AZZ Stock Shareholders: Class Action Complaint Filed Against AZZ

AZZ Inc. Securities Class Action Lawsuit Filed on Behalf of AZZ Stock Holders 

AZZ Inc. (NYSE:AZZ)

AZZ’s Energy Segment Accounting – “Notification of Late Filing” & Form 8-K Disclosure

Kehoe Law Firm, P.C. previously reported about AZZ’s “Notification of Late Filing” regarding AZZ’s inability to file its Form 10-Q for the quarter ended November 30, 2017 without unreasonable effort or expense for the following reasons:

As previously disclosed in a Form 8-K filed with the Commission on January 9, 2018, [AZZ], upon the recommendation of [AZZ’s] management and in consultation with [AZZ’s] Audit Committee and [AZZ’s] independent registered public accounting firm, BDO USA, LLP, determined that [AZZ] historically should have accounted differently for certain contracts within its Energy Segment. As part of the review, [AZZ] is currently evaluating if there are any significant impacts to [AZZ’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 [AZZ] cannot yet estimate when it will be completed. [Emphasis added]

[AZZ] is working diligently and expeditiously towards completion of the review. However, due to the time and effort involved and the potential carryover effects of the review on future periods, [AZZ] is unable file its Quarterly Report on Form 10-Q for the quarter ended November 30, 2017 until such review is completed. [Emphasis added]

Securities Class Action Filed on Behalf of AZZ Common Stock Investors Who Purchased, or Otherwise Acquired, AZZ Stock Between April 22, 2015 and January 8, 2018, Inclusive (the “Class Period”)

On January 11, 2018, a class action complaint was filed against AZZ Inc. and certain AZZ officers in United States District Court, Northern District of Texas, Fort Worth Division, for alleged violations of the Securities Exchange Act of 1934.  The initial complaint filed in the class action lawsuit (Mullins v. AZZ, Inc., et al, No. 18-00025-Y) alleges that

. . . [t]hroughout the Class Period, [AZZ] Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about [AZZ’s] business, operations, and prospects. Specifically, [AZZ] Defendants made false and/or misleading statements and/or failed to disclose (i) that it misstated revenues for its Energy Segment for the duration of the Class Period; (ii) that it had failed to report revenues in compliance with FASB’s Accounting Standards Codification 605-35-25-92, which says 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),” (iii) that [AZZ] lacked adequate internal controls over financial reporting; (iv) that its purported efforts – over more than two years – to evaluate revenue recognition standards had been an apparent failure; and that (v) as a result of the foregoing, AZZ’s publicly disseminated financial statements were materially false and misleading. [Emphasis added]

AZZ’s Accounting Methodology – AZZ “Historically Should Have Accounted Differently for Certain Contracts Within Its Energy Segment”

On January 9, 2018, AZZ filed SEC Form 8-K with an accompanying press release, “AZZ Inc. to Review Accounting Methodology Resulting in a Delay of the Issuance of its Fiscal Year 2018 Third Quarter Form 10-Q. AZZ Inc. Updates Guidance for Fiscal 2018 Revenue and Earnings per Share,” which stated:

AZZ Inc. . . . a global provider of metal coating services, welding solutions, specialty electrical equipment and highly engineered services, today announced upon the recommendation of [AZZ’s] management and in consultation with [AZZ’s] Audit Committee and [AZZ’s] independent registered public accounting firm, BDO USA, LLP, on January 4, 2018 determined that [AZZ] historically should have accounted differently for certain contracts within its Energy Segment. As disclosed in [AZZ’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. [AZZ] has determined that, in the case of contracts for which revenue was recorded upon contract completion and transfer of title, [AZZ] instead should have applied the percentage of completion method. [Emphasis added]

Consequently, according to the press release:

. . . [AZZ] 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 [AZZ’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 [AZZ] cannot yet estimate when it will be completed. However, [AZZ] is working diligently and expeditiously to complete the review and will provide any updates when and if they become available. Accordingly, [AZZ] cannot yet conclude upon the materiality of any potential adjustments. As the review is ongoing, [AZZ] is currently unable to file its Quarterly Report on Form 10-Q for the quarter ended November 30, 2017. [Emphasis added]

Steep Decline of AZZ Stock Share Price

On the news pertaining to AZZ’s late filing, AZZ’s share price fell sharply $3.14, or 6.20%, to close at $47.50 on January 9, 2018, down from a $50.64 close on January 8, 2018.

AZZ Stock Shareholders – Purchasers or Acquirers of AZZ Stock

If you purchased, or otherwise acquired, AZZ stock shares during the Class Period April 22, 2015 through January 8, 2018, inclusive, and have questions or concerns about your potential rights or legal claims, please contact John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected], complete the form above on the right or e-mail [email protected].

Kehoe Law Firm, P.C.