AZZ paints metal coil and rust-proofs steel for North American industry, and its plants have kept more of each sale since a debt-funded expansion. Can that continue as customers pay more slowly and cash returns to acquisitions?
The painted metal skin of a washing machine or an air-conditioning unit may have started as a flat roll of steel, painted before anyone bent it into shape. AZZ does that painting at 14 US plants, on steel and aluminum coil that customers shape into products for buildings, appliances, heating and cooling, containers and transport. Its other business coats fabricated steel with zinc so it resists rust, a process called galvanizing. Almost all its customers are in North America.
Customers pay AZZ to coat their metal, so its sales follow the amount of metal passing through its plants. Manufacturers buy coil painting because coating metal while it is flat wastes less paint and gives a finish hardened under controlled conditions. The costs that matter sit inside the plants: zinc, natural gas, steel and aluminum scrap, and the cost of running each site. Overhead such as selling and administration is a thin layer. What AZZ keeps depends on how fully its plants run and whether its prices keep up with those material and energy costs.
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