AZZ Inc. Q1 FY2026 earnings call

• AZZ reported record high sales, adjusted EBITDA, and EPS for Q1 ended May 31, 2025. • Metal Coatings segment was driven by infrastructure-related demand in construction, industrial, and electrical transmission and distribution. • Restructured Metal Coat and Surface Technologies platform by closing a powder coating facility and divesting a plating facility. • Monetized nearly all electrical product businesses in Avail joint venture, receiving $273 million in cash. • Newly commissioned aluminum coating facility in Washington, Missouri shipped first qualification orders, with expectations of operating leverage improvement and positive gross margins in H2. • Acquired Canton Galvanizing in Ohio, which is immediately accretive. • Dividend increased from $0.17 to $0.20 per share.

Metal Coatings segment had record high sales, adjusted EBITDA, and industry-leading adjusted EBITDA margin of 32.9%. Sales grew 6% in Q1 due to higher steel volume processed. Precoat Metals segment had adjusted EBITDA margin of 20.7%. Sales declined 0.8% vs prior year due to lower demand, but shipments were up as customers drew down inventories. Precoat Metals' largest market sector is construction, and it also saw growth in the aluminum container market.

• Reiterated fiscal 2026 sales guidance in range of $1.625 billion to $1.725 billion and adjusted EBITDA guidance in range of $360 million to $400 million. • Upgraded EPS guidance to $5.75 to $6.25, representing 10%-20% increase over fiscal 2025 adjusted earnings. • Strengthened demand forecasts and continued operational momentum support these guidance numbers.

• Tariff uncertainty continues to cause caution in sales projections. • Impact of recent copper tariff announcement is uncertain as it is very recent and yet to be fully assessed on end markets that are copper intensive.

Q: Thoughts on Precoat Metals sales down and margin potential?

A: Precoat Metals affected by tariffs and imported metal, margins up due to cost structure adaptability. New facility ramping with test qualifications in Q1, volume expected to ramp in later quarters.