AZZ Inc. Q3 FY2026 earnings call

• Achieved record sales of $426 million in Q3 and record trailing 12-month adjusted EBITDA of $358 million. - Maintained a cash dividend of $0.20 per share for 63 consecutive quarters. - Metal Coatings segment benefited from higher volumes and infrastructure demand. - Precoat Metals saw sequential improvement with strong food and beverage container demand. - Emphasized AZZ's proprietary ERP platform as a core differentiator, enhancing customer relationships and margins. - AVAIL completed the sale of a majority interest in its Welding Solutions Business (WSI), simplifying its portfolio.

Metal Coatings: Sales rose 15.7% year-over-year, driven by higher volumes and strong demand from infrastructure projects, with segment EBITDA margins of 30.3%. Precoat Metals: Sales were down 1.8% year-over-year due to softness in construction, HVAC, and transportation markets, but food and beverage container demand reached new record highs, driven by new customer acquisitions and market share gains. Revenue contribution: Metal Coatings likely contributed a significant portion due to its strong growth, while Precoat Metals had a lower contribution but with a positive trend in food and beverage containers.

• Fiscal 2026 sales forecast: $1.625 billion to $1.7 billion. - Adjusted EBITDA forecast: $360 million to $380 million. - Adjusted diluted EPS forecast: $5.90 to $6.20. - Anticipate easier year-over-year comparisons in Q4 due to last year's weather impacts. - Evaluating strategic tuck-in acquisitions in Metal Coatings and Precoat Metals to expand market reach.

Forward-looking statements involve uncertainties outside the company's control. Actual results could differ materially from expectations. Risks detailed in SEC filings, including those related to market conditions, competition, and regulatory changes.

Q: How have order backlogs shaped up in the Metal Coatings and Precoat segments, and was there material impact from the government shutdown?

A: Metal Coatings has good forward-looking opportunities despite no backlog, feeling good about finishing the year. Precoat is more mixed, with no material impact from government shutdown.

Q: Can you provide more color on M&A opportunities?

A: M&A pipeline is active with bolt-on opportunities in Metal Coatings and Precoat, predominantly onesie-twosies, with focus on sweet spot acquisitions.

Q: How impactful will the Washington, Missouri ramp be on Precoat segment margins?

A: The Washington facility's margins will be complementary, with focus on ramping up capacity for the current partner, with more focus on additional customers in early to mid-next year.

Q: How to quantify the favorable weather comp in Q4?

A: Last year had unseasonably cold and wet weather with lost production days, and this year's Q4 is expected to have better weather, though specific details to follow up.

Q: Update on pricing in Metal Coatings and margin impact?

A: Chasing larger projects may marginally affect margins, but teams are disciplined, with zinc costs influencing pricing, and operational improvements expected to help margins next year.

Q: Regionality of metal roofing opportunity?

A: Stronger concentration in southern regions like Florida, Texas, Southern California, and Arizona due to corrosive environments and sun exposure.

Q: Dividend policy and expectations?

A: Dividend policy is under review annually, with commitment to evaluating and potentially adjusting it, with timing around budget and Board approval.