AZZ NYSE: AZZ executives said the company closed fiscal 2026 with record results and reiterated its fiscal 2027 outlook, pointing to infrastructure-related demand and data center construction as key drivers for its Metal Coatings segment while flagging continued softness in some Precoat Metals end markets tied to construction.
Fiscal 2026 closes with record sales and profitability
President and CEO Tom Ferguson said AZZ “delivered a strong close to the year” and achieved “record sales and profitability for the third consecutive year,” adding that teams rebounded after a major winter storm in late January.
For the full year ended Feb. 28, 2026, CFO Jason Crawford reported record sales of $1.65 billion, up 4.6% from the prior year, with adjusted EBITDA of $367.6 million, or 22.3% of sales. Adjusted earnings per share increased 19% year-over-year to $6.19.
Crawford highlighted segment performance:
- Metal Coatings: Sales increased 14.1% and generated “strong EBITDA of over $235 million or 31% of sales.”
- Precoat Metals: Sales declined 2.3% amid “industry-wide softness in residential and other key markets,” but delivered EBITDA of $176 million, or 19.8% of sales.
Crawford also noted that GAAP comparisons were affected by Avail joint venture activity and a prior-year preferred stock redemption expense. In fiscal 2026, Avail generated equity in earnings of $210 million “primarily driven by successfully divesting businesses within the joint venture,” while fiscal 2025 GAAP net income included a $75 million preferred stock redemption premium expense.
Fourth-quarter results show acceleration in Metal Coatings
In the fiscal fourth quarter, AZZ reported record sales of $385.1 million, up 9.4% from $351.9 million in the prior-year period, which Crawford said was driven by “strong double-digit sales growth” in Metal Coatings.
Metal Coatings sales increased 25.7% year-over-year in the quarter, while Precoat Metals sales fell 2.4% due to “continued lower-end market demand in pockets of construction, transportation and HVAC.” Gross profit was $87.6 million, or 22.7% of sales, up 30 basis points year-over-year.
SG&A expenses were $30.5 million, or 7.9% of sales, compared with $38.3 million, or 10.9% of sales, a year earlier. Crawford said the prior-year quarter included $6.7 million in accrued costs tied to “legal, retirement, and severance expenses.” Operating income improved to $57.1 million, or 14.8% of sales, versus $40.4 million, or 11.5% of sales, in the prior year’s fourth quarter.
AZZ recorded a net loss from Avail joint venture equity and earnings of $21.7 million in the quarter, which Crawford said primarily reflected “a loss in the sale of the welding services businesses and an unfavorable prior period adjustment from Avail.” Excluding those items, Avail’s equity and earnings was approximately $700,000, compared with $3.7 million a year earlier.
Adjusted diluted EPS was $1.34, up 36.7% year-over-year, and adjusted EBITDA was $81.3 million, or 21.1% of sales, compared with $71.2 million, or 20.2% of sales, in the prior-year quarter.
Balance sheet actions, capital allocation, and Washington facility ramp
Crawford said AZZ reduced debt by $385 million during fiscal 2026 and ended the year with net leverage of 1.4x net debt-to-EBITDA. The company invested $80.8 million in capital expenditures, including about $7.9 million for its new greenfield Precoat Metals aluminum coil coating facility in Washington, Missouri.
Over the past three years, AZZ invested roughly $125 million in the Washington facility, which Crawford said was delivered “on time and on budget.” He added that with the facility fully operational, volumes are ramping with its partner customer and the site was “profitable at the contribution margin level in Q4.”
In Q&A, Ferguson said the Washington facility was running at about 40% utilization and is expected to produce “around 45,000-50,000 tons this year,” with ramp expected through the second, third, and fourth quarters. Ferguson also said the facility contributed about $11 million in revenue in fiscal 2026.
Ferguson said AZZ was prioritizing its partner customer as it fills remaining capacity, adding that the company had “a lot of interest” in the balance of the plant and hoped “by the end of the third quarter” to begin filling the remaining capacity after taking care of the partner.
AZZ also acquired a galvanizing facility in Canton, Ohio for approximately $30 million. On shareholder returns, Crawford said the company paid $23 million in dividends and repurchased $20 million in shares at an average price of $99.28 per share.
End-market commentary: data centers, infrastructure, and construction headwinds
Management repeatedly cited infrastructure-related demand themes. Ferguson listed industrial reshoring, bridge and highway investment, hyperscale data center expansion, and power generation, transmission and distribution as multi-year trends supporting demand for galvanized steel and coated metal solutions.
Chief Marketing, Communications and Investor Relations Officer David Nark said construction, the company’s largest end market, grew 3% for the full year, while electrical and industrial posted 17% and 15% growth, respectively. He said the consumer end market grew 6%, helped by higher coated aluminum volume “driven by the shift from plastic to aluminum in the beverage market” and the ramp of the Washington facility. Transportation declined 3% due to weaker demand for semi-trailers.
Nark added that industry research characterizes the AI data center build-out as “more structural rather than cyclical,” and said U.S. data center electricity demand is expected to “roughly double by the end of the decade.” He cited external forecasts indicating U.S. hyperscale data-related spending of approximately $700 billion in calendar 2026, with AI investments representing the majority.
Looking ahead, Nark said AZZ expects non-residential construction excluding data centers to remain subdued in fiscal 2027 due to “interest rate, geopolitical, and lingering tariff-related uncertainties.” He also cited industry research indicating single-family housing starts are expected to be flat to down low single digits and mortgage rates are projected to remain above 6%, which management expects to be a headwind for Precoat Metals.
In Q&A, Ferguson said about 75% of Precoat Metals end markets are driven by construction, and roughly one-third of that has residential exposure. He also said availability of substrate has been a factor for some customers, referencing tariffs and domestic supply ramping. Ferguson said some customers are buying closer to seasonal demand, which can make demand less predictable but fits AZZ’s “quick turnarounds” and customization capabilities.
Fiscal 2027 guidance reiterated; M&A and capacity projects discussed
Ferguson said the company was “off to a good start” in the first quarter but noted it was early in the year. AZZ reiterated fiscal 2027 guidance calling for:
- Sales: $1.725 billion to $1.775 billion
- Adjusted EBITDA: $360 million to $400 million
- Adjusted diluted EPS: $6.50 to $7.00
- Debt reduction: $130 million to $170 million
On segment expectations, Ferguson told Baird’s Ghansham Panjabi that Metal Coatings growth projections were “somewhere in the mid-single- to upper-single-digit,” while Precoat Metals was expected to be “relatively flat year-over-year.”
Ferguson said AZZ intends to be “selectively aggressive” in M&A given its balance sheet, focusing on opportunities that strengthen its Metal Coatings and Precoat Metals segments and expand its geographic reach. He said the pipeline was “looking good” on the Metal Coatings side and described bolt-on targets as typically “$15 million in sales, $4 million-$6 million in EBITDA,” adding the company had “three or four in fairly active discussions” and one in due diligence. Ferguson said guidance does not include incremental M&A contributions.
Executives also discussed expansion projects in Metal Coatings. Ferguson said AZZ is adding a new kettle in North Texas due to demand, with startup expected within “the next month or so,” and suggested it could have about a $2 million EBITDA impact, while acknowledging uncertainty about how much will be realized in the near term. He also cited investment in ground line coating capabilities tied to transmission and distribution demand.
On raw materials, Crawford said zinc prices had been trending up prior to recent disruptions and that broader inflation was affecting inputs such as “acids, caustics, chemicals” in galvanizing and paint in Precoat Metals, with pricing actions and transportation surcharges used to protect margins. He added that paint cost increases are generally passed through “one for one” to customers and said Precoat Metals inventory is purchased to customer order, with about “three or four weeks worth of inventory on hand.”
Ferguson closed the call by noting AZZ’s “39th consecutive year of growth and profitability from continuing operations,” attributing the performance to operational execution and employee efforts across the business.
About AZZ NYSE: AZZ
AZZ Inc, incorporated in 1956 and headquartered in Fort Worth, Texas, is a leading provider of galvanizing and metal finishing solutions alongside electrical equipment and services. The company supports a diverse range of industries—such as energy, infrastructure, heavy equipment and general industrial markets—by delivering corrosion protection and high-performance electrical solutions designed for demanding environments.
AZZ operates two primary business segments. The Global Coatings & Services segment offers hot-dip galvanizing, metal finishing, painting, powder coating and related value-added services to steel fabricators and original equipment manufacturers.
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