PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, covering balance sheets, income, cash flows, equity, and related notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly decreased to **$2.226 billion**, while total liabilities significantly decreased to **$922.952 million**, and shareholders' equity increased to **$1.303 billion** | Metric | As of Aug 31, 2025 (in thousands) | As of Feb 28, 2025 (in thousands) | Change (in thousands) | | :----- | :-------------------------------- | :-------------------------------- | :-------------------- | | Total Assets | $2,225,983 | $2,227,101 | $(1,118) | | Total Liabilities | $922,952 | $1,181,606 | $(258,654) | | Total Shareholders' Equity | $1,303,031 | $1,045,495 | $257,536 | | Long-term debt, net | $566,864 | $852,365 | $(285,501) | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net income for the three months ended August 31, 2025, significantly increased to **$89.346 million**, and for the six months, net income available to common shareholders was **$260.254 million** | Metric | 3 Months Ended Aug 31, 2025 (in thousands) | 3 Months Ended Aug 31, 2024 (in thousands) | Change (in thousands) | YoY Change (%) | | :----- | :--------------------------------------- | :--------------------------------------- | :-------------------- | :------------- | | Sales | $417,275 | $409,007 | $8,268 | 2.0% | | Gross margin | $101,292 | $103,514 | $(2,222) | -2.1% | | Operating income | $68,461 | $67,646 | $815 | 1.2% | | Net income | $89,346 | $35,419 | $53,927 | 152.2% | | Basic EPS | $2.97 | $1.19 | $1.78 | 149.6% | | Diluted EPS | $2.95 | $1.18 | $1.77 | 150.0% | | Metric | 6 Months Ended Aug 31, 2025 (in thousands) | 6 Months Ended Aug 31, 2024 (in thousands) | Change (in thousands) | YoY Change (%) | | :----- | :--------------------------------------- | :--------------------------------------- | :-------------------- | :------------- | | Sales | $839,237 | $822,215 | $17,022 | 2.1% | | Gross margin | $205,422 | $206,184 | $(762) | -0.4% | | Operating income | $138,010 | $137,395 | $615 | 0.4% | | Net income available to common shareholders | $260,254 | $(1,377) | $261,631 | N/A | | Basic EPS | $8.68 | $(0.05) | $8.73 | N/A | | Diluted EPS | $8.61 | $(0.05) | $8.66 | N/A | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Comprehensive income for the three months ended August 31, 2025, was **$88.761 million**, and for the six months, it was **$262.160 million**, a significant improvement from the prior year | Metric | 3 Months Ended Aug 31, 2025 (in thousands) | 3 Months Ended Aug 31, 2024 (in thousands) | Change (in thousands) | YoY Change (%) | | :----- | :--------------------------------------- | :--------------------------------------- | :-------------------- | :------------- | | Net income (loss) available to common shareholders | $89,346 | $35,419 | $53,927 | 152.2% | | Other comprehensive income (loss) | $(585) | $(3,836) | $3,251 | -84.7% | | Comprehensive income (loss) | $88,761 | $31,583 | $57,178 | 181.0% | | Metric | 6 Months Ended Aug 31, 2025 (in thousands) | 6 Months Ended Aug 31, 2024 (in thousands) | Change (in thousands) | YoY Change (%) | | :----- | :--------------------------------------- | :--------------------------------------- | :-------------------- | :------------- | | Net income (loss) available to common shareholders | $260,254 | $(1,377) | $261,631 | N/A | | Other comprehensive income (loss) | $1,906 | $(3,001) | $4,907 | N/A | | Comprehensive income (loss) | $262,160 | $(4,378) | $266,538 | N/A | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly increased to **$373.169 million** for the six months ended August 31, 2025, primarily used for debt payments, capital expenditures, and dividends | Metric | 6 Months Ended Aug 31, 2025 (in thousands) | 6 Months Ended Aug 31, 2024 (in thousands) | Change (in thousands) | YoY Change (%) | | :----- | :--------------------------------------- | :--------------------------------------- | :-------------------- | :------------- |\n| Net cash provided by operating activities | $373,169 | $119,430 | $253,739 | 212.5% | | Net cash used in investing activities | $(66,491) | $(58,740) | $(7,751) | 13.2% | | Net cash used in financing activities | $(306,614) | $(62,750) | $(243,864) | 388.6% | | Net decrease in cash and cash equivalents | $(591) | $(2,197) | $1,606 | -73.1% | - Operating cash flows were significantly boosted by a **$273.2 million** cash distribution from the AVAIL JV[17](index=17&type=chunk) [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Total shareholders' equity increased from **$1.045 billion** to **$1.303 billion** at August 31, 2025, primarily due to net income | Metric | As of Aug 31, 2025 (in thousands) | As of Feb 28, 2025 (in thousands) | Change (in thousands) | | :----- | :-------------------------------- | :-------------------------------- | :-------------------- | | Total Shareholders' Equity | $1,303,031 | $1,045,495 | $257,536 | | Retained Earnings | $858,315 | $609,158 | $249,157 | | Common Stock Shares Outstanding | 30,057 | 29,913 | 144 | - The increase in shareholders' equity was primarily driven by net income of **$260.254 million** for the six months ended August 31, 2025[20](index=20&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures for the condensed consolidated financial statements, covering company operations, accounting policies, and various financial items - AZZ Inc. operates in three segments: Metal Coatings, Precoat Metals, and Infrastructure Solutions (**40%** interest in AVAIL JV)[24](index=24&type=chunk) - The company acquired Canton Galvanizing for **$30.1 million** on July 1, 2025, expanding its Metal Coatings segment[32](index=32&type=chunk) - The AVAIL JV sold its Electrical Products Group for **$975.0 million** in May 2025, leading to a significant gain recognized by AZZ, partially offset by an impairment charge on the AVAIL JV investment[62](index=62&type=chunk)[65](index=65&type=chunk) - The company entered into a new fixed-rate interest rate swap (2025 Swap) for **$290.0 million** at **5.509%** to manage interest rate exposure, replacing a terminated 2022 Swap[72](index=72&type=chunk) - Long-term debt decreased significantly from **$852.365 million** to **$566.864 million**, partly due to proceeds from a new **$150.0 million** Receivables Securitization Facility used to pay down the Term Loan B[74](index=74&type=chunk)[82](index=82&type=chunk) - The company initiated a restructuring plan in the Metal Coatings segment, closing two facilities and incurring **$3.8 million** in charges to improve operational efficiency[120](index=120&type=chunk)[121](index=121&type=chunk) - A new **25-acre** aluminum coil coating facility in Washington, Missouri, became operational in Q1 fiscal 2026, supported by a take-or-pay contract for **75%** of its output[131](index=131&type=chunk) - The effective tax rate decreased to **21.9%** for the three months and **23.5%** for the six months ended August 31, 2025, primarily due to higher R&D tax credits from the new aluminum coil coating facility[104](index=104&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) - The Series A Preferred Stock was fully redeemed on May 9, 2024, for **$308.9 million**, using proceeds from a secondary public offering[109](index=109&type=chunk)[114](index=114&type=chunk) - The company recorded a legal accrual of **$5.5 million** for a breach of contract lawsuit verdict against AZZ Beaumont, which is currently under appeal[126](index=126&type=chunk) - Environmental liabilities reserve balance was **$18.4 million** as of August 31, 2025[128](index=128&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial condition and results, including business updates, outlook, segment performance, liquidity, and non-GAAP measures [Forward Looking Statements](index=30&type=section&id=Forward%20Looking%20Statements) This section outlines cautionary statements regarding forward-looking information, emphasizing that actual results may differ due to various risks - Forward-looking statements are subject to risks such as changes in customer demand, increased labor and raw material costs (zinc, natural gas, paint), supply-chain delays, and interest rate fluctuations[133](index=133&type=chunk) - Investors are cautioned not to place undue reliance on forward-looking statements, which are based on information as of the report date and are not updated[134](index=134&type=chunk) [Business Operations Update](index=30&type=section&id=Business%20Operations%20Update) The company's financial results for the six months ended August 31, 2025, were positively impacted by significant equity in earnings from the AVAIL JV and increased demand - Results for the current six-month period were favorably impacted by equity in earnings from the AVAIL JV, including a gain from the sale of its Electrical Products Group[136](index=136&type=chunk) - Growth in demand for manufactured solutions in the construction and utilities industries also contributed positively[136](index=136&type=chunk) - Net income for the current six-month period was **$260.3 million**, primarily due to the AVAIL JV equity in earnings[137](index=137&type=chunk) - Operations generated **$373.2 million** of cash during the current six-month period[137](index=137&type=chunk) [Outlook](index=31&type=section&id=Outlook) The company anticipates consistent sales prices in Metal Coatings and price increases in Precoat Metals, with demand following typical seasonal patterns - AZZ Metal Coatings segment expects sales prices to remain consistent, with potential impact from product mix and competitive pressures[140](index=140&type=chunk) - AZZ Precoat Metals segment expects sales prices to increase due to passing through higher material costs and overall selling price increases[140](index=140&type=chunk) - Demand and volumes for both Metal Coatings and Precoat Metals segments are expected to follow normal seasonal patterns[140](index=140&type=chunk) [RESULTS OF OPERATIONS](index=31&type=section&id=RESULTS%20OF%20OPERATIONS) This section details the financial performance of AZZ's three operating segments for the three and six months ended August 31, 2025, analyzing sales, operating income, and other financial metrics [Overview](index=31&type=section&id=Overview) AZZ Inc. provides hot-dip galvanizing and coil coating solutions through three segments: Metal Coatings, Precoat Metals, and Infrastructure Solutions, with performance evaluated by sales and operating income - AZZ operates three segments: AZZ Metal Coatings, AZZ Precoat Metals, and AZZ Infrastructure Solutions[139](index=139&type=chunk) - Segment performance is evaluated using sales and operating income for Metal Coatings and Precoat Metals, and net income for Infrastructure Solutions[139](index=139&type=chunk) [QUARTER ENDED AUGUST 31, 2025 COMPARED TO THE QUARTER ENDED AUGUST 31, 2024](index=32&type=section&id=QUARTER%20ENDED%20AUGUST%2031,%202025%20COMPARED%20TO%20THE%20QUARTER%20ENDED%20AUGUST%2031,%202024) Consolidated sales increased by **2.0%** to **$417.3 million**, and net income significantly increased by **152.2%** to **$89.3 million**, driven by the AVAIL JV gain | Metric | 3 Months Ended Aug 31, 2025 (in thousands) | 3 Months Ended Aug 31, 2024 (in thousands) | Change (in thousands) | YoY Change (%) | | :----- | :--------------------------------------- | :--------------------------------------- | :-------------------- | :------------- | | Consolidated Sales | $417,275 | $409,007 | $8,268 | 2.0% | | Consolidated Operating Income | $68,461 | $67,646 | $815 | 1.2% | | Net Income | $89,346 | $35,419 | $53,927 | 152.2% | [Sales](index=33&type=section&id=Sales_QoQ) Consolidated sales increased by **$8.3 million** (**2.0%**) year-over-year, with Metal Coatings sales up **10.8%** and Precoat Metals sales down **4.3%** - Consolidated sales increased by **$8.3 million** (**2.0%**) YoY[144](index=144&type=chunk) | Segment | 3 Months Ended Aug 31, 2025 (in thousands) | 3 Months Ended Aug 31, 2024 (in thousands) | Change (in thousands) | YoY Change (%) | | :------ | :--------------------------------------- | :--------------------------------------- | :-------------------- | :------------- | | AZZ Metal Coatings Sales | $189,984 | $171,500 | $18,484 | 10.8% | | AZZ Precoat Metals Sales | $227,291 | $237,507 | $(10,216) | -4.3% | [Operating Income](index=33&type=section&id=Operating%20Income_QoQ) Consolidated operating income increased by **$0.8 million** (**1.2%**), with Metal Coatings up **8.4%** and Precoat Metals down **14.1%** due to lower sales volume and new plant costs - Consolidated operating income increased by **$0.8 million** (**1.2%**) YoY[147](index=147&type=chunk) | Segment | 3 Months Ended Aug 31, 2025 (in thousands) | 3 Months Ended Aug 31, 2024 (in thousands) | Change (in thousands) | YoY Change (%) | | :------ | :--------------------------------------- | :--------------------------------------- | :-------------------- | :------------- | | AZZ Metal Coatings Operating Income | $51,706 | $47,688 | $4,018 | 8.4% | | AZZ Precoat Metals Operating Income | $36,521 | $42,530 | $(6,009) | -14.1% | [Corporate Expenses](index=34&type=section&id=Corporate%20Expenses_QoQ) Corporate SG&A expenses decreased by **$2.8 million** (**12.5%**) due to lower compensation costs from prior year retirement and severance - Corporate SG&A expenses decreased by **$2.8 million** (**12.5%**) YoY[150](index=150&type=chunk) - The decrease was mainly due to lower compensation costs, including retirement and severance expenses recognized in the prior year[150](index=150&type=chunk) [Interest Expense](index=34&type=section&id=Interest%20Expense_QoQ) Interest expense decreased by **$8.2 million** to **$13.7 million**, primarily due to a **$304.4 million** decrease in weighted average debt and a **1.77%** lower interest rate - Interest expense decreased by **$8.2 million** to **$13.7 million** YoY[151](index=151&type=chunk) - This reduction was driven by a **$304.4 million** decrease in weighted average debt outstanding and a **1.77%** decrease in the weighted average interest rate[151](index=151&type=chunk) [Equity in Earnings of Unconsolidated Entities](index=34&type=section&id=Equity%20in%20Earnings%20of%20Unconsolidated%20Entities_QoQ) Equity in earnings from unconsolidated subsidiaries increased significantly by **$57.9 million** to **$59.3 million**, mainly due to a **$109.4 million** gain from the AVAIL JV sale - Equity in earnings increased by **$57.9 million** to **$59.3 million** YoY[152](index=152&type=chunk) - The increase was mainly due to a **$109.4 million** gain from the sale of AVAIL's Electrical Products Group, offset by a **$45.9 million** impairment loss on the AVAIL JV[152](index=152&type=chunk) [Income Taxes](index=34&type=section&id=Income%20Taxes_QoQ) The effective tax rate decreased to **21.9%** from **25.6%**, primarily due to higher R&D tax credits from the new aluminum coil coating facility - Effective tax rate decreased to **21.9%** from **25.6%** YoY[153](index=153&type=chunk) - The decrease is attributed to higher R&D tax credits from the new aluminum coil coating facility[153](index=153&type=chunk) [SIX MONTHS ENDED AUGUST 31, 2025 COMPARED TO THE SIX MONTHS ENDED AUGUST 31, 2024](index=35&type=section&id=SIX%20MONTHS%20ENDED%20AUGUST%2031,%202025%20COMPARED%20TO%20THE%20SIX%20MONTHS%20ENDED%20AUGUST%2031,%202024) Consolidated sales increased by **2.1%** to **$839.2 million**, and net income available to common shareholders dramatically improved to **$260.3 million** from a prior year loss | Metric | 6 Months Ended Aug 31, 2025 (in thousands) | 6 Months Ended Aug 31, 2024 (in thousands) | Change (in thousands) | YoY Change (%) | | :----- | :--------------------------------------- | :--------------------------------------- | :-------------------- | :------------- | | Consolidated Sales | $839,237 | $822,215 | $17,022 | 2.1% | | Consolidated Operating Income | $138,010 | $137,395 | $615 | 0.4% | | Net Income (Loss) available to common shareholders | $260,254 | $(1,377) | $261,631 | N/A | [Sales](index=36&type=section&id=Sales_YoY) Consolidated sales increased by **$17.0 million** (**2.1%**) year-over-year, with Metal Coatings sales up **8.3%** and Precoat Metals sales down **2.5%** - Consolidated sales increased by **$17.0 million** (**2.1%**) YoY[157](index=157&type=chunk) | Segment | 6 Months Ended Aug 31, 2025 (in thousands) | 6 Months Ended Aug 31, 2024 (in thousands) | Change (in thousands) | YoY Change (%) | | :------ | :--------------------------------------- | :--------------------------------------- | :-------------------- | :------------- | | AZZ Metal Coatings Sales | $377,199 | $348,152 | $29,047 | 8.3% | | AZZ Precoat Metals Sales | $462,038 | $474,063 | $(12,025) | -2.5% | [Operating Income](index=36&type=section&id=Operating%20Income_YoY) Consolidated operating income increased by **$0.6 million** (**0.4%**), with Metal Coatings up **7.1%** and Precoat Metals down **8.2%** due to lower sales volume and new plant costs - Consolidated operating income increased by **$0.6 million** (**0.4%**) YoY[160](index=160&type=chunk) | Segment | 6 Months Ended Aug 31, 2025 (in thousands) | 6 Months Ended Aug 31, 2024 (in thousands) | Change (in thousands) | YoY Change (%) | | :------ | :--------------------------------------- | :--------------------------------------- | :-------------------- | :------------- | | AZZ Metal Coatings Operating Income | $102,438 | $95,621 | $6,817 | 7.1% | | AZZ Precoat Metals Operating Income | $75,875 | $82,623 | $(6,748) | -8.2% | [Corporate Expenses](index=36&type=section&id=Corporate%20Expenses_YoY) Corporate SG&A expenses decreased by **$0.6 million** (**1.5%**) due to lower compensation costs from prior year retirement and severance - Corporate SG&A expenses decreased by **$0.6 million** (**1.5%**) YoY[163](index=163&type=chunk) - The decrease was mainly due to lower compensation costs from prior year retirement/severance, partially offset by increased stock-based compensation from the Executive Retiree LTI Program[163](index=163&type=chunk) [Interest Expense](index=36&type=section&id=Interest%20Expense_YoY) Interest expense decreased by **$12.5 million** to **$32.2 million**, primarily due to a **$136.4 million** decrease in weighted average debt and a **1.54%** lower interest rate - Interest expense decreased by **$12.5 million** to **$32.2 million** YoY[164](index=164&type=chunk) - This reduction was driven by a **$136.4 million** decrease in weighted average debt outstanding and a **1.54%** decrease in the weighted average interest rate[164](index=164&type=chunk) [Equity in Earnings of Unconsolidated Entities](index=36&type=section&id=Equity%20in%20Earnings%20of%20Unconsolidated%20Entities_YoY) Equity in earnings from unconsolidated subsidiaries increased significantly by **$227.6 million** to **$232.9 million**, mainly due to a **$275.2 million** gain from the AVAIL JV sale - Equity in earnings increased by **$227.6 million** to **$232.9 million** YoY[165](index=165&type=chunk) - The increase was mainly due to a **$275.2 million** gain from the sale of AVAIL's Electrical Products Group, offset by a **$45.9 million** impairment loss on the AVAIL JV[165](index=165&type=chunk) [Income Taxes](index=36&type=section&id=Income%20Taxes_YoY) The effective tax rate decreased to **23.5%** from **23.9%**, primarily due to higher R&D tax credits, with the One Big Beautiful Bill Act expected to reduce fiscal 2026 cash tax payments - Effective tax rate decreased to **23.5%** from **23.9%** YoY[166](index=166&type=chunk) - The decrease is attributed to higher R&D tax credits from the new aluminum coil coating facility[166](index=166&type=chunk) - The One Big Beautiful Bill Act is expected to reduce fiscal 2026 cash tax payments[167](index=167&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=38&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company's liquidity as of August 31, 2025, was **$362.2 million**, with operating activities generating **$373.2 million** in cash, primarily used for debt payments and capital expenditures - Total liquidity as of August 31, 2025, was **$362.2 million**, including **$361.3 million** from credit facilities and **$0.9 million** cash[169](index=169&type=chunk) - Net cash provided by operating activities for the six months ended August 31, 2025, was **$373.2 million**, a significant increase from **$119.4 million** in the prior year[170](index=170&type=chunk) - Operating cash was used to fund **$40.2 million** in capital expenditures, **$291.4 million** in net debt/finance lease payments, and **$11.1 million** in dividends[170](index=170&type=chunk) [Cash Flows](index=38&type=section&id=Cash%20Flows) Net cash provided by operating activities for the six months ended August 31, 2025, was **$373.2 million**, a substantial increase from **$119.4 million** in the prior year, driven by higher net income and a cash distribution from the AVAIL JV | Metric | 6 Months Ended Aug 31, 2025 (in thousands) | 6 Months Ended Aug 31, 2024 (in thousands) | Change (in thousands) | YoY Change (%) | | :----- | :--------------------------------------- | :--------------------------------------- | :-------------------- | :------------- | | Net cash provided by operating activities | $373,169 | $119,430 | $253,739 | 212.5% | | Net cash used in investing activities | $(66,491) | $(58,740) | $(7,751) | 13.2% | | Net cash used in financing activities | $(306,614) | $(62,750) | $(243,864) | 388.6% | | Net decrease in cash and cash equivalents | $(591) | $(2,197) | $1,606 | -73.1% | - The increase in operating cash flow was primarily due to net income of **$260.3 million** and a **$273.2 million** cash distribution from the AVAIL JV[170](index=170&type=chunk) [Financing and Capital](index=38&type=section&id=Financing%20and%20Capital) Long-term debt decreased to **$566.9 million** from **$852.4 million**, with the Term Loan B repriced and a new **$150.0 million** Receivables Securitization Facility established, reducing the weighted average interest rate to **6.49%** - Term Loan B outstanding balance was **$434.9 million** as of August 31, 2025, and was repriced to SOFR plus **1.75%** (from **2.50%**)[173](index=173&type=chunk)[174](index=174&type=chunk) - A new **$150.0 million** Receivables Securitization Facility was entered into, with proceeds used to pay down the Term Loan B[176](index=176&type=chunk)[177](index=177&type=chunk)[179](index=179&type=chunk) - The weighted average interest rate for outstanding debt decreased to **6.49%** for the six months ended August 31, 2025, from **8.03%** in the prior year[180](index=180&type=chunk) - The company was in compliance with all debt covenants, including a maximum Total Net Leverage Ratio of **4.5** (actual **1.7x**)[181](index=181&type=chunk)[207](index=207&type=chunk) [Capital Commitments—Greenfield Aluminum Coil Coating Facility](index=40&type=section&id=Capital%20Commitments%E2%80%94Greenfield%20Aluminum%20Coil%20Coating%20Facility) The new aluminum coil coating facility became operational in Q1 fiscal 2026, with total project capital payments expected to be **$121.8 million**, and **$4.1 million** remaining to be paid - The new greenfield aluminum coil coating facility became operational in Q1 fiscal 2026[186](index=186&type=chunk) - Total capital payments for the project are expected to be **$121.8 million**, with **$4.1 million** remaining to be paid in H2 fiscal 2026[186](index=186&type=chunk) [AVAIL JV](index=40&type=section&id=AVAIL%20JV) The AVAIL JV sold its Electrical Products Group for **$975.0 million**, resulting in a **$275.2 million** gain for AZZ, offset by a **$45.9 million** impairment loss, leading to **$232.9 million** in equity in earnings - AVAIL JV sold its Electrical Products Group for **$975.0 million** in May 2025[187](index=187&type=chunk) - AZZ recognized a **$275.2 million** gain from the sale, offset by a **$45.9 million** impairment loss on the AVAIL JV investment[189](index=189&type=chunk)[190](index=190&type=chunk) - Total equity in earnings from unconsolidated subsidiaries for the six months ended August 31, 2025, was **$232.9 million**[189](index=189&type=chunk) [Share Repurchase Program](index=41&type=section&id=Share%20Repurchase%20Program) No shares were repurchased during the six months ended August 31, 2025, with **$53.2 million** remaining authorized for repurchases - No common stock repurchases were made during the six months ended August 31, 2025[191](index=191&type=chunk) - **$53.2 million** remains available under the 2020 Share Authorization for future repurchases[191](index=191&type=chunk) [Other Exposures](index=41&type=section&id=Other%20Exposures) The company faces commodity price exposure, primarily to zinc, natural gas, steel, and aluminum scrap, with mitigation strategies including fixed-price agreements and price increases - Commodity price exposure includes zinc and natural gas (Metal Coatings), and natural gas, steel, and aluminum scrap (Precoat Metals)[191](index=191&type=chunk) - Mitigation strategies include fixed-premium agreements with zinc suppliers, fixed-price natural gas contracts, and price increases to customers[191](index=191&type=chunk) [Off Balance Sheet Arrangements and Contractual Obligations](index=41&type=section&id=Off%20Balance%20Sheet%20Arrangements%20and%20Contractual%20Obligations) As of August 31, 2025, the company had no material off-balance sheet arrangements as defined by SEC rules - No material off-balance sheet arrangements existed as of August 31, 2025[192](index=192&type=chunk) [Critical Accounting Policies and Estimates](index=41&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) There were no significant changes to the company's critical accounting policies and estimates compared to those disclosed in the Annual Report on Form 10-K - No significant changes to critical accounting policies and estimates were reported[194](index=194&type=chunk) [Recent Accounting Pronouncements](index=41&type=section&id=Recent%20Accounting%20Pronouncements) The company provided a full description of recent accounting pronouncements, including adoption dates and estimated effects, in Note 1 of the financial statements - Details on recent accounting pronouncements, adoption dates, and estimated effects are provided in Note 1[195](index=195&type=chunk) [Non-GAAP Disclosures](index=42&type=section&id=Non-GAAP%20Disclosures) The company provides non-GAAP measures like adjusted net income, adjusted EPS, and Adjusted EBITDA for greater transparency, excluding items such as intangible asset amortization and restructuring charges - Non-GAAP measures (adjusted net income, adjusted EPS, Adjusted EBITDA) are provided for greater transparency and understanding of financial performance[196](index=196&type=chunk) - Adjustments typically exclude intangible asset amortization, restructuring charges, severance expenses, preferred stock redemption premium, executive retiree LTI program expense, and AVAIL JV equity in earnings adjustments[197](index=197&type=chunk) [Adjusted Net Income and Adjusted Earnings Per Share](index=43&type=section&id=Adjusted%20Net%20Income%20and%20Adjusted%20Earnings%20Per%20Share) Adjusted net income for the three months ended August 31, 2025, was **$46.9 million** (**$1.55** diluted EPS), and for the six months, it was **$100.7 million** (**$3.33** diluted EPS) | Metric | 3 Months Ended Aug 31, 2025 (in thousands) | 3 Months Ended Aug 31, 2024 (in thousands) | Change (in thousands) | YoY Change (%) | | :----- | :--------------------------------------- | :--------------------------------------- | :-------------------- | :------------- | | Adjusted Net Income | $46,926 | $41,252 | $5,674 | 13.8% | | Adjusted Diluted EPS | $1.55 | $1.37 | $0.18 | 13.1% | | Metric | 6 Months Ended Aug 31, 2025 (in thousands) | 6 Months Ended Aug 31, 2024 (in thousands) | Change (in thousands) | YoY Change (%) | | :----- | :--------------------------------------- | :--------------------------------------- | :-------------------- | :------------- | | Adjusted Net Income | $100,733 | $85,257 | $15,476 | 18.2% | | Adjusted Diluted EPS | $3.33 | $2.83 | $0.50 | 17.7% | [Adjusted EBITDA](index=44&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA for the three months ended August 31, 2025, was **$88.7 million**, and for the six months, it increased to **$195.1 million** | Metric | 3 Months Ended Aug 31, 2025 (in thousands) | 3 Months Ended Aug 31, 2024 (in thousands) | Change (in thousands) | YoY Change (%) | | :----- | :--------------------------------------- | :--------------------------------------- | :-------------------- | :------------- | | Adjusted EBITDA | $88,727 | $91,858 | $(3,131) | -3.4% | | Metric | 6 Months Ended Aug 31, 2025 (in thousands) | 6 Months Ended Aug 31, 2024 (in thousands) | Change (in thousands) | YoY Change (%) | | :----- | :--------------------------------------- | :--------------------------------------- | :-------------------- | :------------- | | Adjusted EBITDA | $195,139 | $185,956 | $9,183 | 4.9% | [Adjusted EBITDA by Segment](index=44&type=section&id=Adjusted%20EBITDA%20by%20Segment) This section provides a reconciliation of Adjusted EBITDA by segment, detailing the contribution of Metal Coatings, Precoat Metals, and Infrastructure Solutions to the overall Adjusted EBITDA - Adjusted EBITDA for Metal Coatings was **$58.5 million** (3 months) and **$120.1 million** (6 months)[203](index=203&type=chunk)[205](index=205&type=chunk) - Adjusted EBITDA for Precoat Metals was **$45.9 million** (3 months) and **$94.4 million** (6 months)[203](index=203&type=chunk)[205](index=205&type=chunk) - Infrastructure Solutions Adjusted EBITDA was negative **$(2.3) million** (3 months) and positive **$5.3 million** (6 months), reflecting the AVAIL JV adjustments[203](index=203&type=chunk)[205](index=205&type=chunk) [Debt Leverage Ratio Reconciliation](index=46&type=section&id=Debt%20Leverage%20Ratio%20Reconciliation) The company's net leverage ratio improved to **1.7x** as of August 31, 2025, from **2.5x** as of February 28, 2025, indicating a significant reduction in leverage | Metric | Trailing Twelve Months Ended Aug 31, 2025 | Trailing Twelve Months Ended Feb 28, 2025 | | :----- | :---------------------------------------- | :---------------------------------------- | | Consolidated Indebtedness | $616,372 | $894,227 | | Adjusted EBITDA per Credit Agreement | $365,273 | $358,058 | | Net Leverage Ratio | 1.7x | 2.5x | - The net leverage ratio improved from **2.5x** to **1.7x**, demonstrating reduced debt relative to Adjusted EBITDA[207](index=207&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There were no material changes to the company's market risk disclosures during the three and six months ended August 31, 2025, referring to the Annual Report on Form 10-K for detailed information - No material changes to market risk disclosures were reported for the current periods[208](index=208&type=chunk) [Item 4. Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's disclosure controls and procedures were effective as of August 31, 2025, with no material changes in internal control over financial reporting during the period - Disclosure controls and procedures were deemed effective at a reasonable assurance level[209](index=209&type=chunk) - No material changes in internal control over financial reporting occurred during the period[210](index=210&type=chunk) PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, other information, exhibits, and signatures [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) AZZ and its subsidiaries are involved in various routine lawsuits, with a **$5.5 million** legal accrual recorded for a breach of contract verdict currently under appeal - The company is involved in routine lawsuits, but management does not expect a material financial impact[212](index=212&type=chunk) - A **$5.5 million** legal accrual was recorded for a breach of contract verdict against AZZ Beaumont, which is currently under appeal[212](index=212&type=chunk)[126](index=126&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's most recent Annual Report on Form 10-K - No material changes to risk factors were reported from the previous Annual Report on Form 10-K[213](index=213&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No shares of common stock were repurchased during the six months ended August 31, 2025, with **$53.2 million** remaining available for repurchases - No common stock repurchases were made during the six months ended August 31, 2025[215](index=215&type=chunk) - **$53.2 million** remains available under the 2020 Share Authorization[215](index=215&type=chunk) [Item 5. Other Information](index=48&type=section&id=Item%205.%20Other%20Information) The Chief Legal Officer entered into a Rule 10b5-1 trading arrangement for the potential sale of up to **8,281** shares of common stock from vested restricted and performance stock units - Chief Legal Officer and Secretary, Tara D. Mackey, entered into a Rule 10b5-1 trading arrangement on August 14, 2025[217](index=217&type=chunk) - The arrangement allows for the potential sale of up to **8,281** shares from vested RSUs and PSUs, with sales starting November 13, 2025, and expiring August 15, 2027[217](index=217&type=chunk) [Item 6. Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including amendments to credit agreements, securitization agreements, and certifications - Exhibits include the Sixth Amendment to Credit Agreement (August 5, 2025) and various agreements related to the Receivables Securitization Facility (July 10, 2025)[219](index=219&type=chunk) - Certifications from the CEO and CFO (pursuant to Sarbanes-Oxley Act Sections 302 and 906) are filed/furnished[219](index=219&type=chunk) [SIGNATURES](index=51&type=section&id=SIGNATURES) The report was duly signed on October 8, 2025, by Jason Crawford, Senior Vice President, Chief Financial Officer, and Principal Accounting Officer of AZZ Inc - The report was signed by Jason Crawford, SVP, CFO, and Principal Accounting Officer, on October 8, 2025[222](index=222&type=chunk)

Market Overview - U.S. stock futures rose on Wednesday after declines on Tuesday, with major benchmark indices showing positive movement [1] - The 10-year Treasury bond yielded 4.11%, while the two-year bond was at 3.56%, indicating market expectations for a potential interest rate cut by the Federal Reserve [2] Stock Performance - Oracle Corp. shares fell 2.5% on Tuesday, negatively impacting other tech stocks due to financial struggles related to Nvidia chips [1] - Trilogy Metals Inc. saw an 8% increase in premarket trading, driven by interest in rare earths and battery metals following U.S. government investments [6] - Nuburu Inc. surged 34.84% after acquiring Orbit S.r.l., marking its expansion into defense software [6] - POET Technologies Inc. gained 12.94% after raising $75 million through a private placement, the largest investment in its history [7] - Joby Aviation Inc. dropped 9.47% as it announced plans to offer $500 million in common stock [7] Sector Insights - Consumer staples and utilities stocks closed higher, while most sectors in the S&P 500 ended negatively, with industrials, consumer discretionary, and communication services recording the largest losses [5] - Financials are in a "sweet spot," with commercial bank loans and leases indicating a healthy economy, as the S&P 500 Diversified Banks stock price index reached a record high, up 4.7% year-on-year [9] Economic Indicators - Crude oil futures rose by 0.97% to approximately $62.33 per barrel, while gold spot prices increased by 1.33% to around $4,037.62 per ounce [13] - The U.S. Dollar Index spot was up 0.36% at 98.9350 [13]

Core Viewpoint - Tata Motors stock has experienced a significant decline, dropping nearly 7% in under a week, reflecting growing investor concerns [1] Company Summary - Tata Motors stock has fallen for the fourth consecutive session, reaching a price of 688.9 on the NSE [1] - The recent decline in stock price indicates a troubling trend for the company amidst increasing investor anxiety [1]

Earnings Expectations - AZZ Inc. is expected to report quarterly earnings of $1.58 per share with revenue of $427.38 million [2] - Richardson Electronics Ltd. is anticipated to post earnings of 1 cent per share on revenue of $51.51 million [2] - Bassett Furniture Industries Inc. is projected to report quarterly earnings of 9 cents per share with revenue of $79.91 million [2] Stock Performance - AZZ shares fell by 1.7% to close at $105.08 [2] - Joby Aviation Inc. announced a public offering of $500 million in common stock, leading to an 8.8% dip in shares to $17.25 [2] - Penguin Solutions Inc. reported better-than-expected earnings but missed sales estimates, resulting in an 11.7% decline in shares to $23.85 [2] - Richardson Electronics shares increased by 2.3% to close at $9.84 [2] - Bassett Furniture shares rose by 4% to close at $15.90 [2] Future Guidance - Penguin Solutions projects FY2026 adjusted earnings between $1.75 to $2.25 per share and sales between $1.314 billion to $1.588 billion [2]

Core Insights - The upcoming earnings season in mid-October 2025 is prompting some firms to release results early, with mixed impacts on share prices despite strong financials [1] AZZ Inc. - AZZ Inc. has seen a 29% year-to-date increase in stock price, despite a recent 7% dip, following its acquisition of Canton Galvanizing and expansion in Ohio [2][3] - The company is expected to benefit from a cyclical shift towards industrials, reshoring efforts, and strong infrastructure spending, which should enhance margins starting this quarter [3] - AZZ's current P/E ratio of 12.4 is near its lowest in years and below the industrial sector average, with analysts projecting over 13% earnings growth in the next year [4] Unity Bancorp - Unity Bancorp has a current P/E ratio of 10.0 and has experienced a 53% increase year-to-date, but has recently dipped nearly 18%, presenting a buying opportunity [6][8] - The bank reported modest earnings beats driven by strong lending activity and stable credit quality, with expectations for a similar positive market reaction in the upcoming earnings report [7] - Unity recently increased its dividend by 7%, resulting in a yield of 1.21%, and analysts unanimously rate it as a Buy, anticipating over 14% upside potential [8]

Earnings Results - AZZ Inc. is set to release its second-quarter earnings results on October 8, with analysts expecting earnings of $1.57 per share, an increase from $1.37 per share in the same period last year [1] - The projected quarterly revenue for AZZ is $426.55 million, compared to $409.01 million a year earlier [1] Dividend Information - AZZ currently offers an annual dividend yield of 0.66%, translating to a semi-annual dividend of $0.20 per share, or $0.71 annually [2] - To generate $500 monthly or $6,000 annually from dividends, an investment of approximately $915,835 or around 8,451 shares is required [2] - For a more modest income of $100 monthly or $1,200 annually, an investment of $183,145 or around 1,690 shares is necessary [2] Dividend Yield Dynamics - The dividend yield can fluctuate based on changes in the stock price and dividend payments [3] - An example illustrates that if a stock with a $2 annual dividend priced at $50 sees its price rise to $60, the yield drops to 3.33% [4] - Conversely, if the stock price falls to $40, the yield increases to 5% [4] Price Action - AZZ shares experienced a decline of 0.7%, closing at $108.37 [5] - Analyst Lucas Pipes from B. Riley Securities maintained a Buy rating on AZZ and raised the price target from $131 to $140 [5]

Earnings Results - AZZ Inc. is set to release its second-quarter earnings results on October 8, with analysts expecting earnings of $1.57 per share, an increase from $1.37 per share in the same period last year [1] - The company projects quarterly revenue of $426.55 million, compared to $409.01 million a year earlier [1] Dividend Information - AZZ currently offers an annual dividend yield of 0.66%, translating to a semi-annual dividend of $0.20 per share, or $0.71 annually [2] - To earn $500 monthly from dividends, an investment of approximately $915,835 or around 8,451 shares is required, while a more modest $100 monthly would need $183,145 or about 1,690 shares [2] Dividend Yield Dynamics - The dividend yield can fluctuate based on changes in the stock price and dividend payments [3][4] - For instance, if a stock's price increases while the dividend remains the same, the yield decreases, and vice versa [4][5] Stock Performance - AZZ shares fell by 0.7% to close at $108.37 [5] - Analyst Lucas Pipes from B. Riley Securities maintained a Buy rating on AZZ and raised the price target from $131 to $140 [5]

Earnings Results - AZZ Inc. is set to release its second-quarter earnings results on October 8, with analysts expecting earnings of $1.57 per share, an increase from $1.37 per share in the same period last year [1] - The projected quarterly revenue is $426.55 million, compared to $409.01 million a year earlier [1] - The Board of Directors has authorized a cash dividend of 20 cents per share for the second quarter [1] Stock Performance - AZZ shares fell by 0.7%, closing at $108.37 on the previous Friday [2] - Recent analyst ratings and price targets for AZZ stock have been varied, with some analysts maintaining or raising their ratings while others have downgraded [7] Analyst Ratings - B. Riley Securities analyst maintained a Buy rating and raised the price target from $131 to $140 [7] - Evercore ISI Group analyst maintained an Outperform rating and increased the price target from $90 to $108 [7] - Sidoti & Co. downgraded the stock from Buy to Neutral with a price target of $101 [7] - Roth MKM initiated coverage with a Buy rating and a price target of $108 [7] - Jefferies analyst maintained a Buy rating and raised the price target from $105 to $110 [7]

Group 1 - The article does not provide any specific content related to a company or industry [1]

Core Viewpoint - AZZ Inc. has announced a cash dividend of $0.20 per share for the second quarter, payable on November 6, 2025, to shareholders of record by October 16, 2025 [1]. Company Overview - AZZ Inc. is a leading independent provider of hot-dip galvanizing and coil coating solutions, serving a wide range of end-markets [3]. - The company's business segments offer sustainable metal coating solutions that enhance the longevity and appearance of essential buildings, products, and infrastructure [3]. Dividend Policy - AZZ intends to pay regular quarterly cash dividends in the foreseeable future, with future dividends subject to review and declaration by the Board of Directors based on various factors [2].