), available for viewing on AZZ's website at www.azz.comand on the SEC's website at www.sec.gov. You are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward- looking statements, which are qualified in their entirety by this cautionary statement. These statements are based on information as of the date hereof and AZZ assumes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.

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Q3 FY2022 EARNINGS PRESENTATION

Q3 FY2022 Segment Performance Update

Total Q3 FY2022 Sales: $231.7 million

Metal Coatings	Infrastructure
Segment	Solutions
	Segment
$133	$98
15.4% vs. Q3 FY2021	(11.4)% vs. Q3 FY2021

Segment Updates

• Metal Coatings sales up $17.8M on strong demand for galvanizing from renewables, utility, OEM, and construction end-markets
• Completed one galvanizing acquisition in December

All references are to 3rd quarter on year over year basis

• Overall segment sales down due to:
• • Continued COVID disruptions in some international markets
  • Supply chain disruptions affecting some electrical shipments
• Infrastructure solutions backlog up $16.3M on increasing demand for electrical products
• Domestic backlog growth more than offsets reduction in China backlog

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Q3 FY2022 EARNINGS PRESENTATION

Q3 FY2022 Summary - Consolidated

Legend:

1. - Reported

1. - Adjusted

In $ millions, except per share amounts

Sales		Net Income		Diluted EPS
+2.3%		+7.0%		+11.8%

$226.6	$231.7
FY2021	FY2022

• Higher Metal Coatings segment sales
• Continued price realization

			$0.76	$0.80	$0.85
$19.7	$20.9	$21.1
			FY2021 (r)	FY2021(a)	FY2022
FY2021(r)	FY2021(a)	FY2022

• Metal Coatings continued strength	• Stronger operating income
• Lower SG&A and improved operating	• Lower interest expense from lower rates
income within Infrastructure Solutions	• Improved tax rate

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Q3 FY2022 EARNINGS PRESENTATION

Q3 FY2022 Segment Results - Metal Coatings

Legend:

1. - Reported

1. - Adjusted

In $ millions except percentages

Key Statistics

	FY2021 QTR Sales	$115.6
	Organic	$15.4
	Acquisitions	$2.4
	FY2022 QTR Sales	$133.4

Sales
+15.4%
$115.6	$133.4
FY2021	FY2022

Operating Income

	+14.1%
$28.7		$32.7
$28.4
FY2021( r )	1	FY2022
FY2021(a)

Operating Margin

	-30 bps
24.8%	24.6%	24.5%
FY2021(r)	FY2021	FY2022

Segment Summary:

• Segment sales up 15.4% from prior year on higher volumes of steel galvanized and price inflation
• End markets continuing to demonstrate strength include renewables, construction, utility, and OEM
• Overall segment operating margins relatively flat, primarily due to higher operating costs (zinc, wire, acid, energy labor) offset by operating efficiencies, productivity and value pricing

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