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]

Summary of AZZ FY Conference Call Company Overview - AZZ is the leading independent galvanizing firm in the US, recently expanded by acquiring Precoat Metals, a major player in metal coating and precoating steel and aluminum [1][3][4] Financial Performance - AZZ has shown strong financial results over the past two to three years, with expectations for continued improvement [2] - Sales for the metal coatings segment reached $665 million, while Precoat Metals generated $912 million in sales [10] - The company has a consistent adjusted EBITDA margin of 27% to 32% for metal coatings and a slightly lower margin for Precoat Metals due to higher paint costs [13] Strategic Focus - The company aims to grow faster than GDP and is investing in a new aluminum coil coating line in Washington, Missouri, with a $125 million investment [5][14] - AZZ is committed to reducing debt, having reduced it by $110 million in the past two years, with a target of at least $165 million reduction this year [6][19] - The company is back in the M&A pipeline, looking for both small and larger acquisition opportunities, particularly in the Precoat Metals segment [6][25] Market Dynamics - AZZ operates in various end markets, including construction, industrial, transportation, consumer goods, and electrical sectors, benefiting from funding through the AIIJA [9] - The company has no exposure to steel or aluminum price fluctuations as it operates on a toll processing model [11] Technology and Innovation - AZZ has invested in proprietary technology, including a digital galvanizing system and Coil Zone, enhancing customer efficiency and visibility [12][16][17] - The company has been recognized for its sustainability efforts, being named one of America's most responsible companies for three consecutive years [18] Economic Resilience - AZZ's metal coatings segment demonstrated resilience during economic downturns, with EBITDA growth during the last cycle [20] - The company is focused on strategic capital allocation, including M&A, managing leverage, and returning capital to shareholders [21] Guidance - For the fiscal year, AZZ projects sales between $1.625 billion and $1.725 billion, adjusted EBITDA of $360 million to $400 million, and EPS in the range of $5.50 to $6.10 [21]