AZZ to sell electrical products unit to nVent for $975 million

FORT WORTH, Texas - AZZ Inc. (NYSE: AZZ), a global provider of metal coating solutions with a market capitalization of $2.68 billion and strong financial health according to InvestingPro, announced Monday that its joint venture Avail Infrastructure Solutions (AIS) has agreed to sell its Electrical Products Group to nVent Electric plc (NYSE: NVT) for $975 million. The transaction, which includes electrical enclosures, switchgear, and bus systems, is expected to close in the first half of 2025, subject to customary conditions.

The sale marks AZZ’s strategic shift towards focusing on its core metal coatings business, which has shown robust performance with a 5.63% revenue growth over the last twelve months. AZZ holds a 40% stake in AIS, with the remaining 60% owned by Fernweh Group LLC. According to InvestingPro’s analysis, AZZ maintains strong liquidity with a current ratio of 1.77, suggesting solid operational efficiency. Post-sale, AZZ will retain its interest in AIS’s remaining operations, which include the Industrial Lighting and Welding Solutions Businesses.

Tom Ferguson, CEO of AZZ, stated that the divestiture aligns with the company’s transition to a focused industry leader in metal coatings. He emphasized that the proceeds would be used to reduce debt or fund potential mergers and acquisitions. The company, which InvestingPro data shows has maintained dividend payments for 16 consecutive years, assured that the transaction would not affect AZZ’s fiscal year 2026 earnings guidance, with analysts projecting EPS of $5.22 for FY2025. The debt reduction will be significantly higher than previously announced, potentially improving the company’s current debt-to-equity ratio of 0.88.

Fernweh Group’s CEO, Nick Santhanam, expressed confidence in nVent as the right entity to foster the Electrical Products Group’s growth, citing their strength in the electrical infrastructure market.

The sale is anticipated to have a multiple of approximately 12.5 times the Electrical Products Group’s trailing twelve-month EBITDA. Despite the divestiture, the management of AZZ believes that the company’s financial performance will remain robust, with the net gain from the sale treated as a one-time adjustment to net income and earnings per share.

This press release contains forward-looking statements and non-GAAP financial measures, which management believes provide a clearer understanding of AZZ’s performance. However, such measures should be considered supplementary and not a substitute for financial information prepared in accordance with GAAP. For comprehensive analysis and detailed metrics, investors can access AZZ’s full Pro Research Report, available exclusively on InvestingPro, which provides deep-dive analysis and actionable insights on this and 1,400+ other US stocks. The information in this article is based on a press release statement.

In other recent news, AZZ Inc. reported impressive financial results for its fiscal third quarter of 2024, surpassing earnings expectations. The company achieved an earnings per share (EPS) of $1.39, exceeding the forecasted $1.25, with revenue rising by 5.8% year-over-year to $404 million. This growth was driven by strong performance in the Metal Coatings and Precoat Metals segments. Additionally, AZZ Inc. announced a successful repricing of its $400 million Senior Secured Revolving Line of Credit, which will lower interest costs and fees. Roth/MKM analysts have initiated coverage of AZZ Inc. with a Buy rating, setting a price target of $108.00, citing expected steady growth and operational efficiencies. The analysts also highlighted AZZ’s potential for increased free cash flow and strategic investments. These developments reflect AZZ Inc.’s robust financial health and strategic initiatives aimed at supporting future growth.

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