FORT WORTH, Texas, Jan. 9, 2018 /PRNewswire/ -- AZZ Inc. (NYSE:
AZZ), (the "Company"), a global provider of metal coating services,
welding solutions, specialty electrical equipment and highly
engineered services, today announced upon the recommendation of the
Company's management and in consultation with the Company's Audit
Committee and the Company's independent registered public
accounting firm, BDO USA, LLP, on
January 4, 2018 determined that the
Company historically should have accounted differently for certain
contracts within its Energy Segment. As disclosed in the Company's
2017 Annual Report on Form 10-K, revenue was historically
recognized for the Energy Segment upon transfer of title and risk
to customers or based upon the percentage of completion method of
accounting for electrical products built to customer
specifications. The Company has determined that, in the case of
contracts for which revenue was recorded upon contract completion
and transfer of title, the Company instead should have applied the
percentage of completion method. The FASB's Accounting Standards
Codification 605-35-25-92 notes that "the completed contract method
may be used as an entity's basic accounting policy in circumstances
in which financial position and results of operations would not
vary materially from those resulting from use of the
percentage-of-completion method (for example, in circumstances in
which an entity has primarily short-term contracts)." In general,
the percentage-of-completion method results in a revenue
recognition pattern over time as a project progresses as opposed to
deferring revenues until project completion under the completed
contract method.
As a result, the Company is currently reviewing whether its
historical accounting for these contracts differs materially from
the percentage-of-completion method and if there are any
significant impacts to the Company's audited consolidated financial
statements for the fiscal years ended February 28, 2015 and 2017, and the fiscal year
ended February 29, 2016, as contained
in its 2017 Annual Report on Form 10-K and the previously issued
unaudited financial statements contained in its Quarterly Reports
on Form 10-Q for the quarters ended May 31,
2017 and August 31, 2017. The
analysis is ongoing, and the Company cannot yet estimate when it
will be completed. However, the Company is working diligently and
expeditiously to complete the review and will provide any updates
when and if they become available. Accordingly, the Company cannot
yet conclude upon the materiality of any potential adjustments. As
the review is ongoing, the Company is currently unable to file its
Quarterly Report on Form 10-Q for the quarter ended November 30, 2017. The Company expects to file a
Form 12b-25, Notification of Late Filing, with the Securities and
Exchange Commission regarding the delayed filing.
Updates Guidance
Although the Company will not be filing its Quarterly Report on
Form 10-Q for the quarter ended November 30,
2017, it is updating its current earnings per share guidance
for its fiscal year 2018 in the range of $1.80 - $2.30 per
share which, as noted below, includes an expected one-time tax
benefit. The Company is also reaffirming its current revenue
guidance of $825 to $885 million.
It should be noted that the Company currently anticipates a
significant one-time, non-cash income tax benefit in the fourth
quarter of fiscal year 2018 related to a potential decrease in the
value of our net deferred tax liabilities as a result of the Tax
Cuts and Jobs Act of 2017 (the "Act") signed by the President of
the United States in December 2017. In particular, the Act decreases
the federal statutory income tax rate for corporations effective
January 1, 2018 from 35% to 21%. The
precise impact of the Act on our consolidated financial statements
and related disclosures for fiscal 2018 and beyond cannot be
determined with certainty at this time, in large part because
Treasury Regulations related to the Act have not yet been issued,
and we will continue to review the components of the Act and its
related regulations and evaluate their impact to our consolidated
financial statements and related disclosures for fiscal year 2018
and beyond.
Further, the Company believes that, without this anticipated
benefit from the revaluation of the net deferred tax liabilities
(or in the event this anticipated benefit is smaller than
expected), the full year earnings per share would fall somewhat
below the current guidance due to several market-based factors,
including the effects of Hurricane Harvey on the U.S. refinery
turnaround market, the recent cancellation of the Vogtle Bridge
agreement related to ongoing work in the Plant Vogtle nuclear power
plant, and the effects of a change in scope on a large China project for High Voltage Bus.
About AZZ Inc.
AZZ Inc. is a global provider of metal coating services, welding
solutions, specialty electrical equipment and highly engineered
services to the markets of power generation, transmission,
distribution and industrial in protecting metal and electrical
systems used to build and enhance the world's infrastructure. AZZ
Metal Coatings is a leading provider of metal finishing solutions
for corrosion protection, including hot dip galvanizing to the
North American steel fabrication industry. AZZ Energy is dedicated
to delivering safe and reliable transmission of power from
generation sources to end customers, and automated weld overlay
solutions for corrosion and erosion mitigation to critical
infrastructure in the energy markets worldwide.
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. This release may
contain forward-looking statements that involve risks and
uncertainties including, but not limited to, changes in customer
demand and response to products and services offered by AZZ,
including demand by the power generation markets, electrical
transmission and distribution markets, the industrial markets, and
the hot dip galvanizing markets; prices and raw material cost,
including zinc and natural gas which are used in the hot dip
galvanizing process; changes in the political stability and
economic conditions of the various markets that AZZ serves, foreign
and domestic, customer requested delays of shipments, acquisition
opportunities, currency exchange rates, adequacy of financing, and
availability of experienced management and employees to implement
AZZ's growth strategy. 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, 2017 and other filings with the 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.
Contact:
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Paul Fehlman, Senior
Vice President - Finance and CFO
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AZZ Inc.
817-810-0095
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Internet:
www.azz.com
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Lytham Partners
602-889-9700
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Joe Dorame, Robert
Blum or Joe Diaz
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Internet:
www.lythampartners.com
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