AZZ Q4 2025 Earnings Report

AZZ EPS Results

• Actual EPS: $0.98
• Consensus EPS: $0.95
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: N/A

AZZ Revenue Results

• Actual Revenue: $351.88 million
• Expected Revenue: $367.78 million
• Beat/Miss: Missed by -$15.91 million
• YoY Revenue Growth: N/A

AZZ Announcement Details

• Quarter: Q4 2025
• Date: 4/21/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, April 22, 2025
• Conference Call Time: 11:00AM ET

AZZ (NYSE:AZZ) provides hot-dip galvanizing and coil coating solutions in North America. It offers metal finishing solutions for corrosion protection, including hot-dip galvanizing, spin galvanizing, powder coating, anodizing, and plating to steel fabrication and other industries, as well as to fabricators or manufacturers that provide services to the transmission and distribution, bridge and highway, petrochemical, and general industrial markets; and original equipment manufacturers. It also provides aesthetic and corrosion protective coatings and related value-added services for steel and aluminum coil primarily serving the construction; appliance; heating, ventilation, and air conditioning; container; transportation; and other end markets. The company was incorporated in 1956 and is headquartered in Fort Worth, Texas.

AZZ Q4 2025 Earnings Call Transcript

Presentation

[Operator]

Good day, and welcome to the AZZ Incorporated Q4 FY twenty twenty five Earnings Conference Call and Webcast. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Sandy Martin of 3PART Advisors.

[Operator]

Please go ahead.

[Sandy Martin, Managing Director at Three Part Advisors]

Thank you, operator. Good morning. Thank you for joining us today to review AZZ's financial results for the fourth quarter and full fiscal year that ended 02/28/2025. Joining the call today are Tom Ferguson, President and Chief Executive Officer Jason Crawford, Chief Financial Officer and David Nark, Chief Marketing Communications and Investor Relations Officer. After today's prepared remarks, we will open the call for questions.

[Sandy Martin, Managing Director at Three Part Advisors]

Please note that the live webcast for today's call can be found at www.azz.com/investorevents. Before we begin, I want to remind everyone that our discussion today will include forward looking statements made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. By their nature, forward looking statements are uncertain and outside the company's control. Except for actual results, AZZ's comments containing forward looking statements may involve risks and uncertainties, some of which are detailed from time to time in documents filed by AZZ with the Securities and Exchange Commission, including the annual report on Form 10 ks for the fiscal year ended February. These statements are not guarantees of future performance.

[Sandy Martin, Managing Director at Three Part Advisors]

Therefore, undue reliance should not be placed upon them. Actual results could differ materially from these expectations. In addition, today's call will discuss non GAAP financial measures. Non GAAP financial measures should be considered supplemental to, not as a substitute for GAAP We refer investors to the reconciliation from GAAP to non GAAP measures in today's earnings press release.

[Sandy Martin, Managing Director at Three Part Advisors]

I would now like to turn the call over to Tom Ferguson.

[Thomas Ferguson, President & CEO at AZZ]

Good morning and thank you for joining us. Today, we will discuss AZZ's fiscal twenty twenty five financial results and achievements as well as our outlook for fiscal twenty twenty six. Then we will open up the call for questions. I am pleased to report that our coatings segment delivered record sales and profitability for fiscal twenty twenty five due to a combination of business momentum and disciplined execution of our growth initiatives. Metal Coatings generated fiscal year twenty twenty five sales of $665,000,000 while Precoat Metals generated $912,000,000 Strong sales for the full year were largely based on increased volume as we processed higher tonnage in both fabricated steel and coiled coating.

[Thomas Ferguson, President & CEO at AZZ]

For the full year, our top line results were primarily driven by infrastructure investments to support community growth, urban expansion and economic development. More specifically, AZZ's record breaking performance was driven by growth in bridge and highway construction including new projects and renovation projects across The U. S. The continued expansion in transmission and distribution including solar projects and general construction which for AZZ includes data centers. Jason will cover our fourth quarter financial results in a moment, but as a reminder the fourth quarter is typically our weakest season due to the winter holidays and inclement weather that hampers construction During our fourth quarter, which ended 02/28/2025, the construction activity was impacted by significantly more inclement weather days than in a typical year.

[Thomas Ferguson, President & CEO at AZZ]

Collectively, we experienced over two hundred days of lost production in the fourth quarter due to adverse weather conditions. David will provide more color on this shortly. In fiscal twenty twenty five, Metal Coatings delivered an EBITDA margin of 30.9% primarily due to better operating leverage on expanding volumes and improved zinc productivity. As discussed previously, we believe our new margin range for AMC of 27% to 32% is sustainable. PreCo Metals EBITDA margin of 19.6% exceeded its prior year comparable demonstrating strength based on increased volume, a more profitable business mix and improved operational performance.

[Thomas Ferguson, President & CEO at AZZ]

Our strong EBITDA generated in fiscal twenty twenty five converted to cash from operations of $250,000,000 This robust cash generation allowed us to pay down $110,000,000 of debt and fund our new Greenfield facility near St. Louis, Missouri, which is currently ramping up commercial production as we speak. This year we plan to continue to pay down debt and strengthen the balance sheet while prioritizing other capital allocation strategies including paying quarterly cash dividends. We also plan to invest in AZZ's enterprise wide technologies by enhancing DGS, which is our digital galvanizing system in our galvanizing plants and CoilZone in the coil coating facilities. These customer centric technologies continue to elevate service levels and enhance our unique value proposition as well as provide effective business intelligence reporting for better decision making particularly in relation to improving operating productivity and efficiency.

[Thomas Ferguson, President & CEO at AZZ]

AZZ's pipeline of acquisition targets continues to grow and we are carefully evaluating M and A in markets throughout The United States. We focus on synergistic targets that present attractive risk adjusted returns for enhancing long term shareholder value. We are disciplined in our approach and decide on acquisition based on timing, targeted valuation and appropriate balance sheet leverage. After solely focusing on debt reduction, we anticipate closing the single site bolt on galvanizing deal during the first quarter. AZZ continues to differentiate with industry leading market share positions in both segments.

[Thomas Ferguson, President & CEO at AZZ]

We believe our geographic footprint and scale across The U. S. And Canada as well as technical expertise, reputation for customer service excellence and longstanding customer relationships create a durable competitive mode for AZZ. Our three to five year strategy is anchored on organic market share growth as well as inorganic acquisition growth that we are pursuing for both segments. Under the Trump administration's current tariff mandates, we expect demand for coating solutions of both steel and aluminum produced domestically to accelerate.

[Thomas Ferguson, President & CEO at AZZ]

Additionally, in fiscal twenty twenty six, we will continue to benefit from our tolling model, which insulates us from commodity risks as we do not take ownership of steel or aluminum process through our facilities. Currently, our zinc and paint supplies have not been impacted by the tariffs. With that, I will turn it over to Jason.

[Jason Crawford, CFO & Senior VP at AZZ]

Thank you, Tom, good morning. Starting with a summary of the full year, we reported sales of $1,578,000,000 an increase of 2.6% from the prior year. By segment, precoat metals sales increased 3.5% and metal coating sales increased 1.4% within which the galvanizing segment increased 2.6%. Gross margins for the year were 24.3%, an increase of 70 basis points compared to a year ago. Net income before the preferred stock dividend and redemption premium in fiscal year twenty twenty five was $128,800,000 an increase of 26.8% compared to the prior year.

[Jason Crawford, CFO & Senior VP at AZZ]

This was another record year for the company in terms of sales and net income, which speaks to the strength of the businesses and progress made on our strategic initiatives during the fiscal year. Turning to the fourth quarter results, sales for the quarter were $351,900,000 down 4% from the same quarter in the fiscal year 2024. As Tom mentioned, bad weather impacted our quarter more than normal, which created lost production days for both segments. Despite the lower volumes in the quarter, gross margins improved to 22.4%, primarily due to operational improvements, up 30 basis points from the prior year's quarter. In the fourth quarter, selling, general and administrative expenses were $38,300,000 or 10.9% of sales compared to $38,800,000 or 10.6% of sales in the prior year quarter.

[Jason Crawford, CFO & Senior VP at AZZ]

Operating income was $40,400,000 or 11.5% of sales compared to $42,300,000 even with last year on a percentage of sales basis. Interest expense for the fourth quarter was $17,400,000 down 7,400,000 from a year ago period. This is due to the lower weighted average debt outstanding and lower interest rates from debt repricings and Fed reductions that occurred in 2024. In addition, on March 3, after our fiscal year end, we announced a repricing of our $400,000,000 senior secured revolving line of credit that will allow us to continue to lower our interest expenses going forward. The performance and outlook for the business has allowed us to improve our capital structure and reduce interest costs and we fully anticipate this trend to continue into fiscal year twenty twenty six.

[Jason Crawford, CFO & Senior VP at AZZ]

Equity and earnings of unconsolidated subsidiaries for the fourth quarter was $3,700,000 compared to $4,300,000 for the same quarter last year. These equity and earnings are from our 40% minority ownership interest in the Avail joint venture. The current quarter income tax expense was $6,100,000 reflecting an interim effective tax rate of 23.2% to support the final full year 2025 tax provision of 24.5%. This was higher than the 2024 effective tax rate of 21.9%, primarily attributable to favorable adjustments in 2024 related to uncertain tax positions, partially offset by higher tax deductions for stock compensation in 2025. Net income from the fourth quarter was $20,200,000 compared to $14,300,000 for the prior year's quarter.

[Jason Crawford, CFO & Senior VP at AZZ]

On an adjusted basis, Q4 adjusted net income was $29,600,000 compared to $27,500,000 an increase of 7.9% from the prior year. Fourth quarter adjusted EBITDA was $71,200,000 or 20.2% of sales compared to $73,900,000 in the prior year, flat on a percentage of sales basis on lower volume. Turning to our financial position and balance sheet. We generated significant cash flows from operations at $249,900,000 in fiscal year twenty twenty five, ahead of last year's $244,500,000 After funding the company's annual capital expenditures of $115,900,000 which included $52,800,000 for our new coil coating facility, our free cash flow was $134,000,000 As previously communicated, we have expanded our coil coating capabilities by constructing a new 25 acre aluminum coil coating facility in Washington, Missouri. This new facility contained within our precoat metal segment is supported by a contract for approximately 75% of the plant's capacity.

[Jason Crawford, CFO & Senior VP at AZZ]

During fiscal year twenty twenty five, our capital expenditures as previously stated were $52,800,000 and the remaining and final balance of approximately $8,000,000 is scheduled to occur by the end of Q1 and fiscal year twenty twenty six. This will bring the project online within our originally stated cost and timelines. Further, we are pleased to announce that the facility has started to ship commercial production as of a few weeks ago and will continue to ramp volumes through the fiscal year. Aligned with our previously stated strategies, our disciplined approach to capital allocation includes paying down debt, investing for growth and returning value to our shareholders through dividends and share buybacks. During the fourth quarter of fiscal year twenty twenty five, we reduced debt by $30,000,000 and made debt repayments of $110,000,000 for the full fiscal year.

[Jason Crawford, CFO & Senior VP at AZZ]

Our debt to adjusted EBITDA ended the year at 2.5 times, which compares favorably to our leverage of 2.9 times at the end of fiscal year 2024. With our investment in the new Washington, Missouri facility largely behind us and our debt to adjusted EBITDA below 2.5 times and overall improvements to our capital structure, we will start to transition our focus to a more balanced capital allocation with greater emphasis on M and A and returning value to our shareholders. Finally, subsequent to the end of the fiscal year, on March 10, we announced that our JV partner has entered into a definitive agreement to sell the Electric Products Group to nVent Electric PLC for a purchase price of $975,000,000 This transaction is expected to close in the first half of calendar year twenty twenty five, subject to customary closing conditions, at which time we will receive a pro rata portion of the cash proceeds from the sale, which we estimate to be approximately $200,000,000 after accounting for debt repayments, deal costs and cash retained in the remaining businesses. Post transaction, AGZ will continue to own 40% interest in Avail, which will then consist of the industrial lightings and welding solution businesses and will represent approximately 30% of pre transaction group revenue.

[Jason Crawford, CFO & Senior VP at AZZ]

With that, I'll turn the call over to David Knop.

[David Nark, Senior Vice President of Marketing, Communications & Investor Relations at AZZ]

Thank you, Jason. Good morning, everyone. During fiscal twenty twenty five, customer demand in key industries drove annual sales growth primarily in our largest category construction and in meaningful end markets that include industrial and electrical sectors. Smaller categories at AZZ also experienced growth in fiscal twenty twenty five and those were related to HVAC and container industries. As Tom and Jason mentioned, the demand environment for overall construction was weaker in the fourth quarter due to inclement weather.

[David Nark, Senior Vice President of Marketing, Communications & Investor Relations at AZZ]

We believe that both wet and cold conditions meaning temperatures below 40 degrees impacted construction days throughout our final quarter of the fiscal year. To put this in perspective, for December, the number of wet days increased 13% versus the same month a year ago. In January, the number of warm days available for construction were down 29% year over year. Finally, in February, the number of wet days increased by 10%, while the number of warm days available for construction were down 27% year over year. For the full year, organic top line growth was 2.6% over the prior year.

[David Nark, Senior Vice President of Marketing, Communications & Investor Relations at AZZ]

Looking into fiscal twenty twenty six, we expect a continuation of infrastructure spending related to the AIIJA program. We expect public and private investment to continue to remain resilient with infrastructure spending from planned projects and recent natural disasters. Also, as Tom mentioned, growing populations and urbanization will continue to support the need for infrastructure related projects, especially bridge and highway, transmission construction. In addition, we know that pre painted aluminum and steel will continue to play a critical role in many reshoring projects and the conversion of plastics to aluminum and food and beverage industries will continue to be a longer term secular trend. With that, I'd now like to turn the call back over to Tom.

[Thomas Ferguson, President & CEO at AZZ]

Thank you, David. To summarize our fiscal twenty twenty five, we posted record results for revenue, operating income, adjusted EBITDA, adjusted earnings per share and adjusted net income. Our sales expansion that grew to almost $1,600,000,000 consisted of 100% organic volume growth, which speaks to our market leading segments and service driven culture. Our ability to improve margins demonstrates emphasis on value added service to our customers and disciplined focus on operating quality, efficiency and productivity. We improved our capital structure by eliminating the preferred equity, continuing to reduce debt and improving our net leverage ratio to below 2.5 times.

[Thomas Ferguson, President & CEO at AZZ]

Looking ahead to fiscal twenty twenty six, we anticipate delivering above market growth while getting some bolt on acquisitions done. Importantly, we will be sticking to the disciplined approach to investments, capital allocation and growth that has made us so successful. Today, we are reiterating our fiscal year guidance for 2026, which reflects our confidence in the company's strategic execution, operational resilience and market positioning. Starting with sales, our best estimates given market conditions and sentiment are 1.625 to $1,725,000,000 adjusted EBITDA of $360,000,000 to $400,000,000 and adjusted earnings per share of $5.5 to $6.1 The midpoints of these ranges demonstrates business expansion ahead of any future M and A activity. We look forward to Avail completing its divestiture of the electrical platform so that we can utilize the cash to reduce debt and invest in growth.

[Thomas Ferguson, President & CEO at AZZ]

For this reason, we're leaving our EPS estimates unchanged. Also capital expenditures for the fiscal year are expected to be 60,000,000 to $80,000,000 and debt pay downs are expected to exceed $165,000,000 This amount excludes any additional debt reduction from the AIS sale proceeds as well as any capital used for acquisitions. Additionally, we are off to a good start in the first quarter and have not seen any significant impact from the tariffs, particularly in our Metal Coatings segment. I am proud to recognize AZZ's thirty consecutive year of growth and profitability from continuing operations. This accomplishment was due to the dedicated efforts of our employees.

[Thomas Ferguson, President & CEO at AZZ]

I sincerely thank them for their hard work and continuing commitment to excellence. Finally, we are excited to announce that we will host an Analyst Day on August 14. The event will be held in St. Louis, Missouri and will include management presentations from our precoat headquarters and a tour of our new aluminum coatings plant. I encourage the analyst community to contact our Investor Relations team if you are interested in participating later this year.

[Thomas Ferguson, President & CEO at AZZ]

With that operator, I would like to open up the call for questions.

[Operator]

Thank you. We will now begin the question and answer session. The first question comes from the line of Adam Thalhimer with Thompson Davis. Please go ahead.

[Adam Thalhimer, Director of Research at Thompson Davis & Co]

Hey, good morning guys.

[Thomas Ferguson, President & CEO at AZZ]

Morning.

[Adam Thalhimer, Director of Research at Thompson Davis & Co]

Tom, I was hoping to start off with and you addressed this at the end of your prepared remarks, but what you're seeing in the May and what kind of a bounce back you've seen from the bad winter weather?

[Thomas Ferguson, President & CEO at AZZ]

Yes, great question. Yes, we just in April alone, we've recovered the shortfall in from the fourth quarter for metal coatings and probably exceeded that. So we're looking for a very strong first quarter on the metal coating side and they're out of the gate really, really well. So March was great. April was solid.

[Thomas Ferguson, President & CEO at AZZ]

Outlook for May is good as well. On the precoat side, little about the same. They were weather impacted, but somewhat differently. So instead of as much lost production days, it was more customers who were closed and then it take delivery on some finished goods inventory. So we look for a solid first quarter for Precoat.

[Thomas Ferguson, President & CEO at AZZ]

Jason will talk, he probably want to add something to my comments. But we have a lot going on in the first quarter for Precoat. We've got the new site ramping up, which is great news for us, production in play. And we do focus more on market share growth. So if you just look at last year, markets generally were down.

[Thomas Ferguson, President & CEO at AZZ]

And yet we were able to grow in both segments. So Jason, you may want to add a little bit on preco.

[Jason Crawford, CFO & Senior VP at AZZ]

Yes. I mean, the only other thing I would add in preco is around about their inventory and the seasonality ramp that we would normally see with the good weather coming out of January, February would impact our Q4 and we never seen that. We carried a little bit more inventory from Q3 into Q4 and that happens in relation to where steel prices is at. And obviously, as we kind of enter Q4, there was a lot of uncertainty around about the administration and what that was going to impact or how it was going to impact. And essentially, if you go back eight years ago, how it impacted us was round about supply and price.

[Jason Crawford, CFO & Senior VP at AZZ]

So to be fair, our customers stopped up a little bit and we carry that. So that was probably the main impact to Q4 and then we'll see that getting back out the system as we go into Q1 here.

[Adam Thalhimer, Director of Research at Thompson Davis & Co]

Okay, great color. And then Jason, what's in the guidance for the Avail JV?

[Jason Crawford, CFO & Senior VP at AZZ]

Yes. I mean, you look at the Avail JV and obviously, the guidance Tom reiterated, there is no impact. And the reason we have looked at no impact is, there was 15,000,000 to $18,000,000 in the guidance for the JV. And as Tom, I think as I highlighted, it was round about 30% of that JV continues after the sale. So it comes down to a fairly nominal level once we complete the sale of Electrical Products division.

[Jason Crawford, CFO & Senior VP at AZZ]

If you take the incoming cash and convert that into lower interest rates, it's within the ZIP code of one for one. So obviously, we've not fully decided the capital allocation of that, from an EPS point of view, we're looking at it as being very insignificant in terms of our guidance.

[Adam Thalhimer, Director of Research at Thompson Davis & Co]

I'll turn it over. Thanks guys.

[Jason Crawford, CFO & Senior VP at AZZ]

Thank you.

[Operator]

The next question is from the line of John Franzreb with Sidoti and Company. Please go ahead.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Good morning guys and thanks for taking the questions. I guess I'd like to start about a little question about the tempo of the order book. I know you've had some catch up from weather, but have you seen any change in momentum based on the current macroeconomic environment, be it positive or negative?

[Thomas Ferguson, President & CEO at AZZ]

Yes. Interestingly enough, we spend a lot of time going through our weekly reports from the field. And the optimism is positive. It's projects are going forward. Customers are confirming we've got capacity.

[Thomas Ferguson, President & CEO at AZZ]

And so I'd say generally, while there's always concern further out in the year, the short term outlook over first quarter and second quarter, more positive than I think we would have expected. So I think, like I said, mostly checking our capacity, making sure we've got shifts to run infrastructure. Jason can probably comment on pre code a little better. He already alluded to the fact of the finished goods inventory. But generally, it's positive there too.

[Thomas Ferguson, President & CEO at AZZ]

And the construction season was a little slow to get started, but now it's getting off

[Thomas Ferguson, President & CEO at AZZ]

well.

[Jason Crawford, CFO & Senior VP at AZZ]

John, the only other thing I'd add is, if you look at the couple of industry forums that we've been to start of the year and the general sentiment in those forums and conferences is relatively upbeat. So at this point, obviously, there's lot of turmoil outside, but within our four walls of our business, then we're not necessarily seeing it at the moment.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Great. That's good to hear. I guess the second thing I wanted to touch on was zinc. The U. S.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Doesn't produce an awful lot of zinc. A lot of it comes from China and South America. I'm just curious how should we be thinking about zinc in this current tariff environment? Any kind of color you could provide would actually be very helpful.

[David Nark, Senior Vice President of Marketing, Communications & Investor Relations at AZZ]

Yes, John, this is Dave. I'll take that one. As we look at zinc, one of the things, I think the biggest thing to note is that it is listed on the Annex II list that came out from the administration as something that is exempt from the tariffs. So while to your point The U. S.

[David Nark, Senior Vice President of Marketing, Communications & Investor Relations at AZZ]

Is a net importer of zinc, the vast majority of ours comes from North American sources. And again, it's not an impact for us because it's on the exempt list.

[Thomas Ferguson, President & CEO at AZZ]

Yes. And I'd also talking to all of our suppliers, they don't have any concerns at this point. So supply is good. We'd actually taken on some inventory at the end of the year just as a cushion. But it doesn't look like we're going to need that extra inventory.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Thank you. I appreciate the clarity.

[Operator]

The next question comes from Mark Reichman with NOBLE Capital Markets. Please go ahead.

[Mark Reichman, Senior Natural Resource Analyst at Noble Capital Markets]

Thank you. By my calculations, seems like you would need to reduce debt about $300,000,000 to offset the impact from the sale of the JV transaction. I'm just wondering with that $200,000,000 that you're expected to receive, could you just maybe elaborate on your debt reduction goals and how you might look at that from a capital allocation standpoint? I know you still have about $50,000,000 left on your repurchase authorization. So just some clarity regarding the debt reduction goals would be helpful.

[Jason Crawford, CFO & Senior VP at AZZ]

Yes, certainly. And I can certainly pick that up. At this point, we've not fully decided the capital allocation up $200,000,000 But if you go back to the lost impact from the JV, our income, that doesn't affect our calculation on the 2.5% that we ended the year. So that's excluded from that calculation. As you look at the opportunities from an M and A point of view, potentially returning shareholder value via increased dividends or share buybacks, that's all in the table.

[Jason Crawford, CFO & Senior VP at AZZ]

And if we decide that there's no opportunities there, then we'll continue to pay down debt. We're in the comfort zone of 2.5. And if we go slightly below that, then I think that's that would be our priorities there.

[Mark Reichman, Senior Natural Resource Analyst at Noble Capital Markets]

Okay. Well, just to kind of the just for a little more clarity. So basically, you'll go from the equity in earnings from unconsolidated subsidiaries, you'll go from 15,000,000 to $18,000,000 down to 4.5 to $5,400,000 So to make that up, you're going to have to pay down some additional debt to reduce the interest expense. And you've already said that you'll pay down more than $165,000,000 And I guess what I'm asking is, dollars 300,000,000, is that unrealistic in terms of what to expect in terms of your debt repayment in fiscal year twenty twenty six?

[Jason Crawford, CFO & Senior VP at AZZ]

That's very realistic. Yes. I don't think it's unrealistic. I think the

[Mark Reichman, Senior Natural Resource Analyst at Noble Capital Markets]

Well, that's what I'm assuming. So I'm hopeful that Yes. No.

[Jason Crawford, CFO & Senior VP at AZZ]

I

[Jason Crawford, CFO & Senior VP at AZZ]

mean the math is correct.

[Thomas Ferguson, President & CEO at AZZ]

Yes. Absolutely. And that still leaves us for as we talked about buying in stock to eliminate dilution from equity compensation and things like that. So we fully intend to utilize a chunk of that $53,000,000 remaining buyback authorization in addition to the debt reduction that you just mentioned.

[Mark Reichman, Senior Natural Resource Analyst at Noble Capital Markets]

And then just the second question and final question. The fiscal year twenty twenty six capital expenditures of 60,000,000 to $80,000,000 what's the split between metal coatings and precoat metals? I mean, have a pretty good history for a normalized run rate for metal coatings, but maybe not so much for precoat metals. So just was kind of curious about the normalized spending budget for each of those segments.

[Jason Crawford, CFO & Senior VP at AZZ]

Yes. And I would say it's roughly to and very close to within the pennies of a fifty-fifty split. Think you can look at the lower end of that as being a normal year. And then the upper end of that where maybe we're investing in some projects. I think we highlighted historically that there's some projects that have sat in the sidelines as we focused on paying down debt and they start to come into vogue in terms of generating a return.

[Jason Crawford, CFO & Senior VP at AZZ]

Yes. And I would just add to Jason's point,

[Thomas Ferguson, President & CEO at AZZ]

which yes, 30,000,000 each for the two segments and then we did have so in that $140,000,000 we had some carryover on the new Washington facility that just bills to pay carried into this year. So that's part of it. And then we to Jason's point, we've got a couple of nice new investments in blend cells and things like that that will give us new capabilities in certain facilities. So we'll always look at some increment for growth capital.

[Mark Reichman, Senior Natural Resource Analyst at Noble Capital Markets]

Okay. Great. Well, that's very helpful. Thank you very much.

[Jason Crawford, CFO & Senior VP at AZZ]

Absolutely. Thank you.

[Operator]

The next question comes from Ghansham Panjabi with Baird. Please go ahead.

[Ghansham Panjabi, Senior Research Analyst at Baird]

Hey guys, good morning. If you covered it, I missed it, but what do you estimate the impact from weather was on your 4Q fiscal year twenty twenty five quarter? And is that lost sales just add to the future backlogs? And is that in effect what you're seeing in the first quarter thus far?

[Thomas Ferguson, President & CEO at AZZ]

Yes. That was

[Thomas Ferguson, President & CEO at AZZ]

so probably lost revenue that we can directly attribute on the Metal Coatings side of 8,000,000 to $12,000,000 Virtually well, almost all well, I'd say virtually all of it has now been recovered in March and April on the metal coating side. On the pre coat side, as Jason talked about, there was some weather impact, but also this finished goods inventory build. But we've and it was about 200 loss production days. And most of it hit in from mid January through February. So and we couldn't make it up on weekends just because of storms, ice, weather and also customers who weren't shipping stuff in.

[Thomas Ferguson, President & CEO at AZZ]

So but we saw that ramp up hit quickly in March and worked

[Thomas Ferguson, President & CEO at AZZ]

a

[Thomas Ferguson, President & CEO at AZZ]

lot of weekends to take care of our customers.

[Ghansham Panjabi, Senior Research Analyst at Baird]

Okay. Got it. Thank you. And then relative to when you initially gave your fiscal year twenty twenty six guidance back in February, I mean, there's more uncertainty as it relates to the macroeconomic backdrop, tariffs and also mix indicators on construction, including from the homebuilders. You're reiterating guidance for the year, obviously.

[Ghansham Panjabi, Senior Research Analyst at Baird]

Are there any incremental positives for fiscal year twenty twenty six relative to your view back in February that's sort of underpinning your confidence? And then also how should we think about sequencing of earnings for fiscal year twenty twenty six?

[Thomas Ferguson, President & CEO at AZZ]

Yes. I'll answer the first part and then Jason can answer the sequencing. But yes,

[Thomas Ferguson, President & CEO at AZZ]

so a couple

[Thomas Ferguson, President & CEO at AZZ]

of things that have happened. One, we're off to a strong start in Q1, particularly in Metal Coatings, which with that weather and things like that, there we just did have a little bit of concern, which is now gone. And two, we do intend to at least one, hate to call it mom and pop, but I've called it that for a while, one mom and pop galvanizer done hopefully this quarter and then another later this year. So those would both be nice margin businesses incremental to what we were looking at back in January. And then we have been pushing price because while we're not impacted on the zinc and paint side from a cost perspective, a lot of other things we have seen inflation on, whether it's due to tariffs or just due to supplier taking opportunities.

[Thomas Ferguson, President & CEO at AZZ]

So we are pushing prices, as I think most folks know we do in this case, because we offer the value and want to make sure that we continue to deliver for our customers. So that's kind of the optimism that I would at least that's my optimism as I'm looking forward this year and mostly what we're hearing from the field and our sales resources and what our customers are telling us.

[Jason Crawford, CFO & Senior VP at AZZ]

And then Yes. In terms of the seasonality, I would say it's going to be a normal seasonality pattern that we've seen historically other than three things and two of them we've touched on. In regards to the Metal Coatings division, we are going to see a little pop in Q1 as we've seen the negative side in Q4, which is going to be nice for the quarter. And then as Tom highlighted, if we execute on the acquisition, then Q3, Q4 should provide that additional level boost for that division. From a pre call point of view, business is normal from a seasonality other than bringing on the new facility.

[Jason Crawford, CFO & Senior VP at AZZ]

We highlighted that in Q1, we're starting to see commercial production. Obviously, it's a brand new asset. So it's got a little bit of a drag, not materially so, but certainly it's got a bit of drag before you really see that start to pop in the second half of the year. So other than those three factors, at this point, we're not really seeing anything major in terms of seasonality for the calendar year or for the fiscal year, sorry.

[Ghansham Panjabi, Senior Research Analyst at Baird]

Okay, great. And then just one final one, your capital position, your balance sheet is already quite strong and clearly going to get more proceeds post the JV asset sale. As it relates to acquisitions going forward, should we sort of be thinking about slightly larger deals than maybe originally envisioned just given balance sheet flexibility and just more holistically, what does the pipeline look like for acquisitions at this point?

[Thomas Ferguson, President & CEO at AZZ]

Yes. The pipeline is looking really good. I think we've got deals we could do. The one off galvanizing, those are just slam dunk. That's kind of our history.

[Thomas Ferguson, President & CEO at AZZ]

What we do is normal routine. So we've got, I think three active at the moment, one close to fruition. The two others that hopefully we can get done later this year. And then on the precoat side, they're just generally going to be bigger. We're probably I'd say there's active deal there's things that we could act on, but we're taking a wait and see approach to see how the tariffs impact those businesses.

[Thomas Ferguson, President & CEO at AZZ]

And but they're in our pipeline active, good solid relationships, things that if we can get the right value for them and the timing is right and we prove out what happens to some of these businesses with tariffs because generally galvanizers are like our metal coatings has not been affected too much because they're focused on infrastructure and construction spend that's going to go forward. But on the precoat side, it's they are going to be bigger deals.

[Ghansham Panjabi, Senior Research Analyst at Baird]

Thanks for taking my questions.

[Mark Reichman, Senior Natural Resource Analyst at Noble Capital Markets]

Sure.

[Operator]

Our next question is from Nick Giles with B. Riley Securities. Please go ahead.

[Nick Giles, Senior Research Analyst at B.Riley Securities]

Thank you very much operator and good morning everyone. Maybe just as a follow-up to the last question there. As you think about other potential bolt on opportunities, I mean, what geographies are most compelling? And how does end market exposure come into the decision matrix?

[Thomas Ferguson, President & CEO at AZZ]

Yes. I think and kind of back to for us on the galvanizing side specifically, almost any geography is good. Whether we've got plants in the area or not, we're still going to be interested in those, whether it's one site or five or six or seven sites. It's just our sweet spot. We've got a great playbook.

[Thomas Ferguson, President & CEO at AZZ]

We believe we can add value and improve margins with virtually anything that we acquire in that space. So if it's U. S. Or Canada, we're interested. We continue to have relationships with galvanizers outside of The U.

[Thomas Ferguson, President & CEO at AZZ]

S. And Canada, but that's not on our short term horizon. On the precoat side, I think back to it's everything we have is U. S. Centered.

[Thomas Ferguson, President & CEO at AZZ]

So probably U. S, Canada is the geography. The end markets tend to be relatively of the things that we're aware of out there that are potential. They tend to be in the same serve markets that we're in. I'm not sure Jason might add to this or David, but I'm not sure that there's any geography in that would limit us from looking at it if it's in The U.

[Thomas Ferguson, President & CEO at AZZ]

S. And Canada.

[Jason Crawford, CFO & Senior VP at AZZ]

Yes, I would agree. And in terms of the markets, both businesses is the number one player within the market cover all end markets and really all you would see via acquisition is a little bit more concentration and something bigger than what we have today. So there's not any new markets out there that we could take galvanizing our coil coating to. It would just be a greater presence within those spaces.

[Nick Giles, Senior Research Analyst at B.Riley Securities]

Thanks, guys. That's helpful. And working capital management was a key contributor to strong cash flow in 2025. So are there any working capital considerations you'd highlight as we think about cash flow in 2026? Or could we see further improvement?

[Jason Crawford, CFO & Senior VP at AZZ]

Yes. I mean, I definitely think there's further improvement. As you look at I think Tom had made a couple of mentions in regards to bringing a little bit more zinc in than we had optimally got to. So certainly felt on that part through the system. And then as you look at our finished goods position and our contract assets, this is called in the balance sheet for our preco division, there are certainly opportunities there.

[Jason Crawford, CFO & Senior VP at AZZ]

I think we finished just below 11% in terms of working capital and certainly getting up to single digit as a very strategic goal for us. So there is a little bit more movement, but certainly one of the key the blockbusters that we've

[Jason Crawford, CFO & Senior VP at AZZ]

seen maybe two years ago.

[Thomas Ferguson, President & CEO at AZZ]

Well, I would also add because we are ramping up the new Washington co coating facility. There'll be some working capital new working capital to get attached to that. So I think that's why we're really looking at working capital being relatively flat overall this year, but that includes absorbing a new location.

[Nick Giles, Senior Research Analyst at B.Riley Securities]

Got it. No, that's helpful. And then one more if I could. As we think about margin cadence over the year, should we be thinking about margins that could be closer to the high end as far as pre coke goes as Washington ramps?

[Jason Crawford, CFO & Senior VP at AZZ]

Yes. I mean, think as we've previously stated then Washington definitively comes in the higher end just by the product, just the margin profile of that product. And then above and beyond that, just the leverage of the fixed costs that are within that business unit. So certainly, once we ramp the Washington facility and get it fully capable and producing, then we should see an overall bump to the precoat margins that we've been operating on.

[Nick Giles, Senior Research Analyst at B.Riley Securities]

Got it. Well, guys, I appreciate all the color and continue best of luck.

[Thomas Ferguson, President & CEO at AZZ]

All right.

[Jason Crawford, CFO & Senior VP at AZZ]

Thank you.

[Thomas Ferguson, President & CEO at AZZ]

Thank you.

[Operator]

The next question comes from Timna Tanners with Wolfe Research. Please go ahead.

[Timna Tanners, Managing Director - Equity Research at Wolfe Research, LLC]

Yes. Hey, good morning. I had a few follow ups if I could on tariffs broadly. So I just wanted sorry to be pedantic on this, but on this quarterly call you said that there could be some project delays due to tariff uncertainty. So in this time there is no mention.

[Timna Tanners, Managing Director - Equity Research at Wolfe Research, LLC]

So were there no project delays and are you not hearing anything about tariff uncertainty from your customers anymore?

[Thomas Ferguson, President & CEO at AZZ]

Okay. On the yes, I think the as we looked at it particularly and I'll start with the Metal Coatings side. But yes, were concerns and it was but I think what we saw was steel has been available, metal has been available. So as long as there was that available for construction, those projects move forward. They were under already agreed to price levels and things like that.

[Thomas Ferguson, President & CEO at AZZ]

So as we're looking out and what we did see weather delays in the fourth quarter, and I just mentioned the first quarter started off strong. So there's this natural level of concern about due price, due construction costs spike due, but I think it's less around construction material availability, more around do project costs spike. If they spike, does that make some of them less viable later on this year? But so the general sentiment is still positive, but let's see how it goes as we get to the latter part of this year. On the metal coating side, I think on the precoat side, Jason or David, you may want to add, but I think it's relatively the same.

[Thomas Ferguson, President & CEO at AZZ]

Construction was a little due to weather was a little later to get the season was later to get ramped up, but it's ramping up fine at this point. I'm going to guess that if we dug into more details and you get beyond infrastructure, bridge and highway, T and D, like utilities, data centers, I think the sentiment may be a little weaker as you get further out only because of the unpredictability of the cost estimates and new projects become less viable.

[Jason Crawford, CFO & Senior VP at AZZ]

Yes. And I mean, to be fair, the only other thing I would add is three months ago, it was all very new. And certainly, we were in a little bit cautious and maybe even speculating what could happen versus three months later, we've engaged with our customers. As I mentioned, we've been at the industry forums, etcetera. And we're not hearing that same sentiment that's going to impact us.

[Timna Tanners, Managing Director - Equity Research at Wolfe Research, LLC]

Okay. Thank you. And then similarly along those same lines, you mentioned that paint availability was not impacted by tariffs. We already talked about zinc. But are you and your or your customers finding any materials needed for your business impacted by tariffs?

[Timna Tanners, Managing Director - Equity Research at Wolfe Research, LLC]

And then along those same lines, are you or any of your customers benefiting from some of the downstream tariffs on steel and aluminum? I just don't I'm trying to get my head around like how that could also maybe benefit you on the downstream side. Thanks.

[Jason Crawford, CFO & Senior VP at AZZ]

Yes. I mean, I think it's hard to believe that there's any company out there that's not been impacted by tariffs. And certainly our biggest inputs are zinc and paint. And as we've highlighted, we're not seeing any impact to them. But you go to the great population of goods that we are procuring and some of them in terms of production supplies, etcetera, are being impacted.

[Jason Crawford, CFO & Senior VP at AZZ]

And obviously, have been very customer conscious in terms of pushing back in those, but some of those are stacking. So in terms of margin accountability, then we're driving appropriate from a pricing point of view. So that's something that we continue to stay on top of. Obviously, it's the smaller part of our input cost, at the same extent every penny counts and we just stay on top of that and continue to monitor it.

[Thomas Ferguson, President & CEO at AZZ]

Yes. That would be things like wire, additives, chemicals, acids. So those secondary supply items in both segments have been impacted. But like I said, we're trying to push price and also negotiate. And in a lot of cases, we're still fairly large customers for certain of those items.

[Thomas Ferguson, President & CEO at AZZ]

So in reasonably good position and have not seen much negative impact at this point if any.

[Timna Tanners, Managing Director - Equity Research at Wolfe Research, LLC]

Okay, helpful. And then on the opportunities on the downstream side, is there much that you think you could pick up in terms of business on what might have otherwise, I don't think you compete a lot with imports, but even some of the substrate that you buy maybe being domestic, is that are you able to see some volume improvement perhaps from more domestic production opportunities?

[David Nark, Senior Vice President of Marketing, Communications & Investor Relations at AZZ]

Absolutely, Timna. What we are seeing particularly on the metal coating side, we know that imports, prepainted imports in particular account for about 10% of the volume that comes in that equates to about 800,000 tons annually. We do believe that a portion of that will be looking for domestic supply and obviously being a leading coil coater here in North America as they source domestically, it stands to reason that we'll pick up some tailwind from that this year.

[Timna Tanners, Managing Director - Equity Research at Wolfe Research, LLC]

Okay, great. Thanks again.

[Thomas Ferguson, President & CEO at AZZ]

All right. Thank you.

[Operator]

The

[Operator]

next question comes from Jon Braatz with Kansas City Capital. Please go ahead.

[Jon Braatz, Equity Analyst at Kansas City Capital Associates]

Good morning, everyone. Tom, now that Washington has reached commercialization stage and maybe along with the prior question and maybe some additional imports looking for domestic sources, any reason to believe that Washington's ramp up might go better than expected and we might see something more positive out of Washington here in this fiscal year?

[Thomas Ferguson, President & CEO at AZZ]

Yes. That's always, I think, the hope. It's a big complex project. It's been run well. The team has done a great job of mitigating any issues with deliveries of equipment and getting things ramped up.

[Thomas Ferguson, President & CEO at AZZ]

So we're looking forward to the Analyst Day there in August. But absolutely, we've got they're working to a more aggressive plan than we've got embedded in our guidance. And so if they hit that more aggressive plan, which so far the team has shown they're able to do, then we would have some nice upside this year. So I know some of the teams probably on this call just scratching their heads. But yes, they signed up to and it really hits as they hit the capacity mid year.

[Thomas Ferguson, President & CEO at AZZ]

So as we get into that third quarter and especially late at that point, they're in full stride. And we've heard from at least one customer that they're forecasting higher demand, which is good news. So we'll have the demand. The facility comes online well, which we continue to see signs it is, then we're going to have a really good year there.

[Jon Braatz, Equity Analyst at Kansas City Capital Associates]

Okay. If I'm correct, we're initially the initial revenue expectation is around $40,000,000.50000000 for this year. Is that correct?

[Thomas Ferguson, President & CEO at AZZ]

I think it's a little lower than that.

[Jason Crawford, CFO & Senior VP at AZZ]

The revenue for this year is not 50,000,000 or $60,000,000 The revenue once we get to ramp, we basically stated is that kind of $60,000,000 opportunity. And that's obviously a variable number. There's actually three lines within that facility. There's, I'd say a pre slip lane and then a coating lane and then an overall slitting lane. So there's a lot of variables in that equation in terms of the type of product.

[Jason Crawford, CFO & Senior VP at AZZ]

But as you look at within our models then, fill capacity is in the range that $60,000,000 number.

[Jon Braatz, Equity Analyst at Kansas City Capital Associates]

Okay.

[Jon Braatz, Equity Analyst at Kansas City Capital Associates]

And one last question. David, you spoke about the 200 days of lost production mostly in the Metal Coatings. Was the inclement weather mostly impactful impacting your Southeastern locations or was it pretty much across the board?

[David Nark, Senior Vice President of Marketing, Communications & Investor Relations at AZZ]

Yes. We saw it pretty much across the board in the areas where we operate. The South in particular was definitely impacted more than it was a year ago, as well as the Upper Midwest and some of the Eastern operations as well.

[Thomas Ferguson, President & CEO at AZZ]

Yes. Texas, we hadn't seen this since what 2022. And even then, we didn't have this many down days. And so part of it was that natural gas got curtailed in North Texas. And obviously, with our big furnaces that we basically had everything on slow roll.

[Thomas Ferguson, President & CEO at AZZ]

So it really was and these are big so it happened to impact where we had big facilities. And but all of that has ramped back up in Q1.

[Jon Braatz, Equity Analyst at Kansas City Capital Associates]

All right. Thank you very much.

[Thomas Ferguson, President & CEO at AZZ]

Sure thing.

[Operator]

Thank you. This concludes our question and answer session. I would now like to turn the conference back over to Tom Ferguson for any closing remarks.

[Thomas Ferguson, President & CEO at AZZ]

Thank you, operator. I want to thank everybody for joining us. And as we've implied on this call, we think the fundamentals of our business are outstanding and pretty much unchanged in spite of a lot of the tariff uncertainty. We focus on providing outstanding value, which allows us to take market share. We've made great investments in adding capacity, whether it's spin lines on the metal coating side or whether it's slitting lines on the precoat side.

[Thomas Ferguson, President & CEO at AZZ]

So we have added other services that are flowing through into our revenue line and look forward to continuing to do that, getting some deals done and announcing some additional positives as this quarter goes on. And then talking to you all at the end of the first quarter. Thank you very much.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Thomas Ferguson, President & CEO
• Jason Crawford, CFO & Senior VP
• David Nark, Senior Vice President of Marketing, Communications & Investor Relations

Analysts

• Sandy Martin, Managing Director at Three Part Advisors
• Adam Thalhimer, Director of Research at Thompson Davis & Co
• John Franzreb, Senior Equity Analyst at Sidoti & Company
• Mark Reichman, Senior Natural Resource Analyst at Noble Capital Markets
• Ghansham Panjabi, Senior Research Analyst at Baird
• Nick Giles, Senior Research Analyst at B.Riley Securities
• Timna Tanners, Managing Director - Equity Research at Wolfe Research, LLC
• Jon Braatz, Equity Analyst at Kansas City Capital Associates