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    AZZ
    Earnings call· Feb 2026(Q4 FY26)

    AZZ Q4 FY26 earnings call AZZ

    Apr 23, 2026 Source

    Executive summary

    AZZ Q4 FY26 — Record Sales and Profitability Driven by Infrastructure Demand

    AZZ closed fiscal year 2026 with record sales and profitability, driven by strong performance in Metal Coatings fueled by infrastructure investments and data center expansion. While Precoat Metals faced headwinds from residential and non-residential construction softness, the company is leveraging its diversified portfolio and digital capabilities to capture market share. Management reiterated FY27 guidance, focusing on strategic M&A and disciplined capital allocation to capitalize on secular tailwinds.

    Highlights

    5

    • Achieved record full-year sales of $1.65 billion, up 4.6% from the prior year.

    • Adjusted diluted earnings per share grew 19% year-over-year to $6.19 for the full year.

    • Fourth quarter sales increased 9.4% year-over-year to $385.1 million, supported by Metal Coatings segment growth of 25.7%.

    • Reduced debt by $385 million in FY26, ending the year with a net debt-to-EBITDA ratio of 1.4x.

    • Fourth quarter adjusted EBITDA increased to $81.3 million, up from $71.2 million in the prior year period.

    Concerns

    3

    • Precoat Metals sales declined 2.3% for the full year and 2.4% in Q4 due to industry-wide softness in residential, construction, transportation, and HVAC markets.

    • Non-residential construction is anticipated to remain subdued in fiscal year 2027 due to interest rates, geopolitical, and lingering tariff-related uncertainties.

    • Residential housing starts are expected to be flat to down low single digits in FY27, with 30-year fixed mortgage rates projected to remain above 6%.

    Guidance & targets

    8
    CategoryTargetConfidence
    Full-year sales
    $1.725 billion to $1.775 billion
    high materiality
    High
    Full-year adjusted EBITDA
    $360 million to $400 million
    high materiality
    High
    Full-year adjusted diluted EPS
    $6.50 to $7.00
    high materiality
    High
    Full-year debt reduction
    $130 million to $170 million
    medium materiality
    High
    Full-year capital expenditures
    around $90 million
    medium materiality
    Medium
    Metal Coatings segment growth
    mid-single to upper single digits
    medium materiality
    High
    Precoat Metals segment growth
    relatively flat
    medium materiality
    High
    Washington, Missouri facility production
    around 45,000 to 50,000 tons
    low materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Metal Coatings
    Achieved strong double-digit sales growth, benefiting from higher infrastructure-related demand and less impact from inclement weather.
    EBITDA: $235MEBITDA Margin: 31% of sales
    		—14.1% (FY26); 25.7% (Q4 FY26)—EBITDA over $235 million or 31% of sales (FY26)
    Precoat Metals
    Sales decline driven by industry-wide softness in residential and other key markets, including construction, transportation, and HVAC.
    EBITDA: $176MEBITDA Margin: 19.8% of sales
    		—-2.3% (FY26); -2.4% (Q4 FY26)—EBITDA $176 million or 19.8% of sales (FY26)
    AVAIL joint venture
    FY26 earnings primarily from divesting businesses within the JV. Q4 net loss reflects a loss on sale of welding services businesses and an unfavorable prior period adjustment.
    Equity and earnings (FY26): $210MNet loss (Q4 FY26): $21.7MEquity and earnings (excl. loss/adj, Q4 FY26): $700,000Equity and earnings (excl. loss/adj, Q4 FY25): $3.7M
    		———Equity and earnings $210 million (FY26); Net loss $21.7 million (Q4 FY26); Equity and earnings (excl. loss/adj) $700,000 (Q4 FY26)

    Operational metrics

    29
    Total sales
    $1.65 billionup 4.6% YoY
    FY26

    Record sales for the third consecutive year.

    Adjusted EBITDA
    $367.6 millionup from 22% of sales YoY
    FY26

    Consolidated adjusted EBITDA for the full fiscal year.

    Adjusted EPS
    $6.19up 19% YoY
    FY26

    Adjusted earnings per share for the full fiscal year.

    Gross margin
    23.9%
    FY26

    Consolidated gross margins for the full fiscal year.

    Operating income
    $165 millionrose by 12%
    FY26

    Consolidated operating income for the full fiscal year.

    Total sales
    $385.1 millionup 9.4% from $351.3 million YoY
    Q4 FY26

    Record fourth quarter sales.

    Gross profit
    $87.6 millionup 30 bps from 22.4% YoY
    Q4 FY26

    Company's fourth quarter gross profit.

    SG&A expenses
    $30.5 millioncompares favorably with $38.2 million YoY
    Q4 FY26

    Selling, general and administrative expenses for the fourth quarter.

    Operating income
    $57.1 million330 bps improvement compared with $40.4 million YoY
    Q4 FY26

    Operating income for the fourth quarter.

    Interest expense
    $11.2 millionimprovement of $6.2 million from prior year
    Q4 FY26

    Interest expense for the fourth quarter.

    Income tax expense
    $8.7 million
    Q4 FY26

    Fourth quarter's income tax expense.

    GAAP net income
    $5.9 millioncompared to $20.2 million for Q4 FY25
    Q4 FY26

    GAAP net income for the fourth quarter.

    Adjusted net income
    $40.4 million
    Q4 FY26

    Adjusted net income for the fourth quarter.

    Adjusted diluted EPS
    $1.34up 36.7% versus a year ago
    Q4 FY26

    Adjusted diluted EPS for the fourth quarter.

    Adjusted EBITDA
    $81.3 millionup from $71.2 million YoY
    Q4 FY26

    Adjusted EBITDA for the fourth quarter.

    Debt reduction
    $385 million
    FY26

    Total debt reduction during the fiscal year.

    Net debt-to-EBITDA ratio
    1.4x
    FY26

    Net debt-to-EBITDA ratio at year-end.

    Capital expenditures
    $80.8 million
    FY26

    Total capital expenditures for the fiscal year.

    Cash dividends paid
    $23 million
    FY26

    Cash dividends paid to shareholders during the fiscal year.

    Shares repurchased
    $20 million
    FY26

    Value of shares repurchased during the fiscal year.

    Cash distributions from AVAIL
    $287 million
    FY26

    Total cash distributions received from the AVAIL joint venture.

    Construction end market sales growth
    3%
    FY26

    Sales growth in the construction end market, AZZ's largest.

    Electrical end market sales growth
    17%
    FY26

    Sales growth in the electrical end market.

    Industrial end market sales growth
    15%
    FY26

    Sales growth in the industrial end market.

    Consumer end market sales growth
    6%
    FY26

    Sales growth in the consumer end market.

    Transportation end market sales decline
    3%
    FY26

    Sales decline in the transportation end market.

    Washington, Missouri facility utilization
    40%
    Q4 FY26

    Current utilization of the new Precoat Metals facility.

    Precoat Metals residential exposure
    1/3
    FY27

    Proportion of Precoat Metals' construction-driven end markets exposed to residential activity.

    Precoat Metals paint inventory
    3-4 weeks
    Q4 FY26

    Typical paint inventory levels for Precoat Metals.

    Industry KPIs

    4
    MetricValueDetails
    Price costgeneral inflation
    Order backlognot part of our business
    Data center hvac exposure$700 billionUSD
    Order lead times placement horizonquick turnarounds

    Deals & partnerships

    1
    not statedAcquisition of a galvanizing facility in Canton, Ohio$30 million

    Acquisition made to grow the core businesses organically and inorganically, demonstrating commitment to expansion.

    Capital programs

    2
    Greenfield Precoat Metals facility in Washington, Missouricompleted$125 million
    Period spend: $7.9 million
    Spent to date: $125 million (over past 3 years)

    Benefit: expands participation in aluminum coatings and beverage-related end markets; target production of 45,000 to 50,000 tons in FY27

    A key milestone completed in FY26, advancing organic growth strategy. The facility is now fully operational, with volume ramping and profitable at the contribution margin level in Q4 FY26.

    New hot-dip galvanizing kettle in North Texasunderway
    Start: a few months ago

    Benefit: incremental capacity; potential couple of million impact in EBITDA

    Adding a new kettle due to demand, expected to be up and running in Q1 FY27. Described as a low-risk investment due to existing demand.

    Risks & headwinds

    6
    Precoat Metals end market softnessFY27

    Precoat sales declined 2.3% (FY26) and 2.4% (Q4 FY26)

    Mitigation: Focus on quick turnarounds, small lots, and customization to fit market profile.

    Non-residential construction subduedFY27

    Expected to remain subdued

    Mitigation: Diversified portfolio, focus on infrastructure-related demand (data centers, bridge/highway).

    Residential housing market weaknessFY27

    Single-family housing starts expected to be flat to down low single digits; 30-year fixed mortgage rates projected to remain above 6%

    Mitigation: Diversified portfolio, focus on infrastructure-related demand.

    Geopolitical and interest rate uncertaintiesFY27

    Ongoing uncertainties mentioned as factors for subdued non-residential construction

    Mitigation: AZZ's demand driven by fundamental shifts rather than traditional construction cycles.

    Commodity and input cost inflationOngoing

    Zinc prices trending up; general inflation in acids, caustics, chemicals, and transportation/fuel costs; price increases from suppliers almost daily

    Mitigation: Value pricing, surcharges (for transportation/fuel) to offset costs and maintain margins.

    Sub-grade material availability due to tariffsOngoing

    Constraints in available sub-grade materials for Precoat Metals, increasing project costs and making demand harder to predict

    Mitigation: Focus on quick turnarounds, small lots, and customization.

    What to watch in Q1 FY27

    5

    Metal Coatings segment growth

    Next quarter (Q1 FY27 results)
    Current25.7% YoY in Q4 FY26
    TargetMid-to-upper single digits for FY27

    Why it matters

    Verifies the segment's ability to sustain strong growth despite tougher comps and drives overall company performance.

    So from a metal coatings point of view, if you look at the projections for the next year, somewhere in the mid-single to upper single digits for that business. Obviously, ending the year very strongly, and that builds momentum coming into the year.

    Q&A highlights

    7

    What are the specific growth expectations for Metal Coatings and Precoat Metals in FY27, and what is Precoat's residential construction exposure?

    Metal Coatings is expected to grow mid-to-upper single digits. Precoat Metals is expected to be relatively flat year-over-year, with about one-third of its construction-driven end markets (75% of total) having residential exposure.

    “So from a metal coatings point of view, if you look at the projections for the next year, somewhere in the mid-single to upper single digits for that business. Obviously, ending the year very strongly, and that builds momentum coming into the year. As you look at the pre-cometals business, probably in and around where we've seen them. So relatively flat year-on-year as you look at the overall market...”

    asked by Ghansham Panjabi · answered by Thomas Ferguson

    2 min read5 chapters

    Detailed Narrative

    01

    Secular Tailwinds Driving Demand

    AZZ is benefiting from significant secular tailwinds, including industrial reshoring, bridge and highway investments, hyperscale data center expansion, and investments in power generation, transmission, and distribution. These structural, multi-year trends are central to customer capital spending priorities and drive sustained demand for galvanized steel and coated metal solutions. The company's diversified portfolio allows it to support large-scale, complex projects across multiple end markets simultaneously, leveraging its deep coating experience and operational reliability.

    02

    Strategic Investments and M&A Pipeline

    In fiscal year 2026, AZZ completed a greenfield Precoat Metals facility in Washington, Missouri, expanding its presence in aluminum coatings and beverage markets. The company also acquired a galvanizing facility in Canton, Ohio, strengthening its Metal Coatings platform. Management maintains an active strategic pipeline for M&A, focusing on bolt-on acquisitions in Metal Coatings (typically single sites with ~$15M sales and $4M-$6M EBITDA) and smaller opportunities in Precoat Metals, with several deals in active discussion or due diligence.

    03

    Data Center Market Expansion

    The AI data center build-out is a significant structural driver, with U.S. data center electricity demand expected to double by the end of the decade. External forecasts project U.S. hyperscale data-related spending to be approximately $700 billion in calendar year 2026, with AI investments accounting for the majority. This infrastructure-heavy environment aligns well with AZZ's offerings, as modern data center construction requires advanced corrosion protection and substantial investments in on-site power generation and grid reinforcement.

    04

    Headwinds in Residential and Non-Residential Construction

    Non-residential construction is expected to remain subdued in fiscal year 2027 due to ongoing interest rate, geopolitical, and tariff-related uncertainties. The residential housing market faces challenges with single-family housing starts projected to be flat to down low single digits, and 30-year fixed mortgage rates remaining above 6%, limiting affordability. These factors are expected to create headwinds for the Precoat Metals segment, which has approximately one-third of its construction-driven end markets exposed to residential activity.

    05

    Capital Allocation and Debt Reduction

    AZZ executed a disciplined capital allocation strategy in FY26, reducing debt by $385 million and achieving a net debt-to-EBITDA ratio of 1.4x. The company invested $80.8 million in capital expenditures, including $7.9 million for the Washington, Missouri facility, and returned $23 million in cash dividends and repurchased $20 million in shares at an average price of $98.28 per share. Management prioritizes M&A for immediate EBITDA uplift while also committing to minimizing dilution through share buybacks.

    AI-generated summary of the company’s earnings call. Not investment advice.