AZZ(AZZ) - 2026 Q2 - Quarterly Results

Press Release Overview Headline and Introduction AZZ Inc. reported strong Q2 FY2026 results, showing growth in sales, EPS, and cash flow, with unchanged FY2026 guidance - AZZ Inc. reported Q2 FY2026 results with growth in sales, EPS, and cash flow[1][2] - Fiscal Year 2026 Guidance remains unchanged[1] Fiscal Year 2026 Second Quarter Highlights Q2 FY2026 sales increased 2.0% to $417.3 million, net income surged 152.3% to $89.3 million, and adjusted EPS grew 13.1% to $1.55 Q2 FY2026 Key Financial Highlights | Metric | Q2 FY2026 (Millions) | Change YoY | | :----------------------- | :------------------- | :--------- | | Total Sales | $417.3 | +2.0% | | Metal Coatings Sales | $190.0 | +10.8% | | Precoat Metals Sales | $227.3 | -4.3% | | Net Income | $89.3 | +152.3% | | Adjusted Net Income | $46.9 | +13.8% | | GAAP Diluted EPS | $2.95 | +150.0% | | Adjusted Diluted EPS | $1.55 | +13.1% | | Consolidated Adjusted EBITDA | $88.7 | -3.5% (from $91.9M) | | Cash from Operating Activities | $58.4 | +23% | - Completed the acquisition of a galvanizing facility in Canton, Ohio for $30.1 million[6] - Paid a cash dividend of $0.20 per share to common shareholders during the quarter[6] CEO Commentary CEO Tom Ferguson highlighted Q2 sales growth, strong Metal Coatings, weaker Precoat Metals, and balance sheet strengthening, affirming FY2026 guidance - Metal Coatings delivered strong, double-digit sales gains on volume increases, driven by infrastructure-driven project spending in construction, industrial, and electrical transmission and distribution end-markets[4] - Precoat Metals experienced weaker demand in building construction, HVAC, and appliance end-markets[4] - Strengthened balance sheet by introducing an Accounts Receivable securitization program, repricing Term Loan B (75-basis point reduction), and achieving modest debt paydown, maintaining a net debt leverage of 1.7x[5] Segment Performance Metal Coatings Segment The Metal Coatings segment reported sales of $190.0 million, a 10.8% increase, driven by higher volumes from infrastructure-related project spending Metal Coatings Segment Performance (Q2 FY2026 vs Q2 FY2025) | Metric | Q2 FY2026 | Q2 FY2025 | Change YoY | | :------------------- | :---------- | :---------- | :--------- | | Sales | $190.0 million | $171.5 million | +10.8% | | Adjusted EBITDA | $58.5 million | $54.4 million | +7.5% | | Adjusted EBITDA Margin | 30.8% | 31.7% | -90 bps | - Sales increase driven by increased volume supported by infrastructure-related project spending in construction, industrial, and electrical transmission and distribution end markets[7] Precoat Metals Segment The Precoat Metals segment's sales decreased by 4.3% to $227.3 million due to weaker demand in building construction, HVAC, and appliance end markets Precoat Metals Segment Performance (Q2 FY2026 vs Q2 FY2025) | Metric | Q2 FY2026 | Q2 FY2025 | Change YoY | | :------------------- | :---------- | :---------- | :--------- | | Sales | $227.3 million | $237.5 million | -4.3% | | Adjusted EBITDA | $45.9 million | $50.2 million | -8.4% | | Adjusted EBITDA Margin | 20.2% | 21.1% | -90 bps | - Sales decrease primarily due to weaker end markets, including building construction, HVAC, and appliance[8] Financial Position and Capital Allocation Balance Sheet, Liquidity and Capital Allocation Summary For H1 FY2026, AZZ generated $373.2M in operating cash, reduced debt by $290.4M, and maintained a net leverage of 1.7x Key Financial Position and Capital Allocation Metrics (Six Months Ended Aug 31) | Metric | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | Change YoY | | :-------------------------------- | :---------------------------- | :---------------------------- | :--------- | | Operating Cash Flow | $373.2 million | $119.4 million | +212.5% | | Debt Paid Down | $290.4 million | N/A | N/A | | Cash Dividends to Shareholders | $11.1 million | N/A | N/A | | Capital Expenditures | $40.2 million | N/A | N/A | - Net leverage ratio was 1.7x trailing twelve months Adjusted EBITDA at the end of Q2 FY2026[9] - Operating cash flow for the first six months includes a $273.2 million distribution from the AVAIL JV following the sale of its Electrical Products Group[9] - Full fiscal year capital expenditures are expected to be approximately $60 - $80 million[9] Financial Outlook FY2026 Guidance AZZ Inc. maintains its FY2026 guidance, anticipating sales between $1.625 billion and $1.725 billion, Adjusted EBITDA of $360 million to $400 million, and Adjusted Diluted EPS of $5.75 to $6.25 FY2026 Financial Guidance | Metric | FY2026 Guidance | | :---------------- | :-------------------- | | Sales | $1.625 - $1.725 billion | | Adjusted EBITDA | $360 - $400 million | | Adjusted Diluted EPS | $5.75 - $6.25 | - Guidance assumes an annualized effective tax rate of 24% and excludes future acquisitions, future equity in earnings from AVAIL joint venture, and certain non-GAAP adjustments[10][12] - Assumes EBITDA margin range of 27-32% for the Metal Coatings segment and 17-22% for the Precoat Metals segment[12] Additional Information Conference Call Details AZZ Inc. will host a live conference call on Thursday, October 9, 2025, at 11:00 A.M. ET to discuss Q2 FY2026 financial results - Live conference call on Thursday, October 9, 2025, at 11:00 A.M. ET[11] - Webcast of the call will be available on the Company's Investor Relations page at http://www.azz.com/investor-relations, with a replay available for 12 months[11][13] About AZZ Inc. AZZ Inc. is a leading independent provider of hot-dip galvanizing and coil coating solutions in North America, enhancing essential infrastructure and products - Leading independent provider of hot-dip galvanizing and coil coating solutions to a broad range of end-markets in North America[14] - Business segments provide sustainable, unmatched metal coating solutions that enhance the longevity and appearance of buildings, products, and infrastructure[14] Safe Harbor Statement The report contains forward-looking statements subject to various risks, including changes in demand, cost increases, supply-chain delays, and economic volatility - Forward-looking statements are subject to risks such as changes in customer demand for manufactured solutions (construction, industrial, metal coatings markets)[15] - Risks include increases in labor costs, components and raw materials (zinc, natural gas, paint), supply-chain vendor delays, customer requested delays, and delays in additional acquisition opportunities[15] - Other risks include an increase in debt leverage and/or interest rates, availability of experienced management and employees, downturns in market conditions, economic volatility, tariffs, acts of war or terrorism[15] Contact Information Contact details are provided for AZZ Inc.'s Chief Marketing,