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AZZ (AZZ) Risk Analysis
Risk Overview Q3, 2026
Risk Change Over Time
- Share Price & Shareholder Rights - Risk 1Blackstone may sell shares of our common stock in the public market, which may cause the market price of our common stock to decrease, and therefore make it more difficult to raise equity financing or issue equity as consideration in an acquisition.
Our registration rights agreement with Blackstone requires us to register all shares of common stock held by Blackstone and its permitted transferees issuable upon conversion of the Series A Preferred Stock under the Securities Act, which we completed on November 4, 2022. The registration rights for Blackstone allow Blackstone to sell its shares without compliance with the volume and manner of sale limitations under Rule 144 promulgated under the Securities Act, and facilitates the resale of such securities into the public market. The market value of our common stock could decline as a result of sales by Blackstone from time to time. In particular, the future sale of a substantial number of the shares of our common stock by Blackstone within a short period of time, or the perception that such sale might occur, could cause our stock price to decrease, make it more difficult for us to raise funds through future offerings of our common stock or acquire other businesses in the future using our common stock as consideration for the purchase price.
- Share Price & Shareholder Rights - Risk 2Shares of common stock issuable upon conversion of our Series A Preferred Stock will be dilutive to our existing shareholders upon conversion and adversely affect the market price of our common stock.
As of February 29, 2024, we had outstanding 240,000 shares of Series A Preferred Stock with an aggregate liquidation preference of approximately $312.5 million. As of February 29, 2024, shares of Series A Preferred Stock are convertible into 4.1 million shares of common stock. The issuance of common stock upon conversion of the Series A Preferred Stock would result in immediate dilution to existing holders of our common stock. Further, the Series A Preferred Stock ranks senior to our common stock, which could affect the value of the common stock on liquidation or on a change in control transaction.
- Share Price & Shareholder Rights - Risk 3The Series A Preferred Stock has a liquidation preference and redemption amount significantly in excess of the carrying amount of the Series A Preferred Stock.
The 6.0% Series A Convertible Preferred Stock ("Series A Preferred Stock") has a liquidation preference equal to the greater of (i) the aggregate principal amount of $240.0 million (the "Series A Base Amount") plus accrued but unpaid dividends and (ii) the amount that would have been received had the shares of Series A Preferred Stock been converted immediately prior to liquidation (or other event giving rise to the payment). As of February 29, 2024, the holders of the shares of Series A preferred stock were entitled to a liquidation preference of approximately $312.5 million, in the event of any liquidation, dissolution or winding up of the Company as of such year end. If the Company undergoes a change of control, bankruptcy, insolvency, liquidation or de-listing of the Company's common stock (a "Fundamental Change Event"), holders of Series A Preferred Stock may elect to (i) receive the as-converted value of the Company's common stock at the then-current Conversion Price, (ii) require the Company to redeem the Series A Preferred Stock in cash for the Redemption Amount (as defined below) or (iii) if a non-cash change of control, retain their shares of Series A Preferred Stock. The Company will have the right to redeem the Series A Preferred Stock at a price equal to the greater of (i) the Series A Base Amount plus accrued but unpaid dividends; (ii) the initial Series A Base Amount (excluding any prior PIK dividends) multiplied by the Return Factor less all dividends paid through the redemption date; or (iii) the amount the holder of such share of convertible preferred stock would have received had such holder, immediately prior to such redemption date, converted such shares of convertible preferred stock into common shares (such greater amount, the "Redemption Amount"). The redemption price under option (ii) contains a "Return Factor," which will be equal to 1.4 until May 13, 2024 and, (a) in each of the three years thereafter, will increase by 0.15, (b) will increase by an additional 0.15 after May 13, 2024 (the second anniversary of the issuance date of the Series A Preferred Stock) if (i) the Company's ratio of net debt to earnings before interest, taxes, depreciation and amortization ("EBITDA") (as defined in the May 13, 2022 Credit Agreement) on the second anniversary of the issuance date of the Series A Preferred Stock is greater than 3.5-to-1 and (ii) prior to May 13, 2024, the Company has not consummated dispositions of assets that, in the aggregate, resulted in proceeds in excess of $200.0 million and (c) will increase by an additional 0.20 on May 13, 2028, (the sixth anniversary of the issuance date of the Series A Preferred Stock) and each anniversary thereafter. The redemption price under option (iii) is subject to provisions of the Certificate of Designation that limits the Company's right to redeem to the period following the two year anniversary of the initial issuance, limits the quarterly conversion to up to 25% of the number of shares of convertible preferred stock outstanding, and requires the Company's market price per share of common stock to exceed 185% of the conversion price. As of February 29, 2024, the Redemption Amount for the Series A Preferred stock was $312.5 million. Should the Company exercise its right to redeem the Series A Preferred stock, net income and net income per share available to common shareholders would be reduced, as the excess of the Redemption Amount over the carrying value of the Series A Preferred Stock would be paid to the Series A Preferred stockholders as an additional dividend, which would result in decreased net income available to common stockholders and earnings per share.
Risk Highlights Q3, 2026
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 35
- Share Price & Shareholder Rights - Risk 1The market price and trading volume of our common stock may be volatile.
The market price of our stock may be influenced by many factors, some of which are beyond our control, including the following: - the inability to meet the financial estimates of analysts who follow our common stock;- investor perceptions of the investment opportunity associated with our Company relative to other investment alternatives;- strategic actions by us or our competitors;- announcements by us or our competitors of significant contracts, acquisitions, joint marketing relationships, joint ventures or capital commitments;- variations in our quarterly operating results and those of our competitors;- general economic and stock market conditions;- risks relating to our business and our industry, including those discussed above;- changes in conditions or trends in our industry, markets or customers;- cyber-attacks, terrorist acts or armed hostilities;- future sales of our common stock or other securities;- repurchases of our outstanding shares; and - material weaknesses in our internal control over financial reporting. These broad market and industry factors may materially reduce the market price of our common stock, regardless of our operating performance.
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