AZZ (NYSE:AZZ) reported fourth-quarter financial results on Thursday. The transcript from the company’s fourth-quarter earnings call has been provided below.
Benzinga APIs provide real-time access to earnings call transcripts and financial data. Visit https://www.benzinga.com/apis/ to learn more.
The full earnings call is available at https://event.choruscall.com/mediaframe/webcast.html?webcastid=NQC0z1aD
Summary
AZZ Inc reported record sales of $1.65 billion for fiscal 2026, with an adjusted EBITDA of $367 million, marking a 19% increase in adjusted EPS to $6.19.
The company completed a greenfield pre-coat metals facility in Washington, Missouri, and acquired a galvanizing facility in Canton, Ohio, to strengthen its metal coatings platform.
Guidance for fiscal 2027 includes expected sales between $1.725 to $1.775 billion, adjusted EBITDA of $360 to $400 million, and adjusted diluted EPS of $6.5 to $7.
The company reduced its debt by $385 million, ending the year with a net debt to EBITDA ratio of 1.4x, showing significant financial flexibility.
Management expressed confidence in capturing market share through strategic growth opportunities and M&A, particularly in the metal coatings segment.
Full Transcript
OPERATOR
Good day and welcome to the AZZ Incorporated Fourth Quarter Fiscal Year 2026 Earnings Conference Call and webcast. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Philip Cooper, Managing Director of Three Part Advisors. Please go ahead.
Philip Cooper (Managing Director)
Good morning. Thank you for joining us today to review AZZ’s fiscal 2026 fourth quarter and full year results for the period ended February 28, 2026. Joining the call today are Tom Ferguson, President and Chief Executive Officer Jason Crawford, Chief Financial Officer and David Narc, Chief Marketing, Communications and Investor Relations Officer. After today’s prepared remarks, we will open the call for questions. Please note that the live webcast of today’s call is available at www.azz.cominvestor-events before we begin, I would like to remind everyone that our discussion today will include forward-looking statements made in accordance with 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 latest annual report on Form 10-K. These statements are not guarantees of future performance, 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 which should be considered supplemental and not as a substitute for GAAP financial measures. We refer shareholders to our reconciliations from GAAP to non-GAAP measures contained in today’s earnings press release. I would now like to turn the call over to Tom Ferguson.
Tom Ferguson (President and Chief Executive Officer)
Thanks Philip Good morning everyone and thank you for joining us today. We delivered a strong close to the year and achieved record sales and profitability for the third consecutive year. I’m especially proud of how our teams recovered from the major winter storm in late January to finish a strong fourth quarter full year. Sales totaled $1.65 billion, adjusted EBITDA surpassed $367 million and adjusted earnings per share grew 19% year over year to $6.19. Our performance reflects the strength of our strategy, disciplined execution, operational excellence and commitment. Teamwork and values based culture across the organization. During fiscal 2026, we further fortified our competitive position by driving market share gains across our segments. AZZ continued to win by delivering superior customer service and operating with discipline and consistency while leveraging our proprietary technologies and galvanizing research capabilities to create differentiated value. Throughout the year, we made organic investments across both of our segments to enhance operating efficiencies and support our long A key milestone in this effort was the completion of our greenfield Precoat metals facility in Washington, Missouri. This investment advances our organic growth strategy and strengthens our Precoat metals segment, expanding AZZ’s participation in the growing aluminum coatings and beverage related end markets. We further expanded our metal coatings platform last year through the acquisition of a galvanizing facility in Canton, Ohio which extended our footprint and broadened our service offering for new and existing customers. At the same time, we continue to evaluate acquisition opportunities through a disciplined capital allocation framework while growing an active strategic pipeline of deals. Jason will cover our fourth quarter results in detail, so I’ll focus my remaining comments on the significant secular tailwinds that continue to propel our long term growth. We are seeing momentum across our end markets driven by infrastructure related investment themes that are reshaping the industrial landscape. These include industrial reshoring, bridge and highway investments, hyperscale data center expansion, investments in power generation, transmission and distribution and continued growth in renewable energy. Each of these trends are structural, multi year and increasingly central to our customers capital spending priorities. As we’ve seen throughout the year, these markets rely heavily on galvanized steel and coated metal solutions areas where AZZ brings meaningful scale, deep coding experience, operational reliability and exceptional value. Our diversified portfolio positions us uniquely to be able to support large scale complex projects across multiple end markets and states, often simultaneously, and to do so with consistency and speed together. These demand drivers in our differentiated operating model allows AZZ to capture market share and deepen existing customer relationships. Dave will share additional details on how industry dynamics translate into project activity in just a moment. We continue to drive incremental improvements across our network using our digital galvanizing system in metal coating plants and Kolene in Precoat metals. These systems strengthen customer engagement while driving productivity and margin improvement across our operations. Together, these custom digital capabilities reinforce our competitive advantages and support consistent, profitable growth. With that, I’ll turn it over to Jason.
Jason Crawford (Chief Financial Officer)
Thank you Tom and good morning. Starting with a summary of results for the year, in fiscal 2026, which ended February 28, 2026, we reported record sales of $1.65 billion, up 4.6% from the prior year. For our core segments, we increased metal coating sales 14.1% and and generated strong EBITDA of over $235 million or 31% of sales. For Precoat Metals, despite a modest 2.3% sales decline driven by industry wide softness in residential and other key markets, we generated solid EBITDA of $176 million or 19.8% of sales. Consolidated gross margins remained robust at 23.9% and operating income from the year rose by 12% to $265 million. Also for the full year, GAAP net income comparisons included two noteworthy matters. First, in 2026 our AVAIL joint venture generated equity and earnings from unconsolidated subsidiaries totaling $210 million, primarily driven by successfully divesting businesses within the joint venture, which I will discuss in more detail in a moment. Second, for the fiscal year 2025, GAAP net income AVAILable to common shareholders included a preferred stock redemption Premium expense totaling $75 million. Adjusted net income excluding these items plus intangible asset amortization and restructuring charges resulted in adjusted EPS of $6.19, an increase of 19% on the prior year. In addition, consolidated adjusted EBITDA increased year over year to $367.6 million or 22.3% of sales, up from 22% of sales a year ago. Shifting to our quarterly results, we reported record fourth quarter sales of $385.1 million representing a 9.4% increase from $351.9 million in the prior year period. This was supported by strong double digit sales growth from our metal coating segment up 25.7% year over year compared to the prior year. Q4 results benefited from continued momentum from higher infrastructure related demand and less impact from inclement weather. Precoat metal sales were down 2.4% for the same quarter of the prior year, primarily due to continued lower end market demand in pockets of construction, transportation and H Vac. The company’s fourth quarter gross profit was $87.6 million or 22.7% of sales, up 30 basis points from 22.4% of sales and in the same quarter of the prior year. Selling general and administrative expenses totaled $30.5 million in the fourth quarter or 7.9% of sales. This compares favourably with last year’s fourth quarter which reported $38.3 million or 10.9% of sales inclusive of $6.7 million in accrued costs related to legal retirement and SEVERANCE expenses. Operating income for the quarter was $57.1 million or 14.8% of sales, an exceptional 330 basis point improvement compared with $40.4 million or 11.5% of sales in the fourth quarter of the prior year. Also in the fourth quarter we reported a net loss from the AVAIL joint venture equity in earnings or of $21.7 million, primarily reflecting a loss in the sale of the welding services businesses and an unfavourable prior period adjustment from AVAIL. Excluding the loss in sale and prior period adjustment transactions, the AVAIL joint ventures equity and earnings for the quarter was approximately $700,000 compared with $3.7 million for the fourth quarter of the prior year. Interest expense for the fourth quarter was $11.2 million, an improvement of $6.2 million from the prior year driven by debt pay down from continuing operations, debt pay down from the AVAIL joint venture distribution, the issuance of an AR securitization loan with favorable pricing and a favorable repricing of the term loan. The fourth quarter’s income tax expense was $8.7 million and GAAP net income was $15.9 million compared to GAAP net income of $20.2 million. For the fourth quarter of the prior year, we reported adjusted net income of $40.4 million excluding intangible asset amortization and the AVAIL equity loss discussed earlier, resulting in adjusted diluted EPS of $1.34 up 36.7% versus a year ago. Fourth quarter adjusted EBITDA was $81.3 million or 21.1% of sales compared to $71.2 million or 20.2% of sales for the same period last year. Turning to our financial position and balance sheet consistent with our capital allocation priorities for the year, we executed with discipline across our balance sheet, growth investments and shareholder returns. We reduced debt by $385 million and ended the year with a net debt to ebitda ratio of 1.4 times, providing significant financial flexibility. Moving forward, we continue to invest in the foundations of the core businesses. During the year we invested $80.8 million in capital expenditures, a growing portion of which was dedicated to internal growth initiatives. Also included in the year within our capital expenditures was approximately $7.9 million on our new Washington, Missouri facility. Over the past three years we have invested approximately $125 million in this aluminum coil coating facility with the team delivering the project on time and on budget. With the facility now fully operational, volume continues to ramp in alignment with our partner customer and was profitable at the contribution margin level in Q4. Finally, rounding off our investments for the year, we further strengthened our metal coating segment by acquiring a galvanizing facility in Canton, Ohio for approximately $30 million, demonstrating our commitment to grow the core businesses organically and inorganically. At the same time, we remain committed to returning capital to our shareholders. During the year, we paid $23 million in cash dividends and repurchased $20 million in shares and an average price of $99.28 per share. Together, these actions reflect our disciplined approach to capital deployment and our focus on creating long term shareholder value for the remaining AVAIL joint venture investment. We account for our 40% interest as equity and earnings and unconsolidated subsidiaries which also constitutes a separate operating segment. In 2026, Aveel generated equity in the earnings of $210 million which includes the sale of its electrical and welding businesses and provided cash distributions of $287 million during the year. AZZ’s cash flows from operations of $525 million includes $273 million of cash distributions from Avail, net of the associated taxes paid. The remaining $14 million of cash distributions from AVAIL were classified as cash flows from investing activities. Finally, as expected, 2026 cash taxes were higher in the year associated with higher equity and earnings from AVAIL, offset somewhat by positive effects from the one big beautiful Bill act on depreciation, R and D expenses and interest expense. With that, I’ll turn the call over to David.
David Narc (Chief Marketing, Communications and Investor Relations Officer)
Thank you Jason Good morning everyone. Consistent with our disclosures found in the company’s 10k, total sales for the full year grew at 5% as compared to the prior fiscal year. Construction, our largest end market, grew at 3% while electrical and industrial delivered strong double digit sales growth resulting in 17 and 15% growth rates respectively. As Tom noted, AZZ Inc. continues …
This post was originally published here
