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    AZZ
    Earnings call· May 2026(Q1 FY27)

    AZZ Q1 FY27 earnings call AZZ

    Jul 9, 2026 Source

    Executive summary

    AZZ Inc. Q1 FY27 — Record Sales and Raised Full-Year Guidance

    AZZ Inc. reported a strong first quarter for fiscal 2027, driven by record sales in both segments, particularly Metal Coatings, and the successful ramp-up of the Washington, Missouri facility. The company raised its full-year guidance, reflecting confidence in its strategic execution, robust end markets like data centers and grid modernization, and disciplined capital deployment. Management highlighted a scalable deverticalization model and an active M&A pipeline to capitalize on long-duration secular growth cycles.

    Highlights

    5

    • Delivered record sales of $448.5 million, up 6.3% year-over-year, driven by strong double-digit growth in Metal Coatings.

    • Adjusted diluted EPS increased 3.9% year-over-year to $1.85, demonstrating continued earnings growth despite prior year JV-related earnings.

    • Raised full-year fiscal 2027 sales guidance to $1.8 billion-$1.85 billion and adjusted EBITDA to $375 million-$415 million.

    • Increased quarterly cash dividend by 20% to $0.24 per share, reflecting confidence in earnings and cash flow sustainability.

    • Net leverage remained low at 1.4x, providing significant financial flexibility for growth and capital returns.

    Concerns

    4

    • Precoat Metal sales growth of 1.5% was partially offset by softer volume in certain construction, HVAC, and appliance end markets.

    • Transportation sales were down 1.2% due to lower commercial trailer activity.

    • HVAC and appliances sales were down 2.4% on lower residential new construction.

    • Infrastructure Solutions adjusted EBITDA dropped from $7.6 million in Q1 FY26 to a loss of $0.8 million in Q1 FY27 due to business divestitures.

    Guidance & targets

    4
    CategoryTargetConfidence
    Full-year fiscal 2027 sales
    $1.8 billion to $1.85 billion
    high materiality
    High
    Full-year fiscal 2027 adjusted EBITDA
    $375 million to $415 million
    high materiality
    High
    Full-year fiscal 2027 adjusted diluted EPS
    $6.75 to $7.15
    high materiality
    High
    Full-year fiscal 2027 debt reduction
    $130 million to $170 million
    medium materiality
    High

    Segment performance

    10
    SegmentRevenueYoYQoQMargin
    Metal Coatings
    Strong double-digit sales growth, reflecting continued momentum across construction, industrial, and infrastructure end markets. Underlying margins remain strong and consistent with long-term expectations.
    		—12.3%——
    Precoat Metals
    Sales supported by the pass-through of higher paint and input costs and the continued ramp-up at the Washington, Missouri facility, partially offset by softer volume in certain construction, HVAC, and appliance end markets. Margins improved modestly on operational performance and mix from the Washington, Missouri facility.
    		—1.5%——
    Infrastructure Solutions
    Adjusted EBITDA dropped from $7.6 million in the prior year first quarter to a loss in the current quarter, reflecting the impact of business divestitures in the Aveo JV that occurred throughout fiscal year 2026.
    		———-$0.8 million (adjusted EBITDA)
    Consolidated
    Record first quarter sales driven by strong performance in Metal Coatings and ramp-up at Washington, MO facility. Gross profit was $112.2 million or 25% of sales, representing a 30 basis point improvement year-over-year. Operating income increased to $77 million or 17.2% of sales, an improvement of 70 basis points versus the prior year. Consolidated adjusted EBITDA was $99.5 million or 22.2% of sales.
    		$448.5 million6.3%——
    Construction End Market
    Growth driven by continued strength in large data center and manufacturing-related projects.
    		—3.9%——
    Industrial End Market
    Growth supported by increased demand for utility scale power projects.
    		—7.8%——
    Container End Market
    Growth primarily resulting from the ramp at the new Washington, Missouri plant.
    		—194%——
    Infrastructure End Market
    Essentially flat compared to the same quarter in the prior year, with mixed results by segment.
    		—flat——
    Transportation End Market
    Decline on lower commercial trailer activity.
    		—-1.2%——
    HVAC and Appliances End Market
    Decline on lower residential new construction.
    		—-2.4%——

    Operational metrics

    22
    Gross profit
    $112.2 million
    Q1 FY27

    Reported for the first quarter.

    Gross profit margin
    25%+30 bps YoY
    Q1 FY27

    Reflects favorable mix, pricing discipline, and improved operational execution.

    SG&A expenses
    $35.1 million
    Q1 FY27

    Reported for the first quarter.

    SG&A as % of sales
    7.8%vs 8.2% last year
    Q1 FY27

    Demonstrated good cost control while supporting growth.

    Operating income
    $77 million
    Q1 FY27

    Reported for the first quarter.

    Operating margin
    17.2%+70 bps YoY
    Q1 FY27

    Reflecting strong incremental margins on higher volumes.

    Interest expense
    $11.3 milliondown $7.3 million YoY
    Q1 FY27

    Driven by deliberate debt reduction following the Vale distribution and financing optimization initiatives.

    Effective tax rate
    21.2%vs 22.2% last year (excl. JV equity earnings)
    Q1 FY27

    Reported for the first quarter.

    GAAP net income
    $52 million
    Q1 FY27

    Reported for the first quarter.

    Adjusted diluted EPS
    $1.85+3.9% YoY
    Q1 FY27

    Demonstrating continued earnings growth despite the absence of prior year JV-related earnings.

    Consolidated adjusted EBITDA
    $99.5 million
    Q1 FY27

    Reported for the first quarter.

    Capital expenditures
    $18.7 million
    Q1 FY27

    With a growing focus on high-return organic investments.

    Net leverage
    1.4x
    Q1 FY27

    Providing significant flexibility to fund growth and return capital to shareholders.

    Share repurchase authorization
    $133.2 million
    Q1 FY27

    The company maintains a strong share repurchase program.

    Quarterly cash dividend
    $0.24+20% increase
    Q1 FY27

    Increased from $0.20 per share, underscoring confidence in sustainability of earnings and cash flows.

    Washington, MO facility sales capacity
    $50 million to $60 million
    Annual

    Target sales range for 75% of the facility's capacity.

    Washington, MO facility Q1 run rate
    approaching $15 million
    Q1 FY27

    Starting to approach this run rate on a quarterly basis, expected to hit targets with contracted customer by H2 FY27.

    Washington, MO facility material composition
    100%
    Current

    The facility processes 100% aluminum, which differentiates its tonnage reporting from steel-based operations.

    Galvanizing greenfield CapEx
    $35 million to $40 million
    Program

    Estimated cost for a new greenfield galvanizing plant, dependent on real estate costs.

    Galvanizing greenfield build-out timeline
    18 months
    Program

    Typical build-out time for a new greenfield galvanizing plant.

    Zinc flow-through time
    6 to 8 months
    Current

    Time from purchasing zinc to it flowing through the kettles, providing confidence in cost understanding for surcharges.

    Utility-related structures backlog growth (customer)
    35%
    Recent

    Growth reported by one of AZZ's largest galvanizing customers, providing confidence in future activity and end market durability for AZZ.

    Industry KPIs

    8
    MetricValueDetails
    Price cost—
    Order backlog—
    Regional exposure—
    Vertical revenue breadth—
    Data center hvac exposuredouble-digit growth%
    Residential vs commercial split-2.4%%
    Orders bookings growth by vertical—
    Manufacturing footprint domestic share—

    Deals & partnerships

    2
    vertically integrated manufacturerdivestiture / partnershiplong-term service agreement

    A vertically integrated manufacturer chose to partner with AZZ to divest its noncore galvanizing operation to reduce complexity and cost. As part of this agreement, AZZ acquired their galvanizing Kettle in zinc, providing them with immediate cash liquidity while securing a long-term service agreement. This is viewed as a scalable blueprint for future partnerships.

    unnamedacquisition

    AZZ is actively evaluating a robust pipeline of high-quality acquisition targets that align with core capabilities and meet return thresholds. The company expects to announce a deal later this month, which has been in due diligence for about 6 months.

    Capital programs

    2
    Crowley, Texas kettle expansioncommissioned

    Benefit: doubled capacity

    Successfully commissioned a new large kettle to meet growing regional demand for hot dip galvanizing effectively doubling our capacity at Crowley, Texas. This low-risk, high-return investment supports growing customer demand and strong market fundamentals.

    Washington, Missouri Precoat Metals facility ramp-upramping production

    Benefit: approaching an expected contribution margin levels for this year; performance with strategic partner in beer and beverage-related container category has been very encouraging; on track to contribute meaningfully to revenue and profitability as we move through fiscal year 2027; sales range of $50M-$60M for 75% capacity

    Washington, Missouri facility continues to ramp production as planned. We remain on track to reach targeted utilization with our strategic partner, while actively seeking the commercialization of the remaining capacity. The facility is approaching an expected contribution margin levels for this year.

    Risks & headwinds

    5
    Softer volume in certain Precoat Metals end marketsQ1 FY27

    Partially offset 1.5% Precoat Metal sales growth

    Mitigation: Ramp-up of Washington, MO facility and pass-through of higher paint/input costs.

    Lower commercial trailer activityQ1 FY27

    Transportation sales down 1.2%

    Lower residential new constructionQ1 FY27

    HVAC and appliances sales down 2.4%

    Impact of business divestitures in Aveo JVQ1 FY27

    Infrastructure Solutions adjusted EBITDA dropped from $7.6 million in Q1 FY26 to a loss of $0.8 million in Q1 FY27

    Tariff impact on substrate availability and costPast 18-24 months, stabilizing

    Made substrate less available or of higher cost for Precoat Metals customers

    Mitigation: Higher substrate prices may make imports more attractive, easing supply constraints; working closely with customers.

    Q&A highlights

    10

    How are energy costs/volatility impacting customer decision-making and project timelines, especially with Middle East events?

    Metal Coatings markets are robust, with strength in grid improvement and data centers, seeing projects move forward. Precoat Metals tariffs have stabilized, and substrate prices may attract imports, which is good for customers. No unusual headwinds anticipated.

    “on the Metal Coatings side, there's just not a lot of clouds on the horizon.”

    asked by Josh Westley · answered by Thomas Ferguson

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Investments & Capacity Expansion

    AZZ is investing in capacity, exemplified by the new large kettle in Crowley, Texas, which doubled capacity to meet growing regional demand. This low-risk, high-return investment supports strong market fundamentals, particularly in the Southern U.S. The Washington, Missouri Precoat Metals facility is also ramping production as planned, approaching targeted utilization and expected contribution margin levels for the year, with its performance in the beer and beverage-related container category being very encouraging.

    02

    Deverticalization Model

    The company successfully partnered with a vertically integrated manufacturer to acquire their galvanizing kettle and zinc, providing immediate cash liquidity and securing a long-term service agreement. This deverticalization model, which reduces complexity and cost for customers while creating long-term revenue streams for AZZ, is viewed as a scalable blueprint for future partnerships, with the company actively pursuing similar opportunities.

    03

    Digital Capabilities & Operational Excellence

    AZZ leverages proprietary technologies like the digital galvanizing system in Metal Coatings and CoilZone in Precoat Metals to drive consistency, efficiency, and data-driven decision-making. These digital assets strengthen customer relationships, improve execution, and are forming the basis for utilizing AI to enhance customer intimacy, fine-tune pricing decisions, and support operating efficiency improvements and sustainability initiatives.

    04

    End Market Dynamics & Infrastructure Investment

    The company has enhanced its sales disclosure to reflect six primary categories, with construction, industrial, and container showing growth. Management believes the company is in the early stages of a significant and sustained investment cycle, driven by modernizing the aging electric grid, ongoing infrastructure, energy, and industrial capital deployment, and a multi-decade capital investment cycle across utility, transmission, distribution, and grid technology.

    05

    M&A and Greenfield Opportunities

    AZZ is actively evaluating a robust pipeline of high-quality acquisition targets that align with core capabilities and return thresholds, with an expectation to announce a deal later this month. The company is also evaluating greenfield galvanizing opportunities, particularly where they can partner with strategic customers in high-growth regions like Texas and the Southeast, to provide better solutions and customer concentration, with typical greenfield CapEx estimated at $35M-$40M and an 18-month build-out.

    06

    Capital Allocation Strategy

    The company maintains a strong balance sheet with low net leverage of 1.4x and a commitment to returning capital to shareholders, evidenced by a 20% increase in the quarterly cash dividend to $0.24 per share. They also have a strong share repurchase program with $133.2 million available, indicating a willingness to buy back shares if market conditions are favorable, as the stock has traded in a range that would make repurchases attractive.

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