Core Viewpoint - AZZ has demonstrated strong stock performance, with an 11.5% increase over the past month and a 36.3% gain since the beginning of the year, outperforming both the Zacks Industrial Products sector and the Zacks Manufacturing - Electronics industry [1][2]. Financial Performance - AZZ has a consistent record of positive earnings surprises, having met or exceeded earnings consensus estimates in the last four quarters. In the latest earnings report on July 9, 2025, AZZ reported EPS of $1.78, surpassing the consensus estimate of $1.58, although it missed the revenue estimate by 3.64% [2]. - For the current fiscal year, AZZ is projected to achieve earnings of $6.01 per share on revenues of $1.68 billion, reflecting a 15.58% increase in EPS and a 6.19% increase in revenues. For the next fiscal year, earnings are expected to rise to $6.53 per share on revenues of $1.74 billion, indicating year-over-year changes of 8.65% and 4.05%, respectively [3]. Valuation Metrics - AZZ's current valuation metrics indicate that it trades at 18.6 times the current fiscal year EPS estimates, which is below the peer industry average of 24.3 times. On a trailing cash flow basis, it trades at 10.2 times compared to the peer group's average of 20.8 times, suggesting that the company may not be in the top tier from a value perspective [6]. Zacks Rank - AZZ holds a Zacks Rank of 1 (Strong Buy) due to rising earnings estimates, which positions it favorably for investors seeking stocks with strong potential. The combination of a Zacks Rank of 1 or 2 (Buy) and Style Scores of A or B indicates that AZZ shares may have further upside potential in the near term [7].

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying strong candidates can be challenging due to associated risks and volatility [1] Earnings Growth - AZZ has a historical EPS growth rate of 21.5%, with projected EPS growth of 15.5% this year, surpassing the industry average of 12.2% [5] Cash Flow Growth - AZZ's year-over-year cash flow growth stands at 45.6%, significantly higher than the industry average of 12% [6] - The company's annualized cash flow growth rate over the past 3-5 years is 21.8%, compared to the industry average of 9.2% [7] Earnings Estimate Revisions - The current-year earnings estimates for AZZ have increased by 4.9% over the past month, indicating a positive trend in earnings estimate revisions [8] Overall Assessment - AZZ has achieved a Zacks Rank 1 (Strong Buy) and a Growth Score of A, positioning it well for potential outperformance in the growth stock category [9][10]

Core Viewpoint - Growth stocks are appealing due to their above-average financial growth, but identifying strong growth stocks is challenging due to associated risks and volatility [1] Group 1: Company Overview - AZZ is highlighted as a recommended growth stock with a favorable Growth Score and a top Zacks Rank [2] - The company has a historical EPS growth rate of 21.5% and is projected to grow EPS by 11.6% this year, surpassing the industry average of 11.2% [5] Group 2: Financial Metrics - AZZ's year-over-year cash flow growth stands at 45.6%, significantly higher than the industry average of 12% [6] - The company's annualized cash flow growth rate over the past 3-5 years is 21.8%, compared to the industry average of 9.2% [7] Group 3: Earnings Estimates - There has been a positive trend in earnings estimate revisions for AZZ, with the Zacks Consensus Estimate for the current year increasing by 2.3% over the past month [9] - AZZ has earned a Growth Score of A and a Zacks Rank 2 due to positive earnings estimate revisions, indicating potential for outperformance [11]

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Overview: AZZ - AZZ currently holds a Momentum Style Score of A, indicating strong momentum characteristics [2] - The company has a Zacks Rank of 2 (Buy), suggesting a favorable outlook compared to the market [3] Performance Metrics - Over the past week, AZZ shares increased by 4.79%, outperforming the Zacks Manufacturing - Electronics industry, which rose by 2.76% [5] - In a longer timeframe, AZZ's monthly price change is 16.17%, significantly higher than the industry's 6.18% [5] - Over the past quarter, AZZ shares have surged by 30.91%, and over the last year, they have gained 30.67%, while the S&P 500 increased by 17.01% and 13.4%, respectively [6] Trading Volume - AZZ's average 20-day trading volume is 297,930 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Outlook - In the last two months, two earnings estimates for AZZ have been revised upwards, with the consensus estimate increasing from $5.73 to $5.80 [9] - For the next fiscal year, two estimates have also moved higher, with no downward revisions during the same period [9] Conclusion - Given the strong performance metrics and positive earnings outlook, AZZ is positioned as a 2 (Buy) stock with a Momentum Score of A, making it a potential candidate for near-term investment [10][11]

Core Insights - AZZ Inc. has reached a strategic inflection point, transitioning from a period of leverage and tentative growth to a phase characterized by disciplined execution and a cleaner balance sheet [1] Company Overview - AZZ Inc. is a Texas-based specialist in galvanizing and coil-coating, which has been historically weighed down by high leverage and uncertain growth plans [1] - The company is now benefiting from infrastructure tailwinds that support its growth trajectory [1] Investment Focus - The analysis emphasizes the importance of small- to mid-cap companies, which are often overlooked by investors, while also providing insights into larger-cap companies for a broader market perspective [1]

Financial Data and Key Metrics Changes - The company reported record high sales of $422 million for Q1 2026, a 2.1% increase from $413.2 million in the same quarter last year [12][13] - Adjusted EBITDA for the quarter was $106.4 million, representing a margin of 25.2%, up from $94.1 million or 22.8% in the prior year [17][18] - Net income for Q1 was $170.9 million compared to $39.6 million in the prior year, with adjusted net income of $53.8 million or adjusted diluted EPS of $1.78, up from $44 million or $1.46 [17][19] Business Line Data and Key Metrics Changes - The Metal Coatings segment saw a 6% increase in sales due to higher steel volume processed, while Precoat Metals experienced a slight decline of 0.8% in sales due to inventory challenges [12][13][14] - Adjusted EBITDA margins for Metal Coatings were 32.9%, while Precoat Metals had margins of 20.7% [6][12] - The company incurred a $3.8 million restructuring charge related to the closure of a powder coating facility and divestiture of a plating facility [14] Market Data and Key Metrics Changes - Demand from infrastructure-related projects benefited the company across multiple end markets, particularly in construction and electrical sectors [20] - The aluminum transition in food and beverage packaging remains a key growth driver, with the new Greenfield plant ramping production [20] - Prepainted imports fell 38% year-over-year in May, indicating a positive impact from tariffs on domestic sourcing [38] Company Strategy and Development Direction - The company is focused on disciplined execution of its strategic plan, including market share expansion and converting customers from post-paint to prepay [23] - Recent acquisitions, such as Canton Galvanizing, are aimed at scaling the galvanizing business and enhancing customer relationships [9][10] - The company plans to pursue regular and opportunistic share repurchases and has increased its quarterly cash dividend by 17.6% [19][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's financial position and growth trajectory, despite ongoing tariff uncertainties [56] - The company anticipates continued demand growth driven by infrastructure spending and reshoring initiatives [20][21] - Future sales and EBITDA guidance remains unchanged, with adjusted diluted EPS expected to increase by 10-20% over the previous fiscal year [24][23] Other Important Information - The company generated cash flow from operations of $314.8 million, including $273.2 million from the Avail divestiture [18] - The net leverage ratio improved to 1.7 times, down from 2.8 times in the prior year [19] - The company is committed to maintaining a disciplined capital allocation strategy focused on debt reduction and strategic acquisitions [19] Q&A Session Summary Question: Did Q1 benefit from normalization in volumes? - Yes, about half of the recovery was from Q4 and the other half was organic growth [27] Question: What drove improved zinc utilization for Metal Coatings? - The team has been focusing on digital tools, training, and operational excellence, nearing theoretical zinc efficiency levels [28][29] Question: How are customer inventory levels impacting Precoat? - Customers are pulling down inventory, indicating true demand, despite overall market declines [36] Question: What is the outlook for Precoat given tariff impacts? - Precoat has been affected by tariffs, but margins are up, demonstrating adaptability in cost structure [72] Question: Will share repurchases increase in future quarters? - Yes, the company is committed to share buybacks and has a $100 million facility approved for this purpose [46] Question: What is the outlook for solar projects? - There is an expectation of a pull forward in solar projects due to recent legislative changes [81]

Financial Data and Key Metrics Changes - The company reported record high sales of $422 million for Q1 2026, a 2.1% increase from $413.2 million in the same quarter last year [15] - Adjusted EBITDA for the quarter was $106.4 million, representing a margin of 25.2%, compared to $94.1 million or 22.8% in the prior year [20] - Net income for Q1 was $170.9 million, significantly up from $39.6 million in the prior year, with adjusted net income at $53.8 million or $1.78 per diluted share, a 22.2% increase year-over-year [20][27] Business Line Data and Key Metrics Changes - The Metal Coatings segment saw a 6% increase in sales due to higher steel volume processed, while Precoat Metals experienced a slight decline of 0.8% in sales due to inventory challenges [16][19] - Adjusted EBITDA margins for Metal Coatings were 32.9% and 20.7% for Precoat Metals, indicating strong performance in both segments [7] Market Data and Key Metrics Changes - Demand from infrastructure-related projects benefited the company across multiple end markets, particularly in construction and electrical sectors [24] - The aluminum transition in food and beverage packaging remains a key growth driver, with expectations for continued demand due to reshoring activities and tariffs [24] Company Strategy and Development Direction - The company is focused on disciplined execution of its strategic plan, including market share expansion and converting customers from post-paint to prepay [26] - Recent acquisitions, such as Canton Galvanizing, are aimed at scaling the galvanizing business and enhancing customer relationships [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the fiscal year 2026, reiterating sales and EBITDA guidance while increasing EPS guidance due to strong demand forecasts [26][27] - The company remains cautious about sales due to ongoing tariff uncertainties but is confident in its ability to manage costs and improve margins [62] Other Important Information - The company generated cash flow from operations of $314.8 million, including $273.2 million from the Avail divestiture, allowing for significant debt reduction [21][22] - The Board approved a 17.6% increase in the quarterly cash dividend from $0.17 to $0.20 per share [22] Q&A Session Summary Question: Did Q1 benefit from normalization in volumes? - Management confirmed that Q1 saw recovery from Q4 weather impacts, contributing to organic growth [30] Question: What drove improved zinc utilization for Metal Coatings? - Management attributed it to digital tools, training, and operational excellence, nearing theoretical efficiency levels [31][33] Question: Outlook for Precoat Metals given customer inventory levels? - Management noted that while overall market demand is down, customer inventory drawdowns indicate true demand, with tariffs impacting imports [40][42] Question: Plans for share repurchases and capital allocation? - Management confirmed commitment to share buybacks and strategic acquisitions, with a focus on maintaining a disciplined capital allocation strategy [50][52] Question: Impact of copper tariffs on business? - Management indicated that while recent tariff announcements are new, prior positive trends in project viability remain, with ongoing monitoring of customer feedback [55][56] Question: Expectations for Precoat Metals segment? - Management expects continued margin improvement despite lower volumes, with the new facility ramping up production [77][80]

Group 1: Earnings Performance - AZZ reported quarterly earnings of $1.78 per share, exceeding the Zacks Consensus Estimate of $1.58 per share, and up from $1.46 per share a year ago, representing an earnings surprise of +12.66% [1] - Over the last four quarters, AZZ has surpassed consensus EPS estimates four times [2] - The company posted revenues of $421.96 million for the quarter ended May 2025, missing the Zacks Consensus Estimate by 3.64%, compared to year-ago revenues of $413.21 million [2] Group 2: Stock Performance and Outlook - AZZ shares have increased approximately 20.6% since the beginning of the year, outperforming the S&P 500's gain of 5.9% [3] - The future performance of AZZ's stock will depend on management's commentary during the earnings call and the company's earnings outlook [4][6] - The current consensus EPS estimate for the coming quarter is $1.58 on revenues of $435.43 million, and for the current fiscal year, it is $5.73 on revenues of $1.68 billion [7] Group 3: Industry Context - The Manufacturing - Electronics industry, to which AZZ belongs, is currently ranked in the top 22% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact AZZ's stock performance [5]

Financial Performance - Q1 Fiscal Year 2026 sales reached $422 million, a 2.1% increase compared to the previous year[3] - Adjusted EBITDA for Q1 Fiscal Year 2026 was $106.4 million, a significant 21.9% increase[3] - Adjusted Diluted EPS for Q1 Fiscal Year 2026 was $1.78, up 13.1%[3] - Reported Diluted EPS was $5.66, a substantial 510.1% increase[3] Segment Performance - Metal Coatings sales were $187.2 million, a 6.0% increase[1, 5] - Precoat Metals sales were $234.7 million, a slight decrease of 0.8%[1, 6] - Metal Coatings operating income was $61.5 million[5] - Precoat Metals operating income was $39.4 million[6] - Metal Coatings Adjusted EBITDA was $50.7 million[5] - Precoat Metals Adjusted EBITDA was $48.5 million[6] Balance Sheet and Guidance - Q1 cash provided by operating activities was $314.8 million, including a $273.2 million AVAIL distribution[1] - Debt reduction amounted to $285 million, resulting in a net leverage ratio of 1.7X[1] - The company updated its FY 2026 guidance with sales projected between $1.625 billion and $1.725 billion[1] - Adjusted EBITDA is expected to be in the range of $360 million to $400 million[1] - Adjusted Diluted EPS is projected to be between $5.75 and $6.25[1]

[Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) [Q1 FY2026 Performance Overview](index=1&type=section&id=Fiscal%20Year%202026%20First%20Quarter%20Overview) AZZ reported record results for the first quarter of fiscal year 2026, with total sales increasing 2.1% to $422.0 million, achieving significant growth in profitability with Adjusted EBITDA rising to $106.4 million and Adjusted EPS up 21.9% to $1.78, while a substantial cash infusion from the AVAIL JV asset sale enabled a $285.4 million debt reduction, lowering the net leverage ratio to 1.7x, and following these strong results, the company raised its full-year guidance and increased its quarterly dividend | Financial Metric | Q1 FY2026 | Change (YoY) | | :--- | :--- | :--- | | Total Sales | $422.0 million | +2.1% | | Net Income | $170.9 million | +331.6% | | Adjusted Net Income | $53.8 million | +22.3% | | GAAP Diluted EPS | $5.66 | +510.1% | | Adjusted Diluted EPS | $1.78 | +21.9% | | Adjusted EBITDA | $106.4 million | +13.1% | - The company received **$273.2 million** in cash from its minority interest in AVAIL following the sale of the Electrical Products Group, with these proceeds being a primary driver for the **$285.4 million** debt reduction during the quarter[5](index=5&type=chunk)[6](index=6&type=chunk) - The net leverage ratio was reduced to **1.7x** at the end of the quarter[5](index=5&type=chunk)[6](index=6&type=chunk) - Subsequent to the quarter, the company increased its quarterly cash dividend to common shareholders from **$0.17 to $0.20 per share**[5](index=5&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) [Metal Coatings Segment](index=2&type=section&id=First%20Quarter%202026%20Metal%20Coatings) The Metal Coatings segment delivered strong growth, with sales increasing 6.0% to $187.2 million, driven by higher volumes from infrastructure-related projects, and profitability improved significantly, with Adjusted EBITDA margin expanding by 200 basis points to 32.9% due to increased volume and better zinc utilization | Metric | Q1 FY2026 | Q1 FY2025 | Change | | :--- | :--- | :--- | :--- | | Sales | $187.2M | $176.7M | +6.0% | | Adjusted EBITDA | $61.5M | $54.6M | +12.6% | | Adjusted EBITDA Margin | 32.9% | 30.9% | +200 bps | - Growth was primarily driven by increased volume supported by infrastructure spending in construction, industrial, and electrical transmission and distribution end markets[7](index=7&type=chunk) [Precoat Metals Segment](index=2&type=section&id=First%20Quarter%202026%20Precoat%20Metals) The Precoat Metals segment experienced a slight sales decline of 0.8% to $234.7 million, attributed to decreased volumes in the construction, HVAC, and appliance markets, but despite lower sales, the segment's EBITDA margin improved by 50 basis points to 20.7%, reflecting a favorable product mix and operational efficiencies | Metric | Q1 FY2026 | Q1 FY2025 | Change | | :--- | :--- | :--- | :--- | | Sales | $234.7M | $236.6M | -0.8% | | EBITDA | $48.5M | $47.7M | +1.7% | | EBITDA Margin | 20.7% | 20.2% | +50 bps | - The sales decrease was due to lower volumes in certain end markets, including construction, HVAC, and appliance[8](index=8&type=chunk) [Financial Condition & Capital Allocation](index=2&type=section&id=Balance%20Sheet%2C%20Liquidity%20and%20Capital%20Allocation) [Balance Sheet, Liquidity and Capital Allocation](index=2&type=section&id=Balance%20Sheet%2C%20Liquidity%20and%20Capital%20Allocation) The company significantly strengthened its balance sheet in Q1, generating $314.8 million in operating cash flow, which included a $273.2 million distribution from the AVAIL JV, enabling a debt paydown of $285.4 million, reducing net leverage to 1.7x, with capital allocation also including $5.1 million in dividends and $20.9 million in capital expenditures, and $53.2 million remaining under the current share repurchase authorization - Generated significant operating cash of **$314.8 million**, which included a **$273.2 million** distribution from the AVAIL JV[9](index=9&type=chunk) | Capital Allocation & Liquidity | Amount | | :--- | :--- | | Debt Paid Down | $285.4 million | | Dividends Paid | $5.1 million | | Capital Expenditures | $20.9 million | | Remaining Share Repurchase Authorization | $53.2 million | - Net leverage was **1.7x** trailing twelve months Adjusted EBITDA at the end of the quarter[9](index=9&type=chunk) [FY2026 Financial Outlook](index=2&type=section&id=Financial%20Outlook%20%E2%80%94%20Fiscal%20Year%202026%20Guidance) [Updated Guidance](index=2&type=section&id=Updated%20Guidance) Reflecting confidence from strong Q1 performance, AZZ has raised its full-year fiscal 2026 guidance, now projecting sales of $1.625 to $1.725 billion, Adjusted EBITDA of $360 to $400 million, and Adjusted Diluted EPS of $5.75 to $6.25, with this outlook assuming specific segment margin ranges and excluding any future M&A activity or earnings from the AVAIL joint venture | FY2026 Guidance | Range | | :--- | :--- | | Sales | $1.625 - $1.725 billion | | Adjusted EBITDA | $360 - $400 million | | Adjusted Diluted EPS | $5.75 - $6.25 | - Key guidance assumptions include: - Excludes future acquisitions and equity in earnings from the AVAIL JV - Assumes an annualized effective tax rate of **25%** - Metal Coatings segment Adjusted EBITDA margin range of **27-32%** - Precoat Metals segment Adjusted EBITDA margin range of **17-22%**[10](index=10&type=chunk)[12](index=12&type=chunk) [Financial Statements (Unaudited)](index=4&type=section&id=Financial%20Statements%20%28Unaudited%29) [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For the first quarter ending May 31, 2025, sales grew to $422.0 million from $413.2 million year-over-year, and net income saw a dramatic increase to $170.9 million, compared to $39.6 million in the prior year, largely due to a $173.5 million contribution from 'Equity in earnings of unconsolidated subsidiaries', resulting in a diluted EPS of $5.66, a significant turnaround from a loss of ($1.38) per share in the same quarter last year | (in thousands, except per share) | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | | :--- | :--- | :--- | | Sales | $421,962 | $413,208 | | Operating income | $69,549 | $69,749 | | Equity in earnings of unconsolidated subsidiaries | $173,523 | $3,824 | | Net income | $170,908 | $39,602 | | Diluted earnings (loss) per common share | $5.66 | $(1.38) | [Segment Reporting](index=5&type=section&id=Segment%20Reporting) In Q1 FY2026, the Metal Coatings segment's sales rose to $187.2 million with an Adjusted EBITDA of $61.5 million, while the Precoat Metals segment's sales were slightly down at $234.7 million, but its Adjusted EBITDA increased to $48.5 million, leading to total Segment Adjusted EBITDA growing to $117.6 million from $106.1 million in the prior-year quarter | (in thousands) | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | | :--- | :--- | :--- | | **Sales:** | | | | Metal Coatings | $187,215 | $176,651 | | Precoat Metals | $234,747 | $236,557 | | **Total Sales** | **$421,962** | **$413,208** | | **Adjusted EBITDA:** | | | | Metal Coatings | $61,516 | $54,645 | | Precoat Metals | $48,477 | $47,687 | | **Total Segment Adjusted EBITDA** | **$117,610** | **$106,127** | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of May 31, 2025, the company's balance sheet shows total assets of $2.16 billion, with a significant change from the previous fiscal year-end being the reduction of long-term debt to $569.8 million from $852.4 million, while shareholders' equity increased from $1.05 billion to $1.21 billion | (in thousands) | As of May 31, 2025 | As of February 28, 2025 | | :--- | :--- | :--- | | Total Assets | $2,159,185 | $2,227,101 | | Long-term debt, net | $569,807 | $852,365 | | Shareholders' Equity | $1,214,298 | $1,045,495 | | Total Liabilities and Shareholders' equity | $2,159,185 | $2,227,101 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first three months of FY2026, net cash provided by operating activities was $314.8 million, a substantial increase from $71.9 million in the prior year, primarily due to a $273.2 million distribution from AVAIL, and net cash used in financing activities was $295.5 million, reflecting significant debt repayment | (in thousands) | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $314,782 | $71,944 | | Net cash used in investing activities | $(17,122) | $(27,379) | | Net cash used in financing activities | $(295,512) | $(38,542) | - Net cash from operating activities for the three months ended May 31, 2025, includes distributions from AVAIL of **$273.2 million**[25](index=25&type=chunk) [Non-GAAP Financial Measures & Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) [Reconciliation of Adjusted Net Income and EPS](index=8&type=section&id=Reconciliation%20of%20Adjusted%20Net%20Income%20and%20EPS) The company reconciles its GAAP Net Income of $170.9 million to a non-GAAP Adjusted Net Income of $53.8 million for Q1 FY2026, with the largest adjustment being the exclusion of a $165.8 million gain from the AVAIL JV distribution, and after accounting for this and other items like amortization and restructuring charges, the Adjusted Diluted EPS is calculated to be $1.78, compared to $1.46 in the prior-year quarter | (in thousands, except per share) | Three Months Ended May 31, 2025 | | :--- | :--- | | Net income available to common shareholders (GAAP) | $170,908 | | Total adjustments | $(117,101) | | **Adjusted net income (non-GAAP)** | **$53,807** | | Diluted earnings per share (GAAP) | $5.66 | | **Adjusted earnings per share (non-GAAP)** | **$1.78** | - Key adjustments to reconcile GAAP to non-GAAP net income include the exclusion of a **$165.8 million** gain from the AVAIL JV distribution, and additions for amortization (**$5.7 million**), restructuring charges (**$3.8 million**), and an executive incentive program expense (**$2.2 million**)[31](index=31&type=chunk)[36](index=36&type=chunk) [Reconciliation of Adjusted EBITDA](index=9&type=section&id=Reconciliation%20of%20Adjusted%20EBITDA) Adjusted EBITDA for Q1 FY2026 was $106.4 million, an increase from $94.1 million in the prior-year period, with the calculation starting with GAAP Net Income and adjusting for interest, taxes, D&A, and other specific items, most notably excluding the $165.8 million gain from the AVAIL JV distribution | (in thousands) | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | | :--- | :--- | :--- | | Net income | $170,908 | $39,602 | | Interest expense | $18,563 | $22,774 | | Income tax expense | $54,928 | $11,401 | | Depreciation and amortization | $21,827 | $20,323 | | AVAIL JV excess distribution | $(165,826) | — | | Other adjustments | $6,012 | — | | **Adjusted EBITDA (non-GAAP)** | **$106,412** | **$94,100** | [Debt Leverage Ratio Reconciliation](index=10&type=section&id=Debt%20Leverage%20Ratio%20Reconciliation) The company's net leverage ratio improved significantly, decreasing to 1.7x as of May 31, 2025, from 2.5x at the end of the prior fiscal year, achieved through a reduction in consolidated indebtedness to $607.1 million and an increase in the trailing twelve months Adjusted EBITDA (per Credit Agreement) to $367.3 million | (in thousands) | As of May 31, 2025 | As of Feb 28, 2025 | | :--- | :--- | :--- | | Consolidated indebtedness | $607,107 | $894,227 | | Adjusted EBITDA per Credit Agreement (TTM) | $367,314 | $358,058 | | **Net leverage ratio** | **1.7x** | **2.5x** |