AZZ Inc.

What they do

AZZ applies protective and decorative coatings to fabricated steel and to steel and aluminum coil. The Metal Coatings segment runs 42 galvanizing plants and four surface technologies plants in the U.S. and Canada, offering hot-dip and spin galvanizing, powder coating, anodizing and plating to the steel fabrication industry. The Precoat Metals segment provides aesthetic and corrosion-protective coil coatings and value-added services to construction, appliance, HVAC, container and transportation markets. The Infrastructure Solutions segment is the company's 40% non-controlling interest in the AVAIL JV, which serves power transmission and automated weld overlay markets.

Revenue drivers

• Precoat Metals — Fiscal 2026 sales of $891.4 million, or about 54% of total revenue, from coil coating and related services for construction, appliance, HVAC, container and transportation end markets; Q1 FY27 sales were $238.2 million, up 1.5%.
• Metal Coatings — Fiscal 2026 sales of $758.7 million, or about 46% of total revenue, from hot-dip galvanizing, spin galvanizing, powder coating, anodizing and plating; Q1 FY27 sales were $210.3 million, up 12.3% on higher galvanized steel volume.
• Infrastructure Solutions (AVAIL JV) — A 40% non-controlling interest that produced $209.7 million of equity in earnings in fiscal 2026, including gains from AVAIL's sale of the Electrical Products Group and the Welding Services Business; it generated no consolidated sales.

Recent performance

Fiscal 2026 revenue was $1.65 billion with net income of $317.3 million and diluted EPS of $10.50, driven primarily by $209.7 million of equity in earnings from the AVAIL JV; operating cash flow was $525.4 million. In the first quarter of fiscal 2027 ended May 31, 2026, total sales rose 6.3% to $448.5 million, with Metal Coatings up 12.3% and Precoat Metals up 1.5%. GAAP net income fell 69.6% to $52.0 million and GAAP diluted EPS fell to $1.72, reflecting the prior-year Q1 gain on AVAIL's sale of the Electrical Products Group. Adjusted net income rose 3.6% to $55.8 million and adjusted diluted EPS rose 3.9% to $1.85, while consolidated Adjusted EBITDA was $99.5 million or 22.2% of sales. First-quarter operating cash flow was $37.1 million and net leverage was 1.4x.

Strategy

Management states it is driving profitable growth in the Metal Coatings and Precoat Metals segments, integrating human capital and environmental initiatives, and targeting increased capital returns to shareholders. The company raised its quarterly dividend 20% to $0.24 per share after paying $0.20 in the first quarter of fiscal 2027. CEO Tom Ferguson said AZZ is actively pursuing an expanding pipeline of high-quality acquisition targets. Capital allocation priorities include disciplined working capital, capital expenditures and debt management; the Washington, Missouri Precoat facility is ramping production. The company also remains engaged with its 40%-owned AVAIL joint venture.

Risks

• Highly competitive markets — Competitors in each segment may have lower cost structures or larger raw-material economies of scale and could underprice AZZ, risking loss of market share.
• Quarterly variability and seasonality — Results can vary significantly quarter to quarter due to economic conditions, customer budget timing, weather and seasonality, with the construction-linked business typically slower in winter.
• Zinc and input cost volatility — Zinc, the principal galvanizing raw material, is subject to volatile pricing, and Precoat passes through higher paint and input costs that may affect demand or mix.
• Joint venture concentration — Fiscal 2026 net income depended heavily on $209.7 million of non-cash equity in earnings from the AVAIL JV, including one-time gains; Q1 FY27 adjusted results exclude $1.3 million of such equity earnings.

Outlook

Management said it is on track to set new sales and profitability records in fiscal year 2027 and increased its annual guidance range. It expects Metal Coatings prices to remain consistent with current levels and Precoat Metals prices to increase on average from passing through higher specified-material pricing and higher overall selling prices. Demand in both segments is expected to follow typical seasonal patterns, with normal seasonal volumes in Metal Coatings and normal customer inventories in Precoat Metals.