AZZ Inc. Continues Geographic Expansion of North American Coatings Footprint

Rhea-AI Summary

AZZ Inc. plans to build a new aluminum coil coating facility in Washington, Missouri, near St. Louis, expected to be operational by 2025. The facility will boost capacity by over 120 million pounds annually, with 75% of the volume already secured through long-term customer contracts. Projected sales of at least $60 million by 2026 are anticipated, supported by existing credit facilities and lease agreements. The development will create over 80 jobs and is a strategic move for AZZ's growth in the coatings market.

Positive

• New aluminum coil coating facility expected to enhance production capacity by over 120 million pounds annually.
• 75% of the production volume secured through firm customer commitments.
• Projected sales of at least $60 million by 2026, contributing positively to financial growth.
• Creation of over 80 skilled jobs in the local area.

Negative

• None.

Greenfield aluminum coil coating facility to be constructed near St. Louis, Missouri

New facility will primarily serve the aluminum coil coating market

Completion expected by 2025 adding over 120 million pounds of annual capacity

Firm contractual customer commitments for 75% of volume

Expect sales of at least $60 million by 2026

FORT WORTH, Texas, Nov. 11, 2022 /PRNewswire/ -- AZZ Inc. (NYSE: AZZ), the leading independent provider of hot-dip galvanizing and coil coating solutions, today 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 be operational in 2025.  Upon completion, AZZ Precoat Metals will operate a network of 14 facilities including 16 coating lines and 19 value-added processing lines, adding to their industry leading capacity and capability. AZZ Precoat Metals has secured long-term contractual customer commitments for over 75% of the new capacity.  

Tom Ferguson, Chief Executive Officer of AZZ Inc., commented; "The addition of the Washington coil coating facility with state-of-the-art equipment and technology will strengthen Precoat's position to effectively serve the growing aluminum market. This project was contemplated in our strategic rationale for acquiring Precoat Metals earlier this year and is a key element of our growth roadmap for the coil coating segment.   Aluminum coil coating is an important strategic initiative for AZZ, benefitting from secular sustainability tailwinds.  We are dedicated to expanding our coatings capabilities, addressable markets, and customer base as we continue to transform AZZ into a focused coatings company.  The project will not have a material impact on AZZ's debt leverage nor our previously stated goal of 3.0x debt leverage by 2024.  The capital structure makes use of approximately $60 million in progress payments over the estimated two-year construction timeline from existing credit facilities. An additional $50 million in related operating lease agreements will not require payment until lease commencement." 

"I would like to thank both the City of Washington and the State of Missouri for providing a compelling incentive package. Given the planned ramp in contracted volumes, we expect sales of at least $60 million by 2026 with an EBITDA margin that nicely exceeds the fleet average for Precoat and is well above AZZ's internal rate of return.  I am confident that Kurt and his team will bring the production facility online by 2025, given their demonstrated ability to execute prior major investments," concluded Mr. Ferguson. 

Kurt Russell, President & Chief Operating Officer of AZZ Precoat Metals, commented; "We selected the Washington location due to the growing economic development occurring in the area.  Additionally, the close proximity to our existing operations ensures local engineering and operational resources will be available for a timely startup.  We are pleased to secure a location with several logistical advantages ideally situated for our valued customer base."  Upon completion, the new facility is expected to generate over 80 skilled jobs for the area. Mr. Russell added, "I want to thank both the City of Washington and the State of Missouri for partnering with us through both the Missouri Works and Missouri One Start programs on this exciting project.  We are pleased to invest in and be a part of Washington's future."

About AZZ Inc.
AZZ Inc. is the largest 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. 

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 press release 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; supply-chain vendor delays; customer requested delays of our products or services; delays in additional acquisition or disposition opportunities; currency exchange rates; 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, 2022, and other filings with the Securities and Exchange Commission ("SEC"), available for viewing on AZZ's website at www.azz.com and 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.

Company Contact: 
David Nark, Vice President of Marketing and Communications and Investor Relations
AZZ Inc.
(817) 810-0095
www.azz.com

Investor Contact:
Joe Dorame, Managing Partner
Lytham Partners
(602) 889-9700
www.lythampartners.com

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SOURCE AZZ Inc.