Why AZZ Inc (NYSE: AZZ) stock is rising

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AZZ Inc (NYSE: AZZ) stock rose 2.5% on 10 Oct, (as of 10:27 AM GMT-4 ; Source: Google finance) post a decent second quarter of 2019. Net income for the second quarter increased 14.9% to $11.2 million, compared to net income of $9.8 million, for the second quarter of fiscal year 2018. Gross margins for the second quarter of fiscal year 2019 were 21.1% compared to 22.3% in the second quarter of last year.  Operating margins were 7.7% compared to 8.9% the second quarter of fiscal year 2018 as SG&A as a percentage of sales fell to 13.4% of sales compared to 13.5% of sales in the prior year. Additionally, the effective tax rate decreased to 19.6% in the current quarter compared to 28.7% in the second quarter of the prior year.

AZZ in the second quarter of FY 19 has reported the adjusted earnings per share of 43 cents, missing the analysts’ estimates for the adjusted earnings per share of 47 cents. The company had reported the adjusted revenue growth of 13.5 percent to $222.8 million in the second quarter of FY 19, missing the analysts’ estimates for revenue of $227.99 million. Incoming orders for the quarter were $253.9 million while revenues for the quarter totaled $222.8 million, resulting in a book to revenue ratio of 1.14.  In the second quarter of fiscal year 2018 incoming orders were $190.1 million, resulting in a book to revenue ratio of 0.97. Our backlog at the end of the second quarter of fiscal year 2019 increased 12.0% to $336.0 million compared to $300.1 million for the second quarter of last year. Approximately 54% of the current backlog is expected to be delivered outside the U.S., compared to 42% in the second quarter of fiscal year 2018.

Moreover, the revenues for the Energy segment for the second quarter of fiscal year 2019 were $106.5 million as compared to $97.3 million for the same quarter last year, an increase of 9.5%. Gross profit rose 22.1% to $21.2 million compared to $17.3 million for the same period last year, with gross margins of 19.9% for the second quarter of fiscal year 2019 compared to 17.8% in the prior year. The revenues for the Metal Coatings segment for the second quarter of fiscal year 2019 were a record $116.3 million, compared to the $99.0 million for the same period of last year, an increase of 17.4%. Gross profit fell 2.7% to $25.8 million from $26.5 million in the same quarter last year as a result of $1.3 million of charges taken to consolidate two galvanizing plants into one, driving gross margins of 22.1% compared to 26.7% in the same quarter last year.

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